UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________to_________________
Commission File No. 001-08772
HUGHES SUPPLY, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0559446
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 North Orange Avenue, Suite 200, Orlando, Florida 32801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 407/841-4755
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock ($1.00 Par Value) New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($1.00 Par Value)
Page 1
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant: $467,435,276 as of April 16, 1999.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date: 23,598,410 shares of Common Stock ($1.00 par value) as of
April 16, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference
and the Part of the Form 10-K into which the document is
incorporated:
Part I - Annual Report to Shareholders for the fiscal
year ended January 29, 1999 (designated
portions).
Part II - Annual Report to Shareholders for the fiscal
year ended January 29, 1999 (designated
portions).
Part III- Definitive Proxy Statement for the 1999 Annual
Meeting of Shareholders (designated portions).
Part IV - Annual Report to Shareholders for the fiscal
year ended January 29, 1999 (designated
portions).
Page 2
TABLE OF CONTENTS
Page
PART I
Item 1. Business ............................................. 4
Item 2. Properties ........................................... 14
Item 3. Legal Proceedings .................................... 14
Item 4. Submission of Matters to a Vote of Security Holders .. 14
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters .................................. 15
Item 6. Selected Financial Data .............................. 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................. 15
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk ................................................. 15
Item 8. Financial Statements and Supplementary Data .......... 16
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .................. 16
PART III
Item 10. Directors and Executive Officers of the Registrant ... 17
Item 11. Executive Compensation ............................... 17
Item 12. Security Ownership of Certain Beneficial Owners and
Management ........................................... 17
Item 13. Certain Relationships and Related Transactions ....... 17
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K .......................................... 18
Signatures ........................................... 23
Index to Consolidated Financial Statements and
Schedules ............................................ 24
Index of Exhibits Filed with this Report ............. 25
Page 3
PART I
ITEM 1. BUSINESS
GENERAL
Hughes Supply, Inc. was founded as a general partnership in
Orlando, Florida in 1928 and was incorporated as a Florida corporation
in 1947. As used throughout this Report, the terms "Company" and
"Registrant" shall be deemed to mean Hughes Supply, Inc. and its
subsidiaries, except where the context otherwise indicates.
The Company is one of the largest diversified wholesale
distributors of materials, equipment and supplies for the construction
and industrial markets, and operates primarily in the southeastern,
southwestern and midwestern United States. The Company distributes over
240,000 products through 453 branches located in 29 states, Mexico and
Puerto Rico. The Company's principal customers are electrical, plumbing
and mechanical contractors, electric utility companies, property
management companies, municipalities and industrial companies.
Industrial companies include companies in the petrochemical, food and
beverage, pulp and paper, mining, pharmaceutical and marine industries.
Management believes that the Company holds a significant market share in
the majority of its local markets.
The Company focuses on distributing products that leverage its
strengths in inventory management, specialized sales forces,
distribution expertise, credit management and information technology.
The Company distributes nine different product groups which it has
classified into three major product categories:
- Fluid Control Products, consisting of the Company's industrial
pipe, plate, valves and fittings, plumbing, water and sewer,
and water systems product groups;
- Electrical Products, consisting of the Company's electrical
and electric utilities product groups; and
- Specialty Products, consisting of the Company's air
conditioning and heating, building materials, and pool and spa
equipment and supplies product groups.
The Company employs a specialized and experienced sales force for
each of its nine product groups. Management believes that no other
company competes against the Company across all of its product groups.
The Company sells its products to customers in the commercial,
residential, infrastructure and industrial markets. In recent years,
the Company has focused its internal growth and acquisitions to a
greater extent on products used in repair, maintenance, replacement and
renovation applications. These products generally offer higher margins
and are less dependent on new construction. Management believes that
the Company's product, market and geographic diversification helps
reduce the impact of economic cycles on its net sales and profitability.
Page 4
The Company has established a growth strategy that includes
acquisitions and internal growth. Since January 28, 1994, the Company
has completed 57 acquisitions representing 239 branches. In this same
time period, the Company has also grown internally through increases in
comparable branch net sales, 70 new branch openings and the addition of
new product groups.
The Company pursues an active acquisition program to capitalize on
the opportunities presented by its industry's substantial size and
highly fragmented ownership structure. Management believes that
acquisitions generally represent the most cost effective way for the
Company to enter new geographic markets. Acquisitions also provide
opportunities for the Company to gain market share and to enhance and
diversify its product offerings.
INDUSTRY OVERVIEW
Based on estimates available to the Company, industry sales in the
United States of products sold by the Company exceeded $200 billion in
1998, and no wholesale distributor of these products accounted for more
than 5% of the total market. As a result of their smaller size, many of
the local or regional distributors generally lack the purchasing power
of a larger entity, may lack the resources to offer broad product lines
and multiple brands, and may not possess sophisticated inventory
management and control systems necessary to operate multiple branches
efficiently.
As a result, during the past decade many of the large wholesale
distributors, including the Company, have grown considerably through
acquisitions. However, many independent distributors are still
privately owned, relationship-based companies that emphasize service,
delivery and reliability to their customers. Furthermore, a majority of
independent distributors focus on a particular size or type of customer
and a particular product group. In contrast, the Company services
various sizes and types of customers and multiple product groups and
diversifies its sales across various types of construction and users of
its products. Due to the Company's strong competitive position, its
size and its management infrastructure, management believes that the
Company is well positioned to continue to benefit from consolidation
trends within the wholesale distribution business.
Unlike do-it-yourself home center retailers, the Company does not
market its products to retail consumers. Consequently, the Company
differentiates itself with respect to its customer base, breadth of
products offered and level of service provided. Management believes
that the Company's customers are typically professionals who choose
their suppliers primarily on the basis of product availability, price,
relationships with sales personnel, and the quality and scope of
services offered by such suppliers. Furthermore, professional customers
generally buy in large volumes, are repeat buyers because of their
involvement in longer-term projects, and require specialized services
not typically provided by do-it-yourself home center retailers. The
Company provides its customers with credit services, design assistance,
material specifications, scheduled job site delivery, job site visits to
ensure satisfaction, technical product services, including blueprint
Page 5
take-off and computerized order quotes, and assistance with product
returns. Accordingly, the Company has been able to serve customer
groups that do-it-yourself home center retailers generally do not
emphasize.
ACQUISITION STRATEGY
The Company's acquisition strategy focuses on acquiring profitable
wholesale distribution businesses with strong management teams and well-
developed market positions and customer relationships. The Company
categorizes its acquisitions as fill-in acquisitions or new-market
acquisitions.
Fill-in acquisitions are generally smaller in size and represent
new branches that distribute some of the same product groups as the
Company in geographic areas that the Company already services. Since
January 28, 1994, the Company has added 45 branches through fill-in
acquisitions, and management believes that significant additional fill-
in acquisition opportunities are available.
New-market acquisitions represent the addition of new product
groups, primarily within the Company's existing product categories, or
the entry into new geographic markets, or both. During the last five
fiscal years, the Company has increasingly focused on new-market
acquisitions in order to:
- add products and product groups with higher gross margins;
- increase sales to the replacement and industrial markets
(which tend to be less cyclical than new construction
markets);
- achieve greater geographic diversification; and
- develop additional opportunities for future fill-in
acquisitions and new branch openings.
Since January 30, 1998, the Company has acquired several wholesale
distributors, including:
(i) San Antonio Plumbing Distributors, Inc., significantly
increasing the Company's plumbing and water and sewer
business in existing geographic markets;
(ii) Winn-Lange Electric, Inc., significantly increasing the
Company's electrical business in new geographic markets;
(iii) Douglas Leonhardt and Associates, Inc., significantly
expanding the Company's offering of fire protection
products and services and significantly increasing the
Company's water and sewer business in new and existing
geographic markets;
Page 6
(iv) Florida Electric Supply, Inc., significantly increasing
the Company's electrical and electric utilities business
in existing geographic markets;
(v) Kamen Supply Company, Inc., significantly increasing the
Company's plumbing business in new geographic markets;
and
(vi) W.C. Caye and Company, Inc., significantly increasing the
Company's building materials business in new geographic
markets.
The following table summarizes the fill-in and new-market
acquisitions completed by the Company since January 28, 1994:
<TABLE>
<CAPTION>
Type of Date of Number of Location of
Acquisition Acquisition Acquisition Branches Operation Major Product Categories
- ----------- ----------- ----------- -------- ----------- ------------------------
<S> <C> <C> <C> <C> <C>
Florida and Georgia Fill-in February 1994- 4 FL,GA Electrical; Fluid Control
branches (1) September 1994
Treaty Distribution New-market January 1995 16 IN,OH Fluid Control; Specialty
Group branches
Olander & Brophy, Inc. New-market March 1995 4 OH,PA Fluid Control; Specialty
Port City Electrical Fill-in March 1995 2 GA,SC Electrical
Supply, Inc.
Elec-Tel Supply Fill-in April 1995 1 GA Electrical
Company
Various branches (2) Fill-in June 1995- 7 AL,FL,KY,NJ, All
December 1995 SC,TN,VA
Moore Electric New-market August 1995 5 NC,SC Electrical
Supply, Inc.*
Atlantic Pump & Fill-in September 1995 4 FL,PR Fluid Control; Specialty
Equipment Companies
Florida Pipe & New-market December 1995 1 FL Fluid Control
Supply Company*
Waldorf Supply, Inc. Fill-in February 1996 1 MD Fluid Control
West Virginia Water and New-market March 1996 2 WV Fluid Control
Waste Supply Co., Inc.
Electric Laboratories New-market April 1996 3 IL,OH Electrical
and Sales Corporation*
PVF Holdings, Inc. New-market May 1996 16 GA,IL,LA,MO,NC, Fluid Control
NJ,TN,TX,UT,WA
Gayle Supply Fill-in May 1996 3 AL Fluid Control
Company, Inc.*
R & G Plumbing Fill-in May 1996 2 AL Fluid Control
Supply, Inc.
JuNo Industries, Inc. New-market September 1996 5 FL,GA Fluid Control
and J.I. Services
Corporation*
Page 7
<CAPTION>
Type of Date of Number of Location of
Acquisition Acquisition Acquisition Branches Operation Major Product Categories
- ----------- ----------- ----------- -------- ----------- ------------------------
<S> <C> <C> <C> <C> <C>
Palm Pool New-market September 1996 2 MI,OH Fluid Control; Specialty
Products, Inc.*
Coastal Wholesale, Fill-in November 1996 1 FL Fluid Control; Specialty
Inc.
J & J, Inc. New-market November 1996 2 GA,TX Fluid Control
Wholesale Electric New-market November 1996 2 NC,NY Electrical
Supply Corporation
Panhandle Pipe & Fill-in December 1996 1 WV Fluid Control
Supply Co., Inc.*
Sunbelt Supply Company* New-market December 1996 9 FL,LA,TX,VA Fluid Control
Metals, Incorporated, New-market January 1997 3 AL,MO,OK Fluid Control
Stainless Tubular
Products, Inc., and
Metals, Inc. - Gulf
Coast Division*
Dixie Forming & New-market February 1997 5 NC,SC,VA Specialty
Building Specialties
Incorporated
Gulf Pool Equipment New-market February 1997 3 GA,OK,TX Fluid Control; Specialty
Company
Dominion Pipe and Supply New-market May 1997 1 VA Fluid Control
Company and Dominion
Pipe Fabricators, Inc.*
Gilleland Concrete New-market June 1997 1 GA Fluid Control
Products, Inc.
Shrader Holding Co., New-market August 1997 4 AR,TX Fluid Control
Inc.*
Workman Developments, New-market August 1997 1 WV Fluid Control
Inc.
Supply One Fill-in September 1997 1 OH Fluid Control
Allied Metals, Inc. New-market October 1997 1 TX Fluid Control
Virginia Water Fill-in November 1997 1 VA Fluid Control
& Waste Supply
Company, Inc.*
Superior Concrete Fill-in December 1997 - FL Specialty
Products
APPCO Process Equipment New-market December 1997 1 NC Fluid Control
Company
Mountain Country New-market January 1998 10 AZ Fluid Control; Specialty
Supply, Inc.
International Supply New-market January 1998 38 TX Fluid Control
Company, Inc. and
affiliated operations
Merex Corporation New-market January 1998 2 TX,MX Fluid Control
Chad Supply, Inc.* New-market January 1998 18 AL,FL,GA,KY,LA All
NC,OH,SC,TN
Page 8
<CAPTION>
Type of Date of Number of Location of
Acquisition Acquisition Acquisition Branches Operation Major Product Categories
- ----------- ----------- ----------- -------- ----------- ------------------------
<S> <C> <C> <C> <C> <C>
San Antonio Plumbing Fill-in March 1998 14 TX Fluid Control
Distributors, Inc.*
United Supply Agencies New-market March 1998 1 TX All
Winn-Lange New-market June 1998 3 TX Electrical
Electric, Inc.*
Windward Supply, Inc. New-market August 1998 1 TX All
U.S. Fusion, Inc.* New-market September 1998 1 LA Fluid Control
Douglas Leonhardt and New-market October 1998 3 GA,NC,TN Fluid Control
Associates, Inc.
Municipal and Contractor New-market November 1998 4 MD Fluid Control
Sales, Inc.
Rainbow Sales Co., Inc. New-market December 1998 3 NC,VA All
Florida Electric Fill-in December 1998 1 FL Electrical
Supply, Inc.
Kamen Supply New-market January 1999 10 CO,KS Fluid Control
Company, Inc.
American Industrial New-market January 1999 2 TX Fluid Control
Precast Products, Inc.
Stewart Supply Fill-in February 1999 1 TX All
Company, Inc.
State Wholesale Fill-in March 1999 1 NC Fluid Control
Supply, Inc.
W.C. Caye and New-market March 1999 11 AL,FL,GA,SC Specialty
Company, Inc.
---
TOTAL 239
===
</TABLE>
* Accounted for as pooling of interests.
(1) Facilities acquired in purchases of assets from four entities.
(2) Facilities acquired in purchases of assets from three entities.
OPERATING STRATEGY
The Company's operating strategy is based on decentralizing, at the
branch level, customer-related functions such as sales and local
inventory management, and centralizing, at the corporate level, the
administrative responsibility for certain functions such as credit,
human resources, finance and accounting, legal and information
technology. Key elements of the Company's operating strategy include:
Comprehensive and Diversified Product Categories and Groups.
As part of its emphasis on superior customer service, the Company
offers more than 240,000 products at competitive prices.
Distribution of a wide variety of products within the categories of
Fluid Control Products, Electrical Products and Specialty Products
Page 9
assists the Company's customers in managing their inventory,
arranging for consolidated delivery requirements and providing a
greater portion of total job specifications. The depth and breadth
of the Company's product categories generally permit it to make add
on sales of higher margin, non-commodity items.
The Company is diversified across three broad product
categories, which consist of nine product groups. The Company is
also diversified across various sectors of the construction
industry (including commercial, residential, infrastructure and
industrial markets), which lessens its dependence upon market
conditions applicable to any one of its product groups or any
single sector of the construction industry. Furthermore, the
Company's product diversification permits it to participate in
multiple phases of construction projects.
Superior Customer Service. Substantially all of the Company's
sales are to professional customers with whom the Company has
developed long-term relationships, rather than retail consumers.
These relationships are largely based on the Company's history of
providing superior service. The Company provides its customers
with credit services, design assistance, material specifications,
scheduled job site delivery, job site visits to ensure
satisfaction, technical product services, including blueprint take-
off and computerized order quotes, and assistance with product
returns.
Volume Purchasing Power. The Company established its
preferred vendor program in 1991 to more effectively leverage its
purchasing power. This program has reduced the number of the
Company's vendors and has resulted in stronger, more strategic
relationships with a more concentrated group of vendors. The
concentration of vendors has also improved the Company's ability to
assure more timely delivery, to reduce errors, and to obtain better
terms and greater financial incentives. Other programs currently
being employed with vendors include vendor managed inventory
systems, bar coding, and electronic exchange of purchase orders and
invoices, each of which has resulted in a reduction in transaction
costs and an improvement in operating efficiency.
Well-Trained and Experienced Workforce. The Company has
implemented extensive employee training and recruiting programs to
ensure that its employees have the skill levels necessary to
compete effectively in today's marketplace. The Company utilizes
in-depth training seminars covering basic and advanced product
knowledge, and selling, purchasing, negotiating and management
skills. The Company has also developed a recruiting and training
program to increase the number of qualified applicants introduced
into its management and sales ranks. The Company generally has
experienced a low rate of turnover among its employees and, as a
result, the Company's corporate management group, branch managers,
outside sales representatives and inside sales account executives
have considerable experience with the Company.
Page 10
Centralized Administrative Functions. The Company has
centralized the administrative responsibility for certain functions
such as credit, human resources, finance and accounting, legal and
information technology. The Company's credit function is essential
to its success. All credit decisions are researched, analyzed and
approved by a group of regional credit managers to ensure
conformity and quality of credit decisions across the Company's
operations. Management believes that its credit function has
enabled it to be recognized as an industry leader due to its
consistently low level of bad debt expense. Centralization of
human resources, finance and accounting, legal and information
technology functions ensures conformity in policy and lower overall
cost of administration.
Local Market Focus. The Company has organized its branches as
autonomous, decentralized branches capable of meeting local market
needs and offering competitive prices. Each branch handles one or
more of the Company's focused product groups and operates as a
separate profit center with its own sales force. Each branch
manager has the authority and responsibility to set pricing and
tailor the product offering and mix, as well as the nature of
services offered, to meet the local market demand. In addition,
each branch manager is responsible for purchasing, maintenance of
adequate inventory levels, cost controls and customer relations.
The Company has been able to tailor its branch size and
product offerings to perceived market demand. As a result, the
Company has successfully operated branches in secondary cities
where management believes it has achieved significant market share
and in larger metropolitan areas where it has established a sound
market presence.
PRODUCTS
The Company distributes products in the following three major
product categories and nine product groups:
Fluid Control Products
- Industrial Pipe, Plate, Valves and Fittings: Mechanical and
weld pipe, valves and related fittings, high performance
valves, specialty pipe, high density polyethylene pipe and
fittings, stainless steel and other high alloy pipe, plate,
valves and fittings.
- Plumbing: Plumbing fixtures and related fittings,
residential, commercial and industrial water heaters, drain
waste, vent, natural gas and potable water piping, and
plumbing accessories and supplies.
- Water and Sewer: Water works and industrial supplies,
including large diameter plastic (PVC) and ductile iron pipe,
fire hydrants, water meters, valves, backflow prevention
devices, storm drain, precast concrete tested utility and fire
line vaults, fabricated fire protection systems and supplies,
Page 11
and related hardware and accessories.
- Water Systems: Jet and submersible pumps and tanks,
residential and commercial water treatment, well liners, wire,
poly pipe, accessories and environmental products.
Electrical Products
- Electrical: Electrical supplies, including wire, cable,
cords, boxes, covers, wiring devices, conduit, raceway duct,
safety switches, motor controls, breakers, panels, fuses and
related supplies and accessories, residential, commercial and
industrial electrical fixtures and other specialty fixtures.
- Electric Utilities: Transformers, conductor cable,
insulators, prestressed concrete transmission and distribution
poles, and other electric utility supplies and related
hardware, accessories and tools.
Specialty Products
- Air Conditioning and Heating: Heating, ventilation and air
conditioning equipment, furnaces, heaters, heat pumps,
condensing units, duct, pipe, fittings, registers, grills,
freon, insulation and other refrigeration equipment, supplies
and service parts.
- Building Materials: Reinforcing wire, reinforcing steel,
plyform, lumber, concrete chemicals, concrete forming
accessories, road and bridge products, masonry accessories and
other building materials, hand tools, power tools, hardware,
appliances, paint, flooring, janitorial products and
equipment.
- Pool and Spa Equipment and Supplies: Above-ground and in-
ground pool packages, pumps, filters, heaters, lights, slides,
diving boards, skimmers, drains, chemicals, solar equipment,
pool liners and in-ground pool walls, deck products and
cleaning equipment.
Information with respect to the Company's net sales by product
category is set forth in Note 10 of the Notes to Consolidated Financial
Statements of the Company's Annual Report to Shareholders for the fiscal
year ended January 29, 1999, a copy of which is filed as an exhibit to
this Report and the cited portion of which is incorporated herein by
reference.
SALES AND PURCHASING
The Company employs approximately 920 outside sales representatives
who call on customers and who also work with architects, engineers,
manufacturers' representatives, purchasing agents, and plant
superintendents and foremen for major construction projects.
Approximately 770 inside account executives expedite orders, deliveries,
quotations, and requests for pricing. Most orders are received by
Page 12
telephone, and materials are delivered by the Company's trucks to the
customer's office or job site.
The Company's purchasing agents in its branches use a computerized
inventory system to monitor stock levels, while central distribution
centers in Orlando, Florida and Forest Park, Georgia provide purchasing
assistance as well as a broad stock of inventory which supplements the
inventory of the branches. In addition, the Company uses several of its
larger branches in other parts of the country as distribution points for
certain product lines.
CUSTOMERS AND SUPPLIERS
The Company currently serves over 100,000 customers, and no single
customer accounts for more than 1% of total annual sales. Orders for
larger construction projects normally require long-term delivery
schedules throughout the period of construction, which in some cases may
continue for several years. The substantial majority of customer orders
are shipped from inventory at the Company's branches. The Company also
accommodates special orders from its customers and facilitates the
shipment of certain large volume orders directly from the manufacturer
to the customer.
The Company regularly purchases from over 11,000 manufacturers and
suppliers, of which approximately 940 are currently part of the
Company's preferred vendor program. No single supplier accounted for
more than 5% of the Company's total purchases during fiscal 1999.
INVENTORIES
The Company is a wholesale distributor of construction and
industrial materials and maintains significant inventories to meet rapid
delivery requirements and to assure itself of a continuous allotment of
goods from suppliers. As of January 29, 1999, inventories constituted
approximately 36% of the Company's total assets.
TECHNOLOGY
The Company's information technology ("IT") systems are capable of
supporting numerous operational functions, including purchasing,
receiving, order processing, shipping, inventory management, sales
analysis and accounting. The Company's customers and sales
representatives rely on these systems for real-time information on
product pricing, inventory availability and order status. The systems
also provide management with information relating to sales, inventory
levels and customer payments, and with other data that is essential for
the Company to operate efficiently and provide high levels of service to
its customers. The Company believes that its continued investment in
upgrading and consolidating its IT systems will provide a platform for
future growth and enable it to realize more administrative synergies
from past and future acquisitions.
COMPETITION
Management believes that the Company is one of the largest
Page 13
wholesale distributors of its range of products in the southeastern,
southwestern and midwestern United States and that no other company
competes against it across all of its product groups. However, there is
strong competition in each product group distributed by the Company.
The main sources of competition are other wholesalers, manufacturers who
sell certain lines directly to contractors and, to a limited extent,
retailers in the markets for plumbing, electrical fixtures and supplies,
building materials, pool and spa supplies, and contractor's tools. The
principal competitive factors in the Company's business are product
availability, pricing, technical product knowledge as to application and
usage, and advisory and other service capabilities.
EMPLOYEES
As of January 29, 1999, the Company had approximately 7,200
employees consisting of approximately 15 executives, 1,700 managers,
1,690 sales personnel and 3,795 other employees, including truck
drivers, warehouse personnel, office and clerical workers. Over the
last year, the Company's work force has increased by approximately 20%
compared to the prior year as a result of increased sales volume and
business acquisitions. The Company considers its relationship with its
employees to be good.
ITEM 2. PROPERTIES
The Company leases approximately 63,000 square feet of office space
in Orlando, Florida for its headquarters. In addition, the Company owns
or leases 453 facilities in 29 states, Mexico and Puerto Rico. The
typical sales branch consists of a combined office and warehouse
facility ranging in size from 3,000 to 50,000 square feet, with paved
parking and storage areas. The Company also operates a computer center,
two central distribution warehouses, and a garage and trucking terminal.
Additional information regarding owned and leased properties of the
Company is set forth as Exhibit 99.1 to this Report and in Note 7 of the
Notes to Consolidated Financial Statements of the Annual Report to
Shareholders for the fiscal year ended January 29, 1999, a copy of which
is filed as an exhibit to this Report and the cited portion of which is
incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings arising in the
normal course of its business. Management believes that none of these
proceedings will have a material adverse impact on its financial
condition, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended January 29, 1999.
Page 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information with respect to the principal market for the Company's
common stock, stock prices and dividend information is set forth under
the caption "Corporate and Shareholder Information" and in Note 11 of
the Notes to Consolidated Financial Statements of the Company's Annual
Report to Shareholders for the fiscal year ended January 29, 1999, a
copy of which is filed as an exhibit to this Report and the cited
portion of which is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to selected financial data of the Company
is set forth under the caption "Selected Financial Data" of the
Company's Annual Report to Shareholders for the fiscal year ended
January 29, 1999, a copy of which is filed as an exhibit to this Report
and the cited portion of which is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information with respect to the Company's financial condition,
changes in financial condition and results of operations is set forth
under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of the Company's Annual Report to
Shareholders for the fiscal year ended January 29, 1999, a copy of which
is filed as an exhibit to this Report and the cited portion of which is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to market risk from changes in (i) interest
rates on outstanding variable-rate debt and (ii) the prices of certain
of the Company's products whose manufacture is reliant on certain
commodities.
INTEREST RATE RISK
At January 29, 1999, the Company had approximately $174.2 million
of outstanding variable-rate debt. Based upon an assumed 10% increase
or decrease in interest rates from their January 29, 1999 levels, the
market risk with respect to the Company's variable-rate debt would not
be material. The Company manages its interest rate risk by maintaining
a combination of fixed-rate and variable-rate debt.
COMMODITY PRICE RISK
The Company is affected by price fluctuations in stainless steel,
Page 15
nickel alloys, copper, aluminum, plastic and other commodities. Such
commodity price fluctuations have from time to time created cyclicality
in the financial performance of the Company and could continue to do so
in the future. The Company seeks to minimize the effects of commodity
price fluctuations through (i) economies of purchasing and inventory
management resulting in cost reductions, maintenance of minimum economic
reorder points, and productivity improvements and (ii) price increases
to maintain reasonable profit margins. Additional information with
respect to the Company's commodity price risk is set forth under the
caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations" of the Company's Annual Report to Shareholders
for the fiscal year ended January 29, 1999, a copy of which is filed as
an exhibit to this Report and the cited portion of which is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Financial Statements
The financial statements filed with this report are set forth in
the "Index to Consolidated Financial Statements and Schedules" following
Part IV hereof.
(b) Selected Quarterly Financial Data
Information with respect to selected quarterly financial data of
the Company is set forth in Note 11 of the Notes to Consolidated
Financial Statements of the Company's Annual Report to Shareholders for
the fiscal year ended January 29, 1999, a copy of which is filed as an
exhibit to this Report and the cited portion of which is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The Company has not had any change in, or disagreement with, its
accountants or reportable event which is required to be reported in
response to this item.
Page 16
PART III
All information required by Part III (Items 10, 11, 12 and 13) is
incorporated by reference to the Company's Definitive Proxy Statement
for the 1999 Annual Meeting of Shareholders.
Page 17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules
Financial statements and financial statement schedules required to
be filed by Item 8 of this Report are listed in a separately designated
section submitted below. Exhibits are listed in subparagraph (c) below.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
January 29, 1999.
(c) Exhibits Filed
A substantial number of the exhibits referred to below are
indicated as having been previously filed as exhibits to other reports
under the Securities Exchange Act of 1934, as amended, or as exhibits to
registration statements under the Securities Act of 1933, as amended.
Such previously filed exhibits are incorporated by reference in this
Form 10-K. Exhibits not incorporated by reference herein are filed with
this report.
(2) Plan of acquisition, reorganization, arrangement, liquidation
or succession. Not applicable.
(3) Articles of incorporation and by-laws.
3.1 Restated Articles of Incorporation, as amended,
incorporated by reference to Exhibit 3.1 to Form 10-Q for
the quarter ended April 30, 1997 (Commission File No.
001-08772).
3.2 Composite By-Laws, as amended, incorporated by reference
to Exhibit 3.2 to Form 10-K for the fiscal year ended
January 30, 1998 (Commission File No. 001-08772).
3.3 Form of Articles of Amendment to Restated Articles of
Incorporation of the Company, incorporated by reference
to Exhibit 99.2 to Form 8-A dated May 22, 1998
(Commission File No. 001-08772).
(4) Instruments defining the rights of security holders, including
indentures.
4.1 Form of Common Stock Certificate representing shares of
the Registrant's common stock, $1.00 par value,
incorporated by reference to Exhibit 4.1 to Form 10-Q for
the quarter ended July 31, 1997 (Commission File No. 001-
08772).
Page 18
4.2 Rights Agreement dated as of May 20, 1998 between Hughes
Supply, Inc. and American Stock Transfer & Trust Company,
incorporated by reference to Exhibit 99.2 to Form 8-A
dated May 22, 1998 (Commission File No. 001-08772).
(9) Voting trust agreement. Not applicable.
(10) Material contracts.
10.1 Lease Agreements with Hughes, Inc.
(a) Orlando Trucking, Garage and Maintenance Operations
dated December 1, 1971, incorporated by reference
to Exhibit 13(n) to Registration No. 2-43900
(Commission File No. 0-5235). Letter dated April
15, 1992 extending lease from month to month, filed
as Exhibit 10.1(a) to Form 10-K for the fiscal year
ended January 31, 1992 (Commission File No. 0-
5235).
(b) Leases effective March 31, 1988, incorporated by
reference to Exhibit 10.1(c) to Form 10-K for the
fiscal year ended January 27, 1989 (Commission File
No. 0-5235).
Sub-Item Property
(1) Clearwater
(2) Daytona Beach
(3) Fort Pierce
(4) Lakeland
(6) Leesburg
(7) Orlando Electrical Operation
(8) Orlando Plumbing Operation
(9) Orlando Utility Warehouse
(11) Sarasota
(12) Venice
(13) Winter Haven
(c) Lease amendment letter between Hughes, Inc. and the
Registrant, dated December 1, 1986, amending
Orlando Truck Operations Center and Maintenance
Garage lease, incorporated by reference to Exhibit
10.1(i) to Form 10-K for the fiscal year ended
January 30, 1987 (Commission File No. 0-5235).
(d) Lease agreement dated June 1, 1987, between Hughes,
Inc. and the Registrant, for additional Sarasota
property, incorporated by reference to Exhibit
10.1(j) to Form 10-K for the fiscal year ended
January 29, 1988 (Commission File No. 0-5235).
Page 19
(e) Lease dated March 11, 1992, incorporated by
reference to Exhibit 10.1(e) to Form 10-K for the
fiscal year ended January 31, 1992 (Commission File
No. 0-5235).
Sub-Item Property
(2) Gainesville Electrical Operation
(f) Amendments to leases between Hughes, Inc. and the
Registrant, dated April 1, 1998, amending the
leases for the thirteen properties listed in
Exhibit 10.1(b), (d) and (e), incorporated by
reference to Exhibit 10.1 to Form 10-K for the
fiscal year ended January 30, 1998 (Commission File
No. 001-08772).
10.2 Hughes Supply, Inc. 1988 Stock Option Plan as amended
March 12, 1996 incorporated by reference to Exhibit 10.2
to Form 10-K for the fiscal year ended January 26, 1996
(Commission File No. 001-08772).
10.3 Form of Supplemental Executive Retirement Plan Agreement
entered into between the Registrant and eight of its
executive officers, incorporated by reference to Exhibit
10.6 to Form 10-K for the fiscal year ended January 30,
1987 (Commission File No. 0-5235).
10.4 Directors' Stock Option Plan, as amended, incorporated by
reference to Exhibit 10.4 to Form 10-K for the fiscal
year ended January 30, 1998 (Commission File No. 001-
08772).
10.5 Written description of senior executives' long-term
incentive bonus plan for fiscal year 1996 incorporated by
reference to the description of the bonus plan set forth
under the caption "Approval of the Stock Award Provisions
of the Senior Executives' Long-Term Incentive Bonus Plan
for Fiscal Year 1996" on pages 26 and 27 of the
Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held May 24, 1994 (Commission File No.
001-08772).
10.6 Hughes Supply, Inc. Amended Senior Executives' Long-Term
Incentive Bonus Plan, adopted January 25, 1996,
incorporated by reference to Exhibit 10.9 to Form 10-K
for the fiscal year ended January 26, 1996 (Commission
File No. 001-08772).
10.7 Note Purchase Agreement, dated as of August 28, 1997, by
and among the Company and certain purchasers identified
in Schedule A of the Note Purchase Agreement,
incorporated by reference to Exhibit 10.15 to Form 10-Q
for the quarter ended July 31, 1997 (Commission File No.
001-08772).
Page 20
10.8 Hughes Supply, Inc. 1997 Executive Stock Plan (the
"Plan") incorporated by reference to the description of
the Plan set forth under Exhibit A of the Registrant's
Proxy Statement for the Annual Meeting of Shareholders to
be held May 20, 1997 (Commission File No. 001-08772).
10.9 Note Purchase Agreement, dated as of May 29, 1996, by and
among the Company and certain purchasers identified in
Schedule A of the Note Purchase Agreement, incorporated
by reference to Exhibit 10.13 to Form 10-K for the fiscal
year ended January 30, 1998 (Commission File No. 001-
08772).
10.10 Note Purchase Agreement, dated as of May 5, 1998, by and
among the Company and certain purchasers identified in
Schedule A of the Note Purchase Agreement, incorporated
by reference to Exhibit 10.11 to Form 10-Q for the
quarter ended April 30, 1998 (Commission File No. 001-
08772).
10.11 Revolving Credit Agreement, dated as of January 26, 1999,
by and among the Company and a group of banks. The
Revolving Credit Agreement contains a table of contents
identifying the contents of Schedules and Exhibits, all
of which have been omitted. The Company agrees to
furnish a supplemental copy of any omitted Schedule or
Exhibit to the Commission upon request.
10.12 Line of Credit Agreement, dated as of January 26, 1999,
by and among the Company and a group of banks. The Line
of Credit Agreement contains a table of contents
identifying the contents of Schedules and Exhibits, all
of which have been omitted. The Company agrees to
furnish a supplemental copy of any omitted Schedule or
Exhibit to the Commission upon request.
(11) Statement re computation of per share earnings. Not
applicable.
(12) Statements re computation of ratios. Not applicable.
(13) Annual report to security holders, Form 10-Q or quarterly
report to security holders.
13.1 Information incorporated by reference into Form 10-K from
the Annual Report to Shareholders for the fiscal year
ended January 29, 1999.
(16) Letter re change in certifying accountant. Not applicable.
(18) Letter re change in accounting principles. Not applicable.
(21) Subsidiaries of the Registrant.
21.1 Subsidiaries of the Registrant.
Page 21
(22) Published report regarding matters submitted to vote of
security holders. Not applicable.
(23) Consents of experts and counsel.
23.1 Consent of PricewaterhouseCoopers LLP.
(24) Power of attorney. Not applicable.
(27) Financial Data Schedule.
27.1 Financial Data Schedule (filed electronically only).
(99) Additional exhibits.
99.1 Location of Facilities.
Page 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HUGHES SUPPLY, INC.
By: /s/ David H. Hughes
David H. Hughes, Chairman of
the Board and Chief Executive
Officer
/s/ J. Stephen Zepf
J. Stephen Zepf, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
Date: April 21, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ David H. Hughes /s/ John B. Ellis
David H. Hughes John B. Ellis
April 21, 1999 April 21, 1999
(Director) (Director)
/s/ John D. Baker II /s/ A. Stewart Hall, Jr.
John D. Baker II A. Stewart Hall, Jr.
April 21, 1999 April 21, 1999
(Director) (Director)
/s/ Robert N. Blackford /s/ Vincent S. Hughes
Robert N. Blackford Vincent S. Hughes
April 21, 1999 April 21, 1999
(Director) (Director)
/s/ H. Corbin Day /s/ William P. Kennedy
H. Corbin Day William P. Kennedy
April 21, 1999 April 21, 1999
(Director) (Director)
Page 23
HUGHES SUPPLY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of the Registrant and
its subsidiaries included in the Registrant's Annual Report to
Shareholders for the fiscal year ended January 29, 1999, are
incorporated by reference:
Annual
Report
Page
Consolidated Statements of Income
for the years ended January 29, 1999,
January 30, 1998 and January 31, 1997 13
Consolidated Balance Sheets as of
January 29, 1999 and January 30, 1998 14
Consolidated Statements of Shareholders'
Equity for the years ended January 29,
1999, January 30, 1998 and January 31, 1997 15
Consolidated Statements of Cash Flows for
the years ended January 29, 1999,
January 30, 1998 and January 31, 1997 16
Notes to Consolidated Financial Statements 17
Report of Independent Certified
Public Accountants 27
All other schedules have been omitted as they are either not applicable,
not required or the information is given in the financial statements or
related notes thereto.
Page 24
INDEX OF EXHIBITS FILED WITH THIS REPORT
10.11 Revolving Credit Agreement, dated as of January 26, 1999,
by and among the Company and a group of banks.
10.12 Line of Credit Agreement, dated as of January 26, 1999,
by and among the Company and a group of banks.
13.1 Information incorporated by reference into Form 10-K from
the Annual Report to Shareholders for the fiscal year
ended January 29, 1999.
21.1 Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
27.1 Financial Data Schedule (filed electronically only).
99.1 Location of Facilities.
Page 25
EXHIBIT 10.11
REVOLVING CREDIT AGREEMENT
Dated as of January 26, 1999
By And Among
HUGHES SUPPLY, INC.
AND
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION,
individually and as Administrative Agent,
FIRST UNION NATIONAL BANK,
individually and as Documentation Agent,
NATIONSBANK, N.A.,
individually and as Syndication Agent
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
individually and as Co-Agent,
ABN AMRO BANK, N.V.,
PNC BANK, N.A.,
WACHOVIA BANK, N.A.,
THE FIFTH THIRD BANK,
HIBERNIA NATIONAL BANK, and
other financial institutions becoming a party hereto
====================================================================
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Carolyn Zander Alford
(404) 572-4600
TABLE OF CONTENTS
ARTICLE I DEFINITIONS; CONSTRUCTION 1
Section 1.01 Definitions. 1
Section 1.02 Accounting Terms and Determination. 17
Section 1.03 Other Definitional Terms. 18
Section 1.04 Exhibits and Schedules. 18
ARTICLE II REVOLVING LOAN COMMITMENTS 18
Section 2.01 Revolving Loan Commitments; Use of Proceeds. 18
Section 2.02 Syndicate Note; Repayment of Principal. 19
Section 2.03 Voluntary Reduction of Revolving Loan Commitments. 19
ARTICLE III GENERAL LOAN TERMS 20
Section 3.01 Funding Notices. 20
Section 3.02 Disbursement of Funds. 22
Section 3.03 Increase of Revolving Loan Commitments. 23
Section 3.04 Interest. 24
Section 3.05 Interest Periods. 25
Section 3.06 Fees. 26
Section 3.07 Voluntary Prepayments of Borrowings. 26
Section 3.08 Payments, etc. 27
Section 3.09 Interest Rate Not Ascertainable, etc. 29
Section 3.10 Illegality. 29
Section 3.11 Increased Costs. 30
Section 3.12 Lending Offices. 31
Section 3.13 Funding Losses. 32
Section 3.14 Assumptions Concerning Funding of Eurodollar
Advances. 32
Section 3.15 Apportionment of Payments. 32
Section 3.16 Sharing of Payments, Etc. 33
Section 3.17 Capital Adequacy. 33
Section 3.18 Benefits to Guarantors. 34
Section 3.19 Limitation on Certain Payment Obligations. 34
ARTICLE IV CONDITIONS TO BORROWINGS 34
Section 4.01 Conditions Precedent to Initial Revolving Loans. 34
Section 4.02 Conditions to All Revolving Loans. 37
ARTICLE V REPRESENTATIONS AND WARRANTIES 38
Section 5.01 Organization and Qualification. 38
Section 5.02 Corporate Authority. 38
Section 5.03 Financial Statements. 39
Section 5.04 Tax Returns. 39
Section 5.05 Actions Pending. 39
Section 5.06 Representations; No Defaults. 39
Section 5.07 Title to Properties. 39
Section 5.08 Enforceability of Agreement. 40
Section 5.09 Consent. 40
Section 5.10 Use of Proceeds; Federal Reserve Regulations. 40
Section 5.11 ERISA. 40
Section 5.12 Subsidiaries. 41
Section 5.13 Outstanding Indebtedness. 41
Section 5.14 Conflicting Agreements. 41
Section 5.15 Pollution and Other Regulations. 42
Section 5.16 Possession of Franchises, Licenses, Etc. 43
Section 5.17 Patents, Etc. 43
Section 5.18 Governmental Consent. 43
Section 5.19 Disclosure. 43
Section 5.20 Insurance Coverage. 44
Section 5.21 Labor Matters. 44
Section 5.22 Intercompany Loans; Dividends. 44
Section 5.23 Burdensome Restrictions. 44
Section 5.24 Investment Company Act, Etc. 44
Section 5.25 Notice of Non-Compliance with Laws. 45
Section 5.26 Year 2000 Issues. 45
ARTICLE VI AFFIRMATIVE COVENANTS 45
Section 6.01 Corporate Existence, Etc. 45
Section 6.02 Compliance with Laws, Etc. 45
Section 6.03 Payment of Taxes and Claims, Etc. 45
Section 6.04 Keeping of Books. 46
Section 6.05 Visitation, Inspection, Etc. 46
Section 6.06 Insurance; Maintenance of Properties. 46
Section 6.07 Reporting Covenants. 46
Section 6.08 Financial Covenants. 50
Section 6.09 Notices Under Certain Other Indebtedness. 51
Section 6.10 Additional Guarantors. 51
Section 6.11 Financial Statements; Fiscal Year. 51
Section 6.12 Ownership of Guarantors. 51
ARTICLE VII NEGATIVE COVENANTS 51
Section 7.01 Indebtedness. 52
Section 7.02 Liens. 52
Section 7.03 Mergers, Acquisitions, Sales, Etc. 53
Section 7.04 Investments, Loans, Etc. 54
Section 7.05 Sale and Leaseback Transactions. 55
Section 7.06 Transactions with Affiliates. 55
Section 7.07 Optional Prepayments. 55
Section 7.08 Changes in Business. 55
Section 7.09 ERISA. 55
Section 7.10 Additional Negative Pledges. 56
Section 7.11 Limitation on Payment Restrictions Affecting
Consolidated Companies. 56
Section 7.12 Actions Under Certain Documents. 56
ARTICLE VIII EVENTS OF DEFAULT 56
Section 8.01 Payments. 57
Section 8.02 Covenants Without Notice. 57
Section 8.03 Other Covenants. 57
Section 8.04 Representations. 57
Section 8.05 Non-Payments of Other Indebtedness. 57
Section 8.06 Defaults Under Other Agreements. 57
Section 8.07 Bankruptcy. 57
Section 8.08 ERISA. 58
Section 8.09 Money Judgment. 58
Section 8.10 Ownership of Credit Parties and Pledged Entities. 59
Section 8.11 Change in Control of Borrower. 59
Section 8.12 Default Under Other Credit Documents. 59
Section 8.13 Attachments. 59
ARTICLE IX THE AGENT 60
Section 9.01 Appointment of Administrative Agent. 60
Section 9.02 Nature of Duties of Administrative Agent. 60
Section 9.03 Lack of Reliance on the Administrative Agent. 60
Section 9.04 Certain Rights of the Administrative Agent. 61
Section 9.05 Reliance by Administrative Agent. 61
Section 9.06 Indemnification of Administrative Agent. 61
Section 9.07 The Administrative Agent in Its Individual Capacity. 62
Section 9.08 Holders of Revolving Notes. 62
Section 9.09 Successor Administrative Agent. 62
Section 9.10 Documentation Agent. 63
Section 9.11 Syndication Agent. 63
Section 9.12 Co-Agent. 63
ARTICLE X MISCELLANEOUS 63
Section 10.01 Notices. 63
Section 10.02 Amendments, Etc. 64
Section 10.03 No Waiver; Remedies Cumulative. 64
Section 10.04 Payment of Expenses, Etc. 64
Section 10.05 Right of Setoff. 66
Section 10.06 Benefit of Agreement. 66
Section 10.07 Governing Law; Submission to Jurisdiction. 68
Section 10.08 Independent Nature of Lenders' Rights. 69
Section 10.09 Counterparts. 70
Section 10.10 Effectiveness; Survival. 70
Section 10.11 Severability. 70
Section 10.12 Independence of Covenants. 70
Section 10.13 Change in Accounting Principles, Fiscal Year or Tax
Laws. 70
Section 10.14 Headings Descriptive; Entire Agreement. 71
Section 10.15 Time is of the Essence. 71
Section 10.16 Usury. 71
Section 10.17 Construction. 71
Section 10.18 Waiver of Effect of Corporate Seal. 71
SCHEDULES
Schedule 5.01 Organization and Ownership of Subsidiaries
Schedule 5.11 Employee Benefit Matters
Schedule 5.14 Conflicting Agreements
Schedule 5.15(a) Environmental Compliance
Schedule 5.22 Intercompany Loans
Schedule 7.01(b) Existing Indebtedness
Schedule 7.02 Existing Liens
EXHIBITS
Exhibit A Form of Syndicate Note
Exhibit B Form of Competitive Bid Note
Exhibit C Form of Closing Certificate
Exhibit D Form of Assignment and Acceptance
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of January 26, 1999
(the "Agreement") by and among HUGHES SUPPLY, INC. ("Borrower"), a Florida
corporation, SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION,
("SunTrust Bank, Central Florida") a national banking association, FIRST
UNION NATIONAL BANK, a national banking association, NATIONSBANK, N.A., a
national banking association, SOUTHTRUST BANK, NATIONAL ASSOCIATION, a na
tional banking association, ABN AMRO BANK, N.V., a banking corporation
organized under the laws of the Netherlands, PNC BANK, N.A., a national
banking association, WACHOVIA BANK, N.A., a national banking association,
THE FIFTH THIRD BANK, a national banking association, HIBERNIA NATIONAL
BANK, a national banking association and such other financial institutions
becoming a party hereto from time to time, (individually, a "Lender" and
collectively, the "Lenders"), SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), FIRST UNION NATIONAL BANK, as documentation agent
for the Lenders (in such capacity, the "Documentation Agent"), NATIONSBANK,
N.A., as syndication agent for the Lenders (in such capacity, the
"Syndication Agent") and SOUTHTRUST BANK, NATIONAL ASSOCIATION, as Co-Agent
for the Lenders (in such capacity, the "Co-Agent").
W I T N E S S E T H :
WHEREAS, Borrower has requested that the Lenders establish a
$225,000,000 revolving credit facility in favor of Borrower, and subject to
the terms and conditions contained herein, the Lenders are willing to
establish such revolving credit facility in favor of Borrower subject to
the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants made
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01 Definitions. As used in this Agreement, and in
any instrument, certificate, document or report delivered pursuant hereto,
the following terms shall have the following meanings (to be equally
applicable to both the singular and plural forms of the term defined):
"Administrative Agent" shall mean SunTrust Bank, Central Florida,
a national banking association, as administrative agent for the Lenders
hereunder and under the other Credit Documents, and each successor
administrative agent.
"Adjusted LIBO Rate" shall mean with respect to each Interest
Period for a Eurodollar Advance, the rate obtained by dividing (A) LIBOR
for such Interest Period by (B) a percentage equal to 1 minus the then
stated maximum rate (stated as a decimal) of all reserves requirements
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurodollar liabilities as defined in
Regulation D (or against any successor category of liabilities as defined
in Regulation D). The Administrative Agent shall promptly notify the
Borrower of any such reserve requirements that become applicable.
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under the Revolving Loans, which Advance shall be
made or outstanding as a Base Rate Advance, Competitive Bid Advance or
Eurodollar Advance, as the case may be.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of that Person.
"Agents" shall mean, collectively, the Administrative Agent, the
Documentation Agent, the Syndication Agent and the Co-Agent.
"Agreement" shall mean this Revolving Credit Agreement, either as
originally executed or as it may be from time to time supplemented,
amended, restated, renewed or extended and in effect.
"Applicable Facility Fee Percentage" shall mean the percentage
designated below based on Borrower's Leverage Ratio for the most recently
ended fiscal quarter for which financial statements have been delivered
pursuant to Section 6.07(a) or (b):
Leverage Ratio Applicable
Facility Fee
Percentage for
Revolving Loan
Commitment:
Less than 0.4:1.0 0.15%
Greater than or equal
to 0.4:1.0 but less 0.175%
than 0.45:1.0
Greater than or equal
to 0.45:1.0 but less 0.20%
than 0.5:1.0
Greater than or equal
to 0.5:1.0 but less 0.25%
than 0.55:1.0
Greater than or equal
to 0.55:1.0 0.30%
provided, however, that:
(a) The Applicable Facility Fee Percentage in effect as of
the date of execution and delivery of this Agreement is .20% for
Revolving Loan Commitments, and such percentage shall remain in
effect until such time as the Applicable Facility Fee Percentage
may be adjusted as hereinafter provided; and
(b) Adjustments, if any, to the Applicable Facility Fee
Percentages based on changes in the ratios set forth above shall
be made and become effective (i) on the first day of the fiscal
quarter immediately following delivery of the financial
statements required pursuant to Section 6.07(b), and (ii) on the
first day of the second fiscal quarter immediately following the
last day of any fiscal year of Borrower.
(c) Notwithstanding the foregoing, at any time during which
Borrower has failed to deliver the financial statements and
certificates when required by Section 6.07(a) and (b), as the
case may be, the Applicable Facility Fee Percentage shall be
0.30% until such time as the delinquent financial statements are
delivered at which time the Applicable Facility Fee Percentage
shall be reset as provided above.
"Applicable Margin" shall mean the percentage designated below
based on Borrower's Leverage Ratio for the most recently ended fiscal
quarter for which financial statements have been delivered pursuant to
Section 6.07(a) or (b):
Leverage Ratio Applicable Margin
for Revolving Loan
Commitment:
Less than 0.4:1.0 0.25%
Greater than or
equal to 0.4:1.0 but 0.325%
less than 0.45:1.0
Greater than or
equal to 0.45:1.0 0.55%
but less than
0.5:1.0
Greater than or
equal to 0.5:1.0 but 0.625%
less than 0.55:1.0
Greater than or
equal to 0.55:1.0 0.825%
provided, however, that:
(a) The Applicable Margin in effect as of the date of
execution and delivery of this Agreement is .55% for Revolving
Loan Commitments, and such percentage shall remain in effect
until such time as the Applicable Margin may be adjusted as
hereinafter provided; and
(b) Adjustments, if any, to the Applicable Margin based on
changes in the ratios set forth above shall be made and become
effective (i) on the first day of the fiscal quarter immediately
following delivery of the financial statements required pursuant
to Section 6.07(b), and (ii) on the first day of the second
fiscal quarter immediately following the last day of any fiscal
year of Borrower.
(c) Notwithstanding the foregoing, at any time during which
Borrower has failed to deliver the financial statements and
certificates when required by Section 6.07(a) and (b), as the case may
be, the Applicable Margin shall be 0.825% until such time as the
delinquent financial statements are delivered at which time the
Applicable Margin shall be reset as provided above.
"Asbestos Laws" means the common law in all federal, state and
local and foreign jurisdictions and other laws in such jurisdictions, and
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, now or hereafter in effect
relating to or concerning asbestos or asbestos-containing material,
including without limitation, exposure to asbestos or asbestos-containing
material.
"Asset Value" shall mean, with respect to any property or asset
of any Consolidated Company as of any particular date, an amount equal to
the greater of (i) the then book value of such property or asset as estab
lished in accordance with GAAP, and (ii) the then fair market value of such
property or asset as determined in good faith by the board of directors of
such Consolidated Company.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an Eligible Assignee in accordance
with the terms of this Agreement and substantially in the form of
Exhibit D.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as
amended and in effect from time to time (11 U.S.C. 101 et seq.).
"Base Rate" shall mean (with any change in the Base Rate to be
effective as of the date of change of either of the following rates) the
higher of (a) the rate which the Administrative Agent designates from time
to time to be its prime lending rate, as in effect from time to time, and
(b) the Federal Funds Rate, as in effect from time to time, plus one-half
of one percent (0.50%) per annum. The Administrative Agent's prime lending
rate is a reference rate and does not necessarily represent the lowest or
best rate charged to customers; Administrative Agent may make commercial
loans or other loans at rates of interest at, above or below the
Administrative Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance bearing interest based
on the Base Rate.
"Base Rate Loan" shall mean any Revolving Loan hereunder which
bears interest at the Base Rate.
"Borrowing" shall mean the incurrence by Borrower under any
Facility of Advances of one Type concurrently having the same Interest
Period or the continuation or conversion of an existing Borrowing or
Borrowings in whole or in part.
"Business Day" shall mean, with respect to Eurodollar Loans, any
day other than a day on which commercial banks are closed or required to be
closed for domestic and international business, including dealings in
Dollar deposits on the London interbank market, and with respect to all
other Revolving Loans and matters, any day other than Saturday, Sunday and
a day on which commercial banks are required to be closed for business in
Atlanta, Georgia, or Orlando, Florida.
"Capitalized Lease Obligations" shall mean all lease obligations
which have been or are required to be, in accordance with GAAP, capitalized
on the books of the lessee.
"CERCLA" has the meaning set forth in Section 5.15(a) of this
Agreement.
"Change in Control Provision" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Indebtedness of Borrower evidencing debt or a
commitment to extend loans in excess of $5,000,000 which requires, or
permits the holder(s) of such Indebtedness of Borrower to require that such
Indebtedness of Borrower be redeemed, repurchased, defeased, prepaid or
repaid, either in whole or in part, or the maturity of such Indebtedness of
Borrower to be accelerated in any respect, as a result of a change in
ownership of the capital stock of Borrower or voting rights with respect
thereto.
"Closing Date" shall mean the date on or before January 26, 1999,
on which the initial Revolving Loans are made and the conditions set forth
in Section 4.01 are satisfied or waived in accordance with Section 10.02.
"Co-Agent" shall mean SouthTrust Bank, National Association, a
national banking association, as co-agent for the Lenders hereunder and
under the other Credit Documents, and each successor co-agent.
"Commitment Letter" shall mean that certain letter agreement,
dated as of December 21, 1998, executed by SunTrust Equitable Securities
Corporation, SunTrust Bank, Central Florida, National Association and First
Union National Bank and acknowledged and agreed to by the Borrower.
"Competitive Bid Advance" shall mean an Advance bearing interest
based on a Competitive Bid Rate.
"Competitive Bid Loans" shall mean Revolving Loans made by a
Lender on a competitive bid basis as provided in Article II.
"Competitive Bid Note" shall mean a promissory note evidencing
Competitive Bid Loans in the form attached hereto as Exhibit B.
"Competitive Bid Rate" shall mean the interest rate charged by a
Lender on a Competitive Bid Loan.
"Consolidated Amortization" shall mean, for any fiscal period of
the Borrower, amortization of the Consolidated Companies for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated Companies" shall mean, collectively, Borrower and
all of its Subsidiaries.
