Page 1 of 100
Exhibit Index on Page 12
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For quarter ended May 31, 1998 Commission file number 1-3208
NATIONAL SERVICE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 58-0364900
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1420 Peachtree Street, N. E., Atlanta, Georgia 30309-3002
(Address of Principal Executive Offices) (Zip Code)
(404) 853-1000
(Registrant's Telephone Number, Including Area Code)
None
(Former Name,Former Address and Former Fiscal Year,if Changed Since Last Report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - $1.00 Par Value - 41,447,354 shares as of June 30, 1998.
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NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS -
MAY 31, 1998 AND AUGUST 31, 1997 3
CONSOLIDATED STATEMENTS OF INCOME -
THREE MONTHS AND NINE MONTHS ENDED
MAY 31, 1998 AND 1997 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
NINE MONTHS ENDED MAY 31, 1998 AND 1997 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8-9
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
EXHIBIT INDEX 12
<PAGE>
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NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per-share data)
May 31, August 31,
1998 1997
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $ 28,929 $57,123
Short-term investments 58 205,302
Receivables, less reserves for doubtful
accounts of $6,830 at May 31, 1998 and
$4,302 at August 31, 1997 288,940 258,689
Inventories, at the lower of cost
(on a first-in, first-out basis) or market 200,969 179,046
Linens in service, net of amortization 59,274 60,805
Deferred income taxes 17,795 13,077
Prepayments 7,964 6,716
Total Current Assets 603,929 780,758
Property, Plant, and Equipment, at cost:
Land 19,852 19,911
Buildings and leasehold improvements 145,874 138,933
Machinery and equipment 481,290 434,194
Total Property, Plant, and Equipment 647,016 593,038
Less-Accumulated depreciation and amortization 383,005 356,308
Property, Plant, and Equipment-net 264,011 236,730
Other Assets:
Goodwill and other intangibles 84,562 50,166
Other 39,298 38,698
Total Other Assets 123,860 88,864
Total Assets $ 991,800 $1,106,352
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $75 $116
Notes payable 56,736 5,773
Accounts payable 92,276 101,512
Accrued salaries, commissions, and bonuses 31,190 34,776
Current portion of self-insurance reserves 12,115 12,540
Accrued taxes payable -- 38,351
Other accrued liabilities 74,285 88,932
Total Current Liabilities 266,677 282,000
Long-Term Debt, less current maturities 26,163 26,197
Deferred Income Taxes 46,308 34,093
Self-Insurance Reserves, less current portion 45,494 57,056
Other Long-Term Liabilities 42,914 35,193
Stockholders' Equity:
Series A participating preferred stock,
$.05 stated value, 500,000 shares authorized,
none issued
Preferred stock, no par value,
500,000 shares authorized, none issued
Common stock, $1 par value,
80,000,000 shares authorized,
57,918,978 shares issued 57,919 57,919
Paid-in capital 28,238 25,521
Retained earnings 878,655 841,045
964,812 924,485
Less-Treasury stock, at cost
(16,477,103 shares at May 31, 1998 and 13,719,834
shares at August 31, 1997) 400,568 252,672
Total Stockholders' Equity 564,244 671,813
Total Liabilities and Stockholders' Equity$ 991,800 $1,106,352
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
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NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollar amounts in thousands, except per-share data)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
MAY 31 MAY 31
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales and Service Revenues:
Net sales of products ...................... $ 442,144 $ 383,493 $ 1,253,529 $ 1,136,640
Service revenues ........................... 79,464 131,786 235,073 389,768
Total Revenues ........................ 521,608 515,279 1,488,602 1,526,408
Costs and Expenses:
Cost of products sold ...................... 269,019 231,601 765,854 703,518
Cost of services ........................... 45,270 72,814 136,366 223,589
Selling and administrative expenses ........ 161,618 160,842 464,757 474,137
Interest (income) expense, net (1) ......... 1,304 1,102 (1,092) 2,702
Other (income) expense, net (1) ............ (392) 2,112 (1,739) 4,127
Total Costs and Expenses .............. 476,819 468,471 1,364,146 1,408,073
Income before Provision for Income Taxes ......... 44,789 46,808 124,456 118,335
Provision for Income Taxes ....................... 16,650 17,374 46,161 43,722
Net Income ....................................... $ 28,139 $ 29,434 $ 78,295 $ 74,613
Per Share:
Basic earnings per share ................... $ .67 $ .65 $ 1.83 $ 1.64
Weighted Average Number of Shares
Outstanding (thousands) ............... 42,001 44,996 42,763 45,371
Diluted earnings per share ................. $ .66 $ .65 $ 1.81 $ 1.63
Adjusted Weighted Average Number of Shares
Outstanding (thousands) .......................... 42,659 45,348 43,300 45,663
Cash dividends ............................. $ .31 $ .30 $ .92 $ .89
</TABLE>
(1) Prior-year amounts have been restated to conform to current year
presentation.
The accompanying notes to consolidated financial statements are an integral part
of these statements.
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NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands)
NINE MONTHS ENDED
MAY 31
1998 1997
Cash Provided by (Used for) Operating Activities
Net income ........................................... $ 78,295 $ 74,613
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................... 36,108 44,449
Provision for losses on accounts receivable ...... 3,908 2,654
Gain on the sale of property, plant, and equipment (3,417) (198)
Gain on the sale of businesses ................... (2,402) (972)
Change in noncurrent deferred income taxes ....... 12,216 (2,375)
Change in assets and liabilities net of effect
of acquisitions and divestitures-
Receivables .................................. (28,309) 914
Inventories and linens in service, net ....... (19,683) 3,347
Deferred income taxes ........................ (4,636) (1,994)
Prepayments and other ........................ (971) (1,699)
Accounts payable and accrued liabilities ..... (68,834) (15,067)
Self-insurance reserves and
other long-term liabilities ................ (3,841) (2,306)
Net Cash Provided by (Used for)
Operating Activities .................. (1,568) 101,366
Cash Provided by (Used for) Investing Activities
Change in short-term investments ..................... 205,244 (2)
Purchases of property, plant, and equipment .......... (56,829) (34,215)
Sale of property, plant, and equipment ............... 4,717 3,170
Sale of businesses ................................... 3,011 31,380
Acquisitions ......................................... (39,424) (4,320)
Change in other assets ............................... (6,230) 4,439
Net Cash Provided by Investing Activities .......... 110,489 452
Cash Provided by (Used for) Financing Activities
Change in notes payable .............................. 49,659 (10,796)
Change in long-term debt ............................. (910) 862
Recovery of investment in tax benefits ............... -- 661
Deferred income taxes from investment
in tax benefits ...................................... -- (1,972)
Purchase of treasury stock, net ...................... (145,179) (69,465)
Cash dividends paid .................................. (39,842) (40,657)
Net Cash Used for Financing Activities ............. (136,272) (121,367)
Effect of Exchange Rate Changes on Cash ................ (843) 318
Net Change in Cash and Cash Equivalents ................ (28,194) (19,231)
Cash and Cash Equivalents at Beginning of Period ....... 57,123 58,662
Cash and Cash Equivalents at End of Period ............. $ 28,929 $ 39,431
Supplemental Cash Flow Information:
Income taxes paid during the period .............. $ 76,382 $ 41,744
Interest paid during the period .................. 4,929 4,074
Noncash Investing and Financing Activities:
Noncash aspects of sale of businesses--
Receivables incurred ........................ $ -- $ 391
Liabilities removed ......................... 165 477
Noncash aspects of acquisitions--
Liabilities assumed or incurred ............. $ 4,891 $ 22,440
Treasury stock issued ....................... -- 20,522
The accompanying notes to consolidated financial statements are an integral part
of these statements.
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NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. BASIS OF PRESENTATION:
The interim consolidated financial statements included herein have been prepared
by the company without audit and the condensed consolidated balance sheet as of
August 31, 1997 has been derived from audited statements. These statements
reflect all adjustments, all of which are of a normal, recurring nature, which
are, in the opinion of management, necessary to present fairly the consolidated
financial position as of May 31, 1998, the consolidated results of operations
for the three months and nine months ended May 31, 1998 and 1997, and the
consolidated cash flows for the nine months ended May 31, 1998 and 1997. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. The company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1997.
The results of operations for the three months and nine months ended May 31,
1998 are not necessarily indicative of the results to be expected for the full
fiscal year because the company's revenues and income are generally higher in
the second half of its fiscal year and because of the uncertainty of general
business conditions.
2. BUSINESS SEGMENT INFORMATION:
<TABLE>
Three Months Ended May 31
Sales and Service
Revenues Operating Profit (Loss)
1998 1997 1998 1997
<S> <C> <C> <C> <C>
(In thousands)
Lighting Equipment ........... $ 277,497 $ 237,775 $ 26,123 $ 23,662
Chemical ..................... 119,111 109,813 11,321 9,438
Textile Rental ............... 79,464 131,786 8,707 14,040
Envelope ..................... 45,536 34,404 4,428 2,969
Other ........................ -- 1,501 -- 472
$ 521,608 $ 515,279 50,579 50,581
Corporate .................... (4,486) (2,671)
Interest income (expense), net (1,304) (1,102)
Total ........................ $ 44,789 46,808
Nine Months Ended May 31
Sales and Service
Revenues Operating Profit (Loss)
1998 1997 1998 1997
(In thousands)
Lighting Equipment ........... $ 806,233 $ 688,943 $ 76,649 $ 65,679
Chemical ..................... 332,056 292,990 28,467 26,985
Textile Rental ............... 235,073 389,768 21,525 29,478
Envelope ..................... 115,240 99,165 8,896 7,720
Other ........................ -- 55,542 -- 1,419
$ 1,488,602 $ 1,526,408 135,537 131,281
Corporate .................... (12,173) (10,244)
Interest income (expense), net 1,092 (2,702)
Total ........................ $ 124,456 $ 118,335
</TABLE>
<PAGE>
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3. INVENTORIES:
Major classes of inventory as of May 31, 1998 and August 31, 1997 were as
follows:
May 31, August 31,
1998 1997
(In thousands)
Raw Materials and Supplies ................... $ 78,767 $ 71,266
Work-in-Process .............................. 10,452 10,572
Finished Goods ............................... 111,750 97,208
Total ................................... $200,969 $179,046
4. NEW ACCOUNTING STANDARD
During the quarter ended February 28, 1998, the company adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS No.
128 supersedes Accounting Principles Board Opinion No. 15, "Earnings per Share,"
and promulgates new accounting standards for the computation and manner of
presentation of the company's earnings per share. The adoption of SFAS No. 128
did not have a material impact on the computation or manner of presentation of
the company's earnings per share as previously presented under APB 15. Exhibit
11 represents a reconciliation of basic and diluted weighted average shares and
a calculation of earnings per share using the guidelines of SFAS No. 128.
5. ENVIRONMENTAL MATTERS
The company's operations, as well as other similar operations, are subject to
comprehensive laws and regulations relating to the generation, storage,
handling, transportation, and disposal of hazardous substances and solid and
hazardous wastes and to the remediation of contaminated sites. Permits and
environmental controls are required for certain of the company's operations to
prevent air and water pollution, and these permits are subject to modification,
renewal and revocation by issuing authorities. The company believes that it is
in substantial compliance with all material environmental laws, regulations and
its permits. On an ongoing basis, the company incurs capital and operating costs
relating to environmental compliance. Environmental laws and regulations have
generally become stricter in recent years, and the cost of responding to future
changes may be substantial.
Certain environmental laws, such as Superfund, can impose liability for the
entire cost of site remediation upon each of the current or former owners or
operators of a site or parties who sent waste to a site where a release of a
hazardous substance has occurred regardless of fault or the lawfulness of the
original disposal activity. Generally, where there are a number of financially
viable potentially responsible parties ("PRPs"), liability has been apportioned
based on the type and amount of waste disposed of by each party at such disposal
site and the number of financially viable parties, although no assurance can be
given as to any particular site.
The company is currently a party to, or otherwise involved in, legal proceedings
in connection with several state and federal Superfund sites, one of which is
located on property owned by the company. Except for the Crymes Landfill matter
in Georgia, the company believes its liability is de minimis at each of the
sites which it does not own where it has been named as a PRP. At the Crymes
Landfill Site, since the matter is currently in the investigative phase, the
company does not know whether its liability is de minimis but believes that its
exposure at the site is not likely to result in a material adverse effect on the
company. For the property which the company owns on Seaboard Industrial
Boulevard in Atlanta, Georgia, the company has agreed to conduct an
investigation on its and adjoining properties pursuant to the Georgia Hazardous
Site Response Act. Until that investigation is completed, the company will not
be able to determine if remediation will be required, if the company will be
solely responsible for the cost of such remediation or whether such cost is
likely to result in a material adverse effect on the company.
The company is currently evaluating emissions of volatile organic compounds from
its manufacturing operations in the Atlanta area to determine whether it will
need to install pollution control equipment or modify its operations to comply
with federal and state air pollution regulations. Until the current evaluations
are completed, the company is not able to quantify the possible cost of
compliance. However, based upon currently available information, the company
does not expect any expenditures which may have to be made to achieve compliance
to be material.
In connection with the sale of the North Bros. business and 29 of the company's
textile rental plants in 1997, the company has retained certain environmental
liabilities for which it has established reserves. The company has received
notice from the buyer of the textile rental plants of the alleged presence of
perchloroethylene contamination on one of the properties involved in the sale.
The company has since asserted an indemnification claim against the company from
which it bought the property. Inasmuch as the company has only recently received
notice of the buyer's claim, it is too early to quantify the company's potential
exposure in this matter, the likelihood of an adverse result or the possibility
that the company may be fully or partially indemnified.
In November 1997, the Environmental Protection Agency ("EPA") proposed stringent
new wastewater discharge limits, which would become effective in the future,
that could apply to certain facilities operated by the company. While the
company does not believe that these regulations should apply to its operations,
if the regulations are adopted as proposed, following adoption, the company's
cost to comply with them could be as much as $6-million to $9-million of
equipment expenditures spread over a three-year period, which the company does
not believe would be material to its financial condition or results of
operations.
<PAGE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and related notes.
Financial Condition
National Service Industries continued in strong financial condition at May 31,
1998. Net working capital declined to $337.3 million from $498.8 million at
August 31, 1997, as the company reinvested to support its growth and returned
other funds to its shareholders through share repurchases. The current ratio was
2.3 compared with 2.8 as of year end. Cash and short-term investments were $30.0
million, compared with $262.4 million at August 31. For the nine months ended
May 31, the company invested $96.3 million in capital expenditures and
acquisitions. In addition, the company spent $145.2 million to repurchase 3.0
million shares of its common stock. Operating activities used $1.6 million of
cash primarily for investment in inventories to support sales growth, the
payment of taxes associated with the gain on the 1997 disposal of linen plants
and funding of restructuring activities. Cash provided by operating activities
was $101.4 million for the nine months last year. As planned, the percent of
debt to total capitalization was 12.8 percent, up from 4.6 percent at August 31
due to interim borrowings under a committed credit facility.
Capital expenditures, exclusive of acquisition spending, were $56.8 million for
the nine months this year, compared with $34.2 million for the same period last
year. For the current-year nine months, the lighting equipment segment invested
in facility expansions and manufacturing process improvements, the textile
rental segment invested in efficiency improvements and replacements of
processing equipment and information systems, and the envelope segment invested
in facility and machinery replacements. Prior-year spending consisted primarily
of lighting equipment segment facilities and process improvements, equipment
replacements, and tooling for new products and textile rental segment facilities
improvements and equipment replacements.
Current-year acquisition spending of $39.4 million resulted primarily from the
chemical segment's purchase of Pure Corporation, a specialty chemical company
with its core businesses in Indiana, Pennsylvania, and New York; the envelope
segment's purchase of Allen Envelope Corporation, a single-plant,
Pennsylvania-based envelope manufacturer serving markets in the Northeast; and
performance payments associated with a prior-year chemical acquisition.
Prior-year spending of $4.3 million in cash was the result of: the chemical
segment's purchase of chemical products companies in Ohio and Canada; the
lighting equipment segment's acquisition of Lumaid, Inc., a small emergency
lighting products manufacturer in Canada; and the third quarter acquisition for
an initial payment of $20.5 million in stock of Enforcer Products, Inc., a
specialty chemical company with a retail focus.
Cash from divestitures totaled $3.0 million for the current year due primarily
to the textile rental segment's sale of non-strategic operations. Prior-year
divestitures generated $31.4 million from the sale of the insulation business
for $27.1 million and the sale of non-strategic textile rental businesses.
During the prior-year third quarter, the company agreed to sell, at a gain, 29
uniform and linen plants to G&K Services, Inc. The sale was completed during the
fourth quarter for approximately $280 million in cash.
During the nine months ended May 31, 1998, year-end restructuring reserves were
reduced by $4.4 million, primarily for exit costs associated with the disposal
of facilities and consolidation of operations and severance-related costs.
Dividend payments totaled $39.8 million, or 92 cents per share, for the nine
months, compared with $40.7 million, or 89 cents per share, for the same period
a year ago. Effective January 1998, the regular quarterly dividend rate was
increased 3.3 percent to 31 cents per share, or an annual calendar year rate of
$1.24 per share. During the nine months ended May 31, 1998, the company
repurchased 3.0 million of its common shares, before reissuances related to
acquisitions and stock options.
For the periods presented, capital expenditures, working capital needs,
dividends, acquisitions, and share repurchases were financed primarily with
internally generated funds supplemented by borrowings through a committed credit
facility. European operations were supplemented by short-term borrowings in the
European market. Contractual commitments for capital and acquisition spending
during the coming twelve months total $26.1 million. The company expects actual
capital expenditures in 1998 to be significantly higher than the 1997 level in
support of the company's growth plans. Capital expenditures, excluding
acquisition spending, were $49 million in 1997, $66 million in 1996, and $59
million in 1995. Late in fiscal 1996, the company negotiated a $250 million
multi-currency committed credit facility with eleven domestic and international
banks. The company has complimentary lines of credit totaling $62 million, of
which $40 million is available domestically and $22 million is available on a
multi-currency basis. Current liquid assets, internally generated funds, and
borrowing, either through the existing facility or the debt capital markets, are
expected to meet anticipated general operating cash requirements for the next
twelve months.
Over the past year, the company has devoted significant internal resources in
addressing the expected impact of the Year 2000 issue on its information
technology infrastructure. At this point in time, the company does not believe
that its expenditures relating to the Year 2000 issue will have a material
impact on its financial position, results of operations, liquidity, or future
business strategy. The company expects to have completed all systems
modifications prior to the year 2000.
<PAGE>
Page 9
Results of Operations
National Service Industries' sales for the third quarter ended May 31, 1998
increased slightly to $521.6 million versus last year's $515.3 million. Third
quarter net income was $28.1 million, or 66 cents diluted earnings per share,
compared with prior year's net income of $29.4 million, or 65 cents diluted EPS.
Diluted EPS increased 1.5 percent on a 4.4 percent decline in net income as a
result of 2.7 million fewer average shares outstanding.
For the first nine months of fiscal year 1998, NSI's sales declined 2.5 percent
to $1.49 billion versus last year's $1.53 billion. Net income increased 4.9
percent to $78.3 million versus last year's $74.6 million. Diluted EPS increased
11.0 percent, reflecting increased income and a 2.4 million reduction in average
shares outstanding. The 1998 year-to-date earnings included pretax gains of $5.8
million from the sale of assets compared with $7.3 million from asset sales and
accounting policy changes for ancillary textile rental revenues in 1997.
The lighting equipment segment reported sales of $277.5 million, up 16.7 percent
over last year's third quarter sales of $237.8 million. For the nine months,
sales were $806.2 million, a 17.0 percent increase over the prior year to date.
Continued demand in non-residential construction and market acceptance of new
Lithonia products contributed to the sales growth. Operating income increased
10.4 percent to $26.1 million for the quarter and 16.7 percent to $76.6 million
for the nine months. Operating margin rates for the third quarter were slightly
below those of the same period a year ago due to increased marketing
expenditures and were consistent on a comparative year-to-date basis.
Chemical segment sales, benefiting from a prior-year acquisition, increased 8.5
percent to $119.1 million for the third quarter and 13.3 percent to $332.1
million for the year to date, due largely to incremental revenues from retail
distribution channels. Operating income increased 20.0 percent to $11.3 million
for the quarter and 5.5 percent to $28.5 million for the nine months. While
margin rates for the quarter improved due to a reduction in administrative
costs, year-to-date margin rates were slightly below last year's due to costs
associated with growth initiatives in both the retail and
industrial/institutional distribution channels.
Textile rental segment sales were $79.5 million for the third quarter and $235.1
million for the nine months, each a 40 percent decline from the respective
prior-year amounts. Operating income declined to $8.7 million for the quarter
from $14.0 million last year and was $21.5 million for the nine months compared
with $29.5 million the prior year to date. The declines in sales and operating
income were a result of the uniform plant divestitures completed in the fourth
quarter of fiscal year 1997. After considering divested operations and
non-operating gains, revenue was in line with the prior year's results and
operating income improved slightly. Since the 1997 divestitures, National Linen
Service has continued to improve underlying margin rates and generate positive
economic profit.
