<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30,1999 Commission File Number 0-13147
----------------- --------
LESCO, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 34-0904517
- ------------------------------- ---------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
20005 Lake Road
Rocky River, Ohio 44116
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(440) 333-9250
-------------------------------
(Registrant's telephone number,
including area code)
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 twelve 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 close of the latest practical date.
Outstanding at
Class November 11, 1999
-------------------------------- -----------------
Common shares, without par value 8,444,763 shares
1
<PAGE> 2
LESCO, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 September 30 December 31
(In thousands except share data) 1999 1998 1998
------------ ------------- -----------
(unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 2,937 $ 3,044 $ 1,841
Accounts receivable -- net 81,067 79,273 65,358
Inventories 115,487 94,095 86,662
Deferred income taxes 1,727 1,993 1,568
Prepaid expenses and other assets 2,453 1,725 3,598
--------- --------- ---------
TOTAL CURRENT ASSETS 203,671 180,130 159,027
Property, Plant and Equipment 80,091 66,044 67,874
Less allowance for depreciation and amortization (33,691) (27,204) (28,796)
--------- --------- ---------
46,400 38,840 39,078
Other Assets 8,899 9,909 9,643
--------- --------- ---------
TOTAL ASSETS $ 258,970 $ 228,879 $ 207,748
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 54,017 $ 50,688 $ 36,138
Other current liabilities 12,540 8,283 6,688
Current portion of debt 100 200 100
--------- --------- ---------
TOTAL CURRENT LIABILITIES 66,657 59,171 42,926
Long-term debt 99,021 86,770 83,698
Deferred income taxes 1,650 2,282 2,427
SHAREHOLDERS' EQUITY:
Preferred shares-- without par value--
authorized 500,000 shares
Common shares--without par value--
19,500,000 shares authorized; 8,507,488 shares issued and 8,444,763
outstanding at September 30, 1999, 8,401,418
at September 30, 1998, 8,366,202 at December 31, 1998 851 841 841
Paid-in capital 33,004 31,158 31,631
Retained earnings 58,922 49,588 47,156
Less treasury shares (59) (59) (59)
Unearned compensation (1,076) (872) (872)
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 91,642 80,656 78,697
--------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 258,970 $ 228,879 $ 207,748
========= ========= =========
</TABLE>
2
<PAGE> 3
LESCO, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
------------------------------- ------------------------------
(In thousands except per share data) 1999 1998 1999 1998
--------- --------- --------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales $ 130,938 $ 118,837 $ 364,707 $ 325,973
Cost of sales 86,563 81,996 240,464 218,880
--------- --------- --------- ---------
GROSS PROFIT ON SALES 44,375 36,841 124,243 107,093
Warehouse & delivery expense 9,312 9,263 28,356 25,779
Selling, general & administrative expense 24,715 22,441 72,061 64,729
--------- --------- --------- ---------
34,027 31,704 100,417 90,508
--------- --------- --------- ---------
INCOME FROM OPERATIONS 10,348 5,137 23,826 16,585
Other deductions (income):
Interest expense 1,561 1,153 4,504 4,197
Joint venture loss 573 909 875 1,699
Other - net (1,285) (1,043) (2,790) (2,957)
--------- --------- --------- ---------
849 1,019 2,589 2,939
--------- --------- --------- ---------
Income Before Income Taxes 9,499 4,118 21,237 13,646
Income taxes 3,702 1,605 8,280 5,321
--------- --------- --------- ---------
NET INCOME $ 5,797 $ 2,513 $ 12,957 $ 8,325
========= ========= ========= =========
BASIC EARNINGS PER SHARE $ 0.69 $ 0.30 $ 1.54 $ 1.00
========= ========= ========= =========
DILUTED EARNINGS PER SHARE $ 0.68 $ 0.30 $ 1.51 $ 0.97
========= ========= ========= =========
</TABLE>
3
<PAGE> 4
LESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30
----------------------------
(In thousands) 1999 1998
--------- ---------
(unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 12,957 $ 8,325
Adjustments to reconcile net income to net cash
(used) provided by operating activities:
Depreciation and amortization 4,993 4,065
Increase in accounts receivable (18,189) (15,044)
Provision for uncollectible accounts receivable 2,480 1,890
Increase in inventories (28,825) (10,727)
Increase in accounts payable 17,879 16,466
Increase in other current items 6,838 5,052
Other (33) (743)
--------- ---------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (1,900) 9,284
INVESTING ACTIVITIES:
Purchase of property, plant and equipment - net (12,315) (9,686)
Acquisition of businesses - (8,174)
Bond proceeds held for construction - 4,761
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (12,315) (13,099)
FINANCING ACTIVITIES:
Proceeds from borrowings 167,400 153,097
Reduction of borrowings (152,077) (149,680)
Issuance of common shares 1,172 1,122
Cash dividend (1,184) (1,084)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,311 3,455
--------- ---------
Net increase (decrease) in cash 1,096 (359)
Cash - Beginning of the period 1,841 3,403
--------- ---------
CASH - END OF THE PERIOD $ 2,937 $ 3,044
========= =========
</TABLE>
4
<PAGE> 5
LESCO, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE A - Basis of Presentation
- ------------------------------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the requirements of Regulation S-X and Form 10-Q. The statements
reflect all adjustments, consisting only of normal recurring accruals, which
are, in the opinion of management, necessary for a fair presentation of the
results for interim periods. For further information, refer to the audited
financial statements and footnotes thereto for the year ended December 31, 1998
included in the Company's Form 10-K.
Operating results for the nine months ended September 30 are not necessarily
indicative of the results to be expected for the year due to the seasonal nature
of the Company's business.
NOTE B - Earnings per Share
- ---------------------------
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
- ----------------------------------------------------------------------------------------------------------------
(In thousands except share data) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Numerator:
Net Income $ 5,797 $ 2,513 $ 12,957 $ 8,325
Denominator:
Denominator for basic
earnings per share -
weighted average shares 8,436,974 8,341,510 8,403,994 8,308,997
Effect of dilutive securities:
Employee stock options 127,825 140,570 161,226 284,385
Performance shares 18,301 18,301
---------- ---------- ---------- ----------
Diluted potential common
Shares 127,825 158,871 161,226 302,686
Denominator for diluted
earnings per share -
adjusted weighted average
shares and assumed
conversions 8,564,799 8,500,381 8,565,220 8,611,683
Earnings per share
Basic $ 0.69 $ 0.30 $ 1.54 $ 1.00
Diluted $ 0.68 $ 0.30 $ 1.51 $ 0.97
</TABLE>
5
<PAGE> 6
LESCO, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
Results of Operations
- ---------------------
For the third quarter ended September 30, 1999, sales increased 10.2% to $130.9
million from $118.8 million in 1998. Sales for the first nine months of 1999
increased 11.9% to $364.7 million from $326.0 million in 1998. Sales volumes for
both consumable and hard goods increased in the third quarter and the first nine
months of 1999 compared to 1998. Same store sales for the third quarter and the
first nine months of 1999 compared to 1998 increased 7.0% and 10.6%,
respectively.
Gross profit, as a percent of sales, for the third quarter ended September 30,
1999 was 33.9% compared to 31.0% in the third quarter of 1998. For the first
nine months, gross profit, as a percent of sales, in 1999 was 34.1% compared to
32.9% in 1998. Gross profit increases occurred in all major product categories
for the third quarter and the first nine months ended September 30. The increase
in gross profit, as a percent of sales, is due primarily to more cost effective
purchasing of raw materials and the positive effect of a favorable product mix.
The Company's warehouse and delivery expenses decreased as a percent of sales
for the third quarter from 7.8% in 1998 to 7.1% in 1999 despite a 10.2% sales
increase. For the nine months ended warehouse and delivery expenses decreased as
a percent of sales from 7.9% in 1998 to 7.8% in 1999 despite an 11.9% sales
increase. This is due primarily to the efficiencies gained by the warehouse
consolidation that occurred in 1998.
The Company's selling, general and administrative expenses increased $2.3
million, a 10.1% increase to $24.7 million for the third quarter of 1999
compared to $22.4 million in the third quarter of 1998. Selling, general and
administrative expenses remained unchanged as a percent of sales compared to the
third quarter a year ago. For the nine months ended selling, general and
administrative expenses increased $7.3 million, an 11.3% increase to $72.1
million for 1999 compared to $64.7 million in 1998. Selling, general and
administrative expenses as a percent of sales decreased 0.1% compared to a year
ago. The expense increases for both the third quarter and the first nine months
were primarily attributable to an increase in sales and administrative support
personnel added in the first half of 1999 to support the continuing business
growth.
Interest expense for the third quarter of 1999 increased to $1.6 million from
$1.2 million in 1998. For the first nine months interest expense increased to
$4.5 million in 1999 from $4.2 million in 1998. The third quarter and
year-to-date increase was primarily due to an increase in the level of
outstanding debt and higher interest rates in 1999 compared to 1998.
Other deductions-net include customer finance charges which totaled $1.0 million
in the third quarter of 1999 compared to $1.1 million in 1998 and year-to-date
of $2.3 million in 1999 and $2.4 million in 1998. The slight decrease is
primarily due to the impact of outsourcing the Company's equipment financing
programs.
6
<PAGE> 7
The Company recognized the net operating loss of Commercial Turf Products, Ltd.,
the Company's 50/50 commercial equipment joint venture with MTD Products Inc of
$573,000 in the third quarter of 1999 compared to a net operating loss of
$909,000 in the third quarter of 1998. For the first nine months the Company
recognized a net operating loss of $875,000 in 1999 compared to a net operating
loss of $1.7 million in 1998. The improvement in performance is due primarily to
greater efficiencies resulting from the increase in the number of units produced
compared to a year ago.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
As of September 30, 1999, total assets of the Company were $259.0 million
compared to $228.9 million as of September 30, 1998 and $207.7 million as of
December 31, 1998. The asset increase from September 30, 1998 to September 30,
1999 is primarily related to working capital increases and increases in
property, plant and equipment, while the working capital increase from December
31, 1998 is due primarily to seasonality. Net accounts receivable were $81.1
million as of September 30, 1999 compared to $79.3 million as of September 30,
1998 and $65.4 million as of December 31, 1998. Compared to a year ago, net
accounts receivable increased 2.3% compared to a 11.9% sales increase, due
primarily to the impact of outsourcing equipment financing and the continued
focus on the overall management of receivables. The increase in net accounts
receivable from December 31, 1998 to September 30, 1999 reflect the business
seasonality. Inventories were $115.5 million as of September 30, 1999 compared
to $94.1 million as of September 30, 1998 and $86.7 million as of December 31,
1998. The increase in inventory is due primarily to higher turfseed inventory
levels as a result of higher than anticipated turfseed crop yields and the
Company's new approach being utilized to market equipment.
Funding for the asset increases was provided primarily by an increase in
long-term debt, along with an increase in accounts payable. The Company's
long-term debt increased to $99.0 million as of September 30, 1999 compared to
$86.8 million as of September 30, 1998 and $83.7 million as of December 31,
1998. The increase from September 30, 1998 and December 31, 1998 to September
30, 1999 was primarily due to increased inventory levels as noted above. The
increase in accounts payable from September 30, 1998 to September 30, 1999
relates primarily to the increases in inventory, while the increase from
December 31, 1999 is primarily related to seasonality.
Outstanding debt under the Company's credit facility was $42.8 million as of
September 30, 1999 compared to $23.0 million as of September 30, 1998 and $19.9
million as of December 31, 1998. As of September 30, 1999 the Company had $17.2
million available under its bank credit facility. The Company completed the
renewal of its revolving credit agreement, which provides $60.0 million of
unsecured financing with a maturity of June 30, 2003 and believes its current
borrowing capacity is adequate for the foreseeable future.
Capital expenditures for the first nine months of 1999 included improvements in
the Company's information systems, construction costs for the Company's new
fertilizer plant in Sebring, Florida, investment in the new fertilizer
technology, and general improvements to the Company's other manufacturing and
distribution facilities.
7
<PAGE> 8
Year 2000 Compliance
- --------------------
The Year 2000 issue concerns the potential inability of computer hardware or
software to properly recognize date-sensitive information relating to the Year
2000 and beyond. To address this potential problem, the Company has implemented
a work plan to identify information systems issues and has surveyed each
manufacturing location to identify mission-critical and support-function system
compliance issues. The Company has assessed potential risks that could impact
the Company's business and is developing appropriate contingency plans in the
event of a temporary disruption. The Company's Vice President, Chief Information
Officer leads this effort.
Since 1995, the Company has conducted a broad-based information systems program
to replace and upgrade computer application software and hardware in its
manufacturing, distribution, point-of-sale, financial and administrative
functions. The primary purpose of this program is to improve operating
efficiencies. With the implementation of a new receivables management system in
1999, the Company expects to complete this broad-based information systems
program by the end of 1999. At the time of purchase of these new systems from
vendors, the Company required that these systems be Year-2000 compliant. The
Company has obtained written vendor representations as to the new systems' Year
2000 compliance. It is the Company's belief that these new information systems
and the related hardware to operate these systems are compliant with Year 2000
computing requirements.
During 1998, the Company completed construction of a new fertilizer
manufacturing plant in Sebring, Florida. It is the Company's belief that all
operating systems at this plant are Year-2000 compliant. During 1998, the
Company conducted a review of each manufacturing site, and internal assessments
with respect to Year 2000 compliance for its desktop and manufacturing process
technology and other potentially date-sensitive technology. The Company has
implemented a work plan to ensure all systems are compliant by the end of 1999.
The Company has been testing and will continue to test Year 2000 compliance
throughout its operations during 1999. In addition, the Company is communicating
with key business partners including suppliers, utilities and customers to
determine their risks associated with the Year 2000.
The primary focus of the Company's broad-based information systems upgrades has
been to improve operating efficiencies; however, Year 2000 compliance has been a
secondary benefit of this initiative. The Company has funded these system
improvements from capital funds and annual operating cash flows. The incremental
cost specifically associated with Year 2000 compliance efforts has been nominal,
and is expected to be less than $150,000 in 1999.
The potential risks associated with the Year 2000 issue include temporary
disruption of manufacturing operations, materials ordering, receiving and
shipping product, order entry, billing and collection of accounts receivable,
and disruption in services from vendors who supply materials or services
necessary to the Company in the conduct of its operations. While there can be no
complete assurances, we believe the risk of disruption to the Company has been
minimized as a result of the information systems upgrades that have occurred
since 1995, the ongoing testing and assessments of operating systems, and the
ongoing communication with key business partners. However, if disruptions
relating to the Year 2000 issue occur, the Company could experience some adverse
effects on its operations. The Company is developing contingency plans for
various functional areas, and anticipates completion of these plans by November
30, 1999. During 1999, the Company will continue to assess risks to minimize the
impact of any potential disruptions.
8
<PAGE> 9
Forward-Looking Statements
- --------------------------
Certain statements included in the report are forward-looking statements that
are based on management's current belief, assumptions and expectations. These
forward-looking statements can be identified by the use of predictive or future
tense terms such as "anticipate," "estimate," "project," "may," "will" or
similar terms. These statements are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company's actual
future performance may differ materially from that anticipated in
forward-looking statements. Risk factors that would cause or contribute to such
differences include, but are not limited to:
- regional weather conditions which have an impact on both timing
and volume of sales;
- the Company's successful execution of its operating plans;
- the Company's ability to integrate business acquisitions
successfully;
- general economic and business conditions;
- changes in market demographics; and
- changes in the regulation of the Company's products, including
applicable environmental regulations.
9
<PAGE> 10
PART II - OTHER INFORMATION
---------------------------
Except as noted below, the items in Part II are inapplicable or, if applicable,
would be answered in the negative. These items have been omitted and no other
reference is made thereto.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(10)(v) Credit Agreement dated September 23, 1999 among National City
Bank, PNC Bank, National Association, Bank One, Michigan, National City
Bank, as agent and the Registrant
(27) Financial Data Schedule
10
<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.
LESCO, INC.
November 12, 1999 By: /s/ R. Breck Denny
- ----------------- --------------------------------
R. Breck Denny, Vice-President/
Chief Financial Officer
11
<PAGE> 1
Exhibit 10(u)
================================================================================
================================================================================
CREDIT AGREEMENT
DATED AS OF
SEPTEMBER 23, 1999
AMONG
LESCO, INC.
AS BORROWER
THE LENDING INSTITUTIONS NAMED THEREIN
AS LENDERS
NATIONAL CITY BANK
AS A LENDER, THE SWING LINE LENDER AND
AS ADMINISTRATIVE AGENT
================================================================================
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
SECTION 1. DEFINITIONS AND TERMS...........................................................................1
1.1. Certain Defined Terms...........................................................................1
1.2. Computation of Time Periods....................................................................16
1.3. Accounting Terms...............................................................................16
1.4. Terms Generally................................................................................16
SECTION 2. AMOUNT AND TERMS OF LOANS......................................................................17
2.1. Commitments for Loans..........................................................................17
2.2. Minimum Borrowing Amounts, etc.; Pro Rata Borrowings...........................................17
2.3. Procedures for Borrowing.......................................................................17
2.4. Disbursement of Funds..........................................................................19
2.5. Refunding of, or Participation in, Swing Line Revolving Loans..................................19
2.6. Notes and Loan Accounts........................................................................20
2.7. Conversions of General Revolving Loans.........................................................21
2.8. Interest.......................................................................................22
2.9. Selection and Continuation of Interest Periods.................................................24
2.10. Increased Costs, Illegality, etc...............................................................25
2.11. Breakage Compensation..........................................................................27
2.12. Change of Lending Office; Replacement of Lenders...............................................27
SECTION 3. FEES...........................................................................................28
3.1. Facility Fee...................................................................................28
SECTION 4. REDUCTIONS AND TERMINATION OF COMMITMENTS......................................................29
4.1. Voluntary Termination/Reduction of Commitments.................................................29
4.2. Mandatory Termination/Adjustments of Commitments, etc..........................................29
4.3. Extension of Maturity Date.....................................................................29
SECTION 5. PAYMENTS.......................................................................................30
5.1. Voluntary Prepayments..........................................................................30
5.2. Mandatory Prepayments..........................................................................30
5.3. Method and Place of Payment....................................................................32
5.4. Net Payments...................................................................................32
5.5. Late Charges...................................................................................33
SECTION 6. CONDITIONS PRECEDENT...........................................................................33
6.1. Conditions Precedent at Closing Date...........................................................33
6.2. Conditions Precedent to All Loans..............................................................34
SECTION 7. REPRESENTATIONS AND WARRANTIES.................................................................34
7.1. Corporate Status, etc..........................................................................34
7.2. Subsidiaries...................................................................................34
7.3. Corporate Power and Authority, etc.............................................................34
7.4. No Violation...................................................................................35
7.5. Governmental Approvals.........................................................................35
7.6. Litigation.....................................................................................35
7.7. Use of Proceeds; Margin Regulations............................................................35
7.8. Financial Statements, etc......................................................................35
7.9. No Material Adverse Change.....................................................................36
7.10. Tax Returns and Payments.......................................................................36
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
7.11. Title to Properties, etc.......................................................................36
7.12. Lawful Operations, etc.........................................................................36
7.13. Environmental Matters..........................................................................36
7.14. Compliance with ERISA..........................................................................37
7.15. Intellectual Property, etc.....................................................................37
7.16. Investment Company.............................................................................37
7.17. Burdensome Contracts; Labor Relations..........................................................37
7.18. Existing Indebtedness..........................................................................38
7.19. Year 2000 Computer Matters.....................................................................38
7.20. True and Complete Disclosure...................................................................38
SECTION 8. AFFIRMATIVE COVENANTS..........................................................................38
8.1. Reporting Requirements.........................................................................38
8.2. Books, Records and Inspections.................................................................41
8.3. Insurance......................................................................................41
8.4. Payment of Taxes and Claims....................................................................41
8.5. Corporate Franchises...........................................................................41
8.6. Good Repair....................................................................................41
8.7. Compliance with Statutes, etc..................................................................42
8.8. Compliance with Environmental Laws.............................................................42
8.9. Fiscal Years, Fiscal Quarters..................................................................42
8.10. Hedge Agreements, etc..........................................................................42
8.11. Senior Debt....................................................................................43
SECTION 9. NEGATIVE COVENANTS.............................................................................43
9.1. Changes in Business............................................................................43
9.2. Consolidation, Merger, Acquisitions, Asset Sales, etc..........................................43
9.3. Liens..........................................................................................44
9.4. Indebtedness...................................................................................45
9.5. Advances, Investments, Loans and Guaranty Obligations..........................................46
9.6. Dividends, Stock Repurchases, etc..............................................................48
9.7. Ratio of Consolidated Total Debt to Consolidated Total Adjusted Capital........................48
9.8. Ratio of Consolidated Total Debt to Consolidated EBITDA........................................48
9.9. Interest and Rent Coverage Ratio...............................................................48
9.10. Prepayments and Refinancings of Other Debt, etc................................................48
9.11. Transactions with Affiliates...................................................................49
9.12. Plan Terminations, Minimum Funding, etc........................................................49
SECTION 10. EVENTS OF DEFAULT..............................................................................49
10.1. Events of Default..............................................................................49
10.2. Acceleration, etc..............................................................................50
10.3. Application of Liquidation Proceeds............................................................51
SECTION 11. THE ADMINISTRATIVE AGENT.......................................................................51
11.1. Appointment....................................................................................51
11.2. Delegation of Duties...........................................................................51
11.3. Exculpatory Provisions.........................................................................51
11.4. Reliance by Administrative Agent...............................................................52
11.5. Notice of Default..............................................................................52
11.6. Non-Reliance...................................................................................52
11.7. Indemnification................................................................................53
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
11.8. The Administrative Agent in Individual Capacity................................................53
11.9. Successor Administrative Agent.................................................................53
11.10. Other Agents...................................................................................53
SECTION 12. MISCELLANEOUS..................................................................................53
12.1. Payment of Expenses etc........................................................................53
12.2. Right of Setoff................................................................................55
12.3. Notices........................................................................................55
12.4. Benefit of Agreement...........................................................................55
12.5. No Waiver: Remedies Cumulative.................................................................57
12.6. Payments Pro Rata..............................................................................58
12.7. Calculations: Computations.....................................................................58
12.8. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial.........................58
12.9. Counterparts...................................................................................59
12.10. Effectiveness; Integration.....................................................................59
12.11. Headings Descriptive...........................................................................59
12.12. Amendment or Waiver............................................................................59
12.13. Survival.......................................................................................60
12.14. Domicile of Loans..............................................................................60
12.15. Confidentiality................................................................................60
12.16. Lender Register................................................................................61
12.17. General Limitation of Liability................................................................61
12.18. No Duty........................................................................................61
12.19. Lenders and Agents Not Fiduciary to Borrower, etc..............................................61
12.20. Survival of Representations and Warranties.....................................................61
12.21. Independence of Covenants......................................................................62
</TABLE>
<PAGE> 5
ANNEX I - INFORMATION AS TO LENDERS
ANNEX II - INFORMATION AS TO SUBSIDIARIES
ANNEX III - DESCRIPTION OF EXISTING INDEBTEDNESS
ANNEX IV - DESCRIPTION OF EXISTING LIENS
ANNEX V - DESCRIPTION OF EXISTING ADVANCES, LOANS,
INVESTMENTS AND GUARANTEES
EXHIBIT A-1 - FORM OF GENERAL REVOLVING NOTE
EXHIBIT A-2 - FORM OF SWING LINE REVOLVING NOTE
EXHIBIT B-1 - FORM OF NOTICE OF BORROWING
EXHIBIT B-2 - FORM OF NOTICE OF CONVERSION
EXHIBIT C - FORM OF CORPORATE CERTIFICATE
EXHIBIT D - FORM OF OPINION OF SPECIAL COUNSEL TO THE BORROWER
EXHIBIT E - FORM OF ASSIGNMENT AGREEMENT
EXHIBIT F - FORM OF SECTION 5.4(b)(ii) CERTIFICATE
iv
<PAGE> 6
CREDIT AGREEMENT, dated as of September 23, 1999 (herein, as amended,
supplemented or otherwise modified from time to time, "THIS AGREEMENT"), among
the following:
(i) LESCO, INC., an Ohio corporation (herein, together with
its successors and assigns, the "BORROWER");
(ii) the lending institutions listed in Annex I hereto
(herein, together with its or their successors and assigns, each a
"LENDER" and collectively, the "LENDERS");
(iii) NATIONAL CITY BANK, a national banking association, as
one of the Lenders, as the Lender under the Swing Line Revolving
Facility referred to herein (herein, together with its successors and
assigns, the "SWING LINE LENDER"), and as administrative agent (the
"ADMINISTRATIVE AGENT"):
PRELIMINARY STATEMENTS:
(1) Unless otherwise defined herein, all capitalized terms used herein
and defined in section 1 are used herein as so defined.
(2) The Borrower has applied to the Lenders for credit facilities in
order to refinance certain indebtedness of the Borrower, to finance Acquisitions
and in order to provide working capital and funds for other lawful purposes.
(3) Subject to and upon the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrower the credit facilities
provided for herein.
NOW, THEREFORE, it is agreed:
SECTION 1. DEFINITIONS AND TERMS.
1.1. CERTAIN DEFINED TERMS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires:
"ACQUISITION" shall mean and include (i) any acquisition on a going
concern basis (whether by purchase, lease or otherwise) of any facility and/or
business operated by any person who is not a Subsidiary of the Borrower, and
(ii) acquisitions of a majority of the outstanding equity or other similar
interests in any such person (whether by merger, stock purchase or otherwise).
"ADJUSTED EURODOLLAR RATE" shall mean with respect to each Interest
Period for a Eurodollar Loan, (i) the rate per annum which appears on page 3750
of the Telerate Screen (or on any successor or substitute page, or on any
electronic publication of a recognized service organization providing comparable
rate quotations, in any case as determined from time to time by the
Administrative Agent) for Dollar deposits of $1,000,000 in same day funds for a
maturity corresponding to such Interest Period as of 11:00 A.M. (London time) on
the date which is two Business Days prior to the commencement of such Interest
Period, divided (and rounded upward to the nearest 1/16th of 1%) by (ii) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves and without benefit of credits for
proration, exceptions or offsets which may be available from time to time)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or any successor category
of liabilities under Regulation D).
In the event that such rate is not available at such time for any
reason, the rate referred to in clause (i) above shall be the interest rate per
annum equal to the average (rounded upward to the nearest 1/16th of 1% per
annum),
<PAGE> 7
of the rate per annum at which Dollar deposits of $1,000,000 for a maturity
corresponding to the Interest Period are offered to each of the Reference Banks
by prime banks in the London interbank Eurodollar market, determined as of 11:00
A.M. (London time) on the date which is two Business Days prior to the
commencement of such Interest Period.
"ADMINISTRATIVE AGENT" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to section 11.9.
"AFFILIATE" shall mean, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such person. A person shall be deemed to control a second
person if such first person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such second person or (ii) to direct or cause the
direction of the management and policies of such second person, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, (x) a director, officer or employee of a person shall not, solely
by reason of such status, be considered an Affiliate of such person; and (y)
neither the Administrative Agent nor any Lender shall in any event be considered
an Affiliate of the Borrower or any of its Subsidiaries.
"AGREEMENT" shall have the meaning provided in the introductory
paragraph of this Agreement.
"APPLICABLE EURODOLLAR MARGIN" shall have the meaning provided in
section 2.8(h).
"APPLICABLE FACILITY FEE RATE" shall have the meaning provided in
section 3.1(b).
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender,
(i) such Lender's Domestic Lending Office in the case of Borrowings consisting
of Prime Rate Loans, (ii) such Lender's Eurodollar Lending Office in the case of
Borrowings consisting of Eurodollar Loans, and (iii) in the case of Borrowings
from the Swing Line Lender which consist of Money Market Rate Loans, the
Domestic Lending Office of the Swing Line Lender.
"APPLICABLE PRIME RATE MARGIN" shall have the meaning provided in
section 2.8(h).
"ASSET SALE" shall mean the sale, transfer or other disposition
(including by means of Sale and Lease-Back Transactions, and by means of
mergers, consolidations, and liquidations of a corporation, partnership or
limited liability company of the interests therein of the Borrower or any
Subsidiary) by the Borrower or any Subsidiary to any person other than the
Borrower or any Subsidiary of any of their respective assets, PROVIDED that the
term Asset Sale specifically excludes any sales, transfers or other dispositions
of inventory, or obsolete or excess furniture, fixtures, equipment or other
property, real or personal, tangible or intangible, in each case in the ordinary
course of business.
"ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement substantially
in the form of Exhibit E hereto.
"AUTHORIZED OFFICER" shall mean any officer or employee of the Borrower
designated as such in writing to the Administrative Agent by the Borrower.
"BANKRUPTCY CODE" shall have the meaning provided in section 10.1(g).
"BORROWER" shall have the meaning provided in the first paragraph of
this Agreement.
"BORROWING" shall mean (i) the incurrence of General Revolving Loans
consisting of one Type of Loan, by the Borrower from all of the Lenders having
Commitments in respect thereof on a PRO RATA basis on a given date (or resulting
from Conversions or Continuations on a given date), having in the case of
Eurodollar Loans the same Interest Period, or (ii) the incurrence of a Swing
Line Revolving Loan of a single Type from the Swing Line Lender on a given date,
having in the case of a Money Market Loan a single maturity date and Quoted
Rate.
2
<PAGE> 8
"BUSINESS DAY" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the city in which the Payment Office is located a legal holiday or a day on
which banking institutions are authorized by law or other governmental actions
to close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day which
is a Business Day described in clause (i) and which is also a day for trading by
and between banks in U.S. dollar deposits in the interbank Eurodollar market.
"CAPITAL LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities identified as "capital lease
obligations" (or any similar words) on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP.
"CASH EQUIVALENTS" shall mean any of the following:
(i) securities issued or directly and fully guaranteed or
insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the
United States of America is pledged in support thereof) having
maturities of not more than one year from the date of acquisition;
(ii) U.S. dollar denominated time deposits, certificates of
deposit and bankers' acceptances of (x) any Lender or (y) any bank
whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank, an "APPROVED BANK"), in each case
with maturities of not more than 180 days from the date of acquisition;
(iii) commercial paper issued by any Lender or Approved Bank
or by the parent company of any Lender or Approved Bank and commercial
paper issued by, or guaranteed by, any industrial or financial company
with a short- term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each
thereof, from S&P or Moody's, as the case may be, and in each case
maturing within 270 days after the date of acquisition;
(iv) investments in money market funds or mutual funds
substantially all the assets of which are comprised of securities of
the types described in clauses (i) through (iii) above; and
(v) investments in money market funds access to which is
provided as part of "sweep" accounts maintained with a Lender or an
Approved Bank.
"CASH PROCEEDS" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section. 9601 et Seq.