"Consolidated Depreciation" shall mean, for any fiscal period of
the Borrower, depreciation of the Consolidated Companies for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITR" shall mean, for any fiscal period of the
Borrower, an amount equal to Consolidated Net Income (Loss) for such
period, plus, to the extent deducted in determining Consolidated Net Income
(Loss), (i) Consolidated Tax Expense for such period, (ii) Consolidated
Interest Expense for such period, and (iii) Consolidated Rental Expense for
such period.
"Consolidated EBITDAR" shall mean, for any fiscal period of the
Borrower, an amount equal to Consolidated Net Income (Loss) for such period
plus to the extent deducted in determining Consolidated Net Income (Loss),
(i) Consolidated Interest Expense for such period, (ii) Consolidated Tax
Expense for such period, (iii) Consolidated Depreciation for such period,
(iv) Consolidated Amortization for such period and (v) Consolidated Rental
Expense for such period.
"Consolidated Interest Expense" shall mean, for any fiscal period
of Borrower, total interest expense (including without limitation, interest
expense attributable to capitalized leases in accordance with the GAAP and
any program costs incurred by Borrower in connection with sales of accounts
receivable pursuant to a securitization program) of the Consolidated
Companies for such period, determined on a consolidated basis.
"Consolidated Net Income (Loss)" shall mean, for any fiscal
period of Borrower, the net income (or loss) of the Consolidated Companies
for such period (taken as a single accounting period) determined on a
consolidated basis in conformity with GAAP; provided that there shall be ex
cluded therefrom (i) any items of gain or loss which were included in
determining such Consolidated Net Income and were not realized in the
ordinary course of business or the result of a sale of assets other than in
the ordinary course of business; and (ii) the income (or loss) of any party
accrued prior to the date such becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any of its Subsidiaries, or
such party's assets are acquired by any Consolidated Company, unless such
party is acquired in a transaction accounted for as a pooling of interests.
"Consolidated Net Worth" shall mean as of the date of
determination, the Borrower's total shareholder's equity of such date as
determined in accordance with GAAP.
"Consolidated Rental Expense" shall mean, for any fiscal period
of Borrower, total operating lease expense of the Consolidated Companies
for such period, determined on a consolidated basis in accordance with
GAAP.
"Consolidated Tax Expense" shall mean, for any fiscal period of
the Borrower, tax expense of the Consolidated Companies for such period
determined on a consolidated basis in accordance with GAAP.
"Contractual Obligation" of any Person shall mean any provision
of any security issued by such Person or of any agreement, instrument or
undertaking under which such Person is obligated or by which it or any of
the property owned by it is bound.
"Credit Documents" shall mean, collectively, this Agreement, the
Revolving Notes, the Guaranty Agreements, and all other Guaranty Documents,
if any.
"Credit Parties" shall mean, collectively, each of Borrower, the
Guarantors, and every other Person who, from time to time, executes a
Credit Document with respect to all or any portion of the Obligations.
"Default" shall mean any condition or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Documentation Agent" shall mean First Union National Bank, a
national banking association, as documentation agent for the Lenders
hereunder and under the other Credit Documents, and each successor
documentation agent.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful
money of the United States of America.
"Eligible Assignee" shall mean (i) a commercial bank organized
under the laws of the United States of America, or any state thereof, or
organized under the laws of any other country with a Lending Office in the
United States of America, having total assets in excess of $1,000,000,000
or any commercial finance or asset based lending Affiliate of any such
commercial bank and (ii) any Lender or any Affiliate of any Lender.
"Environmental Laws" shall mean all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, Asbestos Laws), relating to pollution or protection of
the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any
petroleum product or other waste, chemicals or substances regulated by any
Environmental Law into the environment (including without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata), or (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of any
Hazardous Substance, petroleum including crude oil or any fraction thereof,
any petroleum product or other waste, chemicals or substances regulated by
any Environmental Law, and (iii) underground storage tanks and related
piping, and emissions, discharges and releases or threatened releases
therefrom, such Environmental Laws to include, without limitation (i) the
Clean Air Act (42 U.S.C. 7401 et seq.), (ii) the Clean Water Act (33
U.S.C. 1251 et seq.), (iii) the Resource Conservation and Recovery Act
(42 U.S.C. 6901 et seq.), (iv) the Toxic Substances Control Act (15
U.S.C. 2601 et seq.) and (v) the Comprehensive Environmental Response
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act (42 U.S.C. 9601 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each
trade or business (whether or not incorporated) which is a member of a
group of which that Person is a member and which is under common control
within the meaning of the regulations promulgated under Section 414 of the
Tax Code.
"Eurodollar Advance" shall mean an Advance bearing interest based
on the Adjusted LIBO Rate.
"Eurodollar Loan" shall mean any Revolving Loan hereunder which
bears interest based on the Adjusted LIBO Rate.
"Event of Default" shall have the meaning set forth in Article
VIII.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute thereto.
"Executive Officer" shall mean with respect to any Person (other
than a Guarantor), the President, Vice Presidents, Chief Financial Officer,
Treasurer, Secretary and any Person holding comparable offices or duties,
and with respect to a Guarantor, the President.
"Extension of Credit" shall mean the making of a Revolving Loan
or the conversion of a Revolving Loan of one Type into a Revolving Loan of
another Type.
"Facility" or "Facilities" shall mean the Revolving Loan
Commitments and Revolving Loans.
"Facility Fee" shall have the meaning assigned to such term in
Section 3.06(a).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
member banks of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of
Atlanta, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative Agent.
"Fee Letter" shall mean that certain letter agreement, dated as
of December 21, 1998, executed by SunTrust Equitable Securities
Corporation, SunTrust Bank, Central Florida and First Union National Bank
and acknowledged and agreed to by the Borrower, pursuant to which the
Borrower agreed to pay certain fees set forth in such letter agreement.
"Fees" shall mean, collectively, the Facility Fee and any other
fees specified in the Fee Letter.
"Final Maturity Date" shall mean the date on which all
commitments have been terminated and all amounts outstanding under this
Agreement have been declared or have automatically become due and payable
pursuant to the provisions of Article VIII.
"Fixed Charge Coverage Ratio" shall mean, as of any date of
determination, the ratio of (A) Consolidated EBITDAR to (B) the sum of (i)
Consolidated Interest Expense plus (ii) Consolidated Rental Expense, in
each case measured for the four fiscal quarter period ending on such date
(or if such date is not the last day of any fiscal quarter, for the four
fiscal quarter period ending immediately prior to such date).
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a significant
segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend,
or other obligation ("primary obligation") of any other Person (the
"primary obligor") in any manner including, without limitation, any
obligation or arrangement of such Person (a) to purchase or repurchase any
such primary obligation, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) 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 (d) to indemnify the owner of such primary obligation against loss in
respect thereof.
"Guarantors" shall mean, collectively, each Material Subsidiary
of the Borrower that has executed the Guaranty Agreement as of the Closing
Date, together with all other Material Subsidiaries that hereafter execute
supplements to the Guaranty Agreement, and their respective successors and
permitted assigns.
"Guaranty Agreement" shall mean the Subsidiary Guaranty
Agreement, dated as of the date hereof, executed by certain of Borrower's
Subsidiaries in favor of the Lenders and the Administrative Agent, as the
same may be amended, restated or supplemented from time to time.
"Guaranty Documents" shall mean, collectively, the Guaranty
Agreement, and each other guaranty agreement, mortgage, deed of trust,
security agreement, pledge agreement, or other security or collateral
document guaranteeing or securing the Obligations, as the same may be
amended, restated, or supplemented from time to time.
"Hazardous Materials" shall mean oil, petroleum or chemical
liquids or solids, liquid or gaseous products, asbestos, or any other
hazardous waste or hazardous substances, including, without limitation,
hazardous medical waste or any other substance described in any Hazardous
Materials Law.
"Hazardous Materials Law" shall mean the Comprehensive Envi
ronmental Response Compensation and Liability Act as amended by the Super
Fund Amendments and Reauthorization Act, 42 U.S.C. 9601, the Resource
Conservation and Recovery Act, 42 U.S.C. 6901, the state hazardous waste
laws, as such laws may from time to time be in effect, and related
regulations, and all similar laws and regulations.
"Hazardous Substances" has the meaning assigned to that term in
CERCLA.
"Hughes Family" shall mean (i) David H. Hughes, Vincent S.
Hughes, Russell V. Hughes, (ii) any of their direct family members
(including, without limitation, lineal ancestors and descendants, siblings,
and lineal descendants of siblings), (iii) any trusts and profit sharing
plans and stock option plans established for the sole benefit of the
foregoing, and (iv) the heirs and personal representatives of the
foregoing.
"Indebtedness" of any Person shall mean, without duplication (i)
all obligations of such Person which in accordance with GAAP would be shown
on the balance sheet of such Person as a liability (including, without
limitation, obligations for borrowed money and for the deferred purchase
price of property or services, and obligations evidenced by bonds,
debentures, notes or other similar instruments); (ii) all Guaranteed
Indebtedness of such Person (including contingent reimbursements
obligations under undrawn financial letters of credit but not performance
letters of credit) (iii) all Capitalized Lease Obligations; (iv) all
Indebtedness of others secured by any Lien upon property owned by such
Person, whether or not assumed; and (v) all obligations or other
liabilities under currency contracts, interest rate contracts, interest
rate protection agreements, or similar agreements or combinations thereof.
Notwithstanding the foregoing, in determining the Indebtedness of any
Person, there shall be included all obligations of such Person of the
character referred to in clauses (i) through (v) above deemed to be
extinguished under GAAP but for which such Person remains legally liable
except to the extent that such obligations (x) have been defeased in
accordance with the terms of the applicable instruments governing such
obligations and (y) the accounts or other assets dedicated to such
defeasance are not included as assets on the balance sheet of such Person.
"Intercompany Loan Documents" shall mean, collectively, the
promissory notes and all related loan, subordination, and other agreements,
to the extent that they exist, relating in any manner to the Intercompany
Loans.
"Intercompany Loans" shall mean, collectively, (i) the loans more
particularly described on Schedule 5.22 and (ii) those loans or other
extensions of credit made by any Consolidated Company to another
Consolidated Company satisfying the terms and conditions set forth in
Section 7.01 or as may otherwise be approved in writing by the
Administrative Agent and the Required Lenders.
"Interest Period" shall mean (i) with respect to Competitive Bid
Loans, such periods agreed upon between Borrower and Lenders, and (ii) with
respect to Eurodollar Advances, the period of 1, 2, 3 or 6 months selected
by the Borrower, in case of clause (ii) pursuant to the terms of the credit
facility and subject to customary adjustments in duration; provided, that
(a) the first day of an Interest Period must be a Business Day, (b) any
Interest Period that would otherwise end on a day that is not a Business
Day for Eurodollar Loans shall be extended to the next succeeding Business
Day for Eurodollar Loans, unless such Business Day falls in the next
calendar month, in which case the Interest Period shall end on the next
preceding Business Day for Eurodollar Loans, and (c) Borrower may not elect
an Interest Period that would extend beyond the Revolving Credit
Termination Date.
"Investment" shall mean, when used with respect to any Person,
any direct or indirect advance, loan or other extension of credit (other
than the creation of receivables in the ordinary course of business) or
capital contribution by such Person (by means of transfers of property to
others or payments for property or services for the account or use of
others, or otherwise) to any Person, or any direct or indirect purchase or
other acquisition by such Person of, or of a beneficial interest in,
capital stock, partnership interests, bonds, notes, debentures or other
securities issued by any other Person.
"Lender" or "Lenders" shall mean the banks and lending
institutions listed on the signature pages hereof, and each assignee
thereof, if any, pursuant to Section 10.06.
"Lending Office" shall mean for each Lender the office such
Lender may designate in writing from time to time to Borrower and the
Administrative Agent with respect to each Type of Revolving Loan.
"Leverage Ratio" shall mean, as of any date of determination, the
ratio of Total Funded Debt as of such date to Total Capitalization as of
such date.
"LIBOR" shall mean, for any Interest Period, the offered rates
for deposits in U.S. dollars for a period comparable to the Interest Period
appearing on the Telerate Page 3750, as of 11:00 a.m. London time on the
day that is two business days prior to the Interest Period. If at least
two such rates appear on the Telerate Page 3750, the rate for that Interest
Period will be the arithmetic mean of such rates, rounded, if necessary, to
the next higher 1/16 of 1.0%. If the foregoing rate is unavailable from
the Telerate Page 3750 for any reason, then such rate shall be determined
by the Administrative Agent from the Reuters Screen LIBOR Page, or if such
rate is also unavailable on such service, then on any other interest rate
reporting service of recognized standing designated in writing by the
Administrative Agent to Borrower and the Lenders; in any such case rounded,
if necessary, to the next higher 1/16 of 1.0%, if the rate is not such a
multiple.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind or description and shall include,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any capital lease in
the nature thereof including any lease or similar arrangement with a public
authority executed in connection with the issuance of industrial
development revenue bonds or pollution control revenue bonds, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction.
"Line of Credit Agreement" shall mean that certain Line of Credit
Agreement, dated as of the date hereof, by and among Borrower, SunTrust
Bank, Central Florida, as Administrative Agent, First Union National Bank,
as Documentation Agent, NationsBank N.A., as Syndication Agent, SouthTrust
Bank, National Association, as Co-Agent, and the banks and lending
institutions from time to time parties thereto, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Materially Adverse Effect" shall mean the occurrence of an
event, which would (i) cause the recognition of a liability, as required by
Statement of Financial Accounting Standards No. 5, in the current quarter
financial statements in the amount of $15,000,000 or more, or (ii) cause an
auditor to have a substantial doubt about the ability of Borrower to
continue as a going concern after consideration of management's plans as
described in Statement of Auditing Standards, No. 59.
"Material Subsidiary" shall mean each Subsidiary of Borrower, now
existing or hereinafter established or acquired, that at any time prior to
the Final Maturity Date, has or acquires total assets in excess of
$1,000,000 or that accounted for or produced more than 5% of the
Consolidated EBITR of Borrower on a consolidated basis during any of the
three most recently completed fiscal years of Borrower.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Notice of Borrowing" shall have the meaning provided in
Section 3.01.
"Notice of Continuation/Conversion" shall have the meaning
provided in Section 3.01.
"Obligations" shall mean all amounts owing to the Agents and all
Lenders pursuant to the terms of this Agreement or any other Credit
Document, including without limitation, all Revolving Loans (including all
principal and interest payments due thereunder), fees, expenses,
indemnification and reimbursement obligations, payments, indebtedness,
liabilities, and obligations of the Credit Parties, direct or indirect,
absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising, together with all renewals, extensions, modifications or
refinancings thereof.
"Payment Office" shall mean, for any Lender, the "Payment Office"
listed on its signature page to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, and
any successor thereto.
"Permitted Liens" shall mean those Liens expressly permitted by
Section 7.02.
"Person" shall mean and shall include an individual, a part
nership, a joint venture, a corporation, a trust, an unincorporated
association, a government or any department or agency thereof and any other
entity whatsoever.
"Plan" shall mean any employee benefit plan, program, ar
rangement, practice or contract, maintained by or on behalf of the Borrower
or an ERISA Affiliate, which provides benefits or compensation to or on
behalf of employees or former employees, whether formal or informal,
whether or not written, including but not limited to the following types of
plans:
(i) Executive Arrangements - any bonus, incentive compensation,
stock option, deferred compensation, commission, severance, "golden
parachute", "rabbi trust", or other executive compensation plan, program,
contract, arrangement or practice;
(ii) ERISA Plans - any "employee benefit plan" as defined in
Section 3(3) of ERISA), including, but not limited to, any defined benefit
pension plan, profit sharing plan, money purchase pension plan, savings or
thrift plan, stock bonus plan, employee stock ownership plan, Multiemployer
Plan, or any plan, fund, program, arrangement or practice providing for
medical (including post-retirement medical), hospitalization, accident,
sickness, disability, or life insurance benefits;
(iii) Other Employee Fringe Benefits - any stock purchase,
vacation, scholarship, day care, prepaid legal services, severance pay or
other fringe benefit plan, program, arrangement, contract or practice.
"Pro Rata Share" shall mean, with respect to each of the
Revolving Loan Commitments of each Lender and each Loan to be made by and
each payment (including, without limitation, any payment of principal,
interest or fees) to be made to each Lender, the percentage designated as
such Lender's Pro Rata Share of such Revolving Loan Commitments, such
Revolving Loans or such payments, as applicable, set forth under the name
of such Lender on the respective signature page for such Lender or in any
assignment hereafter executed by an assignee of a Lender pursuant to
Section 10.06, in each case as such Pro Rata Share may change from time to
time as a result of assignments or amendments made pursuant to this Agree
ment.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System, as the same may be in effect from time to
time.
"Required Lenders" shall mean, at any time, Lenders holding at
least sixty-six and two-thirds percent (66-2/3%) of the then aggregate
amount of the Revolving Loan Commitments and the aggregate outstanding
Revolving Loans.
"Requested Commitment Amount" shall have the meaning assigned to
it in Section 3.03.
"Requirement of Law" for any Person shall mean the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other
governmental authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuter
Monitor Money Rates Service (or such other page as may replace that page on
that service for the purpose of displaying rates comparable to LIBOR).
"Revolving Loans" or "Loans" shall mean, collectively, the
revolving credit loans made to Borrower by the Lenders pursuant to Section
2.01.
"Revolving Loan Commitment" or "Commitment" shall mean, at any
time for any Lender, the amount of such commitment set forth opposite such
Lender's name on the signature pages hereof or in any assignment hereafter
executed by any assignee of a Lender pursuant to Section 10.06, as the same
may be increased or decreased from time to time as a result of any
reduction thereof pursuant to Section 2.03, any assignment thereof pursuant
to Section 10.06, or any amendment thereof pursuant to Section 10.02.
"Revolving Loan Termination Date" shall mean the earlier of (i)
January 25, 2004 and (ii) the date on which the Revolving Loan Commitments
are terminated in accordance with Article VIII.
"Revolving Note" or "Note" shall mean any of the Syndicate Notes
or Competitive Bid Notes either as originally executed or as the same may
be from time to time supplemented, modified, amended, renewed or extended.
"Subordinated Debt" shall mean all Indebtedness of Borrower and
its Subsidiaries subordinated to all obligations of Borrower and its
Subsidiaries or any other Credit Party arising under this Agreement, the
Revolving Notes and the Guaranty Agreement on terms and conditions
satisfactory in all respects to the Administrative Agent and the Required
Lenders, including without limitation, with respect to interest rates,
payment terms, maturities, amortization schedules, covenants, defaults,
remedies, and subordination provisions, as evidenced by the written
approval of the Administrative Agent and Required Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships,
joint ventures, and associations) regardless of its jurisdiction of
organization or formation, at least a majority of the total combined voting
power of all classes of voting stock or other ownership interests of which
shall, at the time as of which any determination is being made, be owned by
such Person, either directly or indirectly through one or more other
Subsidiaries.
"Syndicate Loans" shall mean, collectively, the Revolving Loans
made to Borrower hereunder other than Competitive Bid Loans.
"Syndicate Note" shall mean a promissory note evidencing
Syndicate Loans in the form attached hereto as Exhibit A.
"Syndication Agent" shall mean NationsBank, N.A., a national
banking association, as syndication agent for the Lenders hereunder and
under the other Credit Documents, and each successor syndication agent.
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social security
and franchise taxes now or hereafter imposed or levied by the United States
of America, or any state, local or foreign government or by any department,
agency or other political subdivision or taxing authority thereof or
therein and all interest, penalties, additions to tax and similar
liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and "LIBOR," the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying rates comparable to "LIBOR").
"Total Capitalization" shall mean, as of any date of
determination, the sum of (i) Total Funded Debt plus (ii) Consolidated Net
Worth as of such date.
"Total Commitment" shall mean the sum of the Lenders' Revolving
Loan Commitments as such Total Commitment may be reduced by voluntary reduc
tion, prepayment or nonrenewal of a Lender's Revolving Loan Commitment as
provided herein.
"Total Funded Debt" shall mean all Indebtedness of the
Consolidated Companies that by its terms or by the terms of any instrument
or agreement relating thereto matures, or which is otherwise payable or
unpaid, one year or more from, or is directly or indirectly renewable or
extendable at the option of the debtor to a date one year or more
(including an option of the debtor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period
of one year or more) from, the date of the creation thereof, provided that
Total Funded Debt shall include, as at any date of determination, any
portion of such Indebtedness outstanding on such date which matures on
demand or within one year from such date (whether by sinking fund, other
required prepayment, or final payment at maturity) and shall also include
all Indebtedness of the Consolidated Companies for borrowed money under a
line of credit, guidance line, revolving credit, bankers acceptance
facility or similar arrangement for borrowed money, including, without
limitation, all unpaid drawings under letters of credit and unreimbursed
amounts pursuant to letter of credit reimbursement agreements, regardless
of the maturity date thereof.
"Type" of Borrowing shall mean a Borrowing consisting of Base
Rate Advances, Eurodollar Advances or Competitive Bid Advances.
"United States of America" shall mean the fifty (50) States and
the District of Columbia
"Wholly Owned Subsidiary" shall mean any Subsidiary, all the
stock or ownership interest of every class of which, except directors'
qualifying shares, shall, at the time as of which any determination is
being made, be owned by Borrower either directly or indirectly.
"Year 2000 Issues" shall mean the actual and anticipated costs,
claims, losses, and liabilities associated with the inability of certain
computer and software applications to effectively handle data that includes
dates prior to, on, spanning or after January 1, 2000, as such inability in
respect of any Consolidated Company affects the business, operations, and
financial condition of any Consolidated Company.
Section 1.02 Accounting Terms and Determination. Unless
otherwise defined or specified herein, all accounting terms shall be
construed herein, all accounting determinations hereunder shall be made,
all financial statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained in accordance with,
GAAP.
Section 1.03 Other Definitional Terms. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article, Section, Schedule,
Exhibit and like references are to this Agreement unless otherwise
specified.
Section 1.04 Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
ARTICLE II
REVOLVING LOAN COMMITMENTS
Section 2.01 Revolving Loan Commitments; Use of Proceeds.
(a) Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees to make to Borrower from time to time
on and after the Closing Date, but prior to the Revolving Loan Termination
Date, Revolving Loans in an aggregate amount outstanding at any time not to
exceed such Lender's Revolving Loan Commitment. Borrower shall be entitled
to repay and reborrow Revolving Loans in accordance with the provisions
hereof.
(b) Each Revolving Loan shall, at the option of Borrower,
be made or continued as, or converted into, part of one or more Borrowings
that shall consist entirely of Syndicate Loans (comprised of Base Rate
Advances or Eurodollar Advances) or Competitive Bid Loans. The aggregate
principal amount of each Borrowing of Revolving Loans comprised of
Eurodollar Advances shall not be less than $5,000,000 or a greater integral
multiple of $1,000,000. The aggregate principal amount of each Borrowing
of Competitive Bid Loans shall not be less than $5,000,000. The aggregate
principal amount of each Borrowing of Revolving Loans comprised of Base
Rate Advances shall not be less than $1,000,000 or a greater integral mul
tiple of $1,000,000. At no time shall the number of Borrowings outstanding
under this Article II exceed ten; provided that, for the purpose of
determining the number of Borrowings outstanding and the minimum amount for
Borrowings resulting from conversions or continuations, all Borrowings of
Base Rate Advances under this Facility shall be considered as one
Borrowing. The parties hereto agree that (i) the aggregate principal
balance of the Revolving Loans (including the Competitive Bid Loans) of the
Lenders as a group shall not exceed the aggregate principal amount of all
Revolving Loan Commitments, (ii) no Lender shall be obligated to make
Syndicate Loans in excess of the Revolving Loan Commitment of such Lender,
(iii) no Lender shall be obligated hereunder to extend Competitive Bid
Loans or to make quotes for such Competitive Bid Loans, and (iv) a Lender
may elect, in its discretion, to extend Competitive Bid Loans which, either
alone or together with the Syndicate Loans of such Lender, exceed the
Revolving Loan Commitment of such Lender.
(c) The proceeds of Revolving Loans shall be used solely to
refinance existing indebtedness, to fund future acquisitions, to fund share
repurchase agreements, to fund the working capital needs of the Borrower
and its Subsidiaries, and for general corporate purposes.
Section 2.02 Syndicate Note; Repayment of Principal.
(a) Borrower's obligations to pay the principal of, and
interest on, the Syndicate Loans and the Competitive Bid Loans to each
Lender shall be evidenced by the records of the Administrative Agent and
such Lender and by the Syndicate Note and the Competitive Bid Note,
respectively, payable to such Lender (or the assignor of such Lender)
completed in conformity with this Agreement.
(b) All outstanding principal amounts under the Revolving
Loans shall be due and payable in full at the earlier of (i) the Revolving
Loan Termination Date or (ii) acceleration of the indebtedness as provided
in Article VIII.
Section 2.03 Voluntary Reduction of Revolving Loan Commitments.
Upon at least three (3) Business Days' prior telephonic notice (promptly
confirmed in writing) to the Administrative Agent, Borrower shall have the
right, without premium or penalty, to terminate the Revolving Loan
Commitments, in part or in whole, provided that (i) any such termination
shall apply to proportionately and permanently reduce the Revolving Loan
Commitments of each of the Lenders, (ii) any partial termination pursuant
to this Section 2.03 shall be in an amount of at least $5,000,000 and
integral multiples of $1,000,000, and (iii) no such reduction shall be
permitted if prohibited or without payment of all costs required to be paid
hereunder with respect to a prepayment. If the aggregate outstanding
amount of the Revolving Loans exceeds the amount of the Revolving Loan
Commitments as so reduced, Borrower shall immediately repay the Revolving
Loans by an amount equal to such excess, together with all accrued but
unpaid interest on such excess amount and any amounts due under
Section 3.13 hereof.
ARTICLE III
GENERAL LOAN TERMS
Section 3.01 Funding Notices.
(a) (i) Whenever Borrower desires to make a Borrowing of
Syndicate Loans under its Revolving Loan Commitments (other than one
resulting from a conversion or continuation pursuant to Section
3.01(b)(i)), it shall give the Administrative Agent prior written notice
(or telephonic notice promptly confirmed in writing) of such Borrowing (a
"Notice of Borrowing") at its Payment Office such Notice of Borrowing to be
given prior to (x) 11:00 A.M. (local time for the Administrative Agent) one
(1) Business Day prior to the requested date of such Borrowing in the case
of Base Rate Advances, (y) 11:00 A.M. (local time for the Administrative
Agent) three (3) Business Days prior to the requested date of such
Borrowing in the case of Eurodollar Advances and (z) prior to 1:00 P.M.
(local time for the Administrative Agent) on the requested date of such
Borrowing in the case of Competitive Bid Advances. Notices received after
11:00 A.M. for Base Rate Advances and Eurodollar Advances and 1:00 P.M. for
Competitive Bid Advances shall be deemed received on the next Business Day.
Each Notice of Borrowing shall be irrevocable and shall specify the
aggregate principal amount of the Borrowing, the date of Borrowing (which
shall be a Business Day), and whether the Borrowing is to consist of Base
Rate Advances or Eurodollar Advances and (in the case of Eurodollar
Advances) the Interest Period to be applicable thereto.
(ii) Whenever Borrower desires to make a Borrowing of Competitive
Bid Loans under its Revolving Loan Commitments (other than one resulting
from a conversion or continuation pursuant to Section 3.01(b)(ii)), it
shall give the Administrative Agent notice that the Lenders are requested
to provide Competitive Bid Rates for Interest Periods identified by
Borrower, such Interest Periods not to exceed 180 days. Notices must
comply with notice requirements of each respective Lender, which shall be
communicated by Lenders to Borrower from time to time. Each Lender in its
discretion may, but shall not be obligated to, submit a quote to the
Borrower in connection with such request. The Borrower shall then be
entitled, in its sole discretion, to elect to incur all or any part of the
Competitive Bid Loan offered by one or more of the Lenders that have
elected to provide quotes for any of the Interest Periods and at the
rate(s) quoted by such Lender(s). The Competitive Bid Loans incurred by
the Borrower in connection with such a request for quotes shall not exceed
(i) with respect to all Lenders then providing quotes, the then unutilized
Revolving Loan Commitments of all Lenders as a group, and (ii) with respect
to each Lender providing a quote, the amount bid by such Lender in
connection with such Lender's quote. The Borrower shall notify the
Administrative Agent and such Lender or Lenders of its election in
accordance with the procedures established with such Lender or Lenders,
having no obligation to report the terms thereof; provided, however, that
if any Borrowing of Eurodollar Advances must be made as Base Rate Advances
as a result of a determination made by the Administrative Agent pursuant to
Section 3.09, such Notice of Borrowing may be revoked by Borrower no later
than one (1) Business Day prior to the date of funding.
(b) (i) Whenever Borrower desires to convert all or a
portion of an outstanding Borrowing of Syndicate Loans under its Revolving
Loan Commitments, which Borrowing consists of Base Rate Advances into one
or more Borrowings consisting of Eurodollar Advances or to continue
outstanding a Borrowing consisting of Eurodollar Advances for a new
Interest Period, it shall give the Administrative Agent at least three
Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each such Borrowing to be converted into or
continued as Eurodollar Advances. Such notice (a "Notice of
Continuation/Conversion") shall be given prior to 11:00 A.M. (local time
for the Administrative Agent) on the date specified at the Payment Office
of the Administrative Agent. Each such Notice of Continuation/Conversion
shall be irrevocable and shall specify the aggregate principal amount of
the Advances to be converted or continued, the date of such conversion or
continuation and the Interest Period applicable thereto. If, upon the ex
piration of any Interest Period in respect of any Borrowing, Borrower shall
have failed to deliver the Notice of Continuation/Conversion, Borrower
shall be deemed to have elected to convert or continue such Borrowing to a
Borrowing consisting of Base Rate Advances. So long as any Executive
Officer of Borrower has knowledge that any Default or Event of Default
shall have occurred and be continuing, no Borrowing may be converted into
or continued as (upon expiration of the current Interest Period) Eurodollar
Advances unless the Administrative Agent and each of the Lenders shall have
otherwise consented in writing. No conversion of any Borrowing of
Eurodollar Advances shall be permitted except on the last day of the
Interest Period in respect thereof.
(ii) Whenever Borrower desires to continue all or a portion of an
outstanding Borrowing of Competitive Bid Loans under its Revolving Loan
Commitments, for a new Interest Period, it may request that the Lenders
provide quotes for Competitive Bid Rates in the same manner prescribed in
Section 3.01(a)(ii) for funding. Whenever Borrower desires to convert all
or a portion of an outstanding Borrowing of Competitive Bid Loans under its
Revolving Loan Commitments into a Borrowing of Syndicate Loans, it shall
comply with the provisions prescribed in Section 3.01(b)(i) for conversion
of Syndicate Loans. If, upon the expiration of any Interest Period in
respect of any Competitive Bid Borrowing, Borrower shall have failed to
deliver the Notice of Continuation/Conversion, or Lenders fail to provide
such quotes, Borrower shall be deemed to have elected to convert or
continue such Borrowing to a Borrowing of a Syndicate Loan consisting of
Base Rate Advances. So long as any Default or Event of Default shall have
occurred and be continuing, no Borrowing may be converted into (upon
expiration of the current Interest Period) Eurodollar Advances. No
conversion of any Borrowing into Eurodollar Advances shall be permitted
except on the last day of the Interest Period in respect thereof.
(c) Without in any way limiting Borrower's obligation to
confirm in writing any telephonic notice, the Administrative Agent and the
Lenders may act without liability upon the basis of telephonic notice be
lieved by the Administrative Agent or the Lender in good faith to be from
Borrower prior to receipt of written confirmation. In each such case,
Borrower hereby waives the right to dispute the Administrative Agent's and
the Lender's record of the terms of such telephonic notice.
(d) The Administrative Agent shall promptly give each
Lender notice by telephone (confirmed in writing) or by telex, telecopy or
facsimile transmission of the matters covered by the notices given to the
Administrative Agent pursuant to this Section 3.01 with respect to the
Revolving Loan Commitments.
Section 3.02 Disbursement of Funds.
(a) No later than 11:00 A.M. (local time for the
Administrative Agent) on the date of each Borrowing of Syndicate Loans
pursuant to the Revolving Loan Commitments (other than one resulting from a
conversion or continuation pursuant to Section 3.01(b)(i)), each Lender
will make available its Pro Rata Share of the amount of such Borrowing in
immediately available funds at the Payment Office of the Administrative
Agent. The Administrative Agent will make available to Borrower the
aggregate of the amounts (if any) so made available by the Lenders to the
Administrative Agent in a timely manner by crediting such amounts to
Borrower's demand deposit account maintained with the Administrative Agent
or at Borrower's option, to effect a wire transfer of such amounts to
Borrower's account specified by the Borrower, by the close of business on
such Business Day. In the event that the Lenders do not make such amounts
available to the Administrative Agent by the time prescribed above, but
such amount is received later that day, such amount may be credited to
Borrower in the manner described in the preceding sentence on the next
Business Day (with interest on such amount to begin accruing hereunder on
such next Business Day).
(b) No later than 2:00 P.M. (local time for the applicable
Lender) on the date of each Borrowing of Competitive Bid Loans (other than
one resulting from a conversion or continuation pursuant to Section
3.01(b)(ii)), the Lender making any Competitive Bid Loan will make
available the amount of such Borrowing in immediately available funds by
wire transfer to an account specified by the Borrower on the date of each
Borrowing pursuant to the Revolving Loan Commitments (other than one
resulting from a conversion or continuation pursuant to Section
3.01(b)(ii)).
(c) Unless the Administrative Agent shall have been
notified by the Lender making any Syndicate Loan prior to the date of a
Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of the Borrowing to be made on
such date, the Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on such date and the
Administrative Agent may make available to Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender on the date of Borrowing, the
Administrative Agent shall be entitled to recover such corresponding amount
on demand from such Lender together with interest at the Federal Funds
Rate. If such Lender does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify Borrower, and Borrower shall immediately pay such
corresponding amount to the Administrative Agent together with interest at
the rate specified for the Borrowing. Nothing in this subsection shall be
deemed to relieve any Lender from its obligation to fund its Revolving Loan
Commitments hereunder or to prejudice any rights which Borrower may have
against any Lender as a result of any default by such Lender hereunder.
(d) All Borrowings of Syndicate Loans shall be loaned by
the Lenders on the basis of their Pro Rata Share of the Revolving Loan
Commitments. All Borrowings of Competitive Bid Loans under the Revolving
Loan Commitments shall be loaned by the Lenders whose quotes were accepted
by the Borrower. No Lender shall be responsible for any default by any
other Lender in its obligations hereunder, and each Lender shall be ob
ligated to make the Revolving Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fund its Revolving Loan
Commitments hereunder.
Section 3.03 Increase of Revolving Loan Commitments.
(a) So long as no Event of Default has occurred and is
continuing, Borrower may, at any time by written notice to the
Administrative Agent, who shall promptly notify the Lenders, request that
the Revolving Loan Commitments be increased up to an amount not to exceed
$275,000,000 in the aggregate (the "Requested Commitment Amount") on a pro
rata basis based on the Pro Rata Shares of the Lenders. No Lender (or any
successor thereto) shall have any obligation to increase its Revolving Loan
Commitment or its other obligations under this Agreement and the other
Credit Documents, and any decision by a Lender to increase its Revolving
Loan Commitment shall be made in its sole discretion independently from any
other Lender. Within fifteen (15) Business Days from each Lender's receipt
of such request from the Borrower, each Lender shall notify the
Administrative Agent in writing of whether or not it will agree to increase
its Revolving Loan Commitment and by what amount it will agree to increase
such Revolving Loan Commitment, up to its Pro Rata Share of the Requested
Commitment Amount. Decisions to increase a Revolving Loan Commitment must
be affirmatively communicated in writing and shall not be presumed based
upon a failure to respond to Borrower's request.
(b) In the event that the aggregate amount to which the
Lenders are willing to increase their Revolving Loan Commitments is less
than the Requested Commitment Amount based on the written notices delivered
by the Lenders to the Administrative Agent, the Administrative Agent shall
first offer to the Lenders who have agreed to increase their Revolving Loan
Commitments the opportunity to further increase their Revolving Loan
Commitments up to an amount equal to the Requested Commitment Amount.
Such Lenders shall promptly respond in writing to the Administrative Agent
of whether or not it will agree to further increase its Revolving Loan
Commitment and by what amount it will agree to further increase its
Revolving Loan Commitment. Within five (5) Business Days after receipt of
all responses from such Lenders, the Administrative Agent shall inform the
Borrower and all Lenders in writing of the amount by which each Lender will
increase its Revolving Loan Commitment.
(c) In the event that the aggregate amount to which the
Lenders are willing to increase their Revolving Loan Commitments is less
than the Requested Commitment Amount based on the notice from the
Administrative Agent to the Borrower and all Lenders, the Borrower shall
have the right, within sixty days (60) after receipt of such notice from
the Administrative Agent, to obtain commitments from new banks or financial
institutions in an aggregate amount such that the existing Revolving Loan
Commitments, plus the aggregate principal amount by which the Lenders are
willing to increase their Revolving Loan Commitments, plus the aggregate
principal amount of the new commitments by the new banks or financial
institutions does not exceed the Requested Commitment Amount; provided,
however, that (1) the new banks or financial institutions must be
acceptable to the Administrative Agent, which acceptance will not be
unreasonably withheld or delayed, and (2) the new banks or financial
institutions must become parties to this Agreement pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent
and the Required Lenders, pursuant to which (x) they shall be granted all
of the rights that existing Lenders have under this Agreement and the other
Credit Documents and (y) they shall assume the same liabilities and
obligations that the existing Lenders have under this Agreement.
Section 3.04 Interest.
(a) Borrower agrees to pay interest in respect of all
unpaid principal amounts of the Syndicate Loans from the respective dates
such principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at rates per annum (on the basis of a
360-day year) equal to the applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from time to
time; and
(ii) For Eurodollar Advances--The relevant Adjusted LIBO Rate
plus the Applicable Margin.
(b) Borrower agrees to pay interest in respect of all
unpaid principal amounts of the Competitive Bid Loans made to Borrower from
the respective dates such principal amounts were advanced to maturity
(whether by acceleration, notice of prepayment or otherwise) at times and
at rates per annum (on the basis of a 360-day year) equal to the applicable
rates agreed upon between Borrower and the Lender making such Competitive
Bid Loans.
(c) Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Revolving Loans,
whether Syndicate Loans or Competitive Bid Loans, and all other overdue
amounts owing hereunder, shall bear interest from each date that such
amounts are overdue:
(i) in the case of overdue principal and interest with respect
to all Revolving Loans outstanding as Eurodollar Advances and Competitive
Bid Advances, at the rate otherwise applicable for the then-current
Interest Period plus an additional two percent (2.0%) per annum; thereafter
at the rate in effect for Base Rate Advances plus an additional two percent
(2.0%) per annum; and
(ii) in the case of overdue principal and interest with respect
to all other Revolving Loans outstanding as Base Rate Advances, and all
other Obligations hereunder (other than Revolving Loans), at a rate equal
to the applicable Base Rate plus an additional two percent (2.0%) per
annum;
provided that no Revolving Loan shall bear interest after maturity, whether
by non-payment at scheduled due date, acceleration, notice of prepayment or
otherwise at a rate per annum less than two percent (2.0%) per annum in
excess of the rate of interest applicable thereto at maturity.
(d) Interest on each Revolving Loan shall accrue from and
including the date of such Revolving Loan to, but excluding, the date of
any repayment thereof; provided that, if a Revolving Loan is repaid on the
same day made, one day's interest shall be paid on such Revolving Loan.
Interest on all outstanding Base Rate Advances shall be payable quarterly
in arrears on the last calendar day of each fiscal quarter of Borrower in
each year. Interest on all outstanding Eurodollar Advances and Competitive
Bid Advances shall be payable on the last day of each Interest Period
applicable thereto, and, in the case of Eurodollar Advances having an
Interest Period in excess of three months, on each day which occurs every
three months, as the case may be, after the initial date of such Interest
Period. Interest on all Revolving Loans shall be payable on any conversion
of any Advances comprising such Revolving Loans into Advances of another
Type, prepayment (on the amount prepaid), at maturity (whether by
acceleration, notice of prepayment or otherwise) and, after maturity, on
demand.
(e) The Administrative Agent, upon determining the Adjusted
LIBO Rate for any Interest Period, shall promptly notify by telephone (con
firmed in writing) or in writing Borrower and the other Lenders. Any such
determination shall, absent manifest error, be final, conclusive and
binding for all purposes. A Lender making a Competitive Bid Loan has no
obligation to notify any other Lender of the interest rates charged to
Borrower.
Section 3.05 Interest Periods.
(a) In connection with the making or continuation of, or
conversion into, each Borrowing of Syndicate Loans comprised of Eurodollar
Advances, Borrower shall select an interest period (each an "Interest
Period") to be applicable to such Eurodollar Advances, which Interest
Period shall be either a 1, 2, 3 or 6 month period; provided that:
(i) The initial Interest Period for any Borrowing of Eurodollar
Advances shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing consisting of Advances of another Type)
and each Interest Period occurring thereafter in respect of such Borrowing
shall commence on the day on which the next preceding Interest Period
expires;
(ii) If any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in respect of
Eurodollar Advances would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(iii) Any Interest Period in respect of Eurodollar Advances which
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period shall, subject to part
(iv) below, expire on the last Business Day of such calendar month;
(iv) No Interest Period shall extend beyond any date upon which
any principal payment is due with respect to the Revolving Loans.
(b) When Borrower requests a quote for a Competitive Bid
Loan, the Borrower shall specify the Interest Period to be applicable to
such Revolving Loan, which Interest Period shall be as agreed upon by the
Borrower and such Lender; provided, however, that (i) no Interest Period
shall exceed 180 days, (ii) no Interest Period shall extend beyond the
Revolving Loan Termination Date and (iii) if any Interest Period would
otherwise expire on a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day. Interest shall be
payable in respect of each Competitive Bid Loan on the last day of each
Interest Period applicable to such Competitive Bid Loan, and at maturity
(whether by acceleration or otherwise).
Section 3.06 Fees.
(a) Borrower shall pay to the Administrative Agent, for the
account of and distribution of the respective Pro Rata Share to each
Lender, a facility fee (the "Facility Fee") for the period commencing on
the Closing Date to and including the Revolving Loan Termination Date,
equal to (i) the Applicable Facility Fee Percentage per annum multiplied by
(ii) on the daily average of the aggregate Revolving Loan Commitments of
the Lenders, such fee being payable quarterly in arrears on the last
calendar day of each fiscal quarter of Borrower and on the Revolving Loan
Termination Date.
(b) Borrower shall pay to the Administrative Agent such
other fees as are specified, and in accordance with, the Fee Letter.
Section 3.07 Voluntary Prepayments of Borrowings.
(a) Borrower may, at its option, prepay Borrowings
consisting of Base Rate Advances at any time in whole, or from time to time
in part, in amounts aggregating $2,500,000 or any greater integral multiple
of $500,000, by paying the principal amount to be prepaid together with
interest accrued and unpaid thereon to the date of prepayment. Those
Borrowings consisting of Eurodollar Advances may be prepaid, at Borrower's
option, in whole, or from time to time in part, in amounts aggregating
$5,000,000 or any greater integral multiple of $1,000,000, by paying the
principal amount to be prepaid, together with interest accrued and unpaid
thereon to the date of prepayment and all compensation payments pursuant to
Section 3.13 if such prepayment is made on a date other than the last day
of an Interest Period applicable thereto. Each such optional prepayment
shall be applied in accordance with Section 3.07(c) below.
(b) Borrower shall give written notice (or telephonic
notice confirmed in writing) to the Administrative Agent of any intended
prepayment of (i) Base Rate Advances not less than one Business Day prior
to any such prepayments and (ii) Eurodollar Advances not less than three
Business Days prior to any such prepayment. Borrower shall give written
notice (or telephonic notice confirmed in writing) to the respective Lender
who made any Competitive Bid Loan of any intended prepayment of such
Competitive Bid Loan not less than one Business Day prior to any prepayment
of such Competitive Bid Loan. Such notice, once given, shall be
irrevocable. Upon receipt of such notice of prepayment pursuant to the
first sentence of this paragraph (b), the Administrative Agent shall
promptly notify each Lender of the contents of such notice and of such
Lender's share of such prepayment.
(c) Borrower, when providing notice of prepayment pursuant
to Section 3.07(b) may designate the Types of Advances and the specific
Borrowing or Borrowings which are to be prepaid, provided that (i) if any
prepayment of Eurodollar Advances made pursuant to a single Borrowing of
the Revolving Loans shall reduce the outstanding Advances made pursuant to
such Borrowing to an amount less than $1,000,000, such Borrowing shall
immediately be converted into Base Rate Advances; and (ii) each prepayment
made pursuant to a single Borrowing shall be applied pro rata among the
Revolving Loans comprising such Borrowing, if such prepayment is not a
prepayment of a Competitive Bid Loan. All voluntary prepayments shall be
applied to the payment of any unpaid interest before application to
principal.
Section 3.08 Payments, etc.
(a) (i) Except as otherwise specifically provided herein,
all payments under this Agreement and the other Credit Documents, other
than the payments specified in clause (ii) below, shall be made without
defense, set-off or counterclaim to the Administrative Agent, not later
than 2:00 P.M. (local time for the Administrative Agent) on the date when
due and shall be made in Dollars in immediately available funds at the
respective Payment Office.
(ii) Except as otherwise specifically provided herein, all
payments under this Agreement with respect to the Lenders making any
Competitive Bid Loans shall be made without defense, set-off or
counterclaim to such Lender not later than 2:00 P.M. (local time for such
Lender) on the date when due and in immediately available funds at its
Payment Office or at any other location of the Lender as such Lender may
specify in writing to Borrower not later than 12:00 Noon (local time for
the Lender) on the Business Day such payment is due.
(b) (i) All such payments shall be made free and clear of
and without deduction or withholding for any Taxes in respect of this
Agreement, the Revolving Notes or other Credit Documents, or any payments
of principal, interest, fees or other amounts payable hereunder or
thereunder (but excluding any Taxes imposed on the overall net income of
the Lenders pursuant to the laws of the jurisdiction in which the principal
executive office or appropriate Lending Office of such Lender is located).
If any Taxes are so levied or imposed, Borrower agrees (A) to pay the full
amount of such Taxes, and such additional amounts as may be necessary so
that every net payment of all amounts due hereunder and under the Revolving
Notes and other Credit Documents, after withholding or deduction for or on
account of any such Taxes (including additional sums payable under this
Section 3.08), will not be less than the full amount provided for herein
had no such deduction or withholding been required, (B) to make such
withholding or deduction and (C) to pay the full amount deducted to the
relevant authority in accordance with applicable law. Borrower will
furnish to the Administrative Agent and each Lender, within 30 days after
the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by Borrower.
Borrower will indemnify and hold harmless the Administrative Agent and each
Lender and reimburse the Administrative Agent and each Lender upon written
request for the amount of any Taxes so levied or imposed and paid by the
Administrative Agent or Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether
or not such Taxes were correctly or illegally asserted. A certificate as
to the amount of such payment by such Lender or the Administrative Agent,
absent manifest error, shall be final, conclusive and binding for all
purposes.
(ii) Each Lender that is organized under the laws of any
jurisdiction other than the United States of America agrees to furnish to
Borrower and the Administrative Agent, prior to the time it becomes a
Lender hereunder, two copies of either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 or any successor forms
thereto (wherein such Lender claims entitlement to complete exemption from
or reduced rate of U.S. Federal withholding tax on interest paid by
Borrower hereunder) and to provide to Borrower and the Administrative Agent
a new Form 4224 or Form 1001 or any successor forms thereto if any
previously delivered form is found to be incomplete or incorrect in any
material respect or upon the obsolescence of any previously delivered form;
provided, however, that no Lender shall be required to furnish a form under
this paragraph (ii) if it is not entitled to claim an exemption from or a
reduced rate of withholding under applicable law. A Lender that is not
entitled to claim an exemption from or a reduced rate of withholding under
applicable law, promptly upon written request of Borrower, shall so inform
Borrower in writing.
(c) Subject to Section 3.05(a)(ii), whenever any payment to
be made hereunder or under any Revolving Note shall be stated to be due on
a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the applicable rate during
such extension.
(d) On other than Competitive Bid Loans, which shall be
negotiated from time to time, all computations of interest and fees shall
be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable (to the extent computed
on the basis of days elapsed), except that interest on Base Rate Advances
shall be computed on the basis of a year of 360 days for the actual number
of days. Interest on Base Rate Advances shall be calculated based on the
Base Rate from and including the date of such Revolving Loan to but
excluding the date of the repayment or conversion thereof. Interest on
Eurodollar Advances shall be calculated as to each Interest Period from and
including the first day thereof to but excluding the last day thereof.
Each determination by the Administrative Agent or the Lender making any
Competitive Bid Loan of an interest rate or fee hereunder shall be made in
good faith and, except for manifest error, shall be final, conclusive and
binding for all purposes.
(e) Payment by Borrower to the Administrative Agent in
accordance with the terms of this Agreement shall, as to Borrower,
constitute payment to the Lenders under this Agreement.
Section 3.09 Interest Rate Not Ascertainable, etc. In the
event that the Administrative Agent, in the case of the Adjusted LIBO Rate,
shall have determined (which determination shall be made in good faith and,
absent manifest error, shall be final, conclusive and binding upon all par
ties) that on any date for determining the Adjusted LIBO Rate for any
Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market or the Administrative
Agent's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted LIBO Rate then, and in any such event, the
Administrative Agent shall forthwith give notice (by telephone confirmed in
writing) to Borrower and to the Lenders of such determination and a summary
of the basis for such determination. Until the Administrative Agent
notifies Borrower that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Lenders to make or
permit portions of the Revolving Loans to remain outstanding past the last
day of the then current Interest Periods as Eurodollar Advances shall be
suspended, and such affected Advances shall bear the same interest as Base
Rate Advances.
Section 3.10 Illegality.
(a) In the event that any Lender shall have determined
(which determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon all parties) at any time
that the making or continuance of any Eurodollar Advance has become
unlawful by compliance by such Lender in good faith with any applicable
law, governmental rule, regulation, guideline or order (whether or not
having the force of law and whether or not failure to comply therewith
would be unlawful), then, in any such event, the Lender shall give prompt
notice (by telephone confirmed in writing) to Borrower and to the
Administrative Agent of such determination and a summary of the basis for
such determination (which notice the Administrative Agent shall promptly
transmit to the other Lenders).
(b) Upon the giving of the notice to Borrower referred to
in subsection (a) above, (i) Borrower's right to request and such Lender's
obligation to make Eurodollar Advances shall be immediately suspended, and
such Lender shall make an Advance as part of the requested Borrowing of
Eurodollar Advances as a Base Rate Advance, provided, Borrower does not
negotiate a Competitive Bid Loan, which Base Rate Advance shall, for all
other purposes, be considered part of such Borrowing, and (ii) if the
affected Eurodollar Advance or Advances are then outstanding, Borrower
shall immediately, or if permitted by applicable law, no later than the
date permitted thereby, upon at least one Business Day's written notice to
the Administrative Agent and the affected Lender, convert each such Advance
into an Advance or Advances of a different Type with an Interest Period
ending on the date on which the Interest Period applicable to the affected
Eurodollar Advances expires, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 3.10(b).
Section 3.11 Increased Costs.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any change by
way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (y) the compliance with any
guideline or request from any central bank or other governmental authority
or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) any Lender (or its applicable Lending Office) shall be
subject to any tax, duty or other charge with respect to its Eurodollar
Advances or its obligation to make Eurodollar Advances, or the basis of
taxation of payments to any Lender of the principal of or interest on its
Eurodollar Advances or its obligation to make Eurodollar Advances shall
have changed (except for changes in the tax on the overall net income of
such Lender or its applicable Lending Office imposed by the jurisdiction in
which such Lender's principal executive office or applicable Lending Office
is located); or
(ii) any reserve (including, without limitation, any imposed by
the Board of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender's applicable Lending Office shall be
imposed or deemed applicable or any other condition affecting its
Eurodollar Advances or its obligation to make Eurodollar Advances shall be
imposed on any Lender or its applicable Lending Office or the London
interbank market;
and as a result thereof there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining Eurodollar
Advances (except to the extent already included in the determination of the
applicable Adjusted LIBO Rate for Eurodollar Advances), or there shall be a
reduction in the amount received or receivable by such Lender or its
applicable Lending Office, then Borrower shall from time to time (subject,
in the case of certain Taxes, to the applicable provisions of Section
3.08(b)), upon written notice from and demand by such Lender on Borrower
(with a copy of such notice and demand to the Administrative Agent), pay to
the Administrative Agent for the account of such Lender within five
Business Days after the date of such notice and demand, additional amounts
sufficient to indemnify such Lender against such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
and the Administrative Agent by such Lender in good faith and accompanied
by a statement prepared by such Lender describing in reasonable detail the
basis for and calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all purposes.
(b) If any Lender shall advise the Administrative Agent
that at any time, because of the circumstances described in clauses (x) or
(y) in Section 3.11(a) or any other circumstances beyond such Lender's
reasonable control arising after the date of this Agreement affecting such
Lender or the London interbank market or the United States of America
secondary certificate of deposit market or such Lender's position in such
markets, the Adjusted LIBO Rate, as determined by the Administrative Agent,
will not adequately and fairly reflect the cost to such Lender of funding
its Eurodollar Advances, then, and in any such event:
(i) the Administrative Agent shall forthwith give notice (by
telephone confirmed in writing) to Borrower and to the other Lenders of
such advice;
(ii) Borrower's right to request and such Lender's obligation to
make or permit portions of the Revolving Loans to remain outstanding past
the last day of the then current Interest Periods as Eurodollar Advances
shall be immediately suspended; and
(iii) such Lender shall make a Revolving Loan as part of the
requested Borrowing of Eurodollar Advances, as the case may be, as a Base
Rate Advance, which such Base Rate Advance shall, for all other purposes,
be considered part of such Borrowing.
Section 3.12 Lending Offices.
(a) Each Lender agrees that, if requested by Borrower, it
will use reasonable efforts (subject to overall policy considerations of
such Lender) to designate an alternate Lending Office with respect to any
of its Eurodollar Advances affected by the matters or circumstances
described in Sections 3.08(b), 3.09, 3.10 or 3.11 to reduce the liability
of Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as determined by such
Lender, which determination if made in good faith, shall be conclusive and
binding on all parties hereto. Nothing in this Section 3.12 shall affect
or postpone any of the obligations of Borrower or any right of any Lender
provided hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America issues a public
announcement with respect to the closing of its lending offices in the
United States of America or any State thereof (including the District of
Columbia) such that any withholdings or deductions and additional payments
with respect to Taxes may be required to be made by Borrower thereafter
pursuant to Section 3.08(b), such Lender shall use reasonable efforts to
furnish Borrower notice thereof as soon as practicable thereafter;
provided, however, that no delay or failure to furnish such notice shall in
any event release or discharge Borrower from its obligations to such Lender
pursuant to Section 3.08(b) or otherwise result in any liability of such
Lender.
