SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended June 26, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8089
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-1995548
(State of incorporation) (I.R.S. Employer
Identification number)
1250 24th Street, N.W., Suite 800
Washington, D.C. 20037
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
202-828-0850
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of shares of common stock outstanding at July
16, 1998 was 117,170,527.<PAGE>
DANAHER CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at June 26, 1998 and December 31, 1997 3
Consolidated Condensed Statements of
Earnings for the three months and
six months ended June 26, 1998 and
June 27, 1997 4
Consolidated Condensed Statements of
Cash Flow for the six months ended
June 26, 1998 and June 27, 1997 5
Notes to Consolidated Condensed
Financial Statements 6-7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-8
PART II - OTHER INFORMATION
Item 6. (a) Exhibits: 8-9
(b) Reports on Form 8-K: None
<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
June 26, December 31,
1998 1997
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 32,916 $ 33,317
Accounts receivable, net 359,589 322,600
Inventories:
Finished goods 114,807 82,451
Work in process 72,342 54,544
Raw material and supplies 100,164 72,421
Total inventories 287,313 209,416
Prepaid expenses and other
current assets 42,906 53,006
Total current assets 722,724 618,339
Property, plant and equipment, net
of accumulated depreciation of
$292,047 and $263,227,
respectively 382,907 335,223
Other assets 63,980 72,739
Excess of cost over net assets of
acquired companies, net 1,201,664 853,416
Total assets $2,371,275 $1,879,717
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term debt $ 162,310 $ 35,527
Accounts payable 158,144 135,190
Accrued expenses 454,009 353,518
Total current liabilities 774,463 524,235
Other liabilities 272,467 275,881
Long-term debt 323,399 162,720
Stockholders' equity:
Common stock-$.01 par value 1,287 1,287
Additional paid-in capital 339,231 335,465
Retained earnings 736,992 655,692
Cumulative foreign translation
adjustment and other (7,123) (6,122)
Treasury Stock (69,441) (69,441)
Total stockholders' equity 1,000,946 916,881
Total liabilities and
stockholders' equity $2,371,275 $1,879,717
See notes to consolidated condensed financial
statements.<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000's omitted except per share amounts)
(unaudited)
Quarter Ended Six Months Ended
June 26, June 27, June 26, June 27,
1998 1997 1998 1997
Net revenues $622,271 $502,789 $1,156,689 $969,230
Operating costs
and expenses:
Cost of sales 409,399 338,725 773,215 657,686
Selling, general
and administrative
expenses 123,213 92,266 222,872 178,532
Goodwill and other
amortization 7,597 5,856 13,493 11,613
Total operating
costs and
expenses 540,209 436,847 1,009,580 847,831
Operating profit 82,062 65,942 147,109 121,399
Interest expense,
net 6,970 3,236 10,156 7,100
Earnings from
continuing operations
before income taxes 75,092 62,706 136,953 114,299
Income taxes 28,910 24,448 52,727 44,506
Net Earnings $ 46,182 $ 38,258 $ 84,226 $ 69,793
Basic earnings
per share $ .39 $ .33 $ .72 $ .59
Average shares
outstanding 117,549 117,314 117,499 117,774
Diluted earnings
per share $ .38 $ .32 $ .69 $ .58
Average common stock and
equivalent shares
outstanding 121,295 120,058 121,257 120,407
See notes to consolidated condensed financial statements.
<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(000's omitted)
(unaudited)
Six Months Ended
June 26, June 27,
1998 1997
Cash flows from operating activities:
Net earnings from operations $ 84,226 $ 69,793
Noncash items, depreciation
and amortization 42,492 38,273
(Increase) decrease in accounts
receivable 11,391 (21,769)
(Increase) decrease in
inventories (29,992) (1,270)
Increase in accounts payable 6,527 10,654
Change in other assets and
liabilities 59,732 40,188
Total operating cash flows 174,376 135,869
Cash flows from investing activities:
Payments for additions to property,
plant, and equipment, net (34,191) (25,976)
Cash paid for acquisitions (375,441) (58,962)
Net cash provided by (used in)
investing activities (409,632) (84,938)
Cash flows from financing activities:
Acquisition of treasury stock -- (19,842)
Proceeds from issuance of
common stock 3,766 1,029
Borrowing (repayments) of debt 234,176 (20,605)
Payment of dividends (2,926) (2,938)
Net cash used in financing
activities 235,016 (42,356)
Effect of exchange rate changes
on cash (161) 29
Net change in cash and cash
equivalents (401) 8,604
Beginning balance of cash and cash
equivalents 33,317 26,444
Ending balance of cash and cash
equivalents $ 32,916 $ 35,048
Supplemental disclosures:
Cash interest payments $ 9,825 $ 6,693
Cash income tax payments $ 29,104 $ 44,266
See notes to consolidated condensed financial statements. <PAGE>
DANAHER CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. GENERAL
The consolidated condensed financial statements
included herein have been prepared by Danaher Corporation
(the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and
regulations; however, the Company believes that the
disclosures are adequate to make the information
presented not misleading. The condensed financial
statements included herein should be read in conjunction
with the financial statements and the notes thereto
included in the Company's 1997 Annual Report on Form
10-K.
In the opinion of the registrant, the
accompanying financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary
to present fairly the financial position of the Company
at June 26, 1998 and December 31, 1997, its results of
operations for the three months and six months ended June
26, 1998 and June 27, 1997, and its cash flows for the
six months ended June 26, 1998 and June 27, 1997.
NOTE 2. MERGER WITH FLUKE CORPORATION
On July 7, 1998, Fluke Corporation was acquired
and merged into the Company. The Company issued
17,748,572 shares of common stock in exchange for all
outstanding Fluke shares. The transaction was a tax-free
reorganization and will be accounted for as a pooling-of-
interests. Accordingly, future financial statements will
be restated to reflect the combined companies. Sales
reported will increase $441 million in 1997 and $421
million in 1996. Reported net income will increase $21.8
million in 1997 and $26.4 million in 1996. 1997 reported
diluted earnings per share will be unchanged and 1996
reported diluted earnings per share from continuing
operations will increase from $1.07 to $1.13 per share.
Results for interim periods in 1998 have not yet been
determined on a combined company basis. It is
anticipated that third quarter results will include a
one-time after-tax charge of approximately $25 million to
$30 million to reflect the costs of the transaction and
integrating and implementing efficiencies associated with
information, operational and administrative systems.
Fluke is engaged in the manufacture and marketing of
compact, professional electronic test tools.
NOTE 3. ACQUISITION OF PACIFIC SCIENTIFIC COMPANY
The Company obtained control of Pacific
Scientific Company as of March 9, 1998. Total
consideration for Pacific Scientific was approximately
$420 million. The fair value of assets acquired was
approximately $520 million and approximately $100 million
of liabilities were assumed. The transaction is being
accounted for as a purchase.
The unaudited pro forma information for the
period set forth below give effect to the transaction as
if it had occurred at the beginning of each period. The
pro forma information is presented for information
purposes only and is not necessarily indicative of the
results of operations that actually would have been
achieved had the acquisition been consummated as of that
time (unaudited, 000's omitted):
Year Ended Six Months Ended Six Months Ended
December 31, June 27, June 26,
1997 1997 1998
Net Sales $2,361,428 $1,120,297 $1,228,271
Net Earnings 147,810 65,799 82,570
Earnings per Share $ 1.22 $ .55 $ .68
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the 1998 quarter were 24% higher than
the 1997 quarter. Net sales for the six-month period were 19%
higher than the corresponding period in 1997. This is due both
to continued increases in shipment volume in all segments and
the effect of acquisitions, with comparable companies
accounting for approximately 5% and 6% of sales growth in both
the quarter and six-month periods, respectively.
Gross profit margin in 1998, as a percentage of
sales, was approximately 34.2% for the quarter and 33.2% for
the six-month period, an increase of 1.6 and 1.1 percentage
points, respectively, from 1997 levels. The gross margin
increase was attributable to both the effect of the acquired
companies which provide a higher gross margin and productivity
improvements within the existing business units.
Selling, general and administrative expenses for the
1998 quarter and six-month period increased in total dollars
principally due to the higher volume levels. Selling, general
and administrative expenses as a percentage of sales was 19.8%
for the 1998 quarter and 19.3% for the six month period,
respectively. This represents an increase of 1.4 and 0.9
percentage points, respectively, from prior periods. This
reflects principally the impact of acquired businesses which
have higher cost percentages in this area.
Interest expense for the quarter and six-month
period was 115% and 43% higher than the 1997 levels,
respectively, due to higher average debt levels, reflecting
the funding of the Pacific Scientific acquisition, offset in
part by strong cash flow experienced in 1998 and 1997.
The effective tax rate for both the second quarter
and six-month periods is .5 percent points less in 1998 than
1997, reflecting lower tax rates associated with higher
expected earnings from foreign operations.
Liquidity and Capital Resources
Since December 31, 1997, the Company has experienced
increases in inventory and accounts payable. This is due to
the lower activity levels experienced in the last weeks of
1997 caused by the holiday season. Total debt increased to
$486 million at June 26, 1998, primarily as a result of the
acquisition of Pacific Scientific, offset in part by strong
operating cash flow.
A regular quarterly dividend of $.0125 per share was
declared, payable on July 31, 1998 to holders of record on
June 26, 1998.
The Company's cash provided from operations, as well
as credit facilities available, should provide sufficient
available funds to meet anticipated working capital
requirements, capital expenditures, acquisitions, dividends
and scheduled debt repayments.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:(10) Material Contracts:
(a) As Amended Employment Agreement between Danaher
Corporation and George M. Sherman dated as of
January 2, 1990
(b) As Amended Credit Agreement Dated As of
September 7, 1990. Among Danaher Corporation,
the Financial Institutions Listed Therein and
Bankers Trust Company as Agent.
(c) As Amended Agreement as of November 1, 1990
between Danaher Corporation, Easco Hand Tools,
Inc. and Sears, Roebuck and Co.
(d) As Amended Note Agreements as of November 1,
1992 and April 1, 1993 Between Danaher Corporation
and Lenders Referenced Therein.
Exhibits: (3)
(a) As Amended Articles of Incorporation
Exhibits: (27) Financial Data Schedules
(b) Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DANAHER CORPORATION:
Date: July 16, 1998 By: /s/ Patrick W. Allender
Patrick W. Allender
Chief Financial Officer
Date: July 16, 1998 By: /s/ C. Scott Brannan
C. Scott Brannan
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-26-1998
<CASH> 32916
<SECURITIES> 0
<RECEIVABLES> 381416
<ALLOWANCES> 21827
<INVENTORY> 287313
<CURRENT-ASSETS> 722724
<PP&E> 674954
<DEPRECIATION> 292047
<TOTAL-ASSETS> 2371275
<CURRENT-LIABILITIES> 774463
<BONDS> 0
0
0
<COMMON> 1287
<OTHER-SE> 999659
<TOTAL-LIABILITY-AND-EQUITY> 2371275
<SALES> 622271
<TOTAL-REVENUES> 622271
<CGS> 409399
<TOTAL-COSTS> 540209
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6970
<INCOME-PRETAX> 75092
<INCOME-TAX> 28910
<INCOME-CONTINUING> 46182
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46182
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
CERTIFICATE OF INCORPORATION
OF
DANAHER CORPORATION
FIRST: The name of the Corporation is Danaher
Corporation.
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 4305 Lancaster
Pike, in the city of Wilmington, County of New Castle.
The name of its registered agent at that address is
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage
in any lawful act or activity for which a corporation may be
organized under the General Corporation Law of Delaware
as set forth in Title 8 of the Delaware Code (the "GCL").
FOURTH: I. The total number of shares of stock
which the Corporation shall have authority to issue is
30,000,000 shares of which 25,000,000 shares, $.01 par
value per share, shall be of a class designated "Common
Stock" and of which 5,000,000 shares, without par value,
shall be designated "Preferred Stock."
II. The Board of Directors of the Corporation is
authorized, subject to limitations prescribed by law and the
provisions of this Article FOURTH, to provide for the
issuance from time to time in one or more series of any
number of shares of Preferred Stock, and, by filing a
certificate pursuant to the GCL, to establish the number of
shares to be included in each such series, and to fix the
designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority
of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the
following:
A. The number of shares constituting that series
and the distinctive designation of that series;
B. The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from
which date or dates, and whether they shall be payable in
preference to, or in another relation to, the dividends
payable on any other class or classes or series of stock;
C. Whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so,
the terms of such voting rights;
D. Whether that series shall have conversion or
exchange privileges, and, if so, the terms and conditions of
such conversion or exchange, including provision for
adjustment of the conversion or exchange rate in such
events as the Board of Directors shall determine;
E. Whether or not the shares of that series shall
be redeemable, and, if so, the terms and conditions or such
redemption, including the manner of selecting shares for
redemption if less than all shares are to be redeemed, the
date or dates upon or after which they shall be redeemable,
and the amount per share payable in case of redemption
which amount may vary under different conditions and at
different redemption dates;
F. Whether that series shall be entitled to the
benefit of a sinking fund to be applied to the purchase or
redemption of shares of that series, and, if so, the terms and
amounts of such sinking fund;
G. The right of the shares of that series to the
benefit of conditions and restrictions upon the creation of
indebtedness of the Corporation or any subsidiary, upon the
issue of any additional stock (including additional shares of
such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by the
Corporation or any subsidiary of any outstanding stock of
the Corporation;
H. The right of the shares of that series in the
event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation and whether
such rights shall be in preference to, or in another relation
to, the comparable rights of any other class or classes or
series of stock; and
I. Any other relative, participating, optional or
other special rights, qualifications, limitations or
restrictions of that series.
III. Shares of any series of Preferred Stock which
have been redeemed (whether through the operation of a
sinking fund or otherwise) or which, if convertible or
exchangeable, have been converted into or exchanged for
shares of stock of any other class or classes shall have the
status of authorized and unissued shares of Preferred Stock
of the same series and may be reissued as a part of the
series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the
Board of Directors or as part of any other series of
Preferred Stock, all subject to the conditions and the
restrictions on issuance set forth in the resolution or
resolutions adopted by the Board of Directors providing for
the issue of any series of Preferred Stock.
IV. Subject to the provisions of any applicable law,
or except as otherwise provided by the resolution or
resolutions providing for the issue of any series of Preferred
Stock, the holders of outstanding shares of Common Stock
shall exclusively possess voting power for the election of
directors and for all other purposes, each holder of record
of shares of Common Stock being entitled to one vote for
each share of Common Stock standing in his name on the
books of the Corporation.
V. Except as otherwise provided by the resolution
or resolutions providing for the issue of any series of
Preferred Stock, after payment shall have been made to the
holders of Preferred Stock of the full amount of dividends
to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of Preferred
Stock the holders of Common Stock shall be entitled, to the
exclusion of the holders of Preferred Stock of any and all
series, to receive such dividends as from time to time may
be declared by the Board of Directors.
VI. Except as otherwise provided by the resolution
or resolutions providing for the issue of any series of
Preferred Stock in the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the
holders of Preferred Stock of the full amount to which they
shall be entitled pursuant to the resolution or resolutions
providing for the issue of any series of Preferred Stock, the
holders of Common Stock shall be entitled, to the exclusion
of the holders of Preferred Stock of any and all series, to
share, ratably according to the number of shares of
Common Stock held by them, in all remaining assets of the
Corporation available for distribution to its stockholders.
VII. The number of authorized shares of any class
may be increased or decreased by the affirmative vote of
the holders of a majority of the stock of the Corporation
entitled to vote.
FIFTH: The name and mailing address for the Sole
Incorporator is as follows:
Name Mailing Address
Sheldon S. Adler Skadden, Arps, Slate, Meagher &
Flom
919 Third Avenue
New York, New York 10022
SIXTH: I. The business and affairs of the
Corporation shall be managed by or under the direction of a
Board of Directors consisting of not less than three
directors, the exact number of directors to be determined
from time to time by resolution adopted by the affirmative
vote of a majority of the entire Board of Directors. The
directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number
of directors constituting the entire Board of Directors.
Class I directors initially shall be elected for a one-year
term to expire at the 1987 annual meeting of stockholders,
Class II directors for a two-year term to expire at 1988
annual meeting of stockholders and Class III directors for a
three-year term to expire at the 1989 meeting of
stockholders. At each succeeding annual meeting of
stockholders, beginning in 1987, successors to the class of
directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional
director of any class elected to fill a vacancy resulting from
an increase in such class shall hold office for a term that
shall coincide with the remaining term of that class, but in
no case will a decrease in the number of directors shorten
the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his
term expires and until his successor shall be elected and
shall qualify, subject however, to prior death, resignation,
retirement, disqualification or removal from office. Any
vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a
majority of the directors then in office, although less than a
quorum, or by a sole remaining director. Any director
elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term
as that of his predecessor.
Notwithstanding the foregoing, whenever the holders
of any one or more classes or series of Preferred Stock
issued by the Corporation shall have the right, voting
separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such
directorships shall be governed by the terms of this
Certificate of Incorporation applicable thereto, and such
directors so elected shall not be divided into classes
pursuant to this Article SIXTH unless expressly provided
by such terms.
II. Except to the extent prohibited by law, the Board
of Directors shall have the right (which, to the extent
exercised, shall be exclusive) to establish the rights,
powers, duties, rules and procedures that from time to time
shall govern the Board of Directors and each of its
members, including without limitation the vote required for
any action by the Board of Directors, and that from time to
time shall affect the directors power to manage the business
and affairs of the Corporation; and no By- laws shall be
adopted by stockholders which shall impair or impede the
implementation of the foregoing.
SEVENTH: The directors shall have concurrent
power with the stockholders to make, alter, amend, change,
add to or repeal the By-Laws of the Corporation. In
addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are
hereby empowered to exercise all such powers and do all
such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the
statutes of Delaware, this Certificate of Incorporation, and
any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been
adopted.
EIGHTH: Meetings of stockholders may be held
within or without the State of Delaware, as the By-Laws
may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside
the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors in
the By-Laws of the Corporation.
NINTH: Whenever a compromise or arrangement
is proposed between the Corporation and its creditors or
any class of them and/or between the Corporation and its
stockholders or any class of them, any court of the
equitable jurisdiction within the State of Delaware may, on
the application in a summary way of the Corporation or of
any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation
under the provisions of Section 291 of Title 8 of the GCL
or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the GCL, order a
meeting of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree
to any compromise or arrangement and to any
reorganization of the Corporation as a consequence of such
compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or
on all the stockholders or class of stockholders, of the
Corporation, as the case may be, and also on the
Corporation.
TENTH: The Corporation shall indemnify to the
full extent authorized or permitted by law any person made,
or threatened to be made, a party to any action or
proceeding (whether civil or criminal or otherwise) by
reason of the fact that he, his testator or intestate, is or was
a director or officer of the Corporation or by reason of the
fact that such director or officer, at the request of the
Corporation, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or
other enterprise, in any capacity. Nothing contained herein
shall affect any rights to indemnification to which
employees other than directors and officers may be entitled
by law. No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary
damages for any breach of fiduciary duty by such a director
as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable
law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) pursuant to Section 174
of the GCL, or (iv) for any transaction from which such
director derived an improper personal benefit. No
amendment to or repeal of this Article TENTH shall apply
to or have any effect on the liability or alleged liability of
any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such
amendment.
ELEVENTH: The Corporation reserves the right to
amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the incorporator
hereinbefore named, for the purpose of forming a
corporation pursuant to the GCL, do make this Certificate,
hereby declaring and certifying that this is my act and deed
and the facts herein stated are true, and accordingly have
hereunto set my hand this third day of October, 1986.
/s/ Sheldon S. Adler
Sheldon S. Adler
Sole Incorporator<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
DANAHER CORPORATION
_________________________________
Pursuant to Section 242 of the General
Corporation Laws of the State of Delaware
_________________________________
Danaher Corporation, a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: That Paragraph I. of Article FOURTH of the
Certificate of Incorporation of the Corporation be amended
and read in its entirety as follows:
FOURTH: I. The total number of shares of stock
which the Corporation shall have authority to issue is
315,000,000 shares of which 300,000,000 shares, $.01 par
value per share, shall be of a class designated "Common
Stock" and of which 15,000,000 shares, without par value,
shall be designated "Preferred Stock".
SECOND: That the foregoing amendment has been
duly adopted in accordance with the provisions of Section
242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, DANAHER
CORPORATION has caused this Certificate of
Amendment to the Certificate of Incorporation of
DANAHER CORPORATION to be executed on its behalf
by its President or Vice President, and attested to by its
Secretary or Assistant Secretary this 5 day of May, 1998.
DANAHER CORPORATION
By: /s/ C.S. Brannan
Name: C. Scott Brannan
Title: Vice President
ATTEST:
By: /s/ Patrick W. Allender
Name: Patrick W. Allender
Title: Secretary
<PAGE>
BY- LAWS
OF
DANAHER CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office
of the Corporation shall be in the City of Dover, County of
Kent, State of Delaware.
Section 2. Other Offices. The Corporation may
also have offices at such other places both within and
without the State of Delaware as the Board of Directors
may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the
stockholders for the election of directors or for any other
purpose shall be held at such time and place, either within
or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in
the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual Meetings. The Annual
Meetings of Stockholders shall be held on such date and at
such time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting,
at which meetings the stockholders shall elect by a plurality
vote a Board of Directors, and transact such other business
as may properly be brought before the meeting. Written
notice of the Annual Meeting stating the place, date and
hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more
than sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise
prescribed by law or by the Certificate of Incorporation,
Special Meetings of Stockholders, for any purpose or
purposes, may be called by either (i) the Chairman, if there
be one, or (ii) the President, [(iii) any Vice President, if
there be one, (iv) the Secretary or (v) any Assistant
Secretary, if there be one,] and shall be called by any such
officer at the request in writing of a majority of the Board
of Directors [or at the request in writing of stockholders
owning a majority of the capital stock of the Corporation
issued and outstanding and entitled to vote]. Such request
shall state the purpose or purposes of the proposed meeting.
Written notice of a Special Meeting stating the place, date
and hour of the meeting and the purpose or purposes for
which the meeting is called shall be given not less than ten
nor more than sixty days before the date of the meeting to
each stockholder entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise provided
by law or by the Certificate of Incorporation, the holders of
a majority of the capital stock issued and outstanding and
entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however,
such quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy,
shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting,
until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might
have been transacted at the meeting as originally noticed.
If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by
law, the Certificate of Incorporation or these Bylaws, any
question brought before any meeting of stockholders shall
be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Each
stockholder represented at a meeting of stockholders shall
be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder.
Such votes may be cast in person or by proxy but no proxy
shall be voted on or after three years from its date, unless
such proxy provides for a longer period. The Board of
Directors, in its discre- tion, or the officer of the
Corporation presiding at a meeting of stockholders, in his
discretion, may require that any votes cast at such meeting
shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of
Meeting. Unless otherwise provided in the Certificate of
Incorporation, any action required or permitted to be taken
at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 7. List of Stockholders Entitled to Vote.
The officer of the Corporation who has charge of the stock
ledger of the Corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane
to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of the
Corporation shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list
required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any
meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The
Board of Directors shall consist of not less than one nor
more than fifteen members, the exact number of which
shall initially be fixed by the Incorporator and thereafter
from time to time by the Board of Directors. Except as
provided in Section 2 of this Article, directors shall be
elected by a plurality of the votes cast at Annual Meetings
of Stockholders, and each director so elected shall hold
office until the next Annual Meeting and until his successor
is duly elected and qualified, or until his earlier resignation
or removal. Any director may resign at any time upon
notice to the Corporation. Directors need not be
stockholders.
Section 2. Vacancies. Vacancies and newly
created directorships resulting from any increase in the
authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or
by a sole remaining director, and the directors so chosen
shall hold office until the next annual election and until
their successors are duly elected and qualified, or until their
earlier resignation or removal.
Section 3. Duties and Powers. The business of the
Corporation shall be managed by or under the direction of
the Board of Directors which may exercise all such powers
of the Corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or
by these By-Laws directed or required to be exercised or
done by the stockholders.
Section 4. Meetings. The Board of Directors of
the Corporation may hold meetings, both regular and
special, either within or without the State of Delaware.
Regular meetings of the Board of Directors may be held
without notice at such time and at such place as may from
time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called
by the Chairman, if there be one, the President, or any [*]
director[s]. Notice thereof stating the place, date and hour
of the meeting shall be given to each director either by mail
not less than forty-eight (48) hours before the date of the
meeting, by telephone or telegram on twenty-four (24)
hours' notice, or on such shorter notice as the person or
persons calling such meeting may deem necessary or
appropriate in the circumstances.
Section 5. Quorum. Except as may be otherwise
specifically provided by law, the Certificate of
Incorporation or these By-Laws, at all meetings of the
Board of Directors, a majority of the entire Board of
Directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a
quorum shall be present.
Section 6. Actions of Board. Unless otherwise
provided by the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all the members
of the Board of Directors or committee, as the case may be,
consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of
Directors or committee.
Section 7. Meetings of Conference Telephone.
Unless otherwise provided by the Certificate of
Incorporation or these By-Laws, members of the Board of
Directors of the Corporation, or any committee designated
by the Board of Directors, may participate in a meeting of
the Board of Directors or such committee by means of a
conference telephone or similar communications equipment
by means of which all persons participating in the meeting
can hear each other, and participation in a meeting pursuant
to this Section 7 shall constitute presence in person at such
meeting.
Section 8. Committees. The Board of Directors
may, by resolution passed by a majority of the entire Board
of Directors, designate one or more committees, each
committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who
may replace any absent or disqualified member at any
meeting of any such committee,. In the absence or
disqualification of a member of a committee, and in the
absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified
member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he
or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member.
Any committee, to the extent allowed by law and provided
in the resolution establishing such committee, shall have
and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs
of the Corporation. Each committee shall keep regular
minutes and report to the Board of Directors when required.
Section 9. Compensation. The directors may be
paid their expenses, if any, of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude
any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of
special or standing committees may be allowed like
compensation for attending meetings.
Section 10. Interested Directors. No contract or
transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any
other corporation, partnership, association, or other
organization in which one or more of its directors or
officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in
the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose if (i)
the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are
known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the
material facts as to his or their relationship or interest and
as to the contract or transaction are disclosed or are known
to the stockholders entitled to vote thereon, and the contract
or transaction is specifically approved in good faith by vote
of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a
committee thereof or the stockholders. Common or
interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract
or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the
Corporation shall be chosen by the Board of Directors and
shall be a President, a Secretary and a Treasurer. The
Board of Directors, in its discretion, may also choose a
Chairman of the Board of Directors (who must be a
director) and one or more Vice-Presidents, Assistant
Secretaries, Assistant Treasurers and other officers. Any
number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of
Incorporation or these By-Laws. The officers of the
Corporation need not be stockholders of the Corporation
nor, except in the case of the Chairman of the Board of
Directors, need such officers be directors of the
Corporation.
Section 2. Election. The Board of Directors at its
first meeting held after each Annual Meeting of
Stockholders shall elect the officers of the Corporation who
shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined
from time to time by the Board of Directors; and all officers
of the Corporation shall hold office until their successors
are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors
may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring
in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the
Corporation. Powers of attorney, proxies, waivers of notice
of meeting, consents and other instruments relating to
securities owned by the Corporation may be executed in the
name of and on behalf of the Corporation by the President
or any Vice-President and any such officer may, in the
name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in
person or by proxy at any meeting of security holders of
any corporation in which the Corporation may own
securities and at any such meeting shall possess and may
exercise any and all rights and power incident to the
ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and
possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any
other person or persons.
Section 4. Chairman of the Board of Directors.
The Chairman of the Board of Directors, if there be one,
shall preside at all meetings of the stockholders and of the
Board of Directors. He shall be the Chief Executive
Officer of the Corporation, and except where by law the
signature of the President is required, the Chairman of the
Board of Directors shall possess the same power as the
President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by
the Board of Directors. During the absence or disability of
the President, the Chairman of the Board of Directors shall
exercise all the powers and discharge all the duties of the
President. The Chairman of the Board of Directors shall
also perform such other duties and may exercise such other
powers as from time to time may be assigned to him by
these By-Laws or by the Board of Directors.
Section 5. President. The President shall, subject to
the control of the Board of Directors and, if there be one,
the Chairman of the Board of Directors, have general
supervision of the business of the Corporation and shall see
that all orders and resolutions of the Board of Directors are
carried into effect. He shall execute all bonds, mortgages,
contracts and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed
and executed and except that the other officers of the
Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the
President. In the absence or disability of the Chairman of
the Board of Directors, or if there be none, the President
shall preside at all meetings of the stockholders and the
Board of Directors. If there be no Chairman of the Board
of Directors, the President shall be the Chief Executive
Officer of the Corporation. The President shall also
perform such other duties and may exercise such other
powers as from time to time may be assigned to him by
these By-Laws or by the Board of Directors.
Section 6. Vice-Presidents. At the request of the
President or in his absence or in the event of his inability or
refusal to act (and if there be no Chairman of the Board of
Directors), the Vice-President or the Vice-Presidents if
there is more than one (in the order designated by the Board
of Directors) shall perform the duties of the President, and
when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Each
Vice-President shall perform such other duties and have
such other powers as the Board of Directors from time to
time may prescribe. If there be no Chairman of the Board
of Directors and no Vice President, the Board of Directors
shall designate the officer of the Corporation who, in the
absence of the President or in the event of the inability or
refusal of the President to act, shall perform the duties of
the President, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of
stockholders and record all the proceedings thereat in a
book or books to be kept for that purpose; the Secretary
shall also perform like duties for the standing committees
when required. The Secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such
other duties as may be prescribed by the Board of Directors
or President, under whose supervision he shall be. If the
Secretary shall be unable or shall refuse to cause to be
given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no
Assistant Secretary, then either the Board of Directors or
the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the
seal of the Corporation and the Secretary or any Assistant
Secre- tary, if there be one, shall have authority to affix the
same to any instrument requiring it and when so affixed, it
may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of
Directors may give general authority to any other officer to
affix the seal of the Corporation and to attest the affixing by
his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and
records required by law to be kept or filed are properly kept
or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the
custody of the corporate funds and securities and shall keep
full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be
designated by the Board of Directors. The Treasurer shall
disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the
Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of
the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money
and other property of whatever kind in his possession or
under his control belonging to the Corporation.
Section 9. Assistant Secretaries. Except as may be
otherwise provided in these By-Laws, Assistant Secretaries,
if there be any, shall perform such duties and have such
powers as from time to time may be assigned to them by
the Board of Directors, the President, any Vice-President, if
there be one, or the Secretary, and in the absence of the
Secretary or in the event of his disability or refusal to act,
shall perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant
Treasurers, if there be any, shall perform such duties and
have such powers as from time to time may be assigned to
them by the Board of Directors, the President, any
Vice-President, if there be one, or the Treasurer, and in the
absence of the Treasurer or in the event of his disability or
refusal to act, shall perform the duties of the Treasurer, and
when so acting, shall have all the powers of and be subject
to all the restrictions upon the Treasurer. If required by the
Board of Directors, an Assistant Treasurer shall give the
Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for
the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the
Corporation.
Section 11. Other Officers. Such other officers as
the Board of Directors may choose shall perform such
duties and have such powers as from time to time may be
assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the
Corporation the power to choose such other officers and to
prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of
stock in the Corporation shall be entitled to have a
certificate signed, in the name of the Corporation (i) by the
Chairman of the Board of Directors, the President or a
Vice- President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him
in the Corporation.
Section 2. Signatures. Where a certificate is
countersigned by (i) a transfer agent other than the
Corporation or its employee, or (ii) a registrar other than
the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of
Directors may direct a new certificate to be issued in place
of any certificate theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed.
When authorizing such issue of a new certificate, the Board
of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as the
Board-of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation
shall be transferable in the manner prescribed by law and in
these By-Laws. Transfers of stock shall be made on the
books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing
and upon the surrender of the certificate therefor, which
shall be cancelled before a new certificate shall be issued.
Section 5. Record Date. In order that the
Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or
for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall
not be more than sixty days nor less than ten days before
the date of such meeting, nor more than sixty days prior to
any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders
shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation
shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize
any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is
required by law, the Certificate of Incorporation or these
By-Laws, to be given to any director, member of a
committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or
stockholder, at his address as it appears on the records of
the Corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the
same shall be deposited in the United States mail. Written
notice may also be given personally or by telegram, telex or
cable.
Section 2. Waivers of Notice. Whenever any
notice is required by law, the Certificate of Incorporation or
these By-Laws, to be given to any director, member of a
committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital
stock of the Corporation, subject to the provisions of the
Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, and
may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for
dividends such sum or sums as the Board of Directors from
time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of
the Corporation, or for any proper purpose, and the Board
of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands
for money and notes-of the Corporation shall be signed by
such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 4. Corporate Seal. The corporate seal shall
have inscribed thereon the name of the Corporation, the
year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced
or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or
Proceedings other Than Those by or in the Right of the
Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of
the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent
of another corpo- ration, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or
Proceedings by or in the Right of the Corporation. Subject
to Section 3 of this Article VIII, the Corporation shall
indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Corporation;
except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless
and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity
for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a
court) shall be made by the Corporation only as authorized
in the specific case upon a determination that
indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sec- tion 1 or
Section 2 of this Article VIII, as the case may be. Such
determination shall be made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director,
officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of
any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith,
without the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of
any determination under Section 3 of this Article VIII, a
person shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable
cause to believe his conduct was unlawful, if his action is
based on the records or books of account of the Corporation
or another enterprise, or on information supplied to him by
the officers of the Corporation or another enterprise in the
course of their duties, or on the advice of legal counsel for
the Corporation or another enterprise or on information or
records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or
by an appraiser or other expert selected with reasonable
care by the Corporation or another enterprise. The term
"another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust
or other enterprise of which such person is or was serving
at the request of the Corporation as a director, officer,
employee or agent. The provisions of this Section 4 shall
not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Sections
1 or 2 of this Article VIII, as the case may be.
Section 5. Indemnification by a Court.
Notwithstanding any contrary determination in the specific
case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination
thereunder, any director, officer, employee or agent may
apply to any court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise
permissible under Sections 1 and 2 of this Article VIII.
The basis of such indemnification by a court shall be a
determination by such court that indemnification of the
director, officer, employee [or agent] is proper in the
circumstances because he has met the applicable standards
of conduct set forth in Sections 1 or 2 of this Article VIII,
as the case may be. Notice of any application for
indemnification pursuant to this Section 5 shall be given to
the Corporation promptly upon the filing of such
application.
Section 6. Expenses Payable in Advance.
Expenses incurred in defending or investigating a
threatened or pending action, suit or proceeding may be
paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article
VIII.
Section 7. Non-exclusivity of Indemnification and
Advancement of Expenses. The indemnification and
advancement of expenses provided by or granted pursuant
to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or
advancement of expenses may be entitled under any
By-Law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction
(howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that
indemnification of the persons specified in Sections 1 and 2
of this Article VIII shall be made to the fullest extent
permitted by law. The provisions of this Article VIII shall
not be deemed to preclude the indemnification of any
person who is not specified in Sections 1 or 2 of this Article
VIII but whom the Corporation has the power or obligation
to indemnify under the provisions of the General
Corporation Law of the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may
purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee [or agent] of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee [or agent] of
another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would
have the power or the obligation to indemnify him against
such liability under the provisions of this Article VIII.
Section 9. Meaning of "Corporation" for Purposes
of Article VIII. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to
the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had
continued, would have had power and authority to
indemnify its directors, officers, and employees [or agents],
so that any person who is or was a director, officer,
employee [or agent] of such constituent corporation, or is
or was serving at the request of such constituent
corporation as a director, officer, employee [or agent] of
another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting
or surviving corporation as he would have with respect to
such constituent corporation if its separate existence had
continued.
Section 10. Survival of Indemnification and
Advancement of Expenses. The indemnification and
advancement of expenses provided by, or granted pursuant
to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE IX
AMENDMENTS
Section 1. These By-Laws may be altered,
amended or repealed, in whole or in part, or new By-Laws
may be adopted by the stockholders or by the Board of
Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be
contained in the notice of such meeting of stockholders or
Board of Directors as the case may be. All such
amendments must be approved by either the holders of a
majority of the outstanding capital stock entitled to vote
thereon or by a majority of the entire Board of Directors
then in office.
Section 2. Entire Board. As used in this Article IX
and in these By-Laws generally, the term "entire Board of
Directors" means the total number of directors which the
Corporation would have if there were no vacancies.
EMPLOYMENT AGREEMENT
AGREEMENT made this 2nd day of January, 1990,
between Danaher Corporation, a Delaware corporation (the
"Company"), and George M. Sherman (the "Executive").
The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the future
growth and success of the Company is expected to be
substantial. The Board desires to provide for the continued
employment of the Executive with the Company which the
board has determined will reinforce and encourage the
continued attention and dedication of the Executive to the
Company as a member of the Company's management, in the
best interest of the Company and its shareholders. The
Executive is willing to commit himself to serve the Company,
on the terms and conditions herein provided.
In order to effect the foregoing, the Company and the
Executive wish to enter into an employment agreement on the
terms and conditions set forth below. Accordingly, in
consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ
the Executive, and the Executive hereby agrees to serve the
Company, on the terms and conditions set forth herein.
2. Term. The employment of the Executive by the
Company as provided in Section 1 will commence no later
than February 15 (The "Commencement Date") and will
continue in effect, unless terminated as otherwise herein
provided, until either party gives notice to the other that it does
not wish to continue the Executive's employment hereunder.
A notice given on or before the third anniversary of the
Commencement Date will terminate the Executive's
employment on the last day of the 36th month following the
date of delivery of the notice, and a notice given after the third
anniversary of the Commencement Date will terminate the
Executive's employment on the last day of the 24th month
following the date of the notice. In no event, however, shall
the Term of the Executive's employment hereunder extend
beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
3. Position and Duties. The Executive shall serve as Chief
Executive Officer and President of the Company with the
responsibility and authority to manage and supervise the
Company's operations in the ordinary course of its business
and shall have such responsibilities, duties and authority as are
generally associated with each such position (or any position
to which he may be promoted after the date hereof) and as
may from time to time be assigned to the Executive by the
Board that are consistent with such responsibilities, duties and
authority. The Executive shall devote substantially all of his
working time and efforts to the business and affairs of the
Company. The Company shall nominate the Executive as a
director of the Company for election at the earliest practical
date consistent with the Company's By-laws following the
Commencement Date.
4. Compensation and Related Matters.
(a) Salary. During the period of the Executive's
employment hereunder, the Company shall pay to the
Executive an annual base salary at a rate not less than
$675,000 or such higher rate as may from time to time be
determined by the Board, such salary to be paid in
substantially equal installments in accordance with the normal
payroll practices of the Company. The Executive's salary will
be reviewed at least annually.
(b) (i) Sign-On Bonus. The Company will pay the
Executive a sign-on bonus of $250,000, payable in a single
sum within 30 days following the Commencement Date.
(ii) Annual Bonus. The Company will pay the
Executive a guaranteed bonus of $325,000 (the "Guaranteed
Bonus") within 30 days following December 31, 1990 (or the
end of the Company's fiscal year if such fiscal year is other
than calendar year) and, thereafter, an annual bonus (the
"Annual Bonus") within 60 days following each subsequent
December 31 (or last day of the fiscal year, if other than
December 31) in an amount not less than 60% of the
Executive's annual base salary then in effect provided the
Company achieves its targeted performance objectives for
such year based upon that year's operating plan (as approved
by the Executive Committee of the Company's Board of
Directors), it being understood that if the Company exceeds
such objectives, the Company will pay the Executive an
additional bonus which shall be reasonable in relation to such
corporate performance. The Executive shall be entitled to a
pro-rata portion of the Annual Bonus and additional bonus for
any period less than a full calendar year (or fiscal year, if other
than a calendar year) for which he is entitled to his salary.
(c) Stock Options. On the Commencement Date, the
Company will grant the Executive 500,000 stock options to
purchase shares of common stock of the Company ("Company
Stock") at an exercise price equal to 85% of the average of the
high and low price of the Company's Stock on the New York
Stock Exchange during the day prior to the date of this
Agreement during which such stock trades (the "Stock
Options"). The Stock Options will become transferable by the
Executive and exercisable in the following amounts on the
following dates:
166,667 Upon the Commencement Date
166,667 Upon the 2nd Anniversary of the
Commencement Date
166,666 Upon the 3rd Anniversary of the
Commencement Date.
In the event the Executive terminates his
employment without Good Reason prior to the third
anniversary of the Commencement Date, all Stock Options not
theretofore transferrable and exercisable will lapse and be
forfeited. In the event the Executive's employment is
terminated for any other reason prior to the third anniversary
of the Commencement Date all Stock Options not theretofore
transferable and exercisable will thereupon become
transferable and exercisable. Except as otherwise provided
herein or in Section 9 each Stock Option will expire 10 years
after it is granted.
(d) Incentive Stock. On the Commencement Date, the
Company will grant the Executive 100,000 shares of Company
Stock (the "Incentive Stock"), of which 33,334 will be
nonforfeitable on the Commencement Date, and, 33,333 of the
remaining 66,666 shares will become non-forfeitable on the
second anniversary of the Commencement Date, and the last
33,333 shares will become non-forfeitable on the third
anniversary of the Commencement Date. In the event the
Executive terminates his employment hereunder without Good
Reason (as defined in Section 6(d)), all Incentive Stock not
theretofore non-forfeitable will be forfeited by the Executive
and returned to the Company; and in the event the Executive's
employment is terminated for any other reason prior to the
third anniversary of the Commencement Date all Incentive
Stock theretofore subject to forfeiture will thereupon become
non-forfeitable and free of any limitation or restriction under
this Agreement. Unless and until a share of Incentive Stock is
forfeited hereunder, the Executive shall be entitled to all
dividends thereon and shall have the right to vote such share at
any meeting of the shareholders of the Company.
(e) "Gross-Up" Payment. Not less than 10 days prior to
the due date of the Executive's federal income tax return for
every taxable year of the Executive in which his income tax
liability is affected by the receipt of the Stock Options and/or
the Incentive Stock, and/or by the lapse of restrictions on the
Stock Options and/or the Incentive Stock, the Company will
pay the Executive an amount (the "Gross-Up Payment") which
will include all federal and state income taxes incurred by the
Executive as a result of the receipt by him of, or the lapse of
restriction on: (i) the Stock Options or (ii) the grant of
Incentive Stock under Section 4(d) hereof or (iii) the Gross-
Up Payment under this sub-paragraph, so that the Executive's
entire federal and state income tax liabilities attributable to the
receipt of the grant of the Stock Options, the receipt of the
Incentive Stock, or the lapse of restrictions on the Stock
Options or the Incentive Stock, and this Gross-Up Payment,
will be included in the Gross-Up Payment. For purposes of
determining the Gross-Up Payment, the Executive will be
deemed to pay federal income tax for his taxable year in which
the Stock Options and Incentive Stock are granted and the
taxable years in which the restrictions on the Stock Options
lapse or the Incentive Stock becomes non-forfeitable and his
taxable year in which the Gross-Up Payment is made, at the
highest marginal rate of federal income tax and the highest
marginal rate of state income tax in such year(s) net of the
maximum reduction of federal income tax which could be
realized by deduction of such state and local taxes paid in such
year(s). The Executive will timely furnish the Company with
a written statement prepared by the Executive's certified public
accountant setting forth the amount of the required Gross-Up
Payment and the due date or dates of such tax liability. The
parties agree that they will cooperate in devising and
implementing a viable and reasonable alternative to all or part
of the Gross-Up Payment, provided such alternative provides
the same economic benefit to the Executive that the Gross-Up
Payment hereinabove provides to him and is acceptable to the
Executive; the Executive agrees he will not unreasonably
withhold his acceptance of an alternative.
(f) Expenses. During the term of the Executive's
employment hereunder, the Executive shall be entitled to
receive prompt reimbursement for all reasonable and
customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and
living expenses while away from home on business or at the
request of and in the service of the Company and (ii) an
automobile, plus all expenses of maintaining and operating the
automobile, provided that all such expenses are accounted for
in accordance with the policies and procedures established by
the Company.
(g) Other Benefits. The Company shall maintain in full
force and effect, and the Executive shall be entitled to
participate in, all of the fringe benefit plans and arrangements
in effect on the date hereof in which executives of the
Company participate or plans or arrangements providing the
Executive with at least equivalent benefits thereunder
(including, without limitation, each group life insurance and
accident plan, medical and dental insurance plans, and
disability plan); provided, however, that, changes in such
plans or arrangements may be made, including termination of
such plans or arrangements if it occurs pursuant to a program
applicable to all executives of the Company and does not
result in a proportionately greater reduction in the rights of or
benefits to the Executive as compared with any other
executive of the Company. Notwithstanding any other
provision of this sub-paragraph, during the Term, the
Company will provide the Executive with term life insurance
(which may include any group life insurance arrangement
provided by the Company to its other employees), covering
the Executive's life in a face amount each year equal to six
times the Executive's base salary for such year through age 55,
at which time such insurance coverage may be decreased by
the Company to four times the Executive's base salary and
thereafter decreasing by .2% upon each birthday of the
Executive thereafter. The Executive agrees to cooperate with
the Company in obtaining such insurance, including
submitting to a physical examination if required to do so by
the insurance carrier. The beneficiary of this insurance will be
designated by the Executive and if not so designated, the
beneficiary will be his estate. Nothing paid to the Executive
under any fringe plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of
the salary payable to the Executive pursuant to paragraph (a)
of this Section. Any payments or benefits payable to the
Executive hereunder in respect of any calendar year during
which the Executive is employed by the Company for less
than the entire such year shall, unless otherwise provided in
the applicable plan or arrangement be pro-rated in accordance
with the number of days in such calendar year during which he
is so employed.
(h) Annual Physical Examination. During the Term,
the Company shall reimburse the Executive for the reasonable
expenses incurred by the Executive in undergoing an annual
physical examination by a licensed physician.
(i) Club-Membership. During the Term, the Company
shall reimburse the Executive for dues and special assessments
incurred by the Executive in connection with his membership
in the Hillendale Country Club, Baltimore County, Maryland
and the Center Club, Baltimore City, Maryland.
(j) Tax and Financial Planning. During the Term, the
Company shall reimburse the Executive for the reasonable
expenses incurred by the Executive in connection with
obtaining professional tax and financial planning advice.
(k) Second Stock. Upon the earlier to occur of:
(i) A person or business organization, or affiliated
group of persons or business organizations who, or which, do
not now own or control 20% or more of the voting stock of the
Company, acquire ownership or control of 20% or more of the
voting stock of the Company, or its successor, and Equity
Group Holdings and its affiliates and its or their successors
then own or control less voting stock of the Company or its
successor than such person, business organization, or affiliated
group; or
(ii) the Executive's 55th birthday,
the Company will grant the Executive 100,000 shares of
Common Stock (the "Second Stock"); provided, however that
if the employment of the Executive is terminated by the
Company or by the Executive for any reason prior to the
occurrence of either of the events described in paragraphs (i)
and (ii) of this Section 4(k), the Executive shall forfeit the
right to receive such grant of 100,000 shares of Company
Stock, unless on or after his 53rd birthday and before his 55th
birthday: (x) the Executive terminates his employment for
Good Reason (as defined in Section 6(d)), or (y) his
employment is involuntarily terminated by the Company for
reasons other than Cause (under subsection 6(c)), death or
Disability (under subsection 6(b)) in which event the
Executive will receive such grant of shares on the first to occur
of the events described in said paragraphs (i) and (ii) above.
5. Offices. Subject to Section 3, the Executive agrees to
serve without additional compensation, if elected or appointed
thereto, as a director of the Company and any of its
subsidiaries and in one or more executive offices of any of the
Company's subsidiaries, provided that the Executive is
indemnified for serving in any and all such capacities on a
basis no less favorable than is currently provided by the
Company to any other director of the Company or any of its
subsidiaries.
6. Termination. The Executive's employment hereunder
may be terminated without any breach of this Agreement only
under the following circumstances:
(a) Death. The Executive's employment hereunder
shall terminate upon his death.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive
shall have been absent from his duties hereunder on a full-time
basis for the entire period of six consecutive months, and
within thirty (30) days after written notice of termination is
given (which may occur before or after the end of such six
month period) shall not have returned to the performance of
his duties hereunder on a full-time basis, the Company may
terminate the Executive's employment hereunder.
(c) Cause. The Company may terminate the
Executive's employment hereunder for Cause. For purposes of
this Agreement, the Company shall have "Cause" to terminate
the Executive's employment hereunder upon (i) the willful and
continued failure by the Executive to substantially perform his
duties hereunder (other than any such failure resulting from
the Executive's incapacity due to physical or mental illness or
any such actual or anticipated failure after the issuance of a
Notice of Termination, as defined in Section 6(e), by the
Executive for Good Reason, as defined in Section 6(d)), after
demand for substantial performance is delivered by the
Company that specifically identifies the manner in which the
Company believes the Executive has not substantially
performed his duties, which is not cured within 10 days after
notice of such failure has been given to the Executive by the
Company, or (ii) the willful engaging by the Executive in
misconduct which is materially injurious to the Company,
monetarily or otherwise (including, but not limited to, conduct
that constitutes competitive activity pursuant to Section 9
hereof). For purposes of this paragraph, no act, or failure to
act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the
best interest of the Company.
(d) Termination by the Executive. The Executive may
terminate his employment hereunder for Good Reason for
purposes of this Agreement, "Good Reason" shall mean:
(A) a failure by the Company to comply with any
material provision of this Agreement which has not been cured
within ten (10) days after notice of such noncompliance has
been given by the Executive to the Company;
(B) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (e)
hereof (and for purposes of this Agreement no such purported
termination shall be effective);
(C) The assignment to the Executive of any duties
materially inconsistent with his status as the President and
Chief Executive Officer of the Company or a material adverse
alteration in the nature or status of his responsibilities in
connection with such responsibilities. For purposes of this
Agreement, "President and Chief Executive Officer of the
Company" shall mean that if a reorganization or merger of the
Company occurs, the Executive will be the President and
Chief Executive Officer of (1) the Company if it is the
surviving entity in any merger, acquisition or other business
combination with the Company, or (2) the successor entity to
the Company in any merger, acquisition or other business
combination with the Company.
(D) A person or business organization, or affiliated
group of persons or business organizations who, or which, do
not now own or control 20% or more of the voting stock of the
Company, acquire ownership or control of 20% or more of the
voting stock of the Company, or its successor, and Equity
Group Holdings and its affiliates and its or their successors
then owns or controls less voting stock of the Company (or its
successor) than such person, business organization, or
affiliated group;
(E) Relocation of the Executive to a location which
is not within the Baltimore City Metropolitan area, the District
of Columbia, or the Suburban Maryland area adjacent to the
District of Columbia, except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations;
(F) The failure by the Company to continue in effect
any compensation or benefit plan in which the Executive
participated as of the Commencement Date and which is
material to the Executive's aggregate compensation and
benefits hereunder, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or
in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative
to other participants, as existed at the Commencement Date;
(G) The failure of the Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement.
(e) Any termination of the Executive's employment by
the Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be communicated by
written Notice of Termination to the other party hereto in
accordance with Section 13 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean only a
notice which is based upon, and shall indicate, the specific
termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(f) "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of
his death, (ii) if the Executive's employment is terminated
pursuant to subsection (b) above, thirty (30) days after Notice
of Termination is given (provided that the Executive shall not
have returned to the performance of his duties on a full-time
basis during such thirty (30) day period), (iii) if the
Executive's employment is terminated pursuant to subsection
(c) above, the date specified in the Notice of Termination, and
(iv) if the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given;
provided, however, that, if within thirty (30) days after any
Notice of Termination is given the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding and final
arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
7.
Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness ("disability period") the Executive
shall continue to receive, or receive the benefit of (as the case
may be), all items described in Section 4 hereinabove at the
rate then in effect for such period until his employment is
terminated pursuant to Section 6(b) hereof, provided that
payments so made to the Executive during the first 180 days
of the disability period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the
time of any such payment under disability benefit plans of the
Company or under the Social Security disability insurance
program, and which amounts were not previously applied to
reduce any such payment.
(b) The Company shall maintain in full force and effect,
for the continued benefit of the Executive for twelve months
following the Date of Termination due to Disability, all
employee welfare benefit plans and programs in which the
Executive was entitled to participate immediately prior to the
Date of Termination provided that the Executive's continued
participation is possible under the general terms and
provisions of such plans and programs. In the event that the
Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which the
Executive would otherwise have been entitled to receive under
such plans and programs from which his continued
participation is barred.
(c) If the Executive's employment is terminated by his
death, the Company shall pay any amounts due to, or for the
benefit of, the Executive under Section 4 through the date of
his death.
(d) If the Executive's employment shall be terminated
by the Company for Cause or by the Executive for other than
Good Reason, the Company shall pay all amounts under
Section 4 hereof due to, or for the benefit of, the Executive
through the Date of Termination at the rate in effect at the time
Notice of Termination is given and the Company shall have no
further obligations to the Executive under this Agreement.
(e) If (A) in breach of this Agreement, the Company
shall terminate the Executive's employment other than for
disability pursuant to Section 6(b) or for Cause (it being
understood that a purported termination for disability pursuant
to Section 6(b) or for Cause which is disputed and finally
determined not to have been proper shall be a termination by
the Company in breach of this Agreement) or (B) the
Executive shall terminate his employment for Good Reason,
then
(i) the Company shall pay all amounts due to, or for
the benefit of, the Executive under Section 4 through the Date
of Termination at the rate in effect at the time Notice of
Termination is given and all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination
under any compensation plan or program of the Company at
the time such payments are due;
(ii) In lieu of any further salary or bonus payments to
the Executive for periods subsequent to the date of the
termination of his employment, the Company shall pay as
severance pay to the Executive a salary and bonus severance
payment equal to three times 160% of the annual base salary
in effect immediately prior to the Executive's termination.
Such payment will be made in 18 even monthly payments on
the first day of each month beginning on the first day of the
month beginning immediately following the Executive's
termination; provided, however, that in the event the
termination of the Executive's employment occurs after the
third anniversary of the Commencement Date, the salary and
bonus severance payment will equal two times 160% of the
annual base salary in effect immediately prior to the
Executive's termination, and such payment will be made in 12
even monthly installments beginning on the first day of the
month beginning immediately following the Executive's
termination.
(iii) The Company shall pay to the Executive any
deferred compensation, including, but not limited to deferred
bonuses, allocated or credited to the Executive or his account
as of the date of termination. For purposes of this subsection,
deferred compensation does not include Second Stock under
subsection 4(k), the terms and conditions of which are
provided elsewhere in this Agreement.
(iv) The Company shall pay all reasonable legal fees
and expenses incurred by the Executive as a result of such
termination, including the reasonable fees and expenses of
enforcing the terms of this Agreement, or in connection with
any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Internal Revenue Code of
1986 as amended (the "Code") to any payment or benefit
provided hereunder).
(v) the Company shall maintain in full force and
effect, for the continued benefit of the Executive for 36
months following the date of termination of the Executive's
employment if such date is prior to the third anniversary of the
Commencement Date, and if such date is on or after the third
anniversary of the Commencement Date, for 24 months
following the date of the termination of the Executive's
employment, all employee welfare benefit plans and programs
in which the Executive was entitled to participate immediately
prior to the Date of Termination provided that the Executive's
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that the
Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which the
Executive would otherwise have been entitled to receive under
such plans and programs from which his continued
participation is barred.
8. Death/Assignment of Stock Options and Stock. In the
event of the Executive's death, whether his death occurs during
or after the Term of this Agreement, all unexercised Stock
Options, and all Stock of the Company then owned by the
Executive will be assigned to his Estate.
9. Termination/Unexercised Stock Options. In the event
of the termination of the employment of the Executive for any
reason, all unexercised stock options granted to him hereunder
must be exercised by him, or his estate (or heir(s)) as the case
may be, before the first anniversary of the termination of his
employment, but in no event after the tenth anniversary of the
date of grant thereof, and any such options not exercised by
that date will lapse immediately thereafter.
10. Mitigation. In the event that the Executive receives
benefits from other employment after the Date of Termination
and during the then unexpired Term of this Agreement, the
benefits to be provided by the Company under the provisions
of Section 7(e)(v) shall be terminated.
11. Anti-Dilution/Recapitalization of the Company. In the
Event of any change in the number of issued shares of
Company Stock resulting from a subdivision or consolidation
of shares or other capital adjustment, or the payment of a stock
dividend, or other increase or decrease in such shares, then
appropriate adjustments shall be made by the Company with
respect to the Incentive Stock, the Second Stock, and with
respect to outstanding unexercised Stock Options and/or the
aggregate number of shares of Company Stock of the
Company in respect of which Stock Options may be exercised.