"CHANGE OF CONTROL" shall mean and include any of the following:
(i) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the
Borrower's Board of Directors (together with any new directors (x)
whose election by the Borrower's Board of Directors was, or (y) whose
nomination for election by the Borrower's shareholders was (prior to
the date of the proxy or consent solicitation relating to such
nomination),
3
<PAGE> 9
approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved),
shall cease for any reason to constitute a majority of the directors
then in office;
(ii) any person or group (as such term is defined in section
13(d)(3) of the 1934 Act), other than the Borrower, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Borrower, or any members of the Current Holder Group, shall
acquire, directly or indirectly, beneficial ownership (within the
meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 35%, on a
fully diluted basis, of the economic or voting interest in the
Borrower's capital stock;
(iii) the shareholders of the Borrower approve a merger or
consolidation of the Borrower with any other person, OTHER than a
merger or consolidation which would result in the voting securities of
the Borrower outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted or
exchanged for voting securities of the surviving or resulting entity)
more than 75% of the combined voting power of the voting securities of
the Borrower or such surviving or resulting entity outstanding after
such merger or consolidation;
(iv) the shareholders of the Borrower approve a plan of
complete liquidation of the Borrower or an agreement or agreements for
the sale or disposition by the Borrower of all or substantially all of
the Borrower's assets; and/or
(v) any "change in control" or any similar term as defined in
any of the indentures, credit agreements, note or securities purchase
agreements, or other agreements or instruments governing any
Indebtedness of the Borrower or any of its Subsidiaries with an
outstanding principal amount, or providing for commitments to lend or
otherwise invest or purchase in an outstanding principal amount, of at
least $10,000,000 (or the equivalent amount in any other currency).
As used in this definition, the term"CURRENT HOLDER GROUP" shall mean (i) those
persons, if any, who as of the Effective Date have disclosed in filings with the
SEC their beneficial ownership of more than 5% of the outstanding shares of
capital stock of the Borrower, (ii) those other persons who are officers and
directors of the Borrower at the Effective Date, (iii) the spouses, heirs,
legatees, descendants and blood relatives to the third degree of consanguinity
of any such person, (iv) the executors and administrators of the estate of any
such person, and any court appointed guardian of any such person, and (v) any
trust, family partnership or similar investment entity for the benefit of any
such person referred to in the foregoing clauses (i), (ii) and (iii) or any
other persons (including for charitable purposes), so long as one or more
members of the Current Holder Group has the exclusive or a joint right to
control the voting and disposition of securities held by such trust, family
partnership or other investment entity.
"CLOSING DATE" shall mean the date, on or after the Effective Date,
upon which the conditions specified in section 6.1 are satisfied.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder. Section references to
the Code are to the Code, as in effect at the Effective Date and any subsequent
provisions of the Code, amendatory thereof, supplemental thereto or substituted
therefor.
"COMMITMENT" shall mean with respect to each Lender its General
Revolving Commitment or its Swing Line Revolving Commitment, or both, as the
case may be.
"CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, all
amortization expenses of the Borrower and its Subsidiaries, all as determined
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the
aggregate of all expenditures for property, plant or equipment (whether paid in
cash or accrued as liabilities and including in all events amounts expended or
capitalized under Capital Leases and Synthetic Leases but excluding any amount
representing capitalized interest) by the Borrower and its Subsidiaries during
that period.
4
<PAGE> 10
"CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, all
depreciation expenses of the Borrower and its Subsidiaries, all as determined
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED EBIT" shall mean, for any period, Consolidated Net Income
for such period; PLUS (A) the sum (without duplication) of the amounts for such
period included in determining such Consolidated Net Income of (i) Consolidated
Interest Expense, (ii) Consolidated Income Tax Expense, and (iii) extraordinary
and other non-recurring non-cash losses and charges; LESS (B) gains on sales of
assets and other extraordinary or other non-recurring gains; all as determined
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
Notwithstanding anything to the contrary contained herein, the
Borrower's Consolidated EBIT for any Testing Period shall (x) include the
appropriate financial items for any person or business unit which has been
acquired by the Borrower for any portion of such Testing Period prior to the
date of acquisition, and (y) exclude the appropriate financial items for any
person or business unit which has been disposed of by the Borrower, for the
portion of such Testing Period prior to the date of disposition.
"CONSOLIDATED EBITDA" shall mean, for any period, Consolidated EBIT for
such period; PLUS the sum (without duplication) of the amounts for such period
included in determining Consolidated Net Income of (i) Consolidated Depreciation
Expense, and (ii) Consolidated Amortization Expense, all as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
Notwithstanding anything to the contrary contained herein, the
Borrower's Consolidated EBITDA for any Testing Period shall (x) include the
appropriate financial items for any person or business unit which has been
acquired by the Borrower for any portion of such Testing Period prior to the
date of acquisition, and (y) exclude the appropriate financial items for any
person or business unit which has been disposed of by the Borrower, for the
portion of such Testing Period prior to the date of disposition.
"CONSOLIDATED INCOME TAX EXPENSE" shall mean, for any period, all
provisions for taxes based on the net income of the Borrower or any of its
Subsidiaries (including, without limitation, any additions to such taxes, and
any penalties and interest with respect thereto), all as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, total
interest expense (including that which is capitalized, that which is
attributable to Capital Leases and Synthetic Leases and the pre-tax equivalent
of dividends payable on Redeemable Preferred Stock) of the Borrower and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries including, without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and net costs under Hedge Agreements, BUT EXCLUDING, HOWEVER,
any amortization or write-off of deferred financing costs and any charges for
prepayment penalties on prepayment of Indebtedness.
"CONSOLIDATED NET INCOME" shall mean for any period, the net income (or
loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"CONSOLIDATED NET WORTH" shall mean at any time for the determination
thereof: (i) all amounts which, in conformity with GAAP, would be included under
the caption "total stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Borrower as at such date (I.E., the sum of the entries for
(1) the par or stated value of common stock and preferred stock (but excluding
treasury stock and capital stock subscribed and unissued), (2) paid-in capital
and (3) retained earnings (or deficit)), MINUS (ii) to the extent included in
clause (i), all amounts properly attributable to minority interests, if any, in
the stock or other equity of Subsidiaries; PROVIDED that in no event shall
Consolidated Net Worth include any amounts in respect of Redeemable Stock.
"CONSOLIDATED RENTAL EXPENSE" shall mean, for any period, total rental
expense of the Borrower and its Subsidiaries, including the interest portion of
all Capitalized Leases and Synthetic Leases if such amount is not
5
<PAGE> 11
reflected in Consolidated Interest Expense, all as determined for the Borrower
and its Subsidiaries on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL ADJUSTED CAPITAL" shall mean at any time (i)
Consolidated Total Debt at such time; PLUS (ii) Consolidated Net Worth as of the
end of its most recent fiscal quarter for which the Borrower's consolidated
financial statements have been furnished to the Lenders under this Agreement;
PLUS (iii) to the extent deducted in determining such Consolidated Net Worth,
all amounts properly attributable to minority interests, if any, in the stock or
other equity of Subsidiaries; MINUS (iv) the aggregate amount of goodwill and
intangible assets of the Borrower and its Subsidiaries as of the end of such
fiscal quarter, as determined in accordance with GAAP.
"CONSOLIDATED TOTAL ASSETS" shall mean with respect to any person at
any date of determination the net book value of all assets which would appear on
a consolidated balance sheet of such person and its consolidated Subsidiaries at
such date which is prepared in accordance with GAAP.
"CONSOLIDATED TOTAL DEBT" shall mean the sum (without duplication) of
the principal amount (or Capitalized Lease Obligation, in the case of a Capital
Lease, or present value, based on the implicit interest rate, in the case of any
Synthetic Lease, or the higher of liquidation value or stated value, in the case
of Redeemable Stock) of all Indebtedness of the Borrower and of each of its
Subsidiaries, all as determined on a consolidated basis, PROVIDED that for
purposes of this definition no obligations under Hedge Agreements shall be
considered in determining Consolidated Total Debt.
"CONTINUE", "CONTINUATION" and "CONTINUED" each refers to a
continuation of a General Revolving Loan which is a Eurodollar Loans for an
additional Interest Period as provided in section 2.9.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion of
General Revolving Loans of one Type into General Revolving Loans of another
Type, pursuant to section 2.7, 2.9(b), 2.10 or 5.2.
"CREDIT DOCUMENTS" shall mean this Agreement and the Notes.
"CTP" shall mean Commercial Turf Products, Ltd., an Ohio limited
liability company, and its successors and assigns.
"DEFAULT" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with, respect to which a
Lender Default is in effect.
"DOLLARS", "U.S. DOLLARS", "DOLLARS" and the sign "$" each means lawful
money of the United States.
"DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its Domestic Lending Office in Annex I or in
the Assignment Agreement pursuant to which it became a Lender, or such other
office of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"EFFECTIVE DATE" shall have the meaning provided in section 12.10.
"ELIGIBLE TRANSFEREE" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D), in each case which is:
(i) identified in a written notice from the Administrative
Agent or a requesting Lender to the Borrower, and not disapproved in
writing by the Borrower in a notice given to the Administrative Agent
and any such requesting Lender, specifying the reasons for such
disapproval, within five Business Days following the receipt by the
Borrower of such notice disclosing the identity of any proposed
transferee (any such disapproval by the Borrower must be reasonable),
PROVIDED that the Borrower shall not be entitled to
6
<PAGE> 12
exercise the foregoing right of disapproval if and so long as any Event
of Default shall have occurred and be continuing; and
(ii) not a direct competitor of the Borrower and its
Subsidiaries, considered as an entirety, or CTP and its Subsidiaries,
considered as an entirety, or engaged in the same or similar principal
lines of business as the Borrower and its Subsidiaries considered as an
entirety, or CTP and its Subsidiaries considered as an entirety, or a
Subsidiary of any such competitor.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued under any such law
(hereafter "CLAIMS"), including, without limitation, (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the storage, treatment or Release (as defined
in CERCLA) of any Hazardous Materials or arising from alleged injury or threat
of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any binding and
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment issued to or
rendered against the Borrower or any of its Subsidiaries relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section. 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. Section. 3803 et seq.; the Oil Pollution
Act of 1990, 33 U.S.C. Section. 2701 et seq.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 U.S.C. Section. 11001 et seq., the
Hazardous Material Transportation Act, 49 U.S.C. Section. 1801 et seq. and the
Occupational Safety and Health Act, 29 U.S.C. Section. 651 et seq. (to the
extent it regulates occupational exposure to Hazardous Materials); and any state
and local or foreign counterparts or equivalents, in each case as amended from
time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the
Effective Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA AFFILIATE" shall mean each person (as defined in section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of section 414(b),(c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
"EURODOLLAR LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its Eurodollar Lending Office in Annex I or
in the Assignment Agreement pursuant to which it became a Lender, or such other
office or offices for Eurodollar Loans of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"EURODOLLAR LOANS" shall mean each Loan bearing interest at the rates
provided in section 2.8(b).
"EVENT OF DEFAULT" shall have the meaning provided in section 10.1.
"EXISTING INDEBTEDNESS" shall have the meaning provided in section
7.18.
"EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning provided in
section 7.18.
"FACILITY" shall mean the General Revolving Facility or the Swing Line
Revolving Facility, as applicable.
7
<PAGE> 13
"FACILITY FEE" shall have the meaning provided in section 3.1(a).
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"FEES" shall mean all amounts payable pursuant to, or referred to in,
section 3.
"FINANCIAL PROJECTIONS" shall have the meaning provided in section
7.8(b).
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of section 9,
including defined terms as used therein, are subject (to the extent provided
therein) to sections 1.3 and 12.7(a).
"GENERAL REVOLVING COMMITMENT" shall mean, with respect to each Lender,
the amount, if any, set forth opposite such Lender's name in Annex I as its
"General Revolving Commitment" as the same may be reduced from time to time
pursuant to section 4.1, 4.2 and/or 10.2 or adjusted from time to time as a
result of assignments to or from such Lender pursuant to section 12.4.
"GENERAL REVOLVING FACILITY" shall mean the credit facility evidenced
by the Total General Revolving Commitment.
"GENERAL REVOLVING FACILITY PERCENTAGE" shall mean at any time for any
Lender with a General Revolving Commitment, the percentage obtained by dividing
such Lender's General Revolving Commitment by the Total General Revolving
Commitment, PROVIDED, that if the Total General Revolving Commitment has been
terminated, the General Revolving Facility Percentage for each Lender with a
General Revolving Commitment shall be determined by dividing such Lender's
General Revolving Commitment immediately prior to such termination by the Total
General Revolving Commitment immediately prior to such termination.
"GENERAL REVOLVING LOAN" shall have the meaning provided in section
2.1(a).
"GENERAL REVOLVING NOTE" shall have the meaning provided in section
2.6(a).
"GUARANTY OBLIGATIONS" shall mean as to any person (without
duplication) any obligation of such person guaranteeing any Indebtedness
("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such person, whether or not contingent, (a) to purchase any such
primary Indebtedness or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary Indebtedness or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary Indebtedness of the
ability of the primary obligor to make payment of such primary Indebtedness, or
(d) otherwise to assure or hold harmless the owner of such primary Indebtedness
against loss in respect thereof, PROVIDED, HOWEVER, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary Indebtedness in respect of which such Guaranty Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such person in good faith.
"HAZARDOUS MATERIALS" shall mean (i) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other
8
<PAGE> 14
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls, and radon gas; and (ii) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "restricted hazardous materials", "extremely
hazardous wastes", "restrictive hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants" or "pollutants", or words of similar meaning and
regulatory effect, under any applicable Environmental Law.
"HEDGE AGREEMENT" shall mean (i) any interest rate swap agreement, any
interest rate cap agreement, any interest rate collar agreement or other similar
agreement or arrangement, and (ii) any currency swap agreement, forward currency
purchase agreement or similar agreement or arrangement.
"INDEBTEDNESS" of any person shall mean without duplication:
(i) all indebtedness of such person for borrowed money;
(ii) all bonds, notes, debentures and similar debt securities
of such person;
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such person;
(iv) the face amount of all letters of credit issued for the
account of such person and, without duplication, all drafts drawn
thereunder;
(v) all obligations, contingent or otherwise, of such person
in respect of bankers' acceptances;
(vi) all Indebtedness of a second person secured by any Lien
on any property owned by such first person, whether or not such
Indebtedness has been assumed;
(vii) all Capitalized Lease Obligations of such person;
(viii) the present value, determined on the basis of the
implicit interest rate, of all basic rental obligations under all
Synthetic Leases of such person;
(ix) all obligations of such person to pay a specified
purchase price for goods or services whether or not delivered or
accepted, I.E., take-or-pay and similar obligations;
(x) all net obligations of such person under Hedge Agreements;
(xi) the full outstanding balance of trade receivables, notes
or other instruments sold with full recourse (and the portion thereof
subject to potential recourse, if sold with limited recourse), other
than in any such case any thereof sold solely for purposes of
collection of delinquent accounts;
(xii) the stated value, or liquidation value if higher, of all
Redeemable Stock of such person; and
(xiii) all Guaranty Obligations of such person;
PROVIDED that (x) neither trade payables nor other similar accrued expenses, in
each case arising in the ordinary course of business, nor obligations in respect
of insurance policies or performance or surety bonds which themselves are not
guarantees of Indebtedness (nor drafts, acceptances or similar instruments
evidencing the same nor obligations in respect of letters of credit supporting
the payment of the same), shall constitute Indebtedness; and (y) the
Indebtedness of any person shall in any event include (without duplication) the
Indebtedness of any other entity (including any general partnership in which
such person is a general partner) to the extent such person is liable thereon as
a result of such person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide expressly
that such person is not liable thereon.
9
<PAGE> 15
"INTEREST AND RENT COVERAGE RATIO" shall mean, for any Testing Period,
the ratio of (i) Consolidated EBIT PLUS Consolidated Rental Expense, for such
Testing Period, TO (ii) the sum of Consolidated Interest Expense and
Consolidated Rental Expense for such Testing Period, in each case on a
consolidated basis for the Borrower and its Subsidiaries for such Testing
Period; PROVIDED that, notwithstanding anything to the contrary contained
herein, the Borrower's Interest and Rent Coverage Ratio for any Testing Period
shall (x) include the appropriate financial items for any person or business
unit which has been acquired by the Borrower on a going concern basis for any
portion of such Testing Period prior to the date of acquisition, and (y) exclude
the appropriate financial items for any person or business unit which has been
disposed of by the Borrower, for the portion of such Testing Period prior to the
date of disposition.
"INTEREST PERIOD" with respect to any Eurodollar Loan shall mean the
interest period applicable thereto, as determined pursuant to section 2.9.
"LEASEHOLDS" of any person means all the right, title and interest of
such person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"LENDER" shall have the meaning provided in the first
paragraph of this Agreement.
"LENDER DEFAULT" shall mean (i) the refusal (which has not been
retracted) of a Lender in violation of its obligations under this Agreement to
make available its portion of any incurrence of Loans or to fund its portion of
any Swing Line Participation Amount under section 2.5(b), or (ii) a Lender
having notified the Administrative Agent and/or the Borrower that it does not
intend to comply with such obligations, in the case of either (i) or (ii) as a
result of the appointment of a receiver or conservator with respect to such
Lender at the direction or request of any regulatory agency or authority.
"LENDER REGISTER" shall have the meaning provided in section 12.16.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"LOAN" shall have the meaning provided in section 2.1 and shall include
any General Revolving Loan or Swing Line Revolving Loan, as the case may be.
"MARGIN STOCK" shall have the meaning provided in Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean any or all of the following: (i)
any material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of, when used with reference
to the Borrower and/or any of its Subsidiaries, the Borrower and its
Subsidiaries, taken as a whole, or when used with reference to any other person,
such person and its Subsidiaries, taken as a whole, as the case may be; (ii) any
material adverse effect on the ability of the Borrower to perform its
obligations under the Credit Documents to which it is a party; (iii) any
material adverse effect on the ability of the Borrower and its Subsidiaries,
taken as a whole, to pay their liabilities and obligations as they mature or
become due; or (iv) any material adverse effect on the validity, effectiveness
or enforceability, as against the Borrower, of any of the Credit Documents to
which it is a party.
"MATERIAL SUBSIDIARY" shall mean, at any time, with reference to any
person, any Subsidiary of such person (i) that has assets at such time
comprising 5% or more of the consolidated assets of such person and its
Subsidiaries, or (ii) whose operations in the current fiscal year are expected
to, or whose operations in the most recent fiscal year did (or would have if
such person had been a Subsidiary for such entire fiscal year), represent 5% or
more of the consolidated earnings before interest, taxes, depreciation and
amortization of such person and its Subsidiaries for such fiscal year.
"MATURITY DATE" shall mean June 30, 2003, or such later date to which
the Maturity Date shall have been extended pursuant to section 4.3, or in any
event such earlier date on which the Total Commitment is terminated.
10
<PAGE> 16
"MINIMUM BORROWING AMOUNT" shall mean (i) for General Revolving Loans
which are (A) Prime Rate Loans, $500,000, with minimum increments thereafter of
$100,000, or (B) Eurodollar Loans, $2,000,000, with minimum increments
thereafter of $1,000,000; and (ii) for Swing Line Revolving Loans, $100,000,
with minimum increments thereafter of $50,000.
"MONEY MARKET RATE LOAN" shall mean each Swing Line Revolving Loan
bearing interest at a rate provided in section 2.8(c).
"MOODY'S" shall mean Moody's Investors Service, Inc. and its
successors.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in
section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan, other
than a Multiemployer Plan, to which the Borrower or any ERISA Affiliate, and one
or more employers other than the Borrower or an ERISA Affiliate, is making or
accruing an obligation to make contributions or, in the event that any such plan
has been terminated, to which the Borrower or an ERISA Affiliate made or accrued
an obligation to make contributions during any of the five plan years preceding
the date of termination of such plan.
"NCB" shall mean National City Bank, a national banking association,
together with its successors and assigns.
"NET CASH PROCEEDS" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of (i) reasonable and customary expenses
of sale incurred in connection with such Asset Sale, and other reasonable and
customary fees and expenses incurred, and all state, and local taxes paid or
reasonably estimated to be payable by such person, as a consequence of such
Asset Sale and the payment of principal, premium and interest of Indebtedness
secured by the asset which is the subject of the Asset Sale and required to be,
and which is, repaid under the terms thereof as a result of such Asset Sale,
(ii) amounts of any distributions payable to holders of minority interests in
the relevant person or in the relevant property or assets and (iii) incremental
income taxes paid or payable as a result thereof.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting
Lender.
"NOTE" shall mean a General Revolving Note or a Swing Line Revolving
Note, as the case may be.
"NOTICE OF BORROWING" shall have the meaning provided in section
2.3(a).
"NOTICE OF CONTINUATION" shall have the meaning provided in section
2.9(a).
"NOTICE OF CONVERSION" shall have the meaning provided in section 2.7.
"NOTICE OFFICE" shall mean the office of the Administrative Agent at
National City Center, 1900 East Ninth Street, Cleveland, Ohio 44114, Attention:
Agent Services Division (facsimile: (216) 575-2481), or such other office,
located in a city in the United States Eastern Time Zone, as the Administrative
Agent may designate to the Borrower from time to time.
"NOTICE OF SWING LINE REFUNDING" shall have the meaning provided in
section 2.5(a).
"OBLIGATIONS" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing by the
Borrower to the Administrative Agent or any Lender pursuant to the terms of this
Agreement or any other Credit Document.
11
<PAGE> 17
"OPERATING LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is not accounted for as a Capital Lease on the balance
sheet of that person.
"PAYMENT OFFICE" shall mean the office of the Administrative Agent at
National City Center, 1900 East Ninth Street, Cleveland, Ohio 44114, Attention:
Agent Services Division (facsimile: (216) 575-2481), or such other office,
located in a city in the United States Eastern Time Zone, as the Administrative
Agent may designate to the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to section 4002 of ERISA, or any successor thereto.
"PERMITTED ACQUISITION" shall mean and include any Acquisition as to
which all of the following conditions are satisfied:
(i) such Acquisition involves a line or lines of business
which is complementary to the lines of business in which the Borrower
and its Subsidiaries, considered as an entirety, are engaged on the
Effective Date, UNLESS the Required Lenders specifically approve or
consent to such Acquisition in writing;
(ii) such Acquisition is not actively opposed by the Board of
Directors (or similar governing body) of the selling person or the
person whose equity interests are to be acquired, UNLESS all of the
Lenders specifically approve or consent to such Acquisition in writing;
(iii) if as a result of an Acquisition a person becomes a
Subsidiary of the Borrower, such Subsidiary shall be a Wholly-Owned
Subsidiary;
(iv) the aggregate consideration for such Acquisition,
including the principal amount of any assumed Indebtedness and (without
duplication) any Indebtedness of any acquired person or persons, does
not exceed $10,000,000, UNLESS the Required Lenders specifically
approve or consent to such Acquisition; PROVIDED that no such approval
or consent shall be effective to permit an Acquisition involving
consideration over $15,000,000 unless all of the Lenders join in such
consent or approval;
(v) the aggregate consideration for such Acquisition and all
other Permitted Acquisitions completed in within the preceding 12 month
period, including the principal amount of any assumed Indebtedness and
(without duplication) any Indebtedness of any acquired person or
persons, does not exceed $20,000,000, UNLESS the Required Lenders
specifically approve or consent to such Acquisition; PROVIDED that no
such approval or consent shall be effective to permit an Acquisition
which would result in such aggregate consideration exceeding
$25,000,000 unless all of the Lenders join in such consent or approval;
and
(vi) the Borrower would, after giving effect to such
Acquisition, be in compliance, on a PRO FORMA basis, with the financial
covenants contained in sections 9.7, 9.8 and 9.9, such PRO FORMA ratios
being determined:
(A) as if (x) such Acquisition had been completed at
the beginning of the most recent period of four consecutive
fiscal quarters of the Borrower for which financial
information for the Borrower and the business or person to be
acquired, is available, and (y) any such Indebtedness incurred
to finance such Acquisition had been outstanding for such
period; and
(B) without giving effect to any credit for
unobtained or unrealized gains in connection with such
Acquisition, but taking into account such adjustments to the
overhead of such properties and assets as may reasonably
determined and specified by the Borrower to reflect the
overhead generally applicable to similar properties and assets
owned by the Borrower and its Subsidiaries, as and to the
extent the Administrative Agent determines (acting on
instructions from
12
<PAGE> 18
the Required Lenders) such adjustments to be reasonable and
appropriate under the particular circumstances);
PROVIDED, that the term Permitted Acquisition specifically excludes any loans,
advances or minority investments otherwise permitted pursuant to section 9.5.
"PERMITTED LIENS" shall mean Liens described in section 9.3.
"PERSON" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" shall mean any multiemployer or single-employer plan as defined
in section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute by) the Borrower or a Subsidiary of the
Borrower or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Borrower, or a Subsidiary of
the Borrower or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"PRIME RATE" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the greater of (i) the rate of interest established by the
Administrative Agent at its principal office, from time to time, as its prime
rate, whether or not publicly announced, which interest rate may or may not be
the lowest rate charged by it for commercial loans or other extensions of
credit; and (ii) the Federal Funds Effective Rate in effect from time to time
PLUS 1/2 of 1% per annum.
"PRIME RATE LOAN" shall mean each Loan bearing interest at the rate
provided in section 2.8(a).
"PRINCIPAL OFFICER" shall mean any officer of the Borrower whose title
is (including any titles which is substantially the same as): (i) Chief
Executive Officer, (ii) President, (iii) Chief Financial Officer or Vice
President- Finance, (iv) Treasurer, or (v) General Counsel.
"PROHIBITED TRANSACTION" shall mean a transaction with respect to a
Plan that is prohibited under section 4975 of the Code or section 406 of ERISA
and not exempt under section 4975 of the Code or section 408 of ERISA.
"QUOTED RATE" shall have the meaning provided in section 2.3(b).
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section. 6901 et seq.
"REAL PROPERTY" of any person shall mean all of the right, title and
interest of such person in and to land, improvements and fixtures, including
Leaseholds.
"REDEEMABLE STOCK" shall mean with respect to any person any capital
stock or similar equity interests of such person that (i) is by its terms
subject to mandatory redemption, in whole or in part, pursuant to a sinking
fund, scheduled redemption or similar provisions, at any time prior to the
Maturity Date; or (ii) otherwise is required to be repurchased or retired on a
scheduled date or dates, upon the occurrence of any event or circumstance, or at
the option of the holder or holders thereof, or otherwise, at any time prior to
the Maturity Date, other than any such repurchase or retirement occasioned by a
"change of control" or similar event.
"REFERENCE BANKS" shall mean (i) NCB, and (ii) any other Lender or
Lenders (x) selected as a Reference Bank by the Administrative Agent and the
Required Lenders, and (y) whose selection is approved by the Borrower, such
approval not to be unreasonably withheld or delayed.
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
13
<PAGE> 19
"REGULATION U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REPORTABLE EVENT" shall mean an event described in section 4043 of
ERISA or the regulations thereunder with respect to a Plan, other than those
events as to which the notice requirement is waived under subsections .22, .23,
.25, .27, .28, .30, .31, .32, .34, .35, .63, .64, .65 or .67 of PBGC Regulation
section 4043.
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose outstanding
General Revolving Loans and Unutilized General Revolving Commitments constitute
more than 66+2/3% of the sum of the total outstanding General Revolving Loans
and Unutilized General Revolving Commitments of Non-Defaulting Lenders (PROVIDED
that, for purposes hereof, neither the Borrower, nor any of its Affiliates,
shall be included in (i) the Lenders holding such amount of the General
Revolving Loans or having such amount of the Unutilized General Revolving
Commitments, or (ii) determining the aggregate unpaid principal amount of the
General Revolving Loans or Unutilized General Revolving Commitments).
"SALE AND LEASE-BACK TRANSACTION" shall mean any arrangement with any
person providing for the leasing by the Borrower or any Subsidiary of the
Borrower of any property (except for temporary leases for a term, including any
renewal thereof, of not more than one year and except for leases between the
Borrower and a Subsidiary or between Subsidiaries), which property has been or
is to be sold or transferred by the Borrower or such Subsidiary to such person.
"S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., and its successors.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC REGULATION D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"SECTION 5.4(B)(II) CERTIFICATE" shall have the meaning provided in
section 5.4(b)(ii).
"SENIOR NOTES" shall mean (i) the $5,000,000 aggregate original
principal amount of 6.52% Senior Notes, Series A, due June 15, 2001, (ii) the
$15,000,000 aggregate original principal amount of 6.64% Senior Notes, Series B,
due June 15, 2004, (iii) the $5,000,000 aggregate original principal amount of
6.71% Senior Notes, Series C, due June 15, 2008, and (iv) the $25,000,000
aggregate original principal amount of 7.00% Senior Notes, Series D, due June
15, 2008, issued by the Borrower pursuant to the Note Purchase Agreement, dated
as of June 15, 1998.
"STANDARD PERMITTED LIENS" shall mean the following:
(i) Liens for taxes not yet delinquent or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
(ii) Liens in respect of property or assets imposed by law
which were incurred in the ordinary course of business, such as
carriers', warehousemen's, materialmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, which do not
in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the
business of the Borrower or any Subsidiary;
(iii) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under section
10.1(f);
(iv) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; and mechanic's Liens, carrier's Liens, and other Liens to
secure the performance of tenders, statutory obligations, contract
bids, government contracts, performance and return-of-money bonds and
14
<PAGE> 20
other similar obligations, incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed
money), whether pursuant to statutory requirements, common law or
consensual arrangements;
(v) Leases or subleases granted to others not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries and any interest or title of a lessor under any lease not
in violation of this Agreement;
(vi) easements, rights-of-way, zoning or deed restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries
considered as an entirety; and
(vii) Liens arising from financing statements regarding
property subject to leases not in violation of the requirements of this
Agreement, PROVIDED that such Liens are only in respect of the property
subject to, and secure only, the respective lease (and any other lease
with the same or an affiliated lessor).
"SUBSIDIARY" of any person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which has been
subordinated to the Obligations in such manner and to such extent as the
Administrative Agent (acting on instructions from the Required Lenders) may
require.
"SWING LINE LENDER" shall have the meaning provided in the introductory
paragraph hereof and shall include any other single Lender to whom the Swing
Line Lender has transferred its entire Swing Line Revolving Commitment and any
Swing Line Revolving Loans.
"SWING LINE REVOLVING COMMITMENT" shall mean, with respect to the Swing
Line Lender, the amount set forth opposite such Lender's name in Annex I as its
"Swing Line Revolving Commitment" as the same may be reduced from time to time
pursuant to section 4.1, 4.2 and/or 10.2 or adjusted from time to time as a
result of assignments to or from the Swing Line Lender pursuant to section 12.4.
"SWING LINE REVOLVING FACILITY" shall mean the credit facility
evidenced by the Swing Line Revolving Commitment.
"SWING LINE REVOLVING LOAN" shall have the meaning provided in section
2.1(b).
"SWING LINE REVOLVING NOTE" shall have the meaning provided in section
2.6(a).
"SYNTHETIC LEASE" shall mean any lease (i) which is accounted for by
the lessee as an Operating Lease, and (ii) under which the lessee is intended to
be the "owner" of the leased property for Federal income tax purposes.
"TESTING PERIOD" shall mean for any determination, a single period
consisting of the four consecutive fiscal quarters of the Borrower then last
ended (whether or not such quarters are all within the same fiscal year), EXCEPT
that if a particular provision of this Agreement indicates that a Testing Period
shall be of a different specified duration, such Testing Period shall consist of
the particular fiscal quarter or quarters of the Borrower then last ended which
are so indicated in such provision.