Section 3.13 Funding Losses. Borrower shall compensate each
Lender, upon its written request to Borrower (which request shall set forth
the basis for requesting such amounts in reasonable detail and which
request shall be made in good faith and, absent manifest error, shall be
final, conclusive and binding upon all of the parties hereto), for all
losses, expenses and liabilities (including, without limitation, any
interest paid by such Lender to lenders of funds borrowed by it to make or
carry its Eurodollar Advances, in either case to the extent not recovered
by such Lender in connection with the re-employment of such funds and
including loss of anticipated profits), which the Lender may sustain: (i)
if for any reason (other than a default by such Lender) a borrowing of, or
conversion to or continuation of Eurodollar Advances to Borrower does not
occur on the date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to Section
3.10(b)) of any Eurodollar Advances to Borrower occurs on a date which is
not the last day of an Interest Period applicable thereto, or (iii), if,
for any reason, Borrower defaults in its obligation to repay its Eurodollar
Advances when required by the terms of this Agreement.
Section 3.14 Assumptions Concerning Funding of Eurodollar
Advances. Calculation of all amounts payable to a Lender under this
Article III shall be made as though that Lender had actually funded its
relevant Eurodollar Advances through the purchase of deposits in the
relevant market bearing interest at the rate applicable to such Eurodollar
Advances in an amount equal to the amount of the Eurodollar Advances and
having a maturity comparable to the relevant Interest Period and through
the transfer of such Eurodollar Advances from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar
Advances in any manner it sees fit and the foregoing assumption shall be
used only for calculation of amounts payable under this Article III.
Section 3.15 Apportionment of Payments. Aggregate principal
and interest payments in respect of Revolving Loans and payments in respect
of the Facility Fee shall be apportioned among all outstanding Revolving
Loan Commitments and Revolving Loans to which such payments relate,
proportionately to the Lenders' respective pro rata portions of such
Revolving Loan Commitments and outstanding Revolving Loans. The
Administrative Agent shall promptly distribute to each Lender at its
Payment Office set forth beside its name on the appropriate signature page
hereof or such other address as any Lender may request its share of all
such payments received by the Administrative Agent.
Section 3.16 Sharing of Payments, Etc. If any Lender shall
obtain any payment or reduction (including, without limitation, any amounts
received as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code) of the Obligations (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its pro rata portion of payments or reductions on account of such
obligations obtained by all the Lenders, such Lender shall forthwith (i)
notify each of the other Lenders and Administrative Agent of such receipt,
and (ii) purchase from the other Lenders such participations in the
affected obligations as shall be necessary to cause such purchasing Lender
to share the excess payment or reduction, net of costs incurred in
connection therewith, ratably with each of them, provided that if all or
any portion of such excess payment or reduction is thereafter recovered
from such purchasing Lender or additional costs are incurred, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery or such additional costs, but without interest unless the Lender
obligated to return such funds is required to pay interest on such funds.
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.16 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Lender were the
direct creditor of Borrower in the amount of such participation.
Section 3.17 Capital Adequacy. Without limiting any other
provision of this Agreement, in the event that any Lender shall have
determined that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy not currently in
effect or fully applicable as of the Closing Date, or any change therein or
in the interpretation or application thereof after the Closing Date, or
compliance by such Lender with any request or directive regarding capital
adequacy not currently in effect or fully applicable as of the Closing Date
(whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) from a central bank or governmental
authority or body having jurisdiction, does or shall have the effect of
reducing the rate of return on such Lender's capital as a consequence of
its obligations hereunder to a level below that which such Lender could
have achieved but for such law, treaty, rule, regulation, guideline or
order, or such change or compliance by an amount reasonably deemed by such
Lender to be material, then within ten (10) Business Days after written
notice and demand by such Lender (with copies thereof to the Administrative
Agent), Borrower shall from time to time pay to such Lender additional
amounts sufficient to compensate such Lender for such reduction (but, in
the case of outstanding Base Rate Advances, without duplication of any
amounts already recovered by such Lender by reason of an adjustment in the
applicable Base Rate). Each certificate as to the amount payable under
this Section 3.17 (which certificate shall set forth the basis for
requesting such amounts in reasonable detail), submitted to Borrower by any
Lender in good faith, shall, absent manifest error, be final, conclusive
and binding for all purposes.
Section 3.18 Benefits to Guarantors. In consideration for the
execution and delivery by the Guarantors of the Guaranty Agreement,
Borrower agrees to make the benefit of extensions of credit hereunder
available to the Guarantors.
Section 3.19 Limitation on Certain Payment Obligations.
(a) Each Lender or Administrative Agent shall make written
demand on Borrower for indemnification or compensation pursuant to Section
3.08 no later than 90 days after the earlier of (i) the date on which such
Lender or the Administrative Agent makes payment of such Taxes, and (ii)
the date on which the relevant taxing authority or other governmental
authority makes written demand upon such Lender or the Administrative Agent
for payment of such Taxes.
(b) Each Lender or the Administrative Agent shall make
written demand on Borrower for indemnification or compensation pursuant to
Sections 3.13 and 3.14 no later than 90 days after the event giving rise
to the claim for indemnification or compensation occurs.
(c) Each Lender or the Administrative Agent shall make
written demand on Borrower for indemnification or compensation pursuant to
Sections 3.11 and 3.17 no later than 90 days after such Lender or the
Administrative Agent receives actual notice or obtains actual knowledge of
the promulgation of a law, rule, order or interpretation or occurrence of
another event giving rise to a claim pursuant to such sections.
(d) In the event that the Lenders or the Administrative
Agent fail to give Borrower notice within the time limitations prescribed
in (a) or (b) above, Borrower shall not have any obligation to pay such
claim for compensation or indemnification. In the event that the Lender or
the Administrative Agent fail to give Borrower notice within the time
limitation prescribed in (c) above, Borrower shall not have any obligation
to pay any amount with respect to claims accruing prior to the ninetieth
day preceding such written demand.
ARTICLE IV
CONDITIONS TO BORROWINGS
The obligations of each Lender to make Advances to Borrower
hereunder is subject to the satisfaction of the following conditions:
Section 4.01 Conditions Precedent to Initial Revolving Loans.
At the time of the making of the initial Revolving Loans hereunder on the
Closing Date, all obligations of Borrower hereunder incurred prior to the
initial Revolving Loans (including, without limitation, Borrower's
obligations to reimburse the reasonable fees and expenses of counsel to the
Administrative Agent and any fees and expenses payable to the
Administrative Agent and the Lenders as previously agreed with Borrower),
shall have been paid in full, and the Administrative Agent shall have
received the following, in form and substance reasonably satisfactory in
all respects to the Administrative Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Notes evidencing the
Revolving Loan Commitments;
(c) the duly executed Guaranty Agreement;
(d) certificate of Borrower in substantially the form of
Exhibit C attached hereto and appropriately completed;
(e) the duly executed Commitment Letter;
(f) the duly executed Fee Letter;
(g) certificates of the Secretary or Assistant Secretary of
each of the Credit Parties attaching and certifying copies of the
resolutions of the boards of directors of the Credit Parties, authorizing
as applicable the execution, delivery and performance of the Credit
Documents;
(h) certificates of the Secretary or an Assistant Secretary
of each of the Credit Parties certifying (i) the name, title and true
signature of each officer of such entities executing the Credit Documents,
(ii) the bylaws or comparable governing documents of such entities; and
(iii) the certificate or articles of incorporation of each Credit Party;
(i) certificates of good standing or existence, as may be
available from the Secretary of State of the jurisdiction of incorporation
or organization of such Credit Party;
(j) copies of all documents and instruments, including all
consents, authorizations and filings, required or advisable under any
Requirement of Law or by any material Contractual Obligation of the Credit
Parties, in connection with the execution, delivery, performance, validity
and enforceability of the Credit Documents and the other documents to be ex
ecuted and delivered hereunder, and such consents, authorizations, filings
and orders shall be in full force and effect and all applicable waiting
periods shall have expired;
(k) certified copies of the Intercompany Loan Documents, to
the extent that they exist and have not previously been certified to the
Lenders;
(l) duly executed solvency certificates of Borrower and
each of the Guarantors, in form and substance satisfactory to the Agents
and Lenders;
(m) acknowledgment from CSC Network Corporation System,
Inc. as to its appointment as agent for service of process for the various
Credit Parties;
(n) certified copies of indentures, credit agreements,
leases, capital leases, instruments, and other documents evidencing or
securing Indebtedness of any Consolidated Company described on Schedule
7.01(b), in any single case in an amount not less than $500,000 and to the
extent not previously certified to the Lenders;
(o) certificates, reports and other information as the
Administrative Agent may reasonably request from any Consolidated Company
in order to satisfy the Lenders as to the absence of any material li
abilities or obligations arising from matters relating to employees of the
Consolidated Companies, including employee relations, collective bargaining
agreements, Plans, and other compensation and employee benefit plans;
(p) certificates, reports, environmental audits and
investigations, and other information as the Administrative Agent may
reasonably request from any Consolidated Company in order to satisfy the
Lenders as to the absence of any material liabilities or obligations
arising from environmental and employee health and safety exposures to
which the Consolidated Companies may be subject, and the plans of the
Consolidated Companies with respect thereto;
(q) certificates, reports and other information as the
Administrative Agent may reasonably request from any Consolidated Company
in order to satisfy the Lenders as to the absence of any material li
abilities or obligations arising from litigation (including without
limitation, products liability and patent infringement claims) pending or
threatened against the Consolidated Companies;
(r) a certificate of insurance summarizing, in form and
detail reasonably acceptable to the Administrative Agent, of the types and
amounts of insurance (property and liability) maintained by the
Consolidated Companies;
(s) the favorable opinion of counsel to the Credit Parties
addressed to the Administrative Agent and each of the Lenders; and
(t) financial statements of Borrower and its Subsidiaries,
audited on a consolidated basis for the fiscal year ended on the last
Friday in January, 1998 and unaudited on a consolidated basis for the
fiscal quarter ended on the last Friday in October, 1998.
In addition to the foregoing, the following conditions shall have been
satisfied or shall exist, all to the satisfaction of the Administrative
Agent, as of the time the initial Revolving Loans are made hereunder:
(x) the Revolving Loans to be made on the Closing Date and the
use of proceeds thereof shall not contravene, violate or conflict
with, or involve the Administrative Agent or any Lender in a violation
of, any law, rule, injunction, or regulation, or determination of any
court of law or other governmental authority;
(y) all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and
enforceability of the Credit Documents shall be reasonably
satisfactory in form and substance to the Required Lenders; and
(z) the status of all pending and threatened litigation
(including products liability and patent claims) which might result in
a Materially Adverse Effect, including a description of any damages
sought and the claims constituting the basis therefor, shall have been
reported in writing to the Administrative Agent, the Administrative
Agent shall have reported such matters to the Lenders, and the Lenders
shall be satisfied with such status.
Section 4.02 Conditions to All Revolving Loans. At the time of
the making of all Revolving Loans (before as well as after giving effect to
such Revolving Loans and to the proposed use of the proceeds thereof), the
following conditions shall have been satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower
contained herein shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made
on and as of the date of such Revolving Loans;
(c) since the date of the most recent financial statements
of the Consolidated Companies described in Section 5.03, there shall have
been no change which has had or could reasonably be expected to have a
Materially Adverse Effect.
(d) there shall be no action or proceeding instituted or
pending before any court or other governmental authority or, to the
knowledge of Borrower, threatened (i) which reasonably could be expected to
have a Materially Adverse Effect, or (ii) seeking to prohibit or restrict
one or more Credit Party's ownership or operation of any portion of its
business or assets, or to compel one or more Credit Party to dispose of or
hold separate all or any portion of its businesses or assets, where such
portion or portions of such business(es) or assets, as the case may be,
constitute a material portion of the total businesses or assets of the Con
solidated Companies;
(e) the Revolving Loans to be made and the use of proceeds
thereof shall not contravene, violate or conflict with, or involve the
Administrative Agent or any Lender in a violation of, any law, rule,
injunction, or regulation, or determination of any court of law or other
governmental authority applicable to Borrower; and
(f) the Administrative Agent shall have received such other
documents or legal opinions as the Administrative Agent or any Lender may
reasonably request, all in form and substance reasonably satisfactory to
the Administrative Agent.
Each request for a Borrowing and the acceptance by Borrower of
the proceeds thereof shall constitute a representation and warranty by
Borrower, as of the date of the Revolving Loans comprising such Borrowing,
that the applicable conditions specified in Sections 4.01 and 4.02 have
been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and covenants to Lenders that:
Section 5.01 Organization and Qualification. Borrower is a
corporation duly organized and existing in good standing under the laws of
the State of Florida. Each Subsidiary of Borrower is a corporation duly
organized and existing under the laws of the jurisdiction of its
incorporation. Borrower and each of its Subsidiaries are duly qualified to
do business as a foreign corporation and are in good standing in each
jurisdiction in which the character of their properties or the nature of
their business makes such qualification necessary, except for such
jurisdictions in which a failure to qualify to do business would not have a
Materially Adverse Effect. Borrower and each of its Subsidiaries have the
corporate power to own their respective properties and to carry on their
respective businesses as now being conducted. The jurisdiction of
incorporation or organization, and the ownership of all issued and
outstanding capital stock, for each Subsidiary as of the date of this
Agreement is accurately described on Schedule 5.01. Schedule 5.01 also
designates the Material Subsidiaries as of the Closing Date.
Section 5.02 Corporate Authority. The execution and delivery
by Borrower and the Guarantors of and the performance by Borrower and
Guarantors of their obligations under the Credit Documents have been duly
authorized by all requisite corporate action and all requisite shareholder
action, if any, on the part of Borrower and the Guarantors and do not and
will not (i) violate any provision of any law, rule or regulation, any judg
ment, order or ruling of any court or governmental agency, the
organizational papers or bylaws of Borrower or the Guarantors, or any
indenture, agreement or other instrument to which Borrower or the
Guarantors are a party or by which Borrower or the Guarantors or any of
their properties is bound, or (ii) be in conflict with, result in a breach
of, or constitute with notice or lapse of time or both a default under any
such indenture, agreement or other instrument.
Section 5.03 Financial Statements. Borrower has furnished
Lenders with the following financial statements: (i) consolidated balance
sheets and consolidated statements of income, stockholders' equity and cash
flow of Borrower for the fiscal year ended on the last Friday in January,
1998, audited by PriceWaterhouseCoopers LLP and (ii) unaudited consolidated
balance sheets and consolidated statements of income, stockholders' equity
and cash flow of Borrower for the fiscal quarter ending on the last Friday
in October, 1998. Such financial statements (including any related
schedules and notes) are true and correct in all material respects
(subject, as to interim statements, to changes resulting from audits and
year end adjustments), have been prepared in accordance with GAAP
consistently applied throughout the period or periods in question and show,
in the case of audited statements, all liabilities, direct or contingent,
of Borrower and its Subsidiaries, required to be shown in accordance with
GAAP consistently applied throughout the period or periods in question and
fairly present the consolidated financial position and the consolidated
results of operations of Borrower and its Subsidiaries for the periods
indicated therein. There has been no material adverse change in the
business, condition or operations, financial or otherwise, of Borrower and
its Subsidiaries since the last Friday in October, 1998.
Section 5.04 Tax Returns. Each of Borrower and its
Subsidiaries has filed all federal, state and other income tax returns
which, to the best knowledge of the executive officers of Borrower and its
Subsidiaries, are required to be filed, and each has paid all taxes as
shown on said returns and on all assessments received by it to the extent
that such taxes have become due or except such as are being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP.
Section 5.05 Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or any of its Subsidiaries or any
of their properties or rights, by or before any court, arbitrator or
administrative or governmental body, which might result in any Materially
Adverse Effect.
Section 5.06 Representations; No Defaults. At the time of each
Extension of Credit there shall exist no Default or Event of Default, and
each Extension of Credit shall be deemed a renewal by Borrower of the
representations and warranties contained in this Agreement and an
affirmative statement by Borrower that such representations and warranties
are true and correct on and as of such time with the same effect as though
such representations and warranties had been made on and as of such time.
Section 5.07 Title to Properties. Each of Borrower and its
Subsidiaries has (i) good and marketable fee simple title to its respective
real properties (other than real properties which it leases from others),
including such real properties reflected in the consolidated balance sheet
of Borrower and its Subsidiaries as of the last Friday of October, 1998,
hereinabove described (other than real properties disposed of in the
ordinary course of business), subject to no Lien of any kind except Liens
permitted by Section 7.02 and (ii) good title to all of its other
respective properties and assets (other than properties and assets which it
leases from others), including the other properties and assets reflected in
the consolidated balance sheet of Borrower and its Subsidiaries at the last
Friday of October, 1998, hereinabove described (other than properties and
assets disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by Section 7.02. Each of Borrower and
its Subsidiaries enjoys peaceful and undisturbed possession under all
leases necessary in any material respect for the operation of its
respective properties and assets, none of which contains any unusual or
burdensome provisions which might materially affect or impair the operation
of such properties and assets, and all such leases are valid and subsisting
and in full force and effect.
Section 5.08 Enforceability of Agreement. This Agreement is
the legal, valid and binding agreement of Borrower enforceable against
Borrower in accordance with its terms, and the Revolving Notes, and all
other Credit Documents, when executed and delivered, will be similarly
legal, valid, binding and enforceable, except as the enforceability of the
Revolving Notes and other Credit Documents may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting creditor's
rights and remedies in general and by general principles of equity, whether
considered in a proceeding at law or in equity.
Section 5.09 Consent. No consent, permission, authorization,
order or license of any governmental authority or Person is necessary in
connection with the execution, delivery, performance or enforcement of the
Credit Documents, or in order to constitute the indebtedness to be incurred
hereunder and under the Revolving Notes and the other Credit Documents as
"Senior Debt" or any similar term defined within the documents evidencing
any Subordinated Debt.
Section 5.10 Use of Proceeds; Federal Reserve Regulations. The
proceeds of the Revolving Notes will be used solely for the purposes
specified in Section 2.01(c) and none of such proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any
"margin security" or "margin stock" or for the purpose of reducing or
retiring any indebtedness that originally was incurred to purchase or carry
a "margin security" or "margin stock" or for any other purpose that might
constitute this transaction a "purpose credit" within the meaning of the
regulations of the Board of Governors of the Federal Reserve System.
Section 5.11 ERISA.
(a) Identification of Certain Plans. Schedule 5.11 hereto
sets forth all Plans of Borrower and its Subsidiaries;
(b) Compliance. Each Plan is being maintained, by its
terms and in operation, in accordance with all applicable laws, except such
noncompliances (when taken as a whole) that will not have a Materially
Adverse Effect;
(c) Liabilities. Neither the Borrower nor any Subsidiary
is currently or will become subject to any liability (including withdrawal
liability), tax or penalty whatsoever to any person whomsoever with respect
to any Plan including, but not limited to, any tax, penalty or liability
arising under Title I or Title IV of ERISA or Chapter 43 of the Tax Code,
except such liabilities (when taken as a whole) as will not have a
Materially Adverse Effect; and
(d) Funding. The Borrower and each ERISA Affiliate has
made full and timely payment of all amounts (i) required to be contributed
under the terms of each Plan and applicable law and (ii) required to be
paid as expenses of each Plan, except where such non-payment would not have
a Materially Adverse Effect. No Plan has an "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) except as
disclosed on Schedule 5.11. No Plan is subject to a waiver or extension of
the minimum funding requirements under ERISA or the Tax Code, and no
request for such waiver or extension is pending.
Section 5.12 Subsidiaries. All the outstanding shares of stock
of each such Subsidiary have been validly issued and are fully paid and
nonassessable and all such outstanding shares, except as noted on such
Schedule 5.01, are owned by Borrower or a Wholly Owned Subsidiary of
Borrower free of any Lien or claim.
Each Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of its
incorporation with the power and authority (corporate and other) to carry
on its business as it is now conducted and (ii) is qualified to transact
business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required under applicable law.
Section 5.13 Outstanding Indebtedness. As of the date of
closing and after giving effect to the transactions contemplated by this
Agreement, neither Borrower nor any of its Subsidiaries has outstanding any
Indebtedness except as permitted by Section 7.01 and there exists no
default under the provisions of any instrument evidencing such Indebtedness
or of any agreement relating thereto.
Section 5.14 Conflicting Agreements. Neither Borrower nor any
of its Subsidiaries is a party to any contract or agreement or other
burdensome restrictions or subject to any charter or other corporate
restriction which materially and adversely affects its business, property
or assets, or financial condition. Assuming the consummation of the
transactions contemplated by this Agreement, neither the execution or
delivery of this Agreement or the Credit Documents, nor fulfillment of or
compliance with the terms and provisions hereof and thereof, will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of Borrower or
any of its Subsidiaries pursuant to, the charter or By-Laws of Borrower or
any of its Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which Borrower or any of its
Subsidiaries is subject, and neither Borrower nor any of its Subsidiaries
is a party to, or otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of Borrower or any of its Subsidiaries,
any agreement relating thereto or any other contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Indebtedness of the type to be evidenced
by the Revolving Notes or contains dividend or redemption limitations on
Common Stock of Borrower, except for this Agreement, Borrower's Certificate
of Incorporation and those matters listed on Schedule 5.14 attached hereto.
Section 5.15 Pollution and Other Regulations.
(a) Each of the Borrower and its Subsidiaries has complied
in all material respects with all applicable Environmental Laws, including
without limitation, compliance with permits, licenses, standards, schedules
and timetables, and is not in violation of, and does not presently have
outstanding any liability under, has not been notified that it is or may be
liable under and does not have knowledge of any liability or potential
liability (including any liability relating to matters set forth on
Schedule 5.15(a)) except as set forth on Schedule 5.15(a), under any
applicable Environmental Law, including without limitation, the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("CERCLA"), the Federal Water Pollution Control Act, as amended
("FWPCA"), the Federal Clean Air Act, as amended ("FCAA"), and the Toxic
Substance Control Act ("TSCA"), which violation, liability or potential
liability could reasonably be expected to have a Materially Adverse Effect.
(b) Neither the Borrower nor any of its Subsidiaries has
received a written request for information under CERCLA, any other
Environmental Laws or any comparable state law, or any public health or
safety or welfare law or written notice that any such entity has been
identified as a potential responsible party under CERCLA, and other
Environmental Laws, or any comparable state law, or any public health or
safety or welfare law, nor has any such entity received any written
notification that any Hazardous Substance that it or any of its respective
predecessors in interest has generated, stored, treated, handled,
transported, or disposed of, has been released or is threatened to be
released at any site at which any Person intends to conduct or is
conducting a remedial investigation or other action pursuant to any
applicable Environmental Law, or any other Environmental Laws.
(c) Each of the Borrower and its Subsidiaries has obtained
all permits, licenses or other authorizations required for the conduct of
their respective operations under all applicable Environmental Laws and
each such authorization is in full force and effect.
(d) Each of Borrower and its Subsidiaries complies in all
material respects with all laws and regulations relating to equal
employment opportunity and employee safety in all jurisdictions in which it
is presently doing business, and Borrower will use its best efforts to
comply, and to cause each of its Subsidiaries to comply, with all such laws
and regulations which may be legally imposed in the future in jurisdictions
in which Borrower or any of its Subsidiaries may then be doing business.
Section 5.16 Possession of Franchises, Licenses, Etc. Each of
Borrower and its Subsidiaries possesses all franchises, certificates,
licenses, permits and other authorizations from governmental political
subdivisions or regulatory authorities, free from burdensome restrictions,
that are necessary in any material respect for the ownership, maintenance
and operation of its properties and assets, and neither Borrower nor any of
its Subsidiaries is in violation of any thereof in any material respect.
Section 5.17 Patents, Etc. Each of Borrower and its
Subsidiaries owns or has the right to use all patents, trademarks, service
marks, trade names, copyrights, licenses and other rights, free from
burdensome restrictions, which are necessary for the operation of its
business as presently conducted. Nothing has come to the attention of
Borrower, any of its Subsidiaries or any of their respective directors and
officers to the effect that (i) any product, process, method, substance,
part or other material presently contemplated to be sold by or employed by
Borrower or any of its Subsidiaries in connection with its business may
infringe any patent, trademark, service mark, trade name, copyright,
license or other right owned by any other Person, (ii) there is pending or
threatened any claim or litigation against or affecting Borrower or any of
its Subsidiaries contesting its right to sell or use any such product,
process, method, substance, part or other material or (iii) there is, or
there is pending or proposed, any patent, invention, device, application or
principle or any statute, law, rule, regulation, standard or code which
would prevent, inhibit or render obsolete the production or sale of any
products of, or substantially reduce the projected revenues of, or
otherwise materially adversely affect the business, condition or operations
of, Borrower or any of its Subsidiaries.
Section 5.18 Governmental Consent. Neither the nature of
Borrower or any of its Subsidiaries nor any of their respective businesses
or properties, nor any relationship between Borrower and any other Person,
nor any circumstance in connection with the execution and delivery of the
Credit Documents and the consummation of the transactions contemplated
thereby is such as to require on behalf of Borrower or any of its
Subsidiaries any consent, approval or other action by or any notice to or
filing with any court or administrative or governmental body in connection
with the execution and delivery of this Agreement and the Credit Documents.
Section 5.19 Disclosure. Neither this Agreement nor the Credit
Documents nor any other document, certificate or written statement
furnished to Lenders by or on behalf of Borrower in connection herewith
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact peculiar to Borrower which
materially adversely affects or in the future may (so far as Borrower can
now foresee) materially adversely affect the business, property or assets,
financial condition or prospects of Borrower which has not been set forth
in this Agreement or in the Credit Documents, certificates and written
statements furnished to Lenders by or on behalf of Borrower prior to the
date hereof in connection with the transactions contemplated hereby.
Section 5.20 Insurance Coverage. Each property of Borrower or
any of its Subsidiaries is insured within terms acceptable to Lenders for
the benefit of Borrower or a Subsidiary of Borrower in amounts deemed
adequate by Borrower's management and no less than those amounts customary
in the industry in which Borrower and its Subsidiaries operate against
risks usually insured against by Persons operating businesses similar to
those of Borrower or its Subsidiaries in the localities where such
properties are located.
Section 5.21 Labor Matters. The Borrower and the Borrower's
Subsidiaries have experienced no strikes, labor disputes, slow downs or
work stoppages due to labor disagreements which have had, or would reason
ably be expected to have, a Materially Adverse Effect, and, to the best
knowledge of Borrower's executive officers, there are no such strikes,
disputes, slow downs or work stoppages threatened against any Borrower or
any of Borrower's Subsidiaries. The hours worked and payment made to
employees of the Borrower and Borrower's Subsidiaries have not been in
violation in any material respect of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due from the
Borrower and Borrower's Subsidiaries, or for which any claim may be made
against the Consolidated Companies, on account of wages and employee health
and welfare insurance and other benefits have been paid or accrued as
liabilities on the books of the Borrower and Borrower's Subsidiaries where
the failure to pay or accrue such liabilities would reasonably be expected
to have a Materially Adverse Effect.
Section 5.22 Intercompany Loans; Dividends. The Intercompany
Loans and the Intercompany Loan Documents, to the extent that they exist,
have been duly authorized and approved by all necessary corporate and
shareholder action on the part of the parties thereto, and constitute the
legal, valid and binding obligations of the parties thereto, enforceable
against each of them in accordance with their respective terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally, and by
general principles of equity. There are no restrictions on the power of
any Consolidated Company to repay any Intercompany Loan or to pay dividends
on the capital stock. Intercompany Loans as of the Closing Date are
described in Schedule 5.22.
Section 5.23 Burdensome Restrictions. None of the Consolidated
Companies is a party to or bound by any Contractual Obligation or
Requirement of Law which has had or would reasonably be expected to have a
Materially Adverse Effect.
Section 5.24 Investment Company Act, Etc. Neither the Borrower
nor any of its Subsidiaries is an "investment company" or a company
"controlled" by an "investment company" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended).
Neither the Borrower nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power
Act, or any foreign, federal or local statute or regulation limiting its
ability to incur indebtedness for money borrowed, guarantee such
indebtedness, or pledge its assets to secure such indebtedness, as
contemplated hereby or by any other Credit Document.
Section 5.25 Notice of Non-Compliance with Laws. Neither the
Borrower nor any of its Subsidiaries has received notice of any violation
of Law, statute, order, rule, regulation, or judgment entered by any court
that may reasonably be expected to have a Materially Adverse Effect.
Section 5.26 Year 2000 Issues. Borrower and the other
Consolidated Companies (i) are performing a comprehensive review of their
computers and software applications to identify the systems that would be
affected by Year 2000 Issues as such issues pertain to the computer
programs and systems of the Consolidated Companies, (ii) based on their
review, and all other information currently available to them, do not
reasonably anticipate that Year 2000 Issues will have a Materially Adverse
Effect, and (iii) are in compliance with all laws, rules and regulations of
the Securities and Exchange Commission.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as it may borrow under
this Agreement or so long as any indebtedness remains outstanding under the
Revolving Notes that it will:
Section 6.01 Corporate Existence, Etc. Preserve and maintain,
and cause each of its Material Subsidiaries to preserve and maintain, its
corporate existence, its material rights, franchises, and licenses, and its
material patents and copyrights (for the scheduled duration thereof),
trademarks, trade names, and service marks, necessary or desirable in the
normal conduct of its business, and its qualification to do business as a
foreign corporation in all jurisdictions where it conducts business or
other activities making such qualification necessary, where the failure to
do so would reasonably be expected to have a Materially Adverse Effect.
Section 6.02 Compliance with Laws, Etc. Comply, and cause each
of its Subsidiaries to comply with all Requirements of Law (including,
without limitation, the Environmental Laws, subject to the exception set
forth in Section 6.07(f) where the penalties, claims, fines, and other
liabilities resulting from noncompliance with such Environmental Laws do
not involve amounts in excess of $10,000,000 in the aggregate) and
Contractual Obligations applicable to or binding on any of them where the
failure to comply with such Requirements of Law and Contractual Obligations
would reasonably be expected to have a Materially Adverse Effect.
Section 6.03 Payment of Taxes and Claims, Etc. Pay, and cause
each of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its property, and (ii) all
claims (including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon its
property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and adequate reserves
are maintained with respect thereto.
Section 6.04 Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, containing
complete and accurate entries of all their respective financial and
business transactions.
Section 6.05 Visitation, Inspection, Etc. Permit, and cause
each of its Subsidiaries to permit, any representative of the
Administrative Agent or any Lender to visit and inspect any of its
property, to examine its books and records and to make copies and take
extracts therefrom, and to discuss its affairs, finances and accounts with
its officers, all at such reasonable times and as often as the
Administrative Agent or such Lender may reasonably request after reasonable
prior notice to Borrower; provided, however, that at any time following the
occurrence and during the continuance of a Default or an Event of Default,
no prior notice to Borrower shall be required.
Section 6.06 Insurance; Maintenance of Properties.
(a) Maintain or cause to be maintained with financially
sound and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss
or damage of the kinds customarily insured against by reputable companies
in the same or similar businesses, such insurance to be of such types and
in such amounts, including such self-insurance and deductible provisions,
as is customary for such companies under similar circumstances; provided,
however, that in any event Borrower shall use its best efforts to maintain,
or cause to be maintained, insurance in amounts and with coverages not
materially less favorable to any Consolidated Company as in effect on the
date of this Agreement, except where the costs of maintaining such
insurance would, in the judgment of both Borrower and the Administrative
Agent, be excessive.
(b) Cause, and cause each of the Consolidated Companies to
cause, all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, settlements and improvements
thereof, all as in the judgment of Borrower may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in
this Section shall prevent Borrower from discontinuing the operation or
maintenance of any such properties if such discontinuance is, in the
judgment of Borrower, desirable in the conduct of its business or the
business of any Consolidated Company.
Section 6.07 Reporting Covenants. Furnish to each Lender:
(a) Annual Financial Statements. As soon as available and
in any event within 95 days after the end of each fiscal year of Borrower,
balance sheets of the Consolidated Companies as at the end of such year,
presented on a consolidated basis, and the related statements of income,
shareholders' equity, and cash flows of the Consolidated Companies for such
fiscal year, presented on a consolidated basis, setting forth in each case
in comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by a report thereon of independent public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent, which such report shall be unqualified as to going
concern and scope of audit and shall state that such financial statements
present fairly in all material respects the financial condition as at the
end of such fiscal year on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies for
such fiscal year in accordance with GAAP and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(b) Quarterly Financial Statements. As soon as available
and in any event within 60 days after the end of each fiscal quarter of
Borrower (other than the fourth fiscal quarter), balance sheets of the
Consolidated Companies as at the end of such quarter presented on a
consolidated basis and the related statements of income, shareholders'
equity, and cash flows of the Consolidated Companies for such fiscal
quarter and for the portion of Borrower's fiscal year ended at the end of
such quarter, presented on a consolidated basis setting forth in each case
in comparative form the figures for the corresponding quarter and the
corresponding portion of Borrower's previous fiscal year, all in reasonable
detail and certified by the chief financial officer or principal accounting
officer of Borrower that such financial statements fairly present in all
material respects the financial condition of the Consolidated Companies as
at the end of such fiscal quarter on a consolidated basis, and the results
of operations and statements of cash flows of the Consolidated Companies
for such fiscal quarter and such portion of Borrower's fiscal year, in
accordance with GAAP consistently applied (subject to normal year-end audit
adjustments and the absence of certain footnotes);
(c) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (a) and (b) above, a
certificate of the president, chief financial officer or principal
accounting officer of Borrower (the "Compliance Certificate") (i) to the
effect that, based upon a review of the activities of the Consolidated
Companies and such financial statements during the period covered thereby,
there exists no Event of Default and no Default under this Agreement, or if
there exists an Event of Default or a Default hereunder, specifying the
nature thereof and the proposed response thereto, and (ii) demonstrating in
reasonable detail compliance as at the end of such fiscal year or such
fiscal quarter with Section 6.08 and Sections 7.01 through 7.04;
(d) Notice of Default. Promptly after any Executive
Officer of Borrower has notice or knowledge of the occurrence of an Event
of Default or a Default, a certificate of the chief financial officer or
principal accounting officer of Borrower specifying the nature thereof and
the proposed response thereto;
(e) Litigation. Promptly after (i) the occurrence thereof,
notice of the institution of or any adverse development in any action, suit
or proceeding or any governmental investigation or any arbitration, before
any court or arbitrator or any governmental or administrative body, agency
or official, against any Consolidated Company, or any material property
thereof which might have a Materially Adverse Effect, or (ii) actual
knowledge thereof, notice of the threat of any such action, suit,
proceeding, investigation or arbitration;
(f) Environmental Notices. Promptly after receipt thereof,
notice of any actual or alleged violation, or notice of any action, claim
or request for information, either judicial or administrative, from any
governmental authority relating to any actual or alleged claim, notice of
potential responsibility under or violation of any Environmental Law, or
any actual or alleged spill, leak, disposal or other release of any waste,
petroleum product, or hazardous waste or Hazardous Substance by any
Consolidated Company which could result in penalties, fines, claims or
other liabilities to any Consolidated Company in amounts in excess of
$5,000,000 individually or in the aggregate;
(g) ERISA.
(i) Promptly after the occurrence thereof with respect to any
Plan of any Consolidated Company or any ERISA Affiliate thereof, or any
trust established thereunder, notice of (x) a "reportable event" described
in Section 4043 of ERISA and the regulations issued from time to time
thereunder (other than a "reportable event" not subject to the provisions
for 30-day notice to the PBGC under such regulations), or (y) any other
event which could subject any Consolidated Company to any tax, penalty or
liability under Title I or Title IV of ERISA or Chapter 43 of the Tax Code,
or any tax or penalty resulting from a loss of deduction under Sections
162, 404 or 419 of the Tax Code, where any such taxes, penalties or
liabilities exceed or could exceed $1,000,000 in the aggregate;
(ii) Promptly after such notice must be provided to the PBGC, or
to a Plan participant, beneficiary or alternative payee, any notice
required under Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or
4041(c)(1)(A) of ERISA or under Section 401(a)(29) or 412 of the Tax Code
with respect to any Plan of any Consolidated Company or any ERISA Affiliate
thereof;
(iii) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the intent
of the PBGC or any other governmental authority to terminate a Plan of such
Company or ERISA Affiliate thereof which is subject to Title IV of ERISA,
to impose any liability on such Company or ERISA Affiliate under Title IV
of ERISA or Chapter 43 of the Tax Code;
(iv) Upon the request of the Administrative Agent, promptly upon
the filing thereof with the Internal Revenue Service ("IRS") or the
Department of Labor ("DOL"), a copy of IRS Form 5500 or annual report for
each Plan of any Consolidated Company or ERISA Affiliate thereof which is
subject to Title IV of ERISA;
(v) Upon the request of the Administrative Agent, (A) true and
complete copies of any and all documents, government reports and IRS
determination or opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL, (B) any reports filed with
the IRS, PBGC or DOL with respect to a Plan of the Consolidated Companies
or any ERISA Affiliate thereof, or (C) a current statement of withdrawal
liability for each Multiemployer Plan of any Consolidated Company or any
ERISA Affiliate thereof;
(h) Liens. Promptly upon any Consolidated Company becoming
aware thereof, notice of the filing of any federal statutory Lien, tax or
other state or local government Lien or any other Lien affecting their
respective properties, other than those Liens expressly permitted by
Section 7.02;
(i) Public Filings, Etc. Promptly upon the filing thereof
or otherwise becoming available, copies of all financial statements,
annual, quarterly and special reports, proxy statements and notices sent or
made available generally by Borrower to its public security holders, of all
regular and periodic reports and all registration statements and prospec
tuses (other than registration statements filed on Form S-3 of the
Securities and Exchange Commission regarding the issuance of restricted
stock in acquisitions), if any, filed by any of them with any securities ex
change, and of all press releases and other statements made available
generally to the public containing material developments in the business or
financial condition of Borrower and the other Consolidated Companies;
(j) Accountants' Reports. Promptly upon receipt thereof,
copies of all financial statements of, and all reports submitted by,
independent public accountants to Borrower in connection with each annual,
interim, or special audit of Borrower's consolidated financial statements;
(k) Burdensome Restrictions, Etc. Promptly upon the
existence or occurrence thereof, notice of the existence or occurrence of
(i) any Contractual Obligation or Requirement of Law described in Section
5.23, (ii) failure of any Consolidated Company to hold in full force and
effect those material trademarks, service marks, patents, trade names, copy
rights, licenses and similar rights necessary in the normal conduct of its
business, and (iii) any strike, labor dispute, slow down or work stoppage
as described in Section 5.21;
(l) New Material Subsidiaries. Simultaneously with the
delivery of each Compliance Certificate, a written list of all Material
Subsidiaries formed, acquired, or created from a transfer of assets or
through any other event, during the period commencing on the Closing Date
and ending on the date on which the first Compliance Certificate is
delivered, and thereafter since the date of the most recently delivered
Compliance Certificate; such written list shall include the name of each
new Material Subsidiary, its state of incorporation, list of its officers
and any other information that the Administrative Agent shall reasonably
request.
(m) Intercompany Asset Transfers. Promptly upon the
occurrence thereof, notice of the transfer of any assets from Borrower or
any Guarantor to any other Consolidated Company that is not Borrower or a
Guarantor (in any transaction or series of related transactions), excluding
sales or other transfers of assets in the ordinary course of business,
where the Asset Value of such assets is greater than $5,000,000 per
transfer;
(n) Year 2000 Issues. Promptly upon any Executive Officer
of Borrower has notice or knowledge thereof, notice that any computer
programs and systems of the Consolidated Companies are subject to any Year
2000 Issues that could reasonable be expected to have a Materially Adverse
Effect; and
(o) Other Information. With reasonable promptness, such
other information about the Consolidated Companies as the Administrative
Agent or any Lender may reasonably request from time to time.
Section 6.08 Financial Covenants.
(a) Fixed Charge Coverage Ratio. Maintain as of the last
day of each fiscal quarter, a Fixed Charge Coverage Ratio of greater than
1.50:1.0.
(b) Leverage Ratio. Maintain as of the last day of each
fiscal quarter, a Leverage Ratio of less than or equal to 0.60:1.0.
(c) Minimum Net Worth. Maintain a Consolidated Net Worth
of not less than (i) $425,000,000 plus (ii) 50% of Consolidated Net Income
(but not Loss) for each fiscal quarter ended after January 30, 1998 and on
or prior to the date of determination.
(d) Dividends. Not declare or pay any dividend on its
capital stock, or make any payment to purchase, redeem, retire or acquire
any of its Subordinated Debt or capital stock or any option, warrant, or
other right to acquire such Subordinated Debt or capital stock, other than:
(i) dividends payable solely in shares of capital stock; and
(ii) cash dividends declared and paid, and all other such
payments made, after January 29, 1993, in an aggregate amount at any time
not to exceed (x) $1,000,000, plus (y) 50% of Consolidated Net Income (or
minus 100% of Consolidated Net Loss) earned during Borrower's fiscal year
ended January 29, 1993, and thereafter (such period to be treated as one
accounting period);
provided, further, however, no such dividend or other payment may be
declared or paid pursuant to clause (ii) above unless no Default or Event
of Default exists at the time of such declaration or payment, or would
exist as a result of such declaration or payment.
Section 6.09 Notices Under Certain Other Indebtedness.
Immediately upon its receipt thereof, Borrower shall furnish the
Administrative Agent a copy of any notice received by it or any other
Consolidated Company from the holder(s) of Indebtedness referred to in
Section 7.01 (or from any trustee, agent, attorney, or other party acting
on behalf of such holder(s)) in an amount which, in the aggregate, exceeds
$5,000,000, where such notice states or claims (i) the existence or
occurrence of any default or event of default with respect to such
Indebtedness under the terms of any indenture, loan or credit agreement,
debenture, note, or other document evidencing or governing such
Indebtedness, or (ii) the existence or occurrence of any event or condition
which requires or permits holder(s) of any Indebtedness to exercise rights
under any Change in Control Provision. Borrower agrees to take such ac
tions as may be necessary to require the holder(s) of any Indebtedness (or
any trustee or agent acting on their behalf) incurred pursuant to documents
executed or amended and restated after the Closing Date, to furnish copies
of all such notices directly to the Administrative Agent simultaneously
with the furnishing thereof to Borrower, and that such requirement may not
be altered or rescinded without the prior written consent of the
Administrative Agent.
Section 6.10 Additional Guarantors. Borrower shall cause each
new Material Subsidiary reported to the Administrative Agent and the
Lenders pursuant to Section 6.07(l) above to execute and deliver to the
Administrative Agent, simultaneously with the report given pursuant to
Section 6.07(l) above, a supplement to the Guaranty Agreement, together
with related documents of the kind described in Section 4.01, as
appropriate, all in form and substance satisfactory to the Administrative
Agent and the Required Lenders.
Section 6.11 Financial Statements; Fiscal Year. Borrower shall
make no change in the dates of the fiscal year now employed for accounting
and reporting purposes without the prior written consent of the Required
Lenders, which consent shall not be unreasonably withheld.
Section 6.12 Ownership of Guarantors. Borrower shall maintain
its percentage of ownership existing as of the date hereof of all
Guarantors, and shall not decrease its ownership percentage in each Person
which becomes a Guarantor after the date hereof, as such ownership exists
at the time such Person becomes a Guarantor.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Revolving Loan Commitment remains in effect
hereunder or any Revolving Note shall remain unpaid, Borrower will not and
will not permit any Subsidiary to:
Section 7.01 Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, other than:
(a) Indebtedness under this Agreement or the Line of Credit
Agreement;
(b) Indebtedness outstanding on the date hereof or pursuant
to lines of credit in effect on the date hereof and described on Schedule
7.01(b);
(c) purchase money Indebtedness to the extent secured by a
Lien permitted by Section 7.02(b) provided such purchase money Indebtedness
does not exceed $20,000,000;
(d) unsecured current liabilities (other than liabilities
for borrowed money or liabilities evidenced by promissory notes, bonds or
similar instruments) incurred in the ordinary course of business and either
(i) not more than 30 days past due, or (ii) being disputed in good faith by
appropriate proceedings with reserves for such disputed liability
maintained in conformity with GAAP;
(e) any Intercompany Loans; provided, however, that the
aggregate principal amount of all Intercompany Loans made to any
Consolidated Companies that are not Guarantors shall not exceed $5,000,000
in the any one time outstanding unless otherwise agreed in writing by the
Administrative Agent and the Required Lenders;
(f) other Subordinated Debt in form and substance
acceptable to the Administrative Agent and the Required Lenders, and
evidenced by their written consent thereto;
(g) other Indebtedness not to exceed $75,000,000 at any one
time outstanding.
Section 7.02 Liens. Create, incur, assume or suffer to exist
any Lien on any of its property now owned or hereafter acquired to secure
any Indebtedness other than:
(a) Liens existing on the date hereof disclosed on Schedule
7.02;
(b) any Lien on any property securing Indebtedness incurred
or assumed for the purpose of financing all or any part of the acquisition
cost of such property and any refinancing thereof, provided that such Lien
does not extend to any other property, and provided further that the
aggregate principal amount of Indebtedness secured by all such Liens at any
time does not exceed $20,000,000;
(c) Liens for taxes not yet due, and Liens for taxes or
Liens imposed by ERISA which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are
being maintained;
(d) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law created
in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings and with respect
to which adequate reserves are being maintained;
(e) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money); and
(f) Liens (other than those permitted by paragraphs (a)
through (e) of this Section 7.02) encumbering assets having an Asset Value
not greater than $20,000,000 in the aggregate at any one time.
Section 7.03 Mergers, Acquisitions, Sales, Etc. Merge or
consolidate with any other Person, other than Borrower or another
Subsidiary, or sell, lease, or otherwise dispose of its accounts, property
or other assets (including capital stock of Subsidiaries), or purchase,
lease or otherwise acquire all or any substantial portion of the property
or assets (including capital stock) of any Person; provided, however, that
the foregoing restrictions on asset sales shall not be applicable to (i)
sales of equipment or other personal property being replaced by other
equipment or other personal property purchased as a capital expenditure
item, (ii) sales of accounts receivable pursuant to a securitization
program, provided further that any program costs incurred by the Borrower
in pursuing such a program shall be considered interest under this Credit
Agreement, (iii) other asset sales (including the stock of Subsidiaries)
where, on the date of execution of a binding obligation to make such asset
sale (provided that if the asset sale is not consummated within six (6)
months of such execution, then on the date of consummation of such asset
sale rather than on the date of execution of such binding obligation), the
Asset Value of asset sales occurring after the Closing Date, taking into
account the Asset Value of the proposed asset sale, would not exceed ten
percent (10%) of Borrower's Consolidated Net Worth, since the Closing Date,
and (iv) sales of inventory in the ordinary course of business; provided,
further, that the foregoing restrictions on mergers shall not apply to
mergers involving Borrower and another entity, provided Borrower is the
surviving entity, and mergers between a Subsidiary of Borrower and Borrower
or between Subsidiaries of Borrower provided that, in either case, upon
consummation of such mergers, Borrower is in compliance with the other
provisions hereof; provided, further, that the foregoing restrictions on
asset purchases shall not apply to asset purchases by Borrower to the
extent that (i) after giving effect to such purchases, Borrower is in
compliance with Section 7.04 hereof and (ii) the Board of Directors or
other governing body of such Person whose assets or stock is being
purchased has approved the terms of such acquisition; provided, however,
that no transaction pursuant to clauses (i), (ii) or (iii) or the second or
third provisos above shall be permitted if any Default or Event of Default
otherwise exists at the time of such transaction or would otherwise exist
as a result of such transaction.
Section 7.04 Investments, Loans, Etc. Make, permit or hold any
Investments in any Person, or otherwise acquire or hold any Subsidiaries,
other than:
(a) Investments in Subsidiaries that are Guarantors under
this Agreement, whether such Subsidiaries are Guarantors on the Closing
Date or become Guarantors in accordance with Section 6.10 after the Closing
Date; provided, however, nothing in this Section 7.04 shall be deemed to
authorize an investment pursuant to this subsection (a) in any entity that
is not a Subsidiary and a Guarantor prior to such investment;
(b) Investments in Subsidiaries, other than those
Subsidiaries that are or become Guarantors under this Agreement, or persons
that thereafter become Subsidiaries, in an aggregate amount not to exceed
$25,000,000 unless otherwise consented to in writing by the Required
Lenders;
(c) Investments in other Persons that are not, and do not
become, Subsidiaries in an aggregate amount not to exceed $25,000,000
unless otherwise consented to in writing by the Required Lenders;
(d) direct obligations of the United States of America or
any agency thereof, or obligations guaranteed by the United States of
America or any agency thereof, in each case supported by the full faith and
credit of the United States of America and maturing within one year from
the date of creation thereof;
(e) commercial paper maturing within one year from the date
of creation thereof rated in the highest grade by a nationally recognized
credit rating agency;
(f) time deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by any
Lender and any office located in the United States of America of any bank
or trust company which is organized under the laws of the United States of
America or any state thereof and has total assets aggregating at least
$500,000,000, including without limitation, any such deposits in
Eurodollars issued by a foreign branch of any such bank or trust company;
(g) Investments made by Plans; and
(h) permitted Intercompany Loans on terms and conditions
acceptable to the Administrative Agent.
Section 7.05 Sale and Leaseback Transactions. Sell or transfer
any property, real or personal, whether now owned or hereafter acquired,
and thereafter rent or lease such property or other property which any
Consolidated Company intends to use for substantially the same purpose or
purposes as the property being sold or transferred, except to the extent
that the aggregate value of all such property sold and leased back does not
exceed $5,000,000 at any one time.
Section 7.06 Transactions with Affiliates.
(a) Enter into any material transaction or series of
related transactions which in the aggregate would be material, whether or
not in the ordinary course of business, with any Affiliate of any
Consolidated Company (but excluding any Affiliate which is also a
Consolidated Company), other than on terms and conditions substantially as
favorable to such Consolidated Company as would be obtained by such
Consolidated Company at the time in a comparable arm's-length transaction
with a Person other than an Affiliate.
(b) Convey or transfer to any other Person (including any
other Consolidated Company) any real property, buildings, or fixtures used
in the manufacturing or production operations of any Consolidated Company,
or convey or transfer to any other Consolidated Company any other assets
(excluding conveyances or transfers in the ordinary course of business) if
at the time of such conveyance or transfer any Default or Event of Default
exists or would exist as a result of such conveyance or transfer.
Section 7.07 Optional Prepayments. Directly or indirectly,
prepay, purchase, redeem, retire, defease or otherwise acquire, or make any
optional payment on account of any principal of, interest on, or premium
payable in connection with the optional prepayment, redemption or
retirement of, any of its Indebtedness, or give a notice of redemption with
respect to any such Indebtedness, or make any payment in violation of the
subordination provisions of any Subordinated Debt, except with respect to
(i) the Obligations under this Agreement and the Notes, (ii) prepayments of
Indebtedness outstanding pursuant to revolving credit, overdraft and line
of credit facilities permitted pursuant to Section 7.01, (iii) Intercompany
Loans made or outstanding pursuant to Section 7.01, and (iv) Subordinated
Debt, in form and substance acceptable to the Administrative Agent and the
Required Lenders, as evidenced by their written consent, issued to
refinance existing Subordinated Debt.
Section 7.08 Changes in Business. Enter into any business
which is substantially different from that presently conducted by the
Consolidated Companies taken as a whole except where the Investment made,
and other funds expended or committed with respect to such business, do not
exceed $5,000,000 in each new business.
Section 7.09 ERISA. Take or fail to take any action with
respect to any Plan of any Consolidated Company or, with respect to its
ERISA Affiliates, any Plans which are subject to Title IV of ERISA or to
continuation health care requirements for group health plans under the Tax
Code, including without limitation (i) establishing any such Plan, (ii)
amending any such Plan (except where required to comply with applicable
law), (iii) terminating or withdrawing from any such Plan, or (iv)
incurring an amount of unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA, or any withdrawal liability under Title IV of ERISA
with respect to any such Plan, without first obtaining the written approval
of the Administrative Agent and the Required Lenders, where such actions or
failures could result in a Materially Adverse Effect.
Section 7.10 Additional Negative Pledges. Create or otherwise
cause or suffer to exist or become effective, directly or indirectly, any
prohibition or restriction on the creation or existence of any Lien upon
any asset of any Consolidated Company, other than pursuant to (i) the terms
of any agreement, instrument or other document pursuant to which any
Indebtedness permitted by Section 7.01(a) or (b) is incurred by any
Consolidated Company, so long as such prohibition or restriction applies
only to the property or asset being financed by such Indebtedness, and (ii)
any requirement of applicable law or any regulatory authority having
jurisdiction over any of the Consolidated Companies.
Section 7.11 Limitation on Payment Restrictions Affecting
Consolidated Companies. Create or otherwise cause or suffer to exist or
become effective, any consensual encumbrance or restriction on the ability
of any Consolidated Company to (i) pay dividends or make any other
distributions on such Consolidated Company's stock, or (ii) pay any
indebtedness owed to Borrower or any other Consolidated Company, or (iii)
transfer any of its property or assets to Borrower or any other
Consolidated Company, except any consensual encumbrance or restriction
existing under the Credit Documents or under the Line of Credit Agreement
and related documents.
Section 7.12 Actions Under Certain Documents. Without the
prior written consent of the Administrative Agent (which consent shall not
be unreasonably withheld), modify, amend, cancel or rescind any agreements
or documents evidencing or governing Subordinated Debt or the senior
Indebtedness permitted pursuant to Section 7.01 hereof, or make demand of
payment or accept payment on any Intercompany Loans permitted by Section
7.01, except that current interest accrued thereon as of the date of this
Agreement and all interest subsequently accruing thereon (whether or not
paid currently) may be paid unless a Default or Event of Default has
occurred and is continuing.