12. Noncompetition.
(a) So long as the Executive is employed by the
Company under this Agreement and unless this Agreement is
terminated for any reason, the Executive agrees not to enter
into competitive endeavors and not to undertake any
commercial activity which is contrary to the best interests of
the Company or its subsidiaries or affiliates, including
becoming an employee, owner (except for passive investments
of not more than three percent (3%) of the outstanding shares
of, or any other equity interest in, any company or entity listed
or traded on a national securities exchange or in an over-the-
counter securities market), officer, agent, advisor, consultant
or director of any firm or person which directly competes with
a line or lines of business of the Company. In the event the
Executive terminates his employment hereunder for any
reason, except Good Reason, the foregoing provisions will be
applicable for an additional period of 24 months following the
Executive's termination of his employment.
(b) During the Term of this Agreement and any period
thereafter during which or in respect of which the Executive
receives payments from the Company under Section 7, the
Executive will retain in confidence any and all confidential
information known to him concerning the Company and its
business and shall not use or disclose such information
without the approval of the Company except to the extent such
information has previously become public or as may be
required by law.
(c) In the event the Executive terminates his
employment hereunder for any reason except Good Reason,
for a period of 36 months following such termination the
Executive will not solicit the employment of any employee of
the Company.
(d) In the event the Executive terminates his
employment hereunder for Good Reason, for a period of 24
months following such termination the Executive will not
solicit the employment of any employee of the Company.
13. Successors; Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms
as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall
mean the Company as herein before defined and any successor
to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 12 or
which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts
would still be payable to him hereunder if he had continued to
live, all such amount unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, if there be
no such designee, to the Executive's estate.
14. Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Mr. George M. Sherman
905 St. Georges Road
Baltimore, Maryland 21210
If the Company:
Danaher Corporation
1250 24th Street, N.W.
Suite 800
Washington, D.C. 20037
Attn: Corporate Secretary
or to such other address as any party may have furnished to the
others in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the
Executive and such officer of the Company as may be
specifically designed by the Board. No waiver by either party
hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or
conditions as the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws
of the District of Columbia without regard to its conflicts of
law principles.
16. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
17. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
18. Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the
subject matter contained herein is hereby terminated and
canceled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
ATTEST: DANAHER CORPORATION
/s/ By: /s/ (SEAL)
Name:
Title:
ATTEST: EXECUTIVE
/s/ /s/ George M. Sherman
George M. Sherman
EXECUTION
VERSION
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 7, 1990
AMONG
DANAHER CORPORATION,
THE FINANCIAL INSTITUTIONS LISTED HEREIN
AND
BANKERS TRUST COMPANY,
as Agent
DANAHER CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. . . . . . . .1
1.1. Certain Defined Terms. . . . . . . . . . . . . . . . . .1
1.2. Accounting Terms; Utilization of GAAP for
Purposes of Calculations Under Agreement. . . . . . . . 25
1.3. Other Definitional Provisions. . . . . . . . . . . . . 25
SECTION 2.
AMOUNTS AND TERMS OF LOANS AND
LETTERS OF CREDIT. . . . 26
2.1. Revolving Loans, Swingline Loans and Bid Rate
Loans. . 26
2.2. Term Loans . . . . . . . . . . . . . . . . . . . . . . 35
2.3. Interest on the Loans. . . . . . . . . . . . . . . . . 36
2.4. Letters Of Credit. . . . . . . . . . . . . . . . . . . 40
2.5. Fees. . . . . . . . . . . . . . . . . . . . . . . 45
2.6. Prepayments and Payments: Reductions in
Commitments. . 47
2.7. Use of Proceeds. . . . . . . . . . . . . . . . . . . . 51
2.8. Special Provisions Governing CD Rate Loans and
Eurodollar
Rate Loans . . . . . . . . . . . . . . . . . . . . . . 52
2.9. Capital Adequacy Adjustment. . . . . . . . . . . . . . 56
2.10. Pledge and Guaranties . . . . . . . . . . . . . . 57
2.11. Additional Lenders. . . . . . . . . . . . . . . . 57
SECTION 3. CONDITIONS TO LOANS
AND LETTERS OF CREDIT57
3.1. Conditions to Effectiveness of this Agreement. . . . .
57
3.2. Conditions to Letters of Credit. . . . . . . . . . . . 60
3.3. Conditions to All Loans and Letters of Credit. . . . .
60 SECTION 4. REPRESENTATIONS AND
WARRANTIES62
4.1. Organization, Powers, Good Standing and Business
. . . 62
4.2. Authorization of Borrowing, etc. . . . . . . . . . . . 63
4.3. Financial Condition. . . . . . . . . . . . . . . . . . 64
4.4. No Material Adverse Change; No Stock Payments. .
. . . 64
4.5. Title to Properties; Liens . . . . . . . . . . . . . . 64
4.6. Litigation: Adverse Facts. . . . . . . . . . . . . . . 65
4.7. Payment of Taxes . . . . . . . . . . . . . . . . . . . 65
4.8. Performance of Agreements. . . . . . . . . . . . . . . 65
4.9. Governmental Regulation. . . . . . . . . . . . . . . . 65
4.10. Securities Activities . . . . . . . . . . . . . . 65
4.11. Employee Benefit Plans. . . . . . . . . . . . . . 66
4.12. Certain Fees. . . . . . . . . . . . . . . . . . . 66
4.13. Environmental Protection. . . . . . . . . . . . . 66
4.14. Solvency. . . . . . . . . . . . . . . . . . . . . 67
4.15. Patents, Trademarks, Etc. . . . . . . . . . . . . 67
4.16. Disclosure. . . . . . . . . . . . . . . . . . . . 67
4.17. Senior Indebtedness . . . . . . . . . . . . . . . 67
4.18. Margin Stock. . . . . . . . . . . . . . . . . . . 67
SECTION 5.
AFFIRMATIVE COVENANTS . . . . . . . . . .
68
5.1. Financial Statements and Other Reports . . . . . . . .
68
5.2. Corporate Existence, Etc.. . . . . . . . . . . . . . . 71
5.3. Payment of Taxes and Claims; Tax Consolidation . .
. . 71
5.4. Maintenance of Properties; Insurance . . . . . . . . . 71
5.5. Inspection; Lender Meeting . . . . . . . . . . . . . . 72
5.6. Compliance with Laws, Etc. . . . . . . . . . . . . . . 72
5.7. Further Assurances as to Future Material
Subsidiaries. 72
5.8. Environmental Disclosure and Inspection. . . . . . . .
72
5.9. Hazardous Materials; Company s Remedial Action .
. . . 73
5.10. Equal Security for Loans and Notes. . . . . . . . 73
SECTION 6. COMPANY S NEGATIVE
COVENANTS74
6.1. Indebtedness and Contingent Obligations. . .74
6.2. Liens and Related Matters. . . . . . . . . . . . . . . 75
6.3. Investments; Joint Ventures. . . . . . . . . . . . . . 75
6.4. Restricted Junior Payments . . . . . . . . . . . . . . 76
6.5. Financial Covenants. . . . . . . . . . . . . . . . . . 77
6.6. Restriction on Fundamental Changes; Asset Sales. .
. . 77
6.7. Transactions with Shareholders and Affiliates. . . . .
78
6.8. Disposal of Subsidiary Stock . . . . . . . . . . . . . 78
6.9. Amendments or Waivers of Charter Documents and
Certain
Other Documents: Prepayments of Subordinated
Indebtedness79
SECTION 7. EVENTS OF DEFAULT. .
. . 79
7.1 Failure to Make Payments When Due. . . . . . . . . . .
79
7.2. Default in Other Agreements. . . . . . . . . . . . . . 79
7.3. Breach of Certain Covenants. . . . . . . . . . . . . . 80
7.4. Breach of Warranty . . . . . . . . . . . . . . . . . . 80
7.5. Other Defaults Under Agreement or Loan
Documents . . . 80
7.6. Involuntary Bankruptcy; Appointment of Receiver,
etc.. 80
7.7. Voluntary Bankruptcy: Appointment of Receiver,
etc.. . 81
7.8. Judgements and Attachments . . . . . . . . . . . . . . 81
7.9. Dissolution. . . . . . . . . . . . . . . . . . . . . . 81
7.10. Employee Benefit Plans. . . . . . . . . . . . . . 82
7.11. Invalidity of Guaranties or Pledge Agreement. .
. 82
7.12. Change of Control . . . . . . . . . . . . . . . . 82
SECTION 8. AGENT AND BID RATE
LOAN AGENT83
8.1. Appointment. . . . . . . . . . . . . . . . . . . . . . 83
8.2. Powers; General Immunity . . . . . . . . . . . . . . . 84
8.3. Representations and Warranties: No Responsibility
For Appraisal
of Creditworthiness. . . . . . . . . . . . . . . . . . 85
8.4. Right to Indemnity . . . . . . . . . . . . . . . . . . 85
8.5. Registered Person Treated as Owner . . . . . . . . . . 86
8.6. Successor Agent. . . . . . . . . . . . . . . . . . . . 86
SECTION 9. MISCELLANEOUS86
9.1. Assignments and Participations in Loans. . . . . . . .
86
9.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . 87
9.3. Indemnity. . . . . . . . . . . . . . . . . . . . . . . 88
9.4. Set Off. . . . . . . . . . . . . . . . . . . . . . . . 89
9.5. Ratable Sharing. . . . . . . . . . . . . . . . . . . . 89
9.6. Amendments and Waivers . . . . . . . . . . . . . . . . 90
9.7. Independence of Covenants. . . . . . . . . . . . . . . 90
9.8. Notices. . . . . . . . . . . . . . . . . . . . . . . . 90
9.9. Survival of Warranties and Certain Agreements. . . .
. 91
9.10. Failure or Indulgence Not Waiver; Remedies
Cumulative91
9.11. Marshalling; Payments Set Aside . . . . . . . . . 91
9.12. Severability. . . . . . . . . . . . . . . . . . . 91
9.13. Lenders Obligations Several; Independent
Nature of Lenders
Rights . . . . . . . . . . . . . . . . . . . . . . . . 92
9.14. Headings. . . . . . . . . . . . . . . . . . . . . 92
9.15. Applicable Law. . . . . . . . . . . . . . . . . . 92
9.16. Successors and Assigns; Subsequent Lenders. . .
. 92
9.17. Consent to Jurisdiction and Service of Process. .
92
9.18. Waiver of Jury Trial. . . . . . . . . . . . . . . 93
9.19. Confidentiality . . . . . . . . . . . . . . . . . 93
9.20. Counterparts; Effectiveness . . . . . . . . . . . 93
SECTION 10. TRUSTEE . . . . . . . . 94
10.1. Appointment as Trustee. . . . . . . . . . . . . . 94
10.2. Limitation on Duties. . . . . . . . . . . . . . . 94
10.3. Limitation on Liabilities . . . . . . . . . . . . 94
10.4. Trustee s Action on Communications. . . . . . . .
94
10.5. Continental Bank Entitled to Act as Lender. . . .
95
10.6. Successor Trustee . . . . . . . . . . . . . . . . 95
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF REQUEST FOR LETTER
OF CREDIT
III FORM OF NOTICE OF
CONVERSION/CONTINUATION
IV FORM OF TERM NOTE
V FORM OF REVOLVING NOTE
VI FORM OF COMPLIANCE CERTIFICATE
VII FORM OF SUBSIDIARY GUARANTY
VIII FORM OF OPINION OF SKADDEN, ARPS,
SLATE, MEAGHER &
FLOM (COUNSEL TO COMPANY AND ITS
SUBSIDIARIES)
IX FORM OF OPINION OF O MELVENY &
MYERS
X FORM OF PLEDGE AGREEMENT
XI FORM OF BID RATE LOAN QUOTE REQUEST
XII FORM OF BID RATE LOAN QUOTE
XIII FORM OF INVITATION FOR BID RATE LOAN
QUOTES
XIV FORM OF ASSIGNMENT AND
ASSUMPTIONSCHEDULES
A EXISTING LETTERS OF CREDIT (Subsection
1.1)
B LENDERS; INITIAL REVOLVING LOAN and
TERM LOAN
COMMITMENTS; PRO RATA SHARES
(Subsection 1.1; Subsection
2.1.A)
C SUBSIDIARIES (Subsection 1.1; Subsection 4.1.C)
D CONFLICTS AND CONSENTS (Subsection 4.2)
E LIENS (Subsection 1.1)
F ERISA EVENTS (Subsection 4.11)
G ENVIRONMENTAL MATTERS (Subsection 4.13)
H EXISTING INDEBTEDNESS AND CREDIT
FACILITIES
(Subsection 1.1; Subsection 4.8; Subsection 6.1)
I CONTINGENT OBLIGATIONS (Subsection 1.1;
Subsection 6.1)
J RESTRICTIONS ON SUBSIDIARIES (Subsection
6.2)DANAHER CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of September 7,
1990 and entered into by and among DANAHER
CORPORATION, a Delaware corporation ( Company ), the
FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually
referred to herein as a Lender and collectively as Lenders
) and BANKERS TRUST COMPANY ( Bankers ) as agent
(in such capacity, Agent ).
RECITALS
WHEREAS, the parties hereto and WPI (such term and
other capitalized terms being used herein as defined in
Section 1 of the Agreement) have heretofore entered into
the Old Credit Agreement whereby lenders agreed to
extend and have extended certain credit facilities to
Company;
WHEREAS, the parties to the Old Credit Agreement
desire to terminate the Old Credit Agreement and
extinguish the commitments thereunder;
WHEREAS, Company desires that Lenders extend to
Company certain new credit facilities to (i) repay the loans
outstanding under the Old Credit Agreement, (ii) fund the
general corporate needs of Company and its Subsidiaries
and (iii) provide for the issuance of Letters of Credit to
support repayment obligations of Company and its
Subsidiaries;
WHEREAS, Company owns, directly or indirectly, all of
the issued and out- standing capital stock of the
Guarantors;
WHEREAS, Company desires to secure its Obligations to
Lenders under this Agreement by granting to Agent on
behalf of Lenders on the Closing Date a first priority
security interest in all of the capital stock of Easco pursuant
to the Pledge Agreement; and
WHEREAS, each of the Material Subsidiaries of Company
(other than Easco) desires to guaranty the Obligations of
Company under this Agreement by executing and
delivering on the Closing Date its Subsidiary Guaranty.
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained,
Company, Lenders and Agent agree as follows:
SECTION 1.
DEFINITIONS
1.1. Certain Defined Terms
The following terms used in this Agreement shall have the
meanings indicated:
Additional Lender has the meaning assigned to that term
in subsection 2.11.
Adjusted Certificate of Deposit Rate means, for any
Interest Rate Determination Date, the sum (rounded upward
to the next highest one hundredth of one percent) of (i) the
rate obtained by dividing (x) the Certificate of Deposit Rate
for that day by (y) a percentage equal to 100% minus the
full reserve requirement percentage as specified by the
Board of Governors of the Federal Reserve System that
Bankers determines would be applicable on that day to a
certificate of deposit of Bankers in excess of $100,000 with
a maturity comparable to the Interest Period to which the
interest rate being determined will apply (including,
without limitation, any marginal, emergency, supplemental,
special or other reserves if Bankers determines that it is
required to maintain any such reserves on such day), plus
(ii) the then daily net annual assessment rate as estimated
by Agent for determining the current annual assessment
payable by Bankers to the Federal Deposit Insurance
Corporation for insuring certificates of deposit with a
maturity comparable to the Interest Period to which the
interest rate being determined will apply.
Adjusted Eurodollar Rate means, for any Interest Rate
Determination Date, the rate (rounded upward to the next
highest 1/100 of one percent) obtained by dividing (i) the
Eurodollar Rate for that date by (ii) a percentage equal to
100% minus the stated maximum rate of all reserves
required to be maintained against Eurocurrency liabilities
as specified in Regulation D (or against any other category
of liabilities which includes deposits by reference to which
the interest rate on Eurodollar Rate Loans is determined or
any category of extensions of credit or other assets which
includes loans by a non-United States office of any Lender
to United States residents).
Adjusted Interest Coverage Ratio means, for any period,
the ratio of (i) Consolidated Adjusted EBDITA (less Net
Capital Expenditures made during the period of
determination) to (ii) Consolidated Net Interest Expense.
Adjusted Leverage Ratio means, for any date of
determination, the ratio of (i) Consolidated Total Debt and
Guarantees to (ii) Adjusted Tangible Net Worth.
Adjusted Tangible Net Worth means, as at any date of
determination, the sum of the capital stock (excluding any
capital stock of Company that, by its terms or by the terms
of any Securities into which it is convertible or
exchangeable, is or upon the happening of an event or the
passage of time would be, required to be repurchased,
including at the option of the holder, in whole or in part, or
have, or upon the happening of an event would have, a
redemption or similar payment due) and additional paid-in
capital plus retained earnings (or minus accumulated
deficit) of Company and its Subsidiaries on a consolidated
basis, minus intangible assets (including, without
limitation, all write-ups (other than write-ups resulting from
foreign currency transactions)) subsequent to the Closing
Date in the book value of any asset owned by such Person
or consolidated Subsidiary of such Person, unamortized
deferred charges, unamortized debt discount and expense,
franchises, patents, patent applications, licenses, trade
marks, service marks, trade names and brand names (but
not goodwill associated with acquisitions made by
Company or any of its Subsidiaries of operating businesses
or operating assets, which shall be included in Adjusted
Tangible Net Worth).
Affected Lender has the meaning assigned to that term in
subsection 2.8.A.(ii).
Affected Loan has the meaning assigned that term in
subsection 2.8.A.(ii).
Affiliate , as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For the purposes
of this definition, control (including with correlative
meanings, the terms controlling , controlled by and under
common control with ), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that
Person, whether through the ownership of voting securities
or by contract or otherwise.
Agent means Bankers, in its capacity as Agent hereunder
and under the other Loan Documents.
Agreement means this Credit Agreement dated as of
September 7, 1990, as it may be amended, supplemented or
otherwise modified from time to time.
Aggregate Amounts Due has the meaning assigned to that
term in subsection 9.5.
Aggregate Excess Proceeds means all amounts received
by Company or any of its Subsidiaries from and after the
Closing Date in respect of Cash Proceeds of Asset Sales,
Condemnation Proceeds and Insurance Proceeds (other than
(i) amounts received pursuant to Receivables Purchase
Agreement dated as of September 30, 1988 between the
Jacobs Manufacturing Company and Continental Bank, as
amended, and (ii) any residual interest in the securities
issued by Allied Steel & Tractor Products, Inc. or its parent
corporation) that exceed, in the aggregate, an amount equal
to the difference between $50,000,000 and the fair market
value of all assets distributed to Company s shareholders
pursuant to subsection 6.6.E.
Applicable Base Rate Pricing Margin shall mean zero;
provided that, upon notice to Company by Agent of the
commencement of an HLT Classification Period, the
Applicable Base Rate Pricing Margin shall become and
remain 1.00% per annum for so long as such HLT
Classification Period continues.
Applicable CD Rate Pricing Margin means: during any
Pricing Period for which Company s Pricing Level is
Pricing Level I, 0.4375% per annum; during any Pricing
Period for which Company s Pricing Level is Pricing Level
II, 0.500% per annum; and during any Pricing Period for
which Company s Pricing Level is Pricing Level III,
0.8750% per annum; provided that, upon notice to
Company by Agent of the commencement of an HLT
Classification Period, the Applicable CD Rate Pricing
Margin shall become and remain 2.00% per annum for so
long as such HLT Classification Period continues.
Applicable Commitment Fee Percentage means: during
any Pricing Period for which Company s Pricing Level is
Pricing Level I, 0.10% per annum; during any Pricing
Period for which Company s Pricing Level is Pricing Level
II, 0.10% per annum; and during any Pricing Period for
which Company s Pricing Level is Pricing Level III, 0.25%
per annum; provided that, upon notice to Company by
Agent of the commencement of an HLT Classification
Period, the Applicable Commitment Fee Percentage shall
become and remain 0.40% per annum for so long as such
HLT Classification Period continues.
Applicable Eurodollar Rate Pricing Margin means: during
any Pricing Period for which Company s Pricing Level is
Pricing Level I, 0.3125% per annum; during any Pricing
Period for which Company s Pricing Level is Pricing Level
II, 0.4375% per annum; and during any Pricing Period for
which Company s Pricing Level is Pricing Level III,
0.7500% per annum; provided that, upon notice to
Company by Agent of the commencement of an HLT
Classification Period, the Applicable Eurodollar Rate
Pricing Margin shall become and remain 2.00% per annum
for so long as such HLT Classification Period continues.
Applicable Facility Fee Percentage means: during any
Pricing Period for which Company s Pricing Level is
Pricing Level I, 0.100% per annum; during any Pricing
Period for which Company s Pricing Level is Pricing Level
II, 0.100% per annum; and during any Pricing Period for
which Company s Pricing Level is Pricing Level III,
0.125% per annum.
Applicable Letter of Credit Fee Percentage means: during
any Pricing Period for which Company s Pricing Level is
Pricing Level I, 0.50% per annum; during any Pricing
Period for which Company s Pricing Level is Pricing Level
II, 0.50% per annum; and during any Pricing Period for
which Company s Pricing Level is Pricing Level III, 0.75%
per annum; provided that, upon notice to Company by
Agent of the commencement of an HLT Classification
Period, the Applicable Letter of Credit Fee Percentage shall
become and remain 2.00% per annum for so long as such
HLT Classification Period continues.
Asset Sale means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of
its wholly-owned Subsidiaries of (i) any of the stock of any
of Company s Subsidiaries; (ii) substantially all of the
assets of any division or line of business of Company or
any of its Subsidiaries; or (iii) any other assets (including,
without limitation, any assets that do not constitute
substantially all of the assets of any division or line of
business of Company or any of its Subsidiaries), which in
the case of clause (i), (ii) or (iii) above individually has a
Fair Market Value in excess of $250,000 (it being
understood that if the Fair Market Value thereof exceeds
$250,000, the entire value and not just the portion in excess
of $250,000 shall be subject to subsection 2.6.B.(i)(a)),
other than (a) the sale in the ordinary course of business of
personal property held for resale in the ordinary course of
business of Company or any of its Subsidiaries and (b)
sales of obsolete or worn out property to the extent the
proceeds of such sales are applied to the purchase of
replacement assets of the same or similar type that are
purchased, ordered or contracted for within six months of
the date of such sale.
Bankers has the meaning assigned to that term in the
introduction to this Agreement.
Bankruptcy Code means Title 11 of the United States
Code entitled Bankruptcy as now and hereafter in effect,
or any successor statute.
Base Rate means, at any time, the highest of (x) the Prime
Rate and (y) the rate that is one half of one percent in
excess of the Federal Funds Effective Rate.
Base Rate Loans means Loans made by Lenders pursuant
to subsections 2.1.A, 2.1.B and 2.2.A and bearing interest
at rates determined by reference to the Base Rate as
provided in subsection 2.3.A.
Benefitted Subsidiary means, with respect to any Letter
of Credit, the Person for whose benefit such Letter of
Credit was issued, which shall be either Company or one of
its Subsidiaries, as specified by Company in the request for
issuance of such Letter of Credit made pursuant to
subsection 2.4.B.
Bid Rate Loan Agent means either (i) if Company has
appointed Continental Bank to act as Bid Rate Loan Agent
hereunder and Continental Bank has accepted such
appointment, for so long as Continental Bank is acting as
Bid Rate Loan Agent hereunder, Continental Bank in its
capacity as Bid Rate Loan Agent hereunder, or (ii) so long
as Company elects to act as Bid Rate Loan Agent
hereunder, Company in its capacity as Bid Rate Loan
Agent; provided that the provisions of Section 8 shall not
apply to the rights and duties of Company acting as Bid
Rate Loan Agent. Anything contained herein to the
contrary notwithstanding, Continental Bank shall have no
rights, duties or obligations in the capacity of Bid Rate
Loan Agent hereunder until such time as it may be
appointed to act as Bid Rate Loan Agent pursuant to and in
accordance with the terms of Section 8.
Bid Rate Loans means Loans made by one or more
Lenders to Company pursuant to subsection 2.1.E.
Bid Rate Loan Interest Payment Date means, with respect
to any Bid Rate Loan, the last day of the Bid Rate Loan
Interest Period applicable to such Bid Rate Loan.
Bid Rate Loan Interest Period means, with respect to any
Bid Rate Loans, the period commencing on the date such
Bid Rate Loans are made and ending on any date not less
than 7 and not more than 180 days thereafter, as Company
may select pursuant to subsection 2.1.E.(ii).
Notwithstanding the foregoing, (i) if any Bid Rate Loan
Interest Period would otherwise end after the Term Loan
Funding Date, such Bid Rate Loan Interest Period shall end
on the Term Loan Funding Date, (ii) each Bid Rate Loan
Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next succeeding
Business Day and (iii) subject to clause (ii) above and
notwithstanding clause (i) above, no Bid Rate Loan Interest
Period for any Bid Rate Loans shall have a duration of less
than 7 days or greater than 180 days and, if the Bid Rate
Loan Interest Period for any Bid Rate Loans would
otherwise be a shorter or longer period, such Bid Rate
Loans shall not be available hereunder.
Bid Rate Loan Quote means an offer by a Lender to make
Bid Rate Loans, substantially in the form of Exhibit XII
annexed hereto, delivered to Trustee by such Lender
pursuant to subsection 2.1.E.
Bid Rate Loan Quote Request means a request by
Company to each Lender to submit Bid Rate Loan Quotes,
substantially in the form of Exhibit XI annexed hereto,
delivered by Company to Trustee pursuant to subsection
2.1.E.
Bid Rate Loan Shortfall Amount means the amount, if
any, by which the amount of Bid Rate Loans requested in a
Bid Rate Loan Quote Request exceeds the amount equal to
(i) the aggregate amount of Bid Rate Loans offered in any
Bid Rate Loan Quotes delivered by Lenders relating to such
Bid Rate Loan Quote Request minus (ii) the amount of Bid
Rate Loans so offered which are rejected in good faith by
Company.
Bid Rate Loan Shortfall Date means a proposed Funding
Date of Bid Rate Loans in respect of which a Bid Rate
Loan Shortfall Amount exists.
Bid Rate Register has the meaning assigned thereto in
subsection 2.1.E. (xii).
Business Day means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday,
Sunday and any day that is a legal holiday under the laws
of the State of New York or, with respect to Bid Rate
Loans, the State of Illinois, or is a day on which banking
institutions located in either such state are authorized or
required by law or other governmental action to close, and
(ii) with respect to all notices, determinations, fundings and
payments in connection with Eurodollar Rate Loans, any
day that is a Business Day described in clause (i) and that is
also a day for trading by and between banks in Dollar
deposits in the applicable interbank Eurodollar market.
Capital Expenditure Credit means, as at the end of any
fiscal quarter of Company, twenty-five percent of the
Capital Expenditure Cushion calculated as at the most
recent Cushion Determination Date, plus the unused
portion, if any, of the Capital Expenditure Credits
attributable to the preceding fiscal quarters of Company
occurring since the immediately preceding Cushion
Determination Date; provided that, the Capital Expenditure
Credit for any fiscal quarter shall not exceed the amount by
which Consolidated Capital Expenditures made during the
four fiscal quarter period ending at the end of the fiscal
quarter as at the end of which such determination is being
made, exceeded total depreciation of Company and its
Subsidiaries for such four fiscal quarter period; provided
further that the Capital Expenditure Credit for any fiscal
quarter of Company occurring during 1990 shall be zero.
Capital Expenditure Cushion means, for the most recent
Cushion Determination Date, the amount by which
Consolidated Adjusted EBDITA minus Net Capital
Expenditures for the fiscal year ending on such Cushion
Determination Date exceeded three times the Consolidated
Net Interest Expense for such period.
Capital Lease , as applied to any Person, means any lease
of any property (whether real, personal or mixed) by that
Person as lessee that, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that
Person.
Cash means money, currency or a credit balance in a
Deposit Account.
Cash Equivalents means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States
government or issued by any agency thereof and backed by
the full faith and credit of the United States of America, in
each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued
by any state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having a
rating not less than one full grade below the highest rating
obtainable from either Standard & Poor s Corporation or
Moody s Investors Service, Inc.; (iii) commercial paper
maturing no more than nine months from the date of
creation thereof and, at the time of acquisition, having a
rating of at least A-2 from Standard & Poor s Corporation
or at least P-2 from Moody s Investors Service, Inc. or any
money-market type obligation of an issuer the commercial
paper of which has such a rating, which obligation matures
no later than one year from the date of creation thereof; (iv)
certificates of deposit (whether or not Eurodollar in nature)
or bankers acceptances maturing within one year from the
date of acquisition thereof issued by any Lender or any
commercial bank organized under the laws of the United
States of America or any state thereof or the District of
Columbia or any foreign country having combined capital
and surplus of not less than $250,000,000 (each such
commercial bank herein called a Cash Equivalent Bank );
(v) Eurodollar time deposits having a maturity of less than
one year purchased directly from any Cash Equivalent
Bank (whether such deposit is with such Cash Equivalent
Bank or any other Cash Equivalent Bank); and (vi)
repurchase agreements and reverse repurchase agreements
with any Lender relating to marketable direct obligations
issued or unconditionally guaranteed by the United States
government or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition
thereof; provided that the terms of such agreements comply
with the guidelines set forth in the Federal Financial
Institutions Examination Council Supervisory Policy --
Repurchase Agreements of Depository Institutions with
Securities, Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985 (the
Supervisory Policy ).
Cash Proceeds means, with respect to any Asset Sale,
cash payments (including any cash received by way of
deferred payment pursuant to, or monetization of, a note
receivable or otherwise (other than the portion of such
deferred payment constituting interest), but only as and
when so received) received from such Asset Sale.
CD Rate Loans means Loans bearing interest at rates
determined by reference to the Adjusted Certificate of
Deposit Rate as provided in subsection 2.3.A.
Certificate of Deposit Rate means, for any Interest Rate
Determination Date, the arithmetic average (rounded
upward to the nearest one hundredth of one percent) of the
consensus bid rates determined by each Reference Lender
as of approximately 10:00 A.M. (New York time) on that
date of two or more New York certificate of deposit dealers
of recognized standing selected by such Reference Lender
for the purchase at face value from such Reference Lender
in New York of certificates of deposit in amounts
comparable to the outstanding principal amount of the CD
Rate Loans of such Reference Lender for which the
Adjusted Certificate of Deposit Rate is then being
determined with maturities comparable to the Interest
Period to which the Adjusted Certificate of Deposit Rate
being determined will apply. If any Reference Lender fails
to provide its bid rate to Agent, the Certificate of Deposit
Rate shall be determined on the basis of the bid rate of the
other Reference Lender.
Change of Control Event means such time as a Schedule
13D has been filed, or should have been filed, with respect
to a Person or group (as defined in the rules (the Rules )
promulgated under Section 13 of the Exchange Act) which
Person or group, as the case may be, owns beneficially (as
such term is defined in the Rules) or of record at such time
a greater number of shares of Company Common Stock
than does Steven M. Rates and Mitchell P. Rales
collectively.
Closing Date means the date on or before September 30,
1990, on which the initial Loans are made.
Commercial Paper means a short-term instrument issued
by Company evidencing Indebtedness commonly known as
commercial paper, with a maximum maturity of 270 days
from the date of issuance thereof.
Commitment Letter means the letter agreement dated
August 24, 1990 by and between Company and Bankers.
Commitment Termination Date means the earliest of (i)
the fifth anniversary of the Closing Date, (ii) if earlier than
the Term Loan Funding Date, the date on which all
Revolving Loans, Swingline Loans and Bid Rate Loans are
paid in full and the Revolving Loan Commitments are
reduced to zero, and (iii) the date on which all Term Loans
are paid in full.
Commitments means the commitments of Lenders to
make Loans as set forth in subsections 2.1 and 2.2.
Company has the meaning given that term in the
introduction to this Agreement.
Company Common Stock means the common stock of
Company, par value $.01 per share.
Compliance Certificate means a certificate substantially
in the form annexed hereto as Exhibit VI delivered to
Lenders by Company pursuant to subsection 5.1.C.
Condemnation Proceeds means any cash payments in
respect of compensa- tion, awards, damages, rights of
action (including, without limitation, causes of action
arising in tort or contract and causes of action for fraud or
concealment of a material fact) and proceeds awarded to
Company or any of its Subsidiaries by reason of any such
taking or damage that have not been reinvested in
Productive Assets.
Consolidated Adjusted EBDITA means, for any period,
the sum of the amounts for such period of (i) Consolidated
Net Income, (ii) provisions for taxes based on income and
intercompany dividends and transfers, (iii) Consolidated
Net Interest Expense, (iv) total depreciation expense, (v)
total amortization expense, and (vi) other unusual and
nonrecurring non-cash items reducing Consolidated Net
Income less other unusual and nonrecurring non-cash items
increasing Consolidated Net Income, all of the foregoing as
determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
Consolidated Capital Expenditures means, for any period,
the aggregate of all expenditures (whether paid in cash or
accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance
sheet of Company and its Subsidiaries) by Company and its
Subsidiaries during that period that, in conformity with
GAAP, are included in additions to property, plant or
equipment or comparable items reflected in the
consolidated statements of cash flows of Company and its
Subsidiaries.
Consolidated Current Assets means, as at any date of
determination, the sum of (x) the total assets of Company
and its Subsidiaries on a consolidated basis that properly
may be classified as current assets in conformity with
GAAP, with most domestic inventories calculated on a
LIFO basis, plus (y) during the Revolving Period, the
unutilized Revolving Loan Commitments.
Consolidated Current Liabilities means, as at any date of
determination, the total liabilities of Company and its
Subsidiaries on a consolidated basis that properly may be
classified as current liabilities in conformity with GAAP,
provided that the Current Maturities of the Term Loans, the
Revolving Loans, the Swingline Loans, and the Bid Rate
Loans which are classified as a current liability in
conformity with GAAP shall be excluded from the
definition of Consolidated Current Liabilities.
Consolidated Net Income means, for any period, the net
income (or loss) of Company and its Subsidiaries on a
consolidated basis for such period taken as a single
accounting period in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any
other Person (other than Company or any of its
Subsidiaries) has a joint interest (except for Joint Ventures
in which Company or any of its Subsidiaries has effective
managerial control of the operations of such Joint Venture
and has the ability to cause such Joint Venture to become a
Subsidiary of Company by Company or such Subsidiary
exercising an option that is subject to no contingency
outside the exclusive control of Company and its
Subsidiaries), except to the extent of the amount of
dividends or other distributions actually paid to Company
or any of its Subsidiaries by such Person during such
period, (ii) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary of Company or is
merged into or consolidated with Company or any of its
Subsidiaries or that Person s assets are acquired by
Company or any of its Subsidiaries, (iii) the income of any
Subsidiary of Company to the extent that the declaration or
payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv)
any after-tax gains or losses attributable to Asset Sales or
returned surplus assets of any Pension Plan and (v) without
duplication, any extraordinary gain or loss for such period
determined in conformity with GAAP, and, in addition,
shall include, without limitation, gains or losses resulting
from the sale, conversion or other disposition of
Investments and other material assets of Company and its
Subsidiaries other than in the ordinary course of business,
or from the repayment of Indebtedness.
Consolidated Net Interest Expense means, for any
twelve-month period, total interest expense (net of interest
income) of Company and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of
Company and its Subsidiaries, including, without
limitation, all capitalized interest, all commissions,
discounts and other fees and charges owed with respect to
letters of credit and bankers acceptance financing and net
costs under Interest Rate Agreements, determined in
conformity with GAAP.
Consolidated Total Debt means, as at any date of
determination, the aggregate stated balance sheet amount of
all Indebtedness (including, without limitation, the Loans)
of Company and its Subsidiaries, determined on a
consolidated basis in conformity with GAAP.
Consolidated Total Debt and Guarantees means
Consolidated Total Debt plus the aggregate amount of the
Contingent Obligations of Company and its Subsidiaries,
other than the Subsidiary Guaranties and those certain
Contingent Obligations set forth on Schedule I annexed
hereto that are specifically excluded from the calculation of
the Adjusted Leverage Ratio.
Continental Bank means Continental Bank, National
Association.
Contingent Obligation , as applied to any Person, means
any direct or indirect liability, contingent or otherwise, of
that Person (i) with respect to any indebtedness, lease,
dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the
obligee of such obligation of another that such obligation of
another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part)
against loss in respect thereof and (ii) with respect to any
letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of
drawings thereunder. Contingent Obligations shall include,
without limitation, (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the
ordinary course of business), co- making, discounting with
recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the
obligations of another through any agreement (contingent
or otherwise) (x) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (y) to
maintain the solvency or any balance sheet item, level of
income or financial condition of another, if in the case of
any agreement described under subclauses (x) or (y) of this
sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
Contractual Obligation , as applied to any Person, means
any provision of any security issued by that Person or of
any indenture, mortgage, deed of trust, contract,
undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
Credit Party means each of Company, all of the
Guarantors and, for so long as the Pledge Agreement is in
effect, Easco; and Credit Parties means all such Persons
collectively.
Current Maturities means, as applied to any Person as at
any date of determination, all payments of principal due
under the terms of any Indebtedness of such Person within
twelve calendar months after that date.
Cushion Determination Date means the last day of the
most recently ended fiscal year of Company.
Date of Determination means, for purposes of
determining the applicable Pricing Level on any Pricing
Level Calculation Date, the last day of the most recently
ended fiscal quarter of Company.
Deposit Account means a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than an
account evidenced by a negotiable certificate of deposit.
Dollars and the sign $ means the lawful money of the
United States of America.
Easco means Easco Hand Tools, Inc., a Delaware
corporation and a wholly owned Subsidiary of Company.
Easco Debt means the 12-7/8% Senior Subordinated
Notes due September 1, 1998 of Easco in the form issued
pursuant to that certain Indenture dated September 1, 1988
by and between Easco and Maryland National Bank, as
Trustee, as in effect on the Closing Date.
Employee Benefit Plan means any employee benefit plan
within the meaning of Section 3(3) of ERISA, other than a
Multi employer Plan, which is maintained for employees of
Company or any of its ERISA Affiliates.
Environmental Claim means any notice of violation,
claim, demand, abatement order or other order by any
governmental authority or any Person for any damage,
including, without limitation, personal injury (including
sickness, disease or death), tangible or intangible property
damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, resulting from or
based upon (i) the existence of a Release (whether sudden
or non- sudden or accidental or non-accidental) of, or
exposure to, any Hazardous Material in, into or onto the
environment at, in, by, from or related to any Facility, (ii)
the use, handling, transportation, storage, treatment or
disposal of Hazardous Materials in connection with the
operation of any Facility, or (iii) the violation, or alleged
violation, of any statutes, ordinances, orders, rules,
regulations, permits, licenses or authorizations of or from
any governmental authority, agency or court relating to
environmental matters connected with the Facilities.
Environmental Laws means all laws relating to
environmental matters, including, without limitation, those
relating to (i) fines, orders, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries
resulting from the Release or threatened Release of
Hazardous Materials and to the generation, use, storage,
transportation, or disposal of Hazardous Materials, in any
manner applicable to Company or any of its Subsidiaries or
any or their respective properties, including, without
limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et
seq.), the Hazardous Material Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.) and the
Emergency Planning and Community Right-to-Know Act
(42 U.S.C. Section 11001 et seq.) and (ii) environmental
protection, including, without limitation, the National
Environmental Policy Act (42 U.S.C. Section 4321 et seq.) and
comparable state laws, each as amended or supplemented,
and any similar or analogous local, state and federal
statutes and regulations promulgated pursuant thereto, each
as in effect as of the date of determination.
ERISA means the Employee Retirement Income Security
Act of 1974, as amended from time to time and any
successor statute.
ERISA Affiliate means Company and (i) any corporation
that is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal
Revenue Code of which Company is a member; (ii) any
trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Internal
Revenue Code of which Company is a member; and (iii)
any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue
Code of which Company, any corporation described in
clause (i) above or any trade or business described in clause
(ii) above is a member.
ERISA Event means (i) the occurrence of a reportable
event within the meaning of Section 4043 of ERISA (other
than a reportable event as to which the requirement for
thirty-day notice to the PBGC has been waived) with
respect to any Pension Plan, (ii) failure with respect to any
Pension Plan to meet the minimum funding standard of
Section 412 of the Internal Revenue Code or of Section 302
of ERISA, including, without limitation, the failure to make
on or before its due date a required installment under
Section 412(m) of the Internal Revenue Code or Section
302(e) of ERISA; (iii) the provision by the administrator of
any Pension Plan of a notice of intent to terminate such
plan pursuant to Section 4041(a)(2) of ERISA (including
any such notice with respect to a plan amendment referred
to in Section 4041(e) of ERISA) if such termination would
result in liability that would constitute a Material Adverse
Effect; (iv) the withdrawal by Company or any ERISA
Affiliate from a Pension Plan during a plan year for which
it was a substantial employer within the meaning of
Section 4001(a)(2) of ERISA resulting in liability of any
such entity pursuant to Section 4062(e) or 4063 or ERISA
which constitutes a Material Adverse Effect; (v) the
institution by the PBGC of proceedings to terminate a
Pension Plan, or for the appointment of a trustee to
administer a Pension Plan, pursuant to Section 4042 of
ERISA; (vi) the withdrawal by Company or any ERISA
Affiliate in a complete or partial withdrawal from a
Multiemployer Plan, or the receipt by Company or any
ERISA Affiliate of notice from a Multi employer Plan that
it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA or that it intends to terminate or
has terminated under Section 4041A of ERISA where any
such event results in liability which constitutes a Material
Adverse Effect; (vii) the imposition on Company or any
ERISA Affiliate of fines, penalties, taxes or related charges
under Chapter 43 of the Internal Revenue Code or under
Sections 502(c), (i) or (l) or 4071 of ERISA where liability
for such charges constitutes a Material Adverse Effect;
(viii) the assertion of a material claim (other than routine
claims for benefits) against any Employee Benefit Plan or
the assets thereof, or against Company or any ERISA
Affiliate in connection with any such plan where liability
for such claim would constitute a Material Adverse Effect;
(ix) the existence, as of any valuation date for a Pension
Plan, of an excess of the present value (determined on the
basis of reasonable assumptions used by the independent
actuary for such Pension Plan) of the accrued benefits
(whether or not vested) of the participants and beneficiaries
of such Pension Plan over the fair market value of the
assets of such Pension Plan, if such excess, when added to
the excesses calculated in the same manner for each of the
other Pension Plans as of the most recently preceding
valuation date for each such other Pension Plan, exceeds
$20,000,000; or (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan to
qualify under Section 401(a) of the Internal Revenue Code,
or the failure of any trust forming part of a Pension Plan to
fail to qualify for exemption from taxation under Section
501(a) of the Internal Revenue Code.
Eurodollar Rate means, for any Interest Rate
Determination Date, the arithmetic average (rounded
upwards to the nearest 1/16 of 1%) of the offered quotation,
if any, to first class banks in the Eurodollar market by each
of the Reference Lenders for Dollar deposits of amounts in
immediately available funds comparable to the principal
amount of the Eurodollar Rate Loan of the Reference
Lender for which the Eurodollar Rate is being determined
with maturities comparable to the Interest Period for which
such Eurodollar Rate will apply as of approximately 10:00
A.M. (New York time) two Business Days prior to the
commencement of such Interest Period. If any Reference
Lender fails to provide its offered quotation to Agent, the
Eurodollar Rate shall be determined on the basis of the
offered quotation of the other Reference Lender.
Eurodollar Rate Loans means Loans bearing interest at
rates determined by reference to the Adjusted Eurodollar
Rate as provided in subsection 2.3.A.
Event of Default means each of the events set forth in
Section 7.
Excess Investments in Securities means, as at any date of
determination, the amount by which the aggregate
Investments of Company and its Subsidiaries in Marketable
Securities and Non-Marketable Securities exceeds the
amount of such Investments permitted by subsection 6.3.B
hereof.
Exchange Act means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
Exchange Rate means, on any date, when an amount
expressed in a currency other than Dollars is to be
determined with respect to any Letter of Credit, the
nominal rate of exchange of the applicable Issuing Lender
in the New York foreign exchange market for the purchase
by such Issuing Lender (by cable transfer) of such currency
in exchange for Dollars at 12:00 noon (New York City
time), one Business Day prior to such date, expressed as the
number of units of such currency per $1.00.
Existing Indebtedness means Indebtedness of Company
and its Subsidiaries existing on the Closing Date and listed
in Schedule H annexed hereto.
Existing Letters of Credit means each of the Letters of
Credit issued pursuant to the Old Credit Agreement and
outstanding on the Closing Date naming Company as
account party that is listed on Schedule A annexed hereto.
Facilities means any and all real property (including,
without limitation, all buildings, fixtures or other
improvements located thereon) now, or heretofore, owned,
leased, operated or used (under permit or otherwise) by
Company or any of its Subsidiaries or any of their
respective predecessors.
Fair Market Value means, with respect to any asset sale,
the price that would be paid by a willing buyer to a willing
seller in a transaction effected at arms length.
Federal Funds Effective Rate means for any period, a
fluctuating interest rate equal for each day during such
period to the weighted average of the rates on overnight
federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for such day on such transactions received
by Agent from three federal funds brokers of recognized
standing selected by Agent.
Financial Statements means the audited financial
statements, and the notes attached thereto, of Company and
its Subsidiaries prepared on a consolidated basis for the
fiscal year ending December 31, 1989, as delivered to
Agent and Lenders prior to the date of execution of this
Agreement.
First Chicago means The First National Bank of Chicago.
Funding Date means the date of the funding of a Loan or
the date of the issuance of a Letter of Credit, as applicable.
GAAP means generally accepted accounting principles
set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards
Board, or in such other statements by such other entity as
may be approved by a significant segment of the
accounting profession, that are applicable to the
circumstances as of the date of determination.
Guarantor means each Material Subsidiary, other than, for
so long as the Easco Debt is outstanding, Easco.
Guaranty means any of the Subsidiary Guaranties, and
Guaranties means all such guaranties, collectively.
Hazardous Materials means (i) any chemical, material or
substance defined as or included in the definition of
hazardous substances, hazardous wastes, hazardous
materials, extremely hazardous waste, restricted
hazardous waste, or toxic substances or words of similar
import under any applicable Environmental Laws; (ii) any
oil, petroleum or petroleum derived substance, any drilling
fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil,
any flammable substances or explosives, any radioactive
materials, any hazardous wastes or substances, any toxic
wastes or substances or any other materials or pollutants
that (a) pose a hazard to any property of Company or any of
its Subsidiaries or to Persons on or about such property or
(b) cause such property to be in violation of any
Environmental Laws; (iii) friable asbestos, urea
formaldehyde foam insulation, electrical equipment which
contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per
million; and (iv) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any
governmental authority.
HLT Classification Date means any date on which Agent
determines, or is advised by any Lender that such Lender
has received notice from any Regulatory Authority to the
effect, that the Loans or Commitments hereunder should be
or are classified as a highly leveraged transaction pursuant
to any objective criteria included in guidelines established
by any Regulatory Authority (whether or not having the
force of law and including without limitation those
announced or published prior to the date of this
Agreement).
HLT Classification Period means any period commencing
on an HLT Classification Date and ending on the day that
Agent first determines that the Loans or Commitments
previously classified as a highly leveraged transaction by
any Regulatory Authority, or that previously should have
been classified as a highly leveraged transaction , no
longer is or should be so classified.
Indebtedness , as applied to any Person, means, without
duplication (i) all indebtedness for borrowed money, (ii)
that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts
accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any
obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such
obligations incurred with respect to any Employee Benefit
Plan) which purchase price is (a) due more than six months
from the date of incurrence of the obligation in respect
thereof, or (b) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any Lien on
any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to
the credit of that Person; provided, however, Indebtedness
shall not include obligations incurred in the ordinary course
of business with respect to the deferred purchase price of
property that are (x) noninterest-bearing, (y) not evidenced
by a note or similar written instrument and (z) mature no
more than nine months from the date of incurrence of the
obligation in respect thereof.
Indemnitee has the meaning assigned to that term in
subsection 9.3.
Insurance Proceeds means any cash payments received by
Company or any of its Subsidiaries under any of the
insurance policies maintained pursuant to subsection 5.4
that have not been reinvested in Productive Assets.
Interest Payment Date means, with respect to any CD
Rate Loan or Eurodollar Rate Loan, the last day of each
Interest Period applicable to such Loan; provided that in the
case of each Interest Period of longer than ninety days in
respect of a CD Rate Loan or three months in respect of a
Eurodollar Rate Loan, Interest Payment Date shall also
include each Interim Payment Date for such Interest
Period.
Interest Period means any interest period applicable to a
Loan as determined pursuant to subsection 2.3.B.
Interest Rate Agreement means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement
designed to protect Company or any of its Subsidiaries
against fluctuations in interest rates; provided that the
calculation of payments for early termination shall be made
on a reasonable basis in accordance with customary
industry practices; provided further that all such obligations
with respect to payments for early termination (guaranteed
or unguaranteed) as may have been incurred shall constitute
Indebtedness.
Interest Rate Determination Date means each date for
calculating the Eurodollar Rate or Certificate of Deposit
Rate, as the case may be, for purposes of determining the
interest rate in respect of an Interest Period. The Interest
Rate Determination Date shall be the second Business Day
prior to the first day of the related Interest Period for any
Eurodollar Rate Loan and the first day of the related
Interest Period for a CD Rate Loan.
Interim Payment Date means, (x) for each Interest Period
applicable to a CD Rate Loan that is longer than ninety
days, the date that is ninety days after the commencement
of that Interest Period and each date that is ninety days after
an Interim Payment Date and (y) for each Interest Period
applicable to a Eurodollar Rate Loan that is longer than
three months, the date that is three months after the
commencement of that Interest Period and each date that is
three months after an Interim Payment Date.
Internal Revenue Code means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to
time hereafter.
Investment , as applied to any Person, means (i) any direct
or indirect purchase or other acquisition by that Person of,
or a beneficial interest in, stock or other Securities of any
other Person other than a Subsidiary, or (ii) any direct or
indirect loan, advance (other than advances to employees
for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of
business) or capital contribution by that Person to any other
Person other than a Subsidiary, including all indebtedness
and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other
Person in the ordinary course of business. The amount of
any Investment shall be the original cost of such Investment
plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such
Investment.
Invitation for Bid Rate Loan Quotes means an invitation
to each Lender to submit a Bid Rate Loan Quote,
substantially in the form of Exhibit XIII annexed hereto,
delivered by Bid Rate Loan Agent to such Lender pursuant
to subsection 2.1.E with respect to a Bid Rate Loan Quote
Request.
Issuing Lender means, with respect to any Letter of
Credit, the Lender that agrees or is otherwise obligated to
issue such Letter of Credit, determined as provided in
subsection 2.4.B.
Joint Venture means a joint venture, partnership or other
similar arrange- ment, whether in corporate, partnership or
other legal form; provided that, as to any such arrangement
in corporate form, such corporation shall not, as to any
Person of which such corporation is a Subsidiary, be
considered to be a Joint Venture to which such Person is a
party.
Lender and Lenders means the persons identified as
Lenders and listed on the signature pages of this
Agreement and Additional Lender, together with their
successors and permitted assigns pursuant to subsection
9.1; provided that the term Lenders when used in the
context of a particular Commitment, shall mean those
Lenders having that Commitment.
Letter of Credit Commitment means the commitment of
Issuing Lenders to issue Letters of Credit as set forth in
subsection 2.4.A.
Letter of Credit Usage means, as at any date of
determination, with respect to all outstanding Letters of
Credit, the sum of (i) the maximum aggregate amount
which is or at any time thereafter may become available for
drawing under such Letters of Credit plus (ii) the aggregate
amount of all drawings under such Letters of Credit
honored by Issuing Lenders and not theretofore reimbursed
by Company; provided, however, the Letter of Credit
Usage of an Issuing Lender shall be deemed to be only such
portion of the Letter of Credit Usage of such Issuing
Lender which Lenders have not bought by participation
pursuant to subsection 2.4.A. For purposes of this
definition, any amount described hereunder which is
denominated in a currency other than Dollars shall be
valued based on the applicable Exchange Rate for such
currency as of such date of determination.
Letters of Credit means the Existing Letters of Credit and
the standby letters of credit or similar instruments issued
pursuant to subsection 2.4 for the purpose of supporting (i)
workers compensation liabilities of Company or any of its
Subsidiaries, (ii) the obligations of third party insurers of
Company or any of its Subsidiaries arising by virtue of the
laws of any jurisdiction requiring third party insurers to
obtain such letters of credit, (iii) Indebtedness of Company
or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (iv) obligations with
respect to Capital Leases or Operating Leases of Company
or any of its Subsidiaries, (v) per- formance, payment,
deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or
governmental rule or regulation or in accordance with
custom and practice in the industry, or (vi) obligations of
Company or any of its Subsidiaries in respect of payment
of customary indemnification and purchase price
adjustment obligations incurred in connection with Asset
Sales and other sales of assets.
Lien means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease
in the nature thereof, and any agreement to give any
security interest).
Loan or Loans means one or more of the Term Loans,
the Revolving Loans, the Swingline Loans and the Bid Rate
Loans, or any combination thereof.
Loan Documents means this Agreement, the Notes, the
Commitment Letter, the Pledge Agreement, the Subsidiary
Guaranties, the Letters of Credit and any applications for,
or reimbursement agreements and other documents or
certificates executed in favor of an Issuing Lender relating
to, the Letters of Credit.
Margin Stock has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
Marketable Securities means shares of capital stock that
trade on the New York Stock Exchange, the American
Stock Exchange or the London Stock Exchange, and bonds,
debentures, notes and other evidences of Indebtedness that
bear ratings issued by Standard & Poor s Corporation or
Moody s Investors Service, Inc. and that trade freely in the
secondary markets established for such respective types of
Indebtedness.
Material Adverse Effect means (i) a material adverse
effect upon the business, operations, properties, assets or
condition (financial or otherwise) of Company and its
Subsidiaries (taken as a whole), (ii) the impairment of the
ability of any Credit Party to perform its Obligations, or
(iii) the impairment of the ability of Agent or Lenders to
enforce the Obligations.
Material Subsidiary means each Subsidiary of Company
now existing or hereof acquired or formed by Company
which (x) for the most recent fiscal year of Company
accounted for more than five percent of the consolidated
revenues of Company or (y) as at the end of such fiscal
year, was the owner of more than five percent of the
consolidated assets of Company.
Minimum Adjusted Tangible Net Worth means
$240,164,000. Such amount shall increase on the first day
of each fiscal quarter of Company by an amount equal to
fifty percent of the Consolidated Net Income of Company,
if positive, calculated as of the last day of the immediately
preceding fiscal quarter.
Multiemployer Plan means a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA to which
Company or any ERISA Affiliate is, or ever has,
contributed or to which Company or any ERISA Affiliate
has, or ever has had, an obligation to contribute.
Net Cash Proceeds means, in the case of any Asset Sale,
Cash Proceeds, net of (i) bona fide direct costs of sale
(including without limitation (a) taxes reasonably estimated
to be actually payable as a result of such Asset Sale within
two years of the date of the Asset Sale, (b) payment of the
outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Loans
and other Obligations) required to be repaid under the terms
thereof as a result of such Asset Sale, and (c) brokerage
fees) and (ii) appropriate amounts provided by Company as
a reserve, in accordance with GAAP, against any liabilities
directly associated with the assets sold in such Asset Sale
and retained by Company or any of its Subsidiaries after
such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities and liabilities
related to environmental matters or against any
indemnification obligations associated with such Asset
Sale.
Net Capital Expenditures means, for any twelve-month
period, Consolidated Capital Expenditures made during the
period of determination, minus the Capital Expenditure
Credit calculated as at the last day of the most recently
ended fiscal quarter of Company.
Non-Marketable Securities means capital stock, shares,
bonds, debentures, notes and other evidences of
indebtedness that do not satisfy the definition of
Marketable Securities set forth in this Agreement.
Notes means one or more of the Term Notes and
Revolving Notes or any combination thereof.
Notice of Bid Rate Loan Borrowing has the meaning
assigned to that term in subsection 2.1.E.
Notice of Borrowing means a notice substantially in the
form of Exhibit I annexed hereto with respect to a proposed
borrowing.
Notice of Conversion/Continuation means a notice
substantially in the form of Exhibit III annexed hereto with
respect to a proposed conversion or continuation.
Notice of Request for Letter of Credit means a notice
substantially in the Form of Exhibit II annexed hereto with
respect to a request for issuance of a Letter of Credit.
Obligations means all obligations of every nature
(including Contingent Obligations) of each Credit Party
from time to time owed to Agent or Lenders or any of them
under the Loan Documents.
