UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
Environment One Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.10 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
294 056 106
-------------------------------------------------------
(CUSIP Number)
William D. Larsson
Vice President and Chief Financial Officer
Precision Castparts Corp.
4650 SW Macadam Avenue, Suite 440
Portland, Oregon 97201
(503) 417-4800
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 31, 1998
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with the statement. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
------------
CUSIP No. 294 056 106 Page 2 of 6 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EOC Acquisition Corporation
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3) SEC USE ONLY _____________________________________________________________
4) SOURCE OF FUNDS
AF
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7) SOLE VOTING POWER
NUMBER OF 3,714,046
--------------------------------------------------
SHARES
8) SHARED VOTING POWER
BENEFICIALLY
OWNED BY --------------------------------------------------
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 3,714,046
--------------------------------------------------
PERSON
10) SHARED DISPOSITIVE POWER
WITH
--------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,714,046
--------------------------------------------------------------------------
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
--------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
86.5%
--------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON*
CO
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SCHEDULE 13D
------------
CUSIP No. 294 056 106 Page 3 of 6 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Precision Castparts Corp.
--------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3) SEC USE ONLY _____________________________________________________________
4) SOURCE OF FUNDS
BK, WC
--------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Oregon
--------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF 3,714,046
--------------------------------------------------
SHARES
8) SHARED VOTING POWER
BENEFICIALLY
OWNED BY --------------------------------------------------
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 3,714,046
--------------------------------------------------
PERSON
10) SHARED DISPOSITIVE POWER
WITH
--------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,714,046
--------------------------------------------------------------------------
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
--------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
86.5%
--------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON*
CO
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Item 1. Security and Issuer
The class of equity securities to which this Statement relates is the
common stock, $.10 par value (the "Common Stock") of Environment One
Corporation, a New York corporation ("E/ONE"). E/ONE's principal executive
offices are located at 2773 Balltown Road, Niskayuna, New York 12309-1090.
Item 2. Identity and Background
(a)-(c), (f) This Statement is filed by Precision Castparts Corp., a
corporation organized under the laws of Oregon ("PCC"), and EOC Acquisition
Corporation, a corporation organized under the laws of New York and an indirect
wholly-owned subsidiary of PCC ("EOC"), each of whose business addresses is 4650
SW Macadam Avenue, Suite 440, Portland, Oregon 97201. PCC's principal business
is manufacturing complex metal components and products, particularly structural
investment castings and airfoil castings used in jet aircraft engines. In
addition, PCC is also involved in the industrial gas turbine, fluid management,
industrial metalworking tools and machines, pulp and paper, powder metal, and
tungsten carbide markets. EOC was formed for the purpose of making the offer to
purchase all of the outstanding shares of Common Stock, as set forth in the
Offer to Purchase dated March 3, 1998 (the "Offer to Purchase").
(d)-(e) During the past five years, neither PCC nor EOC has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and neither has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Set forth under the caption "Directors and Executive Officers of EOC
and PCC" in Schedule I to the Offer to Purchase, which is included as Exhibit
7.1 hereto and incorporated herein by reference, are the names, principal
occupations and business addresses of the executive officers and directors of
PCC and EOC. Each executive officer and director is a citizen of the United
States of America. During the past five years, none of the executive officers or
directors has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
EOC paid $15.25 per share of Common Stock purchased for a total
aggregate amount of $56,639,201. These funds were obtained from PCC. PCC
obtained the funds from its general corporate funds and from borrowings under
its existing credit facility with Bank of America National Trust and Savings
Association, which agreement is attached hereto as Exhibit 7.2 and is
incorporated herein by reference.
Item 4. Purpose of Transaction
The purpose of the acquisition of the Common Stock was to facilitate
EOC's offer to purchase all outstanding Common Stock of E/ONE as described in
the Offer to Purchase, which is attached hereto as Exhibit 7.1 and incorporated
herein by reference. As described in the Offer to Purchase, it is the intention
of EOC to acquire all the remaining outstanding shares of Common Stock. Certain
information set forth in the Introduction, Section 7 ("Certain Information
Concerning the
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Company"), Section 11 ("The Purpose of the Offer; Merger Agreement; Plans for
the Company"), and Section 13 ("Effect of the Offer on the Market for the
Shares, NASDAQ Exchange Listing and Exchange Act Registration") is incorporated
herein by reference.
Item 5. Interest in Securities of the Issuer
(a) - (c) On March 31, 1998, EOC acquired 3,714,046 shares of Common
Stock at $15.25 per share, pursuant to the Offer to Purchase, representing
approximately 86.5 percent of the outstanding share capital of E/ONE. EOC has
the sole power to direct the vote or disposition of the Common Stock it
purchased pursuant to the Offer to Purchase subject to the control of its
ultimate parent company, PCC. Except as described in this Statement, none of
EOC, PCC, or any of the persons named in response to Item 2 has bought or sold
or otherwise effected any transactions in shares of Common Stock during the past
60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Not applicable.
Item 7. Material to be Filed as Exhibits
The following documents are filed as exhibits:
7.1 Offer to Purchase dated March 3, 1998.
7.2 Bank of America Credit Agreement as amended and restated July 31,
1996, among PCC, certain of its subsidiaries, Bank of America
National Trust and Savings Association, as Agent and Letter of
Credit Issuing Bank, and the other financial institutions party
thereto.
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<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: April 7, 1998 EOC ACQUISITION CORPORATION
By: /s/ WILLIAM D. LARSSON
-------------------------------------
William D. Larsson
Vice President
PRECISION CASTPARTS CORP.
By: /s/ WILLIAM D. LARSSON
-------------------------------------
William D. Larsson
Vice President and
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page No.
- ------ ----------- --------
Exhibit 7.1 Offer to Purchase dated March 3, 1998.
Exhibit 7.2 Bank of America Credit Agreement as amended and
restated July 31, 1996, among PCC, certain of its
subsidiaries, Bank of America National Trust and
Savings Association, as Agent and Letter of Credit
Issuing Bank, and the other financial institutions
party thereto.
Exhibit 7.1
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
ENVIRONMENT ONE CORPORATION
at
$15.25 Net Per Share
by
EOC ACQUISITION CORPORATION
a Wholly Owned Subsidiary of
PRECISION CASTPARTS CORP.
THE OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON MONDAY,
MARCH 30, 1998
UNLESS THE OFFER IS EXTENDED
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES THAT WOULD REPRESENT 66 2/3 PERCENT OF ALL OUTSTANDING
SHARES (DETERMINED ON A FULLY DILUTED BASIS) ON THE DATE OF PURCHASE. SEE
INTRODUCTION AND SECTION 13.
THE BOARD OF DIRECTORS OF ENVIRONMENT ONE CORPORATION HAS APPROVED THE
MERGER AGREEMENT AND THE MAKING OF THE OFFER BY THE PURCHASER, AND HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER.
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should (A) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal, have
such stockholder's signature thereon guaranteed if required by Instruction 1 to
the Letter of Transmittal, and mail or deliver the Letter of Transmittal (or
such facsimile) and any other required documents to the Depositary, and either
deliver, together with the Letter of Transmittal, the certificates representing
the tendered Shares and any other required documents to the Depositary, or
tender such Shares pursuant to the procedure for book-entry transfer set forth
in Section 3 or (B) request such stockholder's broker, dealer, bank, trust
company or other nominee to effect the transaction for such stockholder.
Stockholders having Shares registered in the name of a broker, dealer, bank,
trust company or other nominee must contact such broker, dealer, bank, trust
company or other nominee if they desire to tender Shares so registered.
If a stockholder desires to tender Shares and such stockholder's
certificates for such Shares are not immediately available, or the procedures
for book-entry transfer cannot be completed on a timely basis, or time will not
permit all documents to reach the Depositary prior to the Expiration Date, such
stockholder may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to Morrow & Co., Inc.
at the address and telephone numbers set forth on the back cover of this Offer
to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from Morrow &
Co., Inc. or from brokers, dealers, commercial banks or trust companies.
-------------------
The Information Agent for the Offer is:
MORROW & CO., INC.
March 3, 1998
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION...................................................................3
1. TERMS OF THE OFFER; EXPIRATION DATE................................ 4
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES...................... 5
3. PROCEDURE FOR TENDERING SHARES..................................... 6
4. WITHDRAWAL RIGHTS.................................................. 9
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................10
6. PRICE RANGE OF SHARES; CASH DISTRIBUTIONS..........................11
7. CERTAIN INFORMATION CONCERNING THE COMPANY.........................11
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PCC...............12
9. SOURCE AND AMOUNT OF FUNDS.........................................14
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.................14
11. THE PURPOSE OF THE OFFER; MERGER AGREEMENT;
PLANS FOR THE COMPANY..............................................15
12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ
EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION.....................22
13. CERTAIN CONDITIONS OF THE OFFER....................................23
14. CERTAIN LEGAL MATTERS..............................................24
15. FEES AND EXPENSES..................................................25
16. MISCELLANEOUS......................................................25
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND PCC..............S-1
2
<PAGE>
To the Holders of Common Stock
of Environment One Corporation:
INTRODUCTION
EOC Acquisition Corporation, a New York corporation (the "Purchaser"),
which is a wholly owned subsidiary of Precision Castparts Corp., an Oregon
corporation ("PCC"), hereby offers to purchase all outstanding shares of Common
Stock, $.10 par value per share (collectively, the "Shares"), of Environment One
Corporation, a New York corporation (the "Company"), at a purchase price of
$15.25 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
The purpose of the Offer is to enable PCC to acquire the entire equity
interest in the Company. The Offer is being made pursuant to an Agreement and
Plan of Merger dated as of February 24, 1998 by and among the Purchaser, PCC and
the Company (the "Merger Agreement"). The Merger Agreement provides for, among
other things, the Purchaser to commence a cash tender offer to purchase all of
the Shares of the Company for $15.25 per Share. As soon as practicable following
the consummation of the Offer, it is intended that the Purchaser will merge into
the Company (the "Merger") pursuant to the applicable provisions of the New York
Business Corporation Law ("NYBCL"). The purpose of the Merger is to facilitate
the acquisition of the Shares not tendered and purchased pursuant to the Offer.
Under the terms of the Merger Agreement, upon consummation of the Merger each
then outstanding Share (other than Shares owned by the Purchaser or PCC, if any)
would be converted into the right to receive an amount in cash equal to the
price per Share paid pursuant to the Offer (the "Offer Price").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of The Bank of New York, which is
acting as the depositary (the "Depositary"), and Morrow & Co., Inc., which is
acting as Information Agent (the "Information Agent") incurred in connection
with the Offer. See Section 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE MAKING OF THE OFFER BY THE PURCHASER, AND HAS DETERMINED THAT
THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER.
FOURTEEN OF THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS HAVE ENTERED INTO AN
AGREEMENT TO TENDER THEIR SHARES PURSUANT TO THE OFFER. SEE SECTION 11.
Miller, Johnson & Kuehn, Inc. has delivered to the Board of Directors of
the Company its opinion that the consideration to be received by the holders of
Shares in the Offer and the Merger is fair to such holders from a financial
point of view. A copy of the opinion of Miller, Johnson & Kuehn, Inc. is
contained in the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders herewith.
THE OFFER IS CONDITIONED UPON THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1) THAT NUMBER OF
SHARES (THE "MINIMUM NUMBER OF SHARES") THAT WOULD REPRESENT 66 2/3 PERCENT OF
ALL OUTSTANDING SHARES OF THE COMPANY (ON A FULLY DILUTED BASIS) ON THE DATE OF
PURCHASE (THE "MINIMUM CONDITION"). SUBJECT TO OBTAINING THE CONSENT OF THE
COMPANY, THE PURCHASER RESERVES THE RIGHT (SUBJECT TO THE APPLICABLE RULES AND
REGULATIONS OF THE SECURITIES AND
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EXCHANGE COMMISSION ("SEC")), WHICH IT CURRENTLY HAS NO INTENTION OF EXERCISING,
TO WAIVE OR REDUCE THE MINIMUM CONDITION AND TO ELECT TO PURCHASE, PURSUANT TO
THE OFFER, FEWER THAN THE MINIMUM NUMBER OF SHARES. SEE SECTIONS 1 AND 13.
Certain other conditions to the Offer are described in Section 13. Subject
to the limitations of the Merger Agreement, the Purchaser reserves the right to
waive any one or more of the conditions to the Offer. See Sections 2 and 13.
According to the Company, as of February 24, 1998, there were 4,295,827
Shares issued and outstanding. According to the Company, there were 426,422
Shares subject to outstanding options and warrants as of February 24, 1998. The
Company has agreed in the Merger Agreement to use its best efforts to enter into
agreements with holders of outstanding options and warrants providing that,
immediately after the date on which the Purchaser shall have accepted for
payment all Shares tendered in the Offer, each option shall be canceled in
exchange for a payment to the option holder equal to the Offer Price less the
exercise price of such option or warrant multiplied by the number of shares
previously subject to such option or warrant (less any applicable withholding).
Based on the foregoing, and assuming that no changes occur prior to the date of
purchase pursuant to the Offer, there would currently be 4,722,249 Shares
outstanding on a fully diluted basis and the Minimum Number of Shares would be
3,148,167. However, the actual Minimum Number of Shares will depend upon the
facts as they exist on the date of purchase.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), the Purchaser will accept for payment and pay for all Shares that
are validly tendered prior to the Expiration Date and not withdrawn as permitted
by Section 4. The term "Expiration Date" means 12:00 Midnight, Eastern time, on
March 30, 1998, unless and until the period during which the Offer is open shall
have been extended in accordance with the terms of the Merger Agreement, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended, will expire.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION, THE
EXPIRATION OR EARLY TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER (THE "HSR ACT") AND THE SATISFACTION OF THE OTHER
CONDITIONS SET FORTH IN SECTION 13.
If by 12:00 Midnight, Eastern time, on Monday, March 30, 1998 (or any date
and time then set as the Expiration Date), any or all of the conditions to the
Offer have not been satisfied or waived, the Purchaser reserves the right (but
shall not be obligated), subject to the applicable rules and regulations of the
SEC and subject to limitations in the Merger Agreement, to (a) terminate the
Offer and not accept for payment or pay for any Shares and return all tendered
Shares to tendering stockholders, (b) waive all the unsatisfied conditions and
accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn, (c) extend the Offer and, subject
to the right of stockholders to withdraw Shares until the Expiration Date,
retain the Shares that have been tendered during the period or periods for which
the Offer is extended or (d) amend the Offer. See Section 11. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE FOR TENDERED SHARES,
WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the
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case of an extension, Rule 14e-1(d) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), requires that the announcement be issued no
later than 9:00 a.m., Eastern time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance for
payment of Shares) for Shares or it is unable to pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser,
and such Shares may not be withdrawn except to the extent tendering stockholders
are entitled to withdrawal rights as described in Section 4. However, the
ability of the Purchaser to delay the payment for Shares that the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of an offer or information concerning an
offer, other than a change in the percentage of securities sought or a change in
price, will depend upon the facts and circumstances, including the relative
materiality of the changes or information.
If, prior to the Expiration Date and subject to the limitations in the
Merger Agreement, the Purchaser should increase or decrease the percentage of
Shares being sought, or increase or decrease the consideration offered pursuant
to the Offer to holders of Shares, such increase or decrease would be applicable
to all holders whose Shares are accepted for payment pursuant to the Offer and
if, at the time notice of any increase or decrease is first published, sent or
given to holders of Shares, the Offer is scheduled to expire at any time earlier
than the tenth business day from and including the date that such notice is
first so published, sent or given, the Offer would be extended at least until
the expiration of such ten business-day period. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of
ten business days is generally required to allow for adequate dissemination to
stockholders and investor response.
This Offer to Purchase and the related Letter of Transmittal is being
mailed to the record holders of Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment, and will pay for all Shares
validly tendered prior to the Expiration Date (and not properly withdrawn in
accordance with Section 4) promptly after the Expiration Date. See Sections 1
and 13. If any condition to the Offer specified in the Merger Agreement or in
Section 13 of the Offer to Purchase is not
5
<PAGE>
satisfied at the Expiration Date, the Purchaser must either (a) waive the
unsatisfied condition and accept for payment and pay for any tendered Shares,
(b) terminate the Offer and return all tendered Shares to the tendering
stockholders, or (c) further extend the Offer resulting in an extension of the
right of stockholders to withdraw tendered Shares until the new Expiration Date;
provided, however, that the Purchaser may accept tendered Shares for payment
subject to the expiration or termination of the applicable waiting period under
the HSR Act.
PCC filed a Notification and Report Form with respect to the Offer under
the HSR Act on March 3, 1998. The waiting period under the HSR Act with respect
to the Offer will expire at 11:59 p.m., Eastern time, on March 18, 1998 unless
early termination of the waiting period is granted. However, the Antitrust
Division of the Department of Justice (the "Antitrust Division") or the Federal
Trade Commission (the "FTC") may extend the waiting period by requesting
additional information or documentary material from PCC or the Company. If such
a request is made, such waiting period will expire at 11:59 p.m., Eastern time,
on the 10th day after substantial compliance by PCC or the Company with such
request. See Section 14 hereof for additional information concerning the HSR Act
and the applicability of the antitrust laws to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when the Purchaser gives oral or written notice to the Depositary of
the Purchaser's acceptance for payment of such Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to stockholders whose Shares have been accepted
for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE FOR
TENDERED SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING THE PAYMENT AFTER THE
EXPIRATION DATE.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedure set forth in Section 3, (ii) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
If any tendered Shares are not accepted for payment for any reason,
certificates evidencing unpurchased Shares will be returned, without expense, to
the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3, such Shares will be credited
to an account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
3. PROCEDURE FOR TENDERING SHARES.
In order for a holder of Shares validly to tender Shares pursuant to the
Offer, (i) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase and either the certificates evidencing tendered Shares ("Share
Certificates") must be received by the Depositary at such address or such Shares
must be tendered pursuant to the procedure for book-entry transfer described
below and a Book-Entry Confirmation (as defined below) must be received by the
Depositary, in each case prior to the Expiration Date, or (ii) the tendering
stockholder must comply with the guaranteed delivery procedure described below.
6
<PAGE>
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's
Message, and any other required documents must, in any case, be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the tendering stockholder must comply
with the guaranteed delivery procedure described below. The confirmation of a
book-entry transfer of Shares into the Depositary's account at the Book-Entry
Transfer Facility as described above is referred to herein as a "Book-Entry
Confirmation."
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or by a
bank or trust company having an office or correspondent in the United States
(each of the foregoing being referred to as an "Eligible Institution"), except
no signature guarantee is required where Shares are tendered (i) by a registered
holder of Shares who has not completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. See
Instruction 1 of the Letter of Transmittal. If the Share Certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made, or Share Certificates not accepted for
payment or not tendered are to be returned, to a person other than the
registered holder(s), the Share Certificates, as the case may be, must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear on such certificates,
with the signature(s) on such certificates or stock powers guaranteed as
aforesaid. See Instructions 1 and 5 of the Letter of Transmittal.
A properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) must accompany each delivery of Share Certificates to the
Depositary.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or such stockholder cannot deliver the Share Certificates and all
other required documents to the Depositary prior to the Expiration Date, or such
7
<PAGE>
stockholder cannot complete the procedure for delivery by book-entry transfer on
a timely basis, such Shares may nevertheless be tendered, provided that all of
the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation)
representing all tendered Shares, in proper form for transfer, in each case
together with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or in
the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market ("NNM") is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares, (b) a Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and (c) any other documents required by the Letter
of Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to Shares, are actually received by the Depositary.
Determination of Validity. In order for any tender of Shares to be valid,
it must be in proper form. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Purchaser, in its sole discretion, which determination
shall be final and binding on all parties. The Purchaser reserves the absolute
right to reject any and all tenders determined by it not to be in proper form or
the acceptance for payment of which may, in the opinion of its counsel, be
unlawful. The Purchaser also reserves the absolute right to waive any defect or
irregularity in any tender of Shares of any particular stockholder whether or
not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of the Purchaser,
PCC, the Depositary, the Information Agent or any other person will be under any
duty to give notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification. The Purchaser's
determinations with regard to compliance with the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Other Requirements. By executing a Letter of Transmittal as set forth
above, the tendering stockholder irrevocably appoints designees of the Purchaser
as such stockholder's proxies, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after February 24, 1998. Such appointment is effective when, and
only to the extent that, the Purchaser deposits the payment for such Shares with
the Depositary. Upon the effectiveness of such appointment, all prior proxies,
consents and powers of attorney given by such stockholder will be revoked, and
no subsequent proxies, consents and powers of attorney may be given (and, if
given, will not be deemed effective). The designees of the Purchaser will, with
respect to the Shares and other securities for which appointment is effective,
be empowered to exercise all voting and other rights of such stockholder in
respect of any annual, special or
8
<PAGE>
adjourned meeting of the stockholders of the Company, actions by written consent
in lieu of any such meeting or otherwise as they, in their sole discretion, deem
proper. The Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon the Purchaser's payment for such
Shares, the Purchaser must be able to exercise full voting rights with respect
to such Shares and other securities.
A valid tender of Shares pursuant to one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
TO AVOID BACKUP WITHHOLDING OF FEDERAL INCOME TAX WITH RESPECT TO PAYMENT
TO CERTAIN STOCKHOLDERS OF THE OFFER PRICE FOR THE SHARES PURCHASED PURSUANT TO
THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH
STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH
STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE
INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after May 1, 1998.
If the Purchaser extends the Offer, is delayed in the acceptance for
payment of Shares or is unable to purchase Shares validly tendered pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may nevertheless, on behalf of the Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent that tendering stockholders are entitled to withdrawal rights as
described in this Section 4. Any such delay will be by an extension of the Offer
to the extent required by law.
For a withdrawal to be effective, a written telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial number shown on such certificates must be submitted to
the Depositary and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution unless such Shares have been tendered for
the account of any Eligible Institution. If Shares have been tendered pursuant
to the procedure for book-entry transfer as set forth in Section 3, any notice
of withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, PCC, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
9
<PAGE>
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion summarizes the principal federal income tax
consequences under the Internal Revenue Code of 1986, as amended (the "Code"),
associated with the Offer, assuming that the Offer is consummated as
contemplated herein. This summary does not purport to be comprehensive, does not
describe all potentially relevant tax considerations and does not discuss state,
local or foreign tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes under the Code (and may
also be a taxable transaction under applicable state, local, foreign and other
tax laws). Generally, for federal income tax purposes, a tendering stockholder
will recognize gain or loss for federal income tax purposes equal to the
difference between the amount of cash received pursuant to the Offer or the
Merger and the holder's adjusted tax basis for the Shares sold pursuant to the
Offer or converted in the Merger. Such gain or loss will be capital gain or
loss, assuming the Shares are held as capital assets. If the Shares were held
longer than one year, the capital gain will be long term.
The rate at which any such gain will be taxed to noncorporate shareholders
(including individuals, estates and trusts) will, as a general matter, depend
upon each shareholder's holding period in the Shares. If a noncorporate
shareholder has net capital gain (the excess of net long-term capital gain over
net short-term capital loss) for his or her taxable year in which the gain is
recognized and such shareholder's holding period for the Shares is more than 18
months, either a 20 percent or a 10 percent capital gains rate generally will
apply to such gain, depending on the amount of taxable income of such
shareholder for such year. If the noncorporate shareholder's holding period for
the Shares is more than one year, but not more than 18 months, a 28 percent tax
rate generally will apply to such gain. If the shareholder's holding period for
the Shares is one year or less, such gain will be taxed at the same rates as
ordinary income, currently at a maximum of 39.6 percent. Capital loss generally
is deductible only to the extent of capital gain plus $3,000. Net capital loss
in excess of $3,000 may be carried forward to subsequent taxable years.
For corporations, capital losses are allowed only to the extent of capital
gains, and net capital gain is taxed at the same rate as ordinary income.
Corporations generally may carry capital losses back up to three years and
forward up to five years.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF STOCK OPTIONS OR OTHERWISE AS COMPENSATION
OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT
UNDER THE CODE, SUCH AS NON-U.S. PERSONS, INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND SECURITIES DEALERS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. HOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
10
<PAGE>
6. PRICE RANGE OF SHARES; CASH DISTRIBUTIONS.
The Company's Common Stock is listed and traded principally on the NNM
under the trading symbol "EONE." The following table sets forth, for the
quarters indicated, the high and low sales prices as reported on the NNM for the
Shares based on the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996 (the "Company's 1996 Form 10-KSB") and other publicly
available sources.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Year Ended December 31, 1995:
First Quarter.............................................. $ 3 1/4 $ 2 1/4
Second Quarter............................................. 4 1/4 2 3/8
Third Quarter.............................................. 4 7/8 3 7/8
Fourth Quarter............................................. 5 1/2 4 5/8
Year Ended December 31, 1996:
First Quarter.............................................. $ 5 1/2 $ 4 3/4
Second Quarter............................................. 6 4 1/2
Third Quarter.............................................. 5 3/4 4 3/4
Fourth Quarter............................................. 6 5 3/8
Year Ending December 31, 1997:
First Quarter.............................................. $ 7 3/4 $ 5 5/8
Second Quarter............................................. 9 3/4 6 3/8
Third Quarter.............................................. 10 1/4 8 3/4
Fourth Quarter............................................. 11 7/8 9 3/4
</TABLE>
On February 24, 1998, the last full trading day prior to the announcement
of the Offer, the closing sale price per Share of the Company's Common Stock
reported on the NNM was $13.00.
According to the Company's 1996 Form 10-KSB, the Company has not paid
dividends on the Company's Common Stock. According to the Company's 1996 Form
10-KSB, the Company's policy with regard to payment of dividends is evaluated
annually with consideration given to future growth and operating fund
requirements, and current Company policy is not to pay dividends.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or taken
from, or based upon, publicly available documents and records on file with the
SEC and other public sources. The summary information concerning the Company in
this Section 7 and elsewhere in this Offer to Purchase is derived from the
Company's 1996 Form 10-KSB. The summary information set forth below is qualified
in its entirety by reference to such documents (which may be obtained and
inspected as described below) and should be considered in conjunction with the
more comprehensive financial and other information in such documents and other
publicly available reports and documents filed by the Company with the SEC. The
Purchaser assumes no responsibility for the accuracy or completeness of the
information contained in such documents and records, or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but which are not known to the
Purchaser.
General. The Company is a New York corporation. According to the Company's
1996 Form 10-KSB, the Company is an environment-oriented product and service
company engaged in the development of low pressure sewer systems for real estate
developments. The Company also develops detection systems designed to forestall
shutdown of electric power generators operated by electric utility companies.
The Company reports that it has entered into foreign markets and license
agreements with respect to certain products.
11
<PAGE>
Certain Financial Information. Set forth below is certain selected
consolidated financial data with respect to the Company and its subsidiary,
which was excerpted from the Company's 1996 Form 10-KSB. More comprehensive
financial information is included in such report (including management's
discussion and analysis of financial condition and results of operations) and
other documents filed by the Company with the SEC, and the following financial
information is qualified in its entirety by reference to such report and other
documents and all of the financial information and notes contained therein. Such
report and other documents may be examined and copies thereof may be obtained in
the manner set forth below.
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands)
Nine Months Ended Year Ended
September 30, December 31,
-------------------- --------------------
1997 1996 1996 1995
------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Sales of product and contract revenue........................ $17,228 $15,307 $21,536 $17,340
Cost of sales and contract services.......................... 10,819 10,446 14,258 11,565
Selling, marketing, general and
administrative expenses................................... 4,257 3,217 5,071 4,161
Net income................................................... 1,319 928 1,255 821
</TABLE>
<TABLE>
<CAPTION>
December 31,
September 30, --------------------
1997 1996 1995
------------ ------- -------
(unaudited)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.............................................. $ 5,368 $ 3,986 $ 2,431
Total assets................................................. 13,088 11,255 8,722
Total debt................................................... 1,585 1,914 2,727
Stockholders' equity......................................... 7,207 5,713 4,348
</TABLE>
Available Information. The Company is subject to the information filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file with the SEC periodic reports, proxy statements and other information
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in reports filed with the SEC or in
proxy statements distributed to the Company's stockholders and filed with the
SEC. Such reports, proxy statements and other information may be inspected at
the SEC's office at 450 Fifth Street, NW, Washington, D.C., 20549, and also
should be available for inspection at the regional offices of the SEC located in
the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois, and 7 World Trade Center, 13th Floor, New York, New York. Copies of
such materials should be obtainable, upon payment of the SEC's customary
charges, by writing to the SEC's principal office at 450 Fifth Street, NW,
Washington, D.C., 20549. The information also should be available at the offices
of the NNM, 1735 K Street, N.W., Washington, D.C. 20006-1500. Such material may
also be accessed through an Internet Web site maintained by the SEC at
http://www.sec.gov.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PCC.
General. The Purchaser, a New York corporation and a wholly owned
subsidiary of PCC, was recently organized to acquire the Company and has not
conducted any unrelated activities since its organization. The principal office
of the Purchaser is located at the principal office of PCC. All outstanding
shares of capital stock of the Purchaser are owned by PCC.
12
<PAGE>
PCC, an Oregon corporation, is a worldwide manufacturer of complex metal
components and products. PCC is the market leader in manufacturing large,
complex structural investment castings and is the leading manufacturer of
airfoil castings used in jet engine aircrafts. In addition, PCC has expanded
into the industrial gas turbine, fluid management, industrial metalworking tools
and machines, powdered metal and other metal products markets. The principal
executive offices of PCC are located at 4650 SW Macadam Avenue, Suite 440,
Portland, Oregon 97201; the telephone number is (503) 417-4800.
Certain Financial Information. Set forth below is certain selected
consolidated financial information with respect to PCC and its subsidiaries
excerpted from the consolidated financial statements incorporated by reference
in PCC's Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"), copies
of which are available for inspection at the Commission's office at 450 Fifth
Street, NW, Washington, D.C., 20549, and also should be available for inspection
at the regional offices of the SEC located in the Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois, and 7 World Trade
Center, 13th Floor, New York, New York. Copies of such materials should be
obtainable, upon payment of the SEC's customary charges, by writing to the SEC's
principal office at 450 Fifth Street, NW, Washington, D.C., 20549. Such material
may also be accessed through an Internet Web site maintained by the SEC at
http://www.sec.gov.
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands)
Nine Months Ended Fiscal Year Ended
--------------------- ---------------------
Dec. 28, Dec. 29, March 30, March 31,
1997 1996 1997 1996
-------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Net sales............................................... $961,500 $685,500 $972,800 $556,800
Costs of goods sold..................................... 752,300 542,600 765,500 446,100
Selling and administrative expenses..................... 91,300 62,800 91,500 46,900
Net income.............................................. 61,800 39,900 56,500 41,100
</TABLE>
<TABLE>
<CAPTION>
Dec. 28, March 30, March 31,
1997 1997 1996
---------- ---------- ----------
(unaudited)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital......................................... $ 266,100 $ 205,200 $ 125,800
Total assets............................................ 1,233,700 1,070,100 450,500
Total debt.............................................. 388,300 300,500 13,900
Shareholders' investment................................ 568,800 504,400 303,100
</TABLE>
Neither the Purchaser nor, to the best knowledge of the Purchaser, any of
the persons listed on Schedule I hereto or any associate of the Purchaser,
including PCC, or any of the persons so listed, beneficially owns or has a right
to acquire directly or indirectly any securities of the Company, and neither the
Purchaser nor, to the best knowledge of the Purchaser, any of the persons or
entities referred to above, including PCC, or any of the respective executive
officers, directors or subsidiaries of any of the foregoing, has effected any
transactions in the securities of the Company during the past 60 days.
Except as set forth in this Offer to Purchase, none of the Purchaser, PCC
or, to the best knowledge of the Purchaser, any of the persons listed on
Schedule I hereto has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
but not limited to, contracts, arrangements, understandings or relationships
concerning the transfer or voting of such securities, joint ventures, loan or
option arrangements, puts or calls, guaranties of loans, guaranties against loss
or the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, none of
13
<PAGE>
the Purchaser, PCC or, to the best knowledge of the Purchaser, any of the
persons listed on Schedule I hereto, has had since January 1, 1995 any business
relationships or transactions with the Company or any of its executive officers,
directors or affiliates that are required to be reported under the rules and
regulations of the SEC applicable to the Offer. Except as set forth in this
Offer to Purchase, since January 1, 1995, there have been no contacts,
negotiations or transactions between the Purchaser, PCC or, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I hereto, on
the one hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a material
amount of assets.
9. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding on a fully
diluted basis and to pay fees and expenses related to the Offer will be
approximately $72,000,000. The Purchaser plans to obtain all funds needed for
the Offer from PCC. PCC will make an unsecured advance to the Purchaser prior to
the consummation of the Offer. PCC expects to obtain the funds needed for the
Offer from its general corporate funds and from borrowings under its existing
credit facility.
PCC's existing facility is a credit agreement with a syndicate of 12 banks,
for which Bank of America, N.A. is the agent. The credit agreement contains
various standard financial covenants, including maintenance of minimum net
worth, fixed charge coverage ratio and leverage ratio. The credit agreement
includes a $250 million revolving facility, pursuant to which outstanding
amounts bear interest at interest rates of (a) an offshore rate equal to the
effective LIBOR, plus an applicable margin of 0.30 percent to 0.875 percent
based on the consolidated leverage ratio, (b) an overnight base rate equal to
the higher of the federal funds rate or the prime rate of the agent bank plus
0.50 percent, or (c) a rate negotiable between each bank and PCC. PCC intends to
repay amounts due under the revolving credit facility out of funds generated
from operations or by refinancing the facility at maturity. The revolving credit
line matures in July 2001. The foregoing description of the credit facility is
qualified in its entirety by reference to the text of the credit agreement,
which has been filed by PCC as an exhibit to the Schedule 14D-1 filed with the
SEC in connection with the Offer.
THE OFFER IS NOT CONDITIONED UPON THE PURCHASER OBTAINING FINANCING TO PURCHASE
SHARES PURSUANT TO THE OFFER. SEE INTRODUCTION AND SECTION 13.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
On September 22, 1997, the Company engaged The Nassau Group, Inc. to assist
in exploring a possible sale of the Company. In November 1997, representatives
of The Nassau Group contacted an officer of PCC to inquire whether PCC would be
interested in receiving descriptive information concerning the Company as a
possible acquisition candidate. On November 25, 1997, PCC signed a
Confidentiality Agreement, and subsequently received descriptive information
concerning the Company and a request for submission of a preliminary indication
of interest. On December 10, 1997, PCC submitted a preliminary indication of
interest. PCC was invited to attend a management presentation on December 22,
1997, which it did. PCC subsequently submitted a draft letter of intent to
acquire the Company, which included a proposal that the purchase price be paid
in a combination of $12.50 per share cash at closing and a contingent payment
right up to an additional $3.00 per share in 1999 if the Company achieved
certain revenue and earnings objectives in 1998.
The Company's Board of Directors met in January 1998, and approved the
offer on a preliminary basis, subject to certain clarifications. The Company's
legal and financial advisors contacted PCC to clarify and negotiate certain
details of the contingent payment and other terms and conditions contained in
the letter of intent. The letter of intent was executed by the Company and PCC
on January 21, 1998.
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After the execution and delivery of the letter of intent, PCC entered a
formal due diligence period during which it received access to the Company's
records and documents and received additional management presentations. During
the due diligence period, The Nassau Group contacted PCC to state that the
Company preferred an all-cash transaction, without the contingent payment right
element. Over the course of the following week, PCC completed its due diligence
efforts and analyzed the benefit of a fixed-price transaction in terms of time
to closing and other factors. On February 16, 1998, the PCC Board of Directors
approved a revised purchase price of $15.25 per share. On February 24, 1998, the
Board of Directors of the Company approved the Merger Agreement and the offer
and resolved to recommend the Offer to the Company's stockholders. Immediately
thereafter, PCC, the Purchaser and the Company executed the Merger Agreement,
pursuant to which the Purchaser agreed to make the Offer. In addition, a
Stockholder Agreement by and among PCC, the Purchaser, and each of the executive
officers and directors of the Company was executed, pursuant to which those
fourteen individuals agreed to tender their Shares in the Offer and to sell such
Shares to the Purchaser, at the price paid in the Offer, subject to certain
conditions. The parties publicly announced the transaction on February 25, 1998.
11. THE PURPOSE OF THE OFFER; MERGER AGREEMENT; PLANS FOR THE COMPANY.
Purpose
The purpose of the Offer and the Merger is to enable PCC to acquire control
of, and acquire the entire equity interest in, the Company.
Merger Agreement
Set forth below is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as Exhibit (a)(1) to the Schedule 14D-1.
Such Exhibit should be available for inspection and copies should be obtained,
in the manner set forth in Section 8 (except that it will not be available at
the regional offices of the SEC). The following summary is qualified in its
entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides that PCC will cause the Purchaser
to commence and the Purchaser will commence the Offer to purchase all of the
Shares for $15.25 per Share. The Merger Agreement specifies certain conditions
for the Offer, including, among other things the Minimum Condition. Pursuant to
the Merger Agreement, the Purchaser expressly reserves the right to change or
waive any such condition, to increase the Offer Price, and to make any other
changes in the terms and conditions of the Offer; provided however, that without
the prior written consent of the Company, the Purchaser will not (i) decrease
the Offer Price, (ii) change or waive the Minimum Condition, (iii) decrease the
number of Shares sought pursuant to the Offer, (iv) impose conditions in
addition to the Offer Conditions or (v) otherwise amend the Offer in any manner
adverse to the Company's stockholders. Notwithstanding the foregoing, the
Purchaser may, without the Company's consent (x) extend the Offer, if at such
original Expiration Date the Minimum Condition or any of the Offer Conditions
have not been satisfied or waived; (y) extend the Offer for any period required
by any rule, regulation, interpretation or position of the SEC; or (z) extend
the Offer for no more than ten (10) business days beyond the original Expiration
Date in the event that the Offer Conditions have been satisfied but less than
ninety percent (90%) of the Shares have been tendered pursuant to the Offer.
The Merger. The Merger Agreement provides that, on the terms and subject to
the conditions set forth in the Merger Agreement and in accordance with the
relevant provisions of the NYBCL, as soon as practicable following the
satisfaction or waiver, if permissible, of the conditions described below under
"Conditions to the Merger," the Purchaser will be merged with and into the
Company with the Company as the surviving corporation in the Merger (the
"Surviving Corporation"). The Merger will become effective at the time of filing
of a certificate of merger, as required by the NYBCL (the "Effective Time"). At
the Effective Time, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by PCC, by the Purchaser or by any other
direct or indirect subsidiary of PCC or of the
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Company, or held in the treasury of the Company, all of which will be canceled
without any conversion thereof and no payment or distribution will be made with
respect thereto) will be canceled and converted automatically into the right to
receive an amount equal to the Offer Price in cash (the "Merger Consideration")
net to the holder, without any interest thereon.
Stockholders Meeting. The Merger Agreement provides that the Company will,
if required by applicable law, call and hold a special meeting of its
stockholders as soon as practicable following the consummation of the Offer for
the purpose of approving the Merger transaction contemplated thereby and prepare
and file with the SEC under the Exchange Act a proxy statement with respect to
the meeting of stockholders described above (the "Proxy Statement"). The Company
has agreed in the Merger Agreement to use its best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be mailed
to the Company's shareholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff, and to keep PCC informed of all
its correspondence with the SEC with respect to the Proxy Statement. Pursuant to
the Merger Agreement, the Company, through its Board of Directors, will
recommend to its stockholders that the Merger Agreement be approved.
Notwithstanding any other provision in this Agreement, if PCC, the
Purchaser, or any affiliate of either of them beneficially owns at least 90% of
the outstanding Shares, the parties agree to take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
Expiration Date, but in no event later than ten business days thereafter,
without a meeting of the stockholders of the Company in accordance with Section
905 of the NYBCL.
Stock Options and Warrants. The Merger Agreement provides that (a) the
Company will use its best efforts to enter into an agreement with each holder of
an employee or director stock option or warrant to purchase Shares (in each
case, an "Option" or "Warrant") that provides that, immediately after the date
on which the Purchaser will have accepted for payment all Shares validly
tendered and not withdrawn prior to the expiration date with respect to the
Offer (the "Tender Offer Acceptance Date"), each Option or Warrant that is then
outstanding, whether or not then exercisable or vested, will be canceled by the
Company, and each holder of a canceled Option or Warrant will be entitled to
receive from the Purchaser at the same time as payment for Shares is made by the
Purchaser in connection with the Offer, in consideration for the cancellation of
such Option or Warrant, an amount in cash equal to the product of (i) the number
of Shares previously subject to such Option or Warrant, whether or not then
exercisable or vested, and (ii) the excess, if any, of the Offer Price over the
exercise price per Share previously subject to such Option or Warrant, reduced
by any applicable withholding. Alternatively, the Company may advance funds to
one or more Option holders to permit such holders to exercise their Options
(whether or not then exercisable or vested) and tender the Shares so acquired in
the Offer.
Representations and Warranties. The Merger Agreement contains
representations and warranties by the Company, relating to, among other things,
(i) the organization of the Company and other corporate matters, (ii) the
capital structure of the Company, (iii) the authorization, execution, delivery
and consummation of the transactions contemplated by the Merger Agreement, (iv)
consents and approvals, (v) documents filed by the Company with the SEC and the
accuracy of the information contained therein, (vi) the accuracy of the
information contained in documents filed with the SEC in connection with the
Offer and the Merger, (vii) litigation, (viii) environmental matters, (ix)
absence of material changes, and (x) taxes. In addition, the Company represented
to the Purchaser and PCC that the Company had entered into new employment
agreements with each of its officers on terms approved by PCC. The employment
agreements are effective at the closing of the Offer and, except in the case of
Mr. Stephen V. Ardia, supercede the change of control agreements previously
entered into between the Company and each of its officers.
In addition, the Merger Agreement contains representations and warranties
by PCC, relating to, among other things, the organization and ownership of PCC
and the Purchaser, their authority to enter into the Merger Agreement and their
financial capability to purchase the Shares pursuant to the Offer.
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Conduct of Business Pending the Merger. In the Merger Agreement, the
Company has agreed that, prior to the Effective Time, except as otherwise
provided in the Merger Agreement or with the prior written consent of PCC, the
Company (a) will use its best efforts to (i) keep the business and organization
of the Company intact, and (ii) carry on the business of the Company in its
usual manner; (b) will not declare, pay, or set aside for payment any dividend
or other distribution of money or property in respect of its capital stock, (c)
will not issue any shares of its capital stock, or issue or sell any securities
convertible into, or exchangeable for, or options, warrants to purchase, or
rights to subscribe to, any shares of its capital stock or subdivide or in any
way reclassify any shares of its capital stock, or repurchase, reacquire,
cancel, or redeem any such shares; (d) will use best efforts to ensure that (A)
it preserves and maintains in the ordinary course of business its assets,
property and rights and that it will not encumber any of its material assets
other than in connection with certain existing credit arrangements, (B) it will
pay all debts when due in the usual course of business, (C) it will comply in
all material respects with all applicable laws, and (D) it will maintain its
insurance; (e) it will not incur additional debt, incur or increase any
obligation or liability, except in the ordinary and usual course of its
business; and (f) it will not make any payment to discharge or satisfy any lien
or encumbrance or pay any obligation or liability (fixed or contingent) other
than current liabilities or payments under its revolving credit facility made in
the ordinary course of business and consistent with past practices.
The Company has further agreed that, until the Effective Time of the
Merger, it will not, without prior consent of PCC: (a) acquire any assets other
than assets acquired in the ordinary and usual course of its business and
consistent with past practices; (b) purchase or otherwise acquire, or agree to
purchase or otherwise acquire, any debt or equity securities of any person other
than equity securities issued by a money market fund registered as an investment
company under the Investment Company Act of 1940; (c) enter into any transaction
or contract or make any commitment to do the same, except in the ordinary and
usual course of business and not requiring the payment in any case of an amount
in excess of $50,000 annually; (d) increase the wages, salaries, compensation,
pension, or other benefits payable, or to become payable by it, to any of its
officers, employees, or agents, including without limitation any bonus payments
or severance or termination pay, other than increases in wages and salaries
required by employment arrangements existing on the execution date of the Merger
Agreement or except as expressly contemplated by or otherwise in the ordinary
and usual course of its business; (e) implement or agree to any implementation
of or amendment or supplement to any employee profit sharing, stock option,
stock purchase, pension, bonus, commission, incentive, retirement, medical
reimbursement, life insurance, deferred compensation, severance pay, or any
other employee benefit plan or arrangement; or (f) change its accounting
methods, policies or practices. In addition, the Company (a) will, when the
consent of any third party to the transactions contemplated by the Merger
Agreement is required under the terms of any contract to which it is a party or
by which it is bound, use its best efforts to obtain such consent; (b) will
maintain its books and records in accordance with past practices and in
accordance with generally accepted accounting principles; (c) will pay and
discharge all taxes, assessments, governmental charges, and levies imposed upon
it, its income or profits, or upon any property belonging to it, and in all
cases before the date on which penalties attach thereto; (d) will not amend its
Certificate of Incorporation or Bylaws; and (e) will not transfer any shares of
treasury stock or authorized and unissued stock to its Deferred Compensation
Plan Trust on account of bonus amounts deferred under its Deferred Compensation
Plan relating to calendar year 1998.
Prohibition on Solicitation. Pursuant to the Merger Agreement, the Company
has agreed that the Company and its officers, directors, employees,
representatives and agents will cease any discussions or negotiations with any
parties with respect to any Takeover Proposal (as defined below); and, unless
the Merger Agreement has been terminated in accordance with its terms and so
long as neither PCC nor the Purchaser is in material violation of the Merger
Agreement, the Company will not authorize or permit any officer, director or
employee of, or any investment banker, financial advisor, attorney, accountant
or other representative retained by the Company or any of its subsidiaries to
(a) solicit, initiate, encourage or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may
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reasonably be expected to lead to, any Takeover Proposal or (b) participate in
any discussions or negotiations regarding any Takeover Proposal.
The Merger Agreement provides that, notwithstanding the foregoing, if at
any time prior to the Effective Time, the Board of Directors of the Company
determines in good faith, after consultation with counsel, that it is necessary
to do so in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Company may, in response to an
unsolicited Takeover Proposal, (a) furnish information with respect to the
Company to any person pursuant to a confidentiality agreement in substantially
the same form as that entered into between the Company and PCC and (b)
participate in negotiations regarding such Takeover Proposal.
The Merger Agreement provides further that, unless the Merger Agreement has
been terminated in accordance with its terms and so long as neither PCC nor the
Purchaser is in material violation of the Merger Agreement, neither the Board of
Directors of the Company nor any committee thereof will (a) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to PCC, the approval or
recommendation by such Board of Directors or such committee of the Offer, the
Merger Agreement or the Merger, (b) approve or recommend, or propose to approve
or recommend, any Takeover Proposal or (c) cause the Company to enter into any
agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Effective
Time, the Board of Directors of the Company determines in good faith, after
consultation with counsel, that it is necessary to do so in order to comply with
its fiduciary duties to the Company's stockholders under applicable law, the
Merger Agreement provides that the Board of Directors of the Company may
withdraw or modify its approval or recommendation of the Offer, the Merger
Agreement and the Merger, approve or recommend a Superior Proposal (as defined
below), or cause the Company to enter into an agreement with respect to a
Superior Proposal, but in each case only at a time that is after the second
business day following PCC's receipt of written notice advising PCC that the
Board of Directors of the Company has received a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and that the Company has elected to
terminate the Agreement pursuant to the termination provisions described below.
Pursuant to the Merger Agreement, and in addition to the obligations of the
Company described above, the Company has agreed that (a) it will within 48 hours
advise PCC orally and in writing of any request for information or of any
Takeover Proposal, or any inquiry with respect to or which could lead to any
Takeover Proposal, the material terms and conditions of such request, Takeover
Proposal or inquiry and the identity of the person making such request, Takeover
Proposal or inquiry, and (b) it will keep PCC fully informed of the status and
details (including amendments or proposed amendments) of any such request,
Takeover Proposal or inquiry.
The Merger Agreement does not prohibit the Company from making any
disclosure to the Company's stockholders if, in the opinion of the Board of
Directors of the Company, after consultation with counsel, failure to disclose
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law, except that neither the Company nor its Board of Directors
nor any committee thereof may (other than as described above) withdraw or
modify, or propose to withdraw or modify, its position with respect to the Offer
or the Merger or approve or recommend, or propose to approve or recommend, a
Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company or of over 20 percent of any class
of equity securities of the Company, or any tender offer or exchange offer that
if consummated would result in any person beneficially owning 20 percent or more
of any class of equity securities of the Company, any merger, consolidation,
business combination, sale of substantially all the assets, recapitalization,
liquidation or dissolution (other than the transactions contemplated by the
Merger
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Agreement), or any other transactions the consummation of which could reasonably
be expected to impede, interfere with, prevent or materially delay the Offer or
the Merger or which would reasonably be expected to dilute materially the
benefits to PCC of the transactions contemplated by the Merger Agreement, and
the term "Superior Proposal" means any bona fide Takeover Proposal to acquire,
directly or indirectly, for consideration consisting of cash and/or securities,
more than 50% of the shares of common stock of the Company then outstanding or
all or substantially all the assets of the Company and otherwise on terms which
the Board of Directors of the Company determines in its good faith judgment
(after consultation with the Nassau Group, Inc. or another financial advisor of
nationally recognized reputation) to be more favorable to the Company's
stockholders than the Offer and the Merger.
Access. Pursuant to the Merger Agreement, from the date of the Merger
Agreement to the closing date of the Merger, the Company will provide, and cause
each subsidiary to provide, to PCC and its authorized agents, access to their
respective physical assets, facilities, financial information, production
records, contracts and other corporate records and documents during normal
working hours and PCC will be allowed to meet with their respective management
personnel, employees, and any outside consultants, including auditors and
accountants, investment and other bankers, tax and financial advisors, and
environmental consultants.
Directors. The Merger Agreement provides that, upon the Purchaser's
acceptance for payment and payment for Shares pursuant to the Offer, the
Purchaser will be entitled to designate a number of directors (rounded up to the
nearest whole number) on the Company's Board of Directors that is equal to the
product of the total number of directors on the Company's Board multiplied by
the percentage that the aggregate number of Shares beneficially owned by
Purchaser and its affiliates bears to the number of Shares outstanding. The
Company will promptly, at the request of PCC, either increase the size of the
Company's Board of Directors and/or obtain the resignations of such number of
its current directors as is necessary to enable the Purchaser's designees to be
elected to the Company's Board of Directors as provided above.
Conditions to Merger. The respective obligations of each party to the
Merger Agreement to effect the Merger shall be subject to the satisfaction,
prior to the closing of the transactions contemplated by the Merger Agreement,
of the following conditions: (a) all required authorizations, consents, and
approvals of all governmental agencies and authorities shall have been obtained
and the waiting period under the HSR Act will have expired or been terminated
early; (b) if necessary under applicable law, the Merger shall have been
approved by at least 662/3 percent of the Shares of the Company; (c) no law,
statute, rule, regulation, decree, order, injunction or ruling by any
governmental entity remains in effect and prohibits, restrains, enjoins or
restricts the consummation of the Merger; (d) no action, suit or other
proceeding or is pending against any party to prohibit, restrain, enjoin,
restrict or otherwise prevent the consummation of the Offer of the Merger; and
(e) the Purchaser shall have previously accepted for payment and paid for all
Shares validly tendered and not withdrawn pursuant to the Offer.
Termination. The Merger Agreement may be terminated at any time prior to
the closing date of the Merger (a) by mutual consent of PCC, Purchaser and the
Company; (b) by either PCC or the Company if (A) any governmental entity has
promulgated or issued a law, statute, rule, regulation, decree, order,
injunction, or ruling or taken any other action prohibiting, restraining,
enjoining, restricting or otherwise prohibiting the Offer or the Merger that has
become final and nonappealable or if clearance under the HSR Act is not received
within 60 days after the filing of the premerger notification and report form,
or (B) the Offer is terminated or expires in accordance with its terms as the
result of failure of any of the conditions set forth in Section 13 without
Purchaser having purchased any Shares pursuant to the Offer except that this
right to terminate is not available to any party whose failure to perform any of
its covenants or agreements under the Merger Agreement results in the failure of
any condition; (c) by PCC, if not then in default, upon written notice to the
Company if (A) the Company breaches any of its representations or warranties or
defaults in the observance or performance of any of its covenants or agreements
except for
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breaches or defaults which, individually or in the aggregate, would not have a
Combined Material Adverse Effect (as defined in the Merger Agreement) or
materially impair the ability of the parties to consummate the transactions
contemplated by the Merger Agreement, or (B) the Board of Directors of the
Company or any committee thereof has withdrawn or modified in a manner adverse
to PCC or Purchaser its approval or recommendation of the Merger or the Merger
Agreement or approved or recommended any Takeover Proposal, or (C) the Company
has entered into a definite agreement with respect to any Superior Proposal; or
(d) by the Company, if not then in default, upon written notice to PCC if (A)
PCC breaches any of its representations or warranties or defaults in the
observance or performance of any of its covenants or agreements, except for
breaches or defaults which, individually or in the aggregate, would not have a
Combined Material Adverse Effect or materially impair the ability of the parties
to consummate the transactions contemplated by the Merger Agreement or (B) if
the Company determines after consultation with its counsel that it is necessary
to terminate the Merger or the Merger Agreement in order for its directors to
comply with their fiduciary duties under applicable law, provided it has
complied with the notice and payment provisions of the Merger Agreement.
In the event of the termination of the Merger Agreement, the Merger
Agreement shall forthwith become void and there shall be no liability on the
part of any party thereto except as described under "Fees and Expenses" below;
provided, however, that nothing in the Merger Agreement will relieve any party
from liability for any breach thereof before termination.
Fees and Expenses. The Merger Agreement provides that, except as provided
in the following paragraph, all fees and expenses incurred in connection with
the Offer, the Merger, the Merger Agreement and the transactions contemplated
thereby will be paid by the party incurring such fees or expenses, whether or
not the Offer or the Merger is consummated.
Under the Merger Agreement the Company will pay, or cause to be paid, to
PCC the sum of $2,000,000 upon demand if the Offer is not consummated due to the
Company's termination of the Merger Agreement in breach of the Merger Agreement.
Alternatively, if the Company determines in good faith, after consultation with
counsel, that it is necessary to terminate the Agreement in order for its
directors to comply with their fiduciary duties to the Company's stockholders
under applicable law, the Company will pay, or cause to be paid, to PCC the sum
of $3,000,000 (the "Termination Fee") upon demand if the Company (i) agrees to a
Superior Proposal within one year of the date of termination of the Agreement,
or (ii) within 270 days after termination of the Merger Agreement the Company
agrees to a Takeover Proposal. In addition, the Merger Agreement provides that
PCC will pay, or cause to be paid, to the Company the sum of $2,000,000 upon
demand if the Offer is not consummated due to PCC's termination of the Merger
Agreement in breach of the Merger Agreement.
Standstill. The Merger Agreement provides that in the event that PCC does
not purchase Shares pursuant to the Offer, other than in circumstances involving
breach by the Company of the Merger Agreement, PCC and its affiliates shall not
directly or indirectly, for a period of 18 months from the date of the Merger
Agreement, unless the Company's Board of Directors approves such action, (i)
acquire or offer to acquire, seek, propose or agree to acquire, by means of a
purchase, agreement, business combination or in any other manner, beneficial
ownership of any securities or assets of the Company, including rights or
options to acquire such ownership, (ii) seek or propose to influence, change or
control the management or Board of Directors of the Company, or (iii) make any
public disclosure or announcement or submit a proposal for a transaction not in
the ordinary course of business, or take any action which could require the
other party to make any public disclosure, with respect to the matters set forth
in the Merger Agreement or in any way participate directly or indirectly in any
solicitation of proxies to vote, or influence any person or entity with respect
to the voting of, any voting securities of the Company. However, the foregoing
restrictions will not apply in the event that the Company receives a Takeover
Proposal from a party that is not affiliated with PCC.
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Amendment. The Merger Agreement may not be amended except by written
agreement of the parties thereto.
Stockholder Agreement.
The officers and directors of the Company, Stephen V. Ardia, David M. Doin,
George A. Earle, III, George A. Vorsheim, Jr., Mark E. Alexander, Brian
Buchinski, Philip W. Welsh, Kathleen A. Parry, Walter W. Aker, Lars G. Grenback,
Rolf E. Soderstrom, John L. Allen, Angelo Dounoucos and Robert G. James
(collectively, the "Selling Stockholders") are each parties to a Stockholder
Agreement dated February 24, 1998 with PCC and the Purchaser. The Stockholder
Agreement provides that each of the Selling Stockholders will tender their
Shares into the Offer so long as the per Share amount is not less than $15.25 in
cash (net to the seller). Additionally, each Selling Stockholder has agreed to
sell, and the Purchaser has agreed to purchase, his or her Shares at a price per
share equal to $15.25, or such higher price per share as may be offered by the
Purchaser in the Offer, provided that such obligations to purchase and sell are
both subject to (i) the Purchaser having accepted Shares for payment under the
Offer and the Minimum Condition having been satisfied, and (ii) the expiration
or termination of any applicable waiting period under the HSR Act. Each of the
Selling Stockholders has also agreed not to transfer or agree to transfer their
Shares, grant a proxy for their Shares or enter in a voting agreement respecting
them, or take any other action that would in any way restrict, limit or
interfere with the performance of their obligations under the Stockholder
Agreement or the transactions contemplated thereby. The Stockholder Agreement
terminates upon the earlier of (i) the Merger Agreement being terminated by the
Company, PCC or the Purchaser, (ii) the purchase and sale of the Shares of the
Selling Stockholders as described above, or (iii) May 30, 1998. The foregoing
summary of the Stockholder Agreement is qualified in its entirety by the text of
the Stockholder Agreement, a copy of which is filed as Exhibit (c)(2) to the
Schedule 14D-1 and is incorporated herein be reference.
Confidentiality Agreement.
On November 25, 1997, PCC entered into a Confidentiality Agreement with the
Company, pursuant to which PCC agreed to treat all information supplied by the
Company or its representatives as confidential and to use such information
solely in connection with the evaluation of a possible transaction with the
Company. PCC further agreed that, in the event that the transactions
contemplated by the Merger Agreement are not consummated, it will (i) return to
the Company all information furnished by the Company or its representatives, and
(ii) refrain, for a period of two years from the date of the Confidentiality
Agreement, from soliciting or hiring any employees of the Company while they are
still employed by the Company.
Operations Following Consummation Of the Offer.
Following consummation of the Offer, the Company will report into PCC Flow
Technologies, Inc., a wholly owned subsidiary of PCC, but otherwise has no
definitive plans to make any material changes in the business or operations of
the Company. Based on its review of the operations of the Company following
consummation of the Offer, PCC may make changes to the Company's assets,
capitalization, organizational structure and management.
Appraisal Rights.
Holders of Shares do not have appraisal rights as a result of the Offer.
However, if the Merger is consummated, holders of Shares at the record date for
determining shareholders entitled to vote on the Merger may have, depending on
whether the Shares are still listed on NNM at the Effective Time, certain rights
pursuant to the provisions of Sections 623 and 910 of the NYBCL ("Sections 623
and 910") to dissent and demand appraisal of their Shares provided the merger is
accomplished with the vote of the Company's stockholders (see the heading
"Merger" under this section) and the merger adversely affects
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their voting, preferential, and preemptive rights. For a Merger accomplished
without a vote of the Company's stockholders (see the heading "Merger" under
this section), the minority shareholders will have certain rights to dissent and
demand appraisal of their Shares. Under Sections 623 and 910, stockholders who
have the right to dissent in either of the two situations described above, and
who comply with the applicable statutory procedures, will be entitled to receive
a judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the proposed
Merger) and to receive payment of such fair value in cash, together with a fair
rate of interest, if any. Any such judicial determination of the fair value of
Shares could be based upon factors other than, or in addition to, the price per
Share to be paid in the Merger or the market value of the Shares. The value so
determined could be more or less than the price per Share to be paid in the
Merger. The foregoing summary of Sections 623 and 910 does not purport to be
complete and is qualified in its entirety by reference to Sections 623 and 910.
Going Private Transactions.
The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable
to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger. However, Rule 13e-3 would be
inapplicable if (a) the Shares are deregistered under the Exchange Act prior to
the Merger or (b) the Merger is consummated within one year after the purchase
of the Shares pursuant to the Offer and the Merger provided for stockholders to
receive cash for their Shares in an amount at least equal to the Offer Price. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the proposed transaction and the
consideration offered to minority stockholders in such transaction to be filed
with the SEC and disclosed to stockholders prior to the consummation of the
Merger.
12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ EXCHANGE
LISTING AND EXCHANGE ACT REGISTRATION.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of stockholders, which
could adversely affect the liquidity and market value of the remaining Shares
held by the public.
Depending upon the number of Shares acquired pursuant to the Offer and the
Shares accumulated by other parties, it is possible that the Company's Common
Stock will no longer be eligible for listing on the NNM. In that event, the
market for the Shares could be adversely affected.
The Company's Common Stock is registered under the Exchange Act.
Registration of the Company's Common Stock may be terminated upon application of
the Company to the SEC if the Company's Common Stock is not listed on a national
securities exchange and there are fewer than 300 holders of record of the
Company's Common Stock. The Company has informed the Purchaser that there were
approximately 2200 beneficial owners of the Company's Common Stock as of
February 24, 1998. The termination of the registration of the Company's Common
Stock under the Exchange Act would render inapplicable certain provisions of the
Exchange Act, including requirements that the Company furnish stockholders with
proxy materials regarding meetings of stockholders of the Company, the reporting
and short-swing profit liability provisions under Section 16 of the Exchange Act
and the requirements of Rule 13e-3 under the Exchange Act regarding "going
private" transactions.
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"). Among
other things, this status has the effect of allowing lenders to extend credit to
stockholders who wish to use the Shares as collateral. Depending upon factors
similar to those relevant to NNM eligibility, following the Offer the Shares
might no longer constitute "margin securities" for purposes of the Federal
Reserve Board's margin regulations, in which event Shares could no longer be
used as collateral for margin loans made by brokers.
22
<PAGE>
The Purchaser currently intends to cause the Company to make an application
for termination of registration of the Shares under the Exchange Act after
consummation of the Merger, and may cause such an application to be filed prior
to the consummation of the Merger if a sufficient number of Shares are purchased
pursuant to the Offer. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be "margin securities" or eligible for
listing on the NNM.
13. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer unless (i) the Minimum Condition shall have been satisfied and (ii) any
applicable waiting period under the HSR Act shall have expired or been
terminated. Furthermore, the Purchaser may terminate or amend the Offer and may
postpone the acceptance for payment of and payment for Shares tendered, if at
any time on or after the date of the Merger Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:
(a) there shall have been issued and shall remain in effect any
injunction, order or decree by any court or governmental, administrative or
regulatory authority or agency, domestic or foreign, which (i) restrains or
prohibits the making of the Offer or the consummation of the Merger, (ii)
prohibits or limits ownership or operation by the Company, PCC or Purchaser
of all or any material portion of the business or assets of the Company, or
PCC and its subsidiaries, taken as a whole, or compels the Company, PCC or
any of its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company or PCC and its
subsidiaries, taken as a whole, in each case as a result of the Offer or
the Merger; (iii) imposes material limitations on the ability of PCC or
Purchaser to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer, or otherwise on all matters properly
presented to the Company's stockholders, including, without limitation, the
approval and adoption of the Merger Agreement and the Offer and the Merger;
or (iv) requires divestiture by PCC or Purchaser of any material portion of
the Shares;
(b) there shall have been any action taken, or any statute, rule,
regulation order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) PCC, the Company or any
subsidiary or affiliate of PCC or (ii) any action, by any legislative body,
court, government or governmental, administrative or regulatory authority
or agency, domestic or foreign (other than, in the case of both (i) and
(ii), the application of the waiting period provisions of the HSR Act to
the Offer or the Merger), which results in any of the consequences referred
to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred and be continuing (i) a 25 percent or
greater decline in the Dow Jones Average of Industrial Stocks and the
Standard and Poor's 500 Index, measured from the date of the Merger
Agreement, (ii) any general suspension of trading in, or limitation on
prices for, securities on the New York Stock Exchange or in the
over-the-counter market, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any
limitation (whether or not mandatory) by any governmental authority on the
general extension of credit by banks or other financial institutions, or
(v) in the case of any of the foregoing existing at the time of the
commencement of the Offer, in the reasonable judgment of PCC, a material
worsening thereof;
(d) the Company's Board of Directors or any committee thereof shall
have withdrawn or modified in a manner adverse to PCC or Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement
or shall have approved or recommended another merger, consolidation,
business combination with, or acquisition of the Company or all or
substantially all its assets or another tender offer or exchange offer for
Shares, or shall have resolved to do any of the foregoing;
(e) the Company shall have failed to perform any of its covenants in
the Merger Agreement, which failure either individually or in the aggregate
would have a Combined Material Adverse Effect;
23
<PAGE>
(f) the representations and warranties of the Company shall fail to be
true and correct in all material respects on and as of the date made or,
except as otherwise expressly contemplated, on and as of any subsequent
date as if made at and as of such subsequent date, which failure either
individually or in the aggregate would have a Combined Material Adverse
Effect;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder; or
(i) since December 31, 1997, except as (i) expressly contemplated by
the Merger Agreement, (ii) disclosed in any Company SEC Report filed since
such date and prior to the date of the Merger Agreement or (iii) set forth
in the Disclosure Schedule to the Merger Agreement, there shall have
occurred any event having, individually or in the aggregate, a change or
effect that is materially adverse to the business, operations, properties,
financial condition, assets or liabilities (including, without limitation,
contingent liabilities) of the Company.