"TOTAL COMMITMENT" shall mean the sum of the Commitments of the
Lenders.
15
<PAGE> 21
"TOTAL GENERAL REVOLVING COMMITMENT" shall mean the sum of the General
Revolving Commitments of the Lenders.
"TYPE" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Prime Rate Loan, a Eurodollar Loan
or a Money Market Rate Loan.
"UCC" shall mean the Uniform Commercial Code.
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"UNITED STATES" and "U.S." each means United States of America.
"UNUTILIZED GENERAL REVOLVING COMMITMENT" for any Lender at any time
shall mean the excess of (i) such Lender's General Revolving Commitment at such
time over (ii) the principal amount of General Revolving Loans made by such
Lender and outstanding at such time.
"UNUTILIZED SWING LINE REVOLVING COMMITMENT" for the Swing Line Lender
at any time shall mean the excess of (i) the Swing Line Lender's Swing Line
Revolving Commitment at such time over (ii) the aggregate principal amount of
Swing Line Revolving Loans made by the Swing Line Lender and outstanding at such
time.
"UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT" shall mean, at any
time, the excess of (i) the Total General Revolving Commitment at such time over
(ii) the aggregate principal amount of all General Revolving Loans then
outstanding.
"WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the Borrower at
least 95% of whose capital stock, equity interests and partnership interests,
other than director's qualifying shares or similar interests, are owned directly
or indirectly by the Borrower.
"WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
e-mail electronic transmission, telegraph or cable.
1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
1.3. ACCOUNTING TERMS. Except as otherwise specifically provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; PROVIDED that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision of section 8 or 9 hereof to eliminate the effect of
any change occurring after the Effective Date in GAAP or in the application
thereof to such provision (or if the Administrative Agent notifies the Borrower
that the Required Lenders request an amendment to any such provision hereof for
such purposes), regardless of whether any such notice is given before or after
such change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance with the requirements of this
Agreement.
1.4. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document
16
<PAGE> 22
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any person shall be construed to include such
person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to sections, Annexes and Exhibits shall be construed to refer
to sections of, and Annexes and Exhibits to, this Agreement, and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all real property, tangible and intangible assets and
properties, including cash, securities, accounts and contract rights, and
interests in any of the foregoing.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1. COMMITMENTS FOR LOANS. Subject to and upon the terms and
conditions herein set forth, each Lender severally agrees to make a loan or
loans (each a "LOAN" and, collectively, the "LOANS") to the Borrower, which
Loans shall be drawn, to the extent such Lender has a Commitment under a
Facility for the Borrower, under the applicable Facility, as set forth below:
(A) GENERAL REVOLVING FACILITY. Loans to the Borrower under
the General Revolving Facility (each a "GENERAL REVOLVING LOAN" and,
collectively, the "GENERAL REVOLVING LOANS") (i) may be made at any
time and from time to time on and after the Closing Date and prior to
the Maturity Date; (ii) shall be made only in U.S. Dollars; (iii)
except as otherwise provided, may, at the option of the Borrower, be
incurred and maintained as, or Converted into, General Revolving Loans
which are either Prime Rate Loans or Eurodollar Loans, PROVIDED that
all General Revolving Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of General
Revolving Loans of the same Type; (iv) may be repaid or prepaid and
reborrowed in accordance with the provisions hereof; (v) may only be
made if after giving effect thereto the Unutilized Total General
Revolving Commitment exceeds the outstanding Swing Line Revolving
Loans; and (vi) shall not exceed for any Lender at any time outstanding
the General Revolving Commitment of such Lender at such time.
(B) SWING LINE REVOLVING FACILITY. Loans to the Borrower under
the Swing Line Revolving Facility (each a "SWING LINE REVOLVING LOAN"
and, collectively, the "SWING LINE REVOLVING LOANS") (i) shall be made
only by the Swing Line Lender, (ii) may be made at any time and from
time to time on and after the Closing Date and prior to the Maturity
Date; (iii) shall be made only in U.S. Dollars; (iv) shall have a
maturity of 15 days or less; (v) may be incurred as either a Prime Rate
Loan or a Money Market Rate Loan; (vi) may be repaid or prepaid and
reborrowed in accordance with the provisions hereof; (vii) may only be
made if after giving effect thereto the Unutilized Total General
Revolving Commitment exceeds the outstanding Swing Line Revolving
Loans; and (viii) shall not exceed for the Swing Line Lender at any
time outstanding its Swing Line Revolving Commitment at such time.
2.2. MINIMUM BORROWING AMOUNTS, ETC.; PRO RATA BORROWINGS. (a) The
aggregate principal amount of each Borrowing by the Borrower shall not be less
than the Minimum Borrowing Amount. More than one Borrowing may be incurred by
the Borrower on any day, PROVIDED that (i) if there are two or more Borrowings
on a single day under the General Revolving Facility which consist of Eurodollar
Loans, each such Borrowing shall have a different initial Interest Period, (ii)
only one Borrowing under the Swing Line Revolving Facility may be made on any
single day, and (iii) at no time shall there be more than 5 Borrowings under the
General Revolving Facility consisting of Eurodollar Loans outstanding hereunder.
(b) All Borrowings under a Facility shall be made by the Lenders having
Commitments under such Facility PRO RATA on the basis of their respective
Commitments under such Facility. It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Lender to
fulfill its Commitment hereunder.
2.3. PROCEDURES FOR BORROWING. (A) NOTICE OF BORROWING. Whenever the
Borrower desires to incur Loans, it shall give the Administrative Agent at its
Notice Office,
17
<PAGE> 23
(A) BORROWINGS UNDER THE GENERAL REVOLVING FACILITY: in the
case of any Borrowing under the General Revolving Facility of (1)
Eurodollar Loans to be made hereunder, prior to 12:00 noon (local time
at its Notice Office), at least three Business Days' prior written or
telephonic notice thereof (in the case of telephonic notice, promptly
confirmed in writing if so requested by the Administrative Agent); or
(2) Prime Rate Loans to be made hereunder, prior to 12:00 noon (local
time at its Notice Office), at least same Business Day's prior written
or telephonic notice thereof (in the case of telephonic notice,
promptly confirmed in writing if so requested by the Administrative
Agent), or
(B) BORROWINGS UNDER THE SWING LINE REVOLVING FACILITY: in the
case of any Borrowing under the Swing Line Revolving Facility of (1)
Prime Rate Loans to be made hereunder, prior to 12:00 noon (local time
at its Notice Office), at least same Business Day's prior written or
telephonic notice thereof (in the case of telephonic notice, promptly
confirmed in writing if so requested by the Administrative Agent); or
(2) Money Market Rate Loans to be made hereunder, if the Administrative
Agent shall have furnished the Borrower with a Quoted Rate therefor,
prior to 12:00 noon (local time at its Notice Office), at least same
Business Day's prior written or telephonic notice thereof (in the case
of telephonic notice, promptly confirmed in writing if so requested by
the Administrative Agent), which proposed Borrowing shall be within
such period as the Administrative Agent shall have specified for such
Quoted Rate.
Each such notice (each such notice, a "NOTICE OF BORROWING") shall (if requested
by the Administrative Agent to be confirmed in writing), be substantially in the
form of Exhibit B-1, and in any event shall be irrevocable and shall specify:
(i) the Facility under which the Borrowing is to be incurred; (ii) the aggregate
principal amount of the Loans to be made pursuant to such Borrowing; (iii) the
date of the Borrowing (which shall be a Business Day); (iv) whether the
Borrowing shall consist of Prime Rate Loans, Eurodollar Loans or Money Market
Rate Loans; (v) if the Borrowing consists of Swing Line Revolving Loans, the
maturity date thereof (which shall not be more than 15 days), and if such Swing
Line Revolving Loans are Money Market Rate Loans, the Quoted Rate therefor; and
(vi) if the requested Borrowing consists of Eurodollar Loans, the Interest
Period to be initially applicable thereto. If the Borrower fails to specify in a
Notice of Borrowing the maturity date of any Swing Line Revolving Loans, such
maturity date shall be deemed to be 15 days. If the Borrower fails to specify in
a Notice of Borrowing the Interest Period for any Eurodollar Loans, such
Interest Period shall be deemed to be one month. The Administrative Agent shall
promptly give each Lender which has a Commitment under any applicable Facility
written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing under the applicable Facility, of such Lender's proportionate
share thereof and of the other matters covered by the Notice of Borrowing
relating thereto.
(B) BORROWINGS OF MONEY MARKET RATE LOANS. Whenever the Borrower
proposes to submit a Notice of Borrowing with respect to Swing Line Revolving
Loans which will be Money Market Rate Loans, it will prior to submitting such
Notice of Borrowing notify the Administrative Agent of its intention and request
the Administrative Agent to quote a fixed or floating interest rate (the "QUOTED
RATE") to be applicable thereto prior to the proposed maturity thereof. The
Administrative Agent will immediately so notify the Swing Line Lender, and if
the Swing Line Lender is agreeable to a particular interest rate for the
proposed maturity of such Money Market Rate Loans if such Loans are made on or
prior to a specified date, the Administrative Agent shall quote such interest
rate to the Borrower as the Quoted Rate applicable to such proposed Money Market
Rate Loans if made on or before such specified date for a maturity as so
proposed by the Borrower. The Swing Line Lender contemplates that any Quoted
Rate will be a rate of interest which reflects a margin corresponding to (or
greater than) the sum of (x) the Applicable Eurodollar Margin and (y) the
Applicable Facility Fee Rate, each as in effect at the time of quotation of any
Quoted Rate, over the then prevailing fully absorbed average cost of short term
funds of the Swing Line Lender, Federal Funds Effective Rate, commercial paper,
call money, overnite repurchase or other commonly quoted interest rate, in each
case as selected by the Swing Line Lender. Nothing herein shall be deemed to
permit any Lender other than the Swing Line Lender any right of approval with
respect to a Quoted Rate.
(C) ACTIONS BY ADMINISTRATIVE AGENT ON TELEPHONE NOTICE. Without in any
way limiting the obligation of the Borrower to confirm in writing any telephonic
notice permitted to be given hereunder, the Administrative Agent may act prior
to receipt of written confirmation without liability upon the basis of such
telephonic notice believed by the Administrative Agent in good faith to be from
an Authorized Officer of the Borrower entitled to give telephonic notices under
this Agreement on behalf of the Borrower. In each such case, the Administrative
Agent's record of the terms of such telephonic notice shall be conclusive absent
manifest error.
18
<PAGE> 24
2.4. DISBURSEMENT OF FUNDS. (a) No later than 2:00 P.M. (local time at
the Payment Office) on the date specified in each Notice of Borrowing, each
Lender with a Commitment under the Facility under which any Borrowing pursuant
to such Notice of Borrowing is to be made will make available its PRO RATA
share, if any, of each Borrowing under such Facility requested to be made on
such date in the manner provided below. All amounts shall be made available to
the Administrative Agent in U.S. dollars and immediately available funds at the
Payment Office and the Administrative Agent promptly will make available to the
Borrower by depositing to its account at the Payment Office the aggregate of the
amounts so made available in the type of funds received. Unless the
Administrative Agent shall have been notified by any Lender prior to the date of
Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender and the Administrative Agent has made
available same to the Borrower, the Administrative Agent shall be entitled to
recover such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover from such
Lender or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (x) if paid by such Lender, the overnight Federal Funds Effective
Rate or (y) if paid by the Borrower, the then applicable rate of interest,
calculated in accordance with section 2.8, for the respective Loans (but without
any requirement to pay any amounts in respect thereof pursuant to section 2.11).
(b) Nothing herein and no subsequent termination of the Commitments
pursuant to section 4.1 or 4.2 shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder and in existence from time to
time or to prejudice any rights which the Borrower may have against any Lender
as a result of any default by such Lender hereunder.
2.5. REFUNDING OF, OR PARTICIPATION IN, SWING LINE REVOLVING LOANS. (a)
If any Event of Default exists, the Swing Line Lender may, in its sole and
absolute discretion, direct that the Swing Line Revolving Loans owing to it be
refunded by delivering a notice to such effect to the Administrative Agent,
specifying the aggregate principal amount thereof (a "NOTICE OF SWING LINE
REFUNDING"). Promptly upon receipt of a Notice of Swing Line Refunding, the
Administrative Agent shall give notice of the contents thereof to the Lenders
with General Revolving Commitments and, unless an Event of Default specified in
section 10.1(h) in respect of the Borrower has occurred, also to the Borrower.
Each such Notice of Swing Line Refunding shall be deemed to constitute delivery
by the Borrower of a Notice of Borrowing requesting General Revolving Loans
consisting of Prime Rate Loans in the amount of the Swing Line Revolving Loans
to which it relates. Each Lender with a General Revolving Commitment (including
the Swing Line Lender, in its capacity as a Lender) hereby unconditionally
agrees (notwithstanding that any of the conditions specified in section 6.2
hereof or elsewhere in this Agreement shall not have been satisfied, but subject
to the provisions of paragraph (b) below) to make a General Revolving Loan to
the Borrower in an amount equal to such Lender's General Revolving Facility
Percentage of the aggregate amount of the Swing Line Revolving Loans to which
such Notice of Swing Line Refunding relates. Each such Lender shall make the
amount of such General Revolving Loan available to the Administrative Agent in
immediately available funds at the Payment Office not later than 2:00 P.M.
(local time at the Payment Office), if such notice is received by such Lender
prior to 11:00 A.M. (local time at its Domestic Lending Office), or not later
than 2:00 P.M. (local time at the Payment Office) on the next Business Day, if
such notice is received by such Lender after such time. The proceeds of such
General Revolving Loans shall be made immediately available to the Swing Line
Lender and applied by it to repay the principal amount of the Swing Line
Revolving Loans to which such Notice of Swing Line Refunding related. The
Borrower irrevocably and unconditionally agrees that, notwithstanding anything
to the contrary contained in this Agreement, General Revolving Loans made as
herein provided in response to a Notice of Swing Line Refunding shall constitute
General Revolving Loans hereunder consisting of Prime Rate Loans.
19
<PAGE> 25
(b) If prior to the time a General Revolving Loan would otherwise have
been made as provided above as a consequence of a Notice of Swing Line
Refunding, any of the events specified in section 10.1(g) shall have occurred in
respect of the Borrower or one or more of the Lenders with General Revolving
Commitments shall determine that it is legally prohibited from making a General
Revolving Loan under such circumstances, each Lender (other than the Swing Line
Lender), or each Lender (other than the Swing Line Lender) so prohibited, as the
case may be, shall, on the date such General Revolving Loan would have been made
by it (the "PURCHASE DATE"), purchase an undivided participating interest in the
outstanding Swing Line Revolving Loans to which such Notice of Swing Line
Refunding related, in an amount (the "SWING LINE PARTICIPATION AMOUNT") equal to
such Lender's General Revolving Facility Percentage of such Swing Line Revolving
Loans. On the Purchase Date, each such Lender or each such Lender so prohibited,
as the case may be, shall pay to the Swing Line Lender, in immediately available
funds, such Lender's Swing Line Participation Amount, and promptly upon receipt
thereof the Swing Line Lender shall, if requested by such other Lender, deliver
to such Lender a participation certificate, dated the date of the Swing Line
Lender's receipt of the funds from, and evidencing such Lender's participating
interest in such Swing Line Revolving Loans and its Swing Line Participation
Amount in respect thereof. If any amount required to be paid by a Lender to the
Swing Line Lender pursuant to the above provisions in respect of any Swing Line
Participation Amount is not paid on the date such payment is due, such Lender
shall pay to the Swing Line Lender on demand interest on the amount not so paid
at the overnight Federal Funds Effective Rate from the due date until such
amount is paid in full.
(c) Whenever, at any time after the Swing Line Lender has received from
any other Lender such Lender's Swing Line Participation Amount, the Swing Line
Lender receives any payment from or on behalf of the Borrower on account of the
related Swing Line Revolving Loans, the Swing Line Lender will promptly
distribute to such Lender its General Revolving Facility Percentage of such
payment on account of its Swing Line Participation Amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender's participating interest was outstanding and funded);
PROVIDED, HOWEVER, that in the event such payment received by the Swing Line
Lender is required to be returned, such Lender will return to the Swing Line
Lender any portion thereof previously distributed to it by the Swing Line
Lender.
(d) Each Lender's obligation to make General Revolving Loans and/or to
purchase participations in connection with a Notice of Swing Line Refunding
(which shall in all events be within such Lender's Unutilized General Revolving
Commitment, taking into account all outstanding participations in connection
with Swing Line Refundings) shall be subject to the conditions that:
(i) such Lender shall have received a Notice of Swing Line
Refunding complying with the provisions hereof, and
(ii) at the time the Swing Line Revolving Loans which are the
subject of such Notice of Swing Line Refunding were made, the Swing
Line Lender had no actual written notice from another Lender that an
Event of Default had occurred and was continuing,
but otherwise shall be absolute and unconditional, shall be solely for the
benefit of the Swing Line Lender, and shall not be affected by any circumstance,
including, without limitation, (A) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against any other Lender, the
Borrower, or any other person, may have against any Lender or other person, as
the case may be, for any reason whatsoever; (B) the occurrence or continuance of
a Default or Event of Default; (C) any event or circumstance involving a
Material Adverse Effect upon the Borrower; (D) any breach of any Credit Document
by any party thereto; or (E) any other circumstance, happening or event, whether
or not similar to any of the foregoing.
2.6. NOTES AND LOAN ACCOUNTS. (A) FORMS OF NOTES. The Borrower's
obligation to pay the principal of, and interest on, the Loans made to it by
each Lender shall be evidenced (i) if General Revolving Loans, by a promissory
note substantially in the form of Exhibit A-1 with blanks appropriately
completed in conformity herewith (each a "GENERAL REVOLVING NOTE" and,
collectively, the "GENERAL REVOLVING NOTES"), and (ii) if Swing Line Revolving
Loans, by a promissory note substantially in the form of Exhibit A-2 with blanks
appropriately completed in conformity herewith (the "SWING LINE REVOLVING
NOTE").
20
<PAGE> 26
(B) GENERAL REVOLVING NOTES. The General Revolving Note issued to a
Lender with a General Revolving Commitment shall: (i) be executed by the
Borrower; (ii) be payable to the order of such Lender and be dated on or prior
to the date the first Loan evidenced thereby is made; (iii) be in a stated
principal amount equal to the General Revolving Commitment of such Lender and be
payable in the principal amount of General Revolving Loans evidenced thereby;
(iv) mature on the Maturity Date; (v) bear interest as provided in section 2.8
in respect of the Prime Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby; (vi) be subject to mandatory prepayment as provided in
section 5.2; and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(C) SWING LINE REVOLVING NOTE. The Swing Line Revolving Note issued to
the Swing Line Lender shall: (i) be executed by the Borrower; (ii) be payable to
the order of such Lender and be dated on or prior to the date the first Loan
evidenced thereby is made; (iii) be in a stated principal amount equal to the
Swing Line Revolving Commitment of such Lender and be payable in the principal
amount of Swing Line Revolving Loans evidenced thereby; (iv) mature as to any
Swing Line Revolving Loan evidenced thereby on the maturity date, not later than
the 15th day following the date such Swing Line Revolving Loan was made,
specified in the applicable Notice of Borrowing; (v) bear interest as provided
in section 2.8 in respect of the Prime Rate Loans or Money Market Rate Loans, as
the case may be, evidenced thereby; (vi) be subject to mandatory prepayment as
provided in section 5.2; and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(D) LOAN ACCOUNTS OF LENDERS. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Borrower to such Lender resulting from each Loan made by such Lender,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(E) LOAN ACCOUNTS OF ADMINISTRATIVE AGENT. The Administrative Agent
shall maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Type thereof, the particular Facility under which such Loan
was made, and the Interest Period or maturity date and applicable interest rate
if such Loan is a Eurodollar Loan or Money Market Rate Loan, (ii) the amount of
any principal due and payable or to become due and payable from the Borrower to
each Lender hereunder, and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender's
share thereof.
(F) EFFECT OF LOAN ACCOUNTS, ETC. The entries made in the accounts
maintained pursuant to section 2.6(d) and (e) shall be PRIMA FACIE evidence of
the existence and amounts and amounts of the obligations recorded therein;
PROVIDED, that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay or prepay the Loans in accordance with the terms of
this Agreement.
(G) ENDORSEMENTS OF AMOUNTS ON NOTES PRIOR TO TRANSFER. Each Lender
will, prior to any transfer of any of the Notes issued to it by the Borrower,
endorse on the reverse side thereof or the grid attached thereto the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation shall not affect the Borrower's obligations in
respect of such Loans.
2.7. CONVERSIONS OF GENERAL REVOLVING LOANS. The Borrower shall have
the option to Convert on any Business Day all or a portion at least equal to the
applicable Minimum Borrowing Amount of the outstanding principal amount of its
General Revolving Loans of one Type owing by it into a Borrowing or Borrowings
pursuant to the General Revolving Facility of another Type of Loans which can be
made pursuant to such Facility, PROVIDED that:
(a) no partial Conversion of a Borrowing of Eurodollar Loans
shall reduce the outstanding principal amount of the Eurodollar Loans
made pursuant to such Borrowing to less than the Minimum Borrowing
Amount applicable thereto;
(b) any Conversion of Eurodollar Loans into Prime Rate Loans
shall be made on, and only on, the last day of an Interest Period for
such Eurodollar Loans;
21
<PAGE> 27
(c) Prime Rate Loans may only be Converted into Eurodollar
Loans if no Default under section 10.1(a) or Event of Default is in
existence on the date of the Conversion unless the Required Lenders
otherwise agree; and
(d) Prime Rate Loans may not be Converted into Eurodollar
Loans during any period when such Conversion is not permitted under
section 2.10; and
(e) Borrowings of Eurodollar Loans resulting from this section
2.7 shall conform to the requirements of section 2.2(a).
Each such Conversion shall be effected by the Borrower giving the Administrative
Agent at its Notice Office, prior to 12:00 noon (local time at such Notice
Office), at least three Business Days', in the case of Conversion into a
Eurodollar Loans (or prior to 12:00 noon (local time at such Notice Office) same
Business Day's, in the case of a Conversion into Prime Rate Loans), prior
written notice (or telephonic notice promptly confirmed in writing if so
requested by the Administrative Agent) (each a "NOTICE OF CONVERSION"),
substantially in the form of Exhibit B-2, specifying the Loans to be so
Converted, the Type of Loans to be Converted into and, if to be Converted into a
Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Administrative Agent shall give each Lender prompt notice of any
such proposed Conversion affecting any of its Loans. For the avoidance of doubt,
the prepayment or repayment of any General Revolving Loans out of the proceeds
of other General Revolving Loans by the Borrower is not considered a Conversion
of General Revolving Loans into other General Revolving Loans.
2.8. INTEREST. (A) INTEREST RATE FOR PRIME RATE LOANS. During such
periods as a General Revolving Loan or a Swing Line Revolving Loan is a Prime
Rate Loan, the unpaid principal amount thereof shall bear interest at a
fluctuating rate per annum which shall at all times be equal to the Prime Rate
in effect from time to time PLUS the Applicable Prime Rate Margin (as defined
below) in effect from time to time.
(B) INTEREST RATE FOR EURODOLLAR LOANS. During such periods as a
General Revolving Loan is a Eurodollar Loan, the unpaid principal amount thereof
shall bear interest at a rate per annum which shall at all times during any
Interest Period applicable thereto be the relevant Adjusted Eurodollar Rate for
such Interest Period PLUS the Applicable Eurodollar Margin (as defined below) in
effect from time to time.
(C) INTEREST RATE FOR MONEY MARKET RATE LOANS. During such periods as a
Swing Line Revolving Loan is a Money Market Rate Loan, the unpaid principal
amount thereof shall bear interest at the rate per annum which shall be equal to
the Quoted Rate therefor.
(D) DEFAULT INTEREST. Notwithstanding the above provisions, if a
Default under section 10.1(a) or Event of Default is in existence, all
outstanding amounts of principal and, to the extent permitted by law, all
overdue interest, in respect of each Loan shall bear interest, payable on
demand, at a fluctuating rate per annum equal to 2% per annum above the interest
rate which would be applicable under section 2.8(a) to Prime Rate Loans in
effect from time to time. If any amount (other than the principal of and
interest on the Loans) payable by the Borrower under the Credit Documents is not
paid when due, such amount shall bear interest, payable on demand, at a
fluctuating rate per annum equal 2% per annum above the interest rate which
would be applicable under section 2.8(a) to Prime Rate Loans in effect from time
to time.
(E) ACCRUAL AND PAYMENT OF INTEREST. Interest shall accrue from and
including the date of any Borrowing to but excluding the date of any prepayment
or repayment thereof and shall be payable:
(i) in the case of any Swing Line Revolving Loan, (A) at the
maturity date thereof, which shall in any event be not later than the
15th day after such Swing Line Revolving Loan was made, (B) on any
prepayment (on the amount prepaid), and (C) after maturity (whether by
acceleration or otherwise), on demand; and
(ii) in the case of any General Revolving Loan, (A) which is a
Prime Rate Loan, monthly in arrears on the last Business Day of each
calendar month, (B) which is a Eurodollar Loan, on the last day
22
<PAGE> 28
of each Interest Period applicable thereto and, in the case of an
Interest Period in excess of three months, on the dates which are
successively three months after the commencement of such Interest
Period, and (C) on any repayment, prepayment or Conversion (on the
amount repaid, prepaid or Converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(F) COMPUTATIONS OF INTEREST. All computations of interest hereunder
shall be made in accordance with section 12.7(b).
(G) INFORMATION AS TO INTEREST RATES. The Administrative Agent upon
determining the interest rate for any Borrowing shall promptly notify the
Borrower and the affected Lenders thereof. If the Administrative Agent is unable
to determine the Adjusted Eurodollar Rate for any Borrowing of Eurodollar Loans
by reference to the Telerate screen or other information provided by a service
organization referred to in clause (i) of the definition of the term Adjusted
Eurodollar Rate, then each Reference Bank agrees to furnish the Administrative
Agent timely information for the purpose of determining the Adjusted Eurodollar
Rate for any such Borrowing. If any one or more of the Reference Banks shall not
timely furnish such information, the Administrative Agent shall determine the
Adjusted Eurodollar Rate on the basis of timely information furnished by the
remaining Reference Banks.
(H) INTEREST MARGINS. As used herein, the term "APPLICABLE PRIME RATE
MARGIN", as applied to any Loan which is a Prime Rate Loan, and the term
"APPLICABLE EURODOLLAR MARGIN", as applied to any General Revolving Loan which
is a Eurodollar Loan, means the particular rate per annum determined by the
Administrative Agent in accordance with the Pricing Grid Table which appears
below, based on the Borrower's ratio of Consolidated Total Debt to Consolidated
EBITDA and such Pricing Grid Table, and the following provisions:
(i) Initially, until changed hereunder in accordance with the
following provisions, the Applicable Prime Rate Margin will be zero
basis points per annum and the Applicable Eurodollar Margin for General
Revolving Loans will be 150 basis points per annum.
(ii) Commencing with the fiscal quarter of the Borrower ended
on or nearest to September 30, 1999, and continuing with each fiscal
quarter thereafter, the Administrative Agent will determine the
Applicable Prime Rate Margin for any Prime Rate Loan and the the
Applicable Eurodollar Margin for any Eurodollar Loan in accordance with
the Pricing Grid Table, based on the Borrower's ratio of (x)
Consolidated Total Debt as of the end of the fiscal quarter, to (y)
Consolidated EBITDA for the Testing Period ended on the last day of the
fiscal quarter, and identified in such Pricing Grid Table. Changes in
the Applicable Prime Rate Margin and the Applicable Eurodollar Margin
based upon changes in such ratio shall become effective on the first
day of the month following the receipt by the Administrative Agent
pursuant to section 8.1(a) or (b), as applicable, of the financial
statements of the Borrower, accompanied by the certificate and
calculations referred to in section 8.1(c), demonstrating the
computation of such ratio, based upon the ratio in effect at the end of
the applicable period covered (in whole or in part) by such financial
statements.
(iii) Notwithstanding the above provisions, during any period
when (A) the Borrower has failed to timely deliver its consolidated
financial statements referred to in section 8.1(a) or (b), accompanied
by the certificate and calculations referred to in section 8.1(c), (B)
a Default under section 10.1(a) has occurred and is continuing, or (C)
an Event of Default has occurred and is continuing, the Applicable
Prime Rate Margin and the Applicable Eurodollar Margin shall each be
the highest rate per annum indicated therefor in the Pricing Grid
Table, regardless of the Borrower's ratio of Consolidated Total Debt to
Consolidated EBITDA at such time.
(iv) Any changes in the Applicable Prime Rate Margin or the
Applicable Eurodollar Margin shall be determined by the Administrative
Agent in accordance with the above provisions and the Administrative
Agent will promptly provide notice of such determinations to the
Borrower and the Lenders. Any such determination by the Administrative
Agent pursuant to this section 2.8(h) shall be conclusive and binding
absent manifest error.
23
<PAGE> 29
<TABLE>
<CAPTION>
PRICING GRID TABLE
(EXPRESSED IN BASIS POINTS)
===================================================================================================================
RATIO OF APPLICABLE EURODOLLAR APPLICABLE PRIME APPLICABLE
CONSOLIDATED TOTAL DEBT MARGIN FOR GENERAL RATE MARGIN FACILITY FEE
TO REVOLVING LOANS RATE
CONSOLIDATED EBITDA
===================================================================================================================
<S> <C> <C> <C>
greater than or equal to 4.00 to 1.00 175.00 -0- 50.00
- -------------------------------------------------------------------------------------------------------------------
greater than or equal to 3.50 to 1.00
and less than 4.00 to 1.00 150.00 -0- 35.00
- -------------------------------------------------------------------------------------------------------------------
greater than or equal to 3.00 to 1.00
and less 3.50 to 1.00 120.00 -0- 30.00
- -------------------------------------------------------------------------------------------------------------------
greater than or equal to 2.50 to 1.00
and less than 3.00 to 1.00 100.00 -0- 25.00
- -------------------------------------------------------------------------------------------------------------------
greater than or equal to 2.00 to 1.00
and less than 2.50 to 1.00 75.00 -0- 25.00
- -------------------------------------------------------------------------------------------------------------------
less than 2.00 to 1.00 50.00 -0- 20.00
===================================================================================================================
</TABLE>
2.9. SELECTION AND CONTINUATION OF INTEREST PERIODS. (a) The Borrower
shall have the right
(x) at the time it gives a Notice of Borrowing or Notice of
Conversion in respect of the making of or Conversion into a Borrowing
of General Revolving Loans consisting of Eurodollar Loans, to select in
such Notice the Interest Period to be applicable to such Borrowing, and
(y) prior to 11:00 A.M. (local time at the Notice Office) on
the third Business Day prior to the expiration of an Interest Period
applicable to a Borrowing of General Revolving Loans consisting of
Eurodollar Loans, to elect by giving the Administrative Agent written
or telephonic notice (in the case of telephonic notice, promptly
confirmed in writing if so requested by the Administrative Agent) to
Continue all or the Minimum Borrowing Amount of the principal amount of
such Loans as one or more Borrowings of Eurodollar Loans and to select
the Interest Period to be applicable to any such Borrowing (any such
notice, a "NOTICE OF CONTINUATION"),
which Interest Period shall, at the option of the Borrower, be a one, two, three
or six month period; PROVIDED, that notwithstanding anything to the contrary
contained above, the Borrower's right to select an Interest Period or to effect
any Continuation shall be subject to the applicable provisions of section 2.10
and to the following:
(i) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing (the date
of a Borrowing resulting from a Conversion or Continuation shall be the
date of such Conversion or Continuation) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
24
<PAGE> 30
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period for any Eurodollar Loan may be
selected which would end after the Maturity Date;
(v) each Borrowing of Eurodollar Loans resulting from any
Continuation shall be in at least the Minimum Borrowing Amount
applicable thereto;
(vi) no Interest Period may be elected at any time when a
Default under section 10.1(a) or an Event of Default is then in
existence unless the Required Lenders otherwise agree; and
(vii) the initial Interest Period for the Borrowing under the
General Revolving Facility on the Closing Date which is in the
aggregate amount of $7,000,000, and only such initial Interest Period,
shall have a duration from the Closing Date to December 20, 1999.