Officers Certificate means, as applied to any corporation,
a certificate executed on behalf of such corporation by its
Chairman of the Board (if an officer) or its President or one
of its financial officers, who must hold the rank of at least
vice president or secretary, and by its chief financial
officer, controller or treasurer; provided that every Officers
Certificate with respect to the compliance with a condition
precedent to the making of any Loans hereunder shall
include (i) a statement that the officer or officers making or
giving such Officers Certificate have read such condition
and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the
opinion of the signers and on behalf of the Person for
whom such certificate is being delivered, they have made or
have caused to be made such examination or investigation
as is necessary to enable them to determine whether or not
such condition has been complied with, and (iii) a
statement that, based on such investigation, such signers
believe such condition has been complied with.
Old Credit Agreement means that certain Amended and
Restated Credit Agreement dated as of June 16, 1989
among Company, WPI, the lenders listed therein, Bankers,
as agent and as co-manager, National Westminster Bank
USA, as co-manager and Continental Bank, as trustee, as
amended.
Operating Lease means, as applied to any Person, any
lease (including, without limitation, leases that may be
terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital
Lease, other than any such lease under which such Person
is the lessor.
PBGC means the Pension Benefit Guaranty Corporation
(or any successor thereto).
Pension Plan means any Employee Benefit Plan that is
subject to the provisions of Title IV of ERISA and that is
maintained for employees of Company or any of its ERISA
Affiliates.
Permitted Encumbrances means the following types of
Liens:
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time,
required by subsection 5.3;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens
imposed by law incurred in the ordinary course of business
for sums not yet delinquent or being contested in good
faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP or applicable statute shall
have been made therefor;
(iii) Liens (other than any Lien imposed under
Section 401(a)(29) or 412(n) of the Internal Revenue Code
or under ERISA or arising from or as a result of any
Environmental Laws) incurred or deposits made in the
ordinary course of business in connection with workers
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations (but not any Liens or obligations
arising from or as a result of any Environmental Law),
surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money), the
existence of which individually or in the aggregate would
not have a Material Adverse Effect;
(iv) Liens with respect to deposits made in
connection with social security withholding taxes, which
taxes are paid within five Business Days of the date such
deposits are required to be paid over;
(v) any attachment or judgment Lien not in excess of
$5,000,000 individually or in the aggregate unless the
judgment it secures shall, within thirty days after the entry
thereof, not have been discharged or execution thereof
stayed pending appeal, or shall not have been discharged
within thirty days after the expiration of any such stay;
(vi) leases or subleases granted to others not
interfering in any material respect with the business of
Company or any of its Subsidiaries;
(vii) easements, rights-of-way, restrictions, minor
defects, encroach- ments or irregularities in title and other
similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business
of Company or any of its Subsidiaries;
(viii) any interest or title of a lessor or sublessor under
any lease;
(ix) Liens arising from filing UCC financing
statements relating solely to the specific asset subject to a
lease or the specific assets sold pursuant to a receivables
financing facility established for the benefit of Company or
any of its Subsidiaries;
(x) Liens to secure Indebtedness incurred by Company
or any of its Subsidiaries to finance the acquisition of the
assets purchased with the proceeds of such Indebtedness;
provided that the Lien encumbers only the assets so
purchased and is created within ninety days of the date of
such acquisition;
(xi) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods
incurred in the ordinary course of business; and
(xii) Liens described in Schedule E annexed hereto.
Person means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and
governments and agencies and political subdivisions
thereof.
Pledge Agreement means the Pledge Agreement to be
executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit X annexed hereto, as
such Pledge Agreement may hereafter be amended,
supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.
Potential Event of Default means, as of any date of
determination, a condition or event that, after the giving of
notice or lapse of time or both, would constitute an Event
of Default if that condition or event were not cured or
removed within any applicable grace or cure period.
Prescribed Forms shall mean such duly executed form(s)
or statement(s), and in such number of copies, which may,
from time to time, be prescribed by law and which pursuant
to applicable provisions of (a) any income tax treaty
between the United States of America and the country of
residence of the Lender providing the form(s) or
statement(s), (b) the Internal Revenue Code of 1986, as
amended or (c) any applicable rule or regulation under the
Internal Revenue Code of 1986, as amended, permit
Company to make payments hereunder for the account of
such Lender free of deduction or withholding of income or
similar taxes.
Pricing Level means for any Pricing Period, Pricing Level
I, Pricing Level II, or Pricing Level III, as may be in effect
for such Pricing Period. The Pricing Level in effect from
the Closing Date to but excluding the first Pricing Level
Calculation Date following the Closing Date shall be
deemed to be Pricing Level II. Notwithstanding anything to
the contrary contained herein, if any Event of Default has
occurred and been in existence for ten Business Days or
longer, the Pricing Level in effect shall be Pricing Level III
for so long as such Event of Default is continuing.
Pricing Level I means the Pricing Level that will be in
effect for the applicable Pricing Period if, as at the relevant
Date of Determination, (i) the Adjusted Leverage Ratio is
less than 0.5:1 and (ii) the Adjusted Interest Coverage Ratio
is greater than 3:1.
Pricing Level II means the Pricing Level that will be in
effect for the applicable Pricing Period if, as at the relevant
Date of Determination, (i) the Adjusted Leverage Ratio is
greater than or equal to 0.5:1 and less than 0.9:1 and (ii) the
Adjusted Interest Coverage Ratio is greater than 3:1.
Pricing Level III means the Pricing Level that will be in
effect for the applicable Pricing Period if, as at the relevant
Date of Determination, (i) the Adjusted Leverage Ratio is
greater than or equal to 0.9:1 or (ii) the Adjusted Interest
Coverage Ratio is less than or equal to 3:1.
Pricing Level Calculation Date means the date that is
forty-five days after the most recent Date of Determination.
Pricing Period means the period commencing on the last
preceding Pricing Level Calculation Date and ending on the
forty-fourth day of the next succeeding fiscal quarter of
Company following such Pricing Level Calculation Date.
Prime Rate means the rate that Agent announces from
time to time as its prime lending rate, as in effect from time
to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually
charged to any customer. Bankers or any other Lender may
make commercial loans or other loans at rates of interest at,
above or below the Prime Rate.
Pro Rata Share means, with respect to matters relating to
a particular Commitment (including the making or payment
of Loans pursuant to that Commitment) of a Lender, the
percentage obtained by dividing (x) such Commitment of
that Lender by (y) all such Commitments of all Lenders, as
such percentage may be adjusted by assignments permitted
pursuant to subsection 9.1. The initial Pro Rata Share of
each Lender is set forth opposite the name of that Lender
on Schedule B annexed hereto.
Productive Assets means productive replacement assets
of a similar nature to those so replaced that are then used or
usable in the business of Company or any of its
Subsidiaries.
Reference Lender means Bankers and The Chase
Manhattan Bank, N.A.
Register has the meaning assigned to that term in
subsection 2.1.E.
Regulation D means Regulation D of the Board of
Governors of the Federal Reserve System as in effect from
time to time.
Regulatory Authority means any United States
governmental authority, central bank or comparable agency
having jurisdiction over any Lender.
Release means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor
or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or
into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water,
groundwater or property.
Reporting Division means each of the divisions of the
operations of Company or any of its Material Subsidiaries,
as set forth on Schedule C annexed hereto as such Schedule
may hereafter be amended, supplemented or modified from
time to time by Company.
Requisite Lenders means (i) during the Revolving Period,
Lenders having 66-2/3% or more of the Revolving Loan
Commitments or if the Revolving Loan Commitments have
been terminated, Lenders holding 66-2/3% or more of the
aggregate principal amount of the Revolving Loans,
Swingline Loans and Bid Rate Loans outstanding; or (ii)
during the Term Period, Lenders holding 66-2/3% or more
of the aggregate principal amount of the Term Loans
outstanding. As used herein, Requisite Lenders includes
Bankers in its capacity as a Lender; where references are
made to Agent and Requisite Lenders , Bankers interest
shall be included both as Agent and as Lender.
Restricted Junior Payment means (i) any dividend or
other distribution, direct or indirect, on account of any
shares of any class of stock of Company now or hereafter
outstanding, except a dividend payable solely in shares of
that class of stock to the holders of that class, (ii) any
redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of Company now or
hereafter outstanding and (iii) any payment made to retire,
or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
stock of Company now or hereafter outstanding.
Revolving Loan Commitment or Revolving Loan
Commitments means the commitment or commitments of
a Lender or Lenders to make Revolving Loans, Bid Rate
Loans and Swingline Loans as set forth in subsection 2.1,
subject to the terms and conditions contained therein.
Revolving Loans means the Revolving Loans made by
Lenders to Company pursuant to subsection 2.1.A.
Revolving Notes means the promissory notes of
Company issued pursuant to subsection 2.1.F and in
substantially the form of Exhibit V annexed hereto, as they
may be amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
Revolving Period means the period commencing on the
Closing Date and ending on the date occurring on the third
anniversary of the Closing Date.
Scheduled Term Loans Principal Payments means, with
respect to the prin- cipal payments of Term Loans required
pursuant to subsection 2.2.B, for each date set forth below,
the correlative amount set forth opposite thereto, as
adjusted by operation of the following sentence:
Date Scheduled Term Loans Principal Payment
December 31, 1993 12.50% of Term Loans made on
Term Loan Funding Date
March 31, 1994 12.50% of Term Loans made on Term
Loan Funding Date
June 30, 1994 12.50% of Term Loans made on Term
Loan Funding Date
September 30, 1994 12.50% of Term Loans made on
Term Loan Funding Date
December 31, 1994 12.50% of Term Loans made on
Term Loan Funding Date
March 31, 1995 12.50% of Term Loans made on Term
Loan Funding Date
June 30, 1995 12.50% of Term Loans made on Term
Loan Funding Date
September 30, 1995 12.50% of Term Loans made on
Term Loan Funding Date
On the date any Loans are prepaid pursuant to subsection
2.6.A or 2.A.B.(i), the Scheduled Term Loans Principal
Payments set forth above shall be reduced by the amount of
such prepayment, such reduction to be effected by reducing
the amounts set forth above that correspond to the maturity
or maturities of the Scheduled Term Loans Principal
Payment required to be reduced in the manner provided in
subsection 2.6.A or 2.6.B.(ii), as the case may be; provided
that the Scheduled Term Loans Principal Payment for the
Commitment Termination Date shall be an amount, if such
amount is different from that specified above, sufficient to
repay all amounts owing by Company under the Term
Loans.
Securities means any capital stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes or
other evidences of indebtedness (secured or unsecured,
convertible, subordinated or otherwise), any instruments
commonly known as securities , and any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right
to subscribe to, purchase or acquire, any of the foregoing.
Separate Letter of Credit Facility means the letter of
credit facility or facilities established for the benefit of
Company and its Subsidiaries by The Bank of Tokyo Trust
Company or one of its affiliates, or by any other
commercial banking institution or institutions, on terms and
conditions reasonably satisfactory to Requisite Lenders, for
the purpose of issuing letters of credit for the account of
Company that support obligations of Company and any of
its Subsidiaries.
Separate Letter of Credit Facility Usage means, as at any
date of deter- mination with respect to all outstanding
letters of credit under the Separate Letter of Credit Facility,
the sum of (i) the maximum aggregate amount which is or
at any time thereafter may become available for drawing
under such letters of credit plus (ii) the aggregate amount of
all drawings under such letters of credit honored by the
issuer thereof and not theretofore reimbursed.
Solvent means, with respect to any Person, that as of the
date of determina- tion, both (A) (i) the then fair saleable
value of the property of such Person is (y) greater than the
total amount of liabilities (including the maximum amount
of contingent liabilities identified by such Person) of such
Person and (z) greater than the amount that will be required
to pay the probable liabilities of such Person s then existing
debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably
available to such Person; (ii) such Person will not lack
sufficient capital for the needs and anticipated needs for
capital of such Person s business, including identified
contingent liabilities; and (iii) such Person does not intend
to incur, or believe or reasonably should believe that it will
incur, debts beyond its ability to pay such debts as they
become due and (B) such Person is solvent within the
meaning given that term and similar terms under applicable
laws relating to fraudulent transfers.
Subordinated Indebtedness means the Easco Debt and the
WPI Debt.
Subsidiary means, with respect to any Person, any
corporation, association or other business entity of which
more than 50% of the total voting power of shares of stock
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
Subsidiary Guaranty means each guaranty to be
executed and delivered by each Material Subsidiary
pursuant to subsection 3.1 or 5.7, as the case may be, each
substantially in the form of Exhibit VII annexed hereto, as
each such guaranty may hereafter be amended,
supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof, and
Subsidiary Guaranties means all such guaranties
collectively.
Swingline Loan Commitment means the commitment of
Bankers to make Swingline Loans as set forth in subsection
2.1.B.
Swingline Loans means the Swingline Loans made by
Bankers to Company on or after the Closing Date pursuant
to subsection 2.1.B.
Term Loan Commitment or Term Loan Commitments
means the commitment or commitments of a Lender or
Lenders to make Term Loans as set forth in subsection
2.2.A.
Term Loan Funding Date means the date that is the third
anniversary of the Closing Date.
Term Loans means the Loans made by Lenders to
Company pursuant to subsection 2.2.A.
Term Notes means the promissory note of Company
issued pursuant to subsection 2.1.F substantially in the form
of Exhibit IV annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time in
accordance with the terms hereof.
Term Period means the period commencing on the date
occurring on the third anniversary of the Closing Date and
ending on the date occurring on the fifth anniversary of
Closing Date.
Total Utilization of Revolving Loan Commitments
means, as at any date of determination, the sum of (i) the
aggregate principal amount of all outstanding Revolving
Loans, plus (ii) the aggregate principal amount of all
outstanding Swingline Loans, plus (iii) the aggregate
principal amount of all outstanding Bid Rate Loans, plus
(iv) the Letter of Credit Usage, plus (v) the amount by
which the Separate Letter of Credit Facility Usage exceeds
$25,000,000, plus (vi) the amount of the Excess
Investments in Securities.
Trustee means either (i) if Company has appointed
Continental Bank to act as Trustee hereunder and
Continental Bank has accepted such appointment, for so
long as Continental Bank is acting as Trustee hereunder,
Continental Bank solely in its capacity as Trustee
hereunder, or (ii) so long as Company elects to act as
Trustee hereunder, Company in its capacity as Trustee;
provided that the provisions of Section 10 shall not apply to
the rights and duties of Company acting as Trustee.
Anything contained herein to the contrary notwithstanding,
Continental Bank shall have no rights, duties or obligations
in the capacity of Trustee hereunder until such time as it
may be appointed to act as Trustee pursuant to and in
accordance with the terms of Section 10.
WPI means Western Pacific Industries, Inc., a Delaware
corporation and a wholly-owned Subsidiary of Company.
WPI Debt means the 10% Subordinated Debentures due
July 1, 2001 of WPI in the form issued pursuant to that
certain Indenture dated June 15, 1976 by and between WPI
and The Connecticut Bank & Trust Company, as Trustee,
as in effect on the Closing Date.
1.2. Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement
Except as otherwise expressly provided in this Agreement,
all accounting terms not otherwise defined herein shall
have the meanings assigned to them in conformity with
GAAP. Calculations made in connection with the
definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies
in conformity with those used to prepare the Financial
Statements.
1.3. Other Definitional Provisions
References to Sections and subsections shall be to
Sections and subsections, respectively, of this Agreement
unless otherwise specifically provided. Any of the terms
defined in subsection 1.1 may, unless the context otherwise
requires, be used in the singular or the plural, depending on
the reference.
SECTION 2.
AMOUNTS AND TERMS OF LOANS AND
LETTERS OF CREDIT
2.1.Revolving Loans, Swingline Loans and Bid Rate Loans
A. Revolving Loan Commitments.
Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of
Company herein set forth, each Lender hereby severally
agrees, subject to the limitations set forth below with
respect to the maximum amount of Revolving Loans
permitted to be outstanding from time to time, to make
Revolving Loans to Company during the period from the
Closing Date through but excluding the Term Loan
Funding Date in an amount not exceeding its Pro Rata
Share of the aggregate Revolving Loan Commitments for
the purposes identified in subsection 2.7.B. Each Lender s
commitment to make Revolving Loans to Company
pursuant to this subsection 2.1.A is herein called its
Revolving Loan Commitment and such commitments of
all Lenders in the aggregate are herein called the
Revolving Loan Commitments . The initial amount of each
Lender s Revolving Loan Commitment is set forth opposite
its name on Schedule B annexed hereto and the aggregate
initial amount of all Revolving Loan Commitments is
$285,000,000. The amount of the Revolving Loan
Commitments shall be reduced by the amount of all
reductions thereof made pursuant to subsection 2.6 through
the date of determination. In no event shall the aggregate
principal amount of the Revolving Loans from any Lender
outstanding at any time exceed the amount of its Revolving
Loan Commitment then in effect. Each Lender s Revolving
Loan Commitment shall expire on the Term Loan Funding
Date and all Revolving Loans shall be paid in full no later
than that date.
Notwithstanding the foregoing provisions of this
subsection 2.1.A, the amount otherwise available to be
borrowed or maintained as Revolving Loans under the
Revolving Loan Commitments as of any time of
determination (other than (x) to repay Swingline Loans or
Bid Rate Loans and accrued and unpaid interest thereon
and (y) to reimburse any Issuing Lender for the amount of
any drawings under any Letters of Credit honored by such
Issuing Lender and not theretofore reimbursed by
Company) shall be reduced by an amount equal to the sum
of (a) the principal amount of all outstanding Swingline
Loans plus (b) the principal amount of all outstanding Bid
Rate Loans plus (c) the Letter of Credit Usage in respect of
Letters of Credit plus (d) the amount by which the Separate
Letter of Credit Facility Usage exceeds $25,000,000 as at
such date of determination plus (e) the amount of the
Excess Investments in Securities as at such date of
determination.
Subject to subsection 2.8.A.(ii), all Revolving Loans under
this Agreement shall be made by Lenders simultaneously
and proportionately to their Pro Rata Shares, it being
understood that no Lender shall be responsible for any
default by any other Lender in that other Lender s
obligation to make Revolving Loans hereunder nor shall
the Revolving Loan Commitment of any Lender be
increased or decreased as a result of the default by any
other Lender in that other Lender s obligation to make
Revolving Loans hereunder.
Amounts borrowed by Company under this subsection
2.1.A may be repaid and, through but excluding the Term
Loan Funding Date, reborrowed. Revolving Loans made on
any Funding Date shall be in an aggregate minimum
amount of $5,000,000 and integral multiples of $1,000,000
in excess of that amount. Anything contained in this
subsection 2.1.A to the contrary
notwithstanding, Company may not borrow Revolving
Loans more than three times during any week other than
Revolving Loans used solely to repay Swingline Loans or
Bid Rate Loans. Anything contained in this Agreement to
the contrary notwithstanding, in no event shall the Total
Utilization of Revolving Loan Commitments exceed the
Revolving Loan Commitments then in effect.
B. Swingline Loan Commitment.
Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of
Company set forth herein, Bankers hereby agrees, subject
to the limitations set forth below with respect to the
maximum amount of Swingline Loans permitted to be
outstanding from time to time, to make a portion of the
Revolving Loan Commitments available to Company from
time to time during the period from the Closing Date
through and excluding the Term Loan Funding Date in an
aggregate principal amount of up to $10,000,000 by
making Swingline Loans to Company, notwithstanding the
fact that such Swingline Loans, when aggregated with
Bankers outstanding Revolving Iowans and Bid Rate
Loans, may exceed Bankers Revolving Loan Commitment.
The commitment of Bankers to make Swingline Loans to
Company pursuant to this subsection 2.1.B is herein called
its Swingline Loan Commitment . In no event shall (a) the
aggregate principal amount of Swingline Loans outstanding
at any time exceed the Swingline Loan Commitment, (b)
the Total Utilization of Revolving Loan Commitments
exceed the aggregate Revolving Loan Commitments then in
effect or (c) the Swingline Loan Commitment exceed the
aggregate Revolving Loan Commitments. Any reduction of
the Revolving Loan Commitments made pursuant to
subsection 2.6 which reduces the Revolving Loan
Commitments below the then current amount of the
Swingline Loan Commitment shall result in an automatic
corresponding reduction of the Swingline Loan
Commitments to the amount of the Revolving Loan
Commitments, as so reduced, without any further action on
the part of Bankers. The proceeds of Swingline Loans shall
be used for the purposes identified in subsection 2.7.B.
The Swingline Loan Commitment shall expire on the Term
Loan Funding Date and all Swingline Loans shall be paid
in full no later than that date.
Amounts borrowed by Company under this subsection
2.1.B may be repaid and, through but excluding the Term
Loan Funding Date, reborrowed. All Swingline Loans shall
be made as Base Rate Loans and shall not be entitled to be
converted into CD Rate Loans or Eurodollar Rate Loans.
Swingline Loans made on any Funding Date shall be in an
aggregate minimum amount of $100,000.
Bankers may, at any time in its sole and absolute
discretion, and on the fifth Business Day after the making
of a Swingline Loan which has not been voluntarily prepaid
by Company pursuant to subsection 2.6.A shall, on one
Business Day s notice to Agent and Company, so long as
amounts are available to be borrowed under the Revolving
Loan Commitments, require each other Lender, and each
Lender hereby agrees, subject to this subsection 2.1.B, to
make a Revolving Loan (which shall initially be funded as
a Base Rate Loan) in an amount equal to such Lender s Pro
Rata Share of the amount of the Swingline Loans (
Refunded Swingline Loans ) outstanding on the date notice
is given which Bankers requests the Lenders to prepay;
provided, however, the obligation of each Lender to make
any such Revolving Loan is subject to the condition that (i)
Bankers believed in good faith that all conditions under
Section 3 to the making of such Swingline Loan were
satisfied at the time such Swingline Loan was made, or (ii)
such other Lender had actual knowledge, by receipt of the
statements required pursuant to subsection 5.1 or otherwise,
that any such condition had not been satisfied and failed to
notify Agent in writing at or before the time for the making
of the relevant Refunded Swingline Loans that it had no
obligation to make Revolving Loans until such condition
was satisfied (which notice shall be effective as of the date
of receipt by Agent), or (iii) the satisfaction of any such
condition not satisfied had been waived by Bankers prior to
or at the time such Swingline Loan was made. In the case
of Revolving Loans made by Lenders other than Bankers
under the immediately preceding sentence, each such other
Lender shall make the amount of its Revolving Loan
available to Bankers, in same day funds, at the office of
Bankers located at One Bankers Trust Plaza, New York,
New York, not later than 11:00 A.M. (New York time) on
the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Loans shall be
immediately applied to repay the Refunded Swingline
Loans. On the day such Revolving Loans are made,
Bankers Pro Rata Share of the Refunded Swingline Loans
shall be deemed to be paid with the proceeds of a
Revolving Loan made by Bankers and such portion of the
Swingline Loans deemed to be so paid shall no longer be
outstanding as Swingline Loans and shall be due as
Revolving Loans. Company authorizes Bankers to charge
Company s accounts with Bankers (up to the amount
available in each such account) in order to immediately pay
Bankers the amount of such Refunded Swingline Loans to
the extent amounts received by Bankers, including amounts
deemed to be received from Bankers, are not sufficient to
repay in full such Refunded Swingline Loans. If any
portion of any such amount paid (or deemed to be paid) to
Bankers should be recovered by or on behalf of Company
from Bankers in bankruptcy, by assignment for the benefit
of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Lenders in the
manner contemplated by subsection 9.5. Subject to the
proviso contained in the first sentence of this paragraph,
each Lender s obligation to make the Revolving Loans
referred to in this paragraph shall be absolute and
unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which
such Lender may have against Bankers, Company or
anyone else for any reason whatsoever; (ii) the occurrence
or continuance of an Event of Default or a Potential Event
of Default; (iii) any adverse change in the condition
(financial or otherwise) of Company; (iv) any breach of this
Agreement by Company or any other Lender; (v) the
acceleration or maturity of any Loans or the termination of
the Revolving Loan Commitments after the making of the
Swingline Loans; or (vi) any other circumstance, happening
or event whatsoever, whether or not similar to any of the
foregoing.
In the event that Company or any of its Subsidiaries has
filed for protection under the Bankruptcy Code, or
otherwise if Bankers requests, and, in any event, subject to
satisfaction of the conditions set forth in the proviso to the
first sentence of the preceding paragraph, each Lender shall
acquire without recourse or warranty an undivided
participation interest equal to such Lender s Pro Rata Share
of any Swingline Loan otherwise required to be repaid by
such Lender pursuant to the preceding paragraph by paying
to Bankers on the date on which such other Lender would
otherwise have been required to make a Revolving Loan in
respect of such Swingline Loan pursuant to the preceding
paragraph, in immediately available funds, an amount equal
to such Lender s Pro Rata Share of such Swingline Loan,
and no Revolving Loans shall be made by such Lender
pursuant to the preceding paragraph. If such amount is not
in fact made available to Bankers by such other Lender on
the date when Revolving Loans would otherwise be
required to be made pursuant to the preceding paragraph,
Bankers shall be entitled to recover such amount on
demand from such other Lender together with interest
accrued from such date at the customary rate set by Bankers
for the correction of errors among banks for three Business
Days and thereafter at the rate of interest then applicable to
Base Rate Loans. From and after the date on which any
Lender purchases an undivided participation interest in a
Swingline Loan pursuant to this paragraph, Bankers shall
promptly distribute to such other Lender such Lender s Pro
Rata Share of all payments of principal and interest in
respect of such Swingline Loan.
A copy of each notice given by Bankers to Lenders
pursuant to the preceding paragraph shall be promptly
delivered by Bankers to Company. Upon the making of a
Revolving Loan by a Lender pursuant to this subsection
21.B, the amount so funded shall become due as a
Revolving Loan and shall no longer be owed as a
Swingline Loan.
Notwithstanding anything herein to the contrary, Bankers
shall not be obligated to make any Swingline Loans if it has
elected after the occurrence and during the continuation of
a Potential Event of Default or Event of Default not to
make Swingline Loans and has notified Company in
writing or by telephone of such election.
C. Notice of Borrowing.
Whenever Company desires that Lenders make Revolving
Loans under subsection 2.1.A or Term Loans under
subsection 2.2.A, it shall deliver to Agent a No- tice of
Borrowing no later than 11:00 A.M. (New York time) on
the proposed Funding Date in the case of Revolving Loans
to be made as Base Rate Loans on a Bid Rate Loan
Shortfall Date in an aggregate amount not to exceed the
applicable Bid Rate Loan Shortfall Amount or at least one
Business Day in advance of the proposed Funding Date in
the case of any other Base Rate Loan or any CD Rate Loan
or three Business Days in advance of the proposed Funding
Date in the case of a Eurodollar Rate Loan. Whenever
Company desires to borrow a Swingline Loan under
subsection 2.1.B, it shall deliver to Bankers a Notice of
Borrowing no later than 12:00 noon (New York time) on
the proposed Funding Date. The Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a
Business Day), (ii) the amount of the proposed Loans and
whether such Loans are to be made as Swingline Loans,
Revolving Loans or Term Loans; provided that in the case
of a Notice of Borrowing delivered on a Bid Rate Loan
Shortfall Date requesting Base Rate Loans to be made as
Revolving Loans on such Bid Rate Loan Shortfall Date, the
amount of such proposed Revolving Loans may not exceed
the Bid Rate Loan Shortfall Amount in respect of such Bid
Rate Loan Shortfall Date, (iii) whether such Revolving
Loans or Term Loans are initially to consist of Base Rate
Loans, CD Rate Loans or Eurodollar Rate Loans or a
combination thereof, (iv) if such Revolving Loans or Term
Loans, or any portion thereof, are initially to be CD Rate
Loans or Eurodollar Rate Loans, the amounts thereof and
the initial Interest Periods therefor and (v) in the case of a
Notice of Borrowing delivered on a Bid Rate Loan
Shortfall Date requesting Base Rate Loans to be made as
Revolving Loans on such Bid Rate Loan Shortfall Date,
that the amount of such proposed Revolving Loans does
not exceed the Bid Rate Loan Shortfall Amount in respect
of such Bid Rate Loan Shortfall Date; and such Notice of
Borrowing shall further certify that subsection 3.3 is
satisfied on and as of that Funding Date; provided that (a)
the minimum amount of CD Rate Loans with a particular
Interest Period included as a portion of any such
combination, if any, shall be $5,000,000 and integral
multiples of $1,000,000 in excess of that amount, and (b)
the minimum amount of Eurodollar Rate Loans with a
particular Interest Period included as a portion of any such
combination, if any, shall be $5,000,000 and integral
multiples of $1,000,000 in excess of that amount.
Revolving Loans and Term Loans may be continued as or
converted into Base Rate Loans, CD Rate Loans and
Eurodollar Rate Loans in the manner provided in
subsection 2.3.E. In lieu of delivering the above-described
Notice of Borrowing, Company may give Agent telephonic
notice by the required time of any proposed borrowing
under this subsection 2.1; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of
Borrowing to Agent on or prior to the Funding Date of the
requested Revolving Loans, Term Loans or Swingline
Loans, as the case may be.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to
above which Agent believes in good faith to have been
given by a duly authorized officer or other person
authorized to borrow on behalf of Company or for
otherwise acting in good faith under this subsection 2.1.C
and upon funding of Revolving Loans or Term Loans by
any Lender or Swingline Loans by Bankers in accordance
with this Agreement pursuant to any such telephonic notice
Company shall have effected Revolving Loans, Term
Loans or Swingline Loans, as applicable, hereunder.
Except as provided in subsection 2.8.D, a Notice of
Borrowing for a Eurodollar Rate Loan or a CD Rate Loan
(or telephonic notice in lieu thereof) shall be irrevocable on
and after the related Interest Rate Determination Date, and
Company shall be bound to make a borrowing in
accordance therewith.
D. Disbursement of Funds.
Promptly after receipt of a Notice of Borrowing for
Revolving Loans pursuant to subsection 2.1.C (or
telephonic notice in lieu thereof) or the deemed receipt of a
Notice of Borrowing pursuant to subsection 2.4.C, Agent
shall notify each Lender of the proposed borrowing.
Promptly after receipt of a Notice of Borrowing for a
Swingline Loan, Bankers shall make the amount of its
Swingline Loan available, in same day funds, at the office
of Bankers located at One Bankers Trust Plaza, New York,
New York, not later than 12:00 noon (New York time) on
the Funding Date. Each Lender shall make the amount of
its Revolving Loan available to Agent, in same day funds,
at the office of Agent located at One Bankers Trust Plaza,
New York, New York, not later than 12:00 noon (New
York time) on the Funding Date. Except as provided in
subsection 2.1.B with respect to the repayment of
Swingline Loans and subsection 2.4.D, upon satisfaction or
waiver of the conditions precedent specified in subsection
3.3, Agent shall make the proceeds of such Loans available
to Company on such Funding Date by causing an amount
of same day funds equal to the proceeds of all such Loans
received by Agent to be credited to the account of
Company at such office of Agent.
Unless Agent shall have been notified by any Lender prior
to any Funding Date that such Lender does not intend to
make available to Agent such Lender s Loan on such
Funding Date, Agent may assume that such Lender has
made such amount available to Agent on such Funding
Date and Agent in its sole discretion may, but shall not be
obligated to, make available to Company a corresponding
amount on such Funding Date. If such corresponding
amount is not in fact made available to Agent by such
Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender
together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent,
at the customary rate set by Agent for the correction of
errors among banks for three Business Days and thereafter
at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Agent s demand
therefor, Agent shall promptly notify Company, and
Company shall immediately pay such corresponding
amount to Agent. Nothing in this subsection 2.1.D shall be
deemed to relieve any Lender from its obligation to fulfill
its Commitments hereunder or to prejudice any rights
which Company may have against any Lender as a result of
any default by such Lender hereunder.
E. Bid Rate Loans.
(i) The Bid Rate Option. Subject to the terms and
conditions of this Agreement and in reliance upon the
representations and warranties of Company set forth herein,
in addition to Company requesting that Lenders make
Revolving Loans pursuant to subsection 2.1.A, Company
may, as set forth in this subsection 2.1.E, request Lenders
having Revolving Loan Commitments during the period
from and including the Closing Date to but excluding the
Term Loan Funding Date to make offers to make Bid Rate
Loans to Company; provided that the Total Utilization of
Revolving Loan Commitments shall in no event exceed the
Revolving Loan Commitments then in effect. Lenders may,
but shall have no obligation to, make such offers and
Company may, but shall have no obligation to, accept any
such offers in the manner set forth in this subsection 2.1.E.
(ii) Bid Rate Loan Quote Request. Whenever
Company desires to request offers to make Bid Rate Loans,
it shall transmit to Bid Rate Loan Agent (if other than
Company) by telecopy a Bid Rate Loan Quote Request
substantially in the form of Exhibit XI annexed hereto no
later than 11:00 A.M. (New York time) at least one
Business Day in advance of the proposed Funding Date set
forth therein. The Bid Rate Loan Quote Request shall
specify (i) the proposed Funding Date (which shall be a
Business Day not later than seven calendar days prior to the
Term Loan Funding Date, (ii) the amount of Bid Rate
Loans for each Bid Rate Loan Interest Period (of which
there may be up to three) for which offers are requested,
which shall be in a minimum principal amount of
$5,000,000 and in integral multiples of $1,000,000 in
excess of that amount and (iii) the duration of the Bid Rate
Loan Interest Period or Periods applicable thereto, subject
to the provisions set forth in the definition of Bid Rate
Loan Interest Period. Such Bid Rate Loan Quote Request
shall further certify that subsection 3.3 is satisfied on and as
of the date of such Bid Rate Loan Quote Request and will
be satisfied on and as of the date of the making of such Bid
Rate Loans. No Bid Rate Loan Quote Request shall be
given within three Business Days of any other Bid Rate
Loan Quote Request.
(iii) Invitation for Bid Rate Loan Quotes. Promptly
upon any request by Company for Bid Rate Loan Quotes
pursuant to the delivery of a Bid Rate Loan Quote Request
in accordance with the provisions of subsection 2.1.E.(ii),
but in no event later than the close of business on the date
of receipt thereof, Bid Rate Loan Agent shall send to
Lenders by telecopy an Invitation for Bid Rate Loan Quotes
substantially in the form of Exhibit XIII annexed hereto,
which shall constitute an invitation by Company to each
Lender to submit Bid Rate Loan Quotes offering to make
Bid Rate Loans to which such Bid Rate Loan Quote
Request relates in accordance with this subsection 2.1.E.
(iv) Submission and Contents of Bid Rate Loan
Quotes.
(a) Each Lender may, in its sole discretion, submit a
Bid Rate Loan Quote containing an offer or offers to make
Bid Rate Loans in response to any Invitation for Bid Rate
Loan Quotes. Each Bid Rate Loan Quote must comply with
the requirements of this subsection 2.1.E.(iv) and must be
received by Trustee by telecopy no later than 10:00 A.M.
(New York time) on the proposed Funding Date of such
Bid Rate Loans. Any Bid Rate Loan Quote so made shall
be irrevocable, subject to amendment or modification
solely in accordance with subsection 2.1.E.(v), except with
the written consent of Trustee given on the instructions of
Company.
(b) Each Bid Rate Loan Quote shall be in
substantially the form of Exhibit XII annexed hereto and
shall refer to this Agreement and specify (a) the proposed
Funding Date, (b) the principal amount of the Bid Rate
Loan offered, which principal amount (x) may be greater
than or less than the Revolving Loan Commitment of the
quoting Lender, (y) must be in a minimum amount of
$5,000,000 and integral multiples of $1,000,000 in excess
of that amount and (z) may not exceed the principal amount
of Bid Rate Loans for such Bid Rate Loan Interest Period
for which offers were requested, (c) the rate of interest per
annum (expressed as an absolute number and not in terms
of a specified margin over the quoting Lender s cost of
funds, and rounded to the nearest 1/10,000 of 1%) at which
such Lender is willing to make each such Bid Rate Loan
and (d) the identity of the quoting Lender.
(c) Any Bid Rate Loan Quote shall be disregarded
that (a) is not substantially in the form of Exhibit XII
annexed hereto or does not specify all of the information
required in subsection 2.1.E. (iv)(b), (b) contains
qualifying, conditional or similar language, (c) proposes
terms other than or in addition to those set forth in the
applicable Invitation for Bid Rate Loan Quotes or (d)
arrives after 10:00 A.M. on the proposed Funding Date.
(d) If any Lender shall elect not to make such an
offer, such Lender shall so notify Trustee via telecopy no
later than 10:00 A.M. (New York time) on the proposed
Funding Date; provided, however, that failure by any
Lender to give such notice shall not constitute a breach or
default by such Lender nor cause such Lender to be liable
to Company or any other party or be obligated to make any
Bid Rate Loan as part of such requested Bid Rate Loans.
(v) Notice to Agent and Company. Trustee (if other
than Company) shall (by telephone confirmed by telecopy)
promptly notify Company of the terms (x) of any Bid Rate
Loan Quote submitted by a Lender that is in accordance
with subsection 2.1.E.(iv) and (y) of any Bid Rate Loan
Quote that amends, modifies or is otherwise inconsistent
with a previous Bid Rate Loan Quote submitted by such
Lender with respect to the same Bid Rate Loan Quote
Request; provided that any such amending or modifying
Bid Rate Loan Quote shall be disregarded by Trustee unless
such amending or modifying Bid Rate Loan Quote is
submitted solely to correct a manifest error in such former
Bid Rate Loan Quote. Trustee s notice to Company shall
specify (i) the aggregate principal amount of Bid Rate
Loans for which offers have been received in response to a
Bid Rate Loan Quote Request, (ii) the respective principal
amounts and interest rates so offered and (iii) the identity of
each quoting Lender.
(vi) Acceptance and Notice by Company. Not later
than 11:00 A.M. (New York time) on the proposed Funding
Date, Company shall (by telephone confirmed by telecopy)
notify Trustee (if other than Company) (who shall promptly
so notify Agent and Lenders as set forth in subsection
2.1.E(viii)) of its acceptance or non-acceptance of the offers
so notified to it pursuant to subsection 2.1.E.(v). For the
purposes of this subsection 2.1.E.(vi), silence on the part of
Company shall be deemed to be a non-acceptance of all
offers so notified to it pursuant to subsection 2.1.E.(v). In
the case of acceptance, such notice (a Notice of Bid Rate
Loan Borrowing ) shall specify the aggregate principal
amount of offers for each Bid Rate Loan Interest Period
that are accepted. Company may accept any Bid Rate Loan
Quote in whole or in part; provided that (i) acceptance of
offers may only be made on the basis of ascending interest
rates, (ii) the aggregate principal amount of each borrowing
of Bid Rate Loans may not exceed the applicable amount
set forth in the related Bid Rate Loan Quote Request, (iii)
the principal amount of each Bid Rate Loan must be
$5,000,000 or integral multiples of $1,000,000 in excess of
that amount and (iv) Company may not accept any offer
that is described in subsection 2.1.E.(iv)(c) or that
otherwise fails to comply with the requirements of this
Agreement. Subject to the foregoing requirements,
Company may accept or reject, in its sole discretion, any
Bid Rate Loan Quote.
A Notice of Bid Rate Loan Borrowing given by
Company pursuant to this subsection 2.1.E.(vi) shall be
irrevocable.
(vii) Allocation by Company. If offers are made by
two or more Lenders at the same rate of interest for a
greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Bid Rate
Loan Interest Period, the principal amount of Bid Rate
Loans in respect of which such offers are accepted shall be
allocated pro rata by Company among such Lenders;
provided that no Lender whose Bid Rate Loan Quote is
accepted shall be allocated a Bid Rate Loan in a principal
amount less than $1,000,000. Determinations by Company
of the amounts of Bid Rate Loans shall be conclusive in the
absence of manifest error.
(viii) Notice to Agent and Lenders. Trustee shall (by
telephone promptly confirmed by telecopy) promptly notify
each Lender that has submitted a Bid Rate Loan Quote as
described in subsection 2.1.E.(iv)(a), if any, which of its
offers have been accepted by Company pursuant to the
delivery of a Notice of Bid Rate Loan Borrowing,
whereupon such Lender will become bound, subject to the
other applicable conditions hereof, to make the Bid Rate
Loan in respect of which its offer has been accepted.
Promptly after giving such notice, Trustee will deliver to
Agent and each Lender a confirmation specifying the date
and amount of the aggregate Bid Rate Loans made, the
amount, interest rate, Bid Rate Loan Interest Period and
Lender for each Bid Rate Loan made.
(ix) Funding of Bid Rate Loans. Not later than
12:00 noon (New York time) on the proposed Funding Date
specified for each Bid Rate Loan hereunder, each Lender
participating therein shall make the amount of its Bid Rate
Loan available to Company, in same day funds, at
Company s account number 50-194704 at the office of
Agent located at One Bankers Trust Plaza, New York, New
York. Upon satisfaction or waiver of the conditions
precedent specified in subsection 3.3, Agent shall make the
proceeds of all such Bid Rate Loans available to Company
on such Funding Date by causing an amount of same day
funds equal to the proceeds of all such Bid Rate Loans
received by Agent to be credited to the account of
Company at such office of Agent.
Unless Agent shall have received notice from a Lender
participating in a Bid Rate Loan prior to the Funding Date
of such Bid Rate Loan that such Lender will not make
available to Agent such Lender s Bid Rate Loan, Agent
may (but shall not be obligated to) assume that such Lender
has made such Bid Rate Loan available to Agent on the
Funding Date of such Bid Rate Loan in accordance with
this subsection 2.1.E.(ix) and Agent may, in reliance upon
such assumption, make available to Company a
corresponding amount on such Funding Date. If and to the
extent such Lender shall not have so made such Bid Rate
Loan available to Agent, then Agent shall be entitled to
recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from
such Funding Date until the date such amount is paid to
Agent, at the customary rate set by Agent for the correction
of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay
such corresponding amount forthwith upon Agent s demand
therefor, Agent shall promptly notify Company of the
amount of such Bid Rate Loan not funded by such Lender
and Company shall immediately pay such corresponding
amount to Agent. Nothing in this subsection 2.1.E.(ix) shall
be deemed to relieve any Lender from its obligation to
fulfill its commitment hereunder or to prejudice any rights
which Company may have against any Lender as a result of
any default by such Lender hereunder.
(x) Payment of Interest. Interest with respect to each
outstanding Bid Rate Loan shall be payable in arrears on
and to each Bid Rate Loan Interest Payment Date
applicable to that Bid Rate Loan, upon any prepayment of
such Bid Rate Loan (to the extent accrued on the amount
being prepaid) and at maturity.
(xi) Compensation. Company shall compensate
each Lender, upon written request by that Lender (which
request shall set forth in reasonable detail the basis for
requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed
by it to make or carry its Bid Rate Loans and any loss
sustained by that Lender in connection with re-employment
of such funds), which that Lender may sustain with respect
to Bid Rate Loans: (i) if for any reason (other than a default
or error by that Lender) a borrowing of any Bid Rate Loan
does not occur on the date specified therefor in a Notice of
Bid Rate Loan Borrowing, (ii) if any prepayment of any of
such Lender s Bid Rate Loans occurs on a date which is not
the last day of the Bid Rate Loan Interest Period applicable
to that Bid Rate Loan, (iii) if any prepayment of any of
such Lender s Bid Rate Loans is not made on any date
specified in a notice of prepayment given by Company and
consented to by such Lender, or (iv) as a consequence of
any other default by Company to repay such Lender s Bid
Rate Loans when required by the terms of this Agreement.
(xii) Bid Rate Register. Agent shall maintain a
register for the recordation of the names and addresses of
Lenders and the principal amount of the Bid Rate Loans
owing to each Lender from time to time together with the
maturity and interest rates applicable to each Bid Rate
Loan, and other terms applicable thereto (the Bid Rate
Register ). The entries in the Bid Rate Register shall be
prima facie evidence with respect to the entries therein. The
Bid Rate Register shall be available for inspection by
Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(xiii) Maturity. Each Bid Rate Loan shall be payable
on the maturity date specified in the Bid Rate Request
relating to such Bid Rate Loan.
(xiv) Liability. Bid Rate Loan Agent shall not incur
any liability to Company in acting upon any telephonic
notice referred to herein which Bid Rate Loan Agent
believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on
behalf of Company or for otherwise acting in good faith
under this subsection 2.1.E and upon funding of Bid Rate
Loans by any Lender in accordance with this Agreement
pursuant to any such telephonic notice Company shall have
effected Bid Rate Loans hereunder.
F. Register.
(i) Agent shall maintain a register (the Register ) on
which it will record the Commitments from time to time of
each Lender, the Loans made by each Lender and each
repayment in respect of the principal amount of the Loans
of each Lender. Any such recordation shall be conclusive
and binding, absent manifest error.
(ii) Each Lender will record in its internal records the
amount of each Loan made by it and each payment in
respect thereof. Failure to make any such recordation, or
any error in such recordation, shall not affect Company's or
any other Credit Party s Obligations in respect of such
Loans. Any such recordation shall be conclusive and
binding, absent manifest error.
(iii) Any Lender may, by notice to Agent and
Company, request that all or part of the principal amount of
the Obligations of Company to such Lender in respect of its
Commitments hereunder be evidenced by a Term Note or a
Revolving Note, as applicable. Within three Business Days
of Company s receipt of such notice, Company shall
execute and deliver to Agent for delivery to the appropriate
Lender a Note or Notes in the principal amount(s) specified
in such notice, payable to the notifying Lender or, if so
specified in such notice, any Person who is an assignee of
such Lender pursuant to Section 9.1 hereof.
2.2. Term Loans
A. Term Loan Commitments.
Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of
Company herein set forth, each Lender severally agrees to
lend to Company on the Term Loan Funding Date an
amount not exceeding its Pro Rata Share of the aggregate
Term Loan Commitments to be used solely for the
purposes identified in subsection 2.7.A. Each Lender s
commitment to make Term Loans to Company pursuant to
this subsection 2.2.A is herein called its Term Loan
Commitment , and such commitments of all Lenders in the
aggregate are herein called the Term Loan Commitments .
The original amount of each Lender s Term Loan
Commitment is set forth opposite its name on Schedule B
annexed hereto and the aggregate original amount of the
Term Loan Commitments is $285,000,000. Each Lender s
Term Loan Commitment shall expire immediately after the
making of the Term Loans on the Term Loan Funding Date
and all Term Loans and all other amounts owed hereunder
with respect to Term Loans shall be paid in full no later
than the Commitment Termination Date; provided that each
Lender s Term Loan Commitment shall expire immediately
and without further action on the Term Loan Funding Date
if the Term Loans are not made on that date. Company may
make only one borrowing under the Term Loan
Commitments. Amounts borrowed and repaid under this
subsection 2.2.A may not be reborrowed. In connection
with the making of the Term Loans, Company shall deliver
a Notice of Borrowing, and perform in all other relevant
respects, in accordance with subsection 2.1.C. Each Lender
will make the amount of its Term Loan available to Agent,
in same day funds, at the office of Agent located at One
Bankers Trust Plaza, New York, New York, not later than
12:00 noon (New York time) on the Term Loan Funding
Date. Agent shall make the proceeds of such Term Loans
available to Company by causing the aggregate amount of
such Term Loans to be applied to the full extent thereof to
repay the principal amount of the Revolving Loans,
Swingline Loans and Bid Rate Loans outstanding on such
date.
B. Scheduled Payment of Term Loans.
Company agrees to make principal payments in the amount
of the applicable Scheduled Term Loans Principal Payment
on the dates and in the amounts set forth in the definition of
Scheduled Term Loans Principal Payments.
2.3. Interest on the Loans
A. Rate of Interest.
Subject to the provisions of subsection 2.3.F, each Loan
(other than Bid Rate Loans, which shall bear interest as
provided in subsection 2.1.E) shall bear interest on the
unpaid principal amount thereof from the date made
through maturity (whether by acceleration or otherwise) at
a rate determined by reference to the Base Rate, the
Adjusted Certificate of Deposit Rate or the Adjusted
Eurodollar Rate, as the case may be. Except to the extent
that this Agreement specifically provides that certain Loans
are to be made at the Base Rate, the applicable basis for
determining the rate of interest with respect to Term Loans
and Revolving Loans shall be selected by Company
initially at the time a Notice of Borrowing is given pursuant
to subsection 2.1.C (or is deemed to be given pursuant to
subsection 2.4.C) or at the time a Notice of
Conversion/Continuation is given pursuant to subsection
2.3.E. The basis for determining the interest rate with
respect to any Term Loan or Revolving Loan may be
changed from time to time pursuant to subsection 2.3.E. If
on any day a Term Loan or Revolving Loan is outstanding
with respect to which notice has not been delivered to
Agent in accordance with the terms of this Agreement
specifying the basis for determining the rate of interest
then, for that day, that Loan shall bear interest determined
by reference to the Base Rate.
B. Determination of Interest Rate.
As soon as practicable after 10:00 A.M. (New York time)
on each Interest Rate Determination Date, Agent shall
determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the
interest rates that shall apply to CD Rate Loans and
Eurodollar Rate Loans for which interest rates are then
being determined for the applicable Interest Periods and
shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to Company and each
Lender.
Subject to the provisions of subsections 2.3.F and 2.8.F,
Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base
Rate plus the Applicable Base Rate Pricing Margin;
(ii) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Eurodollar
Rate Pricing Margin; or
(iii) if a CD Rate Loan, then at the sum of the Adjusted
CD Rate plus the Applicable CD Rate Pricing Margin.
On each Pricing Level Calculation Date, commencing with
the first such date to occur after the end of the fiscal quarter
of Company immediately succeeding the Closing Date, the
Pricing Level in effect for the Pricing Period commencing
on such Pricing Level Calculation Date and continuing for
the term of the Pricing Period that begins on such Pricing
Level Calculation Date shall be the applicable Pricing
Level that is determined by reference to the definitions of
Pricing Level I, Pricing Level II and Pricing Level III,
subject to the proviso to the definition of Pricing Level.
Notwithstanding the fact that the actual calculation of the
applicable Pricing Level for a Pricing Period to commence
during the first fiscal quarter of Company s fiscal year may
be performed on a date subsequent to the Pricing Level
Calculation Date occurring in such quarter, such Pricing
Period shall commence on such Pricing Level Calculation
Date. Upon the actual calculation of the applicable Pricing
Level for the Pricing Period commencing during the first
fiscal quarter of Company s fiscal year, adjustments to the
amount of accrued interest shall be made to reflect
retroactive application of the applicable Pricing Level to
the first day of such Pricing Period.
C. Interest Periods for CD Rate Loans and Eurodollar
Rate Loans.
In connection with each CD Rate Loan and Eurodollar
Rate Loan, Company, by giving notice as set forth in
subsection 2.1.C, shall elect an interest period (each an
Interest Period ) to be applicable to such Loan, which
Interest Period (x) in the case of CD Rate Loans, be either a
30, 60, 90 or 180 day period and (y) in the case of
Eurodollar Rate Loans, shall be either a one, two, three or
six month period; provided that:
(i) the initial Interest Period for any Loan shall
commence on the Funding Date of such Loan or on the date
of conversion or continuation of such Loan pursuant to
subsection 2.3.E, as the case may be;
(ii) in the case of immediately successive Interest
Periods, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day;
(iv) any Interest Period in respect of a Eurodollar Rate
Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (v) of this
subsection 2.3.C, end on the last Business Day of a
calendar month;
(v) no Interest Period with respect to any Revolving
Loan shall extend beyond the Term Loan Funding Date and
no Interest Period with respect to the Term Loan shall
extend beyond the Commitment Termination Date;
(vi) no Interest Period with respect to a particular Loan
shall extend beyond a date on which Company is required
to make a scheduled payment of principal of the Loans
unless the aggregate principal amount of CD Rate Loans
and Eurodollar Rate Loans with Interest Periods expiring
on such date, together with all Base Rate Loans, equals or
exceeds the principal amount required to be paid on the
Loans on such date; and
(vii) there shall be no more than twelve Interest Periods
relating to CD Rate Loans or Eurodollar Rate Loans or any
combination thereof outstanding at any time.
D. Interest Payments.
Subject to the provisions of subsection 2.3.F, interest shall
be payable on the Loans as follows:
(i) interest on each Base Rate Loan shall be payable
in arrears on and to each March 31, June 30, September 30
and December 31, commencing on the first such date to
occur after the Closing Date, and at final maturity; and
(ii) interest on each CD Rate Loan or Eurodollar Rate
Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any
prepayment of that Loan (to the extent accrued on the
amount being prepaid) and at maturity (including final
maturity).
(iii) interest in respect of the unpaid principal amount
of each Bid Rate Loan shall be payable from the date of
incurrence thereof to maturity (whether by acceleration or
otherwise) at the rate or rates per annum specified in the
Bid Rate Loan Quote accepted by Company in accordance
with subsection 2.1.E.(iv).
E. Conversion or Continuation.
Subject to the provisions of subsection 2.8, Company shall
have the option (i) to convert at any time all or any part of
its outstanding Loans (other than Swingline Loans and Bid
Rate Loans) equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount, from Loans bearing
interest at a rate determined by reference to one basis to
Loans bearing interest at a rate determined by reference to
an alternative basis or (ii) upon the expiration of any
Interest Period applicable to a CD Rate Loan or a
Eurodollar Rate Loan, to continue all or any portion of such
Loan equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount as a CD Rate Loan or
a Eurodollar Rate Loan, as the case may be, and the
succeeding Interest Period(s) of such continued Loan shall
commence on the date of expiration of the Interest Period
of the Loan to be continued; provided, however, that a CD
Rate Loan or a Eurodollar Rate Loan may only be
converted into a Loan bearing interest by reference to an
alternative basis on the expiration date of an Interest Period
applicable thereto; further provided that no outstanding
Loan may be continued as, or be converted into, a CD Rate
Loan or a Eurodollar Rate Loan when any Event of Default
or Potential Event of Default has occurred and is
continuing.
Company shall deliver a Notice of
Conversion/Continuation to Agent no later than 1:00 P.M.
(New York time) at least one Business Day in advance of
the proposed conversion/continuation date in the case of a
conversion to a Base Rate Loan or a CD Rate Loan and at
least three Business Days in advance of the proposed
conversion/continuation date in the case of a conversion to,
or continuation of, a Eurodollar Rate Loan. A Notice of
Conversion/Continuation shall certify (i) the proposed
conversion/continuation date (which shall be a Business
Day), (ii) the amount of the Loan to be
converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of conversion to or
continuation of a CD Rate Loan or a Eurodollar Rate Loan,
the requested Interest Period, and (v) in the case of
conversion to or continuation of a CD Rate Loan or a
Eurodollar Rate Loan, that no Potential Event of Default or
Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of
Conversion/Continuation, Company may give Agent
telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.3.E;
provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation
to Agent on or before the proposed conversion/continuation
date. If Company has failed to timely deliver a Notice of
Conversion/Continuation for conversion to, or continuation
of, a CD Rate Loan or a Eurodollar Rate Loan, Company
shall be deemed to have delivered to Agent a Notice of
Conversion/Continuation to convert such CD Rate Loan or
Eurodollar Rate Loan, as the case may be, to a Base Rate
Loan.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to
in this subsection 2.3.E that Agent believes in good faith to
have been given by a duly authorized officer or other
person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.3.E,
and upon conversion/continuation in accordance with this
Agreement pursuant to any such telephonic notice,
Company shall have effected a conversion or continuation,
as the case may be, hereunder.
Except as otherwise provided in subsection 2.8, a Notice of
Conversion/Contin- uation for conversion to, or
continuation of, a CD Rate Loan or a Eurodollar Rate Loan
(or telephonic notice in lieu thereof) shall be irrevocable on
and after the related Interest Rate Determination Date, and
Company shall be bound to convert or continue in
accordance therewith.
F. Post-Maturity Interest.
Any principal payments on the Loans not paid when due
and, to the extent permitted by applicable law, any interest
payments on the Loans not paid when due and any fees in
respect of Letters of Credit payable pursuant to subsection
2.5.B not paid when due, in any case whether at stated
maturity, by notice of prepayment, by acceleration or
otherwise, shall thereafter bear interest payable upon
demand at a rate that is 2% per annum in excess of the rate
of interest otherwise payable under this Agreement;
provided that any unpaid principal or, to the extent
permitted by applicable law, interest payments in respect of
the Bid Rate Loans shall bear interest at a rate that is 2%
per annum in excess of the rate of interest borne by Base
Rate Loans.
G. Computation of Interest.
Interest on the Loans and on the fees payable pursuant to
subsection 2.5 shall be computed on the basis of a 360-day
year and the actual number of days elapsed in the period
during which it accrues. In computing interest on any
Loan, the date of the making of the Loan or the first day of
an Interest Period, as the case may be, shall be included and
the date of payment or the expiration date of an Interest
Period, as the case may be, shall be excluded; provided that
if a Loan is repaid on the same day on which it is made, one
day s interest shall be paid on that Loan.