Envelope segment sales increased 32.4 percent to $45.5 million for the third
quarter and 16.2 percent to $115.2 million for the nine months. The quarter's
increased sales volume was due largely to the March acquisition of Allen
Envelope, which also benefited year-to-date sales volume. Operating profit
increased for both the quarter and year to date due to additional sales volume
and a $0.6 million gain on the sale of non-productive equipment.
During the third quarter, the company repurchased 1.0 million shares of its
common stock under its buyback program, bringing the total to 3.0 million shares
repurchased during the fiscal year to date. To finance third quarter share
repurchases and acquisitions, the company began borrowing funds, which resulted
in an increase in net interest expense. In addition, corporate expense increased
due to accruals for competitive incentives designed to encourage higher levels
of performance.
The provision for income taxes was 37.2 percent compared to 37.1 percent for the
prior third quarter and was 37.1 percent compared to 36.9 percent the prior year
to date.
From time to time, the company may publish forward-looking statements relating
to such matters as anticipated financial performance, business prospects,
capital expenditures, technological developments, new products, research and
development activities and similar matters. The Private Securities Litigation
Reform Act of 1995 provides a safe harbor for forward-looking statements. In
order to comply with the terms of the safe harbor, the company notes that a
variety of factors could cause the company's actual results and experience to
differ materially from the anticipated results or other expectations expressed
in the company's forward-looking statements. The risks and uncertainties that
may affect the operations, performance, development and results of the company's
business include without limitation the following: (a) the uncertainty of
general business and economic conditions, particularly the potential for a slow
down in non-residential construction awards; and (b) the ability to achieve
strategic initiatives, including but not limited to the ability to achieve sales
growth across the business segments through a combination of increased pricing,
enhanced sales force, new products, and improved customer service, as well as
share repurchases and acquisitions.
<PAGE>
Page 10
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On March 12, 1997, the company acquired all of the issued and outstanding
capital stock of Enforcer Products, Inc. ("Enforcer") and issued as partial
consideration for the acquisition an aggregate of 667,676 restricted shares of
Common Stock of the company to Enforcer's three shareholders, each of whom
qualified as an "accredited investor" within the meaning of the Securities Act
of 1933 (the "Act"). The Common Stock issued to Enforcer's shareholders was
valued at approximately $25.5 million for purposes of the acquisition. The
company relied on Section 4(2) of the Act as its exemption from the registration
requirements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits are listed on the Index to Exhibits (page 12).
(b) There were no reports on Form 8-K for the three months ended May 31, 1998.
<PAGE>
Page 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL SERVICE INDUSTRIES, INC.
REGISTRANT
DATE July 14, 1998 /s/ David Levy
DAVID LEVY
EXECUTIVE VICE PRESIDENT, ADMINISTRATION
AND COUNSEL
DATE July 14, 1998 /s/ Brock Hattox
BROCK HATTOX
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
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INDEX TO EXHIBITS
Page No.
EXHIBIT 10(i)A US$250,000,000 Credit Agreement
dated as of July 23, 1996 among
National Service Industries, Inc.,
Certain of its Subsidiaries,
Certain Listed Banks, Wachovia Bank
of Georgia, N.A., as Agent, and
Nationsbank, N.A. (South) and
Suntrust Bank, Atlanta, as Co-Agents 13
EXHIBIT 11 Computation of Net Income
per Share of Common Stock 99
EXHIBIT 27 Financial Data Schedule 100
Page 13
Exhibit 10(i)A
US$250,000,000
CREDIT AGREEMENT
dated as of
July 23, 1996
among
NATIONAL SERVICE INDUSTRIES, INC.,
Certain of its Subsidiaries
The Banks Listed Herein
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
and
NATIONSBANK, N.A. (SOUTH) and SUNTRUST BANK, ATLANTA,
as Co-Agents
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Exhibit 10(i)A
(xi)
TABLE OF CONTENTS
CREDIT AGREEMENT
Page
ARTICLE I
DEFINITIONS.......................................................... 1
SECTION 1.01. Definitions.................................................... 1
SECTION 1.02. Accounting Terms and Determinations............................ 17
SECTION 1.03. References..................................................... 18
SECTION 1.04. Use of Defined Terms........................................... 18
SECTION 1.05. Terminology.................................................... 18
ARTICLE II
THE CREDITS......................................................... 18
SECTION 2.01. Commitments to Lend Syndicated Loans........................... 18
SECTION 2.02. Method of Borrowing............................................ 19
SECTION 2.03. Money Market Loans............................................. 22
SECTION 2.04. Notes.......................................................... 26
SECTION 2.05. Maturity of Loans.............................................. 27
SECTION 2.06. Interest Rates................................................. 27
SECTION 2.07. Fees........................................................... 31
SECTION 2.08. Optional Termination or Reduction of
Commitments............................................ 32
SECTION 2.09. Mandatory Reduction and Termination of
Commitments............................................ 32
SECTION 2.10. Optional Prepayments........................................... 32
SECTION 2.11. Mandatory Prepayments.......................................... 33
SECTION 2.12. General Provisions as to Payments.............................. 34
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Exhibit 10(i)A
SECTION 2.13. Computation of Interest and Fees............................... 37
SECTION 2.14. Additional Borrowers........................................... 37
ARTICLE III
CONDITIONS TO BORROWINGS............................................... 38
SECTION 3.01. Conditions to First Borrowing.................................. 38
SECTION 3.02. Conditions to All Borrowings................................... 40
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................................... 41
SECTION 4.01. Corporate Existence and Power.................................. 41
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention............................................... 41
SECTION 4.03. Binding Effect................................................. 41
SECTION 4.04. Financial Information.......................................... 41
SECTION 4.05. No Litigation.................................................. 42
SECTION 4.06. Compliance with ERISA.......................................... 42
SECTION 4.07. Compliance with Laws; Payment of Taxes......................... 42
SECTION 4.08. Subsidiaries................................................... 43
SECTION 4.09. Investment Company Act......................................... 43
SECTION 4.10. Public Utility Holding Company Act............................. 43
SECTION 4.11. Ownership of Property; Liens................................... 43
SECTION 4.12. No Default..................................................... 43
SECTION 4.13. Full Disclosure................................................ 44
SECTION 4.14. Environmental Matters.......................................... 44
SECTION 4.15. Capital Stock.................................................. 45
SECTION 4.16. Margin Stock................................................... 45
SECTION 4.17. Insolvency..................................................... 45
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Exhibit 10(i)A
SECTION 4.18. Insurance...................................................... 46
ARTICLE V
COVENANTS.......................................................... 46
SECTION 5.01. Information.................................................... 46
SECTION 5.02. Inspection of Property, Books and Records...................... 48
SECTION 5.03. Maintenance of Existence....................................... 48
SECTION 5.04. Dissolution.................................................... 49
SECTION 5.05. Consolidations and Mergers..................................... 49
SECTION 5.06. Use of Proceeds................................................ 49
SECTION 5.07. Compliance with Laws; Payment of Taxes......................... 49
SECTION 5.08. Insurance...................................................... 50
SECTION 5.09. Subsidiary Debt................................................ 50
SECTION 5.10. Maintenance of Property........................................ 51
SECTION 5.11. Environmental Notices.......................................... 51
SECTION 5.12. Environmental Matters.......................................... 51
SECTION 5.13. Environmental Release.......................................... 51
SECTION 5.14. Transactions with Affiliates................................... 51
SECTION 5.15. Negative Pledge................................................ 52
SECTION 5.16. Leverage Percentage............................................ 54
SECTION 5.17. Election to Become Guarantor................................... 54
ARTICLE VI
DEFAULTS........................................................... 54
SECTION 6.01. Events of Default.............................................. 54
SECTION 6.02. Notice of Default.............................................. 58
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Exhibit 10(i)A
ARTICLE VII
THE AGENT.......................................................... 58
SECTION 7.01. Appointment; Powers and Immunities............................. 58
SECTION 7.02. Reliance by Agent.............................................. 59
SECTION 7.03. Defaults....................................................... 59
SECTION 7.04. Rights of Agent as a Bank and its Affiliates................... 60
SECTION 7.05. Indemnification................................................ 60
SECTION 7.06. CONSEQUENTIAL DAMAGES......................................... 61
SECTION 7.07. Payee of Note Treated as Owner................................. 61
SECTION 7.08. Nonreliance on Agent and Other Banks........................... 61
SECTION 7.09. Failure to Act................................................. 61
SECTION 7.10. Resignation or Removal of Agent................................ 62
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION..................................... 62
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair................................... 62
SECTION 8.02. Illegality..................................................... 63
SECTION 8.03. Increased Cost and Reduced Return.............................. 63
SECTION 8.04. Base Rate Loans or Other Fixed Rate Loans
Substituted for Affected Fixed Rate Loans.............. 65
SECTION 8.05. Compensation................................................... 65
SECTION 8.06. Failure to Pay in Foreign Currency......................... 66
SECTION 8.07. Judgment Currency............................................. 67
SECTION 8.08. Limitation on Certain Payment................................. 67
SECTION 8.09. Alternate Lending Offices..................................... 67
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Exhibit 10(i)A
ARTICLE IX
MISCELLANEOUS....................................................... 68
SECTION 9.01. Notices........................................................ 68
SECTION 9.02. No Waivers..................................................... 68
SECTION 9.03. Expenses; Documentary Taxes.................................... 68
SECTION 9.04. Indemnification................................................ 69
SECTION 9.05 Setoff; Sharing of Setoffs..................................... 69
SECTION 9.06. Amendments and Waivers......................................... 70
SECTION 9.07. No Margin Stock Collateral..................................... 71
SECTION 9.08. Successors and Assigns......................................... 71
SECTION 9.09. Confidentiality................................................ 75
SECTION 9.10. Representation by Banks........................................ 76
SECTION 9.11. Obligations Several............................................ 76
SECTION 9.12. Georgia Law.................................................... 76
SECTION 9.13. Severability................................................... 76
SECTION 9.14. Interest....................................................... 77
SECTION 9.15. Interpretation................................................. 78
SECTION 9.16. Waiver of Jury Trial; Consent to Jurisdiction.................. 78
SECTION 9.17. Counterparts................................................... 78
SECTION 9.18. Source of Funds -- ERISA....................................... 78
SECTION 9.19. References Regarding Foreign Subsidiaries...................... 79
EXHIBIT A-1 Form of Syndicated Dollar Loan Note
EXHIBIT A-2 Form of Foreign Currency Loan Note
EXHIBIT A-3 Form of Money Market Loan Note
EXHIBIT B Form of Opinion of Counsel for the Parent
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Exhibit 10(i)A
EXHIBIT C Form of Opinion of Special Counsel for the Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Closing Certificate
EXHIBIT H Form of Officer's Certificate
EXHIBIT I Form of Money Market Quote Request
EXHIBIT J Form of Money Market Quote
EXHIBIT K Form of Guaranty
EXHIBIT L Form of Additional Borrower Assumption Agreement
EXHIBIT M Form of Contribution Agreement
Schedule 4.08 Subsidiaries
Schedule 5.15(a) Existing Liens
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Exhibit 10(i)A
CREDIT AGREEMENT
AGREEMENT dated as of July 23, 1996 among NATIONAL SERVICE INDUSTRIES,
INC., the other Borrowers parties hereto, the BANKS parties hereto, WACHOVIA
BANK OF GEORGIA, N.A., as Agent and NATIONSBANK, N.A. (SOUTH) and SUNTRUST BANK,
ATLANTA, as Co-Agents.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section 1.01 shall,
for all purposes of this Agreement and any amendment hereto (except as herein
otherwise expressly provided or unless the context otherwise requires), have the
meanings set forth herein:
"Additional Borrower" has the meaning set forth in Section 2.14.
"Adjusted IBOR Rate" has the meaning set forth in Section 2.06(e).
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.06(c).
"Affiliate" of any relevant Person means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the relevant Person (a
"Controlling Person"), (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Wachovia Bank of Georgia, N.A., a national banking
association organized under the laws of the United States of America, in its
capacity as agent for the Banks hereunder, and its successors and permitted
assigns in such capacity.
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Exhibit 10(i)A
"Agent's Letter Agreement" means that certain letter agreement, dated as of
May 24, 1996, between the Parent and the Agent relating to the structure of the
Loans, and certain fees from time to time payable by the Parent to the Agent,
together with all amendments and supplements thereto.
"Agreement" means this Credit Agreement, together with all amendments and
supplements hereto.
"Applicable Margin" has the meaning set forth in Section 2.06(a).
"Assignee" has the meaning set forth in Section 9.08(c).
"Assignment and Acceptance" means an Assignment and Acceptance executed in
accordance with Section 9.08(c) in the form attached hereto as Exhibit D.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as having a
Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate per annum
equal to the higher as of such day of (i) the Prime Rate, and (ii) one-half of
one percent above the Federal Funds Rate. For purposes of determining the Base
Rate or the Federal Funds Rate for any day, changes in the Prime Rate or the
Federal Funds Rate shall be effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear interest at a rate
based upon the Base Rate, and is to be made as a Base Rate Loan pursuant to the
applicable Notice of Borrowing, Section 2.02(f), or Article VIII, as applicable.
"Borrower" or "Borrowers" means, individually and collectively, as the
context shall require, with respect to both Syndicated Dollar Loans, Money
Market Loans, and Foreign Currency Loans, (i) the Parent, (ii) NSI Leasing,
Inc., a Delaware corporation, and I.A. Enterprises, Inc., a California
corporation, and (iii) any additional Wholly Owned Subsidiaries who may become
Additional Borrowers hereunder pursuant to Section 2.14, and in each of the
foregoing cases, their respective successors and permitted assigns, with each
Borrower having several, but not joint, liability as a Borrower hereunder
(except for Parent's liability as to the liability of each and every Borrower
pursuant to the Guaranty).
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Exhibit 10(i)A
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower (i) at the same time by all of the Banks, in the case of a Syndicated
Borrowing, or (ii) at the same time but separately by one or more Banks, in the
case of a Money Market Borrowing, in each case pursuant to Article II. A
Borrowing is a "Base Rate Borrowing", if such Loans are Base Rate Loans, and a
"Euro-Dollar Borrowing", if such Loans are Euro-Dollar Loans. A Borrowing is a
"Dollar Borrowing" if it is a Base Rate Borrowing or a Euro-Dollar Borrowing,
and a "Foreign Currency Borrowing", if such Loans are Foreign Currency Loans
(including any Money Market Loans made in a Foreign Currency). A Borrowing is a
"Money Market Borrowing" if such Loans are made pursuant to Section 2.03 or a
"Syndicated Borrowing" if such Loans are made pursuant to Section 2.01.
"Capital Leases" means leases which are required to be capitalized in
accordance with GAAP.
"Capital Stock" means any nonredeemable capital stock of the Parent or any
Consolidated Subsidiary (to the extent issued to a Person other than the
Parent), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Sec. 9601 et. seq. and its implementing regulations and
amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation and
Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 8.02.
"Closing Certificate" has the meaning set forth in Section 3.01(e).
"Closing Date" means July 23, 1996.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Commitment" means, with respect to each Bank, (i) the amount set forth
opposite the name of such Bank on the signature pages hereof, and (ii) as to any
Bank which enters into any Assignment and Acceptance (whether as transferor Bank
or as Assignee thereunder), the amount of such Bank's Commitment after giving
effect to such Assignment and Acceptance, in each case as such amount may be
reduced from time to time pursuant to Sections 2.08 and 2.09.
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Exhibit 10(i)A
"Compliance Certificate" has the meaning set forth in Section 5.01(c).
"Consolidated Debt" means at any date the Debt of the Parent and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Funded Debt" means, without duplication (i) Long-Term Debt,
plus (ii) Current Maturities of Long-Term Debt, plus (iii) Capital Leases, plus
(iv) Short-Term Debt, plus (iv) all Guarantees of Debt of other Persons (other
than of Debt of the Parent or any Subsidiary), including, obligations of such
other Person to reimburse any bank or other Person in respect of amounts paid or
to be paid under a letter of credit or similar instrument having an expiry date
which is one year or more from the date of measurement.
"Consolidated Operating Profits" means, for any period, the Operating
Profits of the Parent and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means at any date any Subsidiary or other entity
the accounts of which, in accordance with GAAP, would be consolidated with those
of the Parent in its consolidated financial statements as of such date.
"Consolidated Total Assets" means, at any time, the total assets of the
Parent and its Consolidated Subsidiaries, determined on a consolidated basis, as
set forth or reflected on the most recent consolidated balance sheet of the
Parent and its Consolidated Subsidiaries, prepared in accordance with GAAP.
"Consolidated Total Capitalization" means, at any time, the sum of (i)
Stockholder's Equity and (ii) Consolidated Funded Debt.
"Contribution Agreement" means a Contribution Agreement in substantially
the form of Exhibit M to be executed by the Parent and any Subsidiary
Guarantors, together with all amendments and supplements thereto.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Parent, are treated as a single employer under Section
414 of the Code.
"Current Maturities of Long-Term Debt" means all payments in respect of
Long-Term Debt (other than Debt under this Agreement) that are required to be
made within one year from the date of determination, whether or not the
obligation to make such payments would constitute a current liability of the
obligor under GAAP.
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Exhibit 10(i)A
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capital Leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or other Person in
respect of amounts paid or to be paid under a letter of credit or similar
instrument, (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of
others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day, the sum of 2%
plus the then highest interest rate (including the Applicable Margin) which may
be applicable to any Loans hereunder (irrespective of whether any such type of
Loans are actually outstanding hereunder).
"Dollar Equivalent" means the Dollar equivalent of the amount of a Foreign
Currency Loan, determined by the Agent on the basis of its spot rate for the
purchase of the appropriate Foreign Currency with Dollars.
"Dollars" or "$" means dollars in lawful currency of the United States of
America.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in Georgia are authorized by law to close.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
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Exhibit 10(i)A
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower or any Subsidiary required by any Environmental
Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or orders
arising from or in any way associated with any Environmental Requirements,
whether or not entered upon consent or written agreements with an Environmental
Authority or other entity arising from or in any way associated with any
Environmental Requirement, whether or not incorporated in a judgment, decree or
order.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority or by
any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under any
applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to public
health or safety or to the environment and applicable to the Borrower, any
Subsidiary or the Properties, including but not limited to any such requirement
under CERCLA or similar state legislation and all related federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
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Exhibit 10(i)A
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan which bears or is to bear interest at a
rate based upon the Euro-Dollar Rate, and to be made as a Euro-Dollar Loan
pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.06(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Executive Officer" means any of the chief executive officer, president,
executive vice president or senior vice president of the Parent.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to the Agent on such day on such
transactions, as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Parent.
"Fiscal Year" means any fiscal year of the Parent.
"Fixed Rate Borrowing" means a Euro-Dollar Borrowing, a Money Market
Borrowing or a Foreign Currency Borrowing, or any or all of them, as the context
shall require.
"Fixed Rate Loans" means Euro-Dollar Loans, Money Market Loans or Foreign
Currency Loans, or any or all of them, as the context shall require.
"Foreign Bank" has the meaning set forth in Section 2.12(d).
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Exhibit 10(i)A
"Foreign Currencies" means, individually and collectively, as the context
shall require, each of the following, subject to availability: (i) French
francs, Swiss francs, Dutch guilders, Italian lira, Canadian dollars, British
pounds sterling, Belgian francs, German deutsche marks, Japanese yen, Spanish
pesetas and Swedish kroner; and (ii) at the option of the Banks, any other
currency which is freely transferable and convertible into Dollars; provided,
however, that no such other currency under this clause (ii) shall be included as
a Foreign Currency hereunder, or included in a Notice of Borrowing, unless (x) a
Borrower has first submitted a request to the Agent and the Banks that it be so
included, and (y) the Agent and each of the Banks, in their sole discretion,
have agreed to such request.
"Foreign Currency Borrowing" has the meaning set forth in the definition of
"Borrowing."
"Foreign Currency Business Day" shall mean any Domestic Business Day,
excluding one on which trading is not carried on by and between banks in
deposits of the applicable Foreign Currency in the applicable interbank market
for such Foreign Currency.
"Foreign Currency Loan" means (i) a Syndicated Loan to be made as a Foreign
Currency Loan pursuant to the applicable Notice of Borrowing delivered pursuant
to Section 2.02 or (ii) a Money Market Loan to be made in a Foreign Currency
pursuant to the applicable Money Market Quote accepted pursuant to Section
2.03(e), as the case may be.
"Foreign Currency Loan Notes" means promissory notes of any or all of the
Borrowers, as the context shall require, substantially in the form of Exhibit
A-2, evidencing the obligation of the Borrowers to repay the Syndicated Loans
which are Foreign Currency Loans, together with all amendments, consolidations,
modifications, renewals and supplements thereto.