ARTICLE VIII
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
Section 8.01 Payments. Borrower shall fail to make promptly
when due (including, without limitation, by mandatory prepayment) any
principal payment with respect to the Revolving Loans, or Borrower shall
fail to make within five (5) Business Days after the due date thereof any
payment of interest, fee or other amount payable hereunder;
Section 8.02 Covenants Without Notice. Borrower shall fail to
observe or perform any covenant or agreement contained in Sections 6.07,
6.08, 6.11, and Article VII;
Section 8.03 Other Covenants. Borrower shall fail to observe
or perform any covenant or agreement contained in this Agreement, other
than those referred to in Sections 8.01 and 8.02, and, if capable of being
remedied, such failure shall remain unremedied for 30 days after the
earlier of (i) Borrower's obtaining knowledge thereof, or (ii) written
notice thereof shall have been given to Borrower by the Administrative
Agent or any Lender;
Section 8.04 Representations. Any representation or warranty
made or deemed to be made by Borrower or any other Credit Party or by any
of its officers under this Agreement or any other Credit Document
(including the Schedules attached thereto), or any certificate or other
document submitted to the Administrative Agent or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit
Document, shall be incorrect in any material respect when made or deemed to
be made or submitted;
Section 8.05 Non-Payments of Other Indebtedness. Any
Consolidated Company shall fail to make when due (whether at stated
maturity, by acceleration, on demand or otherwise, and after giving effect
to any applicable grace period) any payment of principal of or interest on
any Indebtedness (other than the Obligations) exceeding $5,000,000 in the
aggregate including, without limitation, indebtedness outstanding under the
Line of Credit Agreement;
Section 8.06 Defaults Under Other Agreements. Any Consolidated
Company shall fail to observe or perform within any applicable grace period
any covenants or agreements contained in any agreements or instruments
relating to any of its Indebtedness exceeding $5,000,000 in the aggregate
including, without limitation, indebtedness outstanding under the Line of
Credit Agreement, or any other event shall occur if the effect of such
failure or other event is to accelerate, or to permit the holder of such
Indebtedness or any other Person to accelerate, the maturity of such
Indebtedness; or any such Indebtedness shall be required to be prepaid
(other than by a regularly scheduled required prepayment) in whole or in
part prior to its stated maturity;
Section 8.07 Bankruptcy. Borrower or any other Consolidated
Company shall commence a voluntary case concerning itself under the
Bankruptcy Code or an involuntary case for bankruptcy is commenced against
any Consolidated Company and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement of the case;
or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or any substantial part of the property of any
Consolidated Company; or any Consolidated Company commences proceedings of
its own bankruptcy or to be granted a suspension of payments or any other
proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction, whether now or hereafter in effect, relating to any
Consolidated Company or there is commenced against any Consolidated Company
any such proceeding which remains undismissed for a period of 60 days; or
any Consolidated Company is adjudicated insolvent or bankrupt; or any order
of relief or other order approving any such case or proceeding is entered;
or any Consolidated Company suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or any Consolidated
Company makes a general assignment for the benefit of creditors; or any
Consolidated Company shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or
any Consolidated Company shall call a meeting of its creditors with a view
to arranging a composition or adjustment of its debts; or any Consolidated
Company shall by any act or failure to act indicate its consent to,
approval of or acquiescence in any of the foregoing; or any corporate
action is taken by any Consolidated Company for the purpose of effecting
any of the foregoing;
Section 8.08 ERISA. A Plan of a Consolidated Company or a Plan
subject to Title IV of ERISA of any of its ERISA Affiliates:
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of such Plan,
Section 412 of the Tax Code or Section 302 of ERISA for any plan year or a
waiver of such standard is sought or granted with respect to such Plan
under applicable law, the terms of such Plan or Section 412 of the Tax Code
or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of such Plan; or
(iii) shall require a Consolidated Company to provide security
under applicable law, the terms of such Plan, Section 401 or 412 of the Tax
Code or Section 306 or 307 of ERISA; or
(iv) results in a liability to a Consolidated Company under
applicable law, the terms of such Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or other
event a liability to the PBGC or a Plan that would have a Materially
Adverse Effect;
Section 8.09 Money Judgment. A judgment or order for the
payment of money in excess of $5,000,000 or otherwise having a Materially
Adverse Effect shall be rendered against Borrower or any other Consolidated
Company and such judgment or order shall continue unsatisfied (in the case
of a money judgment) and in effect for a period of 30 days during which
execution shall not be effectively stayed or deferred (whether by action of
a court, by agreement or otherwise);
Section 8.10 Ownership of Credit Parties and Pledged Entities.
If Borrower shall at any time fail to own and control the required
percentage of the voting stock of any Guarantor, either directly or indi
rectly through a wholly-owned Subsidiary of Borrower;
Section 8.11 Change in Control of Borrower. (a) Any "person"
or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act), other than the Hughes Family shall become the "beneficial
owner(s)" (as defined in said Rule 13d-3) of more than twenty-five percent
(25%) of the shares of the outstanding common stock of Borrower entitled to
vote for members of Borrower's board of directors, or (b) any event or
condition shall occur or exist which, pursuant to the terms of any change
in control provision, requires or permits the holder(s) of Indebtedness of
any Consolidated Company to require that such Indebtedness be redeemed,
repurchased, defeased, prepaid or repaid, in whole or in part, or the
maturity of such Indebtedness to be accelerated in any respect;
Section 8.12 Default Under Other Credit Documents. There shall
exist or occur any "Event of Default" as provided under the terms of any
other Credit Document, or any Credit Document ceases to be in full force
and effect or the validity or enforceability thereof is disaffirmed by or
on behalf of Borrower or any other Credit Party, or at any time it is or
becomes unlawful for Borrower or any other Credit Party to perform or
comply with its obligations under any Credit Document, or the obligations
of Borrower or any other Credit Party under any Credit Document are not or
cease to be legal, valid and binding on Borrower or any such Credit Party;
Section 8.13 Attachments. An attachment or similar action
shall be made on or taken against any of the assets of any Consolidated
Company with an Asset Value exceeding $5,000,000 in aggregate and is not
removed, suspended or enjoined within 60 days of the same being made or any
suspension or injunction being lifted;
then, and in any such event, and at any time thereafter if any Event of
Default shall then be continuing, the Administrative Agent may, and upon
the written or telex request of the Required Lenders, shall, by written
notice to Borrower, take any or all of the following actions, without
prejudice to the rights of the Administrative Agent, any Lender or the
holder of any Revolving Note to enforce its claims against Borrower or any
other Credit Party: (i) declare all Revolving Loan Commitments terminated,
whereupon the Revolving Loan Commitments of each Lender shall terminate
immediately and Fees shall forthwith become due and payable without any
other notice of any kind; and (ii) declare the principal of and any accrued
interest on the Revolving Loans, and all other Obligations owing hereunder,
to be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Borrower; provided, that, if an Event of Default specified
in Section 8.07 shall occur, the result which would occur upon the giving
of written notice by the Administrative Agent to any Credit Party, as
specified in clauses (i) and (ii) above, shall occur automatically without
the giving of any such notice.
ARTICLE IX
THE AGENTS
Section 9.01 Appointment of Administrative Agent. Each Lender
hereby designates SunTrust Bank, Central Florida, National Association as
the "Administrative Agent" to administer all matters concerning the
Revolving Loans and to act as herein specified. Each Lender hereby
irrevocably authorizes, and each holder of any Revolving Note by the ac
ceptance of a Revolving Note shall be deemed irrevocably to authorize, the
Administrative Agent to take such actions on its behalf under the
provisions of this Agreement, the other Credit Documents, and all other
instruments and agreements referred to herein or therein, and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Administrative Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. The Administrative Agent may perform any of its duties hereunder
by or through its agents or employees. The provisions of this Section 9.01
are solely for the benefit of the Administrative Agent, and Borrower and
the other Consolidated Companies shall not have any rights as third party
beneficiaries of any of the provisions hereof. In performing its functions
and duties under this Agreement, the Administrative Agent shall act solely
as agent of the Lenders and does not assume and shall not be deemed to have
assumed any obligations towards or relationship of agency or trust with or
for the Borrower and the other Consolidated Companies.
Section 9.02 Nature of Duties of Administrative Agent.
The Administrative Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Credit Documents.
Neither the Administrative Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it
as such hereunder or in connection herewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Administrative
Agent shall be ministerial and administrative in nature; the Administrative
Agent shall not have by reason of this Agreement a fiduciary relationship
in respect of any Lender; and nothing in this Agreement, express or
implied, is intended to or shall be so construed as to impose upon the
Administrative Agent any obligations in respect of this Agreement or the
other Credit Documents except as expressly set forth herein.
Section 9.03 Lack of Reliance on the Administrative Agent.
(a) Independently and without reliance upon the
Administrative Agent, each Lender, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of
the financial condition and affairs of the Credit Parties in connection
with the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of the Credit Parties, and,
except as expressly provided in this Agreement, the Administrative Agent
shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of
the Revolving Loans or at any time or times thereafter.
(b) The Administrative Agent shall not be responsible to
any Lender for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Agreement, the Revolving Notes, the Guaranty Agreement,
or any other documents contemplated hereby or thereby, or the financial
condition of the Credit Parties, or be required to make any inquiry
concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Revolving Notes, the
Guaranty Agreement, or the other documents contemplated hereby or thereby,
or the financial condition of the Credit Parties, or the existence or
possible existence of any Default or Event of Default; provided, however,
to the extent that the Administrative Agent has been advised that a Lender
has not received any information formally delivered to the Administrative
Agent pursuant to Section 6.07, the Administrative Agent shall deliver or
cause to be delivered such information to such Lender.
Section 9.04 Certain Rights of the Administrative Agent. If
the Administrative Agent shall request instructions from the Required
Lenders with respect to any action or actions (including the failure to
act) in connection with this Agreement, the Administrative Agent shall be
entitled to refrain from such act or taking such act, unless and until the
Administrative Agent shall have received instructions from the Required
Lenders; and the Administrative Agent shall not incur liability in any
Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Administrative
Agent as a result of the Administrative Agent acting or refraining from
acting hereunder in accordance with the instructions of the Required
Lenders.
Section 9.05 Reliance by Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cable gram,
radiogram, order or other documentary, teletransmission or telephone
message believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person. The Administrative Agent may consult
with legal counsel (including counsel for any Credit Party), independent
public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
Section 9.06 Indemnification of Administrative Agent. To the
extent the Administrative Agent is not reimbursed and indemnified by the
Credit Parties, each Lender will reimburse and indemnify the Administrative
Agent, ratably according to the respective amounts of the Revolving Loans
outstanding under all Facilities (or if no amounts are outstanding, ratably
in accordance with the Total Commitments), in either case, for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Administrative Agent in
performing its duties hereunder, in any way relating to or arising out of
this Agreement or the other Credit Documents; provided that no Lender shall
be liable to the Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct.
Section 9.07 The Administrative Agent in Its Individual
Capacity. With respect to its obligation to lend under this Agreement, the
Revolving Loans made by it and the Revolving Notes issued to it, the
Administrative Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Revolving Note and may exercise the same as
though it were not performing the duties specified herein; and the terms
"Lenders", "Required Lenders", "holders of Revolving Notes", or any similar
terms shall, unless the context clearly otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, and generally engage in any kind
of banking, trust, financial advisory or other business with the Con
solidated Companies or any affiliate of the Consolidated Companies as if it
were not performing the duties specified herein, and may accept fees and
other consideration from the Consolidated Companies for services in
connection with this Agreement and otherwise without having to account for
the same to the Lenders.
Section 9.08 Holders of Revolving Notes. The Administrative
Agent may deem and treat the payee of any Revolving Note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is
the holder of any Revolving Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Revolving Note or of any
Revolving Note or Revolving Notes issued in exchange therefor.
Section 9.09 Successor Administrative Agent.
(a) The Administrative Agent may resign at any time by
giving written notice thereof to the Lenders and Borrower and may be
removed at any time with or without cause by the Required Lenders; pro
vided, however, the Administrative Agent may not resign or be removed until
a successor Administrative Agent has been appointed and shall have accepted
such appointment. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Administrative Agent
subject to Borrower's prior written approval, so long as no Event of
Default has occurred and is continuing, which approval will not be
unreasonably withheld. If no successor Administrative Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's
giving of notice of resignation or the Required Lenders' removal of the
retiring Administrative Agent, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative Agent subject
to Borrower's prior written approval, which shall be a bank which maintains
an office in the United States of America, or a commercial bank organized
under the laws of the United States of America or any State thereof, or any
Affiliate of such bank, having a combined capital and surplus of at least
$100,000,000. If at any time SunTrust Bank, Central Florida is removed as
a Lender, SunTrust Bank, Central Florida shall simultaneously resign as
Administrative Agent.
(b) Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
an Administrative Agent under this Agreement.
Section 9.10 Documentation Agent. Each Lender designates First
Union National Bank as Documentation Agent and agrees that the
Documentation Agent shall have no duties or obligations hereunder.
Section 9.11 Syndication Agent. Each Lender designates
NationsBank, N.A. as Syndication Agent and agrees that the Syndication
Agent shall have no duties or obligations hereunder.
Section 9.12 Co-Agent. Each Lender designates SouthTrust Bank,
National Association as Co-Agent and agrees that the Co-Agent shall have no
duties or obligations hereunder.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, telecopy or similar teletransmission or writing) and shall be
given to such party at its address or applicable teletransmission number
set forth on the signature pages hereof, or such other address or
applicable teletransmission number as such party may hereafter specify by
notice to the Administrative Agent and Borrower. Each such notice, request
or other communication shall be effective (i) if given by telex, when such
telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, (iii) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section
and the appropriate confirmation is received, or (iv) if given by any other
means (including, without limitation, by air courier), when delivered or
received at the address specified in this Section; provided that notices to
the Administrative Agent shall not be effective until received.
Section 10.02 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the other Credit Documents, nor consent to
any departure by any Credit Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Required
Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and signed by
all the Lenders do any of the following: (i) waive any of the conditions
specified in Section 4.01 or 4.02, (ii) increase the Revolving Loan
Commitments or other contractual obligations to Borrower under this
Agreement except pursuant to Section 3.03, (iii) reduce the principal of,
or interest on, the Revolving Notes or any fees hereunder, (iv) postpone
any date fixed for the payment in respect of principal of, or interest on,
the Revolving Notes or any fees hereunder, (v) change the percentage of the
Revolving Loan Commitments or of the aggregate unpaid principal amount of
the Revolving Notes, or the number or identity of Lenders which shall be
required for the Lenders or any of them to take any action hereunder,
(vi) release any Guarantor from its obligations under any Guaranty Agree
ment, (vii) modify the definition of "Required Lenders," or (viii) modify
this Section 10.02. Notwithstanding the foregoing, no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required hereinabove to take such action, affect
the rights or duties of the Administrative Agent under this Agreement or
under any other Credit Document.
Section 10.03 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Administrative Agent, any Lender or any holder of
a Revolving Note in exercising any right or remedy hereunder or under any
other Credit Document, and no course of dealing between any Credit Party
and the Administrative Agent, any Lender or the holder of any Revolving
Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy hereunder or under any other Credit Docu
ment preclude any other or further exercise thereof or the exercise of any
other right or remedy hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Administrative Agent, any Lender or the holder of any
Revolving Note would otherwise have. No notice to or demand on any Credit
Party not required hereunder or under any other Credit Document in any case
shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Lenders or the holder of any Revolving Note to
any other or further action in any circumstances without notice or demand.
Section 10.04 Payment of Expenses, Etc. Borrower shall:
(i) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of the
Administrative Agent in the administration (both before and after the
execution hereof and including reasonable expenses actually incurred
relating to advice of counsel as to the rights and duties of the
Administrative Agent and the Lenders with respect thereto) of, and in
connection with the preparation, execution and delivery of, preservation of
rights under, enforcement of, and, after a Default or Event of Default,
refinancing, renegotiation or restructuring of, this Agreement and the
other Credit Documents and the documents and instruments referred to
therein, and any amendment, waiver or consent relating thereto (including,
without limitation, the reasonable fees actually incurred and disbursements
of counsel for the Administrative Agent), and in the case of enforcement of
this Agreement or any Credit Document after an Event of Default, all such
reasonable, out-of-pocket costs and expenses (including, without
limitation, the reasonable fees actually incurred and disbursements of
counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the applicable
provisions of Section 3.08(b), pay and hold each of the Lenders harmless
from and against any and all present and future stamp, documentary, and
other similar Taxes with respect to this Agreement, the Revolving Notes and
any other Credit Documents, any collateral described therein, or any
payments due thereunder, and save each Lender harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
to pay such Taxes; and
(iii) indemnified the Administrative Agent and each Lender and
each director, officer, employee, affiliate and agent thereof (each, an
"Indemnitee") from, and hold each of them harmless against, and reimburse
each Indemnitee, upon its demand, for any losses, claims, damages,
liabilities or other expenses ("Losses") incurred by such Indemnitee
insofar as such Losses arise out of or are in any way related to or result
from this Agreement, the Revolving Notes or any other Credit Documents or
the financing provided hereby, including, without limitation, Losses
arising in connection with any legal proceeding relating to any of the
foregoing (whether or not such Indemnitee is a party thereto) and the
reasonable attorneys fees and expenses actually incurred in connection
therewith; provided, however, that the foregoing shall not apply to any
Losses resulting from the gross negligence or willful misconduct of such
Indemnitee.
(iv) without limiting the indemnities set forth in subsection
(iii) above, indemnify each Indemnitee for any and all expenses and costs
(including without limitation, remedial, removal, response, abatement,
cleanup, investigative, closure and monitoring costs), losses, claims
(including claims for contribution or indemnity and including the cost of
investigating or defending any claim and whether or not such claim is
ultimately defeated, and whether such claim arose before, during or after
any Credit Party's ownership, operation, possession or control of its
business, property or facilities or before, on or after the date hereof,
and including also any amounts paid incidental to any compromise or
settlement by the Indemnitee or Indemnitees to the holders of any such
claim), lawsuits, liabilities, obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages (including without limitation
damages for contamination or destruction of natural resources), penalties
and fines of any kind or nature whatsoever (including without limitation in
all cases the reasonable fees actually incurred, other charges and disburse
ments of counsel in connection therewith) incurred, suffered or sustained
by that Indemnitee based upon, arising under or relating to Environmental
Laws based on, arising out of or relating to in whole or in part, the
existence or exercise of any rights or remedies by any Indemnitee under
this Agreement, any other Credit Document or any related documents (but
excluding those incurred, suffered or sustained by any Indemnitee as a
result of any action taken by or on behalf of the Lenders with respect to
any Subsidiary of Borrower (or the assets thereof) owned or controlled by
the Lenders.
If and to the extent that the obligations of Borrower under this Section
10.04 are unenforceable for any reason, Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
Section 10.05 Right of Setoff. In addition to and not in
limitation of all rights of offset that any Lender or other holder of a
Revolving Note may have under applicable law, each Lender or other holder
of a Revolving Note shall, upon the occurrence of any Event of Default and
whether or not such Lender or such holder has made any demand or any Credit
Party's obligations are matured, have the right to appropriate and apply to
the payment of any Credit Party's obligations hereunder and under the other
Credit Documents, all deposits of any Credit Party (general or special,
time or demand, provisional or final) then or thereafter held by and other
indebtedness or property then or thereafter owing by such Lender or other
holder to any Credit Party, whether or not related to this Agreement or any
transaction hereunder. Each Lender shall promptly notify Borrower of any
offset hereunder.
Section 10.06 Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, provided that Borrower may not assign or transfer any
of its interest hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Revolving Loans
at, to or for the account of, any of its branch offices or the office of an
Affiliate of such Lender.
(c) Each Lender may assign all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of any of its Revolving Loan Commitments and the Revolving Loans at
the time owing to it and the Revolving Notes held by it) to any Eligible
Assignee; provided, however, that (i) the Administrative Agent and, so long
as no Event of Default has occurred and is continuing, Borrower must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed) unless such assignment is an Affiliate of
the assigning Lender, (ii) the amount of the Revolving Loan Commitments of
the assigning Lender subject to each assignment (determined as of the date
the assignment and acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $10,000,000, and (iii)
the parties to each such assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a
Revolving Note or Notes subject to such assignment and, unless such
assignment is to an Affiliate of such Lender, a processing and recordation
fee of $2,500. Borrower shall not be responsible for such processing and
recordation fee or any costs or expenses incurred by any Lender or the
Administrative Agent in connection with such assignment. From and after
the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, the assignee thereunder shall be a party hereto and to the extent
of the interest assigned by such Assignment and Acceptance, have the rights
and obligations of a Lender under this Agreement. Within five (5) Business
Days after receipt of the notice and the Assignment and Acceptance,
Borrower, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Revolving Note or
Notes, a new Revolving Note or Notes to the order of such assignee in a
principal amount equal to the applicable Revolving Loan Commitments or
Revolving Loans assumed by it pursuant to such Assignment and Acceptance
and new Revolving Note or Notes to the assigning Lender in the amount of
its retained Revolving Loan Commitment or Commitments or amount of its
retained Revolving Loans. Such new Revolving Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Revolving Note or Notes, shall be dated the date of the
surrendered Revolving Note or Notes which they replace, and shall otherwise
be in substantially the form attached hereto.
(d) Each Lender may, without the consent of Borrower or the
Administrative Agent, sell participations without restriction to one or
more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its
Revolving Loan Commitments in the Revolving Loans owing to it and the
Revolving Notes held by it), provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the per
formance of such obligations, (iii) the participating bank or other entity
shall not be entitled to the benefit (except through its selling Lender) of
the cost protection provisions contained in Article III of this Agreement,
and (iv) Borrower and the Administrative Agent and other Lenders shall
continue to deal solely and directly with each Lender in connection with
such Lender's rights and obligations under this Agreement and the other
Credit Documents, and such Lender shall retain the sole right to enforce
the obligations of Borrower relating to the Revolving Loans and to approve
any amendment, modification or waiver of any provisions of this Agreement.
Any Lender selling a participation hereunder shall provide prompt written
notice to Borrower of the name of such participant.
(e) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation,
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant any information relating to Borrower or
the other Consolidated Companies furnished to such Lender by or on behalf
of Borrower or any other Consolidated Company. With respect to any
disclosure of confidential, non-public, proprietary information, such
proposed assignee or participant shall agree to use the information only
for the purpose of making any necessary credit judgments with respect to
this credit facility and not to use the information in any manner
prohibited by any law, including without limitation, the securities laws of
the United States of America. The proposed participant or assignee shall
agree not to disclose any of such information except (i) to directors,
employees, auditors or counsel to whom it is necessary to show such
information, each of whom shall be informed of the confidential nature of
the information, (ii) in any statement or testimony pursuant to a subpoena
or order by any court, governmental body or other agency asserting
jurisdiction over such entity, or as otherwise required by law (provided
prior notice is given to Borrower and the Administrative Agent unless
otherwise prohibited by the subpoena, order or law), and (iii) upon the
request or demand of any regulatory agency or authority with proper
jurisdiction. The proposed participant or assignee shall further agree to
return all documents or other written material and copies thereof received
from any Lender, the Administrative Agent or Borrower relating to such
confidential information unless otherwise properly disposed of by such
entity.
(f) Any Lender may at any time assign all or any portion of
its rights in this Agreement and the Revolving Notes issued to it to a
Federal Reserve Bank; provided that no such assignment shall release the
Lender from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 3.08(b) have
been levied or imposed so as to require withholdings or deductions by
Borrower and payment by Borrower of additional amounts to any Lender as a
result thereof, (ii) any Lender shall make demand for payment of any
material additional amounts as compensation for increased costs pursuant to
Section 3.11 or for its reduced rate of return pursuant to Section 3.17, or
(iii) any Lender shall decline to consent to a modification or waiver of
the terms of this Agreement or the other Credit Documents requested by
Borrower, then and in such event, upon request from Borrower delivered to
such Lender and the Administrative Agent, such Lender shall assign, in
accordance with the provisions of Section 10.06(c), all of its rights and
obligations under this Agreement and the other Credit Documents to another
Lender or an Eligible Assignee selected by Borrower, in consideration for
the payment by such assignee to the Lender of the principal of, and
interest on, the outstanding Revolving Loans accrued to the date of such
assignment, and the assumption of such Lender's Revolving Loan Commitment
hereunder, together with any and all other amounts owing to such Lender
under any provisions of this Agreement or the other Credit Documents
accrued to the date of such assignment.
Section 10.07 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE REVOLVING NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE REVOLVING NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT
IN THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE
STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND BORROWER
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, 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 SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) BORROWER HEREBY IRREVOCABLY DESIGNATES THE CORPORATION
SERVICE COMPANY, ATLANTA, GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL
AGENT TO RECEIVE, FOR AND ON BEHALF OF BORROWER, SERVICE OF PROCESS IN SUCH
RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR THE REVOLVING NOTES OR ANY DOCUMENT RELATED THERETO. IT
IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH LOCAL AGENT WILL
BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF SUCH PROCESS
BY MAIL TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW,
BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY
WAY THE SERVICE OF SUCH PROCESS. BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the
Administrative Agent, any Lender, any holder of a Revolving Note or any
Credit Party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against Borrower in any
other jurisdiction.
Section 10.08 Independent Nature of Lenders' Rights. The
amounts payable at any time hereunder to each Lender shall be a separate
and independent debt, and each Lender shall be entitled to protect and
enforce its rights pursuant to this Agreement and its Revolving Notes, and
it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
Section 10.09 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 10.10 Effectiveness; Survival.
(a) This Agreement shall become effective on the date (the
"Effective Date") on which all of the parties hereto shall have signed a
counterpart hereof (whether the same or different counterparts) and shall
have delivered the same to the Administrative Agent pursuant to Section
10.01 or, in the case of the Lenders, shall have given to the
Administrative Agent written or telex notice (actually received) that the
same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 3.08(b),
3.11, 3.13, 3.14, 3.17, and 10.04 hereof shall survive for ninety (90) days
after the payment in full of the Revolving Notes after the Final Maturity
Date. All representations and warranties made herein, in the certificates,
reports, notices, and other documents delivered pursuant to this Agreement
shall survive the execution and delivery of this Agreement, the other
Credit Documents, and such other agreements and documents, the making of
the Revolving Loans hereunder, and the execution and delivery of the
Revolving Notes.
Section 10.11 Severability. In case any provision in or
obligation under this Agreement or the other Credit Documents shall be
invalid, illegal or unenforceable, in whole or in part, in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 10.12 Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular action
or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a
Default or an Event of Default if such action is taken or condition exists.
Section 10.13 Change in Accounting Principles, Fiscal Year or
Tax Laws. If (i) any preparation of the financial statements referred to
in Section 6.07 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accounts (or successors thereto or agencies with similar functions) (other
than changes mandated by FASB 106) result in a material change in the
method of calculation of financial covenants, standards or terms found in
this Agreement, (ii) there is any change in Borrower's fiscal quarter or
fiscal year, or (iii) there is a material change in federal tax laws which
materially affects any of the Consolidated Companies' ability to comply
with the financial covenants, standards or terms found in this Agreement,
Borrower and the Required Lenders agree to enter into negotiations in order
to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating any of the Consolidated
Companies' financial condition shall be the same after such changes as if
such changes had not been made. Unless and until such provisions have been
so amended, the provisions of this Agreement shall govern.
Section 10.14 Headings Descriptive; Entire Agreement. The
headings of the several sections and subsections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement. This Agreement, the
other Credit Documents, and the agreements and documents required to be
delivered pursuant to the terms of this Agreement constitute the entire
agreement among the parties hereto and thereto regarding the subject
matters hereof and thereof and supersede all prior agreements,
representations and understandings related to such subject matters.
Section 10.15 Time is of the Essence. Time is of the essence in
interpreting and performing this Agreement and all other Credit Documents.
Section 10.16 Usury. It is the intent of the parties hereto not
to violate any federal or state law, rule or regulation pertaining either
to usury or to the contracting for or charging or collecting of interest,
and Borrower and Lenders agree that, should any provision of this Agreement
or of the Revolving Notes, or any act performed hereunder or thereunder,
violate any such law, rule or regulation, then the excess of interest
contracted for or charged or collected over the maximum lawful rate of
interest shall be applied to the outstanding principal indebtedness due to
Lenders by Borrower under this Agreement.
Section 10.17 Construction. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that
the court interpreting or construing the same shall not apply a presumption
that the terms hereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be more strictly
construed against the party who itself or through its agents prepared the
same, it being agreed that Borrower, the Administrative Agent, the Lenders
and their respective agents have participated in the preparation hereof.
Section 10.18 Waiver of Effect of Corporate Seal. Borrower
represents and warrants that it is not required to affix its corporate seal
to this Agreement or any other Credit Document pursuant to any Requirement
of Law and waives any shortening of the statute of limitations that may
result from not affixing the corporate seal to this Agreement or the other
Credit Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered in Atlanta, Georgia, by their duly
authorized officers as of the day and year first above written.
Address for Notices: BORROWER:
20 N. Orange Avenue HUGHES SUPPLY, INC.
Suite 200
Orlando, Florida 32801
Attention: J. Stephen Zepf By: /s/ J. Stephen Zepf
J. Stephen Zepf
Treasurer
By: /s/ Ben Butterfield
Ben Butterfield
Secretary
Address for Notices: SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, individually
200 S. Orange Avenue and as Administrative Agent
MC 2064
Orlando, Florida 32801
Attn: Mr. William C. Barr By: /s/ William C. Barr III
Name: William C. Barr III
Telecopy No. 407/237-4076 Title: First Vice President
Payment Office:
200 S. Orange Avenue
MC 2064
Orlando, Florida 32801
________________________________
Revolving Loan Commitment: $41,250,000.00
Pro Rata Share of Revolving Loan Commitment: 18.33%
Address for Notices: FIRST UNION NATIONAL BANK,
individually and as Documentation
225 Water Street Agent
4th Floor
Mail Code FL0060
Jacksonville, Florida 32202 By: /s/ Michael L. Williamson
Attn: Mr. Michael L. Williamson Name: Michael L. Williamson
Title: Vice President
Telecopy No. 904/361-3560
Payment Office:
100 S. Ashley Drive
Suite 1000
Mail Code FL4009
Tampa, Florida 32602
Attn: Ms. Mary Doonan
________________________________
Revolving Loan Commitment: $37,500,000.00
Pro Rata Share of Revolving Loan Commitment: 16.67%
Address for Notices: NATIONSBANK, N.A., individually and as
Syndication Agent
100 SE 2nd Street, 14th Floor
Miami, Florida 33131
Attn: Mr. Richard Starke By: /s/ Andrew M. Airheart
Name: Andrew M. Airheart
Telecopy No. Title: SVP
Payment Office:
NationsBank, N.A.
101 N. Tryon Street
Charlotte, North Carolina 28255
Attn: Ms. Deon Wright
_______________________________
Revolving Loan Commitment: $37,500,000.00
Pro Rata Share of Revolving Loan Commitment: 16.67%
Address for Notices: SOUTHTRUST BANK, NATIONAL
ASSOCIATION, individually and as
Co-Agent
420 N. 20th Street
Birmingham, AL 35203
Attn: FL Corp. Banking, 9th Floor By: /s/ Steven W. Davis
Name: Steven W. Davis
Telecopy No. 727/898-5319 Title: VP
Payment Office:
P.O. Box 830716
Birmingham, AL 35203
________________________________
Revolving Loan Commitment: $30,000,000.00
Pro Rata Share of Revolving Loan Commitment: 13.33%
Address for Notices:
ABN AMRO BANK, N.V.
Southwest Financial Center
200 S. Biscayne Boulevard, 22nd Floor
Miami, Florida 33131-5311
Attn: Ms. Deborah Day Orozco
By: /s/ Deborah Day Orozco
Telecopy No. (305)577-0825 Name: Deborah Day Orozco
Title: Vice President
Payment Office:
208 S. LaSalle Street, Suite 1500 By: /s/ Miguel Castillo
Chicago, IL 60604-1003 Name: Miguel Castillo
Attention: Loan Administration Title: Corporate Officer
Telephone: (312)992-5152
Fax: (312)992-5157
________________________________
Revolving Loan Commitment: $18,750,000.00
Pro Rata Share of Revolving Loan Commitment: 8.33%
Address for Notices: PNC BANK, N.A.
249 5th Avenue
Pittsburgh, Pennsylvania 15222
Attn: Mr. James D. Neil By: /s/ James D. Neil
Name: James D. Neil
Telecopy No. 412/762-6484 Title: Vice President
Payment Office:
Two PNC Plaza/ Liberty Avenue.
Pittsburgh, Pennsylvania 15222
Attn: Ms. Anita Truchman
________________________________
Revolving Loan Commitment: $18,750,000.00
Pro Rata Share of Revolving Loan Commitment: 8.33%
Address for Notices:
WACHOVIA BANK, N.A.
191 Peachtree Street, 29th Floor
Atlanta, Georgia 30303
Attn: Mr. Shawn Janko
By: /s/ Shawn Janko
Telecopy No. (404)332-5016 Name: Shawn Janko
Title: Banking Officer
Payment Office:
191 Peachtree Street, 29th Floor
Atlanta, Georgia 30303
Attn: Ms. Sharon Westmoreland
________________________________
Revolving Loan Commitment: $18,750,000.00
Pro Rata Share of Revolving Loan Commitment: 8.33%
Address for Notices: THE FIFTH THIRD BANK
MD 109054
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Mr. Kevin J. Walter By: /s/ Kevin J. Walter
Name: Kevin J. Walter
Telecopy No. 513/579-5226 Title: Corporate Banking Officer
Payment Office:
MD 109054
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Ms. Megan Heisel
________________________________
Revolving Loan Commitment: $11,250,000.00
Pro Rata Share of Revolving Loan Commitment: 5.00%
Address for Notices: HIBERNIA NATIONAL BANK
313 Carondelet Street
New Orleans, LA 70130
Attn: Ms. Kristie Peychaud By: /s/ Kristie Peychaud
Name: Kristie Peychaud
Telecopy No. 504/533-5344 Title: Banking Officer
Payment Office:
313 Carondelet Street
New Orleans, LA 70130
Attn: Ms. Shelly Strada
________________________________
Revolving Loan Commitment: $11,250,000.00
Pro Rata Share of Revolving Loan Commitment: 5.00%
EXHIBIT 10.12
LINE OF CREDIT AGREEMENT
Dated as of January 26 , 1999
By And Among
HUGHES SUPPLY, INC.
AND
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION,
individually and as Administrative Agent,
FIRST UNION NATIONAL BANK,
individually and as Documentation Agent,
NATIONSBANK, N.A.,
individually and as Syndication Agent
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
individually and as Co-Agent,
ABN AMRO BANK, N.V.,
PNC BANK, N.A.,
WACHOVIA BANK, N.A.,
THE FIFTH THIRD BANK,
HIBERNIA NATIONAL BANK and
other financial institutions becoming a party hereto
====================================================================
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Carolyn Zander Alford
(404) 572-4600
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; CONSTRUCTION -2-
Section 1.01. Definitions -2-
Section 1.02. Accounting Terms and Determination -18-
Section 1.03. Other Definitional Terms -18-
Section 1.04. Exhibits and Schedules -18-
ARTICLE II LINE OF CREDIT COMMITMENT -18-
Section 2.01. Line of Credit Commitment; Use of Proceeds -18-
Section 2.02. Line of Credit Notes; Repayment of Principal -19-
Section 2.03. Voluntary Reduction of Line of Credit
Commitments -19-
Section 2.04. Extension of the Line of Credit Termination Date -20-
ARTICLE III GENERAL LOAN TERMS -20-
Section 3.01. Funding Notices -20-
Section 3.02. Disbursement of Funds -22-
Section 3.03. Interest -23-
Section 3.04. Interest Periods -25-
Section 3.05. Fees -26-
Section 3.06. Voluntary Prepayments of Borrowings -26-
Section 3.07. Payments, etc. -27-
Section 3.08. Interest Rate Not Ascertainable, etc -28-
Section 3.09. Illegality -29-
Section 3.10. Increased Costs -29-
Section 3.11. Lending Offices -31-
Section 3.12. Funding Losses -31-
Section 3.13. Assumptions Concerning Funding of Eurodollar
Advances -31-
Section 3.14. Apportionment of Payments -32-
Section 3.15. Sharing of Payments, Etc -32-
Section 3.16. Capital Adequacy -32-
Section 3.17. Benefits to Guarantors -33-
Section 3.18. Limitation on Certain Payment Obligations -33-
ARTICLE IV CONDITIONS TO BORROWINGS -34-
Section 4.01. Conditions Precedent to Initial Line of Credit
Loans -34-
Section 4.02. Conditions to All Line of Credit Loans -36-
ARTICLE V REPRESENTATIONS AND WARRANTIES -37-
Section 5.01. Organization and Qualification -37-
Section 5.02. Corporate Authority -38-
Section 5.03. Financial Statements -38-
Section 5.04. Tax Returns -38-
Section 5.05. Actions Pending -38-
Section 5.06. Representations; No Defaults -39-
Section 5.07. Title to Properties -39-
Section 5.08. Enforceability of Agreement -39-
Section 5.09. Consent -39-
Section 5.10. Use of Proceeds; Federal Reserve Regulations -39-
Section 5.11. ERISA -40-
Section 5.12. Subsidiaries -40-
Section 5.13. Outstanding Indebtedness -40-
Section 5.14. Conflicting Agreements -41-
Section 5.15. Pollution and Other Regulations -41-
Section 5.16. Possession of Franchises, Licenses, Etc -42-
Section 5.17. Patents, Etc -42-
Section 5.18. Governmental Consent -42-
Section 5.19. Disclosure -43-
Section 5.20. Insurance Coverage -43-
Section 5.21. Labor Matters -43-
Section 5.22. Intercompany Loans; Dividends -43-
Section 5.23. Burdensome Restrictions -44-
Section 5.24. Investment Company Act, Etc -44-
Section 5.25. Notice of Non-Compliance with Laws -44-
Section 5.26. Year 2000 Issues -44-
ARTICLE VI AFFIRMATIVE COVENANTS -44-
Section 6.01. Corporate Existence, Etc -44-
Section 6.02. Compliance with Laws, Etc -44-
Section 6.03. Payment of Taxes and Claims, Etc -45-
Section 6.04. Keeping of Books -45-
Section 6.05. Visitation, Inspection, Etc -45-
Section 6.06. Insurance; Maintenance of Properties -45-
Section 6.07. Reporting Covenants -46-
Section 6.08. Financial Covenants -49-
Section 6.09. Notices Under Certain Other Indebtedness -50-
Section 6.10. Additional Guarantors -50-
Section 6.11. Financial Statements; Fiscal Year -50-
Section 6.12. Ownership of Guarantors -50-
ARTICLE VII NEGATIVE COVENANTS -51-
Section 7.01. Indebtedness -51-
Section 7.02. Liens -51-
Section 7.03. Mergers, Acquisitions, Sales, Etc -52-
Section 7.04. Investments, Loans, Etc -53-
Section 7.05. Sale and Leaseback Transactions -54-
Section 7.06. Transactions with Affiliates -54-
Section 7.07. Optional Prepayments -54-
Section 7.08. Changes in Business -54-
Section 7.09. ERISA -54-
Section 7.10. Additional Negative Pledges -55-
Section 7.11. Limitation on Payment Restrictions Affecting
Consolidated Companies -55-
Section 7.12. Actions Under Certain Documents -55-
ARTICLE VIII EVENTS OF DEFAULT -55-
Section 8.01. Payments -56-
Section 8.02. Covenants Without Notice -56-
Section 8.03. Other Covenants -56-
Section 8.04. Representations -56-
Section 8.05. Non-Payments of Other Indebtedness -56-
Section 8.06. Defaults Under Other Agreements -56-
Section 8.07. Bankruptcy -56-
Section 8.08. ERISA -57-
Section 8.09. Money Judgment -57-
Section 8.10. Ownership of Credit Parties and Pledged Entities -58-
Section 8.11. Change in Control of Borrower -58-
Section 8.12. Default Under Other Credit Documents -58-
Section 8.13. Attachments -58-
ARTICLE IX THE AGENT -59-
Section 9.01. Appointment of Administrative Agent -59-
Section 9.02. Nature of Duties of Administrative Agent -59-
Section 9.03. Lack of Reliance on the Administrative Agent -59-
Section 9.04. Certain Rights of the Administrative Agent -60-
Section 9.05. Reliance by Administrative Agent -60-
Section 9.06. Indemnification of Administrative Agent -60-
Section 9.07. The Administrative Agent in Its Individual
Capacity -61-
Section 9.08. Holders of Line of Credit Notes -61-
Section 9.09. Successor Administrative Agent -61-
Section 9.10. Documentation Agent -62-
Section 9.11. Syndication Agent -62-
ARTICLE X MISCELLANEOUS -62-
Section 10.01. Notices -62-
Section 10.02. Amendments, Etc -62-
Section 10.03. No Waiver; Remedies Cumulative -63-
Section 10.04. Payment of Expenses, Etc -63-
Section 10.05. Right of Setoff -65-
Section 10.06. Benefit of Agreement -65-
Section 10.07. Governing Law; Submission to Jurisdiction -67-
Section 10.08. Independent Nature of Lenders' Rights -68-
Section 10.09. Counterparts -68-
Section 10.10. Effectiveness; Survival -68-
Section 10.11. Severability -69-
Section 10.12. Independence of Covenants -69-
Section 10.13. Change in Accounting Principles, Fiscal Year or
Tax Laws -69-
Section 10.14. Headings Descriptive; Entire Agreement -69-
Section 10.15. Time is of the Essence -70-
Section 10.16. Usury -70-
Section 10.17. Construction -70-
Section 10.18. Waiver of Effect of Corporate Seal -70-
SCHEDULES
Schedule 5.01 Organization and Ownership of Subsidiaries
Schedule 5.11 Employee Benefit Matters
Schedule 5.14 Conflicting Agreements
Schedule 5.15(a) Environmental Compliance
Schedule 5.22 Intercompany Loans
Schedule 7.01(b) Existing Indebtedness
Schedule 7.02 Existing Liens
EXHIBITS
Exhibit A Form of Syndicate Note
Exhibit B Form of Competitive Bid Note
Exhibit C Form of Closing Certificate
Exhibit D Form of Assignment and Acceptance
LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT, dated as of January 26, 1999 (the
"Agreement") by and among HUGHES SUPPLY, INC. ("Borrower"), a Florida
corporation, SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION,
("SunTrust Bank, Central Florida") a national banking association, FIRST
UNION NATIONAL BANK, a national banking association, NATIONSBANK, N.A., a
national banking association, SOUTHTRUST BANK, NATIONAL ASSOCIATION, a
national banking association, ABN AMRO BANK, N.V., a banking corporation
organized under the laws of the Netherlands, PNC BANK, N.A., a national
banking association, WACHOVIA BANK, N.A., a national banking association,
THE FIFTH THIRD BANK, a national banking association, HIBERNIA NATIONAL
BANK, a national banking association and such other financial institutions
becoming a party hereto from time to time, (individually, a "Lender" and
collectively, the "Lenders"), SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), FIRST UNION NATIONAL BANK, as documentation agent
for the Lenders (in such capacity, the "Documentation Agent"), NATIONSBANK,
N.A., as syndication agent for the Lenders (in such capacity, the
"Syndication Agent"), and SOUTHTRUST BANK, NATIONAL ASSOCIATION, as Co-
agent for the Lenders (in such capacity, the "Co-Agent").
W I T N E S S E T H :
WHEREAS, Borrower has requested that the Lenders establish a
$75,000,000 line of credit facility in favor of Borrower, and subject to
the terms and conditions contained herein, the Lenders are willing to
establish such line of credit facility in favor of Borrower subject to the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants made
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. As used in this Agreement, and in
any instrument, certificate, document or report delivered pursuant hereto,
the following terms shall have the following meanings (to be equally
applicable to both the singular and plural forms of the term defined):
"Administrative Agent" shall mean SunTrust Bank, Central Florida,
a national banking association, as administrative agent for the Lenders
hereunder and under the other Credit Documents, and each successor
administrative agent.
"Adjusted LIBO Rate" shall mean with respect to each Interest
Period for a Eurodollar Advance, the rate obtained by dividing (A) LIBOR
for such Interest Period by (B) a percentage equal to 1 minus the then
stated maximum rate (stated as a decimal) of all reserves requirements
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurodollar liabilities as defined in
Regulation D (or against any successor category of liabilities as defined
in Regulation D). The Administrative Agent shall promptly notify the
Borrower of any such reserve requirements that become applicable.
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under the Line of Credit Loans, which Advance shall
be made or outstanding as a Base Rate Advance, Competitive Bid Advance or
Eurodollar Advance, as the case may be.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of that Person.
"Agents" shall mean, collectively, the Administrative Agent, the
Documentation Agent, the Syndication Agent and the Co-Agent.
"Agreement" shall mean this Line of Credit Agreement, either as
originally executed or as it may be from time to time supplemented,
amended, restated, renewed or extended and in effect.
"Applicable Facility Fee Percentage" shall mean the percentage
designated below based on Borrower's Leverage Ratio for the most recently
ended fiscal quarter for which financial statements have been delivered
pursuant to Section 6.07(a) or (b):
Leverage Ratio Applicable Facility
Fee Percentage for
Line of Credit
Commitments:
Less than 0.4:1.0 0.125%
Greater than or
equal to 0.4:1.0 but 0.15%
less than 0.45:1.0
Greater than or
equal to 0.45:1.0 0.175%
but less than
0.5:1.0
Greater than or
equal to 0.5:1.0 but 0.225%
less than 0.55:1.0
Greater than or
equal to 0.55:1.0 0.275%
provided, however, that:
(a) The Applicable Facility Fee Percentage in effect as of
the date of execution and delivery of this Agreement is .175% for
the Line of Credit Commitments, and such percentage shall remain
in effect until such time as the Applicable Facility Fee
Percentage may be adjusted as hereinafter provided; and
(b) Adjustments, if any, to the Applicable Facility Fee
Percentages based on changes in the ratios set forth above shall
be made and become effective on the first day of the fiscal
quarter immediately following delivery of the financial
statements required pursuant to Section 6.07(b), and (ii) on the
first day of the second fiscal quarter immediately following the
last day of any fiscal year of Borrower.
(c) Notwithstanding the foregoing, at any time during which
Borrower has failed to deliver the financial statements and
certificates when required by Section 6.07(a) and (b), as the
case may be, the Applicable Facility Fee Percentage shall be
0.275% until such time as the delinquent financial statements are
delivered at which time the Applicable Facility Fee Percentage
shall be reset as provided above.
"Applicable Margin" shall mean the percentage designated below
based on Borrower's Leverage Ratio for the most recently ended fiscal
quarter for which financial statements have been delivered pursuant to
Section 6.07(a) or (b):
Leverage Ratio Applicable Margin
for Line of Credit
Commitments:
Less than 0.4:1.0 0.275%
Greater than or
equal to 0.4:1.0 but 0.35%
less than 0.45:1.0
Greater than or
equal to 0.45:1.0 0.575%
but less than
0.5:1.0
Greater than or
equal to 0.5:1.0 but 0.65%
less than 0.55:1.0
Greater than or
equal to 0.55:1.0 0.85%
provided, however, that:
(a) The Applicable Margin in effect as of the date of
execution and delivery of this Agreement is .575% for the Line of
Credit Commitments, and such percentage shall remain in effect
until such time as the Applicable Margin may be adjusted as
hereinafter provided; and
(b) Adjustments, if any, to the Applicable Margin based on
changes in the ratios set forth above shall be made and become
effective on the first day of the fiscal quarter immediately
following delivery of the financial statements required pursuant
to Section 6.07(b), and (ii) on the first day of the second
fiscal quarter immediately following the last day of any fiscal
year of Borrower.
(c) Notwithstanding the foregoing, at any time during which
Borrower has failed to deliver the financial statements and
certificates when required by Section 6.07(a) and (b), as the
case may be, the Applicable Margin shall be 0.85% until such time
as the delinquent financial statements are delivered at which
time the Applicable Margin shall be reset as provided above
"Asbestos Laws" means the common law in all federal, state and
local and foreign jurisdictions and other laws in such jurisdictions, and
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, now or hereafter in effect
relating to or concerning asbestos or asbestos-containing material,
including without limitation, exposure to asbestos or asbestos-containing
material.
"Asset Value" shall mean, with respect to any property or asset
of any Consolidated Company as of any particular date, an amount equal to
the greater of (i) the then book value of such property or asset as
established in accordance with GAAP, and (ii) the then fair market value of
such property or asset as determined in good faith by the board of
directors of such Consolidated Company.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an Eligible Assignee in accordance
with the terms of this Agreement and substantially in the form of
Exhibit D.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as
amended and in effect from time to time (11 U.S.C. 101 et seq.).
"Base Rate" shall mean (with any change in the Base Rate to be
effective as of the date of change of either of the following rates) the
higher of (a) the rate which the Administrative Agent designates from time
to time to be its prime lending rate, as in effect from time to time, and
(b) the Federal Funds Rate, as in effect from time to time, plus one-half
of one percent (0.50%) per annum. The Administrative Agent's prime lending
rate is a reference rate and does not necessarily represent the lowest or
best rate charged to customers; Administrative Agent may make commercial
loans or other loans at rates of interest at, above or below the
Administrative Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance bearing interest based
on the Base Rate.
"Base Rate Loan" shall mean any Line of Credit Loan hereunder
which bears interest at the Base Rate.
"Borrowing" shall mean the incurrence by Borrower under any
Facility of Advances of one Type concurrently having the same Interest
Period or the continuation or conversion of an existing Borrowing or
Borrowings in whole or in part.
"Business Day" shall mean, with respect to Eurodollar Loans, any
day other than a day on which commercial banks are closed or required to be
closed for domestic and international business, including dealings in
Dollar deposits on the London interbank market, and with respect to all
other Line of Credit Loans and matters, any day other than Saturday, Sunday
and a day on which commercial banks are required to be closed for business
in Atlanta, Georgia, or Orlando, Florida.
"Capitalized Lease Obligations" shall mean all lease obligations
which have been or are required to be, in accordance with GAAP, capitalized
on the books of the lessee.
"CERCLA" has the meaning set forth in Section 5.15(a) of this
Agreement.
"Change in Control Provision" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Indebtedness of Borrower evidencing debt or a
commitment to extend loans in excess of $5,000,000 which requires, or
permits the holder(s) of such Indebtedness of Borrower to require that such
Indebtedness of Borrower be redeemed, repurchased, defeased, prepaid or
repaid, either in whole or in part, or the maturity of such Indebtedness of
Borrower to be accelerated in any respect, as a result of a change in
ownership of the capital stock of Borrower or voting rights with respect
thereto.
"Closing Date" shall mean the date on or before January 26, 1999,
on which the initial Line of Credit Loans are made and the conditions set
forth in Section 4.01 are satisfied or waived in accordance with Section
10.02.
"Co-Agent" shall mean SouthTrust Bank, National Association, a
national banking association, as co-agent for the Lenders hereunder and
under the other Credit Documents, and each successor co-agent.
"Commitment Letter" shall mean that certain letter agreement,
dated as of December 21, 1998, executed by SunTrust Equitable Securities
Corporation, SunTrust Bank, Central Florida, and First Union National Bank
and acknowledged and agreed to by the Borrower.
"Competitive Bid Advance" shall mean an Advance bearing interest
based on a Competitive Bid Rate.
"Competitive Bid Loan" shall mean a Line of Credit Loan made by a
Lender on a competitive bid basis as provided in Article II.
"Competitive Bid Note" shall mean a promissory note evidencing
Competitive Bid Loans in the form attached hereto as Exhibit B.
"Competitive Bid Rate" shall mean the interest rate charged by a
Lender on a Competitive Bid Loan.
"Consolidated Amortization" shall mean, for any fiscal period of
the Borrower, amortization of the Consolidated Companies for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated Companies" shall mean, collectively, Borrower and
all of its Subsidiaries.
"Consolidated Depreciation" shall mean, for any fiscal period of
the Borrower, depreciation of the Consolidated Companies for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITR" shall mean, for any fiscal period of the
Borrower, an amount equal to Consolidated Net Income (Loss) for such
period, plus, to the extent deducted in determining Consolidated Net Income
(Loss), (i) Consolidated Tax Expense for such period, (ii) Consolidated
Interest Expense for such period, and (iii) Consolidated Rental Expense for
such period.
"Consolidated EBITDAR" shall mean, for any fiscal period of the
Borrower, an amount equal to Consolidated Net Income (Loss) for such period
plus to the extent deducted in determining Consolidated Net Income (Loss),
(i) Consolidated Interest Expense for such period, (ii) Consolidated Tax
Expense for such period, (iii) Consolidated Depreciation for such period,
(iv) Consolidated Amortization for such period and (v) Consolidated Rental
Expense for such period.
"Consolidated Interest Expense" shall mean, for any fiscal period
of Borrower, total interest expense (including without limitation, interest
expense attributable to capitalized leases in accordance with the GAAP and
any program costs incurred by Borrower in connection with sales of accounts
receivable pursuant to a securitization program) of the Consolidated
Companies for such period, determined on a consolidated basis.
"Consolidated Net Income (Loss)" shall mean, for any fiscal
period of Borrower, the net income (or loss) of the Consolidated Companies
for such period (taken as a single accounting period) determined on a
consolidated basis in conformity with GAAP; provided that there shall be
excluded therefrom (i) any items of gain or loss which were included in
determining such Consolidated Net Income and were not realized in the
ordinary course of business or the result of a sale of assets other than in
the ordinary course of business; and (ii) the income (or loss) of any party
accrued prior to the date such becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any of its Subsidiaries, or
such party's assets are acquired by any Consolidated Company, unless such
party is acquired in a transaction accounted for as a pooling of interests.
"Consolidated Net Worth" shall mean as of the date of
determination, the Borrower's total shareholder's equity of such date as
determined in accordance with GAAP.
"Consolidated Rental Expense" shall mean, for any fiscal period
of Borrower, total operating lease expense of the Consolidated Companies
for such period, determined on a consolidated basis in accordance with
GAAP.
"Consolidated Tax Expense" shall mean, for any fiscal period of
the Borrower, tax expense of the Consolidated Companies for such period
determined on a consolidated basis in accordance with GAAP.
"Contractual Obligation" of any Person shall mean any provision
of any security issued by such Person or of any agreement, instrument or
undertaking under which such Person is obligated or by which it or any of
the property owned by it is bound.
"Credit Documents" shall mean, collectively, this Agreement, the
Line of Credit Notes, the Guaranty Agreements, and all other Guaranty
Documents, if any.
"Credit Parties" shall mean, collectively, each of Borrower, the
Guarantors, and every other Person who, from time to time, executes a
Credit Document with respect to all or any portion of the Obligations.
"Default" shall mean any condition or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Documentation Agent" shall mean First Union National Bank, a
national banking association, as documentation agent for the Lenders
hereunder and under the other Credit Documents, and each successor
documentation agent.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful
money of the United States of America.
"Eligible Assignee" shall mean (i) a commercial bank organized
under the laws of the United States of America, or any state thereof, , or
organized under the laws of any other country with a Lending Office in the
United States of America, having total assets in excess of $1,000,000,000
or any commercial finance or asset-based lending Affiliate of any such
commercial bank and (ii) any Lender or any Affiliate of any Lender.
"Environmental Laws" shall mean all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, Asbestos Laws), relating to pollution or protection of
the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any
petroleum product or other waste, chemicals or substances regulated by any
Environmental Law into the environment (including without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata), or (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of any
Hazardous Substance, petroleum including crude oil or any fraction thereof,
any petroleum product or other waste, chemicals or substances regulated by
any Environmental Law, and (iii) underground storage tanks and related
piping, and emissions, discharges and releases or threatened releases
therefrom, such Environmental Laws to include, without limitation (i) the
Clean Air Act (42 U.S.C. 7401 et seq.), (ii) the Clean Water Act (33
U.S.C. 1251 et seq.), (iii) the Resource Conservation and Recovery Act
(42 U.S.C. 6901 et seq.), (iv) the Toxic Substances Control Act (15
U.S.C. 2601 et seq.) and (v) the Comprehensive Environmental Response
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act (42 U.S.C. 9601 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each
trade or business (whether or not incorporated) which is a member of a
group of which that Person is a member and which is under common control
within the meaning of the regulations promulgated under Section 414 of the
Tax Code.