2.4. Letters of Credit
A. Letters of Credit.
In addition to Company requesting that Lenders make
Loans pursuant to subsection 2.1.A Company may request,
in accordance with the provisions of this sub- section 2.4,
that one or more Issuing Lenders issue Letters of Credit for
the account of Company; provided that Company shall not
request that any Lender issue any Letter of Credit if, after
giving effect to such issuance (i) the Total Utilization of
Revolving Loan Commitments would exceed the
Revolving Loan Commitments then in effect, as the amount
available under the Revolving Loan Commitments may be
limited from time to time pursuant to subsection 2.1.A, or
(ii) the Letter of Credit Usage would exceed $25,000,000.
In no event shall Company request that any Letter of Credit
be issued to the extent that Company would be able to
arrange for such letter of credit to be issued pursuant to the
Separate Letter of Credit Facility. The commitment of each
Issuing Lender to issue Letters of Credit pursuant to this
subsection 2.4.A is herein called its Letter of Credit
Commitment and such commitments of the Issuing
Lenders collectively are herein called the Letter of Credit
Commitments . The original amount of the Letter of Credit
Commitment is $25,000,000 and shall expire on the date
occurring three months prior to the Term Loan Funding
Date, after which date no Letter of Credit shall be issued
hereunder. In no event shall any Issuing Lender issue any
Letter of Credit having an expiration date later than the
earlier of (y) the Term Loan Funding Date and (z) the date
which is one year from the date of issuance of such Letter
of Credit; provided that this clause (z) shall not prevent
such Issuing Lender from agreeing that a Letter of Credit
will automatically be extended for a period not to exceed
one year unless such Issuing Lender elects not to extend for
such additional period. Each Letter of Credit issued
pursuant to this subsection 2.4 shall be in a minimum stated
amount of at least $25,000.
Any Existing Letters of Credit issued pursuant to the Old
Credit Agreement and outstanding as of the Closing Date
shall for all purposes of this Agreement be deemed to have
been issued under and pursuant to the terms of this
Agreement.
The issuance of any Letter of Credit in accordance with the
provisions of this subsection 2.4 shall be given effect in the
calculation of the Total Utilization of Revolving Loan
Commitments and shall require the satisfaction of each
condition set forth in subsection 3.1 and 3.3.
Immediately upon the issuance of each Letter of Credit,
Agent shall promptly notify each Lender of such issuance
and each Lender shall be deemed to, and hereby agrees to,
have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and drawings
thereunder in an amount equal to such Lender s Pro Rata
Share (determined by reference to the Revolving Loan
Commitments of the Lenders) of the maximum amount
which is or at any time may become available to be drawn
thereunder.
Each Letter of Credit may provide that the Issuing Lender
may (but shall not be required to) pay the beneficiary
thereof upon the occurrence of an Event of Default and the
acceleration of the maturity of the Loans or, if payment is
not then due to the beneficiary, provide for the deposit of
funds in an amount sufficient to secure payment to the
beneficiary of the Letter of Credit if conditions to such
payment are satisfied, which amount shall be returned to
the Issuing Lender for distribution to Lenders (or, if all
Letters of Credit have been cancelled and all Obligations
shall have been indefeasibly paid in full, to Company) if no
payment to the beneficiary has been made and the final date
available for drawings under the Letter of Credit has
passed. Each payment or deposit of funds by an Issuing
Lender as provided in this paragraph shall be treated for all
purposes of this Agreement as a drawing duly honored by
such Issuing Lender under the related Letter of Credit.
B. Notice of Issuance.
Whenever Company desires to cause the issuance of a
Letter of Credit, Company shall deliver to Agent a Notice
of Request for Letter of Credit no later than 11:00 A M.
(New York time) at least five Business Days in advance of
the proposed date of issuance or such shorter time as may
be agreed to by any Issuing Lender in any particular
instance. The notice shall specify (i) the proposed date of
issuance (which shall be a Business Day), (ii) the stated
amount of the Letter of Credit, (iii) the effective date of the
Letter of Credit, (iv) the expiration date of the Letter of
Credit, (v) the name and address of the beneficiary, and
shall include such other documents or materials as the
Issuing Lender may reasonably request, (vi) the Benefitted
subsidiary or Benefitted Subsidiaries, if any, with respect to
such Letter of Credit and the amount inuring to the benefit
of each such Benefitted Subsidiary, and (vii) the verbatim
text of the proposed Letter of Credit or the proposed terms
and conditions, including a precise description of any
documentation required to be complied with by the
beneficiary which, if complied with by the beneficiary prior
to the expiration date of the Letter of Credit, would require
the Issuing Lender to make payment under the Letter of
Credit; provided that the Issuing Lender, in its reasonable
discretion, may require changes in any such documentation;
provided further that the Issuing Lender shall not be
required to issue any Letter of Credit that by its terms
requires payment thereunder against a conforming draft on
the same business day (under the laws of the jurisdiction of
the Issuing Lender) that such draft is presented if such
presentation is made after 11:00 A.M. in the time zone of
the Issuing Lender on such business day.
As soon as practicable after delivery of such Notice of
Request for Letter of Credit, the Issuing Lender for such
Letter of Credit shall be determined as provided in this
subsection. Promptly upon the issuance or amendment of a
Letter of Credit, Agent shall notify each other Lender of the
issuance or amendment, the Issuing Lender therefor and the
amount of each such other Lender s respective participation
therein determined in accordance with subsection 2.4.D.
Upon receipt by Agent of a notice from Company pursuant
to this subsection 2.4.B requesting the issuance of a Letter
of Credit, in the event Bankers elects to issue such Letter of
Credit, in its sole discretion, Agent shall so notify
Company and Bankers shall be the Issuing Lender with
respect thereto. In the event that Bankers elects not to issue
such Letter of Credit, Bankers shall promptly so notify
Company and Company may request First Chicago to issue
such Letter of Credit. If First Chicago is requested to issue
such Letter of Credit, it shall promptly notify Company and
Agent whether or not, in its sole discretion, it has elected to
issue such Letter of Credit, and it shall be the Issuing
Lender with respect to such Letter of Credit in the event it
elects to issue such Letter of Credit. In the event that both
Bankers and First Chicago shall have declined to issue such
Letter of Credit, notwithstanding the prior election of each
of Bankers and First Chicago not to issue such Letter of
Credit, each of Bankers and First Chicago shall be
obligated to issue a Letter of Credit in a maximum
aggregate amount available for drawing equal to such
Lender s proportionate share (based upon the relative Pro
Rata Shares of such Lenders) of the Letter of Credit
requested by Company and each such Lender shall be an
Issuing Lender with respect to the Letter of Credit issued
by it. Each Issuing Lender which elects to issue a Letter of
Credit shall promptly give written notice to Agent and each
other Lender of the information required under clauses
(i)-(iv) of the first paragraph of this subsection 2.4.B
relating to such Letter of Credit.
C. Payment of Amounts Drawn Under Letters of Credit.
In determining whether to honor any request for drawing
under any Letter of Credit by the beneficiary thereof, the
Issuing Lender shall be responsible only to determine that
the documentation required to be delivered under such
Letter of Credit has been delivered and that it complies on
its face with the requirements of such Letter of Credit. In
the event the Issuing Lender has determined to honor such
a request for drawing, such Issuing Lender shall notify
Company and Agent on or before the date on which such
Issuing Lender intends to honor such drawing, and
Company shall reimburse such Issuing Lender on the day
on which such drawing is honored in an amount in same
day funds equal to the amount of such drawing; provided
that, anything contained in this Agreement to the contrary
notwithstanding (i) unless prior to the close of business of
the Business Day immediately preceding the date of such
drawing (a) Company shall have notified Agent and Issuing
Lender that it intends to reimburse such Issuing Lender for
the amount of such drawing with funds other than the
proceeds of Revolving Loans or (b) Company shall have
delivered a Notice of Borrowing requesting Revolving
Loans in an amount equal to the amount of such drawing,
Company shall be deemed to have delivered a Notice of
Borrowing to Agent requesting Lenders to make Revolving
Loans which are Base Rate Loans on the date on which
such drawing is honored in an amount equal to the amount
of such drawing to be used to reimburse such drawing, and
(ii) Lenders shall, on the date of such drawing, make
Revolving Loans in the amount of such drawing to be made
in accordance with subsection 2.1.A and 2.7.B, the
proceeds of which shall be applied directly by Agent to
reimburse such Issuing Lender for the amount of such
drawing; provided further that, if for any reason proceeds of
Revolving Loans are not received by such Issuing Lender
on such date in an amount equal to the amount of such
drawing, Company shall reimburse such Issuing Lender, on
the Business Day immediately following the date of such
drawing, in an amount in same day funds equal to the
excess of the amount of such drawing over the amount of
such Revolving Loans, if any, which are so received, plus
accrued interest on such amount at the rate set forth in
subsection 2.5.B.(ii).
D. Payment by Lenders.
If Company shall fail to reimburse an Issuing Lender, for
any reason, as provided in subsection 2.4.C (including,
without limitation, by means of the making of Revolving
Loans by Lenders pursuant to the terms of subsection
2.4.C) in an amount equal to the amount of any drawing
honored by such Issuing Lender under a Letter of Credit,
such Issuing Lender shall promptly notify each Lender of
the unreimbursed amount of such drawing and of such
Lender s respective participation therein based on such
Lender s Pro Rata Share. Each Lender shall make available
to Issuing Lender an amount equal to its respective
participation, in same day funds, at the office of such
Issuing Lender specified in such notice, not later than 1:00
P.M. (New York time) on the Business Day after the date
notified by such Issuing Lender. If any Lender fails to make
available to such Issuing Lender the amount of such Lender
s participation in such Letter of Credit as provided in this
subsection 2.4.D, such Issuing Lender shall be entitled to
recover such amount on demand from such Lender together
with interest at the customary rate set by Agent for the
correction of errors among banks for one Business Day and
thereafter at the Base Rate. Nothing in this subsection 2.4.D
shall be deemed to prejudice the right of any Lender to
recover from such Issuing Lender any amounts made
available by such Lender to such Issuing Lender pursuant
to this subsection 2.4.D if it is determined by a court of
competent jurisdiction that the payment with respect to
such Letter of Credit by such Issuing Lender in respect of
which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such Issuing
Lender. Each Issuing Lender shall distribute to each other
Lender which has paid all amounts payable by it under this
subsection 2.4.D with respect to any Letter of Credit, such
other Lender s Pro Rata Share of all payments received by
such Issuing Lender from Company in reimbursement of
drawings honored by such Issuing Lender under such Letter
of Credit when such payments are received.
E. Obligations Absolute.
The obligation of Company to reimburse each Issuing
Lender for drawings made under the Letters of Credit and
to repay any Revolving Loans made by Lenders pursuant to
and in accordance with subsection 2.4.C and the obligations
of Lenders under subsection 2.4.D shall be unconditional
and irrevocable and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances
including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or a Lender may have at any time
against a beneficiary or any transferee of any Letter of
Credit (or any persons or entities for whom any such
transferee may be acting), such Issuing Lender, any Lender
or any other Person or, in the case of a Lender, against
Company, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated
transaction (including any underlying transaction between
Company or one of its Subsidiaries and the beneficiary for
which the Letter of Credit was procured);
(iii) any draft, demand, 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) payment by such Issuing Lender under any Letter
of Credit against presentation of a demand, draft or
certificate or other document which does not comply with
the terms of such Letter of Credit;
(v) any adverse change in the condition (financial or
otherwise) of Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any Credit Party;
(vii) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential
Event of Default shall have occurred and be continuing.
F. Indemnification; Nature of Issuing Lenders Duties.
In addition to amounts payable as elsewhere provided in
this subsection 2.4, Company hereby agrees to protect,
indemnify, pay and save harmless each Issuing Lender
from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including
reasonable fees and disbursements of counsel) that such
Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit,
other than as a result of the gross negligence or willful
misconduct of such Issuing Lender or (ii) the failure of
such Issuing Lender to honor a drawing under any Letter of
Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or
omissions herein called Government Acts ). Each Lender,
proportionately to its Pro Rata Share, severally agrees to
indemnify such Issuing Lender to the extent such Issuing
Lender shall not have been reimbursed in accordance with
the terms of the Loan Documents for drawings under any
Letter of Credit, for and against any of the foregoing
claims, demands, liabilities, damages, losses, costs, charges
and expenses to which such Issuing Lender is entitled to
reimbursement under the Loan Documents.
As between Company and each Issuing Lender, Company
assumes all risks of the acts and omissions of, or misuse of
such Letters of Credit by, the beneficiary or beneficiaries of
each Letter of Credit. In furtherance and not in limitation
of the foregoing, such Issuing Lender shall not be
responsible (absent gross negligence or willful misconduct
of such Issuing Lender (as determined by a court of
competent jurisdiction)) for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with any
Notice of Request for Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) the failure of the beneficiary
of any such Letter of Credit to comply fully with conditions
required in order to draw upon such Letter of Credit; (iv)
errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in
the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of
any drawing under such Letter of Credit; and (viii) any
consequences arising from causes beyond the control of
such Issuing Lender, including, without limitation, any
Government Acts, and none of the above shall affect,
impair, or prevent the vesting of any of such Issuing Lender
s rights or powers hereunder.
G. Additional Payments.
If by reason of (a) any change in any applicable law,
regulation, rule, decree or regulatory requirement or any
change in the interpretation or application thereof by any
judicial or regulatory authority or (b) compliance by any
Issuing Lender or any Lender with any direction, request or
requirement (whether or not having the force of law) of any
governmental or monetary authority including, without
limitation, Regulation D:
(i) such Issuing Lender or any Lender shall be subject
to any tax, levy, charge or withholding of any nature or to
any variation thereof or to any penalty with respect to the
maintenance or fulfillment of its obligations under this
subsection 2.4, whether directly or by such being imposed
on or suffered by such Issuing Lender or any Lender;
(ii) any reserve, special deposit, premium, Federal
Deposit Insurance Corporation assessment, capital
adequacy or similar requirement is or shall be applicable,
imposed or modified in respect of any Letters of Credit
issued by such Issuing Lender or participations therein
purchased by any Lender; or
(iii) there shall be imposed on such Issuing Lender or
any Lender any other condition regarding this subsection
2.4, any Letter of Credit or any participation therein;
and the result of the foregoing is to directly or indirectly
increase the cost to such Issuing Lender or any Lender of
issuing, making or maintaining any Letter of Credit or of
purchasing or maintaining any participation therein, or to
directly or indirectly reduce the amount receivable in
respect thereof by such Issuing Lender or any Lender, then
and in any such case such Issuing Lender or such Lender
may, at any time within a reasonable period after the
additional cost is incurred or the amount received is
reduced, notify Company and Agent, and Company shall
pay on demand such amounts as such Issuing Lender or
such Lender may specify to be necessary to compensate
such Issuing Lender or such Lender for such additional cost
or reduced receipt, together with interest on such amount
from the date demanded until payment in full thereof at a
rate equal at all times to the Base Rate plus 2% per annum.
The determination by such Issuing Lender or any Lender,
as the case may be, of any amount due pursuant to this
subsection 2.4.G as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence
of manifest error, be final and conclusive and binding on all
of the parties hereto.
2.5. Fees
A. Commitment Fees.
Company agrees to pay to Agent for distribution to each
Lender in proportion to such Lender s Pro Rata Share of the
Revolving Loan Commitments, commitment fees for the
period from and including the Closing Date, to and
excluding the Term Loan Funding Date, equal to the
average of the daily excess of the Loan Commitments over
the sum of the aggregate principal amount of Revolving
Loans and Swingline Loans outstanding and the Letter of
Credit Usage, multiplied by the Applicable Commitment
Fee Percentage, such commitment fees to be calculated on
the basis of a 360-day year and the actual number of days
elapsed and to be payable quarterly in arrears each March
31, June 30, September 30 and December 31 commencing
on the first such date to occur after the Closing Date, and
on the Commitment Termination Date.
B. Letter of Credit Fees.
Company agrees to pay the following amounts to each
Issuing Lender with respect to each Letter of Credit issued
by such Issuing Lender:
(i) a commission equal to the Applicable Letter of
Credit Fee Percentage multiplied by the maximum amount
available from time to time to be drawn under any Letter of
Credit, payable quarterly in arrears on each March 31, June
30, September 30 and December 31 and upon expiration of
such Letter of Credit and calculated on the basis of a
360-day year and the actual number of days elapsed to be
applied as follows: .1875% of the maximum amount
available under each Letter of Credit shall be distributed to
the Issuing Lender thereof, and the remainder of such
commission shall be distributed to each Lender (including
the Issuing Lenders) in proportion to such Lender s Pro
Rata Share of the Revolving Loan Commitments;
(ii) with respect to drawings made under any Letter of
Credit, interest, payable on demand, on the amount paid by
such Issuing Lender in respect of each such drawing from
the date of the drawing through the date such amount is
reimbursed by Company (including any such
reimbursement derived from the proceeds of Revolving
Loans made pursuant to subsection 2.4.C) at a rate that is at
all times equal to 2% per annum in excess of the rate of
interest otherwise payable under this Agreement for Base
Rate Loans; and
(iii) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made
thereunder (without duplication of the fees payable under
clause (a) above), documentary and processing charges in
accordance with such Issuing Lender s standard schedule
for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be, or as
otherwise agreed by such Issuing Lender.
Promptly upon receipt by such Issuing Lender of any
amount described in clauses (ii) or (iii) of this subsection
2.5.B with respect to a Letter of Credit, such Issuing Lender
shall distribute to each Lender which has purchased a
participation in such Letter of Credit pursuant to subsection
2.4.A, its Pro Rata Share of such amount.
C. Facility Fees.
Company agrees to pay to Agent, for distribution to each
Lender in proportion to such Lender s Pro Rata Share of (i)
the Revolving Loan Commitments, facility fees for the
period from and including the Closing Date to and
excluding the Term Loan Funding Date, equal to the daily
amount of the Revolving Loan Commitments and (ii) the
Term Loans, facility fees for the period from the Term
Loan Funding Date to but excluding the Commitment
Termination Date, equal to the aggregate principal amount
of the Term Loans outstanding on each day, in either case
multiplied by the Applicable Facility Fee Percentage, such
facility fee to be calculated on the basis of 360-day year
and the actual number of days elapsed and to be payable
quarterly in advance on the Closing Date and on each
March 31, June 30, September 30 and December 31,
commencing on the first such date to occur after the
Closing Date, and on the Commitment Termination Date.
D. Other Fees.
Company agrees to pay to Agent such fees in the amounts
and at the times separately agreed upon between Company
and Agent. Company agrees to pay to Continental Bank
upon its appointment as Bid Rate Loan Agent and Trustee a
fee for services provided by Bid Rate Loan Agent and
Trustee hereunder in the amounts and at the times
separately agreed upon between Company and Continental
Bank.
E. Determination of Applicable Fee Percentage.
On each Pricing Level Calculation Date, commencing with
the first such date to occur after the end of the fiscal quarter
of Company immediately succeeding the Closing Date, the
Pricing Level in effect for the Pricing Period commencing
on such Pricing Level Calculation Date and continuing for
the term of the Pricing Period that begins on such Pricing
Level Calculation Date shall be the applicable Pricing
Level that is determined by reference to the definitions of
Pricing Level I, Pricing Level II and Pricing Level III,
subject to the proviso to the definition of Pricing Level.
Notwithstanding the fact that the actual calculation of the
applicable Pricing Level for a Pricing Period to commence
during the first fiscal quarter of Company s fiscal year may
be performed on a date subsequent to the Pricing Level
Calculation Date occurring in such quarter, such Pricing
Period shall commence on such Pricing Level Calculation
Date. Upon the actual calculation of the applicable Pricing
Level for the Pricing Period commencing during the first
fiscal quarter of Company s fiscal year, adjustments to the
amount of accrued fees shall be made to reflect retroactive
application of the applicable Pricing Level to the first day
of such Pricing Period.
F. HLT Classification Period and HLT Fees.
Agent shall notify Company and Lenders of the
commencement of any HLT Classification Period, and
Company shall pay to Agent for distribution to Lenders in
accordance with their Pro Rata Shares, a fee equal to
1-1/4% of (i) during the Revolving Period, the Revolving
Loan Commitments as in effect on the later of the Closing
Date and the date occurring ninety days prior to the HLT
Classification Date for which such notice was given and (ii)
for the Term Period, the Term Loans outstanding on the
HLT Classification Date for which such notice was given,
which fee shall be due and payable in five equal
installments commencing on the date that is 180 days after
the relevant HLT Classification Date and on each date that
occurs each three months thereafter until paid in full;
provided that no such fee shall be payable at any time that
the Commitments have been terminated and the
Obligations paid in full or if no HLT Classification Period
is in effect. Nothing herein contained shall be construed to
impose on Agent any duty to determine that an HLT
Classification Period has commenced.
2.6. Prepayments and Payments: Reductions in
Commitments
A. Voluntary Prepayments.
Company may, upon not less than one Business Day s
prior written or telephonic notice confirmed in writing to
Agent (which notice Agent will promptly transmit by
telegram, telex or telephone to each Lender), at any time
and from time to time prepay any Loans in whole or in part
in an aggregate minimum amount of $1,000,000 and
integral multiples of $1,000,000 in excess of that amount
(or, with respect to Swingline Loans only, in an aggregate
minimum amount of $100,000); provided, however, that a
Eurodollar Rate Loan or a CD Rate Loan may only be
prepaid on the expiration of the Interest Period applicable
thereto unless Company tenders to Agent at the time of
such prepayment the payment of all amounts required to be
paid by subsection 2.8.B. Company may not prepay any
Bid Rate Loan without the consent of the applicable
Lender. Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in
such notice shall become due and payable on the
prepayment date. During the Revolving Period, Company
may elect to apply such voluntary prepayment to the
outstanding Loans without such prepayment effecting a
reduction of the Revolving Loan Commitments. In the
event that Company does not specify the Loan to which a
prepayment is to be applied, such prepayment shall be
applied to the full extent thereof pro rata to outstanding
Swingline Loans and Revolving Loans that are Base Rate
Loans, then to Eurodollar Rate Loans or CD Rate Loans, as
determined by Agent, and then to cash collateralize
outstanding Letters of Credit. During the Term Period,
such voluntary prepayment shall be applied to prepay
outstanding Term Loans to the full extent thereof, first to
the next two immediately succeeding Scheduled Term
Loans Principal Payments in their respective order of
maturity and then pro rata to the remaining Scheduled Term
Loans Principal Payments.
B. Mandatory Prepayments and Reduction of Revolving
Loan Commitments.
(i) Prepayment Events.
(a) Prepayments and Reductions from Asset Sales.
No later than the second Business Day following the date
of receipt by Company or any of its Subsidiaries of Cash
Proceeds of any Asset Sale (including Cash Proceeds in
respect of principal payments received on promissory notes
received in connection with Asset Sales occurring on or
after the date hereof), Company shall prepay the Loans in
an amount equal to the Net Cash Proceeds of such Asset
Sale that constitute Aggregate Excess Proceeds.
Concurrently with the making of any prepayment or
reduction pursuant to this subsection 2.6.B.(i)(a), Company
shall deliver an Officers Certificate demonstrating the
derivation of Net Cash Proceeds from the gross sales price
of the correlative Asset Sale. In the event that Company
shall, at any time after receipt of Cash Proceeds of any
Asset Sale requiring a prepayment or commitment
reduction pursuant to this subsection 2.6.B.(i)(a), determine
that the prepayments and/or Commitment reductions
previously made in respect of such Asset Sale were in an
aggregate amount less than required by the terms of this
subsection 2.6.B.(i)(a), Company shall promptly make an
additional prepayment of the Loans and reduce the
Revolving Loan Commitments and cash collateralize
outstanding Letters of Credit) in an amount equal to the
amount of any such deficit, and Company shall
concurrently therewith deliver an Officers Certificate
demonstrating the derivation of the additional Net Cash
Proceeds resulting in such deficit.
(b) Prepayments and Reductions Due to Insurance
Proceeds. No later than the fifth Business Day following
the date of receipt by Company or any of its Subsidiaries of
any Insurance Proceeds or Condemnation Proceeds that
constitute Aggregate Excess Proceeds, Company shall
prepay the Loans in an amount equal to the aggregate
amount of such Insurance Proceeds or Condemnation
Proceeds that have not then been applied to reimburse
Company or its Subsidiaries for investments previously
made in corresponding Productive Assets, in the manner
specified in subsection 2.6.B.(ii)(a).
(c) Prepayments Due to Reductions of Revolving
Loan Commitments. Company shall make prepayments of
Revolving Loans and Swingline Loans so that the Total
Utilization of Revolving Loan Commitments shall not at
any time exceed the Revolving Loan Commitments then in
effect.
(ii) Application of Certain Prepayments and Reductions
of Revolving Loan Commitments.
(a) Application by Type of Loans and Order of
Maturity. Amounts prepaid pursuant to subsection
2.6.B.(i)(a)-2.6.B.(i)(b) shall be applied as follows: during
the Revolving Period, any such prepayment shall be applied
first, to the full extent thereof to outstanding Revolving
Loans that are Base Rate Loans, second to the full extent
thereof to Eurodollar Rate Loans or CD Rate Loans, third
to the full extent thereof to Swingline Loans, fourth to the
full extent thereof to prepay or cash collateralize Bid Rate
Loans (at the election of the Lenders who have made such
Bid Rate Loans), and fifth to the full extent thereof to cash
collateralize outstanding Letters of Credit; and during the
Term Period, any such prepayment shall be applied to
prepay Term Loans to the full extent thereof, first to the
next two immediately succeeding Scheduled Term Loans
Principal Payments in their respective order of maturity and
then pro rata to the remaining Scheduled Term Loans
Principal Payments; provided that, following an
acceleration of the Obligations pursuant to Section 7, and
until such acceleration may have been rescinded or
annulled, all such prepayments shall be applied pro rata to
the outstanding Loans and then to cash collateralize Letters
of Credit.
(b) Application to Principal and Interest of Loans.
All prepayments shall include payment of accrued interest
on the principal amount so prepaid and shall be applied to
the payment of interest before application to principal. Any
prepayment shall be applied first to Base Rate Loans to the
full extent thereof before application to CD Rate Loans or
Eurodollar Rate Loans.
C. Manner and Time of Payment.
All payments by Company of principal, interest,
reimbursements, fees and other Obligations hereunder and
under the Notes shall be made without defense, set-off or
counterclaim and in same day funds and delivered to Agent
not later than 2:00 p.m. (New York time) on the date due at
its office located at One Bankers Trust Plaza, New York,
New York for the account of Lenders; funds received by
Agent after that time on such due date shall be deemed to
have been paid on the next succeeding Business Day.
Company hereby authorizes Agent to charge its accounts
with Agent in order to cause timely payment to be made to
Agent of all principal, interest, reimbursements, fees and
expenses due hereunder (subject to sufficient funds being
available in its respective accounts for that purpose).
D. Apportionment of Payments.
Aggregate principal and interest payments shall be
apportioned among all out- standing Loans (other than
Swingline Loans and Bid Rate Loans) and fees to which
such payments relate, in each case proportionately to
Lenders respective Pro Rata Shares. Reimbursement
payments in respect of Letters of Credit shall be paid over
by Agent to the Issuing Lender who issued the respective
Letter of Credit. Agent shall promptly distribute to each
Lender at its primary address set forth below its name on
the appropriate signature page hereof or such other address
as such Lender may request, its Pro Rata Share of all such
payments received by Agent and the commitment fees and
compensation amounts of such Lender when received by
Agent pursuant to subsection 2.5. Notwithstanding the
foregoing provisions of this subsection 2.6.D if, pursuant to
the provisions of subsection 2.8, any Notice of Borrowing
or Notice of Conversion/Continuation is withdrawn as to
any Affected Lender or if any Affected Lender makes Base
Rate Loans in lieu of its Pro Rata Share of Eurodollar Rate
Loans, Agent shall give effect thereto in apportioning
payments received thereafter.
E. Payments on Business Days.
Whenever any payment to be made hereunder or under
the Notes shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall
be included in the computation of the payment of interest
hereunder or under the Notes or of the commitment and
other fees hereunder, as the case may be.
F.Notation of Payment.
Each Lender agrees that before disposing of any Loan
recorded for such Lender s benefit in the Register, or any
part thereof (other than by granting participations therein),
such Lender will make a notation in such Lender s internal
register of all Loans made in respect thereof and principal
payments previously made thereon and of the date to which
interest thereon has been paid, and will notify Company
and Agent of the name and address of the transferee of such
Loan or portion thereof; provided that the failure to make
(or any error in the making of) a notation of any Loan or to
notify Company and Agent of the name and address of such
transferee shall not limit or otherwise affect the obligation
of Company hereunder with respect to any Loan and
payments of principal or interest on any such Loan.
G. Voluntary Reductions of Revolving Loan
Commitments.
Company shall have the right, at any time and from time to
time, to terminate in whole or permanently reduce in part,
without premium or penalty, the Revolving Loan
Commitments in an amount up to the amount by which the
Revolving Loan Commitments exceed the Total Utilization
of Revolving Loan Commitments at the time of such
proposed termination or reduction.
Company shall give not less than one Business Day s prior
written notice to Agent designating the date (which shall be
a Business Day) of such termination or reduction and the
amount of any partial reduction. Promptly after receipt of a
notice of such termination or partial reduction, Agent shall
notify each Lender of the proposed termination or
reduction. Such termination or reduction of the Revolving
Loan Commitments shall be effective on the date specified
in Company s notice and shall reduce the Revolving Loan
Commitment of each Lender proportionately to its
applicable Pro Rata Share. Any such partial reduction of
the Revolving Loan Commitments shall be in an aggregate
minimum amount of $1,000,000, and integral multiples of
$500,000 in excess of that amount.
H. Mandatory Reductions of Revolving Loan
Commitments.
The Revolving Loan Commitments shall be permanently
reduced on each date that Company is required to make
mandatory prepayments of Loans (or would be required to
prepay Loans if Loans were outstanding) pursuant to
subsection 2.6.B in the full amount of the Net Cash
Proceeds, Insurance Proceeds or Condemnation Proceeds
received by Company or any of its Subsidiaries in the
amount that would be required to be applied to repay Loans
if Loans in at least such amount were outstanding. To the
extent that, as of any date of determination, Letter of Credit
Usage exceeds the Revolving Loan Commitments then in
effect, Company shall use its best efforts to obtain such
substitute letters of credit and surrender to the Issuing
Lenders thereof for cancellation the Letters of Credit being
replaced, as may be necessary to reduce Letter of Credit
Usage to an amount not in excess of the Revolving Loan
Commitments. In the event that Company is unable to
arrange for such substitution and cancellation of Letters of
Credit on or before a date of determination, Company shall
cash collateralize the Letters of Credit in an amount not less
than the difference between the Revolving Loan
Commitments and the Letter of Credit Usage.
2.7. Use of Proceeds
A. Term Loans.
The proceeds of the Term Loans shall be applied by
Company to repay in full the principal amount of all Loans
made pursuant to the Revolving Loan Commitments
outstanding on the Term Loan Funding Date.
B. Revolving Loans Swingline Loans and Bid Rate
Loans.
The proceeds of the Revolving Loans made on the Closing
Date shall be used to repay the obligations of Company and
its Subsidiaries arising under the Old Credit Agreement.
The proceeds of the Revolving Loans, the Swingline Loans
and the Bid Rate Loans shall also be used, and Company
shall cause such proceeds to be used, only for Company s
general corporate purposes, which may include the
repayment of the Swingline Loans pursuant to subsection
2.1.B, the payment of the Bid Rate Loans, the
reimbursement to any Issuing Lender of any amounts
drawn under any Letters of Credit issued by such Issuing
Lender as provided in subsection 2.4.D the payment of
fees, costs and expenses payable by Company pursuant to
the Old Credit Agreement and this Agreement, the making
of intercompany loans to Company s Subsidiaries for their
own general corporate purposes and the repurchase from
the holders thereof of any Commercial Paper.
C. Letters of Credit.
Letters of Credit shall be issued solely for the purposes
specified in the definition of Letters of Credit. D. Margin
Regulations.
No portion of the proceeds of any borrowing under this
Agreement shall be used by Company or any of its
Subsidiaries in any manner that might cause the borrowing
or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T, or Regulation X of the Board
of Governors of the Federal Reserve System or any other
regulation of the Board or to violate the Exchange Act, in
each case as in effect on the date or dates of such borrowing
and such use of proceeds.
E. Benefits to Subsidiaries.
In consideration of the issuance of the Subsidiary
Guaranties, Company agrees to make certain of the benefits
of the Revolving Loans, Bid Rate Loans, Swingline Loans
and Letters of Credit available to the Subsidiaries of
Company executing and delivering such Subsidiary
Guaranties.
2.8. Special Provisions Governing CD Rate Loans and
Eurodollar Rate Loans
Notwithstanding any other provision of this Agreement to
the contrary, the following provisions shall govern with
respect to CD Rate Loans and Eurodollar Rate Loans as to
the matters covered:
A. Increased Costs, Illegality, etc.
(i) In the event that any Lender, including Agent, shall
have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all
parties hereto but, with respect to clauses (a) and (b)(y)
below, shall be made only after consultation with Company
and Agent):
(a) on any date for determining the Adjusted
Eurodollar Rate for any Interest Period that, by reason of
any changes arising on or 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 Adjusted
Eurodollar Rate so that the determined rate will not
adequately and fairly reflect the costs of the Lender making
the relevant Eurodollar Rate Loan; or
(b) at any time, that such Lender shall incur
increased costs or reductions in the amounts or in the rate
of return received or receivable hereunder with respect to
any Loan bearing interest by reference to the Adjusted
Eurodollar Rate because of (x) any change since the date of
this Agreement in any applicable law, governmental rule,
regulation, guideline or order whether or not having the
force of law (or in the interpretation or administration
thereof and including the introduction of any new law or
governmental rule, regulation, guideline or order) (such as,
for example, but not limited to, 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 Adjusted Eurodollar Rate); (y) any
other circumstances affecting such Lender, the interbank
Eurodollar market or the position of such Lender in such
market and/or (z) the maintenance of reserves not reflected
in the determination of the Adjusted Eurodollar Rate, as the
case may be; or
(c) at any time, that the making or continuance of
any Loan has become unlawful as a result of compliance by
such Lender in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any
such governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply
therewith would not be unlawful), or has become
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 Lender on such date may
give notice (by telephone, confirmed in writing) to
Company and to Agent of such determina- tion (which
notice Agent shall promptly transmit to each of the other
Lenders). Thereafter (x) in the case of clause (a) above,
Eurodollar Rate Loans shall no longer be available until
such time as Agent notifies Company and Lenders that the
circumstances giving rise to such notice by Agent no longer
exist, and any Notice of Borrowing or Notice of
Conversion/Continuation pursuant to subsections 2.1.B or
2.3.E respectively, given by Company with respect to such
Loans which have not yet been incurred shall be deemed
rescinded by Company, (y) in the case of clause (b) above,
Company shall pay to such Lender, upon written demand
therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating,
interest or otherwise as such Lender shall determine) as
shall be required to compensate such Lender for such
increased costs or reductions in amounts receivable
hereunder (a written notice as to the additional amounts
owed to such Lender, showing the basis for the calculation
thereof, submitted to Company by such Lender shall,
absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (c)
above, Company shall take one of the actions specified in
subsection 2.8.A.(ii) as promptly as possible and, in any
event, within the time period required by law.
(ii) At any time that any Loan is affected by the
circumstances described in subsection 2.8.A (an Affected
Loan ), Company may (and in the case of an Affected Loan
pursuant to subsection 2.8.A.(i)(c) shall) either (a) if the
Affected Loan is then being made pursuant to a Notice of
Borrowing or being converted or continued pursuant to a
Notice of Conversion/Continuation, cancel said Notice of
Borrowing or Notice of Conversion/Continuation, as the
case may be, by giving Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that
Company was notified by a Lender pursuant to subsection
2.8.A, or (b) if the Affected Loan is then outstanding, upon
at least three Business Days notice to Agent, require the
Lender (the Affected Lender ) who has made such
Affected Loan to convert each such Affected Loan into a
Base Rate Loan; provided that if more than one Lender is
affected at any time, then all Affected Lenders must be
treated in the same manner pursuant to this subsection
2.8.A.(ii).
B. Compensation.
Company shall compensate each Lender, upon written
request to Company by such Lender (which request shall
set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by such Lender to
lenders of funds borrowed by it to make or carry its CD
Rate Loans or Eurodollar Rate Loans and any loss, expense
or liability sustained by such Lender in connection with the
liquidation or re-employment of such funds) such Lender
may sustain: (i) if for any reason (other than a default by
such Lender) a borrowing of any CD Rate Loans or
Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation (whether or not withdrawn by
Company or deemed withdrawn pursuant to subsections
2.8.A) or a telephonic request for borrowing or
conversion/continuation or a successive Interest Period
does not commence after notice therefor is given pursuant
to subsection 2.3.E, (ii) if any repayment or conversion of
any of its CD Rate Loans or Eurodollar Rate Loans occurs
on a date that is not the last day of an Interest Period
applicable to such Loan, (iii) if any repayment of any of its
CD Rate Loans or Eurodollar Rate Loans is not made on
any date specified in a notice of repayment given by
Company, or (iv) as a consequence of (y) any other default
by Company to repay its CD Rate Loans or Eurodollar Rate
Loans when required by the terms of this Agreement or (z)
an election made pursuant to subsection 2.8.A.
C. Eurodollar Rate Taxes and Tax Withholding.
Promptly upon notice from any Lender to Company,
Company will pay, prior to the date on which penalties
attach thereto, all present and future income, stamp and
other taxes, levies, or costs and charges whatsoever
imposed, assessed, levied or collected on or in respect of a
Loan solely as a result of the interest rate being determined
by reference to the Adjusted Eurodollar Rate and/or the
provisions of this Agreement relating to the Adjusted
Eurodollar Rate and/or the recording, registration,
notarization or other formalization of any thereof and/or
any payments of principal, interest or other amounts made
on or in respect of a Loan when the interest rate is
determined by reference to the Adjusted Eurodollar Rate
(all such taxes, levies, costs and charges being herein
collectively called Eurodollar Rate Taxes ), without
duplication of such amounts reflected in the calculation of
the Adjusted Eurodollar Rate performed in accordance with
the definition thereof contained herein; provided that
Eurodollar Rate Taxes shall not include: taxes imposed on
or measured by the overall net income of such Lender
(whether gross or net income) by the United States of
America or any political subdivision or taxing authority
thereof or therein, or taxes on or measured by the overall
income of any foreign branch, operation or subsidiary of
such Lender (whether gross or net income) by any foreign
country or subdivision thereof in which such branch,
operation or subsidiary is doing business or any
withholding taxes imposed by the United States of America
with respect to the payment of interest. Company shall also
pay such additional amounts equal to increases in taxes
payable by such Lender described in the foregoing proviso
which increases are attributable to payments made by
Company described in the immediately preceding sentence
or this sentence. Promptly after the date on which payment
of any such Eurodollar Rate Tax is due pursuant to
applicable law, Company will, at the request of such
Lender, furnish to such Lender evidence, in form and
substance satisfactory to such Lender, that Company have
met their obligations under this subsection 2.8.C.
Company will indemnify each Lender against, and
reimburse each Lender on demand for, any Eurodollar Rate
Taxes, as determined by such Lender in its good faith
discretion. Such Lender shall provide Company with
appropriate receipts for any payments or reimbursements
made by Company pursuant to this clause (ii) of subsection
2.8.C. Notwithstanding the foregoing, Company shall be
entitled, to the extent it is required to do so by law, to
deduct or withhold (and shall not be required to make
payments as otherwise required in this subsection on
account of such deductions or withholding) income or other
similar taxes imposed by the United States of America from
interest, fees or other amounts payable hereunder for the
account of any Lender other than a Lender (i) who is a
domestic corporation (as such term is defined in Section
7701 of the Internal Revenue Code of 1986, as amended)
for federal income tax purposes or (ii) who has the
Prescribed Forms on file with Company for the applicable
year to the extent deduction or withholding of such taxes is
not required as a result of the filing of such Prescribed
Forms; provided that if Company shall so deduct or
withhold any such taxes, it shall provide a statement to
Agent and such Lender setting forth the amount of such
taxes so deducted or withheld, the applicable rate and any
other information or documentation which such Lender
may reasonably request for assisting such Lender to obtain
any allowable credits or deductions for the taxes so
deducted or withheld in the jurisdiction or jurisdictions in
which such Lender is subject to tax. Company agrees to
indemnify any Lender referred to in the previous sentence
who has the Prescribed Forms on file with Company (but in
respect of which, despite the filing of such Prescribed
Forms, deduction or withholding of taxes is required) for
such taxes referred to above other than taxes of the type
excluded from the definition of Eurodollar Rate Taxes in
such amounts as may be necessary so that such Lender
receives payment of all amounts due hereunder as provided
for herein, after giving effect to the tax effect of all such
deductions and withholding.
D. Booking of Eurodollar Rate Loans.
Any Lender may make, carry or, provided that such
transfer will not result in increased cost to Company under
this subsection 2.8, transfer Eurodollar Rate Loans at, to, or
for the account of, any of its branch offices or the office of
an Affiliate of such Lender; provided that each Lender
agrees that upon the occurrence of any event giving rise to
the operation of subsections 2.8.A.(i)(b) or 2.8.A.(i)(c) with
respect to such Lender, such Lender will if so requested by
Company use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to designate a
different lending office for any Affected Loans with the
objective of avoiding the consequence of the event giving
rise to the operation of such subsections, but only if, in the
sole judgment of such Lender, such designation would not
be otherwise disadvantageous to such Lender. Nothing in
this proviso shall affect or postpone any of the obligations
of Company or the rights of any Lender pursuant to
subsections 2.8.A or 2.8.C, and Company hereby agrees to
pay all expenses incurred by any Lender in designating and
using another lending office pursuant to this proviso.
E. Assumptions Concerning Funding of CD Rate Loans
and Eurodollar Rate Loans.
Calculation of all amounts payable to a Lender under this
subsection 2.8 shall be made as though such Lender had
actually funded its relevant CD Rate Loan through the
issuance of a certificate of deposit by one of its domestic
offices bearing interest by reference to the Adjusted
Certificate of Deposit Rate in an amount equal to the
amount of the CD Rate Loan and having a maturity
comparable to the relevant Interest Period or had funded its
relevant Eurodollar Rate Loan through the purchase of a
Eurodollar deposit bearing interest by reference to the
Adjusted Eurodollar Rate in an amount equal to the amount
of the Eurodollar Rate Loan and having a maturity
comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office
of such Lender to a domestic office of such Lender in the
United States of America, as the case may be; provided,
however, that each Lender may fund each of its CD Rate
Loans and Eurodollar Rate Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection 2.8.
F. CD Rate Loans and Eurodollar Rate Loans After
Default.
After the occurrence of and during the continuance of a
Potential Event of Default or Event of Default, Company
may not elect to have a Loan be made or maintained as, or
converted to, a CD Rate Loan or a Eurodollar Rate Loan
after the expiration of any Interest Period then in effect for
such Loan.
G. Replacement Lender
In the event Company becomes obligated to pay any
material additional amounts to any Lender pursuant to
subsections 2.8.A.(i)(b), 2.8.C or 2.9, or it becomes illegal
for any Lender to continue to fund or to make Eurodollar
Loans pursuant to subsection 2.8.A.(i)(c), as a result of any
event or condition described in any such subsection, then,
unless such Lender has theretofore taken steps to remove or
cure, and has removed or cured, the conditions creating the
cause for such obligation to pay such additional amounts or
for such illegality, Company may designate a substitute
lender acceptable to Agent (such lender herein called a
Replacement Lender ) to purchase such Lender s rights and
obligations hereunder, without recourse to or warranty by,
or expense to, such Lender, for a purchase price equal to
the outstanding principal amounts payable to such Lender
hereunder, plus any accrued and unpaid interest on such
amount and accrued and unpaid fees in respect of Lender s
Commitment. Upon such purchase by Replacement Lender
and payment of all other amounts owing to the Lender
being replaced hereunder, such Lender shall no longer be a
party hereto or have any rights or obligations hereunder,
and the Replacement Lender shall succeed to the rights and
obligations of such Lender hereunder.
2.9. Capital Adequacy Adjustment
If any Lender shall have determined that the adoption or
effectiveness, after the date hereof, of any applicable law,
rule or regulation (or any provision thereof), regarding
capital adequacy, or any change therein or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office)
with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender
s capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such
Lender could have achieved but for such adoption,
effectiveness, change or compliance (taking into
consideration such Lender s policies with respect to capital
adequacy) by an amount deemed by such Lender to be
material, then from time to time, within fifteen days after
demand (given in writing or by telephone and confirmed in
writing) by such Lender (with a copy to Agent), Company
shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such
reduction. Each Lender, upon determining in good faith
that any additional amounts will be payable pursuant to this
subsection 2.9, will give prompt written notice thereof to
Company, which notice shall set forth the basis of the
calculation of such additional amounts, although the failure
to give any such notice shall not release or diminish any
obligation of Company to pay additional amounts under
this subsection 2.9.
2.10. Pledge and Guaranties
To secure the full performance of the Obligations,
Company shall grant to Agent on behalf of Lenders a duly
perfected, first priority Lien on all shares of capital stock
now owned or hereafter acquired by Company in Easco (to
be held until Easco delivers to Agent its duly executed
Subsidiary Guaranty in accordance with subsection 5.7,
whereupon the pledge will be terminated) and each
Guarantor shall have executed and delivered to Agent on
behalf of Lenders, its Subsidiary Guaranty.
2.11. Additional Lenders
By due execution and delivery of a written instrument
acceptable to and signed by Company, Agent and the
financial institution party thereto, such financial institution
( Additional Lender ) may become a party to this
Agreement and become a Lender for all purposes hereof
and become entitled to all benefits and rights and subject to
all duties and obligations hereunder and the other Loan
Documents to the same extent as if it had executed copies
hereof; provided that the amount of the Commitments of
such Additional Lender shall be $15,000,000. Agent shall
give written notice of such Additional Lender becoming a
Lender hereunder to all other parties hereto reasonably
promptly after such written instrument becomes effective
and shall enclose therewith a conformed copy of such
written instrument, which shall set forth notice address
information of the type appearing on the signature pages
hereof. Upon the addition of the Additional Lender and the
increase of the aggregate amount of the Commitments, the
Pro Rata Share of each Lender shall adjust accordingly.
SECTION 3.
CONDITIONS TO LOANS AND LETTERS OF
CREDIT
The effectiveness of this Agreement and the obligations of
Lenders to make Loans and of Issuing Lenders to issue
Letters of Credit are subject to the satisfaction of all of the
following conditions.
3.1. Conditions to Effectiveness of this Agreement
The effectiveness of this Agreement is subject to prior or
concurrent satisfaction of the following conditions:
A. Company Documents.
On or before the Closing Date, Company shall deliver or
cause to be delivered to Lenders (or to Agent for Lenders
with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) the following,
each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of its Certificate of Incorporation,
together with a good standing certificate from the state of
its incorporation and each other state in which it is qualified
as a foreign corporation to do business, in each case to be
dated a recent date prior to the Closing Date and to be
supplemented by a bring-down telegram from the
respective Secretary of State;
(ii) Copies of its bylaws, certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of its board of directors approving
and authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents, in form and
substance satisfactory to Agent and its counsel, certified as
of the Closing Date by its corporate secretary or an
assistant secretary as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of its
officers executing this Agreement and the other Loan
Documents to which it is a party;
(v) Executed originals of this Agreement and the other
Loan Documents to which it is a party; and
(vi) Such other documents as Agent may reasonably
request.
B. Delivery of Subsidiary Documents.
On or before the Closing Date, each of the Material
Subsidiaries shall have delivered to Lenders (or to Agent
for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) each,
unless otherwise noted, dated as of the Closing Date:
(i) Certified copies of its Certificate of Incorporation,
together with a good standing certificate from the Secretary
of State of the state of its incorporation and each state in
which it has material operations in each case dated a recent
date prior to the Closing Date;
(ii) Copies of its bylaws, certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of its board of directors approving
and authorizing the execution, delivery and performance of
each Loan Document to which it is a party, in form and
substance satisfactory to Agent and its counsel, each
certified as of the Closing Date by its corporate secretary or
an assistant sec- retary;
(iv) Signature and incumbency certificates of its
officers executing each Loan Document to which it is a
party;
(v) Executed copies of each Loan Document to which
it is a party; and
(vi) Such other documents as Agent may reasonably
request.
C. Delivery of Compliance Certificate.
Company shall have delivered to Agent a Compliance
Certificate as at the most recently ended fiscal quarter of
Company, substantially in the form of Exhibit VI annexed
hereto, dated as of the Closing Date in form and substance
satisfactory to Agent.
D. Fees.
Company shall have paid to Agent for distribution (as
appropriate) to Agent and Lenders the fees payable on the
Closing Date, together with all fees and expenses payable
pursuant to subsection 9.2.
E. Opinions of Credit Parties Counsel.
Lenders shall have received originally executed copies of
one or more favorable written opinions of Skadden, Arps,
Slate, Meagher & Flom, counsel for the Credit Parties, in
form and substance reasonably satisfactory to Agent and its
counsel, dated as of the Closing Date, and setting forth
substantially the matters in the opinions designated in
Exhibit VIII annexed hereto, and as to such other matters as
Agent or Requisite Lenders may reasonably request.
F. Opinions of Agent s Counsel.
Lenders shall have received an originally executed copy of
one or more favorable written opinions of O Melveny &
Myers, dated as of the Closing Date, substantially in the
form of Exhibit IX annexed hereto.
G. No Action or Injunction.
No litigation, inquiry or other action and no injunction or
restraining order shall be pending or threatened with respect
to the making of the Loans hereunder which Requisite
Lenders shall reasonably determine could have a Material
Adverse Effect.
H. No Material Adverse Effect.
Nothing shall have occurred since the date of the Financial
Statements, and no fact or condition not previously known
has come to the attention of any Lender, that could, in the
reasonable determination of Requisite Lenders, have a
material adverse effect on the business, property, assets,
liabilities, condition (financial or otherwise), operations or
results of operations of the Credit Parties, impair the ability
of any Credit Party to perform its respective Obligations, or
impair the ability of Agent or Lenders to enforce the
Obligations.
I. Representations and Warranties; Performance of
Agreements.
Each Credit Party shall have delivered to Agent an Officers
Certificate in form and substance satisfactory to Agent to
the effect that the representations and warranties contained
in Section 4 hereof pertaining to such Credit Parties are
true, correct and complete in all material respects on and as
of the Closing Date to the same extent as though made on
and as of that date and that each such Credit Party shall
have performed in all material respects all of its respective
obligations which this Agreement provides shall be
performed on or before the Closing Date except as
otherwise disclosed to and agreed to in writing by Agent
and Requisite Lenders.
J. Compliance with Laws.
Agent shall have been provided with satisfactory evidence
that Company and its Subsidiaries are in compliance with
all applicable laws, rules, regulations and orders of any
federal, state or local governmental authority, including,
without limitation, all Environmental Laws, the
non-compliance with which could have a Material Adverse
Effect.
K. Completion of Proceedings.
All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and
all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent
and such counsel, and Agent and its counsel shall have
received all such counterpart originals or certified copies of
such documents as Agent may reasonably request.
L. Old Credit Agreement.
All action shall have been taken as, in the sole judgment of
Agent and its counsel or Requisite Lenders, may be
necessary or desirable to terminate the Old Credit
Agreement and the commitments thereunder, and the
guaranties, security agreements, pledge agreements,
mortgages, deeds of trust, cash collateral agreements,
financing statements and all other agreements, documents
and instruments entered into in connection therewith,
including, without limitation, the payment of all obligations
arising under the Old Credit Agreement simultaneously
with the making of the initial Loans hereunder, the
termination in writing by Company of the commitments
thereunder and the release of all collateral and guaranties
held therefor.
3.2. Conditions to Letters of Credit
The obligation of the Issuing Lenders to issue any Letter of
Credit is, in addition to the conditions precedent specified
in subsection 3.3, subject to Agent having received on or
before the date of issuance of such Letter of Credit in
accordance with the provisions of subsection 2.4.B, a
Notice of Request for Letter of Credit and all other
information specified in subsection 2.4.B, and such other
documents as such Issuing Lender may reasonably require
in connection with the issuance of such Letter of Credit.
3.3. Conditions to All Loans and Letters of Credit
The obligations of Lenders to make Revolving Loans,
Swingline Loans, Bid Rate Loans and Term Loans (which
shall not include conversions or continuations of existing
Loans pursuant to subsection 2.3.E or 2.8 or the conversion
to Term Loans of Revolving Loans outstanding on the
Term Loan Funding Date, but which shall include the
portion of such Term Loans the proceeds of which are to be
applied to repay Bid Rate Loans or Swingline Loans) and
the obligation of each Issuing Lender to issue a Letter of
Credit on each Funding Date are subject to the following
further conditions precedent:
A. Agent or Bid Rate Loan Agent, as the case may be,
shall have received, in accordance with the provisions of
subsection 2.1.C, 2.1.E.(ii) or 2.4.B, as the case may be,
before that Funding Date, an originally executed Notice of
Borrowing, Bid Rate Loan Quote Request or Notice of
Request for Letter of Credit, as the case may be, in each
case signed by the chief executive officer, the chief
financial officer or the comptroller of Company or by any
executive officer of Company designated by any of the
above-described officers on behalf of Company in writing
delivered to Agent.
B. As of such Funding Date:
(i) The representations and warranties contained herein
shall be true, correct and complete in all material respects
on and as of such Funding Date to the same extent as
though made on and as of that date except those that by
their terms specifically relate only to an earlier date, which
shall have been accurate as of such date;
(ii) No event shall have occurred and be continuing or
would result from the consummation of the borrowing
contemplated by such Notice of Borrowing or the issuance
of such Letter of Credit that would constitute an Event of
Default or a Potential Event of Default (other than the
failure to reimburse the Issuing Lender for a drawing under
a Letter of Credit in the case of a Notice of Borrowing
made to request Revolving Loans the proceeds of which
will be applied directly by Agent to reimburse such Issuing
Lender for the amount of such unpaid drawing);
(iii) Each Credit Party shall have performed in all
material respects all agreements and satisfied all conditions
that this Agreement provides shall be performed by it on or
before that Funding Date;
(iv) No order, judgment or decree of any court,
arbitrator or govern- mental authority shall purport to
enjoin or restrain any Lender from making the Loans or the
Issuing Lender from issuing the Letter of Credit;
(v) Not more than twenty-five percent of the value of
the assets of Company, or of Company and its Subsidiaries
on a consolidated basis, shall constitute Margin Stock. The
making of the Loans or the issuing of the Letter of Credit
requested on such Funding Date shall not violate
Regulation G, Regulation T, Regulation U or Regulation X
of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Loan or Letter of Credit
will be used to purchase or carry any Margin Stock in
violation of Regulation U or to extend credit for the
purpose of purchasing or carrying any Margin Stock in
violation of Regulation U; and
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or
affecting any Credit Party or any property of any Credit
Party that has not been disclosed by Company in writing
pursuant to subsection 4.6 or 5.1.I prior to the making of
the most recent preceding Loans (or, in the case of the
initial Loans, prior to the execution of this Agreement) or
the issuing of the most recent Letter of Credit (or, in the
case of the initial Letter of Credit, prior to the execution of
this Agreement) and there shall have occurred no
development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of Requisite
Lenders, would be expected to have a Material Adverse
Effect. No injunction or other restraining order shall have
been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed
with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the
performance of this Agreement or the making of Loans or
the issuing of a Letter of Credit hereunder.
C. Each time Agent or Bid Rate Loan Agent, as the case
may be, is notified by Company of a proposed Loan or
issuance of a proposed Letter of Credit, such notification
shall be deemed to constitute a representation of Company
that each of the conditions set forth in this subsection 3.3
will be satisfied on the Funding Date of the proposed Loan
or date of issuance of the proposed Letter of Credit.
SECTION 4.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement,
Company represents and warrants to each Lender that the
following statements are true, correct and complete:
4.1. Organization, Powers, Good Standing and Business
A. Organization and Powers.
Each Credit Party is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation. Each Credit Party has all
requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and
proposed to be conducted, to enter into and perform under
the Loan Documents, to carry out the transactions
contemplated thereby and to issue the Notes, in each case to
the extent it is a party thereto.
B. Good Standing.
Each Credit Party is or will as of the Closing Date be in
good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its present
business and operations, except where the failure to be so
qualified has not had and will not have a Material Adverse
Effect.
