<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1994
Commission File Number l-8803
MATERIAL SCIENCES CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 95-2673173
(State or other jurisdiction (IRS employer identification
of incorporation or organization) number)
2300 East Pratt Boulevard
Elk Grove Village, Illinois 60007
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (708) 439-8270
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------------- --------------
As of October 7, 1994, there were outstanding 15,127,644 shares of common stock,
$ .02 par value.
<PAGE>
MATERIAL SCIENCES CORPORATION
FORM 10-Q
For The Quarter Ended August 31, 1994
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- - -----------------------------
(a) Financial statements of Material Sciences Corporation and
Subsidiaries
(b) Summarized income statement information for Walbridge Coatings,
An Illinois Partnership
-2-
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Material Sciences Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
(In thousands, except per share data) 1994 1993 1994 1993
- - ----------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C>
NET SALES(1) $59,415 $47,658 $118,237 $89,273
Cost of Sales 43,826 36,461 87,598 68,158
------- ------- -------- -------
Gross Profit $15,589 $11,197 $ 30,639 $21,115
Selling, General and Administrative
Expenses 8,640 6,287 17,464 12,579
------- ------- -------- -------
Income from Operations $ 6,949 $ 4,910 $ 13,175 $ 8,536
Other (Income) and Expense:
Interest Income (182) (331) (355) (603)
Interest Expense 40 28 58 62
Equity in Results of Partnership 5 184 (72) 126
Other, Net (113) ( 75) (238) (144)
------- ------- -------- -------
Total Other (Income), Net $ (250) $ (194) $ (607) $ (559)
------- ------- -------- -------
Income Before Income Taxes $ 7,199 $ 5,104 $ 13,782 $ 9,095
Income Taxes 2,736 1,979 5,238 3,455
------- ------- -------- -------
NET INCOME $ 4,463 $ 3,125 $ 8,544 $ 5,640
======= ======= ======== =======
Net Income Per Common and Common Equivalent
Share (2) $0.29 $0.21 $0.56 $0.38
======= ======= ======== =======
Weighted Average Number of Common and
Common Equivalent Shares Outstanding (2) 15,270 14,717 15,260 14,701
</TABLE>
The accompanying notes are an integral part of these statements.
- 3 -
<PAGE>
CONSOLIDATED BALANCE SHEETS
Material Sciences Corporation and Subsidiaries
<TABLE>
<CAPTION>
August 31, February 28,
(In thousands, except share data) 1994 1994
- - --------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
ASSETS: (Unaudited)
Current Assets:
Cash and Cash Equivalents $ 6,756 $ 11,930
Receivables:
Trade, Less Reserves of $3,703 and $3,502, respectively(3) 26,359 22,909
Current Portion of Partnership Note Receivable 801 804
Income Taxes 726 -
Prepaid Expenses 2,626 1,242
Inventories 16,691 19,578
Prepaid Taxes 5,797 5,797
-------- --------
Total Current Assets $ 59,756 $ 62,260
-------- --------
Gross Property, Plant and Equipment $138,723 $129,054
Accumulated Depreciation and Amortization (61,405) (57,006)
-------- --------
Net Property, Plant and Equipment $ 77,318 $ 72,048
-------- --------
Other Assets:
Investment in Partnership $ 10,124 $ 9,463
Partnership Note Receivable, Less Current Portion 2,245 2,620
Intangible Assets, Net 3,303 3,231
Other 1,769 1,970
-------- --------
Total Other Assets $ 17,441 $ 17,284
-------- --------
TOTAL ASSETS $154,515 $151,592
======== ========
LIABILITIES:
Current Liabilities:
Current Portion of Long-Term Debt $ 1,844 $ 1,770
Accounts Payable 13,585 18,661
Accrued Expenses 12,378 12,803
-------- --------
Total Current Liabilities $ 27,807 $ 33,234
-------- --------
Long-Term Liabilities:
Deferred Income Taxes $ 12,460 $ 12,704
Long-Term Debt, Less Current Portion 8,140 8,853
Accrued Superfund Liability 4,345 4,479
Other 6,026 5,858
-------- --------
Total Long-Term Liabilities $ 30,971 $ 31,894
-------- --------