"Eurodollar Advance" shall mean an Advance bearing interest based
on the Adjusted LIBO Rate.
"Eurodollar Loan" shall mean any Line of Credit Loan hereunder
which bears interest based on the Adjusted LIBO Rate.
"Event of Default" shall have the meaning set forth in Article
VIII.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute thereto.
"Executive Officer" shall mean with respect to any Person (other
than a Guarantor), the President, Vice Presidents, Chief Financial Officer,
Treasurer, Secretary and any Person holding comparable offices or duties,
and with respect to a Guarantor, the President.
"Extension of Credit" shall mean the making of a Line of Credit
Loan or the conversion of a Line of Credit Loan of one Type into a Line of
Credit Loan of another Type.
"Facility" or "Facilities" shall mean the Line of Credit
Commitment and Line of Credit Loans.
"Facility Fee" shall have the meaning assigned to such term in
Section 3.05(a).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
member banks of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of
Atlanta, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative Agent.
"Fee Letter" shall mean that certain letter agreement, dated as
of December 21, 1998, executed by SunTrust Equitable Securities
Corporation, SunTrust Bank, Central Florida and First Union National Bank
and acknowledged and agreed to by the Borrower, pursuant to which the
Borrower agreed to pay certain fees specified in such letter agreement.
"Fees" shall mean, collectively, the Facility Fee and any other
fees specified in the Fee Letter.
"Final Maturity Date" shall mean the date on which all
commitments have been terminated and all amounts outstanding under this
Agreement have been declared or have automatically become due and payable
pursuant to the provisions of Article VIII.
"Fixed Charge Coverage Ratio" shall mean, as of any date of
determination, the ratio of (A) Consolidated EBITDAR to (B) the sum of (i)
Consolidated Interest Expense plus (ii) Consolidated Rental Expense, in
each case measured for the four fiscal quarter period ending on such date
(or if such date is not the last day of any fiscal quarter, for the four
fiscal quarter period ending immediately prior to such date).
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a significant
segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend,
or other obligation ("primary obligation") of any other Person (the
"primary obligor") in any manner including, without limitation, any
obligation or arrangement of such Person (a) to purchase or repurchase any
such primary obligation, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) 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 (d) to indemnify the owner of such primary obligation against loss in
respect thereof.
"Guarantors" shall mean, collectively, each Material Subsidiary
of the Borrower that has executed the Guaranty Agreement as of the Closing
Date, together with all other Material Subsidiaries that hereafter execute
supplements to the Guaranty Agreement, and their respective successors and
permitted assigns.
"Guaranty Agreement" shall mean the Subsidiary Guaranty
Agreement, dated as of the date hereof, executed by certain of Borrower's
Subsidiaries in favor of the Lenders and the Administrative Agent, as the
same may be amended, restated or supplemented from time to time.
"Guaranty Documents" shall mean, collectively, the Guaranty
Agreement, and each other guaranty agreement, mortgage, deed of trust,
security agreement, pledge agreement, or other security or collateral
document guaranteeing or securing the Obligations, as the same may be
amended, restated, or supplemented from time to time.
"Hazardous Materials" shall mean oil, petroleum or chemical
liquids or solids, liquid or gaseous products, asbestos, or any other
hazardous waste or hazardous substances, including, without limitation,
hazardous medical waste or any other substance described in any Hazardous
Materials Law.
"Hazardous Materials Law" shall mean the Comprehensive
Environmental Response Compensation and Liability Act as amended by the
Super Fund Amendments and Reauthorization Act, 42 U.S.C. 9601, the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, the state
hazardous waste laws, as such laws may from time to time be in effect, and
related regulations, and all similar laws and regulations.
"Hazardous Substances" has the meaning assigned to that term in
CERCLA.
"Hughes Family" shall mean (i) David H. Hughes, Vincent S.
Hughes, Russell V. Hughes, (ii) any of their direct family members
(including, without limitation, lineal ancestors and descendants, siblings,
and lineal descendants of siblings), (iii) any trusts and profit sharing
plans and stock option plans established for the sole benefit of the
foregoing, and (iv) the heirs and personal representatives of the
foregoing.
"Indebtedness" of any Person shall mean, without duplication (i)
all obligations of such Person which in accordance with GAAP would be shown
on the balance sheet of such Person as a liability (including, without
limitation, obligations for borrowed money and for the deferred purchase
price of property or services, and obligations evidenced by bonds,
debentures, notes or other similar instruments); (ii) all Guaranteed
Indebtedness of such Person (including contingent reimbursements
obligations under undrawn financial letters of credit but not performance
letters of credit) (iii) all Capitalized Lease Obligations; (iv) all
Indebtedness of others secured by any Lien upon property owned by such
Person, whether or not assumed; and (v) all obligations or other
liabilities under currency contracts, interest rate contracts, interest
rate protection agreements or similar agreements or combinations thereof.
Notwithstanding the foregoing, in determining the Indebtedness of any
Person, there shall be included all obligations of such Person of the
character referred to in clauses (i) through (v) above deemed to be
extinguished under GAAP but for which such Person remains legally liable
except to the extent that such obligations (x) have been defeased in
accordance with the terms of the applicable instruments governing such
obligations and (y) the accounts or other assets dedicated to such
defeasance are not included as assets on the balance sheet of such Person.
"Intercompany Loan Documents" shall mean, collectively, the
promissory notes and all related loan, subordination, and other agreements,
to the extent that they exist, relating in any manner to the Intercompany
Loans.
"Intercompany Loans" shall mean, collectively, (i) the loans more
particularly described on Schedule 5.22 and (ii) those loans or other
extensions of credit made by any Consolidated Company to another
Consolidated Company satisfying the terms and conditions set forth in
Section 7.01 or as may otherwise be approved in writing by the
Administrative Agent and the Required Lenders.
"Interest Period" shall mean (i) with respect to Competitive Bid
Loans, such periods agreed upon between Borrower and Lenders, and (ii) with
respect to Eurodollar Advances, the period of 1, 2, 3 or 6 months selected
by the Borrower, in case of clause (ii) pursuant to the terms of the credit
facility and subject to customary adjustments in duration; provided, that
(a) the first day of an Interest Period must be a Business Day, (b) any
Interest Period that would otherwise end on a day that is not a Business
Day for Eurodollar Loans shall be extended to the next succeeding Business
Day for Eurodollar Loans, unless such Business Day falls in the next
calendar month, in which case the Interest Period shall end on the next
preceding Business Day for Eurodollar Loans, and (c) Borrower may not elect
an Interest Period that would extend beyond the Line of Credit Termination
Date.
"Investment" shall mean, when used with respect to any Person,
any direct or indirect advance, loan or other extension of credit (other
than the creation of receivables in the ordinary course of business) or
capital contribution by such Person (by means of transfers of property to
others or payments for property or services for the account or use of
others, or otherwise) to any Person, or any direct or indirect purchase or
other acquisition by such Person of, or of a beneficial interest in,
capital stock, partnership interests, bonds, notes, debentures or other
securities issued by any other Person.
"Lender" or "Lenders" shall mean the banks and lending
institutions listed on the signature pages hereof, and each assignee
thereof, if any, pursuant to Section 10.06.
"Lending Office" shall mean for each Lender the office such
Lender may designate in writing from time to time to Borrower and the
Administrative Agent with respect to each Type of Line of Credit Loan.
"Leverage Ratio" shall mean, as of any date of determination, the
ratio of Total Funded Debt as of such date to Total Capitalization as of
such date.
"LIBOR" shall mean, for any Interest Period, the offered rates
for deposits in U.S. dollars for a period comparable to the Interest Period
appearing on the Telerate Page 3750, as of 11:00 a.m. London time on the
day that is two business days prior to the Interest Period. If at least
two such rates appear on the Telerate Page 3750, the rate for that Interest
Period will be the arithmetic mean of such rates, rounded, if necessary, to
the next higher 1/16 of 1.0%. If the foregoing rate is unavailable from
the Telerate Page 3750 for any reason, then such rate shall be determined
by the Administrative Agent from the Reuters Screen LIBOR Page, or if such
rate is also unavailable on such service, then on any other interest rate
reporting service of recognized standing designated in writing by the
Administrative Agent to Borrower and the Lenders; in any such case rounded,
if necessary, to the next higher 1/16 of 1.0%, if the rate is not such a
multiple.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind or description and shall include,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any capital lease in
the nature thereof including any lease or similar arrangement with a public
authority executed in connection with the issuance of industrial
development revenue bonds or pollution control revenue bonds, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction.
"Line of Credit Commitment" or "Commitment" shall mean at any
time for any Lender, the amount of such commitment set forth opposite such
Lender's name on the signature pages hereof or in any assignment hereafter
executed by any assignee of a Lender pursuant to Section 10.06, as the same
may be increased or decreased from time to time as a result of any
reduction thereof pursuant to Section 2.03, any assignment thereof pursuant
to Section 10.06, or any amendment thereof pursuant to Section 10.02.
"Line of Credit Loans" or "Loans" shall mean, collectively, the
line of credit loans made to Borrower by the Lenders pursuant to Section
2.01.
"Line of Credit Note" shall mean any of the Syndicate Notes or
the Competitive Bid Notes either as originally executed or as the same may
be from time to time supplemented, modified, amended, renewed or extended.
"Line of Credit Termination Date" shall mean the earlier of (i)
January 25, 2000 and (ii) the date on which the Line of Credit Commitments
are terminated in accordance with Article VIII.
"Materially Adverse Effect" shall mean the occurrence of an
event, which would (i) cause the recognition of a liability, as required by
Statement of Financial Accounting Standards No. 5, in the current quarter
financial statements in the amount of $15,000,000 or more, or (ii) cause an
auditor to have a substantial doubt about the ability of Borrower to
continue as a going concern after consideration of management's plans as
described in Statement of Auditing Standards, No. 59.
"Material Subsidiary" shall mean each Subsidiary of Borrower, now
existing or hereinafter established or acquired, that at any time prior to
the Final Maturity Date, has or acquires total assets in excess of
$1,000,000 or that accounted for or produced more than 5% of the
Consolidated EBITR of Borrower on a consolidated basis during any of the
three most recently completed fiscal years of Borrower.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Notice of Borrowing" shall have the meaning provided in
Section 3.01.
"Notice of Continuation/Conversion" shall have the meaning
provided in Section 3.01.
"Obligations" shall mean all amounts owing to the Agents and all
Lenders pursuant to the terms of this Agreement or any other Credit
Document, including without limitation, all Line of Credit Loans (including
all principal and interest payments due thereunder), fees, expenses,
indemnification and reimbursement obligations, payments, indebtedness,
liabilities, and obligations of the Credit Parties, direct or indirect,
absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising, together with all renewals, extensions, modifications or
refinancings thereof.
"Payment Office" shall mean, for any Lender, the "Payment Office"
listed on its signature page to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, and
any successor thereto.
"Permitted Liens" shall mean those Liens expressly permitted by
Section 7.02.
"Person" shall mean and shall include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
association, a government or any department or agency thereof and any other
entity whatsoever.
"Plan" shall mean any employee benefit plan, program,
arrangement, practice or contract, maintained by or on behalf of the
Borrower or an ERISA Affiliate, which provides benefits or compensation to
or on behalf of employees or former employees, whether formal or informal,
whether or not written, including but not limited to the following types of
plans:
(i) Executive Arrangements - any bonus, incentive
compensation, stock option, deferred compensation, commission,
severance, "golden parachute", "rabbi trust", or other executive
compensation plan, program, contract, arrangement or practice;
(ii) ERISA Plans - any "employee benefit plan" as defined in
Section 3(3) of ERISA), including, but not limited to, any defined
benefit pension plan, profit sharing plan, money purchase pension
plan, savings or thrift plan, stock bonus plan, employee stock
ownership plan, Multiemployer Plan, or any plan, fund, program,
arrangement or practice providing for medical (including post-
retirement medical), hospitalization, accident, sickness, disability,
or life insurance benefits;
(iii) Other Employee Fringe Benefits - any stock
purchase, vacation, scholarship, day care, prepaid legal services,
severance pay or other fringe benefit plan, program, arrangement,
contract or practice.
"Pro Rata Share" shall mean, with respect to each of the Line of
Credit Commitments of each Lender and each Line of Credit Loan to be made
by and each payment (including, without limitation, any payment of
principal, interest or fees) to be made to each Lender, the percentage
designated as such Lender's Pro Rata Share of such Line of Credit
Commitments, such Line of Credit Loans or such payments, as applicable, set
forth under the name of such Lender on the respective signature page for
such Lender or in any assignment hereafter executed by an assignee of a
Lender pursuant to Section 10.06, in each case as such Pro Rata Share may
change from time to time as a result of assignments or amendments made
pursuant to this Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System, as the same may be in effect from time to
time.
"Required Lenders" shall mean, at any time, Lenders holding at
least sixty-six and two-thirds percent (66 2/3%) of the then aggregate
amount of the Line of Credit Commitments and the aggregate outstanding Line
of Credit Loans.
"Requirement of Law" for any Person shall mean the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other
governmental authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuter
Monitor Money Rates Service (or such other page as may replace that page on
that service for the purpose of displaying rates comparable to LIBOR).
"Revolving Credit Agreement" shall mean that certain Revolving
Credit Agreement, dated as of the date hereof, by and among Borrower,
SunTrust Bank, Central Florida, as Administrative Agent, First Union
National Bank, as Documentation Agent, NationsBank N.A., as Syndication
Agent, SouthTrust Bank, National Association, as Co-Agent, and the banks
and lending institutions from time to time parties thereto, as the same may
be amended, restated, supplemented or otherwise modified from time to time.
"Subordinated Debt" shall mean all Indebtedness of Borrower and
its Subsidiaries subordinated to all obligations of Borrower and its
Subsidiaries or any other Credit Party arising under this Agreement, the
Line of Credit Notes and the Guaranty Agreement on terms and conditions
satisfactory in all respects to the Administrative Agent and the Required
Lenders, including without limitation, with respect to interest rates,
payment terms, maturities, amortization schedules, covenants, defaults,
remedies, and subordination provisions, as evidenced by the written
approval of the Administrative Agent and Required Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships,
joint ventures, and associations) regardless of its jurisdiction of
organization or formation, at least a majority of the total combined voting
power of all classes of voting stock or other ownership interests of which
shall, at the time as of which any determination is being made, be owned by
such Person, either directly or indirectly through one or more other
Subsidiaries.
"Syndicate Loan" shall mean the Line of Credit Loans made to
Borrower hereunder other than Competitive Bid Loans.
"Syndicate Note" shall mean a promissory note evidencing
Syndicate Loans in the form attached hereto as Exhibit A.
"Syndication Agent" shall mean NationsBank, N.A., a national
banking association, as syndication agent for the Lenders hereunder and
under the other Credit Documents, and each successor syndication agent.
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social security
and franchise taxes now or hereafter imposed or levied by the United States
of America, or any state, local or foreign government or by any department,
agency or other political subdivision or taxing authority thereof or
therein and all interest, penalties, additions to tax and similar
liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and "LIBOR," the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying rates comparable to "LIBOR").
"Total Capitalization" shall mean, as of any date of
determination, the sum of (i) Total Funded Debt plus (ii) Consolidated Net
Worth as of such date.
"Total Commitment" shall mean the sum of the Lenders' Line of
Credit Commitments as such Total Commitment may be reduced by voluntary
reduction, prepayment or nonrenewal of a Lender's Line of Credit Commitment
as provided herein.
"Total Funded Debt" shall mean all Indebtedness of the
Consolidated Companies that by its terms or by the terms of any instrument
or agreement relating thereto matures, or which is otherwise payable or
unpaid, one year or more from, or is directly or indirectly renewable or
extendable at the option of the debtor to a date one year or more
(including an option of the debtor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period
of one year or more) from, the date of the creation thereof, provided that
Total Funded Debt shall include, as at any date of determination, any
portion of such Indebtedness outstanding on such date which matures on
demand or within one year from such date (whether by sinking fund, other
required prepayment, or final payment at maturity) and shall also include
all Indebtedness of the Consolidated Companies for borrowed money under a
line of credit, guidance line, revolving credit, bankers acceptance
facility or similar arrangement for borrowed money, including, without
limitation, all unpaid drawings under letters of credit and unreimbursed
amounts pursuant to letter of credit reimbursement agreements, regardless
of the maturity date thereof.
"Type" of Borrowing shall mean a Borrowing consisting of Base
Rate Advances, Eurodollar Advances or Competitive Bid Advances.
"United States of America" shall mean the fifty (50) States and
the District of Columbia
"Wholly Owned Subsidiary" shall mean any Subsidiary, all the
stock or ownership interest of every class of which, except directors'
qualifying shares, shall, at the time as of which any determination is
being made, be owned by Borrower either directly or indirectly.
"Year 2000 Issues" shall mean the actual and anticipated costs,
claims, losses, and liabilities associated with the inability of certain
computer and software applications to effectively handle data that includes
dates prior to, on, spanning or after January 1, 2000, as such inability in
respect of any Consolidated Company affects the business, operations, and
financial condition of any Consolidated Company.
Section 1.02. Accounting Terms and Determination. Unless
otherwise defined or specified herein, all accounting terms shall be
construed herein, all accounting determinations hereunder shall be made,
all financial statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained in accordance with,
GAAP.
Section 1.03. Other Definitional Terms. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article, Section, Schedule,
Exhibit and like references are to this Agreement unless otherwise
specified.
Section 1.04. Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
ARTICLE II
LINE OF CREDIT COMMITMENT
Section 2.01. Line of Credit Commitment; Use of Proceeds.
(a) Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees to make to Borrower from time to time
on and after the Closing Date, but prior to the Line of Credit Termination
Date, Line of Credit Loans in an aggregate amount outstanding at any time
not to exceed such Lender's Line of Credit Commitment. Borrower shall be
entitled to repay and reborrow Line of Credit Loans in accordance with the
provisions hereof.
(b) Each Line of Credit Loan shall, at the option of
Borrower, be made or continued as, or converted into, part of one or more
Borrowings that shall consist entirely of Syndicate Loans (comprised of
Base Rate Advances or Eurodollar Advances) or Competitive Bid Loans. The
aggregate principal amount of each Borrowing of Line of Credit Loans
comprised of Eurodollar Advances shall not be less than $2,000,000 or a
greater integral multiple of $100,000. The aggregate principal amount of
each Borrowing of Competitive Bid Loans shall not be less than $2,000,000.
The aggregate principal amount of each Borrowing of Line of Credit Loans
comprised of Base Rate Advances shall not be less than $250,000 or a
greater integral multiple of $10,000. At no time shall the number of
Borrowings outstanding under this Article II exceed ten; provided that, for
the purpose of determining the number of Borrowings outstanding and the
minimum amount for Borrowings resulting from conversions or continuations,
all Borrowings of Base Rate Advances under this Facility shall be
considered as one Borrowing. The parties hereto agree that (i) the
aggregate principal balance of the Line of Credit Loans (including the
Competitive Bid Loans) of the Lenders as a group shall not exceed the
aggregate principal amounts of all Line of Credit Commitments, (ii) no
Lender shall be obligated to make Syndicate Loans in excess of the Line of
Credit Commitment of such Lender, (iii) no Lender shall be obligated
hereunder to extend Competitive Bid Loans or to make quotes for such Line
of Credit Loans and (iv) a Lender may elect, in its discretion, to extend
Competitive Bid Loans which, either alone or together with the Syndicate
Loans of such Lender, exceed the Line of Credit Commitment of such Lender.
(c) The proceeds of the Line of Credit Loans shall be used
solely to provide liquidity for the payment of commercial paper issued by
Borrower from time to time pursuant to the Borrower's unrated commercial
paper program with SunTrust Bank, Atlanta or any of its Affiliates. Line of
Credit Loans plus the amount of all commercial paper issued by Borrower may
not at any one time exceed seventy-five million dollars ($75,000,000).
Section 2.02. Line of Credit Notes; Repayment of Principal.
(a) Borrower's obligations to pay the principal of, and
interest on, the Syndicate Loans and the Competitive Bid Loans to each
Lender shall be evidenced by the records of the Administrative Agent and
such Lender and by the Syndicate Note and the Competitive Bid Note,
respectively, payable to such Lender (or the assignor of such Lender)
completed in conformity with this Agreement.
(b) All outstanding principal amounts under the Line of
Credit Loans shall be due and payable at the earlier of (i) the Line of
Credit Termination Date or (ii) acceleration of the indebtedness as
provided in Article VIII.
Section 2.03. Voluntary Reduction of Line of Credit
Commitments. Upon at least three (3) Business Days' prior telephonic
notice (promptly confirmed in writing) to the Administrative Agent,
Borrower shall have the right, without premium or penalty, to terminate the
Line of Credit Commitments, in part or in whole, provided that (i) any such
termination shall apply to proportionately and permanently reduce the Line
of Credit Commitments of each of the Lenders, (ii) any partial termination
pursuant to this Section 2.03 shall be in an amount of at least $5,000,000
and integral multiples of $1,000,000, and (iii) no such reduction shall be
permitted if prohibited or without payment of all costs required to be paid
hereunder with respect to a prepayment. If the aggregate outstanding
amount of the Line of Credit Loans exceeds the amount of the Line of Credit
Commitments as so reduced, Borrower shall immediately repay the Line of
Credit Loans by an amount equal to such excess, together with all accrued
but unpaid interest on such excess amount and any amounts due under
Section 3.12 hereof.
Section 2.04. Extension of the Line of Credit Termination Date.
Borrower may, on and before two hundred ten (210) days prior to the then
current Line of Credit Termination Date, request in writing an extension of
the Line of Credit Termination Date. The Lenders may, in the exercise of
their sole discretion, extend the Line of Credit Termination Date for an
additional one hundred eighty (180) days. The Lenders shall notify the
Borrower in writing of such election no later than one hundred eighty (180)
days prior to then Line of Credit Termination Date. If any Lender elects
to extend the Line of credit Termination Date for such one hundred eighty
(180) day period beyond the Line of Credit Termination Date, then effective
as of the then current Line of Credit Termination Date, the Line of Credit
Termination Date for such Lender's Line of Credit Commitment shall be
extended to the date one hundred eighty (180) days from the then current
Line of Credit Termination Date. In the event that any Lender elects not
to extend the then current Line of Credit Termination Date, such Lender's
Line of Credit Commitment shall terminate on the then current Line of
Credit Termination Date, and all Line of Credit Loans made by such Lender
to the Borrower shall be due and payable in full on the then current Line
of Credit Termination Date. Failure by any Lender to respond to the
request by the Borrower to extend the Line of Credit Termination Date
shall be deemed to be an election by such Lender not to extend the Line of
Credit Termination Date.
ARTICLE III
GENERAL LOAN TERMS
Section 3.01. Funding Notices.
(a) (i) Whenever Borrower desires to make a Borrowing of
Syndicate Loans under its Line of Credit Commitments (other than one
resulting from a conversion or continuation pursuant to Section
3.01(b)(i)), it shall give the Administrative Agent prior written notice
(or telephonic notice promptly confirmed in writing) of such Borrowing (a
"Notice of Borrowing") at its Payment Office such Notice of Borrowing to be
given prior to (x) 11:00 A.M. (local time for the Administrative Agent) one
(1) Business Day prior to the requested date of such Borrowing in the case
of Base Rate Advances, (y) 11:00 A.M. (local time for the Administrative
Agent) three (3) Business Days prior to the requested date of such
Borrowing in the case of Eurodollar Advances and (z) prior to 1:00 P.M.
(local time for the Administrative Agent) on the requested date of such
Borrowing in the case of Competitive Bid Advances. Notices received after
11:00 A.M. for Base Rate Advances and Eurodollar Advances and 1:00 P.M. for
Competitive Bid Advances shall be deemed received on the next Business Day.
Each Notice of Borrowing shall be irrevocable and shall specify the
aggregate principal amount of the Borrowing, the date of Borrowing (which
shall be a Business Day), and whether the Borrowing is to consist of Base
Rate Advances or Eurodollar Advances and (in the case of Eurodollar
Advances) the Interest Period to be applicable thereto.
(ii) Whenever Borrower desires to make a Borrowing of Competitive
Bid Loans under its Line of Credit Commitments (other than one resulting
from a conversion or continuation pursuant to Section 3.01(b)(ii)), it
shall give the Administrative Agent notice that the Lenders are requested
to provide Competitive Bid Rates for Interest Periods identified by
Borrower, such Interest Periods not to exceed 180 days. Notices must
comply with notice requirements of each respective Lender, which shall be
communicated by Lenders to Borrower from time to time. Each Lender in its
discretion may, but shall not be obligated to, submit a quote to the
Borrower in connection with such request. The Borrower shall then be
entitled, in its sole discretion, to elect to incur all or any part of the
Competitive Bid Loan offered by one or more of the Lenders that have
elected to provide quotes for any of the Interest Periods and at the
rate(s) quoted by such Lender(s). The Competitive Bid Loans incurred by
the Borrower in connection with such a request for quotes shall not exceed
(i) with respect to all Lenders then providing quotes, the then unutilized
Line of Credit Commitments of all Lenders as a group, and (ii) with respect
to each Lender providing a quote, the amount bid by such Lender in
connection with such Lender's quote. The Borrower shall notify the
Administrative Agent and such Lender or Lenders of its election in
accordance with the procedures established with such Lender or Lenders,
having no obligation to report the terms thereof; provided, however, that
if any Borrowing of Eurodollar Advances must be made as Base Rate Advances
as a result of a determination made by the Administrative Agent pursuant to
Section 3.09, such Notice of Borrowing may be revoked by Borrower no later
than one (1) Business Day prior to the date of funding.
(b) (i) Whenever Borrower desires to convert all or a
portion of an outstanding Borrowing of Syndicate Loans under its Line of
Credit Commitments, which Borrowing consists of Base Rate Advances into one
or more Borrowings consisting of Eurodollar Advances or to continue
outstanding a Borrowing consisting of Eurodollar Advances for a new
Interest Period, it shall give the Administrative Agent at least three
Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each such Borrowing to be converted into or
continued as Eurodollar Advances. Such notice (a "Notice of
Continuation/Conversion") shall be given prior to 11:00 A.M. (local time
for the Administrative Agent) on the date specified at the Payment Office
of the Administrative Agent. Each such Notice of Continuation/Conversion
shall be irrevocable and shall specify the aggregate principal amount of
the Advances to be converted or continued, the date of such conversion or
continuation and the Interest Period applicable thereto. If, upon the
expiration of any Interest Period in respect of any Borrowing, Borrower
shall have failed to deliver the Notice of Continuation/Conversion,
Borrower shall be deemed to have elected to convert or continue such
Borrowing to a Borrowing consisting of Base Rate Advances. So long as any
Executive Officer of Borrower has knowledge that any Default or Event of
Default shall have occurred and be continuing, no Borrowing may be
converted into or continued as (upon expiration of the current Interest
Period) Eurodollar Advances unless the Administrative Agent and each of the
Lenders shall have otherwise consented in writing. No conversion of any
Borrowing of Eurodollar Advances shall be permitted except on the last day
of the Interest Period in respect thereof.
(ii) Whenever Borrower desires to continue all or a portion of an
outstanding Borrowing of Competitive Bid Loans under its Line of Credit
Commitments for a new Interest Period, it may request that the Lenders
provide quotes for Competitive Bid Rates in the same manner prescribed in
Section 3.01(a)(ii) for funding. Whenever Borrower desires to convert all
or a portion of an outstanding Borrowing of Competitive Bid Loans under its
Line of Credit Commitments into a Borrowing of Syndicate Loans it shall
comply with the provisions prescribed in Section 3.01(b)(i) for conversion
of Syndicate Loans. If, upon the expiration of any Interest Period in
respect of any Competitive Bid Borrowing, Borrower shall have failed to
deliver the Notice of Continuation/Conversion, or Lenders fail to provide
such quotes, Borrower shall be deemed to have elected to convert or
continue such Borrowing to a Borrowing of a Syndicate Loan consisting of
Base Rate Advances. So long as any Default or Event of Default shall have
occurred and be continuing, no Borrowing may be converted into (upon
expiration of the current Interest Period) Eurodollar Advances. No
conversion of any Borrowing into Eurodollar Advances shall be permitted
except on the last day of the Interest Period in respect thereof.
(c) Without in any way limiting Borrower's obligation to
confirm in writing any telephonic notice, the Administrative Agent and the
Lenders may act without liability upon the basis of telephonic notice
believed by the Administrative Agent or the Lender in good faith to be from
Borrower prior to receipt of written confirmation. In each such case,
Borrower hereby waives the right to dispute the Administrative Agent's and
the Lender's record of the terms of such telephonic notice.
(d) The Administrative Agent shall promptly give each
Lender notice by telephone (confirmed in writing) or by telex, telecopy or
facsimile transmission of the matters covered by the notices given to the
Administrative Agent pursuant to this Section 3.01 with respect to the Line
of Credit Commitments.
Section 3.02. Disbursement of Funds.
(a) No later than 11:00 A.M. (local time for the
Administrative Agent) on the date of each Borrowing of Syndicate Loans
pursuant to the Line of Credit Commitments (other than one resulting from a
conversion or continuation pursuant to Section 3.01(b)(i)), each Lender
will make available its Pro Rata Share of the amount of such Borrowing in
immediately available funds at the Payment Office of the Administrative
Agent. The Administrative Agent will make available to Borrower the
aggregate of the amounts (if any) so made available by the Lenders to the
Administrative Agent in a timely manner by crediting such amounts to
Borrower's demand deposit account maintained with the Administrative Agent
or at Borrower's option, to effect a wire transfer of such amounts to
Borrower's account specified by the Borrower, by the close of business on
such Business Day. In the event that the Lenders do not make such amounts
available to the Administrative Agent by the time prescribed above, but
such amount is received later that day, such amount may be credited to
Borrower in the manner described in the preceding sentence on the next
Business Day (with interest on such amount to begin accruing hereunder on
such next Business Day).
(b) No later than 2:00 P.M. (local time for the applicable
Lender) on the date of each Borrowing of Competitive Bid Loans (other than
one resulting from a conversion or continuation pursuant to Section
3.01(b)(ii)), the Lender making any Competitive Bid Loan will make
available the amount of such Borrowing in immediately available funds by
wire transfer to an account specified by the Borrower, by the close of
business on such Business Day on the date of each Borrowing pursuant to the
Line of Credit Commitments (other than one resulting from a conversion or
continuation pursuant to Section 3.01(b)(ii)).
(c) Unless the Administrative Agent shall have been
notified by the Lender making any Syndicate Loan prior to the date of a
Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of the Borrowing to be made on
such date, the Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on such date and the
Administrative Agent may make available to Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender on the date of Borrowing, the
Administrative Agent shall be entitled to recover such corresponding amount
on demand from such Lender together with interest at the Federal Funds
Rate. If such Lender does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify Borrower, and Borrower shall immediately pay such
corresponding amount to the Administrative Agent together with interest at
the rate specified for the Borrowing. Nothing in this subsection shall be
deemed to relieve any Lender from its obligation to fund its Line of Credit
Commitments hereunder or to prejudice any rights which Borrower may have
against any Lender as a result of any default by such Lender hereunder.
(d) All Borrowings of Syndicate Loans shall be loaned by
the Lenders on the basis of their Pro Rata Share of the Line of Credit
Commitments. All Borrowings of Competitive Bid Loans under the Line of
Credit Commitments shall be loaned by the Lenders whose quotes were
accepted by the Borrower. No Lender shall be responsible for any default
by any other Lender in its obligations hereunder, and each Lender shall be
obligated to make the Line of Credit Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to fund its Line
of Credit Commitments hereunder.
Section 3.03. Interest.
(a) Borrower agrees to pay interest in respect of all
unpaid principal amounts of the Syndicate Loans from the respective dates
such principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at rates per annum (on the basis of a
360-day year) equal to the applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from time to
time; and
(ii) For Eurodollar Advances--The relevant Adjusted LIBO Rate
plus the Applicable Margin.
(b) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Competitive Bid Loans made to Borrower from the
respective dates such principal amounts were advanced to maturity (whether
by acceleration, notice of prepayment or otherwise) at times and at rates
per annum (on the basis of a 360-day year) equal to the applicable rates
agreed upon between Borrower and the Lender making such Competitive Bid
Loans.
(c) Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Line of Credit Loans,
whether Syndicate Loans or Competitive Bid Loans, and all other overdue
amounts owing hereunder, shall bear interest from each date that such
amounts are overdue:
(i) in the case of overdue principal and interest with respect
to all Line of Credit Loans outstanding as Eurodollar Advances and
Competitive Bid Advances, at the rate otherwise applicable for the
then-current Interest Period plus an additional two percent (2.0%) per
annum; thereafter at the rate in effect for Base Rate Advances plus an
additional two percent (2.0%) per annum; and
(ii) in the case of overdue principal and interest with respect
to all other Line of Credit Loans outstanding as Base Rate Advances,
and all other Obligations hereunder (other than Line of Credit Loans),
at a rate equal to the applicable Base Rate plus an additional two
percent (2.0%) per annum;
provided that no Line of Credit Loan shall bear interest after maturity,
whether by non-payment at scheduled due date, acceleration, notice of
prepayment or otherwise at a rate per annum less than two percent (2.0%)
per annum in excess of the rate of interest applicable thereto at maturity.
(d) Interest on each Line of Credit Loan shall accrue from
and including the date of such Line of Credit Loan to, but excluding, the
date of any repayment thereof; provided that, if a Line of Credit Loan is
repaid on the same day made, one day's interest shall be paid on such Line
of Credit Loan. Interest on all outstanding Base Rate Advances shall be
payable quarterly in arrears on the last calendar day of each fiscal
quarter of Borrower in each year. Interest on all outstanding Eurodollar
Advances and Competitive Bid Advances shall be payable on the last day of
each Interest Period applicable thereto, and, in the case of Eurodollar
Advances having an Interest Period in excess of three months, on each day
which occurs every three months, as the case may be, after the initial date
of such Interest Period. Interest on all Line of Credit Loans shall be
payable on any conversion of any Advances comprising such Line of Credit
Loans into Advances of another Type, prepayment (on the amount prepaid), at
maturity (whether by acceleration, notice of prepayment or otherwise) and,
after maturity, on demand.
(e) The Administrative Agent, upon determining the Adjusted
LIBO Rate for any Interest Period, shall promptly notify by telephone
(confirmed in writing) or in writing Borrower and the other Lenders. Any
such determination shall, absent manifest error, be final, conclusive and
binding for all purposes. A Lender making a Competitive Bid Loan has no
obligation to notify any other Lender of the interest rates charged to
Borrower.
Section 3.04. Interest Periods.
(a) In connection with the making or continuation of, or
conversion into, each Borrowing of Syndicate Loans comprised of Eurodollar
Advances, Borrower shall select an interest period (each an "Interest
Period") to be applicable to such Eurodollar Advances, which Interest
Period shall be either a 1, 2, 3 or 6 month period; provided that:
(i) The initial Interest Period for any Borrowing of Eurodollar
Advances shall commence on the date of such Borrowing (including the
date of any conversion from a Borrowing consisting of Advances of
another Type) and each Interest Period occurring thereafter in respect
of such Borrowing shall commence on the day on which the next
preceding Interest Period expires;
(ii) If any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in
respect of Eurodollar Advances would otherwise expire on a day that is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iii) Any Interest Period in respect of Eurodollar Advances which
begins on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period shall, subject
to part (iv) below, expire on the last Business Day of such calendar
month;
(iv) No Interest Period shall extend beyond any date upon which
any principal payment is due with respect to the Line of Credit Loans.
(b) When Borrower requests a quote for a Competitive Bid Loan,
the Borrower shall specify the Interest Period to be applicable to such
Line of Credit Loan, which Interest Period shall be as agreed upon by the
Borrower and such Lender; provided, however, that (i) no Interest Period
shall exceed 180 days, (ii) no Interest Period shall extend beyond the
Line of Credit Termination Date and (iii) if any Interest Period would
otherwise expire on a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day. Interest shall be
payable in respect of each Competitive Bid Loan on the last day of each
Interest Period applicable to such Competitive Bid Loan, and at maturity
(whether by acceleration or otherwise).
Section 3.05. Fees.
(a) Borrower shall pay to the Administrative Agent, for the
account of and distribution of the respective Pro Rata Share to each
Lender, a facility fee (the "Facility Fee") for the period commencing on
the Closing Date to and including the Line of Credit Termination Date,
computed at a rate equal to the Applicable Facility Fee Percentage per
annum multiplied by (ii) on the daily average of the aggregate Line of
Credit Commitments of the Lenders, such fee being payable quarterly in
arrears on the last calendar day of each fiscal quarter of Borrower and on
the Line of Credit Termination Date.
(b) Borrower shall pay to the Administrative Agent such
other fees as are specified, and in accordance with, the Fee Letter.
Section 3.06. Voluntary Prepayments of Borrowings.
(a) Borrower may, at its option, prepay Borrowings
consisting of Base Rate Advances at any time in whole, or from time to time
in part, in amounts aggregating $2,500,000 or any greater integral multiple
of $500,000, by paying the principal amount to be prepaid together with
interest accrued and unpaid thereon to the date of prepayment. Those
Borrowings consisting of Eurodollar Advances may be prepaid, at Borrower's
option, in whole, or from time to time in part, in amounts aggregating
$5,000,000 or any greater integral multiple of $1,000,000, by paying the
principal amount to be prepaid, together with interest accrued and unpaid
thereon to the date of prepayment and all compensation payments pursuant to
Section 3.12 if such prepayment is made on a date other than the last day
of an Interest Period applicable thereto. Each such optional prepayment
shall be applied in accordance with Section 3.06(c) below.
(b) Borrower shall give written notice (or telephonic
notice confirmed in writing) to the Administrative Agent of any intended
prepayment of (i) Base Rate Advances not less than one Business Day prior
to any such prepayments and (ii) Eurodollar Advances not less than three
Business Days prior to any such prepayment. Borrower shall give written
notice (or telephonic notice confirmed in writing) to the respective Lender
who made any Competitive Bid Loan of any intended prepayment of such
Competitive Bid Loan not less than one Business Day prior to any prepayment
of such Competitive Bid Loan. Such notice, once given, shall be
irrevocable. Upon receipt of such notice of prepayment pursuant to the
first sentence of this paragraph (b), the Administrative Agent shall
promptly notify each Lender of the contents of such notice and of such
Lender's share of such prepayment.
(c) Borrower, when providing notice of prepayment pursuant
to Section 3.06(b) may designate the Types of Advances and the specific
Borrowing or Borrowings which are to be prepaid, provided that (i) if any
prepayment of Eurodollar Advances made pursuant to a single Borrowing of
the Line of Credit Loans shall reduce the outstanding Advances made
pursuant to such Borrowing to an amount less than $1,000,000, such
Borrowing shall immediately be converted into Base Rate Advances; and (ii)
each prepayment made pursuant to a single Borrowing shall be applied pro
rata among the Line of Credit Loans comprising such Borrowing, if such
prepayment is not a prepayment of a Competitive Bid Loan. All voluntary
prepayments shall be applied to the payment of any unpaid interest before
application to principal.
Section 3.07. Payments, etc.
(a) (i) Except as otherwise specifically provided herein,
all payments under this Agreement and the other Credit Documents, other
than the payments specified in clause (ii) below, shall be made without
defense, set-off or counterclaim to the Administrative Agent, not later
than 2:00 P.M. (local time for the Administrative Agent) on the date when
due and shall be made in Dollars in immediately available funds at the
respective Payment Office.
(ii) Except as otherwise specifically provided herein, all
payments under this Agreement with respect to the Lenders making any
Competitive Bid Loans shall be made without defense, set-off or
counterclaim to such Lender not later than 2:00 P.M. (local time for such
Lender) on the date when due and in immediately available funds at the
Payment Office of such Lender, or at any other location of the Lender as
such Lender may specify in writing to Borrower not later than 12:00 Noon
(local time for the Lender) on the Business Day such payment is due.
(b) (i) All such payments shall be made free and clear of
and without deduction or withholding for any Taxes in respect of this
Agreement, the Line of Credit Notes or other Credit Documents, or any
payments of principal, interest, fees or other amounts payable hereunder or
thereunder (but excluding any Taxes imposed on the overall net income of
the Lenders pursuant to the laws of the jurisdiction in which the principal
executive office or appropriate Lending Office of such Lender is located).
If any Taxes are so levied or imposed, Borrower agrees (A) to pay the full
amount of such Taxes, and such additional amounts as may be necessary so
that every net payment of all amounts due hereunder and under the Line of
Credit Notes and other Credit Documents, after withholding or deduction for
or on account of any such Taxes (including additional sums payable under
this Section 3.07), will not be less than the full amount provided for
herein had no such deduction or withholding been required, (B) to make such
withholding or deduction and (C) to pay the full amount deducted to the
relevant authority in accordance with applicable law. Borrower will
furnish to the Administrative Agent and each Lender, within 30 days after
the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by Borrower.
Borrower will indemnify and hold harmless the Administrative Agent and each
Lender and reimburse the Administrative Agent and each Lender upon written
request for the amount of any Taxes so levied or imposed and paid by the
Administrative Agent or Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether
or not such Taxes were correctly or illegally asserted. A certificate as
to the amount of such payment by such Lender or the Administrative Agent,
absent manifest error, shall be final, conclusive and binding for all
purposes.
(ii) Each Lender that is organized under the laws of any
jurisdiction other than the United States of America agrees to furnish to
Borrower and the Administrative Agent, prior to the time it becomes a
Lender hereunder, two copies of either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 or any successor forms
thereto (wherein such Lender claims entitlement to complete exemption from
or reduced rate of U.S. Federal withholding tax on interest paid by
Borrower hereunder) and to provide to Borrower and the Administrative Agent
a new Form 4224 or Form 1001 or any successor forms thereto if any
previously delivered form is found to be incomplete or incorrect in any
material respect or upon the obsolescence of any previously delivered form;
provided, however, that no Lender shall be required to furnish a form under
this paragraph (ii) if it is not entitled to claim an exemption from or a
reduced rate of withholding under applicable law. A Lender that is not
entitled to claim an exemption from or a reduced rate of withholding under
applicable law, promptly upon written request of Borrower, shall so inform
Borrower in writing.
(c) Subject to Section 3.04(a)(ii), whenever any payment to
be made hereunder or under any Line of Credit Note shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the applicable rate
during such extension.
(d) On other than Competitive Bid Loans, which shall be
negotiated from time to time, all computations of interest and fees shall
be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable (to the extent computed
on the basis of days elapsed), except that interest on Base Rate Advances
shall be computed on the basis of a year of 360 days for the actual number
of days. Interest on Base Rate Advances shall be calculated based on the
Base Rate from and including the date of such Line of Credit Loan to but
excluding the date of the repayment or conversion thereof. Interest on
Eurodollar Advances shall be calculated as to each Interest Period from and
including the first day thereof to but excluding the last day thereof.
Each determination by the Administrative Agent or the Lender making any
Competitive Bid Loan of an interest rate or fee hereunder shall be made in
good faith and, except for manifest error, shall be final, conclusive and
binding for all purposes.
(e) Payment by Borrower to the Administrative Agent in
accordance with the terms of this Agreement shall, as to Borrower,
constitute payment to the Lenders under this Agreement.
Section 3.08. Interest Rate Not Ascertainable, etc. In the
event that the Administrative Agent, in the case of the Adjusted LIBO Rate,
shall have determined (which determination shall be made in good faith and,
absent manifest error, shall be final, conclusive and binding upon all
parties) that on any date for determining the Adjusted LIBO Rate for any
Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market or the Administrative
Agent's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted LIBO Rate then, and in any such event, the
Administrative Agent shall forthwith give notice (by telephone confirmed in
writing) to Borrower and to the Lenders of such determination and a summary
of the basis for such determination. Until the Administrative Agent
notifies Borrower that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Lenders to make or
permit portions of the Line of Credit Loans to remain outstanding past the
last day of the then current Interest Periods as Eurodollar Advances shall
be suspended, and such affected Advances shall bear the same interest as
Base Rate Advances.
Section 3.09. Illegality.
(a) In the event that any Lender shall have determined
(which determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon all parties) at any time
that the making or continuance of any Eurodollar Advance has become
unlawful by compliance by such Lender in good faith with any applicable
law, governmental rule, regulation, guideline or order (whether or not
having the force of law and whether or not failure to comply therewith
would be unlawful), then, in any such event, the Lender shall give prompt
notice (by telephone confirmed in writing) to Borrower and to the
Administrative Agent of such determination and a summary of the basis for
such determination (which notice the Administrative Agent shall promptly
transmit to the other Lenders).
(b) Upon the giving of the notice to Borrower referred to
in subsection (a) above, (i) Borrower's right to request and such Lender's
obligation to make Eurodollar Advances shall be immediately suspended, and
such Lender shall make an Advance as part of the requested Borrowing of
Eurodollar Advances as a Base Rate Advance, provided, Borrower does not
negotiate a Competitive Bid Loan, which Base Rate Advance shall, for all
other purposes, be considered part of such Borrowing, and (ii) if the
affected Eurodollar Advance or Advances are then outstanding, Borrower
shall immediately, or if permitted by applicable law, no later than the
date permitted thereby, upon at least one Business Day's written notice to
the Administrative Agent and the affected Lender, convert each such Advance
into an Advance or Advances of a different Type with an Interest Period
ending on the date on which the Interest Period applicable to the affected
Eurodollar Advances expires, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 3.09(b).
Section 3.10. Increased Costs.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any change by
way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (y) the compliance with any
guideline or request from any central bank or other governmental authority
or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) any Lender (or its applicable Lending Office) shall be
subject to any tax, duty or other charge with respect to its
Eurodollar Advances or its obligation to make Eurodollar Advances, or
the basis of taxation of payments to any Lender of the principal of or
interest on its Eurodollar Advances or its obligation to make
Eurodollar Advances shall have changed (except for changes in the tax
on the overall net income of such Lender or its applicable Lending
Office imposed by the jurisdiction in which such Lender's principal
executive office or applicable Lending Office is located); or
(ii) any reserve (including, without limitation, any imposed by
the Board of Governors of the Federal Reserve System), special deposit
or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender's applicable Lending
Office shall be imposed or deemed applicable or any other condition
affecting its Eurodollar Advances or its obligation to make Eurodollar
Advances shall be imposed on any Lender or its applicable Lending
Office or the London interbank market;
and as a result thereof there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining Eurodollar
Advances (except to the extent already included in the determination of the
applicable Adjusted LIBO Rate for Eurodollar Advances), or there shall be a
reduction in the amount received or receivable by such Lender or its
applicable Lending Office, then Borrower shall from time to time (subject,
in the case of certain Taxes, to the applicable provisions of Section
3.07(b)), upon written notice from and demand by such Lender on Borrower
(with a copy of such notice and demand to the Administrative Agent), pay to
the Administrative Agent for the account of such Lender within five
Business Days after the date of such notice and demand, additional amounts
sufficient to indemnify such Lender against such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
and the Administrative Agent by such Lender in good faith and accompanied
by a statement prepared by such Lender describing in reasonable detail the
basis for and calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all purposes.
(b) If any Lender shall advise the Administrative Agent
that at any time, because of the circumstances described in clauses (x) or
(y) in Section 3.10(a) or any other circumstances beyond such Lender's
reasonable control arising after the date of this Agreement affecting such
Lender or the London interbank market or the United States of America
secondary certificate of deposit market or such Lender's position in such
markets, the Adjusted LIBO Rate, as determined by the Administrative Agent,
will not adequately and fairly reflect the cost to such Lender of funding
its Eurodollar Advances, then, and in any such event:
(i) the Administrative Agent shall forthwith give notice (by
telephone confirmed in writing) to Borrower and to the other Lenders
of such advice;
(ii) Borrower's right to request and such Lender's obligation to
make or permit portions of the Line of Credit Loans to remain
outstanding past the last day of the then current Interest Periods as
Eurodollar Advances shall be immediately suspended; and
(iii) such Lender shall make a Line of Credit Loan as part of
the requested Borrowing of Eurodollar Advances, as the case may be, as
a Base Rate Advance, which such Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing.
Section 3.11. Lending Offices.
(a) Each Lender agrees that, if requested by Borrower, it
will use reasonable efforts (subject to overall policy considerations of
such Lender) to designate an alternate Lending Office with respect to any
of its Eurodollar Advances affected by the matters or circumstances
described in Sections 3.07(b), 3.08, 3.09 or 3.10 to reduce the liability
of Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as determined by such
Lender, which determination if made in good faith, shall be conclusive and
binding on all parties hereto. Nothing in this Section 3.11 shall affect
or postpone any of the obligations of Borrower or any right of any Lender
provided hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) issues a public announcement with
respect to the closing of its lending offices in the United States of
America such that any withholdings or deductions and additional payments
with respect to Taxes may be required to be made by Borrower thereafter
pursuant to Section 3.07(b), such Lender shall use reasonable efforts to
furnish Borrower notice thereof as soon as practicable thereafter;
provided, however, that no delay or failure to furnish such notice shall in
any event release or discharge Borrower from its obligations to such Lender
pursuant to Section 3.07(b) or otherwise result in any liability of such
Lender.
Section 3.12. Funding Losses. Borrower shall compensate each
Lender, upon its written request to Borrower (which request shall set forth
the basis for requesting such amounts in reasonable detail and which
request shall be made in good faith and, absent manifest error, shall be
final, conclusive and binding upon all of the parties hereto), for all
losses, expenses and liabilities (including, without limitation, any
interest paid by such Lender to lenders of funds borrowed by it to make or
carry its Eurodollar Advances, in either case to the extent not recovered
by such Lender in connection with the re-employment of such funds and
including loss of anticipated profits), which the Lender may sustain: (i)
if for any reason (other than a default by such Lender) a borrowing of, or
conversion to or continuation of Eurodollar Advances to Borrower does not
occur on the date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to Section
3.09(b)) of any Eurodollar Advances to Borrower occurs on a date which is
not the last day of an Interest Period applicable thereto, or (iii), if,
for any reason, Borrower defaults in its obligation to repay its Eurodollar
Advances when required by the terms of this Agreement.
Section 3.13. Assumptions Concerning Funding of Eurodollar
Advances. Calculation of all amounts payable to a Lender under this
Article III shall be made as though that Lender had actually funded its
relevant Eurodollar Advances through the purchase of deposits in the
relevant market bearing interest at the rate applicable to such Eurodollar
Advances in an amount equal to the amount of the Eurodollar Advances and
having a maturity comparable to the relevant Interest Period and through
the transfer of such Eurodollar Advances from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar
Advances in any manner it sees fit and the foregoing assumption shall be
used only for calculation of amounts payable under this Article III.
Section 3.14. Apportionment of Payments. Aggregate principal
and interest payments in respect of Line of Credit Loans and payments in
respect of the Facility Fee shall be apportioned among all outstanding Line
of Credit Commitments and Line of Credit Loans to which such payments
relate, proportionately to the Lenders' respective pro rata portions of
such Line of Credit Commitments and outstanding Line of Credit Loans. The
Administrative Agent shall promptly distribute to each Lender at its
Payment Office set forth beside its name on the appropriate signature page
hereof or such other address as any Lender may request its share of all
such payments received by the Administrative Agent.
Section 3.15. Sharing of Payments, Etc. If any Lender shall
obtain any payment or reduction (including, without limitation, any amounts
received as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code) of the Obligations (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its pro rata portion of payments or reductions on account of such
obligations obtained by all the Lenders, such Lender shall forthwith (i)
notify each of the other Lenders and Administrative Agent of such receipt,
and (ii) purchase from the other Lenders such participations in the
affected obligations as shall be necessary to cause such purchasing Lender
to share the excess payment or reduction, net of costs incurred in
connection therewith, ratably with each of them, provided that if all or
any portion of such excess payment or reduction is thereafter recovered
from such purchasing Lender or additional costs are incurred, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery or such additional costs, but without interest unless the Lender
obligated to return such funds is required to pay interest on such funds.
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.15 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Lender were the
direct creditor of Borrower in the amount of such participation.
Section 3.16. Capital Adequacy. Without limiting any other
provision of this Agreement, in the event that any Lender shall have
determined that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy not currently in
effect or fully applicable as of the Closing Date, or any change therein or
in the interpretation or application thereof after the Closing Date, or
compliance by such Lender with any request or directive regarding capital
adequacy not currently in effect or fully applicable as of the Closing Date
(whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) from a central bank or governmental
authority or body having jurisdiction, does or shall have the effect of
reducing the rate of return on such Lender's capital as a consequence of
its obligations hereunder to a level below that which such Lender could
have achieved but for such law, treaty, rule, regulation, guideline or
order, or such change or compliance by an amount reasonably deemed by such
Lender to be material, then within ten (10) Business Days after written
notice and demand by such Lender (with copies thereof to the Administrative
Agent), Borrower shall from time to time pay to such Lender additional
amounts sufficient to compensate such Lender for such reduction (but, in
the case of outstanding Base Rate Advances, without duplication of any
amounts already recovered by such Lender by reason of an adjustment in the
applicable Base Rate). Each certificate as to the amount payable under
this Section 3.16 (which certificate shall set forth the basis for
requesting such amounts in reasonable detail), submitted to Borrower by any
Lender in good faith, shall, absent manifest error, be final, conclusive
and binding for all purposes.
Section 3.17. Benefits to Guarantors. In consideration for the
execution and delivery by the Guarantors of the Guaranty Agreement,
Borrower agrees to make the benefit of extensions of credit hereunder
available to the Guarantors.
Section 3.18. Limitation on Certain Payment Obligations.
(a) Each Lender or Administrative Agent shall make written
demand on Borrower for indemnification or compensation pursuant to Section
3.07 no later than 90 days after the earlier of (i) the date on which such
Lender or the Administrative Agent makes payment of such Taxes, and (ii)
the date on which the relevant taxing authority or other governmental
authority makes written demand upon such Lender or the Administrative Agent
for payment of such Taxes.
(b) Each Lender or the Administrative Agent shall make
written demand on Borrower for indemnification or compensation pursuant to
Sections 3.12 and 3.13 no later than 90 days after the event giving rise
to the claim for indemnification or compensation occurs.
(c) Each Lender or the Administrative Agent shall make
written demand on Borrower for indemnification or compensation pursuant to
Sections 3.10 and 3.16 no later than 90 days after such Lender or the
Administrative Agent receives actual notice or obtains actual knowledge of
the promulgation of a law, rule, order or interpretation or occurrence of
another event giving rise to a claim pursuant to such sections.
(d) In the event that the Lenders or the Administrative
Agent fail to give Borrower notice within the time limitations prescribed
in (a) or (b) above, Borrower shall not have any obligation to pay such
claim for compensation or indemnification. In the event that the Lender or
the Administrative Agent fail to give Borrower notice within the time
limitation prescribed in (c) above, Borrower shall not have any obligation
to pay any amount with respect to claims accruing prior to the ninetieth
day preceding such written demand.