The foregoing conditions are for the sole benefit of the Purchaser and PCC
and may be asserted by the Purchaser or PCC regardless of the circumstances
giving rise to any such condition or may be waived by the Purchaser and PCC in
whole or in part at any time and from time to time in its sole discretion. The
failure by the Purchaser or PCC at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
14. CERTAIN LEGAL MATTERS.
Except as described below, the Purchaser is not aware of any approval or
other action by any federal, state or foreign governmental or administrative
agency that would be required for the acquisition of the Shares by the Purchaser
pursuant to this Offer. Should any approval or other action be required, it is
presently contemplated that such approval or action would be sought. However,
while there is no present intent to delay the purchase of the Shares tendered
pursuant to this Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, could be obtained
without substantial delay or conditions, or at all. The Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions, including conditions relating to the legal matters discussed in this
Section 14. See Section 13.
State Takeover Laws. Section 912 of the NYBCL prohibits a New York
corporation such as the Company from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers) with an "Interested
Shareholder" (defined generally as a person that is the beneficial owner of 20%
or more of a corporation's outstanding voting stock) for a period of five years
following the date that such person became an Interested Shareholder unless (a)
prior to the date such person became an Interested Shareholder, the board of
directors of the corporation approved either the Business Combination or the
transaction that resulted in the person becoming an Interested Shareholder, (b)
subsequent to the date such person became an Interested Stockholder, the
Business Combination is approved by the board of directors of the corporation
and authorized at a meeting of stockholders, and not by written consent, by the
affirmative vote of a majority of the holders of the outstanding voting stock of
the corporation not owned by the Interested Stockholder, or (c) the shareholders
of the corporation as a result of the Business Combination receive fair and
adequate consideration as determined under the statute. Because the Company's
Board of Directors has approved the Offer, the prohibition of section 912 will
not apply to the Merger. The foregoing summary of Section 912 does not purport
to be complete and is qualified in its entirety by reference to Section 912.
The Purchaser and PCC do not believe any of the statutes adopted by states
in which the Company conducts business by their terms apply to the Offer, and
except as described in this Offer to Purchase, the
24
<PAGE>
Purchaser has not complied with any state takeover law. Pursuant to the Merger
Agreement, if any state's takeover law should become applicable to the Offer of
the Merger, the Purchaser, PCC and the Company have agreed to use their best
efforts to take such actions as are necessary so that the transactions
contemplated by the Merger Agreement may be consummated as promptly as
practicable on the terms contemplated thereby and otherwise to minimize the
effects of any such statute on such transactions. Should any government official
or third party seek to apply any state takeover law to the Offer other than
those described in this Offer to Purchase, the Purchaser will take such action
as then appears desirable and currently anticipate that it will contest the
validity or applicability of such statute in appropriate court proceedings.
If it is asserted that one or more state takeover laws other than those
described in this Offer to Purchase apply to the Offer and it is not determined
by all appropriate courts that such act or acts do not apply or are invalid as
applied to the Offer, the Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities. In
addition, if enjoined, the Purchaser might be unable to accept for payment any
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer.
In such case, the Purchaser may not be obligated to accept for payment any
Shares tendered. See Section 13.
Antitrust Laws. The Antitrust Division and the FTC frequently scrutinize
the legality under the antitrust laws of transactions such as the proposed
acquisition of the Company by the Purchaser. At any time before or after the
Purchaser's acquisition of Shares pursuant to the Offer, the Antitrust Division
or the FTC could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the proposed Merger or
seeking the divestiture of Shares acquired by the Purchaser or the divestiture
of substantial assets of the Company or its subsidiaries or PCC or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge to
the Offer on antitrust grounds will not be made or, if such a challenge is made,
of the result thereof.
15. FEES AND EXPENSES.
The Purchaser has retained The Bank of New York to act as Depositary and
Morrow & Co., Inc. to serve as Information Agent in connection with the Offer.
The Purchaser will pay each of the Depositary and the Information Agent
reasonable and customary compensation for their services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify each of
them against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws.
Neither the Purchaser nor PCC will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
16. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
Neither the Purchaser nor PCC is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction. Consequently, the Offer
is currently being made to all holders of Shares. To the extent the Purchaser
25
<PAGE>
or PCC becomes aware of any law that would limit the class of offers in the
Offer, the Purchaser will amend the Offer and, depending on the timing of such
amendment, if any, will extend the Offer to provide adequate dissemination of
such information to holders of Shares prior to the expiration of the Offer.
The Purchaser has filed with the SEC a Statement on Schedule 14D-1
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer, and may file
amendments thereto. Such Schedule 14D-1 and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the SEC in Washington, D.C. and the NNM in the manner set forth in Section 8.
No person has been authorized to give any information or make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
March 3, 1998
EOC ACQUISITION CORPORATION
26
<PAGE>
Schedule I
DIRECTORS AND CORPORATE OFFICERS
OF THE PURCHASER AND PCC
(Note: footnote (+) appears at end of this Schedule I)
Set forth in the table below are the names and present principal
occupations or employments, and the material occupations, positions, offices,
and employments during the past five years, for the directors and corporate
officers of EOC Acquisition Corporation and Precision Castparts Corp., and the
name, principal business and address for any corporation or other organization
in which such employment is carried on. Each person listed below is of United
States citizenship, and, unless otherwise indicated, positions have been held
for the past five years. Directors are identified by an asterisk (*) and the
year in which such person became a director is indicated in parentheses.
<TABLE>
<CAPTION>
Precision Castparts Corp.
Present Principal Occupation or Employment (and
Name and Residence Principal Business); Material Positions Held
or Business Address During Past Five Years
- ------------------- -----------------------------------------------
<S> <C>
William C. McCormick* (1986) Chairman of PCC since October 1994; Chief
Precision Castparts Corp. Executive Officer of PCC since August 1991;
4650 SW Macadam, Suite 440 from 1985-97, President of PCC
Portland, OR 97201
Vernon E. Oechsle* (1996) President and Chief Executive Officer of
Precision Castparts Corp.+ Quanex Corporation, a manufacturer of steel
bars, aluminum shapes and steel tubes and
pipes, since 1995; formerly Chief
Operating Officer of Quanex Corporation
Steven C. Riedel* (1997) President and Chief Operating Officer of PCC
Precision Castparts Corp.+ since May 1997; formerly Vice President and
General Manager of the Latin America
operations of GE Appliances, a division
of General Electric Company
Peter R. Bridenbaugh* (1995) Retired; through December 1997, Executive
Precision Castparts Corp.+ Vice President-Automotive, Aluminum Co. of
America, an integrated producer of aluminum
and other products for the packaging,
aerospace, automotive, building and
construction, and commercial and industrial
markets; from 1994-1996, Executive Vice
President and Chief Technical Officer,
Aluminum Co. of America; from 1991-1994,
Executive Vice President-Science and
Technology, Engineering, Environment, Safety &
Health, Aluminum Co. of America
Steven G. Rothmeier* (1994) Chairman and Chief Executive Officer of Great
Precision Castparts Corp.+ Northern Capital, a private investment and
merchant banking firm, since March 1993;
formerly President of IAI Capital Group;
Director of Honeywell, Inc., E.W. Blanch
Holdings, Inc., Department 56, Inc., and Waste
Management, Inc.
Dean T. DuCray* (1996) Vice President and Chief Financial Officer of
Precision Castparts Corp.+ York International Corporation, a manufacturer
of heating, air conditioning, ventilation and
refrigeration equipment, since 1987
S-1
<PAGE>
Present Principal Occupation or Employment (and
Name and Residence Principal Business); Material Positions Held
or Business Address During Past Five Years
- ------------------- -----------------------------------------------
<S> <C>
Don R. Graber* (1995) President and Chief Operating Officer of Huffy
Precision Castparts Corp.+ Corporation, a manufacturer of outdoor leisure
products and services, since July 1996; from
1994 to 1996, President of Worldwide Household
Products Group, The Black & Decker
Corporation; from 1992 to 1994, President of
Black & Decker International Group
Roy M. Marvin* (1967) Retired; Through May 1996, Vice
Precision Castparts Corp.+ President-Administration and Secretary of PCC
William D. Larsson Vice President and Chief Financial Officer of
Precision Castparts Corp.+ PCC
Peter G. Waite Executive Vice President of PCC and President of
Precision Castparts Corp.+ PCC Airfoils, Inc.
Mark Donegan Executive Vice President of PCC and President of
Precision Castparts Corp.+ PCC Structurals, Inc.
David W. Norris Executive Vice President of PCC and President of
Precision Castparts Corp.+ PCC Flow Technologies, Inc. since 1996;
President of Keystone Controls (North America)
Division of Keystone International, Inc., from
1991-1996
Gregory M. Delaney Executive Vice President of PCC and President of
Precision Castparts Corp.+ PCC Specialty Products, Inc. since 1998;
President of Wygand Industrial Division of
Emerson Electric Company, 1997-1998; Executive
Vice President of Sales, Marketing and
Engineering, Wygand Industrial Division of
Emerson Electric Company, 1996-1997; Vice
President of Marketing, Refrigerator Division
of Copeland Corporation, a subsidiary of
Emerson Electric Company, 1995-1996; General
Manager, Condensing Unit Division of Copeland
Corporation, 1993-1995.
James A. Johnson Treasurer of PCC
Precision Castparts Corp.+
Shawn R. Hagel Corporate Controller of PCC since 1997; Manager
Precision Castparts Corp.+ of Financial Reporting of PCC, 1995-1997;
Manager, Deloitte & Touche LLP, 1993-1995
Donna C. Ragan Director of Taxes of PCC since 1997; Tax Manager
Precision Castparts Corp.+ of PCC, 1994-1997; Tax Manager of NAACO
Materials Handling, Inc., 1993-1994
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
EOC Acquisition Corporation
Present Principal Occupation or Employment (and
Name and Residence Principal Business); Material Positions Held
or Business Address During Past Five Years
- ------------------- -----------------------------------------------
<S> <C>
William C. McCormick* Chairman of PCC since October 1994; Chief Executive
EOC Acquisition Corporation Officer of PCC since August 1991; from 1985-97,
4650 SW Macadam, Suite 440 President of PCC
Portland, OR 97201
William D. Larsson* Vice President and Chief Financial Officer of PCC;
EOC Acquisition Corporation+ Vice President of the Purchaser
Steven C. Riedel* President and Chief Operating Officer of PCC since
EOC Acquisition Corporation+ May 1997; formerly Vice President and General Manger
of the Latin America operations of GE
Appliances, a division of General Electric
Company
David W. Norris* President of PCC Flow Technologies, Inc.; Chief
EOC Acquisition Corporation+ Executive Officer of the Purchaser
- --------------
+ The principal business and address of the corporation or other organization for
which the listed individual's principal occupation is conducted is set forth at
the first place at which the name of such corporation or other organization
appears in this Schedule I.
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
The Depositary for the Offer is:
The Bank of New York
By Mail: Facsimile Transmission: By Hand or Overnight
(for Eligible Institutions Only) Courier:
<S> <C> <C>
The Bank of New York (212) 815-6213 Tender & Exchange Department
PO Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York New York, New York 10286
10286-1248
For Information Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Questions or requests for assistance may be directed to the Information
Agent at the address and telephone number set forth below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below, and
will be furnished promptly at the Purchaser's expense. Stockholders may also
contact their brokers, dealers, banks or trust companies or other nominees for
assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Banks and Brokerage firms please call:
(800) 662-5200
Toll Free: (800) 566-9061
Exhibit 7.2
CREDIT AGREEMENT
Dated as of July 31, 1996
among
PRECISION CASTPARTS CORP.;
Certain of its Subsidiaries;
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
and
Letter of Credit Issuing Bank;
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BA SECURITIES, INC.
<PAGE>
TABLE OF CONTENTS
Section
ARTICLE I
DEFINITIONS 1
1.01 Certain Defined Terms 1
1.02 Other Interpretive Provisions 32
1.03 Accounting Principles 33
1.04 Currency Equivalents Generally 33
ARTICLE II
THE CREDITS 34
2.01 Amounts and Terms of Commitments 34
2.02 Loan Accounts; Notes; Designation of Company 34
2.03 Procedure for Committed Borrowing 35
2.04 Conversion and Continuation Elections 37
2.05 Utilization of Revolving Commitments in Offshore
Currencies. 39
2.06 Bid Borrowings 41
2.07 Procedure for Bid Borrowings 41
2.08 Voluntary Termination or Reduction of Commitments 47
2.09 Optional Prepayments 47
2.10 Currency Exchange Fluctuations; Mandatory
Prepayment of Loans 48
2.11 Repayment 49
2.12 Interest 49
2.13 Fees 50
2.14 Computation of Fees and Interest 51
2.15 Payments by the Borrowers 52
2.16 Payments by the Banks to the Agent 53
2.17 Sharing of Payments, Etc. 54
2.18 Guaranties 55
2.19 Additional Subsidiary Borrowers 55
ARTICLE III
THE LETTERS OF CREDIT 55
3.01 The Letter of Credit Subfacility.
3.02 Issuance, Amendment and Renewal of Letters of
Credit 57
3.03 Risk Participations, Drawings and Reimbursements 60
3.04 Repayment of Participations 62
3.05 Role of the Issuing Bank 63
Page I
<PAGE>
3.06 Obligations Absolute 64
3.07 Cash Collateral Pledge 65
3.08 Letter of Credit Fees 65
3.09 Uniform Customs and Practice 66
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY 66
4.01 Taxes. 66
4.02 Illegality 68
4.03 Increased Costs and Reduction of Return 69
4.04 Funding Losses 69
4.05 Inability to Determine Rates 70
4.06 Reserves on Offshore Rate Committed Loans 71
4.07 Certificates of Banks 72
4.08 Substitution of Banks 72
4.09 Survival 72
ARTICLE V
CONDITIONS PRECEDENT 72
5.01 Conditions of Initial Credit Extensions 72
5.02 Conditions to All Credit Extensions 75
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 76
6.01 Corporate Existence and Power 76
6.02 Corporate Authorization; No Contravention 77
6.03 Governmental Authorization 77
6.04 Binding Effect 77
6.05 Litigation 77
6.06 No Default 78
6.07 ERISA Compliance 78
6.08 Use of Proceeds; Margin Regulations 79
6.09 Title to Properties 79
6.10 Taxes 79
6.11 Financial Condition 80
6.12 Environmental Matters 80
6.13 Regulated Entities 80
6.14 No Burdensome Restrictions; No Restrictions on
Subsidiary Dividends 81
Page ii
<PAGE>
6.15 Copyrights, Patents, Trademarks and Licenses,
etc. 81
6.16 Subsidiaries 81
6.17 Insurance 81
6.18 Swap Obligations 82
6.19 Credit Limit for Subsidiary Borrowers 82
6.20 Full Disclosure 82
ARTICLE VII
AFFIRMATIVE COVENANTS 82
7.01 Financial Statements 83
7.02 Certificates; Other Information 84
7.03 Notices 84
7.04 Preservation of Corporate Existence, Etc 85
7.05 Maintenance of Property 86
7.06 Insurance 86
7.07 Payment of Obligations 86
7.08 Compliance with Laws 87
7.09 Compliance with ERISA 87
7.10 Inspection of Property and Books and Records 87
7.11 Environmental Laws 87
7.12 Use of Proceeds 88
7.13 Internal Controls 88
7.14 New Material Subsidiaries 88
ARTICLE VIII
NEGATIVE COVENANTS 89
8.01 Limitation on Liens 89
8.02 Disposition of Assets 91
8.03 Consolidations and Mergers 91
8.04 Loans and Investments 93
8.05 Limitation on Subsidiary Indebtedness 94
8.06 Transactions with Affiliates 94
8.07 Use of Proceeds 94
8.08 Contingent Obligations 95
8.09 Joint Ventures 96
8.10 ERISA 96
8.11 Change in Business 96
8.12 Accounting Changes 96
8.13 Minimum Consolidated Net Worth 96
8.14 Fixed Charge Coverage Ratio 96
8.15 Leverage Ratio 97
8.16 No Restrictions on Subsidiary Dividends 97
Page iii
<PAGE>
ARTICLE IX
EVENTS OF DEFAULT 97
9.01 Event of Default 97
9.02 Remedies 101
9.03 Rights Not Exclusive 102
ARTICLE X
THE AGENT 102
10.01 Appointment and Authorization; "Agent" 102
10.02 Delegation of Duties 103
10.03 Liability of Agent 103
10.04 Reliance by Agent 104
10.05 Notice of Default 104
10.06 Credit Decision 105
10.07 Indemnification of Agent 105
10.08 Agent in Individual Capacity 106
10.09 Successor Agent 106
10.10 Withholding Tax 107
10.11 Co-Agents 109
ARTICLE XI
MISCELLANEOUS 109
11.01 Amendments and Waivers 109
11.02 Notices 111
11.03 No Waiver; Cumulative Remedies 112
11.04 Costs and Expenses 112
11.05 Company Indemnification 112
11.06 Payments Set Aside 113
11.07 Successors and Assigns 114
11.08 Assignments, Participations, etc. 114
11.09 Confidentiality 116
11.10 Set-off 117
11.11 Automatic Debits of Fees 118
11.12 Included Subsidiaries 118
11.13 Notification of Addresses, Lending Offices, Etc. 118
11.14 Counterparts 118
11.15 Severability 119
11.16 No Third Parties Benefited 119
11.17 Governing Law and Jurisdiction 119
11.18 Waiver of Jury Trial 119
11.19 Judgment 120
11.20 Oregon Legal Notice 120
11.21 Entire Agreement 121
Page iv
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of July 31,
1996, among Precision Castparts Corp., an Oregon
corporation (the "Company"), AETC Limited, a corporation
organized under the laws of the United Kingdom, the other
"Subsidiary Borrowers" from time to time party hereto, the
several financial institutions from time to time party to
this Agreement (collectively, the "Banks"; individually, a
"Bank") and Bank of America National Trust and Savings
Association, as letter of credit issuing bank and as agent
for the Banks.
WHEREAS, the Banks have agreed to make available to
the Borrowers a term loan and revolving multicurrency
credit facility with a letter of credit subfacility upon
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual
agreements, provisions and covenants contained herein, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have
the following meanings:
"Absolute Rate" has the meaning specified in
subsection 2.07(c).
"Absolute Rate Auction" means a solicitation
of Competitive Bids setting forth Absolute Rates
pursuant to Section 2.07.
"Absolute Rate Bid Loan" means a Bid Loan
that bears interest at a rate determined with
reference to the Absolute Rate.
"Acquisition" means any transaction or series of
related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisi
tion of in excess of 50% of the capital stock,
partnership interests, membership interests or equity
of any Person, or otherwise causing any Person to
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become a Subsidiary, or (c) a merger or consolidation
or any other combination with another Person (other
than a Person that is a Subsidiary) provided that the
Company or the Subsidiary is the surviving entity.
"Affected Bank" means the meaning specified in
Section 4.08.
"Affiliate" means, as to any Person, any other
Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control
another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause
the direction of the management and policies of the
other Person, whether through the ownership of voting
securities or membership interests, by contract, or
otherwise.
"Agent" means BofA in its capacity as agent for
the Banks hereunder, and any successor agent appointed
or arising under Section 10.09.
"Agent-Related Persons" means BofA and any
successor agent appointed or arising under Section
10.09 and any successor letter of credit issuing bank
hereunder, together with their respective Affiliates
(including, in the case of BofA, the Arranger), and
the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means (i) in respect of
payments in Dollars, the address for payments set
forth on Schedule 11.02 or such other address as the
Agent may from time to time specify in accordance with
Section 11.02, and, (ii) in the case of payments in
any Offshore Currency, such address as the Agent may
from time to time specify in accordance with Section
11.02.
"Agreed Alternative Currency" has the meaning
specified in subsection 2.05(d).
"Agreement" means this Credit Agreement.
"Applicable Currency" means, as to any particular
payment or Loan, Dollars or the Offshore Currency in
which it is denominated or is payable.
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"Applicable Margin" means, in respect of all
Committed Loans outstanding on any date (A) for the
period from the Closing Date through September 29,
1996, 0.6750% for Offshore Rate Committed Loans and
0.0000% for Base Rate Committed Loans, and (B) from
September 30, 1996, the percentage specified below
opposite the Leverage Ratio (which ratio shall be
calculated for the relevant four fiscal quarter
period) calculated for the periods described below.
<TABLE>
<CAPTION>
Leverage Ratio
at End of Fiscal Quarter Applicable Margin
________________________ _________________
Offshore Base
Rate Rate
<S> <C> <C>
Less than 1.35 to 1.00 0.3000% 0.0000%
Less than 1.85 to 1.00 but
greater than or equal
to 1.35 to 1.00 0.3750% 0.0000%
Less than 2.35 to 1.00 but
greater than or equal to
1.85 to 1.00 0.4500% 0.0000%
Less than 2.85 to 1.00 but
greater than or equal to
2.35 to 1.00 0.5000% 0.0000%
Less than 3.35 to 1.00 but
greater than or equal to
2.85 to 1.00 0.6750% 0.0000%
Greater than or equal to
3.35 to 1.00 0.8750% 0.0000%
</TABLE>
The Applicable Margin for each fiscal quarter
commencing on and after September 30, 1996 will be
determined by the Agent from time to time for each
quarter of each calendar year (the "Current Quarter")
in accordance with the table set forth above based on
the Compliance Certificate delivered by the Company
for the immediately preceding calendar quarter (the
"Preceding Quarter") under subsection 7.02(b). Such
determination will be based on the calculation of the
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Leverage Ratio set forth in the Compliance Certificate
for the Preceding Quarter and shall apply from and
including the first day of the Current Quarter until
and including the last day of the Current Quarter.
Prior to the date in the Current Quarter on which the
Agent receives the Compliance Certificate for the
Preceding Quarter which is required to be delivered
during the Current Quarter, the Applicable Margin
shall be the same as was applicable in the Preceding
Quarter, subject to any necessary adjustment pursuant
to this paragraph upon receipt of such subsequent
Compliance Certificate, effective as of the beginning
of the Current Quarter; provided, that the Applicable
Margin for any day after the fifty-fifth day of any
calendar quarter in which the Company shall not
deliver a Compliance Certificate shall equal the next
higher Applicable Margin as set forth in the table
above immediately below the previously effective
Applicable Margin; thus if the Applicable Margin had
previously been 0.3750% for Offshore Rate Committed
Loans, and 0.0000% for Base Rate Committed Loans, a
failure to deliver the Compliance Certificate by the
fifty-fifth day of the Current Quarter would cause the
Applicable Margin to be 0.4500% and 0.0000%,
respectively, for the duration of that quarter. If
the subsequent Compliance Certificate shall indicate
that the Applicable Margin should have been increased
for the Current Quarter pursuant to this paragraph,
then the Company shall pay on the date of delivery of
such Compliance Certificate, to the Agent for the
account of the Banks, an amount equal to the positive
difference, if any, between (i) the aggregate amount
of interest which would theretofore have been payable
during such Current Quarter had such increase been
made on the first day of such Current Quarter and (ii)
the amount of interest which the Company actually paid
during such Current Quarter. If such Compliance
Certificate shall indicate that the Company paid more
interest than would have been required if any
reduction therein required by this paragraph had
commenced on the first day of such Current Quarter,
any such excess payment shall be credited to future
payments of interest and other amounts payable by the
Company hereunder. Any such credit to future payments
of interest shall in each case be made first to the
next occurring payment of interest due hereunder. The
Applicable Margin shall be adjusted automatically as
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to all Committed Loans then outstanding (without
regard to the timing of Interest Periods) as of the
effective date of any change in the Applicable Margin.
"Arranger" means BA Securities, Inc., a Delaware
corporation.
"Assignee" has the meaning specified in
subsection 11.08(a).
"Attorney Costs" means and includes all fees and
disbursements of any law firm or other external
counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
"Authorized Amount" means with respect to any
Subsidiary Borrower the amount of Credit Extensions
hereunder authorized by resolution of the Board of
Directors or similar governing body of such Subsidiary
Borrower.
"Bank" has the meaning specified in the
introductory clause hereto. References to the "Banks"
shall include BofA, including in its capacity as
Issuing Bank; for purposes of clarification only, to
the extent that BofA may have any rights or
obligations in addition to those of the Banks due to
its status as Issuing Bank, its status as such will be
specifically referenced.
"Banking Day" means any day other than a
Saturday, Sunday or other day on which commercial
banks in New York City or San Francisco are authorized
or required by law to close and (i) with respect to
disbursements and payments in Dollars, a day on which
dealings are carried on in the applicable offshore
Dollar interbank market, and (ii) with respect to any
disbursements and payments in and calculations
pertaining to any Offshore Currency Loan, a day on
which commercial banks are open for foreign exchange
business in London, England, and on which dealings in
the relevant Offshore Currency are carried on in the
applicable offshore foreign exchange interbank market
in which disbursement of or payment in such Offshore
Currency will be made or received hereunder.
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"Bankruptcy Code" means the Federal Bankruptcy
Reform Act of 1978 (11 U.S.C. Sec. 101, et seq.).
"Base Rate" means, for any day, the higher of:
(a) 0.50% per annum above the latest Federal Funds
Rate; and (b) the rate of interest in effect for
such day as publicly announced from time to time by
BofA in San Francisco, California, as its "reference
rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and
desired return, general economic conditions and other
factors, and is used as a reference point for pricing
some loans, which may be priced at, above, or below
such announced rate.)
Any change in the reference rate announced by
BofA shall take effect at the opening of business on
the day specified in the public announcement of such
change.
"Base Rate Committed Loan" means a Committed
Loan, or an L/C Advance, that bears interest based on
the Base Rate.
"Bid Borrowing" means a Borrowing hereunder
consisting of one or more Bid Loans made to a
Borrower on the same day by one or more Banks.
"Bid Loan" means a Loan by a Bank to a
Borrower under Section 2.06, which may be a
LIBOR Bid Loan or an Absolute Rate Bid Loan.
"Bid Loan Note" has the meaning specified in
Section 2.02.
"BofA" means Bank of America National Trust and
Savings Association, a national banking association.
"Borrowers" means the Company and the Subsidiary
Borrowers. References to "the Borrower" in relation
to any particular Loan or Letter of Credit shall be
deemed to refer to the applicable Borrower with
respect to such Loan or Letter of Credit.
"Borrowing" means a borrowing hereunder
consisting of Loans of the same Type and in the same
Applicable Currency made to the same Borrower on the
same day by the Banks under Article II, and may be a
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Committed Borrowing or a Bid Borrowing and, other
than in the case of Base Rate Committed Loans, having
the same Interest Period.
"Borrowing Date" means any date on which a
Borrowing occurs under Section 2.03.
"Business Day" means any day other than a
Saturday, Sunday or other day on which commercial
banks in New York City or San Francisco are
authorized or required by law to close and, if the
applicable Business Day relates to any Offshore Rate
Loan, means a Banking Day.
"Capital Adequacy Regulation" means any
guideline, request or directive of any central bank
or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force
of law, in each case, regarding capital adequacy of
any bank or of any corporation controlling a bank.
"Cash Collateralize" means to pledge and deposit
with or deliver to the Agent, for the benefit of the
Agent, the Issuing Bank and the Banks, as collateral
for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and
substance satisfactory to the Agent and the Issuing
Bank (which documents are hereby consented to by the
Banks). Derivatives of such term shall have
corresponding meaning. Each Borrower hereby grants
the Agent, for the benefit of the Agent, the Issuing
Bank and the Banks, a security interest in all such
cash and deposit account balances as collateral for
the L/C Obligations. Cash collateral shall be
maintained in blocked deposit accounts at BofA.
"Closing Date" means the date on which all
conditions precedent set forth in Section 5.01 are
satisfied or waived by all Banks (or, in the case of
subsection 5.01(e), waived by the Person entitled to
receive such payment).
"Code" means the Internal Revenue Code of 1986,
and regulations promulgated thereunder.
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"Commitment", as to each Bank, has the meaning
specified in Section 2.01.
"Commitment Fee Percentage" means (A) for the
period from the Closing Date through September 29,
1996, 0.2250%, and (B) from September 30, 1996, the
percentage specified below opposite the Leverage
Ratio (which ratio shall be calculated for the
relevant four fiscal quarter period) calculated for
the periods described below.
Leverage Ratio
at End of Fiscal Quarter Commitment Fee
Less than 1.35 to 1.00 0.10000%
Less than 1.85 to 1.00 but greater than
or equal to 1.35 to 1.00 0.12500%
Less than 2.35 to 1.00 but greater than
or equal to 1.85 to 1.00 0.15000%
Less than 2.85 to 1.00 but greater than
or equal to 2.35 to 1.00 0.18750%
Less than 3.35 to 1.00 but greater than
or equal to 2.85 to 1.00 0.22500%
Greater than or equal to 3.35 to 1.00 0.25000%
The Commitment Fee Percentage for each fiscal
quarter commencing on and after September 30, 1996,
will be determined by the Agent from time to time for
each Current Quarter in accordance with the table set
forth above based on the Compliance Certificate
delivered by the Company for the Preceding Quarter
under subsection 7.02(b). Such determination will
be based on the calculation of the Leverage Ratio set
forth in the Compliance Certificate for the Preceding
Quarter and shall apply from and including the first
day of the Current Quarter until and including the
last day of the Current Quarter. Prior to the date
in the Current Quarter on which the Agent receives
the Compliance Certificate for the Preceding Quarter
which is required to be delivered during the Current
Quarter, the Commitment Fee Percentage shall be the
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same as was applicable in the Preceding Quarter,
subject to any necessary adjustment pursuant to this
paragraph upon receipt of such subsequent Compliance
Certificate, effective as of the beginning of the
Current Quarter; provided, that the Commitment Fee
Percentage for any day after the fifty-fifth day of
any calendar quarter in which the Company shall not
deliver a Compliance Certificate shall equal the next
higher Commitment Fee Percentage as set forth in the
table above immediately below the previously
effective Commitment Fee Percentage; thus if the
Commitment Fee Percentage had previously been
0.15000%, a failure to deliver the Compliance
Certificate by the fifty-fifth day of the Current
Quarter would cause the Commitment Fee Percentage to
be 0.18750% for the duration of that quarter. If the
subsequent Compliance Certificate shall indicate that
the Commitment Fee Percentage should have been
increased for the Current Quarter pursuant to this
paragraph, then the Company shall pay on the date of
delivery of such Compliance Certificate, to the Agent
for the account of the Banks, an amount equal to the
positive difference, if any, between (i) the
aggregate amount of commitment fees which would
theretofore have been payable during such Current
Quarter had such increase been made on the first day
of such Current Quarter and (ii) the amount of
commitment fees which the Company actually paid
during such Current Quarter. If such Compliance
Certificate shall indicate that the Company paid more
commitment fees than would have been required if any
reduction therein required by this paragraph had
commenced on the first day of such Current Quarter,
any such excess payment shall be credited to future
payments of commitment fees and other amounts payable
by the Company hereunder. Any such credit to future
payments of commitment fees shall in each case be
made first to the next occurring payment of
commitment fees due hereunder.
"Committed Borrowing" means a Borrowing
hereunder consisting of Committed Loans made on
the same day by the Banks ratably according to
their respective Pro Rata Shares and, in the
case of Offshore Rate Committed Loans, having
the same Interest Periods.