C. Subsidiaries.
All of the Subsidiaries of Company as of the Closing Date
are identified in Schedule C annexed hereto. None of the
capital stock of the Persons identified on Schedule C is
Margin Stock. Each of the Subsidiaries identified on
Schedule C is validly existing and in good standing under
the laws of its respective jurisdiction of incorporation and
has full corporate power and authority to own its assets and
properties and to operate its business as presently owned
and conducted except where failure to be in good standing
or a lack of corporate power and authority has not had and
will not have a Material Adverse Effect. Schedule C
correctly sets forth the ownership interest of each Credit
Party in each of its Subsidiaries identified therein. Each of
the Subsidiaries of Company is a direct or indirect
wholly-owned Subsidiary of Company.
4.2. Authorization of Borrowing, etc.
A. Authorization of Borrowing.
The execution, delivery and performance of the Loan
Documents has been duly authorized by all necessary
corporate action by each Credit Party that is a party thereto.
B. No Conflict.
The execution, delivery and performance by each Credit
Party of the Loan Documents, the issuance, delivery and
performance of the Notes and any other trans- action
contemplated by the Loan Documents do not and will not
(i) violate any provision of law applicable to such Credit
Party, the certificate of incorporation or bylaws of such
Credit Party or any order, judgment or decree of any court
or other agency of government binding on such Credit
Party, violation of which could have a Material Adverse
Effect, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under
any Contractual Obligation of such Credit Party in a
manner that could have a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien
upon any of the properties or assets of any Credit Party
(other than Liens granted by Company in the capital stock
of Easco in favor of Agent on behalf of Lenders) or (iv)
require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of
any Credit Party, except for such approvals or consents
which will be obtained on or before the Closing Date as set
forth on Schedule D annexed hereto.
C. Governmental Consents.
The execution, delivery and performance by each Credit
Party of the Loan Documents to which it is a party, the
issuance, delivery and performance of the Notes and the
consummation any other transactions contemplated by the
Loan Documents do not and will not require any
registration with, consent or approval of, or notice to, or
other action in respect of, with or by, any federal, state or
other governmental authority or regulatory body, except for
filings and approvals which have been made or obtained as
set forth on Schedule D hereto and filings and approvals the
failure to make or obtain which would not have a Material
Adverse Effect. All such consents or approvals from or
notices to or filings with any federal, state or other
regulatory authorities required to be obtained on or before
the Closing Date will have been accomplished in all
material respects in compliance with all applicable laws
and regulations.
D. Binding Obligation.
Each of the Loan Documents has been duly executed and
delivered by each Credit Party that is a party thereto, and is
the legally valid and binding obligations of such Credit
Party, enforceable against such Credit Party in accordance
with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors rights generally and subject
to the availability of equitable remedies.
4.3. Financial Condition
Company has heretofore delivered to Lenders, at Lenders
request, the Financial Statements. All such statements were
prepared in conformity with GAAP and fairly present the
consolidated or consolidating, as the case may be, financial
position of Company and its Subsidiaries as at the
respective dates thereof and the consolidated or
consolidating, as the case may be, results of operations and
statements of cash flow of Company and its Subsidiaries
for each of the periods then ended. Neither Company nor
any Subsidiary has (and will not following the funding of
the Loans have) any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual
forward or long-term commitment that is not reflected in
the foregoing Financial Statements that could have a
Material Adverse Effect.
4.4. No Material Adverse Change; No Stock Payments
No event or change has occurred since December 31, 1989
that, in the reasonable judgment of Requisite Lenders, has
caused or evidences, either in any case or in the aggregate,
a Material Adverse Effect. From and after the Closing
Date, neither Company nor any of its Subsidiaries has
directly or indirectly declared, ordered, paid, made or set
apart any sum or property for any Restricted Junior
Payment or agreed so to do except as permitted by
subsection 6.4.
4.5. Title to Properties; Liens
Company and its Subsidiaries have good, sufficient and
legal title, subject to Permitted Encumbrances to or a
leasehold interest, in all the properties and assets reflected
in the more recent of (x) the Financial Statements and (y)
the most recent financial statements delivered pursuant to
subsection 5.1 of this Agreement, except for properties and
assets acquired or disposed of since the date of such
financial statements and except for such defects that in the
aggregate will not have a Material Adverse Effect. All
such properties and assets are free and clear of Liens except
as permitted by this Agreement.
4.6. Litigation; Adverse Facts
There is no action, suit, proceeding, governmental
arbitration or governmental investigation (whether or not
purportedly on behalf of any Credit Party) at law or in
equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or,
to the knowledge of Company, threatened against or
affecting any Credit Party or any property of any Credit
Party that has, or would be expected to result in, any
Material Adverse Effect.
4.7. Payment of Taxes
Except to the extent permitted by subsection 5.3, all tax
returns and reports of Company and its Subsidiaries
required to be filed by it have been timely filed, and all
taxes, assessments, fees and other governmental charges
upon such Persons and upon their respective properties,
assets, income and franchises which are due and payable,
except where being contested in good faith or where the
non-payment of which would not have a Material Adverse
Effect, have been paid when due and payable. Company
knows of no proposed tax assessment against any such
Person which is not being actively contested by such
Person, in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions,
if any, as shall be required in conformity with GAAP shall
have been made or provided therefor.
4.8. Performance of Agreements
A. No Credit Party is in default in the performance,
observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of
notice or the lapse of time or both, would constitute such a
default, except where the consequences, direct or indirect,
of such default or defaults, if any, would not in either case
have a Material Adverse Effect. Schedule H correctly
identifies all credit facilities of Company and its
Subsidiaries as of the Closing Date.
B. No Credit Party is a party or subject to any agreement
or instrument which has or will have, in any case or in the
aggregate, a Material Adverse Effect.
4.9. Governmental Regulation
No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power
Act or the Investment Company Act of 1940 or to any
federal or state statute or regulation limiting its ability to
incur Indebtedness.
4.10. Securities Activities
No Credit Party is engaged principally, or as one of its
important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
4.11. Employee Benefit Plans
A. Company and each ERISA Affiliate are in substantial
compliance with all applicable provisions and requirements
of ERISA with respect to each Employee Benefit Plan, and
have substantially performed all their obligations under
each Employee Benefit Plan. There are no actions, suits or
claims (other than routine claims for benefits) pending or
threatened against any Employee Benefit Plan or its assets
liability for which would constitute a Material Adverse
Effect, and, to the best knowledge of Company, no facts
exist which could give rise to any such actions, suits or
claims.
B. Except as disclosed in Schedule F, within the period of
five years ending on the Closing Date, no ERISA Event has
occurred, and there is no unpaid liability of Company or
any ERISA Affiliate that arose in connection with any
ERISA Event that occurred prior to that five-year period.
Except as disclosed in Schedule F, no ERISA Event is
reasonably expected to occur with respect to any Employee
Benefit Plan.
4.12. Certain Fees
No broker s or finder s fee or commission are or will be
payable with respect to the offer, issuance and sale of the
Notes or any of the other transactions contemplated hereby
or thereby, and Company hereby indemnifies Lenders
against and agrees that it will hold Lenders harmless from
any claim, demand or liability for broker s or finder s fees
alleged to have been incurred in connection with any such
offer, issuance and sale, or any of the other transactions
contemplated hereby and any expenses, including legal
fees, arising in connection with any such claim, demand or
liability. No other similar fees or commissions will be
payable by any Credit Party for any other services rendered
to Company or any of its Subsidiaries ancillary to the
transactions contemplated hereby.
4.13. Environmental Protection
Except as set forth in Schedule G annexed hereto:
A. the operations of Company and each of its Subsidiaries
(including, without limitation, all operations and conditions
at or in the Facilities) comply in all material respects with
all Environmental Laws non-compliance with which could
have a Material Adverse Effect;
B. Company and each of its Subsidiaries have obtained
all permits under Environmental Laws necessary to their
respective operations, and all such permits are in good
standing, and Company and each of its Subsidiaries are in
compliance with all material terms and conditions of such
permits non-compliance with which could have a Material
Adverse Effect; and
C. neither Company nor any of its Subsidiaries has any
liability (contingent or otherwise) in connection with any
Release of any Hazardous Materials by Company or any of
its Subsidiaries or the existence of any Hazardous Material
on, under or about any Facility that could give rise to an
Environmental Claim that could have a Material Adverse
Effect.
4.14. Solvency
Each Credit Party is, and on and after the Closing Date will
be, Solvent.
4.15. Patents, Trademarks, Etc.
Company and each of its Subsidiaries owns, or is licensed
to use, all patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary
for the conduct of their respective businesses as currently
conducted which are material to the condition (financial or
otherwise), business or operations of Company and its
Subsidiaries (taken as a whole). The use of such patents,
trademarks, trade names, copyrights, technology,
know-how and processes by Company and its Subsidiaries
does not infringe on the rights of any Person, subject to
such claims and infringements as do not, in the aggregate,
give rise to any liability on the part of Company and its
Subsidiaries which is material to either Company and its
Subsidiaries. The consummation of the transactions
contemplated by this Agreement will not require any
consents to be obtained with respect to such patents,
trademarks, trade names, copyrights, technology,
know-how or processes, the absence of which will in any
material manner or to any material extent impair the
ownership of (or the license to use, as the case may be) any
of such patents, trademarks, trade names, copyrights,
technology, know-how or processes by Company and its
Subsidiaries (taken as a whole).
4.16. Disclosure
No representation or warranty of any Credit Party
contained in any Loan Document or any other document,
certificate or written statement furnished to Lenders by or
on behalf of any Credit Party for use in connection with the
transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
contained herein or therein not misleading in light of the
circumstances in which the same were made. The
projections and pro forma financial information contained
in such materials are based upon good faith estimates and
assumptions believed by Company to be reasonable at the
time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered
by any such projections may differ from the projected
results.
4.17. Senior Indebtedness
The Loans and interest thereon and Company s
reimbursement obligations under the Letters of Credit each
constitute Senior Debt or Senior Indebtedness as such
terms are defined in any indentures or other instruments
defining the rights and obligations of all Existing
Indebtedness of Company which by their terms purport to
be subordinate in right of payment to any other
Indebtedness of Company.
4.18. Margin Stock
Not more than twenty-five percent of the value of the
assets of Company, or of Company and its Subsidiaries on
a consolidated basis, constitutes Margin Stock, and
Company intends that its aggregate Investments in Margin
Stock shall at no time exceed twenty-five percent of the
value of such assets. No part of the proceeds of any Loan
or Letter of Credit will be used to purchase or carry any
Margin Stock in violation of Regulation U or to extend
credit for the purpose of purchasing or carrying any Margin
Stock in violation of Regulation U.
SECTION 5.
AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments or the Letter of Credit Commitment shall be
in effect and until payment in full of all of the Loans and
Notes and other Obligations and the repayment in full of
amounts due under, or the cancellation or expiration of, all
Letters of Credit and all other amounts owing hereunder,
unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its
respective Subsidiaries to perform, all covenants in this
Section 5.
5.1. Financial Statements and Other Reports
Company will maintain, and cause each of its Subsidiaries
to maintain, a system of accounting established and
administered in accordance with sound business practices
to permit preparation of consolidated financial statements
in conformity with GAAP. Company will deliver to
Lenders:
A. Quarterly Financials: as soon as practicable and in any
event within forty-five days after the end of each fiscal
quarter (other than fiscal quarters ending on the last day of
a fiscal year) ending after the Closing Date in Company s
fiscal year, (i) the consolidated balance sheet of Company
and its Subsidiaries, and (ii) the consolidating balance
sheets of Company and Subsidiaries presented on a basis
substantially consistent with the format previously
presented to Lenders under the Old Credit Agreement, in
each case, as at the end of such period, and (iii) the related
consolidated statements of earnings and statements of cash
flow of Company and its Subsidiaries, and (iv) the
consolidating statements of earnings of Company and its
Subsidiaries; in each case, the financial statements shall be
certified by the chief financial officer or controller of
Company to the effect that they fairly present the financial
condition of the respective entity as at the dates indicated
and the results of their operations and statements of cash
flow subject to changes resulting from audit and normal
year-end adjustments, based on their respective normal
accounting procedures applied on a consistent basis;
B. Year-End Financials: as soon as practicable and in any
event within ninety days after the end of each fiscal year, (i)
the consolidated balance sheet of Company and its
Subsidiaries, and (ii) the consolidating balance sheets of
Company and its Subsidiaries presented on a basis
reasonably satisfactory to Requisite Lenders, in each case,
as at the end of such period, and (iii) the related
consolidated statements of earnings and statements of cash
flow of Company and its Subsidiaries, and (iv) the
consolidating statements of earnings of Company and its
Subsidiaries and, in the case of items (i) and (iii), as
certified by independent public accountants of recognized
national standing reasonably acceptable to Agent;
C. Officers and Compliance Certificates: together with
each delivery of financial statements of Company and its
Subsidiaries pursuant to subsection 5.1.A and subsection
5.1.B above, (i) an Officers Certificate of Company stating
that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their
supervision, a review in reasonable detail of the
transactions and condition of Company and its Subsidiaries
during the accounting period covered by such financial
statements and that such review has not disclosed the
existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence
as at the date of the Officers Certificate, of any condition
or event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed
or exists, specifying the nature and period of existence
thereof and what action Company has taken, is taking and
proposes to take with respect thereto; and (ii) a Compliance
Certificate demonstrating in reasonable detail compliance
(as determined in accordance with GAAP) during and at the
end of such accounting periods with the restrictions
contained in subsections 6.1, 6.2, 6.3, 6.5, and 6.6 and, in
addition, a written statement of the chief accounting officer,
chief financial officer or controller of Company describing
in reasonable detail the differences between the financial
information contained in such financial statements and the
information contained in the Compliance Certificate
relating to Company s compliance with subsection 6.5;
D. Reconciliation Statement: if, as a result of any change
in accounting principles and policies from those used in the
preparation of the Financial Statements, the consolidated
financial statements of Company and its Subsidiaries
delivered pursuant to subsections A, B or L of this
subsection 5.1 will differ in any material respect from the
consolidated financial statements that would have been
delivered pursuant to such subsections had no such change
in accounting principles and policies been made, then,
together with the first delivery of financial statements
pursuant to subsection A, B or L following such change,
consolidated financial statements of Company and its
Subsidiaries prepared on a pro forma basis, for (i) the
current year to the effective date of such change and (ii) the
two full fiscal years immediately preceding the fiscal year
in which such change is made, as if such change had been
in effect during such period;
E. Accountants Certification: together with each delivery
of consolidated financial statements of Company and its
Subsidiaries pursuant to subsection 5.1.B above, a written
statement by the independent public accountants giving the
report thereon (i) stating that their audit examination has
included a review of the terms of this Agreement as they
relate to accounting matters, (ii) stating whether, in
connection with their audit examination, any condition or
event which constitutes an Event of Default or Potential
Event of Default has come to their attention, and if such a
condition or event has come to their attention, specifying
the nature and period of existence thereof; provided that
such accountants shall not be liable by reason of any failure
to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in
the course of their audit examination, and (iii) stating that
based on their audit examination nothing has come to their
attention which causes them to believe that the information
contained in either or both of the certificates delivered
therewith pursuant to subsection C above is not correct or
that the matters set forth in the Compliance Certificate
delivered therewith pursuant to clause (ii) of such
subsection C above for the applicable fiscal year are not
stated in accordance with the terms of this Agreement;
F. Audit Reports: promptly upon receipt thereof, copies
of all reports submitted to Company by independent public
accountants in connection with each annual, interim or
special audit of the financial statements of Company made
by such accountants, including, without limitation, the
comment letter submitted by such accountants to
management in connection with their annual audit;
G. SEC Filings: promptly upon their becoming available,
copies of all financial statements, reports, notices and proxy
statements sent or made available generally by Company to
its security holders or by any Subsidiary of Company to its
security holders other than Company or another Subsidiary,
of all regular and periodic reports and all registration
statements and prospectuses, if any, filed by Company or
any of its Subsidiaries with any securities exchange or with
the Securities and Exchange Commission and of all press
releases and other statements made available generally by
Company or any Subsidiary to the public concerning
material developments in the business of Company and its
Subsidiaries;
H. Events of Default: promptly upon any officer of
Company obtaining knowledge (i) of any condition or
event which constitutes an Event of Default or Potential
Event of Default, (ii) that any Person has given any notice
to Company or any Subsidiary of Company or taken any
other action with respect to a claimed default or event or
condition of the type referred to in subsection 7.2, (iii) of
any condition or event which would be required to be
disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items
1, 2, 4 and 5 of such Form as in effect on the date hereof) if
Company were required to file such reports under the
Exchange Act, or (iv) of a material adverse change in the
business, operations, properties, assets or condition
(financial or otherwise) of Company and its Subsidiaries
(taken as a whole), an Officers Certificate specifying the
nature and period of existence of any such condition or
event, or specifying the notice given or action taken by
such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event
or condition, and what action Company has taken, is taking
and proposes to take with respect thereto;
I. Litigation: promptly upon any officer of Company
obtaining knowledge of (i) the institution of, or
non-frivolous threat of, any action, suit, proceeding,
governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries not
previously disclosed by Company to Lenders, or (ii) any
material development in any such action, suit, proceeding,
governmental investigation or arbitration, which in either
case, if adversely determined, could have a Material
Adverse Effect, Company shall give notice thereof the
Lenders and provide such other information as may be
reasonably available to it (without waiver of any applicable
evidentiary privilege) to enable Lenders and their counsel
to evaluate such matters;
J. ERISA Events: promptly upon becoming aware of the
occurrence of any ERISA Event that could result in liability
that would constitute a Material Adverse Effect, a written
notice specifying the nature thereof, what action Company
has taken, is taking or proposes to take with respect thereto,
and, when known, any action taken or threatened by and
any notices received from the Internal Revenue Service, the
Department of Labor, the PBGC or a Multiemployer Plan
sponsor with respect thereto;
K. Financial Plans: as soon as practicable and in any
event by the fifteenth day following the last day of each
fiscal year of Company, a consolidated plan and financial
forecast, prepared in accordance with Company s normal
accounting procedures applied on a consistent basis, for the
next succeeding fiscal year of Company and its
Subsidiaries, including, without limitation, (i) a forecasted
consolidated balance sheet and a consolidated statement of
earnings and a consolidated statement of cash flows of
Company for such fiscal year, (ii) forecasted consolidated
balance sheets, statement of earnings and retained earnings,
and cash flows of Company for each fiscal quarter of such
fiscal year and forecasted balance sheets and statements of
earnings and cash flows for each Reporting Division for
each fiscal quarter of such fiscal year, and (iii) the amount
of forecasted capital expenditures for such fiscal year;
L. Insurance: as soon as practicable and in any event by
the March 31 following the last day of each fiscal year of
Company, a report in form and substance reasonably
satisfactory to Agent and Requisite Lenders outlining all
material insurance coverage maintained as of the date of
such report by Company and its Subsidiaries and all
material insurance coverage planned to be maintained by
such Persons in the subsequent fiscal year; and
M. Other Information: with reasonable promptness, such
other information and data with respect to Company or any
of its Subsidiaries as from time to time may be reasonably
requested by any Lender.
5.2. Corporate Existence, Etc.
Except as otherwise provided in subsection 6.6, Company
will, and will cause each of its Material Subsidiaries to, at
all times preserve and keep in full force and effect its
corporate existence and rights and franchises material to its
business and those of each of Company s Material
Subsidiaries; provided, however, that the corporate
existence of any such Material Subsidiary may be
terminated if such termination is in the best interests of its
parent or Company and would not have a Material Adverse
Effect.
5.3. Payment of Taxes and Claims; Tax Consolidation
A. Company will, and will cause each of its Subsidiaries
to, pay all taxes, assessments and other governmental
charges imposed upon it or any of its properties or assets or
in respect of any of its franchises, business, income or
property before any penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services,
materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto, which
Liens secure taxes, assessments or other governmental
charges or claims, individually or in the aggregate, in
excess of $500,000; provided that no such charge or claim
need be paid if being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted
and if such reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been
made therefor.
B. Company will not file or consent to the filing of, or
permit any of its respective Subsidiaries to file or consent
to the filing of, any consolidated income tax return with any
Person (other than Company or any of their respective
Subsidiaries).
5.4. Maintenance of Properties; Insurance
Company will maintain or cause to be maintained in good
repair, working order and condition all material properties
used or useful in the business of Company and its
Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements
thereof on a timely basis considering the nature of the
repair. Company will maintain or cause to be maintained,
with financially sound and reputable insurers, insurance
with respect to its properties and businesses and the
properties and businesses of its Subsidiaries against loss or
damage of the kinds customarily carried or maintained
under similar circumstances by corporations of established
reputation engaged in the same or similar businesses and
similarly situated, of such types and in amounts as are
customarily carried under similar circumstances by such
other corporations.
5.5. Inspection; Lender Meeting
Company shall permit any authorized representatives
designated by any Lender to visit and inspect any of the
properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss its and
their affairs, finances and accounts with its and their
officers and independent public accountants, all upon
reasonable notice and at such reasonable times during
normal business hours and as often as may be reasonably
requested, provided such information is not subject to
privilege. Without in any way limiting the foregoing,
Company will, upon the request of Requisite Lenders,
participate in a meeting of Agent and Lenders at least once
during each fiscal year to be held at a location acceptable to
Company, at such time as may be agreed to by Company
and Requisite Lenders.
5.6. Compliance with Laws, Etc.
Company shall, and shall cause its Subsidiaries to, comply
in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any
governmental authority non-compliance with which could
have a Material Adverse Effect. Company shall not engage
in any transaction or permit the occurrence of any act or
omission, and shall cause each ERISA Affiliate not to
engage in any transaction or to permit the occurrence of any
act or omission, which would constitute, or would give rise
to, an ERISA Event that could have a Material Adverse
Effect.
5.7. Further Assurances as to Future Material Subsidiaries
Company will notify Agent promptly in the event that any
Person becomes a Material Subsidiary of Company, will
cause each such new Material Subsidiary to promptly
execute and deliver to Agent on behalf of Lenders a
Subsidiary Guaranty, and will take all such further action as
may be required to guaranty the Obligations of Company
under this Agreement as may be reasonably required by
Agent or Requisite Lenders. Immediately upon the
repayment of the Easco Debt, Company shall cause Easco
to execute and deliver to Agent on behalf of Lenders its
Subsidiary Guaranty.
5.8. Environmental Disclosure and Inspection
A. Company shall, and shall cause each of its
Subsidiaries to, exercise all due diligence in order to
comply and cause (i) all tenants under any lease or
occupancy agreement affecting any portion of the Facilities
and (ii) all other Persons on or occupying such property, to
comply with all Environmental Laws, noncompliance with
which could have a Material Adverse Effect.
B. Company agrees that Agent may, from time to time if
in the reasonable judgment of Agent it is advisable to do so,
retain, at Company s expense, an independent professional
consultant to review any report relating to Hazardous
Materials prepared by or for Company disclosing an event
or occurrence that could result in liability that could have a
Material Adverse Effect, and, if advisable in light of the
results of such review, to conduct its own investigation of
any Facility; provided that with respect to any Facility no
longer owned or operated by Company or any of its
Subsidiaries, Company shall use its best efforts to obtain
from the owner or operator thereof for Agent to have access
thereto. Company hereby grants to Agent, its agents,
employees, consultants and contractors the right to enter
into or onto the Facilities to perform such tests on such
property as are reasonably necessary to conduct such a
review and/or investigation. Lenders shall have no duty to
disclose or discuss any information produced by such
reviews or investigations with Company or any of its
Subsidiaries.
C. Company shall promptly advise Lenders in writing and
in reasonable detail of (i) any Release of any Hazardous
Material required to be reported to any federal, state or
local governmental or regulatory agency under any
applicable Environmental Laws, (ii) any and all written
communications with respect to Environ- mental Claims or
any Release of Hazardous Material required to be reported
to any federal, state or local governmental or regulatory
agency, (iii) any remedial action taken by Company or any
other Person in response to (a) any Hazardous Material on
or under any Facility, the existence of which could result in
an Environmental Claim having a
Material Adverse Effect or (b) any Environmental Claim
that could have a Material Adverse Effect, and (iv) any
request for information from any governmental agency that
indicates such agency is investigating whether Company or
any of its Subsidiaries may be potentially responsible for a
Release of Hazardous Materials.
D. Company shall promptly notify Lenders of any
proposed acquisition of stock, assets or property by
Company or any of its Subsidiaries, that could reasonably
be expected to expose Company or any of its Subsidiaries
to, or result in, Environmental Claims that could have a
Material Adverse Effect.
E. Company shall, at is own expense, provide copies of
such documents or information as Agent may reasonably
request in relation to any matters disclosed pursuant to this
subsection 5.8.
5.9. Hazardous Materials; Company s Remedial Action
Company shall, and shall cause each of its Subsidiaries to,
promptly take any and all remedial action in connection
with the presence, storage, use, disposal, transportation or
Release of any Hazardous Materials on or under any
Facility (excluding any Facility no longer owned or
operated by Company or any of its Subsidiaries) the failure
of which to take could have a Material Adverse Effect. In
the event Company or any of its Subsidiaries undertakes
any remedial action with respect to any Hazardous Material
on or under any such Facility, Company or such Subsidiary
shall conduct and complete such remedial action in material
compliance with all applicable Environmental Laws, except
when and only to the extent that Company s or such
Subsidiary s liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous
Material is being contested in good faith by Company or
such Subsidiary.
5.10. Equal Security for Loans and Notes
If Company or any of its Subsidiaries shall create or
assume any Lien upon any of its property or assets, whether
now owned or hereafter acquired, other than Liens by the
provisions of subsection 6.2 (unless prior written consent to
the creation or assumption thereof shall have been obtained
from Requisite Lenders), it shall, at the request of Requisite
Lenders, make or cause to be made effective provision
whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness
thereby secured as long as any such Indebtedness shall be
secured; provided, that this covenant shall not be construed
as consent by Agent or any Lender to any violation of the
provisions of subsection 6.2.
SECTION 6.
COMPANY S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments or the Letter of Credit Commitment shall be
in effect and until payment in full of all of the Loans and
the Notes and other Obligations and the repayment in full
of all amounts due under, or the cancellation or expiration
of, all Letters of Credit and all other amounts owing
hereunder, unless Requisite Lenders shall otherwise give
prior written consent, Company will perform, and shall
cause each of its Subsidiaries to perform, all of its
covenants contained in this Section 6.
6.1. Indebtedness and Contingent Obligations
Company will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guaranty, or
otherwise become or remain directly or indirectly liable
with respect to any Indebtedness or Contingent Obligations,
except:
A. Each Guarantor may become and remain liable with
respect to the Subsidiary Guaranties;
B. The Subsidiaries of Company may become and remain
liable with respect to intercompany Indebtedness;
C. The Subsidiaries of Company may become and remain
liable with respect to Indebtedness and Contingent
Obligations not otherwise covered by a separate clause of
this subsection 6.1 in an aggregate principal amount
outstanding at any one time incurred from and after the
Closing Date not to exceed $50,000,000; provided that, the
entire principal amount of any Indebtedness and Contingent
Obligations with respect to which a Subsidiary of Company
is liable, if such Person became a Subsidiary of Company
on or after the Closing Date, shall be included in the
calculation of such aggregate Indebtedness and Contingent
Obligations; and
D. Contingent Obligations of the Subsidiaries of
Company resulting from endorsement of negotiable
instruments for collection in the ordinary course of
business;
E. Contingent Obligations of the Subsidiaries of
Company respecting customary indemnification and
purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets;
F. Contingent Obligations of the Subsidiaries of
Company under guarantees in the ordinary course of
business of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries
not exceeding at any time outstanding $2,000,000 in
aggregate liability;
G. Existing Indebtedness described in Schedule H
annexed hereto; and
H. Contingent Obligations described in Schedule I
annexed hereto.
6.2. Liens and Related Matters
A. Prohibitions on Liens.
Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any
property or asset (including any document or instrument in
respect of goods or accounts receivable) of any Credit
Party, whether now owned or hereafter acquired, or any
income or profits therefrom, except:
(i) Permitted Encumbrances;
(ii) Liens on assets of any Subsidiary of Company that
secure Indebtedness of such Subsidiary outstanding at the
time such Person became a Subsidiary of Company,
provided that such Indebtedness was not incurred in
connection with or anticipation of such event; and
(iii) The liens on the capital stock of Easco created
by the Pledge Agreement.
B. No Restrictions on Subsidiary Distributions to
Company.
Except pursuant to this Agreement, Company will not, and
will not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind (other
than those restrictions in existence prior to the Closing Date
as set forth on Schedule J annexed hereto) on the ability of
any Subsidiary to (i) pay dividends or make any other
distribution on any of such Subsidiary s capital stock
owned by Company or any Subsidiary of Company; (ii)
pay any Indebtedness owed to Company or any other
Subsidiary; (iii) make loans or advances to Company or any
other Subsidiary; or (iv) transfer any of its property or
assets to Company or any other Subsidiary.
6.3. Investments; Joint Ventures
Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make or own any
Investment in the Securities of any Person or in any Joint
Venture, except:
A. Company and its Subsidiaries may make purchases of
or otherwise acquire all or substantially all of the assets of
any Person or the capital stock of any Person if Company
shall (i) be entitled to purchase and shall purchase such
number of shares of the capital stock of such Person such
that Company will have the ability to cause the merger of
such Person with and into a Subsidiary of Company
without the necessity that holders of such capital stock
(other than Company, Affiliates or Persons acting in
concert with Company) approve such merger and such
merger or acquisition actually occurs as soon as practicable
following the purchase of such shares, (ii) directly or
indirectly own all of the voting stock (on a fully diluted
basis) of such Person or (iii) acquire all or substantially all
of the assets of such Person; provided that Company and its
Subsidiaries may make no such acquisition of all or
substantially all of the assets of any Person or the capital
stock of any Person if such acquisition is not approved in
advance by affirmative vote of the board of directors of
such Person; provided further that, prior to the
consummation of any such acquisition, Company shall
have delivered to Agent an Officers Certificate of
Company stating that, after giving effect to the proposed
acquisition, Company will be in compliance on a pro forma
basis with the covenants contained in subsection 6.5,
recomputed as at the last day of the most recently ended
fiscal quarter of Company and including for purposes of
such pro forma calculation the relevant financial
information for the Person whose capital stock, or all or
substantially all the assets of which, are proposed to be
acquired;
B. Company and its Subsidiaries may purchase and hold,
for investment purposes only, Marketable Securities and
Non-Marketable Securities, valued at the original cost
thereof, as follows: (i) during any Pricing Period for which
Company s Pricing Level is Pricing Level I, Company and
its Subsidiaries may have Investments in Marketable
Securities or Non-Marketable Securities, or any
combination thereof, in an aggregate amount not to exceed
$100,000,000; (ii) during any Pricing Period for which
Company s Pricing Level is Pricing Level II, Company and
its Subsidiaries may have Investments in Marketable
Securities or Non-Marketable Securities, or any
combination thereof, in an aggregate amount not to exceed
$75,000,000, provided that the portion thereof held in
Non-Marketable Securities shall in no event exceed
$35,000,000; and (iii) during any Pricing Period for which
Company s Pricing Level is Pricing Level III, Company
and its Subsidiaries may have Investments in Marketable
Securities or Non-Marketable Securities, or any
combination thereof, in an aggregate amount not to exceed
$25,000,000, provided further that the portion thereof held
in Non-Marketable Securities shall in no event exceed
$12,500,000; provided still further that in the event that
Company and its Subsidiaries have Excess Investments in
Securities, to the extent that the Total Utilization of
Revolving Loan Commitments exceeds the Revolving Loan
Commitments then in effect, Company and its Subsidiaries
shall commence to dispose of such excess Securities in a
prudent and diligent manner; provided still further that the
aggregate Investments under this subsection 6.3.B in any
one Person may not exceed ten percent of Adjusted
Tangible Net Worth determined as at the time of such
Investment;
C. Company and its Subsidiaries may make Investments
in Joint Ventures in which Company or such Subsidiary has
an active managerial role in the decision making and
operations; and
D. Company and its Subsidiaries may make and own
Investments in Cash Equivalents.
6.4. Restricted Junior Payments
Upon the occurrence and during the continuance of an
Event of Default or a Potential Event of Default, Company
will not, directly or indirectly, declare, order, pay, make or
set apart any sum for any Restricted Junior Payment.
6.5. Financial Covenants
A. Consolidated Current Ratio.
Company will not permit, at any time, the ratio of
Consolidated Current Assets to Consolidated Current
Liabilities to be less than 1.25:1.
B. Adjusted Leverage Ratio.
Company will not permit, at any time, the Adjusted
Leverage Ratio to exceed 1.10:1.
C. Minimum Adjusted Tangible Net Worth.
Company will not permit, at any time, the Adjusted
Tangible Net Worth to be less than the Minimum Adjusted
Tangible Net Worth.
D. Interest Coverage Ratio.
Company will not permit the Adjusted Interest Coverage
Ratio to be less than 2.50:1. Such ratio will be calculated
on a cumulative quarterly basis as of the last day of each of
the four-fiscal quarters immediately succeeding the Closing
Date, and, thereafter, calculated as of the last day of each
fiscal quarter for the immediately preceding four fiscal
quarters.
6.6. Restriction on Fundamental Changes; Asset Sales
Subject to subsection 5.2, Company and its Subsidiaries
will not alter in any material respect their respective
corporate, capital or legal structure or enter into any
transaction of merger, or consolidate, or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution),
or convey, sell, lease, sub-lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all
or any substantial part of their respective business, property
or fixed assets, whether now owned or hereafter acquired,
or acquire by purchase or otherwise all or substantially all
the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person, except in
accordance with subsection 6.3.A, 6.3.D or as follows:
A. Company and its Subsidiaries may sell or dispose of
assets for the Fair Market Value thereof; provided that (x)
in the case of a sale or disposition, or a series of related
sales or dispositions, in excess of $500,000, the
determination of the value thereof shall be made in good
faith by the board of directors of Company or such
Subsidiary, as the case may be, (y) fifty percent of the
consideration therefor is received in cash at the
consummation of the sale thereof, and (z) after giving effect
thereto, the aggregate of all notes or other evidences of
Indebtedness in respect of the non-cash portion of all such
dispositions made by Company and its Subsidiaries shall in
no event exceed $50,000,000 outstanding at any one time;
B. Company and its Subsidiaries may sell or otherwise
dispose of obsolete or worn out property and may sell,
resell or otherwise dispose of real or personal property held
for sale or resale in the ordinary course of business;
C. any Subsidiary of Company may be merged or
consolidated with or into any wholly-owned Subsidiary of
Company if such wholly-owned Subsidiary shall be the
surviving corporation;
D. any wholly-owned Subsidiary of Company may be
wound-up, liquidated or dissolved, or all or substantially all
of its business, property or assets may be con- veyed, sold,
leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to, any other
wholly-owned Subsidiary of Company; and
E. Company may make distributions on account of any
class of shares of its capital stock in accordance with
subsection 6.4; provided that, if any such distribution is
made with assets other than Cash or shares of common
stock of Company, the fair market value of such assets,
plus the fair market value of all assets previously
distributed to Company s shareholders pursuant to this
subsection 6.6.E, plus all amounts received by Company or
any of its Subsidiaries from and after the Closing Date in
respect of Cash Proceeds of Asset Sales, Condemnation
Proceeds and Insurance Proceeds (other than those items
specifically excluded in the parenthetical contained in the
definition of Aggregate Excess Proceeds) shall in no event
exceed $50,000,000.
To the extent necessary to consummate any transaction
permitted by this subsection 6.6, Agent and the Lenders
agree to release from the pledge of the Pledge Agreement
the capital stock of Easco if it is the subject of such
transaction and to release the Subsidiary Guaranty of any
Subsidiary Guarantor that is the subject of such transaction.
6.7. Transactions with Shareholders and Affiliates
Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 5% or more of
any class of equity securities of Company or with any
Affiliate of Company or any Affiliate of any such holder, as
the case may be, on terms that are less favorable to
Company or that Subsidiary, as the case may be, than those
which might be obtained at the time from Persons who are
not such a holder or Affiliate; provided that the foregoing
restriction shall not apply to (a) any transaction between
Company and any of its wholly-owned Subsidiaries or
between any of its wholly-owned Subsidiaries and (b)
customary fees paid to members of the board of directors of
Company and its Subsidiaries.
6.8. Disposal of Subsidiary Stock
Company will not, and will not permit any of its
Subsidiaries to (except as permitted by subsection 6.7);
A. directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other
equity securities of (or warrants, rights or options to acquire
shares or other equity securities of) any of its Subsidiaries,
except to qualify directors if required by applicable law; or
B. permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of
any shares of capital stock or other securities of (or
warrants, rights or options to acquire shares or other
securities of) any of its Sub- sidiaries, except to Company,
another Subsidiary of Company, or to qualify directors if
required by applicable law.
6.9. Amendments or Waivers of Charter Documents and
Certain Other Documents: Prepayments of Subordinated
Indebtedness
Company will not, and will not permit any of its
Subsidiaries to, agree to any amendment to, or waive any of
its rights under, any of its articles of incorporation or
bylaws or other documents relating to the Company
Common Stock, or the equity securities of Company or its
Subsidiaries, if such amendment or waiver of such right
would have a Material Adverse Effect. Company will not
amend or otherwise change any material term of any
agreement, instrument or other document establishing the
terms and conditions of any Separate Letter of Credit
Facility. Neither Company nor any of its Subsidiaries will
amend or otherwise change the terms of any Subordinated
Indebtedness except as specifically permitted hereby, or
make any payment consistent with an amendment or
change thereto, if the effect of such amendment or change
is to increase the interest rate on such Subordinated
Indebtedness, change the dates upon which payments of
principal or interest are due thereon, change any event of
default or condition to an event of default with respect to
such Subordinated Indebtedness, grant any security interest
in favor of such Subordinated Indebtedness, change the
redemption provisions thereof, change the subordination
provisions thereof, cause the Subordinated Indebtedness to
be guaranteed by any Person or which, together with all
other amendments or changes made, increase materially the
obligations of the obliger or confer additional rights on the
holder of such Subordinated Indebtedness which would be
adverse to Company or Lenders.
SECTION 7.
EVENTS OF DEFAULT
IF any of the following conditions or events ( Events of
Default ) shall occur and be continuing:
7.1. Failure to Make Payments When Due
Failure to pay any installment of principal of any Loan
when due, or any amount payable in reimbursement of the
Issuing Lender in respect of a Letter of Credit when due,
whether at stated maturity, by acceleration, by notice of
prepayment or otherwise; or failure to pay any installment
of interest on any Loan or any other amount due under this
Agreement within five days after the date due; or
7.2. Default in Other Agreements
A. Failure of the Credit Parties to pay when due (x) any
principal or interest on any Indebtedness (other than
Indebtedness referred to in subsection 7.1) in an individual
principal amount of $5,000,000 or more or items of
Indebtedness with an aggregate principal amount of
$5,000,000 or more, or (y) any Contingent Obligation in an
individual principal amount of $5,000,000 or more or
Contingent Obligations with an aggregate principal amount
of $5,000,000 or more, in each case beyond the end of any
grace period provided therefor; provided that, in the event
that and for so long as the Revolving Loan Commitments
then in effect exceed the Total Utilization of Revolving
Loan Commitments by an amount equal to or greater than
the principal amount of, and unpaid accrued interest and
premium on, the Easco Debt, no payment default on the
Easco Debt shall constitute an Event of Default hereunder;
or
B. Breach or default of the Credit Parties with respect to
any other material term of (x) any evidence of any
Indebtedness in an individual principal amount of
$5,000,000 or more or items of Indebtedness with an
aggregate principal amount of $5,000,000 or more or any
Contingent Obligation in an individual principal amount of
$5,000,000 or more or Contingent Obligations with an
aggregate principal amount of $5,000,000 or more; or (y)
any loan agreement, mortgage, deed of trust, indenture or
other agreement relating thereto, if the effect of such
failure, default or breach is to cause, or to permit the holder
or holders of that Indebtedness or Contingent Obligation
(or a trustee on behalf of such holder or holders) to cause,
that Indebtedness or Contingent Obligation to become or be
declared due prior to its stated maturity (or the stated
maturity of any underlying obligation, as the case may be);
provided that, in the event that and for so long as the
Revolving Loan Commitments then in effect exceed the
Total Utilization of Revolving Loan Commitments by an
amount equal to or greater than the principal amount of,
and unpaid accrued interest and premium on, the Easco
Debt, no such default on the Easco Debt shall constitute an
Event of Default hereunder; or
7.3. Breach of Certain Covenants
Failure of any Credit Party to perform or comply with any
term or condition contained in subsection 2.6, 2.7, 5.2 or
5.10 or Section 6 beyond any grace period provided for in
such respective section, or any material term of any Loan
Document (other than this Agreement); or
7.4. Breach of Warranty
Any representation, warranty, certification or other
statement made by any Credit Party in any Loan Document
or in any statement or certificate at any time given by any
Credit Party in writing pursuant hereto or in connection
herewith or therewith, shall be false in any material respect
on the date as of which made; or
7.5. Other Defaults Under Agreement or Loan Documents
Any Credit Party shall default in the performance of or
compliance with any term contained in this Agreement or
the other Loan Documents other than those otherwise
referred to in this Section 7 and such default shall not have
been remedied or waived within thirty days after receipt by
Company of notice from any Lender of such default; or
7.6. Involuntary Bankruptcy; Appointment of Receiver,
etc.
(i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of any Credit
Party, in an involuntary case under the Bankruptcy Code or
any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not
stayed; or any other similar relief shall be granted under
any applicable federal or state law; or
(ii) an involuntary case is commenced against any
Credit Party, under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect; or a decree
or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers
over any Credit Party, or over all or a substantial part of its
property, shall have been entered; or the involuntary
appointment of an interim receiver, trustee or other
custodian of any Credit Party, for all or a substantial part of
its property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of
the property of any Credit Party, and the continuance of any
such event in clause (ii) for sixty days unless dismissed,
bonded or discharged; or
7.7. Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Any Credit Party shall have an order for relief
entered with respect to it or commence a voluntary case
under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect,
or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial
part of its property; the making by any Credit Party of any
assignment for the benefit of creditors; or
(ii) the inability or failure of any Credit Party, or the
admission by any Credit Party in writing of its inability, to
pay its debts as such debts become due; or the board of
directors of any Credit Party (or any committee thereof)
adopts any resolution or otherwise authorizes action to
approve any of the actions referred to in clause (i) or this
clause (ii) of subsection 7.7; or
7.8. Judgements and Attachments
Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an
amount in excess of $5,000,000 or (ii) in the aggregate at
any time an amount in excess of $10,000,000 (in either case
not adequately covered by insurance as to which the
insurance company has acknowledged coverage) shall be
entered or filed against any Credit Party or any of its
respective assets and shall remain undischarged, unvacated,
unhanded or unstayed for a period of sixty days or in any
event later than five days prior to the date of any proposed
sale thereunder; or
7.9. Dissolution
Any order, judgment or decree shall be entered against any
Credit Party decreeing the dissolution or split up of
Company or any Material Subsidiary and such order shall
remain undischarged or unstayed for a period in excess of
thirty days; or
7.10. Employee Benefit Plans
There occurs one or more ERISA Events resulting (i) in
any individual case, liability to Company or any ERISA
Affiliate in excess of $5,000,000 or (ii) in the aggregate
during the term of this Agreement, liability of Company
and its ERISA Affiliates in excess of $10,000,000;
provided, however, that it shall be an Event of Default if
there exists, as of any valuation date for a Pension Plan, an
excess of the present value (determined on the basis of
reasonable assumptions used by the independent actuary for
such Pension Plan) of the accrued benefits (whether or not
vested) of the participants and beneficiaries of such Pension
Plan over the fair market value of the assets of such
Pension Plan, only if such excess, when added to the
excesses calculated in the same manner for each of the
other Pension Plans as of the most recently preceding
valuation date for each such other Pension Plan, exceeds
$20 million; or
7.11. Invalidity of Guaranties or Pledge Agreement
Any Guaranty or the Pledge Agreement for any reason,
other than the satisfaction in full of all Obligations or the
termination or release thereof in accordance with the
provisions hereof and thereof, ceases to be in full force and
effect or is declared to be null and void, or any Credit Party
denies that it has any further liability, including without
limitation with respect to future advances by Lenders,
under any Loan Document to which it is a party, or gives
notice to such effect; or
7.12. Change of Control
There shall occur a Change of Control Event.
THEN (i) upon the occurrence of any Event of Default
described in the foregoing subsections 7.6 or 7.7, each of
(a) the unpaid principal amount of and accrued interest on
the Loans, (b) an amount equal to the maximum amount
that may at any time be drawn under all Letters of Credit
then outstanding (whether or not any beneficiary under any
Letter of Credit shall have been presented or be entitled to
present, the drafts and other documents required to draw
under the Letter of Credit) (the Maximum Available
Amount ), and (c) all other Obligations, shall automatically
become immediately due and payable, without
presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by
Company, and the obligation of each Lender to make any
Loan or to issue any Letter of Credit shall thereupon
terminate, and (ii) upon the occurrence and during the
continuance of any other Event of Default, Agent shall,
upon the written request of Requisite Lenders, by written
notice to Company, declare all or any portion of the
amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and
payable, together with accrued interest thereon, and the
obligation of each Lender to make any Loan or to issue any
Letter of Credit shall thereupon terminate and Lenders may
pursue any and all remedies under the Loan Documents;
provided, that the foregoing shall not affect in any way the
obligations of Lenders under subsection 2.4.D or the
obligations of Lenders to make Revolving Loans to
reimburse drawings under Letters of Credit as provided in
subsection 2.4.C. So long as any Letter of Credit shall
remain outstanding, any amounts described in clause (b)
above with respect to Letters of Credit, when received by
any Issuing Lender, shall be held by such Issuing Lender,
pursuant to such documentation as such Issuing Lender
shall request, as cash collateral for the obligation of
Company to reimburse such Issuing Lender in the event of
any drawing under such Letters of Credit, and so much of
such funds shall at all times remain on deposit as cash
collateral as aforesaid as shall equal the Maximum
Available Amount; provided further that in the event of
cancellation or expiration of any Letter of Credit or any
reduction in the Maximum Available Amount, the Issuing
Lender shall apply the difference between the Maximum
Available Amount immediately prior to such cancellation,
expiration or reduction and the Maximum Available
Amount immediately after such cancellation, expiration or
reduction first to the payment of any outstanding
Obligation, and then to the payment to whomsoever shall
be lawfully entitled to receive such funds. If at any time
within sixty days after acceleration of the maturity of the
Loans, Company shall pay all arrears of interest and all
payments on account of the principal which shall have
become due otherwise than by acceleration (with interest on
principal and, to the extent permitted by law, on overdue
interest, at the rate specified in this Agreement) and all
Events of Default and Potential Events of Default (other
than non-payment of principal of and accrued interest on
the Loans, and payments of amounts referred to in clause
(b) above, in each case due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to
subsection 9.6, then Agent on behalf of Requisite Lenders
by written notice to Company may, but shall not be
obligated to, rescind and annul the acceleration and its
consequences; and Agent shall return to Company any
amounts held by Agent as cash collateral in respect of
amounts described in clause (b) above; but such action shall
not affect any subsequent Event of Default or Potential
Event of Default or impair any right attendant to such
subsequent Event of Default or Potential Event of Default.
SECTION 8.
AGENT AND BID RATE LOAN AGENT
8.1. Appointment
Bankers is hereby appointed Agent hereunder and under
the other Loan Documents. Each Lender hereby authorizes
Agent to act as its agent in accordance with the terms
hereof and the other Loan Documents and under the other
instruments and agreements referred to herein and therein.
Agent agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as
applicable. Company may appoint Continental Bank to act
as Bid Rate Loan Agent hereunder and Continental Bank
may accept or decline such appointment. In the event that
Continental Bank accepts such appointment, each Lender
shall be deemed to have authorized Continental Bank to act
in the capacity of Bid Rate Loan Agent as agent for such
Lender in accordance with the terms hereof. Continental
Bank agrees that if it is so appointed, it will act upon the
express conditions contained in this Agreement. The
provisions of this Agreement are solely for the benefit of
Agent, Bid Rate Loan Agent (other than Company acting as
Bid Rate Loan Agent) and Lenders and no Credit Party
shall have rights as a third party beneficiary of any of the
provisions hereof. In performing their respective functions
and duties under this Agreement, Agent and Bid Rate Loan
Agent shall each act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or
for any Credit Party. In acting as Bid Rate Loan Agent
hereunder, Company shall not be entitled to the benefits
accorded by this Section 8.
8.2. Powers; General Immunity
A. Duties Specified.
Each Lender irrevocably authorizes Agent and Bid Rate
Loan Agent to take such action on such Lender s behalf and
to exercise such powers hereunder and under the other
instruments and agreements referred to herein as are
specifically delegated to Agent or Bid Rate Loan Agent by
the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. Each of Agent and Bid
Rate Loan Agent shall have only those duties and
responsibilities that are expressly specified in this
Agreement and may perform such duties by or through its
agents or employees. Neither Agent nor Bid Rate Loan
Agent shall have by reason of this Agreement any fiduciary
relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon Agent or Bid Rate Loan
Agent any obligations in respect of this Agreement or the
other instruments and agreements referred to herein except
as expressly set forth herein or therein.
B. No Responsibility for Certain Matters.
Neither Agent nor Bid Rate Loan Agent shall be
responsible to any Lender for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document
or Letters of Credit or for any representations, warranties,
recitals or statements made herein or therein or made in any
written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or
made by Agent or Bid Rate Loan Agent to Lenders or by or
on behalf of any Credit Party to any Lender or be required
to ascertain or inquire as to the performance or observance
of any of the terms, conditions, provisions, covenants or
agreements contained herein or therein or as to the use of
the proceeds of the Loans or of the existence or possible
existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the
contrary notwithstanding, neither Agent not Bid Rate Loan
Agent shall have any liability arising from confirmations of
the amount of outstanding Loans or Letters of Credit.
C. Exculpatory Provisions.
Neither Agent nor Bid Rate Loan Agent, or any of its
respective officers, directors, employees or agents, shall be
liable to Lenders for any action taken or omitted hereunder
or in connection herewith (including, without limitation,
any act or omission under this Agreement) by Agent or Bid
Rate Loan Agent except to the extent caused by its
respective gross negligence or willful misconduct. If Agent
or Bid Rate Loan Agent, as the case may be shall request
instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with
this Agreement or the other instruments or agreements
referred to herein, Agent or Bid Rate Loan Agent, as the
case may be, shall be entitled to refrain from such act or
taking such action unless and until Agent or Bid Rate Loan
Agent shall have received instructions from Requisite
Lenders. Without prejudice to the generality of the
foregoing, (i) Agent and Bid Rate Loan Agent shall be
entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it
to be genuine and correct and to have been signed or sent
by the proper person or persons, and shall be entitled to rely
and shall be protected in relying on opinions and judgments
of attorneys (who may be attorneys for one or more of the
Credit Parties and their respective Subsidiaries),
accountants, experts and other professional advisors
selected by it; and (ii) no Lender shall have any right of
action whatsoever against Agent or Bid Rate Loan Agent as
a result of Agent or Bid Rate Loan Agent acting or (where
so instructed) refraining from acting under this Agreement
or the other instruments and agreements referred to herein
in accordance with the instructions of Requisite Lenders.
Agent and Bid Rate Loan Agent shall be entitled to refrain
from exercising any power, discretion or authority vested in
it under this Agreement or the other instruments and
agreements referred to herein unless and until it has
obtained the instructions of Requisite Lenders.
D. Agent and Bid Rate Loan Agent Entitled to Act as
Lenders.
The agency hereby created shall in no way impair or affect
any of the rights and powers of, or impose any duties or
obligations upon, Agent or Bid Rate Loan Agent in its
individual capacity as a Lender hereunder. With respect to
its respective participation in the Loans, Agent and Bid
Rate Loan Agent shall have the same rights and powers
hereunder as any other Lender and may exercise the same
as though it were not performing the duties and functions
delegated to it hereunder and the term Lender or Lenders
or any similar term shall, unless the context clearly
otherwise indicates, include Agent and Bid Rate Loan
Agent in its respective individual capacity. Agent and Bid
Rate Loan Agent and their respective Affiliates may accept
deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business
with any Credit Party or any Affiliate of any Credit Party as
if it were not performing the duties specified herein, and
may accept fees and other consideration from any Credit
Party for services in connection with this Agreement and
otherwise without having to account for the same to
Lenders.
8.3. Representations and Warranties; No Responsibility
For Appraisal of Creditworthiness
Each Lender represents and warrants that it has made its
own independent investigation of the financial condition
and affairs of Company in connection with the making of
the Loans hereunder and has made and shall continue to
make its own appraisal of the creditworthiness of
Company. Neither Agent nor Bid Rate Loan Agent shall
have any duty or responsibility either initially or on a
continuing basis to make any such investigation or any
such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect
thereto whether coming into its possession before the
making of the Loans, or any time or times thereafter and
neither Agent nor Bid Rate Loan Agent shall have any
responsibility with respect to the accuracy of or the
completeness of the information provided to Lenders.
8.4. Right to Indemnity
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Agent and Bid Rate Loan Agent to the
extent that Agent or Bid Rate Loan Agent shall not have
been reimbursed by Company, for and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without
limitation, counsel and legal assistants fees and
disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or
asserted against Agent or Bid Rate Loan Agent in
performing its duties hereunder or under the other
instruments and agreements referred to herein in its
capacity as Agent or Bid Rate Loan Agent in any way
relating to or arising out of this Agreement or such
instruments and agreements; provided that no Lender shall
be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent s or Bid
Rate Loan Agent s gross negligence or willful misconduct.
If any indemnity furnished to Agent or Bid Rate Loan
Agent for any purpose shall, in the opinion of Agent or Bid
Rate Loan Agent, as the case may be, be insufficient or
become impaired, Agent or Bid Rate Loan Agent may call
for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity
is furnished.
8.5. Registered Person Treated as Owner
Agent may deem and treat each respective Person listed as
a Lender in the Register as the owner of the corresponding
Loan listed therein for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall
have been filed with Agent and recorded in the Register.
Any request, authority or consent of any Person or entity
who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender
shall be conclusive and binding on any subsequent
transferee or assignee of the corresponding Loan.
8.6. Successor Agent
Agent may resign at any time by giving thirty days prior
written notice thereof to Lenders and Company, and Agent
may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to
Company, Agent and signed by Requisite Lenders. Upon
any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five days
notice to Company, to appoint a successor Agent. Upon
the acceptance of any appointment as an Agent hereunder
by a successor Agent that successor Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent and
the retiring or removed Agent shall be discharged from its
duties and obligations under this Agreement. After any
retiring or removed Agent s resignation or removal
hereunder as Agent, the provisions of this Section 8 shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
SECTION 9.
MISCELLANEOUS
9.1. Assignments and Participations in Loans
Each Lender shall have the right at any time, to (y) sell,
assign, transfer or negotiate all or any part of any Loan or
Loans made by it or its Commitments, its participations in
the Letters of Credit or any other interest herein or any
other Obligations owed to it, to any Person or (z) sell
participations in all or any part of any Loan or Loans made
by it or its Commitments, its participations in the Letters of
Credit or any other interest herein or any other Obligations
owed to it, to any Person; provided that (i) no participation
or assignment shall, without the consent of Company,
require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify
the Loans under the blue sky law of any state; (ii) in the
case of an assignment, such assignment may (a) be
assigned in any amount to another Lender or an Affiliate of
such Lender or another Lender with the giving of notice to
Company and Agent or (b) be otherwise assigned with the
consent of Company (which consent shall not be
unreasonably withheld) and the consent of Agent in an
aggregate amount of at least $10,000,000; provided further,
that, to the extent of such assignment in either clause (a) or
(b), the assigning Lender shall be relieved of its obligations
with respect to such Commitments as it has so assigned;
provided still further that any assignment shall become
effective five Business Days after Agent s receipt of (x) a
written notice of such assignment from the assigning
Lender and the assignee Lender and (y) a processing and
recordation fee of $2,500, together with a copy of the
assignment agreement, in connection with Agent s
recording of such sale, assignment, transfer or negotiation;
provided still further that all assignments pursuant to this
subsection 9.1 shall be effected pursuant to an assignment
agreement between the assigning Lender and the assignee
Lender substantially in the form of Exhibit XIV annexed
hereto; and (iii) in the case of a participation, the holder of
any such participation, other than an Affiliate of such
Lender, shall not be entitled to require such Lender to take
or omit to take any action hereunder, except action directly
affecting the extension of the regularly scheduled maturity
of any portion of the principal amount of or interest on a
Loan or any fees related thereto allocated to such
participation, or a reduction of the principal amount of or
the rate of interest payable on the Loans or any fees related
thereto allocated to such participation, and all amounts
payable by Company hereunder shall be determined as if
that Lender had not sold such participation. In the case of
an assignment authorized under this subsection 9.1, the
assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as it would if it were a
Lender, including, without limitation, the right to
indemnification pursuant to subsection 9.3 and the right to
approve or disapprove actions which, in accordance with
the terms hereof, require the approval of the Requisite
Lenders and the assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitment, or,
as the case may be, the assigned portion thereof. In the
event of an assignment hereunder the Commitments
hereunder shall be modified to reflect the Commitment of
such assignee and, if any such assignment occurs while any
Loan is outstanding, Agent shall, no later than five
Business Days following receipt of notice thereof, record
such assignment in the Register as provided in subsection
2.1.F and such assignment shall become effective upon
such recordation. In the event of an assignment of Notes,
upon surrender of the assigning Lender s Notes, Company
shall issue and deliver to Agent for delivery to such
assignee and to assigning Lender, if applicable, new Notes
pursuant to subsection 2.1.F as necessary to reflect the new
Commitments of Lender and of assignee. Each Lender
may furnish any information concerning Company and its
Subsidiaries in the possession of that Lender from time to
time to assignees and participants (including prospective
assignees and participants), subject to subsection 9.19.