"Foreign Subsidiary" means any Subsidiary which is not organized or created
under the laws of the United States of America or any state thereof or the
District of Columbia.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Agreement.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
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Exhibit 10(i)A
"Guarantors" means any one or more or all of the following, as the context
shall require: (i) the Parent, and (ii) any Subsidiary which becomes a Guarantor
pursuant to Section 5.17.
"Guaranty" means the Guaranty Agreement dated as of even date herewith
substantially in the form of Exhibit K, executed by Parent, and any Subsidiary
which at any time becomes a Guarantor pursuant to Section 5.17, in favor of the
Agent, for the benefit of the Banks, unconditionally Guaranteeing the payment of
all obligations of the other Borrowers hereunder, under the Notes and under the
other Loan Documents executed by them.
"Hazardous Materials" includes, without limitation, (a) solid or hazardous
waste, as defined in the Resource Conservation and Recovery Act of 1980, 42
U.S.C. Sec. 6901 et seq. and its implementing regulations and amendments, or in
any applicable state or local law or regulation, (b) "hazardous substance",
"pollutant", or "contaminant" as defined in CERCLA, or in any applicable state
or local law or regulation, (c) gasoline, or any other petroleum product or
by-product, including, crude oil or any fraction thereof (d) toxic substances,
as defined in the Toxic Substances Control Act of 1976, or in any applicable
state or local law or regulation or (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide
Act of 1975, or in any applicable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time.
"IBOR" has the meaning set forth in Section 2.06(e).
"Interest Period" means: (1) with respect to each Euro-Dollar Borrowing and
Foreign Currency Borrowing (other than a Foreign Currency Borrowing which is a
Money Market Borrowing), subject to paragraph (c) below, the period commencing
on the date of such Borrowing and ending on the numerically corresponding day in
the first, second, third or sixth month thereafter, as the Borrower may elect in
the applicable Notice of Borrowing; provided that:
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Exhibit 10(i)A
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day or Foreign Currency Business Day, as the
case may be, shall be extended to the next succeeding Euro-Dollar Business
Day or Foreign Currency Business Day, as the case may be, unless such
Euro-Dollar Business Day or Foreign Currency Business Day, as the case may
be, falls in another calendar month, in which case such Interest Period
shall, subject to paragraph (c) below, end on the next preceding
Euro-Dollar Business Day or Foreign Currency Business Day, as the case may
be;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day or Foreign Currency Business Day, as the case may be, of a calendar
month (or on a day for which there is no numerically corresponding day in
the appropriate subsequent calendar month) shall end on the last
Euro-Dollar Business Day or Foreign Currency Business Day, as the case may
be, of the appropriate subsequent calendar month; and
(c) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(2) With respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Domestic Business Day shall be extended to the next succeeding
Domestic Business Day; and
(b) no Interest Period which begins before the Termination Date and
would otherwise end after the Termination Date may be selected.
(3) With respect to each Money Market Borrowing, the period commencing on the
date of such Borrowing and ending on the Stated Maturity Date or such other date
or dates as may be specified in the applicable Money Market Quote; provided
that:
(a) any Interest Period (subject to clause (b) below) which would
otherwise end on a day which is not a Domestic Business Day or Foreign
Currency Business Day, as the case may be, shall be extended to the next
succeeding Domestic Business Day or Foreign Currency Business Day, as the
case may be; and
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Exhibit 10(i)A
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
"Lending Office" means, as to each Bank, its office located at its address
set forth on the signature pages hereof (or identified on the signature pages
hereof as its Lending Office) or such other office as such Bank may hereafter
designate as its Lending Office by notice to the Borrower and the Agent. Each
Bank may designate a Lending Office for Syndicated Dollar Loans and a different
Lending Office for Foreign Currency Loans, and the term "Lending Office" shall
in such case mean either such Lending Office, as the context shall require.
"Leverage Percentage" means the percentage which Consolidated Funded Debt
bears to Consolidated Total Capitalization.
"Lien" means, with respect to any asset, any mortgage, deed to secure debt,
deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means a Base Rate Loan, Euro-Dollar Loan, Money Market Loan,
Syndicated Dollar Loan, Foreign Currency Loan or Syndicated Loan, and "Loans"
means Base Rate Loans, Euro-Dollar Loans, Money Market Loans, Syndicated Dollar
Loans, Foreign Currency Loans Syndicated Loans or any or all of them, as the
context shall require.
"Loan Documents" means this Agreement, the Notes, the Guaranty, any other
document evidencing, relating to or securing the Loans, and any other document
or instrument delivered from time to time in connection with this Agreement, the
Notes, the Guaranty or the Loans, as such documents and instruments may be
amended or supplemented from time to time.
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Exhibit 10(i)A
"London Interbank Offered Rate" has the meaning set forth in Section
2.06(c).
"Long-Term Debt" means at any date any Consolidated Debt which matures (or
the maturity of which may at the option of the Parent or any Consolidated
Subsidiary be extended such that it matures) more than one year after such date.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U or X.
"Material Adverse Effect" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business or properties of the Parent and its Consolidated
Subsidiaries taken as a whole, (b) the rights and remedies of the Agent or the
Banks under the Loan Documents, or the ability of any of the Borrowers to
perform its obligations under the Loan Documents to which it is a party, or of
the Parent to pay its obligations under the Guaranty, as applicable, or (c) the
legality, validity or enforceability of any Loan Document.
"Material Subsidiary" means (i) each Borrower other than the Parent and
(ii) each other Consolidated Subsidiary, now existing or hereinafter established
or acquired, that at any time during the period that any Bank has any Commitment
hereunder or any amount payable hereunder or under any Note remains unpaid,
either (x) has or acquires total assets in excess of 10% of Consolidated Total
Assets at the end of the most recent Fiscal Quarter, or (y) contributed more
than 10% of Consolidated Operating Profits for the 4 most recent Fiscal Quarters
then ended (or, with respect to any Subsidiary which existed during the entire 4
Fiscal Quarter period but was acquired by the Parent during such period, which
would have contributed more than 10% of Consolidated Operating Profits for such
period had it been a Subsidiary for the entire period, as determined on a pro
forma basis in accordance with GAAP).
"Money Market Borrowing Date" has the meaning specified in Section 2.03(b).
"Money Market Loan" means a Loan which bears or is to bear interest at a
Money Market Rate, and to be made as a Money Market Loan pursuant to the
applicable Money Market Quote Request.
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Exhibit 10(i)A
"Money Market Loan Notes" means the promissory notes of any or all of the
Borrowers, as the context shall require, substantially in the form of Exhibit
A-3, evidencing the obligation of the Borrowers to repay the Money Market Loans,
together with all amendments, consolidations, modifications, renewals and
supplements thereto.
"Money Market Quote" has the meaning specified in Section 2.03(c).
"Money Market Quote Request" has the meaning specified in Section 2.03(b).
"Money Market Rate" has the meaning specified in Section 2.03(c)(ii)(C).
"Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3)
of ERISA.
"Net Income" means, as applied to any Person for any period, the aggregate
amount of net income of such Person, after taxes, for such period, as determined
in accordance with GAAP.
"Notes" means the Syndicated Dollar Loan Notes, the Money Market Loan
Notes, the Foreign Currency Loan Notes, or any or all of them, as the context
shall require.
"Notice of Borrowing" has the meaning set forth in Section 2.02(a).
"Officer's Certificate" has the meaning set forth in Section 3.01(f).
"Operating Profits" means, as applied to any Person for any period, the sum
of (i) net revenues, less (ii) cost of goods and services sold, less (iii)
operating expenses (including depreciation and amortization) of such Person for
such period, as determined in accordance with GAAP.
"Parent" means National Service Industries, Inc., a Delaware corporation,
and its successors and permitted assigns.
"Participant" has the meaning set forth in Section 9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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Exhibit 10(i)A
"Performance Pricing Determination Date" has the meaning set forth in
Section 2.06(a).
"Person" means an individual, a corporation, a partnership, a limited
liability company, an unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code and is either (i) maintained by a member of the Controlled Group
for employees of any member of the Controlled Group or (ii) maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which a member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding 5 plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by Wachovia. Wachovia lends
at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise used or
occupied by the Parent or any Subsidiary, wherever located.
"Proprietary Information" has the meaning set forth in Section 9.09.
"Redeemable Preferred Stock" of any Person means any preferred stock issued
by such Person which is at any time prior to the Termination Date either (i)
mandatorily redeemable (by required sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Refunding Loan" means a new Syndicated Loan made on the day on which an
outstanding Syndicated Loan is maturing or a Base Rate Borrowing is being
converted to a Fixed Rate Borrowing, if and to the extent that the proceeds
thereof are used entirely for the purpose of paying such maturing Loan or Loan
being converted, excluding any difference between the amount of such maturing
Loan or Loan being converted and any greater amount being borrowed on such day
and actually either being made available to the Borrower pursuant to Section
2.02(c) or remitted to the Agent as provided in Section 2.12, in each case as
contemplated in Section 2.02(d).
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Exhibit 10(i)A
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Required Banks" means at any time Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments are no longer in
effect, Banks holding at least 51% of the aggregate outstanding principal amount
of the sum of the (i) Syndicated Loans to all Borrowers and (ii) Money Market
Loans to all Borrowers.
"Reuters Screen" shall mean, when used in connection with any designated
page and the London Interbank Offered Rate or IBOR, as the case may be, 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 the London Interbank Offered Rate or IBOR).
"Short-Term Debt" means at any date any Consolidated Debt which matures
less than one year after such date, and the maturity of which may not at the
option of the Parent or any Consolidated Subsidiary be extended such that it
matures more than one year after such date, but excluding any such Consolidated
Debt which represents contingent obligations to reimburse any bank or other
Person in respect of amounts to be paid under an undrawn letter of credit or
similar instrument having an expiry date which is less than one (1) year from
the date of measurement.
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Exhibit 10(i)A
"Stated Maturity Date" means, with respect to any Money Market Loan, the
Stated Maturity Date therefor specified by the Bank in the applicable Money
Market Quote.
"Stockholders' Equity" means, at any time, the shareholders' equity of the
Parent and its Consolidated Subsidiaries, as set forth or reflected on the most
recent consolidated balance sheet of the Parent and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
Preferred Stock of the Parent or any of its Consolidated Subsidiaries.
"Subsidiary" means any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Parent.
"Syndicated Dollar Loan Notes" means promissory notes of any or all of the
Borrowers, as the context shall require, substantially in the form of Exhibit
"A-1", evidencing the obligation of the Borrowers to repay the Syndicated Dollar
Loans, together with all amendments, consolidations, modifications, renewals,
and supplements thereto.
"Syndicated Dollar Loan" means a Loan made in Dollars, which shall be
either a Base Rate Loan or a Euro-Dollar Loan.
"Syndicated Loans" means (i) Syndicated Dollar Loans and (ii) Foreign
Currency Loans (other than Money Market Loans).
"Tax Benefit" has the meaning set forth in Section 2.12(d).
"Taxes" has the meaning set forth in Section 2.12(d).
"Telerate" means, when used in connection with any designated page and the
London Interbank Offered Rate or IBOR, 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 the London Interbank
Offered Rate or IBOR).
"Termination Date" means the earlier of (i) July 22, 2001, (ii) the date
the Commitments are terminated pursuant to Section 6.01 following the occurrence
of an Event of Default, or (iii) the date the Borrower terminates the
Commitments entirely pursuant to Section 2.08.
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Exhibit 10(i)A
"Third Parties" means all lessees, sublessees, licensees and other users of
the Properties, excluding those users of the Properties in the ordinary course
of the Parent's or any Subsidiary's business and on a temporary basis.
"Transferee" has the meaning set forth in Section 9.08(d).
"Unused Commitment" means at any date, with respect to any Bank, an amount
equal to its Commitment less the aggregate outstanding principal amount of its
Syndicated Dollar Loans and Foreign Currency Loans (but not its Money Market
Loans, whether or not they are Foreign Currency Loans).
"Wachovia" means Wachovia Bank of Georgia, N.A., a national banking
association, and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of capital
stock or other ownership interests of which (except (i) directors' qualifying
shares, (ii) Redeemable Preferred Stock, and (ii) in the case of any Foreign
Subsidiary, such nominal ownership interests which are required to be held by
third parties under the laws of the foreign jurisdiction under which such
Foreign Subsidiary was incorporated or organized) are at the time directly or
indirectly owned by the Parent.
SECTION 1.02. Accounting Terms & Determinations. Unless otherwise specified
herein, all terms of an accounting character used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by the
Parent's independent public accountants or otherwise required by a change in
GAAP) with the most recent audited consolidated financial statements of the
Parent and its Consolidated Subsidiaries delivered to the Banks unless with
respect to any such change concurred in by the Parent's independent public
accountants or required by GAAP, in determining compliance with any of the
provisions of this Agreement or any of the other Loan Documents: (i) the Parent
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements, or (ii) the Required Banks shall so
object in writing within 30 days after the delivery of such financial
statements, in either of which events such calculations shall be made on a basis
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under Section 5.01
hereof, shall mean the financial statements referred to in Section 4.04).
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Exhibit 10(i)A
SECTION 1.03. References. Unless otherwise indicated, references in this
Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
SECTION 1.04. Use of Definde Terms. All terms defined in this Agreement
shall have the same defined meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall require
otherwise.
SECTION 1.05. Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend Syndicated Loans. Each Bank severally
agrees, on the terms and conditions set forth herein, to make Loans (which may
be, at the option of the Borrower and subject to the terms and conditions
hereof, Foreign Currency Loans or Syndicated Dollar Loans, and Syndicated Dollar
Loans may be Base Rate Loans or Euro-Dollar Loans) to the Borrowers (which may
be made to any of the Borrowers) from time to time before the Termination Date;
provided that,
(i) immediately after each such Loan is made, the sum of the aggregate
outstanding principal amount of the Syndicated Dollar Loans and the Dollar
Equivalent of the aggregate principal amount of the Foreign Currency Loans
by such Bank to all Borrowers shall not exceed the amount of its
Commitment, and
(ii) the aggregate outstanding principal amount of all Syndicated
Loans and Money Market Loans of all Banks to all Borrowers shall not exceed
the aggregate amount of the Commitments.
The Dollar Equivalent of each Foreign Currency Loan on the date each Foreign
Currency Loan is disbursed pursuant hereto shall be deemed to be the amount of
such Foreign Currency Loan outstanding for the purpose of calculating the
aggregate outstanding principal amount of the Foreign Currency Loans for
purposes of
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Exhibit 10(i)A
clause (ii) of Section 2.01 and clause (ii) of Section 2.03(a); provided,
however, that if at the time of receipt of any Notice of Borrowing or Money
Market Quote Request, the aggregate outstanding principal amount of all
Syndicated Dollar Loans and Money Market Loans of all Banks and the Dollar
Equivalent of the aggregate principal amount of the Foreign Currency Loans of
all Banks is equal to or greater than 75% of the aggregate amount of all of the
Commitments, then the Dollar Equivalent of each Foreign Currency Loan shall be
calculated as of such date, rather than as of the date such Foreign Currency
Loans were disbursed, and in the event that, as a result of such calculation,
the aggregate outstanding principal amount of all Syndicated Dollar Loans and
Money Market Loans of all Banks and the Dollar Equivalent of the aggregate
principal amount of the Foreign Currency Loans of all Banks exceeds the
aggregate amount of all of the Commitments, then (i) no additional Borrowings
shall be permitted and (ii) the Foreign Currency Loans shall be subject to
mandatory repayment pursuant to the provisions of Section 2.11(b). Each (i)
Euro-Dollar Borrowing or Foreign Currency Borrowing under this Section shall be
in an aggregate principal amount of $5,000,000 (or the Dollar Equivalent thereof
in any Foreign Currency) or any larger integral multiple of $1,000,000 and
(ii)Base Rate Borrowing under this Section shall be in an aggregate principal
amount of $1,000,000 or any larger integral multiple of $250,000 (except in each
case that any such Syndicated Borrowing may be in the aggregate amount of the
Unused Commitments) and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the foregoing limits, the
Borrower may borrow under this Section, repay or, to the extent permitted by
Section 2.10, prepay Syndicated Loans and reborrow under this Section at any
time before the Termination Date. Notwithstanding the foregoing, if there shall
occur on or prior to the date of any Foreign Currency Loan any change in
national or international financial, political or economic conditions or
currency exchange rates or exchange controls which would in the opinion of the
Agent make it impracticable to make such Foreign Currency Loan, then the Agent
shall forthwith give notice thereof to the Borrower and the Banks, and such
Foreign Currency Loan shall be made on such date as Base Rate Loans, unless the
Borrower notifies the Agent prior to the Borrowing that it elects not to borrow
on such date.
SECTION 2.02 Method of Borrowing. (a) The Borrower shall give the Agent
notice (a "Notice of Borrowing"), which shall be substantially in the form of
Exhibit E, prior to 11:00 A.M. (Atlanta, Georgia time) for Dollar Borrowings,
and 9:30 A.M. (Atlanta, Georgia time) for Foreign Currency Borrowings, on the
same Domestic Business Day of each Base Rate Borrowing, and at least
3-Euro-Dollar Business Days before each
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Exhibit 10(i)A
Euro-Dollar Borrowing, and at least 3 Foreign Currency Business Days before each
Foreign Currency Borrowing, specifying:
(i) the date of such Syndicated Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing, a Euro-Dollar Business
Day in the case of a Euro-Dollar Borrowing, or a Foreign Currency Business
Day in the case of a Foreign Currency Borrowing,
(ii) the aggregate amount of such Syndicated Borrowing,
(iii) whether the Syndicated Loans comprising such Borrowing are to be
Base Rate Loans, Euro-Dollar Loans or Foreign Currency Loans, and if such
Loans are to be Foreign Currency Loans, specifying the Foreign Currency,
and
(iv) in the case of a Fixed Rate Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable share of such
Borrowing and such Notice of Borrowing, once received by the Agent, shall not
thereafter be revocable by the requesting Borrower.
(c) Not later than 2:00 P.M. (Atlanta, Georgia time) for Base Rate
Borrowings, and 11:00 A.M. (Atlanta, Georgia time) for all other Borrowings, on
the date of each Syndicated Borrowing, each Bank shall (except as provided in
paragraph (d) of this Section) make available its ratable share of such
Syndicated Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in Section 9.01, which
funds shall be in Dollars, if such Borrowing is a Dollar Borrowing, and in the
applicable Foreign Currency, if such Borrowing is a Foreign Currency Borrowing.
Unless the Agent determines that any applicable condition specified in Article
III has not been satisfied, the Agent will make the funds so received from the
Banks available to the requesting Borrower at the Agent's aforesaid address by
no later than 4:00 P.M. (local time at such address) on the date of such
Syndicated Borrowing. Unless the Agent receives notice from a Bank, at the
Agent's address referred to in or specified pursuant to Section 9.01, no later
than 4:00 P.M. (local time at such address) on the Domestic Business Day before
the date of a Syndicated Borrowing stating that such Bank will not make a
Syndicated Loan in connection with such Syndicated Borrowing, the Agent shall be
entitled to assume that such Bank will make a
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Exhibit 10(i)A
Syndicated Loan in connection with such Syndicated Borrowing and, in reliance on
such assumption, the Agent may (but shall not be obligated to) make available
such Bank's ratable share of such Syndicated Borrowing to the requesting
Borrower for the account of such Bank. If the Agent makes such Bank's ratable
share available to the requesting Borrower and such Bank, if such Bank does not
pay such share upon demand by the Agent, does not in fact make its ratable share
of such Syndicated Borrowing available on such date, the Agent shall be entitled
to recover such Bank's ratable share from such Bank or the Borrower (and for
such purpose shall be entitled to charge such amount to any account of the
requesting Borrower maintained with the Agent), together with interest thereon
for each day during the period from the date of such Syndicated Borrowing until
such sum shall be paid in full at a rate per annum equal to the rate at which
the Agent determines that it obtained (or could have obtained) overnight Federal
funds to cover such amount for each such day during such period, provided that
(i) any such payment by the requesting Borrower of such Bank's ratable share and
interest thereon shall be without prejudice to any rights that the requesting
Borrower may have against such Bank and (ii) until such Bank has paid its
ratable share of such Syndicated Borrowing, together with interest pursuant to
the foregoing, it will have no interest in or rights with respect to such
Syndicated Borrowing for any purpose hereunder. If the Agent does not exercise
its option to advance funds for the account of such Bank, it shall forthwith
notify the requesting Borrower of such decision.
(d) If any Bank makes a new Syndicated Loan hereunder on a day on which the
requesting Borrower is to repay all or any part of an outstanding Syndicated
Loan from such Bank, such Bank shall apply the proceeds of its new Syndicated
Loan to make such repayment as a Refunding Loan and only an amount equal to the
difference (if any) between the amount being borrowed and the amount of such
Refunding Loan shall be made available by such Bank to the Agent as provided in
paragraph (c) of this Section, or remitted by the requesting Borrower to the
Agent as provided in Section 2.12, as the case may be; provided, however, that
if the Syndicated Loan which is to be repaid is a Foreign Currency Loan, the
foregoing provisions shall apply only if the new Syndicated Loan is to be made
in the same Foreign Currency.