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"Committed Loan" means a Revolving Loan or
Term Loan by a Bank to a Borrower under
Section 2.01, and may be an Offshore Rate
Committed Loan or a Base Rate Committed Loan
(each, a "Type" of Committed Loan).
"Committed Loan Note" has the meaning specified
in Section 2.02.
"Company Guaranty" means a guaranty
substantially in the form of Exhibit L.
"Competitive Bid" means an offer by a Bank
to make a Bid Loan in accordance with subsection
2.07(b).
"Competitive Bid Request" has the meaning
specified in subsection 2.07(a).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C.
"Computation Date" has the meaning specified in
subsection 2.05(a).
"Consolidated Funded Indebtedness" means, as of
the date of determination, all Indebtedness of the
Company and its Included Subsidiaries representing
all Indebtedness of the type described in clauses
(a), (c), (d) and (f) of the definition of
Indebtedness, and any Guaranty Obligation of the
Company or its Included Subsidiaries with respect to
such Indebtedness of another Person.
"Consolidated Interest Expense" means, for any
period, gross consolidated interest expense for the
period (including all commissions, discounts, fees
and other charges in connection with standby letters
of credit and similar instruments) for the Company
and its Included Subsidiaries.
"Consolidated Net Income" means for any period
the gross revenues from operations of the Company and
its Included Subsidiaries less all their operating
and non-operating expenses (including taxes on
income), but excluding all amounts with respect to
the operations of any Included Subsidiary for any
period prior to the time it shall have become an
Included Subsidiary.
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"Consolidated Net Worth" means, as of the date
of determination, the consolidated shareholders'
equity of the Company and its Included Subsidiaries;
provided, however, that any reduction in
shareholders' equity directly resulting from a change
in GAAP shall be disregarded in determining
Consolidated Net Worth for the purposes of this
Agreement, but only if and to the extent such change
is (a) (i) a mandatory change required as a result of
a definitive pronouncement by the Financial
Accounting Standards Board and (ii) concurred with by
the Company's Independent Auditors; and (b) has no
cash or other working capital effect on the
consolidated balance sheet of the Company.
"Consolidated Total Assets" means, as of the
date of determination, the consolidated total assets
of the Company and its Included Subsidiaries.
"Contingent Obligation" means, as to any Person,
any direct or indirect liability of that Person,
whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the
"primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise
acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the
payment or discharge of any such primary obligation,
or to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor,
(iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the
primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation
against loss in respect thereof (each with respect to
the items in this clause (a), a "Guaranty
Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or
as to which that Person is otherwise liable for
reimbursement of drawings or payments; (c) to
purchase any materials, supplies or other property
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from, or to obtain the services of, another Person if
the relevant contract or other related document or
obligation requires that payment for such materials,
supplies or other property, or for such services,
shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or
tendered, or such services are ever performed or
tendered, or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation shall, in the
case of Guaranty Obligations, be deemed equal to the
stated or determinable amount of the primary
obligation in respect of which such Guaranty
Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated
liability in respect thereof, and in the case of
other Contingent Obligations other than in respect of
Swap Contracts, shall be equal to the maximum
reasonably anticipated liability in respect thereof
and, in the case of Contingent Obligations in respect
of Swap Contracts, shall be equal to the Swap
Termination Value.
"Contractual Obligation" means, as to any
Person, any provision of any security issued by such
Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other
instrument, document or agreement to which such
Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on
which, under Section 2.04, a Borrower (a) converts
Committed Loans of one Type to another Type, or (b)
continues as Committed Loans of the same Type, but
with a new Interest Period, Committed Loans having
Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the
making of any Committed Loans or Bid Loans hereunder,
and (b) the Issuance of any Letters of Credit
hereunder.
"Current Quarter" has the meaning specified in
the definition of Applicable Margin.
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"Default" means any event or circumstance which,
with the giving of notice, the lapse of time, or
both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Dollar Equivalent" means, at any time, (a) as
to any amount denominated in Dollars, the amount
thereof at such time, and (b) as to any amount
denominated in an Offshore Currency, the equivalent
amount in Dollars as determined by the Agent at such
time on the basis of the Spot Rate for the purchase
of Dollars with such Offshore Currency on the most
recent Computation Date provided for in subsection
2.05(a).
"Dollars", "dollars" and "$" each mean lawful
money of the United States.
"EBITDA" means, for any period, for the Company
and its Included Subsidiaries on a consolidated
basis, the sum of (a) the net income (or net loss)
for such period plus (b) all amounts treated as
expenses for depreciation, interest and the
amortization of intangibles of any kind to the extent
included in the determination of such net income (or
loss), plus (c) all accrued taxes on or measured by
income to the extent included in the determination of
such net income (or loss); provided, however, that
(i) net income (or loss) shall be computed for these
purposes without giving effect to extraordinary
losses or extraordinary gains; and (ii) all amounts
with respect to the foregoing items with respect to
any Subsidiary acquired during the 12-month period
ending on the Closing Date and listed on Schedule
1.01 shall be included in the calculation of EBITDA
for any relevant period prior to the time it shall
have become a Subsidiary.
"Effective Amount" means (i) with respect to any
Committed Loans and Bid Loans on any date, the
aggregate outstanding Dollar Equivalent principal
amount thereof after giving effect to any Borrowings
and prepayments or repayments of Committed Loans and
Bid Loans occurring on such date; and (ii) with
respect to any outstanding L/C Obligations on any
date, the Dollar Equivalent amount of such L/C
Obligations on such date after giving effect to any
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Issuances of Letters of Credit occurring on such date
and any other changes in the aggregate amount of the
L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid
drawings under any Letters of Credit or any
reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such
date.
"Eligible Assignee" means (a) a commercial bank
organized under the laws of the United States, or any
state thereof, and having a combined capital and
surplus of at least $100,000,000; (b) a commercial
bank organized under the laws of any other country
which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having
a combined capital and surplus of at least
$100,000,000, provided that such bank is acting
through a branch or agency located in the United
States; and (c) a Person that is primarily engaged in
the business of commercial banking and that is (i) a
Subsidiary of a Bank, (ii) a Subsidiary of a Person
of which a Bank is a Subsidiary, or (iii) a Person of
which a Bank is a Subsidiary; provided that such
Person is acting through a branch or agency located
in the United States. No proposed assignee shall be
an Eligible Assignee if the effect of the assignment
to the proposed assignee would be to impose increased
costs on a Borrower pursuant to Section 4.01.
"Environmental Claims" means all claims, however
asserted, by any Governmental Authority or other
Person alleging potential liability or responsibility
for violation of any Environmental Law, or for
release or injury to the environment.
"Environmental Laws" means all federal, state or
local laws, statutes, common law duties, rules,
regulations, ordinances and codes, together with all
administrative orders, directed duties, requests,
licenses, authorizations and permits of, and
agreements with, any Governmental Authorities, in
each case relating to environmental, health, safety
and land use matters.
"ERISA" means the Employee Retirement Income
Security Act of 1974, and regulations promulgated
thereunder.
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"ERISA Affiliate" means any trade or business
(whether or not incorporated) under common control
with the Company within the meaning of Section 414(b)
or (c) of the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions relating to
Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with
respect to a Pension Plan; (b) a withdrawal by the
Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal
under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d)
the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement
of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition
which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the
Company or any ERISA Affiliate.
"Event of Default" means any of the events or
circumstances specified in Section 9.01.
"Exchange Act" means the Securities Exchange Act
of 1934, and regulations promulgated thereunder.
"Excluded Subsidiary" means Newflo, subject to
Section 11.12 hereof.
"Existing Lines of Business" means those lines
of business carried on by the Company and its
Subsidiaries on the date hereof.
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"FDIC" means the Federal Deposit Insurance
Corporation, and any Governmental Authority
succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the
rate set forth in the weekly statistical release
designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of
New York (including any such successor, "H.15(519)")
on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant
day such rate is not so published on any such
preceding Business Day, the rate for such day will be
the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected
by the Agent.
"Fee Letter" has the meaning specified in
subsection 2.13(a).
"Fixed Charge Coverage Ratio" means for any
period the ratio of (i) (A) EBITDA minus (B) all
accrued taxes on or measured by income to the extent
included in the determination of net income (or loss)
included in the calculation of EBITDA for such
period, in each case calculated on a four quarter
rolling basis for the applicable fiscal quarter and
the three immediately preceding fiscal quarters, to
(ii) (A) Consolidated Interest Expense, calculated on
a four quarter rolling basis for the applicable
fiscal quarter and the three immediately preceding
fiscal quarters plus (B) the current portion of long-
term debt, determined on a consolidated basis for the
Company and its Included Subsidiaries; provided, that
for the calculation of the Fixed Charge Coverage
Ratio (1) for the quarter ending September 29, 1996,
the items in subclause (ii)(A) of this definition
shall be calculated by multiplying times four such
amounts for the quarter ending September 29, 1996;
(2) for the quarter ending December 29, 1996, such
items shall be calculated by multiplying times two
such amounts for the two quarter period ending
December 29, 1996; and (3) for the quarter ending
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March 30, 1997, such items shall be calculated by
multiplying times 4/3 such amounts for the three
quarter period ending March 30, 1997.
"FRB" means the Board of Governors of the
Federal Reserve System, and any Governmental
Authority succeeding to any of its principal
functions.
"FX Trading Office" means the Foreign Exchange
Trading Center #5193, San Francisco, California, of
BofA, or such other of BofA's offices as BofA may
designate from time to time.
"Further Taxes" means any and all present or
future taxes, levies, assessments, imposts, duties,
deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and
franchise taxes), and all liabilities with respect
thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 4.01.
"GAAP" means generally accepted accounting
principles set forth from time to time in the
opinions and pronouncements of the Accounting
Principles Board and the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of
comparable stature and authority within the U.S.
accounting profession), which are applicable to the
circumstances as of the date of application.
"Governmental Authority" means any nation or
government, any state or other political subdivision
thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or
administrative functions of or pertaining to
government, and any corporation or other entity owned
or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified
in the definition of "Contingent Obligation."
"Honor Date" has the meaning specified in
subsection 3.03(b).
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"Included Subsidiary" means each Subsidiary
other than the Excluded Subsidiary, provided that the
term "Included Subsidiary" shall mean all
Subsidiaries from and after such time that the
Excluded Subsidiary has been designated an Included
Subsidiary (which designation shall be irrevocable)
pursuant to the provisions and in accordance with the
terms of Section 11.12.
"Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money;
(b) all obligations issued, undertaken or assumed as
the deferred purchase price of property or services
(other than trade payables and accrued liabilities
incurred in the ordinary course of business on
ordinary terms); (c) all non-contingent reimbursement
or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with
the acquisition of property, assets or businesses;
(e) all indebtedness created or arising under any
conditional sale or other title retention agreement,
or incurred as financing, in either case with respect
to property acquired by the Person (even though the
rights and remedies of the seller or bank under such
agreement in the event of default are limited to
repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all
indebtedness referred to in clauses (a) through (f)
above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in
property (including accounts and contracts rights)
owned by such Person, even though such Person has not
assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in
respect of indebtedness or obligations of others of
the kinds referred to in clauses (a) through (g)
above.
For all purposes of this Agreement, the Indebtedness
of any Person shall include all recourse Indebtedness
of any partnership, joint venture or limited
liability company in which such Person is a general
partner, a joint venturer or a member.
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"Indemnified Liabilities" has the meaning
specified in Section 11.05.
"Indemnified Person" has the meaning specified
in Section 11.05.
"Independent Auditor" has the meaning specified
in subsection 7.01(a).
"Insolvency Proceeding" means, with respect to
any Person, (a) any case, action or proceeding with
respect to such Person before any court or other
Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement
in respect of its creditors generally or any
substantial portion of its creditors; undertaken
under U.S. Federal, state or foreign law, including
the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan
other than a Base Rate Committed Loan, the last day
of each Interest Period applicable to such Loan and,
as to any Base Rate Committed Loan, the last Business
Day of each calendar quarter and each date such
Committed Loan is converted into another Type of
Committed Loan, provided, however, that (a) if any
Interest Period for an Offshore Rate Committed Loan
exceeds three months, the date that falls three
months after the beginning of such Interest Period
and after each Interest Payment Date thereafter is
also an Interest Payment Date, and (b) as to any Bid
Loan, such intervening dates prior to the maturity
thereof as may be specified by a Borrower and agreed
to by the applicable Bank in the applicable
Competitive Bid shall also be Interest Payment Dates.
"Interest Period" means, (a) as to any Offshore
Rate Committed Loan, the period commencing on the
Borrowing Date of such Loan, or on the
Conversion/Continuation Date on which such Loan is
converted into or continued as an Offshore Rate
Committed Loan, and ending on the date one, two,
three or six months thereafter as selected by a
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Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be; (b) as
to any LIBOR Bid Loan, the period commencing on the
date such Loan is disbursed and ending on the date
one, two, three, six or twelve months thereafter as
selected by a Borrower in its Competitive Bid
Request; and (c) as to any Absolute Rate Bid Loan, a
period of not less than 14 days and not more than 365
days as selected by a Borrower in the applicable
Competitive Bid Request;
provided that:
(i) if any Interest Period would
otherwise end on a day that is not a Business
Day, that Interest Period shall be extended to
the following Business Day unless, in the case
of an Offshore Rate Loan, the result of such
extension would be to carry such Interest Period
into another calendar month, in which event such
Interest Period shall end on the preceding
Business Day;
(ii) any Interest Period pertaining
to an Offshore Rate Loan that begins on the last
Business Day of a calendar month (or on a day
for which there is no numerically corresponding
day in the calendar month at the end of such
Interest Period) shall end on the last Business
Day of the calendar month at the end of such
Interest Period;
(iii) no Interest Period for any Term
Loan shall extend beyond the Term Maturity Date
and no Interest Period for any Revolving Loan
shall extend beyond the date set forth in clause
(a) of the definition of Revolving Termination
Date; and
(iv) no Interest Period applicable to
a Term Loan or portion thereof shall extend
beyond any date upon which is due any scheduled
principal payment in respect of the Term Loans
unless the aggregate principal amount of Term
Loans represented by Offshore Rate Loans having
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Interest Periods that will expire on or
before such date and by Base Rate Committed
Loans equals or exceeds the amount of such
principal payment.
"Invitation for Competitive Bids" means a
solicitation for Competitive Bids, substantially
in the form of Exhibit F.
"Issuance Date" has the meaning specified in
subsection 3.01(a).
"Issue" means, with respect to any Letter of
Credit, to issue or to extend the expiry of, or to
renew, amend, or increase the amount of, such Letter
of Credit; and the terms "Issued," "Issuing" and
"Issuance" have corresponding meanings.
"Issuing Bank" means BofA in its capacity as
issuer of one or more Letters of Credit hereunder,
together with any replacement letter of credit issuer
arising under subsection 10.01(b) or Section 10.09.
"IRS" means the Internal Revenue Service, and
any Governmental Authority succeeding to any of its
principal functions under the Code.
"Joint Venture" means a single-purpose
corporation, partnership, limited liability company,
joint venture or other similar legal arrangement
(whether created by contract or conducted through a
separate legal entity) now or hereafter formed by the
Company or any of its Subsidiaries with another
Person in order to conduct a common venture or
enterprise with such Person.
"L/C Advance" means each Bank's participation in
any L/C Borrowing in accordance with its Pro Rata
Share.
"L/C Amendment Application" means an application
form for amendment of outstanding standby or
commercial documentary letters of credit as shall at
any time be in use at the Issuing Bank, as the
Issuing Bank shall request.
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"L/C Application" means an application form for
issuances of standby or commercial documentary
letters of credit as shall at any time be in use at
the Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit
resulting from a drawing under any Letter of Credit
which shall not have been reimbursed on the date when
made nor converted into a Borrowing of Revolving
Loans under subsection 3.03(b).
"L/C Commitment" means the commitment of the
Issuing Bank to Issue, and the commitment of the
Banks severally to participate in, Letters of Credit
from time to time Issued or outstanding under Article
III, in an aggregate Dollar Equivalent amount not to
exceed on any date the amount of $20,000,000, as the
same shall be reduced as a result of a reduction in
the L/C Commitment pursuant to Section 2.08; provided
that the L/C Commitment is a part of the combined
Commitments, rather than a separate, independent
commitment.
"L/C Obligations" means at any time the sum of
(a) the aggregate undrawn Dollar Equivalent amount of
all Letters of Credit then outstanding, plus (b) the
Dollar Equivalent amount of all unreimbursed drawings
under all Letters of Credit, including all
outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of
Credit, the L/C Applications, the L/C Amendment
Applications and any other document relating to any
Letter of Credit, including any of the Issuing Bank's
standard form documents for letter of credit
issuances.
"Lending Office" means, as to any Bank, the
office or offices of such Bank specified as its
"Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on
Schedule 11.02, or such other office or offices as
such Bank may from time to time notify the Company
and the Agent.
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"Letters of Credit" means any letters of credit
(whether standby letters of credit or commercial
documentary letters of credit) Issued by the Issuing
Bank pursuant to Article III.
"Leverage Ratio" means for any period the ratio
of Consolidated Funded Indebtedness to EBITDA.
"LIBO Rate" means, for any Interest Period with
respect to a LIBOR Bid Loan or Offshore Rate
Committed Loan, the rate of interest per annum
determined by the Agent as the rate for deposits in
the Applicable Currency in the approximate amount of
the requested Loan for a period equal to the
applicable Interest Period which appears on the
display designated at page 3750 on the Telerate
System, or such other display on the Telerate System
as may replace such page displaying the London
Interbank offered rates, as of 11:00 a.m., London
time, on the day that is two Business Days prior to
the commencement of such Interest Period. If the
Agent is unable to obtain any quotation as provided
above, the LIBO Rate shall be the rate of interest
per annum determined by the Agent to be the
arithmetic mean (rounded upward to the nearest 1/16th
of 1%) of the rates of interest per annum notified to
the Agent by BofA as the rate of interest at which
deposits in the Applicable Currency in the
approximate amount of, in the case of LIBOR Bid
Loans, the LIBOR Bid Loans to be borrowed in such Bid
Loan Borrowing, and, in the case of Offshore Rate
Committed Loans, the Offshore Rate Committed Loan to
be made by BofA, and having a maturity comparable to
such Interest Period, would be offered to major banks
in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest
Period. In the case of Offshore Currency Loans
denominated in English pounds sterling, the cost to
the Banks of complying with mandatory liquid asset
and special deposit requirements, if any, of the Bank
of England will be added to the LIBO Rate and
computed in the manner set forth in Schedule 1.01(a).
"LIBOR Auction" means a solicitation of
Competitive Bids setting forth a LIBOR Bid
Margin pursuant to Section 2.07.
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"LIBOR Bid Loan" means any Bid Loan that
bears interest at a rate based upon the LIBO
Rate.
"LIBOR Bid Margin" has the meaning
specified in subsection 2.07(c)(ii)(C).
"Lien" means any security interest, mortgage,
deed of trust, pledge, hypothecation, assignment,
charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any
property (including those created by, arising under
or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a
capital lease, any financing lease having
substantially the same economic effect as any of the
foregoing, or the filing of any financing statement
naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code
or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not
including the interest of a lessor under an operating
lease.
"Loan" means an extension of credit by a Bank to
a Borrower under Article II, and may be a Committed
Loan or a Bid Loan.
"Loan Documents" means this Agreement, any
Notes, the Company Guaranty, the Subsidiary
Guaranty(ies), the L/C Related Documents, the Fee
Letter and all other documents delivered to the Agent
or any Bank in connection herewith.
"Margin Stock" means "margin stock" as such term
is defined in Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material
adverse change in, or a material adverse effect upon,
the operations, business, properties, condition
(financial or otherwise) or prospects of the Company
and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Borrower or any
Material Subsidiary party to a Subsidiary Guaranty to
perform under any Loan Document and to avoid any
Event of Default; or (c) a material adverse effect
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upon the legality, validity, binding effect or
enforceability against any Borrower or any Material
Subsidiary party to a Subsidiary Guaranty of any Loan
Document. For purposes of this definition, a
liability shall be considered to be material if it
involves a cost to or expenditure by a Borrower or
any Material Subsidiary of $15,000,000 or more, net
of amounts recoverable from insurers where coverage
is not contested or pursuant to uncontested rights of
subrogation, contribution or indemnity.
"Material Subsidiary" means any Subsidiary whose
total assets constitute 10% or more of Consolidated
Total Assets, in each case based upon the Company's
most recent annual or quarterly financial statements
delivered to the Agent under Section 7.01.
"Minimum Tranche" means, in respect of Committed
Loans comprising part of the same Borrowing, or to be
converted or continued under Section 2.04, (a) in the
case of Base Rate Committed Loans, $5,000,000 or any
multiple of $1,000,000 in excess thereof, and (b) in
the case of Offshore Rate Committed Loans, the Dollar
Equivalent amount of $10,000,000 or any multiple of
1,000,000 units of the Applicable Currency in excess
thereof.
"Multiemployer Plan" means a "multiemployer
plan", within the meaning of Section 4001(a)(3) of
ERISA, to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make
contributions or, during the preceding three calendar
years, has made, or been obligated to make,
contributions.
"Net Issuance Proceeds" means, in respect of any
issuance of common or preferred equity, cash proceeds
received in connection therewith, net of ordinary and
necessary out-of-pocket costs and expenses paid or
incurred in connection therewith in favor of any
Person not an Affiliate of the Company.
"Newflo" means Newflo Corporation, a Delaware
corporation, and its Subsidiaries.
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"Notes" means the Committed Loan Notes and the
Bid Loan Notes.
"Notice of Borrowing" means a notice in
substantially the form of Exhibit A.
"Notice of Conversion/Continuation" means a
notice in substantially the form of Exhibit B.
"Obligations" means all advances, debts,
liabilities, obligations, covenants and duties
arising under any Loan Document, owing by the
Borrowers to any Bank, the Agent, or any Indemnified
Person, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising.
"Offshore Currency" means at any time English
pounds sterling, French francs, Deutsche Marks and
any Agreed Alternative Currency.
"Offshore Currency Loan" means any Revolving
Loan that is an Offshore Rate Loan denominated in an
Offshore Currency.
"Offshore Currency Loan Sublimit" means, as to
all Offshore Currencies in the aggregate,
$75,000,000.
"Offshore Rate Committed Loan" means any
Committed Loan that bears interest based on the LIBO
Rate.
"Offshore Rate Loan" means a Loan that bears
interest based on the LIBO Rate, and may be an
Offshore Currency Loan or a Loan denominated in
Dollars.
"Organization Documents" means, for any
corporation, the certificate or articles of
incorporation (or equivalent), the bylaws (or
equivalent), any certificate of determination or
instrument relating to the rights of preferred
shareholders of such corporation, any shareholder
rights agreement, and all applicable resolutions of
the board of directors (or any equivalent governing
body), or any committee thereof, of such corporation.
"Other Taxes" means any present or future stamp,
court or documentary taxes or any other excise or
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property taxes, charges or similar levies which arise
from any payment made hereunder or from the
execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Overnight Rate" means, for any day, the rate of
interest per annum at which overnight deposits in the
Applicable Currency, in an amount approximately equal
to the amount with respect to which such rate is
being determined, would be offered for such day by
BofA's London Branch to major banks in the London or
other applicable offshore interbank market.
"Participant" has the meaning specified in
subsection 11.08(d).
"PBGC" means the Pension Benefit Guaranty
Corporation, or any Governmental Authority succeeding
to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined
in Section 3(2) of ERISA) subject to Title IV of
ERISA which the Company sponsors, maintains, or to
which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer
plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately
preceding five (5) plan years.
"Permitted Liens" has the meaning specified in
Section 8.01.
"Permitted Swap Obligations" means all
obligations (contingent or otherwise) of the Company
or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following
criteria is satisfied: (a) such obligations are (or
were) entered into by such Person in the ordinary
course of business for the purpose of directly
mitigating risks associated with liabilities,
commitments or assets held by such Person, or changes
in the value of securities issued by such Person in
conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes
of speculation or taking a "market view;" and
(b) such Swap Contracts do not contain (i) any
provision ("walk-away" provision) exonerating the
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non-defaulting party from its obligation to make
payments on outstanding transactions to the
defaulting party, or (ii) any provision creating or
permitting the declaration of an event of default,
termination event or similar event upon the
occurrence of an Event of Default hereunder (other
than an Event of Default under subsection 9.01(a)).
"Person" means an individual, partnership,
corporation, limited liability company, business
trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as
defined in Section 3(3) of ERISA) which the Company
sponsors or maintains or to which the Company makes,
is making, or is obligated to make contributions and
includes any Pension Plan.
"Preceding Quarter" has the meaning specified in
the definition of Applicable Margin.
"Pro Rata Share" means, as to any Bank at any
time, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the
combined Commitments of all Banks.
"Replacement Bank" has the meaning specified in
Section 4.08.
"Reportable Event" means any of the events set
forth in Section 4043(c) of ERISA or the regulations
thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived
in regulations issued by the PBGC.
"Required Banks" means (a) at any time prior to
the Revolving Termination Date, or after the
Revolving Termination Date if no Loans are then
outstanding, Banks then holding at least 66-2/3% of
the Commitments, and (b) otherwise, Banks then
holding at least 66-2/3% of the then aggregate unpaid
principal amount of the Loans.
"Requirement of Law" means, as to any Person,
any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or of a
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Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to
which the Person or any of its property is subject.
"Responsible Officer" means the chief executive
officer or the president of the Company (or any other
officer having substantially the same authority and
responsibility) or the vice president and chief
financial officer of the Company (or any other
officer having substantially the same authority and
responsibility); and, with respect certification of
financial statements or compliance with financial
covenants, the treasurer of the Company (or any other
officer having substantially the same authority and
responsibility).
"Revolving Loan" has the meaning specified in
subsection 2.01(b).
"Revolving Termination Date" means the earlier
to occur of:
(a) July 31, 2001; and
(b) the date on which the Commitments
terminate in accordance with the provisions of
this Agreement.
"Same Day Funds" means (i) with respect to
disbursements and payments in Dollars, immediately
available funds, and (ii) with respect to
disbursements and payments in an Offshore Currency,
same day or other funds as may be determined by the
Agent to be customary in the place of disbursement or
payment for the settlement of international banking
transactions in the relevant Offshore Currency.
"SEC" means the Securities and Exchange
Commission, or any Governmental Authority succeeding
to any of its principal functions.
"Spot Rate" for a currency means the rate quoted
by BofA as the spot rate for the purchase by BofA of
such currency with another currency through its FX
Trading Office at approximately 8:00 a.m. (San
Francisco time) on the date two Banking Days prior to
the date as of which the foreign exchange computation
is made.
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"Subsidiary" of a Person means any corporation,
association, partnership, limited liability company,
joint venture or other business entity of which more
than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other
than corporations), is owned or controlled directly
or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Subsidiary Borrowers" means AETC Limited, a
corporation existing under the laws of the United
Kingdom, and any Person becoming a Subsidiary
Borrower under Section 2.19.
"Subsidiary Guaranty" means a guaranty
substantially in the form of Exhibit K.
"Surety Instruments" means all letters of credit
(including standby and commercial), banker's
acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.
"Swap Contract" means any agreement, whether or
not in writing, relating to any transaction that is a
rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity
index swap or option, bond, note or bill option,
interest rate option, forward foreign exchange
transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, swaption,
currency option or any other, similar transaction
(including any option to enter into any of the
foregoing) or any combination of the foregoing, and,
unless the context otherwise clearly requires, any
master agreement relating to or governing any or all
of the foregoing.
"Swap Termination Value" means, in respect of
any one or more Swap Contracts, after taking into
account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts
have been closed out and termination value(s)
determined in accordance therewith, such termination
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value(s), and (b) for any date prior to the date
referenced in clause (a) the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts,
as determined based upon one or more mid-market or
other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may
include any Bank).
"Taxes" means any and all present or future
taxes, levies, assessments, imposts, duties,
deductions, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding,
in the case of each Bank and the Agent, respectively,
taxes imposed on or measured by its net income (or
taxes imposed in lieu of such net income taxes) by
the jurisdiction (or any political subdivision
thereof) under the laws of which such Bank or the
Agent, as the case may be, is organized or maintains
a lending office.
"Term Commitment" means $150,000,000, as the
same may be reduced from time to time by repayments
or prepayments of Term Loans.
"Term Loan" has the meaning specified in
subsection 2.01(a).
"Type" has the meaning specified in the
definition of "Committed Loan."
"Unfunded Pension Liability" means the excess of
a Plan's benefit liabilities under Section
4001(a)(16) of ERISA over the current value of that
Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan
pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United
States of America.
"Wholly-Owned Subsidiary" means any corporation
in which (other than directors' qualifying shares
required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the
capital stock of every other class, in each case, at
the time as of which any determination is being made,
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is owned, beneficially and of record, by the Company,
or by one or more of the other Wholly-Owned
Subsidiaries, or both.
1.02 Other Interpretive Provisions. (a) The
meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder"
and similar words refer to this Agreement as a whole and
not to any particular provision of this Agreement; and
subsection, Section, Schedule and Exhibit references are
to this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and
all instruments, documents, agreements, certificates,
indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting
and means "including without limitation."
(iii) The term "to the best knowledge of
the Borrower", or any other term of similar import,
means to the actual knowledge of any executive
officer of the Borrower or any employee of the
Borrower with management responsibility for the
subject matter as to which the Borrower's knowledge
is relevant.
(iv) In the computation of periods of time
from a specified date to a later specified date, the
word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and
the word "through" means "to and including."
(d) Unless otherwise expressly provided herein,
(i) references to agreements (including this Agreement)
and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
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(e) The captions and headings of this Agreement
are for convenience of reference only and shall not affect
the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may
use several different limitations, tests or measurements
to regulate the same or similar matters. All such
limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
Unless otherwise expressly provided, any reference to any
action of the Agent or the Banks by way of consent,
approval or waiver shall be deemed modified by the phrase
"in its/their sole discretion."
(g) This Agreement and the other Loan Documents
are the result of negotiations among and have been
reviewed by counsel to the Agent, the Borrowers and the
other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks
or the Agent merely because of the Agent's or Banks'
involvement in their preparation.
1.03 Accounting Principles. (a) Unless the context
otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all
financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied
(including changes required by the application thereof).
(b) References herein to "fiscal year" and
"fiscal quarter" refer to such fiscal periods of the
Company.
1.04 Currency Equivalents Generally. For all
purposes of this Agreement (but not (i) as otherwise
expressly provided in Section 11.19 and (ii) for purposes
of the preparation of any financial statements delivered
pursuant hereto), the equivalent in any Offshore Currency
or other currency of an amount in Dollars, and the
equivalent in Dollars of an amount in any Offshore
Currency or other currency, shall be determined at the
Spot Rate.
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ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. (a) The Term
Credit. Each Bank severally agrees, on the terms and
conditions set forth herein, to make a single loan to the
Company (each such loan, a "Term Loan") on the Closing
Date in a principal amount not to exceed such Bank's Pro
Rata Share of the Term Commitment. Amounts borrowed as
Term Loans which are repaid or prepaid by the Company may
not be reborrowed. Term Loans shall be denominated in
Dollars and shall not be available in, or convertible
into, Offshore Currencies.
(b) The Revolving Credit. Each Bank severally
agrees, on the terms and conditions set forth herein, to
make loans to the Borrowers (each such loan, a "Revolving
Loan") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination
Date, in an aggregate principal Dollar Equivalent amount
not to exceed at any time outstanding, together with the
principal amount of Term Loans outstanding in favor of
such Bank at such time, the amount set forth on Schedule
2.01 under the heading "Commitment" (such amount, together
with such Bank's Pro Rata Share of the Term Commitment, as
the same may be reduced under Section 2.08 or as a result
of one or more assignments under Section 11.08, the Bank's
"Commitment"); provided, however, that, after giving
effect to any Committed Borrowing of Revolving Loans, the
Effective Amount of all outstanding Revolving Loans, Term
Loans, Bid Loans and L/C Obligations shall not at any time
exceed the combined Commitments; and provided further
that, (i) after giving effect to any Borrowing of Offshore
Currency Loans, the aggregate principal Dollar Equivalent
amount of all Offshore Currency Loans shall not exceed the
Offshore Currency Loan Sublimit, and (ii) the Effective
Amount of the Revolving Loans and Term Loans of any Bank
plus the participation of such Bank in the Effective
Amount of all L/C Obligations shall not exceed such Bank's
Commitment. Within the limits of each Bank's Commitment,
and subject to the other terms and conditions hereof, the
Borrowers may borrow under this subsection 2.01(b), prepay
under Section 2.09 and reborrow under this subsection
2.01(b).