Company hereby acknowledges and agrees that any
participation will give rise to a direct obligation of
Company to the participant and the participant shall for
purposes of subsections 2.3.G, 2.4.G, 2.8.A, 2.8.B, 2.8.C,
2.9, 2.10, 9.4 and 9.5 be considered to be a Lender ;
provided that no participant shall be entitled to receive any
greater amount pursuant to subsections 2.3, 2.4, 2.8 or 2.9
than the transferor Lender would have been entitled to
receive in respect of the amount of the participation
effected by such transferor Lender to such participant had
no such participation occurred.
Except as otherwise provided in the immediately preceding
paragraph, no Lender shall, as between Company and such
Lender, be relieved of any of its obligations hereunder as a
result of any sale, assignment, transfer or negotiation of, or
granting of participations in, all or any part of the Loans or
other Obligations owed to such Lender.
9.2. Expenses
Whether or not the transactions contemplated hereby shall
be consummated, Company agrees to pay promptly (i) all
the actual and reasonable costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all
opinions by counsel for the Credit Parties (including
without limitation any opinions requested by Lenders as to
any legal matters arising hereunder), and of the Credit
Parties perfor- mance of and compliance with all
agreements and conditions contained herein and in the
other Loan Documents on its part to be performed or
complied with; (ii) the reasonable fees, expenses and
disbursements of counsel to Agent in connection with the
negotiation, preparation, execution and administration of
the Loan Documents and the Loans and any consents,
amendments, waivers or other modifications hereto or
thereto and any other documents or matters requested by
any Credit Party; (iii) all other actual and reasonable costs
and expenses (without duplication) incurred by Agent
(including reasonable fees, expenses and disbursements of
counsel) in connection with the negotiation, preparation
and execution of the Loan Documents, the issuance of the
Letters of Credit and the transactions contemplated hereby
and thereby, including the arrangement by Agent for one or
more Lenders (as defined in the Commitment Letter) to
participate in the Bank Financing (as defined in the
Commitment Letter), but excluding the costs and expenses
of such Lenders (other than Bankers) and their counsel in
connection with such arrangements; and (iv) after the
occurrence of an Event of Default, all costs and expenses
(including reasonable fees, expenses and disbursements of
counsel, including allocated costs of internal counsel, and
costs of settlement) incurred by Lenders in enforcing any
Obligations of or in collecting any payments due from any
Credit Party hereunder or under the Notes or the other Loan
Documents or any Letter of Credit by reason of such Event
of Default or in connection with any refinancing or
restructuring of the credit arrangements provided under this
Agreement in the nature of a work-out or of any
insolvency or bankruptcy proceedings.
9.3. Indemnity
In addition to the payment of expenses pursuant to
subsection 9.2, whether or not the transactions
contemplated hereby shall be consummated, Company
agrees to indemnify, pay and hold Agent, Bid Rate Loan
Agent, Trustee and Lenders and the officers, directors,
employees, agents, and affiliates of Agent, Bid Rate Loan
Agent, Trustee and Lenders (collectively called the
Indemnitees ) harmless from and against, any and all other
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without
limitation, the reasonable and documented fees and
disbursements of counsel and its legal assistants for such
Indemnitee in connection with any investigative,
administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitee shall be
designated a party thereto), that may be imposed on,
incurred by, suffered by or asserted against that Indemnitee,
in any manner relating to or arising out of this Agreement
or the other Loan Documents, the statements contained in
the commitment letter delivered by any Lender, Lenders
agreement to make the Loans hereunder, Issuing Lenders
agreement to issue Letters of Credit, the use or intended use
of the proceeds of any of the Loans or any Letter of Credit
or under or on account of any Environmental Law or
Release of any Hazardous Materials (the indemnified
liabilities ); provided that Company shall not have any
obligation to an Indemnitee hereunder with respect to
indemnified liabilities arising from gross negligence or
willful misconduct of that Indemnitee (treating, for this
purpose only, any Lender and its directors, officers,
employees, agents and affiliates as a single Indemnitee).
To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public
policy, Company shall contribute the maximum portion that
they are permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them.
9.4. Set Off
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such
rights, upon the occurrence and continuation of any Event
of Default, each Lender is hereby authorized by Company
at any time or from time to time, without notice to
Company, or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and
to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of
deposit, whether matured or unmatured but not including
trust accounts) and any other Indebtedness at any time held
or owing by such Lender to or for the credit or the account
of Company, against and on account of the obligations and
liabilities of Company to such Lender under this
Agreement, including, without limitation, all claims of any
nature or description arising out of or connected with this
Agreement, the Notes or any other Loan Document,
regardless of whether or not (a) such Lender shall have
made any demand hereunder or (b) the principal of or the
interest on the Loans or Notes, amounts in respect of the
Letters of Credit or any other Obligations of Company in
respect of and other amounts due hereunder shall have
become due and payable pursuant to Section 7 and although
said obligations and liabilities, or any of them, may be
contingent or unmatured.
9.5. Ratable Sharing
Lenders agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon
security, through the exercise of any right of counterclaim,
cross action, set-off, bankers lien, by enforcement of any
right under the Loan Documents or otherwise or as
adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction
of a proportion of the aggregate amount of principal and
interest then due in respect of any Loans held by such
Lender or amounts payable in respect of Letters of Credit or
the other Obligations, the amount then due to such Lender
with respect to any participation therein or amounts due to
such Lender in respect of facility fees or commitment fees
hereunder (collectively, the Aggregate Amounts Due to
such Lender), which is greater than the proportion received
by any other Lender in respect of the Aggregate Amounts
Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (y) notify each other
Lender and Agent of such receipt and (z) purchase
participations (which it shall be deemed to have purchased
from each seller simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by
Lenders in proportion to the Aggregate Amounts Due them;
provided that if all or part of such proportionately greater
payment received by such purchasing Lender is thereafter
recovered from such Lender, those purchases shall be
rescinded and the purchase prices paid for such
participations shall be returned to such Lender to the extent
of such recovery, with interest only to the extent actually
paid over by such purchasing Lender. Company expressly
consents to the foregoing arrangement and agree that any
holder of a participation so purchased and any other
subsequent holder of a participation in any Loan otherwise
acquired may exercise any and all rights of bankers lien,
set-off or counterclaim with respect to any and all monies
owing by Company to that holder as fully as if that holder
were a Lender in the amount of the participation held by
that holder.
9.6. Amendments and Waivers
No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, the Guaranties
or the Pledge Agreement, or consent to any departure by
any Credit Party therefrom, shall in any event be effective
without the written concurrence of Requisite Lenders;
except that any amendment, modification, termination, or
waiver of: the amount of the Commitments or the principal
amount of the Loans or payments or prepayments by
Company in respect thereof (other than the order of
application of proceeds pursuant to subsection 2.6); each
Lender s Pro Rata Share; the definitions of Requisite
Lenders , Scheduled Term Loans Principal Payments ; any
provision expressly requiring the approval or concurrence
of all Lenders; the scheduled maturity dates of the Loans;
the dates on which interest is payable; decreases in the
interest rates borne by the Loans; the dates and amount of
fees payable hereunder; the maximum duration of interest
periods; the termination of the Pledge Agreement or the
release of the collateral pledged thereunder or the release of
all or substantially all of the Obligations of the Guarantors
(except as expressly permitted herein and therein); and the
provisions contained in subsections 7.1 and 9.6 shall be
effective only if evidenced by a writing signed by or on
behalf of all Lenders. Any amendment, modification,
termination or waiver of any of the provisions contained in
Section 3 shall be effective only if evidenced by a writing
signed by or on behalf of Requisite Lenders. No
amendment, modification, termination or waiver of any
provision of Section 8 hereof shall be effective without the
written concurrence of Agent and no amendment,
modification, termination or waiver of Section 10 hereof
shall be effective without the written concurrence of
Trustee. Agent may, but shall have no obligation to, with
the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that
Lender. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
it was given. No notice to or demand on Company in any
case shall entitle Company to any other or further notice or
demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent
effected in accordance with this subsection 9.6 shall be
binding upon each Lender at the time listed in the Register,
each future Lender, and if signed by Company, on
Company.
9.7. Independence of Covenants
All covenants hereunder shall be given independent effect
so that if a particular action or condition is not permitted by
any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an
Event of Default or Potential Event of Default if such
action is taken or condition exists.
9.8. Notices
Unless otherwise specifically provided herein, any notice
or other communica- tion herein required or permitted to
be given shall be in writing and may be personally served,
telecopied or sent by United States mail or courier service
and shall be deemed to have been given when delivered in
person, receipt of telecopy or four Business Days after
depositing it in the United States mail, registered or
certified, with postage prepaid and properly addressed;
provided that notices to Agent shall not be effective until
received. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered
as provided in this subsection 9.8) shall be as set forth
under each party s name on the signature pages hereof. In
connection with the solicitation and making of Bid Rate
Loans in accordance with subsection 2.1.E, Agent, Bid
Rate Loan Agent, Trustee and each Lender shall be entitled
to rely upon all telephonic notices without awaiting receipt
of written versions of such notices and Company shall hold
Agent, Bid Rate Loan Agent, Trustee and each Lender
harmless from, and shall indemnify Agent, Bid Rate Loan
Agent and Trustee against, any loss, cost or expense
ensuing from any such reliance.
9.9. Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties made
herein shall survive the execution and delivery of this
Agreement, the making of the Loans hereunder, the
issuances of the Letters of Credit and the execution and
delivery of the Notes.
B. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of Company
set forth in subsections 2.3.G, 2.4.G, 2.8.A, 2.8.B, 2.8.C,
2.9, 9.2, and 9.3 and the agreements of Lenders set forth in
subsections 8.2.C, 8.4, 9.4 and 9.5 shall survive the
payment of the Loans and the Notes, the termination of the
Letters of Credit and the termination of this Agreement.
9.10. Failure or Indulgence Not Waiver; Remedies
Cumulative
No failure or delay on the part of any Lender or issuer of
any Letter of Credit in the exercise of any power, right or
privilege hereunder or under the Notes or the Letters of
Credit shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights
and remedies existing under this Agreement and the Notes,
the Letters of Credit and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies
otherwise available.
9.11. Marshalling; Payments Set Aside
Neither any Lender nor Agent shall be under any
obligation to marshal any assets in favor of any Credit
Party or any other Person or against or in payment of any or
all of the Obligations. To the extent that Company makes a
payment or payments to Agent or Lenders (or to Agent for
the benefit of Lenders) or Agent or Lenders or exercise
their rights of setoff, and such payment or payments or the
proceeds of setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of
such recovery, the obligation or part thereof originally
intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such
enforcement or set-off had not occurred.
9.12. Severability
In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
9.13. Lenders Obligations Several; Independent Nature of
Lenders Rights
The obligation of each Lender hereunder is several and no
Lender shall be responsible for the obligation or
commitment of any other Lender hereunder. Nothing
contained in any Loan Document and no action taken by
Lenders pursuant hereto or thereto shall be deemed to
constitute Lenders to be a partnership, an association, a
joint venture or any other kind of entity. The amounts
payable at any time hereunder to each Lender shall be a
separate and independent debt, and, subject to subsection
9.5, each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
9.14. Headings
Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other
purpose or be given any substantive effect.
9.15. Applicable Law
This Agreement and the other Loan Documents shall be
governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New
York, without regard to conflicts of laws principles.
9.16. Successors and Assigns; Subsequent Lenders
This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and shall inure
to the benefit of the parties hereto and the successors and
assigns of Lenders. The terms and provisions of this
Agreement shall inure to the benefit of any assignee or
transferee of the Loans, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon
Lenders shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and
conditions hereof. Company s rights or any interest therein
hereunder may not be assigned without the written consent
of all Lenders. Lenders rights of assignment are subject to
subsection 8.2.
9.17. Consent to Jurisdiction and Service of Process
All judicial proceedings brought against Company arising
out of or relating to this Agreement, any Note or other Loan
Document or any Obligation may be brought in any state or
federal court of competent jurisdiction in the State of New
York and by execution and delivery of this Agreement,
Company accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts and waives any defense
of forum non conveniens, and irrevocably agrees (subject to
appeal) to be bound by any judgment rendered thereby in
connection with this Agreement, such Note, such other
Loan Document or such Obligation. Company designates
and appoints the Controller and Chief Financial Officer of
Company, at the address set forth under Company s name
on the signature page hereof and such other Persons as may
hereafter be selected by Company irrevocably in writing to
so serve, as its agent to receive on its behalf service of all
process in any such proceedings in any such court, such
service being hereby acknowledged by Company to be
effective and binding service in every respect. A copy of
any such process so served shall be mailed by registered
mail to Company at its address provided in the applicable
signature page hereto, except that unless otherwise
provided by applicable law, any failure to mail such copy
shall not affect the validity of service of process. If any
agent appointed by Company refuses to accept service,
Company hereby agrees that service upon it by mail shall
upon receipt constitute sufficient notice. Nothing herein
contained shall affect the right to serve process in any other
manner permitted by law or shall limit the right of any
Lender to bring proceedings against Company in the courts
of any other jurisdiction.
9.18. Waiver of Jury Trial
Each of the parties to this Agreement hereby irrevocably
waives all right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement,
the Loan Documents or the transactions contemplated
hereby or thereby.
9.19. Confidentiality
Lenders and participants shall hold all non-public
information obtained pursuant to the requirements of this
Agreement which has been identified as such by Company
in accordance with its customary procedure for handling
confidential information of this nature and in accordance
with safe and sound banking practices and in any event
may make disclosures (x) reasonably required by any bona
fide assignee, transferee or participant who has agreed to
comply with this subsection 9.19 as if it were a Lender
hereunder in connection with the contemplated assignment
or transfer of any Loans or participation therein or (y) as
required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided
that, unless specifically prohibited by applicable law or
court order, each Lender shall notify Company of any
request by any governmental agency or representative
thereof (other than any such request in connection with any
examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such
non-public information prior to disclosure of such
information, and provide Company with an opportunity to
respond; provided further that in no event shall any Lender
be obligated or required to return any materials furnished
by Company or any of its Subsidiaries.
9.20. Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents,
or supplements may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed and
delivered shall be deemed an original, but all such
counterparts, together shall constitute but one and the same
instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties
hereto and written or telephonic notification of such
execution and authorization of delivery thereof has been
received by Company and Agent.
SECTION 10.
TRUSTEE
10.1. Appointment as Trustee
Company may appoint Continental Bank to act as Trustee
hereunder and Continental Bank may accept or decline such
appointment. In the event that Continental Bank accepts
such appointment, it will accept solely in its capacity as
Trustee, subject to the terms and conditions of this Section
10, to follow the procedures set forth in subsection 2.1.E.
Each Lender shall be deemed to have authorized
Continental Bank to act in the capacity of Trustee as agent
for such Lender in accordance with the terms hereof. In
acting as Trustee hereunder, Company shall not be entitled
to the benefits accorded by this Section 10.
10.2. Limitation on Duties
Trustee shall have no duties or responsibilities except those
expressly specified in this Agreement and those duties and
liabilities shall be subject to the limitations and
qualifications set forth herein. The duties of Trustee shall
be mechanical and administrative in nature.
10.3. Limitation on Liabilities
Neither Trustee nor any of its directors, officers or
employees shall be liable for any action taken or omitted
(whether or not such action taken or omitted is within or
without Trustee s responsibilities and duties expressly
specified in this Agreement) under or in connection with
this Agreement or any other instrument or document
executed in connection herewith, except to the extent
caused by its gross negligence or willful misconduct.
Without prejudice to the generality of the foregoing, neither
Trustee nor any of its directors, officers or employees shall
be responsible for, or have any duty to inquire into (a) the
genuineness, execution, validity, effectiveness, or
sufficiency of (i) any Bid Rate Loan Quote Request, Bid
Rate Loan Quote, Notice of Bid Rate Loan Borrowing or
Invitation for Bid Rate Loan Quotes, or (ii) any document
or instrument furnished pursuant to or in connection with
this Agreement, or (b) any failure of any party to this
Agreement to receive any communication sent.
10.4. Trustee s Action on Communications
Trustee shall be entitled to receive, and shall be fully
protected in acting upon, any communication in whatever
form believed by Trustee in good faith to be genuine and
correct and to have been signed or sent or made by a proper
person or persons or entity. Trustee may consult counsel
and shall be entitled to act, and shall be fully protected in
any action taken in good faith, in accordance with advice
given by counsel. Trustee may employ agents and
attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected
by Trustee with reasonable care. Trustee shall not be
bound to ascertain or inquire as to the performance or
observance of any of the terms, provisions or conditions of
this Agreement.
10.5. Continental Bank Entitled to Act as Lender
With respect to the Commitments of Continental Bank and
Loans made by Continental Bank hereunder, Continental
Bank shall have the same rights and powers and duties
under this Agreement as any other Lender and may exercise
such rights and duties as though it were not also acting as
Trustee hereunder. Continental Bank and its Affiliates may
accept deposits from, lend money to, and generally engage,
and continue to engage, in any kind of business with
Company as if Continental Bank were not also acting as
Trustee hereunder.
10.6. Successor Trustee
Trustee may resign at any time by giving at least thirty
days written notice thereof to Lenders and Company.
Upon any such notice of resignation, Lenders with the
consent of the Company (which consent shall not be
unreasonably withheld) shall have the right to appoint a
successor Trustee. If no successor Trustee shall have been
appointed by Lenders and accepted such appointment
within thirty days after the retiring Trustee s giving notice
of resignation, then the retiring Trustee may, but shall not
be required to, on behalf of the Lenders, appoint a
successor Trustee.WITNESS the due execution hereof by
the respective duly authorized officers of the undersigned
as of the date first written above.
COMPANY:
DANAHER CORPORATION
By: /s/ Patrick W. Allender
Title: Chief Financial Officer and Secretary
Notice Address:
DANAHER CORPORATION
1250 24th Street, N.W.
Washington, D.C. 20037
Attention: Patrick W. Allender
Telecopier: (202) 828-0860
with copies to:
SKADDEN, ARPS, SLATE, MEAGHER &
FLOM
919 Third Avenue
New York, New York 10022
Attention: Scott V. Simpson, Esq.
Telecopier: (212) 735-2001
LENDERS:
BANKERS TRUST COMPANY,
individually, and as Agent
By: /s/
Title: Vice President
Notice Address:
BANKERS TRUST COMPANY
Operations
280 Park Avenue
14th Floor
New York, New York 10017
Attention: Robert R. Telesca
with copies to:
BANKERS TRUST COMPANY
Operations
280 Park Avenue
14th Floor
New York, New York 10017
Attention: Fred J. Angelo
Telecopier: (212) 850-2605
O MELVENY & MYERS
153 East 53rd Street
54th Floor
New York, New York 10022-4611
Attention: Marc P. Hanrahan, Esq.
THE BANK OF NOVA SCOTIA
By: /s/ J. Alan Edwards
Title: Assistant General Manager
Notice Address:
THE BANK OF NOVA SCOTIA
One Liberty Plaza
New York, New York 10066
Attention: Jim Trimble
Telecopier: (212) 225-5090
THE BANK OF TOKYO TRUST COMPANY
By: /s/ S.W. Starr
Title: Vice President and Manager
Notice Address:
THE BANK OF TOKYO TRUST COMPANY
1825 K Street, N.W.
Suite 703
Washington, D.C. 20006
Attention: Stanley W. Starr
Telecopier: (202) 293-3416
THE CHASE MANHATTAN BANK, NA
By: /s/
Title: Vice President
Notice Address:
THE CHASE MANHATTAN BANK, NA
One Chase Manhattan Plaza
New York, New York 10081
Attention: Brian McDonagh
Telecopier: (212) 552-5189
CONTINENTAL BANK, NATIONAL
ASSOCIATION in its individual
corporate capacity
By: /s/
Title: Vice President
Notice Address as Lender:
CONTINENTAL BANK, NATIONAL
ASSOCIATION
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Timothy J. Pepowski
Telecopier: (312) 828-3864
FOR BID RATE LOAN QUOTE
REQUESTS:
MR. WILLIAM M. LUPOLETTI
Phone: (312) 828-1946
Fax: (312) 346-3575
or
(313) 372-3206
CREDIT SUISSE
By: /s/ Thomas N. George
Title: Vice President
By: /s/ Jay Hall
Title: Vice President
Notice Address:
CREDIT SUISSE
100 Wall Street
New York, New York 10005
Attention: Jay Chall
Telecopier: (212) 943-1598
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/
Title: Vice President
Notice Address:
THE FIRST NATIONAL BANK OF
CHICAGO
1776 I Street, N.W.
Suite 800
Washington, D.C. 20006
Attention: Ted Wozniak
Telecopier: (202) 833-6677
THE TORONTO-DOMINION BANK
By: /s/
Title: Director
Notice Address:
THE TORONTO-DOMINION BANK
31 West 52nd Street
New York, New York 10019
Attention: Eric I. Skillins
Attention: Duncan Robertson
Telecopier: (212) 262-1926
THIS AGREEMENT is made this 7th day of March,
1988 between EASCO HAND TOOLS, INC., a Delaware
corporation ("Seller") , and SEARS, ROEBUCK AND CO., a
New York corporation ("Sears") ;
WITNESSETH
The Parties hereto mutually agree as follows:
1. (a) Seller agrees to manufacture and sell to Sears, and
Sears agrees to purchase from Seller, in each contract year
during the term hereof, seventy percent (70%) of Sears
requirements of Sears "Craftsman" grade socket wrenches and
accessories and flat wrenches (open end, box end and
combination end) of the types currently being manufactured by
Seller for Sears, as purchased through Sears Department 609
(hereinafter collectively called "Product"). Sears shall have the
right, at its option, to purchase from Seller and to require Seller
to manufacture and sell to Sears in any contract year during the
term hereof, at the prices and subject to the terms of this
Agreement, additional quantities of product, not exceeding,
however, Sears total requirements thereof for such year.
(b) The parties may agree to the sale and purchase of
item(s) of product outside of this Agreement and under different
prices, terms and conditions except that such purchases shall be
counted as if purchased hereunder for purposes of determining
whether Sears has met its minimum purchase obligation. Such
purchases shall be subject to the terms and conditions of this
Agreement unless otherwise modified. Such purchases and any
additional costs incurred because of them shall not be
considered in establishing, in accordance with Schedule A,
estimated manufacturing costs and prices for goods purchased
under this Agreement. Such product purchased outside this
Agreement shall be treated as if such purchases were additional,
unanticipated, and unestimated sales by Seller for purposes of
estimating manufacturing costs and establishing prices.
However, purchases of product made outside this Agreement
and the costs attributable or allocable, in accordance with
Schedule A, to product purchased outside of this Agreement,
shall be included in the determinations of any excess under
Paragraph 5 hereof as if such product were purchased by Sears
under this Agreement. All such agreements to purchase items
outside of this Agreement shall be in writing and signed by the
Vice President in charge of the appropriate Sears merchandise
group.
2. It is the intent of the parties that product manufactured
by Seller for Sears will be scheduled for production during the
term hereof so as to meet Sears reasonable delivery
requirements, and insofar as possible to achieve manufacturing
efficiency and economical production. Each contract year shall
be divided into two (2) production periods beginning,
respectively on the first day of January and July. Sears shall
furnish to Seller, at least one hundred and twenty (120) days
before the beginning of each contract year, a written estimate of
Sears requirements of product for the ensuing contract year.
This estimate will not be a firm commitment by Sears, it will be
provided as a guide to Seller for purposes of production
scheduling and cost development. Within fifteen (15) days after
receipt of such written estimate of Sears requirements of
product for the contract year, Seller shall furnish Sears
Department 609 a written statement of its estimated capacity for
production of product during such contract year, and a written
statement of Seller's computation of its estimated
"manufacturing cost", as defined in Schedule "A" hereof, of
product to be manufactured for Sears during such contract year,
based an Sears estimated requirements for said contract year.
Such statements of estimated cost shall show, as accurately as
Seller can determine each element entering into "manufacturing
cost" of product and Seller's standard cost hereinafter referred
to. Thereafter, and at least thirty (30) days before the beginning
of each contract year, the estimated "manufacturing cost" to be
used in fixing the contract price to be charged for product to be
manufactured during such contract year (including both
production periods) shall be agreed upon by Seller and Sears, or
otherwise established as provided in Paragraph 7 hereof. Sears
shall then immediately after the estimated manufacturing cost is
so agreed upon or otherwise established, place with Seller a
firm production order for the first production period of the
contract year at the contract price determined in accordance
with the provisions of Paragraph 3 hereof. Sears shall place
with Seller a firm production order for the second production
period of the contract year, at least thirty (30) days prior to the
beginning of such production period, at the same contract price
as determined in accordance with the provisions of Paragraph 3
hereof for the contract year. Notwithstanding the foregoing,
prior to the due date of the firm production order for the second
production period of the contract year, Sears, at its sole
discretion, may revise its written estimate of Sears requirements
of any product for the contract year, and in the event Sears does
such a revision, Sears and Seller shall review the sales,
inventory, production and cost and may agree to adjust the
estimated manufacturing cost to be used to establish the contract
price for any such product the subject of such a revision, to the
extent necessary as a result of Sears revision of the written
estimate of Sears requirements of such product for the contract
year provided that Seller may include considerations of
updating its estimate of manufacturing cost. The revised
contract price established by any such adjusted estimated
manufacturing cost shall be calculated in accordance with
paragraph 3(a). The contract price for the second production
period order shall then be adjusted upward or downward in
amounts determined by Sears for each product so that the total
contract prices paid by Sears for all estimated product
requirements for the contract year, as revised would equal the
amount which would be paid if the revised contract price had
been in effect for the entire year. If Sears purchases two or
more products of different specifications from Seller, the
foregoing procedure shall be followed with respect to each item
of product.
3. (a) Except for items of product purchased by Sears
from Seller which are of like grade and quality as items then
sold domestically by Seller to its other customers and subject to
the provisions of Paragraph 4 hereof, the contract price for each
item of product to be produced for Sears during each production
period shall equal the amount determined by dividing the
estimated "manufacturing cost," excluding the no profit items
thereof, by the number determined by subtracting from one the
decimal figure equivalent to the net operating profit rate plus the
no profit items of "manufacturing cost". [Contract Price =
"manufacturing cost" - no profit items of manufacturing cost" =
1- .127) + no profit items of "manufacturing cost".] The net
operating profit rate shall be twelve and seven-tenths percentage
(12.7%).
The contract price during each production period for
buyout items, which are defined for purposes of this Agreement,
as items approved by Sears purchased by Seller from other
sources for inclusion in combination with product manufactured
by Seller in product its sold by Seller to Sears hereunder, shall
equal (1) the estimated net landed cost thereof and (2) any
"manufacturing cost," as defined in Schedule A, allocable in
accordance with sound and accepted accounting principles to
any such buyout items (which allocable "manufacturing cost"
shall not be included in the "manufacturing cost" of any
product), both (1) and (2) as established for such period by
agreement of the parties, plus (3) a profit equal to seven percent
(7%) of such costs excluding any no profit cost items. There
shall not be any settlement between Seller and Sears with
respect to any variance between the amount of the actual net
landed cost and the estimated net landed cost of the buyout
items provided, however, that any cost increase or decrease
accepted by Sears from current Sears sources for items, which
are purchased by Easco after the effective date of such increase
or decrease and are included as buyout items in product sets
Easco provides to Sears pursuant to this Agreement, may result
in an increase or decrease, respectively, in the cost of such
product sets, but only to extent of the amount of the net
aggregate cost increase or decrease resulting from Sears
accepted price increase or decrease for items included as buy
out items in such sets.
(b) Subject to the provisions of Paragraph 4 hereof,
Seller's price to Sears (F.O.B. shipping point) for each item of
product to be manufactured for Sears during each production
period which is of like grade and quality as an item sold
domestically by Seller to any of its other customers, shall equal
the net price for said item then charged by Seller to such other
customers less a differential (if any) which makes due
allowance for differences in the cost of manufacture, sale, or
delivery for or to Sears, resulting from the differing methods or
quantities in which said item of product is sold or delivered to
Sears as compared to such other customers of Seller. Said
differential shall be computed prospectively in accordance with
generally accepted accounting principles, and shall be based
upon estimates which fairly reflect past results.
4. Seller's "delivered price" of product for any
production period to a Sears Catalog Merchandise Distribution
Center ("CMDC") shall mean Seller's proposed contract price
for such period, determined pursuant to Paragraph 3 hereof, plus
the cost of transportation of product from Seller's plant to such
CMDC. The term "competitive delivered price" shall mean the
lowest price (except a distress price) quoted to Sears for said
production period by any other reputable manufacturer or
source for the same or similar product of comparable kind and
quality, plus the cost of transportation of said product from the
plant of such other manufacturer or source to a Sears CMDC. If
Seller's "delivered price" of product to any Sears CMDC
exceeds the "competitive delivered price" to such CMDC, and
Sears gives Seller written notice to that effect before placing its
order with Seller for any production period, then Seller shall,
within ten (10) days after receipt of such notice, advise Sears in
writing that it will reduce or refuses to reduce its contract price
to each such CMDC and to the retail stores served by each such
CMDC, to such extent that Seller's "delivered price" to each
such CMDC will not exceed the "competitive delivered price"
to that CMDC. If Seller refuses to so reduce said contract price
or fails to advise Sears of its decision within the aforesaid ten
(10) day period, Sears shall have the right, in its discretion, to
purchase from such other manufacturer or source all or any part
of the quantity of product required by Sears in the territory
served by any such CMDC, and Sears obligations to purchase
and Seller's obligation to manufacture and sell product
hereunder shall be reduced by the amount of such purchases
from such other manufacturer or source.
5. Within ninety (90) days after the end of each contract
year hereof, Seller shall determine by audit the actual
"manufacturing cost", as defined in Schedule A, of product sold
to Sears hereunder during such contract year and the actual net
landed cost of, and "manufacturing cost" allocable to, buyout
items sold to Sears during such year. The actual manufacturing
cost shall be allocated between product sold to Sears under the
provisions of Paragraph 3(a) and product sold under the
provisions of Paragraph 3(b). If the total contract prices paid to
Seller for product and buyout items sold to Sears hereunder
during such year shall exceed the total contract prices for the
products, determined by the actual "manufacturing cost" in
accordance with Paragraph 3, and for buyout items, determined
by the actual net landed cost of, and actual "manufacturing
costs" allocable to, buyout items, plus the profit specified in
Paragraph 3 hereof applicable to buyout items sold to Sears
during such year, then Seller shall promptly pay, or, at Sears
option, credit to Sears, one-half of such excess. Seller shall
furnish to Sears within the aforesaid period of time a copy of
each such determination and a statement showing the amount
due Sears hereunder, if any.
6. The parties recognize that a standard cost accounting
system is desirable in order to establish effective cost control
procedures, to provide a means of accurately determining the
length of most efficient production runs and methods of
reducing seasonal production curver to enable the parties to
evaluate the costs peculiar to different specifications and
assortments of product, and to otherwise enable the parties to
achieve economical production. Accordingly, during the term
hereof, Seller shall maintain a standard cost accounting system
based upon sound and accepted accounting practice, using
standard cost representing Seller's determination of the most
economical costs attainable with its facilities under existing
conditions. Since lower costs and efficient production can best
be attained through the joint effort of Seller and Sears, it is
agreed that all books and records pertaining to such cost system,
including the budget for control of overhead, shall be available
for examination by Sears at all reasonable times. Seller shall
also furnish to Sears Department 609 monthly operating reports,
prepared from such standard cost accounting system and
showing a comparison of actual manufacturing cost, as defined
in Schedule "A", of product produced for Sears as compared to
standard cost and a statement of actual profit earned for the
period covered by each report.
7. Sears shall have the right to examine Seller's
accounting and cost records in connection with establishing
periodic contract prices and for the purpose of auditing the
year-end determination of actual "manufacturing cost". If the
parties do not agree on the computation of "manufacturing cost"
in establishing periodic contract prices or in making the
year-end cost determination, either party may have Seller's
books and records audited by a firm of independent certified
public accountants approved by the other party for that purpose.
Said audit and determination shall be final and binding upon
both parties hereto, and each party shall bear one-half the cost
of such audit.
8. Seller guarantees and warrants that product sold to
Sears under this Agreement will be of good workmanship and
material, free of defects, merchantable, and will conform to
specifications agreed upon by the parties. In the event any
product or buyout item sold to Sears under this Agreement
proves to be not in compliance with the above warranty, then
the same may be rejected by Sears and held or returned to Seller
at Seller's expense and risk, and Seller shall, at Sears option,
either replace such item of product or buyout item with a new
item of product or new buyout item respectively, and deliver the
same, shipping charges prepaid, to Sears, or to such person, and
at such place, as Sears may in writing direct, or give Sears full
credit for said returned item of product or buyout item, plus
transportation charges paid thereon by Sears. Ratchet wrench
warrantees hereunder shall be as modified by Letter Agreement
dated December 31, 1985, as amended by letter dated June 1,
1986, between Sears and Seller regarding the Ratchet Warranty
Reimbursement Policy Agreement.
9. Seller shall provide space on its premises for storage
of product and buyout items pending delivery and sale to Sears.
Product manufactured for Sears and buyout items shall be
stored at Seller's risk, shall be packed in accordance with Sears
written specifications, and shall be shipped by Seller at such
time, and in such manner as Sears shall reasonable direct in its
shipping instructions to Seller.
In the event Seller shall fail to ship, in compliance with
Sears shipping instructions, product or buyout item ordered by
Sears from Seller under this Agreement, then Sears shall have
the right, at its option, to purchase or commit itself to purchase
any of such product or buyout item from other manufacturers or
sources, and to the extent of the purchase or commitments
which Sears may place with other manufacturers or sources in
the exercise of such right, Sears obligations in respect to orders
placed with Seller shall be reduced accordingly, and the amount
required to be purchased by Sears under this Agreement shall
likewise be so reduced.
10. Product and buyout items shall be billed at the time
of actual shipment by Seller to Sears pursuant to Sears written
shipping instructions. Terms of payment shall be net thirty (30)
days from receipt of goods with no anticipation.
11. Seller guarantees that product manufactured and sold
and buyout items sold to Sears under this Agreement will not
infringe any patent, and agrees without cost to Sears, to protect,
defend, hold harmless, and indemnify Sears from and against
any and all claims, demands, suits, judgments, damages,
royalties, actions and causes of action whatsoever arising out of
any alleged infringement of any patent or claim of patent by
reason of the manufacture, sale, or use of product or buyout
items sold by Seller to Sears under this Agreement. In the event
of any claim that the manufacture, sale, or use of product or
buyout items sold by Seller to Sears under this Agreement
constitutes an infringement of any patent, Sears shall have the
right, at its option, in addition to all other rights and remedies it
may have, to cease purchasing from Seller the product or
buyout items affected by such claim, and to purchase such
product or buyout item from other manufacturers or sources
until such time during the term hereof as there shall be a final
adjudication of such claim favorable to Seller, and the total
quantity of product or buyout item required to be purchased by
Sears from Seller under this Agreement shall be reduced by the
amount of such purchases. For the purposes of this paragraph,
"product" shall be deemed to include any packaging supplied by
Seller.
12. Seller agrees to protect, defend, hold harmless, and
indemnify Sears from and against any and all liability and
expense resulting from any alleged or claimed defect in product
or buyout items, whether latent or patent, including allegedly
improper construction and design, or from the failure of product
to comply with specifications or with any express or implied
warranties of Seller or arising out of the alleged violation by
product or buyout items or in the manufacture or sale of any
law, statute, ordinance or administrative order, rule or
regulation. These agreements and obligations shall not be
affected or limited in any way by Sears extending express or
implied warranties to its customer, except to the extent that
Sears warranties extend beyond the scope of Seller's warranties,
express or implied, to Sears. Nor shall these agreements and
obligations be affected or limited in any way by any action or
inaction on the part of Sears pursuant to Paragraph 8 hereof.
Seller further agrees to obtain at its expense product liability
insurance, with a vendors' endorsement, in such form and
amount and in such company as may be approved by Sears in
writing. Satisfactory evidence of such insurance shall be
submitted to Sears upon request. For the purposes of this
paragraph, "product" shall he deemed to include any packaging
supplied by Seller.
13. Neither party shall be liable for any failure, inability,
or delay to perform hereunder, if such failure, inability or delay
be due to war, strike, fire, explosion or sabotage accident,
casualty, government law order or regulation, or any cause
beyond the reasonable control of the party so failing, but due
diligence shall be used in curing such cause and in resuming
performance. If Seller's performance shall be prevented,
delayed or materially impaired by any such cause, then this
Agreement, if Sears so elects shall be inoperative, in whole or in
part, so long as such situation continues, but without thereby
effecting an extension of the term of this Agreement, and all
costs and expenses incurred by Seller while this Agreement is
inoperative as aforesaid shall be excluded from the
determination of Seller's "manufacturing cost" in calculating
contract prices, but shall be included in the end determination of
cost provided under Paragraph 5 hereof.
14. Seller represents and warrants that product or
buyout items sold to Sears under this Agreement and any
extension thereof, will be produced in compliance with the
requirements of the Fair Labor Standards Act of 1938, as
amended, and any regulation issued thereunder. Seller further
agrees that a certificate of such compliance will be printed or
stamped upon each invoice issued to Sears covering purchases
made hereunder.
15. If any voluntary petition in bankruptcy or for
corporate reorganization or any similar relief shall be filed by
either party hereto, or if any involuntary petition in bankruptcy
shall be filed against either party and shall not have been
dismissed within sixty (60) days from the filing thereof under
any Federal or State Bankruptcy or Insolvency Act, or if a
receiver shall be appointed for either party or the property of
either party by any court of competent jurisdiction, and such
receiver shall not have been dismissed within sixty (60) days
from the date of his appointment, or if either party shall make
an assignment for the benefit of creditors, or if either party shall
admit in writing its inability to meet its debts as they mature,
then, in any such event, the other party hereto shall have the
right, at its option, to cancel this agreement by giving written
notice of such cancellation to the first-mentioned party,
whereupon this agreement shall immediately cease and
terminate.
16. The term of this Agreement shall extend for the
period of one (1) year commencing January 1, 1988, and ending
December 31, 1988, and thereafter for successive additional
periods of one (1) year each unless terminated as of December
31, 1988, or as of the end of any such additional one (1) year
period, by either party giving the other party at least one (1)
year prior written notice of such termination. Each "contract
year," as the term is used herein, shall commence on January 1,
and shall end on the succeeding December 31.
17. The parties hereto agree that as of January 1, 1988,
this Agreement shall supersede and cancel the Agreement dated
January 3, 1967 between Sears and Seller as amended but that
the Letter Agreement dated September 1, 1986 between Sears
and Seller regarding the exclusive manufacture and purchase of
Sears Best Products shall survive the cancellation of said
January 3, 1967 Agreement for the term of the Letter
Agreement as otherwise provided in paragraph 6 thereof or for
such time thereafter as Sears may decide during the term of this
Agreement.
18. All notices herein provided for, or which may be
given in connection with this Agreement, shall be in writing.
Notices given by Seller shall be addressed to:
SEARS ROEBUCK AND CO
Sears Tower
Attention: Vice President and Comptroller.
Chicago, IL 60684
or at such other address as Sears by written notice to Seller shall
have specified for that purpose.
Notices given by Sears shall be addressed to Seller at:
EASCO HAND TOOLS INC.
SPECIAL MARKETS GROUP
East Windsor Industrial Park
Attention: Vice President-Operations
East Windsor, CT 06088
or at such other address as Seller by written notice to Sears shall
have specified for that purpose.
19. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors
and assigns, provided, however, no assignment hereof by either
party shall be of any force or effect except with the prior written
consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers duly
authorized thereunto, as of the day and year first above written.
ATTEST: EASCO HAND TOOLS, INC.
/s/ By: /s/
Secretary Vice-President, Operations
ATTEST: SEARS, ROEBUCK AND CO.
/s/ By : /s/
Secretary Senior-Executive Vice President
Merchandising
Approved for Signature by
Department 700-7
/s/
Group Vice President
Approved for Signature by
Department 609
/s/
National Merchandise Manager
/s/
Senior Buyer
/s/
Buyer
SCHEDULE A
Definition of Manufacturing Cost of Product
(Including Warehousing and Shipping Expense)
Produced by EASCO HAND TOOLS, INC. ("Seller")
Under Agreement with SEARS, ROEBUCK AND CO.
("Sears")
Dated: March 7, 1988
General Definition
The term "Manufacturing Cost" as used in the attached
Agreement, shall mean the actual costs incurred by Seller,
which, under sound and accepted accounting principle;
consistently applied are applicable to product manufactured for
and sold to Sears, or buyout items sold to Sears.
Specific Definition
I DIRECT MATERIALS Actual net landed cost (after
deducting trade discounts) of materials used directly in
manufacturing product, to the extent that they can be definitely
measured and charged to specific cost units.
II DIRECT LABOR The portion of payroll covering those
employees working directly on the product which can be
definitely measured and charged to specific cost units.
III FACTORY OVERHEAD The portion of Seller's overhead
which under sound and accepted accounting principles is
assignable to product produced for Sears under the attached
Agreement. Overhead shall consist of that portion of the
following items of cost which are properly chargeable to
manufacturing operations.
(a) Indirect Materials supplies and those materials used in
manufacturing product other than those of direct material
classifications.
(b) Indirect Labor that portion of the wages of employes
engaged manufacturing operations which are not classified as
direct labor; including down time, shift and overtime premiums,
vacations and holiday pay, and the salary and wages of factory
supervisory personnel, of employes engaged in receiving,
packing, production engineering, quality control, inspection
warehousing, (including salary of field warehouse custodian),
shipping, and factory clerical employes, of such departments as
timekeeping, methods, time study, scheduling, purchasing, cost
accounting, payroll, first aid, and other departments performing
related manufacturing functions.
(c) Power, Light, Heat, Water and Rent.
(d) Repairs and Maintenance cost of keeping buildings and
equipment in repair and working condition; but excluding
expenditures covering new building and additions to or
extraordinary repairs to existing equipment or buildings,
whether owned or leased, if such expenditures, under sound and
accepted accounting principles, should be capitalized or
amortized over the life of a lease. The depreciation or
amortization on such expenditures however, shall be allowed as
an item of cost, as hereinafter provided.
(e) Insurance net premiums for all insurance, except
premiums for insurance covering lives of officers when Seller is
directly or indirectly a beneficiary.
(f) Taxes all taxes, excluding, however, any tax, or the
of any tax which is based on income.
(g) Depreciation and Amortization fixed asset valuation and
the rate of depreciation or amortization shall be based on the
actual cost and the useful life of the asset, but shall not in any
case exceed the values and rates used by the Internal Revenue
Service in determinating the allowable depreciation or
amortization for income tax purposes and must conform to
generally accepted accounting principles.
Asset cost will not be revalued for redetermination
purposes.
(h) Factory Employee Bonuses payments made to factory
employes, other than management or officers, resulting from a
definite bonus policy shall be considered an allowable item of
cost.
(i) Other Factory Expense general factory supplies,
perishable tools, telephone and telegraph, illness benefits,
workmen's compensation and such other factory expenses
incurred by factory departments as are properly chargeable to
manufacturing operations.
IV ADMINISTRATIVE EXPENSE The portion of Seller's
administrative expense applicable to product sold to Sears shall
be determined in accordance with generally accepted accounting
principles most appropriate to Seller's business. This involves
the principle of allocating specifically to each customer or
product those expenses which can be identified as having been
incurred directly for or with respect to a particular customer or
product. Costs of departments performing common functions
for more than one customer or product shall be allocated on an
equitable basis, taking into account the value of the services of
such department to each customer or product. Costs which do
not lend themselves to the above methods of allocation shall be
distributed to Sears product in the same proportion that the cost
of sales (direct materials, direct labor and factory overhead) of
product sold to Sears bears to the total cost of sales of all goods
sold by Seller during the contract year.
Administrative expense shall consist of executive,
administrative and general office and clerical salaries; including
bonuses paid office employees as a result of a definite policy,
and such portion of other expenses incurred by Seller as are
properly chargeable to administrative functions, such as
supplies, stationery, printing, postage, telephone, telegraph,
dues, subscriptions, legal fees, professional services,
depreciation of office machinery and equipment, office rent,
Federal and State Unemployment Insurance, and Federal Old
Age Benefit taxes applicable to administrative, executive and
general clerical salaries.
V. RESEARCH AND DEVELOPMENT EXPENSE The
amount of research and development expense charged to Sears
product shall be based upon the amount of time spent on
research and development work for Sears product versus the
amount of time spent on that work for products other than Sears.
The amount charged to Sears product on this basis must be
approved by Sears in advance as part of the written computation
of estimated manufacturing cost at the time periodic estimated
"manufacturing cost" are agreed upon. For the year-end
redetermination of "manufacturing cost", the item shall be the
lesser of the amount approved by Sears in advance or the actual
amount spent.
VI PENSION AND PROFIT SHARING PLANS
Contributions to pension or profitsharing plans shall not be
considered an item of cost unless approved in writing in
advance by Sears.
VII BONUSES TO OFFICERS AND MANAGEMENT The
parties recognize that management incentive bonus plans are
desirable; however, a part of bonuses paid to management, at
times, may represent a distribution of profits, and as such, is not
proper element of cost. Therefore, it is agreed that bonus
payments to management to be included in cost of Sears product
shall he agreed to by Sears in writing in advance.
VIII OTHER INCOME AND OTHER DEDUCTIONS That
portion of other income and other deductions which under
sound and accepted accounting principles is applicable to cost
of product produced and sold to Sears. Such items may include
cash discounts, recovery from sale of scrap and waste, the net of
short term interest income and short term interest expense and
fees paid to field warehousing companies for issuing warehouse
receipts on raw materials and finished goods pledged by Seller.
IX SELLING EXPENSE It is understood that no selling or
advertising expense is necessary, nor will be incurred by Seller
in the production and sale of product to Sears. However, the
cost of handling Sears orders, including invoicing, etc., shall be
considered as part of the cost of Sears product. In those
instances where it is necessary to incur expenses for contacting
or servicing the Sears account, such contacting or servicing
expenses will be included in the cost of Sears product where the
amounts involved have been agreed to by Sears in writing in
advance. For the year-end redetermination of "manufacturing
cost", this cost item shall be the lesser of the amount approved
by Sears in advance or the actual amount spent.
X. INTERCOMPANY TRANSFERS Where materials, parts
or services are furnished to Seller by a division, wholly-owned
subsidiary or parent company, all intercompany or interplant
profit on such items will be eliminated in computing the cost of
product manufactured for Sears. In the event that any
substantial amount of materials, parts or services are furnished
to Seller by a partially owned subsidiary or a company having
substantially similar ownership, then all inter-company charges
therefor shall be approved in writing by Sears in advance.
Provided, however, that there shall be allowed as an item of
manufacturing cost, the corporate charge levied upon Seller by
Seller's parent corporation, which is applicable to product sold
to Sears, to the extent that said corporate charge does not exceed
the lesser of Five Hundred Thousand Dollars ($500,000) or
Eight-Tenths of One Percent (0.8%) of the contract price to
Sears of product manufactured by Seller and sold to Sears under
the provisions of Paragraph 3 of this Agreement.
XI NONPROFIT ITEM Patent royalties and excise taxes
which Seller is required to pay on the product that is
manufactured for Sears, and transportation prepaid by Seller
pursuant to Sears request for delivery of product purchased by
Sears, shall be reimbursed to Seller by adding such items to the
manufacturing cost; however, the percentage of profits specified
in the attached Agreement shall not be added to such items in
the determination of contract prices or in the year-end
redetermination of prices.
XII ITEMS NOT APPLICABLE The parties recognize that
the following expenditures and receipts are not applicable to the
product sold Sears, and therefore, shall be excluded in the
determination of the manufacturing cost of product produced for
Sears:
(a) Cost of collecting other than Sears accounts and losses
due to uncollectible notes and accounts receivable.
(b) Interest on indebtedness of Seller having an original
maturity of one (1) year or more and dividends on capital stock.
(c) Organization or reorganization expense, unless otherwise
mutually agreed in writing by the parties; including, but not
limited to business acquisition or disposition costs and
expenses, parent charges resulting from, or in connection with,
an acquisition or reorganization, costs resulting from changes in
accounting methods or cost systems; capitalized cost resulting
from a reevaluation of assets; or expense in connection with
issuance or retirement of stock or funded debt.
(d) Expenditures for patents, profit or loss on investments,
and sales of capital assets.
(e) Selling and advertising expense, except expense incurred
in contacting (excluding commissions) and servicing Sears
account.
(f) Expenditures covering erection of new building, or
expenditures covering additions or extraordinary repairs to
equipment if, under sound accounting principles, such
expenditures, should be capitalized or amortized over the life of
a lease. The amortization or depreciation on such expenditures,
however, shall be allowed as an item of cost.
(g) All Federal and State income taxes and other taxes, or
portion thereof, based on income.
(h) Research and development expense not approved in
writing by Sears as specified herein.
(i) Bonuses paid to management of Seller, or bonuses based
on profits not approved in writing by Sears as specified herein.
(j) Contributions to pension or profit sharing plans not
approved in writing by Sears as specified herein.
The above schedule is hereby made a part of the aforesaid
Agreement between the undersigned parties.
EASCO HAND TOOLS, INC.
By: /s/
SEARS, ROEBUCK AND CO.
By : /s/
Senior-Executive Vice President
MerchandisingAGREEMENT
This is an agreement dated as of November 1, 1990, between
Danaher Corporation, a Delaware corporation ("Danaher"), and
its wholly owned subsidiary Easco Hand Tools, Inc, a Delaware
corporation ("Easco"), as one party, and Sears, Roebuck and
Co., a New York corporation ("Sears"), as the other party.
Danaher, Easco and Sears mutually agree as follows:
Reference is hereby made to the Agreement dated March 7,
1988 between Easco and Sears whereby Easco agreed to
manufacture and sell to Sears and Sears agreed to purchase from
Easco in each contract year during the term thereof a certain
percentage of Sears Craftsman mechanics hand tool products
(the "Products") as specified in such Agreement (the "Basic
Contract").
1. (a) In the event that, during the term of the Basic
Contract, Danaher determines to sell or otherwise convey a
controlling interest in Easco or any other business entity or
group of assets owned directly or indirectly by Danaher which
includes the plants and infrastructure necessary to support the
supply of the Products for Sears under the Basic Contract, Sears
shall have a prior right to purchase such interest, entity or assets
on economically equivalent and otherwise substantially the
same terms and conditions as shall have been offered to
Danaher by a bona fide nonaffiliated purchaser. For purposes of
this Agreement, "control" or "controlling" shall mean any
person or entity owning more than 25% of the voting securities
and more voting securities than the persons currently controlling
the entity or those persons' affiliates, and "change of control"
shall exclude any spinoff of the business entity to Danaher's
shareholders or broadly based public offering (one not made to
a controlling interest, other than to the persons who currently
control that entity), and shall exclude any transfer of control
within the Danaher group or the transfer of Danaher shares to
any entity controlled by the persons currently controlling
Danaher.
(b) This right of first refusal shall be exercisable by Sears
only if Sears business represents 60% or more of the past twelve
month's sales (in dollars) or manufacturing output (in dollars) of
the entity, entities or assets being sold. If Sears purchases any
such business entity, entities or assets, all existing business
relationships between such entity and Danaher, its subsidiaries
or affiliates, will continue under the same terms and conditions
that existed prior to the purchase by Sears.
2. In the event that, during the term of the Basic Contract,
Danaher sells or otherwise conveys, directly or indirectly,
control of plants, assets or infrastructure necessary to meet
Sears requirements for the Products to a named competitor of
the craftsman brand, as defined below, Danaher shall make a
"Partners Payment" to Sears equal to 7% of Sears purchases of
the Products during the twelve-month period immediately
preceding such sale or conveyance. The Partners Payment will
be paid in cash to Sears upon a sale to a named competitor and
shall not affect any other rights Sears has under this Agreement
or the Basic Contract. A named direct competitor means any of
four companies whose names are contained on a list delivered
by Sears to Easco every other year in connection with budgeting
meetings held under the Basic Contract, or any subsidiary or
affiliate of such named competitor. In case of a merger,
reorganization, sale of business or similar occurrence of any
named competitor, the successor to the business of such named
competitor shall be substituted for such named competitor,
whether or not notice of any such substitution is specifically
given by Sears to Easco.
3. Danaher shall commit and utilize sufficient funds as shall
be necessary and appropriate, to modernize and expand Easco's
manufacturing and related facilities to permit increased
production of the Products for Sears under the Basic Contract.
Easco's capacity will be increased with an initial target of
reaching an annual $250 million production rate of the Products
by December 31, 1992.
In order to provide a source of short term cash to assist
Danaher in funding the expansion and modernization, Sears will
negotiate in good faith with Easco at the 1991 budget meeting
to reduce existing payment terms on Easco's receivables from
Sears on purchases made on or after February 1, 1991 and
returning to normal payment terms on purchases beginning
January 1, 1992. The reduction in payment terms will be tied to
actual cash outflows associated with Easco's capital expenditure
program and will be based on a portion of the total cash outlay
required by Easco.
4. The Basic Contract, as previously amended, shall remain
in place except as amended by this Agreement. Following are
agreed upon amendments to the Basic Contract:
(a) Easco's agreement to manufacture and sell to Sears
and Sears agreement to purchase from Easco, in each contract
year, seventy percent (70%) of Sears requirements of Products
under Paragraph l(a) of the Basic Contract is hereby modified so
that now Easco shall have the right of first supply of Sears
requirements of the Products sold domestically through Sears or
its domestic subsidiaries or divisions (including Sears retail,
catalog, QVC and commercial sales operations and Western
Auto) or sold domestically through Sears authorized dealers of
the Products or, in order to protect the integrity of the Craftsman
trademark and, to the extent legally permissible, sold
domestically under a Craftsman brand license ("Product
Requirements") and Easco hereby agrees to manufacture and
sell to Sears such Product Requirements; provided that Easco
meets Sears requirements with respect to competitive costs,
quality Service of supply and production capacity and is able to
produce such Product Requirements in accordance with the
terms and conditions of the Basic Contract; and provided further
that Sears may purchase up to $59 million dollars, based on
Sears 1990 purchase cost per year of Product Requirements
from third party sources (The "$59 million exclusion").
In the event that Sears discontinues purchasing Products
from its current major third-party source, Easco will have the
right to bid for up to one-half of the volume no longer
purchased from such major third-party source. If Easco meets
Sears re- quirements with respect to competitive costs, quality,
service of supply and available production capacity, such
volume bid upon will thereafter be included under the Basic
Contract.
In the event of a change in control of Danaher or any entity
controlling Easco, or any other business entity or group of
assets which includes the plants and infrastructure necessary to
meet Sears Product Requirements, Sears shall have the option of
excluding up to $25 Million of purchases (based on Sears 1990
purchase costs) from the Product Requirements in the next to
the last year of the Basic Contract and up to $50 million of
purchases (based on Sears 1990 purchase costs) in the last year
of the Basic Contract term. This optional exclusion shall be in
addition to the $59 million exclusion.
The $59 million, $25 million and $50 million figures will be
adjusted for increases in Sears purchase costs above 1990 costs.
(b) Easco must first take into account the Product
Requirements in determining its production schedules and
product availability. Sears shall have the first right to review
and obtain exclusivity on new product developments or
innovations on the types of mechanics hand tools described in
the Basic Contract. The time period for exclusivity and
purchase volume required to support these products shall be
negotiated in good faith between Easco and Sears.