(e) Notwithstanding anything to the contrary contained in this Agreement,
no Fixed Rate Borrowing may be made if there shall have occurred a Default or an
Event of Default, which Default or Event of Default shall not have been cured or
waived, and all Refunding Loans made during the continuation of any Default or
Event of Default shall be made as Base Rate Loans (but shall bear interest at
the Default Rate, if applicable).
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Exhibit 10(i)A
(f) In the event that a Notice of Borrowing fails to specify whether the
Syndicated Loans comprising such Borrowing are to be Base Rate Loans,
Euro-Dollar Loans or Foreign Currency Loans, such Syndicated Loans shall be made
as Base Rate Loans. If the requesting Borrower is otherwise entitled under this
Agreement to repay any Syndicated Loans maturing at the end of an Interest
Period applicable thereto with the proceeds of a new Syndicated Borrowing, and
the requesting Borrower fails to repay such Syndicated Loans using its own
moneys and fails to give a Notice of Borrowing in connection with such new
Borrowing, a new Syndicated Borrowing shall be deemed to be made on the date
such Syndicated Loans mature in an amount equal to the principal amount of the
Syndicated Loans so maturing, and the Syndicated Loans comprising such new
Syndicated Borrowing shall be Base Rate Loans, which shall be in the Dollar
Equivalent of such maturing Loans, if such maturing Loans were Foreign Currency
Loans.
(g) Notwithstanding anything to the contrary contained herein, there shall
not be more than an aggregate of 12 Fixed Rate Borrowings to all Borrowers
outstanding at any given time.
SECTION 2.03. Money Market Loans. (a) In addition to making Syndicated
Borrowings, any Borrower may, as set forth in this Section 2.03, request the
Banks to make offers to make Money Market Borrowings available to the requesting
Borrower. The Banks may, but shall have no obligation to, make such offers and
the requesting Borrower may, but shall have no obligation to, accept any such
offers in the manner set forth in this Section 2.03, provided that:
(i) the number of interest rates applicable to Money Market Loans
which may be outstanding at any given time is subject to the provisions of
Section 2.02(g);
(ii) the aggregate principal amount of all Money Market Loans to all
Borrowers, together with the aggregate principal amount of all Syndicated
Loans to all Borrowers, at any one time outstanding shall not exceed the
aggregate amount of the Commitments of all of the Banks at such time; and
(iii) the Money Market Loans of any Bank will not reduce such Bank's
obligation to lend its remaining Unused Commitment.
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Exhibit 10(i)A
(b) When any Borrower wishes to request offers to make Money Market Loans,
it shall give the Agent (which shall promptly notify the Banks) notice
substantially in the form of Exhibit I hereto (a "Money Market Quote Request")
so as to be received no later than 11:00 A.M. (Atlanta, Georgia time) at least 1
Domestic Business Day (or, in the case of a request pertaining to a Money Market
Loan to be made in a Foreign Currency, 4 Foreign Currency Business Days) prior
to the date of the Money Market Borrowing proposed therein (or such other time
and date as the Borrower and the Agent, with the consent of the Required Banks,
may agree), specifying:
(i) the proposed date of such Money Market Borrowing, which shall be a
Euro-Dollar Business Day (or, in the case of a request pertaining to a
Money Market Loan to be made in a Foreign Currency, a Foreign Currency
Business Day)(the "Money Market Borrowing Date");
(ii) the maturity date (or dates) (each a "Stated Maturity Date") for
repayment of each Money Market Loan to be made as part of such Money Market
Borrowing (which Stated Maturity Date shall be that date occurring not less
than 7-days but not more than 270 days from the date of such Money Market
Borrowing); provided that the Stated Maturity Date for any Money Market
Loan may not extend beyond the Termination Date (as in effect on the date
of such Money Market Quote Request);
(iii) whether such Money Market Loan is to be made in Dollars or in a
Foreign Currency, and if in a Foreign Currency, specifying the Foreign
Currency requested; and
(iv) the aggregate amount of principal to be requested by the Borrower
as a result of such Money Market Borrowing, which shall be at least
$5,000,000 (or the Dollar Equivalent thereof), and in larger integral
multiples of $1,000,000 (or the Dollar Equivalent thereof), but shall not
cause the limits specified in Section 2.03(a) to be violated.
The Borrower may request offers to make Money Market Loans having up to 2
different Stated Maturity Dates in a single Money Market Quote Request; provided
that the request for each separate Stated Maturity Date shall be deemed to be a
separate Money Market Quote Request for a separate Money Market Borrowing.
Except as otherwise provided in the immediately preceding sentence, after the
first Money Market Quote Request has been given hereunder, no Money Market Quote
Request shall be given until at least 3 Domestic Business Days after all prior
Money Market Quote Requests have been fully processed by the Agent, the Banks
and the Borrower pursuant to this Section 2.03.
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Exhibit 10(i)A
(c) (i) Each Bank may, but shall have no obligation to, submit a response
containing an offer to make a Money Market Loan substantially in the form of
Exhibit J hereto (a "Money Market Quote") in response to any Money Market Quote
Request; provided that, if the Borrower's request under Section 2.03(b)
specified more than 1-Stated Maturity Date, such Bank may, but shall have no
obligation to, make a single submission containing a separate offer for each
such Stated Maturity Date and each such separate offer shall be deemed to be a
separate Money Market Quote. Each Money Market Quote must be submitted to the
Agent not later than 10:00 A.M. (Atlanta, Georgia time) on the Money Market
Borrowing Date (or, in the case of a Money Market Quote pertaining to Money
Market Loans to be made in a Foreign Currency, 2 Foreign Currency Business Days
prior to the Money Market Borrowing Date); provided that any Money Market Quote
submitted by Wachovia may be submitted, and may only be submitted, if Wachovia
notifies the Borrower of the terms of the offer contained therein not later than
9:45 A.M. (Atlanta, Georgia time) on the Money Market Borrowing Date (or, in the
case of a Money Market Quote pertaining to Money Market Loans to be made in a
Foreign Currency, 2 Foreign Currency Business Days prior to the Money Market
Borrowing Date) (or 15 minutes prior to the time that the other Banks are
required to have submitted their respective Money Market Quotes). Subject to
Section 6.01, any Money Market Quote so made shall be irrevocable except with
the written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall specify:
(A) the proposed Money Market Borrowing Date and the Stated Maturity
Date therefor;
(B) whether such Loan is to be made in Dollars or in Foreign Currency,
and if in a Foreign Currency, specifying such Foreign Currency, the
principal amounts of the Money Market Loan which the quoting Bank is
willing to make for the applicable Money Market Quote, which principal
amounts (x) may be greater than or less than the Commitment of the quoting
Bank, (y)-shall be at least $1,000,000 (or the Dollar Equivalent thereof)
or a larger integral multiple of $500,000 (or the Dollar Equivalent
thereof), and (z) may not exceed the principal amount of the Money Market
Borrowing for which offers were requested;
(C) the rate of interest per annum (rounded upwards, if necessary, to
the nearest 1/10,000th of 1%) offered for each such Money Market Loan (such
rate being hereinafter referred to as the "Money Market Rate"); and
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Exhibit 10(i)A
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Borrower, no Money Market Quote
shall contain qualifying, conditional or similar language or propose terms other
than or in addition to those set forth in the applicable Money Market Quote
Request (other than setting forth the principal amount of the Money Market Loan
which the quoting Bank is willing to make for the applicable Interest Period)
and, in particular, no Money Market Quote may be conditioned upon acceptance by
the Borrower of all (or some specified minimum) of the principal amount of the
Money Market Loan for which such Money Market Quote is being made.
(d) The Agent shall as promptly as practicable after the Money Market Quote
is submitted (but in any event not later than 10:30 A.M. (Atlanta, Georgia
time)) on the Money Market Borrowing Date, notify the Borrower of the terms (i)
of any Money Market Quote submitted by a Bank that is in accordance with Section
2.03(c) and (ii) of any subsequent Money Market Quote that amends, modifies or
is otherwise inconsistent with a previous Money Market Quote submitted by such
Bank with respect to the same Money Market Quote Request. Any such subsequent
Money Market Quote shall be disregarded by the Agent unless such subsequent
Money Market Quote is submitted solely to correct a manifest error in such
former Money Market Quote. The Agent's notice to the Borrower shall specify (A)
the principal amounts of the Money Market Borrowing for which offers have been
received and (B) the respective principal amounts and Money Market Rates so
offered by each Bank (identifying the Bank that made each Money Market Quote).
(e) Not later than 11:00 A.M. (Atlanta, Georgia time) on the Money Market
Borrowing Date (or, in the case of a Money Market Quote pertaining to Money
Market Loans to be made in a Foreign Currency, 2 Foreign Currency Business Days
prior to the Money Market Borrowing Date), the Borrower shall notify the Agent
of its acceptance or nonacceptance of the offers so notified to it pursuant to
Section 2.03(d) and the Agent shall promptly notify each Bank which submitted an
offer. In the case of acceptance, such notice shall specify the aggregate
principal amount of offers (for each Stated Maturity Date) that are accepted.
The requesting Borrower may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each Money Market Borrowing may
not exceed the applicable amount set forth in the related Money Market
Quote Request;
(ii) the aggregate principal amount of each Money Market Loan
comprising a Money Market Borrowing shall be at least $5,000,000 (or the
Dollar Equivalent thereof), and in larger integral multiples of $1,000,000
(or the Dollar Equivalent thereof), but shall not cause the limits
specified in Section 2.03(a) to be violated;
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Exhibit 10(i)A
(iii) acceptance of offers may only be made in ascending order of
Money Market Rates; and
(iv) the requesting Borrower may not accept any offer where the Agent
has advised the requesting Borrower that such offer fails to comply with
Section 2.03(c)(ii) or otherwise fails to comply with the requirements of
this Agreement (including without limitation, Section 2.03(a)).
If offers are made by 2 or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Stated Maturity Date, the principal amount of Money
Market Loans in respect of which such offers are accepted shall be allocated by
the requesting Borrower among such Banks as nearly as possible in proportion to
the aggregate principal amount of such offers. Determinations by the requesting
Borrower of the amounts of Money Market Loans shall be conclusive in the absence
of manifest error.
(f) Any Bank whose offer to make any Money Market Loan has been accepted
shall, not later than 1:00 P.M. (Atlanta, Georgia time) on the Money Market
Borrowing Date, make the amount of such Money Market Loan allocated to it
available to the Agent at its address referred to in Section 9.01 in immediately
available funds. The amount so received by the Agent shall, subject to the terms
and conditions of this Agreement, be made available to the Borrower on such date
by depositing the same, in immediately available funds, not later than 4:00 P.M.
(Atlanta, Georgia time), in an account of such Borrower maintained with
Wachovia.
(g) After any Money Market Loan has been funded, the Agent shall notify the
Banks of the aggregate principal amount of the Money Market Quotes received and
the highest and lowest rates included in such Money Market Quotes.
SECTION 2.04. Notes. (a) The Syndicated Loans of each Bank to each Borrower
shall be evidenced by a single Syndicated Dollar Loan Note in an amount equal to
the original principal amount of such Bank's Commitment and a single Foreign
Currency Loan Note of such Borrower, each payable to the order of such Bank for
the account of its Lending Office.
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Exhibit 10(i)A
(b) The Money Market Loans made by any Bank to any Borrower shall be
evidenced by a single Money Market Loan Note of such Borrower payable to the
order of such Bank for the account of its Lending Office in an amount equal to
the original principal amount of the aggregate Commitments.
(c) Upon receipt of each Bank's Notes pursuant to Section 3.01, the Agent
shall deliver such Notes to such Bank. Each Bank shall record, and prior to any
transfer of its Notes shall endorse on the schedules forming a part thereof
appropriate notations to evidence, the date, amount and maturity of, and
effective interest rate for, each Loan made by it, the date and amount of each
payment of principal made by the Borrower with respect thereto, whether such
Loan is a Base Rate Loan, Euro-Dollar Loan or Foreign Currency Loan, and if a
Foreign Currency Loan, a specification of the Foreign Currency, and such
schedules of each such Bank's Notes shall constitute rebuttable presumptive
evidence of the principal amounts owing and unpaid on such Bank's Notes;
provided that the failure of any Bank to make, or any error in making, any such
recordation or endorsement shall not affect the obligation of the Borrower
hereunder or under the Notes or the ability of any Bank to assign its Notes.
Each Bank is hereby irrevocably authorized by the Borrower so to endorse its
Notes and to attach to and make a part of any Note a continuation of any such
schedule as and when required.
SECTION 2.05.Maturity Loans. (a) Each Loan included in any Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Borrowing.
(b) Notwithstanding the foregoing, the outstanding principal amount of the
Loans, if any, together with all accrued but unpaid interest thereon, if any,
shall be due and payable on the Termination Date.
SECTION 2.06. Interest Rates. (a) "Applicable Margin" means: (i) for the
period commencing on the Closing Date to and including the first Performance
Pricing Determination Date, (x) for any Base Rate Loan, 0.0% and (y) for any
Euro-Dollar Loan or Foreign Currency Loan, 0.125%; and (ii) from and after the
first Performance Pricing Determination Date, for each type of Loan, the
percentage determined on each Performance Pricing Determination Date by
reference to the table set forth below as to such type of Loan and the Leverage
Percentage for the quarterly or annual period ending immediately prior to such
Performance Pricing Determination Date.
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Exhibit 10(i)A
Euro-Dollar or
Foreign Currency Base Rate
Leverage Percentage Applicable Margin Applicable Margin
less than 25% 0.125% 0.0%
greater than or equal to 25%
but less than 35% 0.15% 0.0%
greater than or equal to 35%
but less than 45% 0.175% 0.0%
greater than of equal to 45% 0.25% 0.0%
In determining interest for purposes of this Section 2.06 and fees for
purposes of Section 2.07, the Borrower and the Banks shall refer to the Parent's
most recent consolidated quarterly and annual (as the case may be) financial
statements delivered pursuant to Section 5.01(a) or (b), as the case may be. If
such financial statements require a change in interest pursuant to this Section
2.06 or fees pursuant to Section 2.07, the Borrower shall deliver to the Agent,
along with such financial statements, a notice to that effect, which notice
shall set forth in reasonable detail the calculations supporting the required
change. The "Performance Pricing Determination Date" is the date which is the
last date on which such financial statements are permitted to be delivered
pursuant to Section 5.01(a) or (b), as applicable. Any such required change in
interest and fees shall become effective on such Performance Pricing
Determination Date, and shall be in effect until the next Performance Pricing
Determination Date, provided that: (x) for Fixed Rate Loans, changes in interest
shall only be effective for Interest Periods commencing on or after the
Performance Pricing Determination Date; and (y) no fees or interest shall be
decreased pursuant to this Section 2.06 or Section 2.07 if a Default is in
existence under Section 5.01(a) or (b) on the Performance Pricing Determination
Date.
(b) Each Base Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the Base Rate for such day plus the Applicable
Margin. Such interest shall be payable for each Interest Period on the last day
thereof. Any overdue principal of and, to the extent permitted by applicable
law, overdue interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
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Exhibit 10(i)A
equal to the sum of the Applicable Margin plus the applicable Adjusted London
Interbank Offered Rate for such Interest Period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 3 months, at intervals of 3 months after the first day thereof. Any
overdue principal of and, to the extent permitted by law, overdue interest on
any Euro-Dollar Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upwards,
if necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such Euro-Dollar Loan, the rate per annum
determined on the basis of the offered rate for deposits in Dollars of amounts
equal or comparable to the principal amount of such Euro-Dollar Loan offered for
a term comparable to such Interest Period, which rates appear on the Telerate
Page 3750 effective as of 11:00 A.M., London time, 2 Euro-Dollar Business Days
prior to the first day of such Interest Period, provided that if no such offered
rates appear on such page, the "London Interbank Offered Rate" for such Interest
Period will be the arithmetic average (rounded upward, if necessary, to the next
higher 1/100th of 1%) of rates quoted by not less than 2 major banks in New York
City, selected by the Agent, at approximately 10:00 A.M., New York City time, 2
Euro-Dollar Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered to leading European banks for a period comparable to
such Interest Period in an amount comparable to the principal amount of such
Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents). The Adjusted London Interbank Offered Rate
shall be adjusted automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
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Exhibit 10(i)A
(d) Each Money Market Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Money Market Loan is made until
it becomes due, at a rate per annum equal to the applicable Money Market Rate
set forth in the relevant Money Market Quote. Such interest shall be payable on
the Stated Maturity Date thereof, and, if the Stated Maturity Date occurs more
than 90 days after the date of the relevant Money Market Loan, at intervals of
90 days after the first day thereof. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
(e) Each Foreign Currency Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Applicable Margin plus the applicable Adjusted
IBOR Rate for such Interest Period. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than 3 months, at intervals of 3 months after the first day thereof. Any overdue
principal of and, to the extent permitted by law, overdue interest on any
Foreign Currency Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
"Adjusted IBOR Rate" means, with respect to each Interest Period for a
Foreign Currency Loan, the sum of (i) the rate obtained by dividing (A) IBOR 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 as defined
in Regulation D (or against any successor category of liabilities as defined in
Regulation D), plus (ii) if the relevant Foreign Currency Loan is in British
pounds sterling, a percentage sufficient to compensate the Banks for the cost of
complying with any reserves, liquidity and/or special deposit requirements of
the Bank of England directly or indirectly affecting the maintenance or funding
of such Foreign Currency Loan.
"IBOR" means, for any Interest Period, with respect to Foreign Currency
Loans, the offered rate for deposits in the applicable Foreign Currency, for a
period comparable to such Interest Period and in an amount comparable to the
amount of such Foreign Currency Loan appearing on Reuters Screen Page FRBD,
FRBE, FRBF or FRBG, as applicable (or, if it is unavailable on the Reuters
Screen, on Telerate Page 3750, or, if it is unavailable on either the Reuters
Screen or the Telerate Screen, as determined by the Agent as provided below) as
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Exhibit 10(i)A
of 11:00 A.M. (London, England time) on the day that is two Business Days prior
to the first day of the Interest Period. If the foregoing rate is unavailable
from either the Reuters Screen or Telerate for any reason, then such rate shall
be determined by the Agent from any other interest rate reporting service of
recognized standing designated in writing by the Agent to the Borrower.
(f) The Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the requesting Borrower and the
Banks by telecopier of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) After the occurrence and during the continuance of an Event of Default,
the principal amount of the Loans of all Borrowers (and, to the extent permitted
by applicable law, all accrued interest thereon) may, at the election of the
Required Banks, bear interest at the Default Rate.
SECTION 2.07. Fees. (a) The Parent shall pay to the Agent, for the ratable
account of each Bank, a facility fee, calculated in the manner provided in the
last paragraph of Section 2.06(a)(ii), on the aggregate amount of such Bank's
Commitment (without taking into account the amount of the outstanding Loans made
by such Bank), at a rate per annum equal to: (i) for the period commencing on
the Closing Date to and including the first Performance Pricing Determination
Date, 0.065%; and (ii) from and after the first Performance Pricing
Determination Date, the percentage determined on each Performance Pricing
Determination Date by reference to the table set forth below and the Leverage
Percentage for the quarterly or annual period ending immediately prior to such
Performance Pricing Determination Date:
Leverage Percentage Facility Fee
less than 25% 0.065%
greater than or equal to 25%
but less than 35% 0.075%
Greater than or equal to 35% 0.09%
but less than 45%
Greater than 45% 0.125%
Such facility fees shall accrue from and including the Closing Date to (but
excluding the Termination Date) and shall be payable on each March 31, June 30,
September 30 and December 31 and on the Termination Date.
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Exhibit 10(i)A
(b) The Parent shall pay to the Agent, for the account and sole benefit of
the Agent, such fees and other amounts at such times as set forth in the Agent's
Letter Agreement.
SECTION 2.08. Optional Termination Or Reduction Of Commitments. The
Borrower may, upon at least 3 Domestic Business Days' notice to the Agent,
terminate the Commitments in their entirety at any time, or proportionately
reduce the Commitments from time to time by an aggregate amount of at least
$5,000,000 or any larger integral multiple of $1,000,000. If the Commitments are
terminated in their entirety, all accrued fees (as provided under Section 2.07)
shall be due and payable on the effective date of such termination.