2.02 Loan Accounts; Notes; Designation of Company.
(a) The Loans made by each Bank and the Letters of Credit
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issued by the Issuing Bank shall be evidenced by one or
more loan accounts or records maintained by such Bank or
Issuing Bank, as the case may be, in the ordinary course
of business. The accounts or records maintained by the
Agent, the Issuing Bank and each Bank shall be conclusive
absent manifest error of the amount of the Loans made by
the Banks to the Borrowers, and the Letters of Credit
Issued for the account of the Borrowers, and the interest
and payments thereon. Any failure so to record or any
error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay
any amount owing with respect to the Loans or any Letter
of Credit.
(b) Upon the request of any Bank made through
the Agent, the Committed Loans made by such Bank may be
evidenced by one or more notes in the form of Exhibit I
("Committed Loan Notes") and the Bid Loans made by such
Bank may be evidenced by one or more notes in the form of
Exhibit J ("Bid Loan Notes"), instead of or in addition to
loan accounts. Each such Bank shall endorse on the
schedules annexed to its Note(s) the date, amount and
maturity of each Loan made by it and the amount and
Applicable Currency of each payment of principal made by
the applicable Borrower with respect thereto. Each such
Bank is irrevocably authorized by the Company to endorse
its Note(s) and each Bank's record shall be conclusive
absent manifest error; provided, however, that the failure
of a Bank to make, or an error in making, a notation
thereon with respect to any Loan shall not limit or
otherwise affect the obligations of the Borrowers
hereunder, under any such Note, or under any other Loan
Document, to such Bank.
(c) Each Subsidiary Borrower hereby irrevocably
appoints the Company as its agent and attorney-in-fact,
authorized to execute and deliver on its behalf any and
all statements, certificates, documents and agreements as
may be required or contemplated hereunder, including
Notices of Borrowing and Notices of
Conversion/Continuation and requests for offers to make
Bid Loans, and to receive any and all notices and other
communications from the Agent and the Banks hereunder and
to perform on such Subsidiary Borrower's behalf any and
all other acts, deeds and requirements of this Agreement.
2.03 Procedure for Committed Borrowing. (a) Each
Committed Borrowing shall be made upon the Borrower's
irrevocable written notice delivered to the Agent in the
form of a Notice of Borrowing, which notice must be
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received by the Agent prior to 9:00 a.m. (San Francisco
time) at least (i) three Business Days prior to the
requested Borrowing Date, in the case of Offshore Rate
Committed Loans denominated in Dollars; (ii) one Business
Day prior to the requested Borrowing Date, in the case of
Base Rate Committed Loans; and (iii) four Business Days
prior to the requested Borrowing Date, in the case of
Offshore Currency Loans, specifying:
(A) the applicable Borrower;
(B) the amount of the Committed
Borrowing, which shall be in an aggregate amount
not less than the Minimum Tranche;
(C) the requested Borrowing
Date, which shall be a Business Day;
(D) the Type of Loans comprising
the Committed Borrowing;
(E) if applicable, the duration
of the Interest Period applicable to such
Committed Loans included in such notice. If the
Notice of Borrowing fails to specify the
duration of the Interest Period for any
Committed Borrowing comprised of Offshore Rate
Committed Loans, such Interest Period shall be
three months; and
(F) in the case of a Borrowing
comprised of Offshore Currency Loans, the
Applicable Currency;
provided, however, that with respect to the Borrowing to
be made on the Closing Date, the Notice of Borrowing shall
be delivered to the Agent not later than 8:00 a.m. (San
Francisco time) on the Closing Date and, unless consented
to by the Agent, such Borrowing will consist of Base Rate
Committed Loans only; and further provided that if so
requested by the Agent, all Borrowings during the first 60
days following the Closing Date shall have the same
Interest Period and shall be Offshore Rate Committed Loans
for Interest Periods no longer than one month.
(b) The Dollar Equivalent amount of any
Committed Borrowing in an Offshore Currency will be
determined by the Agent for such Committed Borrowing on
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the Computation Date therefor in accordance with
subsection 2.05(a). Upon receipt of the Notice of
Borrowing, the Agent will promptly notify each Bank
thereof and of the amount of such Bank's Pro Rata Share of
the Committed Borrowing denominated in the Applicable
Currency.
(c) Each Bank will make the amount of its Pro
Rata Share of each Committed Borrowing available to the
Agent for the account of the applicable Borrower at the
Agent's Payment Office on the Borrowing Date requested by
the Borrower in Same Day Funds and in the requested
currency (i) in the case of a Borrowing comprised of
Committed Loans in Dollars, by 11:00 a.m. (San Francisco
time), and (ii) in the case of a Committed Borrowing
comprised of Offshore Currency Loans, by such time as the
Agent may specify. The proceeds of all such Committed
Loans will then be made available to the applicable
Borrower by the Agent at such office by crediting the
account of the Borrower on the books of BofA with the
aggregate of the amounts made available to the Agent by
the Banks or by wire transfer in accordance with written
instructions provided to the Agent by the Borrower, in
each case in like funds as received by the Agent.
(d) After giving effect to any Committed
Borrowing, unless the Agent shall otherwise consent, there
may not be more than 10 different Interest Periods in
effect in respect of all Committed Loans and Bid Loans
together then outstanding.
2.04 Conversion and Continuation Elections for
Committed Borrowings. (a) The Borrower may, upon
irrevocable written notice to the Agent in accordance with
subsection 2.04(b):
(i) elect, as of any Business Day, in the
case of Base Rate Committed Loans, or as of the last
day of the applicable Interest Period, in the case of
any other Type of Committed Loans denominated in
Dollars, to convert any such Committed Loans (or any
part thereof in an amount not less than the Minimum
Tranche) into Committed Loans of any other Type; or
(ii) elect, as of the last day of the
applicable Interest Period, to continue any Committed
Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than the
Minimum Tranche);
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provided, that if at any time the aggregate amount of
Offshore Rate Committed Loans denominated in Dollars in
respect of any Committed Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to be less than
$10,000,000, such Offshore Rate Committed Loans
denominated in Dollars shall automatically convert into
Base Rate Committed Loans, and on and after such date the
right of the Borrower to continue such Committed Loans as,
and convert such Committed Loans into, Offshore Rate
Committed Loans shall terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Agent not
later than 9:00 a.m. (San Francisco time) at least (i)
three Business Days in advance of the
Conversion/Continuation Date, if the Committed Loans are
to be converted into or continued as Offshore Rate
Committed Loans denominated in Dollars; (ii) one Business
Day in advance of the Conversion/Continuation Date, if the
Loans are to be converted into Base Rate Committed Loans;
and (iii) four Business Days in advance of the
continuation date, if the Loans are to be continued as
Offshore Currency Loans, specifying:
(A) the applicable Borrower;
(B) the proposed
Conversion/Continuation Date;
(C) the aggregate amount of
Committed Loans to be converted or continued,
whether they are Term Loans or Revolving Loans,
and the Applicable Currency or Currencies;
(D) the Type of Committed Loans
resulting from the proposed conversion or
continuation; and
(E) other than in the case of
conversions into Base Rate Committed Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest
Period applicable to Offshore Rate Committed Loans in
Dollars the Borrower has failed to select timely a new
Interest Period to be applicable to such Offshore Rate
Committed Loans, or if any Default or Event of Default
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then exists, the Borrower shall be deemed to have elected
to convert such Offshore Rate Committed Loans into Base
Rate Committed Loans effective as of the expiration date
of such Interest Period. If the Borrower has failed to
select a new Interest Period to be applicable to Offshore
Currency Loans prior to the fourth Business Day in advance
of the expiration date of the current Interest Period
applicable thereto as provided in subsection 2.04(b), or
if any Default or Event of Default shall then exist,
subject to the provisions of subsection 2.05(b), the
Borrower shall be deemed to have elected to continue such
Offshore Currency Loans on the basis of a one month
Interest Period.
(d) The Agent will promptly notify each Bank of
its receipt of a Notice of Conversion/Continuation, or, if
no timely notice is provided by the Borrower, the Agent
will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations
shall be made ratably according to the respective
outstanding principal amounts of the Committed Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Required Banks otherwise
consent, during the existence of a Default or Event of
Default the Borrower may not elect to have a Committed
Loan in Dollars converted into or continued as an Offshore
Rate Committed Loan in Dollars, or an Offshore Currency
Loan continued on the basis of an Interest Period
exceeding one month, subject to subsection 2.05(b).
(f) After giving effect to any conversion or
continuation of Committed Loans, unless the Agent shall
otherwise consent, there may not be more than 10 different
Interest Periods in effect in respect of all Committed
Loans and Bid Loans together then outstanding.
2.05 Utilization of Revolving Commitments in
Offshore Currencies. (a) The Agent will determine the
Dollar Equivalent amount with respect to any (i) Borrowing
of Revolving Loans comprised of Offshore Currency Loans as
of the requested Borrowing Date, (ii) outstanding Offshore
Currency Loans as of the last Banking Day of each month,
and (iii) outstanding Offshore Currency Loans as of any
redenomination date pursuant to this Section 2.05 or
Section 4.05 (each such date under clauses (i) through
(iii) a "Computation Date").
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(b) Notwithstanding anything herein to the
contrary, during the existence of a Default or an Event of
Default, upon the request of the Required Banks, all or
any part of any outstanding Offshore Currency Loans shall
be redenominated and converted into Revolving Loans in
Dollars bearing interest based on the Base Rate with
effect from the last day of the Interest Period with
respect to any such Offshore Currency Loans. The Agent
will promptly notify the Borrower of any such
redenomination and conversion request.
(c) Notwithstanding anything herein to the
contrary, if there shall occur on or prior to the proposed
Borrowing Date or Conversion/Continuation Date of any
Offshore Currency Loan any change in national or
international financial, political or economic conditions
or currency exchange rates or exchange controls which
would in the reasonable opinion of the Agent or the
Required Banks make it impracticable for the Offshore Rate
Loans included in such requested Borrowing to be
denominated in the Offshore Currency requested by a
Borrower, then the Agent shall promptly notify the
Borrower and the Banks, and such Committed Loans shall not
be denominated in the requested Offshore Currency or
continued in the Offshore Currency of such Loan, but shall
(i) in the case of a proposed Borrowing, be made on the
requested Borrowing Date as Base Rate Committed Loans in
Dollars, unless the Borrower notifies the Agent (which
shall promptly notify the Banks) on or before 9:00 a.m.
(San Francisco time) one Business Day prior to the
requested Borrowing Date that it elects not to borrow on
such date, or (ii) in the case of a continuation, be
redenominated and converted into Revolving Loans in
Dollars bearing interest based on the Base Rate with
effect from the last day of the Interest Period with
respect to any such Offshore Currency Loans.
(d) The Borrower shall be entitled to request
that Revolving Loans hereunder also be permitted to be
made in any other lawful currency constituting an offshore
currency (other than Dollars), in addition to the offshore
currencies specified in the definition of "Offshore
Currency" herein, that in the opinion of the Banks is at
such time freely traded in the offshore interbank foreign
exchange markets and is freely transferable and freely
convertible into Dollars (an "Agreed Alternative
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Currency"). The Borrower shall deliver to the Agent any
request for designation of an Agreed Alternate Currency in
accordance with Section 11.02, to be received by the Agent
not later than 10:00 a.m. (San Francisco time) at least
ten Business Days in advance of the date of any Borrowing
hereunder proposed to be made in such Agreed Alternate
Currency. Upon receipt of any such request the Agent will
promptly notify the Banks thereof, and each Bank will use
its best efforts to respond to such request within two
Business Days of receipt thereof. Each Bank may grant or
accept such request in its sole discretion. The Agent
will promptly notify the Borrower of the acceptance or
rejection of any such request by the Banks. Any such
currency shall only be an Agreed Alternative Currency
hereunder if accepted by all of the Banks.
2.06 Bid Borrowings. In addition to Committed
Borrowings pursuant to Section 2.03, each Bank severally
agrees that the Borrowers may, as set forth in
Section 2.07, from time to time request the Banks prior to
the Revolving Termination Date to submit offers to make
Bid Loans to the Borrowers; provided, however, that the
Banks may, but shall have no obligation to, submit such
offers and a Borrower may, but shall have no obligation
to, accept any such offers; provided, further, that all
Bid Loans shall be denominated in Dollars; and provided,
further, that at no time shall (a) the Effective Amount of
all outstanding Bid Loans made by all Banks, plus the
Effective Amount of all outstanding Term Loans and
Revolving Loans made by all Banks, plus the Effective
Amount of all outstanding L/C Obligations, exceed the
combined Commitments; or (b) unless the Agent shall
otherwise consent, the number of Interest Periods for Bid
Loans then outstanding plus the number of Interest Periods
for Committed Loans then outstanding exceed 10.
2.07 Procedure for Bid Borrowings. (a) When a
Borrower wishes to request the Banks to submit offers to
make Bid Loans hereunder, it shall transmit to the Agent
by telephone call followed promptly by facsimile
transmission a notice in substantially the form of Exhibit
G (a "Competitive Bid Request") so as to be received no
later than 7:00 a.m. (San Francisco time) at least
(x) four Business Days prior to the date of a proposed Bid
Borrowing in the case of a LIBOR Auction, or (y) two
Business Days prior to the date of a proposed Bid
Borrowing in the case of an Absolute Rate Auction,
specifying:
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(i) the applicable Borrower;
(ii) the date of such Bid Borrowing,
which shall be a Business Day;
(iii) the aggregate amount of such
Bid Borrowing, which shall be a minimum amount
of $10,000,000 or in multiples of $1,000,000 in
excess thereof;
(iv) whether the Competitive Bids
requested are to be for LIBOR Bid Loans or
Absolute Rate Bid Loans or both; and
(v) the duration of the Interest
Period applicable thereto, subject to the
provisions of the definition of "Interest
Period" herein.
Subject to subsection 2.07(c), the Borrowers may not
request Competitive Bids for more than three Interest
Periods in a single Competitive Bid Request and may not
request Competitive Bids more than once in any period of
five consecutive Business Days.
(b) Upon receipt of a Competitive Bid Request,
the Agent will promptly send to the Banks by facsimile
transmission an Invitation for Competitive Bids, which
shall constitute an invitation by the Borrower to each
Bank to submit Competitive Bids offering to make the Bid
Loans to which such Competitive Bid Request relates in
accordance with this Section 2.07.
(c) (i) Each Bank may at its discretion
submit a Competitive Bid containing an offer or
offers to make Bid Loans in response to any
Invitation for Competitive Bids. Each
Competitive Bid must comply with the
requirements of this subsection 2.07(c) and must
be submitted to the Agent by facsimile transmis
sion at the Agent's office for notices set forth
on the signature pages hereto not later than
(1) 6:30 a.m. (San Francisco time) three
Business Days prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (2)
6:30 a.m. (San Francisco time) on the proposed
date of Borrowing, in the case of an Absolute
Rate Auction; provided that Competitive Bids
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submitted by the Agent (or any Affiliate of the
Agent) in the capacity of a Bank may be
submitted, and may only be submitted, if the
Agent or such Affiliate notifies the Company of
the terms of the offer or offers contained
therein not later than (A) 6:15 a.m. (San
Francisco time) three Business Days prior to the
proposed date of Borrowing, in the case of a
LIBOR Auction or (B) 6:15 a.m. (San Francisco
time) on the proposed date of Borrowing, in the
case of an Absolute Rate Auction.
(ii) Each Competitive Bid shall be in
substantially the form of Exhibit H, specifying
therein:
(A) the applicable Borrower;
(B) the proposed date of
Borrowing;
(C) the principal amount of
each Bid Loan for which such Competitive
Bid is being made, which principal amount
(x) may be equal to, greater than or less
than the Commitment of the quoting Bank,
(y) must be $10,000,000 or in multiples of
$1,000,000 in excess thereof, and (z) may
not exceed the principal amount of Bid
Loans for which Competitive Bids were
requested;
(D) in case the Borrower
elects a LIBOR Auction, the margin above or
below the LIBO Rate (the "LIBOR Bid
Margin") offered for each such Bid Loan,
expressed in multiples of 1/1000th of one
basis point to be added to or subtracted
from the applicable LIBO Rate and the
Interest Period applicable thereto;
(E) in case the Borrower
elects an Absolute Rate Auction, the rate
of interest per annum expressed in
multiples of 1/1000th of one basis point
(the "Absolute Rate") offered for each such
Bid Loan; and
(F) the identity of the
quoting Bank.
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A Competitive Bid may contain up to three
separate offers by the quoting Bank with respect
to each Interest Period specified in the related
Invitation for Competitive Bids.
(iii) Any Competitive Bid shall be
disregarded if it:
(A) is not substantially in
conformity with Exhibit H or does not
specify all of the information required by
subsection (c)(ii) of this Section;
(B) contains qualifying,
conditional or similar language;
(C) proposes terms other
than or in addition to those set forth in
the applicable Invitation for Competitive
Bids; or
(D) arrives after the time
set forth in subsection (c)(i).
(d) Promptly on receipt and not later than
7:00 a.m. (San Francisco time) three Business Days prior
to the proposed date of Borrowing in the case of a LIBOR
Auction, or 7:00 a.m. (San Francisco time) on the proposed
date of Borrowing in the case of an Absolute Rate Auction,
the Agent will notify the Borrower of the terms (i) of any
Competitive Bid submitted by a Bank that is in accordance
with subsection 2.07(c), and (ii) of any Competitive Bid
that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid submitted by such Bank with
respect to the same Competitive Bid Request. Any such
subsequent Competitive Bid shall be disregarded by the
Agent unless such subsequent Competitive Bid is submitted
solely to correct a manifest error in such former
Competitive Bid and only if received within the times set
forth in subsection 2.07(c). The Agent's notice to the
Borrower shall specify (1) the aggregate principal amount
of Bid Loans for which offers have been received for each
Interest Period specified in the related Competitive Bid
Request; and (2) the respective principal amounts and
LIBOR Bid Margins or Absolute Rates, as the case may be,
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so offered. Subject only to the provisions of
Sections 4.02, 4.05 and 5.02 hereof and the provisions of
this subsection (d), any Competitive Bid shall be
irrevocable except with the written consent of the Agent
given on the written instructions of the Borrower.
(e) Not later than 7:30 a.m. (San Francisco
time) three Business Days prior to the proposed date of
Borrowing in the case of a LIBOR Auction, or 7:30 a.m.
(San Francisco time) on the proposed date of Borrowing in
the case of an Absolute Rate Auction, the Borrower shall
notify the Agent of its acceptance or non-acceptance of
the offers so notified to it pursuant to subsection
2.07(d). The Borrower shall be under no obligation to
accept any offer and may choose to reject all offers. In
the case of acceptance, such notice shall specify the
aggregate principal amount of offers for each Interest
Period that is accepted. The Borrower may accept any
Competitive Bid in whole or in part; provided that:
(i) the aggregate principal amount of
each Bid Borrowing may not exceed the applicable
amount set forth in the related Competitive Bid
Request;
(ii) the principal amount of each Bid
Borrowing must be $10,000,000 or in any multiple
of $1,000,000 in excess thereof;
(iii) acceptance of offers may only
be made on the basis of ascending LIBOR Bid
Margins or Absolute Rates within each Interest
Period, as the case may be; and
(iv) the Borrower may not accept any
offer that is described in subsection
2.07(c)(iii) or that otherwise fails to comply
with the requirements of this Agreement.
(f) If offers are made by two or more Banks
with the same LIBOR Bid Margins or Absolute Rates, as the
case may be, for a greater aggregate principal amount than
the amount in respect of which such offers are accepted
for the related Interest Period, the principal amount of
Bid Loans in respect of which such offers are accepted
shall be allocated by the Agent among such Banks as nearly
as possible (in such multiples, not less than $1,000,000,
as the Agent may deem appropriate) in proportion to the
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aggregate principal amounts of such offers. Determination
by the Agent of the amounts of Bid Loans shall be
conclusive in the absence of manifest error.
(g) (i) The Agent will promptly notify each
Bank having submitted a Competitive Bid if its offer
has been accepted and, if its offer has been
accepted, of the amount of the Bid Loan or Bid Loans
to be made by it on the date of the Bid Borrowing.
(ii) Each Bank which has received
notice pursuant to subsection 2.07(g)(i) that
its Competitive Bid has been accepted shall make
the amounts of such Bid Loans available to the
Agent for the account of the Borrower at the
Agent's Payment Office by 11:00 a.m. (San
Francisco time) on such date of Bid Borrowing,
in funds immediately available to the Agent for
the account of the Borrower at the Agent's
Payment Office. The proceeds of all such Bid
Loans will then be made available to the
Borrower by the Agent at such office by
crediting the account of the Borrower on the
books of BofA with the aggregate of the amounts
made available to the Agent by the Banks and in
like funds as received by the Agent.
(iii) Promptly following each Bid
Borrowing, the Agent shall notify each Bank of
the ranges of bids submitted and the highest and
lowest Bids accepted for each Interest Period
requested by the Borrower and the aggregate
amount borrowed pursuant to such Bid Borrowing.
(iv) From time to time, the Borrowers
and the Banks shall furnish such information to
the Agent as the Agent may request relating to
the making of Bid Loans, including the amounts,
interest rates, dates of borrowings and
maturities thereof, for purposes of the
allocation of amounts received from the
Borrowers for payment of all amounts owing
hereunder.
(h) If, on or prior to the proposed date of
Borrowing, the Commitments have not been terminated and if
on such proposed date of Borrowing all applicable
conditions to funding referenced in Sections 4.02, 4.05
and 5.02 hereof are satisfied, the Banks whose offers the
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Company has accepted will fund each Bid Loan so accepted.
Nothing in this Section 2.07 shall be construed as a right
of first offer in favor of the Banks or to otherwise limit
the ability of the Borrowers to request and accept credit
facilities from any Person (including any of the Banks),
provided that no Default or Event of Default would
otherwise arise or exist as a result of the Borrowers
executing, delivering or performing under such credit
facilities.
2.08 Voluntary Termination or Reduction of
Commitments. The Company may, upon not less than five
Business Days' prior notice to the Agent, terminate the
Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $10,000,000 or any multiple of
$1,000,000 in excess thereof; unless, after giving effect
thereto and to any prepayments of Committed Loans made on
the effective date thereof, (a) the Effective Amount of
all Revolving Loans, Term Loans, Bid Loans and L/C
Obligations would exceed the amount of the combined
Commitments then in effect, or (b) the Effective Amount of
all L/C Obligations then outstanding would exceed the L/C
Commitment. Once reduced in accordance with this Section,
the Commitments may not be increased. Any reduction of
the Commitments shall be applied to each Bank according to
its Pro Rata Share. Subject to clause (b) of the first
sentence of this Section, if and to the extent specified
by the Company in the notice to the Agent, some or all of
the reduction in the combined Commitments shall be applied
to reduce the L/C Commitment. All accrued commitment fees
and letter of credit fees to, but not including, the
effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such
reduction or termination.
2.09 Optional Prepayments. (a) Subject to Section
4.04, the Borrowers may, at any time or from time to time,
with prior irrevocable notice to the Agent in accordance
with this Section, ratably prepay Committed Loans, in
whole or in part, in minimum Dollar Equivalent amounts of
$10,000,000 or any multiple of $1,000,000 in excess
thereof. The applicable Borrower shall deliver a notice
of prepayment in accordance with Section 11.02 to be
received by the Agent not later than 9:00 a.m. (San
Francisco time) (i) at least four Business Days in advance
of the prepayment date if the Loans to be prepaid are
Offshore Currency Loans, (ii) at least three Business Days
in advance of the prepayment date if the Loans to be
prepaid are Offshore Rate Committed Loans in Dollars, and
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(iii) at least one Business Day in advance of the
prepayment date if the Loans to be prepaid are Base Rate
Committed Loans. Such notice of prepayment shall specify
the date and amount of such prepayment and whether such
prepayment is of Base Rate Committed Loans, Offshore Rate
Committed Loans, or any combination thereof, and the
Applicable Currency. Such notice shall not thereafter be
revocable by the Borrower and the Agent will promptly
notify each Bank thereof and of such Bank's Pro Rata Share
of such prepayment. If such notice is given by a Borrower,
the Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable
on the date specified therein, together with accrued
interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.04. Optional
prepayments of Term Loans shall be applied in inverse
order of maturity.
(b) Bid Loans may not be voluntarily prepaid.
2.10 Currency Exchange Fluctuations; Mandatory
Prepayment of Loans. (a) Subject to Section 4.04, if on
any Computation Date the Agent shall have determined that
the aggregate Dollar Equivalent principal amount of all
Committed Loans then outstanding exceeds the combined
Commitments of the Banks by more than $500,000, due to a
change in applicable rates of exchange between Dollars and
Offshore Currencies, then the Agent shall give notice to
the Company that a prepayment is required under this
Section, and the Company agrees thereupon to make or cause
the Subsidiary Borrowers to make prepayments of Committed
Loans such that, after giving effect to such prepayment
the aggregate Dollar Equivalent amount of all Committed
Loans does not exceed the combined Commitments.
(b) If on any date the Effective Amount of L/C
Obligations exceeds the L/C Commitment, the Company shall
Cash Collateralize on such date the outstanding Letters of
Credit in an amount equal to the excess of the maximum
amount then available to be drawn under the Letters of
Credit over the Aggregate L/C Commitment. Subject to
Section 4.04 and subsection 2.10(a), if on any date after
giving effect to any Cash Collateralization made on such
date pursuant to the preceding sentence, the Effective
Amount of all Revolving Loans, Term Loans and Bid Loans
then outstanding plus the Effective Amount of all L/C
Obligations exceeds the combined Commitments, the Company
shall immediately, and without notice or demand, prepay or
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cause the Subsidiary Borrowers to prepay the outstanding
principal amount of the Revolving Loans, Term Loans and
L/C Advances by an amount equal to the applicable excess.
2.11 Repayment. (a) The Company shall repay the
Term Loans on the dates and in the amounts set forth
below:
Payment Date Amount
March 31, 1997 $ 5,000,000
June 30, 1997 5,000,000
September 30, 1997 7,500,000
December 31, 1997 7,500,000
March 31, 1998 7,500,000
June 30, 1998 7,500,000
September 30, 1998 7,500,000
December 31, 1998 7,500,000
March 31, 1999 7,500,000
June 30, 1999 7,500,000
September 30, 1999 7,500,000
December 31, 1999 7,500,000
March 31, 2000 7,500,000
June 30, 2000 7,500,000
September 30, 2000 12,500,000
December 31, 2000 12,500,000
March 31, 2001 12,500,000
June 30, 2001 12,500,000
The Company shall repay to the Banks on the
Revolving Termination Date the aggregate principal amount
of any Term Loans outstanding on such date.
(b) The Borrowers shall repay to the Banks on
the Revolving Termination Date the aggregate principal
amount of any Revolving Loans outstanding on such date.
(c) The Borrowers shall repay each Bid Loan on
the last day of the relevant Interest Period.
2.12 Interest. (a) Each Committed Loan shall bear
interest on the outstanding principal amount thereof from
the applicable Borrowing Date at a rate per annum equal to
the LIBO Rate or the Base Rate, as the case may be (and
subject to the Borrowers' right to convert to other Types
of Loans under Section 2.04), plus the Applicable Margin.
Each Bid Loan shall bear interest on the outstanding
principal amount thereof from the relevant Borrowing Date
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at a rate per annum equal to the LIBO Rate plus (or minus)
the LIBOR Bid Margin, or at the Absolute Rate, as the case
may be.
(b) Interest on each Loan shall be paid in
arrears on each Interest Payment Date. Interest shall
also be paid on the date of any prepayment of Committed
Loans under Section 2.09 or 2.10 for the portion of the
Loans so prepaid and upon payment (including prepayment)
in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Agent at
the request or with the consent of the Required Banks.
(c) Notwithstanding subsection (a) of this
Section, while any Event of Default exists or after
acceleration, the Borrowers shall pay interest (after as
well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all
outstanding Loans, at a rate per annum which is determined
by adding 3% per annum to the Applicable Margin then in
effect for such Loans; provided, however, that, on and
after the expiration of any Interest Period applicable to
any Offshore Rate Loan outstanding on the date of
occurrence of such Event of Default or acceleration, the
principal amount of such Loan shall, during the
continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin plus 3%.
(d) Anything herein to the contrary
notwithstanding, the obligations of the Borrowers to any
Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period
for which interest is computed hereunder, to the extent
(but only to the extent) that contracting for or receiving
such payment by such Bank would be contrary to the
provisions of any law applicable to such Bank limiting the
highest rate of interest that may be lawfully contracted
for, charged or received by such Bank, and in such event
the Borrowers shall pay such Bank interest at the highest
rate permitted by applicable law.
2.13 Fees. In addition to the fees described in
Section 3.08:
(a) Arrangement, Agency Fees. The Company
shall pay an arrangement fee, underwriting fee, and
certain commitment fees to the Arranger and BofA for their
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own account, and shall pay an agency fee and certain bid
auction fees to the Agent for the Agent's own account, as
required by the letter agreement between the Company and
the Arranger and Agent dated June 19, 1996 (the "Fee
Letter").
(b) Commitment Fees. The Company shall pay to
the Agent for the account of each Bank a commitment fee on
the average daily unused portion of such Bank's
Commitment, computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon
the daily utilization for that quarter as calculated by
the Agent, equal to the Commitment Fee Percentage. For
purposes of calculating utilization under this Section,
with respect to each Bank's Commitment, the making of any
Bid Loan by such Bank shall not be considered a use of a
portion of such Bank's Commitment. Such commitment fee
shall accrue from the Closing Date to the Revolving
Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter
commencing on the first such day this Agreement is
executed by the Company through the Revolving Termination
Date, with the final payment to be made on the Revolving
Termination Date; provided that, in connection with any
reduction or termination of Commitments under
Section 2.08, the accrued commitment fee calculated for
the period ending on such date shall also be paid on the
date of such reduction or termination, with the following
quarterly payment being calculated on the basis of the
period from such reduction or termination date to such
quarterly payment date. The commitment fees provided in
this subsection shall accrue at all times after the above-
mentioned commencement date, including at any time during
which one or more conditions in Article V are not met.
2.14 Computation of Fees and Interest. (a) All
computations of interest for Base Rate Committed Loans
when the Base Rate is determined by BofA's "reference
rate" and all computations of interest for Offshore
Currency Loans denominated in English pounds sterling
shall be made on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which
results in more interest being paid than if computed on
the basis of a 365-day year). Interest and fees shall
accrue during each period during which interest or such
fees are computed from the first day thereof to the last
day thereof.
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(b) For purposes of determining utilization of
each Bank's Commitment in order to calculate the
commitment fee due under Section 2.13(b), the amount of
any outstanding Offshore Currency Loan on any date shall
be determined based upon the Dollar Equivalent amount as
of the most recent Computation Date with respect to such
Offshore Currency Loan.
(c) Each determination of an interest rate or a
Dollar Equivalent amount by the Agent shall be conclusive
and binding on the Borrowers and the Banks in the absence
of manifest error. The Agent will, at the request of the
Company or any Bank, deliver to the Company or the Bank,
as the case may be, a statement showing the quotations
used by the Agent in determining any interest rate or
Dollar Equivalent Amount.
2.15 Payments by the Borrowers. (a) All payments to
be made by the Borrowers shall be made without set-off,
recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrowers, shall be
made to the Agent for the account of the Banks at the
Agent's Payment Office, and, with respect to principal of,
interest on, and any other amounts relating to, any
Offshore Currency Loan, shall be made in the Offshore
Currency in which such Loan is denominated or payable,
and, with respect to all other amounts payable hereunder,
shall be made in Dollars. Such payments shall be made in
Same Day Funds, and (i) in the case of Offshore Currency
payments, no later than such time on the dates specified
herein as may be determined by the Agent to be necessary
for such payment to be credited on such date in accordance
with normal banking procedures in the place of payment,
and (ii) in the case of any Dollar payments, no later than
10:00 a.m. (San Francisco time) on the date specified
herein. The Agent will promptly distribute to each Bank
its Pro Rata Share (or other applicable share as expressly
provided herein) of such payment in like funds as
received. Any payment received by the Agent later than
10:00 a.m. (San Francisco time), or later than the time
specified by the Agent as provided in clause (i) above (in
the case of Offshore Currency payments), shall be deemed
to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any
payment is due on a day other than a Business Day, such
payment shall be made on the following Business Day, and
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such extension of time shall in such case be included in
the computation of interest or fees, as the case may be.