ARTICLE IV
CONDITIONS TO BORROWINGS
The obligations of each Lender to make Advances to Borrower
hereunder is subject to the satisfaction of the following conditions:
Section 4.01. Conditions Precedent to Initial Line of Credit
Loans. At the time of the making of the initial Line of Credit Loans
hereunder on the Closing Date, all obligations of Borrower hereunder
incurred prior to the initial Line of Credit Loans (including, without
limitation, Borrower's obligations to reimburse the reasonable fees and
expenses of counsel to the Administrative Agent and any fees and expenses
payable to the Administrative Agent and the Lenders as previously agreed
with Borrower), shall have been paid in full, and the Administrative Agent
shall have received the following, in form and substance reasonably
satisfactory in all respects to the Administrative Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Line of Credit Notes evidencing the Line
of Credit Commitment;
(c) the duly executed Guaranty Agreement;
(d) certificate of Borrower in substantially the form of Exhibit
C attached hereto and appropriately completed;
(e) the duly executed Commitment Letter;
(f) the duly executed Fee Letter;
(g) certificates of the Secretary or Assistant Secretary of each
of the Credit Parties attaching and certifying copies of the resolutions of
the boards of directors of the Credit Parties, authorizing as applicable
the execution, delivery and performance of the Credit Documents;
(h) certificates of the Secretary or an Assistant Secretary of
each of the Credit Parties certifying (i) the name, title and true
signature of each officer of such entities executing the Credit Documents,
(ii) the bylaws or comparable governing documents of such entities; and
(iii) the certificate or articles of incorporation of each Credit Party;
(i) certificates of good standing or existence, as may be
available from the Secretary of State of the jurisdiction of incorporation
or organization of such Credit Party;
(j) copies of all documents and instruments, including all
consents, authorizations and filings, required or advisable under any
Requirement of Law or by any material Contractual Obligation of the Credit
Parties, in connection with the execution, delivery, performance, validity
and enforceability of the Credit Documents and the other documents to be
executed and delivered hereunder, and such consents, authorizations,
filings and orders shall be in full force and effect and all applicable
waiting periods shall have expired;
(k) certified copies of the Intercompany Loan Documents, to the
extent that they exist and have not previously been certified to the
Lenders;
(l) duly executed solvency certificates of Borrower and each of
the Guarantors, in form and substance satisfactory to the Agents and
Lenders;
(m) acknowledgment from CSC Network Corporation System, Inc. as
to its appointment as agent for service of process for the various Credit
Parties;
(n) certified copies of indentures, credit agreements, leases,
capital leases, instruments, and other documents evidencing or securing
Indebtedness of any Consolidated Company described on Schedule 7.01(b), in
any single case in an amount not less than $500,000 and to the extent not
previously certified to the Lenders;
(o) certificates, reports and other information as the
Administrative Agent may reasonably request from any Consolidated Company
in order to satisfy the Lenders as to the absence of any material
liabilities or obligations arising from matters relating to employees of
the Consolidated Companies, including employee relations, collective
bargaining agreements, Plans, and other compensation and employee benefit
plans;
(p) certificates, reports, environmental audits and
investigations, and other information as the Administrative Agent may
reasonably request from any Consolidated Company in order to satisfy the
Lenders as to the absence of any material liabilities or obligations
arising from environmental and employee health and safety exposures to
which the Consolidated Companies may be subject, and the plans of the
Consolidated Companies with respect thereto;
(q) certificates, reports and other information as the
Administrative Agent may reasonably request from any Consolidated Company
in order to satisfy the Lenders as to the absence of any material
liabilities or obligations arising from litigation (including without
limitation, products liability and patent infringement claims) pending or
threatened against the Consolidated Companies;
(r) a certificate of insurance summarizing, in form and detail
reasonably acceptable to the Administrative Agent, of the types and amounts
of insurance (property and liability) maintained by the Consolidated
Companies;
(s) the favorable opinion of counsel to the Credit Parties
addressed to the Administrative Agent and each of the Lenders; and
(t) financial statements of Borrower and its Subsidiaries,
audited on a consolidated basis for the fiscal year ended on the last
Friday in January, 1998 and unaudited on a consolidated basis for the
fiscal quarter ended on the last Friday in October, 1998.
In addition to the foregoing, the following conditions shall have been
satisfied or shall exist, all to the satisfaction of the Administrative
Agent, as of the time the initial Line of Credit Loans are made hereunder:
(x) the Line of Credit Loans to be made on the Closing Date and
the use of proceeds thereof shall not contravene, violate or conflict
with, or involve the Administrative Agent or any Lender in a violation
of, any law, rule, injunction, or regulation, or determination of any
court of law or other governmental authority;
(y) all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and
enforceability of the Credit Documents shall be reasonably
satisfactory in form and substance to the Required Lenders; and
(z) the status of all pending and threatened litigation
(including products liability and patent claims) which might result in
a Materially Adverse Effect, including a description of any damages
sought and the claims constituting the basis therefor, shall have been
reported in writing to the Administrative Agent, the Administrative
Agent shall have reported such matters to the Lenders, and the Lenders
shall be satisfied with such status.
Section 4.02. Conditions to All Line of Credit Loans. At the
time of the making of all Line of Credit Loans (before as well as after
giving effect to such Line of Credit Loans and to the proposed use of the
proceeds thereof), the following conditions shall have been satisfied or
shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower contained
herein shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and
as of the date of such Line of Credit Loans;
(c) since the date of the most recent financial statements of
the Consolidated Companies described in Section 5.03, there shall have been
no change which has had or could reasonably be expected to have a
Materially Adverse Effect.
(d) there shall be no action or proceeding instituted or pending
before any court or other governmental authority or, to the knowledge of
Borrower, threatened (i) which reasonably could be expected to have a
Materially Adverse Effect, or (ii) seeking to prohibit or restrict one or
more Credit Party's ownership or operation of any portion of its business
or assets, or to compel one or more Credit Party to dispose of or hold
separate all or any portion of its businesses or assets, where such portion
or portions of such business(es) or assets, as the case may be, constitute
a material portion of the total businesses or assets of the Consolidated
Companies;
(e) the Line of Credit Loans to be made and the use of proceeds
thereof shall not contravene, violate or conflict with, or involve the
Administrative Agent or any Lender in a violation of, any law, rule,
injunction, or regulation, or determination of any court of law or other
governmental authority applicable to Borrower; and
(f) the Administrative Agent shall have received such other
documents or legal opinions as the Administrative Agent or any Lender may
reasonably request, all in form and substance reasonably satisfactory to
the Administrative Agent.
Each request for a Borrowing and the acceptance by Borrower of
the proceeds thereof shall constitute a representation and warranty by
Borrower, as of the date of the Line of Credit Loans comprising such
Borrowing, that the applicable conditions specified in Sections 4.01 and
4.02 have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and covenants to Lenders that:
Section 5.01. Organization and Qualification. Borrower is a
corporation duly organized and existing in good standing under the laws of
the State of Florida. Each Subsidiary of Borrower is a corporation duly
organized and existing under the laws of the jurisdiction of its
incorporation. Borrower and each of its Subsidiaries are duly qualified to
do business as a foreign corporation and are in good standing in each
jurisdiction in which the character of their properties or the nature of
their business makes such qualification necessary, except for such
jurisdictions in which a failure to qualify to do business would not have a
Materially Adverse Effect. Borrower and each of its Subsidiaries have the
corporate power to own their respective properties and to carry on their
respective businesses as now being conducted. The jurisdiction of
incorporation or organization, and the ownership of all issued and
outstanding capital stock, for each Subsidiary as of the date of this
Agreement is accurately described on Schedule 5.01. Schedule 5.01 also
designates the Material Subsidiaries as of the Closing Date.
Section 5.02. Corporate Authority. The execution and delivery
by Borrower and the Guarantors of and the performance by Borrower and
Guarantors of their obligations under the Credit Documents have been duly
authorized by all requisite corporate action and all requisite shareholder
action, if any, on the part of Borrower and the Guarantors and do not and
will not (i) violate any provision of any law, rule or regulation, any
judgment, order or ruling of any court or governmental agency, the
organizational papers or bylaws of Borrower or the Guarantors, or any
indenture, agreement or other instrument to which Borrower or the
Guarantors are a party or by which Borrower or the Guarantors or any of
their properties is bound, or (ii) be in conflict with, result in a breach
of, or constitute with notice or lapse of time or both a default under any
such indenture, agreement or other instrument.
Section 5.03. Financial Statements. Borrower has furnished
Lenders with the following financial statements: (i) consolidated balance
sheets and consolidated statements of income, stockholders' equity and cash
flow of Borrower for the fiscal year ended on the last Friday in January,
1998, audited by PriceWaterhouseCoopers LLP and (ii) unaudited consolidated
balance sheets and consolidated statements of income, stockholders' equity
and cash flow of Borrower for the fiscal quarter ending on the last Friday
in October, 1998. Such financial statements (including any related
schedules and notes) are true and correct in all material respects
(subject, as to interim statements, to changes resulting from audits and
year end adjustments), have been prepared in accordance with GAAP
consistently applied throughout the period or periods in question and show,
in the case of audited statements, all liabilities, direct or contingent,
of Borrower and its Subsidiaries, required to be shown in accordance with
GAAP consistently applied throughout the period or periods in question and
fairly present the consolidated financial position and the consolidated
results of operations of Borrower and its Subsidiaries for the periods
indicated therein. There has been no material adverse change in the
business, condition or operations, financial or otherwise, of Borrower and
its Subsidiaries since the last Friday in October, 1998.
Section 5.04. Tax Returns. Each of Borrower and its
Subsidiaries has filed all federal, state and other income tax returns
which, to the best knowledge of the executive officers of Borrower and its
Subsidiaries, are required to be filed, and each has paid all taxes as
shown on said returns and on all assessments received by it to the extent
that such taxes have become due or except such as are being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP.
Section 5.05. Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or any of its Subsidiaries or any
of their properties or rights, by or before any court, arbitrator or
administrative or governmental body, which might result in any Materially
Adverse Effect.
Section 5.06. Representations; No Defaults. At the time of
each Extension of Credit there shall exist no Default or Event of Default,
and each Extension of Credit shall be deemed a renewal by Borrower of the
representations and warranties contained in this Agreement and an
affirmative statement by Borrower that such representations and warranties
are true and correct on and as of such time with the same effect as though
such representations and warranties had been made on and as of such time.
Section 5.07. Title to Properties. Each of Borrower and its
Subsidiaries has (i) good and marketable fee simple title to its respective
real properties (other than real properties which it leases from others),
including such real properties reflected in the consolidated balance sheet
of Borrower and its Subsidiaries as of the last Friday of October, 1998,
hereinabove described (other than real properties disposed of in the
ordinary course of business), subject to no Lien of any kind except Liens
permitted by Section 7.02 and (ii) good title to all of its other
respective properties and assets (other than properties and assets which it
leases from others), including the other properties and assets reflected in
the consolidated balance sheet of Borrower and its Subsidiaries at the last
Friday of October, 1998, hereinabove described (other than properties and
assets disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by Section 7.02. Each of Borrower and
its Subsidiaries enjoys peaceful and undisturbed possession under all
leases necessary in any material respect for the operation of its
respective properties and assets, none of which contains any unusual or
burdensome provisions which might materially affect or impair the operation
of such properties and assets, and all such leases are valid and subsisting
and in full force and effect.
Section 5.08. Enforceability of Agreement. This Agreement is
the legal, valid and binding agreement of Borrower enforceable against
Borrower in accordance with its terms, and the Line of Credit Notes, and
all other Credit Documents, when executed and delivered, will be similarly
legal, valid, binding and enforceable, except as the enforceability of the
Line of Credit Notes and other Credit Documents may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditor's rights and remedies in general and by general principles of
equity, whether considered in a proceeding at law or in equity.
Section 5.09. Consent. No consent, permission, authorization,
order or license of any governmental authority or Person is necessary in
connection with the execution, delivery, performance or enforcement of the
Credit Documents, or in order to constitute the indebtedness to be incurred
hereunder and under the Line of Credit Notes and the other Credit Documents
as "Senior Debt" or any similar term defined within the documents
evidencing any Subordinated Debt.
Section 5.10. Use of Proceeds; Federal Reserve Regulations.
The proceeds of the Line of Credit Notes will be used solely for the
purposes specified in Section 2.01(c) and none of such proceeds will be
used, directly or indirectly, for the purpose of purchasing or carrying any
"margin security" or "margin stock" or for the purpose of reducing or
retiring any indebtedness that originally was incurred to purchase or carry
a "margin security" or "margin stock" or for any other purpose that might
constitute this transaction a "purpose credit" within the meaning of the
regulations of the Board of Governors of the Federal Reserve System.
Section 5.11. ERISA.
(a) Identification of Certain Plans. Schedule 5.11 hereto
sets forth all Plans of Borrower and its Subsidiaries;
(b) Compliance. Each Plan is being maintained, by its
terms and in operation, in accordance with all applicable laws, except such
noncompliances (when taken as a whole) that will not have a Materially
Adverse Effect;
(c) Liabilities. Neither the Borrower nor any Subsidiary
is currently or will become subject to any liability (including withdrawal
liability), tax or penalty whatsoever to any person whomsoever with respect
to any Plan including, but not limited to, any tax, penalty or liability
arising under Title I or Title IV of ERISA or Chapter 43 of the Tax Code,
except such liabilities (when taken as a whole) as will not have a
Materially Adverse Effect; and
(d) Funding. The Borrower and each ERISA Affiliate has
made full and timely payment of all amounts (i) required to be contributed
under the terms of each Plan and applicable law and (ii) required to be
paid as expenses of each Plan, except where such non-payment would not have
a Materially Adverse Effect. No Plan has an "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) except as
disclosed on Schedule 5.11. No Plan is subject to a waiver or extension of
the minimum funding requirements under ERISA or the Tax Code, and no
request for such waiver or extension is pending.
Section 5.12. Subsidiaries. All the outstanding shares of
stock of each such Subsidiary have been validly issued and are fully paid
and nonassessable and all such outstanding shares, except as noted on such
Schedule 5.01, are owned by Borrower or a Wholly Owned Subsidiary of
Borrower free of any Lien or claim.
Each Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of its
incorporation with the power and authority (corporate and other) to carry
on its business as it is now conducted and (ii) is qualified to transact
business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required under applicable law.
Section 5.13. Outstanding Indebtedness. As of the date of
closing and after giving effect to the transactions contemplated by this
Agreement, neither Borrower nor any of its Subsidiaries has outstanding any
Indebtedness except as permitted by Section 7.01 and there exists no
default under the provisions of any instrument evidencing such Indebtedness
or of any agreement relating thereto.
Section 5.14. Conflicting Agreements. Neither Borrower nor any
of its Subsidiaries is a party to any contract or agreement or other
burdensome restrictions or subject to any charter or other corporate
restriction which materially and adversely affects its business, property
or assets, or financial condition. Assuming the consummation of the
transactions contemplated by this Agreement, neither the execution or
delivery of this Agreement or the Credit Documents, nor fulfillment of or
compliance with the terms and provisions hereof and thereof, will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of Borrower or
any of its Subsidiaries pursuant to, the charter or By-Laws of Borrower or
any of its Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which Borrower or any of its
Subsidiaries is subject, and neither Borrower nor any of its Subsidiaries
is a party to, or otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of Borrower or any of its Subsidiaries,
any agreement relating thereto or any other contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Indebtedness of the type to be evidenced
by the Line of Credit Notes or contains dividend or redemption limitations
on Common Stock of Borrower, except for this Agreement, Borrower's
Certificate of Incorporation and those matters listed on Schedule 5.14
attached hereto.
Section 5.15. Pollution and Other Regulations.
(a) Each of the Borrower and its Subsidiaries has complied
in all material respects with all applicable Environmental Laws, including
without limitation, compliance with permits, licenses, standards, schedules
and timetables, and is not in violation of, and does not presently have
outstanding any liability under, has not been notified that it is or may be
liable under and does not have knowledge of any liability or potential
liability (including any liability relating to matters set forth on
Schedule 5.15(a)) except as set forth on Schedule 5.15(a), under any
applicable Environmental Law, including without limitation, the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("CERCLA"), the Federal Water Pollution Control Act, as amended
("FWPCA"), the Federal Clean Air Act, as amended ("FCAA"), and the Toxic
Substance Control Act ("TSCA"), which violation, liability or potential
liability could reasonably be expected to have a Materially Adverse Effect.
(b) Neither the Borrower nor any of its Subsidiaries has
received a written request for information under CERCLA, any other
Environmental Laws or any comparable state law, or any public health or
safety or welfare law or written notice that any such entity has been
identified as a potential responsible party under CERCLA, and other
Environmental Laws, or any comparable state law, or any public health or
safety or welfare law, nor has any such entity received any written
notification that any Hazardous Substance that it or any of its respective
predecessors in interest has generated, stored, treated, handled,
transported, or disposed of, has been released or is threatened to be
released at any site at which any Person intends to conduct or is
conducting a remedial investigation or other action pursuant to any
applicable Environmental Law, or any other Environmental Laws.
(c) Each of the Borrower and its Subsidiaries has obtained
all permits, licenses or other authorizations required for the conduct of
their respective operations under all applicable Environmental Laws and
each such authorization is in full force and effect.
(d) Each of Borrower and its Subsidiaries complies in all
material respects with all laws and regulations relating to equal
employment opportunity and employee safety in all jurisdictions in which it
is presently doing business, and Borrower will use its best efforts to
comply, and to cause each of its Subsidiaries to comply, with all such laws
and regulations which may be legally imposed in the future in jurisdictions
in which Borrower or any of its Subsidiaries may then be doing business.
Section 5.16. Possession of Franchises, Licenses, Etc. Each of
Borrower and its Subsidiaries possesses all franchises, certificates,
licenses, permits and other authorizations from governmental political
subdivisions or regulatory authorities, free from burdensome restrictions,
that are necessary in any material respect for the ownership, maintenance
and operation of its properties and assets, and neither Borrower nor any of
its Subsidiaries is in violation of any thereof in any material respect.
Section 5.17. Patents, Etc. Each of Borrower and its
Subsidiaries owns or has the right to use all patents, trademarks, service
marks, trade names, copyrights, licenses and other rights, free from
burdensome restrictions, which are necessary for the operation of its
business as presently conducted. Nothing has come to the attention of
Borrower, any of its Subsidiaries or any of their respective directors and
officers to the effect that (i) any product, process, method, substance,
part or other material presently contemplated to be sold by or employed by
Borrower or any of its Subsidiaries in connection with its business may
infringe any patent, trademark, service mark, trade name, copyright,
license or other right owned by any other Person, (ii) there is pending or
threatened any claim or litigation against or affecting Borrower or any of
its Subsidiaries contesting its right to sell or use any such product,
process, method, substance, part or other material or (iii) there is, or
there is pending or proposed, any patent, invention, device, application or
principle or any statute, law, rule, regulation, standard or code which
would prevent, inhibit or render obsolete the production or sale of any
products of, or substantially reduce the projected revenues of, or
otherwise materially adversely affect the business, condition or operations
of, Borrower or any of its Subsidiaries.
Section 5.18. Governmental Consent. Neither the nature of
Borrower or any of its Subsidiaries nor any of their respective businesses
or properties, nor any relationship between Borrower and any other Person,
nor any circumstance in connection with the execution and delivery of the
Credit Documents and the consummation of the transactions contemplated
thereby is such as to require on behalf of Borrower or any of its
Subsidiaries any consent, approval or other action by or any notice to or
filing with any court or administrative or governmental body in connection
with the execution and delivery of this Agreement and the Credit Documents.
Section 5.19. Disclosure. Neither this Agreement nor the
Credit Documents nor any other document, certificate or written statement
furnished to Lenders by or on behalf of Borrower in connection herewith
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact peculiar to Borrower which
materially adversely affects or in the future may (so far as Borrower can
now foresee) materially adversely affect the business, property or assets,
financial condition or prospects of Borrower which has not been set forth
in this Agreement or in the Credit Documents, certificates and written
statements furnished to Lenders by or on behalf of Borrower prior to the
date hereof in connection with the transactions contemplated hereby.
Section 5.20. Insurance Coverage. Each property of Borrower or
any of its Subsidiaries is insured within terms acceptable to Lenders for
the benefit of Borrower or a Subsidiary of Borrower in amounts deemed
adequate by Borrower's management and no less than those amounts customary
in the industry in which Borrower and its Subsidiaries operate against
risks usually insured against by Persons operating businesses similar to
those of Borrower or its Subsidiaries in the localities where such
properties are located.
Section 5.21. Labor Matters. The Borrower and the Borrower's
Subsidiaries have experienced no strikes, labor disputes, slow downs or
work stoppages due to labor disagreements which have had, or would
reasonably be expected to have, a Materially Adverse Effect, and, to the
best knowledge of Borrower's executive officers, there are no such strikes,
disputes, slow downs or work stoppages threatened against any Borrower or
any of Borrower's Subsidiaries. The hours worked and payment made to
employees of the Borrower and Borrower's Subsidiaries have not been in
violation in any material respect of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due from the
Borrower and Borrower's Subsidiaries, or for which any claim may be made
against the Consolidated Companies, on account of wages and employee health
and welfare insurance and other benefits have been paid or accrued as
liabilities on the books of the Borrower and Borrower's Subsidiaries where
the failure to pay or accrue such liabilities would reasonably be expected
to have a Materially Adverse Effect.
Section 5.22. Intercompany Loans; Dividends. The Intercompany
Loans and the Intercompany Loan Documents, to the extent that they exist,
have been duly authorized and approved by all necessary corporate and
shareholder action on the part of the parties thereto, and constitute the
legal, valid and binding obligations of the parties thereto, enforceable
against each of them in accordance with their respective terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally, and by
general principles of equity. There are no restrictions on the power of
any Consolidated Company to repay any Intercompany Loan or to pay dividends
on the capital stock. Intercompany Loans as of the Closing Date are
described in Schedule 5.22.
Section 5.23. Burdensome Restrictions. None of the
Consolidated Companies is a party to or bound by any Contractual Obligation
or Requirement of Law which has had or would reasonably be expected to have
a Materially Adverse Effect.
Section 5.24. Investment Company Act, Etc. Neither the
Borrower nor any of its Subsidiaries is an "investment company" or a
company "controlled" by an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940, as
amended). Neither the Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed, guarantee
such indebtedness, or pledge its assets to secure such indebtedness, as
contemplated hereby or by any other Credit Document.
Section 5.25. Notice of Non-Compliance with Laws. Neither the
Borrower nor any of its Subsidiaries has received notice of any violation
of Law, statute, order, rule, regulation, or judgment entered by any court
that may reasonably be expected to have a Materially Adverse Effect.
Section 5.26. Year 2000 Issues. Borrower and the other
Consolidated Companies (i) are performing a comprehensive review of their
computers and software applications to identify the systems that would be
affected by Year 2000 Issues as such issues pertain to the computer
programs and systems of the Consolidated Companies, (ii) based on their
review and all other information currently available to them, do not
reasonably anticipate that Year 2000 Issues will have a Materially Adverse
Effect, and (iii) are in compliance with all laws, rules and regulations of
the Securities and Exchange Commission.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as it may borrow under
this Agreement or so long as any indebtedness remains outstanding under the
Line of Credit Notes that it will:
Section 6.01. Corporate Existence, Etc. Preserve and maintain,
and cause each of its Material Subsidiaries to preserve and maintain, its
corporate existence, its material rights, franchises, and licenses, and its
material patents and copyrights (for the scheduled duration thereof),
trademarks, trade names, and service marks, necessary or desirable in the
normal conduct of its business, and its qualification to do business as a
foreign corporation in all jurisdictions where it conducts business or
other activities making such qualification necessary, where the failure to
do so would reasonably be expected to have a Materially Adverse Effect.
Section 6.02. Compliance with Laws, Etc. Comply, and cause
each of its Subsidiaries to comply with all Requirements of Law (including,
without limitation, the Environmental Laws, subject to the exception set
forth in Section 6.07(f) where the penalties, claims, fines, and other
liabilities resulting from noncompliance with such Environmental Laws do
not involve amounts in excess of $10,000,000 in the aggregate) and
Contractual Obligations applicable to or binding on any of them where the
failure to comply with such Requirements of Law and Contractual Obligations
would reasonably be expected to have a Materially Adverse Effect.
Section 6.03. Payment of Taxes and Claims, Etc. Pay, and cause
each of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its property, and (ii) all
claims (including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon its
property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and adequate reserves
are maintained with respect thereto.
Section 6.04. Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, containing
complete and accurate entries of all their respective financial and
business transactions.
Section 6.05. Visitation, Inspection, Etc. Permit, and cause
each of its Subsidiaries to permit, any representative of the
Administrative Agent or any Lender to visit and inspect any of its
property, to examine its books and records and to make copies and take
extracts therefrom, and to discuss its affairs, finances and accounts with
its officers, all at such reasonable times and as often as the
Administrative Agent or such Lender may reasonably request after reasonable
prior notice to Borrower; provided, however, that at any time following the
occurrence and during the continuance of a Default or an Event of Default,
no prior notice to Borrower shall be required.
Section 6.06. Insurance; Maintenance of Properties.
(a) Maintain or cause to be maintained with financially
sound and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss
or damage of the kinds customarily insured against by reputable companies
in the same or similar businesses, such insurance to be of such types and
in such amounts, including such self-insurance and deductible provisions,
as is customary for such companies under similar circumstances; provided,
however, that in any event Borrower shall use its best efforts to maintain,
or cause to be maintained, insurance in amounts and with coverages not
materially less favorable to any Consolidated Company as in effect on the
date of this Agreement, except where the costs of maintaining such
insurance would, in the judgment of both Borrower and the Administrative
Agent, be excessive.
(b) Cause, and cause each of the Consolidated Companies to
cause, all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, settlements and improvements
thereof, all as in the judgment of Borrower may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in
this Section shall prevent Borrower from discontinuing the operation or
maintenance of any such properties if such discontinuance is, in the
judgment of Borrower, desirable in the conduct of its business or the
business of any Consolidated Company.
Section 6.07. Reporting Covenants. Furnish to each Lender:
(a) Annual Financial Statements. As soon as available and
in any event within 95 days after the end of each fiscal year of Borrower,
balance sheets of the Consolidated Companies as at the end of such year,
presented on a consolidated basis, and the related statements of income,
shareholders' equity, and cash flows of the Consolidated Companies for such
fiscal year, presented on a consolidated basis, setting forth in each case
in comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by a report thereon of independent public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent, which such report shall be unqualified as to going
concern and scope of audit and shall state that such financial statements
present fairly in all material respects the financial condition as at the
end of such fiscal year on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies for
such fiscal year in accordance with GAAP and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(b) Quarterly Financial Statements. As soon as available
and in any event within 60 days after the end of each fiscal quarter of
Borrower (other than the fourth fiscal quarter), balance sheets of the
Consolidated Companies as at the end of such quarter presented on a
consolidated basis and the related statements of income, shareholders'
equity, and cash flows of the Consolidated Companies for such fiscal
quarter and for the portion of Borrower's fiscal year ended at the end of
such quarter, presented on a consolidated basis setting forth in each case
in comparative form the figures for the corresponding quarter and the
corresponding portion of Borrower's previous fiscal year, all in reasonable
detail and certified by the chief financial officer or principal accounting
officer of Borrower that such financial statements fairly present in all
material respects the financial condition of the Consolidated Companies as
at the end of such fiscal quarter on a consolidated basis, and the results
of operations and statements of cash flows of the Consolidated Companies
for such fiscal quarter and such portion of Borrower's fiscal year, in
accordance with GAAP consistently applied (subject to normal year-end audit
adjustments and the absence of certain footnotes);
(c) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (a) and (b) above, a
certificate of the president, chief financial officer or principal
accounting officer of Borrower (the "Compliance Certificate") (i) to the
effect that, based upon a review of the activities of the Consolidated
Companies and such financial statements during the period covered thereby,
there exists no Event of Default and no Default under this Agreement, or if
there exists an Event of Default or a Default hereunder, specifying the
nature thereof and the proposed response thereto, and (ii) demonstrating in
reasonable detail compliance as at the end of such fiscal year or such
fiscal quarter with Section 6.08 and Sections 7.01 through 7.04;
(d) Notice of Default. Promptly after any Executive
Officer of Borrower has notice or knowledge of the occurrence of an Event
of Default or a Default, a certificate of the chief financial officer or
principal accounting officer of Borrower specifying the nature thereof and
the proposed response thereto;
(e) Litigation. Promptly after (i) the occurrence thereof,
notice of the institution of or any adverse development in any action, suit
or proceeding or any governmental investigation or any arbitration, before
any court or arbitrator or any governmental or administrative body, agency
or official, against any Consolidated Company, or any material property
thereof which might have a Materially Adverse Effect, or (ii) actual
knowledge thereof, notice of the threat of any such action, suit,
proceeding, investigation or arbitration;
(f) Environmental Notices. Promptly after receipt thereof,
notice of any actual or alleged violation, or notice of any action, claim
or request for information, either judicial or administrative, from any
governmental authority relating to any actual or alleged claim, notice of
potential responsibility under or violation of any Environmental Law, or
any actual or alleged spill, leak, disposal or other release of any waste,
petroleum product, or hazardous waste or Hazardous Substance by any
Consolidated Company which could result in penalties, fines, claims or
other liabilities to any Consolidated Company in amounts in excess of
$5,000,000 individually or in the aggregate;
(g) ERISA.
(i) Promptly after the occurrence thereof with respect to
any Plan of any Consolidated Company or any ERISA Affiliate thereof,
or any trust established thereunder, notice of (x) a "reportable
event" described in Section 4043 of ERISA and the regulations issued
from time to time thereunder (other than a "reportable event" not
subject to the provisions for 30-day notice to the PBGC under such
regulations), or (y) any other event which could subject any
Consolidated Company to any tax, penalty or liability under Title I or
Title IV of ERISA or Chapter 43 of the Tax Code, or any tax or penalty
resulting from a loss of deduction under Sections 162, 404 or 419 of
the Tax Code, where any such taxes, penalties or liabilities exceed or
could exceed $1,000,000 in the aggregate;
(ii) Promptly after such notice must be provided to the
PBGC, or to a Plan participant, beneficiary or alternative payee, any
notice required under Section 101(d), 302(f)(4), 303, 307,
4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 401(a)(29) or
412 of the Tax Code with respect to any Plan of any Consolidated
Company or any ERISA Affiliate thereof;
(iii) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the
intent of the PBGC or any other governmental authority to terminate a
Plan of such Company or ERISA Affiliate thereof which is subject to
Title IV of ERISA, to impose any liability on such Company or ERISA
Affiliate under Title IV of ERISA or Chapter 43 of the Tax Code;
(iv) Upon the request of the Administrative Agent, promptly
upon the filing thereof with the Internal Revenue Service ("IRS") or
the Department of Labor ("DOL"), a copy of IRS Form 5500 or annual
report for each Plan of any Consolidated Company or ERISA Affiliate
thereof which is subject to Title IV of ERISA;
(v) Upon the request of the Administrative Agent, (A) true
and complete copies of any and all documents, government reports and
IRS determination or opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL, (B) any reports filed
with the IRS, PBGC or DOL with respect to a Plan of the Consolidated
Companies or any ERISA Affiliate thereof, or (C) a current statement
of withdrawal liability for each Multiemployer Plan of any
Consolidated Company or any ERISA Affiliate thereof;
(h) Liens. Promptly upon any Consolidated Company becoming
aware thereof, notice of the filing of any federal statutory Lien, tax or
other state or local government Lien or any other Lien affecting their
respective properties, other than those Liens expressly permitted by
Section 7.02;
(i) Public Filings, Etc. Promptly upon the filing thereof
or otherwise becoming available, copies of all financial statements,
annual, quarterly and special reports, proxy statements and notices sent or
made available generally by Borrower to its public security holders, of all
regular and periodic reports and all registration statements and
prospectuses (other than registration statements filed on Form S-3 of the
Securities and Exchange Commission regarding the issuance of restricted
stock in acquisitions), if any, filed by any of them with any securities
exchange, and of all press releases and other statements made available
generally to the public containing material developments in the business or
financial condition of Borrower and the other Consolidated Companies;
(j) Accountants' Reports. Promptly upon receipt thereof,
copies of all financial statements of, and all reports submitted by,
independent public accountants to Borrower in connection with each annual,
interim, or special audit of Borrower's consolidated financial statements;
(k) Burdensome Restrictions, Etc. Promptly upon the
existence or occurrence thereof, notice of the existence or occurrence of
(i) any Contractual Obligation or Requirement of Law described in Section
5.23, (ii) failure of any Consolidated Company to hold in full force and
effect those material trademarks, service marks, patents, trade names,
copyrights, licenses and similar rights necessary in the normal conduct of
its business, and (iii) any strike, labor dispute, slow down or work
stoppage as described in Section 5.21;
(l) New Material Subsidiaries. Simultaneously with the
delivery of each Compliance Certificate, a written list of all Material
Subsidiaries formed, acquired, or created from a transfer of assets or
through any other event, during the period commencing on the Closing Date
and ending on the date on which the first Compliance Certificate is
delivered, and thereafter since the date of the most recently delivered
Compliance Certificate; such written list shall include the name of each
new Material Subsidiary, its state of incorporation, list of its officers
and any other information that the Administrative Agent shall reasonably
request.
(m) Intercompany Asset Transfers. Promptly upon the
occurrence thereof, notice of the transfer of any assets from Borrower or
any Guarantor to any other Consolidated Company that is not Borrower or a
Guarantor (in any transaction or series of related transactions), excluding
sales or other transfers of assets in the ordinary course of business,
where the Asset Value of such assets is greater than $5,000,000 per
transfer;
(n) Year 2000 Issues. Promptly upon any Executive Officer
of Borrower has notice or knowledge thereof, notice that any computer
programs and systems of the Consolidated Companies are subject to any Year
2000 Issues that could reasonable be expected to have a Materially Adverse
Effect; and
(o) Other Information. With reasonable promptness, such
other information about the Consolidated Companies as the Administrative
Agent or any Lender may reasonably request from time to time.
Section 6.08. Financial Covenants.
(a) Fixed Charge Coverage Ratio. Maintain as of the last
day of each fiscal quarter, a Fixed Charge Coverage Ratio of greater than
1.50:1.0.
(b) Leverage Ratio. Maintain as of the last day of each
fiscal quarter, a Leverage Ratio of less than or equal to 0.60:1.0.
(c) Minimum Net Worth. Maintain a Consolidated Net Worth
of not less than (i) $425,000,000 plus (ii) 50% of Consolidated Net Income
(but not Loss) for each fiscal quarter ended after January 30, 1998 and on
or prior to the date of determination.
(d) Dividends. Not declare or pay any dividend on its
capital stock, or make any payment to purchase, redeem, retire or acquire
any of its Subordinated Debt or capital stock or any option, warrant, or
other right to acquire such Subordinated Debt or capital stock, other than:
(i) dividends payable solely in shares of capital stock; and
(ii) cash dividends declared and paid, and all other such
payments made, after January 29, 1993, in an aggregate amount at any
time not to exceed (x) $1,000,000, plus (y) 50% of Consolidated Net
Income (or minus 100% of Consolidated Net Loss) earned during
Borrower's fiscal year ended January 29, 1993, and thereafter (such
period to be treated as one accounting period);
provided, further, however, no such dividend or other payment may be
declared or paid pursuant to clause (ii) above unless no Default or Event
of Default exists at the time of such declaration or payment, or would
exist as a result of such declaration or payment.
Section 6.09. Notices Under Certain Other Indebtedness.
Immediately upon its receipt thereof, Borrower shall furnish the
Administrative Agent a copy of any notice received by it or any other
Consolidated Company from the holder(s) of Indebtedness referred to in
Section 7.01 (or from any trustee, agent, attorney, or other party acting
on behalf of such holder(s)) in an amount which, in the aggregate, exceeds
$5,000,000, where such notice states or claims (i) the existence or
occurrence of any default or event of default with respect to such
Indebtedness under the terms of any indenture, loan or credit agreement,
debenture, note, or other document evidencing or governing such
Indebtedness, or (ii) the existence or occurrence of any event or condition
which requires or permits holder(s) of any Indebtedness to exercise rights
under any Change in Control Provision. Borrower agrees to take such
actions as may be necessary to require the holder(s) of any Indebtedness
(or any trustee or agent acting on their behalf) incurred pursuant to
documents executed or amended and restated after the Closing Date, to
furnish copies of all such notices directly to the Administrative Agent
simultaneously with the furnishing thereof to Borrower, and that such
requirement may not be altered or rescinded without the prior written
consent of the Administrative Agent.
Section 6.10. Additional Guarantors. Borrower shall cause each
new Material Subsidiary reported to the Administrative Agent and the
Lenders pursuant to Section 6.07(l) above to execute and deliver to the
Administrative Agent, simultaneously with the report given pursuant to
Section 6.07(l) above, a supplement to the Guaranty Agreement, together
with related documents of the kind described in Section 4.01, as
appropriate, all in form and substance satisfactory to the Administrative
Agent and the Required Lenders.
Section 6.11. Financial Statements; Fiscal Year. Borrower
shall make no change in the dates of the fiscal year now employed for
accounting and reporting purposes without the prior written consent of the
Required Lenders, which consent shall not be unreasonably withheld.
Section 6.12. Ownership of Guarantors. Borrower shall maintain
its percentage of ownership existing as of the date hereof of all
Guarantors, and shall not decrease its ownership percentage in each Person
which becomes a Guarantor after the date hereof, as such ownership exists
at the time such Person becomes a Guarantor.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Line of Credit Commitment remains in effect
hereunder or any Line of Credit Note shall remain unpaid, Borrower will not
and will not permit any Subsidiary to:
Section 7.01. Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, other than:
(a) Indebtedness under this Agreement or the Revolving
Credit Agreement;
(b) Indebtedness outstanding on the date hereof or pursuant
to lines of credit in effect on the date hereof and described on Schedule
7.01(b);
(c) purchase money Indebtedness to the extent secured by a
Lien permitted by Section 7.02(b) provided such purchase money Indebtedness
does not exceed $20,000,000;
(d) unsecured current liabilities (other than liabilities
for borrowed money or liabilities evidenced by promissory notes, bonds or
similar instruments) incurred in the ordinary course of business and either
(i) not more than 30 days past due, or (ii) being disputed in good faith by
appropriate proceedings with reserves for such disputed liability
maintained in conformity with GAAP;
(e) any Intercompany Loans; provided, however, that the
aggregate principal amount of all Intercompany Loans made to any
Consolidated Companies that are not Guarantors shall not exceed $5,000,000
in the any one time outstanding unless otherwise agreed in writing by the
Administrative Agent and the Required Lenders;
(f) other Subordinated Debt in form and substance
acceptable to the Administrative Agent and the Required Lenders, and
evidenced by their written consent thereto; and
(g) other Indebtedness not to exceed $75,000,000 at any one
time outstanding.
Section 7.02. Liens. Create, incur, assume or suffer to exist
any Lien on any of its property now owned or hereafter acquired to secure
any Indebtedness other than:
(a) Liens existing on the date hereof disclosed on Schedule
7.02;
(b) any Lien on any property securing Indebtedness incurred
or assumed for the purpose of financing all or any part of the acquisition
cost of such property and any refinancing thereof, provided that such Lien
does not extend to any other property, and provided further that the
aggregate principal amount of Indebtedness secured by all such Liens at any
time does not exceed $20,000,000;
(c) Liens for taxes not yet due, and Liens for taxes or
Liens imposed by ERISA which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are
being maintained;
(d) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law created
in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings and with respect
to which adequate reserves are being maintained;
(e) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money); and
(f) Liens (other than those permitted by paragraphs (a)
through (e) of this Section 7.02) encumbering assets having an Asset Value
not greater than $20,000,000 in the aggregate at any one time.
Section 7.03. Mergers, Acquisitions, Sales, Etc. Merge or
consolidate with any other Person, other than Borrower or another
Subsidiary, or sell, lease, or otherwise dispose of its accounts, property
or other assets (including capital stock of Subsidiaries), or purchase,
lease or otherwise acquire all or any substantial portion of the property
or assets (including capital stock) of any Person; provided, however, that
the foregoing restrictions on asset sales shall not be applicable to (i)
sales of equipment or other personal property being replaced by other
equipment or other personal property purchased as a capital expenditure
item, (ii) sales of accounts receivable pursuant to a securitization
program, provided further that any program costs incurred by the Borrower
in pursuing such a program shall be considered interest under this Credit
Agreement, (iii) other asset sales (including the stock of Subsidiaries)
where, on the date of execution of a binding obligation to make such asset
sale (provided that if the asset sale is not consummated within six (6)
months of such execution, then on the date of consummation of such asset
sale rather than on the date of execution of such binding obligation), the
Asset Value of asset sales occurring after the Closing Date, taking into
account the Asset Value of the proposed asset sale, would not exceed ten
percent (10%) of Borrower's Consolidated Net Worth, since the Closing Date,
and (iv) sales of inventory in the ordinary course of business; provided,
further, that the foregoing restrictions on mergers shall not apply to
mergers involving Borrower and another entity, provided Borrower is the
surviving entity, and mergers between a Subsidiary of Borrower and Borrower
or between Subsidiaries of Borrower provided that, in either case, upon
consummation of such mergers, Borrower is in compliance with the other
provisions hereof; provided, further, that the foregoing restrictions on
asset purchases shall not apply to asset purchases by Borrower to the
extent that (i) after giving effect to such purchases, Borrower is in
compliance with Section 7.04 hereof and (ii) the Board of Directors or
other governing body of such Person whose assets or stock is being
purchased has approved the terms of such acquisition; provided, however,
that no transaction pursuant to clauses (i), (ii) or (iii) or the second or
third provisos above shall be permitted if any Default or Event of Default
otherwise exists at the time of such transaction or would otherwise exist
as a result of such transaction.
Section 7.04. Investments, Loans, Etc. Make, permit or hold
any Investments in any Person, or otherwise acquire or hold any
Subsidiaries, other than:
(a) Investments in Subsidiaries that are Guarantors under
this Agreement, whether such Subsidiaries are Guarantors on the Closing
Date or become Guarantors in accordance with Section 6.10 after the Closing
Date; provided, however, nothing in this Section 7.04 shall be deemed to
authorize an investment pursuant to this subsection (a) in any entity that
is not a Subsidiary and a Guarantor prior to such investment;
(b) Investments in Subsidiaries, other than those
Subsidiaries that are or become Guarantors under this Agreement, or persons
that thereafter become Subsidiaries, in an aggregate amount not to exceed
$25,000,000 unless otherwise consented to in writing by the Required
Lenders;
(c) Investments in other Persons that are not, and do not
become, Subsidiaries in an aggregate amount not to exceed $25,000,000
unless otherwise consented to in writing by the Required Lenders;
(d) direct obligations of the United States of America or
any agency thereof, or obligations guaranteed by the United States of
America or any agency thereof, in each case supported by the full faith and
credit of the United States of America and maturing within one year from
the date of creation thereof;
(e) commercial paper maturing within one year from the date
of creation thereof rated in the highest grade by a nationally recognized
credit rating agency;
(f) time deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by any
Lender and any office located in the United States of America of any bank
or trust company which is organized under the laws of the United States of
America or any state thereof and has total assets aggregating at least
$500,000,000, including without limitation, any such deposits in
Eurodollars issued by a foreign branch of any such bank or trust company;
(g) Investments made by Plans; and
(h) permitted Intercompany Loans on terms and conditions
acceptable to the Administrative Agent.
Section 7.05. Sale and Leaseback Transactions. Sell or
transfer any property, real or personal, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property
which any Consolidated Company intends to use for substantially the same
purpose or purposes as the property being sold or transferred, except to
the extent that the aggregate value of all such property sold and leased
back does not exceed $5,000,000 at any one time.
Section 7.06. Transactions with Affiliates.
(a) Enter into any material transaction or series of
related transactions which in the aggregate would be material, whether or
not in the ordinary course of business, with any Affiliate of any
Consolidated Company (but excluding any Affiliate which is also a
Consolidated Company), other than on terms and conditions substantially as
favorable to such Consolidated Company as would be obtained by such
Consolidated Company at the time in a comparable arm's-length transaction
with a Person other than an Affiliate.
(b) Convey or transfer to any other Person (including any
other Consolidated Company) any real property, buildings, or fixtures used
in the manufacturing or production operations of any Consolidated Company,
or convey or transfer to any other Consolidated Company any other assets
(excluding conveyances or transfers in the ordinary course of business) if
at the time of such conveyance or transfer any Default or Event of Default
exists or would exist as a result of such conveyance or transfer.
Section 7.07. Optional Prepayments. Directly or indirectly,
prepay, purchase, redeem, retire, defease or otherwise acquire, or make any
optional payment on account of any principal of, interest on, or premium
payable in connection with the optional prepayment, redemption or
retirement of, any of its Indebtedness, or give a notice of redemption with
respect to any such Indebtedness, or make any payment in violation of the
subordination provisions of any Subordinated Debt, except with respect to
(i) the Obligations under this Agreement and the Line of Credit Notes, (ii)
prepayments of Indebtedness outstanding pursuant to revolving credit,
overdraft and line of credit facilities permitted pursuant to Section 7.01,
(iii) Intercompany Loans made or outstanding pursuant to Section 7.01, and
(iv) Subordinated Debt, in form and substance acceptable to the
Administrative Agent and the Required Lenders, as evidenced by their
written consent, issued to refinance existing Subordinated Debt.
Section 7.08. Changes in Business. Enter into any business
which is substantially different from that presently conducted by the
Consolidated Companies taken as a whole except where the Investment made,
and other funds expended or committed with respect to such business, do not
exceed $5,000,000 in each new business.
Section 7.09. ERISA. Take or fail to take any action with
respect to any Plan of any Consolidated Company or, with respect to its
ERISA Affiliates, any Plans which are subject to Title IV of ERISA or to
continuation health care requirements for group health plans under the Tax
Code, including without limitation (i) establishing any such Plan, (ii)
amending any such Plan (except where required to comply with applicable
law), (iii) terminating or withdrawing from any such Plan, or (iv)
incurring an amount of unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA, or any withdrawal liability under Title IV of ERISA
with respect to any such Plan, without first obtaining the written approval
of the Administrative Agent and the Required Lenders, where such actions or
failures could result in a Materially Adverse Effect.
Section 7.10. Additional Negative Pledges. Create or otherwise
cause or suffer to exist or become effective, directly or indirectly, any
prohibition or restriction on the creation or existence of any Lien upon
any asset of any Consolidated Company, other than pursuant to (i) the terms
of any agreement, instrument or other document pursuant to which any
Indebtedness permitted by Section 7.01(a) or (b) is incurred by any
Consolidated Company, so long as such prohibition or restriction applies
only to the property or asset being financed by such Indebtedness, and (ii)
any requirement of applicable law or any regulatory authority having
jurisdiction over any of the Consolidated Companies.
Section 7.11. Limitation on Payment Restrictions Affecting
Consolidated Companies. Create or otherwise cause or suffer to exist or
become effective, any consensual encumbrance or restriction on the ability
of any Consolidated Company to (i) pay dividends or make any other
distributions on such Consolidated Company's stock, or (ii) pay any
indebtedness owed to Borrower or any other Consolidated Company, or (iii)
transfer any of its property or assets to Borrower or any other
Consolidated Company, except any consensual encumbrance or restriction
existing under the Credit Documents or under the Revolving Credit Agreement
and related documents.
Section 7.12. Actions Under Certain Documents. Without the
prior written consent of the Administrative Agent (which consent shall not
be unreasonably withheld), modify, amend, cancel or rescind any agreements
or documents evidencing or governing Subordinated Debt or the senior
Indebtedness permitted pursuant to Section 7.01 hereof, or make demand of
payment or accept payment on any Intercompany Loans permitted by Section
7.01, except that current interest accrued thereon as of the date of this
Agreement and all interest subsequently accruing thereon (whether or not
paid currently) may be paid unless a Default or Event of Default has
occurred and is continuing.
ARTICLE VIII
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
Section 8.01. Payments. Borrower shall fail to make promptly
when due (including, without limitation, by mandatory prepayment) any
principal payment with respect to the Line of Credit Loans, or Borrower
shall fail to make within five (5) Business Days after the due date thereof
any payment of interest, fee or other amount payable hereunder;
Section 8.02. Covenants Without Notice. Borrower shall fail to
observe or perform any covenant or agreement contained in Sections 6.07,
6.08, 6.11, and Article VII;
Section 8.03. Other Covenants. Borrower shall fail to observe
or perform any covenant or agreement contained in this Agreement, other
than those referred to in Sections 8.01 and 8.02, and, if capable of being
remedied, such failure shall remain unremedied for 30 days after the
earlier of (i) Borrower's obtaining knowledge thereof, or (ii) written
notice thereof shall have been given to Borrower by the Administrative
Agent or any Lender;
Section 8.04. Representations. Any representation or warranty
made or deemed to be made by Borrower or any other Credit Party or by any
of its officers under this Agreement or any other Credit Document
(including the Schedules attached thereto), or any certificate or other
document submitted to the Administrative Agent or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit
Document, shall be incorrect in any material respect when made or deemed to
be made or submitted;
Section 8.05. Non-Payments of Other Indebtedness. Any
Consolidated Company shall fail to make when due (whether at stated
maturity, by acceleration, on demand or otherwise, and after giving effect
to any applicable grace period) any payment of principal of or interest on
any Indebtedness (other than the Obligations) exceeding $5,000,000 in the
aggregate including, without limitation, indebtedness outstanding under the
Revolving Credit Agreement;
Section 8.06. Defaults Under Other Agreements. Any
Consolidated Company shall fail to observe or perform within any applicable
grace period any covenants or agreements contained in any agreements or
instruments relating to any of its Indebtedness exceeding $5,000,000 in the
aggregate including, without limitation, indebtedness outstanding under the
Revolving Credit Agreement, or any other event shall occur if the effect of
such failure or other event is to accelerate, or to permit the holder of
such Indebtedness or any other Person to accelerate, the maturity of such
Indebtedness; or any such Indebtedness shall be required to be prepaid
(other than by a regularly scheduled required prepayment) in whole or in
part prior to its stated maturity;
Section 8.07. Bankruptcy. Borrower or any other Consolidated
Company shall commence a voluntary case concerning itself under the
Bankruptcy Code or an involuntary case for bankruptcy is commenced against
any Consolidated Company and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement of the case;
or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or any substantial part of the property of any
Consolidated Company; or any Consolidated Company commences proceedings of
its own bankruptcy or to be granted a suspension of payments or any other
proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction, whether now or hereafter in effect, relating to any
Consolidated Company or there is commenced against any Consolidated Company
any such proceeding which remains undismissed for a period of 60 days; or
any Consolidated Company is adjudicated insolvent or bankrupt; or any order
of relief or other order approving any such case or proceeding is entered;
or any Consolidated Company suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or any Consolidated
Company makes a general assignment for the benefit of creditors; or any
Consolidated Company shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or
any Consolidated Company shall call a meeting of its creditors with a view
to arranging a composition or adjustment of its debts; or any Consolidated
Company shall by any act or failure to act indicate its consent to,
approval of or acquiescence in any of the foregoing; or any corporate
action is taken by any Consolidated Company for the purpose of effecting
any of the foregoing;
Section 8.08. ERISA. A Plan of a Consolidated Company or a
Plan subject to Title IV of ERISA of any of its ERISA Affiliates:
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of
such Plan, Section 412 of the Tax Code or Section 302 of
ERISA for any plan year or a waiver of such standard is
sought or granted with respect to such Plan under applicable
law, the terms of such Plan or Section 412 of the Tax Code
or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject
of termination proceedings under applicable law or the terms
of such Plan; or
(iii) shall require a Consolidated Company to
provide security under applicable law, the terms of such
Plan, Section 401 or 412 of the Tax Code or Section 306 or
307 of ERISA; or
(iv) results in a liability to a Consolidated Company
under applicable law, the terms of such Plan, or Title IV of
ERISA;
and there shall result from any such failure, waiver, termination or other
event a liability to the PBGC or a Plan that would have a Materially
Adverse Effect;
Section 8.09. Money Judgment. A judgment or order for the
payment of money in excess of $5,000,000 or otherwise having a Materially
Adverse Effect shall be rendered against Borrower or any other Consolidated
Company and such judgment or order shall continue unsatisfied (in the case
of a money judgment) and in effect for a period of 30 days during which
execution shall not be effectively stayed or deferred (whether by action of
a court, by agreement or otherwise);
Section 8.10. Ownership of Credit Parties and Pledged Entities.
If Borrower shall at any time fail to own and control the required
percentage of the voting stock of any Guarantor, either directly or
indirectly through a wholly-owned Subsidiary of Borrower;
Section 8.11. Change in Control of Borrower. (a) Any "person"
or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act), other than the Hughes Family shall become the "beneficial
owner(s)" (as defined in said Rule 13d-3) of more than twenty-five percent
(25%) of the shares of the outstanding common stock of Borrower entitled to
vote for members of Borrower's board of directors, or (b) any event or
condition shall occur or exist which, pursuant to the terms of any change
in control provision, requires or permits the holder(s) of Indebtedness of
any Consolidated Company to require that such Indebtedness be redeemed,
repurchased, defeased, prepaid or repaid, in whole or in part, or the
maturity of such Indebtedness to be accelerated in any respect;
Section 8.12. Default Under Other Credit Documents. There
shall exist or occur any "Event of Default" as provided under the terms of
any other Credit Document, or any Credit Document ceases to be in full
force and effect or the validity or enforceability thereof is disaffirmed
by or on behalf of Borrower or any other Credit Party, or at any time it is
or becomes unlawful for Borrower or any other Credit Party to perform or
comply with its obligations under any Credit Document, or the obligations
of Borrower or any other Credit Party under any Credit Document are not or
cease to be legal, valid and binding on Borrower or any such Credit Party;
Section 8.13. Attachments. An attachment or similar action
shall be made on or taken against any of the assets of any Consolidated
Company with an Asset Value exceeding $5,000,000 in aggregate and is not
removed, suspended or enjoined within 60 days of the same being made or any
suspension or injunction being lifted;
then, and in any such event, and at any time thereafter if any Event of
Default shall then be continuing, the Administrative Agent may, and upon
the written or telex request of the Required Lenders, shall, by written
notice to Borrower, take any or all of the following actions, without
prejudice to the rights of the Administrative Agent, any Lender or the
holder of any Line of Credit Note to enforce its claims against Borrower or
any other Credit Party: (i) declare all Line of Credit Commitments
terminated, whereupon the Line of Credit Commitments of each Lender shall
terminate immediately and Fees shall forthwith become due and payable
without any other notice of any kind; and (ii) declare the principal of and
any accrued interest on the Line of Credit Loans, and all other Obligations
owing hereunder, to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by Borrower; provided, that, if an Event of
Default specified in Section 8.07 shall occur, the result which would occur
upon the giving of written notice by the Administrative Agent to any Credit
Party, as specified in clauses (i) and (ii) above, shall occur
automatically without the giving of any such notice.