SECTION 2.09. Manditory Reduction or Termination of Commitments. (a) If,
upon a transfer of assets by the Parent or any Subsidiary (other than transfers
(i) of inventory in the ordinary course of business, (ii) of obsolete or
unnecessary equipment, real estate or other fixed assets in accordance with the
Parent's historical practices, (iii) made in connection with sale and lease-back
transactions or asset securitization transactions to the extent not prohibited
by the other terms and conditions of this agreement, and (iv) made to the Parent
or another Subsidiary), or the discontinuance or elimination of a Subsidiary or
division (in a single transaction or in a series of related transactions), the
aggregate assets so transferred or utilized in a Subsidiary or division to be so
discontinued during any Fiscal Year, when combined with all other assets
transferred, and all other assets utilized in all other Subsidiaries or
divisions discontinued during such Fiscal Year, constitute more than 25% of
Consolidated Total Assets measured as of the end of the immediately preceding
Fiscal Year, then the Parent shall promptly notify the Agent and the Banks
thereof, and upon written notice from the Agent (acting at the direction of the
Required Banks) sent to the Parent within 30 days after the Agent's receipt of
such notice from the Parent, the entire amount of the Commitments then in effect
shall be terminated effective 364 days after the date of such notice from the
Agent to the Parent, and all of the Loans shall be prepaid pursuant to Section
2.11.
(b) The Commitments shall terminate on the Termination Date and any Loans
then outstanding (together with accrued interest thereon) shall be due and
payable on such date.
SECTION 2.10. Optional Prepayments. (a) The Borrowers may, upon at least 1
Domestic Business Days' notice to the Agent, prepay any Base Rate Borrowing in
whole at any time, or from time to time in part in amounts aggregating at least
$1,000,000 or any larger integral multiple of $250,000, by paying the principal
amount to be prepaid together with accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied to prepay ratably the
Base Rate Loans of the several Banks included in such Base Rate Borrowing.
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Exhibit 10(i)A
(b) Except as provided in Section 8.02, the Borrowers may not prepay all or
any portion of the principal amount of any Fixed Rate Loan prior to the maturity
thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section 2.10,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment and such notice, once received by the
Agent, shall not thereafter be revocable by the Borrowers.
SECTION 2.11. Manditory Prepayments. (a) On each date on which the
Commitments are reduced pursuant to Section 2.08 or Section 2.09, the Borrowers
shall repay or prepay such principal amount of the outstanding Loans, if any
(together with interest accrued thereon and any amount due under Section
8.05(a)), as may be necessary so that after such payment the aggregate unpaid
principal amount of the Loans does not exceed the aggregate amount of the
Commitments as then reduced.
(b) If the Agent determines at any time (either on its own initiative or at
the instance of any Bank) that the aggregate principal amount of the Foreign
Currency Loans of all Borrowers outstanding (after converting each Foreign
Currency Loan to its Dollar Equivalent on the date of such calculation) at any
time exceeds 105% of the aggregate Commitments less the outstanding aggregate
amount of all Syndicated Dollar Loans and Money Market Loans of all Borrowers,
then upon 5 Foreign Currency Business Days' written notice from the Agent
(acting at the direction of the Required Banks), the Borrowers shall prepay an
aggregate principal amount of Foreign Currency Loans sufficient to bring the
aggregate of the Foreign Currency Loans of all Borrowers outstanding within the
Commitment less the outstanding aggregate amount of all Syndicated Dollar Loans
and Money Market Loans of all Borrowers. Nothing in the foregoing shall require
the Agent to make any such calculation unless expressly requested to do so by
the Required Banks.
(c) Each such payment or prepayment under paragraph (a) or (b) above shall
be applied ratably to the Loans of the Banks outstanding on the date of payment
or prepayment in the following order of priority (and the portion allocated to
Euro-Dollar Loans or Money Market Loans shall be applied to those having the
shortest Interest Period first, unless otherwise directed by the prepaying
Borrower): (i) first, to Base Rate Loans; (ii) secondly, to Euro-Dollar Loans;
and (iii) lastly, to Money Market Loans.
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Exhibit 10(i)A
Section 2.12. General Provisions as to Prepayments. (a) The Borrowers shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 11:00 A.M. (Atlanta, Georgia time) on the date when
due, in Federal or other funds (subject to paragraph (c) below with respect to
Foreign Currency Loans) immediately available in Atlanta, Georgia, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the Base Rate
Loans or Money Market Loans which are made in Dollars or of fees hereunder shall
be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of or interest on, the Euro-Dollar Loans or the Foreign
Currency Loans shall be due on a day which is not a Euro-Dollar Business Day or
Foreign Currency Business Day, as the case may be, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day or Foreign
Currency Business Day, as the case may be, unless such Euro-Dollar Business Day
or Foreign Currency Business Day, as the case may be, falls in another calendar
month, in which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day or Foreign Currency Business Day, as the case may be.
(c) All payments of principal and interest with respect to Foreign Currency
Loans shall be made in the Foreign Currency in which the related Foreign
Currency Loan was made.
(d) All payments of principal, interest and fees and all other amounts to
be made by a Borrower pursuant to this Agreement with respect to any Loan or fee
relating thereto shall be paid without deduction for, and free from, any tax,
imposts, levies, duties, deductions, or withholdings of any nature now or at
anytime hereafter imposed by any governmental authority or by any taxing
authority thereof or therein excluding in the case of each Bank, taxes imposed
on or measured by its net income, and franchise or branch profit taxes imposed
on it, by the jurisdiction under the laws of which such Bank is organized or any
political subdivision thereof and, in the case of each Bank, taxes imposed on
its income, and franchise and branch profit taxes imposed on it, by the
jurisdiction of such Bank's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies, duties,
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Exhibit 10(i)A
deductions or withholdings of any nature being "Taxes"). In the event that any
Borrower is required by applicable law to make any such withholding or deduction
of Taxes with respect to any Loan or fee or other amount, such Borrower shall
pay such deduction or withholding to the applicable taxing authority, shall
promptly furnish to any Bank in respect of which such deduction or withholding
is made all receipts and other documents evidencing such payment and shall pay
to such Bank additional amounts as may be necessary in order that the amount
received by such Bank after the required withholding or other payment shall
equal the amount such Bank would have received had no such withholding or other
payment been made.
Each Bank that is organized under the laws of a jurisdiction other than the
United States of America or any state thereof or the District of Columbia (each
a "Foreign Bank") agrees to furnish to the Borrowers and the Agent, prior to
time it becomes a Bank hereunder, two (2) 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 Foreign Bank claims entitlement to complete
exemption from or a reduced rate of U.S. federal withholding tax on interest
paid by the Borrowers hereunder) and to provide to the Borrowers and the 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 Foreign Bank shall be required to furnish any such form under this paragraph
if it is not entitled to claim an exemption from or reduced rate of withholding
under applicable law. Any Foreign Bank that is not entitled to claim an
exemption from or a reduced rate of withholding under applicable law, promptly
upon written request of the Borrowers, shall so inform the Borrowers and the
Agent in writing.
No Borrower shall be required to pay any amounts pursuant to this Section
2.12(d) to any Foreign Bank for the account of such Foreign Bank or any Lending
Office of such Foreign Bank in respect of any United States withholding taxes
payable hereunder (and each Borrower, if required by law to do so, shall be
entitled to withhold such amounts and to pay such amounts to the United States
Internal Revenue Service) if the obligation to pay such additional amounts would
not have arisen but for the failure by such Foreign Bank to comply with its
obligations under the immediately preceding paragraph of this Section, and such
Foreign Bank shall not be entitled to exemption from deduction or withholding of
United States federal income tax in respect of the payment of any such sum by
any Borrower hereunder for, in each case, any reason other than a change in the
United States law or regulations or any applicable tax treaty or regulations or
in the official interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date such Foreign Bank
becomes a Bank hereunder.
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Exhibit 10(i)A
Within 60 days after receipt of the written request of the Borrower, each
Bank shall execute and deliver such certificates, forms or other documents,
which in each such case can be reasonably furnished by such Bank consistent with
the facts and which are reasonably necessary to assist any Borrower in applying
for refunds of Taxes remitted by such Borrower hereunder.
Each Bank shall also use reasonable efforts to avoid and minimize any
amounts which might otherwise be payable by any Borrower pursuant to this
Section 2.12(d), except to the extent that any Bank determines that such efforts
would be disadvantageous to such Bank, as determined by such Bank and which
determination, if made in good faith, shall be binding and conclusive on all
parties hereto.
To the extent that the payment of any Bank's Taxes by any Borrower
hereunder gives rise from time to time to a Tax Benefit to such Bank in any
jurisdiction other than the jurisdiction which imposed such Taxes, such Bank
shall pay to such Borrower the amount of each such Tax Benefit so recognized or
received. The amount of each Tax Benefit and, therefore, payment to such
Borrower will be determined from time to time by the relevant Bank in its sole
discretion, which determination shall be binding and conclusive on all parties
hereto. Each such payment will be due and payable by such Bank to such Borrower
within a reasonable time after the filing of the tax return in which such Tax
Benefit is recognized or, in the case of any tax refund, after the refund is
received; provided, however, if at any time thereafter such Bank is required to
rescind such Tax Benefit or such Tax Benefit is otherwise disallowed or
nullified, the relevant Borrower shall promptly, after notice thereof from such
Bank, repay to such Bank the amount of such Tax Benefit previously paid to such
Bank and which has been rescinded, disallowed or nullified. For purposes hereof,
the term "Tax Benefit" shall mean the amount by which any Bank's income tax
liability for the taxable period in question is reduced below what would have
been payable had the relevant Borrower not been required to pay such Bank's
taxes hereunder.
Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements and obligations of the Borrowers and the Banks
contained in this Section 2.12(d) shall be applicable with respect to any
Assignee, and any calculations required by such provisions (i) shall be made
based upon the circumstances of such Assignee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the payment in
full or cancellation of the Notes.
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Exhibit 10(i)A
SECTION 2.13. Computation of Interest od Fees. Interest on Base Rate Loans
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Interest on Euro-Dollar Loans and on Foreign Currency Loans shall be computed on
the basis of a year of 360 days (except for any Foreign Currency Loans
outstanding in British pounds sterling, Belgian francs or Canadian dollars, (or,
if selected as a Foreign Currency with the consent of all of the Banks pursuant
to clause (ii) of the definition of "Foreign Currency," in Australian dollars,
Irish punts or New Zealand dollars), which shall be computed on the basis of a
year of 365 or 366 days, as the case may be) and paid for the actual number of
days elapsed, calculated as to each Interest Period from and including the first
day thereof to but excluding the last day thereof. Commitment fees and any other
fees payable hereunder shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first day but
excluding the last day).
SECTION 2.14 Additional Borrowings. It is contemplated that the Parent
hereafter may elect to add as Borrowers hereunder additional Wholly Owned
Subsidiaries (collectively, the "Additional Borrowers"), and each of the
Additional Borrowers may become a Borrower hereunder upon the delivery to the
Agent of the following documents in form and substance satisfactory to the Agent
and duly executed and delivered on behalf of such Additional Borrower and the
Parent (as the case may be): (i) an Additional Borrower Assumption Agreement in
the form of Exhibit L attached hereto duly executed by such Additional Borrower,
(ii) a duly executed Syndicated Dollar Loan Note, Foreign Currency Loan Note,
and Money Market Loan Note in favor of each Bank from such Additional Borrower,
(iii) a duly executed reaffirmation and acknowledgment from the Parent and each
other Guarantor with respect to such Additional Borrower, acknowledging that
such additional Borrower shall be a "Principal" for all purposes under the
Guaranty, and reaffirming its obligations under the Guaranty, (iv) an opinion of
Counsel to the Parent addressed, dated as of the date of the aforesaid Loan
Documents, and providing with respect to such Additional Borrower and the
aforesaid Loan Documents, substantially the same opinions as are set forth in
Exhibit B with respect to the initial Borrowers and the initial Loan Documents,
(v) a Closing Certificate from the Parent in the form of Exhibit G dated as of
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Exhibit 10(i)A
the date of such additional Loan Documents, and (vi) any additional documents
with respect to such Additional Borrowers and the aforesaid Loan Documents of
the type described in Section 3.01(f) as may be requested by the Agent. Upon
becoming a Borrower hereunder, an Additional Borrower may assume liability for
some or all of the Loans then outstanding to some or all of the other Borrowers
if and to the extent so expressly provided in the Additional Borrower Assumption
Agreement executed by such Additional Borrower, and the Guaranty executed by the
Parent and the other Guarantors with respect to such Additional Borrower shall
automatically cover (and the Parent and each other Guarantor thereunder shall
guaranty the repayment of) the Loans assumed by such Additional Borrower.
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of each Bank to
make a Loan on the occasion of the first Borrowing is subject to the
satisfaction of the conditions set forth in Section 3.02 and receipt by the
Agent of the following (as to the documents described in paragraphs (a),(c), (d)
and (e) below (in sufficient number of counterparts for delivery of a
counterpart to each Bank and retention of one counterpart by the Agent):
(a) from each of the parties hereto of either (i) a duly executed
counterpart of this Agreement signed by such party or (ii) a facsimile
transmission of such executed counterpart with the original to be sent to the
Agent by overnight courier;
(b) from each Borrower, a duly executed Syndicated Dollar Loan Note, a duly
executed Foreign Currency Loan Note and a duly executed Money Market Loan Note
for the account of each Bank complying with the provisions of Section 2.04, and
from the Parent, a duly executed Guaranty;
(c) an opinion letter of David Levy, Counsel of the Borrower, dated as of
the Closing Date, substantially in the form of Exhibit B;
(d) an opinion of Jones, Day, Reavis & Pogue, special counsel for the
Agent, dated as of the Closing Date, substantially in the form of Exhibit C and
covering such additional matters relating to the transactions contemplated
hereby as the Agent may reasonably request;
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Exhibit 10(i)A
(e) a certificate (the "Closing Certificate") substantially in the form of
Exhibit G), dated as of the Closing Date, signed by a principal financial
officer of each of the Borrowers, to the effect that (i) no Default has occurred
and is continuing on the date of the first Borrowing and (ii) the
representations and warranties of the Borrowers contained in Article IV are true
on and as of the date of the first Borrowing hereunder (x) as stated, as to
representations and warranties which contain materiality limitations and (y) in
all material respects, as to all other representations and warranties;
(f) all documents which the Agent or any Bank may reasonably request
relating to the existence of the Borrowers, the corporate authority for and the
validity of this Agreement, the Notes and the Guaranty, and any other matters
relevant hereto, all in form and substance satisfactory to the Agent, including,
without limitation, a certificate of each of the Borrowers, signed by the
Secretary or an Assistant Secretary of each of the Borrowers substantially in
the form of Exhibit J (the "Officer's Certificate"), certifying as to the names,
true signatures and incumbency of the officer or officers of such Borrower
authorized to execute and deliver the Loan Documents and, as to the Parent, the
Guaranty, and certified copies of the following items: (i) each Borrower's
Certificate of Incorporation (or comparable document in the case of any Borrower
which is a Foreign Subsidiary), (ii) each Borrower's Bylaws (or comparable
document in the case of any Borrower which is a Foreign Subsidiary), (iii) a
certificate of the Secretary of State of the State of Delaware as to the good
standing of the Parent as a Delaware corporation, and a comparable certificate
(if available) from the Secretary of State (or other comparable public official)
from the jurisdiction of each other Borrower and (iv) the action taken by the
Board of Directors of each of the Borrowers authorizing the Borrower's
execution, delivery and performance of this Agreement, the Notes and the other
Loan Documents to which the Borrower is a party and, as to the Parent, the
Guaranty;
(g) a Notice of Borrowing or notification pursuant to Section 2.03(e) of
acceptance of one or more Money Market Quotes, as applicable; and
(h) payment of the Agent's fees pursuant to the Agent's Letter Agreement.
In addition, if any Borrower desires funding of a Fixed Rate Loan on the Closing
Date, the Agent shall have received, the requisite number of days prior to the
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Exhibit 10(i)A
Closing Date, a funding indemnification letter satisfactory to it, pursuant to
which (i) the Agent and such Borrower shall have agreed upon the interest rate,
amount of Borrowing and Interest Period for such Fixed Rate Loan, and (ii) such
Borrower shall indemnify the Banks from any loss or expense arising from the
failure to close on the anticipated Closing Date identified in such letter or
the failure to borrow such Fixed Rate Loan on such date.
SECTION 3.02. Conditions to All Borrowings. The obligation of each Bank to
make a Loan on the occasion of each Borrowing is subject to the satisfaction of
the following conditions except as expressly provided in the last sentence of
this Section 3.02:
(a) receipt by the Agent of a Notice of Borrowing or notification pursuant
to Section 2.03(e) of acceptance of one or more Money Market Quotes, as
applicable.
(b) the fact that, immediately before and after such Borrowing, no Default
shall have occurred and be continuing;
(c) the fact that the representations and warranties of the Borrower
contained in Article IV of this Agreement shall be true on and as of the date of
such Borrowing (x) as stated, as to representations and warranties which contain
materiality limitations and (y) in all material respects, as to all other
representations and warranties; and
(d) the fact that, immediately after such Borrowing, the conditions set
forth in clauses (i) and (ii) of Section 2.01 shall have been satisfied.
Each Syndicated Borrowing and each Money Market Borrowing hereunder shall be
deemed to be a representation and warranty by the Borrower on the date of such
Borrowing as to the truth and accuracy of the facts specified in paragraphs (b),
(c) and (d) of this Section; provided that (i) the representation and warranty
set forth in Section 4.04(b) shall be deemed to be made only as of the Closing
Date, and (ii) if such Borrowing is a Syndicated Borrowing which consists solely
of a Refunding Loan, such Borrowing shall not be deemed to be such a
representation and warranty to the effect set forth in Section 4.05.
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Exhibit 10(i)A
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrowers (each as to itself) represent and warrant that:
SECTION 4.01. Corporate Existence and Power. Each Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, and where the failure to qualify would have or could reasonably be
expected to cause a Material Adverse Effect, and has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each Borrower of this Agreement, the
Notes and the other Loan Documents and by the Parent of the Guaranty (i) are
within such Borrower's and the Parent's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) require no action by or in
respect of or filing with, any governmental body, agency or official, (iv) do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the certificate of incorporation or by-laws of such Borrower
or the Parent or of any agreement, judgment, injunction, order, decree or other
instrument binding upon such Borrower or the Parent or any of its Subsidiaries,
and (v) do not result in the creation or imposition of any Lien on any asset of
the Borrower or the Parent or any of its Subsidiaries.
SECTION 4.03. Binding Effects. This Agreement and, as to the Parent, the
Guaranty, constitutes a valid and binding agreement of each Borrower and the
Parent enforceable in accordance with its terms, and the Notes and the other
Loan Documents, when executed and delivered in accordance with this Agreement,
will constitute valid and binding obligations of each Borrower enforceable in
accordance with their respective terms, provided that the enforceability hereof
and thereof is subject in each case to general principles of equity and to
bankruptcy, insolvency and similar laws affecting the enforcement of creditors'
rights generally.
SECTION 4.04. Financial Information. (a) The consolidated balance sheet of
the Parent and its Consolidated Subsidiaries as of August 31, 1995 and the
related consolidated statements of income, stockholders' equity and cash flows
for the Fiscal Year then ended, reported on by Arthur Andersen, LLP, copies of
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Exhibit 10(i)A
which have been delivered to each of the Banks, and the unaudited consolidated
financial statements of the Parent for the interim period ended February 29,
1996 copies of which have been delivered to each of the Banks, fairly present in
all material respects, in conformity with GAAP, the consolidated financial
position of the Parent and its Consolidated Subsidiaries as of such dates and
their consolidated results of operations and cash flows for such periods stated.
(b) During the period from August 31, 1995 through the Closing Date, in the
good faith judgment of the Executive Officers, there has been no event, act,
condition or occurrence having a Material Adverse Effect.
SECTION 4.05. No Litigation . There is no action, suit or proceeding
pending, or to the knowledge of the Borrowers overtly threatened in writing,
against or affecting any of the Borrowers or any of the Subsidiaries before any
court or arbitrator or any governmental body, agency or official which has or is
likely to have a Material Adverse Effect or which in any manner draws into
question the legality, validity or enforceability of this Agreement, the Notes
or any of the other Loan Documents.
SECTION 4.06. Compliance with ERISA. (a) The Borrowers and each member of
the Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code with respect to such Plan, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA in an aggregate amount in excess of the
amount permitted by Section 6.01(i).
(b) Neither the Borrowers nor any member of the Controlled Group has
incurred any withdrawal liability with respect to any Multiemployer Plan under
Title IV of ERISA in an aggregate amount in excess of the amount permitted by
Section 6.01(i), and no such liability is expected to be incurred.
SECTION 4.07. Compliance with Laws; Payment of Taxes. The Borrowers and the
Subsidiaries are in compliance in all material respects with all applicable
laws, regulations and similar requirements of governmental authorities, except
where such compliance is being contested in good faith through appropriate
proceedings. There have been filed on behalf of the Borrowers and the
Subsidiaries all Federal, state and local income, excise, property and other tax
returns which are required to be filed by them and all taxes due pursuant to
such returns or pursuant to any assessment received by or on behalf of the
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Exhibit 10(i)A
Borrowers or any Subsidiary have been paid, except to the extent that (i) any
Borrower or Subsidiary is contesting the same pursuant to Section 5.07 or (ii)
the failure to make such filing or payment would not have and would not
reasonably be expected to cause a Material Adverse Effect. The charges, accruals
and reserves on the books of the Borrowers and the Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the Borrowers,
adequate. United States income tax returns of the Borrowers and the Subsidiaries
have been examined and closed through the Fiscal Year ended August 31, 1992.