(b) If upon the expiration of any Interest Period the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to Convert such Borrowing to Prime Rate Loans
effective as of the expiration date of such current Interest Period. If the
Borrower fails to specify in a Notice of Continuation the Interest Period for
any Eurodollar Loans which will be Continued as Eurodollar Loans, such Interest
Period shall be deemed to be one month.
2.10. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender, shall have determined on a reasonable
basis (which determination shall, absent manifest error, be final and conclusive
and binding upon all parties hereto):
(i) on any date for determining the Adjusted Eurodollar Rate
for any Interest Period that, by reason of any changes arising after
the Effective Date affecting the interbank Eurodollar market, adequate
and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Adjusted Eurodollar
Rate; or
(ii) at any time, that such Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder in an
amount which such Lender reasonably deems material with respect to any
Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a
change in the rate of taxes or similar charges) because of (x) any
change since the Effective Date in any applicable law, governmental
rule, regulation, guideline, order or request (whether or not having
the force of law), or in the interpretation or administration thereof
and including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves includable in the Adjusted Eurodollar Rate
pursuant to the definition thereof) and/or (y) other circumstances
adversely affecting the interbank Eurodollar market or the position of
such Lender in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Lender in
good faith with any change since the Effective Date in any law,
governmental rule, regulation, guideline or order, or the
interpretation or application thereof, or would conflict with any
thereof not having the force of law but with which such Lender
customarily complies or has become impracticable as a result of a
contingency occurring after the Effective Date which materially
adversely affects the interbank Eurodollar market;
25
<PAGE> 31
THEN, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on or promptly following such date or time
and (y) within 10 Business Days of the date on which such event no longer exists
give notice (by telephone confirmed in writing) to the Borrower and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other applicable Lenders).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no longer
be available until such time as the Administrative Agent notifies the Borrower
and the Lenders that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing or Notice of
Conversion given by the Borrower with respect to Eurodollar Loans which have not
yet been incurred or converted shall be deemed rescinded by the Borrower or, in
the case of a Notice of Borrowing, shall, at the option of the Borrower, be
deemed converted into a Notice of Borrowing for Prime Rate Loans to be made on
the date of Borrowing contained in such Notice of Borrowing, (y) in the case of
clause (ii) above, the Borrower shall pay to such Lender, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender shall
determine) as shall be required to compensate such Lender, for such increased
costs or reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Lender, showing the basis for the calculation
thereof, which basis must be reasonable, submitted to the Borrower by such
Lender shall, absent manifest error, be final and conclusive and binding upon
all parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in section 2.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in section 2.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to section 2.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, by giving the Administrative Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that the Borrower was
notified by a Lender pursuant to section 2.10(a)(ii) or (iii), cancel said
Borrowing, convert the related Notice of Borrowing into one requesting a
Borrowing of Prime Rate Loans or require the affected Lender to make its
requested Loan as a Prime Rate Loan, or (ii) if the affected Eurodollar Loan is
then outstanding, upon at least one Business Day's notice to the Administrative
Agent, require the affected Lender to convert each such Eurodollar Loan into a
Prime Rate Loan, PROVIDED that if more than one Lender is affected at any time,
then all affected Lenders must be treated the same pursuant to this section
2.10(b).
(c) If any Lender shall have determined that after the Effective Date,
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 by any governmental authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by such Lender or its parent corporation with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank, or comparable agency, in each case made
subsequent to the Effective Date, has or would have the effect of reducing by an
amount reasonably deemed by such Lender to be material the rate of return on
such Lender's or its parent corporation's capital or assets as a consequence of
such Lender's commitments or obligations hereunder to a level below that which
such Lender or its parent corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's or
its parent corporation's policies with respect to capital adequacy), then from
time to time, within 30 days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or its parent corporation for
such reduction. Each Lender, upon determining in good faith that any additional
amounts will be payable pursuant to this section 2.10(c), will give prompt
written notice thereof to the Borrower, which notice shall set forth, in
reasonable detail, the basis of the calculation of such additional amounts,
which basis must be reasonable, although the failure to give any such notice
shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this section 2.10(c) upon the subsequent receipt
of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, (i) no
Lender shall be entitled to compensation or payment or reimbursement of other
amounts under section 2.10 for any amounts incurred or accruing more than 120
days prior to the giving of notice to the Borrower of additional costs or other
amounts of the nature described in such section, PROVIDED that if a change in
applicable law, rule, regulation, guideline or order, or in the interpretation
or application thereof, becomes effective during such 120 day period but is
retroactive to an earlier date, such 120 day period shall be extended to include
the period of retroactive effect thereof, and (ii) no
26
<PAGE> 32
Lender shall demand compensation for any reduction referred to in section
2.10(c) if it shall not at the time be the general policy or practice of such
Lender to demand such compensation, payment or reimbursement in similar
circumstances under comparable provisions of other credit agreements.
2.11. BREAKAGE COMPENSATION. The Borrower shall compensate each
applicable Lender, upon its written request (which request shall set forth the
detailed basis for requesting and the method of calculating such compensation),
for all reasonable losses, expenses and liabilities (including, without
limitation, any loss, expense or liability incurred by reason of the liquidation
or reemployment of deposits or other funds required by such Lender to fund its
Eurodollar Loans or Money Market Rate Loans) which such Lender may sustain: (i)
if for any reason (other than a default by such Lender or the Administrative
Agent), (A) a Borrowing of Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
rescinded or withdrawn by the Borrower or deemed rescinded or withdrawn pursuant
to section 2.10(a)), or (B) a Borrowing of Money Market Rate Loans does not
occur on a date specified therefor in a Notice of Borrowing; (ii) if any
repayment, prepayment, Conversion or Continuation of any of its Eurodollar Loans
occurs on a date which is not the last day of an Interest Period applicable
thereto; (iii) if any repayment or prepayment of any of its Money Market Rate
Loans occurs on a date which is not the maturity date thereof; (iv) if any
prepayment of any of its Eurodollar Loans or Money Market Rate Loans is not made
on any date specified in a notice of prepayment given by the Borrower; (v) if
such Lender transfers its Eurodollar Loans pursuant to a request by the Borrower
under section 2.12(b) hereof; or (vi) as a consequence of (x) any other default
by the Borrower to repay its Eurodollar Loans or Money Market Rate Loans when
required by the terms of this Agreement or (y) an election made pursuant to
section 2.10(b). Such loss, cost, expense and liability to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the interest rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period (or maturity period, in the case of
a Money Marker Rate Loan) therefor (or, in the case of a failure to effect a
Borrowing, Conversion or Continuation, for the period that would have been the
Interest Period for such Loan, or maturity period, in the case of a Money Marker
Rate Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such request within 10 days after
receipt thereof.
2.12. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
section 2.10(a)(ii) or (iii) or 2.10(c), with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another Applicable Lending Office
for any Loans or Commitment affected by such event, PROVIDED that such
designation is made on such terms that such Lender and its Applicable Lending
Office suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
section.
(b) If any Lender requests any compensation, reimbursement or other
payment under section 2.10(a)(ii) or (iii) or 2.10(c) with respect to such
Lender, or if any Lender is a Defaulting Lender, then the Borrower may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with the restrictions contained in section 12.4(c)), all its
interests, rights and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); PROVIDED that (i) the Borrower shall have received the
prior written consent of the Administrative Agent, which consent shall not be
unreasonably withheld, (ii) such Lender shall have received payment of an amount
equal to the outstanding principal of its Loans, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts, including any breakage
compensation under section 2.11 hereof), and (iii) in the case of any such
assignment resulting from a claim for compensation, reimbursement or other
payments required to be made under section 2.10(a)(ii) or (iii) or 2.10(c) with
respect to such Lender, such assignment will result in a reduction in such
compensation, reimbursement or payments. A Lender shall
27
<PAGE> 33
not be required to make any such assignment and delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrower to require such assignment and delegation cease to apply.
(c) Nothing in this section 2.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in section 2.10.
SECTION 3. FEES.
3.1. FACILITY FEE. (a) The Borrower agrees to pay to the Administrative
Agent a Facility Fee ("FACILITY FEE"), for the account of each Non-Defaulting
Lender which has a General Revolving Commitment, for the period from and
including the Effective Date to but not including the date the Total General
Revolving Commitment has been terminated and no General Revolving Loans are
outstanding, which Facility Fee, in the case of any such Non- Defaulting Lender,
shall be computed on the amount of the General Revolving Commitment of such
Non-Defaulting Lender, whether used or unused, at the Applicable Facility Fee
Rate in effect from time to time. The Facility Fee shall be due and payable in
arrears on the last Business Day of each March, June, September and December,
commencing with the last Business Day of December 1999.
(b) As used herein, the term "APPLICABLE FACILITY FEE RATE" means the
particular rate per annum determined by the Administrative Agent in accordance
with the Pricing Grid Table which appears in section 2.8(h) hereof, based on the
Borrower's ratio of Consolidated Total Debt to Consolidated EBITDA, and the
following provisions:
(i) Initially, until changed hereunder in accordance with the
following provisions, the Applicable Facility Fee Rate will be 35 basis
points per annum.
(ii) Commencing with the fiscal quarter of the Borrower ended
on or nearest to September 30, 1999, and continuing for each fiscal
quarter thereafter, the Administrative Agent will determine the
Applicable Facility Fee Rate in accordance with the Pricing Grid Table,
based on the Borrower's ratio of (x) Consolidated Total Debt as of the
end of the fiscal quarter, to (y) Consolidated EBITDA for the Testing
Period ended on the last day of the fiscal quarter, and identified in
such Pricing Grid Table. Changes in the Applicable Facility Fee Rate
shall be made and effective as of the same date as is provided in
section 2.8(h) in the case of the determination of the Applicable Prime
Rate Margin or Applicable Eurodollar Margin.
(iii) Notwithstanding the above provisions, during any period
when (A) the Borrower has failed to timely deliver its consolidated
financial statements referred to in section 8.1(a) or (b), accompanied
by the certificate and calculations referred to in section 8.1(c), (B)
a Default under section 10.1(a) has occurred and is continuing, or (C)
an Event of Default has occurred and is continuing, the Applicable
Facility Fee Rate shall be the highest rate per annum indicated
therefor in the Pricing Grid Table, regardless of the Borrower's ratio
of Consolidated Total Debt to Consolidated EBITDA at such time.
(iv) Any changes in the Applicable Facility Fee Rate shall be
determined by the Administrative Agent in accordance with the above
provisions and the Administrative Agent will promptly provide notice of
such determinations to the Borrower and the Lenders. Any such
determination by the Administrative Agent pursuant to this section
3.1(b) shall be conclusive and binding absent manifest error.
3.2. OTHER FEES. The Borrower shall pay to the Administrative Agent on
the Effective Date and thereafter for its own account and/or for distribution to
the Lenders such fees as heretofore agreed by the Borrower and the
Administrative Agent.
3.3. COMPUTATIONS OF FEES. All computations of Fees under this
Agreement shall be made in accordance with section 12.7(b).
28
<PAGE> 34
SECTION 4. REDUCTIONS AND TERMINATION OF COMMITMENTS.
4.1. VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS. Upon at least
three Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, to:
(a) terminate the Total Commitment, PROVIDED that all
outstanding Loans are contemporaneously prepaid in accordance with
section 5.1;
(b) terminate the Swing Line Revolving Commitment, PROVIDED
that all outstanding Swing Line Revolving Loans are contemporaneously
prepaid in accordance with section 5.1;
(c) partially and permanently reduce the Unutilized Total
General Revolving Commitment, PROVIDED that (i) any such reduction
shall apply to proportionately and permanently reduce the General
Revolving Commitment of each of the Lenders; (ii) any partial reduction
of the Unutilized Total General Revolving Commitment pursuant to this
section 4.1(c) shall be in the amount of at least $1,000,000 (or, if
greater, in integral multiples of $1,000,000); and (iii) after giving
effect to any such partial reduction of the Unutilized Total General
Revolving Commitment, the Total General Revolving Commitment then in
effect shall exceed the Swing Line Revolving Commitment then in effect
by at least $20,000,000; and/or
(d) partially and permanently reduce the Unutilized Swing Line
Revolving Commitment, PROVIDED that any partial reduction of the
Unutilized Swing Line Revolving Commitment pursuant to this section
4.1(d) shall be in the amount of at least $1,000,000 (or, if greater,
in integral multiples of $1,000,000).
4.2. MANDATORY TERMINATION/ADJUSTMENTS OF COMMITMENTS, ETC. (a) The
Total Commitment (and the Commitment of each Lender) shall terminate on
September 30, 1999, unless the Closing Date has occurred on or prior to such
date.
(b) The Total Commitment shall terminate (and the Commitment of each
Lender shall terminate) on the earlier of (x) the Maturity Date and (y) the date
on which a Change of Control occurs.
(c) The Total General Revolving Commitment shall be permanently
reduced, without premium or penalty, at the time that any mandatory prepayment
of General Revolving Loans would be made pursuant to section 5.2(d) if General
Revolving Loans were then outstanding in the full amount of the Total General
Revolving Commitment then in effect, in an amount equal to the required
prepayment of principal of General Revolving Loans which would be required to be
made in such circumstance. Any such reduction shall apply to proportionately and
permanently reduce the General Revolving Commitment of each of the Lenders. The
Borrower will provide at least three Business Days' prior written notice (or
telephonic notice confirmed in writing) to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders), of any reduction of the Total General Revolving Commitment
pursuant to this section 4.2(c), specifying the date and amount of the
reduction.
4.3. EXTENSION OF MATURITY DATE. At any time after January 1, 2000 and
during the 60 day period following delivery by the Borrower pursuant to section
8.1(a) of its consolidated financial statements for its fiscal year then most
recently ended, and annually thereafter during the 60 day period following
delivery by the Borrower of its consolidated financial statements pursuant to
section 8.1(a), the Borrower may request the Administrative Agent to determine
if all of the Lenders are then willing to extend the Maturity Date for a single
additional year. If the Borrower so requests, the Administrative Agent will so
advise the Lenders. If all of the Lenders in their sole discretion are all
willing to so extend the Maturity Date, after taking into account such
considerations as any Lender may deem relevant, the Borrower, the Administrative
Agent and all of the Lenders shall execute and deliver a definitive written
instrument so extending the Maturity Date. No such extension of the Maturity
Date shall be valid or effective for any purpose unless such definitive written
instrument is so signed and delivered within 60 days
29
<PAGE> 35
following the giving by the Administrative Agent of notice to the Lenders that
the Borrower has requested such an extension.
SECTION 5. PAYMENTS.
5.1. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay
any of its Loans, in whole or in part, without premium or penalty, from time to
time on the following terms and conditions:
(a) the Borrower shall give the Administrative Agent at the
Notice Office written or telephonic notice (in the case of telephonic
notice, promptly confirmed in writing if so requested by the
Administrative Agent) of its intent to prepay the Loans, the amount of
such prepayment and (in the case of Eurodollar Loans) the specific
Borrowing(s) pursuant to which made, which notice shall be received by
the Administrative Agent by
(x) 12:00 noon (local time at the Notice Office)
three Business Days prior to the date of such prepayment, in
the case of any prepayment of Eurodollar Loans, or
(y) 12:00 noon (local time at the Notice Office) one
Business day prior to the date of such prepayment, in the case
of any prepayment of Prime Rate Loans or Money Market Rate
Loans,
and which notice shall promptly be transmitted by the Administrative
Agent to each of the affected Lenders;
(b) in the case of prepayment of any Borrowings under the
General Revolving Facility, each partial prepayment of any such
Borrowing shall be in an aggregate principal of at least $500,000 or an
integral multiple of $100,000 in excess thereof, in the case of Prime
Rate Loans, and at least $2,000,000 or an integral multiple of
$1,000,000 in excess thereof, in the case of Eurodollar Loans;
(c) in the case of prepayment of any Borrowings under the
Swing Line Revolving Facility, each partial prepayment of any such
Borrowing shall be in an aggregate principal of at least $100,000 or an
integral multiple of $50,000 in excess thereof;
(d) no partial prepayment of any Loans made pursuant to a
Borrowing shall reduce the aggregate principal amount of such Loans
outstanding pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto;
(e) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied PRO RATA among such Loans; and
(f) each prepayment of Eurodollar Loans or Money Market Rate
Loans pursuant to this section 5.1 on any date other than the last day
of the Interest Period applicable thereto, in the case of Eurodollar
Loans, or the maturity date thereof, in the case of Money Market Rate
Loans, shall be accompanied by any amounts payable in respect thereof
under section 2.11.
5.2. MANDATORY PREPAYMENTS. The Loans shall be subject to mandatory
prepayment in accordance with the following provisions:
(a) IF OUTSTANDING GENERAL REVOLVING LOANS AND SWING LINE
REVOLVING LOANS EXCEED TOTAL GENERAL REVOLVING COMMITMENT. If on any
date (after giving effect to any other payments on such date) the sum
of (i) the aggregate outstanding principal amount of General Revolving
Loans, PLUS (ii) the aggregate outstanding principal amount of Swing
Line Revolving Loans, EXCEEDS the Total General Revolving Commitment as
then in effect, the Borrower shall prepay on such date that principal
amount of Swing Line Revolving Loans and, after Swing Line Revolving
Loans have been paid in full, General
30
<PAGE> 36
Revolving Loans, in an aggregate amount at least equal to such excess
and conforming in the case of partial prepayments of any Loans to the
applicable requirements as to the amounts of partial prepayments which
are contained in section 5.1.
(B) IF OUTSTANDING SWING LINE REVOLVING LOANS EXCEED
UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT. If on any date (after
giving effect to any other payments on such date) the aggregate
outstanding principal amount of Swing Line Revolving Loans exceeds the
Unutilized Total General Revolving Commitment as then in effect, the
Borrower shall prepay on such date Swing Line Revolving Loans in an
aggregate amount at least equal to such excess and conforming in the
case of partial prepayments of Swing Line Revolving Loans to the
requirements as to the amounts of partial prepayments of Swing Line
Revolving Loans which are contained in section 5.1.
(C) IF OUTSTANDING SWING LINE REVOLVING LOANS EXCEED SWING
LINE REVOLVING COMMITMENT. If on any date (after giving effect to any
other payments on such date) the aggregate outstanding principal amount
of Swing Line Revolving Loans exceeds the Swing Line Revolving
Commitment at such time, the Borrower shall prepay on such date Swing
Line Revolving Loans in an aggregate amount at least equal to such
excess and conforming in the case of partial prepayments of Swing Line
Revolving Loans to the requirements as to the amounts of partial
prepayments of Swing Line Revolving Loans which are contained in
section 5.1.
(D) CERTAIN PROCEEDS OF ASSET SALES. If during any fiscal year
of the Borrower, the Borrower and its Subsidiaries have received
cumulative Net Cash Proceeds during such fiscal year from one or more
Asset Sales in an aggregate amount at least equal to 10% of the
Borrower's Consolidated Net Worth as of the end of the preceding fiscal
year, then not later than the third Business Day following the date of
receipt of any Net Cash Proceeds in excess of such amount, an amount,
conforming to the requirements as to the amount of partial prepayments
contained in section 5.1, at least equal to 100% of the Net Cash
Proceeds then received in excess of such amount from any Asset Sale,
shall be applied as a mandatory prepayment of principal of FIRST, Swing
Line Revolving Loans and, SECOND, after Swing Line Revolving Loans have
been paid in full, General Revolving Loans; PROVIDED, that (i) if no
Default under section 10.1(a) or Event of Default shall have occurred
and be continuing, (ii) the Borrower and its Subsidiaries have expected
Consolidated Capital Expenditures during the following 12 months, and
(iii) the Borrower notifies the Administrative Agent of the amount and
nature thereof and of its intention to reinvest all or a portion of
such Net Cash Proceeds in such Consolidated Capital Expenditures during
such 12 month period, then no such prepayment shall be required to the
extent the Borrower so indicates that such reinvestment will take
place. If at the end of any such 12 month period any portion of such
Net Cash Proceeds has not been so reinvested, the Borrower will
immediately make a prepayment of the outstanding Swing Line Revolving
Loans and General Revolving Loans as provided above in an amount,
conforming to the requirements as to amount of prepayments contained in
section 5.1, at least equal to such remaining amount.
(E) CHANGE OF CONTROL. On the date of which a Change of
Control occurs, notwithstanding anything to the contrary contained in
this Agreement, no further Borrowings shall be made and the then
outstanding principal amount of all Loans, if any, shall become due and
payable and shall be prepaid in full,
(F) PARTICULAR LOANS TO BE PREPAID. With respect to each
repayment or prepayment of Loans required by this section 5.2, the
Borrower shall designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which such repayment or
prepayment is to be made, PROVIDED that (i) the Borrower shall first so
designate all Loans that are Prime Rate Loans and Eurodollar Loans with
Interest Periods ending on the date of repayment or prepayment prior to
designating any other Eurodollar Loans for repayment or prepayment,
(ii) if the outstanding principal amount of Eurodollar Loans made
pursuant to a Borrowing is reduced below the applicable Minimum
Borrowing Amount as a result of any such repayment or prepayment, then
all the Loans outstanding pursuant to such Borrowing shall be Converted
into Prime Rate Loans, and (iii) each repayment and prepayment of any
Loans made pursuant to a Borrowing shall be applied PRO RATA among such
Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Administrative Agent shall, subject to the
above, make such designation in its sole discretion with a view, but no
obligation, to minimize breakage costs owing under
31
<PAGE> 37
section 2.11. Any repayment or prepayment of Eurodollar Loans or Money
Market Rate Loans pursuant to this section 5.2 shall in all events be
accompanied by such compensation as is required by section 2.11.
5.3. METHOD AND PLACE OF PAYMENT. (a) Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its PRO RATA share) account of
the Lenders entitled thereto, not later than 12:00 noon (local time at the
Payment Office) on the date when due and shall be made in immediately available
funds and in lawful money of the United States of America at the Payment Office,
it being understood that written notice by the Borrower to the Administrative
Agent to make a payment from the funds in the Borrower's account at the Payment
Office shall constitute the making of such payment to the extent of such funds
held in such account. Any payments under this Agreement which are made later
than 12:00 noon (local time at the Payment Office) shall be deemed to have been
made on the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
Fees then due hereunder and an Event of Default is not then in existence, such
funds shall be applied (i) FIRST, towards payment of interest and Fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and Fees then due to such parties, and (ii) SECOND, towards
payment of principal then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal then due to such parties.
5.4. NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as otherwise provided for in section
5.4(c), all such payments will be made free and clear of, and without deduction
or withholding for, any present or future United States withholding taxes. The
Borrower will furnish to the Administrative Agent within 45 days after the date
of any withholding or deduction on account of United States withholding taxes
certified copies of tax receipts, or other evidence satisfactory to the Lender,
evidencing payment thereof by the Borrower.
(b) Each Lender that is not a United States person (as such term is
defined in section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to provide to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the cases of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to section 12.4 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer and such Lender is in compliance with the provisions of
this section 5.4(b)), on the date of such assignment or transfer to such Lender,
(i) two accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement
to a complete exemption from United States withholding tax with respect to
payments to be made under this Agreement, any Note or any other Credit Document,
or (ii) if the Lender is not a "bank" within the meaning of section 881(c)(3)(A)
of the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit F (any such certificate, a "SECTION 5.4(B)(II) CERTIFICATE") and (y) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8 (or successor form) certifying to such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement, any Note or any other Credit Document.
In addition, each Lender agrees that from time to time after the Effective Date,
when a lapse in time or change in circumstances renders the previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Borrower and the Administrative Agent two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a
Section 5.4(b)(ii) Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement, any Note or any other Credit Document,
or it shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which case such Lender
shall not be required to deliver any such Form or Certificate pursuant to this
section 5.4(b).
(c) Notwithstanding anything to the contrary contained in section
5.4(a), the Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold income or other similar taxes imposed by the United
32
<PAGE> 38
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Lender which is not a United States person (as such term is defined in section
7701(a)(30) of the Code) for United States federal income tax purposes and which
has not provided to the Borrower such forms that establish a complete exemption
from such deduction or withholding (i) if such Lender has not provided to the
Borrower the Internal Revenue Service forms required to be provided to the
Borrower pursuant to section 5.4(b), or (ii) in the case of a payment other than
interest, to a Lender described in clause (ii) of section 5.2(b) above, to the
extent that such forms do not establish a complete exemption from withholding of
such taxes.
5.5. LATE CHARGES. If any principal of any Loan is not paid within 10
days after the Administrative Agent shall have given the Borrower notice of
demand for the payment of the same or within 10 days after any Event of Default
described in section 10.1(g) in respect of the Borrower shall have occurred, or
if any interest on any Loan is not paid within 10 days after the same becomes
due, THEN and in any such case the Administrative Agent shall have the right to
assess a late charge, payable by the Borrower upon demand, in an amount equal to
the greater of $20.00 or 5% of the amount not timely paid. Any such late charge
shall be for the account of the Lenders for the benefit of whom such amount was
not timely paid and shall be in addition to any other amounts payable by the
Borrower under the Credit Documents.
SECTION 6. CONDITIONS PRECEDENT.
6.1. CONDITIONS PRECEDENT AT CLOSING DATE. The obligation of the
Lenders to make Loans is subject to the satisfaction of each of the following
conditions on the Closing Date:
(a) EFFECTIVENESS; NOTES. On or prior to the Closing Date, (i)
the Effective Date shall have occurred and (ii) there shall have been
delivered to the Administrative Agent for the account of each Lender
the appropriate Note or Notes executed by the Borrower, in each case,
in the amount, maturity and as otherwise provided herein.
(b) FEES, ETC. The Borrower shall have paid or caused to be
paid all fees required to be paid by it on or prior to such date
pursuant to section 3 hereof and all reasonable fees and expenses of
the Administrative Agent and of special counsel to the Administrative
Agent which have been invoiced on or prior to such date in connection
with the preparation, execution and delivery of this Agreement and the
other Credit Documents and the consummation of the transactions
contemplated hereby and thereby.
(c) CORPORATE CHARTER AND LONG FORM GOOD STANDING. The
Administrative Agent shall have received, in sufficient quantity for
the Administrative Agent and the Lenders, (i) a copy of the Articles of
Incorporation of the Borrower and any and all amendments and
restatements thereof, certified as of a recent date by the Secretary of
State of the State of Ohio, and (ii) a certificate the Secretary of
State of the State of Ohio, dated as of a recent date, listing all
charter documents affecting the Borrower and certifying as to the good
standing of the Borrower.
(d) CORPORATE CERTIFICATE. The Administrative Agent shall have
received, in sufficient quantity for the Administrative Agent and the
Lenders, a certificate of the Secretary or an Assistant Secretary of
the Borrower, dated the Closing Date or reasonably prior thereto,
substantially in the form attached hereto as Exhibit C, and such
certificate shall be satisfactory in form and substance to the
Administrative Agent.
(e) OPINION OF COUNSEL. On the Closing Date, the
Administrative Agent shall have received an opinion, addressed to the
Administrative Agent and each of the Lenders and dated the Closing
Date, from Baker & Hostetler LLP, special counsel to the Borrower,
substantially in the form of Exhibit D hereto and covering such other
matters incident to the transactions contemplated hereby as the
Administrative Agent may reasonably request, such opinion to be in form
and substance satisfactory to the Administrative Agent.
33
<PAGE> 39
(f) EXISTING CREDIT FACILITIES. Contemporaneously with the
Closing Date, the Borrower shall have terminated the commitments of the
lenders under its existing credit agreement, dated as of September 30,
1994, as amended, and prepaid all borrowings thereunder.
(g) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incidental to the transactions
contemplated hereby shall be satisfactory in substance and form to the
Administrative Agent and the Lenders and the Administrative Agent and
its special counsel and the Lenders shall have received all such
counterpart originals or certified or other copies of such documents as
the Administrative Agent or its special counsel or any Lender may
reasonably request.
6.2. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Lenders
to make each Loan is subject, at the time thereof, to the satisfaction of the
following conditions:
(a) NOTICE OF BORROWING, ETC. The Administrative Agent shall
have received a Notice of Borrowing meeting the requirements of section
2.3 with respect to the incurrence of Loans.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
such Loan and also after giving effect thereto, (i) there shall exist
no Default or Event of Default and (ii) all representations and
warranties of the Borrower contained herein or in the other Credit
Documents shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made
on and as of the date of such Loan, except to the extent that such
representations and warranties expressly relate to an earlier specified
date, in which case such representations and warranties shall have been
true and correct in all material respects as of the date when made.
The acceptance of the benefits of each Loan shall constitute a representation
and warranty by the Borrower to each of the Lenders that all of the applicable
conditions specified in section 6.1 and/or 6.2, as the case may be, exist as of
that time. All of the certificates, legal opinions and other documents and
papers referred to in this section 6, unless otherwise specified, shall be
delivered to the Administrative Agent for the account of each of the Lenders
and, except for the Notes, in sufficient counterparts for each of the Lenders,
and the Administrative Agent will promptly distribute to the Lenders their
respective Notes and the copies of such other certificates, legal opinions and
documents.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to make
the Loans provided for herein, the Borrower makes the following representations
and warranties to, and agreements with, the Lenders, all of which shall survive
the execution and delivery of this Agreement and the making of each Loan:
7.1. CORPORATE STATUS, ETC. Each of the Borrower and its Subsidiaries
(i) is a duly organized or formed and validly existing corporation, partnership
or limited liability company, as the case may be, in good standing under the
laws of the jurisdiction of its formation and has the corporate, partnership or
limited liability company power and authority, as applicable, to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage, and (ii) has duly qualified and is authorized to
do business in all jurisdictions where it is required to be so qualified except
where the failure to be so qualified would not have a Material Adverse Effect.
7.2. SUBSIDIARIES. Annex II hereto lists, as of the date hereof, each
Subsidiary of the Borrower (and the direct and indirect ownership interest of
the Borrower therein).