(c) At each annual budget meeting, Sears and Easco will
negotiate an allowance for certain overhead costs incurred by
Danaher to be included in manufacturing costs under the Basic
Contract. Such overhead costs included will be only for
functions that replaced those previously performed by Easco
under the Basic Contract and included only to the extent the
total cost thereof will be less than the total costs previously
incurred by Easco for such functions as permitted under the
Basic Contract; subject to increases or decreases after 1991,
based on actual costs, but not to exceed the percentage of sales
of those costs to 1991 sales to Sears.
(d) The competitive price clause of the Basic Contract shall
not be invoked by Sears with respect to Product Requirements
for purchases made through the 1993 contract year.
(e) Interest costs allowable under the Basic Contract shall be
limited to debt incurred for the working capital required to
operate the business as currently handled in redetermination
audits. Specifically excluded will be any debt incurred in an
acquisition of or by Easco or Danaher, or for the capital
required to modernize and expand Easco's facilities.
(f) Sears will receive product pricing consistent with its
position as Easco's largest volume customer of mechanics hand
tools. As such, Sears will receive all legal price advantages
relative to sale of product to others consistent with the total cost
of manufacturing and going to market with Sears versus other
customers.
(g) Paragraph 16 of the Basic Contract is modified to read in
its entirety as follows:
"The term of this Agreement shall extend for the period
commencing January 1, 1988 and ending December 31, 1995;
provided, however, that the term shall be extended
automatically one day at a time commencing January 1, 1991,
until terminated by either party giving the other party at least
five (5) years prior written notice of such termination. Each
"contract year", as the term is used in this Agreement, shall
continue to mean each calendar year, or, in the event of the
earlier termination of this Agreement, the remaining portion of
such calendar year, commencing on January 1, and ending on
the succeeding December 31.
In the event of a change of control of Danaher or any
other entity controlling Easco, Sears shall have the right to
extend the term of this Agreement to a date certain that is up to
five (5) years after the termination date as determined according
to the preceding paragraph of this Paragraph 16."
5. This Agreement shall be binding upon the assignees and
successors of the parties hereto; provided, however; that no
assignment hereof by either party shall be of any force or effect
except with the prior written consent of the other party.
6. Danaher shall give Sears 60 days prior written notice of
any event that would trigger Sears right of first refusal or to
extend the term of the Basic Contract, and Sears will respond in
writing within 60 days after receipt of such notice as to Sears
decision whether to exercise this right.
7. This Agreement shall have a term beginning as of the
date first above written, and ending with the termination date of
the Basic Contract.
8. This Agreement contains the entire understanding
between the parties concerning the subject matter hereof and
supersedes all prior negotiations and agreements, whether
written or verbal. This Agreement shall not be supplemented,
modified or amended except in writing by the parties hereto and
no person or individual has or shall have the authority to
supplement, modify or amend this Agreement in any manner
whatsoever.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers duly
authorized thereunto as of the date first above written.
DANAHER CORPORATION
By: /s/ George M. Sherman
George M. Sherman,
Chief Executive Officer
EASCO AND TOOLS, INC.
By: /s/ George M. Sherman
George M. Sherman,
Chief Executive Officer
SEARS, ROEBUCK AND C0.
By: /s/ W. E. Patterson
W. E. Patterson.
Vice President
AGREEMENT
This Amendment Agreement is made as of this 22nd day of
December 1995 by and between Danaher Corporation, a
Delaware corporation ("Danaher"), and its wholly owned
subsidiary Easco II Hand Tools, Inc., a Delaware corporation
("Easco"), (Danaher and Easco are referred to herein as
"Danaher") as one party, and Sears, Roebuck and Co., a New
York Corporation ("Sears"), as the other party.
Reference is hereby made to the Agreement dated March 7,
1988 between Easco and Sears, whereby Easco agreed to
manufacture and sell to Sears and Sears agreed to purchase from
Easco in each contract year during the term thereof a certain
percentage of Sears Craftsman mechanics hand tool products
(the "Products") as specified in such Agreement (the "Basic
Contract") and the Agreement dated as of November 1, 1990
between Danaher and Easco, as one party, and Sears, as the
other party, relating to certain right of first refusal of Sears,
Partners payment, Danaher's and Easco's commitment to expand
and modernize relating to the Basic Contract and certain
amendments to the Basic Contract.
Whereas, the Parties hereto desire to make certain additional
agreements with respect to, and amendments of the Basic
Contract as provided herein.
The parties hereto mutually agree as follows:
1. Paragraph 10 of the Basic Contract is hereby amended to
read as follows:
10. Product and buyout items shall be billed at the time
of actual shipment by Seller to Sears pursuant to Sears purchase
order. Terms of payment shall be net sixty (60) days receipt of
goods.
2. The parties hereby agree that they shall in good faith
negotiate an agreement mutually acceptable to Sears and
Danaher to replace the Basic Contract and that this process shall
commence and be completed by the end of 1996.
The parties agree that until the completion of the negotiation
of such Agreement, Sears shall not be entitled pursuant to
paragraph 5 of the Basic Contract to any portion of the amount
the total contract prices paid to Easco for product and buyout
items sold to Sears under the Basic Contract during a contract
year exceeds the total contract prices for the products,
determined by the actual "manufacturing cost" in accordance
with Paragraph 3 of the Basic Contract, and contract prices for
buyout items, determined by the actual net landed costs of, and
actual manufacturing costs allocable to, buyout items, plus the
profit specified in Paragraph 3 of the Basic Contract applicable
to buyout items sold to Sears during a contract year.
Notwithstanding the foregoing, this waiver of certain
provisions of Paragraph 3 shall only be in effect as long as
Danaher continues to invest to remain the low cost domestic
provider and share any such cost reductions with Sears and to
provided to Sears industry leading quality, delivery and costs.
3. The parties have agreed to negotiate in good faith a new
agreement for Ratchet Warranty Returns to supersede the
requirements of the December 31, 1985 Ratchet Warranty
Reimbursement Policy Agreement (the "Ratchet Warranty
Policy") as amended by the June 1, 1986 Letter, and that in the
interim, in lieu of the requirements of such Ratchet Warranty
Policy, Danaher agrees to pay Sears in December of a contract
year $463,000 per contract year of the Basic Contract,
beginning with the contract year commencing January 1, 1995
as reimbursement for the ratchet warranty expense pursuant to
the Ratchet Warranty Policy; provided, however that
i. in the event Sears determines a product recall of a
ratchet or ratchets or other course of action is appropriate,
Danaher shall be totally responsible for all costs and expense
thereof and for refunding to Sears, its full purchase price of all
items returned or replaced pursuant to such product recall, and
the costs of any such recall or other course of action shall be
borne solely by Danaher, and Such cost shall not be charged
back to Sears in any manner whatsoever, including its inclusion
as an allowable "manufacturing cost" in the Basic Contract; or
ii. in the event of a product defect, where the parties
reasonably determine that the defective ratchet returns arc
excessive based upon the normal rate of return over the past
twelve months in which such Product has been in full
distribution to Sears provided the parties shall use other
measures if such Product has not been in full distribution,
Danaher shall reimburse Sears for all such ratchets returned at
the rate of 100% of Sears current cost for such ratchets and
there shall be no limit on Danaher's liability for such
reimbursement for the year or years involved.
4. Danaher shall continue to invest in its operations to
remain the low costs provider and to attempt to further reduce
its costs of producing Product and will share such costs
reductions with Sears. Danaher agrees that there shall be no
price increase to Sears for any Product under the Basic Contract
prior to the end of 1996 unless mutually agreed to.
5. This Agreement shall be binding upon the assignees and
successors of the parties hereto; provided, however, that no
assignment hereof by either party shall be of any force or effect
except with the prior written consent of the other party.
6. This Agreement contains the entire understanding
between the parties concerning the subject matter hereof and
supersedes all prior negotiations and agreements, whether
written or verbal. This Agreement shall not be supplemented,
modified or amended except in writing by the parties hereto and
no person or individual has or shall have the authority to
supplement, modify or amend this Agreement in any manner
whatsoever.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers duly
authorized thereunto as of the date first written above.
DANAHER CORPORATION
By: /s/
EASCO HAND TOOLS, INC.
By: /s/
SEARS, ROEBUCK AND CO.
By: /s/
<PAGE>
AMENDMENT NO. 3
This Third Amendment to the Agreement (this Third
Amendment ) is dated as of December 16, 1997, by and
between Danaher Corporation, a Delaware corporation (
Danaher Corp. ), its wholly owned subsidiary Easco Hand
Tools, Inc., a Delaware corporation ( Easco ) (Danaher Corp.
and Easco collectively, Danaher ), and Sears, Roebuck and Co.,
a New York corporation ( Sears ).
Danaher and Sears are parties to that certain Agreement
dated as of March 7, 1988 (the Agreement ), as amended as of
November 1, 1990 (the First Amendment ) and as further
amended as of December 22, 1995 (the Second Amendment ).
Danaher and Sears desire to make certain additional
agreements and amendments with respect to the Agreement and
Second Amendment.
Now, therefore, in consideration of the mutual covenants and
agreements set forth herein, the parties hereby agree as follows.
1. Amendments to the Agreement: Upon the date hereof,
the Agreement shall be amended as follows:
a. Paragraph 1(b) shall be amended by deleting the third,
fourth, fifth and sixth sentences of Paragraph 1(b).
b. Paragraph 2 shall be deleted and replaced and by the
following: It is the intent of the parties that product
manufactured by Seller for Sears will be scheduled for
production during the term hereof so as to meet Sears
reasonable delivery requirements, and insofar as possible to
achieve manufacturing efficiency and economical production.
On November 1 of each year, Seller shall furnish Sears
Department 609 a written statement of its estimated capacity for
production of product during the following contract year, based
on estimated promotional and regular unit volume projections
provided by Sears.
c. Paragraph 3(a) shall be deleted and replaced as
follows: Except for items of product purchased by Sears from
Seller which are of like grade and quality as items then sold
domestically by Seller to its other customers and subject to the
provisions of Paragraph 4 hereof, the contract price for each
item of product, including buyout items (as defined hereafter),
to be produced for Sears during each production period shall be
the price mutually agreed upon in writing by Sears and Seller.
The contract price during each production period for buyout
items , which are defined for purposes of this Agreement as
items approved by Sears purchased by Seller from other sources
for inclusion in combination with product manufactured by
Seller in product sets sold by Seller to Sears hereunder, shall be
as set forth in the preceding sentence.
d. Paragraph 5 shall be deleted and replaced by the
following: No later than 30 days after the end of each calendar
quarter, Seller shall provide Sears with a profit and lossThe
information marked below with * and [ ] has been omitted
pursuant to a request for confidential treatment. The omitted
portion has been separately filed with the Commission.
statement (the Quarterly P&L ) for Seller's Sears business. No
later than March 31 of each year, Seller shall provide Sears with
an annual profit and loss statement (the Annual P&L ) for
Seller's Sears business. Both the Quarterly P&L and the Annual
P&L shall be (i) prepared in accordance with generally accepted
accounting principles, consistently applied, and (ii) be
consistent with the Seller's internal financial statements utilized
by Seller's management.
e. Paragraph 6 shall be deleted and replaced by the
following: Growth Share Rebate. No later than March 31 of
each year, Danaher shall pay Sears by wire transfer of
immediately available funds to an account specified in writing
by Sears, an amount (the Growth Share Rebate ) equal to a
percent (the Designated Percentage , as defined hereafter) [*
]
f. Paragraph 7 shall be deleted and replaced by the
following: Sears shall have the right to examine Seller's
accounting books and other records that Sears deems necessary
for the purpose of determining Seller's annual Net Sales to Sears
and the Growth Share Rebate (as defined in Section 6). If the
parties do not agree on the results of the Net Sales or the
Growth Share Rebate, either party may deliver notice of such
disagreement to the other (the Objection Notice ) and the
parties will use good faith efforts to resolve the dispute. If final
resolution is not obtained within 30 days after receipt of the
Objection Notice (the Resolution Period ), the parties shall
submit the dispute to binding arbitration by a major independent
accounting firm. Within 10 business days of the end of the
Resolution Period, each party shall select, and designate in
writing to the other party, an accounting firm. The two firms
selected by the parties, shall, within 15 business days, select a
third major independent accounting firm to solely arbitrate the
dispute. If a party shall fail to designate an accounting firm
within 10 days of the expiration of the Resolution Period, the
firm of the party that has selected a firm shall solely pick the
major independent accounting firm to conduct the arbitration.
The arbitration shall be governed by the Federal Arbitration
Act, 9 U.S.C. Sec. 1-16. Such arbitration audit and
determination shall be final and binding upon both parties
hereto, and each party shall bear one-half the cost of such audit.
g. The following shall be deleted from the last sentence
of Paragraph 13: and all costs and expenses incurred by Seller
while this Agreement is inoperative as aforesaid shall be
excluded from the determination of Seller's manufacturing cost
in calculating contract prices, but shall be included in the year-
end determination of cost provided under Paragraph 5 hereof.
2. Amendments to Second Amendment:
a. The following shall be deleted from paragraph
number two of the Second Amendment by the end of 1996 and
replaced with the following: as soon as practicable .
b. The following shall be deleted from paragraph
number two of the Second Amendment: Notwithstanding the
foregoing, this waiver of certain provisions of Paragraph 3 shall
only be in effect as long as Danaher continues to invest to
remain the low cost domestic producer and share any such cost
reductions with Sears and to provide to Sears industry leading
quality, delivery and costs.
c. Paragraph number four shall be deleted in its entirety.
3. Miscellaneous. This Third Amendment contains the
entire understanding between the parties concerning the subject
matter hereof and supersedes all prior negotiations and
agreements, whether written or verbal. This Third Amendment
shall not be supplemented, modified or amended except in
writing by the parties hereto and no person or individual has or
shall have the authority to supplement, modify or amend this
Third Amendment in any manner whatsoever. Except as
otherwise expressly provided by this Third Amendment, all of
the terms, conditions and provisions of the Agreement, as
amended, shall continue in full force and effect and that this
Third Amendment, Second Amendment and First Amendment
and the Agreement shall be read and construed as one
instrument.
In witness whereof, the parties hereto have caused this
Agreement to be executed by their respective officers duly
authorized thereunto as of the date first written above.
DANAHER CORPORATION
By: /s/ George C. Moore /s/ Rita F. La Bonte
Name: George C. Moore Rita F. La Bonte
Its: Vice President Witness
EASCO HAND TOOLS, INC.
By: /s/ Thomas R. Sulentic /s/ Rita F. La Bonte
Name: Thomas R. Sulentic Rita F. La Bonte
Its: President Witness
SEARS, ROEBUCK AND CO "OFFICIAL SEAL"
SHANNON WATTS
NOTARY PUBLIC STATE OF
ILLINOIS
My Commission Expires 06/30/2001
By: /s/ Robert L. Mettler /s/ Shannon Watts
Name: Robert L. Mettler
Its: President, Merchandising -- Full Line Stores
DANAHER CORPORATION
NOTE AGREEMENT
Dated as of November 1, 1992
$73,500,000 Principal Amount
7.15% Senior Notes
Due December 15, 1999
$26,500,000 Principal Amount
7.63% Senior Notes
Due December 15, 1999
PPN: 235851 A# 9
PPN: 235851 B* 2
<PAGE>
TABLE OF CONTENTS
1. DESCRIPTION OF NOTES AND
COMMITMENT . . . . . . . . . . . . . . . . . . . . . .1
1.1 Description of Notes. . . . . . . . . .1
1.2 Commitment; Closing Date. . . . . . . .2
1.3 Guaranty; Release . . . . . . . . . . .2
2. PREPAYMENT OF NOTES. . . . . . . . . . . . .2
2.1 Required Prepayments. . . . . . . . . .2
2.2 Optional Prepayments. . . . . . . . . .2
2.3 Notice of Prepayments . . . . . . . . .3
2.4 Surrender of Notes on Prepayment or
Exchange. . . . . . . . . . . . . . . .4
2.5 Direct Payment and Deemed Date of Receipt4
2.6 Allocation of Payments. . . . . . . . .5
2.7 Payments Due on Saturdays, Sundays and
Holidays. . . . . . . . . . . . . . . .5
3. REPRESENTATIONS. . . . . . . . . . . . . . .5
3.1 Representations of the Company. . . . .5
3.2 Representations of the Purchasers . . 11
4. CLOSING CONDITIONS . . . . . . . . . . . . 12
4.1 Representations and Warranties. . . . 12
4.2 Legal Opinions. . . . . . . . . . . . 12
4.3 Events of Default . . . . . . . . . . 13
4.4 Payment of Fees and Expenses. . . . . 13
4.5 Sale of Notes to Other Purchasers . . 13
4.6 Guaranty. . . . . . . . . . . . . . . 13
4.7 Legality of Investment. . . . . . . . 13
4.8 Private Placement Numbers . . . . . . 13
4.9 Proceedings and Documents . . . . . . 13
5. INTERPRETATION OF AGREEMENT. . . . . . . . 13
5.1 Certain Terms Defined . . . . . . . . 13
5.2 Accounting Principles.. . . . . . . . 21
5.3 Valuation Principles. . . . . . . . . 22
5.4 Direct or Indirect Actions. . . . . . 22
6. AFFIRMATIVE COVENANTS. . . . . . . . . . . 22
6.1 Corporate Existence. . . . . . . . . 22
6.2 Insurance . . . . . . . . . . . . . . 22
6 . 3 Taxes, Claims for Labor and Materials23
6.4 Maintenance of Properties . . . . . . 23
6.5 Maintenance of Records. . . . . . . . 23
6.6 Financial Information and Reports . . 23
6.7 Inspection of Properties and Records. 26
6.8 ERISA . . . . . . . . . . . . . . . . 26
6.9 Compliance with Laws.. . . . . . . . 26
6.10 Acquisition of Notes. . . . . . . . . 27
6.11 Private Placement Number. . . . . . . 27
7. NEGATIVE COVENANTS . . . . . . . . . . . . 27
7.1 Net Worth . . . . . . . . . . . . . . 27
7.2 Fixed Charge Ratio. . . . . . . . . . 27
7.3 Debt Ratio. . . . . . . . . . . . . . 28
7.4 Subsidiary Debt . . . . . . . . . . . 28
7.5 Liens . . . . . . . . . . . . . . . . 28
7.6 Restricted Payments . . . . . . . . . 29
7.7 Merger or Consolidation . . . . . . . 30
7.8 Sale of Assets. . . . . . . . . . . . 30
7.9 Disposition of Stock of Subsidiaries. 31
7.10 Transactions with Affiliates. . . . . 31
7.11 Guaranties . . . . . . . . . . . 31
7.12 Nature of Business. . . . . . . . . . 31
7.13 Restrictions on Dividends . . . . . . 32
8. EVENTS OF DEFAULT AND REMEDIES
THEREFOR . . . . . . . . . . . . . . . . . . . . . . 32
8.1 Nature of Events. . . . . . . . . . . 32
8.2 Remedies on Default . . . . . . . . . 34
8.3 Annulment of Acceleration of Notes. 34
8.4 Other Remedies. . . . . . . . . . . . 34
8.5 Conduct No Waiver; Collection Expenses35
8.6 Remedies Cumulative . . . . . . . . . 35
8.7 Notice of Default . . . . . . . . . . 35
9. AMENDMENTS; WAIVERS AND CONSENTS . . . . . 35
9.1 Matters Subject to Modification.. . . 35
9.2 Solicitation of Holders of Notes. . . 36
9.3 Binding Effect. . . . . . . . . . . . 36
10. FORM OF NOTES, REGISTRATION,
TRANSFER, EXCHANGE AND
REPLACEMENT. . . . . . . . . . . . . . . . 36
10.1 Form of Notes . . . . . . . . . . . . 36
10.2 Note Register . . . . . . . . . . . . 37
10.3 Issuance of New Notes upon Exchange or
Transfer. . . . . . . . . . . . . . . 37
10.4 Replacement of Notes. . . . . . . . . 37
11. MISCELLANEOUS. . . . . . . . . . . . . . . 37
11.1 Expenses. . . . . . . . . . . . . . . 37
11.2 Notices . . . . . . . . . . . . . . . 38
11.3 Reproduction of Documents . . . . . . 38
11.4 Successors and Assigns . . . . . 38
11.5 Law Governing. . . . . . . . . . 38
11.6 Headings. . . . . . . . . . . . . . . 39
11.7 Counterparts. . . . . . . . . . . . . 39
11.8 Reliance on and Survival of Provisions39
11.9 Integration and Severability. . . . . 39
SCHEDULE I - Purchasers and Commitments. . . . . . . 54
ANNEXES
I Subsidiaries. . . . . . . . . . . . . . . .
II Liens. . . . . . . . . . . . . . . . . . . .
III Litigation . . . . . . . . . . . . . . . . .
IV ERISA Events . . . . . . . . . . . . . . . .
EXHIBITS
A Form of 7.15% Senior Note Due December 15,
1999
B Form of 7.63% Senior Note Due December 15,
1999
C Form of Opinion of Purchasers Counsel
D Form of Opinion of Company's Counsel
E Form of Guaranty Agreement<PAGE>
DANAHER CORPORATION
NOTE AGREEMENT
Dated as of November 1, 1992
To Each of the Purchasers
Named in Schedule I Hereto
Ladies and Gentlemen:
DANAHER CORPORATION, a Delaware
corporation (the "Company"), agrees with you as follows:
1. DESCRIPTION OF NOTES AND
COMMITMENT
1.1 Description of Notes. The Company has
authorized the issuance and sale of $100,000,000 aggregate
principal amount of its Senior Notes (the "Notes"), to be dated the
date of issuance, to bear interest from such date (computed on the
basis of a 360-day year comprised of twelve 30-day months),
payable semi-annually on June 15 and December 15 of each year,
commencing June 15, 1993, and at maturity, at the following rates:
(i) $73,500,000 aggregate principal amount of the Notes (the
"Series A Notes") shall bear interest at the rate of 7.15% per annum
prior to maturity and shall bear interest on any overdue principal
(including any overdue optional or required prepayment), on any
overdue Make-Whole Amount, and (to the extent legally
enforceable) on any overdue installment of interest at the rate of
9.15% per annum; and (ii) $26,500,000 aggregate principal amount
of the Notes (the "Series B Notes") shall bear interest at the rate of
7.63% per annum prior to maturity and shall bear interest on any
overdue principal (including any overdue optional or required
prepayment), on any overdue Make-Whole Amount, and (to the
extent legally enforceable) on any overdue installment at the rate of
9.63% per annum. The Notes shall be expressed to mature on
December 15, 1999 and the Series A Notes and Series B Notes
shall be substantially in the forms attached as Exhibits A and B,
respectively. The term "Notes" as used herein shall include each
Note delivered pursuant to this Note Agreement (the "Agreement")
and each Note delivered in substitution or exchange therefor and,
where applicable, shall include the singular number as well as the
plural. Any reference to you in this Agreement shall in all
instances be deemed to include any nominee of yours or any
separate account or other person on whose behalf you are
purchasing Notes. You and the other purchasers are sometimes
referred to herein individually as a "Purchaser" and collectively as
the "Purchasers."
1.2 Commitment; Closing Date. Subject to the
terms and conditions hereof and on the basis of the representations
and warranties hereinafter set forth, the Company agrees to issue
and sell to you, and you agree to purchase from the Company,
Notes in the aggregate principal amount set forth opposite your
name in the attached Schedule I at a price of 100% of the principal
amount thereof.
Delivery of and payment for the Notes shall be
made at the offices of Gardner, Carton & Douglas, 321 North
Clark Street, Quaker Tower, Chicago, Illinois 60610, at 9:00 a.m.,
Chicago Time, on December 15, 1992 (the "Closing Date"). The
Notes shall be delivered to you in the form of one or more Notes in
fully registered form, issued in your name or in the name of your
nominee. Delivery of the Notes to you on the Closing Date shall
be against payment of the purchase price thereof in Federal funds
or other funds in U.S. dollars immediately available at Bankers
Trust, One Bankers Trust Plaza, New York, New York, A.B.A. No.
021001033, for deposit in the Company's Account No. 50194704.
If on the Closing Date the Company shall fail to tender the Note to
you, you shall be relieved of all remaining obligations under this
Agreement. Nothing in the preceding sentence shall relieve the
Company of any liability occasioned by such failure to deliver the
Note. The funding and other obligations of the Purchasers under
this Agreement shall be several and not joint.
1.3 Guaranty; Release. The Notes will be
guaranteed by each Material Subsidiary pursuant to the Guaranty.
In the event any Material Subsidiary has been released from its
guaranty under or pursuant to the Credit Agreement the Company
will promptly notify you of such release and, upon delivery by the
Company to you of evidence reasonably satisfactory to you that
such Material Subsidiary has been so released, you agree to release
such Material Subsidiary from its obligations under the Guaranty.
In the event any other Subsidiary shall at any time guarantee all or
any portion of Indebtedness or any other obligation (contingent or
otherwise) of the Company outstanding under the Credit
Agreement, the Company shall cause such Subsidiary to
contemporaneously guarantee the Notes and become a party to the
Guaranty.
2. PREPAYMENT OF NOTES
2.1 Required Prepayments. In addition to
payment of all outstanding principal of the Notes at maturity and
regardless of the amount of Notes which may be outstanding from
time to time, the Company shall prepay and there shall become due
and payable on December 15 in each year, $14,700,000 of the
principal amount of the Series A Notes or such lesser amount as
would constitute payment in full on the Notes, commencing
December 15, 1995 and ending December 15, 1998, inclusive, with
the remaining principal payable on December 15, 1999. Each such
prepayment shall be at a price of 100% of the principal amount
prepaid, together with interest accrued thereon to the date of
prepayment. There shall be no mandatory prepayments on the
Series B Notes.
2.2 Optional Prepayments. (a) Upon notice as
provided in Section 2.3, the Company may prepay the Notes, in
whole or in part, at any time, in an amount not less than
$1,000,000, an integral multiple of $100,000 in excess thereof or
such lesser amount as shall constitute payment in full of the Notes.
Each such prepayment shall be at a price of 100% of the principal
amount to be prepaid, plus interest accrued thereon to the date of
prepayment, plus the Make-Whole Amount.
(b) Upon the effective date of a Change of
Control, the Company shall immediately and in any event not later
than 5 calendar days after such date, give written notice to each
holder of a Note of the Change of Control, accompanied by a
certificate of an authorized officer of the Company specifying the
nature of the Change of Control. Such notice shall (i) contain the
written, irrevocable offer of the Company to prepay, on a date
specified in such notice which shall be not less than 30 or more
than 45 calendar days after the effective date of such Change of
Control, the entire principal amount of the Notes held by each
holder at a price equal to 100% thereof, plus interest accrued
thereon to the date of prepayment, plus the Make-Whole Amount,
(ii) state that notice of acceptance of the Company's offer to prepay
under this Section 2.2(b) must be delivered to the Company not
later than 10 calendar days prior to the date fixed for prepayment,
and (iii) contain the information specified in clauses (iii), (iv) and
(v) of the first sentence of Section 2.3. Upon receipt by the
Company of such notice of acceptance from any holder, but subject
to the following sentence, the aggregate principal amount of Notes
held by such holder plus the interest accrued thereon plus the
Make-Whole Amount shall become due and payable on the day
specified in the Company's notice. Not earlier than 7 calendar days
prior to the date fixed for prepayment, the Company shall give
written notice to each holder of those holders, and the principal
amount of Notes held by each, who have given notices of
acceptance of the Company's offer, and thereafter any holder may
change its response to the Company's offer by written notice to
such effect delivered to the Company not less than 3 business days
prior to the date fixed for prepayment. Promptly following the day
on which the Company first learns of a proposed Change of
Control the Company will give notice thereof to the holders of
Notes, which notice shall include the estimated date (if known) on
which such Change of Control may occur.
(c) Any optional prepayment of less than all of
the Series A Notes outstanding pursuant to Section 2.2(a), Section
2.2(b) or Section 7.8 shall be applied to reduce, pro rata, the
prepayments and payment at maturity required by Section 2.1.
(d) Except as provided in Section 2.1, Section
7.8 and this Section 2.2, the Notes shall not be prepayable in whole
or in part.
2.3 Notice of Prepayments. The Company shall
give notice of any optional prepayment of the Notes pursuant to
Section 2.2(a) to each holder of the Notes not less than 30 days nor
more than 60 days before the date fixed for prepayment, specifying
(i) such date, (ii) the principal amount of the holder's Notes to be
prepaid on such date, (iii) the Determination Date for calculating
the Make-Whole Amount, (iv) a calculation of the estimated
amount of the Make-Whole Amount showing in detail the method
of calculation and (v) the accrued interest applicable to the
prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice,
together with the Make-Whole Amount, if any, and accrued
interest thereon shall become due and payable on the prepayment
date.
The Company also shall give notice to each holder
of the Notes to be prepaid pursuant to Section 2.2(a) or (b) or
Section 7.8 by telecopy, telegram, telex or other same-day written
communication, confirmed by notice delivered by overnight
courier, as soon as practicable but in any event no less than 2
business days prior to the prepayment date, of the Make-Whole
Amount applicable to such prepayment and the details of the
calculations used to determine the amount of such Make-Whole
Amount.
In the event of a miscalculation of the Make-Whole
Amount that results in an additional amount due to holders of the
Notes in respect thereof, such additional amount shall be payable
not later than 2 business days following notice to the Company by
any holder of the Notes.
2.4 Surrender of Notes on Prepayment or
Exchange. Subject to Section 2.5, upon any partial prepayment of
a Note pursuant to this Section 2 or partial exchange of a Note
pursuant to Section 10.3, such Note may, at the option of the
holder thereof, (i) be surrendered to the Company pursuant to
Section 10.3 in exchange for a new Note or Notes of the same
series equal to the principal amount remaining unpaid on the
surrendered Note, or (ii) be made available to the Company, at the
Company's principal office, for notation thereon of the portion of
the principal so prepaid or exchanged. In case the entire principal
amount of any Note is prepaid or exchanged, such Note shall be
surrendered to the Company for cancellation and shall not be
reissued, and no Note shall be issued in lieu of such Note.
2.5 Direct Payment and Deemed Date of
Receipt. Notwithstanding any other provision contained in the
Notes or this Agreement, the Company will pay all sums becoming
due on each Note held by you or any subsequent Institutional
Holder by wire transfer of immediately available funds to such
account as you or such subsequent Institutional Holder have
designated in Schedule I, or as you or such subsequent Institutional
Holder may otherwise designate by notice to the Company, in each
case without presentment and without notations being made
thereon, except that any such Note so paid or prepaid in full shall
be surrendered to the Company for cancellation. Any wire transfer
shall identify such payment in the manner set forth in Schedule I
and shall identify the payment as principal, Make-Whole Amount,
if any, and/or interest. You and any subsequent Institutional
Holder of a Note to which this Section 2.5 applies agree that,
before selling or otherwise transferring any such Note, you or it
will make a notation thereon of the aggregate amount of all
payments of principal theretofore made and of the date to which
interest has been paid and, upon written request of the Company,
will provide a copy of such notations to the Company. Any
payment made pursuant to this Section 2.5 shall be deemed
received on the payment date only if received before 11:00 A.M.,
Chicago time. Payments received after 11:00 A.M., Chicago time,
shall be deemed received on the next succeeding business day.
2.6 Allocation of Payments. In the case of a
prepayment pursuant to Section 2.1, if less than the entire principal
amount of all of the Series A Notes outstanding is to be paid, the
Company will prorate the aggregate principal amount to be prepaid
among the outstanding Series A Notes in proportion to the unpaid
principal amounts thereof. In the case of a prepayment pursuant to
Section 2.2(a), if less than the entire principal amount of all the
Notes of both series outstanding is to be paid, the Company will
prorate the aggregate principal amount to be paid between the
Series A and Series B Notes in proportion to the aggregate unpaid
principal amounts thereof and among the outstanding Notes of
each series in proportion to the unpaid principal amounts thereof.
2.7 Payments Due on Saturdays, Sundays and
Holidays. In any case where the date of any required prepayment
of the Notes or any interest payment date on the Notes or the date
fixed for any other payment of any Note or exchange of any Note is
a Saturday, Sunday or a legal holiday or a day on which banking
institutions in the United States of America generally are au-
thorized by law to close, then such payment, prepayment or ex-
change need not be made on such date but may be made on the
next succeeding business day which is not a Saturday, Sunday or a
legal holiday or a day on which banking institutions in the United
States of America generally are authorized by law to close, with the
same force and effect as if made on the due date.
3. REPRESENTATIONS
3.1 Representations of the Company. As an
inducement to, and as part of the consideration for, your purchase
of the Notes pursuant to this Agreement, the Company represents
and warrants to you as follows:
(a) Corporate Organization and Authority. The
Company is a solvent corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has
all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as
presently proposed to be conducted, to enter into and perform the
Agreement and to issue and sell the Notes as contemplated in the
Agreement.
(b) Qualification to Do Business. The Company
is duly licensed or qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction where
the nature of the business transacted by it or the character of its
properties owned or leased makes such qualification or licensing
necessary, except for jurisdictions, individually or in the aggregate,
where the failure to be so licensed or qualified could not be
reasonably expected to have a Material Adverse Effect.
(c) Subsidiaries. The Company has no
Subsidiaries except those listed in the attached Annex I, which
correctly sets forth the jurisdiction of incorporation and the
percentage of the outstanding Voting Stock or equivalent interest
of each Subsidiary which is owned, of record or beneficially, by the
Company and/or one or more Subsidiaries. Each Subsidiary which
is a Material Subsidiary and each Subsidiary which is a guarantor
under the Credit Agreement is so designated in Annex I. Each
Subsidiary has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization and is duly licensed or qualified and in good standing
as a foreign corporation in each other jurisdiction where the nature
of the business transacted by it or the character of its properties
owned or leased makes such qualification or licensing necessary,
except for jurisdictions, individually or in the aggregate, where the
failure to be so licensed or qualified could not be reasonably
expected to have a Material Adverse Effect. Each Subsidiary has
full corporate power and authority to own and operate its properties
and to carry on its business as now conducted and as presently
proposed to be conducted, except for instances, individually or in
the aggregate, where the failure to have such power and authority
could not be reasonably expected to have a Material Adverse
Effect. The Company and each Subsidiary have good and market-
able title to all of the shares they purport to own of the capital stock
of each Subsidiary, free and clear in each case of any Lien, except
as otherwise disclosed in the attached Annex II and except, with
respect to Subsidiaries other than Material Subsidiaries, for defects
or liens which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, and all
such shares have been duly issued and are fully paid and
nonassessable.
(d) Financial Statements. The consolidated
balance sheets of the Company and its Subsidiaries as of December
31, 1987, 1988, 1989, 1990 and 1991, and the related consolidated
statements of earnings, stockholders' equity and cash flows for
each of the years ended on such dates, accompanied by the reports
and unqualified opinions of Arthur Andersen & Co., independent
public accountants, copies of which have heretofore been delivered
to you, were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein) and present fairly the
consolidated financial condition of the Company and its
Subsidiaries of such dates and their consolidated results of
operations and cash flows for the years then ended. The unaudited
condensed consolidated balance sheets of the Company and its
Subsidiaries as of June 26, 1992 and December 31, 1991 and the
related unaudited condensed consolidated statements of earnings
for the three months and six months, and cash flows for the six
months, ended June 26, 1991 and June 26, 1992, copies of which
have heretofore been delivered to you, were, and the comparable
financial statements as of and for the periods ended September 25,
1992 to be delivered to you prior to the Closing Date will be,
prepared in accordance with generally accepted accounting
principles and present or will present fairly the consolidated
financial condition of the Company and its Subsidiaries as of such
dates and the consolidated results of their operations and changes
in their cash flows for the periods then ended.
(e) No Contingent Liabilities or Adverse
Changes. Neither the Company nor any of its Subsidiaries has any
contingent liabilities which, individually or in the aggregate, are
material to the Company and its Subsidiaries taken as a whole,
other than as indicated in the most recent audited and unaudited
financial statements described in the foregoing paragraph (d) of
this Section 3.1, and, except as set forth in such financial
statements or the Company's Quarterly Report on Form 10-Q for
the period ended June 26, 1992, since December 31, 1991, there
have been no changes in the condition, financial or otherwise, of
the Company and its Subsidiaries except changes occurring in the
ordinary course of business, none of which, individually or in the
aggregate, has been materially adverse.
(f) No Pending Litigation or Proceedings.
Except as disclosed in Note 10 of the Notes to the most recent
audited financial statements referred to in the foregoing paragraph
(d) and in the attached Annex III, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threat-
ened against or affecting the Company or any of its Subsidiaries, at
law or in equity or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which might
reasonably be expected to result, either individually or in the
aggregate, in a Material Adverse Effect.
(g) Compliance with Law. (i) Neither the
Company nor any of its Subsidiaries is: (x) in default with respect
to any order, writ, injunction or decree of any court to which it is a
named party; or (y) in default under any law, rule, regulation,
ordinance or order relating to its or their respective businesses, the
sanctions and penalties resulting from which defaults described in
clauses (x) and (y) might reasonably be expected to have a Material
Adverse Effect.
(ii) Neither the Company nor any
Subsidiary nor any Affiliate of the Company is an entity defined as
a "designated national" within the meaning of the Foreign Assets
Control Regulations, 31 C.F.R. Chapter V, or is in violation of, any
Federal statute or Presidential Executive Order, or any rules or
regulations of any department, agency or administrative body
promulgated under any such statute or Order, concerning trade or
other relations with any foreign country or any citizen or national
thereof or the ownership or operation of any property and no
restriction or prohibition under any such statute, Order, rule or
regulation has a Material Adverse Effect.
(h) Pension Reform Act of 1974. Neither the
purchase of the Notes by you nor the consummation of any of the
other transactions contemplated by this Agreement is or will
constitute a "prohibited transaction" within the meaning of Section
4975 of the Code or Section 406 of ERISA. The Company and
each ERISA Affiliate are in substantial compliance with all
applicable provisions and requirements of ERISA with respect to
each Employee Benefit Plan, and have substantially performed all
their obligations under each Employee Benefit Plan. There are no
actions, suits or claims (other than routine claims for benefits)
pending or threatened against any Employee Benefit Plan or its
assets liability for which would constitute a Material Adverse
Effect, and, to the best knowledge of Company, no facts exist
which could give rise to any such actions, suits or claims. Except
as disclosed in the attached Annex IV, within the period of five
years ending on the Closing Date, no ERISA Event has occurred,
there is no unpaid liability of Company or any ERISA Affiliate that
arose in connection with any ERISA Event that occurred prior to
such five-year period and no ERISA Event is reasonably expected
to occur with respect to any Employee Benefit Plan.
(i) Title to Properties. The Company and its
Subsidiaries have good, sufficient and legal title to all the property
and assets reflected in the most recent audited consolidated balance
sheet described in the foregoing paragraph (d) of this Section 3.1 or
subsequently acquired by the Company or any Subsidiary (except
as sold or otherwise disposed of in the ordinary course of
business), free from all Liens or defects in title except those
permitted by Section 7.5.
(j) Leases. The Company and its Subsidiaries
enjoy peaceful and undisturbed possession under all leases under
which they are a lessee or are operating, except for leases the
termination of which, individually or in the aggregate, will not
have a Material Adverse Effect.
(k) Franchises, Patents, Trademarks and Other
Rights. The Company and its Subsidiaries have all franchises,
permits, licenses and other authority necessary to carry on their
businesses as now being conducted and are not in default there-
under, except for such franchises, permits, licenses or other
authority and defaults which, individually and in the aggregate, do
not and will not have a Material Adverse Effect. The Company
and its Subsidiaries own or possess all patents, trademarks, service
marks, trade names, copyrights, licenses and rights with respect to
the foregoing necessary for the present conduct of their businesses,
without any known conflict with the rights of others which might
have, individually or in the aggregate, a Material Adverse Effect.
(1) Authorization. This Agreement and the
Notes have been duly authorized on the part of the Company and
the Agreement does, and the Notes when issued will, constitute the
legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, except to the extent that enforcement
of the Notes may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or
by equitable principles, regardless of whether enforcement is
sought in equity or at law. The sale of the Notes and compliance
by the Company with all of the provisions of this Agreement and
of the Notes (i) are within the corporate powers of the Company,
(ii) have been duly authorized by proper corporate action, (iii) are
legal and will not violate any provisions of any law or regulation or
order of any court, governmental authority or agency and (iv) will
not result in any breach of any of the provisions of, or constitute a
default under, or result in the creation of any Lien on any property
of the Company or any Subsidiary under the provisions of, any
charter document, by-law, loan agreement or other agreement or
instrument to which the Company or any Subsidiary is a party or by
which any of them or their property may be bound. The Guaranty
has been duly authorized on the part of each Material Subsidiary
and when duly executed and delivered will constitute the legal,
valid and binding obligation of each Material Subsidiary, en-
forceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether
enforcement is sought in equity or at law. Compliance by each
Material Subsidiary with all of the provisions of the Guaranty (i) is
within its corporate powers, (ii) has been duly authorized by
proper corporate action, (iii) is legal and will not violate any
provisions of any law or regulation or order of any court,
governmental authority or agency and (iv) will not result in any
breach of any of the provisions of, or constitute a default under, or
result in the creation of any Lien on any property of such Material
Subsidiary under the provisions of, any charter document, bylaw,
loan agreement or other agreement or instrument to which such
Material Subsidiary is a party or by which it or its property may be
bound.
(m) No Defaults. No event has occurred and no
condition exists which, upon the issuance of the Notes, would
constitute a Default or an Event of Default under this Agreement.
Neither the Company nor any Subsidiary is in default under any
charter document, by-law, loan agreement or other agreement or
instrument to which it is a party or by which it or its property may
be bound, except for defaults the consequences of which, indi-
vidually and in the aggregate, do not and will not have a Material
Adverse Effect.
(n) Governmental Consent. Neither the nature
of the Company or any of its Subsidiaries, their respective
businesses or properties, nor any relationship between the
Company or any of its Subsidiaries and any other Person, nor any
circumstances in connection with the offer, issue, sale or delivery
of the Notes is such as to require a consent, approval or
authorization of, or withholding of objection on the part of, or
filing, registration or qualification with, any governmental
authority on the part of the Company or any Material Subsidiary in
connection with the execution and delivery of this Agreement or
the Guaranty or the offer, issue, sale or delivery of the Notes.
(o) Taxes. All income tax returns and all other
material tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have been filed, and all taxes,
assessments, fees and other governmental charges upon the
Company or any Subsidiary, or upon any of their respective prop-
erties, income or franchises, which are due and payable, have been
paid timely or within appropriate extension periods or contested in
good faith by appropriate proceedings and the collection thereof
has been stayed by the applicable governmental authority during
the period of the contest, except for such filings and nonpayments
which, individually and in the aggregate, do not and will not have a
Material Adverse Effect. The Company does not know of any
proposed additional tax assessment against it or any Subsidiary for
which adequate provision has not been made on its books. The
statute of limitations with respect to Federal income tax liability of
the Company and its Subsidiaries has expired for all taxable years
up to and including the taxable year ended December 31, 1987
(except with respect to utilization of tax loss carryforwards) and no
material controversy in respect of additional taxes due since such
date is pending or, to the Company's knowledge, threatened. The
provisions for taxes on the books of the Company and each
Subsidiary are adequate for all open years and for the current fiscal
period.
(p) Status under Certain Statutes. Neither the
Company nor any Subsidiary is: (i) a "public utility company" or a
"holding company," or an "affiliate" or a "subsidiary company" of a
"holding company," or an "affiliate" of such a "subsidiary com-
pany," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (ii) a "public utility" as
defined in the Federal Power Act, as amended, or (iii) an "in-
vestment company" or an "affiliated person" thereof or an "af-
filiated person" of any such "affiliated person," as such terms are
defined in the Investment Company Act of 1940, as amended.
(q) Private Offering. Neither the Company, BT
Securities Corporation nor The First National Bank of Chicago (the
only Persons authorized or employed by the Company as agent,
broker, dealer or otherwise in connection with the offering of the
Notes or any similar security of the Company) has offered any of
the Notes or any similar security of the Company for sale to, or
solicited offers to buy any thereof from, or otherwise approached
or negotiated with respect thereto with, any prospective purchaser,
other than not more than 76 institutional investors, including the
Purchasers, each of whom was offered all or a portion of the Notes
at private sale for investment. Neither the Company nor anyone
acting on its authorization will offer the Notes or any part thereof
or any similar securities for issue or sale to, or solicit any offer to
acquire any of the same from, anyone so as to bring the issuance
and sale of the Notes within the provisions of Section 5 of the
Securities Act.
(r) Effect of Other Instruments. Neither the
Company nor any Subsidiary is bound by any agreement or
instrument or subject to any charter or other corporate restriction
which (i) in any way materially restricts Company's ability to
perform its obligations under this Agreement or the Notes or any
Subsidiary's ability to pay dividends or make advances to the
Company or to perform under the Guaranty or (ii) has a Material
Adverse Effect.
(s) Use of Proceeds. The Company will
initially apply the net proceeds from the sale of the Notes to repay
Indebtedness to banks, and thereafter for working capital and
general corporate purposes and for possible future acquisitions.
None of the transactions contemplated in this Agreement
(including, without limitation thereof, the use of the proceeds from
the sale of the Notes) will violate or result in a violation of Section
7 of the Exchange Act, or any regulations issued pursuant thereto,
including, without limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System (12 C.F.R.
Chapter II). Neither the Company nor any Subsidiary owns or
presently intends to carry or purchase any "margin stock" within
the meaning of Regulation G, and none of the proceeds from the
sale of the Notes will be used to purchase or carry or refinance any
borrowing the proceeds of which were used to purchase or carry
any "margin stock" or "margin security" in violation of Regulations
G, T, U or X.
(t) Condition of Property. All of the facilities
of the Company and its Subsidiaries are in sound operating
condition and repair except for facilities being repaired in the
ordinary course of business or facilities which individually or in
the aggregate are not material to the Company and its Subsidiaries,
taken as a whole.
(u) Books and Records. The Company and each
of its Subsidiaries (i) maintain books, records and accounts in
reasonable detail which accurately and fairly reflect their respective
transactions and business affairs, and (ii) maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that transactions are executed in accordance with
management's general or specific authorization and to permit
preparation of financial statements in accordance with generally
accepted accounting principles.
(v) Full Disclosure. Neither the Private
Placement Memorandum dated July 1992 (including the
attachments and enclosures), the financial statements referred to in
paragraph (d) of this Section 3.1, nor this Agreement, nor any other
written statement or document furnished by the Company to you in
connection with the negotiation of the sale of the Notes, taken
together, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or
herein not misleading in light of the circumstances under which
they were made. There is no fact (exclusive of general economic,
political or social conditions or trends) particular to the Company
and known by the Company which the Company has not disclosed
to you in writing and which has a Material Adverse Effect on or, so
far as the Company can now foresee, will have a Material Adverse
Effect.
(w) Environmental Compliance. The operations
of the Company and each Subsidiary (including, without limitation,
all operations and conditions at or in the Facilities) comply in all
material respects with all Environmental Laws non-compliance
with which could have a Material Adverse Effect; the Company
and each of its Subsidiaries have obtained all permits under
Environmental Laws necessary to their respective operations, and
all such permits are in good standing, and the Company and each
of its Subsidiaries are in compliance with all material terms and
conditions of such permits non-compliance with which could have
a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has any liability (contingent or otherwise) in
connection with any Release of any Hazardous Materials by the
Company or any of its Subsidiaries or the existence of any
Hazardous Material on, under or about any Facility that could give
rise to an Environmental Claim that could have a Material Adverse
Effect.
(x) Solvency of the Material Subsidiaries. To
the best knowledge and belief of the Company, after due and
diligent inquiry, and after giving effect to the transactions
contemplated herein, (i) the present fair salable value of the assets
of each material Subsidiary is in excess of the amount that will be
required by each Material Subsidiary to pay its respective probable
liability on its existing debts as such debts become absolute and
matured, (ii) the property remaining in the hands of each Material
Subsidiary is not an unreasonably small amount of capital, and (iii)
each Material Subsidiary is able to pay, and does not intend to take
or fail to take any action such that it will be unable to pay, its debts
as they mature.
(y) Antitrust Compliance. There is no action or
proceeding pending or, to the Company's knowledge, contemplated
by the Antitrust Division of the United States Department of
Justice or the United States Federal Trade Commission that
involves or would involve the Company or any Subsidiary.
3.2 Representations of the Purchasers. You
represent, and in entering into this Agreement the Company
understands, that you are acquiring Notes for your own account
and not with a view to any distribution thereof; provided that the
disposition of your property shall at all times be and remain within
your control, subject, however, to compliance with Federal
securities laws. You acknowledge that the Notes have not been
registered under the Securities Act and you understand that the
Notes must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such
registration is available. You have been advised that the Company
does not contemplate registering, and is not legally required to
register, the Notes under the Securities Act.
You further represent that either: (i) no part of the
funds to be used by you to purchase the Notes will constitute assets
allocated to any separate account maintained by you; or (ii) no part
of the funds to be used by you to purchase the Notes will constitute
assets allocated to any separate account maintained by you such
that the application of such funds will constitute a prohibited
transaction under Section 406 of ERISA; or (iii) all or a part of
such funds will constitute assets of one or more separate accounts
maintained by you, and you have disclosed to the Company the
names of such employee benefit plans whose assets in such
separate account or accounts exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such account or
accounts as of the date of such purchase and the Company has
advised you in writing that the Company is not a party-in-interest
nor are the Notes employer securities with respect to the particular
employee benefit plans disclosed to the Company by you as
aforesaid (for the purpose of this clause (iii), all employee benefit
plans maintained by the same employer or employee organization
are deemed to be a single plan). As used herein, the terms
"separate account," "party-in-interest," "employer securities," and
"employee benefit plan" have the meanings assigned to them in
ERISA.
4. CLOSING CONDITIONS
Your obligation to purchase the Notes on the
Closing Date shall be subject to the performance by the Company
of its agreements hereunder, which are to be performed at or prior
to the time of delivery of the Notes, and to the following conditions
to be satisfied on or before the Closing Date:
4.1 Representations and Warranties. The
representations and warranties of the Company contained in this
Agreement or otherwise made in writing in connection herewith
shall be true and correct on or as of the Closing Date and the
Company shall have delivered to you a certificate to such effect,
dated the Closing Date and executed by the president, the chief
financial officer, chief accounting officer or treasurer of the
Company.
4.2 Legal Opinions. You shall have received
from Gardner, Carton & Douglas, who is acting as your special
counsel in this transaction, and from Piper & Marbury, counsel for
the Company, their respective opinions, dated such Closing Date,
in form and substance satisfactory to you and covering
substantially the matters set forth or provided in the attached
Exhibits C and D.
4.3 Events of Default. No event shall have
occurred and be continuing on the Closing Date which would
constitute a Default or an Event of Default, and the Company shall
have delivered to you a certificate to such effect, dated the Closing
Date and executed by the president, the chief financial officer,
chief accounting officer or treasurer of the Company.
4.4 Payment of Fees and Expenses. The
Company shall have paid all reasonable fees, expenses, costs and
charges, including the reasonable fees and expenses of Gardner,
Carton & Douglas, your special counsel, incurred by you through
the Closing Date and incident to the proceedings in connection
with, and transactions contemplated by, this Agreement and the
Notes.
4.5 Sale of Notes to Other Purchasers. The
Company shall have consummated the sale of the entire
$100,000,000 principal amount of the Notes to be sold on the
Closing Date pursuant to this Agreement.
4.6 Guaranty. Each Material Subsidiary shall
have executed and delivered the Guaranty.
4.7 Legality of Investment. Your acquisition of
the Notes shall constitute a legal investment as of the Closing Date
under the laws and regulations of each jurisdiction to which you
may be subject (without resort to any "basket" or "leeway"
provision which permits the making of an investment without
restrictions as to the character of the particular investment being
made), and such acquisition shall not subject you to any penalty or
other onerous condition in or pursuant to any such law or regu-
lation; and you shall have received such certificates or other
evidence as you may reasonably request to establish compliance
with this condition.
4.8 Private Placement Numbers. Private
placement numbers with respect to the Series A Notes and the
Series B Notes shall have been issued by Standard & Poor's
Corporation.
4.9 Proceedings and Documents. All
proceedings taken in connection with the transactions
contemplated by this Agreement, and all documents necessary to
the consummation of such transactions shall be satisfactory in form
and substance to you and your special counsel, and you and your
special counsel shall have received copies (executed or certified as
may be appropriate) of all legal documents or proceedings which
you and they may reasonably request.
5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined. The terms
hereinafter set forth when used in this Agreement shall have the
following meanings:
Affiliate - Any Person (other than a Wholly-Owned
Subsidiary) (i) who is a director or executive officer of the
Company or any Subsidiary, (ii) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with, the Company, (iii) which
beneficially owns or holds securities representing 5% or more of
the combined voting power of the Voting Stock of the Company or
any Subsidiary or (iv) securities representing 5% or more of the
combined voting power of the Voting Stock (or in the case of a
Person which is not a corporation, 5% or more of the equity) of
which is beneficially owned or held by the Company or a
Subsidiary. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Agreement - As defined in Section 1.1.
business day - Any day, other than Saturday, Sunday
or a legal holiday or any other day on which banking institutions in
the United States of America generally are authorized by law to
close.
Capitalized Lease - Any lease the obligation for
Rentals with respect to which, in accordance with generally
accepted accounting principles, would be required to be capitalized
on a balance sheet of the lessee or for which the amount of the
asset and liability thereunder, as if so capitalized, would be
required to be disclosed in a note to such balance sheet.
CERCLA - The Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as now or
hereafter amended, and any successor to such law.
Change of Control - The acquisition, through
purchase or otherwise, by any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) who is or
becomes a "beneficial owner" (as such term is defined in Rule 13d-
3 under the Exchange Act) of shares of Voting Stock of the
Company which in the aggregate exceed by one the number of
shares of Voting Stock of the Company then "beneficially owned"
(as such term is defined in the aforesaid Rule 13d-3) collectively
by Steven M. Rales and Mitchell P. Rales.
Closing Date - As defined in Section 1.2.
Code - The Internal Revenue Code of 1986, as
amended.
Consolidated Debt - The consolidated Debt of the
Company and its Subsidiaries, other than Debt of a Subsidiary to
the Company or another Wholly-Owned Subsidiary and Debt of
the Company to a Wholly-Owned Subsidiary, determined, except
as so provided, in accordance with generally accepted accounting
principles.
Consolidated Income Available for Fixed Charges -
For any period, the sum of (i) Consolidated Net Income, plus (to
the extent deducted in determining Consolidated Net Income), (ii)
all provisions for any Federal, state, or other income taxes made by
the Company and its Subsidiaries during such period plus (iii)
Fixed Charges.
Consolidated Net Income - For any period, the
consolidated net income (or deficit) of the Company and its
Subsidiaries after deducting, without duplication, all operating
expenses, provisions for all taxes and reserves (including reserves
for deferred income taxes) and all other proper deductions, all de-
termined in accordance with generally accepted accounting prin-
ciples and after deducting portions of income properly attributable
to outstanding minority interests, if any, in Subsidiaries; provided,
however, that there shall be excluded (i) any income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary or
merges into or consolidates with the Company or a Subsidiary, (ii)
the income (or deficit) of any Person (other than a Subsidiary) in
which the Company or any Subsidiary has any ownership interest
(except that any such income actually received by the Company or
such Subsidiary in the form of cash dividends or similar
distributions shall be included without limitation), (iii) any gains or
losses, or other income, properly classified as extraordinary in
accordance with generally accepted accounting principles and (iv)
any gains or losses, or other income, characterized as non-recurring
in the financial statements delivered pursuant to Section 6.
Consolidated Net Worth - The sum of consolidated
stockholders' equity and, without duplication, outstanding non-
redeemable preferred stock of the Company determined in
accordance with generally accepted accounting principles.
Consolidated Total Assets - The total assets of the
Company and its Subsidiaries determined on a consolidated basis
in accordance with generally accepted accounting principles.
Consolidated Total Capitalization - The sum of
Consolidated Net Worth and Consolidated Debt.
Credit Agreement - The Credit Agreement dated as
of September 7, 1990 among the Company, the financial
institutions listed therein and Bankers Trust Company, as Agent, as
amended from time to time, and any similar agreement entered into
by the Company in replacement or substitution therefor or in
connection with a refinancing thereof.
Debt - (i) All Indebtedness for borrowed money, (ii)
all Capitalized Leases and (iii) all Guaranties of Debt of other
Persons.
Default - Any event which, with the lapse of time or
the giving of notice, or both, would become an Event of Default.