SECTION 4.08. Subsidaries. Each of the Parent's other Subsidiaries (which
are not Borrowers) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly qualified
to transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, except where the failure to be in such good
standing, or to be so duly organized or to be so qualified would not have or
reasonably could not be expected to cause a Material Adverse Effect, and has all
material corporate powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted. The
Parent has no Subsidiaries except for those Subsidiaries listed on Schedule
4.08, as supplemented by the Borrower from time to time by written notice to the
Agent and the Borrowers, which accurately sets forth each such Subsidiary's
complete name and jurisdiction of incorporation.
SECTION 4.09. Investment Company Act. Neither the Borrowers nor any of
other Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10. Public Utility Holding Company Act. Neither the Borrowers nor
any of the Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the Borrowers and the
Consolidated Subsidiaries has title to its properties sufficient for the conduct
of its business, and none of such property is subject to any Lien except as
permitted in Section 5.15.
SECTION 4.12. No Defult. To the best knowledge of the Borrowers, neither
any of the Borrowers nor any of the Consolidated Subsidiaries is in default
under or with respect to any agreement, instrument or undertaking to which it is
a party or by which it or any of its property is bound which default could
reasonably be expected to have or cause a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
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Exhibit 10(i)A
SECTION 4.13. Full Disclosure. All information heretofore furnished by the
Borrowers to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrowers to the Agent or any Bank will be, true and
accurate in every material respect or based on reasonable estimates on the date
as of which such information is stated or certified. The Borrowers have
disclosed to the Banks in writing any and all facts known to the Executive
Officers which would have or reasonably would be expected to cause a Material
Adverse Effect.
SECTION 4.14. Environmental Matters. (a) Neither any Borrower nor any
Subsidiary is subject to any Environmental Liability which would have or could
reasonably be expected to cause a Material Adverse Effect and, to the best
knowledge of the Borrowers, neither any Borrower nor any Subsidiary has been
designated as a potentially responsible party under CERCLA or under any state
statute similar to CERCLA in circumstances which have or could reasonably be
expected to have a Material Adverse Effect. To the best knowledge of the
Borrowers, none of the Properties has been identified on any current or proposed
(i) National Priorities List under 40 C.F.R. Sec. 300, (ii) CERCLIS list or
(iii) any list arising from a state statute similar to CERCLA, in each case in
circumstances which have or could reasonably be expected to have a Material
Adverse Effect.
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the Properties, except
for Hazardous Materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed, or otherwise handled in
compliance with all applicable Environmental Requirements, except where the
failure to comply does not have and could not reasonably be expected to cause a
Material Adverse Effect.
(c) Each of the Borrowers, and each of the Subsidiaries and Affiliates, has
procured all material Environmental Authorizations necessary for the conduct of
its business, and is in material compliance with all Environmental Requirements
in connection with the operation of the Properties and each Borrower's, and each
of the Subsidiary's, respective businesses.
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Exhibit 10(i)A
SECTION 4.15. Capital Stock. All Capital Stock, debentures, bonds, notes
and all other securities of each Borrower and the Subsidiaries presently issued
and outstanding are validly and properly issued in accordance with all
applicable laws, including but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws. The issued shares of Capital
Stock of the Parent's Wholly Owned Subsidiaries which are owned by the Parent
are free and clear of any Lien or adverse claim. At least a majority of the
issued shares of capital stock of each of the Parent's other Subsidiaries (other
than Wholly Owned Subsidiaries) is owned by the Parent free and clear of any
Lien or adverse claim.
SECTION 4.16. Margin Stock . Neither any Borrower nor any of the
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation G, T, U or X.
SECTION 4.17. Insolvency. After giving effect to the execution and delivery
of the Loan Documents and the making of the Loans under this Agreement: (i) none
of the Borrowers will (x) be "insolvent," within the meaning of such term as
used in O.C.G.A. Sec. 18-2-22 or as defined in Sec.101 of the "Bankruptcy Code",
or Section 2 of either the "UFTA" or the "UFCA", or as defined or used in any
"Other Applicable Law" (as those terms are defined below), or (y) be unable to
pay its debts generally as such debts become due within the meaning of Section
548 of the Bankruptcy Code, Section 4 of the UFTA or Section 6 of the UFCA, or
(z) have an unreasonably small capital to engage in any business or transaction,
whether current or contemplated, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA or Section 5 of the UFCA; and (ii) the
obligations of the Borrowers under the Loan Documents and with respect to the
Loans will not be rendered avoidable under any Other Applicable Law. For
purposes of this Section 4.17, "Bankruptcy Code" means Title 11 of the United
States Code, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA" means the
Uniform Fraudulent Conveyance Act, and "Other Applicable Law" means any other
applicable state law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.
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Exhibit 10(i)A
SECTION 4.18. Insurance. The Parent and its Subsidiaries have (either in
the name of the Parent or in any Subsidiary's own name) insurance, which
includes self-insurance which is reasonable and in accordance with sound
industry practice taking into account the nature of their respective businesses,
on all of their respective properties in at least such amounts and against at
least such risks as are usually insured against in the same geographic area by
companies of established repute engaged in the same or similar business.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment hereunder or
any amount payable hereunder or under any Note remains unpaid:
SECTION 5.01. Information. The Parent will deliver to each of the Banks:
(a) as soon as available and in any event within 90 days (or such
longer period as may be the subject of an extension granted by the
Securities and Exchange Commission) after the end of each Fiscal Year, a
consolidated balance sheet of the Parent and its Consolidated Subsidiaries
as of the end of such Fiscal Year and the related consolidated statements
of income, stockholders' equity and cash flows for such Fiscal Year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all certified by Arthur Andersen, LLP or other independent
public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications not acceptable to
the Required Banks;
(b) as soon as available and in any event within 45 days (or such
longer period as may be the subject of an extension granted by the
Securities and Exchange Commission) after the end of each of the first 3
Fiscal Quarters of each Fiscal Year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such Fiscal
Quarter and the related statement of income and statement of cash flows for
the portion of the Fiscal Year ended at the end of such Fiscal Quarter,
setting forth in each case in comparative form the figures for the
corresponding Fiscal Quarter and the corresponding portion of the previous
Fiscal Year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, GAAP and consistency by the chief financial
officer or the chief accounting officer of the Parent;
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Exhibit 10(i)A
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of Exhibit-F (a "Compliance Certificate"), of the
chief financial officer or the chief accounting officer of the Parent (i)
setting forth in reasonable detail the calculations required to establish
whether the Parent was in compliance with the requirements of Sections
5.09, 5.15 and 5.16 on the date of such financial statements and (ii)
stating whether any Default exists on the date of such certificate and, if
any Default then exists, setting forth the details thereof and the action
which the Parent is taking or proposes to take with respect thereto;
(d) within 5 Domestic Business Days after any Executive Officer
becomes aware of the occurrence of any Default, a certificate of the chief
financial officer or the chief accounting officer of the Parent setting
forth the details thereof and the action which such the Parent is taking or
proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of the
Parent generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and annual, quarterly or monthly reports
which the Parent shall have filed with the Securities and Exchange
Commission;
(g) if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which could reasonably
be expected to constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan has
given or is required to give notice of any such reportable event, a copy of
the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA, a copy of such notice; or (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate or appoint
a trustee to administer any Plan, a copy of such notice; provided, however,
that each of the foregoing notices shall not be required to be given unless
the reportable event, withdrawal liability, plan termination or trustee
appointment involved could reasonably be expected to give rise to a
liability of more than $1,000,000 on the part of the Parent or any of its
Subsidiaries; and
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Exhibit 10(i)A
(h) from time to time such additional information regarding the
financial position or business of each of the Borrowers and the
Subsidiaries as the Agent, at the request of any Bank, may reasonably
request (except such plans and forecasts which have not been made available
by the Parent to its creditors).
Section 5.02. Inspection of Property. The Parent will (i) keep, and cause
each Consolidated Subsidiary (other than Foreign Subsidiaries which are not
Material Subsidiaries) to keep, proper books of record and account in which
full, true and correct entries in conformity with GAAP (except, with respect to
the books and records of Foreign Subsidiaries, as may be permitted by local
accounting principles) shall be made of all dealings and transactions in
relation to its business and activities; and (ii) permit, and cause each
Subsidiary to permit, representatives of any Bank at such Bank's expense prior
to the occurrence of a Default and at the Borrower's expense during the
continuance of a Default to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants. Each
Borrower agrees to cooperate and assist in such visits and inspections, in each
case at such reasonable times and as often as may reasonably be desired. Unless
a Default has occurred and is then continuing, each Bank shall give the Parent
not less than 3 Domestic Business Days' prior written notice of its intent to
conduct such a visit or inspection. To the extent that any Bank, in the course
of any such visit or inspection, obtains possession of any Proprietary
Information pertaining to any Borrower or Subsidiary, such Bank shall handle
such information in accordance with the requirements of Section 9.09.
SECTION 5.03. Maintenance of Existence. Each Borrower shall, and the Parent
shall cause each Material Subsidiary to, maintain its corporate existence
(except through corporate reorganization to the extent permitted by Section
5.05) and carry on its business in substantially the same manner and in
substantially the same fields as such business is now carried on and maintained;
provided, however, that nothing in the foregoing shall prevent the Parent or any
Material Subsidiary from discontinuing any line of business if (i) no Default is
in existence, and (ii) with respect to the discontinuance of a material line of
business, the Board of Directors of the Parent determines in good faith that
such discontinuance is in the best interest of the Parent and its Consolidated
Subsidiaries, taken as a whole.
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Exhibit 10(i)A
SECTION 5.04. Dissolution. Neither any Borrower nor any of the Material
Subsidiaries shall suffer or permit dissolution or liquidation either in whole,
except (i) through corporate reorganization to the extent permitted by Section
5.05, and (ii) any Material Subsidiary may be dissolved or liquidated if its
assets are distributed to a Borrower, a Guarantor or another Material
Subsidiary, and, if it is a Borrower or Guarantor, its liabilities in such
capacity are assumed by the Person to whom its assets are distributed.
SECTION 5.05. Consolidations and Mergers. Each Borrower agrees that it will
not, nor will the Parent permit any Subsidiary to, consolidate or merge with or
into any other Person, provided that if, after giving effect to any of the
following, no Default will be in existence, (a) any Subsidiary may merge or
consolidate with the Parent, if the Parent is the corporation surviving such
merger, (b) any Borrower may merge or consolidate with any other Borrower, (c)
any Subsidiary which is a Guarantor may merge or consolidate with any other
Subsidiary which is a Guarantor, (d) any Subsidiary which is not a Borrower or
Guarantor may merge or consolidate with any other Subsidiary which is not a
Borrower or Guarantor, or with any other Subsidiary which is a Borrower or
Guarantor, if the Borrower or Guarantor, as the case may be, is the corporation
surviving such merger, and (e) any Borrower or Subsidiary may merge with another
Person if (i) such Person was organized under the laws of the United States of
America or one of its states, (ii) such Borrower or Subsidiary is the
corporation surviving such merger and (iii) immediately after giving effect to
such merger, no Default shall have occurred and be continuing.
SECTION 5.06. Use of Proceeds. The proceeds of the Loans will be used for
general corporate purposes. No portion of the proceeds of the Loans will be used
by any Borrower or any other Subsidiary directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any Margin
Stock in violation of Regulation G, T, U or X, or for any purpose in violation
of any applicable law or regulation.
SECTION 5.07. Compliance with Laws; Payment of Taxes. (a) Each Borrower
agrees that it will, and the Parent will cause each of its other Subsidiaries
and each member of the Controlled Group to, comply in all material respects with
applicable laws (including but not limited to
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Exhibit 10(i)A
ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued. Each Borrower will, and the Parent will cause each of its
other Subsidiaries to, pay promptly when due all material taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien against the property of any Borrower or
any Subsidiary, except liabilities being contested in good faith and against
which such Borrower will, or the Parent will cause such other Subsidiary to, set
up reserves in accordance with GAAP.
(b) The Parent shall not permit at any time the aggregate complete or
partial withdrawal liability under Title IV of ERISA with respect to
Multiemployer Plans incurred by the Parent and members of the Controlled Group
to exceed 10% of Stockholders' Equity as of the end of the Fiscal Quarter just
ended. For purposes of this Section 5.07(b), the amount of withdrawal liability
of the Parent and members of the Controlled Group at any date shall be the
aggregate present value of the amount claimed to have been incurred less any
portion thereof which the Parent and members of the Controlled Group have paid
or as to which the Borrower reasonably believes, after appropriate consideration
of possible adjustments arising under Sections 4219 and 4221 of ERISA, it and
members of the Controlled Group will have no liability, provided that, upon
request of any Bank, the Parent shall obtain prompt written advice from
independent actuarial consultants supporting such determination. The Parent
agrees (i) once in each year, beginning with Fiscal Year 1997 to request a
current statement of the withdrawal liability of the Parent and members of the
Controlled Group from each Multiemployer Plan in which the Parent or any member
of the Controlled Group has 5 or more employees, if any, and (ii) to transmit a
copy of such statement to the Agent and the Banks within 15 days after the
Borrower receives the same.
SECTION 5.08. Insurance. The Parent and its Subsidiaries will maintain
(either in the name of the Parent or in any Subsidiary's own name) insurance,
which may include self-insurance which is reasonable and in accordance with
sound industry practice taking into account the nature of their respective
businesses, on all of their respective properties in at least such amounts and
against at least such risks as are usually insured against in the same
geographic area by companies of established repute engaged in the same or
similar business.
SECTION 5.09. Subsidary Debt. The Parent shall not permit any Subsidiary
which is not a Borrower or a Guarantor to incur any Debt except for (i) Debt
owing to the Parent or another Subsidiary (including any Borrower) and (ii)
other Debt which shall not exceed in the aggregate for all such other Debt of
all such Subsidiaries an amount, together with the amount of Debt subject to
Liens permitted by Section 5.15(p) (but without duplication), in excess of 25%
of Stockholders' Equity as of the end of the Fiscal Quarter just ended.
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Exhibit 10(i)A
SECTION 5.10. Maintenance of Property. Each Borrower shall, and the Parent
shall cause each Material Subsidiary to, maintain all of its material properties
and assets in good condition, repair and working order, ordinary wear and tear
excepted or, in the event of any loss of or damage to any such property or asset
each Borrower shall, and the Parent shall cause each Material Subsidiary to,
take reasonable action to repair or replace such property or assets within a
reasonable time.
SECTION 5.11. Environmental Notices. The Parent shall furnish to the Banks
and the Agent written notice, promptly after becoming aware thereof, of all
material Environmental Liabilities, pending, threatened or anticipated
Environmental Proceedings, Environmental Notices, Environmental Judgments and
Orders, and Environmental Releases at, on, in, under or in any way affecting the
Properties, and all facts, events, or conditions that could lead to any of the
foregoing, if such circumstance or circumstances could reasonably be expected to
give rise to liabilities on the part of the Parent or any of its Subsidiaries in
an aggregate amount in excess of $5,000,000.
SECTION 5.12. Environmental Matters. Each Borrower agrees that it will not,
and the Parent will cause each Subsidiary to not, and each Borrower will not
permit any Third Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials except for Hazardous
Materials used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed, managed, or otherwise handled in material compliance with all
applicable Environmental Requirements.
SECTION 5.13. Environmental Release. Each Borrower agrees that upon the
occurrence of any material Environmental Release at or on any of the Properties
it will act immediately to investigate the extent of, and to commence and pursue
appropriate remedial action to eliminate, to the extent required by applicable
law, such Environmental Release, whether or not ordered or otherwise directed to
do so by any Environmental Authority.
SECTION 5.14. Transactions with Affiliates. Neither any Borrower nor any of
the Subsidiaries shall enter into, or be a party to, any transaction with any
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Exhibit 10(i)A
Affiliate of such Borrower or such Subsidiary (which Affiliate is not a Borrower
or a Wholly Owned Subsidiary), except as permitted by law and in the ordinary
course of business and pursuant to reasonable terms which are no less favorable
to such Borrower or such Subsidiary than would be obtained in a comparable arm's
length transaction with a Person which is not an Affiliate.
SECTION 5.15. Negative Pledge. Neither any Borrower nor any Consolidated
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement and disclosed on
Schedule 5.15(a);
(b) any Lien existing on any specific fixed asset of any corporation
at the time such corporation becomes a Consolidated Subsidiary and not
created in contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost of
acquiring or constructing such asset, provided that such Lien attaches to
such asset concurrently with or within 18 months after the acquisition or
completion of construction thereof;
(d) any Lien on any specific fixed asset of any corporation existing
at the time such corporation is merged or consolidated with or into any
Borrower or a Consolidated Subsidiary and not created in contemplation of
such event;
(e) any Lien existing on any specific fixed asset prior to the
acquisition thereof by any Borrower or a Consolidated Subsidiary and not
created in contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the Parent or
another Wholly Owned Subsidiary;
(g) Liens on and transfers of accounts receivable in connection with
an accounts receivable securitization program in which the aggregate
principal amount invested by the purchaser of such receivables does not
exceed $100,000,000 at any one time;
(h) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
paragraphs of this Section, provided that (i) such Debt is not secured by
any additional assets, and (ii) the amount of such Debt secured by any such
Lien is not increased;
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Exhibit 10(i)A
(i) any Lien on Margin Stock;
(j) subject to Section 6.01(k), Liens for taxes (including ad valorem
taxes), assessments or other governmental charges or levies not yet due or
which are being actively contested in good faith by appropriate
proceedings, if adequate reserves with respect thereto are maintained on
the books of such Borrower or Subsidiary, as the case may be, in accordance
with GAAP;
(k) 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, if adequate reserves
with respect thereto are maintained on the books of such Borrower or such
Subsidiary, as the case may be, in accordance with GAAP;
(l) Liens incurred or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment insurance and other
types of social security benefits or obligations or to secure performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations, provided that such Liens were not incurred in
connection with the incurrence of any Debt;
(m) zoning ordinances, easements, licenses, restrictions on the use of
real property and minor irregularities in title thereto which do not
materially impair the use of such property and the operation of the
business of such Borrower or such Subsidiary (as the case may be) thereon
or the value of such property;
(n) inchoate Liens arising under ERISA to secure current service
pension liabilities as they are incurred under the provisions of Plans from
time to time in effect;
(o) rights reserved to or invested in any municipality or
governmental, statutory or public authority to control or regulate any
property of such Borrower or such Subsidiary, as the case may be, or to use
such property in a manner which does not materially impair the use of such
property for the purposes of which it is held by such Borrower or such
Subsidiary, as the case may be; and
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Exhibit 10(i)A
(p) Liens not otherwise permitted by the foregoing paragraphs of this
Section securing Debt (other than indebtedness represented by the Notes) in
an aggregate principal amount at any time outstanding, together with the
amount of Debt permitted by Section 5.09(ii) (but without duplication),
does not exceed 25% of Stockholders' Equity as of the end of the Fiscal
Quarter just ended.
SECTION 5.16. Leverage Percentage. The Leverage Percentage will not at any
time exceed 60% as of the end of any Fiscal Quarter or Fiscal Year.