7.3. CORPORATE POWER AND AUTHORITY, ETC. The Borrower has the corporate
power and authority to execute, deliver and carry out the terms and provisions
of the Credit Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Credit Documents to which it is party. The Borrower has duly executed and
delivered each Credit Document to which it is party and each Credit Document to
which it is party constitutes the legal, valid and binding agreement or
obligation of the Borrower enforceable in accordance with its terms, except to
the extent that the enforceability thereof may be limited by
34
<PAGE> 40
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
7.4. NO VIOLATION. Neither the execution, delivery and performance by
the Borrower of the Credit Documents to which it is party nor compliance with
the terms and provisions thereof (i) will contravene any provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality applicable to the Borrower or its properties and
assets, (ii) will conflict with or result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien upon any of the property or assets of the Borrower pursuant to the terms of
any promissory note, bond, debenture, indenture, mortgage, deed of trust, credit
or loan agreement, or any other material agreement or other instrument, to which
the Borrower is a party or by which it or any of its property or assets are
bound or to which it may be subject, or (iii) will violate any provision of the
articles of incorporation or code of regulations of the Borrower.
7.5. GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required as a
condition to (i) the execution, delivery and performance by the Borrower of any
Credit Document to which it is a party, or (ii) the legality, validity, binding
effect or enforceability of any Credit Document to which the Borrower is a
party.
7.6. LITIGATION. There are no actions, suits or proceedings pending or,
to, the knowledge of the Borrower, threatened with respect to the Borrower or
any of its Subsidiaries (i) that have, or could reasonably be expected to have,
a Material Adverse Effect, or (ii) which question the validity or enforceability
of any of the Credit Documents, or of any action to be taken by the Borrower
pursuant to any of the Credit Documents to which it is a party.
7.7. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all Loans
shall be utilized for lawful purposes not inconsistent with the requirements of
this Agreement.
(b) No part of the proceeds of any Loan will be used directly or
indirectly to purchase or carry Margin Stock, or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock, in violation of any of
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System. The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying any Margin Stock. At no time would
more than 25% of the value of the assets of the Borrower or of the Borrower and
its consolidated Subsidiaries that are subject to any "arrangement" (as such
term is used in section 221.2(g) of such Regulation U)
hereunder be represented by Margin Stock.
7.8. FINANCIAL STATEMENTS, ETC. (a) The Borrower has furnished to the
Lenders and the Administrative Agent complete and correct copies of (i) the
audited consolidated balance sheets of the Borrower and its consolidated
subsidiaries as of the end of its fiscal years ended on or nearest to December
31, 1997 and December 31, 1998, and the related audited consolidated statements
of income, stockholders' equity, and cash flows for the fiscal years then ended,
accompanied by the unqualified report thereon of the Borrower's independent
accountants; and (ii) the unaudited condensed consolidated balance sheets of the
Borrower and its consolidated subsidiaries as of June 30, 1999, and the related
unaudited condensed consolidated statements of income and of cash flows of the
Borrower and its consolidated subsidiaries for the fiscal quarter or quarters
then ended, as contained in the Form 10-Q Quarterly Report of the Borrower filed
with the SEC for such fiscal quarter. All such financial statements have been
prepared in accordance with GAAP, consistently applied (except as stated
therein), and fairly present in all material respects the financial position of
the Borrower and its consolidated subsidiaries as of the respective dates
indicated and the consolidated results of their operations and cash flows for
the respective periods indicated, subject in the case of any such financial
statements which are unaudited, to normal audit adjustments, none of which will
involve a Material Adverse Effect.
(b) The Borrower has delivered or caused to be delivered to the Lenders
prior to the execution and delivery of this Agreement (i) a copy of the
Borrower's Report on Form 10-K as filed (without Exhibits) with the SEC for its
fiscal year ended on or nearest to December 31, 1998, which contains a general
description of the
35
<PAGE> 41
business and affairs of the Borrower and its Subsidiaries, and (ii) financial
projections prepared by management of the Borrower for the Borrower and its
Subsidiaries for the fiscal years 1999-2001 (the "FINANCIAL PROJECTIONS"). The
Financial Projections were prepared on behalf of the Borrower in good faith
after taking into account the existing and historical levels of business
activity of the Borrower and its Subsidiaries, known trends, including general
economic trends, and all other information, assumptions and estimates considered
by management of the Borrower and its Subsidiaries to be reasonable at the time;
PROVIDED, that no representation or warranty is made as to the impact of future
general economic conditions or as to whether the Borrower's projected
consolidated results as set forth in the Financial Projections will actually be
realized. No facts are known to the Borrower at the date hereof which, if
reflected in the Financial Projections, would result in a material adverse
change in the assets, liabilities, results of operations or cash flows reflected
therein.
7.9. NO MATERIAL ADVERSE CHANGE. Since December 31, 1998, there has
been no change in the condition, business or affairs of the Borrower and its
Subsidiaries taken as a whole, or their properties and assets considered as an
entirety, except for changes, none of which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect.
7.10. TAX RETURNS AND PAYMENTS. Each of the Borrower and each of its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Borrower and each of its Subsidiaries has established on its books such charges,
accruals and reserves in respect of taxes, assessments, fees and other
governmental charges for all fiscal periods as are required by GAAP. The
Borrower knows of no proposed assessment for additional federal, foreign or
state taxes for any period, or of any basis therefor, which, individually or in
the aggregate, taking into account such charges, accruals and reserves in
respect thereof as the Borrower and its Subsidiaries have made, could reasonably
be expected to have a Material Adverse Effect.
7.11. TITLE TO PROPERTIES, ETC. The Borrower and each of its
Subsidiaries has good and marketable title, in the case of real property, and
good title (or valid Leaseholds, in the case of any leased property), in the
case of all other property, to all of its properties and assets free and clear
of Liens other than Liens permitted by section 9.3. The interests of the
Borrower and each of its Subsidiaries in the properties reflected in the most
recent balance sheet referred to in section 7.8, taken as a whole, were
sufficient, in the judgment of the Borrower, as of the date of such balance
sheet for purposes of the ownership and operation of the businesses conducted by
the Borrower and such Subsidiaries.
7.12. LAWFUL OPERATIONS, ETC. The Borrower and each of its Subsidiaries
(i) holds all necessary federal, state and local governmental licenses,
registrations, certifications, permits and authorizations necessary to conduct
its business, and (ii) is in full compliance with all material requirements
imposed by law, regulation or rule, whether federal, state or local, which are
applicable to it, its operations, or its properties and assets, including
without limitation, applicable requirements of Environmental Laws, EXCEPT for
any failure to obtain and maintain in effect, or noncompliance, which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
7.13. ENVIRONMENTAL MATTERS. (a) The Borrower and each of its
Subsidiaries is in compliance with all Environmental Laws governing its
business, EXCEPT to the extent that any such failure to comply (together with
any resulting penalties, fines or forfeitures) would not reasonably be expected
to have a Material Adverse Effect. All licenses, permits, registrations or
approvals required for the conduct of the business of the Borrower and each of
its Subsidiaries under any Environmental Law have been secured and the Borrower
and each of its Subsidiaries is in material compliance therewith, EXCEPT for
such licenses, permits, registrations or approvals the failure to secure or to
comply therewith is not reasonably likely to have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has received written notice, or
otherwise knows, that it is in any respect in noncompliance with, breach of or
default under any applicable writ, order, judgment, injunction, or decree to
which the Borrower or such Subsidiary is a party or which would affect the
ability of the Borrower or such Subsidiary to operate any Real Property and no
event has occurred and is continuing which, with the passage of time or the
giving of notice or both, would constitute noncompliance, breach of or default
thereunder, EXCEPT in each such case, such noncompliance, breaches or defaults
as would not reasonably be expected to, in the aggregate, have a Material
Adverse Effect. There
36
<PAGE> 42
are no Environmental Claims pending or, to the best knowledge of the Borrower,
threatened, which would reasonably be expected to have a Material Adverse
Effect. There are no facts, circumstances, conditions or occurrences on any Real
Property now or at any time owned, leased or operated by the Borrower or any of
its Subsidiaries or on any property adjacent to any such Real Property, which
are known by the Borrower or as to which the Borrower or any such Subsidiary has
received written notice, that could reasonably be expected (i) to form the basis
of an Environmental Claim against the Borrower or any of its Subsidiaries or any
Real Property of the Borrower or any of its Subsidiaries, or (ii) to cause such
Real Property to be subject to any restrictions on the ownership, occupancy, use
or transferability of such Real Property under any Environmental Law, except in
each such case, such Environmental Claims or restrictions that individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect.
(b) Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any such Real Property,
in each case where such occurrence or event is not in compliance in all material
respects with Environmental Laws and is reasonably likely to have a Material
Adverse Effect.
7.14. COMPLIANCE WITH ERISA. Compliance by the Borrower with the
provisions hereof and Loans contemplated hereby will not involve any prohibited
transaction within the meaning of ERISA or section 4975 of the Code. The
Borrower and each of its Subsidiaries, (i) has fulfilled all obligations under
minimum funding standards of ERISA and the Code with respect to each Plan that
is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has satisfied all
respective contribution obligations in respect of each Multiemployer Plan and
each Multiple Employer Plan, (iii) is in compliance in all material respects
with all other applicable provisions of ERISA and the Code with respect to each
Plan, each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not
incurred any liability under the Title IV of ERISA to the PBGC with respect to
any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust
established thereunder. No Plan or trust created thereunder has been terminated,
and there have been no Reportable Events, with respect to any Plan or trust
created thereunder or with respect to any Multiemployer Plan or Multiple
Employer Plan, which termination or Reportable Event will or could reasonably be
expected to result in the termination of such Plan, Multiemployer Plan or
Multiple Employer Plan and give rise to a material liability of the Borrower or
any ERISA Affiliate in respect thereof. Neither the Borrower nor any ERISA
Affiliate is at the date hereof, or has been at any time within the two years
preceding the date hereof, an employer required to contribute to any
Multiemployer Plan or Multiple Employer Plan, or a "contributing sponsor" (as
such term is defined in section 4001 of ERISA) in any Multiemployer Plan or
Multiple Employer Plan. Neither the Borrower nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement "welfare benefit plan"
(as such term is defined in ERISA) except as has been disclosed to the Lenders
in writing.
7.15. INTELLECTUAL PROPERTY, ETC. The Borrower and each of its
Subsidiaries has obtained or has the right to use all material patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights
with respect to the foregoing necessary for the present and planned future
conduct of its business, without any known conflict with the rights of others,
EXCEPT for such patents, trademarks, servicemarks, trade names, copyrights,
licenses and rights, the loss of which, and such conflicts, which in any such
case individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
7.16. INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of its
Subsidiaries is subject to regulation with respect to the creation or incurrence
of Indebtedness under the Investment Company Act of 1940, as amended, the
Interstate Commerce Act, as amended, the Federal Power Act, as amended, the
Public Utility Holding Company Act of 1935, as amended, or any applicable state
public utility law.
7.17. BURDENSOME CONTRACTS; LABOR RELATIONS. Neither the Borrower nor
any of its Subsidiaries (i) is subject to any burdensome contract, agreement,
corporate restriction, judgment, decree or order, (ii) is a party to any labor
dispute affecting any bargaining unit or other group of employees generally,
(iii) is subject to any material strike, slow down, workout or other concerted
interruptions of operations by employees of the Borrower or any Subsidiary,
whether or not relating to any labor contracts, (iv) is subject to any
significant pending or, to the knowledge of the Borrower, threatened, unfair
labor practice complaint, before the National Labor Relations Board, (v) is
subject to any significant pending or, to the knowledge of the Borrower,
threatened, grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement, (vi) is subject to any significant
37
<PAGE> 43
pending or, to the knowledge of the Borrower, threatened, significant strike,
labor dispute, slowdown or stoppage, or (vii) is, to the knowledge of the
Borrower, involved or subject to any union representation organizing or
certification matter with respect to the employees of the Borrower or any of its
Subsidiaries, EXCEPT (with respect to any matter specified in any of the above
clauses), for such matters as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
7.18. EXISTING INDEBTEDNESS. Annex III sets forth a true and complete
list, as of the date or dates set forth therein, of all Indebtedness of the
Borrower and each of its Subsidiaries, on a consolidated basis, which (i) has an
outstanding principal amount of at least $1,000,000, or may be incurred pursuant
to existing commitments or lines of credit, or (ii) is secured by any Lien on
any property of the Borrower or any Subsidiary, and which will be outstanding on
the Closing Date after giving effect to the initial Borrowing hereunder, other
than the Indebtedness created under the Credit Documents (all such Indebtedness,
whether or not in a principal amount meeting such threshold and required to be
so listed on Annex III, herein the "EXISTING INDEBTEDNESS"). As and to the
extent the Administrative Agent has so requested, the Borrower has provided to
the Administrative Agent prior to the date of execution hereof true and complete
copies (or summary descriptions) of all agreements and instruments governing the
Indebtedness listed on Annex III (the "EXISTING INDEBTEDNESS AGREEMENTS").
7.19. YEAR 2000 COMPUTER MATTERS. The Borrower and its Subsidiaries
have reviewed the areas within their business and operations which could be
adversely affected by, and have developed or are developing a program to address
on a timely basis the "Year 2000 Computer Issue" (that is, the risk that
computer applications used by the Borrower and its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999). Based on such review and
program, the Borrower reasonably believes that the "Year 2000 Computer Issue" is
not reasonably likely to have a Material Adverse Effect.
7.20. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the Borrower
or any of its Subsidiaries in writing to the Administrative Agent or any Lender
for purposes of or in connection with this Agreement or any transaction
contemplated herein, other than the Financial Projections (as to which
representations are made only as provided in section 7.8), is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of such person in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided, except that any such
future information consisting of financial projections prepared by management of
the Borrower is only represented herein as being based on good faith estimates
and assumptions believed by such persons to be reasonable at the time made, it
being recognized by the Lenders that such projections as to future events are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ materially from the projected
results. As of the Effective Date, there is no fact known to the Borrower or any
of its Subsidiaries which has, or could reasonably be expected to have, a
Material Adverse Effect which has not theretofore been disclosed in writing to
the Lenders.
SECTION 8. AFFIRMATIVE COVENANTS.
The Borrower hereby covenants and agrees that until such time as the
Total Commitment has been terminated, no Notes are outstanding and the Loans,
together with interest, and Fees hereunder, have been paid in full:
8.1. REPORTING REQUIREMENTS. The Borrower will furnish to each Lender
and the Administrative Agent:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within 90 days after the close of each fiscal year of the
Borrower, the consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income, of stockholder's equity and
of cash flows for such fiscal year, in each case setting forth
comparative figures for the preceding fiscal year, all in reasonable
detail and accompanied by the opinion with respect to such
38
<PAGE> 44
consolidated financial statements of independent public accountants of
recognized national standing selected by the Borrower, which opinion
shall be unqualified and shall (i) state that such accountants audited
such consolidated financial statements in accordance with generally
accepted auditing standards, that such accountants believe that such
audit provides a reasonable basis for their opinion, and that in their
opinion such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Borrower
and its consolidated subsidiaries as at the end of such fiscal year and
the consolidated results of their operations and cash flows for such
fiscal year in conformity with generally accepted accounting
principles, or (ii) contain such statements as are customarily included
in unqualified reports of independent accountants in conformity with
the recommendations and requirements of the American Institute of
Certified Public Accountants (or any successor organization); PROVIDED,
that the delivery within the time period specified above of the
Borrower's Annual Report on Form 10-K for such fiscal year (together
with the Borrower's annual report to shareholders, if any, prepared
pursuant to Rule 14a-3 under the 1934 Act) prepared in accordance with
the requirements therefor and filed with the SEC shall be deemed to
satisfy the requirements of this section 8.1(a).
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event within 45 days after the close of each of the quarterly
accounting periods in each fiscal year of the Borrower, the unaudited
condensed consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such quarterly period and
the related unaudited condensed consolidated statements of income and
of cash flows for such quarterly period, and setting forth, in the case
of such unaudited consolidated statements of income and of cash flows,
comparative figures for the related periods in the prior fiscal year,
and which consolidated financial statements shall be certified on
behalf of the Borrower by the Chief Financial Officer or other
Authorized Officer of the Borrower, subject to changes resulting from
normal year-end audit adjustments.
(c) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the
delivery of the financial statements provided for in sections 8.1(a)
and (b), a certificate on behalf of the Borrower of the Chief Financial
Officer or other Authorized Officer of the Borrower to the effect that,
to the best knowledge of the Borrower, no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying
the nature and extent thereof, which certificate shall set forth the
calculations required to establish compliance with the provisions of
sections 9.4(c), 9.5(l) and (m), and 9.6 through 9.9, inclusive of this
Agreement, including an identification of the amounts of any financial
items of persons or business units acquired by the Borrower for any
periods prior to the date of acquisition which are used in making such
calculations.
(d) BUDGETS AND FORECASTS. Not later than 60 days after the
commencement of each fiscal year of the Borrower, a consolidated budget
in reasonable detail for such entire fiscal year and for each of the
fiscal quarters in such fiscal year, and (if and to the extent prepared
by management of the Borrower) for any subsequent fiscal years, as
customarily prepared by management for its internal use, setting forth,
with appropriate discussion, the forecasted balance sheet, income
statement, operating cash flows and capital expenditures of the
Borrower and its Subsidiaries for the period or periods covered
thereby, and the principal assumptions upon which forecasts and budget
are based.
(e) AUDITORS' ANNUAL MANAGEMENT LETTER. Promptly upon receipt
thereof, a copy of the definitive letter or memorandum commenting on
internal accounting controls and/or accounting or financial reporting
policies followed by the Borrower and/or any of its Subsidiaries, which
is submitted to the Borrower by its independent accountants in
connection with any annual audit made by them of the books of the
Borrower or any of its Subsidiaries.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any
event within three Business Days, in the case of clause (i) below, or
five Business Days, in the case of clause (ii) below, after a Principal
Officer of the Borrower obtains knowledge thereof, notice of
(i) the occurrence of any event which constitutes a
Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what
action the Borrower proposes to take with respect thereto, and
39
<PAGE> 45
(ii) any litigation or governmental or regulatory
investigation or proceeding pending against or involving the
Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect.
(g) ERISA. Promptly, and in any event within 10 days after a
Principal Officer of the Borrower knows of the occurrence of any of the
following, the Borrower will deliver to each of the Lenders a
certificate on behalf of the Borrower of an Authorized Officer of the
Borrower setting forth the full details as to such occurrence and the
action, if any, that the Borrower, such Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Borrower,
the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or
the Plan administrator with respect thereto:
(i) that a Reportable Event has occurred with respect
to any Plan;
(ii) the institution of any steps by the Borrower,
any ERISA Affiliate, the PBGC or any other person to terminate
any Plan;
(iii) the institution of any steps by the Borrower or
any ERISA Affiliate to withdraw from any Plan;
(iv) the institution of any steps by the Borrower or
any Subsidiary to withdraw from any Multiemployer Plan or
Multiple Employer Plan, if such withdrawal could result in
withdrawal liability (as described in Part 1 of Subtitle E of
Title IV of ERISA) in excess of $1,000,000;
(v) a non-exempt "prohibited transaction" within the
meaning of section 406 of ERISA in connection with any Plan;
(vi) that a Plan has an Unfunded Current Liability
exceeding $1,000,000;
(vii) any material increase in the contingent
liability of the Borrower or any Subsidiary with respect to
any post-retirement welfare liability; or
(viii) the taking of any action by, or the
threatening of the taking of any action by, the Internal
Revenue Service, the Department of Labor or the PBGC with
respect to any of the foregoing.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event
within 10 Business Days after a Principal Officer of the Borrower
obtains actual knowledge thereof, notice of any of the following
environmental matters which involves any reasonable likelihood (in the
Borrower's reasonable judgment) of resulting in a Material Adverse
Effect: (i) any pending or threatened (in writing) Environmental Claim
against the Borrower or any of its Subsidiaries or any Real Property
owned or operated by the Borrower or any of its Subsidiaries; (ii) any
condition or occurrence on or arising from any Real Property owned or
operated by the Borrower or any of its Subsidiaries that (A) results in
noncompliance by the Borrower or any of its Subsidiaries with any
applicable Environmental Law or (B) would reasonably be expected to
form the basis of an Environmental Claim against the Borrower or any of
its Subsidiaries or any such Real Property; (iii) any condition or
occurrence on any Real Property owned, leased or operated by the
Borrower or any of its Subsidiaries that could reasonably be expected
to cause such Real Property to be subject to any restrictions on the
ownership, occupancy, use or transferability by the Borrower or any of
its Subsidiaries of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to the
actual or alleged presence of any Hazardous Material on any Real
Property owned, leased or operated by the Borrower or any of its
Subsidiaries as required by any Environmental Law or any governmental
or other administrative agency. All such notices shall describe in
reasonable detail the nature of the Environmental Claim and the
Borrower's or such Subsidiary's response thereto.
40
<PAGE> 46
(i) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly upon
transmission thereof or other filing with the SEC, copies of all
registration statements (other than the exhibits thereto and any
registration statement on Form S-8 or its equivalent) and annual,
quarterly or current reports that the Borrower or any of its
Subsidiaries files with the SEC.
(j) OTHER INFORMATION. With reasonable promptness, such other
information or documents (financial or otherwise) relating to the
Borrower or any of its Subsidiaries as any Lender may reasonably
request from time to time.
8.2. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause
each of its Subsidiaries to, (i) keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Borrower or such Subsidiaries, as the case may
be, in accordance with GAAP, in the case of the Borrower, or which are
reconcilable to a GAAP presentation, in the case of any Subsidiary; and (ii)
permit, upon at least five Business Days' notice to the Chief Financial Officer
or any other Authorized Officer of the Borrower, officers and designated
representatives of the Administrative Agent or any of the Lenders to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession (but only to the extent the Borrower or
such Subsidiary has the right to do so to the extent in the possession of
another person), and to examine (and make copies of or take extracts from) the
books of account of the Borrower and any of its Subsidiaries and discuss the
affairs, finances and accounts of the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants and independent actuaries, if any, all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or any of
the Lenders may request.
8.3. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, (i) maintain insurance coverage by such insurers and in such
forms and amounts and against such risks as are generally consistent with the
insurance coverage maintained by the Borrower and its Subsidiaries at the date
hereof, and (ii) forthwith upon any Lender's written request, furnish to such
Lender such information about such insurance as such Lender may from time to
time reasonably request, which information shall be prepared in form and detail
satisfactory to such Lender and certified by an Authorized Officer of the
Borrower.
8.4. PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries; PROVIDED that neither the Borrower nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP; and PROVIDED,
FURTHER, that the Borrower will not be considered to be in default of any of the
provisions of this sentence if the Borrower or any Subsidiary fails to pay any
such amount which, individually or in the aggregate, is immaterial to the
Borrower and its Subsidiaries considered as an entirety.
8.5. CORPORATE FRANCHISES. The Borrower will do, and will cause each of
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its corporate or other organizational
existence, rights, authority and franchises, PROVIDED that nothing in this
section 8.5 shall be deemed to prohibit (i) any transaction permitted by section
9.2; (ii) the termination of existence of any Subsidiary if (A) the Borrower
determines that such termination is in its best interest and (B) such
termination is not adverse in any material respect to the Lenders; or (iii) the
loss of any rights, authorities or franchises if the loss thereof, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
8.6. GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business in whomsoever's possession they may be, are kept in good
repair, working order and condition, normal wear and tear excepted, PROVIDED
that this sentence shall not prohibit the Borrower or any Subsidiary from
discontinuing the operation and/or the maintenance of any of its properties if
(i) the Borrower has concluded that such discontinuance is desirable in the
overall conduct of the business of the
41
<PAGE> 47
Borrower and its Subsidiaries considered as an entirety, and (ii) such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
8.7. COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause
each of its Subsidiaries to, comply, in all material respects, with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, other than those (i)
being contested in good faith by appropriate proceedings, as to which adequate
reserves are established to the extent required under GAAP, and (ii) the
noncompliance with which would not have, and which would not be reasonably
expected to have, a Material Adverse Effect.
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of the
covenants contained in section 8.7 hereof:
(a) The Borrower will, and will cause each of its Subsidiaries
to, (i) comply, in all material respects, with all Environmental Laws
applicable to the ownership, lease or use of all Real Property now or
hereafter owned, leased or operated by the Borrower or any of its
Subsidiaries, and promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, except for such
noncompliance as would not have, and which would not be reasonably
expected to have, a Material Adverse Effect; and (ii) keep or cause to
be kept all such Real Property free and clear of any Liens imposed
pursuant to such Environmental Laws which are not permitted under
section 9.3.
(b) Without limitation of the foregoing, if the Borrower or
any of its Subsidiaries shall generate, use, treat, store, release or
dispose of, or permit the generation, use, treatment, storage, release
or disposal of, Hazardous Materials on any Real Property now or
hereafter owned, leased or operated by the Borrower or any of its
Subsidiaries, or transport or permit the transportation of Hazardous
Materials to or from any such Real Property, any such action shall be
effected in compliance, in all material respects, with all
Environmental Laws applicable thereto, except for such noncompliance as
would not have, and which would not be reasonably expected to have, a
Material Adverse Effect.
(c) If required to do so under any applicable order of any
governmental agency, the Borrower will undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Borrower or any of
its Subsidiaries in accordance with, in all material respects, the
requirements of all applicable Environmental Laws and in accordance
with, in all material respects, such orders of all governmental
authorities, except (i) to the extent that the Borrower or such
Subsidiary is contesting such order in good faith and by appropriate
proceedings and for which adequate reserves have been established to
the extent required by GAAP, or (ii) for such noncompliance as would
not have, and which would not be reasonably expected to have, a
Material Adverse Effect.
8.9. FISCAL YEARS, FISCAL QUARTERS. If the Borrower shall change any of
its or any of its Subsidiaries' fiscal years or fiscal quarters (other than the
fiscal year or fiscal quarters of a person which becomes a Subsidiary, made at
the time such person becomes a Subsidiary to conform to the Borrower's fiscal
year and fiscal quarters), the Borrower will promptly, and in any event within
30 days following any such change, deliver a notice to the Administrative Agent
and the Lenders describing such change and any material accounting entries made
in connection therewith and stating whether such change will have any impact
upon any financial computations to be made hereunder, and if any such impact is
foreseen, describing in reasonable detail the nature and extent of such impact.
If the Required Lenders determine that any such change will have any impact upon
any financial computations to be made hereunder which is adverse to the Lenders,
the Borrower will, if so requested by the Administrative Agent, enter into an
amendment to this Agreement, in form and substance reasonably satisfactory to
the Administrative Agent and the Required Lenders, modifying any of the
financial covenants or related provisions hereof in such manner as the Required
Lenders determine is necessary to eliminate such adverse effect.
8.10. HEDGE AGREEMENTS, ETC. In the event the Borrower or any of its
Subsidiaries determines to enter into a Hedge Agreement it may do so, PROVIDED
that such Hedge Agreement, when considered in light of other outstanding Hedge
Agreements to which the Borrower or any of its Subsidiaries is a party, does not
expose the
42
<PAGE> 48
Borrower and its Subsidiaries considered as an entirety to predominantly
speculative risks unrelated to the amount of assets, Indebtedness or other
liabilities intended to be subject to coverage on a notional basis under all
such Hedge Agreements.
8.11. SENIOR DEBT. The Borrower will at all times ensure that (a) the
claims of the Lenders in respect of the Obligations of the Borrower will not be
subordinate to, and will in all respects at least rank PARI PASSU with, the
claims of every other senior unsecured creditor of the Borrower, and (b) any
Indebtedness subordinated in any manner to the claims of any other senior
unsecured creditor of the Borrower will be subordinated in like manner to such
claims of the Lenders.
SECTION 9. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that until such time as the
Total Commitment has been terminated, no Notes remain outstanding and the Loans,
together with interest, and Fees hereunder, have been paid in full:
9.1. CHANGES IN BUSINESS. Neither the Borrower nor any of its
Subsidiaries will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Borrower and its Subsidiaries, would be substantially changed from the
general nature of the business engaged in by the Borrower and its Subsidiaries
on the date hereof.
9.2. CONSOLIDATION, MERGER, ACQUISITIONS, ASSET SALES, ETC. The
Borrower will not, and will not permit any Subsidiary to, (1) wind up, liquidate
or dissolve its affairs, (2) enter into any transaction of merger or
consolidation, (3) make or otherwise effect any Acquisition, (4) sell or
otherwise dispose of any of its property or assets outside the ordinary course
of business, or otherwise make or otherwise effect any Asset Sale, or (5) agree
to do any of the foregoing at any future time, EXCEPT that the following shall
be permitted:
(a) CERTAIN INTERCOMPANY MERGERS, ETC. If no Default or Event
of Default shall have occurred and be continuing or would result
therefrom,
(i) the merger, consolidation or amalgamation of any
Subsidiary of the Borrower with or into the Borrower, PROVIDED
the Borrower is the surviving or continuing or resulting
corporation;
(ii) the merger, consolidation or amalgamation of any
Subsidiary of the Borrower with or into another Subsidiary of
the Borrower, PROVIDED that the surviving or continuing or
resulting corporation is a Wholly-Owned Subsidiary of the
Borrower;
(iii) the liquidation, winding up or dissolution of
any Subsidiary of the Borrower; and
(iv) the transfer or other disposition of any
property by the Borrower to any Wholly- Owned Subsidiary or by
any Subsidiary to the Borrower or any other Wholly-Owned
Subsidiary of the Borrower;
shall each be permitted, if after giving effect thereto at least
66+2/3% of the Consolidated Total Assets of the Borrower are owned
directly by the Borrower and not indirectly through Subsidiaries.
(b) OTHER MERGERS, ETC. INVOLVING THE BORROWER. The Borrower
may consolidate or merge with any other corporation, or sell, transfer
or otherwise dispose of all or substantially all of the property and
assets of the Borrower and its Subsidiaries to any person, if (i) the
surviving, continuing or resulting corporation of such merger or
consolidation (if other than the Borrower) or the acquiring person is a
corporation, limited liability company or partnership organized under
the laws of the District of Columbia or one of the States of the United
States and unconditionally assumes the obligations of the Borrower
under the Credit Documents pursuant to an assumption agreement in form
and substance reasonably satisfactory
43
<PAGE> 49
to the Required Lenders, (ii) no Event of Default has occurred and is
continuing or would result therefrom, (iii) no Change of Control would
be occasioned thereby; and (iv) if any such merger or consolidation is
entered into for the purpose of effecting an Acquisition, such
Acquisition is permitted by section 9.2(c).
(c) ACQUISITIONS. If no Default or Event of Default shall have
occurred and be continuing or would result therefrom, the Borrower or
any Subsidiary may make any Acquisition which is a Permitted
Acquisition, PROVIDED that all of the conditions contained in the
definition of the term Permitted Acquisition are satisfied.