ARTICLE IX
THE AGENTS
Section 9.01. Appointment of Administrative Agent. Each Lender
hereby designates SunTrust Bank, Central Florida, National Association as
the "Administrative Agent" to administer all matters concerning the Line of
Credit Loans and to act as herein specified. Each Lender hereby
irrevocably authorizes, and each holder of any Line of Credit Note by the
acceptance of a Line of Credit Note shall be deemed irrevocably to
authorize, the Administrative Agent to take such actions on its behalf
under the provisions of this Agreement, the other Credit Documents, and all
other instruments and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder and thereunder as
are specifically delegated to or required of the Administrative Agent by
the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Administrative Agent may perform any of its duties
hereunder by or through its agents or employees. The provisions of this
Section 9.01 are solely for the benefit of the Administrative Agent, and
Borrower and the other Consolidated Companies shall not have any rights as
third party beneficiaries of any of the provisions hereof. In performing
its functions and duties under this Agreement, the Administrative Agent
shall act solely as agent of the Lenders and does not assume and shall not
be deemed to have assumed any obligations towards or relationship of agency
or trust with or for the Borrower and the other Consolidated Companies.
Section 9.02. Nature of Duties of Administrative Agent. The
Administrative Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Credit Documents.
Neither the Administrative Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it
as such hereunder or in connection herewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Administrative
Agent shall be ministerial and administrative in nature; the Administrative
Agent shall not have by reason of this Agreement a fiduciary relationship
in respect of any Lender; and nothing in this Agreement, express or
implied, is intended to or shall be so construed as to impose upon the
Administrative Agent any obligations in respect of this Agreement or the
other Credit Documents except as expressly set forth herein.
Section 9.03. Lack of Reliance on the Administrative Agent.
(a) Independently and without reliance upon the
Administrative Agent, each Lender, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of
the financial condition and affairs of the Credit Parties in connection
with the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of the Credit Parties, and,
except as expressly provided in this Agreement, the Administrative Agent
shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of
the Line of Credit Loans or at any time or times thereafter.
(b) The Administrative Agent shall not be responsible to
any Lender for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Agreement, the Line of Credit Notes, the Guaranty
Agreement, or any other documents contemplated hereby or thereby, or the
financial condition of the Credit Parties, or be required to make any
inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Line of Credit
Notes, the Guaranty Agreement, or the other documents contemplated hereby
or thereby, or the financial condition of the Credit Parties, or the
existence or possible existence of any Default or Event of Default;
provided, however, to the extent that the Administrative Agent has been
advised that a Lender has not received any information formally delivered
to the Administrative Agent pursuant to Section 6.07, the Administrative
Agent shall deliver or cause to be delivered such information to such
Lender.
Section 9.04. Certain Rights of the Administrative Agent. If
the Administrative Agent shall request instructions from the Required
Lenders with respect to any action or actions (including the failure to
act) in connection with this Agreement, the Administrative Agent shall be
entitled to refrain from such act or taking such act, unless and until the
Administrative Agent shall have received instructions from the Required
Lenders; and the Administrative Agent shall not incur liability in any
Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Administrative
Agent as a result of the Administrative Agent acting or refraining from
acting hereunder in accordance with the instructions of the Required
Lenders.
Section 9.05. Reliance by Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cable gram,
radiogram, order or other documentary, teletransmission or telephone
message believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person. The Administrative Agent may consult
with legal counsel (including counsel for any Credit Party), independent
public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
Section 9.06. Indemnification of Administrative Agent. To the
extent the Administrative Agent is not reimbursed and indemnified by the
Credit Parties, each Lender will reimburse and indemnify the Administrative
Agent, ratably according to the respective amounts of the Line of Credit
Loans outstanding under all Facilities (or if no amounts are outstanding,
ratably in accordance with the Total Commitments), in either case, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Administrative Agent in
performing its duties hereunder, in any way relating to or arising out of
this Agreement or the other Credit Documents; provided that no Lender shall
be liable to the Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct.
Section 9.07. The Administrative Agent in Its Individual
Capacity. With respect to its obligation to lend under this Agreement, the
Line of Credit Loans made by it and the Line of Credit Notes issued to it,
the Administrative Agent shall have the same rights and powers hereunder as
any other Lender or holder of a Line of Credit Note and may exercise the
same as though it were not performing the duties specified herein; and the
terms "Lenders", "Required Lenders", "holders of Line of Credit Notes", or
any similar terms shall, unless the context clearly otherwise indicates,
include the Administrative Agent in its individual capacity. The
Administrative Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust, financial advisory or other business
with the Consolidated Companies or any affiliate of the Consolidated
Companies as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Consolidated Companies for
services in connection with this Agreement and otherwise without having to
account for the same to the Lenders.
Section 9.08. Holders of Line of Credit Notes. The
Administrative Agent may deem and treat the payee of any Line of Credit
Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed
with the Administrative Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Line of Credit Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such Line of
Credit Note or of any Line of Credit Note or Notes issued in exchange
therefor.
Section 9.09. Successor Administrative Agent.
(a) The Administrative Agent may resign at any time by
giving written notice thereof to the Lenders and Borrower and may be
removed at any time with or without cause by the Required Lenders;
provided, however, the Administrative Agent may not resign or be removed
until a successor Administrative Agent has been appointed and shall have
accepted such appointment. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Administrative
Agent subject to Borrower's prior written approval, so long as no Event of
Default has occurred and is continuing, which approval will not be
unreasonably withheld. If no successor Administrative Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's
giving of notice of resignation or the Required Lenders' removal of the
retiring Administrative Agent, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative Agent subject
to Borrower's prior written approval, which shall be a bank which maintains
an office in the United States of America, or a commercial bank organized
under the laws of the United States of America or any State thereof, or any
Affiliate of such bank, having a combined capital and surplus of at least
$100,000,000. If at any time SunTrust Bank, Central Florida is removed as
a Lender, SunTrust Bank, Central Florida shall simultaneously resign as
Administrative Agent.
(b) Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
an Administrative Agent under this Agreement.
Section 9.10. Documentation Agent. Each Lender designates
First Union National Bank as Documentation Agent and agrees that the
Documentation Agent shall have no duties or obligations hereunder.
Section 9.11. Syndication Agent. Each Lender designates
NationsBank, N.A. as Syndication Agent and agrees that the Syndication
Agent shall have no duties or obligations hereunder.
Section 9.12. Co-Agent. Each Lender designates SouthTrust
Bank, National Association as Co-Agent and agrees that the Co-Agent shall
have no duties or obligations hereunder.
ARTICLE X
MISCELLANEOUS
Section 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, telecopy or similar teletransmission or writing) and shall be
given to such party at its address or applicable teletransmission number
set forth on the signature pages hereof, or such other address or
applicable teletransmission number as such party may hereafter specify by
notice to the Administrative Agent and Borrower. Each such notice, request
or other communication shall be effective (i) if given by telex, when such
telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, (iii) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section
and the appropriate confirmation is received, or (iv) if given by any other
means (including, without limitation, by air courier), when delivered or
received at the address specified in this Section; provided that notices to
the Administrative Agent shall not be effective until received.
Section 10.02. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the other Credit Documents, nor consent to
any departure by any Credit Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Required
Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and signed by
all the Lenders do any of the following: (i) waive any of the conditions
specified in Section 4.01 or 4.02, (ii) increase the Line of Credit
Commitments or other contractual obligations to Borrower under this
Agreement, (iii) reduce the principal of, or interest on, the Line of
Credit Notes or any fees hereunder, (iv) postpone any date fixed for the
payment in respect of principal of, or interest on, the Line of Credit
Notes or any fees hereunder, (v) change the percentage of the Line of
Credit Commitments or of the aggregate unpaid principal amount of the Line
of Credit Notes, or the number or identity of Lenders which shall be
required for the Lenders or any of them to take any action hereunder,
(vi) release any Guarantor from its obligations under any Guaranty
Agreement, (vii) modify the definition of "Required Lenders," or
(viii) modify this Section 10.02. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required hereinabove to
take such action, affect the rights or duties of the Administrative Agent
under this Agreement or under any other Credit Document.
Section 10.03. No Waiver; Remedies Cumulative. No failure or
delay on the part of the Administrative Agent, any Lender or any holder of
a Line of Credit Note in exercising any right or remedy hereunder or under
any other Credit Document, and no course of dealing between any Credit
Party and the Administrative Agent, any Lender or the holder of any Line of
Credit Note shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of
any other right or remedy hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Administrative Agent, any Lender or the holder of any
Line of Credit Note would otherwise have. No notice to or demand on any
Credit Party not required hereunder or under any other Credit Document in
any case shall entitle any Credit Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the
rights of the Administrative Agent, the Lenders or the holder of any Line
of Credit Note to any other or further action in any circumstances without
notice or demand.
Section 10.04. Payment of Expenses, Etc. Borrower shall:
(i) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of
the Administrative Agent in the administration (both before and after
the execution hereof and including reasonable expenses actually
incurred relating to advice of counsel as to the rights and duties of
the Administrative Agent and the Lenders with respect thereto) of, and
in connection with the preparation, execution and delivery of,
preservation of rights under, enforcement of, and, after a Default or
Event of Default, refinancing, renegotiation or restructuring of, this
Agreement and the other Credit Documents and the documents and
instruments referred to therein, and any amendment, waiver or consent
relating thereto (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel for the Administrative
Agent), and in the case of enforcement of this Agreement or any Credit
Document after an Event of Default, all such reasonable, out-of-pocket
costs and expenses (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel), for any of the
Lenders;
(ii) subject, in the case of certain Taxes, to the applicable
provisions of Section 3.07(b), pay and hold each of the Lenders
harmless from and against any and all present and future stamp,
documentary, and other similar Taxes with respect to this Agreement,
the Line of Credit Notes and any other Credit Documents, any
collateral described therein, or any payments due thereunder, and save
each Lender harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such Taxes;
and
(iii) indemnified the Administrative Agent and each Lender and
each director, officer, employee, affiliate and agent thereof (each,
an "Indemnitee") from, and hold each of them harmless against, and
reimburse each Indemnitee, upon its demand, for any losses, claims,
damages, liabilities or other expenses ("Losses") incurred by such
Indemnitee insofar as such Losses arise out of or are in any way
related to or result from this Agreement, the Line of Credit Notes or
any other Credit Documents or the financing provided hereby,
including, without limitation, Losses arising in connection with any
legal proceeding relating to any of the foregoing (whether or not such
Indemnitee is a party thereto) and the reasonable attorneys fees and
expenses actually incurred in connection therewith; provided, however,
that the foregoing shall not apply to any Losses resulting from the
gross negligence or willful misconduct of such Indemnitee;
(iv) without limiting the indemnities set forth in subsection
(iii) above, indemnify each Indemnitee for any and all expenses and
costs (including without limitation, remedial, removal, response,
abatement, cleanup, investigative, closure and monitoring costs),
losses, claims (including claims for contribution or indemnity and
including the cost of investigating or defending any claim and whether
or not such claim is ultimately defeated, and whether such claim arose
before, during or after any Credit Party's ownership, operation,
possession or control of its business, property or facilities or
before, on or after the date hereof, and including also any amounts
paid incidental to any compromise or settlement by the Indemnitee or
Indemnitees to the holders of any such claim), lawsuits, liabilities,
obligations, actions, judgments, suits, disbursements, encumbrances,
liens, damages (including without limitation damages for contamination
or destruction of natural resources), penalties and fines of any kind
or nature whatsoever (including without limitation in all cases the
reasonable fees actually incurred, other charges and disbursements of
counsel in connection therewith) incurred, suffered or sustained by
that Indemnitee based upon, arising under or relating to Environmental
Laws based on, arising out of or relating to in whole or in part, the
existence or exercise of any rights or remedies by any Indemnitee
under this Agreement, any other Credit Document or any related
documents (but excluding those incurred, suffered or sustained by any
Indemnitee as a result of any action taken by or on behalf of the
Lenders with respect to any Subsidiary of Borrower (or the assets
thereof) owned or controlled by the Lenders.
If and to the extent that the obligations of Borrower under this Section
10.04 are unenforceable for any reason, Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
Section 10.05. Right of Setoff. In addition to and not in
limitation of all rights of offset that any Lender or other holder of a
Line of Credit Note may have under applicable law, each Lender or other
holder of a Line of Credit Note shall, upon the occurrence of any Event of
Default and whether or not such Lender or such holder has made any demand
or any Credit Party's obligations are matured, have the right to
appropriate and apply to the payment of any Credit Party's obligations
hereunder and under the other Credit Documents, all deposits of any Credit
Party (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter
owing by such Lender or other holder to any Credit Party, whether or not
related to this Agreement or any transaction hereunder. Each Lender shall
promptly notify Borrower of any offset hereunder.
Section 10.06. Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, provided that Borrower may not assign or transfer any
of its interest hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Line of Credit
Loans at, to or for the account of, any of its branch offices or the office
of an Affiliate of such Lender.
(c) Each Lender may assign all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of any of its Line of Credit Commitments and the Line of Credit
Loans at the time owing to it and the Line of Credit Notes held by it) to
any Eligible Assignee; provided, however, that (i) the Administrative Agent
and, so long as no Event of Default has occurred and is continuing,
Borrower must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed) unless such
assignment is an Affiliate of the assigning Lender, (ii) the amount of the
Line of Credit Commitments of the assigning Lender subject to each
assignment (determined as of the date the assignment and acceptance with
respect to such assignment is delivered to the Administrative Agent) shall
not be less than $10,000,000, and (iii) the parties to each such assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a Line of Credit Note or Notes subject to such
assignment and, unless such assignment is to an Affiliate of such Lender, a
processing and recordation fee of $2,500. Borrower shall not be
responsible for such processing and recordation fee or any costs or
expenses incurred by any Lender or the Administrative Agent in connection
with such assignment. From and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, the assignee thereunder shall be
a party hereto and to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement. Within five (5) Business Days after receipt of the
notice and the Assignment and Acceptance, Borrower, at its own expense,
shall execute and deliver to the Administrative Agent, in exchange for the
surrendered Line of Credit Note or Notes, a new Line of Credit Note or
Notes to the order of such assignee in a principal amount equal to the
applicable Line of Credit Commitments or Line of Credit Loans assumed by it
pursuant to such Assignment and Acceptance and new Line of Credit Note or
Notes to the assigning Lender in the amount of its retained Line of Credit
Commitment or Commitments or amount of its retained Line of Credit Loans.
Such new Line of Credit Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Line of
Credit Note or Notes, shall be dated the date of the surrendered Line of
Credit Note or Notes which they replace, and shall otherwise be in
substantially the form attached hereto.
(d) Each Lender may, without the consent of Borrower or the
Administrative Agent, sell participations without restriction to one or
more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Line of
Credit Commitments in the Line of Credit Loans owing to it and the Line of
Credit Notes held by it), provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating bank or other
entity shall not be entitled to the benefit (except through its selling
Lender) of the cost protection provisions contained in Article III of this
Agreement, and (iv) Borrower and the Administrative Agent and other Lenders
shall continue to deal solely and directly with each Lender in connection
with such Lender's rights and obligations under this Agreement and the
other Credit Documents, and such Lender shall retain the sole right to
enforce the obligations of Borrower relating to the Line of Credit Loans
and to approve any amendment, modification or waiver of any provisions of
this Agreement. Any Lender selling a participation hereunder shall provide
prompt written notice to Borrower of the name of such participant.
(e) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation,
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant any information relating to Borrower or
the other Consolidated Companies furnished to such Lender by or on behalf
of Borrower or any other Consolidated Company. With respect to any
disclosure of confidential, non-public, proprietary information, such
proposed assignee or participant shall agree to use the information only
for the purpose of making any necessary credit judgments with respect to
this credit facility and not to use the information in any manner
prohibited by any law, including without limitation, the securities laws of
the United States of America. The proposed participant or assignee shall
agree not to disclose any of such information except (i) to directors,
employees, auditors or counsel to whom it is necessary to show such
information, each of whom shall be informed of the confidential nature of
the information, (ii) in any statement or testimony pursuant to a subpoena
or order by any court, governmental body or other agency asserting
jurisdiction over such entity, or as otherwise required by law (provided
prior notice is given to Borrower and the Administrative Agent unless
otherwise prohibited by the subpoena, order or law), and (iii) upon the
request or demand of any regulatory agency or authority with proper
jurisdiction. The proposed participant or assignee shall further agree to
return all documents or other written material and copies thereof received
from any Lender, the Administrative Agent or Borrower relating to such
confidential information unless otherwise properly disposed of by such
entity.
(f) Any Lender may at any time assign all or any portion of
its rights in this Agreement and the Line of Credit Notes issued to it to a
Federal Reserve Bank; provided that no such assignment shall release the
Lender from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 3.07(b) have
been levied or imposed so as to require withholdings or deductions by
Borrower and payment by Borrower of additional amounts to any Lender as a
result thereof, (ii) any Lender shall make demand for payment of any
material additional amounts as compensation for increased costs pursuant to
Section 3.10 or for its reduced rate of return pursuant to Section 3.16, or
(iii) any Lender shall decline to consent to a modification or waiver of
the terms of this Agreement or the other Credit Documents requested by
Borrower, then and in such event, upon request from Borrower delivered to
such Lender and the Administrative Agent, such Lender shall assign, in
accordance with the provisions of Section 10.06(c), all of its rights and
obligations under this Agreement and the other Credit Documents to another
Lender or an Eligible Assignee selected by Borrower, in consideration for
the payment by such assignee to the Lender of the principal of, and
interest on, the outstanding Line of Credit Loans accrued to the date of
such assignment, and the assumption of such Lender's Line of Credit
Commitment hereunder, together with any and all other amounts owing to such
Lender under any provisions of this Agreement or the other Credit Documents
accrued to the date of such assignment.
Section 10.07. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE LINE OF CREDIT NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE LINE OF CREDIT NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY OTHER COURT
OF THE STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND BORROWER
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, 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 SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) BORROWER HEREBY IRREVOCABLY DESIGNATES THE CORPORATION
SERVICE COMPANY, ATLANTA, GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL
AGENT TO RECEIVE, FOR AND ON BEHALF OF BORROWER, SERVICE OF PROCESS IN SUCH
RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR THE LINE OF CREDIT NOTES OR ANY DOCUMENT RELATED THERETO.
IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH LOCAL AGENT
WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF SUCH
PROCESS BY MAIL TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE
BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN
ANY WAY THE SERVICE OF SUCH PROCESS. BORROWER FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the
Administrative Agent, any Lender, any holder of a Line of Credit Note or
any Credit Party to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against Borrower in any
other jurisdiction.
Section 10.08. Independent Nature of Lenders' Rights. The
amounts payable at any time hereunder to each Lender shall be a separate
and independent debt, and each Lender shall be entitled to protect and
enforce its rights pursuant to this Agreement and its Line of Credit Notes,
and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
Section 10.09. Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 10.10. Effectiveness; Survival.
(a) This Agreement shall become effective on the date (the
"Effective Date") on which all of the parties hereto shall have signed a
counterpart hereof (whether the same or different counterparts) and shall
have delivered the same to the Administrative Agent pursuant to Section
10.01 or, in the case of the Lenders, shall have given to the
Administrative Agent written or telex notice (actually received) that the
same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 3.07(b),
3.10, 3.12, 3.13, 3.16, and 10.04 hereof shall survive for ninety (90) days
after the payment in full of the Line of Credit Notes after the Final
Maturity Date. All representations and warranties made herein, in the
certificates, reports, notices, and other documents delivered pursuant to
this Agreement shall survive the execution and delivery of this Agreement,
the other Credit Documents, and such other agreements and documents, the
making of the Line of Credit Loans hereunder, and the execution and
delivery of the Line of Credit Notes.
Section 10.11. Severability. In case any provision in or
obligation under this Agreement or the other Credit Documents shall be
invalid, illegal or unenforceable, in whole or in part, in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 10.12. Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular action
or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a
Default or an Event of Default if such action is taken or condition exists.
Section 10.13. Change in Accounting Principles, Fiscal Year or
Tax Laws. If (i) any preparation of the financial statements referred to
in Section 6.07 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accounts (or successors thereto or agencies with similar functions) (other
than changes mandated by FASB 106) result in a material change in the
method of calculation of financial covenants, standards or terms found in
this Agreement, (ii) there is any change in Borrower's fiscal quarter or
fiscal year, or (iii) there is a material change in federal tax laws which
materially affects any of the Consolidated Companies' ability to comply
with the financial covenants, standards or terms found in this Agreement,
Borrower and the Required Lenders agree to enter into negotiations in order
to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating any of the Consolidated
Companies' financial condition shall be the same after such changes as if
such changes had not been made. Unless and until such provisions have been
so amended, the provisions of this Agreement shall govern.
Section 10.14. Headings Descriptive; Entire Agreement. The
headings of the several sections and subsections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement. This Agreement, the
other Credit Documents, and the agreements and documents required to be
delivered pursuant to the terms of this Agreement constitute the entire
agreement among the parties hereto and thereto regarding the subject
matters hereof and thereof and supersede all prior agreements,
representations and understandings related to such subject matters.
Section 10.15. Time is of the Essence. Time is of the essence
in interpreting and performing this Agreement and all other Credit
Documents.
Section 10.16. Usury. It is the intent of the parties hereto
not to violate any federal or state law, rule or regulation pertaining
either to usury or to the contracting for or charging or collecting of
interest, and Borrower and Lenders agree that, should any provision of this
Agreement or of the Line of Credit Notes, or any act performed hereunder or
thereunder, violate any such law, rule or regulation, then the excess of
interest contracted for or charged or collected over the maximum lawful
rate of interest shall be applied to the outstanding principal indebtedness
due to Lenders by Borrower under this Agreement.
Section 10.17. Construction. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that
the court interpreting or construing the same shall not apply a presumption
that the terms hereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be more strictly
construed against the party who itself or through its agents prepared the
same, it being agreed that Borrower, the Administrative Agent, the Lenders
and their respective agents have participated in the preparation hereof.
Section 10.18. Waiver of Effect of Corporate Seal. Borrower
represents and warrants that it is not required to affix its corporate seal
to this Agreement or any other Credit Document pursuant to any Requirement
of Law and waives any shortening of the statute of limitations that may
result from not affixing the corporate seal to this Agreement or the other
Credit Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered in Atlanta, Georgia, by their duly
authorized officers as of the day and year first above written.
Address for Notices: BORROWER:
20 N. Orange Avenue HUGHES SUPPLY, INC.
Suite 200
Orlando, Florida 32801
By: /s/ J. Stephen Zepf
Attention: J. Stephen Zepf J. Stephen Zepf
Treasurer
By: /s/ Ben Butterfield
Ben Butterfield
Secretary
Address for Notices: SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, individually and
200 S. Orange Avenue as Administrative Agent
MC 2064
Orlando, Florida 32801
By: /s/ William C. Barr III
Attn: Mr. William C. Barr Name: William C. Barr III
Title: First Vice President
Telecopy No. 407/237-4076
Payment Office:
200 S. Orange Avenue
MC 2064
Orlando, Florida 32801
________________________________
Line of Credit Commitment: $13,750,000.00
Pro Rata Share of Line of Credit Commitment: 18.33%
Address for Notices: FIRST UNION NATIONAL BANK, individually
and as Documentation Agent
225 Water Street
4th Floor
Mail Code FL0060
Jacksonville, Florida 32202 By: /s/ Michael L. Williamson
Attn: Mr. Michael L. Williamson Name: Michael L. Williamson
Title: Vice President
Telecopy No. 904/361-3560
Payment Office:
100 S. Ashley Drive
Suite 1000
Mail Code FL4009
Tampa, Florida 32602
Attn: Ms. Mary Doonan
_______________________________
Line of Credit Commitment: $12,500,000.00
Pro Rata Share of Line of Credit Commitment: 16.67%
Address for Notices:
NATIONSBANK, N.A., individually and as
100 SE 2nd Street, 14th Floor Syndication Agent
Miami, Florida 33131
Attn: Mr. Richard Starke
By: /s/ Andrew M. Airheart
Telecopy No. Name: Andrew M. Airheart
Title: SVP
Payment Office:
NationsBank, N.A.
101 N. Tryon Street
Charlotte, North Carolina 28255
Attn: Ms. Deon Wright
_______________________________
Line of Credit Commitment: $12,500,000.00
Pro Rata Share of Line of Credit Commitment: 16.67%
Address for Notices:
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, individually and as
Co-Agent
420 N. 20th Street
Birmingham, AL 35203 By: /s/ Steven W. Davis
Attn: FL Corp. Banking, 9th Floor Name: Steven W. Davis
Title: VP
Telecopy No. 727/898-5319
Payment Office:
P.O. Box 830716
Birmingham, AL 35203
________________________________
Line of Credit Commitment: $10,000,000.00
Pro Rata Share of Line of Credit Commitment: 13.33%
Address for Notices: ABN AMRO BANK, N.V.
Southwest Financial Center
200 S. Biscayne Boulevard, 22nd Floor
Miami, Florida 33131-5311
Attn: Ms. Deborah Day Orozco
By: /s/ Deborah Day Orozco
Name: Deborah Day Orozco
Title: Vice President
Telecopy No. (305)577-0825
Payment Office:
208 S. LaSalle Street, Suite 1500 By: /s/ Miguel Castillo
Chicago, IL 60604-1003 Name: Miguel Castillo
Attention: Loan Administration Title: Corporate Officer
Telephone: (312)992-5152
(312)992-5157
_______________________________
Line of Credit Commitment: $6,250,000.00
Pro Rata Share of Line of Credit Commitment: 8.33%
Address for Notices: PNC BANK, N.A.
249 5th Avenue
Pittsburgh, Pennsylvania 15222
Attn: Mr. James D. Neil
By: /s/ James D. Neil
Telecopy No. 412/762-6484 Name: James D. Neil
Title: Vice President
Payment Office:
Two PNC Plaza/ Liberty Avenue.
Pittsburgh, Pennsylvania 15222
Attn: Ms. Anita Truchman
________________________________
Line of Credit Commitment: $6,250,000.00
Pro Rata Share of Line of Credit Commitment: 8.33%
Address for Notices: WACHOVIA BANK, N.A.
191 Peachtree Street, 29th Floor
Atlanta, Georgia 30303
Attn: Mr. Shawn Janko
By: /s/ Shawn Janko
Name: Shawn Janko
Title: Banking Officer
Telecopy No. (404)332-5016
Payment Office:
191 Peachtree Street, 29th Floor
Atlanta, Georgia 30303
Attn: Ms. Sharon Westmoreland
________________________________
Line of Credit Commitment: $6,250,000.00
Pro Rata Share of Line of Credit Commitment: 8.33%
Address for Notices: THE FIFTH THIRD BANK
MD 109054
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Mr. Kevin J. Walter
By: /s/ Kevin J. Walter
Telecopy No. 513/579-5226 Name: Kevin J. Walter
Title: Large Corporate Banking
Officer
Payment Office:
MD 109054
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Ms. Megan Heisel
________________________________
Line of Credit Commitment: $3,750,000.00
Pro Rata Share of Line of Credit Commitment: 5.00%
Address for Notices: HIBERNIA NATIONAL BANK
313 Carondelet Street
New Orleans, LA 70130
Attn: Ms. Kristie Peychaud
By: /s/ Kristie Peychaud
Telecopy No. 504/533-5344 Name: Kristie Peychaud
Title: Banking Officer
Payment Office:
313 Carondelet Street
New Orleans, LA 70130
Attn: Ms. Shelly Strada
________________________________
Line of Credit Commitment: $3,750,000.00
Pro Rata Share of Line of Credit Commitment: 5.00%
EXHIBIT 13.1
HUGHES SUPPLY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Years Ended
------------------------------------------------------------
January 29, January 30, January 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales .................................................. $ 2,536,265 $ 1,945,446 $ 1,619,362
Cost of Sales .............................................. 1,977,266 1,519,323 1,276,481
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Profit ............................................... 558,999 426,123 342,881
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Selling, general and administrative ...................... 416,642 318,923 261,355
Depreciation and amortization ............................ 23,269 18,727 15,566
Provision for doubtful accounts .......................... 1,882 1,229 1,023
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating expenses ............................... 441,793 338,879 277,944
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Income ........................................... 117,206 87,244 64,937
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Operating Income and (Expenses):
Interest and other income ................................ 6,886 5,837 6,241
Interest expense ......................................... (25,415) (19,257) (14,842)
- ------------------------------------------------------------------------------------------------------------------------------------
(18,529) (13,420) (8,601)
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes ................................. 98,677 73,824 56,336
Income Taxes ............................................... 37,234 26,254 19,282
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income ................................................. $ 61,443 $ 47,570 $ 37,054
====================================================================================================================================
Earnings Per Share:
Basic .................................................... $ 2.57 $ 2.37 $ 2.13
====================================================================================================================================
Diluted .................................................. $ 2.55 $ 2.33 $ 2.09
====================================================================================================================================
Average Shares Outstanding:
Basic .................................................... 23,889 20,108 17,384
====================================================================================================================================
Diluted .................................................. 24,138 20,432 17,719
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
13
<PAGE>
HUGHES SUPPLY, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
January 29, January 30,
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents .................................................................. $ 6,010 $ 8,204
Accounts receivable, less allowance for losses of $2,809 and $3,522 ........................ 341,109 293,837
Inventories ................................................................................ 409,734 353,846
Deferred income taxes ...................................................................... 8,520 9,708
Other current assets ....................................................................... 31,346 18,625
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets ..................................................................... 796,719 684,220
Property and Equipment, Net .................................................................. 127,632 108,068
Excess of Cost over Net Assets Acquired ...................................................... 181,622 153,775
Deferred Income Taxes ........................................................................ -- 3,438
Other Assets ................................................................................. 17,540 16,241
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,123,513 $ 965,742
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt .......................................................... $ 39 $ 674
Accounts payable ........................................................................... 176,234 148,693
Accrued compensation and benefits .......................................................... 25,029 21,272
Other current liabilities .................................................................. 27,982 27,475
- ------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities ................................................................ 229,284 198,114
Long-Term Debt ............................................................................... 402,203 343,197
Deferred Income Taxes ........................................................................ 4,711 --
Other Noncurrent Liabilities ................................................................. 3,359 2,662
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities ........................................................................ 639,557 543,973
- ------------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 7)
Shareholders' Equity:
Preferred stock, no par value; 10,000,000 shares authorized;
none issued; preferences, limitations and relative rights to be established
by the Board of Directors ................................................................ -- --
Common stock, par value $1 per share; 100,000,000 shares authorized; 24,183,834
and 23,437,039 shares issued ............................................................. 24,184 23,437
Capital in excess of par value ............................................................. 219,558 202,210
Retained earnings .......................................................................... 242,730 197,364
Unearned compensation related to outstanding restricted stock .............................. (2,516) (1,242)
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ............................................................... 483,956 421,769
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,123,513 $ 965,742
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
14
<PAGE>
HUGHES SUPPLY, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Common Stock Capital in
---------------------------- Excess of Retained
Shares Amount Par Value Earnings
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 26, 1996 as previously reported ........... 14,106,745 $ 14,107 $ 37,793 $ 133,131
Adjustment for pooling of interests ...................... 843,146 843 (841) 3,893
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, January 26, 1996 as restated ...................... 14,949,891 14,950 36,952 137,024
Net income ............................................... -- -- -- 37,054
Cash dividends--
$.25 per share ......................................... -- -- -- (3,712)
Pooled companies ....................................... -- -- -- (5,376)
Shares issued under stock option and bonus plans ......... 146,350 146 977 --
Issuance of shares in public offering .................... 2,230,483 2,231 45,962 --
Purchase and retirement of common shares ................. (21,948) (22) (202) (329)
Other acquisitions ....................................... 2,270,948 2,271 26,639 4,668
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, January 31, 1997 .................................. 19,575,724 19,576 110,328 169,329
Net income ............................................... -- -- -- 47,570
Cash dividends--
$.31 per share ......................................... -- -- -- (5,966)
Pooled companies ....................................... -- -- -- (2,794)
Shares issued under stock option and bonus plans ......... 172,455 172 1,494 --
Purchase and retirement of common shares ................. (19,476) (19) (234) (325)
Issuance of restricted stock ............................. 50,000 50 1,250 --
Capitalization of undistributed earnings
of Subchapter S corporation ............................ -- -- 12,999 (12,999)
Other acquisitions ....................................... 3,658,336 3,658 76,373 2,549
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, January 30, 1998 .................................. 23,437,039 23,437 202,210 197,364
Net income ............................................... -- -- -- 61,443
Cash dividends--
$.33 per share ......................................... -- -- -- (7,866)
Pooled companies ....................................... -- -- -- (1,222)
Shares issued under stock option and bonus plans ......... 107,980 108 1,282 --
Purchase and retirement of common shares ................. (19,439) (19) (193) (389)
Issuance of restricted stock ............................. 52,500 52 1,615 --
Capitalization of undistributed earnings
of Subchapter S corporation ............................ -- -- 7,697 (7,697)
Other acquisitions ....................................... 605,754 606 6,947 1,097
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, January 29, 1999 .................................. 24,183,834 $ 24,184 $ 219,558 $ 242,730
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
15
<PAGE>
HUGHES SUPPLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Fiscal Years Ended
--------------------------------------------
January 29, January 30, January 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income .................................................................... $ 61,443 $ 47,570 $ 37,054
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization ............................................. 23,269 18,727 15,566
Provision for doubtful accounts ........................................... 1,882 1,229 1,023
Other, net ................................................................ (671) (626) (708)
Changes in assets and liabilities, net of
effects of business acquisitions:
(Increase) in accounts receivable ......................................... (25,497) (30,443) (14,143)
(Increase) in inventories ................................................. (29,493) (39,136) (23,894)
(Increase) decrease in other current assets ............................... (7,718) (3,865) 4,922
(Increase) in other assets ................................................ (5,692) (9,061) (67)
Increase (decrease) in accounts payable and accrued liabilities ........... 8,532 6,102 (10,577)
(Decrease) increase in accrued interest and income taxes .................. (2,948) 1,880 (839)
Increase in other noncurrent liabilities .................................. 697 408 421
Decrease (increase) in net deferred income taxes .......................... 7,763 2,425 (1,988)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities ..................... 31,567 (4,790) 6,770
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital expenditures .......................................................... (26,921) (28,185) (16,898)
Proceeds from sale of property and equipment .................................. 6,630 1,184 1,838
Business acquisitions, net of cash ............................................ (40,378) (47,725) (100,078)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities ................................... (60,669) (74,726) (115,138)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Net borrowings (payments) under short-term debt arrangements .................. 10,232 36,921 (6,808)
Principal payments on long-term debt .......................................... (24,975) (28,503) (20,762)
Proceeds from issuance of long-term debt ...................................... 50,000 80,000 98,000
Proceeds from sale of common stock ............................................ -- -- 48,193
Proceeds from stock options exercised ......................................... 1,084 1,373 1,123
Purchase of common shares ..................................................... (601) (578) (553)
Dividends paid ................................................................ (8,832) (8,112) (8,548)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities ............................... 26,908 81,101 110,645
- ------------------------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents ............................ (2,194) 1,585 2,277
Cash and Cash Equivalents, Beginning of Year .................................... 8,204 6,619 4,342
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Year .......................................... $ 6,010 $ 8,204 $ 6,619
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
16
<PAGE>
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
NOTE 1 -- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Industry
Hughes Supply, Inc. and its subsidiaries (the "Company") are engaged in the
wholesale distribution of a broad range of materials, equipment and supplies
primarily to the construction and industrial markets. The Company distributes
nine different product groups which it has classified into three major product
categories: (i) Fluid Control Products, consisting of the Company's industrial
pipe, plate, valves and fittings, plumbing, water and sewer, and water systems
product groups; (ii) Electrical Products, consisting of the Company's electrical
and electric utilities product groups; and (iii) Specialty Products, consisting
of the Company's air conditioning and heating, building materials, and pool and
spa equipment and supplies product groups. The Company's principal customers are
electrical, plumbing and mechanical contractors, electric utility companies,
property management companies, municipalities and industrial companies.
Industrial companies include companies in the petrochemical, food and beverage,
pulp and paper, mining, pharmaceutical and marine industries.
Principles of Consolidation
The consolidated financial statements include the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated. Prior period financial statements have been restated to include the
accounts of companies acquired and accounted for as poolings of interests.
Results of operations of companies acquired and accounted for as purchases and
immaterial poolings are included from their respective dates of acquisition.
Fiscal Year
The Company's fiscal year ends on the last Friday in January. Fiscal 1999, 1998
and 1997 contained 52 weeks, 52 weeks and 53 weeks, respectively.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories
Inventories are carried at the lower of cost or market. The cost of
substantially all inventories is determined by the average cost method.
Property and Equipment
Buildings and equipment are recorded at cost and depreciated using both
straight-line and declining-balance methods based on the following estimated
useful lives:
Buildings and improvements.................................. 5-40 years
Transportation equipment.................................... 2- 7 years
Furniture, fixtures and equipment........................... 2-12 years
Property under capital leases............................... 20-40 years
Maintenance and repairs are charged to expense as incurred and major renewals
and betterments are capitalized. Gains or losses are credited or charged to
earnings upon disposition.
Excess of Cost over Net Assets Acquired
The excess of cost over the fair value of net assets of purchased companies
(goodwill) is being amortized by the straight-line method over 15 to 40 years.
At January 29, 1999 and January 30, 1998, goodwill was $181,622 and $153,775,
respectively, net of accumulated amortization of $16,688 and $11,098,
respectively. Amortization of goodwill totaled $5,614, $5,053 and $4,535 in
fiscal 1999, 1998 and 1997, respectively.
Other Assets
The Company capitalizes certain internal software development costs which are
amortized by the straight-line method over the estimated useful lives of the
software, not to exceed five years. At January 29, 1999 and January 30, 1998,
unamortized software development costs were $9,474 and $8,357, respectively, net
of accumulated amortization of $1,873 and $394, respectively. Amortization of
capitalized internal software development costs totaled $1,680, $316 and $78 in
fiscal 1999, 1998 and 1997, respectively.
Impairment of Long-Lived Assets
In the event that facts and circumstances indicate that the carrying value of a
long-lived asset, including associated intangibles, may be impaired, an
evaluation of recoverability is performed by comparing the estimated future
undiscounted cash flows associated with the asset to the
17
<PAGE>
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands, except per share data)
asset's carrying amount to determine if a write-down to market value or
discounted cash flow is required.
Deferred Employee Benefits
The present value of amounts estimated to be payable under unfunded supplemental
retirement agreements with certain officers is being accrued over the remaining
years of active employment of the officers and is included in other noncurrent
liabilities.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities approximate their fair values because of the
short maturity of these instruments. The fair value of the Company's long-term
debt is estimated based on quoted market prices for the same or similar issues
or on current rates offered to the Company for debt of the same remaining
maturities. The fair values of long-term debt, excluding capital lease
obligations, approximated $407,836 and $346,320 and the related carrying values
were $402,242 and $342,629 at January 29, 1999 and January 30, 1998,
respectively.
Revenue Recognition
The Company recognizes revenue from product sales when goods are received by
customers.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
resulting from temporary differences. Such temporary differences result from
differences in the carrying value of assets and liabilities for tax and
financial reporting purposes. The deferred tax assets and liabilities represent
the future tax consequences of those differences, which will either be taxable
or deductible when the assets and liabilities are recovered or settled. Deferred
taxes are also recognized for operating losses that are available to offset
future taxable income.
Stock-Based Compensation
The Company accounts for compensation cost related to employee stock options and
other forms of employee stock-based compensation plans in accordance with the
requirements of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees ("APB 25"). APB 25 requires compensation cost for
stock-based compensation plans to be recognized based on the difference, if any,
between the fair market value of the stock on the date of grant and the option
exercise price. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). SFAS 123 established a fair value based method of
accounting for compensation cost related to stock options and other forms of
stock-based compensation plans. SFAS 123 allows an entity to continue to measure
compensation cost using the principles of APB 25 if certain pro forma
disclosures are made. The Company adopted the provisions for the pro forma
disclosure requirements of SFAS 123.
Earnings Per Common Share
Basic earnings per share is calculated by dividing net income by the
weighted-average number of shares outstanding. Diluted earnings per share is
calculated by dividing net income by the weighted-average number of shares
outstanding, adjusted for dilutive potential common shares. The weighted-average
number of shares used in calculating basic earnings per share were 23,889,000,
20,108,000 and 17,384,000 for fiscal 1999, 1998 and 1997, respectively. In
calculating diluted earnings per share, these amounts were adjusted to include
249,000, 324,000 and 335,000 of dilutive potential common shares for fiscal
1999, 1998 and 1997, respectively. The Company's dilutive potential common
shares consist of stock options and restricted stock.
18
<PAGE>
Reclassifications
The January 30, 1998 balance sheet contains certain reclassifications which were
made to conform to the January 29, 1999 financial statement format. None of
these reclassifications affected net income or shareholders' equity.
In fiscal 1999, the Company changed the format of its statements of cash flows
from the direct method to the indirect method for purposes of reporting cash
flows from operating activities. Accordingly, the statements of cash flows for
fiscal 1998 and 1997 contain certain reclassifications which were made to
conform to the Company's current financial statement format.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles necessarily requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2--BUSINESS COMBINATIONS
On June 30, 1998, the Company exchanged 936,904 shares of the Company's common
stock for all of the common stock of Winn-Lange Electric, Inc. ("Winn-Lange").
Winn-Lange is a wholesale distributor of electrical supplies and equipment with
three branches in Texas. Winn-Lange was a Subchapter S corporation for federal
income tax purposes and accordingly, did not pay U.S. federal income taxes.
Winn-Lange will be included in the Company's U.S. federal income tax return
commencing June 30, 1998.
The above transaction has been accounted for as a pooling of interests and
accordingly, the consolidated financial statements for the periods presented
have been restated to include the accounts of Winn-Lange. Winn-Lange's fiscal
year end has been changed to the last Friday in January to conform to the
Company's fiscal year end.
Net sales and net income of the separate companies for the periods preceding the
Winn-Lange merger were as follows:
<TABLE>
<CAPTION>
Unaudited
Pro Forma
Net Net Net
Sales Income Income
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Three months ended
April 30, 1998 (unaudited):
Hughes, as previously reported......... $ 582,042 $10,746 $10,746
Winn-Lange............................. 19,989 857 537
- --------------------------------------------------------------------------------------------------
Combined............................... $ 602,031 $11,603 $11,283
==================================================================================================
Fiscal year ended
January 30, 1998:
Hughes, as previously reported......... $1,878,739 $44,824 $43,472
Winn-Lange............................. 66,707 2,746 1,782
- --------------------------------------------------------------------------------------------------
Combined............................... $1,945,446 $47,570 $45,254
==================================================================================================
Fiscal year ended
January 31, 1997:
Hughes, as previously reported......... $1,567,571 $35,314 $33,458
Winn-Lange............................. 51,791 1,740 1,132
- --------------------------------------------------------------------------------------------------
Combined............................... $1,619,362 $37,054 $34,590
==================================================================================================
</TABLE>
Unaudited pro forma net income reflects adjustments to net income to record an
estimated provision for income taxes for each period presented assuming
Winn-Lange was a tax-paying entity. Additionally, in fiscal 1998 and 1997, the
Company merged with certain other Subchapter S corporations, including Chad
Supply, Inc. ("Chad"), Electric Laboratories and Sales Corporation and ELASCO
Agency Sales, Inc. (collectively, "ELASCO") and Metals, Incorporated and
Stainless Tubular Products, Inc. (the "Metals Group"). As Subchapter S
corporations, Chad, ELASCO and the Metals Group did not pay U.S. federal income
taxes in periods prior to the mergers. Chad, ELASCO and the Metals Group were
included in the Company's U.S. federal income tax return commencing with their
mergers with the Company on January 30, 1998, April 26, 1996 and January 24,
1997, respectively. For purposes of calculating unaudited pro forma net income,
Chad, ELASCO and the Metals Group were also assumed to be tax-paying entities.
19
<PAGE>
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands, except per share data)
On January 8, 1998, the Company acquired all of the common stock of Mountain
Country Supply, Inc. ("Mountain Country"). Mountain Country is a wholesale
distributor of plumbing supplies; water and sewer equipment and supplies; and
air conditioning and heating equipment and supplies with 10 locations in
Arizona. On January 13, 1998, the Company acquired all of the common stock of
International Supply Company, Inc. and all of its affiliated operations
("International"). International is a wholesale distributor of water and sewer
equipment and supplies, plumbing supplies and industrial pipe, valves and
fittings with 38 locations in Texas. The aggregate consideration paid for the
Mountain Country and International acquisitions was $98,772, consisting of cash
in the amount of $38,477 and the issuance of 2,153,396 shares of common stock.
These transactions were accounted for as purchases and the results of operations
of Mountain Country and International from their respective dates of acquisition
are included in the consolidated financial statements. The excess of cost over
net assets acquired for Mountain Country and International is being amortized
over 40 years by the straight-line method.
On May 13, 1996, the Company acquired substantially all of the assets,
properties and business of PVF Holdings, Inc. and its subsidiaries ("PVF"), a
wholesale distributor of stainless steel pipe, valves and fittings with 16
locations nationwide. The aggregate consideration paid was $108,984, consisting
of cash in the amount of $82,069, the issuance of 1,106,468 shares of common
stock and the assumption of $6,436 of bank debt. The transaction was accounted
for as a purchase and the results of operations of PVF from the date of
acquisition are included in the consolidated financial statements. The excess of
cost over net assets acquired is being amortized over 40 years by the
straight-line method.
The following table reflects the unaudited pro forma combined results of
operations, assuming the Mountain Country, International and PVF acquisitions
had occurred at the beginning of each year presented:
Fiscal Years Ended
-------------------------
1998 1997
- ------------------------------------------------------------------------
Net sales..................................... $2,180,227 $1,892,371
Net income.................................... 53,214 44,800
Earnings per share:
Basic....................................... 2.41 2.26
Diluted..................................... 2.37 2.22
The past and future financial performance of Mountain Country, International and
PVF will be directly influenced by price fluctuations in stainless steel, nickel
alloys, copper, aluminum, plastic and other commodities. As a result of these
commodity price fluctuations and the fact that significant price fluctuations
could continue to create cyclicality in Mountain Country's, International's and
PVF's future operating performance, management believes that the pro forma
information is not necessarily indicative of future performance.
During fiscal 1999, 1998 and 1997, the Company acquired several other wholesale
distributors of materials to the construction and industrial markets that were
accounted for as purchases or immaterial poolings. These acquisitions,
individually or in the aggregate, did not have a material effect on the
consolidated financial statements. Results of operations of these companies from
their respective dates of acquisition have been included in the consolidated
financial statements.
NOTE 3--PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
1999 1998
- --------------------------------------------------------------------------------
Land ......................................... $ 25,590 $ 19,738
Buildings and improvements ................... 93,341 85,309
Transportation equipment ..................... 31,158 28,719
Furniture, fixtures and equipment ............ 57,840 43,799
Assets under capital leases .................. -- 9,407
- --------------------------------------------------------------------------------
207,929 186,972
Less accumulated depreciation
and amortization ........................... (80,297) (78,904)
- --------------------------------------------------------------------------------
$ 127,632 $ 108,068
================================================================================
20
<PAGE>
NOTE 4--LONG-TERM DEBT
Long-term debt consists of the following:
1999 1998
- --------------------------------------------------------------------------------
7.96% Senior notes, due 2011 ................... $ 98,000 $ 98,000
7.14% Senior notes, due 2012 ................... 40,000 40,000
7.19% Senior notes, due 2012 ................... 40,000 40,000
6.74% Senior notes, due 2013 ................... 50,000 --
Unsecured bank notes under $225,000
revolving credit agreement, payable
January 25, 2004, fluctuating interest
(5.3% to 5.6% at January 29, 1999) ........... 108,450 105,900
Short-term instruments classified as
long-term debt ............................... 65,753 50,000
Other notes payable ............................ 39 8,729
Capital lease obligations ...................... -- 1,242
- --------------------------------------------------------------------------------
402,242 343,871
Less current portion ........................... (39) (674)
- --------------------------------------------------------------------------------
$ 402,203 $ 343,197
================================================================================
On August 28, 1997, the Company issued $80,000 of senior notes due 2012 in a
private placement. The senior notes, of which $40,000 bear interest at 7.14% and
$40,000 bear interest at 7.19%, will be payable in 21 and 13 equal semi-annual
principal payments beginning in 2002 and 2006, respectively. Proceeds received
by the Company from the sale of the senior notes were used to reduce
indebtedness outstanding under the Company's revolving credit agreement and line
of credit agreement (the "credit agreement").
On August 27, 1997, in connection with the issuance of the $80,000 of senior
notes, the Company entered into an interest rate swap agreement (the "swap
agreement"). The swap agreement effectively converts the Company's $40,000 of
7.19% senior notes due 2012 from fixed-rate debt to floating-rate debt based on
six-month London Interbank Offered Rates (LIBOR) less a predetermined spread of
.05% (5.08% as of January 29, 1999). The differential is accrued as interest
rates change and is recorded as an adjustment to interest expense. As a result
of the swap agreement, interest expense decreased by $171 and $219 in fiscal
1999 and 1998, respectively. The swap agreement matures in 2012. However, the
counterparty has the option to terminate the agreement at any time from May 30,
2000 through November 30, 2011. The estimated fair value of the swap agreement,
based on a valuation from an investment bank, approximated $1,251 and $1,091 at
January 29, 1999 and January 30, 1998, respectively.
On May 5, 1998, the Company issued $50,000 of senior notes due 2013 in a private
placement. The senior notes bear interest at 6.74% and will be payable in 21
equal semi-annual principal payments beginning in 2003. Proceeds received by the
Company from the sale of the senior notes were used to reduce indebtedness
outstanding under the Company's credit agreement.
On January 26, 1999, the Company entered into a new credit agreement with a
group of banks. The credit agreement permits the Company to borrow up to
$300,000 (subject to borrowing limitations under the credit agreement)--$225,000
under its revolving credit agreement as long-term debt due January 25, 2004, and
$75,000 under its line of credit agreement. Under the credit agreement, interest
is payable at market rates plus applicable margins. Facility fees of .20% and
.175% are paid on the total of the revolving credit agreement and line of credit
agreement, respectively.
The credit agreement contains financial covenants requiring the Company to
maintain certain financial ratios and minimum net worth levels. The covenants
also restrict the Company's activities regarding investments, liens, borrowing
and leasing, and payment of dividends other than stock. Under the dividend
covenant, approximately $60,793 was available at January 29, 1999 for payment of
dividends.
The Company has a commercial paper program backed by its line of credit
agreement. The weighted-average interest rate on outstanding commercial paper
borrowings of $65,753 and $50,000 as of January 29, 1999 and January 30, 1998
was 5.8% and 6.1%, respectively. The Company has the ability and intent to
refinance short-term borrowings on a long-term basis. Accordingly, $65,753 and
$50,000 of the commercial paper borrowings at January 29, 1999 and January 30,
1998, respectively, have been classified as long-term debt.
On September 30, 1998, the Company entered into a new $25,000 line of credit for
short-term borrowing. There were no amounts outstanding under this line of
credit at January 29, 1999.
21
<PAGE>
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands, except per share data)
Maturities of long-term debt for each of the five years subsequent to January
29, 1999 and in the aggregate are as follows:
Fiscal Years Ending
- --------------------------------------------------------------------------------
2000 .................................................. $ 39
2001 .................................................. --
2002 .................................................. 9,334
2003 .................................................. 13,143
2004 .................................................. 192,108
Later years ........................................... 187,618
- --------------------------------------------------------------------------------
$402,242
================================================================================
NOTE 5--INCOME TAXES
The components of deferred tax assets and liabilities at January 29, 1999 and
January 30, 1998 are as follows:
1999 1998
- --------------------------------------------------------------------------------
Deferred tax assets:
Allowance for doubtful accounts .................. $ 1,211 $ 1,286
Inventories ...................................... 506 1,445
Property and equipment ........................... 215 3,184
Accrued vacation ................................. 3,001 2,252
Deferred compensation ............................ 1,446 1,092
Other accrued liabilities ........................ 2,326 3,596
Other ............................................ 55 1,129
- --------------------------------------------------------------------------------
Total deferred tax assets ...................... 8,760 13,984
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Capitalized software development costs ........... 2,664 --
Intangible assets ................................ 2,287 838
- --------------------------------------------------------------------------------
Total deferred tax liabilities ................. 4,951 838
- --------------------------------------------------------------------------------
Net deferred tax assets ............................ $ 3,809 $13,146
================================================================================
No valuation allowance has been provided for these deferred tax assets at
January 29, 1999 and January 30, 1998 as full realization of these assets is
more likely than not.
The consolidated provision for income taxes consists of the following:
Fiscal Years Ended
--------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Currently payable:
Federal ................. $ 25,119 $ 21,058 $ 18,399
State ................... 2,778 3,377 2,911
- --------------------------------------------------------------------------------
27,897 24,435 21,310
- --------------------------------------------------------------------------------
Deferred:
Federal ................. 7,864 1,500 (1,739)
State ................... 1,473 319 (289)
- --------------------------------------------------------------------------------
9,337 1,819 (2,028)
- --------------------------------------------------------------------------------
$ 37,234 $ 26,254 $ 19,282
================================================================================
The following is a reconciliation of tax computed at the statutory Federal rate
to the income tax expense in the consolidated statements of income:
Fiscal Years Ended
---------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Amount % Amount % Amount %
- --------------------------------------------------------------------------------
Tax computed
at statutory
Federal rate ..... $ 34,537 35.0 $ 25,838 35.0 $ 19,718 35.0
Effect of:
State income
tax, net of
Federal income
tax benefit .... 2,763 2.8 2,459 3.3 1,741 3.1
Subchapter
S corporation
earnings ....... (606) (.6) (2,315) (3.1) (2,360) (4.2)
Nondeductible
purchase
adjustments .... 880 .9 288 .4 123 .2
Nondeductible
expenses ....... 1,085 1.1 886 1.2 637 1.1
Other, net ....... (1,425) (1.5) (902) (1.2) (577) (1.0)
- --------------------------------------------------------------------------------
Income tax
expense .......... $ 37,234 37.7 $ 26,254 35.6 $ 19,282 34.2
================================================================================
Prior to their merger with the Company, ELASCO, the Metals Group, Chad and
Winn-Lange were Subchapter S corporations and were not subject to corporate
income tax.
NOTE 6--EMPLOYEE BENEFIT PLANS
Profit Sharing and Employee Stock Ownership Plans
The Company has a 401(k) profit sharing plan which provides benefits for
substantially all employees of the Company who meet minimum age and length of
service requirements. Under the plan, employee contributions of not less than 2%
to not more than 3% of each eligible employee's compensation are matched (in
cash or stock) 50% by the Company. Additional annual contributions may be made
at the discretion of the Board of Directors.
The Company has an employee stock ownership plan (ESOP) covering substantially
all employees of the Company who meet minimum age and length of service
requirements. The plan is designed to enable eligible employees to acquire a
proprietary interest in the Company. Company contributions (whether in cash or
stock) are determined annually by the Board of Directors in an amount not to
exceed the maximum allowable as an income
22
<PAGE>
tax deduction. At January 29, 1999 and January 30, 1998, the plan owned
approximately 248,000 and 259,000 shares, respectively, of the Company's common
stock, all of which were allocated to participants.
Amounts charged to expense for these and other similar plans during fiscal 1999,
1998 and 1997 were $1,946, $1,581 and $2,088, respectively.