SECTION 5.17. Election to Become Guarantor. Any Subsidiary (whether
existing on the Closing Date or acquired or created thereafter) may elect to
become a Guarantor at any time by (x) executing and delivering to the Agent a
counterpart of the Guaranty and a counterpart of the Contribution Agreement
(which must also be executed and delivered by the Parent at the time of
execution and delivery thereof by the first Subsidiary Guarantor), thereby
becoming a party to each of them, (y) delivering to the Agent opinions of
counsel to such Subsidiary substantially in the form of Exhibit B (with
appropriate modifications) with respect to such Guarantor and the Guaranty and
Contribution Agreement, and (z) delivering to the Agent documents pertaining to
such Guarantor reasonably requested by the Agent of the types described in
paragraph (f) of Section 3.01.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) any Borrower shall fail to pay when due any principal of any Loan
or shall fail to pay any interest on any Loan within 5 Domestic Business
Days after such interest shall become due, or shall fail to pay any fee or
other amount payable hereunder within 5 Domestic Business Days after such
fee or other amount becomes due; or
(b) any Borrower shall fail to observe or perform any covenant
contained in Sections 5.01(d), 5.02(ii), 5.03 to 5.06, inclusive, or
Sections 5.09, 5.15 or 5.16; or
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Exhibit 10(i)A
(c) any Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement (other
than those covered by paragraph (a) or (b) above) and such failure shall
not have been cured within 30 days after the earlier to occur of (i)
written notice thereof has been given to such Borrower by the Agent at the
request of any Bank or (ii) an Executive Officer otherwise becomes aware of
any such failure; provided, however, that such cure period shall be
extended for a period of time, not to exceed an additional 30 days,
reasonably sufficient to permit such Borrower to cure such failure if such
failure cannot be cured within the initial 30-day period but reasonably
could be expected to be capable of cure within such additional 30 days,
such Borrower has commenced efforts to cure such failure during the initial
30-day period and such Borrower is diligently pursuing such cure; or
(d) any representation, warranty, certification or statement made by
the Borrower in Article IV of this Agreement or in any certificate,
financial statement or other document delivered pursuant to this Agreement
shall prove to have been incorrect or misleading in any material respect
when made (or deemed made); or
(e) any Borrower or any Subsidiary shall fail to make any payment in
respect of Debt outstanding (other than the Notes) in an aggregate amount
in excess of $25,000,000 when due or within any applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of any Borrower or any
Subsidiary in an aggregate amount in excess of $25,000,000 (including,
without limitation, any required mandatory prepayment or "put" of such Debt
to such Borrower or any Subsidiary) or enables (or, with the giving of
notice or lapse of time or both, would enable) the holders of such Debt or
Commitment or any Person acting on such holders' behalf to accelerate the
maturity thereof or terminate any such commitment (including, without
limitation, any required mandatory prepayment or "put" of such Debt to such
Borrower or any Subsidiary); or
(g) any Borrower or any Material Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or shall consent to any such
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Exhibit 10(i)A
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally, or shall admit in writing its inability, to pay its debts as
they become due, or shall take any corporate action to authorize any of the
foregoing; or
(h) an involuntary case or other proceeding shall be commenced against
any Borrower or any Material Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
any Borrower or any Material Subsidiary under the federal bankruptcy laws
as now or hereafter in effect; or
(i) any Borrower or any member of the Controlled Group shall fail to
pay when due any amount in excess of 10% of Stockholders' Equity as of the
end of the Fiscal Quarter just ended which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent
to terminate a Plan or Plans shall be filed under Title IV of ERISA by the
Borrower, any member of the Controlled Group, any plan administrator or any
combination of the foregoing if the amount of liability involved is in
excess of 10% of Stockholders' Equity as of the end of the Fiscal Quarter
just ended; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any such
Plan or Plans or a proceeding shall be instituted by a fiduciary of any
such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter if the
amount of liability involved is in excess of 10% of Stockholders' Equity as
of the end of the Fiscal Quarter just ended; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating
that any such Plan or Plans must be terminated, if the amount involved is
in excess of 10% of Stockholders' Equity as of the end of the Fiscal
Quarter just ended; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of 10% of Stockholders' Equity as of the end of
the Fiscal Quarter just ended shall be rendered against the Borrower or any
Material Subsidiary and such judgment or order shall continue unsatisfied
and unstayed for a period of 30 days; or
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Exhibit 10(i)A
(k) a federal tax lien shall be filed against the Borrower or any
Material Subsidiary under Section 6323 of the Code or a lien of the PBGC
shall be filed against the Borrower or any Subsidiary under Section 4068 of
ERISA and in either case such lien shall remain undischarged for a period
of 25 days after the date of filing if the aggregate amount involved is in
excess of 10% of Stockholders' Equity as of the end of the Fiscal Quarter
just ended; or
(l) (i) any Person or two or more Persons acting in concert shall have
acquired after the Closing Date beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 30% or more of the outstanding shares of the
voting stock of the Parent; or (ii) the individuals who, as of the Closing
Date, are members of the Board of the Parent (the "Incumbent Board") cease
for any reason thereafter to constitute at least 66 2/3% of the Board of
the Parent; provided, however, that if the election, or nomination for
election by the Parent's stockholders, of any new director was approved by
a vote of at least 66 2/3% of the Incumbent Board, such new director shall,
for purposes of this Section 6.01(l), be considered as a member of the
Incumbent Board; or
then, and in every such event, the Agent shall (i) if requested by the Required
Banks, by notice to the Borrowers terminate the Commitments and they shall
thereupon terminate, (ii) if requested by any Bank, by notice to the Borrowers,
terminate such Bank's obligation to fund a Money Market Loan in connection with
any relevant Money Market Quote, and (iii) if requested by the Required Banks,
by notice to the Borrowers, declare the Notes of all Borrowers (together with
accrued interest thereon), and all other amounts payable hereunder and under the
other Loan Documents, to be, and the Notes of all Borrowers (together with
accrued interest thereon), and all other amounts payable hereunder and under the
other Loan Documents shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers together with interest at the Default Rate
accruing on the principal amount thereof during the continuation of such Event
of Default; provided that if any Event of Default specified in paragraph (g) or
(h) above occurs with respect to any Borrower, without any notice to such
Borrower or any other act by the Agent or the Banks, the Commitments shall
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Exhibit 10(i)A
thereupon terminate and the Notes of all Borrowers (together with accrued
interest thereon) and all other amounts payable hereunder and under the other
Loan Documents shall automatically and without notice become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrowers together with interest thereon at the
Default Rate accruing on the principal amount thereof during the continuation of
such Event of Default. Notwithstanding the foregoing, the Agent shall have
available to it all other remedies at law or equity, and shall exercise any one
or all of them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrowers of any Default under Section 6.01(c) promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment; Powers and Immunities. (a) Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated to
the Agent by the terms hereof and thereof, together with such other powers as
are reasonably incidental thereto. The Agent: (a) shall have no duties or
responsibilities except as expressly set forth in this Agreement and the other
Loan Documents, and shall not by reason of this Agreement or any other Loan
Document be a trustee for any Bank; (b) shall not be responsible to the Banks
for any recitals, statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any Bank under, this Agreement or
any other Loan Document, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
any other document referred to or provided for herein or therein or for any
failure by the Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by the Required Banks, and then only on terms and conditions
satisfactory to the Agent, and (d) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other Loan Document or any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or wilful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not be
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Exhibit 10(i)A
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of this
Article VII are solely for the benefit of the Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and under the other Loan Documents, the Agent shall act solely as agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Borrower. The duties
of the Agent shall be ministerial and administrative in nature, and the Agent
shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank.
(b) Each Bank hereby designates NationsBank, N.A. (South) and SunTrust
Bank, Atlanta, as the Co-Agents. The Co-Agents, in such capacity, shall have no
duties or obligations whatsoever under this Agreement or any other Loan Document
or any other document or any matter related hereto and thereto, but shall
nevertheless be entitled to all the indemnities and other protection afforded to
the Agent under this Article VII.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of a Default or an Event of Default (other than the nonpayment of
principal of or interest on the Loans) unless the Agent has received notice from
a Bank or the Borrower specifying such Default or Event of Default and stating
that such notice is a "Notice of Default". In the event that the Agent receives
such a notice of the occurrence of a Default or an Event of Default, the Agent
shall give prompt notice thereof to the Banks. The Agent shall give each Bank
prompt notice of each nonpayment of principal of or interest on the Loans
whether or not it has received any notice of the occurrence of such nonpayment.
The Agent shall (subject to Section 9.06) take such action hereunder with
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Exhibit 10(i)A
respect to such Default or Event of Default as shall be directed by the Required
Banks, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
SECTION 7.04.Rights of Agent as a Bank and its Affiliates. With respect to
the Loans made by the Agent and any Affiliate of the Agent, the Agent in its
capacity as a Bank hereunder and any Affiliate of the Agent or such Affiliate,
Wachovia in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include Wachovia in its individual capacity and any
Affiliate of the Agent in its individual capacity. The Agent and any Affiliate
of the Agent may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with any of the Borrowers (and any of the Borrowers'
Affiliates) as if the Bank were not acting as the Agent, and the Agent and any
Affiliate of the Agent may accept fees and other consideration from the
Borrowers (in addition to any agency fees and arrangement fees heretofore agreed
to between the Borrowers and the Agent) for services in connection with this
Agreement or any other Loan Document or otherwise without having to account for
the same to the Banks.
SECTION 7.05. Indemnification. Each Bank severally agrees to indemnify the
Agent, to the extent the Agent shall not have been reimbursed by the Borrowers,
ratably in accordance with its Commitment, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, reasonable counsel fees and
disbursements actually incurred) or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement or any other Loan Document
or any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (excluding, unless an Event of
Default has occurred and is continuing, the normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or any such other documents;
provided, however that no Bank shall be liable for any of the foregoing to the
extent they arise from the gross negligence or wilful misconduct of the Agent.
If any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
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Exhibit 10(i)A
SECTION 7.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE RESPONSIBLE OR
LIABLE TO ANY BANK, THE BORROWERS OR ANY OTHER PERSON OR ENTITY FOR ANY
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
SECTION 7.07. Payee of Note Treated as Owner. The Agent may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent and the provisions of Section 9.08(c) have been satisfied.
Any requests, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of that
Note or of any Note or Notes issued in exchange therefor or replacement thereof.
SECTION 7.08. Nonreliance on Agent and Other Banks. Each Bank agrees that
it has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrowers and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Loan Documents. The Agent
shall not be required to keep itself (or any Bank) informed as to the
performance or observance by the Borrowers of this Agreement or any of the other
Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrowers or any other
Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrowers or any other Person (or any of
their Affiliates) which may come into the possession of the Agent.
SECTION 7.09. Failure to Act. Except for action expressly required of the
Agent hereunder or under the other Loan Documents, the Agent shall in all cases
be fully justified in failing or refusing to act hereunder and thereunder unless
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Exhibit 10(i)A
it shall receive further assurances to its satisfaction by the Banks of their
indemnification obligations under Section 7.05 against any and all liability and
expense which may be incurred by the Agent by reason of taking, continuing to
take, or failing to take any such action.
SECTION 7.10. Resignation or Removal of Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Banks and the Borrowers and the Agent
may be removed at any time with or without cause by the Required Banks. Upon any
such resignation or removal, the Required Banks shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by the
Required Banks and shall have accepted such appointment within 30 days after the
retiring Agent's notice of resignation or the Required Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks and on 5
days prior written notice to the Parent, appoint a successor Agent. Any
successor Agent shall be a bank which has a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01 Basis for Determining Interest Rates. If on or prior to the
first day of any Interest Period for any Fixed Rate Loan:
(a) the Agent determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest
Period, or
(b) the Required Banks advise the Agent that the London Interbank
Offered Rate or IBOR, as the case may be, as determined by the Agent will
not adequately and fairly reflect the cost to such Banks of funding the
relevant type of Fixed Rate Loans for such Interest Period,
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Exhibit 10(i)A
the Agent shall forthwith give notice thereof to the Borrowers and the Banks,
whereupon until the Agent notifies the Borrowers that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
the type of Fixed Rate Loans specified in such notice shall be suspended. Unless
the relevant Borrower notifies the Agent prior to such Borrowing of such type of
Fixed Rate Loans for which a Notice of Borrowing has previously been given that
it elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein or any existing or
future law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (any such
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for any Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Loans or Foreign Currency
Loans and such Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrowers, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank to make Euro-Dollar
Loans or Foreign Currency Loans, as the case may be, shall be suspended. If such
Bank shall determine that it may not lawfully continue to maintain and fund any
of its outstanding Euro-Dollar Loans or Foreign Currency Loans, as the case may
be, to maturity and shall so specify in such notice, the relevant Borrower shall
immediately prepay in full the then outstanding principal amount of each
Euro-Dollar Loan or Foreign Currency Loans, as the case may be, of such Borrower
from such Bank, together with accrued interest thereon any amount due such Bank
pursuant to Section 8.05(a). Concurrently with prepaying each such Euro-Dollar
Loan or Foreign Currency Loans, as the case may be, such Borrower shall borrow a
Base Rate Loan in an equal principal amount from such Bank (on which interest
and principal shall be payable contemporaneously with the related Euro-Dollar
Loans or Foreign Currency Loans, as the case may be, of the other Banks), and
such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If after the date
hereof, a Change of Law or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority:
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Exhibit 10(i)A
(i) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding (A) with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage and
(C) with respect to any Foreign Currency Loan any such requirement included
in the applicable Adjusted IBOR Rate) against assets of, deposits with or
for the account of, or credit extended by, any Bank (or its Lending
Office); or
(ii) shall impose on any Bank (or its Lending Office) or on the United
States market for certificates of deposit or the London interbank market
any other condition affecting its Fixed Rate Loans, its Notes or its
obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the relevant Borrowers shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
increased cost or reduction.
(b) If any Bank shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any Authority, has or would have the effect of reducing the rate of return on
such Bank's capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank, the relevant Borrowers
shall pay to such Bank such additional amount or amounts as will compensate such
Bank for such reduction.
(c) Each Bank will promptly notify the relevant Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section. A certificate of any
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Exhibit 10(i)A
Bank claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 8.03 (i) shall be applicable with
respect to any Assignee, and any calculations required by such provisions shall
be made based upon the circumstances of such Assignee and (ii) shall constitute
a continuing agreement and shall survive the termination of this Agreement and
the payment in full or cancellation of the Notes.
SECTION 8.04. Base Rate Loanes or Other Fixed Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of any Bank to make or maintain
any type of Fixed Rate Loans has been suspended pursuant to Section 8.02 or (ii)
any Bank has demanded compensation under Section 8.03, and the Borrower shall,
by at least 5 Euro-Dollar Business Days' or Foreign Currency Business Days, as
applicable, prior notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans or Foreign Currency Loans, as the case may be, shall be
made instead either (A) as Base Rate Loans, (B) if such suspension or
demand for compensation relates to Euro-Dollar Loans, but not Foreign
Currency Loans, as Foreign Currency Loans, or (C) if such demand for
compensation relates to Foreign Currency Loans, but not Euro-Dollar Loans,
as Euro-Dollar Loans, as the Borrower may elect in the notice to such Bank
through the Agent referred to hereinabove (in all cases interest and
principal on such Loans shall be payable contemporaneously with the related
Fixed Rate Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans or Foreign Currency Loans, as
the case may be, has been repaid, all payments of principal which would
otherwise be applied to repay such Fixed Rate Loans shall be applied to
repay its Base Rate Loans instead.
SECTION 8.05. Compensation. Upon the request of any Bank, delivered to the
relevant Borrower and the Agent, such Borrower shall pay to such Bank such
amount or amounts as shall compensate such Bank for any loss, cost or expense
incurred by such Bank as a result of:
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Exhibit 10(i)A
(a) any payment or prepayment (pursuant to Section 2.10, 2.11, 6.01, 8.02
or otherwise) of a Fixed Rate Loan on a date other than the last day of an
Interest Period for such Fixed Rate Loan; or
(b) any failure by such Borrower to prepay a Fixed Rate Loan on the date
for prepayment thereof pursuant hereto or any failure by the Borrower to borrow
a Fixed Rate Loan on the date for the Fixed Rate Borrowing of which such Fixed
Rate Loan is a part specified in the applicable Notice of Borrowing delivered
pursuant to Section 2.02 or notification of acceptance of Money Market Quotes
pursuant to Section 2.03(e); or
(c) any failure by the Borrower to pay a Foreign Currency Loan in the
applicable Foreign Currency;
such compensation to include, without limitation, as applicable: (A)-an amount
equal to the excess, if any, of (x) the amount of interest which would have
accrued on the amount so paid or prepaid or not prepaid or borrowed for the
period from the date of such payment, prepayment or failure to prepay or borrow
to the last day of the then current Interest Period for such Fixed Rate Loan
(or, in the case of a failure to prepay or borrow, the Interest Period for such
Fixed Rate Loan which would have commenced on the date of such failure to prepay
or borrow) at the applicable rate of interest for such Fixed Rate Loan provided
for herein over (y) the amount of interest (as reasonably determined by such
Bank) such Bank would have paid on (i) deposits in Dollars of comparable amounts
having terms comparable to such period placed with it by leading banks in the
London interbank market (if such Fixed Rate Loan is a Euro-Dollar Loan), or (ii)
any deposit in a Foreign Currency of comparable amounts having terms comparable
to such period placed with it by lending banks in the applicable interbank
market for such Foreign Currency (if such Fixed Rate Loan is a Foreign Currency
Loan); or (B) any such loss, cost or expense incurred by such Bank in
liquidating or closing out any foreign currency contract undertaken by such Bank
in funding or maintaining such Fixed Rate Loan (if such Fixed Rate Loan is a
Foreign Currency Loan).
SECTION 8.06. Failure to Pay in Foreign Currency. If any Borrower is unable
for any reason to effect payment in a Foreign Currency as required by this
Agreement or if any Borrower shall default in the Foreign Currency, each Bank
may, through the Agent, require such payment to be made in Dollars in the Dollar
Equivalent amount of such payment. In any case in which any Borrower shall make
such payment in Dollars, such Borrower agrees to hold the Banks harmless from
any loss incurred by the Banks arising from any change in the value of Dollars
in relation to such Foreign Currency between the date such payment became due
and the date of payment thereof.
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Exhibit 10(i)A
SECTION 8.07. Judgement Currency. If for the purpose of obtaining judgment
in any court or enforcing any such judgment it is necessary to convert any
amount due in any Foreign Currency into any other currency, the rate of exchange
used shall be the Agent's spot rate of exchange for the purchase of the Foreign
Currency with such other currency at the close of business on the Foreign
Currency Business Day preceding the date on which judgment is given or any order
for payment is made. The obligation of the relevant Borrower in respect of any
amount due from it hereunder shall, notwithstanding any judgment or order for a
liquidated sum or sums in respect of amounts due hereunder or under any judgment
or order in any other currency or otherwise be discharged only to the extent
that on the Foreign Currency Business Day following receipt by the Agent of any
payment in a currency other than the relevant Foreign Currency the Agent is able
(in accordance with normal banking procedures) to purchase the relevant Foreign
Currency with such other currency. If the amount of the relevant Foreign
Currency that the Agent is able to purchase with such other currency is less
than the amount due in the relevant Foreign Currency, notwithstanding any
judgment or order, such Borrower shall indemnify the Banks for the shortfall.
SECTION 8.08. Limitation on Certain Payment Obligations. (a) Each Bank or
the Agent shall make written demand on any Borrower for indemnification or
compensation pursuant to Section 8.05 or 8.06 hereof no later than 90 after the
event giving rise to the claim for indemnification or compensation occurs.
(b) In the event that any Bank or the Agent fails to give any Borrower
notice within the applicable time limitation prescribed in (a) above, neither
such Borrower nor any other Borrower shall have any obligation to pay such claim
for compensation or indemnification hereunder. No Borrower shall have any
obligation to pay any amount to any Bank with respect to claims accruing under
Section 8.02 or 8.03 prior to the 90th day preceding written demand therefor
from such Bank.
SECTION 8.09. Alternate Lending Offices. Each Bank agrees, if requested by
the Borrowers, it will use reasonable efforts (subject to the overall policy
considerations of such Bank) to designate an alternate Lending Office with
respect to Loans affected by any of the matters or circumstances prescribed in
Section 2.12(d), 8.02 or 8.03 hereof in order to reduce the liability of the
Borrowers or avoid the results provided thereunder, so long as such designation
is not disadvantageous to such Bank as determined by such Bank, which
determination, if made in good faith, shall be conclusive and binding on all
parties hereto. Nothing in this Section 8.09 shall affect or postpone any of the
obligation of the Borrowers hereunder or any right of any Bank hereunder.
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Exhibit 10(i)A
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telecopier or
similar writing) and shall be given to such party at its address or telecopier
number set forth on the signature pages hereof or such other address or
telecopier number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice, request or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopier number specified in this Section and the appropriate confirmation 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 (except
that any financial or other materials so sent pursuant to Section 5.01 shall be
effective when deposited in the mail) or (iii) if given by any other means, when
delivered at the address specified in this Section; provided that notices to the
Agent under Article II or Article VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under any Note or other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03 Expenses; Documentary Taxes. The Borrowers shall pay (i) all
reasonable out-of-pocket expenses of the Agent, including reasonable actual fees
and disbursements of special counsel for the Banks and the Agent, in connection
with the preparation of this Agreement and the other Loan Documents, any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default occurs,
all reasonable out-of-pocket expenses incurred by the Agent and the Banks,
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Exhibit 10(i)A
including reasonable actual fees and disbursements of counsel (including
allocated costs of in-house counsel), in connection with such Default and
collection and other enforcement proceedings resulting therefrom, including
reasonable out-of-pocket expenses incurred in enforcing this Agreement and the
other Loan Documents. The Borrowers shall indemnify the Agent and each Bank
against any transfer taxes, documentary taxes, and other similar taxes,
assessments or charges made by any Authority by reason of the execution and
delivery of this Agreement or the other Loan Documents.
SECTION 9.04. Indemnification. Each Borrower shall indemnify the Agent, the
Banks and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by such Borrower of the proceeds of any
extension of credit by any Bank hereunder or breach by such Borrower of this
Agreement or any other Loan Document or from any investigation, litigation
(including, without limitation, any actions taken by the Agent or any of the
Banks to enforce this Agreement or any of the other Loan Documents, unless the
Borrowers prevail) or other proceeding (including, without limitation, any
threatened investigation or proceeding) relating to the foregoing, and such
Borrower shall reimburse the Agent and each Bank, and each Affiliate thereof and
their respective directors, officers, employees and agents, upon demand for any
expenses (including, without limitation, legal fees) incurred in connection with
any such investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the negligence or
wilful misconduct of the Person to be indemnified or by reason of such Person's
breach of its obligations hereunder or other legal duty or which are the result
of claims of Banks against other Banks or the Agent not attributable to any
Borrower's actions and for which the Borrowers otherwise have no liability.