(d) PERMITTED DISPOSITIONS. If no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any of its Subsidiaries may (i) sell any property, land or
building (including any related receivables or other intangible assets)
to any person which is not a Subsidiary of the Borrower, or (ii) sell
the entire capital stock (or other equity interests) and Indebtedness
of any Subsidiary owned by the Borrower or any other Subsidiary to any
person which is not a Subsidiary of the Borrower, or (iii) permit any
Subsidiary to be merged or consolidated with a person which is not an
Affiliate of the Borrower, or (iv) consummate any other Asset Sale with
a person who is not a Subsidiary of the Borrower; PROVIDED that:
(A) the consideration for such transaction represents
fair value (as determined by management of the Borrower), and
at least 75% of such consideration consists of cash,
(B) in the case of any such transaction involving
consideration in excess of $10,000,000, at least five Business
Days prior to the date of completion of such transaction the
Borrower shall have delivered to the Administrative Agent an
officer's certificate executed on behalf of the Borrower by an
Authorized Officer of the Borrower, which certificate shall
contain (1) a description of the proposed transaction, the
date such transaction is scheduled to be consummated, the
estimated purchase price or other consideration for such
transaction, (2) a certification that no Default or Event of
Default has occurred and is continuing, or would result from
consummation of such transaction, and (3) which shall (if
requested by the Administrative Agent) include a certified
copy of the draft or definitive documentation pertaining
thereto; and
(C) contemporaneously with the completion of such
transaction the Borrower prepays its Loans as and to the
extent required by section 5.2 hereof; and
PROVIDED, FURTHER, that sales or other dispositions of obsolete, worn
out or surplus equipment or fixtures may be effected at any time in the
ordinary course of business without compliance with the above
provisions and the amount of any such sales or other dispositions shall
be excluded from any computations under this section 9.2(d).
(e) LEASES. The Borrower or any of its Subsidiaries may enter
into leases of property or assets not constituting Acquisitions,
PROVIDED such leases are not otherwise in violation of this Agreement.
(f) CAPITAL EXPENDITURES: The Borrower and it Subsidiaries
shall be permitted to make any Consolidated Capital Expenditures.
(g) PERMITTED INVESTMENTS. The Borrower and it Subsidiaries
shall be permitted to make the investments permitted pursuant to
section 9.5.
9.3. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with or without
recourse to the Borrower or any of its Subsidiaries, other than for purposes of
collection of delinquent accounts in the ordinary course of business) or assign
44
<PAGE> 50
any right to receive income, or file or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute, EXCEPT that the foregoing restrictions shall not
apply to:
(a) STANDARD PERMITTED LIENS: the Standard Permitted Liens;
(b) EXISTING LIENS, ETC.: Liens (i) in existence on the
Effective Date which are listed, and the Indebtedness secured thereby
and the property subject thereto on the Effective Date described, in
Annex IV, or (ii) arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any such Liens, PROVIDED that
the principal amount of such Indebtedness is not increased and such
Indebtedness is not secured by any additional assets; and
(c) PURCHASE MONEY LIENS: Liens (i) which are placed upon
fixed or capital assets, acquired, constructed or improved by the
Borrower or any Subsidiary, PROVIDED that (A) such Liens secure
Indebtedness permitted by section 9.4(c), (B) such Liens and the
Indebtedness secured thereby are incurred prior to or within 180 days
after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 100%
of the cost of acquiring, constructing or improving such fixed or
capital assets; and (D) such Liens shall not apply to any other
property or assets of the Borrower or any Subsidiary; or (ii) arising
out of the refinancing, extension, renewal or refunding of any
Indebtedness secured by any such Liens, PROVIDED that the principal
amount of such Indebtedness is not increased and such Indebtedness is
not secured by any additional assets;
(d) LIENS ON ACQUIRED PROPERTIES: any Lien (i) existing on any
property or asset prior to the acquisition thereof by the Borrower or
any Subsidiary, or existing on any property or asset of any person that
becomes a Subsidiary after the date hereof prior to the time such
person becomes a Subsidiary; PROVIDED that (A) such Lien secures
Indebtedness permitted by section 9.4(c), (B) such Lien is not created
in contemplation of or in connection with such acquisition or such
person becoming a Subsidiary, as the case may be, (C) such Lien shall
not attach or apply to any other property or assets of the Borrower or
any Subsidiary, (D) such Lien shall secure only those obligations which
it secures on the date of such acquisition or the date such person
becomes a Subsidiary, as the case may be; or (ii) arising out of the
refinancing, extension, renewal or refunding of any Indebtedness
secured by any such Liens, PROVIDED that the principal amount of such
Indebtedness is not increased and such Indebtedness is not secured by
any additional assets; and
(e) OTHER LIENS: any other Liens, PROVIDED that the aggregate
amount of Indebtedness secured by such Liens which is outstanding at
any time does not exceed $5,000,000.
9.4. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT:
(a) CREDIT DOCUMENTS: Indebtedness incurred under this
Agreement and the other Credit Documents;
(b) EXISTING INDEBTEDNESS: Existing Indebtedness (including,
without limitation, the Senior Notes); and any refinancing, extension,
renewal or refunding of any such Existing Indebtedness not involving an
increase in the principal amount thereof or a reduction of more than
10% in the remaining weighted average life to maturity thereof
(computed in accordance with standard financial practice); PROVIDED
that any Existing Indebtedness identified in Annex III or referred to
in section 6.1 as being intended to be refinanced by Loans incurred
hereunder may not be otherwise refinanced;
(c) CERTAIN PRIORITY DEBT: to the extent not permitted by the
foregoing clauses,
(i) Indebtedness consisting of Capital Lease
Obligations of the Borrower and its Subsidiaries,
45
<PAGE> 51
(ii) Indebtedness consisting of obligations under
Synthetic Leases of the Borrower and its Subsidiaries,
(iii) Indebtedness secured by a Lien referred to in
section 9.3(c), 9.3(d) or 9.3(e),
(iv) Indebtedness of Subsidiaries of the Borrower
(other than Indebtedness owed to the Borrower or other
Subsidiaries of the Borrower), and
(v) any refinancing, extension, renewal or refunding
of any such Indebtedness not involving an increase in the
principal amount thereof or a reduction of more than 10% in
the remaining weighted average life to maturity thereof
(computed in accordance with standard financial practice),
PROVIDED that (A) at the time of any incurrence thereof after the date
hereof, and after giving effect thereto, the Borrower would be in
compliance with sections 9.7 and 9.8, and no Event of Default shall
have occurred and be continuing or would result therefrom; and (B) the
aggregate outstanding principal amount (using Capitalized Lease
Obligations in lieu of principal amount, in the case of any Capital
Lease, and using the present value, based on the implicit interest
rate, in lieu of principal amount, in the case of any Synthetic Lease)
of Indebtedness permitted by this clause (c), when taken together with
any outstanding Indebtedness permitted by clause (b) above which is
Indebtedness of a Subsidiary of the Borrower, or represented by a
Capital Lease or a Synthetic Lease or which is secured by any Lien,
shall not exceed 15% of the Borrower's Consolidated Net Worth as of the
date of the most recent financial statements for the Borrower referred
to in section 7.8 or section 8.1(a) or (b);
(d) INTERCOMPANY DEBT: the following: (i) unsecured
Indebtedness of the Borrower owed to any of its Subsidiaries, PROVIDED
such Indebtedness constitutes Subordinated Indebtedness; and (ii)
unsecured Indebtedness of any of the Borrower's Subsidiaries to the
Borrower or to another Subsidiary of the Borrower;
(e) HEDGE AGREEMENTS: Indebtedness of the Borrower and its
Subsidiaries under Hedge Agreements;
(f) GUARANTY OBLIGATIONS: any Guaranty Obligations permitted
by section 9.5;
(g) PRIVATE PLACEMENTS: additional unsecured Indebtedness of
the Borrower incurred pursuant to any sale or issuance of debt
securities by the Borrower after the Closing Date in a Rule 144A
offering or private placement with one or more institutional investors
of unsecured debt securities having a weighted average life to maturity
(computed in accordance with standard financial practice) of at least 5
years, without limit as to aggregate principal amount, PROVIDED that at
the time of incurrence thereof, and after giving effect thereto, (i)
the Borrower would be in compliance with sections 9.7 and 9.8; and (ii)
no Event of Default shall have occurred and be continuing or would
result therefrom; and
(h) ADDITIONAL UNSECURED DEBT OF THE BORROWER: additional
unsecured Indebtedness of the Borrower, not in excess of $15,000,000
aggregate principal amount outstanding at any time, PROVIDED that at
the time of incurrence thereof, and after giving effect thereto, (i)
the Borrower would be in compliance with sections 9.7 and 9.8; and (ii)
no Event of Default shall have occurred and be continuing or would
result therefrom.
9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS. The
Borrower will not, and will not permit any of its Subsidiaries to, (1) lend
money or credit or make advances to any person, (2) purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, or other investment in, any person, (3) create, acquire
or hold any Subsidiary, (4) be or become a party to any joint venture, member of
a limited liability company or partner of a partnership, or (5) be or become
obligated under any Guaranty Obligations (other than those created in favor of
the Lenders pursuant to the Credit Documents), EXCEPT:
46
<PAGE> 52
(a) the Borrower or any of its Subsidiaries may invest in cash
and Cash Equivalents;
(b) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal course
of business;
(c) the Borrower and its Subsidiaries may acquire and hold
receivables owing to them in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(d) investments acquired by the Borrower or any of its
Subsidiaries (i) in exchange for any other investment held by the
Borrower or any such Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other investment, or (ii) as a result of a foreclosure by the
Borrower or any of its Subsidiaries with respect to any secured
investment or other transfer of title with respect to any secured
investment in default;
(e) loans and advances to employees for
(i) business-related travel expenses, moving
expenses, costs of replacement homes, business machines or
supplies, automobiles and other similar expenses, in each case
incurred in the ordinary course of business, and
(ii) other purposes up to an aggregate of not more
than $100,000 outstanding at any time;
(f) to the extent not permitted by the foregoing clauses, the
existing loans, advances, investments and guarantees described on Annex
V hereto;
(g) investments of the Borrower and its Subsidiaries in Hedge
Agreements;
(h) existing investments in any Subsidiaries shall be
permitted, as shall the creation and holding of any Wholly-Owned
Subsidiary and any additional investments in any current or future
Wholly- Owned Subsidiary;
(i) intercompany loans and advances permitted by section
9.4(d);
(j) the Acquisitions permitted by section 9.2; and loans,
advances and investments of any person which are outstanding at the
time such person becomes a Subsidiary of the Borrower as a result of an
Acquisition permitted by section 9.2, but not any increase in the
amount thereof;
(k) any unsecured Guaranty Obligation incurred by the Borrower
or any Subsidiary with respect to (i) Indebtedness of a Wholly-Owned
Subsidiary of the Borrower which is permitted under section 9.4 without
restriction upon the ability of the Borrower or any Subsidiary to
guarantee the same, or (ii) other obligations of a Wholly-Owned
Subsidiary of the Borrower which are not prohibited by this Agreement;
(l) any additional unsecured Guaranty Obligations of the
Borrower, PROVIDED that at the time of incurrence thereof, and after
giving effect thereto, (i) the Borrower would be in compliance with
sections 9.7 and 9.8; (ii) no Event of Default shall have occurred and
be continuing or would result therefrom; and (iii) the aggregate amount
of all Guaranty Obligations of the Borrower and its Subsidiaries in
respect of Indebtedness of persons other than Wholly-Owned Subsidiaries
of the Borrower, is not in excess of $20,000,000; and
(m) any other loans, advances, investments (whether in the
form of cash or contribution of property, and if in the form of a
contribution of property, such property shall be valued for purposes of
this clause at the fair value thereof as reasonably determined by the
Borrower), in or to any corporation, partnership, limited liability
company, joint venture or other business entity, not otherwise
permitted by the foregoing clauses, made after June 30, 1999 (such
loans, advances and investments, collectively, "BASKET
47
<PAGE> 53
INVESTMENTS"), PROVIDED that (i) at the time of making any such Basket
Investment no Event of Default shall have occurred and be continuing,
or would result therefrom, and (ii) the maximum cumulative amount of
Basket Investments which are so made and outstanding at any time,
taking into account the repayment of any loans or advances comprising
such Basket Investments, shall not, when taken together with the
aggregate amount of all Guaranty Obligations of the Borrower and its
Subsidiaries in respect of Indebtedness of persons other than
Wholly-Owned Subsidiaries of the Borrower which are then outstanding,
does not exceed an aggregate of $20,000,000.
9.6. DIVIDENDS, STOCK REPURCHASES, ETC. (a) The Borrower will not
directly or indirectly declare, order, pay or make any dividend (other than
dividends payable solely in capital stock of the Borrower) or other distribution
on or in respect of any capital stock of any class of the Borrower, whether by
reduction of capital or otherwise, EXCEPT that the Borrower may make cash
dividend payments in respect of its capital stock if (i) no Default under
section 10.1(a) or Event of Default shall have occurred and be continuing at the
time of declaration or payment thereof; and (ii) after giving effect thereto the
Borrower will be in compliance, on a PRO FORMA basis, with sections 9.7 and 9.8.
(b) The Borrower will not directly or indirectly make, or permit any of
its Subsidiaries to directly or indirectly make, any purchase, redemption,
retirement or other acquisition of (x) any capital stock of any class of the
Borrower (other than for a consideration consisting solely of capital stock of
the same class of the Borrower), or (y) any warrants, rights or options to
acquire or any securities convertible into or exchangeable for any capital stock
of the Borrower, EXCEPT that the Borrower may make cash payments for such
purposes if (i) no Default under section 10.1(a) or Event of Default shall have
occurred and be continuing at the time of payment; (ii) after giving effect
thereto the Borrower will be in compliance, on a PRO FORMA basis, with sections
9.7 and 9.8; and (iii) at the time of making any such cash payment and after
giving effect thereto, the cumulative aggregate amount so expended for such
purposes subsequent to June 30, 1999 does not exceed $15,000,000.
9.7. RATIO OF CONSOLIDATED TOTAL DEBT TO CONSOLIDATED TOTAL ADJUSTED
CAPITAL. The Borrower will not at any time permit the ratio, expressed as a
percentage, of (x) the amount of its Consolidated Total Debt, to (y) its
Consolidated Total Adjusted Capital, to exceed 60.00%.
9.8. RATIO OF CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA. The
Borrower will not at any time permit the ratio of (x) the amount of its
Consolidated Total Debt at such time to (y) its Consolidated EBITDA for its
Testing Period most recently ended, to exceed (i) 4.50 to 1.00 for its Testing
Period ended September 30, 1999, (ii) 4.00 to 1.00 for its Testing Periods ended
December 31, 1999 and March 31, 2000, (iii) 3.50 to 1.00 for its Testing Periods
ended June 30, 2000 and September 30, 2000, or (iv) 3.00 to 1.00 for any Testing
Period thereafter.
9.9. INTEREST AND RENT COVERAGE RATIO. The Borrower will not permit its
Interest and Rent Coverage Ratio to be less than (i) 1.25 to 1.00 for its
Testing Period ended September 30, 1999, (ii) 1.50 to 1.00 for its Testing
Periods ended December 31, 1999 and March 31, 2000, (iii) 1.60 to 1.00 for its
Testing Periods ended June 30, 2000 and September 30, 2000, or (iv) 1.70 to 1.00
for any Testing Period thereafter.
9.10. PREPAYMENTS AND REFINANCINGS OF OTHER DEBT, ETC. The Borrower
will not, and will not permit any of its Subsidiaries to, make (or give any
notice in respect thereof) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) or exchange of, or refinance or refund, any
Indebtedness of the Borrower or its Subsidiaries having an outstanding principal
balance (or Capitalized Lease Obligation, in the case of a Capital Lease, or
present value, based on the implicit interest rate, in the case of any Synthetic
Lease) in excess of $6,000,000 (other than the Obligations and intercompany
loans and advances among the Borrower and its Subsidiaries); PROVIDED that the
Borrower or any Subsidiary may refinance or refund any such Indebtedness if the
aggregate principal amount thereof (or Capitalized Lease Obligation, in the case
of a Capital Lease, or present value, based on the implicit interest rate, in
the case of any Synthetic Lease) is not increased and the weighted average life
to maturity thereof (computed in accordance with standard financial practice) is
not reduced by more than 10%.
48
<PAGE> 54
9.11. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and
in the case of a Subsidiary, the Borrower or another Subsidiary) other than in
the ordinary course of business of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a person other than an Affiliate,
EXCEPT (i) sales of goods to an Affiliate for use or distribution outside the
United States which in the good faith judgment of the Borrower complies with any
applicable legal requirements of the Code, or (ii) agreements and transactions
with and payments to officers, directors and shareholders which are either (A)
entered into in the ordinary course of business and not prohibited by any of the
provisions of this Agreement, or (B) entered into outside the ordinary course of
business, approved by the directors or shareholders of the Borrower, and not
prohibited by any of the provisions of this Agreement.
9.12. PLAN TERMINATIONS, MINIMUM FUNDING, ETC. The Borrower will not,
and will not permit any ERISA Affiliate to, (i) terminate any Plan or plans so
as to result in liability of the Borrower or any ERISA Affiliate to the PBGC in
excess of, in the aggregate, the amount which is equal to 5% of the Borrower's
Consolidated Net Worth as of the date of the then most recent financial
statements furnished to the Lenders pursuant to the provisions of this
Agreement, (ii) permit to exist one or more events or conditions which
reasonably present a material risk of the termination by the PBGC of any Plan or
Plans with respect to which the Borrower or any ERISA Affiliate would, in the
event of such termination, incur liability to the PBGC in excess of such amount
in the aggregate, or (iii) fail to comply in any material respect with the
minimum funding standards of ERISA and the Code with respect to any Plan.
SECTION 10. EVENTS OF DEFAULT.
10.1. EVENTS OF DEFAULT. Any of the following specified events (each an
"EVENT OF DEFAULT") shall constitute an Event of Default hereunder:
(a) PAYMENTS: the Borrower shall (i) default in the payment
when due of any principal of the Loans; or (ii) default, and such
default shall continue for five or more days, in the payment when due
of any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document; or
(b) REPRESENTATIONS, ETC.: any representation, warranty or
statement made by the Borrower herein or in any other Credit Document
or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
(c) CERTAIN COVENANTS: the Borrower shall default in the due
performance or observance by it of any term, covenant or agreement
contained in section 8.1(f)(i), or sections 9.2 through 9.10,
inclusive, of this Agreement; or
(d) OTHER COVENANTS: the Borrower shall default in the due
performance or observance by it of any term, covenant or agreement
contained in this Agreement or any other Credit Document, other than
those referred to in section 10.1(a) or (b) or (c) above, and such
default is not remedied within 30 days after the earlier of (i) an
officer of the Borrower obtaining actual knowledge of such default and
(ii) the Borrower receiving written notice of such default from the
Administrative Agent or the Required Lenders (any such notice to be
identified as a "notice of default " and to refer specifically to this
paragraph); or
(e) CROSS DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any
of its Subsidiaries shall (i) default in any payment with respect to
any Indebtedness (other than the Obligations) owed to any Lender or any
of its Affiliates, or having an unpaid principal amount of $5,000,000
or greater, and such default shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to
such Indebtedness, or (ii) default in the observance or performance of
any agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or
relating
49
<PAGE> 55
thereto (and all grace periods applicable to such observance,
performance or condition shall have expired), or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness to become due prior to its
stated maturity; or any such Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or shall be
required to be prepaid (other than by a regularly scheduled required
prepayment or redemption, prior to the stated maturity thereof); or
(f) JUDGMENTS: one or more judgments or decrees shall be
entered against the Borrower and/or any of its Subsidiaries involving a
liability (other than a liability covered by insurance, as to which the
carrier has adequate claims paying ability and has not denied coverage)
equal to or more than 5% of the Borrower's Consolidated Total Assets as
of the end of its most recent fiscal year (in the aggregate for all
such judgments and decrees for the Borrower and its Subsidiaries) and
any such judgments or decrees shall not have been vacated, discharged
or stayed or bonded pending appeal within 30 days (or such longer
period, not in excess of 60 days, during which enforcement thereof, and
the filing of any judgment lien, is effectively stayed or prohibited)
from the entry thereof; or
(g) BANKRUPTCY, ETC.: the Borrower or any of its Material
Subsidiaries shall commence a voluntary case concerning itself under
Title 11 of the United States Code entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE");
or an involuntary case is commenced against the Borrower or any of its
Material Subsidiaries and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Material Subsidiaries; or the Borrower or
any of its Material Subsidiaries commences (including by way of
applying for or consenting to the appointment of, or the taking of
possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "CONSERVATOR") of itself or
all or any substantial portion of its property) any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency, liquidation, rehabilitation,
conservatorship or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or any of its Material
Subsidiaries; or any such proceeding is commenced against the Borrower
or any of its Material Subsidiaries to the extent such proceeding is
consented to by such person or remains undismissed for a period of 60
days; or the Borrower or any of its Material Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Borrower
or any of its Material Subsidiaries suffers any appointment of any
conservator or the like for it or any substantial part of its property
which continues undischarged or unstayed for a period of 60 days; or
the Borrower or any of its Material Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate (or similar
organizational) action is taken by the Borrower or any of its Material
Subsidiaries for the purpose of effecting any of the foregoing; or
(h) ERISA: (i) any of the events described in clauses (i)
through (viii) of section 8.1(g) shall have occurred; or (ii) there
shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk
of incurring a liability; and (iii) any such event or events or any
such lien, security interest or liability, individually, and/or in the
aggregate, has had, or could reasonably be expected to have, a Material
Adverse Effect.
10.2. ACCELERATION, ETC. Upon the occurrence and during the continuance
of any Event of Default, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower
(PROVIDED that, if an Event of Default specified in section 10.1(g) shall occur
with respect to the Borrower, the result which would occur upon the giving of
written notice by the Administrative Agent as specified in clauses (i) and (ii)
below shall occur automatically without the giving of any such notice): (i)
declare the Total Commitment terminated, whereupon the Commitment of each Lender
shall forthwith terminate immediately without any other notice of any kind;
and/or (ii) declare the principal of and any accrued interest in respect of all
Loans, and all other Obligations owing hereunder and under the other Credit
Documents to be,
50
<PAGE> 56
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
10.3. APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the
Administrative Agent or any Lender from the exercise of remedies hereunder or
under the other Credit Documents or under any other documents relating to this
Agreement shall, unless otherwise required by the terms of the other Credit
Documents or by applicable law, be applied as follows:
(1) FIRST, to the payment of all expenses (to the extent not
paid by the Borrower) incurred by the Administrative Agent and the
Lenders in connection with the exercise of such remedies, including,
without limitation, all reasonable costs and expenses of collection,
attorneys' fees, court costs and any foreclosure expenses;
(2) SECOND, to the payment PRO RATA of interest then accrued
on the outstanding Loans;
(3) THIRD, to the payment PRO RATA of any fees then accrued
and payable to the Administrative Agent or any Lender under this
Agreement;
(4) FOURTH, to the payment PRO RATA of the principal balance
then owing on the outstanding Loans;
(5) FIFTH, to the payment PRO RATA of all other amounts owed
by the Borrower to the Administrative Agent or any Lender under this
Agreement or any other Credit Document; and
(6) FINALLY, any remaining surplus after all of the
Obligations have been paid in full, to the Borrower or to whomsoever
shall be lawfully entitled thereto.
SECTION 11. THE ADMINISTRATIVE AGENT.
11.1. APPOINTMENT. Each Lender hereby irrevocably designates and
appoints NCB as Administrative Agent to act as specified herein and in the other
Credit Documents, and each such Lender hereby irrevocably authorizes NCB as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
The Administrative Agent agrees to act as such upon the express conditions
contained in this section 11. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Credit Documents, nor any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this section 11 are solely for the benefit of the
Administrative Agent, and the Lenders, and the Borrower and its Subsidiaries
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, the
Administrative Agent shall act solely as agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation or relationship of
agency or trust with or for the Borrower or any of its Subsidiaries.
11.2. DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by section 11.3.
11.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such person under or in connection with this Agreement (except
for its or such person's own
51
<PAGE> 57
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by the Borrower or of its Subsidiaries or any of their respective officers
contained in this Agreement, any other Credit Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Credit Document or for any failure of the Borrower or any Subsidiary of
the Borrower or any of their respective officers to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries. The Administrative Agent shall not be responsible to any
Lender for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Credit Document or for
any representations, warranties, recitals or statements made herein or therein
or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished or made by the Administrative Agent
to the Lenders or by or on behalf of the Borrower or any of its Subsidiaries to
the Administrative Agent or any Lender or be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Default
or Event of Default.
11.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or conversation believed by it, in good faith, to be genuine and
correct and to have been signed, sent or made by the proper person or persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrower or any of its Subsidiaries), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Credit Documents in accordance with a request of the Required Lenders (or
all of the Lenders, as to any matter which, pursuant to section 12.12, can only
be effectuated with the consent of all Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders.
11.5. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders, PROVIDED that unless and until the
Administrative Agent shall have received such directions, the Administrative
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 Lenders.
11.6. NON-RELIANCE. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such
52
<PAGE> 58
investigation as it deems necessary to inform itself as to the business, assets,
operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries. The Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, assets, property,
financial and other conditions, prospects or creditworthiness of the Borrower or
any of its Subsidiaries which may come into the possession of the Administrative
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
11.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective General Revolving Loans and Unutilized General Revolving Commitments,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Obligations) be imposed on,
incurred by or asserted against the Administrative Agent in its capacity as such
in any way relating to or arising out of this Agreement or any other Credit
Document, or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted to be taken by
the Administrative Agent under or in connection with any of the foregoing, but
only to the extent that any of the foregoing is not paid by the Borrower,
PROVIDED that no Lender shall be liable to the Administrative Agent for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting solely from the Administrative Agent's gross negligence or
willful misconduct. If any indemnity furnished to the Administrative Agent for
any purpose shall, in the opinion of the Administrative Agent, be insufficient
or become impaired, the Administrative Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished. The agreements in this section 11.7 shall
survive the payment of all Obligations.
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its Subsidiaries
and their Affiliates as though not acting as Administrative Agent hereunder.
With respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
11.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as the Administrative Agent upon not less than 20 Business Days' notice
to the Lenders and the Borrower. The Administrative Agent may be removed as the
Administrative Agent for cause upon not less than 20 Business Days' notice to
the Administrative Agent and the Borrower from the Required Lenders. The
Required Lenders shall appoint from among the Lenders a successor Administrative
Agent for the Lenders, subject to prior approval by the Borrower if no Event of
Default has occurred and is continuing (such approval not to be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall include such successor agent effective upon its
appointment, and the resigning or removed Administrative Agent's rights, powers
and duties as the Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement. After the retiring or removed Administrative
Agent's resignation or removal hereunder as the Administrative Agent, the
provisions of this section 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.
11.10. OTHER AGENTS. Any Lender identified herein as a Co-Agent,
Syndication Agent, Documentation Agent, Managing Agent, Manager or any other
corresponding title, other than "Administrative Agent", shall have no right,
power, obligation, liability, responsibility or duty under this Agreement or any
other Credit Document except those applicable to all Lenders as such. Each
Lender acknowledges that it has not relied, and will not rely, on any Lender so
identified in deciding to enter into this Agreement or in taking or not taking
any action hereunder.
SECTION 12. MISCELLANEOUS.
12.1. PAYMENT OF EXPENSES ETC. (a) Whether or not the transactions
contemplated hereby are consummated, the Borrower agrees to pay (or reimburse
the Administrative Agent for) all reasonable out-of-pocket
53
<PAGE> 59
costs and expenses of the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein, including, without limitation,
the reasonable fees and disbursements of Jones, Day, Reavis & Pogue, special
counsel to the Administrative Agent.
(b) The Borrower agrees to pay (or reimburse the Administrative Agent
for) all reasonable out-of-pocket costs and expenses of the Administrative Agent
in connection with any amendment, waiver or consent relating to any of the
Credit Documents which is requested by the Borrower, including, without
limitation, the reasonable fees and disbursements of Jones, Day, Reavis & Pogue,
special counsel to the Administrative Agent.
(c) The Borrower agrees to pay (or reimburse the Administrative Agent,
the Lenders and their Affiliates for) all reasonable out-of-pocket costs and
expenses of the Administrative Agent and the Lenders in connection with the
enforcement against the Borrower of any of the Credit Documents or the other
documents and instruments referred to therein, including, without limitation,
(i) the reasonable fees and disbursements of Jones, Day, Reavis & Pogue, special
counsel to the Administrative Agent, and (ii) the reasonable fees and
disbursements of any individual counsel to any Lender (including allocated costs
of internal counsel).
(d) The Borrower agrees to pay and hold the Administrative Agent and
each of the Lenders harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and save the
Administrative Agent and each of the Lenders harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to any such indemnified person) to pay such
taxes.
(e) The Borrower agrees to indemnify the Administrative Agent, each
Lender, and their respective officers, directors, trustees, employees,
representatives, agents and Affiliates, and the successors and assigns of any of
the foregoing (collectively, the "INDEMNITIES") from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
reasonably incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of
(i) any investigation, litigation or other proceeding (whether
or not the Administrative Agent or any Lender is a party thereto)
related to the entering into and/or performance of any Credit Document
or the use of the proceeds of any Loans hereunder or the consummation
of any transactions contemplated in any Credit Document, other than any
such investigation, litigation or proceeding arising out of
transactions solely between any of the Lenders or the Administrative
Agent, transactions solely involving the assignment by a Lender of all
or a portion of its Loans and Commitments, or the granting of
participations therein, as provided in this Agreement, or arising
solely out of any examination of a Lender by any regulatory or other
governmental authority having jurisdiction over it, or
(ii) the actual or alleged presence of Hazardous Materials in
the air, surface water or groundwater or on the surface or subsurface
of any Real Property owned, leased or at any time operated by the
Borrower or any of its past or then current Subsidiaries or Affiliates
or any of their predecessors in interest, the release, generation,
storage, transportation, handling or disposal of Hazardous Materials at
any location, whether or not owned or operated by the Borrower or any
of its past or current Subsidiaries or any of their respective
Affiliates or any of their predecessors in interest, if the Borrower or
any such Subsidiary or Affiliate could have or is alleged to have any
responsibility in respect thereof, the non-compliance of any such Real
Property with foreign, federal, state and local laws, regulations and
ordinances (including applicable permits thereunder) applicable
thereto, or any Environmental Claim asserted against the Borrower or
any of its Subsidiaries or any of their respective Affiliates, in
respect of any such Real Property,
including, in each case, without limitation, the reasonable documented fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the person to be indemnified or of any other
Indemnitee who is such person or an Affiliate of such person). To the extent
that the undertaking to indemnify, pay or hold harmless any person set forth in
the preceding sentence may be
54
<PAGE> 60
unenforceable because it is violative of any law or public policy, the Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the indemnified liabilities which is permissible under applicable law.
12.2. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Lender and each of its Affiliates is hereby authorized at any time
or from time to time, without presentment, demand, protest or other notice of
any kind to the Borrower or to any other person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Lender or Affiliate (including, without limitation, by branches and
agencies of such Lender or Affiliate wherever located) to or for the credit or
the account of the Borrower against and on account of the Obligations and
liabilities of the Borrower to such Lender under this Agreement or under any of
the other Credit Documents, including, without limitation, all interests in
Obligations of the Borrower purchased by such Lender pursuant to section
12.4(b), and all other claims of any nature or description arising out of or
connected with this Agreement or any other Credit Document, irrespective of
whether or not such Lender shall have made any demand hereunder and although
said Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
12.3. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission, e-mail transmission or
cable communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Borrower, at 20005 Lake Road, Rocky River, Ohio 44116,
attention: R. Breck Denny, Vice President & Chief Financial Officer (facsimile:
(440) 333-7789); if to any Lender at its address specified for such Lender on
Annex I hereto; if to the Administrative Agent, at its Notice Office; or at such
other address as shall be designated by any party in a written notice to the
other parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, telecopied, transmitted or cabled or sent by overnight
courier, and shall be effective when received.