(c) Unless the Agent receives notice from a
Borrower prior to the date on which any payment is due to
the Banks that the Borrower will not make such payment in
full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on
such date in Same Day Funds and the Agent may (but shall
not be so required), in reliance upon such assumption,
distribute to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent
the Borrower has not made such payment in full to the
Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest
thereon at the Federal Funds Rate or, in the case of a
payment in an Offshore Currency, the Overnight Rate, for
each day from the date such amount is distributed to such
Bank until the date repaid.
2.16 Payments by the Banks to the Agent. (a) Unless
the Agent receives notice from a Bank on or prior to the
Closing Date or, with respect to any Borrowing after the
Closing Date, at least one Business Day prior to the date
of such Committed Borrowing, that such Bank will not make
available as and when required hereunder to the Agent for
the account of a Borrower the amount of that Bank's Pro
Rata Share of the Committed Borrowing, the Agent may
assume that each Bank has made such amount available to
the Agent in Same Day Funds on the Borrowing Date and the
Agent may (but shall not be so required), in reliance upon
such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent any
Bank shall not have made its full amount available to the
Agent in Same Day Funds and the Agent in such
circumstances has made available to the Borrower such
amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent,
together with interest at the Federal Funds Rate or, in
the case of any Committed Borrowing consisting of Offshore
Currency Loans, the Overnight Rate, for each day during
such period. A notice of the Agent submitted to any Bank
with respect to amounts owing under this subsection (a)
shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent
shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not
made available to the Agent on the Business Day following
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the Borrowing Date, the Agent will notify the Borrower of
such failure to fund and, upon demand by the Agent, the
Borrower shall pay such amount to the Agent for the
Agent's account, together with interest thereon (but not
including any amounts calculated under Section 4.04) for
each day elapsed since the date of such Committed
Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Committed Loans comprising
such Committed Borrowing.
(b) The failure of any Bank to make any
Committed Loan on any Borrowing Date shall not relieve any
other Bank of any obligation hereunder to make a Committed
Loan on such Borrowing Date, but no Bank shall be
responsible for the failure of any other Bank to make the
Committed Loan to be made by such other Bank on any
Borrowing Date.
2.17 Sharing of Payments, Etc. If, other than as
expressly provided elsewhere herein, any Bank shall obtain
on account of the Committed Loans made by it any payment
(whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) in excess of its
ratable share (or other share contemplated hereunder),
such Bank shall immediately (a) notify the Agent of such
fact, and (b) purchase from the other Banks such
participations in the Committed Loans made by them as
shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided,
however, that if all or any portion of such excess payment
is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price
paid therefor, together with an amount equal to such
paying Bank's ratable share (according to the proportion
of (i) the amount of such paying Bank's required repayment
to (ii) the total amount so recovered from the purchasing
Bank) of any interest or other amount paid or payable by
the purchasing Bank in respect of the total amount so
recovered. The Borrowers agree that any Bank so
purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights
of payment (including the right of set-off, but subject to
Section 11.10) with respect to such participation as fully
as if such Bank were the direct creditor of the Borrowers
in the amount of such participation. The Agent will keep
records (which shall be conclusive and binding in the
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absence of manifest error) of participations purchased
under this Section and will in each case notify the Banks
following any such purchases or repayments.
2.18 Guaranties. (a) The Obligations shall be
unconditionally, jointly and severally guaranteed by the
Material Subsidiaries (other than the Excluded Subsidiary,
subject to Section 7.14, and other than AETC Limited)
pursuant to one or more Subsidiary Guaranties.
(b) The Obligations of the Subsidiary Borrowers
shall be unconditionally guaranteed by the Company
pursuant to the Company Guaranty.
(c) Notwithstanding anything to the contrary in
this Agreement, each Borrower, in its capacity as a
Borrower, shall be severally liable for any Credit
Extension to it under this Agreement, and the liability of
the Company or any Subsidiary for any Credit Extensions to
a Borrower under this Agreement, other than the Company as
a Borrower or such Subsidiary as a Subsidiary Borrower,
shall be solely by virtue of a Company Guaranty or a
Subsidiary Guaranty.
2.19 Additional Subsidiary Borrowers. From time to
time, the Company may designate additional Subsidiaries as
Subsidiary Borrowers by delivering to the Agent a fully-
executed original certificate in the form of Exhibit M,
together with all documents required by such certificate
(in sufficient number for the Agent and each of the
Banks), whereupon, upon the Agent's acknowledgment of
receipt of same, such designated Subsidiaries shall also
be deemed Subsidiary Borrowers for all purposes hereof.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility. (a) On the
terms and conditions set forth herein (i) the Issuing Bank
agrees, (A) from time to time on any Business Day during
the period from the Closing Date to the Revolving
Termination Date to issue Letters of Credit for the
account of the Borrowers, and to amend or renew Letters of
Credit previously issued by it, in accordance with
subsections 3.02(c) and 3.02(d), and (B) to honor drafts
under the Letters of Credit; and (ii) the Banks severally
agree to participate in Letters of Credit Issued for the
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account of the Borrowers; provided, that the Issuing Bank
shall not be obligated to Issue, and no Bank shall be
obligated to participate in, any Letter of Credit if as of
the date of Issuance of such Letter of Credit (the
"Issuance Date") (1) the Effective Amount of all L/C
Obligations plus the Effective Amount of all Revolving
Loans, Term Loans and Bid Loans exceeds the combined
Commitments, (2) the participation of any Bank in the
Effective Amount of all L/C Obligations plus the Effective
Amount of the Revolving Loans and Term Loans of such Bank
exceeds such Bank's Commitment, or (3) the Effective
Amount of L/C Obligations exceeds the L/C Commitment.
Within the foregoing limits, and subject to the other
terms and conditions hereof, the Borrowers' ability to
obtain Letters of Credit shall be fully revolving, and,
accordingly, the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon
and reimbursed.
(b) The Issuing Bank is under no obligation to
Issue any Letter of Credit if:
(i) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its
terms purport to enjoin or restrain the Issuing Bank
from Issuing such Letter of Credit, or any Requirement
of Law applicable to the Issuing Bank or any request
or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the Issuance of letters of
credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Bank with
respect to such Letter of Credit any restriction,
reserve or capital requirement (for which the Issuing
Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the
Issuing Bank any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which
the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank has received written
notice from any Bank, the Agent or any Borrower, on or
prior to the Business Day prior to the requested date
of Issuance of such Letter of Credit, that one or more
of the applicable conditions contained in Article V is
not then satisfied;
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(iii) the expiry date of any requested
Letter of Credit is (A) more than one year after the
date of Issuance, unless the Required Banks have
approved such expiry date in writing, or (B) later
than 30 days prior to the Revolving Termination Date,
unless all of the Banks have approved such expiry date
in writing;
(iv) the expiry date of any requested
Letter of Credit is prior to the maturity date of any
financial obligation to be supported by the requested
Letter of Credit;
(v) any requested Letter of Credit does not
provide for drafts, or is not otherwise in form and
substance acceptable to the Issuing Bank, or the
Issuance of a Letter of Credit shall violate any
applicable policies of the Issuing Bank;
(vi) any standby Letter of Credit is for
the purpose of supporting the issuance of any letter
of credit by any other Person; or
(vii) such Letter of Credit is in a face
amount less than $1,000,000, for commercial
documentary letters of credit, or $5,000,000, for
standby letters of credit, or to be denominated in a
currency other than Dollars.
3.02 Issuance, Amendment and Renewal of Letters of
Credit. (a) Each Letter of Credit shall be issued upon
the irrevocable written request of the Borrower received
by the Issuing Bank (with a copy sent by the Company to
the Agent) at least four days (or such shorter time as the
Issuing Bank may agree in a particular instance in its
sole discretion) prior to the proposed date of issuance.
Each such request for issuance of a Letter of Credit shall
be by facsimile, confirmed immediately in an original
writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Issuing
Bank: (i) the proposed date of issuance of the Letter of
Credit (which shall be a Business Day); (ii) the face
amount of the Letter of Credit; (iii) the expiry date of
the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by
the beneficiary of the Letter of Credit in case of any
drawing thereunder; (vi) the full text of any certificate
to be presented by the beneficiary in case of any drawing
thereunder; (vii) the applicable Borrower; and (viii) such
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other matters as the Issuing Bank may require. The Agent
will promptly notify the Banks of the receipt by it of any
L/C Application.
(b) At least two Business Days prior to the
Issuance of any Letter of Credit, the Issuing Bank will
confirm with the Agent (by telephone or in writing) that
the Agent has received a copy of the L/C Application or
L/C Amendment Application from a Borrower and, if not, the
Issuing Bank will provide the Agent with a copy thereof.
Unless the Issuing Bank has received notice on or before
the Business Day immediately preceding the date the
Issuing Bank is to issue a requested Letter of Credit from
the Agent (A) directing the Issuing Bank not to issue such
Letter of Credit because such issuance is not then
permitted under subsection 3.01(a) as a result of the
limitations set forth in clauses (1) through (3) thereof
or subsection 3.01(b)(ii); or (B) that one or more
conditions specified in Article V are not then satisfied;
then, subject to the terms and conditions hereof, the
Issuing Bank shall, on the requested date, issue a Letter
of Credit for the account of the Borrower in accordance
with the Issuing Bank's usual and customary business
practices.
(c) From time to time while a Letter of Credit
is outstanding and prior to the Revolving Termination
Date, the Issuing Bank will, upon the written request of
the applicable Borrower received by the Issuing Bank (with
a copy sent by the Borrower to the Agent) at least four
days (or such shorter time as the Issuing Bank may agree
in a particular instance in its sole discretion) prior to
the proposed date of amendment, amend any Letter of Credit
issued by it. Each such request for amendment of a Letter
of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in the form of an
L/C Amendment Application and shall specify in form and
detail satisfactory to the Issuing Bank: (i) the Letter
of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment;
and (iv) such other matters as the Issuing Bank may
require. The Issuing Bank shall be under no obligation to
amend any Letter of Credit if: (A) the Issuing Bank would
have no obligation at such time to issue such Letter of
Credit in its amended form under the terms of this
Agreement; or (B) the beneficiary of any such letter of
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Credit does not accept the proposed amendment to the
Letter of Credit. The Agent will promptly notify the
Banks of the receipt by it of any L/C Amendment
Application.
(d) The Issuing Bank and the Banks agree that,
while a Letter of Credit is outstanding and prior to the
Revolving Termination Date, at the option of the
applicable Borrower and upon the written request of the
Borrower received by the Issuing Bank (with a copy sent by
the Borrower to the Agent) at least five days (or such
shorter time as the Issuing Bank may agree in a particular
instance in its sole discretion) prior to the proposed
date of notification of renewal, the Issuing Bank shall be
entitled to authorize the automatic renewal of any Letter
of Credit issued by it. Each such request for renewal of
a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, in the form of an L/C
Amendment Application, and shall specify in form and
detail satisfactory to the Issuing Bank: (i) the Letter of
Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which
shall be a Business Day); (iii) the revised expiry date of
the Letter of Credit; and (iv) such other matters as the
Issuing Bank may require. The Issuing Bank shall be under
no obligation so to renew any Letter of Credit if: (A) the
Issuing Bank would have no obligation at such time to
issue or amend such Letter of Credit in its renewed form
under the terms of this Agreement; or (B) the beneficiary
of any such Letter of Credit does not accept the proposed
renewal of the Letter of Credit. If any outstanding
Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof
receives notice from the Issuing Bank that such Letter of
Credit shall not be renewed, and if at the time of renewal
the Issuing Bank would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance
with this subsection 3.02(e) upon the request of the
Borrower but the Issuing Bank shall not have received any
L/C Amendment Application from the Borrower with respect
to such renewal or other written direction by the Company
with respect thereto, the Issuing Bank shall nonetheless
be permitted to allow such Letter of Credit to renew, and
the Company and the Banks hereby authorize such renewal,
and, accordingly, the Issuing Bank shall be deemed to have
received an L/C Amendment Application from the Borrower
requesting such renewal.
(e) The Issuing Bank may, at its election (or as
required by the Agent at the direction of the Required
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Banks), deliver any notices of termination or other
communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order
to cause the expiry date of such Letter of Credit to be a
date not later than the Revolving Termination Date.
(f) This Agreement shall control in the event of
any conflict with any L/C-Related Document (other than any
Letter of Credit).
(g) The Issuing Bank will also deliver to the
Agent, concurrently or promptly following its delivery of
a Letter of Credit, or amendment to or renewal of a Letter
of Credit, to an advising bank or a beneficiary, a true
and complete copy of each such Letter of Credit or
amendment to or renewal of a Letter of Credit.
3.03 Risk Participations, Drawings and
Reimbursements.
(a) Immediately upon the Issuance of each Letter
of Credit, each Bank shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from
the Issuing Bank a participation in such Letter of Credit
and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Bank, times (ii)
the maximum amount available to be drawn under such Letter
of Credit and the amount of such drawing, respectively.
For purposes of subsection 2.01(b), each Issuance of a
Letter of Credit shall be deemed to utilize the Commitment
of each Bank by an amount equal to the amount of such
participation.
(b) In the event of any request for a drawing
under a Letter of Credit by the beneficiary or transferee
thereof, the Issuing Bank will promptly notify the
applicable Borrower. The Borrower shall reimburse the
Issuing Bank prior to 10:00 a.m. (San Francisco time), on
each date that any amount is paid by the Issuing Bank
under any Letter of Credit (each such date, an "Honor
Date"), in an amount equal to the amount so paid by the
Issuing Bank. In the event the Borrower fails to
reimburse the Issuing Bank for the full amount of any
drawing under any Letter of Credit by 10:00 a.m. (San
Francisco time) on the Honor Date, the Issuing Bank will
promptly notify the Agent and the Agent will promptly
notify each Bank thereof, and the Borrower shall be deemed
to have requested that Revolving Loans consisting of Base
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Rate Committed Loans be made by the Banks to be disbursed
on the Honor Date under such Letter of Credit, subject to
the amount of the unutilized portion of the Revolving
Commitment and subject to the conditions set forth in
Section 5.02. Any notice given by the Issuing Bank or the
Agent pursuant to this subsection 3.03(b) may be oral if
immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of
such notice.
(c) Each Bank shall upon any notice pursuant to
subsection 3.03(b) make available to the Agent for the
account of the relevant Issuing Bank an amount in Dollars
and in immediately available funds equal to its Pro Rata
Share of the amount of the drawing, whereupon the
participating Banks shall (subject to subsection 3.03(d))
each be deemed to have made a Revolving Loan consisting of
a Base Rate Committed Loan to the Borrower in that amount.
If any Bank so notified fails to make available to the
Agent for the account of the Issuing Bank the amount of
such Bank's Pro Rata Share of the amount of the drawing by
no later than 12:00 noon (San Francisco time) on the Honor
Date, then interest shall accrue on such Bank's obligation
to make such payment, from the Honor Date to the date such
Bank makes such payment, at a rate per annum equal to the
Federal Funds Rate in effect from time to time during such
period. The Agent will promptly give notice of the
occurrence of the Honor Date, but failure of the Agent to
give any such notice on the Honor Date or in sufficient
time to enable any Bank to effect such payment on such
date shall not relieve such Bank from its obligations
under this Section 3.03.
(d) With respect to any unreimbursed drawing
that is not converted into Revolving Loans consisting of
Base Rate Committed Loans to the Borrower in whole or in
part, because of the Borrower failure to satisfy the
conditions set forth in Section 5.02 or for any other
reason, the Company shall be deemed to have incurred from
the Issuing Bank an L/C Borrowing in the amount of such
drawing, which L/C Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at
a rate per annum equal to the Base Rate plus the
Applicable Margin plus 2% per annum, and each Bank's
payment to the Issuing Bank pursuant to subsection 3.03(c)
shall be deemed payment in respect of its participation in
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such L/C Borrowing and shall constitute an L/C Advance
from such Bank in satisfaction of its participation
obligation under this Section 3.03.
(e) Each Bank's obligation in accordance with
this Agreement to make the Revolving Loans or L/C
Advances, as contemplated by this Section 3.03, as a
result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the
Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may
have against the Issuing Bank, the Borrowers or any other
Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a
Material Adverse Effect; or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to
any of the foregoing; provided, however, that each Bank's
obligation to make Revolving Loans under this Section 3.03
is subject to the conditions set forth in Section 5.02.
3.04 Repayment of Participations. (a) Upon (and only
upon) receipt by the Agent for the account of the Issuing
Bank of immediately available funds from a Borrower (i) in
reimbursement of any payment made by the Issuing Bank
under the Letter of Credit with respect to which any Bank
has paid the Agent for the account of the Issuing Bank for
such Bank's participation in the Letter of Credit pursuant
to Section 3.03 or (ii) in payment of interest thereon,
the Agent will pay to each Bank, in the same funds as
those received by the Agent for the account of the Issuing
Bank, the amount of such Bank's Pro Rata Share of such
funds, and the Issuing Bank shall receive the amount of
the Pro Rata Share of such funds of any Bank that did not
so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required
at any time to return to any Borrower, or to a trustee,
receiver, liquidator, custodian, or any official in any
Insolvency Proceeding, any portion of the payments made by
the Borrower to the Agent for the account of the Issuing
Bank pursuant to subsection 3.04(a) in reimbursement of a
payment made under the Letter of Credit or interest or fee
thereon, each Bank shall, on demand of the Agent,
forthwith return to the Agent or the Issuing Bank the
amount of its Pro Rata Share of any amounts so returned by
the Agent or the Issuing Bank plus interest thereon from
the date such demand is made to the date such amounts are
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returned by such Bank to the Agent or the Issuing Bank, at
a rate per annum equal to the Federal Funds Rate in effect
from time to time.
3.05 Role of the Issuing Bank. (a) Each Bank and the
Borrowers agree that, in paying any drawing under a Letter
of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any
sight draft and certificates expressly required by the
Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority
of the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the
respective correspondents, participants or assignees of
the Issuing Bank shall be liable to any Bank for: (i) any
action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the
Required Banks, as applicable); (ii) any action taken or
omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any L/C-Related Document.
(c) Each Borrower hereby assumes all risks of
the acts or omissions of any beneficiary or transferee
with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and
shall not, preclude any Borrower pursuing such rights and
remedies as it may have against the beneficiary or
transferee at law or under any other agreement. No Agent-
Related Person, nor any of the respective correspondents,
participants or assignees of the Issuing Bank, shall be
liable or responsible for any of the matters described in
clauses (i) through (vii) of Section 3.06; provided,
however, anything in such clauses to the contrary
notwithstanding, that a Borrower may have a claim against
the Issuing Bank, and the Issuing Bank may be liable to
the Borrower, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary,
damages suffered by the Borrower which the Borrower proves
were caused by the Issuing Bank's willful misconduct or
gross negligence or the Issuing Bank's willful failure to
pay under any Letter of Credit after the presentation to
it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a
Letter of Credit. In furtherance and not in limitation of
the foregoing: (i) the Issuing Bank may accept documents
that appear on their face to be in order, without
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responsibility for further investigation, regardless of
any notice or information to the contrary; and (ii) the
Issuing Bank shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a 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.
3.06 Obligations Absolute. The obligations of the
Borrowers under this Agreement and any L/C-Related
Document to reimburse the Issuing Bank for a drawing under
a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving
Loans, shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under
all circumstances, including the following:
(i) any lack of validity or enforceability
of this Agreement or any L/C-Related Document;
(ii) any change in the time, manner or
place of payment of, or in any other term of, all or
any of the obligations of the Borrowers in respect of
any Letter of Credit or any other amendment or waiver
of or any consent to departure from all or any of the
L/C-Related Documents;
(iii) the existence of any claim, set-off,
defense or other right that any Borrower may have at
any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the
Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or
any unrelated transaction;
(iv) any draft, demand, certificate or
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; or any loss
or delay in the transmission or otherwise of any
document required in order to make a drawing under any
Letter of Credit;
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(v) any payment by the Issuing Bank under
any Letter of Credit against presentation of a draft
or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by
the Issuing Bank under any Letter of Credit to any
Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other
representative of or successor to any beneficiary or
any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-
perfection of any collateral, or any release or
amendment or waiver of or consent to departure from
any other guarantee, for all or any of the obligations
of any Borrower in respect of any Letter of Credit; or
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a
discharge of, any Borrower or a guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of
the Agent, (A) if the Issuing Bank has honored any full or
partial drawing request on any Letter of Credit and such
drawing has resulted in an L/C Borrowing hereunder, or (B)
if, as of the Revolving Termination Date, any Letters of
Credit may for any reason remain outstanding and partially
or wholly undrawn, or (ii) the occurrence of the
circumstances described in subsection 2.10(b) requiring
the Company to Cash Collateralize Letters of Credit, then,
the Company shall immediately Cash Collateralize the L/C
Obligations in an amount equal to such L/C Obligations.
3.08 Letter of Credit Fees. (a) The Company shall
pay to the Agent for the account of each of the Banks a
letter of credit fee with respect to the Letters of Credit
equal to (i) a per annum percentage equal to the
Applicable Margin with respect to Offshore Rate Loans then
in effect times the average daily maximum amount available
to be drawn of all outstanding standby Letters of Credit
plus (ii) a per annum percentage equal to the Commitment
Fee Percentage then in effect times the average daily
maximum amount available to be drawn of all outstanding
commercial documentary Letters of Credit, computed in each
case on a quarterly basis in arrears on the last Business
Day of each calendar quarter based upon Letters of Credit
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outstanding for that quarter as calculated by the Agent.
Such letter of credit fees shall be due and payable
quarterly in arrears on the last Business Day of each
calendar quarter during which Letters of Credit are
outstanding, commencing on the first such quarterly date
to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the
final payment to be made on the Revolving Termination Date
(or such later expiration date).
(b) The Company shall pay to the Issuing Bank a
letter of credit fronting fee for each Letter of Credit
Issued by the Issuing Bank equal to 0.1250% of the face
amount (or increased face amount, as the case may be) of
such Letter of Credit. Such Letter of Credit fronting fee
shall be due and payable on each date of Issuance of a
Letter of Credit.
(c) The Company shall pay or cause the
applicable Borrower to pay to the Issuing Bank from time
to time on demand the normal issuance, presentation,
amendment and other processing fees, and other standard
costs and charges, of the Issuing Bank relating to letters
of credit as from time to time in effect.
3.09 Uniform Customs and Practice. The Uniform
Customs and Practice for Documentary Credits as published
by the International Chamber of Commerce most recently at
the time of issuance of any Letter of Credit shall (unless
otherwise expressly provided in the Letters of Credit)
apply to the Letters of Credit.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes. (a) Any and all payments by the
Borrowers to each Bank or the Agent under this Agreement
and any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any Taxes.
In addition, the Borrowers shall pay all Other Taxes.
(b) If a Borrower shall be required by law to
deduct or withhold any Taxes, Other Taxes or Further Taxes
from or in respect of any sum payable hereunder to any
Bank or the Agent, then:
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(i) the sum payable shall be increased as
necessary so that, after making all required
deductions and withholdings (including deductions and
withholdings applicable to additional sums payable
under this Section), such Bank or the Agent, as the
case may be, receives and retains an amount equal to
the sum it would have received and retained had no
such deductions or withholdings been made;
(ii) the Borrower shall make such
deductions and withholdings;
(iii) the Borrower shall pay the full
amount deducted or withheld to the relevant taxing
authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay to each
Bank or the Agent for the account of such Bank, at the
time interest is paid, Further Taxes in the amount
that the respective Bank specifies as necessary to
preserve the after-tax yield the Bank would have
received if such Taxes, Other Taxes or Further Taxes
had not been imposed.
(c) Each Borrower agrees to indemnify and hold
harmless each Bank and the Agent for the full amount of
(i) Taxes, (ii) Other Taxes, and (iii) Further Taxes in
the amount that the respective Bank specifies as necessary
to preserve the after-tax yield the Bank would have
received if such Taxes, Other Taxes or Further Taxes had
not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written
demand therefor.
(d) Within 30 days after the date of any payment
by a Borrower of Taxes, Other Taxes or Further Taxes, the
Borrower shall furnish to each Bank or the Agent the
original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory
to such Bank or the Agent.
(e) If a Borrower is required to pay any amount
to any Bank or the Agent pursuant to subsection (b) or (c)
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of this Section, then such Bank shall use reasonable
efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending
Office so as to eliminate any such additional payment by
the Borrower which may thereafter accrue, if such change
in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
4.02 Illegality. (a) If any Bank determines that
the introduction of any Requirement of Law, or any change
in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Bank
or its applicable Lending Office to make Offshore Rate
Loans (including Offshore Rate Loans in any Applicable
Currency), then, on notice thereof by the Bank to the
Borrowers through the Agent, any obligation of that Bank
to make Offshore Rate Loans (including in respect of any
LIBOR Bid Loan as to which a Borrower has accepted such
Bank's Competitive Bid, but as to which the Borrowing Date
has not arrived) shall be suspended until the Bank
notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer
exist.
(b) If a Bank determines that it is unlawful for
such Bank to maintain any Offshore Rate Loan, each
applicable Borrower shall, upon its receipt of notice of
such fact and demand from such Bank (with a copy to the
Agent), prepay in full such Offshore Rate Loans of that
Bank then outstanding, together with interest accrued
thereon and amounts required under Section 4.04, either on
the last day of the Interest Period thereof, if the Bank
may lawfully continue to maintain such Offshore Rate Loans
to such day, or immediately, if the Bank may not lawfully
continue to maintain such Offshore Rate Loan. If a
Borrower is required to so prepay any Offshore Rate
Committed Loan, then concurrently with such prepayment,
the Borrower shall borrow from the affected Bank, in the
amount of such repayment, a Base Rate Committed Loan.
(c) If the obligation of any Bank to make or
maintain Offshore Rate Committed Loans has been so
terminated or suspended, the Borrowers may elect, by
giving notice to the Bank, through the Agent, that all
Loans which would otherwise be made by the Bank as
Offshore Rate Committed Loans shall be instead Base Rate
Committed Loans.
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4.03 Increased Costs and Reduction of Return. (a)
If any Bank determines that, due to either (i) the
introduction of or any change in or in the interpretation
of any law or regulation or (ii) the compliance by that
Bank with any guideline or request from any central bank
or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to
such Bank of agreeing to make or making, funding or
maintaining any Offshore Rate Committed Loans or
participating in Letters of Credit, or, in the case of the
Issuing Bank, any increase in the cost to the Issuing Bank
of agreeing to issue, issuing or maintaining any Letter of
Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit,
then the Borrowers shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to
be sent to the Agent), pay to the Agent for the account of
such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i)
the introduction of any Capital Adequacy Regulation, (ii)
any change in any Capital Adequacy Regulation, (iii) any
change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Bank (or
its Lending Office) or any corporation controlling the
Bank with any Capital Adequacy Regulation, affects or
would affect the amount of capital required or expected to
be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital
adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as
a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of
such Bank to the Borrowers through the Agent, the
Borrowers shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to
compensate the Bank for such increase.
4.04 Funding Losses. Each Borrower shall reimburse
each Bank and hold each Bank harmless from any loss or
expense which the Bank may sustain or incur as a
consequence of:
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(a) the failure of the Borrower to make on a
timely basis any payment of principal of any Offshore Rate
Loan;
(b) the failure of the Borrower to borrow,
continue or convert a Committed Loan after the Borrower
has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any
prepayment of any Committed Loan in accordance with any
notice delivered under Section 2.09;
(d) the prepayment (including pursuant to
Section 2.09 or 2.10) or other payment (including after
acceleration thereof) of any Offshore Rate Loan or
Absolute Rate Bid Loan on a day that is not the last day
of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04
of any Offshore Rate Committed Loan to a Base Rate
Committed Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss or expense arising from the
liquidation or reemployment of funds obtained by it to
maintain its Offshore Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained
or from charges relating to any Offshore Currency Loans.
For purposes of calculating amounts payable by a Borrower
to the Banks under this Section and under subsection
4.03(a), each Offshore Rate Committed Loan made by a Bank
(and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been
funded at the LIBO Rate for such Offshore Rate Loan by a
matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan
is in fact so funded.
4.05 Inability to Determine Rates. If the Agent
determines that for any reason adequate and reasonable
means do not exist for determining the LIBO Rate for any
requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the LIBO Rate applicable
pursuant to subsection 2.12(a) for any requested Interest
Period with respect to a proposed Offshore Rate Loan does
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not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will promptly so notify the
Borrowers and each Bank. Thereafter, the obligation of
the Banks to make or maintain Offshore Rate Loans
hereunder shall be suspended until the Agent revokes such
notice in writing. Upon receipt of such notice, any
Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the
Borrower does not revoke such Notice, the Banks shall
make, convert or continue the Committed Loans, as proposed
by the Borrower, in the amount specified in the applicable
notice submitted by the Borrower, but such Committed Loans
shall be made, converted or continued as Base Rate
Committed Loans instead of Offshore Rate Committed Loans.
In the case of any Offshore Currency Loans, the Borrowing
or continuation shall be in an aggregate amount equal to
the Dollar Equivalent amount of the originally requested
Borrowing or continuation in the Offshore Currency, and to
that end any outstanding Offshore Currency Loans which are
the subject of any continuation shall be redenominated and
converted into Revolving Loans which are Base Rate
Committed Loans in Dollars with effect from the last day
of the Interest Period with respect to any such Offshore
Currency Loans.
4.06 Reserves on Offshore Rate Committed Loans. The
Borrowers shall pay to each Bank, as long as such Bank
shall be required under regulations of the FRB to maintain
reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently
known as "Eurocurrency liabilities"), and, in respect of
any Offshore Currency Loans, under any applicable
regulations of the central bank or other relevant
Governmental Authority in the country in which the
Offshore Currency of such Offshore Rate Loan circulates
(except to the extent already included in the calculation
of the LIBO Rate for Offshore Currency Loans denominated
in English pounds sterling), additional costs on the
unpaid principal amount of each Offshore Rate Committed
Loan equal to the actual costs of such reserves allocated
to such Committed Loan by the Bank (as determined by the
Bank in good faith, which determination shall be
conclusive absent manifest error), payable on each date on
which interest is payable on such Committed Loan, provided
the Borrower shall have received at least 15 days' prior
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written notice (with a copy to the Agent) of such
additional costs from the Bank. If a Bank fails to give
notice 15 days prior to the relevant Interest Payment
Date, such additional costs shall be payable 15 days from
receipt of such notice.
4.07 Certificates of Banks. Any Bank claiming
reimbursement or compensation under this Article III shall
deliver to the applicable Borrower (with a copy to the
Agent) a certificate setting forth in reasonable detail
the amount payable to the Bank hereunder and such
certificate shall be conclusive and binding on the
Borrower in the absence of manifest error.
4.08 Substitution of Banks. Upon the receipt by a
Borrower from any Bank (an "Affected Bank") of a claim for
compensation under Section 4.03, the Company may: (i)
request the Affected Bank to use its commercially
reasonable efforts (without any obligation to make any
expenditure of funds) to obtain a replacement bank or
financial institution satisfactory to the Company to
acquire and assume all or a ratable part of all of such
Affected Bank's Loans and Commitment (a "Replacement
Bank"); provided, that such Affected Bank shall have no
liability if it is unable to obtain such a Replacement
Bank; (ii) request one more of the other Banks to acquire
and assume all or part of such Affected Bank's Loans and
Commitment; provided, that no Bank shall have any
obligation to do so; or (iii) designate a Replacement
Bank. Any such designation of a Replacement Bank under
clause (i) or (iii) shall be subject to the prior written
consent of the Agent (which consent shall not be
unreasonably withheld or delayed). Any Replacement Bank
shall assume the Loans, the Commitments and the other
rights and obligations of such Affected Bank in accordance
with the procedures set forth in Section 11.08.