SECTION 9.05. Setoff; Sharing of Setoffs. (a) Each Borrower hereby grants
to the Agent and each Bank a lien for all indebtedness and obligations owing to
them from such Borrower under any of the Loan Documents upon all deposits or
deposit accounts, of any kind, or any interest in any deposits or deposit
accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned
to the Agent or any such Bank or otherwise in the possession or control of the
Agent or any such Bank for any purpose for the account or benefit of such
Borrower and including any balance of any deposit account or of any credit of
such Borrower with the Agent or any such Bank, whether now existing or hereafter
established hereby authorizing the Agent and each Bank at any time or times upon
the occurrence and during the continuation of any Event of Default with or
without prior notice to apply such balances or any part thereof to such of the
indebtedness and obligations owing by such Borrower to the Banks and/or the
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Exhibit 10(i)A
Agent then past due and in such amounts as they may elect, and whether or not
the collateral, if any, or the responsibility of other Persons primarily,
secondarily or otherwise liable may be deemed adequate. For the purposes of this
paragraph, all remittances and property shall be deemed to be in the possession
of the Agent or any such Bank as soon as the same may be put in transit to it by
mail or carrier or by other bailee.
(b) Each Bank agrees that if it shall, by exercising any right of setoff or
counterclaim or resort to collateral security or otherwise, receive payment of a
proportion of the aggregate amount of principal and interest owing with respect
to the Note held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of all principal and interest
owing with respect to the Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks owing to such other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks owing to such other Banks
shall be shared by the Banks pro rata; provided that (i) nothing in this Section
shall impair the right of any Bank to exercise any right of setoff or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Notes, and (ii) if all or any portion of such payment received by the purchasing
Bank is thereafter recovered from such purchasing Bank, such purchase from each
other Bank shall be rescinded and such other Bank shall repay to the purchasing
Bank the purchase price of such participation to the extent of such recovery
together with an amount equal to such other Bank's ratable share (according to
the proportion of (x) the amount of such other Bank's required repayment to (y)
the total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Note, whether or
not acquired pursuant to the foregoing arrangements, may exercise rights of
setoff or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
relevant Borrower in the amount of such participation.
SECTION 9.06. Amendments and Waivers. (a) Any provision of this Agreement,
the Notes, the Guaranty or any other Loan Documents may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of the Agent are
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Exhibit 10(i)A
affected thereby, by the Agent); provided that, no such amendment or waiver
shall, unless signed by all Banks, (i) change the Commitment of any Bank or
subject any Bank to any additional obligation, (ii) change the principal of or
rate of interest on any Loan or any fees (other than fees payable to the Agent)
hereunder, (iii) change the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder, (iv) change the amount of principal,
interest or fees due on any date fixed for the payment thereof, (v) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes, or the percentage of Banks, which shall be required for the Banks or any
of them to take any action under this Section or any other provision of this
Agreement or the definition of Foreign Currency, (vi) change the manner of
application of any payments made under this Agreement or the Notes, (vii)
release or substitute all or any substantial part of the collateral (if any)
held as security for the Loans, or (viii) release any Guarantee given to support
payment of the Loans.
(b) None of the Borrowers will solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement unless each Bank shall be informed thereof by such Borrower and shall
be afforded an opportunity of considering the same and shall be supplied by the
Borrower with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Agreement shall be delivered
by the Borrowers to each Bank forthwith following the date on which the same
shall have been executed and delivered by the requisite percentage of Banks.
None of the Borrowers will, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to all such Banks.
SECTION 9.07. No Margin Stock Collateral. Each of the Banks represents to
the Agent and each of the other Banks that it in good faith is not, directly or
indirectly (by negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 9.08. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that none of the Borrowers may
assign or otherwise transfer any of its rights under this Agreement.
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Exhibit 10(i)A
(b) Any Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to such Bank, any Note
held by such Bank, any Commitment hereunder or any other interest of such Bank
hereunder. In the event of any such sale by a Bank of a participating interest
to a Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrowers and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of principal of or interest on the related
loan or loans, (ii) the change of the amount of any principal, interest or fees
due on any date fixed for the payment thereof with respect to the related loan
or loans, (iii) the change of the principal of the related loan or loans, (iv)
any change in the rate at which either interest is payable thereon or (if the
Participant is entitled to any part thereof) fee is payable hereunder from the
rate at which the Participant is entitled to receive interest or fee (as the
case may be) in respect of such participation, (v) the release or substitution
of all or any substantial part of the collateral (if any) held as security for
the Loans, or (vi) the release of any Guarantee given to support payment of the
Loans. Each Bank selling a participating interest in any Loan, Note, Commitment
or other interest under this Agreement, other than a Money Market Loan or Money
Market Loan Note or participating interest therein, shall, within 10 Domestic
Business Days of such sale, provide the Borrower and the Agent with written
notification stating that such sale has occurred and identifying the Participant
and the interest purchased by such Participant. The Borrower agrees that each
Participant shall be entitled to the benefits of Section 2.12(d) and Article
VIII with respect to its participation in Loans outstanding from time to time,
but not to receive payment pursuant thereto in an amount greater than its share
of the amount to which the Bank selling such participations would be entitled.
Notwithstanding anything herein to the contrary, no Bank may sell any
participating interests in its Loans or Commitments hereunder to any Person
other than another Bank or to an Affiliate of such Bank or any other Bank in an
amount (after giving effect to all other permitted assignments or participations
made by such Bank) in excess of 50% of such Loans and Commitments, except that
such limitations shall not apply to any such participating interests sold at any
time there exists a Default or in order to satisfy any law or regulatory
requirement applicable to such Bank.
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Exhibit 10(i)A
(c) Any Bank may at any time assign to one or more banks or financial
institutions (each an "Assignee") all, or in the case of its Syndicated Loans
and Commitments, a proportionate part of all its Syndicated Loans and
Commitments, of its rights and obligations under this Agreement, the Notes and
the other Loan Documents, and such Assignee shall assume all such rights and
obligations, pursuant to an Assignment and Acceptance, executed by such
Assignee, such transferor Bank and the Agent (and, in the case of an Assignee
that is not then a Bank, subject to clauses (iii) below, by the Parent);
provided that (i) no interest may be sold by a Bank pursuant to this paragraph
(c) unless the Assignee shall agree to assume ratably equivalent portions of the
transferor Bank's Commitment, (ii) if a Bank is assigning only a portion of its
Commitment, then, the amount of the Commitment being assigned (determined as of
the effective date of the assignment) shall be in an amount not less than
$20,000,000 (or the Dollar Equivalent thereof), or such lesser amount as is
equal to its entire Commitment, (iii) except during the continuance of a
Default, no interest may be sold by a Bank pursuant to this paragraph (c) to any
Assignee that is not then a Bank (or an Affiliate of a Bank) without the consent
of the Parent and the Agent, which consent shall not be unreasonably withheld,
and (iv) a Bank may not have more than 2 Assignees that are not then Banks at
any one time. Notwithstanding the foregoing, if any proceeds of the Loans are
intended by any of the Borrowers to be used in connection with, whether directly
or indirectly, any tender offer for, or other acquisition of, stock of any
corporation with a view towards obtaining control of such other corporation,
unless such tender offer or other acquisition is to be made on a negotiated
basis with the approval of the Board of Directors of the Person to be acquired,
the Parent will so advise the Agent and the Banks, and the consent of the Parent
to any assignment by any Bank shall not be required, so long as such Bank (1)
has notified the Parent of its intent to so assign within 10 days of the funding
of such Loan, (2) diligently pursues such assignment, and (3) concludes such
assignment within a reasonable time after it has given such notice to the
Parent. Upon (A) execution of the Assignment and Acceptance by such transferor
Bank, such Assignee, the Agent and (if applicable) the Borrower, (B) delivery of
an executed copy of the Assignment and Acceptance to the Borrowers and the
Agent, (C) payment by such Assignee to such transferor Bank of an amount equal
to the purchase price agreed between such transferor Bank and such Assignee, and
(D) payment of a processing and recordation fee of $2,500 to the Agent, such
Assignee shall for all purposes be a Bank party to this Agreement and shall have
73
<PAGE>
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Exhibit 10(i)A
all the rights and obligations of a Bank under this Agreement to the same extent
as if it were an original party hereto with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by the Borrower, the Banks or the Agent shall be required. Upon the
consummation of any transfer to an Assignee pursuant to this paragraph (c), the
transferor Bank, the Agent and the Borrowers shall make appropriate arrangements
so that, if required, a new Note from each Borrower is issued each of such
Assignee and such transferor Bank and such transferor Bank.
(d) Subject to the provisions of Section 9.09 (which shall be binding upon
each such Transferee), the Borrowers authorize each Bank to disclose to any
Participant, Assignee or other transferee (each a "Transferee") and any
prospective Transferee any and all financial information in such Bank's
possession concerning the Borrowers which has been delivered to such Bank by the
Borrowers pursuant to this Agreement or which has been delivered to such Bank by
the Borrowers in connection with such Bank's credit evaluation prior to entering
into this Agreement.
(e) No Transferee shall be entitled to receive any greater payment under
Section 2.12(d) or Section 8.03 than the transferor Bank would have been
entitled to receive with respect to the rights transferred, unless such transfer
is made with the Borrower's prior written consent or by reason of the provisions
of Section 8.02 or 8.03 requiring such Bank to designate a different Lending
Office under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
(g) Anything in this Section 9.08 to the contrary notwithstanding, any Bank
may assign and pledge all or any portion of the Loans and/or obligations owing
to it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Loans and/or obligations
made by the Borrowers to the assigning and/or pledging Bank in accordance with
the terms of this Agreement shall satisfy the Borrowers' obligations hereunder
in respect of such assigned Loans and/or obligations to the extent of such
payment. No such assignment shall release the assigning and/or pledging Bank
from its obligations hereunder.
(h) If (i) any Taxes referred to in Section 2.12(d) have been levied or
imposed so as to require withholdings or deductions by any Borrower and payment
74
<PAGE>
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Exhibit 10(i)A
by such Borrower of additional amounts to any Bank as a result thereof or (ii)
any Bank shall make demand for payment of any material additional amounts as
compensation for increased costs or for its reduced rate of return pursuant to
Section 8.02 or 8.03, then and in any such event, upon request from the
Borrowers delivered to such Bank and the Agent, such Bank shall assign, in
accordance with the provisions of Section 9.08(c), all of its rights and
obligations under this Agreement and the other Loan Documents to another Bank or
another assignee selected by the Borrower and acceptable to the Agent (and the
Agent shall not unreasonably withhold its acceptance thereof) upon the payment
by such assignee to such Bank of the principal of and interest on the
outstanding Loans of such Bank accrued to the date of assignment and the
assumption of such Bank's remaining Commitments hereunder, together with any and
all other amounts owing to such Bank under any other provisions of this
Agreement or the other Loan Documents accrued to the date of such assignment,
and compliance in all other respects with the provisions of Section 9.08(c).
SECTION 9.09. Confidentiality. Unless otherwise agreed to in writing by the
Parent, each Bank and the Agent hereby agrees to keep all Proprietary
Information confidential and not to disclose or reveal any Proprietary
Information to any Person other than its (or its Affiliates,) directors,
officers, employees, agents or representatives who reasonably require such
information in connection with their activities concerning this Agreement or the
transactions contemplated hereby and to actual or potential Assignees,
Participants, or Transferees, and then only upon a confidential basis in any
such case; provided, however, that the Agent or any Bank may disclose
Proprietary Information (i) to any other Bank, (ii) to the extent reasonably
required in connection with any litigation to which the Agent, any Bank or their
respective Affiliates may be a party, (iii) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (iv) as required by law,
rule, regulation or judicial process, (v) to its attorneys, accountants or other
consultants (but only on a confidential basis) and (vi) to bank regulatory
authorities or other governmental authorities. For purposes of this Agreement,
the term "Proprietary Information" shall mean all information about the Parent
or any of its Subsidiaries which has been furnished to the Agent or any Bank by
or on behalf of the Parent or any of its Subsidiaries before or after the date
hereof or which is obtained by any Bank or the Agent in the course of any visit
or inspection made pursuant to Section 5.02; provided, however, that the term
"Proprietary Information" does not include information which (x) is or becomes
publicly available (other than as a result of a breach of this Section 9.09),
(y) is possessed by or available to the Agent or any Bank on a non-confidential
75
<PAGE>
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Exhibit 10(i)A
basis prior to its disclosure to the Agent or such Bank by any Borrower or
Subsidiary or (z) becomes available to the Agent or any Bank on a
non-confidential basis from a Person which, to the knowledge of the Agent or
such Bank, as the case may be, is not bound by a confidentiality agreement with
the Parent or any of its Subsidiaries and is not otherwise prohibited from
transmitting such information to the Agent or such Bank. In the event the Agent
or any Bank is required to disclose any Proprietary Information by virtue of
clause (ii) (but only if and to the extent such disclosure has not been sought
by the Agent or any Bank, and if neither the Parent nor any Borrower is a party
to such litigation), (iv) or (v) above, to the extent such Bank or the Agent (as
the case may be) determines in good faith that it is permissible by law so to
do, it shall promptly notify the Parent of same so as to allow the Parent or its
Subsidiaries to seek a protective order or to take other appropriate action;
provided, however, neither any Bank nor the Agent shall be required to delay
compliance with any directive to disclose any such information so as to allow
the Parent or any of Subsidiaries to effect any such action.
SECTION 9.10. Representation by Banks. Each Bank hereby represents that it
is a commercial lender or financial institution which makes loans in the
ordinary course of its business and that it will make its Loans hereunder for
its own account in the ordinary course of such business; provided, however that,
subject to Section 9.08, the disposition of the Note or Notes held by that Bank
shall at all times be within its exclusive control.
SECTION 9.11. Obligations Several. The obligations of each Bank hereunder
are several, and no Bank shall be responsible for the obligations or commitment
of any other Bank hereunder. Nothing contained in this Agreement and no action
taken by the Banks pursuant hereto shall be deemed to constitute the Banks to be
a partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Bank shall be a separate and
independent debt, and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement or any other Loan Document and it shall not
be necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
SECTION 9.12. Georgial Law. This Agreement and each Note shall be construed
in accordance with and governed by the law of the State of Georgia.
SECTION 9.13. Severalbility. In case any one or more of the provisions
contained in this Agreement, the Notes, the Guaranty or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
76
<PAGE>
Page 96
Exhibit 10(i)A
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.14. Interest. In no event shall the amount of interest, and all
charges, amounts or fees contracted for, charged or collected pursuant to this
Agreement, the Notes or the other Loan Documents and deemed to be interest under
applicable law (collectively, "Interest") exceed the highest rate of interest
allowed by applicable law (the "Maximum Rate"), and in the event any such
payment is inadvertently received by any Bank, then the excess sum (the
"Excess") shall be credited as a payment of principal, unless the relevant
Borrower shall notify such Bank in writing that it elects to have the Excess
returned forthwith. It is the express intent hereof that the Borrower not pay
and the Banks not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by such Borrower under
applicable law. The right to accelerate maturity of any of the Loans does not
include the right to accelerate any interest that has not otherwise accrued on
the date of such acceleration, and the Agent and the Banks do not intend to
collect any unearned interest in the event of any such acceleration. All monies
paid to the Agent or the Banks hereunder or under any of the Notes or the other
Loan Documents, whether at maturity or by prepayment, shall be subject to rebate
of unearned interest as and to the extent required by applicable law. By the
execution of this Agreement, each Borrower covenants, to the fullest extent
permitted by law, that (i) the credit or return of any Excess shall constitute
the acceptance by the Borrower of such Excess, and (ii) such Borrower shall not
seek or pursue any other remedy, legal or equitable , against the Agent or any
Bank, based in whole or in part upon contracting for charging or receiving any
Interest in excess of the Maximum Rate. For the purpose of determining whether
or not any Excess has been contracted for, charged or received by the Agent or
any Bank, all interest at any time contracted for, charged or received from such
Borrower in connection with this Agreement, the Notes or any of the other Loan
Documents shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Commitments. The Borrower, the Agent and each Bank shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this Section shall be
deemed to be incorporated into each Note and each of the other Loan Documents
(whether or not any provision of this Section is referred to therein). All such
Loan Documents and communications relating to any Interest owed by any Borrower
and all figures set forth therein shall, for the sole purpose of computing the
77
<PAGE>
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Exhibit 10(i)A
extent of obligations hereunder and under the Notes and the other Loan Documents
be automatically recomputed by such Borrower, and by any court considering the
same, to give effect to the adjustments or credits required by this Section.
SECTION 9.15. Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 9.16. Waiver of Jury Trial; Consent to Jurisdiction. Each Borrower
(a) and each of the Banks and the Agent irrevocably waives, to the fullest
extent permitted by law, any and all right to trial by jury in any legal
proceeding arising out of this Agreement, any of the other Loan Documents, or
any of the transactions contemplated hereby or thereby, (b) submits to the
nonexclusive personal jurisdiction in the State of Georgia, the courts thereof
and the United States District Courts sitting therein, for the enforcement of
this Agreement, the Notes and the other Loan Documents, (c) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or venue
within the State of Georgia for the purpose of litigation to enforce this
Agreement, the Notes or the other Loan Documents, and (d) agrees that service of
process may be made upon it in the manner prescribed in Section 9.01 for the
giving of notice to the such Person. Nothing herein contained, however, shall
prevent the Agent from bringing any action or exercising any rights against any
security and against any Borrower personally, and against any assets of any
Borrower, within any other state or jurisdiction.
SECTION 9.17. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 9.18. Source of Funds -- ERISA. Each of the Banks hereby severally
(and not jointly) represents to the Borrowers that no part of the funds to be
used by such Bank to fund the Loans hereunder from time to time constitutes (i)
assets allocated to any separate account maintained by such Bank in which any
employee benefit plan (or its related trust) has any interest nor (ii) any other
assets of any employee benefit plan. As used in this Section, the terms
"employee benefit plan" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
78
<PAGE>
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Exhibit 10(i)A
SECTION 9.19. References Regarding Foreign Subsidiaries. Any references
herein to any officer or organic document of any Foreign Subsidiary shall be
deemed to refer to the equivalent to such officer or document in the
jurisdiction of such Person's incorporation or organization.
[Signatures are contained on the following pages.]
79
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Exhibit 11
NATIONAL SERVICE INDUSTRIES, INC.
COMPUTATIONS OF NET INCOME PER SHARE OF COMMON STOCK
(In thousands, except per-share data)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
MAY 31 MAY 31
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic:
Net Income ............................................... $28,139 $29,434 $78,295 $74,613
Basic Weighted Average Number of
Shares Outstanding (determined on
a monthly basis), including Shares
Contingently Issuable .................................... 42,001 44,996 42,763 45,371
Basic Earnings per Share ................................. .67 $ .65 $ 1.83 $ 1.64
Diluted:
Basic Weighted Average Number of Shares Outstanding ...... 42,001 44,996 42,763 45,371
Add: Shares of common stock assumed issued upon
exercise of stock options using the "Treasury
Stock" method as it applies to the computation of diluted
earnings per share ....................................... 658 352 537 292
Average Common Shares Outstanding (as adjusted) .......... 42,659 45,348 43,300 45,663
Diluted Earnings per Share ............................... $ .66 $ .65 $ 1.81 $ 1.63
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Page 100
Exhibit 27
Financial Data Schedule
Quarter Ended May 31, 1998
Pursuant to Section 601(c) of Regulation S-K
This schedule contains summary financial information extracted from National
Service Industries, Inc. consolidated balance sheet as of May 31, 1998 and the
consolidated statement of income for the nine months ended May 31, 1998, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> MAY-31-1998
<CASH> 28,929
<SECURITIES> 58
<RECEIVABLES> 295,769
<ALLOWANCES> 6,830
<INVENTORY> 200,969
<CURRENT-ASSETS> 603,929
<PP&E> 647,016
<DEPRECIATION> 383,005
<TOTAL-ASSETS> 991,800
<CURRENT-LIABILITIES> 266,677
<BONDS> 26,162
0
0
<COMMON> 57,919
<OTHER-SE> 506,324
<TOTAL-LIABILITY-AND-EQUITY> 991,800
<SALES> 1,253,529
<TOTAL-REVENUES> 1,488,602
<CGS> 765,854
<TOTAL-COSTS> 902,220
<OTHER-EXPENSES> 457,229
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,698
<INCOME-PRETAX> 124,456
<INCOME-TAX> 46,161
<INCOME-CONTINUING> 78,295
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,295
<EPS-PRIMARY> 1.83
<EPS-DILUTED> 1.81
</TABLE>