Determination Date - The day 3 business days
before the date fixed for a prepayment pursuant to Section 2.2(a) or
(b) or Section 7.8 or the date of declaration pursuant to Section 8.2.
Employee Benefit Plan - Any employee benefit plan
within the meaning of Section 3(3) of ERISA, other than a
Multiemployer Plan, which is maintained for employees of the
Company or any of its ERISA Affiliates.
Environmental Claim - Any notice of violation,
claim, demand, abatement order or other order by any
governmental authority or any Person for any damage, including,
without limitation, personal injury (including sickness, disease or
death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions,
resulting from or based upon (i) the existence of a Release
(whether sudden or non-sudden or accidental or non-accidental) of,
or exposure to, any Hazardous Material in, into or onto the
environment at, in, by, from or related to any Facility, (ii) the use,
handling, transportation, storage, treatment or disposal of
Hazardous Materials in connection with the operation of any
Facility, or (iii) the violation, or alleged violation, of any statutes,
ordinances, orders, rules, regulations, permits, licenses or
authorizations of or from any governmental authority, agency or
court relating to environmental matters connected with the
Facilities.
Environmental Laws - All laws relating to
environmental matters, including, without limitation, those relating
to (i) fines, orders, injunctions, penalties, damages, contribution,
cost recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials and to the
generation, use, storage, transportation, or disposal of Hazardous
Materials, in any manner applicable to the Company or any of its
Subsidiaries or any or their respective properties, including,
without limitation, the Comprehensive Environmental Response,
Compensatiorn, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U. S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), and
the Emergency Planning and Community Right-to-Know Act (42
U.S.C. Section 11001 et seq.), and (ii) environmental protection,
including, without limitation, the National Environmental Policy
Act (42 U.S.C. Section 4321 et seq.), and comparable state laws, each as
amended or supplemented, and any similar or analogous local, state
and federal statutes and regulations promulgated pursuant thereto,
each as in effect as of the date of determination.
ERISA - The Employee Retirement Income Security
Act of 1974, as amended from time to time and any successor
statute.
ERISA Affiliate - The Company and (i) any
corporation that is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Code of which the
Company is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses
under common control within the meaning of Section 414(c) of the
Code of which the Company is a member; and (iii) any member of
an affiliated service group within the meaning of Section 414(m) or
(o) of the Code of which the Company, any corporation described
in clause (i) above or any trade or business described in clause (ii)
above is a member.
ERISA Event - (i) The occurrence of a reportable
event within the meaning of Section 4043 of ERISA (other than a
reportable event as to which the requirement for thirty-day notice
to the PBGC has been waived) with respect to any Pension Plan,
(ii) failure with respect to any Pension Plan to meet the minimum
funding standard of Section 412 of the Code or of Section 302 of
ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA; (iii) the provision by the
administrator of any Pension Plan of a notice of intent to terminate
such plan pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section
4041(e) of ERISA) if such termination would result in liability that
would constitute a Material Adverse Effect; (iv) the withdrawal by
the Company or any ERISA Affiliate from a Pension Plan during a
plan year for which it was a "substantial employer" within the
meaning of Section 4001(a)(2) of ERISA resulting in liability of
any such entity pursuant to Section 4062(e) or 4063 of ERISA
which constitutes a Material Adverse Effect; (v) the institution by
the PBGC of proceedings to terminate a Pension Plan, or for the
appointment of a trustee to administer a Pension Plan, pursuant to
Section 4042 of ERISA; (vi) the withdrawal by the Company or
any ERISA Affiliate in a complete or partial withdrawal from a
Multiemployer Plan, or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA where any such event results in liability
which constitutes a Material Adverse Effect; (vii) the imposition
on the Company or any ERISA Affiliate of fines, penalties, taxes
or related charges under Chapter 43 of the Code or under Sections
502(c), (i) or (1) or 4071 of ERISA where liability for such charges
constitutes a Material Adverse Effect; (viii) the assertion of a claim
(other than routine claims for benefits) against any Employee
Benefit Plan or the assets thereof, or against the Company or any
ERISA Affiliate in connection with any such plan where liability
for such claim would constitute a Material Adverse Effect; (ix) the
existence, as of any valuation date for a Pension Plan, of an excess
of the present value (determined on the basis of reasonable
assumptions used by the independent actuary for such Pension
Plan) of the accrued benefits (whether or not vested) of the
participants and beneficiaries of such Pension Plan over the fair
market value of the assets of such Pension Plan, if such excess,
when added to the excesses calculated in the same manner for each
of the other Pension Plans as of the most recently preceding
valuation date for each such other Pension Plan is material to the
Company and its Subsidiaries, taken as a whole; or (x) receipt from
the Internal Revenue Service of notice of the failure of any Pension
Plan to qualify under Section 401(a) of the Code, or the failure of
any trust forming part of a Pension Plan to fail to qualify for
exemption from taxation under Section 501(a) of the Code.
Event of Default - As defined in Section 8.1.
Exchange Act - The Securities Exchange Act of
1934, as amended, and as it may be further amended from time to
time.
Facilities - Any and all real property (including,
without limitation, all buildings, fixtures or other improvements
located thereon) now, or heretofore, owned, leased, operated or
used (under permit or otherwise) by the Company or any of its
Subsidiaries or any of their respective predecessors.
Fixed Charges - For any period, the sum of (i)
interest expense (including the interest component of Rentals under
Capitalized Leases) net of interest income, amortization of debt
discount and expense on Indebtedness (including commissions,
discounts and other fees or charges in respect of letters of credit
and bankers' acceptances, and net costs under interest rate
agreements) of the Company and its Subsidiaries during such
period and (ii) Operating Rentals.
Guaranties - All obligations (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of a Person guaranteeing or,
in effect, guaranteeing any Indebtedness, dividend or other
obligation of any other Person in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred
through an agreement, contingent or otherwise, by such Person: (i)
to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds
(x) for the purchase or payment of such Indebtedness or obligation,
(y) to maintain working capital or other balance sheet condition or
(z) otherwise to advance or make available funds for the purchase
or payment of such Indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services
primarily for the purpose of assuring the owner of such
Indebtedness or obligation against loss in respect thereof, or (iv)
otherwise to assure the owner of the Indebtedness or obligation
against loss in respect thereof. For the purposes of all
computations made under this Agreement, Guaranties in respect of
any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness
for borrowed money which has been guaranteed, and Guaranties in
respect of any other obligation or liability or any dividend shall be
deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
Guaranty - The Guaranty Agreement, dated the
Closing Date, of each Material Subsidiary in the form attached as
Exhibit E.
Hazardous Materials - (i) Any chemical, material or
substance defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "ex-
tremely hazardous waste," "restricted hazardous waste," or "toxic
substances" or words of similar import under any applicable
Environmental Laws; (ii) any oil, petroleum or petroleum derived
substance, any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of
crude oil, any flammable substances or explosives, any radioactive
materials, any hazardous wastes or substances, any toxic wastes or
substances or any other materials or pollutants that (a) pose a
hazard to any property of Company or any of its Subsidiaries or to
Persons on or about such property or (b) cause such property to be
in violation of any Environmental Laws; (iii) friable asbestos, urea
formaldehyde foam insulation, electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; and (iv) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.
Indebtedness - (i) All obligations, including
Capitalized Leases, obligations incurred in connection with the
acquisition of assets or property or nonrecourse obligations, which
in accordance with generally accepted accounting principles would
be included in determining total liabilities as shown on the liability
side of a balance sheet as of the date at which Indebtedness is to be
determined, and (ii) all Guaranties of obligations of other Persons
of the character referred to in clause (i).
Institutional Holder - Any bank, trust company,
insurance company, pension fund, mutual fund or other similar
financial institution, including, without limiting the foregoing, any
"qualified institutional buyer" within the meaning of Rule 144A
under the Securities Act, which is or becomes a holder of any Note.
Lien - Any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including any agreement
to grant any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing
of or agreement to file any financing statement under the Uniform
Commercial Code of any jurisdiction in connection with any of the
foregoing.
Make-Whole Amount - As of any Determination
Date, to the extent that the Reinvestment Yield on such
Determination Date is lower than the interest rate payable on or in
respect of the Series A Notes or Series B Notes, as the case may
be, the excess of (a) the present value of the principal and interest
payments to be foregone by any prepayment (exclusive of accrued
interest on such Notes through the date of prepayment) on such
Notes to be prepaid (taking into account the manner of application
of such prepayment required by Section 2.2(c)), determined by
discounting (semi-annually on the basis of a 360-day year com-
posed of twelve 30-day months), such payments at a rate that is
equal to the Reinvestment Yield over (b) the aggregate principal
amount of such Notes then to be paid or prepaid. To the extent that
the Reinvestment Yield on any Determination Date is equal to or
higher than the interest rate payable on or in respect of such Notes,
the Make-Whole Amount is zero.
Material Adverse Effect - (i) A material adverse
effect on the business, properties, assets, results of operations or
condition, financial or otherwise, of the Company and its
Subsidiaries, taken as a whole, (ii) the impairment of the ability of
the Company or any Material Subsidiary to perform its obligations
under this Agreement, the Notes or the Guaranty, or (iii) the
impairment of the ability of the holders of the Notes to enforce
such obligations.
Material Subsidiary - Any Subsidiary the
consolidated revenues or total assets of which accounted for more
than 5% of the consolidated revenues or Consolidated Total
Assets, respectively, of the Company and its Subsidiaries as of the
end of the Company's most recently completed fiscal year.
Multiemployer Plan - A "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA to which the
Company or any ERISA Affiliate is, or ever has, contributed or to
which the Company or any ERISA Affiliate has, or ever has had,
an obligation to contribute.
Notes - As defined in Section 1.1.
Operating Rentals - For any period, the aggregate
Rentals payable by the Company and its Subsidiaries during such
period under all leases other than Capitalized Leases.
PBGC - The Pension Benefit Guaranty Corporation
or any successor thereto.
Pension Plan - Any Employee Benefit Plan that is
subject to the provisions of Title IV of ERISA and that is
maintained for employees of the Company or any of its ERISA
Affiliates.
Person - Any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
Purchaser - As defined in Section 1.1.
Reinvestment Yield - The sum of (i) 0.50% plus (ii)
the yield as set forth on page "USD" of the Bloomberg Financial
Markets Service (or other on-the-run service acceptable to the
holders of not less than a majority in principal amount of the
outstanding Notes) at 10:00 A.M. (Chicago time) on the
Determination Date for actively traded U.S. Treasury securities
having a maturity equal to the Weighted Average Life to Maturity
of the Notes then being prepaid or paid as of the date of
prepayment or payment, rounded to the nearest month, or if such
yields shall not be reported as of such time or the yields reported as
of such time are not ascertainable in accordance with the preceding
clause, then the arithmetic mean of the yields published in the
statistical release designated H.15(519) of the Board of Governors
of the Federal Reserve System under the caption "U.S.
Government Securities--Treasury Constant Maturities" (the
"statistical release") for the maturity corresponding to the
remaining Weighted Average Life to Maturity of the Notes then
being prepaid or paid as of the date of such prepayment or payment
rounded to the nearest month. For purposes of calculating the
Reinvestment Yield, the most recent weekly statistical release
published prior to the applicable Determination Date shall be used.
If no maturity exactly corresponding to such rounded Weighted
Average Life to Maturity shall appear therein, yields for the two
most closely corresponding published maturities (one of which
occurs prior and the other subsequent to the Weighted Average
Life to Maturity) shall be calculated pursuant to the foregoing
sentence and the Reinvestment Yield shall be interpolated from
such yields on a straight-line basis (rounding in each of such
relevant periods, to the nearest month).
Release - Any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials), or into or out of any Facility,
including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
Rentals - As of the date of any determination
thereof, all fixed payments (including all payments which the
lessee is obligated to make to the lessor on termination of the lease
or surrender of the property) payable by the Company or a
Subsidiary, as lessee or sublessee under a lease of real or personal
property, but exclusive of any amounts required to be paid by the
Company or a Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance,
taxes, assessments, amortization and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed on the
basis of the minimum rents, if any, required to be paid by the
lessee, regardless of sales volume or gross revenues.
Securities Act - The Securities Act of 1933, as
amended, and as it may be further amended from time to time.
Subsidiary - Any corporation of which shares of
Voting Stock representing more than 50% of the combined voting
power of each outstanding class of Voting Stock are owned or
controlled by the Company.
Voting Stock - Capital stock of any class of a
corporation having power to vote for the election of members of
the board of directors of such corporation, or persons performing
similar functions.
Weighted Average Life to Maturity - As applied to
any payment or prepayment of principal of the Notes, at any date,
the number of years obtained by dividing (a) the principal amount
of the Notes to be paid or prepaid into (b) the sum of the products
obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity, or other required
payment, including payment at final maturity, forgone by virtue of
such payment or prepayment, by (ii) the number of years
(calculated to the nearest 1/12th) which would have elapsed be-
tween such date and the making of such required payment.
Wholly-Owned - When applied to a Subsidiary, any
Subsidiary 100% of the Voting Stock of which is owned by the
Company and/or its Wholly-Owned Subsidiaries.
Terms which are defined in other Sections of this
Agreement shall have the meanings specified therein.
5.2 Accounting Principles. Where the character
or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with (and
references elsewhere in this Agreement to generally accepted
accounting principles shall mean) United States generally accepted
accounting principles utilized in the preparation of the Company's
audited consolidated financial statements for the year ended
December 31, 1991, except where such principles are inconsistent
with the requirements of this Agreement and except that financial
statements to be delivered pursuant to Sections 6.6(a) or (b) shall
be prepared, and the books to be kept pursuant to Section 6.5 shall
be kept, in accordance with United States generally accepted
accounting principles then in effect.
5.3 Valuation Principles. Except where
indicated expressly to the contrary by the use of terms such as "fair
value," "fair market value" or "market value," each asset, each
liability and each capital item of any Person, and any quantity
derivable by a computation involving any of such assets, liabilities
or capital items, shall be taken at the net book value thereof for all
purposes of this Agreement. "Net book value" with respect to any
asset, liability or capital item of any Person shall mean the amount
at which the same is recorded or, in accordance with generally
accepted accounting principles, should have been recorded in the
books of account of such Person, as reduced by any reserves which
have been or, in accordance with generally accepted accounting
principles, should have been set aside with respect thereto, but in
every case (whether or not permitted in accordance with generally
accepted accounting principles) without giving effect to any write-
up, write-down or write-off (other than any write-down or write-off
the entire amount of which was charged to Consolidated Net
Income or to a reserve which was a charge to Consolidated Net
Income) relating thereto which was made after the date of this
Agreement.
5.4 Direct or Indirect Actions. Where any
provision in this Agreement refers to action to be taken by any
Person, or which such Person is prohibited from taking, such
provision shall be applicable whether the action in question is
taken directly or indirectly by such Person.
6. AFFIRMATIVE COVENANTS
Pending the Closing Date, the Company agrees to comply with the
provisions of Section 6.6(a) and (c). The Company agrees that, for
so long as any amount remains unpaid on any Note:
6.1 Corporate Existence. The Company will
maintain and preserve, and will cause each Subsidiary to maintain
and preserve, its corporate existence and right to carry on its busi-
ness and use, and cause each Subsidiary to use, its best efforts to
maintain, preserve renew and extend all of its rights, powers,
privileges and franchises necessary to the proper conduct of its
business; provided, however, that the foregoing shall not prevent
any transaction permitted by Section 7.7 or the termination of the
corporate existence of any Subsidiary if, in the opinion of the
Board of Directors of the Company, such termination is in the best
interests of the Company, is not otherwise prohibited by this
Agreement and does not, individually or in the aggregate, result in
a Material Adverse Effect.
6.2 Insurance. The Company will, and will
cause each Subsidiary to, maintain insurance coverage with
financially sound and reputable insurers in such forms and
amounts, with such deductibles and against such risks as are
required by law or sound business practice and are customary for
corporations engaged in the same or similar businesses and owning
and operating similar properties as the Company and its
Subsidiaries.
6 . 3 Taxes, Claims for Labor and Materials. The
Company will pay and discharge when due, and will cause each
Subsidiary to pay and discharge when due, all taxes, assessments
and governmental charges or levies imposed upon it or its property
or assets, or upon properties leased by it (but only to the extent
required to do so by the applicable lease), other than taxes which
individually and in the aggregate are not material in amount or the
non-payment of which would not have a Material Adverse Effect,
provided that neither the Company nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim, the
payment of which is being contested in good faith and by proper
proceedings that will stay the forfeiture or sale of any property and
with respect to which adequate reserves are maintained in
accordance with generally accepted accounting principles.
6.4 Maintenance of Properties. The Company
will maintain, preserve and keep, and will cause each Subsidiary to
maintain, preserve and keep, its properties (whether owned in fee
or a leasehold interest) in good repair and working order, ordinary
wear and tear excepted, and from time to time will make all nec-
essary repairs, replacements, renewals and additions.
6.5 Maintenance of Records. The Company will
keep, and will cause each Subsidiary to keep, at all times proper
books of record and account in which full, true and correct entries
will be made of all dealings or transactions of or in relation to the
business and affairs of the Company or such Subsidiary, in ac-
cordance with generally accepted accounting principles consis-
tently applied throughout the period involved (except for such
changes as are disclosed in such financial statements or in the notes
thereto and concurred in by the independent certified public
accountants), and the Company will, and will cause each
Subsidiary to, provide reasonable protection against loss or damage
to such books of record and account.
6.6 Financial Information and Reports. The
Company will furnish to the Securities Valuation Office of the
National Association of Insurance Commissioners, 195 Broadway,
New York, New York 10007, a copy of the financial statements
referred to in Section 6.6(b) as soon as they are available. The
Company will furnish to you and to any other Institutional Holder
(in duplicate if you or such other holder so request) the following:
(a) As soon as available and in any event within
60 days after the end of each of the first three quarterly accounting
periods of each fiscal year of the Company, a consolidated
condensed balance sheet of the Company and its Subsidiaries as of
the end of such period and consolidated condensed statements of
earnings and cash flows of the Company and its Subsidiaries for
the periods beginning on the first day of such fiscal year and the
first day of such quarterly accounting period and ending on the date
of such balance sheet, setting forth in comparative form (x) the
corresponding consolidated condensed statements of earnings for
the corresponding periods of the preceding fiscal year, (y) the
corresponding consolidated condensed statements of cash flow for
the corresponding year to date period of the preceding fiscal year
and (z) a consolidated condensed balance sheet as of the end of the
preceding fiscal year, all in reasonable detail prepared in
accordance with generally accepted accounting principles
consistently applied throughout the period involved (except for
changes disclosed in such financial statements or in the notes
thereto and concurred in by the Company's independent certified
public accountants) and certified by the chief financial officer or
chief accounting officer of the Company (i) outlining the basis of
presentation, and (ii) stating that the information presented in such
statements presents fairly the financial condition of the Company
and its Subsidiaries and the results of operations for the period,
subject to customary year-end audit adjustments;
(b) As soon as available and in any event within
90 days after the last day of each fiscal year, consolidated and
consolidating balance sheets of the Company and its Subsidiaries
as of the end of such fiscal year and the related consolidated
statements of earnings, stockholders' equity, cash flows and
consolidating statements of earnings for such fiscal year, in each
case setting forth in comparative form figures for the preceding
fiscal year, all in reasonable detail, prepared in accordance with
generally accepted accounting principles consistently applied
throughout the period involved (except for changes disclosed in
such financial statements or in the notes thereto and concurred in
by independent certified public accountants) and accompanied by a
report unqualified as to scope of audit and unqualified as to going
concern as to the consolidated balance sheet and the related
consolidated statements of earnings, stockholders' equity and cash
flows of Arthur Andersen & Co. or any other firm of independent
public accountants of recognized national standing selected by the
Company to the effect that such financial statements have been
prepared in conformity with generally accepted accounting prin-
ciples and present fairly, in all material respects, the financial
condition of the Company and its Subsidiaries and that the
examination of such financial statements by such accounting firm
has been made in accordance with generally accepted auditing
standards;
(c) Together with the financial statements
delivered pursuant to paragraphs (a) and (b) of this Section 6.6, (i)
a management's discussion and analysis of the financial condition
and results of operations for the periods reported upon by such fi-
nancial statements, which discussion and analysis shall satisfy the
requirements of Item 303 of Securities and Exchange Commission
Regulation S-K, (ii) a detailed reconciliation of such financial
statements to financial statements prepared in accordance with the
generally accepted accounting principles utilized in connection
with the preparation of the Company's audited consolidated
financial statements for the year ended December 31, 1991, and
(iii) a certificate of the chief financial officer or chief accounting
officer, (x) to the effect that such officer has re-examined the terms
and provisions of this Agreement and that at the date of such
certificate, during the periods covered by such financial reports and
as of the end of such periods, the Company is not, or was not, in
default in the fulfillment of any of the terms, covenants, provisions
and conditions of this Agreement and that no Default or Event of
Default is occurring or has occurred as of the date of such cer-
tificate, during such periods and as of the end of such periods, or if
the signer is aware of any Default or Event of Default, such officer
shall disclose in such statement the nature thereof, its period of
existence and what action, if any, the Company has taken or
proposes to take with respect thereto, and (y) stating whether the
Company is in compliance with Sections 7.1 through 7.11 and
setting forth, in sufficient detail, the information and computations
required to establish whether or not the Company was in
compliance with the requirements of Sections 7.1 through 7.9
during the periods covered by the financial reports then being
furnished and as of the end of such periods;
(d) Together with the financial reports delivered
pursuant to paragraph (b) of this Section 6.6, a letter of the
independent certified public accountants stating (i) that in making
the examination necessary for expressing an opinion on such finan-
cial statements, nothing came to their attention that caused them to
believe that there is in existence or has occurred any Default or
Event of Default hereunder (the occurrence of which is
ascertainable by accountants in the course of normal audit
procedures) or, if such accountants shall have obtained knowledge
of any such Default or Event of Default, describing the nature
thereof and the length of time it has existed and (ii) that they have
reviewed the reconciliation referred to in clause (ii) of the
foregoing paragraph (c) of this Section 6.6 and nothing has come to
their attention that caused them to believe that such reconciliation
does not accurately reconcile the financial statements delivered
pursuant to paragraph (b) of this Section 6.1 to financial statements
prepared in accordance with the generally accepted accounting
principles utilized in connection with the preparation of the
Company's audited consolidated financial statements for the year
ended December 31, 1991;
(e) Promptly after the Company obtains
knowledge thereof, notice of any litigation or any governmental
proceeding pending against the Company or any Subsidiary in
which liability might reasonably be expected to exceed $5,000,000
or which might reasonably be expected to otherwise have a
Material Adverse Effect;
(f) As soon as available, copies of each
financial statement, notice, report and proxy statement which the
Company shall furnish to its stockholders; copies of each
registration statement and periodic report which the Company may
file with the Securities and Exchange Commission, and any other
similar or successor agency of the Federal government
administering the Securities Act, the Exchange Act or the Trust
Indenture Act of 1939, as amended; without duplication, copies of
each report (other than reports relating solely to the issuance of, or
transactions by others involving, its securities) relating to the
Company or its securities which the Company may file with any
securities exchange on which any of the Company's securities may
be registered; copies of any orders in any material proceedings to
which the Company or any of its Subsidiaries is a party, issued by
any governmental agency, Federal or state, having jurisdiction over
the Company or any of its Subsidiaries; and, except at such times
as the Company is a reporting company under Section 13 or 15(d)
of the Exchange Act or has complied with the requirements for the
exemption from registration under the Exchange Act set forth in
Rule 12g-3-2(b), such financial or other information as any holder
of the Notes or prospective purchaser of the Notes may reasonably
determine is required to permit such holder to comply with the
requirements of Rule 144A under the Securities Act in connection
with the resale by it of the Notes;
(g) As soon as available, a copy of each other
report submitted to the Company or any Subsidiary by independent
accountants retained by the Company or any Subsidiary in
connection with any interim or special audit made by them of the
books of the Company or any Subsidiary;
(h) Promptly following any change in the
composition of the Company's Subsidiaries from that set forth in
Annex I, as theretofore updated pursuant to this paragraph, an
updated list setting forth the information specified in Annex I;
(i) As soon as available, a copy of each final
management letter submitted to the Company or any Subsidiary by
independent accountants; and
(j) Such additional information as you or such
other Institutional Holder of the Notes may reasonably request
concerning the Company and its Subsidiaries.
6.7 Inspection of Properties and Records. The
Company will allow, and will cause each Subsidiary to allow, any
representative of you or any other Institutional Holder, so long as
you or such other Institutional Holder holds any Note, to visit and
inspect any of its properties, to examine its books of record and
account and to discuss its affairs, finances and accounts with its
officers and its public accountants (and by this provision the
Company authorizes such accountants to discuss with you or such
Institutional Holder its affairs, finances and accounts), all at such
reasonable times and as often as you or such Institutional Holder
may reasonably request and, if at the time thereof any Default or
Event of Default has occurred and is continuing, at the Company's
expense.
6.8 ERISA. (a) All assumptions and methods
used to determine the actuarial valuation of employee benefits,
both vested and unvested, under each Employee Benefit Plan of the
Company or any ERISA Affiliate, and each such Employee Benefit
Plan, whether now existing or adopted after the date hereof, will
comply in all material respects with ERISA.
(b) The Company will not, and will not permit
any ERISA Affiliate or any Employee Benefit Plan to, at any time
take or permit to be taken any action which will, or is reasonably
likely to, result in the occurrence of an ERISA Event which ERISA
Event, individually or together with any other ERISA Events which
have occurred, would have a Material Adverse Effect.
(c) Promptly upon the occurrence thereof, the
Company will give you and each other Institutional Holder notice
of the occurrence of an ERISA Event.
6.9 Compliance with Laws. (a) The Company
will comply, and will cause each Subsidiary to comply, with all
laws, rules and regulations, including Environmental Laws,
relating to its or their respective businesses, other than laws, rules
and regulations the failure to comply with which or the sanctions
and penalties resulting therefrom, individually or in the aggregate,
would not have a Material Adverse Effect; provided, however, that
the Company and its Subsidiaries shall not be required to comply
with laws, rules and regulations the validity or applicability of
which are being contested in good faith and by appropriate
proceedings and as to which the Company has established adequate
reserves on its books.
(b) Promptly upon the occurrence thereof, the
Company will give you and each other Institutional Holder notice
of the institution of any proceedings against, or the receipt of
notice of any Environmental Claim which if determined adversely
to the Company might reasonably be expected to have a Material
Adverse Effect.
6.10 Acquisition of Notes. Neither the Company
nor any Subsidiary or Affiliate, directly or indirectly, will
repurchase or offer to repurchase any Notes unless the offer is
made to repurchase Notes pro rata from all holders at the same
time and on the same terms. The Company will forthwith cancel
any Notes in any manner or at any time acquired by the Company
or any Subsidiary or Affiliate and such Notes shall not be deemed
to be outstanding for any of the purposes of this Agreement or the
Notes.
6.11 Private Placement Number. The Company
consents to the filing of copies of this Agreement with Standard &
Poor's Corporation to obtain a private placement number and with
the National Association of Insurance Commissioners.
7. NEGATIVE COVENANTS
The Company agrees that, for so long as any amount
remains unpaid on any Note:
7.1 Net Worth. The Company will not permit at
any time its Consolidated Net Worth to be less than $255,000,000
plus the cumulative sum of 50% of its Consolidated Net Income
(without reduction for any losses) for each of its fiscal years ending
after December 31, 1991.
7.2 Fixed Charge Ratio. The Company will not
at any time permit the ratio of Consolidated Income Available for
Fixed Charges to Fixed Charges for the most recently completed
four fiscal quarters to be less than the ratio set forth below:
For Fiscal Quarters Ending
During the Period
Ratio
Closing Date Through December 31, 1993
1.50 to 1.00
January 1, 1994 through December 31, 1994
1.25 to 1.00
January 1, 19 95 and Thereafter
1.10 to 1.00
7.3 Debt Ratio. The Company will not permit at
any time the ratio of Consolidated Debt to Consolidated Total
Capitalization (calculated as of the end of each fiscal quarter) to be
more than .60 to 1.00
7.4 Subsidiary Debt. The Company will not
permit any Subsidiary to create, assume or incur any Debt, other
than Debt to the Company or a Wholly-Owned Subsidiary, unless,
after giving effect thereto and to the application of the proceeds
thereof, the sum of (i) Debt of the Company and its Subsidiaries
secured by Liens incurred pursuant to Section 7.5(g) and, without
duplication, (ii) any other Debt of Subsidiaries incurred subsequent
to the Closing Date does not exceed 15% of Consolidated Net
Worth.
7.5 Liens. The Company will not, and will not
permit any Subsidiary to, create, assume, or incur, or permit to
exist, directly or indirectly, any Lien on its properties or assets,
whether now owned or hereafter acquired, unless the Notes are
equally and r atably secured, except:
(a) Liens existing on property of the Company
or any Subsidiary as of the date of this Agreement that are
described in attached Annex II;
(b) Liens for taxes, assessments or
governmental charges not then due and delinquent or the validity
of which is being contested in good faith and as to which the
Company has established adequate reserves on its books;
(c) Liens arising in connection with court
proceedings, provided the execution of such Lien's is effectively
stayed and such Liens are being contested in good faith and as to
which the Company has established adequate reserves on its books;
(d) Protective filings under the Uniform
Commercial Code in connection with true leases, defects in title
and Liens arising in the ordinary course of business and not
incurred in connection with the borrowing of money, including
encumbrances in the nature of zoning restrictions, easements,
rights and restrictions of record on the use of real property,
landlord's and lessor's liens in the ordinary course of business,
which in the aggregate do not materially interfere with the conduct
of the business of the Company and its Subsidiaries taken as a
whole or materially impair the value of the property subject thereto
for the purpo se of such business;
(e) Liens securing Indebtedness of a Wholly-
Owned Subsidiary to the Company or another Wholly-Owned
Subsidiary or of the Company to a Wholly-Owned Subsidiary;
(f) Liens (i) existing on property at the time of
its acquisition by the Company or a Subsidiary and not created in
contemplation thereof, whether or not the Indebtedness secured by
such Lien is assumed by the Company or such Subsidiary or (ii) on
property created substantially contemporaneously with the date of
acquisition or within 120 days of the acquisition or completion of
construction thereof to secure or provide for all or a portion of the
purchase price or cost of construction of such property or (iii)
existing on property of a corporation at the time such corporation is
merged into or consolidated with or is acquired by, or substantially
all of its assets are acquired by, the Company or a Subsidiary and
not created in contemplation thereof; provided that such Liens do
not extend to other property of the Company or any Subsidiary and
that the aggregate principal amount of Indebtedness secured by
each such Lien does not exceed 100% of the lesser of the cost or
fair market value of the property subject thereto;
(g) Liens not otherwise permitted by paragraphs
(a) through (f) above incurred subsequent to the Closing Date to
secure Debt, provided that, the sum of (x) Debt of the Company
and its Subsidiaries secured by Liens incurred pursuant to this
paragraph (g) and without duplication, (y) other Debt of
Subsidiaries incurred subsequent to the Closing Date does not
exceed 15% of Consolidated Net Worth; and
(h) Liens resulting from extensions, renewals,
refinancings and refundings of Indebtedness secured by Liens
permitted by paragraph (a) above, provided there is no increase in
the principal amount of Indebtedness secured thereby at the time of
renewal, and any new Lien attaches only to the same property
theretofore subject to such earlier Lien.
In the event any property of the Company or any
Subsidiary is subjected to a Lien securing Indebtedness which Lien
is not otherwise permitted by this Section 7.5, the Company will
make or cause to be made provision whereby the Notes will be
secured, to the full extent permitted under applicable law, equally
and ratably with all other Indebtedness secured by such Lien, and
in any case the Notes shall have the benefit, to the full extent that
the holders may be entitled thereto under applicable law, of an
equitable Lien on such property equally and ratably securing the
Notes and such other Indebtedness. Compliance with the
provisions of this paragraph shall not be deemed to constitute a
waiver of, or consent to, any violation of the provisions of this
Section 7.5.
7.6 Restricted Payments. The Company will
not, except a s hereinafter provided:
(a) declare or pay any dividends, either in cash
or property, on any shares of its capital stock of any class (except
dividends or other distributions payable solely in shares of capital
stock of the Company);
(b) directly or indirectly, or through any
Subsidiary, purchase, redeem or retire any shares of its capital
stock of any class or any warrants, rights or options to purchase or
acquire any shares of its capital stock (other than in exchange for
or out of the net cash proceeds from the substantially concurrent
issuance or sale of other shares of capital stock of the Company
subsequent to the Closing Date); or
(c) make any other payment or distribution,
either directly or indirectly or through any Subsidiary, in respect of
its capital stock;
if, after giving effect thereto a Default or an Event of Default
would exist.
7.7 Merger or Consolidation. The Company
will not, and will not permit any Subsidiary to, merge or
consolidate with, or sell all or substantially all of its assets to, any
Person, except that:
(a) The Company may consolidate with or
merge into, or sell all or substantially all of its assets to, any Person
or permit any Person to merge into it, provided that immediately
after giving effect thereto,
(i) Subject to the provisions of Section
2.2(b), the Company is the successor corporation or,
if the Company is not the successor corporation, the
successor corporation is a solvent corporation
organized under the laws of a state of the United
States of America or the District of Columbia and
shall expressly assume in writing the Company's
obligations under the Notes and this Agreement, the
Guaranty of the Material Subsidiaries shall continue
in full force and effect, and the holders of the Notes
shall receive a favorable opinion of counsel
reasonably acceptable to them as to the validity and
enforceability of such assumption and the Guaranty;
and
(ii) There shall exist no Default or Event
of Defaul t; and
(b) Any Subsidiary may (i) merge into the
Company or another Wholly-Owned Subsidiary or (ii) sell, transfer
or lease all or any part of its assets to the Company or to another
Wholly-Owned Subsidiary or (iii) merge into any Person which, as
a result of such merger, becomes a Wholly-Owned Subsidiary, or
(iv) merge with any Person in a transaction in which such
Subsidiary is the surviving corporation provided the percentage of
Voting Stock of such Subsidiary owned by the Company and its
Subsidiaries is not reduced as a result of such transaction; provided
in each such instance that immediately after giving effect thereto
there shall exist no Default or Event of Default.
7.8 Sale of Assets. The Company will not, and
will not permit any Subsidiary to, sell, lease, transfer or otherwise
dispose of (collectively a "Disposition") any assets (including
capital stock of Subsidiaries), in one or a series of transactions
(other than in the ordinary course of business or as permitted by
Section 7.7) to any Person, other than the Company or a Wholly-
Owned Subsidiary, if for the 12 month period ending on and
including the date of such Disposition, after giving effect to such
Disposition, the aggregate net proceeds from all Dispositions
during such twelve month period would exceed 15% of
Consolidated Total Assets as of the beginning of such twelve
month period unless either (i) after giving effect thereto and to the
contemporaneous repayment of any Consolidated Debt, the
resulting ratio of Consolidated Income Available for Fixed Charges
to Fixed Charges for each fiscal quarter ending during such twelve
month period would be not less than 1.50 to 1.00 or (ii) the
Company offers to prepay the Notes then outstanding as hereinafter
provided. In the event the Company offers to prepay the Notes as
herein provided the Company shall immediately give written notice
to each holder of a Note of such offer, accompanied by a certificate
of an authorized officer of the Company setting forth the
calculations described in clause (i) of the preceding sentence. Such
notice shall contain the written, irrevocable offer of the Company
to prepay, on a date specified in such notice which shall be not less
than 30 or more than 45 calendar days after the date of such
Disposition, the entire principal amount of the Notes held by each
holder at a price equal to 100% of the outstanding principal
thereof, plus interest accrued thereon to the date of prepayment,
plus the Make-Whole Amount, and shall state that notice of
acceptance of the Company's offer to prepay under this Section 7.8
must be delivered to the Company not later than 10 calendar days
prior to the date fixed for prepayment. Upon receipt by the
Company of such notice from any holder, but subject to the
following sentence, the aggregate principal amount and accrued
interest and Make-Whole Amount of Notes held by such holder
shall become due and payable on the day specified in the
Company's notice. Not earlier than 7 calendar days prior to the
date fixed for prepayment, the Company shall give written notice
to each holder of those holders, and the principal amount of Notes
held by each, who have given notices of acceptance of the
Company's offer, and thereafter any holder may revoke its
acceptance of the Company's offer, or accept such offer, by written
notice to such effect delivered to the Company not less than 3
calendar days prior to the date fixed for prepayment.
7.9 Disposition of Stock of Subsidiaries. The
Company will not, and will not permit any Subsidiary to, issue, sell
or transfer the capital stock of a Subsidiary to any Person other
than the Company or another Wholly-Owned Subsidiary if such
issuance, sale or transfer would cause it to cease to be a Subsidiary,
unless (i) such sale would not be prohibited under Section 7.8 and
(ii) such Subsidiary does not own any shares of capital stock or
Indebtedness of the Company or another Subsidiary which
Subsidiary is not being disposed of as a part of such transaction.
7.10 Transactions with Affiliates. The Company
will not, and will not permit any Subsidiary to, enter into any
transaction or transactions (including the furnishing of goods or
services) calling for payments or any other transfer of value in
excess of $100,000, individually or in the aggregate in any fiscal
year, with an Affiliate except in the ordinary course of business as
presently conducted and on terms and conditions no less favorable
to the Company or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate.
7.11 Guaranties. The Company will not, and
will not permit any Subsidiary to become or be liable in respect to any
Guaranty of Indebtedness for borrowed money except Guaranties
which are limited in amount to a stated maximum principal amount
of dollar exposure.
7.12 Nature of Business. The Company will not,
and will not permit any Subsidiary to, engage in any new business
if, as a result thereof, the general nature of the business then to be
engaged in by the Company and its Subsidiaries, taken as a whole,
would be substantially changed from the general nature of the
businesses engaged in by the Company and its Subsidiaries
described in the Private Placement Memorandum dated July 1992.
7.13 Restrictions on Dividends. The Company
will not, and it will not permit any Subsidiary to, enter into or
become bound by any agreement or instrument or any charter or
other corporate restriction which in any way prohibits or restricts
any Subsidiary's ability to pay dividends or make advances to the
Company or to perform under the Guaranty.
8. EVENTS OF DEFAULT AND REMEDIES
THEREFOR
8.1 Nature of Events. An "Event of Default"
shall exist if any one or more of the following occurs:
(a) Any default in the payment of interest when
due on any of the Notes and continuance of such default for a
period of five days;
(b) Any default in the payment of the principal
of any of the Notes or the Make-Whole Amount thereon, if any, at
maturity, upon acceleration of maturity or at any date fixed for
prepayment;
(c) Any default (i) in the payment of the
principal of or interest on any other Indebtedness of the Company
and its Subsidiaries aggregating in excess of $10,000,000 as and
when due and payable (whether by lapse of time, declaration, call
for redemption or otherwise) and the continuation of such default
beyond the period of grace, if any, allowed with respect thereto, or
(ii) (other than a payment default) under any mortgages,
agreements or other instruments of the Company and its
Subsidiaries under or pursuant to which such Indebtedness aggre-
gating in excess of $10,000,000, is issued resulting in the ac-
celeration of such Indebtedness;
(d) Any default in the observance of any
covenant or agreement contained in Sections 7.1 through 7.3,
Sections 7.6 or 7.7 or Section 8.7;
(e) Any default in the observance or
performance of any other covenant or provision of this Agreement
which is not remedied within 30 days following the earlier to occur
of (i) the day on which an officer of the Company first obtains
knowledge of such default or (ii) the day on which written notice
thereof is given to the Company by any holder of a Note;
(f) Any representation or warranty made by the
Company in this Agreement or by any Material Subsidiary in the
Guaranty, or made by the Company in any written statement or
certificate furnished by the Company in connection with the
issuance and sale of the Notes or furnished by the company
pursuant to this Agreement, proves incorrect in any material
respect as of the date of the issuance or making thereof;
(g) Any judgment, writ or warrant of attachment
or any similar process in an aggregate amount in excess of
$5,000,000 shall be entered or filed against the Company or any
Subsidiary or against any property or assets of either and remain
unpaid, unvacated, unbonded or unstayed (through appeal or
otherwise) for a period of 60 days after the Company or any
Subsidiary re ceives notice thereof;
(h) This Agreement, the Notes or the Guaranty
at any time for any reason cease to be in full force and effect as a
result of acts taken by the Company or any Material Subsidiary or
shall be declared to be null and void in whole or in part by a court
or other governmental or regulatory authority having jurisdiction,
or the validity or enforceability thereof shall be contested by the
Company or any Material Subsidiary, or the Company or any
Material Subsidiary shall renounce any of the same or deny that it
has any or further liability thereunder; or
(i) The Company or any Material Subsidiary
shall
(i) generally not pay its debts as they
become due or admit in writing its inability to pay
its debts generally as they become due;
(ii) file a petition in bankruptcy or for
reorganization or for the adoption of an arrangement
under the Federal Bankruptcy Code, or any similar
applicable bankruptcy or insolvency law, as now or
in the future amended (herein collectively called
"Bankruptcy Laws"); file an answer or other
pleading admitting or failing to deny the material
allegations of such a petition; fail to file, within the
time allowed for such purpose, an answer or other
pleading denying or otherwise controverting the
material allegations of such a petition; or file an
answer or other pleading seeking, consenting to or
acquiescing in relief provided for under the
Bankruptcy Laws;
(iii) make an assignment of all or a
substantial part of its property for the benefit of its
creditors;
(iv) seek or consent to or acquiesce in the
appointment of a receiver, liquidator, custodian or
trustee of it or for all or a substantial part of its
property;
(v) be finally adjudicated a bankrupt or
insolvent;
(vi) be subject to the entry of a court
order, which shall not be vacated, set aside or stayed
within 60 days from the date of entry, (A)
appointing a receiver, liquidator, custodian or
trustee of it or for all or a substantial part of its
property, or (B) for relief pursuant to an involuntary
case brought under, or effecting an arrangement in,
bankruptcy or (C) for a reorganization pursuant to
the Bankruptcy Laws or (D) for any other judicial
modification or alteration of the rights of creditors;
or
(vii) be subject to the assumption of
custody or sequestration by a court of competent
jurisdiction of all or a substantial part of its
property, which custody or sequestration shall not
be suspended or terminated within 60 days from its
inception.
8.2 Remedies on Default. When any Event of
Default described in paragraphs (a) through (h) of Section 8.1 has
occurred and is continuing, the holders of at least 25% in aggregate
principal amount of the Notes then outstanding may, by notice to
the Company, declare the entire principal, together with the Make-
Whole Amount (to the extent permitted by law), and all interest
accrued on all Notes to be, and such Notes shall thereupon become,
forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are expressly
waived. Notwithstanding the foregoing, when (i) any Event of
Default described in paragraphs (a) or (b) of Section 8.1 has
occurred and is continuing, any holder may by notice to the
Company declare the entire principal, together with the Make-
Whole Amount (to the extent permitted by law), and all interest
accrued on the Notes then held by such holder to be, and such
Notes shall thereupon become, forthwith due and payable, without
any presentment, demand, protest or other notice of any kind, all of
which are expressly waived and (ii) where any Event of Default
described in paragraph (i) of Section 8.1 has occurred, then the
entire principal, together with the Make-Whole Amount (to the
extent permitted by law) and all interest accrued on all outstanding
Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes or any
of them becoming due and payable as aforesaid, the Company will
forthwith pay to the holders of such Notes the entire
principal of and interest accrued on such Notes, plus the Make-
Whole Amount which shall be calculated on the Determination
Date.
8.3 Annulment of Acceleration of Notes. The
provisions of Section 8.2 are subject to the condition that if the
principal of and accrued interest on the Notes have been declared
immediately due and payable by reason of the occurrence of any
Event of Default described in paragraphs (a) through (i), inclusive,
of Section 8.1, the holder or holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such decla-
ration and the consequences thereof, provided that (i) at the time
such declaration is annulled and rescinded no judgment or decree
has been entered for the payment of any monies due pursuant to the
Notes or this Agreement, (ii) all arrears of interest upon all the
Notes and all other sums payable under the Notes and under this
Agreement (except any principal, interest or premium on the Notes
which has become due and payable solely by reason of such
declaration under Section 8.2) shall have been duly paid and (iii)
each and every Default or Event of Default shall have been cured
or waived; and provided further, that no such rescission and
annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereto.
8.4 Other Remedies. If any Event of Default
shall be continuing, any holder of Notes may enforce its rights by
suit in equity, by action at law, or by any other appropriate pro-
ceedings, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power
granted in this Agreement, and may enforce the payment of any
Note held by such holder and any of its other legal or equitable
rights.
8.5 Conduct No Waiver; Collection Expenses.
No course of dealing on the part of any holder of Notes, nor any
delay or failure on the part of any holder of Notes to exercise any
of its rights, shall operate as a waiver of such rights or otherwise
prejudice such holder's rights, powers and remedies. If the
Company fails to pay, when due, the principal of, or the interest on,
any Note, or fails to comply with any other provision of this
Agreement, the Company will pay to each holder, to the extent
permitted by law, on demand, such further amounts as shall be
sufficient to cover the cost and expenses, including but not limited
to reasonable attorneys' fees, incurred by such holders of the Notes
in collecting any sums due on the Notes or in otherwise enforcing
any of their rights.
8.6 Remedies Cumulative. No right or remedy
conferred upon or reserved to any holder of Notes under this
Agreement is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to
every other right or remedy given under this Agreement or now or
hereafter existing under any applicable law. Every right and
remedy given by this Agreement or by applicable law to any holder
of Notes may be exercised from time to time and as often as may
be deemed expedient by such holder, as the case may be.
8.7 Notice of Default. With respect to Defaults,
Events of Default or claimed defaults, the Company will give the
following notices:
(a) The Company promptly, but in any
event within 5 days after the day on which an executive officer of
the Company first obtains knowledge thereof, will furnish to each
holder of a Note written notice of the occurrence of a Default or an
Event of Default. Such notice shall specify the nature of such
default, the period of existence thereof and what action the
Company has taken or is taking or proposes to take with respect
thereto.
(b) If the holder of any Note or of any
other evidence of Indebtedness of the Company or any Subsidiary
(i) aggregating $5,000,000 or more or (ii) the default in connection
with which, either alone or considered with existing defaults in
connection with other Indebtedness, could give rise to an Event of
Default pursuant to Section 8.1(c), gives any notice or takes any
other action with respect to a claimed default, the Company will
forthwith give written notice thereof to each holder of the then
outstanding Notes, describing the notice or action and the nature of
the claimed default.
9. AMENDMENTS; WAIVERS AND CONSENTS
9.1 Matters Subject to Modification.
Any term, covenant, agreement or condition of this Agreement or the
Guaranty may, with the consent of the Company, be amended, or
compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), if the
Company shall have obtained the consent in writing of the holder
or holders of at least 66-2/3% in aggregate principal amount of
outstanding Notes; provided, however, that, without the written
consent of the holder or holders of all of the Notes then out-
standing, no such waiver, modification, alteration or amendment
shall be effective which will (i) change the time of payment
(including any required prepayment) of the principal of or the
interest on any Note, (ii) reduce the principal amount thereof or the
premium, if any, or change the rate of interest thereon, (iii) change
any provision of any instrument affecting the preferences between
holders of the Notes or between holders of the Notes and other
creditors of the Company, or (iv) change any of the provisions of
Section 8.2, Section 8.3 or this Section 9.
For the purpose of determining whether holders of the
requisite principal amount of Notes have made or concurred in any waiver,
consent, approval, notice or other communication under this
Agreement, Notes held in the name of, or owned beneficially by,
the Company, any Subsidiary or any Affiliate thereof, shall not be
deemed outstanding.
9.2 Solicitation of Holders of Notes. The
Company will not solicit, request or negotiate for or with respect to
any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of the Notes
(irrespective of the amount of Notes then owned by it) shall
concurrently be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall be
supplied by the Company with sufficient information to enable it to
make an informed decision with respect thereto. Executed or true
and correct copies of any waiver or consent effected pursuant to the
provisions of this Section 9 shall be delivered by the Company to
each holder of outstanding Notes forthwith following the date on
which the same shall have been executed and delivered by the
holder or holders of the requisite percentage of outstanding Notes.
The Company will not, directly or indirectly, pay or cause to be
paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of the Notes as
consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the
terms and provisions of this Agreement unless such remuneration
is concurrently paid, on the same terms, ratably to each holder of
the then outstanding Notes.
9.3 Binding Effect. Any such amendment or
waiver shall apply equally to all the holders of the Notes and shall
be binding upon them, upon each future holder of any Note and
upon the Company whether or not such Note shall have been
marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right related thereto.
10. FORM OF NOTES, REGISTRATION,
TRANSFER, EXCHANGE AND
REPLACEMENT
10.1 Form of Notes. Each Series A Note and
Series B Note initially delivered under this Agreement will be in
the form of one fully registered Note in the form attached as
Exhibit A or Exhibit B, respectively. The Notes are issuable only
in fully registered form and in denominations of at least $100,000
(or the remaining outstanding balance thereof, if less than
$100,000).
10.2 Note Register. The Company shall cause to
be kept at its principal office a register (the "Note Register") for the
registration and transfer of the Notes. The names and addresses of
the holders of Notes, the transfer thereof and the names and
addresses of the transferees of the Notes shall be registered in the
Note Register. The Company may deem and treat the person in
whose name a Note is so registered as the holder and owner thereof
for all purposes and shall not be affected by any notice to the
contrary, until due presentment of such Note for registration of
transfer as provided in this Section 10.
10.3 Issuance of New Notes upon Exchange or
Transfer. Upon surrender for exchange or registration of transfer
of any Note at the office of the Company designated for notices in
accordance with Section 11.2, the Company shall execute and
deliver, at its expense, one or more new Notes of any authorized
denominations requested by the holder of the surrendered Note,
each dated the date to which interest has been paid on the Notes so
surrendered (or, if no interest has been paid, the date of such
surrendered Note), but in the same aggregate unpaid principal
amount as such surrendered Note, and registered in the name of
such person or persons as shall be designated in writing by such
holder. Every Note surrendered for registration of transfer shall be
duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or by his
attorney duly authorized in writing. The Company may condition
its issuance of any new Note in connection with a transfer by any
Person on compliance with Section 3.2, by Institutional Holders on
compliance with Section 2.5 and on the payment to the Company
of a sum sufficient to cover any stamp tax or other governmental
charge imposed in respect of such transfer.
10.4 Replacement of Notes. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation
or destruction of any Note, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company or in the
event of such mutilation upon surrender and cancellation of the
Note, the Company, without charge to the holder thereof, will
make and deliver a new Note, of like tenor in lieu of such lost,
stolen, destroyed or mutilated Note. If any such lost, stolen or
destroyed Note is owned by you or any other Institutional Holder,
then the affidavit of an authorized officer of such owner setting
forth the fact of such loss, theft or destruction and of its ownership
of the Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof, and no further indemnity
shall be required as a condition to the execution and delivery of a
new Note, other than a written agreement of such owner (in form
reasonably satisfactory to the Company) to indemnify the
Company.
11. MISCELLANEOUS
11.1 Expenses. Whether or not the purchase of
Notes herein contemplated shall be consummated, the Company
agrees to pay directly all reasonable expenses in connection with
the preparation, execution and delivery of this Agreement and the
transactions contemplated by this Agreement, including, but not
limited to, out-of-pocket expenses, filing lees of Standard & Poor's
Corporation in connection with obtaining a private placement
number, charges and disbursements of special counsel,
photocopying and printing costs and charges for shipping the
Notes, adequately insured, to you at your home office or at such
other address as you may designate, and all similar expenses
(including the fees and expenses of counsel) relating to any
amendments, waivers or consents in connection with this
Agreement or the Notes, including, but not limited to, any such
amendments, waivers or consents resulting from any work-out,
renegotiation or restructuring relating to the performance by the
Company of its obligations under this Agreement and the Notes.
The Company also agrees that it will pay and save you harmless
against any and all liability with respect to stamp and other
documentary taxes, if any, which may be payable, or which may be
determined to be payable in connection with the execution and
delivery of this Agreement or the Notes (but not in connection with
a transfer of any Notes), whether or not any Notes are then
outstanding. The obligations of the Company under this Section
11.1 shall survive the retirement of the Notes.
11.2 Notices. Except as otherwise expressly
provided herein, all communications provided for in this
Agreement shall be in writing and delivered or sent by registered or
certified mail, return receipt requested, or by overnight courier (i) if
to you, to the address set forth below your name in Annex I, or to
such other address as you may in writing designate, (ii) if to any
other holder of the Notes, to such address as the holder may
designate in writing to the Company, and (iii) if to the Company, to
Danaher Corporation, 1250 24th Street, N.W., Suite 800,
Washington, D.C. 20037, Attention: Controller, or to such other
address as the Company may in writing designate.
11.3 Reproduction of Documents. This
Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers and modifications which may
hereafter be executed, (ii) documents received by you at the closing
of the purchase of the Notes (except the Notes themselves), and
(iii) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you
by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and you may destroy any
original document so reproduced. The Company agrees and
stipulates that any such reproduction which is legible shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you
in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence; provided that nothing herein
contained shall preclude the Company from objecting to the
admission of any reproduction on the basis that such reproduction
is not accurate, has been altered or is otherwise incomplete.
11.4 Successors and Assigns. This Agreement
will inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
11.5 Law Governing. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Illinois.
11.6 Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only
and do not constitute a part of this Agreement.
11.7 Counterparts. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account
for more than one such counterpart or reproduction thereof per-
mitted by Section 11.3.
11.8 Reliance on and Survival of Provisions. All
covenants, representations and warranties made by the Company
herein and in any certificates delivered pursuant to this Agreement,
whether or not in connection with a closing, (i) shall be deemed to
have been relied upon by you, notwithstanding any investigation
heretofore or hereafter made by you or on your behalf and (ii) shall
survive the delivery of this Agreement and the Notes.
11.9 Integration and Severability. This
Agreement embodies the entire agreement and understanding
between you and the Company, and supersedes all prior
agreements and understandings relating to the subject matter
hereof. In case any one or more of the provisions contained in this
Agreement or in any Note, or application thereof, shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this
Agreement and in any Note, and any other application thereof,
shall not in any way be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the Company and the
Purchaser have caused this Agreement to be executed and
delivered by their respective officer or officers thereunto duly
authorized.
DANAHER CORPORATION
By: /s/ C. S. Brannan
Title: Vice President
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By: /s/ Frederick A. Bell
Title: Director - Securities Investment
By: /s/ Warren Shank
Title: Counsel
NIPPON LIFE INSURANCE COMPANY OF AMERICA, an
Iowa corporation by its attorney-in-fact, Principal Mutual Life
Insurance Company, an Iowa corporation
By: /s/ Frederick A. Bell
Title: Director - Securities Investment
By: /s/ Warren Shank
Title: Counsel
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
By: /s/ Gary W. Fridley
Authorized Signatories
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
By: Boylston Capital Advisors, Inc, its asset manager and
investment advisor
By: /s/ Kenneth J. Frey, Jr.
Title: Vice President
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By: /s/ E.A. Marr
Its: Assistance Vice President
Private Placement Investments
By: /s/ Mark Corben
Its: Manager
Private Placement Investments
INTEGRITY LIFE INSURANCE
By: /s/
Title: President
NATIONAL INTEGRITY LIFE INSURANCE
By: /s/
Title: President
UNITED OF OMAHA LIFE INSURANCE COMPANY
By: /s/ M.G. Echtenkamp
Title: Second Vice President
<PAGE>
COMPANION LIFE INSURANCE COMPANY
By: /s/ David S. Lee
Its: Vice President
By: /s/ Richard A.Witt
Its: Second Vice President & Assistant
Treasurer
UNITED WORLD LIFE INSURANCE COMPANY
By: /s/ M.S. Echtenkamp
Its: Authorized Signer
AMERICAN REPUBLIC INSURANCE COMPANY
By: /s/ M. E. Abbott
Its: President and Chief Financial Officer
By: /s/
Its: Senior Vice President, Investment
CENTRAL LIFE ASSURANCE COMPANY
By: /s/ Robert B. Lindstrom
Its : Vice President - Private Placements
GENERAL AMERICAN LIFE INSURANCE COMPANY
By: /s/ Leonard M. Rubenstein
Its: Executive Vice President and Treasurer
PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF
AMERICA
By: /s/
Title: Investment Officer
SECURITY MUTUAL LIFE INSURANCE COMPANY
By: /s/ Kevin W. Hammond
Title: Vice President - Investments
THE UNION CENTRAL LIFE INSURANCE COMPANY
By: /s/ Joseph A. Tucker
Title: Assistant Treasurer
By:
Title:
THE MANHATTAN LIFE INSURANCE COMPANY
By: /s/ J.N. Kotsonis
Title: Senior VP and CFO