Bonus Plans
The Company has bonus plans, based on profitability formulas, which provide
incentive compensation for key employees. Amounts charged to expense for bonuses
to executive officers were $1,576, $1,539 and $1,544 for fiscal 1999, 1998 and
1997, respectively.
Stock Plans
The Company's two active stock plans include the 1997 Executive Stock Plan (the
"1997 Stock Plan") and the Directors' Stock Option Plan. These stock plans
authorize the granting of both incentive and non-incentive stock options for an
aggregate of 952,500 shares of common stock, including 750,000 shares to key
employees and 202,500 shares to directors. Under the stock plans, options are
granted at prices not less than the market value on the date of grant, and the
maximum term of an option may not exceed ten years. Prices for incentive stock
options granted to employees who own 10% or more of the Company's stock are at
least 110% of market value at date of grant. Options may be granted from time to
time to December 2006 with respect to the 1997 Stock Plan, or May 2003 with
respect to the Directors' Stock Option Plan. An option becomes exercisable at
such times and in such installments as set forth by the Compensation Committee
or by the Directors' Stock Option Plan.
Under the 1997 Stock Plan, the Company can grant up to 375,000 shares of the
authorized options as restricted stock to certain key employees. These shares
are subject to certain transfer restrictions, and vesting may be dependent upon
continued employment, the satisfaction of performance objectives, or both.
During fiscal 1999 and 1998, the Company granted certain employees 52,500 and
50,000 shares of restricted stock, with market values of $1,667 and $1,300 at
the date of grant, respectively. The market value of the restricted stock was
recorded as unearned compensation, a component of shareholders' equity, and is
being charged to expense over the respective vesting periods. In fiscal 1999 and
1998, this expense amounted to $393 and $58, respectively.
The 1997 Stock Plan also permits the granting of stock appreciation rights
("SARs") to holders of options. Such rights permit the optionee to surrender an
exercisable option, in whole or in part, on any date that the fair market value
of the Company's common stock exceeds the option price for the stock and receive
payment in common stock or, if the Board of Directors approves, in cash or any
combination of cash and common stock. Such payment would be equal to the excess
of the fair market value of the shares under the surrendered option over the
option price for such shares. The change in value of SARs would be reflected in
income based upon the market value of the stock. No SARs have been granted or
issued through January 29, 1999.
A summary of option transactions, including a terminated plan under which
options remain outstanding, during each of the three fiscal years in the period
ended January 29, 1999 is shown below:
Weighted-
Number Average
of Option
Shares Price
- --------------------------------------------------------------------------------
Under option, January 26, 1996
(494,912 shares exercisable) ................ 584,914 $ 10.24
Granted ................................... 172,500 19.58
Exercised ................................. (85,100) 9.05
Canceled .................................. (6,000) 13.50
- --------------------------------------------------------------------------------
Under option, January 31, 1997
(492,312 shares exercisable) ................ 666,314 12.78
Granted ................................... 271,991 33.23
Exercised ................................. (112,908) 11.53
Canceled .................................. (6,000) 13.50
- --------------------------------------------------------------------------------
Under option, January 30, 1998
(455,897 shares exercisable) ................ 819,397 19.74
Granted ................................... 48,000 34.19
Exercised ................................. (98,587) 10.99
Canceled .................................. (12,800) 34.06
- --------------------------------------------------------------------------------
Under option, January 29, 1999
(435,810 shares exercisable) ................ 756,010 21.55
================================================================================
There were 400,309 shares available for the granting of options at January 29,
1999.
23
<PAGE>
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands, except per share data)
The following table summarizes the stock options outstanding at January 29,
1999:
Weighted-
Average Weighted-
Range of Number Remaining Average
Exercise Outstanding at Contractual Exercise
Prices January 29, 1999 Life Price
- --------------------------------------------------------------------------------
$ 8.42-$12.08 182,469 2 Years $ 8.54
12.83- 18.67 257,776 6 Years 16.55
24.83- 35.63 315,765 9 Years 33.16
The Company has adopted the disclosure-only provisions of SFAS 123. Accordingly,
no compensation expense has been recognized for its stock option plans. If the
fair value estimates had been used to record compensation expense, pro forma net
income would have been $60,307, $47,140 and $36,747 in fiscal 1999, 1998 and
1997, respectively, with an immaterial effect on earnings per share. The fair
value of each option is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions: dividend
yields of 1.3% for fiscal 1999, 1998 and 1997; expected volatility of 33%, 32%
and 33% for fiscal 1999, 1998 and 1997, respectively; risk-free interest rates
of 4.77%, 5.72% and 6.47% for fiscal 1999, 1998 and 1997, respectively; and
expected lives of eight years for fiscal 1999, 1998 and 1997. The
weighted-average fair value of options granted during the year was $13.81,
$13.92 and $8.76 for fiscal 1999, 1998 and 1997, respectively. The pro forma
calculations do not include the effects of options granted prior to fiscal 1996.
As such, the impact is not necessarily indicative of the effects on reported net
income in future years.
Supplemental Executive Retirement Plan
The Company has entered into agreements with certain key executive officers
providing for supplemental payments, generally for periods up to 15 years, upon
retirement, disability or death. The obligations are not funded apart from the
Company's general assets. Amounts charged to expense under the agreements were
$537, $445 and $421 in fiscal 1999, 1998 and 1997, respectively.
NOTE 7--COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases certain properties from a corporation owned by three
executive officers of Hughes Supply, Inc. The leases generally provide that all
expenses related to the properties are to be paid by the lessee. On April 1,
1998, certain amendments to these leases were executed, which included the
extension of their lease terms through March 31, 2003. Rents paid to the related
corporation under these leases and other operating leases amounted to $1,241,
$1,140 and $1,312 in fiscal 1999, 1998 and 1997, respectively.
Future minimum payments, by year and in the aggregate, under the aforementioned
leases and other noncancelable operating leases with initial or remaining terms
in excess of one year as of January 29, 1999, are as follows:
Fiscal Years Ending
- --------------------------------------------------------------------------------
2000................................................... $ 29,578
2001................................................... 26,499
2002................................................... 20,478
2003................................................... 15,070
2004................................................... 8,852
Later years............................................ 14,754
- --------------------------------------------------------------------------------
Total minimum lease payments........................... $115,231
================================================================================
Lease-related expenses were as follows:
Fiscal Years Ended
---------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Capital lease amortization .............. $ 89 $ 518 $ 552
Capital lease interest expense .......... 30 199 290
Operating lease rentals
(excluding month-to-
month rents) .......................... 33,062 22,335 16,544
Legal Matters
The Company is involved in various legal proceedings arising in the normal
course of its business. In the opinion of management, none of the proceedings
are material in relation to the Company's consolidated operations or financial
position.
24
<PAGE>
NOTE 8--CAPITAL STOCK
Common Stock
In May 1996, the Company sold 2,230,483 shares of its common stock in a public
offering which generated net proceeds of $48,193. Proceeds received by the
Company from the sale of the common stock were used to partially fund the PVF
acquisition and to reduce indebtedness outstanding under the Company's credit
agreement.
On May 20, 1997, the Company's Board of Directors declared a three-for-two stock
split to shareholders of record as of July 10, 1997. The date of issuance for
the additional shares was July 17, 1997. Accordingly, all share and per share
data have been restated for periods prior to the stock split.
On May 20, 1997, the shareholders approved an amendment to the Restated Articles
of Incorporation of the Company increasing the number of authorized shares of
common stock from 20,000,000 to 100,000,000 shares.
Preferred Stock
The Company's Board of Directors established Series A Junior Participating
Preferred Stock ("Series A Stock") consisting of 75,000 shares. Each share of
Series A Stock will be entitled to 1,000 votes on all matters submitted to a
vote of shareholders. Series A Stock is not redeemable or convertible into any
other security. Each share of Series A Stock shall have a minimum cumulative
preferential quarterly dividend rate equal to the greater of $1.00 per share or
1,000 times the aggregate per share amount of the dividend declared on common
stock in the related quarter. In the event of liquidation, shares of Series A
Stock will be entitled to the greater of $1,000 per share plus any accrued and
unpaid dividend or 1,000 times the payment to be made per share of common stock.
No shares of Series A Stock are presently outstanding, and no shares are
expected to be issued except in connection with the shareholder rights plan
referred to below.
The Company has a shareholder rights plan. Under the plan, the Company
distributed to shareholders a dividend of one right per share of the Company's
common stock. When exercisable, each right will permit the holder to purchase
from the Company one one-thousandth of a share (a "unit") of Series A Stock at a
purchase price of $200 per unit. The rights generally become exercisable if a
person or group acquires 15% or more of the Company's common stock or commences
a tender offer that could result in such person or group owning 15% or more of
the Company's common stock. If certain subsequent events occur after the rights
first become exercisable, the rights may become exercisable for the purchase of
shares of common stock of the Company, or of an acquiring company, having a
value equal to two times the exercise price of the right. In general, the rights
may be redeemed by the Company at $.01 per right at any time prior to the later
of (i) ten days after 20% or more of the Company's stock is acquired by a person
or group and (ii) the first date of a public announcement that a person or group
has acquired 15% or more of the Company's stock. The rights expire on June 2,
2008 unless terminated earlier in accordance with the rights plan.
NOTE 9--SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest during fiscal 1999, 1998 and 1997 was $23,972, $18,107
and $14,216, respectively. Cash paid for income taxes during fiscal 1999, 1998
and 1997 was $33,862, $23,099 and $22,735, respectively.
Noncash Investing and Financing Activities
The net assets acquired and consideration for acquisitions accounted for as
purchases are summarized below:
Fiscal Years Ended
------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Fair value of:
Assets acquired .............. $ 77,707 $ 172,546 $ 161,198
Liabilities assumed .......... (32,048) (45,816) (32,958)
- --------------------------------------------------------------------------------
Purchase price ................. $ 45,659 $ 126,730 $ 128,240
================================================================================
Consideration in fiscal 1999, 1998 and 1997 included 207,829, 2,850,526 and
1,420,154 shares of common stock, with fair values of $5,438, $78,768 and
$28,162, respectively.
25
<PAGE>
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands, except per share data)
NOTE 10--PRODUCT, GEOGRAPHIC AND CUSTOMER INFORMATION
The Company's products are classified into three major product categories,
including Fluid Control Products, Electrical Products and Specialty Products.
Net sales for each of these product categories were as follows:
Fiscal Years Ended
------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Fluid Control
Products ..................... $1,512,828 $1,048,688 $ 843,835
Electrical Products ............ 572,048 536,490 493,260
Specialty Products ............. 451,389 360,268 282,267
- --------------------------------------------------------------------------------
$2,536,265 $1,945,446 $1,619,362
================================================================================
The Company sells its products in the major areas of construction and industrial
markets in certain states primarily in the southeast, southwest and midwest
United States. Revenues and assets of operations located outside the United
States are not material.
Approximately 90% of the Company's sales are credit sales which are made
primarily to customers whose ability to pay is dependent upon the economic
strength of the construction industry in the areas where it operates.
Concentration of credit risk with respect to trade accounts receivable is
limited, however, due to the large number of customers comprising the Company's
customer base and the fact that no one customer comprises more than 1% of annual
sales. The Company performs ongoing credit evaluations of its customers and in
certain situations obtains collateral sufficient to protect its credit position.
The Company maintains reserves for potential credit losses, and such losses have
been within management's expectations.
NOTE 11--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter
-----------------------------------------------------
First Second Third Fourth
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal 1999
Net sales .............................................. $602,031 $674,550 $659,045 $600,639
Gross profit ........................................... $129,277 $148,841 $146,639 $134,242
Net income ............................................. $ 11,603 $ 19,773 $ 19,150 $ 10,917
Earnings per share:
Basic ................................................ $ .49 $ .83 $ .80 $ .45
Diluted .............................................. $ .49 $ .82 $ .79 $ .45
Average shares outstanding (in thousands):
Basic ................................................ 23,601 23,925 23,989 24,038
Diluted .............................................. 23,874 24,180 24,204 24,294
Market price per share:
High ................................................. $ 39.81 $ 39.19 $ 32.50 $ 29.50
Low .................................................. $ 32.56 $ 29.13 $ 25.13 $ 25.13
Dividends per share .................................... $ .080 $ .080 $ .085 $ .085
- --------------------------------------------------------------------------------------------------------------------
Fiscal 1998
Net sales .............................................. $448,842 $493,801 $525,838 $476,965
Gross profit ........................................... $ 97,056 $108,282 $115,294 $105,491
Net income ............................................. $ 9,301 $ 14,129 $ 14,669 $ 9,471
Earning per share:
Basic ................................................ $ .48 $ .72 $ .72 $ .45
Diluted .............................................. $ .48 $ .71 $ .71 $ .44
Average shares outstanding (in thousands):
Basic ................................................ 19,255 19,577 20,318 21,266
Diluted .............................................. 19,552 19,952 20,647 21,624
Market price per share:
High ................................................. $ 24.00 $ 26.83 $ 35.69 $ 36.13
Low .................................................. $ 20.33 $ 22.00 $ 25.56 $ 31.38
Dividends per share .................................... $ .073 $ .075 $ .080 $ .080
</TABLE>
26
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of Hughes Supply, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Hughes
Supply, Inc. and its subsidiaries at January 29, 1999 and January 30, 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended January 29, 1999, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
Orlando, Florida
March 19, 1999
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The consolidated financial statements and related information included in this
annual report were prepared in conformity with generally accepted accounting
principles. Management is responsible for the integrity of the financial
statements and for the related information. Management has included in the
Company's financial statements amounts that are based on estimates and
judgements which it believes are reasonable under the circumstances.
The responsibility of the Company's independent accountants is to express an
opinion on the fairness of the financial statements. Their opinion is based on
an audit conducted in accordance with generally accepted auditing standards as
further described in their report.
The Audit Committee of the Board of Directors is composed of four non-management
directors. The Committee meets periodically with financial management, internal
auditors, and the independent accountants to review internal accounting control,
auditing, and financial reporting matters.
27
<PAGE>
HUGHES SUPPLY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As described in Note 2 of the Notes to Consolidated Financial Statements, in
fiscal 1999 the Company entered into a business combination with Winn-Lange
which was accounted for as a pooling of interests. Accordingly, all financial
data in Management's Discussion and Analysis of Financial Condition and Results
of Operations is reported as though the companies have always been one entity.
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations, including but not limited to
certain statements made regarding the Year 2000 Issue (as subsequently defined),
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, and are subject to the safe harbor created by such
sections. When used in this report, the words "believe," "anticipate,"
"estimate," "expect," and similar expressions are intended to identify
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. The Company's actual
results may differ significantly from the results discussed in such
forward-looking statements. When appropriate, certain factors that could cause
results to differ materially from those projected in the forward-looking
statements are enumerated. This Management's Discussion and Analysis of
Financial Condition and Results of Operations should be read in conjunction with
the Company's consolidated financial statements and the notes thereto.
RESULTS OF OPERATIONS
Net Sales
In fiscal 1999, the Company generated net sales of $2.54 billion, a 30% increase
over fiscal 1998 net sales of $1.95 billion. Fiscal 1998 net sales of $1.95
billion increased 20% over fiscal 1997 net sales of $1.62 billion. The increases
in net sales are primarily due to acquired and newly-opened wholesale branches
resulting from the Company's acquisition and internal growth programs.
Same-store sales growth also contributed to the increases. On a basis comparable
to the prior year, same-store sales increased 6% for both fiscal 1999 and 1998.
The same-store sales increase of 6% for fiscal 1999 is primarily attributable to
(i) continued growth in construction markets and (ii) the favorable impact of
warm and dry weather conditions experienced in certain regions served by the
Company's air conditioning and pool supply products. This increase was offset to
a large extent, however, by the impact of declining prices on certain
commodity-priced products, as further discussed below. Conversely, the
same-store sales increase of 6% for fiscal 1998 was below the high single-digit
increases the Company experienced in previous years, primarily due to the
adverse impact that mild and wet weather had on sales of air conditioning and
pool supply products.
Gross Margin
Over the past three years, gross margins have been improving. Gross margins were
22.0%, 21.9% and 21.2% for fiscal 1999, 1998 and 1997, respectively. The
improvement in gross margins resulted from several factors, including the
Company's overall expansion of higher-margin products resulting primarily from
its acquisition program, efficiencies created with central distribution centers
and enhanced purchasing power. Enhanced purchasing power is attributable to
increased volume and concentration of supply sources as part of the Company's
28
<PAGE>
preferred vendor program. In fiscal 1999, total gross profit dollars were
negatively impacted by deflationary pressure on the pricing of certain of the
Company's products whose manufacture is reliant on certain commodities,
including stainless steel, nickel alloys, copper, aluminum and plastic. Despite
the commodity pricing pressure, however, the Company was able to maintain the
gross margins on much of the business associated with these products and
increase overall gross margin for the year.
Operating Expenses
Operating expenses in fiscal 1999 were $442 million (or 17.4% of net sales), a
30% increase over fiscal 1998 operating expenses of $339 million (or 17.4% of
net sales). Approximately 25 percentage points of the 30% increase is
attributable to branches acquired and opened after February 1, 1997. The
remainder of the increase is primarily due to (i) higher personnel and
transportation costs associated with same-store sales growth and (ii) higher
expenses associated with the Company's program of upgrading its information
technology ("IT") systems. While upgrading the IT systems has increased
operating expenses in the short term, the Company believes this investment will
provide a platform for future growth and enable it to realize more
administrative synergies from past and future acquisitions.
Similarly, the increase of $61 million in fiscal 1998 compared to fiscal 1997,
which had operating expenses of $278 million (or 17.2% of net sales), is
primarily attributable to branches acquired and opened after January 27, 1996.
The remainder of the increase is primarily due to higher personnel expenses,
including health care costs, and higher transportation costs associated with
same-store sales growth. The increase in operating expenses as a percentage of
sales from 17.2% in fiscal 1997 to 17.4% in fiscal 1998 is primarily the result
of unrealized synergies associated with acquisitions completed in the fourth
quarter of fiscal 1998.
Non-Operating Income and Expenses
Interest and other income was $6.9 million in fiscal 1999 compared to $5.8
million in fiscal 1998 and $6.2 million in fiscal 1997. The increase of $1.1
million in fiscal 1999 is primarily the result of higher levels of accounts
receivable and the related collection of service charge income levied on
accounts receivable. The decrease of $.4 million from fiscal 1997 to fiscal 1998
is primarily due to non-recurring gains recognized on the sale of property and
equipment in fiscal 1997.
Interest expense for fiscal 1999, 1998 and 1997 was $25.4 million, $19.3 million
and $14.8 million, respectively. The $6.1 million increase in fiscal 1999 and
the $4.5 million increase in fiscal 1998 are primarily the result of higher
borrowing levels, partially offset by lower interest rates. The higher borrowing
levels are primarily due to the Company's expansion through business
acquisitions, which has been partially funded by debt financing.
Income Taxes
The effective tax rates for fiscal 1999, 1998 and 1997 were 37.7%, 35.6% and
34.2%, respectively. Prior to the mergers with ELASCO on April 26, 1996, with
the Metals Group on January 24, 1997, with Chad on January 30, 1998 and with
Winn-Lange on June 30, 1998, each of these entities were Subchapter S
corporations and, therefore, not subject to corporate income tax. Each entity's
Subchapter S corporation status terminated upon the merger with the Company. As
a result, the Company's effective tax rate is higher for fiscal 1999 compared to
fiscal 1998 and is higher for fiscal 1998 compared to fiscal 1997. The Company's
effective tax rate for fiscal 1999, 1998 and 1997 would have been approximately
38.3%, 38.7%, and 38.6%, respectively, assuming ELASCO, the Metals Group, Chad
and Winn-Lange were tax-paying entities.
29
<PAGE>
HUGHES SUPPLY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Net Income
Net income in fiscal 1999 increased 29% to $61.4 million from $47.6 million in
fiscal 1998. Diluted earnings per share increased 9% to $2.55 in fiscal 1999
compared to $2.33 in fiscal 1998 on 18% more average shares outstanding. These
results followed fiscal 1998 increases of 28% and 11% in net income and diluted
earnings per share, respectively. Net income and diluted earnings per share in
fiscal 1997 were $37.1 million and $2.09, respectively.
These improved results reflect operating leverage that has been achieved through
the Company's acquisition program and the resulting purchasing and
administrative synergies. Operating margins (operating income as a percentage of
net sales) have improved to 4.6% in fiscal 1999, compared to 4.5% and 4.0% in
fiscal 1998 and 1997, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Working capital in fiscal 1999 amounted to $567 million compared to $486 million
and $351 million in fiscal 1998 and 1997, respectively. The working capital
ratio was 3.5 to 1, 3.5 to 1 and 3.3 to 1 for fiscal 1999, 1998 and 1997,
respectively. During expansionary periods when sales volumes are increasing, the
Company is required to carry higher levels of inventories and receivables to
support such growth. The Company strives to maintain inventories at levels that
support current sales activity but that are not excessive. The Company believes
this is accomplished through increased use of central distribution facilities
and by investing in resources to improve the efficiency and service capability
of its facilities.
Net cash provided by operations was $31.6 million in fiscal 1999 compared to net
cash used in operations of $4.8 million in fiscal 1998 and net cash provided by
operations of $6.8 million in fiscal 1997. Net cash provided by operations of
$31.6 million in fiscal 1999 is primarily the result of the Company's improved
profit levels, partially offset by increases in accounts receivable and
inventories, resulting from higher sales volumes.
The Company's expenditures for property and equipment were $26.9 million in
fiscal 1999, including approximately $10 million for new warehouse facilities to
support its internal growth and approximately $7 million for computer and
communications hardware and related software. Capital expenditures for property
and equipment, not including amounts for business acquisitions, are expected to
be approximately $35 million in fiscal 2000.
Proceeds from the sale of property and equipment were $6.6 million for fiscal
1999, compared to $1.2 million and $1.8 million for fiscal 1998 and 1997,
respectively. This increase in fiscal 1999 is primarily due to a sale and
subsequent lease-back of certain computer hardware during the second quarter
ended July 31, 1998, which generated proceeds of $5.4 million.
Principal reductions on long-term debt were $25.0 million for fiscal 1999
compared to $28.5 million and $20.8 million for fiscal 1998 and 1997,
respectively. These amounts are primarily attributable to the repayment of debt
assumed as a result of certain business acquisitions. Dividend payments of $8.8
million, $8.1 million and $8.5 million during fiscal 1999, 1998 and 1997
included cash dividends of pooled companies totaling $1.2 million, $2.8 million
and $5.4 million, respectively.
As discussed in Note 4 of the Notes to Consolidated Financial Statements, in May
1998 the Company issued $50 million of 6.74% senior notes due 2013 in a private
placement. The proceeds of this private placement were used to reduce
indebtedness outstanding under the Company's credit agreement.
In January 1999, the Company entered into a new credit agreement with a group of
banks. The credit agreement permits the Company to borrow up to $300 million
($180 million previously), with an option to increase the borrowing capacity to
$350 million. With this facility, the Company believes it has the resources
necessary, with approximately $156 million available under its existing credit
facilities (subject to borrowing limitations under long-term debt covenants) as
of January 29, 1999, to fund ongoing operating requirements and anticipated
capital
30
<PAGE>
expenditures. The Company also believes it has sufficient borrowing capacity to
take advantage of growth and business acquisition opportunities and to fund
share repurchases in the near term. The Company expects to continue to finance
future expansion on a project-by-project basis through additional borrowing or
through the issuance of common stock.
Business Acquisitions
In addition to the business combination with Winn-Lange accounted for as a
pooling of interests, during fiscal 1999 the Company acquired several wholesale
distributors for approximately $58 million ($40 million in cash and $18 million
in stock). In fiscal 1998, consideration paid by the Company for acquisitions
(excluding poolings of interests) was approximately $144 million ($48 million in
cash and $96 million in stock). Outlays for acquisitions of wholesale
distributors in fiscal 1997 (excluding poolings of interests) totaled $144
million ($100 million in cash and $44 million in stock). These acquisitions were
accounted for as either purchases or immaterial poolings and the results of
operations of these businesses from their respective dates of acquisition are
included in the Company's consolidated financial statements. The acquisitions
completed in fiscal 1999, along with the merger of Winn-Lange, were primarily
responsible for the increase in the number of the Company's branches to 438 as
of the end of fiscal 1999, compared to 384 branches as of the end of fiscal
1998.
Share Repurchases
On March 15, 1999, the Board of Directors authorized the Company to repurchase
up to 2.5 million of its outstanding shares of common stock. Repurchases may be
made from time to time in open market transactions and are expected to be
financed through additional borrowing under the Company's credit agreement.
Through March 31, 1999, the Company repurchased 370,800 shares for a total cost
of $8.1 million or an average of $21.82 per share.
INFLATION AND CHANGING PRICES
The Company is aware of the potentially unfavorable effects inflationary
pressures may create through higher asset replacement costs and related
depreciation, higher interest rates and higher material costs. In addition, the
Company's operating performance is affected by price fluctuations in stainless
steel, nickel alloys, copper, aluminum, plastic and other commodities. The
Company seeks to minimize the effects of inflation and changing prices through
economies of purchasing and inventory management resulting in cost reductions
and productivity improvements as well as price increases to maintain reasonable
profit margins.
Management believes that inflation (which has been moderate over the past few
years) and changing prices did not significantly affect the Company's operating
results or markets in fiscal 1998 and 1997. As previously discussed, however,
the Company's results of operations for fiscal 1999 were negatively impacted by
deflationary pressure on the pricing of certain commodity-priced products. Such
commodity price fluctuations have from time to time created cyclicality in the
financial performance of the Company and could continue to do so in the future.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related Information ("SFAS 131"), was effective in the
period ended January 29, 1999. SFAS 131 superseded Statement of Financial
Accounting Standards No. 14, Financial Reporting for Segments of a Business
Enterprise, replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of a company's reportable segments. SFAS 131 also requires
disclosures about products and services, geographic areas and major customers.
As the Company operates in one reportable segment, SFAS 131 did not have a
material impact on its financial reporting.
31
<PAGE>
HUGHES SUPPLY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
In March 1998, The American Institute of Certified Public Accountants issued
Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use ("SOP 98-1"). SOP 98-1 provides that
software development costs, including external direct costs, internal payroll
and related costs, and interest costs be capitalized and amortized over their
useful lives. As the Company's previous accounting policy was consistent with
the provisions of SOP 98-1, there was no impact as a result of its adoption.
YEAR 2000 ISSUE
Many existing computer programs use only two digits to identify a year in the
date field. As the century date change occurs, these programs may recognize the
year 2000 as 1900, or not at all. If not corrected, many computer systems and
applications could fail or create erroneous results by or at the year 2000 (the
"Year 2000 Issue").
The Company has developed plans to address its possible exposures related to the
impact of the Year 2000 Issue on each of its internal systems and those of third
parties. These plans are expected to be implemented primarily with the use of
internal personnel.
The Company's internal systems consist of its central operating and accounting
systems, which handle the majority of its business transactions, and other
remote operating systems, which have resulted from the Company's acquisition
program. Plans to address the Year 2000 Issue with respect to the Company's
internal systems include an assessment phase, a remediation phase and a testing
phase.
All required modifications to the Company's central operating system were
completed in December 1998. This system was thoroughly tested and the
modifications were implemented into the production environment. An upgraded,
vendor-certified year 2000 compliant version of the Company's accounting system
was received and tested for compatibility with the version currently being used.
The Company's own internal verification and validation testing for year 2000
compliance of the accounting system is expected to be completed by May 31, 1999.
With respect to these two systems, the Company does not anticipate that the Year
2000 Issue will materially impact its operations or operating results.
As of March 5, 1999, the Company had 30 remote operating systems in place. These
systems utilize commercially available business software applications. Of the 30
remote operating systems, six are certified year 2000 compliant by their
vendors, five have vendor-certified year 2000 compliant upgrades available and
the remaining 19 systems will be removed from service and replaced with one of
the Company's systems that is expected to be year 2000 compliant. Of the 19
systems to be replaced, 12 resulted from acquisitions completed on or prior to
July 31, 1998 and are expected to be replaced by July 31, 1999. The remaining
seven systems resulted from acquisitions completed after July 31, 1998 and are
expected to be replaced by October 31, 1999.
The Company will conduct its own internal verification and validation testing on
each of the vendor-certified year 2000 compliant systems that are expected to be
in use on January 1, 2000. These tests are scheduled to be completed by July 31,
1999 for entities acquired on or prior to July 31, 1998 and by October 31, 1999
for entities acquired from August 1, 1998 through March 5, 1999. All additional
remote operating systems added after March 5, 1999 as a result of the Company's
acquisition program will be assessed, remediated and tested to the extent that
is necessary to ensure year 2000 compliance, or replaced with one of the
Company's systems that is expected to be year 2000 compliant.
Management estimates total pretax costs relating to the Year 2000 Issue to be
approximately $2 million. Approximately 11% of these costs were incurred through
January 29, 1999 and the remaining costs are expected to be incurred through
March 2000. The estimate of $2 million excludes certain costs of converting
remote operating systems to the Company's other year 2000 compliant systems,
because such costs are not expected to be material or the conversion is
scheduled to be performed as part of
32
<PAGE>
the Company's normal integration activities. Approximately $1 million of the
estimated total pretax costs of $2 million are personnel and other expenses
related to the Company's Year 2000 Project Team, which is expected to remain
intact through the turn of the century. The remaining estimated cost of $1
million is expected to be incurred primarily in connection with the remediation
and testing of the Company's remote operating systems.
The Company believes its planning efforts are adequate to address the Year 2000
Issue and that its greatest risks in this area are primarily those that it
cannot directly control, including the readiness of its major suppliers,
customers and service providers. Failure on the part of any of these entities to
timely remediate their Year 2000 Issues could result in disruptions in the
Company's supply of materials, disruptions in its customers' ability to conduct
business and interruptions to the Company's daily operations. Management
believes that its exposure to third party risk may be minimized to some extent
because it does not rely significantly on any one supplier or customer. There
can be no guarantee, however, that the systems of other third parties on which
the Company's systems and operations rely will be corrected on a timely basis
and will not have a material adverse effect on the Company.
The Company is in the preliminary stages of contacting its major suppliers,
customers and service providers regarding their Year 2000 Issues to assess the
risk of these entities not being able to continue to provide goods and services
to the Company. Initial responses received from these entities indicate that the
majority of them have programs in place to address their respective
organization's Year 2000 Issues. However, because the Company believes this area
is among its greatest risks, as more information is received and evaluated, the
Company intends to develop contingency plans, as deemed necessary, to safeguard
its ongoing operations. Such contingency plans may include identifying
alternative suppliers or service providers, stockpiling certain inventories if
alternative sources of supply are not available, evaluating the impact and
creditworthiness of non-compliant customers and the addition of borrowing
capacity if deemed necessary to finance higher levels of inventory or working
capital on an interim basis.
33
<PAGE>
HUGHES SUPPLY, INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data and ratios)
<TABLE>
<CAPTION>
Fiscal Years Ended(1)(2)
-----------------------------------------------------------
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales .................................. $2,536,265 $1,945,446 $1,619,362 $1,326,978
Cost of sales .............................. $1,977,266 $1,519,323 $1,276,481 $1,052,120
Gross margin ............................... 22.0% 21.9% 21.2% 20.7%
- ------------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses $ 416,642 $ 318,923 $ 261,355 $ 218,093
As a percentage of net sales ............. 16.4% 16.4% 16.1% 16.4%
Depreciation and amortization .............. $ 23,269 $ 18,727 $ 15,566 $ 11,859
Provision for doubtful accounts ............ $ 1,882 $ 1,229 $ 1,023 $ 2,203
Operating income ........................... $ 117,206 $ 87,244 $ 64,937 $ 42,703
Operating margin ........................... 4.6% 4.5% 4.0% 3.2%
- ------------------------------------------------------------------------------------------------------------
Interest and other income .................. $ 6,886 $ 5,837 $ 6,241 $ 5,111
Interest expense ........................... $ 25,415 $ 19,257 $ 14,842 $ 10,440
- ------------------------------------------------------------------------------------------------------------
Income before income taxes ................. $ 98,677 $ 73,824 $ 56,336 $ 37,374
As a percentage of net sales ............. 3.9% 3.8% 3.5% 2.8%
Income taxes (benefits) .................... $ 37,234 $ 26,254 $ 19,282 $ 11,728
Net income ................................. $ 61,443 $ 47,570 $ 37,054 $ 25,646
As a percentage of net sales ............. 2.4% 2.4% 2.3% 1.9%
- ------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic .................................... $ 2.57 $ 2.37 $ 2.13 $ 1.78
Diluted .................................. $ 2.55 $ 2.33 $ 2.09 $ 1.75
- ------------------------------------------------------------------------------------------------------------
Average shares outstanding:
Basic .................................... 23,889 20,108 17,384 14,418
Diluted .................................. 24,138 20,432 17,719 14,647
BALANCE SHEET DATA:
Working capital ............................ $ 567,435 $ 486,106 $ 350,975 $ 235,113
Total assets ............................... $1,123,513 $ 965,742 $ 684,056 $ 474,574
Long-term debt, less current portion ....... $ 402,203 $ 343,197 $ 228,351 $ 139,165
Shareholders' equity ....................... $ 483,956 $ 421,769 $ 299,233 $ 188,926
- ------------------------------------------------------------------------------------------------------------
Current ratio............................... 3.5 to 1 3.5 to 1 3.3 to 1 2.6 to 1
Ratio of long-term debt to
total capital employed.................... .45 to 1 .45 to 1 .43 to 1 .42 to 1
Leverage (total assets/shareholders' equity) 2.32 2.29 2.29 2.51
OTHER DATA:
Cash dividends per share ................... $ .33 $ .31 $ .25 $ .20
Shareholders' equity per share ............. $ 20.01 $ 18.00 $ 15.29 $ 12.64
Return on average assets ................... 5.9% 5.8% 6.4% 5.7%
Return on average shareholders' equity ..... 13.6% 13.2% 15.2% 14.5%
Capital expenditures(3) .................... $ 26,921 $ 28,185 $ 16,898 $ 14,713
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company's fiscal year ends on the last Friday in January.
(2) All data adjusted for poolings of interests and three-for-two stock splits
declared in fiscal 1998 and 1989.
(3) Excludes capital leases.
34
<PAGE>
<TABLE>
<CAPTION>
Fiscal Years Ended(1)(2)
------------------------------------------------------
1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales .................................. $1,065,549 $880,977 $724,466 $ 690,311
Cost of sales .............................. $ 848,698 $704,907 $583,513 $ 557,380
Gross margin ............................... 20.4% 20.0% 19.5% 19.3%
- -------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses $ 172,828 $145,913 $119,732 $ 116,317
As a percentage of net sales ............. 16.2% 16.6% 16.5% 16.8%
Depreciation and amortization .............. $ 10,131 $ 8,657 $ 7,382 $ 7,987
Provision for doubtful accounts ............ $ 1,501 $ 2,448 $ 2,028 $ 3,247
Operating income ........................... $ 32,391 $ 19,052 $ 11,811 $ 5,380
Operating margin ........................... 3.0% 2.2% 1.6% .8%
- -------------------------------------------------------------------------------------------------------
Interest and other income .................. $ 3,206 $ 3,677 $ 4,072 $ 2,696
Interest expense ........................... $ 6,813 $ 6,456 $ 6,087 $ 7,702
- -------------------------------------------------------------------------------------------------------
Income before income taxes ................. $ 28,784 $ 16,273 $ 9,796 $ 374
As a percentage of net sales ............. 2.7% 1.8% 1.4% .1%
Income taxes (benefits) .................... $ 7,984 $ 4,710 $ 1,734 $ (1,359)
Net income ................................. $ 20,800 $ 11,563 $ 8,062 $ 1,733
As a percentage of net sales ............. 2.0% 1.3% 1.1% .3%
- -------------------------------------------------------------------------------------------------------
Earnings per share:
Basic .................................... $ 1.54 $ .97 $ .68 $ .15
Diluted .................................. $ 1.50 $ .92 $ .68 $ .15
- -------------------------------------------------------------------------------------------------------
Average shares outstanding:
Basic .................................... 13,504 11,900 11,899 11,899
Diluted .................................. 13,992 13,675 11,917 11,899
BALANCE SHEET DATA:
Working capital ............................ $ 212,573 $171,702 $148,919 $ 134,961
Total assets ............................... $ 418,717 $330,526 $294,510 $ 276,439
Long-term debt, less current portion ....... $ 127,166 $121,292 $103,870 $ 89,921
Shareholders' equity ....................... $ 165,427 $116,918 $106,597 $ 99,649
- -------------------------------------------------------------------------------------------------------
Current ratio............................... 2.7 to 1 2.9 to 1 2.8 to 1 2.6 to 1
Ratio of long-term debt to
total capital employed.................... .43 to 1 .51 to 1 .49 to 1 .47 to 1
Leverage (total assets/shareholders' equity) 2.53 2.83 2.76 2.77
OTHER DATA:
Cash dividends per share ................... $ .15 $ .11 $ .08 $ .16
Shareholders' equity per share ............. $ 11.40 $ 9.43 $ 8.71 $ 8.14
Return on average assets ................... 5.6% 3.7% 2.8% .6%
Return on average shareholders' equity ..... 14.7% 10.3% 7.8% 1.7%
Capital expenditures(3) .................... $ 15,824 $ 9,997 $ 10,335 $ 6,073
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Fiscal Years Ended(1)(2)
-------------------------------------
1991 1990 1989
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales .................................. $752,951 $706,860 $655,648
Cost of sales .............................. $608,322 $565,386 $520,592
Gross margin ............................... 19.2% 20.0% 20.6%
- --------------------------------------------------------------------------------------
Selling, general and administrative expenses $117,649 $107,882 $ 97,695
As a percentage of net sales ............. 15.6% 15.3% 14.9%
Depreciation and amortization .............. $ 9,929 $ 9,743 $ 9,289
Provision for doubtful accounts ............ $ 3,119 $ 2,962 $ 1,724
Operating income ........................... $ 13,932 $ 20,887 $ 26,348
Operating margin ........................... 1.9% 3.0% 4.0%
- --------------------------------------------------------------------------------------
Interest and other income .................. $ 4,732 $ 3,348 $ 4,116
Interest expense ........................... $ 9,850 $ 8,911 $ 7,654
- --------------------------------------------------------------------------------------
Income before income taxes ................. $ 8,814 $ 15,324 $ 22,810
As a percentage of net sales ............. 1.2% 2.2% 3.5%
Income taxes (benefits) .................... $ 2,058 $ 4,937 $ 7,732
Net income ................................. $ 6,756 $ 10,387 $ 15,078
As a percentage of net sales ............. .9% 1.5% 2.3%
- --------------------------------------------------------------------------------------
Earnings per share:
Basic .................................... $ .58 $ .84 $ 1.21
Diluted .................................. $ .58 $ .81 $ 1.13
- --------------------------------------------------------------------------------------
Average shares outstanding:
Basic .................................... 11,746 12,374 12,499
Diluted .................................. 11,746 14,062 14,182
BALANCE SHEET DATA:
Working capital ............................ $143,011 $140,226 $129,526
Total assets ............................... $273,216 $285,434 $263,364
Long-term debt, less current portion ....... $ 99,261 $ 94,409 $ 85,994
Shareholders' equity ....................... $102,094 $107,113 $103,070
- --------------------------------------------------------------------------------------
Current ratio............................... 3.0 to 1 2.7 to 1 2.8 to 1
Ratio of long-term debt to
total capital employed.................... .49 to 1 .47 to 1 .45 to 1
Leverage (total assets/shareholders' equity) 2.68 2.66 2.56
OTHER DATA:
Cash dividends per share ................... $ .24 $ .23 $ .21
Shareholders' equity per share ............. $ 8.64 $ 8.54 $ 8.05
Return on average assets ................... 2.4% 3.8% 6.1%
Return on average shareholders' equity ..... 6.5% 9.9% 15.2%
Capital expenditures(3) .................... $ 8,877 $ 11,844 $ 10,295
- --------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
HUGHES SUPPLY, INC.
CORPORATE AND SHAREHOLDER INFORMATION
DIRECTORS
David H. Hughes
Chairman of the Board
John D. Baker II
President and Chief Executive Officer,
Florida Rock Industries, Inc.
Robert N. Blackford
Attorney, Holland & Knight LLP
H. Corbin Day
Chairman,
Jemison Investment Co., Inc.
John B. Ellis
Former Senior Vice President--
Finance and Treasurer,
Genuine Parts Company
A. Stewart Hall, Jr.
Vincent S. Hughes
William P. Kennedy
Chief Executive Officer,
Nephron Pharmaceuticals Corporation
EXECUTIVE OFFICERS
AND MANAGEMENT
David H. Hughes
Chairman of the Board and
Chief Executive Officer
A. Stewart Hall, Jr.
President and Chief Operating Officer
Benjamin P. Butterfield
Secretary and General Counsel
Jacquel K. Clark
Assistant Secretary and
Assistant Treasurer
Jasper L. Holland, Jr.
Regional Vice President
Clyde E. Hughes III
Regional Vice President
Russell V. Hughes
Vice President
Vincent S. Hughes
Vice President
James C. Plyler, Jr.
Regional Vice President
Kenneth H. Stephens
Regional Vice President
Sidney J. Strickland, Jr.
Vice President of Administration
Gradie E. Winstead, Jr.
Regional Vice President
J. Stephen Zepf
Treasurer and Chief Financial Officer
TRANSFER AGENT
AND REGISTRAR
American Stock Transfer
& Trust Company
40 Wall Street
New York, New York 10005
ANNUAL MEETING
Wednesday, May 19, 1999,
at 10:00 a.m., local time
Hughes Supply, Inc.
20 North Orange Avenue
Suite 200
Orlando, Florida 32801
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Orlando, Florida
CORPORATE HEADQUARTERS
Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Telephone: 407-841-4755
- --------------------------------------------------------------------------------
The shares of Hughes Supply, Inc. common stock are traded on the New York Stock
Exchange under the symbol "HUG." The approximate number of shareholders of
record as of February 19, 1999 was 1,226. A COPY OF THE HUGHES SUPPLY, INC.
ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WILL BE MADE AVAILABLE WITHOUT CHARGE, UPON WRITTEN REQUEST. REQUESTS SHOULD BE
DIRECTED TO:
J. Stephen Zepf
Treasurer and Chief Financial Officer
Hughes Supply, Inc.
Post Office Box 2273
Orlando, Florida 32802
36
EXHIBIT 21.1
Subsidiaries of the Registrant
Set forth below is a listing, by name and jurisdiction of
incorporation, of each corporation which is, as of the date of this Report,
a subsidiary of the Registrant. Unless otherwise indicated, each such
corporation is a 100% owned subsidiary of the Registrant.
1) Allied Metals, Inc., a Texas corporation.
2) APPCO Process Equipment Company, a North Carolina corporation.
3) Aspen Water Products, Inc., a Texas corporation.
4) Atlantic Pump & Equipment Company of Miami, Inc., a Florida
corporation.
5) Atlantic Pump and Equipment Co. of Puerto Rico, a Puerto Rico
corporation.
6) Atlantic Pump & Equipment Company of West Palm Beach, Inc., a Florida
corporation.
7) Carolina Pump & Supply Corp., a Rhode Island corporation.
8) Chad Supply, Inc., a Florida corporation.
9) Coastal Wholesale, Inc., a Florida corporation.
10) Dominion Pipe & Supply Co., a Virginia corporation.
11) Dominion Pipe Fabricators, Incorporated, a Virginia corporation.
12) Douglas Leonhardt & Associates, Inc., a North Carolina corporation.
13) ELASCO Agency Sales, Inc., an Illinois corporation.
14) Elec-Tel Supply Company, a Georgia corporation.
15) Electric Laboratories and Sales Corporation, a Delaware corporation.
16) FIFE/Florida Electric Supply, Inc., a Florida corporation.
17) Florida Electric Supply, Inc., a Florida corporation.
18) Florida Pipe & Supply Company, a Florida corporation.
19) Full Circle Transport, Inc., a Florida corporation.
20) Gayle Supply Company, Inc., an Alabama corporation.
21) Gilleland Concrete Products, Inc., a Georgia corporation.
22) GPEC, Inc., a Texas corporation.
23) H Venture Corp., a Florida corporation.
24) HHH, Inc., a Delaware corporation.
25) HSI Acquisition Corporation, an Ohio corporation.
26) HSI Corp., a Delaware corporation.
27) HSI Fusion Services, Inc., a Florida corporation.
28) Hughes Supply FSC, Inc., a Barbados corporation.
29) Hughes Supply Management Services, Inc., a Delaware corporation.
30) Hughes Water & Sewer Company, a West Virginia corporation.
31) International Supply Company, Inc., a Texas corporation.
32) J.I. Services Corporation, a Florida corporation.
33) J & J, Inc., a Georgia corporation.
34) JuNo Industries, Inc., a Florida corporation.
35) Kamen Merger Corp., a Kansas corporation.
36) L & T of Delaware, Inc., a Delaware corporation.
37) Merex Corporation, a Texas corporation.
38) Merex De Mexico, Sociedad Anonima De Capital Variable, a Mexico
corporation, 75% owned.
39) Merex Diesel Power, Sociedad Anonima De Capital Variable, a Mexico
corporation, 75% owned.
40) Metals Incorporated, an Oklahoma corporation.
41) Metals, Inc. - Gulf Coast Division, an Oklahoma corporation.
42) Mills & Lupton Supply Company, a Tennessee corporation.
43) Moore Electric Supply, Inc., a North Carolina corporation.
44) Mountain Country Supply, Inc., an Arizona corporation.
45) Olander & Brophy, Inc., a Pennsylvania corporation.
46) One Stop Supply, Inc., a Tennessee corporation.
47) Paine Supply of Jackson, Inc., a Mississippi corporation.
48) Palm Pool Products, Inc., a Michigan corporation.
49) Panhandle Pipe & Supply Co., Inc., a West Virginia corporation.
50) Port City Electrical Supply, Inc., a Georgia corporation.
51) R & G Plumbing Supply, Inc., an Alabama corporation.
52) San Antonio Plumbing Distributors, Inc., a Texas corporation.
53) Shrader Holding Company, Inc., an Arkansas corporation.
54) Southwest Stainless, L.P., a Delaware corporation.
55) Stainless Tubular Products, Inc., an Oklahoma corporation.
56) Sunbelt Supply Company, a Texas corporation.
57) Union Merger Corporation, a North Carolina corporation.
58) USCO Incorporated, a North Carolina corporation.
59) U.S. Fusion Services, Inc., a Louisiana corporation.
60) Virginia Water & Waste Supply Company, Inc., a Virginia corporation.
61) WCC Merger Corporation, a Georgia corporation.
62) Wholesale Electric Supply Corporation, a New York corporation.
63) Z&L Acquisition Corp., a Delaware corporation.
64) Z&L Acquisition Corp. Of Delaware, Inc., a Delaware corporation.
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 2-78323, 33-9082, 33-26468, 33-33701, 333-
19007, 333-27935, 333-35059, 333-57977 and 333-57979) and in the Prospectus
constituting part of the Registration Statement on Form S-3 (Nos. 333-
15675, 333-21953, 333-27937, 333-31523, 333-41699, 333-51377 and 333-65825)
of Hughes Supply, Inc. of our report dated March 19, 1999, appearing on
page 27 of the Annual Report to Shareholders which is incorporated in this
Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Orlando, Florida
April 23, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF HUGHES SUPPLY, INC. AS OF JANUARY 29, 1999, AND
THE RELATED STATEMENT OF INCOME FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000049029
<NAME> HUGHES SUPPLY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-29-1999
<PERIOD-END> JAN-29-1999
<CASH> 6,010
<SECURITIES> 0
<RECEIVABLES> 343,918
<ALLOWANCES> 2,809
<INVENTORY> 409,734
<CURRENT-ASSETS> 796,719
<PP&E> 207,929
<DEPRECIATION> 80,297
<TOTAL-ASSETS> 1,123,513
<CURRENT-LIABILITIES> 229,284
<BONDS> 402,203
0
0
<COMMON> 24,184
<OTHER-SE> 459,772
<TOTAL-LIABILITY-AND-EQUITY> 1,123,513
<SALES> 2,536,265
<TOTAL-REVENUES> 2,536,265
<CGS> 1,977,266
<TOTAL-COSTS> 1,977,266
<OTHER-EXPENSES> 439,911
<LOSS-PROVISION> 1,882
<INTEREST-EXPENSE> 25,415
<INCOME-PRETAX> 98,677
<INCOME-TAX> 37,234
<INCOME-CONTINUING> 61,443
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,443
<EPS-PRIMARY> 2.57
<EPS-DILUTED> 2.55
</TABLE>
HUGHES SUPPLY, INC. EXHIBIT 99.1
LOCATION OF FACILITIES
AS OF MARCH 31, 1999
NUMBER OF
STATE/TERRITORY/COUNTRY CITY BRANCHES
- --------------------------------------------------------------------------------
ALABAMA Anniston 2
Birmingham 4
Cullman 1
Dothan 2
Homewood 1
Huntsville 4
Mobile 3
Montgomery 3
Pelham 1
Prichard 2
---
23
ARIZONA Cottonwood 1
Flagstaff 1
Gilbert 1
Kingman 1
Lake Havasu 1
Lakeside 1
Phoenix 1
Prescott 1
Scottsdale 1
Tucson 1
---
10
ARKANSAS North Little Rock 1
Tontitown 1
---
2
CALIFORNIA Artesia 1
---
1
COLORADO Avon 1
Denver 3
Englewood 1
Ft. Collins 1
Longmont 1
---
7
FLORIDA Auburndale 1
Bradenton 1
Bunnell 1
Cape Coral 2
Clearwater 3
Clermont 1
Daytona 1
Eaton Park 2
Ft. Lauderdale 2
Ft. Myers 3
Ft. Pierce 1
Gainesville 3
Holly Hill 1
Inverness 1
Jacksonville 7
Kissimmee 1
Lady Lake 1
Lakeland 4
Leesburg 1
Longwood 1
Marianna 1
Melbourne 1
Miami 4
Mulberry 1
Naples 1
Ocala 4
Orange City 1
Orlando 9
Orlando (Distribution Center) 1
Panama City 3
Pembroke Park 1
Pensacola 1
Perry 1
Pompano Beach 4
Port Richey 1
Riviera Beach 1
Port St. Lucie 1
St. Augustine 1
St. Petersburg 1
Sarasota 3
Sebring 1
Tallahassee 5
Tampa 6
Tavares 1
Thonotosassa 2
Venice 1
West Melbourne 1
West Palm Beach 4
Winter Haven 2
Winter Park 1
---
103
GEORGIA Albany 1
Alpharetta 1
Athens 3
Atlanta 3
Augusta 1
Austell 1
Brunswick 1
Buford 1
Columbus 3
Conyers 2
Doraville 3
Forest Park (Distribution Center) 1
Garden City 1
Hampton 1
Lawrenceville 1
Lithonia 1
Macon 5
Marietta 2
Martinez 1
McDonough 1
Norcross 3
Oakwood 1
Savannah 3
Thomasville 1
Tifton 2
Tucker 1
Valdosta 2
Woodstock 1
---
48
ILLINOIS Decatur 1
Mattoon 2
Romeoville 1
---
4
INDIANA Fort Wayne 1
Indianapolis 3
Muncie 1
Whitestown 1
---
6
KANSAS Garden City 1
Hutchinson 1
Wichita 1
---
3
KENTUCKY Bowling Green 1
Glasgow 1
Louisville 4
---
6
LOUISIANA Baton Rouge 1
Gonzales 1
Kenner 1
Luling 1
Port Allen 1
Sulphur 1
---
6
MARYLAND Aberdeen 1
Capitol Heights 1
Finksburg 1
Salisbury 1
Waldorf 2
---
6
MEXICO Tampico 2
---
2
MICHIGAN Detroit 1
Holt 1
Romulus 1
---
3
MISSISSIPPI D'Iberville 1
Greenville 1
Greenwood 1
Gulfport 1
Hattiesburg 1
Jackson 1
Laurel 1
Meridian 1
Pascagoula 1
Tupelo 1
---
10
MISSOURI Arnold 1
Bridgeton 1
Springfield 1
St. Charles 1
Wentzville 1
---
5
NEW JERSEY Blackwood 1
Hopelawn 1
Piscataway 1
---
3
NEW YORK Vestal 1
---
1
NORTH CAROLINA Albemarle 1
Asheville 1
Charlotte 10
Concord 2
Durham 1
Elizabeth City 1
Fayetteville 1
Goldsboro 1
Greensboro 1
Henderson 1
Hickory 1
High Point 1
Kinston 1
Leland 1
Monroe 2
Pinehurst 1
Pineville 1
Raleigh 5
Rocky Mount 2
Salisbury 1
Statesville 1
Wilmington 2
Zebulon 1
---
40
OHIO Batavia 1
Brimfield 1
Cincinnati 1
Cleveland 1
Columbus 3
Dayton 2
Elyria 1
Fairfield 1
Greenville 1
Hartville 1
Lima 1
Marion 1
Monroe 1
Perrysburg 1
Solon 1
Van Wert 1
West Chester 1
---
20
OKLAHOMA Oklahoma City 1
Tulsa 2
---
3
PENNSYLVANIA Bedford 1
Monroeville 1
Shippenville 1
---
3
PUERTO RICO Carolina 1
---
1
SOUTH CAROLINA Aiken 1
Anderson 1
Bluffton 2
Charleston 3
Cheraw 1
Columbia 2
Florence 1
Greenville 3
Greer 2
Hilton Head 1
Johns Island 1
Lancaster 1
Myrtle Beach 1
North Charleston 2
Roebuck 1
West Columbia 2
---
25
TENNESSEE Alcoa 1
Chattanooga 2
Clarksville 1
Cookeville 1
Jackson 1
Knoxville 2
Memphis 4
Nashville 6
---
18
TEXAS Allen 1
Alvarado 1
Austin 6
Beaumont 2
Boerne 1
Brenham 1
College Station 1
Conroe 1
Corpus Christi 4
Dallas 4
Denton 1
DeSoto 1
Fort Worth 1
Freeport 1
Friendswood 1
Grand Praire 1
Grapevine 1
Haltom City 2
Harlingen 1
Helotes 1
Houston 15
Kerrville 1
La Porte 1
Laredo 1
Longview 3
Lufkin 1
McAllen 1
Mesquite 1
Mt. Pleasant 1
Pharr 1
Prosper 1
Richardson 1
Richland Hills 1
Round Rock 1
San Antonio 9
Seguin 1
Sherman 2
Southlake 1
Texas City 1
---
77
UTAH Salt Lake City 1
---
1
VIRGINIA Arlington 1
Colonial Heights 1
Herndon 1
La Crosse 1
Lynchburg 1
Manassas Park 1
Norfolk 1
Richmond 2
Roanoke 1
Virginia Beach 1
---
11
WASHINGTON Tukwila 1
---
1
WEST VIRGINIA Alum Creek 1
Fairmont 1
Martinsburg 1
South Charleston 1
---
4
---
TOTAL BRANCHES 453
===