12.4. BENEFIT OF AGREEMENT. (A) SUCCESSORS AND ASSIGNS GENERALLY. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns, PROVIDED that
the Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of all the Lenders (other than any
Defaulting Lender), and, PROVIDED, FURTHER, that any assignment by a Lender of
its rights and obligations hereunder shall be effected in accordance with
section 12.4(c).
(b) PARTICIPATIONS. Notwithstanding the foregoing, each Lender may at
any time grant participations in any of its rights hereunder or under any of the
Notes to (x) an Affiliate of such Lender which is a commercial bank, financial
institution or other "accredited investor" (as defined in SEC Regulation D), (y)
another Lender that is not a Defaulting Lender, or (z) one or more Eligible
Transferees, PROVIDED that in the case of any such participation,
(i) the participant shall not have any rights under this
Agreement or any of the other Credit Documents, including rights of
consent, approval or waiver (the participant's rights against such
Lender in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the participant relating
thereto),
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment hereunder) shall remain
unchanged,
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations,
(iv) such Lender shall remain the holder of any Note for all
purposes of this Agreement, and
(v) the Borrower, the Administrative Agent, and the other
Lenders shall continue to deal solely and directly with the selling
Lender in connection with such Lender's rights and obligations under
this Agreement, and all amounts payable by the Borrower hereunder shall
be determined as if such Lender had not sold such participation, except
that the participant shall be entitled to the benefits of sections 2.10
and
55
<PAGE> 61
2.11 of this Agreement to the extent that such Lender would be entitled
to such benefits if the participation had not been entered into or
sold,
and, PROVIDED FURTHER, that no Lender shall transfer, grant or sell any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (x) extend any interim or final date
on or by which any Loan in which such participant is participating may be
incurred, or on which any such Loan is scheduled to be repaid, prepaid or
mature, or extend any interim or final date on which any Commitment in which
such participant is participating is scheduled to expire or terminate, or reduce
the rate or extend the time of payment of interest or Fees thereon (except in
connection with a waiver of the applicability of any post-default increase in
interest rates), or reduce the principal amount thereof, or increase such
participant's participating interest in any Commitment over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of
Default shall not constitute a change in the terms of any such Commitment), or
(y) consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement.
(C) ASSIGNMENTS BY LENDERS. Notwithstanding the foregoing, (x) any
Lender may assign all or a fixed portion of its Loans and/or Commitment, and its
rights and obligations hereunder, to another Lender that is not a Defaulting
Lender, or to an Affiliate of any Lender (including itself) which is not a
Defaulting Lender and which is a commercial bank, financial institution or other
"accredited investor" (as defined in SEC Regulation D), and (y) any Lender may
assign all, or if less than all, a fixed portion, equal to at least $10,000,000
in the aggregate for the assigning Lender or assigning Lenders, of its Loans
and/or Commitment and its rights and obligations hereunder, to one or more
Eligible Transferees, each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment Agreement, PROVIDED that
(i) in the case of any assignment of a portion of any Loans
and/or Commitment of a Lender, such Lender shall retain a minimum fixed
portion of all Loans and Commitments equal to at least $10,000,000,
(ii) the Swing Line Lender may only assign its Swing Line
Revolving Commitment and its Swing Line Revolving Loans as an entirety
and only if the assignee thereof is or becomes a Lender with a General
Revolving Commitment,
(iii) at the time of any such assignment the Lender Register
shall be deemed modified to reflect the Commitments of such new Lender
and of the existing Lenders,
(iv) upon surrender of the old Notes, new Notes will be issued
to such new Lender and to the assigning Lender, such new Notes to be in
conformity with the requirements of section 2.5 (with appropriate
modifications) to the extent needed to reflect the revised Commitments,
(v) in the case of clause (y) only, the consent of the
Administrative Agent shall be required in connection with any such
assignment (which consent shall not be unreasonably withheld or
delayed), and
(vi) the Administrative Agent shall receive at the time of
each such assignment, from the assigning or assignee Lender, the
payment of a non-refundable assignment fee of $5,000,
and, PROVIDED FURTHER, that such transfer or assignment will not be effective
until the Assignment Agreement in respect thereof is recorded by the
Administrative Agent on the Lender Register maintained by it as provided herein.
To the extent of any assignment pursuant to this section 12.4(c) the
assigning Lender shall be relieved of its obligations hereunder with respect to
its assigned Commitments.
At the time of each assignment pursuant to this section 12.4(c) to a
person which is not already a Lender hereunder and which is not a United States
person (as such term is defined in section 7701(a)(30) of the Code) for Federal
income tax purposes, the respective assignee Lender shall provide to the
Borrower and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable a Section 5.4(b)(ii) Certificate) described
56
<PAGE> 62
in section 5.4(b). To the extent that an assignment of all or any portion of a
Lender's Commitment and related outstanding Obligations pursuant to this section
12.4(c) would, at the time of such assignment, result in increased costs under
section 2.10 from those being charged by the respective assigning Lender prior
to such assignment, then the Borrower shall not be obligated to pay such
increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type referred to above in this sentence resulting from
changes after the date of the respective assignment).
Nothing in this section 12.4(c) shall prevent or prohibit (i) any
Lender which is a bank, trust company or other financial institution from
pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank, or (ii) any Lender which is
a trust, limited liability company, partnership or other investment company from
pledging its Notes or Loans to a trustee or agent for the benefit of holders of
certificates or debt securities issued by it. No such pledge, or any assignment
pursuant to or in lieu of an enforcement of such a pledge, shall relieve the
transferor Lender from its obligations hereunder.
(D) NO SEC REGISTRATION OR BLUE SKY COMPLIANCE. Notwithstanding any
other provisions of this section 12.4, no transfer or assignment of the
interests or obligations of any Lender hereunder or any grant of participation
therein shall be permitted if such transfer, assignment or grant would require
the Borrower to file a registration statement with the SEC or to qualify the
Loans under the "Blue Sky" laws of any State.
(E) REPRESENTATIONS OF LENDERS. Each Lender initially party to this
Agreement hereby represents, and each person that became a Lender pursuant to an
assignment permitted by this section 12.4 will, upon its becoming party to this
Agreement, represent that it is a commercial lender, other financial institution
or other "accredited" investor (as defined in SEC Regulation D) which makes or
acquires loans in the ordinary course of its business and that it will make or
acquire Loans for its own account in the ordinary course of such business,
PROVIDED that subject to the preceding sections 12.4(b) and (c), the disposition
of any promissory notes or other evidences of or interests in Indebtedness held
by such Lender shall at all times be within its exclusive control.
(F) GRANTS BY LENDERS TO SPCS. Notwithstanding anything to the contrary
contained herein, any Lender, (a "GRANTING LENDER") may grant to a special
purpose funding vehicle (an "SPC"), identified as such in writing from time to
time by the Granting Lender to the Administrative Agent, the Borrower and the
other Lenders, the option to provide to the Borrower all or any part of any Loan
that such Granting Lender would otherwise be obligated to make to the Borrower
pursuant to this Agreement; PROVIDED that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan, and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for
any indemnity or payment under this Agreement for which a Lender would otherwise
be liable for so long as, and to the extent, the Granting Lender provides such
indemnity or makes such payment. In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this section 12.4, any SPC may (i) with notice to, but without the prior
written consent of, the Borrower and the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions providing
liquidity and/or credit support to or for the account of such SPC to support the
funding or maintenance of Loans and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancements to such SPC. This section 12.4(f) may not be amended without the
written consent of any Granting Lender affected thereby.
12.5. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Administrative Agent or any Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit
57
<PAGE> 63
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Administrative Agent or any Lender would otherwise have. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or any Lender to
any other or further action in any circumstances without notice or demand.
12.6. PAYMENTS PRO RATA. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations, it shall distribute such payment to the Lenders
(other than any Lender that has expressly waived in writing its right to receive
its PRO RATA share thereof) PRO RATA based upon their respective shares, if any,
of the Obligations with respect to which such payment was received. As to any
such payment received by the Administrative Agent prior to 1:00 P.M. (local time
at its Payment Office) in funds which are immediately available on such day, the
Administrative Agent will use all reasonable efforts to distribute such payment
in immediately available funds on the same day to the Lenders as aforesaid.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount, PROVIDED that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding sections 12.6(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Lenders which are not Defaulting Lenders, as opposed to
Defaulting Lenders.
12.7. CALCULATIONS: COMPUTATIONS. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders); PROVIDED, that if at any time the computations
determining compliance with section 9 utilize accounting principles different
from those utilized in the financial statements furnished to the Lenders, such
computations shall set forth in reasonable detail a description of the
differences and the effect upon such computations.
(b) All computations of interest on Eurodollar Loans hereunder
hereunder shall be made on the actual number of days elapsed over a year of 360
days, and all computations of Facility Fees and interest on Prime Rate Loans
hereunder shall be made on the actual number of days elapsed over a year of 365
or 366 days, as the case may be.
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO. TO THE FULLEST
EXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE
OF OHIO GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the Courts of the State of Ohio, or of the United States for
the Northern District of Ohio, and, by execution and delivery of this Agreement,
the Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower hereby further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies
58
<PAGE> 64
thereof by registered or certified mail, postage prepaid, to the Borrower at its
address for notices pursuant to section 12.3, such service to become effective
30 days after such mailing or at such earlier time as may be provided under
applicable law. Nothing herein shall affect the right of the Administrative
Agent or any Lender to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in section 12.8(a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS
(INCLUDING, WITHOUT LIMITATION, ANY AMENDMENTS, WAIVERS OR OTHER MODIFICATIONS
RELATING TO ANY OF THE FOREGOING), OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS PARAGRAPH.
12.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
12.10. EFFECTIVENESS; INTEGRATION. This Agreement shall become
effective on the date (the "EFFECTIVE DATE") on which the Borrower and each of
the Lenders shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Administrative Agent at the
Notice Office of the Administrative Agent or, in the case of the Lenders, shall
have given to the Administrative Agent telephonic (confirmed in writing),
written telex or facsimile transmission notice (actually received) at such
office that the same has been signed and mailed or sent by overnight courier to
it. This Agreement, the other Credit Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent, for its own
account and benefit and/or for the account, benefit of, and distribution to, the
Lenders, constitute the entire contract among the parties relating to the
subject matter hereof and thereof and supersede any and all previous agreements
and understandings, oral or written, relating to the subject matter hereof or
thereof.
12.11. HEADINGS DESCRIPTIVE. The headings of the several sections and
other portions of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
12.12. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof
or thereof may be amended, waived or otherwise modified UNLESS such amendment,
waiver or other modification is in writing and signed by the Borrower and the
Required Lenders, PROVIDED that no such amendment, waiver or other modification
shall, without the consent of each Lender (other than a Defaulting Lender)
affected thereby,
(a) extend any interim or final date on or by which any Loan
to be made by such Lender may be incurred, or on which any such Loan is
scheduled to be repaid, prepaid or mature, or extend any interim or
final date on which any Commitment of such Lender is scheduled to
expire or terminate, or reduce the rate or extend the time of payment
of interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or
reduce the principal amount thereof, or increase any Commitment of such
Lender over the amount thereof then in effect,
59
<PAGE> 65
(b) change the definition of the term "Change of Control" or
any of the provisions of section 4.2 or 5.2 which are applicable upon a
Change of Control,
(c) change the definition of the term "Permitted Acquisition"
or any of the provisions of section 9.2(c) which are applicable to
Permitted Acquisitions which would have the effect of depriving such
Lender of its rights with respect to "hostile acquisitions" as
contemplated by such definition,
(d) amend, modify or waive any provision of this section
12.12, or section 11.7, 12.1, 12.4, 12.6 or 12.7(b), or any other
provision of any of the Credit Documents pursuant to which the consent
or approval of all Lenders is by the terms of such provision explicitly
required,
(e) reduce the percentage specified in, or otherwise modify,
the definition of Required Lenders, or
(f) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement.
No provision of section 11 may be amended without the consent of the
Administrative Agent.
12.13. SURVIVAL. All indemnities set forth herein including, without
limitation, in section 2.10, 2.11, 11.7 and 12.1, shall survive the execution
and delivery of this Agreement and the making, prepayment and repayment of
Loans.
12.14. DOMICILE OF LOANS. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender, PROVIDED that no Borrower shall be responsible for costs arising under
section 2.10 resulting from any such transfer (other than a transfer pursuant to
section 2.12) to the extent not otherwise applicable to such Lender prior to
such transfer.
12.15. CONFIDENTIALITY. (a) The Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Confidential Information (as
defined below), EXCEPT that Confidential Information may be disclosed (1) to its
and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
persons to whom such disclosure is made will be informed of the confidential
nature of such Confidential Information and instructed to keep such Confidential
Information confidential), (2) to the extent requested by any regulatory
authority, (3) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (4) to any other party to this Agreement,
(5) in connection with the exercise of any remedies hereunder or under any of
the other Credit Documents, or any suit, action or proceeding relating to this
Agreement or any of the other Credit Documents or the enforcement of rights
hereunder or thereunder, (6) subject to an agreement containing provisions
substantially the same as those of this section 12.15, to any assignee of or
participant in, or any prospective assignee of or participant in, any of its
rights or obligations under this Agreement, (7) with the consent of the
Borrower, or (8) to the extent such Confidential Information (i) becomes
publicly available other than as a result of a breach of this section 12.15, or
(ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower. If the
Administrative Agent or any Lender receives a subpoena, or request for
information, relating to any Confidential Information, in connection with any
proceeding involving the Borrower or any of its Subsidiaries which the
Administrative Agent or such Lender, as applicable, knows is pending or
threatened, the Administrative Agent or such Lender, as applicable, shall use
reasonable efforts to notify the Borrower thereof in writing prior to any
disclosure by it of such Confidential Information in response to such subpoena
or request.
(b) For the purposes of this section 12.15, "CONFIDENTIAL INFORMATION"
means all information received from the Borrower relating to the Borrower and/or
its Subsidiaries or their business, other than any such information that is (i)
identified at the time of delivery as non-confidential, or (ii) available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower.
(c) Any person required to maintain the confidentiality of Confidential
Information as provided in this section 12.15 shall be considered to have
complied with its obligation to do so if such person has exercised the same
60
<PAGE> 66
degree of care to maintain the confidentiality of such Confidential Information
as such person would accord to its own confidential information. The Borrower
hereby agrees that the failure of the Administrative Agent or any Lender to
comply with the provisions of this section 12.15 shall not relieve the Borrower
of any of its obligations under this Agreement or any of the other Credit
Documents.
12.16. LENDER REGISTER. The Borrower hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this section
12.16, to retain a copy of each Assignment Agreement delivered to and accepted
by it and to maintain a register (the "LENDER REGISTER") on or in which it will
record the names and addresses of the Lenders, and the Commitments from time to
time of each of such Lenders to the Borrower, the Loans made to the Borrower by
each of such Lenders and each repayment and prepayment in respect of the
principal amount of such Loans of each such Lender. Failure to make any such
recordation, or (absent manifest error) any error in such recordation, shall not
affect the Borrower's obligations in respect of such Loans. With respect to any
Lender, the transfer of any Commitment of such Lender and the rights to the
principal of, and interest on, any Loan made pursuant to such Commitment shall
not be effective until such transfer is recorded on the Lender Register
maintained by the Administrative Agent with respect to ownership of such
Commitment and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitment and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitment and Loans shall be recorded by the Administrative Agent on the Lender
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment Agreement pursuant to section 12.4(c). The
Borrower agrees to indemnify the Administrative Agent from and against any and
all losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by the Administrative Agent in
performing its duties under this section 12.16. The Lender Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
12.17. GENERAL LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any Lender or the Administrative Agent or any other person against the
Administrative Agent or any other Lender or the Affiliates, directors, officers,
employees, attorneys or agents of any of them, for any damages other than actual
compensatory damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contemplated
by this Agreement or any of the other Credit Documents, or any act, omission or
event occurring in connection therewith; and the Borrower, each Lender and the
Administrative Agent hereby, to the fullest extent permitted under applicable
law, waives, releases and agrees not to sue or counterclaim upon any such claim
for any special, consequential or punitive damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
12.18. NO DUTY. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Credit Documents
shall have the right to act exclusively in the interest of the Administrative
Agent or such Lender, as the case may be, and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, to any of its Subsidiaries or Affiliates, or to any
other person, with respect to any matters within the scope of such
representation or related to their activities in connection with such
representation. The Borrower agrees, on behalf of itself and its Subsidiaries,
not to assert any claim or counterclaim against any such persons with regard to
such matters, all such claims and counterclaims, now existing or hereafter
arising, whether known or unknown, foreseen or unforeseeable, being hereby
waived, released and forever discharged.
12.19. LENDERS AND AGENTS NOT FIDUCIARY TO BORROWER, ETC. The
relationship among the Borrower and its Subsidiaries and Affiliates, on the one
hand, and the Administrative Agent and the Lenders, on the other hand, is solely
that of debtor and creditor, and the Administrative Agent and the Lenders have
no fiduciary or other special relationship with the Borrower and/or any of its
Subsidiaries and Affiliates, and no term or provision of any Credit Document, no
course of dealing, no written or oral communication, or other action, shall be
construed so as to deem such relationship to be other than that of debtor and
creditor.
12.20. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties herein shall survive the making of Loans hereunder, the execution
and delivery of this Agreement, the Notes and any other documents the forms of
which are attached as Exhibits hereto, the issue and delivery of the Notes, any
disposition
61
<PAGE> 67
thereof by any holder thereof, and any investigation made by the Administrative
Agent or any Lender or any other holder of any of the Notes or on its behalf.
All statements contained in any certificate or other document delivered to the
Administrative Agent or any Lender or any holder of any Notes by or on behalf of
the Borrower or any of its Subsidiaries or Affiliates pursuant hereto or
otherwise specifically for use in connection with the transactions contemplated
hereby shall constitute representations and warranties by the Borrower
hereunder, made as of the respective dates specified therein or, if no date is
specified, as of the respective dates furnished to the Administrative Agent or
any Lender.
12.21. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action, event, condition or
circumstance is not permitted by any of such covenants, the fact that it would
be permitted by an exception to, or would otherwise be within the limitations or
restrictions of, another covenant, shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or event, condition or
circumstance exists.
[The balance of this page is intentionally blank.]
62
<PAGE> 68
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
<TABLE>
<CAPTION>
<S> <C>
LESCO, INC. NATIONAL CITY BANK,
individually as a Lender and the Swing Line
Lender and as Administrative Agent
BY: /s/ R. BRECK DENNY
----------------------------------
R. BRECK DENNY, VICE PRESIDENT
& CHIEF FINANCIAL OFFICER By: /s/ Robert S. Coleman
-----------------------------------
Robert S. Coleman, Vice President
BANK ONE, MICHIGAN PNC BANK, NATIONAL ASSOCIATION
By: /s/ Babette Casey Coerdt By: /s/ Jefferson M. Green
-------------------------------------- -----------------------------------
Babette Casey Coerdt, Vice President Jefferson M. Green, Vice President
</TABLE>
63
<PAGE> 69
ANNEX I
INFORMATION AS TO LENDERS
<TABLE>
<CAPTION>
===============================================================================================================
NAME OF
LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
===============================================================================================================
<S> <C> <C> <C>
National City National City Bank National City Bank
Bank GENERAL 1900 East Ninth Street 1900 East Ninth Street
REVOLVING Cleveland, Ohio 44114 Cleveland, Ohio 44114
COMMITMENT:
PRIMARY CONTACT:
$30,000,000 Robert S. Coleman
Vice President
SWING LINE Telephone: (216) 575-9714
REVOLVING Facsimile: (216) 222-0003
COMMITMENT:
CONTACT FOR BORROWINGS, PAYMENTS,
$10,000,000 ETC.:
Connie B. Djukic
Money Desk Officer
Telephone: (216) 575-2578
Facsimile: (216) 575-2481
WIRING INFORMATION:
ABA No. 041 000 124
A/C #
Ref.: LESCO, Inc.
Attention: Commercial Loan
Operations Large Corporate
Processing
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 70
<TABLE>
<CAPTION>
===============================================================================================================
NAME OF
LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
===============================================================================================================
<S> <C> <C> <C>
Bank One, Bank One, Michigan Bank One, Michigan
Michigan GENERAL 611 Woodward Avenue 611 Woodward Avenue
REVOLVING Detroit, Michigan 48226 Detroit, Michigan 48226
COMMITMENT:
PRIMARY CONTACTS:
$15,000,000 Babette Coerdt
Vice President
Telephone: (216) 781-2226
Facsimile: (216) 348-6642
Sommer Gillow
Credit Underwriter
Telephone: (313) 225-1783
Facsimile: (313) 225-1671
CONTACT FOR BORROWINGS, PAYMENTS,
ETC.:
Karen Graham
Telephone: (313) 225-2911
Facsimile: (313) 225-2747
WIRING INFORMATION:
ABA No. 072 000 326
A/C # 2891000007
Ref.: LESCO, Inc.
Attention: L S Z Incoming
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 71
<TABLE>
<CAPTION>
===============================================================================================================
NAME OF
LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
===============================================================================================================
<S> <C> <C> <C>
PNC Bank, PNC Bank, National Association PNC Bank, National
National GENERAL 249 Fifth Avenue Association
Association REVOLVING P2-PTPP-03-1 249 Fifth Avenue
COMMITMENT: Pittsburgh, Pennsylvania 15222 P2-PTPP-03-1
Pittsburgh, Pennsylvania
$15,000,000 PRIMARY CONTACTS: 15222
Jeff Green
Vice President
PNC Bank, National Association
Suite 1250
1375 East Ninth Street
Cleveland, Ohio 44114
Telephone: (216) 348-8560
Facsimile: (216) 348-8594
CONTACT FOR BORROWINGS, PAYMENTS,
ETC.:
Peggy Collier
Telephone: (412) 762-7946
Facsimile: (412) 762-4586
WIRING INFORMATION:
ABA No. 043 000 096
A/C # N/A
Ref.: LESCO, Inc.
Attention: Commercial Loan
Operations
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 72
ANNEX II
INFORMATION AS TO SUBSIDIARIES
<TABLE>
<CAPTION>
===================================================================================================================
PERCENTAGE OF
OUTSTANDING STOCK
NAME OF TYPE OF JURISDICTION OR OTHER EQUITY
SUBSIDIARY ORGANIZATION WHERE INTERESTS OWNED
ORGANIZED (INDICATING WHETHER
OWNED BY THE
BORROWER OR A
SPECIFIED SUBSIDIARY)
===================================================================================================================
<S> <C> <C> <C>
Tri-Delta Fertilizer, Inc.(1) corp. California 100% by the Borrower
- -------------------------------------------------------------------------------------------------------------------
LESCO Service Centers, Inc. corp. Ohio 100% by the Borrower
- -------------------------------------------------------------------------------------------------------------------
LESCO International, Inc. corp. Ohio 100% by the Borrower
- -------------------------------------------------------------------------------------------------------------------
AIM Lawn & Garden Products, Inc. corp. Ohio 100% by the Borrower
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
</TABLE>
- --------
(1) Tri-Delta Fertilizer, Inc. is scheduled to merge into LESCO, Inc. during the
third or fourth quarter 1999.
<PAGE> 73
ANNEX III
DESCRIPTION OF EXISTING INDEBTEDNESS
(as of September 1, 1999)
<TABLE>
<CAPTION>
================================================================================================================
LENDER DESCRIPTION OF DEBT SECURED ASSETS AMOUNT
================================================================================================================
<S> <C> <C> <C>
National City Bank Credit Agreement, dated as None $34,500,000
Bank One, Michigan of September 30, 1994, as
PNC Bank, National Association amended
- ----------------------------------------------------------------------------------------------------------------
Canada Life Insurance Company; Note Purchase Agreement None $50,000,000
Pacific Life Insurance Company; dated as of June 15, 1998
Provident Mutual Life Insurance
Company; Provident Mutual Life &
Annuity Company of America;
Phoenix American Life Insurance
Company; The Travelers Insurance
Company
- ----------------------------------------------------------------------------------------------------------------
Loan Agreement/ Reimbursement Industrial Development Bond Martins Ferry, $5,875,000
Agreement--County of Belmont, dated January 1, 1988 Ohio Facility
Ohio / PNC Bank, National
Association
- ----------------------------------------------------------------------------------------------------------------
Director of Development, State of Development Loan dated Martins Ferry, $453,771
Ohio January 28, 1988 Ohio Facility
- ----------------------------------------------------------------------------------------------------------------
TOTAL LESCO $90,828,771
Debt outstanding -----------
at September 1,
1999
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
COMMERCIAL TURF PRODUCTS, LTD. GUARANTEES
<TABLE>
<CAPTION>
================================================================================================================
LENDER DESCRIPTION OF DEBT SECURED ASSETS AMOUNT
================================================================================================================
<S> <C> <C> <C>
National City Bank Industrial Revenue Bond Streetsboro, Ohio $4,508,685
Facility
- ----------------------------------------------------------------------------------------------------------------
National City Bank Line of Credit Streetsboro, Ohio $3,000,000
Facility
- ----------------------------------------------------------------------------------------------------------------
National City Bank Lease Line Streetsboro, Ohio $1,500,000
Facility
- ----------------------------------------------------------------------------------------------------------------
TOTAL LESCO $99,837,456
Debt and ==========
Guarantees
outstanding at
September 1, 1999
================================================================================================================
</TABLE>
<PAGE> 74
ANNEX IV
DESCRIPTION OF EXISTING LIENS
(AS OF SEPTEMBER 1, 1999)
Liens securing the debt described in Annex III.
<PAGE> 75
ANNEX V
DESCRIPTION OF EXISTING ADVANCES, LOANS, INVESTMENTS AND GUARANTEES
(AS OF SEPTEMBER 1, 1999)
================================================================================
COMPANY DESCRIPTION AMOUNT
================================================================================
Commercial Turf Products, LTD. Equity $700,000
- --------------------------------------------------------------------------------
Commercial Turf Products, LTD. Loan $3,100,000
- --------------------------------------------------------------------------------
Commercial Turf Products, LTD. Loan Guarantees $9,008,685
- --------------------------------------------------------------------------------
Southern Golf Products, Inc. Advance $344,500
- --------------------------------------------------------------------------------
Philip R. Gardner Employee Advance $89,630
================================================================================
<PAGE> 76
EXHIBIT A-1
GENERAL REVOLVING NOTE
$_______________ Cleveland, Ohio
_________, 1999
FOR VALUE RECEIVED, the undersigned LESCO, INC., an Ohio corporation
(herein, together with its successors and assigns, the "BORROWER"), hereby
promises to pay to the order of _________________________ (the "LENDER"), in
lawful money of the United States of America in immediately available funds, at
the Payment Office (such term and certain other terms used herein without
definition shall have the meanings ascribed thereto in the Credit Agreement
referred to below) of National City Bank (the "ADMINISTRATIVE AGENT"), on the
Maturity Date, the principal sum of ________________ DOLLARS AND NO CENTS ($ )
or, if less, the then unpaid principal amount of all General Revolving Loans
made by the Lender to the Borrower pursuant to the Credit Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount of each General Revolving Loan made by the Lender to the Borrower in like
money at said office from the date hereof until paid at the rates and at the
times provided in section 2.8 of the Agreement.
This Note is one of the General Revolving Notes referred to in the
Credit Agreement, dated as of September 23, 1999, among the Borrower, the
financial institutions from time to time party thereto (including the Lender),
and National City Bank, as Administrative Agent (as from time to time in effect,
the "CREDIT AGREEMENT"), and is entitled to the benefits thereof and of the
other Credit Documents (as defined in the Credit Agreement). As provided in the
Credit Agreement, this Note is subject to mandatory prepayment prior to the
Maturity Date, in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may be declared to be due and
payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note. No failure to exercise, or delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of any such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF OHIO.
LESCO, Inc.
By: ________________________________
Vice President &
Chief Financial Officer
<PAGE> 77
LOANS AND PAYMENTS OF PRINCIPAL
================================================================================
AMOUNT
OF
DATE AMOUNT TYPE PRINCIPAL UNPAID
OF OF OF INTEREST PAID OR PRINCIPAL MADE
NOTATION LOAN LOAN PERIOD PREPAID BALANCE BY
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 78
EXHIBIT A-2
SWING LINE REVOLVING NOTE
$________________ Cleveland, Ohio
_________, 1999
FOR VALUE RECEIVED, the undersigned LESCO, INC., an Ohio corporation
(herein, together with its successors and assigns, the "BORROWER"), hereby
promises to pay to the order of _________________________ (the "LENDER"), in
lawful money of the United States of America in immediately available funds, at
the Payment Office (such term and certain other terms used herein without
definition shall have the meanings ascribed thereto in the Credit Agreement
referred to below) of National City Bank (the "ADMINISTRATIVE AGENT"), the
principal sum of ________________ DOLLARS AND NO CENTS ($____ ) or, if less, the
then unpaid principal amount of all Swing Line Revolving Loans made by the
Lender to the Borrower pursuant to the Credit Agreement. The Borrower will pay
the principal amount of any Swing Line Revolving Loan on the maturity date
specified therefor in the Notice of Borrowing relating thereto, which maturity
date shall in no event be more than 15 days following the date such Swing Line
Revolving Loan was made.
The Borrower promises also to pay interest on the unpaid principal
amount of each Swing Line Revolving Loan made by the Lender in like money at
said office from the date hereof until paid at the rates and at the times
provided in section 2.8 of the Credit Agreement.
This Note is the Swing Line Revolving Note referred to in the Credit
Agreement, dated as of September 23, 1999, among the Borrower, the financial
institutions from time to time party thereto (including the Lender), and
National City Bank, as Administrative Agent (as from time to time in effect, the
"CREDIT AGREEMENT"), and is entitled to the benefits thereof and of the other
Credit Documents (as defined in the Credit Agreement). As provided in the
Agreement, this Note is subject to mandatory prepayment prior to the maturity
date of any Swing Line Revolving Loan, in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may be declared to be due and
payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note. No failure to exercise, or delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of any such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF OHIO.
LESCO, Inc.
By: ________________________________
Vice President &
Chief Financial Officer
<PAGE> 79
LOANS AND PAYMENTS OF PRINCIPAL
================================================================================
TYPE AMOUNT
OF OF
DATE AMOUNT LOAN/ PRINCIPAL UNPAID
OF OF OR PAID OR PRINCIPAL MADE
NOTATION LOAN INTEREST MATURITY PREPAID BALANCE BY
RATE
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 80
EXHIBIT B-1
NOTICE OF BORROWING AND/OR PAYMENT
[Date]
VIA FACSIMILE TO (216) 575-2481
Money Desk-Agency Services
National City Bank,
as Administrative Agent
RE: NOTICE OF BORROWING AND/OR PAYMENT
UNDER CREDIT AGREEMENT
--------------------------------------
Ladies and Gentlemen:
The undersigned, LESCO, Inc. (the "BORROWER"), refers to the Credit
Agreement, dated as of September 23, 1999 (as amended from time to time, the
"CREDIT AGREEMENT", the terms defined therein being used herein as therein
defined), among the Borrower, the financial institutions from time to time party
thereto (the "LENDERS"), and National City Bank, as Administrative Agent for
such Lenders.