4.09 Survival. The agreements and obligations of the
Borrowers in this Article IV shall survive the payment of
all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The
obligation of each Bank to make its initial Credit
Extension hereunder is subject to the condition that
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the Agent shall have received on or before the Closing
Date all of the following, in form and substance
satisfactory to the Agent and each Bank, and in sufficient
copies for each Bank:
(a) Credit Agreement; Notes; Guaranties. (i)
This Agreement and, to the extent requested by any Bank,
the Note(s), executed by each party thereto; (ii) the
Subsidiary Guaranty, executed by each Material Subsidiary
(other than the Excluded Subsidiary); and (iii) the
Company Guaranty, executed by the Company;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board
of directors or similar governing body of each
Borrower and each Material Subsidiary (other than the
Excluded Subsidiary) authorizing the transactions
contemplated hereby, certified as of the Closing Date
by the Secretary or an Assistant Secretary of such
Person; and
(ii) A certificate of the Secretary or
Assistant Secretary of each Borrower and each Material
Subsidiary (other than the Excluded Subsidiary)
certifying the names and true signatures of the
officers of such Person authorized to execute, deliver
and perform, as applicable, this Agreement, the
Company Guaranty, the Subsidiary Guaranty and all
other Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each
of the following documents:
(i) the articles or certificate of
incorporation and the bylaws or similar governing
documents of each Borrower and each Material
Subsidiary (other than the Excluded Subsidiary) as in
effect on the Closing Date, certified by the Secretary
or Assistant Secretary of such Person as of the
Closing Date; and
(ii) a status certificate for the Company
from the Secretary of State of Oregon, a letter of
good standing from the Registrar of Companies for AETC
Limited, and a similar certificate for each Material
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Subsidiary (other than the Excluded Subsidiary) from
the Secretary of State or similar applicable
Governmental Authority of its state of incorporation;
(d) Legal Opinions. An opinion of Stoel Rives
LLP, counsel to the Company and addressed to the Agent and
the Banks, substantially in the form of Exhibit D-1 and an
opinion of Edge & Ellison, English counsel to AETC Limited
and addressed to the Agent and the Banks, substantially in
the form of Exhibit D-2;
(e) Payment of Fees. Evidence of payment by the
Company of all accrued and unpaid fees, costs and expenses
to the extent then due and payable on the Closing Date,
together with reasonable Attorney Costs of BofA to the
extent invoiced prior to or on the Closing Date, including
any such costs, fees and expenses arising under or
referenced in Sections 2.13 and 11.04;
(f) Certificate. A certificate signed by a
Responsible Officer and similar officer of each Material
Subsidiary (other than the Excluded Subsidiary) and of
AETC Limited, dated as of the Closing Date, stating that:
(i) the representations and warranties
contained in Article VI or in the Subsidiary Guaranty
or in the Company Guaranty, as applicable, are true
and correct on and as of such date, as though made on
and as of such date;
(ii) no Default or Event of Default exists
or would result from the execution and delivery of the
Loan Documents to which each Borrower and each
Material Subsidiary is a party;
(iii) there has occurred since March 31,
1996, no event or circumstance that has resulted or
could reasonably be expected to result in a Material
Adverse Effect; and
(iv) in the case of the certificate from a
Responsible Officer, closing of the purchase, for a
purchase price not in excess of $325,000,000, of
Newflo has occurred or will occur simultaneously with
the closing under this Agreement and that,
simultaneously with the closing hereunder, all
Indebtedness of Newflo (other than Indebtedness
permitted under Section 8.05) will have been paid off
and satisfied;
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(g) Prior Credit Agreement. Evidence
satisfactory to the Agent that the commitments to extend
credit under the Credit Agreement dated as of February 29,
1996 among the Company, BofA as agent, The Bank of Nova
Scotia and Wachovia Bank of Georgia, N.A., as co-agents,
and the other financial institutions party thereto have
been terminated and that all principal, interest, charges
and fees due thereunder have been paid or that
arrangements satisfactory to the Agent for the payment
thereof have been made by the Company; the Company and
each Bank party hereto that is a party to such Credit
Agreement acknowledging that such commitments shall be
terminated simultaneously with the closing hereunder;
(h) AETC Note. Evidence satisfactory to the
Agent that all principal outstanding under and interest
thereon and any other sums due under that certain
45,000,000 (GBP) Promissory Note dated July 15, 1996 from
AETC Limited to the order of BofA have been paid or that
arrangements satisfactory to the Agent for the payment
thereof have been made by the Company; and
(i) Other Documents. Such other approvals,
opinions, documents or materials (including those relating
to the purchase of Newflo) as the Agent or any Bank may
reasonably request.
5.02 Conditions to All Credit Extensions. The
obligation of each Bank to make any Committed Loan to be
made by it, and the obligation of any Bank to make any Bid
Loan as to which a Borrower has accepted the relevant
Competitive Bid (including its initial Loan), or to
continue or convert any Committed Loan under Section 2.04,
and the obligation of the Issuing Bank to Issue any Letter
of Credit (including the initial Letter of Credit) is
subject to the satisfaction of the following conditions
precedent on the relevant disbursement date,
Conversion/Continuation Date, or Issuance Date:
(a) Notice of Borrowing or
Conversion/Continuation, Application. As to any Committed
Loan, the Agent shall have received (with, in the case of
the initial Loan only, a copy for each Bank) a Notice of
Borrowing or a Notice of Conversion/Continuation, as
applicable, or in the case of any Issuance of any Letter
of Credit, the Issuing Bank and the Agent shall have
received an L/C Application or L/C Amendment Application,
as required under Section 3.02;
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(b) Continuation of Representations and
Warranties. The representations and warranties in Article
VI and in the Subsidiary Guaranty(ies) and the Company
Guaranty shall be true and correct in all material
respects on and as of such Borrowing Date,
Conversion/Continuation Date or Issuance Date with the
same effect as if made on and as of such disbursement
date, Conversion/Continuation Date or Issuance Date; and
(c) No Existing Default. No Default or
Event of Default shall exist or shall result from such
Borrowing, continuation or conversion, or Issuance.
Each Notice of Borrowing, Notice of
Conversion/Continuation, Competitive Bid Request, L/C
Application and L/C Amendment Application submitted by a
Borrower hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of each
such notice or request and as of each disbursement date,
Conversion/Continuation Date or Issuance Date, as
applicable, that the conditions in this Section 5.02 are
satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants for itself to
the Agent and each Bank that:
6.01 Corporate Existence and Power. Each Borrower
and each of its Subsidiaries:
(a) is a corporation duly organized, validly
existing and, if applicable in the jurisdiction of its
incorporation, in good standing under the laws of the
jurisdiction of its incorporation;
(b) (i) has the power and authority and all
material governmental licenses, authorizations, consents
and approvals to own its assets and carry on its business
and (ii) has the power and authority and all governmental
licenses, authorizations, consents and approvals to
execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified as a foreign corporation
and is licensed and in good standing under the laws of
each jurisdiction where its ownership, lease or operation
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of property or the conduct of its business requires such
qualification or license; and
(d) is in compliance with all material
Requirements of Law.
6.02 Corporate Authorization; No Contravention. The
execution, delivery and performance by each Borrower of
this Agreement and each other Loan Document to which it is
a party have been duly authorized by all necessary
corporate action, and do not and will not:
(a) contravene the terms of any of the
Borrower's Organization Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any
document evidencing any Contractual Obligation to which
the Borrower is a party or any order, injunction, writ or
decree of any Governmental Authority to which the Borrower
or its property is subject; or
(c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval,
consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is
necessary or required in connection with the execution,
delivery or performance by, or enforcement against, the
Borrowers of the Agreement or any other Loan Document.
6.04 Binding Effect. This Agreement and each other
Loan Document to which the Borrower is a party constitute
the legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their
respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to
enforceability.
6.05 Litigation. Except as specifically disclosed on
Schedule 6.05, there are no actions, suits, proceedings,
claims or disputes pending, or to the best knowledge of
the Borrower, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental
Authority, against the Borrower or its Subsidiaries or any
of their respective properties which:
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(a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or
(b) if determined adversely to the Borrower or
its Subsidiaries, would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary
restraining order or any order of any nature has been
issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any other Loan
Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein
provided.
6.06 No Default. No Default or Event of Default
exists or would result from the incurring of any
Obligations by the Borrowers. As of the Closing Date, no
Borrower nor any Subsidiary is in default under or with
respect to any Contractual Obligation in any respect
which, individually or together with all such defaults,
could reasonably be expected to have a Material Adverse
Effect, or that would, if such default had occurred after
the Closing Date, create an Event of Default under
subsection 9.01(e).
6.07 ERISA Compliance.
(a) Except as specifically disclosed on Schedule
6.07, each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and
other federal or state law. Each Plan which is intended
to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS and to the
best knowledge of the Company, nothing has occurred which
would cause the loss of such qualification. The Company
and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the
Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section
412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best
knowledge of Company, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably
be expected to result in a Material Adverse Effect. There
has been no prohibited transaction or violation of the
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fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) except as specifically
disclosed on Schedule 6.07, no Pension Plan has any
Unfunded Pension Liability; (iii) neither the Company nor
any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the
Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event
has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Company nor any
ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The
proceeds of the Loans and the Letters of Credit are to be
used solely for the purposes set forth in and permitted by
Section 7.12 and Section 8.07. None of the Borrowers nor
any Subsidiary is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
6.09 Title to Properties. Each Borrower and each
Subsidiary have good record and marketable title in fee
simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of
their respective businesses, except for such defects in
title as could not, individually or in the aggregate, have
a Material Adverse Effect. As of the Closing Date, the
property of each Borrower and its Subsidiaries is subject
to no Liens, other than Permitted Liens.
6.10 Taxes. The Company and its Subsidiaries have
filed all Federal and other material tax returns and
reports required to be filed, and have paid all Federal
and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable,
except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves
have been provided in accordance with GAAP. There is no
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proposed tax assessment against any Borrower or any
Subsidiary that would, if made, have a Material Adverse
Effect.
6.11 Financial Condition. (a) The audited
consolidated financial statements of the Company and its
Subsidiaries as at March 31, 1996 and the related
consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal year
ended on that date:
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein;
(ii) fairly present the financial condition
of the Company and its Subsidiaries as of the date
thereof and results of operations for the period
covered thereby; and
(iii) except as specifically disclosed in
Schedule 6.11, show all material indebtedness and
other liabilities, direct or contingent, of the
Company and its consolidated Subsidiaries as of the
date thereof, including liabilities for taxes,
material commitments and Contingent Obligations.
(b) Since March 31, 1996, there has been no
Material Adverse Effect.
6.12 Environmental Matters. The Company conducts in
the ordinary course of business a review of the effect of
existing Environmental Laws and existing Environmental
Claims on its business, operations and properties, and as
a result thereof the Company has reasonably concluded
that, except as specifically disclosed in Schedule 6.12,
such Environmental Laws and Environmental Claims would
not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.13 Regulated Entities. None of the Borrowers, any
Person controlling any Borrower, or any Subsidiary is an
"Investment Company" within the meaning of the Investment
Company Act of 1940. No Borrower is subject to regulation
under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state
public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur
Indebtedness.
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6.14 No Burdensome Restrictions; No Restrictions on
Subsidiary Dividends. No Borrower nor any Subsidiary is a
party to or bound by any Contractual Obligation, or
subject to any restriction in any Organization Document or
any Requirement of Law, which could reasonably be expected
to have a Material Adverse Effect. Except as specifically
disclosed in Schedule 6.14, no Borrower nor any Subsidiary
is a party to or bound by any Contractual Obligation which
restricts, limits or prohibits the payment of dividends by
any Subsidiary or the making of any other distribution in
respect of such Subsidiary's capital stock.
6.15 Copyrights, Patents, Trademarks and Licenses,
etc. Each Borrower or its Subsidiaries own or are
licensed or otherwise have the right to use all of the
material patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and
other rights that are reasonably necessary for the
operation of their respective businesses, without conflict
with the rights of any other Person. To the best
knowledge of each Borrower, no slogan or other advertising
device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed,
by the Borrower or any Subsidiary infringes upon any
rights held by any other Person. Except as specifically
disclosed in Schedule 6.15, no claim or litigation
regarding any of the foregoing is pending or threatened,
and no patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is
pending or, to the knowledge of the Borrower, proposed,
which, in either case, could reasonably be expected to
have a Material Adverse Effect.
6.16 Subsidiaries. The Company has no Subsidiaries
other than those specifically disclosed in part (a) of
Schedule 6.16 hereto and has no equity investments in any
other corporation or entity other than those specifically
disclosed in part (b) of Schedule 6.16, except in each
case for Subsidiaries acquired in Acquisitions not
prohibited by this Agreement or other equity investments
not prohibited by this Agreement. The Company has no
Material Subsidiaries other than those specifically
disclosed in part (c) of Schedule 6.16 or those as to
which the Company has notified the Agent pursuant to
Section 7.14. Each of the Borrowers (other than the
Company) is a Wholly-Owned Subsidiary.
6.17 Insurance. Except as specifically disclosed in
Schedule 6.17, the properties of each Borrower and its
Subsidiaries are insured with financially sound and
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reputable insurance companies not Affiliates of the
Borrower, in such amounts, with such deductibles and
covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar
properties in localities where the Borrower or such
Subsidiary operates.
6.18 Swap Obligations. Neither of the Borrowers nor
any of its Subsidiaries has incurred any outstanding
obligations under any Swap Contracts, other than Permitted
Swap Obligations. Each Borrower has undertaken its own
independent assessment of its consolidated assets,
liabilities and commitments and has considered appropriate
means of mitigating and managing risks associated with
such matters and has not relied on any swap counterparty
or any Affiliate of any swap counterparty in determining
whether to enter into any Swap Contract.
6.19 Credit Limit for Subsidiary Borrowers. After
giving effect to any Credit Extension to a Subsidiary
Borrower, the Effective Amount of all outstanding
Revolving Loans, Bid Loans and L/C Obligations of such
Subsidiary Borrower will not exceed the Authorized Amount
for such Subsidiary Borrower.
6.20 Full Disclosure. None of the representations or
warranties made by any Borrower or any Subsidiary in the
Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of any Borrower or
any Subsidiary in connection with the Loan Documents
(including the offering and disclosure materials delivered
by or on behalf of any Borrower to the Banks prior to the
Closing Date), contains any untrue statement of a material
fact or omits any material fact required to be stated
therein or necessary to make the statements made therein,
in light of the circumstances under which they are made,
not misleading as of the time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment
hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied, or any Letter of Credit shall
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remain outstanding, unless the Required Banks waive
compliance in writing:
7.01 Financial Statements. The Company shall deliver
to the Agent, in form and detail satisfactory to the Agent
and the Required Banks, with sufficient copies for each
Bank:
(a) as soon as available, but not later than 100
days after the end of each fiscal year, a copy of the
audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related
consolidated statements of income or operations,
shareholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the unqualified
opinion of Price Waterhouse L.L.P. or another
nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such
consolidated financial statements present fairly the
financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years.
Such opinion shall not be qualified or limited because of
a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any
Subsidiary's records;
(b) as soon as available, but not later than 55
days after the end of each fiscal quarter of each fiscal
year (commencing with the fiscal quarter ending June 30,
1996, a copy of the unaudited consolidated balance sheet
of the Company and its Subsidiaries as of the end of such
quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period
commencing on the first day and ending on the last day of
such quarter, and certified by a Responsible Officer as
fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments and the
absence of footnotes), the financial position and the
results of operations of the Company and the Subsidiaries;
and
(c) for so long as Newflo is the Excluded
Subsidiary, concurrently with the financial statements
described in subsections 7.01(a) and (b), a statement in
form and detail reasonably satisfactory to the Agent and
Required Banks showing the reconciliation of the items
included in Schedule 2 of the Compliance Certificate
(calculated in accordance with the terms hereof without
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including the income, expenses, assets, liabilities or
similar items of the Excluded Subsidiary) with the
financial information in such financial statements.
7.02 Certificates; Other Information. The Company
shall furnish to the Agent, with sufficient copies for
each Bank:
(a) as soon as available and in any event within
55 days after the end of each fiscal quarter, a Compliance
Certificate executed by a Responsible Officer;
(b) promptly, copies of all financial statements
and reports that the Company sends to its shareholders,
and copies of all financial statements and regular,
periodical or special reports (including Forms 10K, 10Q
and 8K) that the Company or any Subsidiary may make to, or
file with, the SEC; and
(c) promptly, such additional information
regarding the business, financial or corporate affairs of
any Borrower or any Subsidiary as the Agent, at the
request of any Bank, may from time to time reasonably
request.
7.03 Notices. The Company shall promptly notify the
Agent and each Bank:
(a) but in no event more than 10 days after the
occurrence or existence thereof, of the occurrence of any
Default or Event of Default, and of the occurrence or
existence of any event or circumstance that foreseeably
will become a Default or Event of Default;
(b) but in no event more than 10 days after the
occurrence thereof, of any matter that has resulted or may
reasonably be expected to result in a Material Adverse
Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Company or
any Subsidiary; (ii) any dispute, litigation,
investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority;
or (iii) the commencement of, or any material development
in, any litigation or proceeding affecting the Company or
any Subsidiary, including pursuant to any applicable
Environmental Laws;
(c) of the occurrence of any of the following
events affecting the Company or any ERISA Affiliate (but
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in no event more than 10 days after such event), and
deliver to the Agent and each Bank a copy of any notice
with respect to such event that is filed with a
Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA
Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded
Pension Liability of any Pension Plan;
(iii) the adoption of, or the commencement
of contributions to, any Plan subject to Section 412
of the Code by the Company or any ERISA Affiliate; or
(iv) the adoption of any amendment to a
Plan subject to Section 412 of the Code, if such
amendment results in a material increase in
contributions or Unfunded Pension Liability; and
(d) of any material change in accounting
policies or financial reporting practices by the Company
or any of its consolidated Subsidiaries, including any
change in GAAP that will have an effect on Consolidated
Net Worth;
Each notice under this Section shall be
accompanied by a written statement by a Responsible
Officer setting forth details of the occurrence referred
to therein, and stating what action the Company or any
affected Subsidiary proposes to take with respect thereto
and at what time. Each notice under subsection 7.03(a)
shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that
have been (or foreseeably will be) breached or violated.
7.04 Preservation of Corporate Existence, Etc. The
Company shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and
effect its corporate existence and good standing under the
laws of its state or jurisdiction of incorporation;
(b) preserve and maintain in full force and
effect all governmental rights, privileges,
qualifications, permits, licenses and franchises necessary
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or desirable in the normal conduct of its business, the
non-preservation or maintenance of which could reasonably
be expected to have a Material Adverse Effect, except in
connection with transactions permitted by Section 8.03 and
sales of assets permitted by Section 8.02;
(c) use reasonable efforts, in the ordinary
course of business, to preserve its business organization
and goodwill; and
(d) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the
non-preservation of which could reasonably be expected to
have a Material Adverse Effect.
7.05 Maintenance of Property. Except as permitted by
Section 8.02, the Company shall maintain, and shall cause
each Subsidiary to maintain, and preserve all its property
which is used or useful in its business in good working
order and condition, ordinary wear and tear excepted and
make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so
could not reasonably be expected to have a Material
Adverse Effect. The Company and each Subsidiary shall use
the standard of care typical in the industry in the
operation and maintenance of its facilities.
7.06 Insurance. The Company shall maintain, and
shall cause each Subsidiary to maintain, with financially
sound and reputable independent insurers, insurance with
respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and
in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.07 Payment of Obligations. The Company shall, and
shall cause each Subsidiary to, pay and discharge as the
same shall become due and payable all their respective
obligations and liabilities, including:
(a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties
or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company
or such Subsidiary;
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(b) all lawful claims which, if unpaid, would by
law become a Lien upon its property; and
(c) all indebtedness, as and when due and
payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such
Indebtedness.
7.08 Compliance with Laws. The Company shall comply,
and shall cause each Subsidiary to comply, in all material
respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except
such as may be contested in good faith or as to which a
bona fide dispute may exist.
7.09 Compliance with ERISA. The Company shall, and
shall cause each of its ERISA Affiliates to: (a) maintain
each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal
or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification;
and (c) make all required contributions to any Plan
subject to Section 412 of the Code.
7.10 Inspection of Property and Books and Records.
The Company shall maintain and shall cause each Subsidiary
to maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial
transactions and matters involving the assets and business
of the Company and such Subsidiary. The Company shall
permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Agent
or any Bank to visit and inspect any of their respective
properties, to examine their respective corporate,
financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective
directors, officers, and independent public accountants,
all at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable
advance notice to the Company; provided, however, when an
Event of Default exists the Agent or any Bank may do any
of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.
7.11 Environmental Laws. The Company shall, and
shall cause each Subsidiary to, conduct its operations and
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keep and maintain its property in material compliance with
all Environmental Laws, except such as may be contested in
good faith or as to which a bona fide dispute may exist
and adequate reserves are being maintained with respect
thereto in accordance with GAAP.
7.12 Use of Proceeds. The Company shall use the
proceeds of the Loans and the Letters of Credit for
working capital and other general corporate purposes
including for purposes of undertaking Acquisitions;
provided that such Acquisitions do not contravene any
provision of this Agreement or of any other Loan Document
or any applicable Requirement of Law.
7.13 Internal Controls. Each Borrower shall maintain
reasonable internal controls and reporting systems
designed to insure that the executive officers of the
Borrower and any employee of the Borrower with management
responsibility for the subject matter as to which the
Borrower's knowledge is relevant will be promptly informed
of all material financial, operational and compliance
matters relevant to compliance with the provisions of this
Agreement.
7.14 New Material Subsidiaries. The Company shall
notify the Agent, which shall notify each Bank, promptly
after the date any Subsidiary of the Company becomes a
Material Subsidiary or the Company acquires a Subsidiary
which is a Material Subsidiary, of such occurrence and
promptly (i) after such date or (ii) after the date that
the Company designates Newflo as an Included Subsidiary
pursuant to and subject to the terms of Section 11.12
(provided that at such time Newflo is a Material
Subsidiary) and, in any event, within five Business Days
following receipt by the Company from the Agent of a
guaranty of the Obligations in substantially the form of
the Subsidiary Guaranty, shall cause such Material
Subsidiary to execute and deliver such guaranty to the
Agent. Within 30 days after the request therefor by the
Agent, at the request of any Bank, the Company and such
Material Subsidiary shall execute and deliver to the Agent
such other items as reasonably requested by the Agent, at
the request of any Bank, in connection with the foregoing,
including resolutions, incumbency certificates, officer's
certificates and opinions of counsel.
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ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment
hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, unless the Required Banks waive
compliance in writing:
8.01 Limitation on Liens. The Company shall not, and
shall not suffer or permit any Subsidiary to, directly or
indirectly, make, create, incur, assume or suffer to exist
any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) any Lien existing on property of the Company
or any Subsidiary on the Closing Date and set forth in
Schedule 8.01 securing Indebtedness outstanding on such
date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain
payable without penalty, or to the extent that non-payment
thereof is permitted by Section 7.07, provided that no
notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar
Liens arising in the ordinary course of business which are
not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate
proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject
thereto;
(e) Liens (other than any Lien imposed by ERISA)
consisting of pledges or deposits required in the ordinary
course of business in connection with workers'
compensation, unemployment insurance and other social
security legislation;
(f) Liens on the property of the Company or its
Subsidiaries securing (i) the non-delinquent performance
of bids, trade contracts (other than for borrowed money),
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leases, statutory obligations, (ii) contingent obligations
on surety and appeal bonds, and (iii) other non-delinquent
obligations of a like nature; in each case, incurred in
the ordinary course of business, provided all such Liens
in the aggregate would not (even if enforced) cause a
Material Adverse Effect;
(g) Liens consisting of judgment or judicial
attachment liens, provided that the enforcement of such
Liens is effectively stayed and all such liens in the
aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $5,000,000;
(h) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial
in amount, and which do not in any case materially detract
from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of
the Company and its Subsidiaries;
(i) purchase money security interests on any
property acquired or held by the Company or its
Subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such
property; provided that (i) any such Lien attaches to such
property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the
property (including proceeds thereof) so acquired in such
transaction, and (iii) the principal amount of the debt
secured thereby does not exceed 100% of the cost of such
property;
(j) Liens securing obligations in respect of
capital leases on assets subject to such leases, provided
that such capital leases are otherwise permitted
hereunder;
(k) Liens arising solely by virtue of any
statutory or common law provision relating to banker's
liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such
deposit account is not a dedicated cash collateral account
and is not subject to restrictions against access by the
Company in excess of those set forth by regulations
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promulgated by the FRB, and (ii) such deposit account is
not intended by the Company or any Subsidiary to provide
collateral to the depository institution; and
(l) any other Liens if the aggregate amount of
obligations of the Company or any of its Subsidiaries that
is secured by such Liens does not exceed $30,000,000 in
the aggregate at any time.
8.02 Disposition of Assets. The Company shall not,
and shall not suffer or permit any Subsidiary to, directly
or indirectly, sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes
receivable, with or without recourse) or enter into any
agreement to do any of the foregoing, except:
(a) dispositions of inventory or used, worn-out,
obsolete or surplus equipment, all in the ordinary course
of business;
(b) the sale of equipment to the extent that
such equipment is exchanged for credit against the
purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to
the purchase price of such replacement equipment;
(c) dispositions by the Company of divisions or
Subsidiaries, dispositions by Subsidiaries of divisions,
and dispositions of the assets of divisions of the Company
or any Subsidiary, in aggregate amount not to exceed (i)
$25,000,000 in any one year and (ii) on a cumulative basis
from and after the Closing Date, 10% of Consolidated Total
Assets as of the end of the fiscal quarter immediately
preceding the date of determination; and
(d) sales or transfers permitted by Section
8.03.
8.03 Consolidations and Mergers. The Company shall
not, and shall not suffer or permit any Subsidiary to,
merge, consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all
of its assets (whether now owned or hereafter acquired) to
or in favor of any Person, except:
(a) any Subsidiary may merge with the Company,
provided that the Company shall be the continuing or
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surviving corporation, or with any one or more
Subsidiaries, provided that (i) if any transaction shall
be between a Subsidiary and a Wholly-Owned Subsidiary, the
Wholly-Owned Subsidiary shall be the continuing or
surviving corporation, (ii) that if any such transaction
shall be between a Subsidiary Borrower and a Subsidiary,
the Subsidiary Borrower shall be the continuing or
surviving corporation, and (iii) an Included Subsidiary
may not merge with the Excluded Subsidiary;
(b) any Subsidiary may sell all or substantially
all of its assets (upon voluntary liquidation or
otherwise), to the Company or another Wholly-Owned
Subsidiary; provided that an Included Subsidiary may not
so sell to the Excluded Subsidiary;
(c) the Company or any Subsidiary may merge with
any Person so long as (i) (A) the Company or such
Subsidiary shall be the continuing or surviving
corporation or (B) in the case of a merger with a
Subsidiary, the acquired Person is, as a result of the
merger transaction, a Wholly-Owned Subsidiary of the
Company and (ii) immediately prior to and after giving
effect to such merger, there shall be no Default or Event
or Default; and
(d) the Company may (i) transfer the operating
assets of its structurals division to a Wholly-Owned
Subsidiary which is an Included Subsidiary or (ii) engage
in an internal reorganization transaction, whether
involving a share exchange, merger, share dividend or
otherwise, resulting in a holding company structure in
which the Company's structurals division and each of the
Wholly-Owned Subsidiaries are Subsidiaries of the holding
company, and whereby the holding company assumes all
obligations of the Company under this Agreement pursuant
to an assumption agreement in form and substance
acceptable to the Required Banks; provided, that in the
case of clause (i) and (ii), immediately prior to and
after giving effect to the proposed transaction, there
shall be no Default or Event of Default, and, in the case
of clause (ii), the Agent and the Banks shall have
received one or more guarantees, substantially in the form
of the Subsidiary Guaranty, of the obligations hereunder
and under the other Loan Documents of the holding company
and the Subsidiary Borrowers from any Person which, after
giving effect to the proposed transaction, would be a
Material Subsidiary of the holding company, along with
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such other certificates, documents, and opinions related
to the proposed transaction, the assumption of the
Company's obligations hereunder by the holding company and
such guarantees, as the Agent or any Bank may reasonably
request.
8.04 Loans and Investments. The Company shall not
purchase or acquire, or suffer or permit any Subsidiary to
purchase or acquire, or make any commitment therefor, any
capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or
make or commit to make any Acquisitions, or make or commit
to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person
including any Affiliate of the Company (together,
"Investments"), except for:
(a) Investments incurred in order to consummate
Acquisitions otherwise permitted hereunder, provided that
(i) such Acquisitions are undertaken in accordance with
all applicable Requirements of Law; and (ii) immediately
before and after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing;
(b) Investments held by the Company or a
Subsidiary in the form of cash equivalents or short term
marketable securities;
(c) extensions of credit in the nature of
accounts receivable or notes receivable arising from the
sale or lease of goods or services in the ordinary course
of business;
(d) extensions of credit by the Company to any
of its Wholly-Owned Subsidiaries (other than the Excluded
Subsidiary, except to the extent permitted by subsection
(f) of this Section) or by any of its Wholly-Owned
Subsidiaries to another of its Wholly-Owned Subsidiaries
(other than the Excluded Subsidiary, except to the extent
permitted by subsection (f) of this Section; provided that
the Excluded Subsidiary may make extensions of credit to
any of its Subsidiaries);
(e) Investments constituting Permitted Swap
Obligations or payments or advances under Swap Contracts
relating to Permitted Swap Obligations; and
(f) Investments in the Excluded Subsidiary made
or incurred at any time after the Closing Date in an
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amount not to exceed $30,000,000 in the aggregate at any
time outstanding; provided, that this subsection (f) shall
not limit Investments in Newflo made after it is
designated as an Included Subsidiary in compliance with
and subject to the terms of Section 11.12.
8.05 Limitation on Subsidiary Indebtedness. The
Company shall not suffer or permit any Subsidiary to,
create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(a) Indebtedness of the Borrowers or any
Material Subsidiary in favor of the Agent and the Banks
hereunder and under any other Loan Document;
(b) Indebtedness consisting of Contingent
Obligations permitted pursuant to Section 8.08;
(c) Indebtedness existing on the Closing Date
and set forth in Schedule 8.05;
(d) Indebtedness existing on or arising after
the Closing Date and not set forth on Schedule 8.05 in an
aggregate amount not to exceed $50,000,000 at any time
outstanding; and
(e) Indebtedness secured by Liens permitted by
subsection 8.01(i).
8.06 Transactions with Affiliates. The Company shall
not, and shall not suffer or permit any Subsidiary to,
enter into any transaction with any Affiliate of the
Company, except in the ordinary course of business upon
fair and reasonable terms no less favorable to the Company
or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of
the Company or such Subsidiary.
8.07 Use of Proceeds. (a) The Borrowers shall not,
and shall not suffer or permit any Subsidiary to, use any
portion of the Loan proceeds or any Letter of Credit,
directly or indirectly, (i) to purchase or carry Margin
Stock in violation of, or for a purpose which violates, or
would be inconsistent with, Regulation G, T, U or X of the
FRB, (ii) to repay or otherwise refinance indebtedness of
the Borrowers or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to
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finance an Acquisition which is contested at any time by
the board of directors or equivalent governing body of the
acquired Person or the Person from whom the Acquisition is
to be made (an "Unfriendly Acquisition") or for a bid to
make an Unfriendly Acquisition.
(b) The Borrowers shall not, directly or
indirectly, use any portion of the Loan proceeds or any
Letter of Credit (i) knowingly to purchase Ineligible
Securities from the Arranger during any period in which
the Arranger makes a market in such Ineligible Securities,
(ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten
or privately placed by the Arranger, or (iii) to make
payments of principal or interest on Ineligible Securities
underwritten or privately placed by the Arranger and
issued by or for the benefit of the Borrowers or any
Affiliate of the Borrowers. The Arranger is a registered
broker-dealer and permitted to underwrite and deal in
certain Ineligible Securities; and "Ineligible Securities"
means securities which may not be underwritten or dealt in
by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. 24,
Seventh), as amended.
8.08 Contingent Obligations. The Company shall not,
and shall not suffer or permit any Subsidiary to, create,
incur, assume or suffer to exist any Contingent
Obligations except:
(a) endorsements for collection or deposit in
the ordinary course of business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and
its Subsidiaries existing as of the Closing Date and
listed in Schedule 8.08;
(d) without duplication of subsection (f) of
this Section, Contingent Obligations with respect to
Surety Instruments incurred in the ordinary course of
business and not exceeding at any time $15,000,000 in the
aggregate in respect of the Company and its Subsidiaries
together;
(e) unsecured Guaranty Obligations by the
Company of Indebtedness and other obligations of a
Subsidiary; provided, that such Indebtedness and other
obligations are permitted hereunder; and provided,
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further, that this subsection (e) shall not permit any
guaranty by the Company of the Indebtedness of the
Excluded Subsidiary listed as item 5 on Schedule 8.05; and
(f) Contingent Obligations of the Borrowers or
the Material Subsidiaries party to Subsidiary Guaranties
with respect to the Obligations.
8.09 Joint Ventures. The Company shall not, and
shall not suffer or permit any Subsidiary to enter into
any Joint Venture, other than in the ordinary course of
business.
8.10 ERISA. The Company shall not, and shall not
suffer or permit any of its ERISA Affiliates to: (a)
engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably expected to result
in liability of the Company in an aggregate amount in
excess of $5,000,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
8.11 Change in Business. The Company shall not, and
shall not suffer or permit any Subsidiary to, engage in
any material line of business substantially different from
the Existing Lines of Business.
8.12 Accounting Changes. The Company shall not, and
shall not suffer or permit any Subsidiary to, make any
significant change in accounting treatment or reporting
practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary; provided,
that the Company may permit any Subsidiary to, and any
Subsidiary may, change such Subsidiary's fiscal year to
conform to the fiscal year of the Company.
8.13 Minimum Consolidated Net Worth. The Company
shall not permit its Consolidated Net Worth as of the last
day of any fiscal quarter (commencing with the quarter
ended June 30, 1996) to be less than (a) the greater of
(1) 90% of its Consolidated Net Worth as of June 30, 1996
and (2) $295,000,000, plus (b) 50% of Consolidated Net
Income (without giving effect to any net loss for any
period) from and after July 1, 1996, plus (c) 50% of all
Net Issuance Proceeds from and after July 1, 1996.
8.14 Fixed Charge Coverage Ratio. The Company shall
not permit its Fixed Charge Coverage Ratio as determined
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as of the last day of any fiscal quarter (commencing with
the quarter ended June 30, 1996), to be less than (i) 1.40
to 1.00 through the quarter ending March 30, 1997 and (ii)
1.50 to 1.00 thereafter.
8.15 Leverage Ratio. The Company shall not permit
its Leverage Ratio as determined as of the last day of any
fiscal quarter (commencing with the quarter ended June 30,
1996) to be greater than (i) 3.85 to 1.00 through the
quarter ending December 29, 1996 and (ii) 3.50 to 1.00
thereafter. For purposes of calculation of the Leverage
Ratio, EBITDA shall be calculated on a four quarter
rolling basis for such fiscal quarter and the three
immediately preceding fiscal quarters.
8.16 No Restrictions on Subsidiary Dividends. The
Company shall not, and shall not suffer or permit any
Subsidiary (other than the Excluded Subsidiary) to, enter
into or be bound by any Contractual Obligation which
restricts, limits or prohibits the payment of dividends by
any Subsidiary (other than the Excluded Subsidiary) or the
making of any other distribution in respect of such
Subsidiary's capital stock.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. Any Borrower fails to pay, (i)
when and as required to be paid herein, any amount of
principal of any Loan or of any L/C Obligation, or any
amount of interest on any Bid Loan, or (ii) within five
days after the same becomes due, any interest, fee or any
other amount payable hereunder or under any other Loan
Document; or
(b) Representation or Warranty. Any
representation or warranty by a Borrower or any Subsidiary
made or deemed made herein, in any other Loan Document, or
which is contained in any certificate, document or
financial or other statement by a Borrower, any
Subsidiary, or any Responsible Officer, furnished at any
time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of
the date made or deemed made; or
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(c) Specific Defaults. Any Borrower fails to
perform or observe any term, covenant or agreement
contained in any of Section 7.01, 7.02(a), 7.03 or in
Article VIII; or
(d) Other Defaults. Any Borrower (including the
Company as guarantor under a Company Guaranty) fails to
perform or observe any other term or covenant contained in
this Agreement or any other Loan Document, and such
default shall continue unremedied for a period of 30 days
after the earlier of (i) the date upon which a Responsible
Officer knew or reasonably should have known of such
failure or (ii) the date upon which written notice thereof
is given to the Company by the Agent or any Bank; or
(e) Cross-Default. (i) The Company or any
Subsidiary (A) fails to make any payment in respect of any
Indebtedness or Contingent Obligation (other than in
respect of Swap Contracts), having an aggregate principal
amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than
$5,000,000, when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise);
or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition
exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation, if the effect
of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness
to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable
or cash collateral in respect thereof to be demanded; or
(ii) there occurs under any Swap Contract an Early
Termination Date resulting from (1) any event of default
under such Swap Contract as to which the Company or any
Subsidiary is the Defaulting Party or (2) any Termination
Event as to which the Company or any Subsidiary is an
Affected Party, and, in either event, the Swap Termination
Value owed by the Company or such Subsidiary as a result
thereof is greater than $5,000,000; for purposes of this
subsection (e), the terms "Early Termination Date",
"Defaulting Party", "Termination Event", and "Affected
Party" shall have the meanings assigned to them in the
relevant Swap Contract, it being understood that such
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definitions contemplate Swap Contracts documented on
International Swaps and Derivatives Association ("ISDA")
standard forms; if such Swap Contract is not documented on
an ISDA standard form, such terms shall be given similar
or analogous meanings as used in such non-ISDA standard
agreements; or
(f) Insolvency; Voluntary Proceedings. Any
Borrower or any Material Subsidiary (i) ceases or fails to
be solvent, or generally fails to pay, or admits in
writing its inability to pay, its debts as they become
due, subject to applicable grace periods, if any, whether
at stated maturity or otherwise; (ii) voluntarily ceases
to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or
authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any
involuntary Insolvency Proceeding is commenced or filed
against any Borrower or any Material Subsidiary, or any
writ, judgment, warrant of attachment, execution or
similar process, is issued or levied against a substantial
part of any Borrower's or any Material Subsidiary's
properties, and any such proceeding or petition shall not
be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) any Borrower or any
Material Subsidiary admits the material allegations of a
petition against it in any Insolvency Proceeding, or an
order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) any
Borrower or any Material Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a
substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with
respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in
liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an
aggregate amount in excess of $5,000,000; (ii) the
aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $25,000,000; or (iii)
the Company or any ERISA Affiliate shall fail to pay when
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due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of
$5,000,000;
(i) Monetary Judgments. One or more non-
interlocutory judgments, non-interlocutory orders, decrees
or arbitration awards is entered against the Company or
any Subsidiary involving in the aggregate a liability (to
the extent not covered by independent third-party
insurance as to which the insurer does not dispute
coverage) as to any single or related series of
transactions, incidents or conditions, of more than
$5,000,000, and the same shall remain unvacated and
unstayed pending appeal for a period of 10 days after the
entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary
judgment, order or decree is entered against the Company
or any Subsidiary which does or would reasonably be
expected to have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect;
or
(k) Change of Control. (i) Any Person or two or
more Persons acting in concert acquires beneficial
ownership (within the meaning of Rule 13d-3 of the SEC
under the Exchange Act), directly or indirectly, of
securities of the Company (or other securities convertible
into such securities) representing 25% or more of the
combined voting power of all securities of the Company
entitled to vote in the election of directors; or
(ii) during any period of up to 12 consecutive months,
individuals who at the beginning of such 12-month period
were directors of the Company ceasing for any reason to
constitute a majority of the Board of Directors of the
Company unless the Persons replacing such individuals were
nominated by the Board of Directors of the Company; or
(iii) any Person or two or more Persons acting in concert
acquiring by contract or otherwise, or entering into a
contract or arrangement which upon consummation will
result in its or their acquisition of, or control over,
securities of the Company (or other securities convertible
into such securities) representing 25% or more of the
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combined voting power of all securities of the Company
entitled to vote in the election of directors;
(l) Guarantor Defaults. Any Material Subsidiary
party to a Subsidiary Guaranty fails in any material
respect to perform or observe any term, covenant or
agreement in the Subsidiary Guaranty to which it is a
party; or a Subsidiary Guaranty or a Company Guaranty is
for any reason partially (including with respect to future
advances) or wholly revoked or invalidated, or otherwise
ceases to be in full force and effect, or a Material
Subsidiary, the Company or any other Person contests in
any manner the validity or enforceability thereof or
denies that it has any further liability or obligation
thereunder; or
(m) Adverse Change. There occurs a Material
Adverse Effect.
9.02 Remedies. If any Event of Default occurs, the
Agent shall, at the request of, or may, with the consent
of, the Required Banks,
(a) declare the commitment of each Bank to make
Committed Loans and any obligation of the Issuing Bank to
Issue Letters of Credit to be terminated, whereupon such
commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum
aggregate amount that is or at any time thereafter may
become available for drawing under any outstanding Letters
of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present,
the drafts or other documents required to draw under such
Letters of Credit) to be immediately due and payable,
declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived by each
Borrower; and
(c) exercise on behalf of itself and the Banks
all rights and remedies available to it and the Banks
under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event
specified in subsection (f) or (g) of Section 9.01 (in the
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case of clause (i) of subsection (g) upon the expiration
of the 60-day period mentioned therein), the obligation of
each Bank to make Loans and any obligation of the Issuing
Bank to Issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable
without further act of the Agent, the Issuing Bank or any
Bank.
9.03 Rights Not Exclusive. The rights provided for
in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in
equity, or under any other instrument, document or
agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization; "Agent". (a)
Each Bank hereby irrevocably (subject to Section 10.09)
appoints, designates and authorizes the Agent to take such
action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise
such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall
not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be
deemed to have any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist
against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this
Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or
reflect only an administrative relationship between
independent contracting parties.
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(b) The Issuing Bank shall act on behalf of the
Banks with respect to any Letters of Credit Issued by it
and the documents associated therewith until such time and
except for so long as the Agent may agree at the request
of the Majority Lenders to act for such Issuing Bank with
respect thereto; provided, however, that the Issuing Bank
shall have all of the benefits and immunities (i) provided
to the Agent in this Article X with respect to any acts
taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it or proposed
to be Issued by it and the application and agreements for
letters of credit pertaining to the Letters of Credit as
fully as if the term "Agent", as used in this Article X,
included the Issuing Bank with respect to such acts or
omissions, and (ii) as additionally provided in this
Agreement with respect to the Issuing Bank.
10.02 Delegation of Duties. The Agent may execute
any of its duties under this Agreement or any other Loan
Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it
selects with reasonable care.
10.03 Liability of Agent. None of the Agent-Related
Persons shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection
with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible
in any manner to any of the Banks for any recital,
statement, representation or warranty made by any Borrower
or any Subsidiary or Affiliate of any Borrower, or any
officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report,
statement or other document referred to or provided for
in, or received by the Agent under or in connection with,
this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document,
or for any failure of any Borrower or any other party to
any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any
obligation to any Bank to ascertain or to inquire as to
the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any
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other Loan Document, or to inspect the properties, books
or records of the Borrower's or any of the Company's
Subsidiaries or Affiliates.
10.04 Reliance by Agent. (a) The Agent shall be
entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex
or telephone message, statement or other document or
conversation believed in good faith by it to be genuine
and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements
of legal counsel (including counsel to any Borrower),
independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems
appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or
consent of the Required Banks and such request and any
action taken or failure to act pursuant thereto shall be
binding upon all of the Banks.
(b) For purposes of determining compliance with
the conditions specified in Section 5.01, each Bank that
has executed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by the
Agent to such Bank for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to the Bank.
10.05 Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of
any Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the
Banks, unless the Agent shall have received written notice
from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating
that such notice is a "notice of default". The Agent will
notify the Banks of its receipt of any such notice. The
Agent shall take such action with respect to such Default
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or Event of Default as may be requested by the Required
Banks in accordance with Article VIII; provided, however,
that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that
none of the Agent-Related Persons has made any
representation or warranty to it, and that no act by the
Agent hereinafter taken, including any review of the
affairs of the Borrowers and their Subsidiaries, shall be
deemed to constitute any representation or warranty by any
Agent-Related Person to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own
appraisal of and investigation into the business,
prospects, operations, property, financial and other
condition and credit worthiness of the Borrowers and their
Subsidiaries, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to
extend credit to the Borrowers hereunder. Each Bank also
represents that it will, independently and without
reliance upon any Agent-Related Person and based on such
documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform
itself as to the business, prospects, operations,
property, financial and other condition and credit
worthiness of the Borrowers. Except for notices, reports
and other documents expressly herein required to be
furnished to the Banks by the Agent, the Agent shall not
have any duty or responsibility to provide any Bank with
any credit or other information concerning the business,
prospects, operations, property, financial and other
condition or credit worthiness of any Borrower which may
come into the possession of any of the Agent-Related
Persons.
10.07 Indemnification of Agent. Whether or not the
transactions contemplated hereby are consummated, the
Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of
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the Company and without limiting the obligation of the
Company to do so), pro rata, from and against any and all
Indemnified Liabilities; provided, however, that no Bank
shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its
ratable share of any costs or out-of-pocket expenses
(including reasonable Attorney Costs) incurred by the
Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the
Company. The undertaking in this Section shall survive
the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for
the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business
with any Borrower and its Subsidiaries and Affiliates as
though BofA were not the Agent or the Issuing Bank
hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities,
BofA or its Affiliates may receive information regarding a
Borrower or its Affiliates (including information that may
be subject to confidentiality obligations in favor of the
Borrower or such Subsidiary) and acknowledge that the
Agent shall be under no obligation to provide such
information to them. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement
as any other Bank and may exercise the same as though it
were not the Agent or the Issuing Bank.
10.09 Successor Agent. The Agent may, and at the
request of the Required Banks shall, resign as Agent upon
30 days' notice to the Banks. If the Agent resigns under
this Agreement, the Required Banks shall appoint from
among the Banks a successor agent for the Banks. If no
successor agent is appointed prior to the effective date
of the resignation of the Agent, the Agent may appoint,
after consulting with the Banks and the Company, a
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successor agent from among the Banks. Upon the acceptance
of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article X and
Sections 11.04 and 11.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it
was Agent under this Agreement. If no successor agent has
accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as
the Required Banks appoint a successor agent as provided
for above. Notwith-standing the foregoing, however, BofA
may not be removed as the Agent at the request of the
Required Banks unless BofA shall also simultaneously be
replaced as "Issuing Bank" hereunder pursuant to
documentation in form and substance reasonably
satisfactory to BofA.
10.10 Withholding Tax. (a) If any Bank is a "foreign
corporation, partnership or trust" within the meaning of
the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of
the Agent and the Borrowers, to deliver to the Agent
(which will deliver a copy to the Company):
(i) if such Bank claims an exemption from,
or a reduction of, withholding tax under a United
States tax treaty, two properly completed and executed
copies of IRS Form 1001 before the payment of any
interest in the first calendar year and before the
payment of any interest in each third succeeding
calendar year during which interest may be paid under
this Agreement;
(ii) if such Bank claims that interest paid
under this Agreement is exempt from United States
withholding tax because it is effectively connected
with a United States trade or business of such Bank,
two properly completed and executed copies of IRS Form
4224 before the payment of any interest is due in the
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first taxable year of such Bank and in each succeeding
taxable year of such Bank during which interest may be
paid under this Agreement; and
(iii) such other form or forms as may be
required under the Code or other laws of the United
States as a condition to exemption from, or reduction
of, United States withholding tax.
Such Bank agrees to promptly notify the Agent
(which will notify the Company) of any change in
circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Bank claims exemption from, or
reduction of, withholding tax under a United States tax
treaty by providing IRS Form 1001 and such Bank sells,
assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrowers to such
Bank, such Bank agrees to notify the Agent (which will
notify the Company) of the percentage amount in which it
is no longer the beneficial owner of Obligations of the
Borrowers to such Bank. To the extent of such percentage
amount, the Agent and the Borrowers will treat such Bank's
IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United
States withholding tax by filing IRS Form 4224 with the
Agent sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of the
Borrowers to such Bank, such Bank agrees to undertake sole
responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the
Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from
any interest payment to such Bank an amount equivalent to
the applicable withholding tax after taking into account
such reduction. However, if the forms or other
documentation required by subsection (a) of this Section
are not delivered to the Agent, then the Agent may
withhold from any interest payment to such Bank not
providing such forms or other documentation an amount
equivalent to the applicable withholding tax imposed by
Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental
Authority of the United States or other jurisdiction
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asserts a claim that the Agent did not properly withhold
tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not
properly executed, or because such Bank failed to notify
the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall
indemnify the Agent fully for all amounts paid, directly
or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under
this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks
under this subsection shall survive the payment of all
Obligations and the resignation or replacement of the
Agent.
10.11 Co-Agents. None of the Banks identified on the
facing page or signature pages of this Agreement or
elsewhere herein or in the future appointed by the Banks
as a "co-agent" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement
other than those applicable to all Banks as such. Without
limiting the foregoing, none of the Banks so identified or
appointed as a "co-agent" shall have or be deemed to have
any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on
any of the Banks so identified or appointed in deciding to
enter into this Agreement or in taking or not taking
action hereunder.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver
of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by
any Borrower therefrom, shall be effective unless the same
shall be in writing and signed by the Required Banks (or
by the Agent at the written request of the Required Banks)
and the Borrowers and acknowledged by the Agent, and then
any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment,
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or consent shall, unless in writing and signed by all the
Banks and the Borrowers and acknowledged by the Agent, do
any of the following:
(a) increase or extend the Commitment of any
Bank (or reinstate any Commitment terminated pursuant to
Section 9.02);
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts due to the
Banks (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of
interest specified herein on any Loan, or (subject to
clause (ii) below) any fees or other amounts payable
hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans
which is required for the Banks or any of them to take any
action hereunder;
(e) amend this Section, Section 2.17, the
definition of "Required Banks" or any provision herein
providing for consent or other action by all Banks; or
(f) (i) release any Material Subsidiary from its
obligations under the Subsidiary Guaranty to which it is a
party or terminate such Subsidiary Guaranty or (ii)
release the Company from its obligations under a Company
Guaranty or terminate a Company Guaranty, except in each
case as expressly provided for therein;
and, provided further, that (i) no amendment, waiver or
consent shall, unless in writing and signed by the Issuing
Bank in addition to the Required Banks or all the Banks,
as the case may be, affect the rights or duties of the
Issuing Bank under this Agreement or any L/C-Related
Document relating to any Letter of Credit Issued or to be
Issued by it, (ii) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to
the Required Banks or all the Banks, as the case may be,
affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (iii) each Fee
Letter may be amended, or rights or privileges thereunder
waived, in a writing executed by the parties thereto.
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11.02 Notices. (a) All notices, requests, consents,
approvals, waivers and other communications shall be in
writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any
matter transmitted by or to a Borrower by facsimile (i)
shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 11.02, and
(ii) except in the case of notices to the Borrowers under
Article II, shall be followed promptly by delivery of a
hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified
for notices on Schedule 11.02; or, as directed to the
Borrowers or the Agent, to such other address as shall be
designated by such party in a written notice to the other
parties, and as directed to any other party, at such other
address as shall be designated by such party in a written
notice to the Company and the Agent.
(b) All such notices, requests and
communications shall, when transmitted by overnight
delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible
form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into
the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or X to the Agent
shall not be effective until actually received by the
Agent, and notices pursuant to Article III to the Issuing
Bank shall not be effective until actually received by the
Issuing Bank at the address specified for the "Issuing
Bank" on Schedule 11.02.
(c) Any agreement of the Agent and the Banks
herein to receive certain notices by telephone or
facsimile is solely for the convenience and at the request
of the Borrowers. The Agent and the Banks shall be
entitled to rely on the authority of any Person purporting
to be a Person authorized by a Borrower to give such
notice and the Agent and the Banks shall not have any
liability to any Borrower or other Person on account of
any action taken or not taken by the Agent or the Banks in
reliance upon such telephonic or facsimile notice. The
obligation of each Borrower to repay the Loans and any L/C
Obligation shall not be affected in any way or to any
extent by any failure by the Agent and the Banks to
receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Banks
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of a confirmation which is at variance with the terms
understood by the Agent and the Banks to be contained in
the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the
Agent or any Bank, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right,
remedy, power or privilege.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated
hereby are consummated, pay or reimburse BofA (including
in its capacity as Agent and Issuing Bank) within five
Business Days after demand (subject to subsection 5.01(e))
for all reasonable costs and expenses (excluding travel
expenses) incurred by BofA (including in its capacity as
Agent) in connection with the development, preparation,
delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any
Loan Document and any other documents prepared in
connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby,
including reasonable Attorney Costs incurred by BofA
(including in its capacity as Agent and Issuing Bank) with
respect thereto; and
(b) pay or reimburse the Agent and each Bank
within five Business Days after demand (subject to
subsection 5.01(e)) for all costs and expenses (including
Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan
Document during the existence of an Event of Default or
after acceleration of the Loans (including in connection
with any "workout" or restructuring regarding the Loans,
and including in any Insolvency Proceeding or appellate
proceeding).
11.05 Company Indemnification. Whether or not the
transactions contemplated hereby are consummated, the
Company shall indemnify, defend and hold the Agent-Related
Persons, and each Bank and each of its respective
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officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless
from and against any and all liabilities, claims,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and
disbursements (including reasonable (given due regard to
the prevailing circumstances) Attorney Costs) of any kind
or nature whatsoever which may at any time (including at
any time following repayment of the Loans, the termination
of the Letters of Credit and the termination, resignation
or replacement of the Agent or replacement of any Bank)
be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any
action taken or omitted by any such Person under or in
connection with any of the foregoing, including with
respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or
the Loans or Letters of Credit or the use of the proceeds
thereof, or related to any Offshore Currency transactions
entered into in connection herewith, whether or not any
Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided,
that the Company shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in
this Section shall survive payment of all other
Obligations.
11.06 Payments Set Aside. To the extent that any
Borrower makes a payment to the Agent or the Banks, or the
Agent or the Banks exercise their right of set-off, and
such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with
any Insolvency Proceeding or otherwise, then (a) to the
extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had
not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand
its pro rata share of any amount so recovered from or
repaid by the Agent.
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11.07 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns, except that no Borrower may assign or transfer
any of its rights or obligations under this Agreement
without the prior written consent of the Agent and each
Bank.
11.08 Assignments, Participations, etc. (a) Any
Bank may, with the written consent of the Company at all
times other than during the existence of an Event of
Default and the Agent and the Issuing Bank, which consents
shall not be unreasonably withheld or delayed, at any time
assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company, the
Agent or the Issuing Bank shall be required in connection
with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each
an "Assignee") all, or any ratable part of all, of the
Loans, the Commitments, the L/C Obligations and the other
rights and obligations of such Bank hereunder, in a
minimum amount of $10,000,000 or, if less, the remaining
Commitment of such Bank; provided, however, that after
giving effect to any such assignment, the Commitment of
the assignor Bank shall be at least $10,000,000 unless
such Bank's entire Commitment is assigned; and provided,
further, that the Borrowers and the Agent may continue to
deal solely and directly with such assignor Bank in
connection with the interest so assigned to an Assignee
until (i) written notice of such assignment, together with
payment instructions, addresses and related information
with respect to the Assignee, shall have been given to the
Company and the Agent by such Bank and the Assignee;
(ii) such Bank and its Assignee shall have delivered to
the Company and the Agent an Assignment and Acceptance in
the form of Exhibit E ("Assignment and Acceptance")
together with any Note or Notes subject to such assignment
and (iii) the assignor Bank or Assignee has paid to the
Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent
notifies the assignor Bank that it has received (and
provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-
referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to
such Assignment and Acceptance, shall have the rights and
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obligations of a Bank under the Loan Documents, and (ii)
the assignor Bank shall, to the extent that rights and
obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Business Days after receipt of
notice from the Agent that the Agent has received an
executed Assignment and Acceptance and payment of the
processing fee (and provided that it consents to such
assignment if such consent is required in accordance with
subsection 11.08(a)), if requested by the assignor Bank or
the Assignee, through the Agent, the Borrowers shall
execute and deliver to the Agent new Notes evidencing such
Assignee's assigned Loans and Commitment and, if the
assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of
the Loans retained by the assignor Bank (such Notes to be
in exchange for, but not in payment of, the Notes held by
such Bank), and upon delivery by the Borrowers to the
Agent of the new Notes evidencing the assigned Loans and
Commitment and, if applicable, any replacement Notes in
favor of the assignor Bank, the Agent shall mark the
original Notes payable to the assignor Bank "replaced and
cancelled" and deliver such Notes to the Company.
Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitment of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the
Company (a "Participant") participating interests in any
Loans, the Commitment of that Bank and the other interests
of that Bank (the "Originator") hereunder and under the
other Loan Documents; provided, however, that (i) the
Originator's obligations under this Agreement shall remain
unchanged, (ii) the Originator shall remain solely
responsible for the performance of such obligations,
(iii) the Borrowers, the Agent and the Issuing Bank shall
continue to deal solely and directly with the Originator
in connection with the Originator's rights and obligations
under this Agreement and the other Loan Documents, and
(iv) no Bank shall transfer or grant any participating
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interest under which the Participant has rights to approve
any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to
the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in the first
proviso to Section 11.01. In the case of any such
participation, the Participant shall be entitled to the
benefit of Sections 4.01, 4.03 and 11.05 as though it were
also a Bank hereunder (but, in the case of Sections 4.01
and 4.03, solely to the extent that the amounts claimed
thereunder by such Participant do not exceed the amounts
that could be claimed thereunder by the Bank which sold a
participation interest to such Participant had such Bank
not sold such participation interest), and, if amounts
outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount
of its participating interest were owing directly to it as
a Bank under this Agreement.
(e) Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security
interest in, or pledge, all or any portion of its rights
under and interest in this Agreement and any Note held by
it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under
applicable law.
11.09 Confidentiality. Each Bank agrees to take and
to cause its Affiliates to take normal and reasonable
precautions and exercise due care to maintain the
confidentiality of all information identified as
"confidential" or "secret" by the Company and provided to
it by the Company or any Subsidiary, or by the Agent on
the Company's or such Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor
any of its Affiliates shall use any such information other
than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection
with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; except to
the extent such information (i) was or becomes generally
available to the public other than as a result of
disclosure by the Bank, or (ii) was or becomes available
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on a non-confidential basis from a source other than the
Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the
Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any
requirement of any Governmental Authority to which the
Bank is subject or in connection with an examination of
such Bank by any such authority; (B) pursuant to subpoena
or other court process; (C) when required to do so in
accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required
in connection with any litigation or proceeding to which
the Agent, any Bank or their respective Affiliates may be
party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent
auditors and other professional advisors; (G) to any
Participant or Assignee, actual or potential, provided
that such Person agrees in writing to keep such
information confidential to the same extent required of
the Banks hereunder; (H) as to any Bank or its Affiliate,
as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which
the Company or any Subsidiary is party or is deemed party
with such Bank or such Affiliate; and (I) to its
Affiliates; provided, that with respect to disclosures
under clauses (B) and (D), such Bank shall use
commercially reasonable efforts to notify the Company
(unless such notification is prohibited by any applicable
Requirement of Law) of the proposed disclosure before such
disclosure is made to reasonably afford the Company the
opportunity to seek to prevent such disclosure.
11.10 Set-off. In addition to any rights and
remedies of the Banks provided by law, if an Event of
Default exists or the Loans have been accelerated, each
Bank is authorized at any time and from time to time,
without prior notice to any Borrower, any such notice
being waived by each Borrower to the fullest extent
permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional
or final) at any time held by, and other indebtedness at
any time owing by, such Bank to or for the credit or the
account of such Borrower, against any and all Obligations
owing to such Bank, now or hereafter existing,
irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan
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Document and although such Obligations may be contingent
or unmatured. Each Bank agrees promptly to notify the
Company and the Agent after any such set-off and
application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity
of such set-off and application.
11.11 Automatic Debits of Fees. With respect to any
fee, or any other cost or expense (including Attorney Costs
as provided for herein) due and payable to the Agent, the
Issuing Bank, BofA or the Arranger under the Loan
Documents, the Company hereby irrevocably authorizes BofA
to debit any deposit account of the Company with BofA in an
amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or
expense. If there are insufficient funds in such deposit
accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or
in part, in BofA's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under
this Section shall be deemed a set-off.
11.12 Included Subsidiaries. The Company may
designate Newflo to be an Included Subsidiary by giving a
certification signed by a Responsible Officer to the Agent
with sufficient copies for each Bank that (i) the Company
has made such designation and (ii) the EBITDA of Newflo for
the four fiscal quarter period ending immediately prior to
the date of such certification is at least equal to
$15,000,000, accompanied by a calculation in detail
reasonably acceptable to the Agent of such EBITDA; provided
that, Newflo may not be designated a Included Subsidiary
if, at the time of such designation and after giving effect
thereto, a Default or Event of Default shall exist. Any
such designation shall be irrevocable.
11.13 Notification of Addresses, Lending Offices, Etc.
Each Bank shall notify the Agent in writing of any changes
in the address to which notices to the Bank should be
directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it
hereunder and of such other administrative information as
the Agent shall reasonably request.
11.14 Counterparts. This Agreement may be executed in
any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute
but one and the same instrument.
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11.15 Severability. The illegality or
unenforceability of any provision of this Agreement or any
instrument or agreement required hereunder shall not in any
way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or
agreement required hereunder.
11.16 No Third Parties Benefited. This Agreement is
made and entered into for the sole protection and legal
benefit of the Borrowers, the Banks, the Agent and the
Agent-Related Persons, and their permitted successors and
assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause
of action or claim in connection with, this Agreement or
any of the other Loan Documents.
11.17 Governing Law and Jurisdiction. (a) THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF OREGON; PROVIDED THAT THE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT
IN THE ANY UNITED STATES FEDERAL OR OREGON STATE COURT
SITTING IN PORTLAND, OREGON, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT AND THE
BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF
THE BORROWERS, THE AGENT, AND THE BANKS IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
11.18 Waiver of Jury Trial. THE BORROWERS, THE BANKS,
AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE BORROWERS, THE BANKS, AND THE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
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FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
11.19 Judgment. If, for the purposes of obtaining
judgment in any court, it is necessary to convert a sum due
hereunder or any other Loan Document in one currency into
another currency, the rate of exchange used shall be that
at which in accordance with normal banking procedures the
Agent could purchase the first currency with such other
currency on the Business Day preceding that on which final
judgment is given. The obligation of each Borrower in
respect of any such sum due from it to the Agent hereunder
or under the other Loan Documents shall, notwithstanding
any judgment in a currency (the "Judgment Currency") other
than that in which such sum is denominated in accordance
with the applicable provisions of this Agreement (the
"Agreement Currency"), be discharged only to the extent
that on the Business Day following receipt by the Agent of
any sum adjudged to be so due in the Judgment Currency, the
Agent may in accordance with normal banking procedures
purchase the Agreement Currency with the Judgment Currency.
If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Agent in the
Agreement Currency, each Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to
indemnify the Agent or the Person to whom such obligation
was owing against such loss. If the amount of the
Agreement currency so purchased is greater than the sum
originally due to the Agent in such currency, the Agent
agrees to return the amount of any excess to the applicable
Borrower (or to any other Person who may be entitled
thereto under applicable law).
11.20 OREGON LEGAL NOTICE. UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US AFTER
OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD
PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST
BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO
BE ENFORCEABLE. THE TERM "US" MEANS THE AGENT AND THE
BANKS.
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11.21 Entire Agreement. This Agreement, together with
the other Loan Documents, embodies the entire agreement and
understanding among the Borrowers, the Banks and the Agent,
and supersedes all prior or contemporaneous agreements and
understandings of such Persons, oral or written, relating
to the subject matter hereof and thereof.
[remainder of page intentionally left blank;
signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first
above written.
PRECISION CASTPARTS CORP.
By: /s/WILLIAM D. LARSSON
______________________________
Name: William D. Larsson
Title: Vice President and
Chief Financial Officer
AETC LIMITED
By: /s/WILLIAM D. LARSSON
______________________________
Name: William D. Larsson
Title: Director and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: /s/STEVEN F. STERLING
______________________________
Name: Steven F. Sterling
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/STEVEN F. STERLING
______________________________
Name: Steven F. Sterling
Title: Vice President
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