[FOR A BORROWING]
The Borrower hereby gives you notice, irrevocably, pursuant to section
2.3(a) of the Credit Agreement, that the undersigned hereby requests a Borrowing
under the Credit Agreement (the "PROPOSED BORROWING") on _____,1999, as follows:
(a) $_____ aggregate principal amount of General Revolving
Loans [with an Interest Period of _____ months] [which will be Prime
Rate Loans]; and/or
(b) a Swing Line Revolving Loan of $_____ which will be a
[Prime Rate Loan ] [Money Market Rate Loan with an interest rate of
____% and a maturity of ___days].
The Borrower hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing after
giving effect thereto: (i) no Default or Event of Default has occurred and is
continuing; and (ii) all representations and warranties of the Borrower
contained in the Credit Agreement or in the other Credit Documents are true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of such date, except to
the extent that such representations and warranties expressly relate to an
earlier specified date, in which case such representations and warranties were
true and correct in all material respects as of the date when made.
[FOR A PAYMENT]
The Borrower will make a principal payment of $_____ on ______, 1999 on
the following Loan or Loans:________.
Very truly yours,
LESCO, Inc.
By: _________________________________
Title:
<PAGE> 81
EXHIBIT B-2
NOTICE OF CONVERSION
[Date]
National City Bank,
as Administrative Agent for the Lenders party
to the Credit Agreement referred to below
1900 East Ninth Street
Cleveland, Ohio 44114
RE: NOTICE OF CONVERSION
OF OUTSTANDING GENERAL REVOLVING LOANS
UNDER THE CREDIT AGREEMENT
-----------------------------------------
Ladies and Gentlemen:
The undersigned, LESCO, Inc. (the "BORROWER"), refers to the Credit
Agreement, dated as of September 23, 1999 (as amended from time to time, the
"CREDIT AGREEMENT", the terms defined therein being used herein as therein
defined), among the Borrower, the financial institutions from time to time party
thereto (the "LENDERS"), and National City Bank, as Administrative Agent for
such Lenders, and hereby gives you notice, irrevocably, pursuant to section 2.7
of the Credit Agreement, that the undersigned hereby requests one or more
Conversions of General Revolving Loans of one Type into General Revolving Loans
of another Type, pursuant to section 2.7 of the Credit Agreement, and in that
connection sets forth in the schedule attached hereto the information relating
to each such Conversion.
Very truly yours,
LESCO, Inc.
By: __________________________________
Title:
<PAGE> 82
CONVERSION SCHEDULE
PROPOSED CONVERSION #1
[OF THE LOANS DESCRIBED IN THE FIRST TABLE BELOW
INTO LOANS DESCRIBED IN THE SECOND TABLE BELOW]
<TABLE>
<CAPTION>
===============================================================================================
INTEREST PERIOD
AGGREGATE AMOUNT IF LOANS ARE
DATE OF LOANS TYPE OF LOANS OF LOANS EURODOLLAR LOANS
===============================================================================================
<S> <C> <C> <C>
One Month
__________, 19____ Prime Rate Loans
$____________________ Two Months
Eurodollar Loans
Three Months
Six Months
[Circle One of
Above]
[Circle one of
above]
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================================
INTEREST PERIOD
AGGREGATE AMOUNT IF LOANS ARE
DATE OF LOANS TYPE OF LOANS OF LOANS EURODOLLAR LOANS
=======================================================================================================
<S> <C> <C> <C>
One Month
__________, 19____ Prime Rate Loans
$____________________ Two Months
Eurodollar Loans
Three Months
Six Months
[Circle One of
Above] [Circle one of
above]
======================================================================================================
</TABLE>
<PAGE> 83
PROPOSED CONVERSION #2
[OF THE LOANS DESCRIBED IN THE FIRST TABLE BELOW
INTO LOANS DESCRIBED IN THE SECOND TABLE BELOW]
<TABLE>
<CAPTION>
========================================================================================================
INTEREST PERIOD
AGGREGATE AMOUNT IF LOANS ARE
DATE OF LOANS TYPE OF LOANS OF LOANS EURODOLLAR LOANS
========================================================================================================
<S> <C> <C> <C>
One Month
__________, 19____ Prime Rate Loans
$____________________ Two Months
Eurodollar Loans
Three Months
Six Months
[Circle One of
Above] [Circle one of
above]
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================
INTEREST PERIOD
AGGREGATE AMOUNT IF LOANS ARE
DATE OF LOANS TYPE OF LOANS OF LOANS EURODOLLAR LOANS
========================================================================================================
<S> <C> <C> <C>
One Month
__________, 19____ Prime Rate Loans
$____________________ Two Months
Eurodollar Loans
Three Months
Six Months
[Circle One of
Above] [Circle one of
above]
========================================================================================================
</TABLE>
2
<PAGE> 84
EXHIBIT C
----------------------------
FORM OF
CORPORATE CERTIFICATE
----------------------------
<PAGE> 85
OFFICER'S CERTIFICATE
LESCO, INC.
The undersigned, R. Breck Denny, hereby certifies that:
1. He is the duly elected and acting Vice President and Chief Financial
Officer of LESCO, Inc., an Ohio corporation (the "COMPANY").
2. Attached hereto as EXHIBIT A is a true, correct and complete copy of
the Articles of Incorporation of the Company, together with all amendments
thereto (the "ARTICLES"), which Articles are in full force and effect and in
such form as of the date hereof.
3. Attached hereto as EXHIBIT B is a true, correct and complete copy of
the Code of Regulations of the Company, together with all amendments thereto
(the "CODE"), which Code is in full force and effect and in such form as of the
date hereof.
4. Attached hereto as EXHIBIT C is a true, correct and complete copy of
certain resolutions duly adopted by the Board of Directors of the Company,
authorizing the Company to enter into revolving loan transactions with National
City Bank and other lenders, which resolutions have not been amended, modified,
supplemented or rescinded since their adoption and remain in full force and
effect. Such resolutions are the only resolutions adopted by the Company
relating to the matters set forth therein.
5. Each of the officers of the Company whose name and signature appear
below is a duly elected or appointed, qualified and acting officer of the
Company, holding the office or offices of the Company set forth opposite his
name, and the signature set forth opposite his name is his own genuine
signature:
Name Title Signature
---- ----- ---------
William A. Foley President and Chief Executive
Officer ____________________
R. Breck Denny Vice President and Chief Financial
Officer ____________________
Kenneth W. Didion Treasurer ____________________
Patricia W. Pribisko Vice President, General Counsel
and Secretary ____________________
6. The representations and warranties of the Company contained in
section 7 of the Credit Agreement are true and correct in all material respects
on the date hereof; and all obligations and conditions under the Credit
Agreement, that are to be performed by the Company prior to the date hereof,
have been performed by the Company in all material respects at or prior to the
date hereof.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate in the name and on behalf of the Company, as of September ___, 1999.
---------------------------
R. Breck Denny
<PAGE> 86
The undersigned, Patricia W. Pribisko, hereby certifies that she is the
duly elected and acting Vice President, General Counsel and Secretary of the
Company and that R. Breck Denny is the duly elected and acting Vice President
and Chief Financial Officer of the Company, that he is authorized on the
Company's behalf to deliver the foregoing certificate and that his signature
above is his genuine signature.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate in the name and on behalf of the Company as of September ___, 1999.
-------------------------------
Patricia W. Pribisko
2
<PAGE> 87
EXHIBIT D
FORM OF OPINION OF SPECIAL COUNSEL TO THE BORROWER
________ __, 1999
To the Administrative Agent and
each of the Lenders (as defined
below) party to the Credit Agreement
referred to below
c/o National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
RE: $60,000,000 CREDIT AGREEMENT,
DATED AS OF SEPTEMBER 23, 1999,
WITH LESCO, INC.
---------------------------------
Ladies and Gentlemen:
We have acted as special counsel to LESCO, Inc., an Ohio corporation
(the "BORROWER"), in connection with the execution and delivery of the Credit
Agreement, dated as of September 23, 1999 (the "CREDIT AGREEMENT"), among the
Borrower, the financial institutions that are parties thereto as lenders (the
"LENDERS"), and National City Bank, as a Lender, the Swing Line Lender (the
"SWING LINE LENDER") and the Administrative Agent (the "ADMINISTRATIVE AGENT")
and the transactions contemplated thereby. Unless otherwise indicated,
capitalized terms used herein, but not otherwise defined herein, shall have the
respective meanings set forth in the Credit Agreement. This opinion letter is
being furnished at the request of the Borrower pursuant to section 6.1(e) of the
Credit Agreement.
In rendering this opinion, we have examined only the following: (a)
executed counterparts, originals or copies, as the case may be, of the documents
identified on Exhibit A attached hereto; (b) the certificate of certain officers
of the Borrower attached hereto as Exhibit B, certifying as to certain factual
matters (the "OFFICERS' CERTIFICATE"); (c) the documents referred to in clause
(ii) of paragraph 4 below, and (d) such matters of law as we deemed necessary
for purposes of this opinion. Except as expressly referred to in Exhibit A, we
have neither examined nor requested an examination of the indices or records of
any governmental or other agency, authority, instrumentality or entity for
purposes of this opinion.
We have, with your consent, relied as to matters of fact upon the
representations and warranties contained in the Credit Documents (as defined in
Exhibit A attached hereto) and upon the Officers' Certificate. In all instances
where any opinion herein is qualified "to our knowledge" or "known to us," we
have, with your consent, relied as to matters of fact solely on the Officers'
Certificate and on the absence of contrary knowledge by the attorneys of our
firm who have given substantive attention to the transactions contemplated by
the Credit Agreement, and we have not made (nor do we acknowledge any duty to
make) any independent or other investigation with respect thereto.
In rendering the opinions set forth herein, we have assumed (there
being no facts known to us to the contrary), with your approval, that (i) the
signatures of all parties (other than the Borrower with respect to the Credit
Documents) on all documents examined by us are genuine, (ii) all documents
submitted to us as originals are authentic, (iii) all documents submitted to us
as copies conform to the originals, and (iv) natural persons signing the
documents examined by us at the time of such signing were fully competent and
had full legal capacity to sign,
<PAGE> 88
deliver and perform their obligations under such documents. We have also
assumed, with your approval, the due authorization, execution and delivery of
the Credit Documents on the part of the Lenders, the Swing Line Lender and the
Administrative Agent and the legality, validity, binding effect on, and
enforceability of the Credit Documents against those persons.
In connection with these opinions, we do not purport to be qualified to
express legal conclusions based on the laws of any state or jurisdiction other
than the laws of the State of Ohio and the United States of America, and
accordingly, we express no opinion as to the laws of any other state or
jurisdiction.
Based upon the foregoing and subject to the qualifications, assumptions
and limitations contained in this opinion letter, we are of the opinion that:
1. The Borrower is a corporation validly existing and in good
standing under the laws of the State of Ohio.
2. To our knowledge, Annex II to the Credit Agreement
correctly sets forth each Subsidiary of the Borrower
3. The Borrower has all requisite corporate power and
authority to execute and deliver the Credit Documents and to perform
its obligations under the Credit Documents. The execution and delivery
of, and performance by the Borrower of its obligations under, the
Credit Documents have been duly and validly authorized by all necessary
corporate action on the part of the Borrower. Each of the Credit
Documents has been duly executed and delivered by the Borrower and
constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.
4. The execution and delivery by the Borrower of the Credit
Documents and the performance by the Borrower of its obligations under
the Credit Documents do not contravene (a) any existing law or
regulation of general applicability of the State of Ohio or the United
States of America, or (b) assuming that the proceeds of the Loans are
utilized by the Borrower solely for the purposes permitted under
section 7.7 of the Credit Agreement, Regulations T, U and X of the
Board of Governors of the Federal Reserve System; and do not violate
any provision of (i) the Articles of Incorporation or Code of
Regulations of the Borrower, as now in effect, or (ii) to our
knowledge, (A) any order, writ, injunction, decree or demand of any
court or governmental authority binding upon the Borrower or (B) any
provision of any agreement or instrument binding on the Borrower that
has been filed by the Borrower with the Securities and Exchange
Commission pursuant to Item 601 of Regulation S-K, and that relates to
indebtedness for borrowed money (except that we express no opinion with
respect to compliance with financial tests or covenants or similar
provisions applicable to the Borrower or any of its Subsidiaries or
both).
5. Other than with respect to any filings contemplated by the
Credit Documents, no consent, approval or authorization of, or
registration or declaration with, any governmental authority of the
State of Ohio or any governmental authority of the United States of
America is required in connection with the Borrower's execution and
delivery of the Credit Documents.
6. Neither the Borrower nor any of its Subsidiaries is an
"investment company" as that term is defined in section 3(a)(1) of the
Investment Company Act of 1940, as amended, or a "holding company" as
such term is defined in the Public Utility Holding Company Act of 1935,
as amended.
We hereby confirm that to our knowledge, there are no actions, suits or
proceedings pending or threatened against the Borrower or any of its
Subsidiaries which, if determined adversely to the Borrower, would have a
material adverse effect on, or which contests, the validity or enforceability of
any of the Credit Documents or of any action to be taken by the Borrower
pursuant to any of the Credit Documents.
Despite any other express or implied statement in this letter, each of
the opinions expressed in this letter is subject to the following further
qualifications, whether or not such opinions refer to such qualifications:
2
<PAGE> 89
(i) The opinions expressed herein may be limited by: (a)
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
or similar federal or state laws or judicial decisions of general
application relating to the rights of creditors; (b) as to rights of
acceleration, the appointment of a receiver, specific performance and
other remedies, by general principles of equity, including the defenses
of unconscionability, ambiguity, and economic duress, whether asserted
in equitable or in legal actions; and (c) general principles of
interpretation and rules of construction of contracts.
(ii) Certain of the remedial provisions contained in the
Credit Documents may be limited or rendered unenforceable under Ohio
law in whole or in part. For example: (a) certain indemnification
provisions and provisions for the recovery of legal fees and expenses
in connection with the enforcement of such remedies may not be
enforceable; (b) provisions resulting in a waiver of certain rights by
the Borrower may be limited by legal and equitable principles and
public policy at the time in effect; and (c) the availability of
specific performance, injunctive relief or other equitable remedies and
the appointment of a receiver are subject to the discretion of the
court before which any proceeding therefor may be brought.
(iii) We express no opinion as to whether a court would limit
the exercise or enforcement of rights or remedies under the Credit
Documents (a) in the event of any default by any person under the
Credit Documents or any related agreement or instrument if it is
determined that such default is not material or if such exercise or
enforcement is not reasonably necessary for a creditor's protection,
and (b) if the exercise or enforcement thereof under the circumstances
would violate an implied covenant of good faith and fair dealing.
(iv) We wish to advise you that we do not express any opinion
with respect to (a) the power or authority of any of the Lenders or the
Swing Line Lender to make the Loans pursuant to the Credit Agreement,
(b) compliance by the Administrative Agent, the Swing Line Lender or
any of the Lenders with any federal or state banking law, rule,
regulation or restriction or (c) compliance by the Administrative
Agent, the Swing Line Lender or any of the Lenders with any federal or
state law, rule, regulation or restriction which is or was required to
be complied with by the Administrative Agent, the Swing Line Lender or
any of the Lenders (as opposed to compliance therewith by the Borrower)
in order to enforce any rights of the Administrative Agent or any of
the Lenders under any of the Credit Documents.
This opinion letter is being furnished only to the addressees and is
solely for their benefit and the benefit of their participants and assigns in
connection with the transactions contemplated by the Credit Documents. This
opinion letter may not otherwise be disclosed or be relied upon for any other
purpose, or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent. The opinions expressed in this
letter are made only as of the date hereof and cannot be relied upon with
respect to events which occur subsequent to the issuance of this letter. We
assume no obligation to advise you of any changes in the foregoing subsequent to
the delivery of this letter. The opinions in this letter are limited to the
matters set forth in this letter, and no other opinion should be inferred beyond
the matters expressly stated. The opinion is not to be quoted in whole or in
part or otherwise referred to, nor is it to be filed with any governmental
agencies or any person without our prior written consent, except as may be
required by applicable law or by order of any governmental authority.
Very truly yours,
3
<PAGE> 90
EXHIBIT A
1. An executed counterpart of the Credit Agreement.
2. General Revolving Note, dated as of September 23, 1999, executed by the
Borrower to Bank One, Michigan, in the original principal amount of
$15,000,000.
3. General Revolving Note, dated as of September 23, 1999, executed by the
Borrower to PNC Bank, National Association, in the original principal
amount of $15,000,000.
4. General Revolving Note, dated as of September 23, 1999, executed by the
Borrower to National City Bank in the original principal amount of
$30,000,000.
5. Swing Line Revolving Note, dated as of September 23, 1999, executed by
the Borrower to National City Bank in the original principal amount of
$10,000,000.
6. The Amended Articles of Incorporation of the Borrower, certified by the
Secretary of State of the State of Ohio on September 9, 1999.
7. The Amended Code of Regulations of the Borrower, certified by the Vice
President and Chief Financial Officer of the Borrower.
8. Certificate of Good Standing of the Borrower, dated September 9, 1999,
certified by the Secretary of State of the State of Ohio.
9. Resolutions of the Board of Directors of the Borrower, approving the
execution and delivery by the Borrower of the Credit Agreement and the
instruments and agreements related thereto, and as certified by the
Secretary of the Borrower.
Items 1 through 5, inclusive, are collectively referred to as the
"CREDIT DOCUMENTS".
<PAGE> 91
EXHIBIT B
CERTIFICATE OF OFFICERS
TO
BAKER & HOSTETLER LLP
This Certificate is delivered to Baker & Hostetler LLP by the
undersigned, Kenneth W. Didion, the Treasurer of LESCO, Inc., an Ohio
corporation (the "COMPANY"), and Patricia W. Pribisko, the Secretary of the
Company. This Certificate will be relied upon by Baker & Hostetler LLP for the
accuracy and completeness of the facts set forth herein, in rendering legal
opinions to be delivered in connection with the Credit Agreement, dated as of
September 23, 1999 (the "CREDIT AGREEMENT"), among the Borrower, the financial
institutions that are a party thereto as lenders (the "LENDERS"), and National
City Bank, as a Lender, the Swing Line Lender and the Administrative Agent (the
"ADMINISTRATIVE AGENT").
Terms not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement.
The undersigned hereby certify to Baker & Hostetler LLP that as of the
date hereof:
1. All certificates being delivered by or on behalf of the Company to
the Administrative Agent pursuant to the Credit Documents (as defined on
Schedule I hereto) at the closing under the Credit Documents are true and
accurate in all respects.
2. The representations and warranties of the Company set forth in the
Credit Documents are true and accurate in all respects.
3. Accurate copies of all proceedings of the Board of Directors of the
Company have been made available to Baker & Hostetler LLP.
4. Annex II to the Credit Agreement correctly sets forth each
Subsidiary of the Borrower and the direct and indirect ownership interest of the
Borrower therein.
5. The execution and delivery by the Borrower of the Credit Documents
and the performance by the Borrower of its obligations under the Credit
Documents do not violate any provision of any order, writ, injunction, decree or
demand of any court or governmental authority binding upon the Borrower or any
of its Subsidiaries or any provision of any agreement or instrument binding upon
the Borrower or any of its Subsidiaries.
6. The Company has no knowledge, notice or belief that the execution
and delivery by the Company of the Credit Documents and the performance by the
Borrower of its obligations under the Credit Documents will violate, or with or
without the giving of notice or the passage of time, or both, violate, conflict
with or result in a default of right to accelerate or loss of rights under (a)
any material mortgage, deed of trust, lease, license or agreement material to
the Company's business or filed by the Company with the Securities and Exchange
Commission pursuant to Item 601 of Regulation S-K that relate to indebtedness
for borrowed money; or (b) any order, judgment or decree to which the Company is
a party or by which the Company is bound.
7. There are no actions, suits or proceedings pending or threatened
against the Borrower or any of its Subsidiaries which, if determined adversely
to the Borrower, would have a material adverse effect on, or which contests, the
validity or enforceability of any of the Credit Documents or of any action to be
taken by the Borrower pursuant to any of the Credit Documents.
8. The Borrower has received no notice that the Borrower is not in
compliance with applicable statutes, laws, orders, permits, authorizations and
the like.
<PAGE> 92
9. The Company is not engaged primarily in, does not hold itself out as
being engaged primarily in, and does not propose to engage primarily in, the
business of investing, reinvesting or trading in securities. 2
10. The Company does not engage in, or propose to engage in, the
business of issuing "face amount certificates of the installment type"
(collectively, "face-amount certificates"). A face-amount certificate means any
security 3 which represents the Company's obligation to pay a stated or
determinable sum at a fixed or determinable date or dates in consideration of
the payment to the Company of periodic installments of a stated or determinable
amount or any other security which represents a similar obligation. The Company
does not have any face-amount certificates outstanding.
11. The Company does not engage in or propose to engage in the business
of investing, reinvesting, owning, holding or trading in securities(4), and does
not own or propose to own any "investment securities"(5) having a value in
excess of 40% of the value of the Company's total assets (exclusive of
Government Securities and cash) on an unconsolidated basis.
12. The Company currently is engaged in, and intends to continue to
engage in, the business of directly owning real estate (owning the fee interests
in real estate, as opposed to owning securities(6) of an entity which owns the
fee interests in real estate) or leasehold interests in real estate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- -----------------------------
(2) "Securities" are defined as "any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable
share, investment contract, voting-trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option or privilege on
any security (including a certificate of deposit) or on any group or
index of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option or privilege entered
into on a national securities exchange relating to foreign currency,
or, in general, any interest or instrument commonly known as a
"security," or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of, or
warrant or right to subscribe to or purchase, any of the foregoing.
(3) See definition of "Securities" in prior footnote.
(4) See definition of "Securities" in prior footnote.
(5) "Investment securities" are generally defined as any securities* other
than securities issued or guaranteed by the U.S. Government or its
agencies and instrumentalities (collectively, "Government Securities")
and securities of majority-owned subsidiaries. A majority-owned
subsidiary of a person is an entity 50% or more of the outstanding
VOTING SECURITIES of which is owned by such person.
(6) See definition of "Securities" in prior footnote.
2
<PAGE> 93
Executed and delivered to Baker & Hostetler LLP as of September ___,
1999.
---------------------------------------
Kenneth W. Didion, Treasurer
---------------------------------------
Patricia W. Pribisko, Vice President,
General Counsel and Secretary
3
<PAGE> 94
SCHEDULE I
1. An executed counterpart of the Credit Agreement.
2. General Revolving Note, dated as of September 23, 1999, executed by the
Borrower to Bank One, Michigan, in the original principal amount of
$15,000,000.
3. General Revolving Note, dated as of September 23, 1999, executed by the
Borrower to PNC Bank, National Association, in the original principal
amount of $15,000,000.
4. General Revolving Note, dated as of September 23, 1999, executed by the
Borrower to National City Bank in the original principal amount of
$30,000,000.
5. Swing Line Revolving Note, dated as of September 23, 1999, executed by
the Borrower to National City Bank in the original principal amount of
$10,000,000.
6. The Amended Articles of Incorporation of the Borrower, certified by the
Secretary of State of the State of Ohio on September 9, 1999.
7. The Amended Code of Regulations of the Borrower, certified by the Vice
President and Chief Financial Officer of the Borrower.
8. Certificate of Good Standing of the Borrower, dated September 9, 1999,
certified by the Secretary of State of the State of Ohio.
9. Resolutions of the Board of Directors of the Borrower, approving the
execution and delivery by the Borrower of the Credit Agreement and the
instruments and agreements related thereto, and as certified by the
Secretary of the Borrower.
Items 1 through 5, inclusive, are collectively referred to as the
"CREDIT DOCUMENTS" .
<PAGE> 95
EXHIBIT E
----------------------------
FORM OF
ASSIGNMENT AGREEMENT
----------------------------
<PAGE> 96
ASSIGNMENT AGREEMENT
DATE:_____________
Reference is made to the Credit Agreement described in Item 2 of Annex
I annexed hereto (as such Credit Agreement may hereafter be amended, modified or
supplemented from time to time, the "CREDIT AGREEMENT"). Unless defined in Annex
I attached hereto, terms defined in the Credit Agreement are used herein as
therein defined.
_____________ (the "ASSIGNOR") and ______________ (the "ASSIGNEE")
hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I (the "ASSIGNED SHARE") of all of
Assignor's outstanding rights and obligations under the Credit Agreement
indicated in Item 4 of Annex I, including, without limitation, all rights and
obligations with respect to the Assigned Share of the Assignor's Commitment and
of the Loans and the Notes held by the Assignor. After giving effect to such
sale and assignment, the Assignee's Commitment will be as set forth in Item 4 of
Annex I.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder, that such
interest is free and clear of any liens or security interests, and that it is
duly authorized to enter into and perform the terms of this Assignment
Agreement; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the other Credit Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or the other Credit Documents or any other
instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any of its Subsidiaries or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or the other Credit Documents or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is duly authorized
to enter into and perform the terms of this Assignment Agreement; (ii) confirms
that it has received a copy of the Credit Agreement and the other Credit
Documents, together with copies of the financial statements referred to therein,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment Agreement;
(iii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iv) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Credit Documents as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; [and] (v) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender[; and (vi) to the extent legally
entitled to do so, attaches the forms described in section 5.4(b)(ii) of the
Credit Agreement7.
4. Following the execution of this Assignment Agreement by the Assignor
and the Assignee, an executed original hereof (together with all attachments)
will be delivered to the Administrative Agent. The effective date of this
Assignment Agreement shall be the date of execution hereof by the Assignor, the
Assignee and the consent hereof by the Administrative Agent and the receipt by
the Administrative Agent of the administrative fee
- -------------------------
(7) If the Assignee is organized under the laws of a jurisdiction outside the
United States.
6
<PAGE> 97
referred to in section 12.4(b) of the Credit Agreement, unless otherwise
specified in Item 5 of Annex I hereto (the "SETTLEMENT DATE").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
Agreement, have the rights and obligations of a Lender thereunder and under the
other Credit Documents, and (ii) the Assignor shall, to the extent provided in
this Assignment Agreement, relinquish its rights (except any rights to indemnity
by the Borrower) and be released from its obligations under the Credit Agreement
and the other Credit Documents.
6. It is agreed that upon the effectiveness hereof, the Assignee shall
be entitled to (x) all interest on the Assigned Share of the Loans at the rates
specified in Item 6 of Annex I, and (y) all Facility Fee (if applicable) on the
Assigned Share of the Commitment at the rate specified in Item 7 of Annex I,
which, in each case, accrue on and after the Settlement Date, such interest and,
if applicable, Facility Fees, to be paid by the Administrative Agent, upon
receipt thereof from the Borrower, directly to the Assignee. It is further
agreed that all payments of principal made by the Borrower on the Assigned Share
of the Loans which occur on and after the Settlement Date will be paid directly
by the Administrative Agent to the Assignee. Upon the Settlement Date, the
Assignee shall pay to the Assignor an amount specified by the Assignor in
writing which represents the Assigned Share of the principal amount of the
respective Loans made by the Assignor pursuant to the Credit Agreement which are
outstanding on the Settlement Date, net of any closing costs, and which are
being assigned hereunder. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Settlement Date directly between themselves on the Settlement Date.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By:___________________________ By:______________________________
Vice President Vice President
Acknowledged and agreed.
NATIONAL CITY BANK,
as Administrative Agent
By:___________________________
Vice President
2
<PAGE> 98
ANNEX I
FOR
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. The Borrower: LESCO, INC.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of September 23, 1999,
among LESCO, Inc., the Lenders from time to time
party thereto, and National City Bank, as
Administrative Agent.
3. Date of Assignment Agreement:
--------- ---, -----
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
General Revolving General Revolving Swing Line Swing Line
Commitment Loans Revolving Revolving Loans
Commitment
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate Amount $_____ $_____ $_____ $_____
for all Lenders
- -----------------------------------------------------------------------------------------------------------------
Assigned Share _____% _____% _____% _____%
- -----------------------------------------------------------------------------------------------------------------
Amount of $_____ $_____ $_____ $_____
Assigned Share
- -----------------------------------------------------------------------------------------------------------------
Amount Retained $_____ $_____ $_____ $_____
by Assignor
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
5. Settlement Date:
--------- ---, ---
6. Rate of Interest
to the Assignee: As set forth in section 2.8 of the Credit
Agreement (unless otherwise agreed to
by the Assignor and the Assignee).(8)
- ---------------------------
(8) The Borrower and the Administrative Agent shall direct the entire
amount of the interest to the Assignee at the rate set forth in section
2.8 of the Credit Agreement, with the Assignor and Assignee effecting
any agreed upon sharing of interest through payments by the Assignee to
the Assignor.
8
<PAGE> 99
7. Facility
Fee: As set forth in section 3.1 of the Credit
Agreement (unless otherwise agreed to
by the Assignor and the Assignee).9
8. Notices:
- --------------------------------------------------------------------------------
ASSIGNOR: ASSIGNEE:
Attention:__________________ Attention:__________________
Telephone: Telephone:
Facsimile: Facsimile:
- --------------------------------------------------------------------------------
9. Payment Instructions:
- --------------------------------------------------------------------------------
ASSIGNOR: ASSIGNEE:
ABA No.: ABA No.:
Account No.: Account No.:
Ref.: LESCO, Inc. Ref.: LESCO, Inc.
Attention:__________________ Attention:__________________
Telephone: Telephone:
Facsimile: Facsimile:
- --------------------------------------------------------------------------------
- ----------------------
(9) The Borrower and the Administrative Agent shall direct the entire
amount of the Facility Fee to the Assignee at the rate set forth in
section 3.1 of the Credit Agreement, with the Assignor and the Assignee
effecting any agreed upon sharing of Facility Fee through payment by
the Assignee to the Assignor.
2
<PAGE> 100
EXHIBIT F
SECTION 5.4(B)(II) CERTIFICATE
Reference is hereby made to the Credit Agreement, dated as of September
23, 1999, among LESCO, Inc., the financial institutions party thereto from time
to time, and National City Bank, as Administrative Agent (the "CREDIT
AGREEMENT"). Pursuant to the provisions of section 5.4(b)(ii) of the Credit
Agreement, the undersigned hereby certifies that it is not a "bank" as such term
is used in section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended.
[NAME OF BANK]
By:_____________________________
Title:
Dated:__________
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,937
<SECURITIES> 0
<RECEIVABLES> 84,999
<ALLOWANCES> 3,932
<INVENTORY> 115,487
<CURRENT-ASSETS> 203,671
<PP&E> 80,091
<DEPRECIATION> 33,691
<TOTAL-ASSETS> 258,970
<CURRENT-LIABILITIES> 66,657
<BONDS> 99,021
0
0
<COMMON> 851
<OTHER-SE> 90,791
<TOTAL-LIABILITY-AND-EQUITY> 258,970
<SALES> 364,707
<TOTAL-REVENUES> 364,707
<CGS> 240,464
<TOTAL-COSTS> 240,464
<OTHER-EXPENSES> (1,915)
<LOSS-PROVISION> 2,480
<INTEREST-EXPENSE> 4,504
<INCOME-PRETAX> 21,237
<INCOME-TAX> 8,280
<INCOME-CONTINUING> 12,957
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,957
<EPS-BASIC> 1.54
<EPS-DILUTED> 1.51
</TABLE>