SHAREHOLDERS' EQUITY:
Preferred Stock(4) $ - $ -
Common Stock(5) 316 210
Additional Paid-In Capital 41,304 40,574
Treasury Stock at Cost(6) (3,382) (3,380)
Retained Earnings 57,499 49,060
-------- --------
Total Shareholders' Equity $ 95,737 $ 86,464
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $154,515 $151,592
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
- 4 -
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Material Sciences Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
(In thousands) 1994 1993 1994 1993
- - --------------------------------------------------------------------------------------- ------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net Income $ 4,463 $ 3,125 $ 8,544 $ 5,640
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 2,168 1,931 4,548 3,695
Provision for Deferred Income Taxes (248) 98 (244) 145
Compensatory Effect of Stock Plans 162 12 323 40
Other, Net 11 131 (38) 654
------- --------- ------- --------
Operating Cash Flow Prior to Changes in
Working Capital $ 6,556 $ 5,297 $13,133 $ 10,174
------- --------- ------- --------
Changes in Working Capital:
Receivables 808 (2,131) (3,447) (1,328)
Income Taxes Receivable (726) 48 (726) 546
Prepaid Expenses (186) (186) (1,384) (1,065)
Inventories 2,147 (1,740) 2,887 (2,609)
Accounts Payable (1,000) 3,429 (5,076) 121
Accrued Expenses (1,568) 1,404 (425) 40
------- --------- ------- --------
Cash Flow from Changes in Working Capital $ (525) $ 824 $(8,171) $ (4,295)
------- --------- ------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 6,031 $ 6,121 $ 4,962 $ 5,879
------- --------- ------- --------
INVESTING ACTIVITIES:
Capital Expenditures, Net (6,781) (3,790) (9,711) (6,547)
Investment in Acquired Facility - (12,300) - (12,300)
Investment in Partnership (194) (290) (589) (366)
Distribution from Partnership 375 374 375 374
Other Long-Term Assets (45) (1,807) 22 (1,801)
------- --------- ------- --------
NET CASH USED IN INVESTING ACTIVITIES $(6,645) $ (17,813) $(9,903) $(20,640)
------- --------- ------- --------
FINANCING ACTIVITIES:
Proceeds of Debt 38 33 74 66
Payments to Settle Debt (361) (325) (713) (762)
Sale of Common Stock, Net of Repurchase 90 103 406 406
------- --------- ------- --------
NET CASH USED IN FINANCING ACTIVITIES $ (233) $ (189) $ (233) $ (290)
------- --------- ------- --------
NET DECREASE IN CASH $ (847) $ (11,881) $(5,174) $(15,051)
Cash and Cash Equivalents at Beginning of
Period 7,603 20,341 11,930 23,511
------- --------- ------- --------
Cash and Cash Equivalents at End of Period $ 6,756 $ 8,460 $ 6,756 $ 8,460
======= ========= ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MATERIAL SCIENCES CORPORATION
The data for the three and six months ended August 31, 1994 and 1993 have not
been examined by independent public accountants but, in the opinion of the
Company, reflect all adjustments (consisting of only normal, recurring
adjustments) necessary for a fair presentation of the information at those dates
and for those periods. The financial information contained in this report
should be read in conjunction with the Company's 1994 Annual Report to
Shareholders and Annual Report on Form 10-K. Certain prior year amounts have
been reclassified to conform with the fiscal 1995 presentation.
(1) During the six month periods ending August 31, 1994 and 1993, the Company
derived approximately 20.8% and 25.4%, respectively, of its net sales from
fees billed to the Partnership by a subsidiary of the Company for operating
the Walbridge, Ohio facility.
(2) On June 16, 1994 the Board of Directors of the Company declared a stock
dividend of one-half share per share of the Company's Common Stock, which
was paid on July 28, 1994 to shareholders of record at the close of business
on June 30, 1994. All share and per share data has been restated to
retroactively reflect this stock dividend.
(3) Includes trade receivables due from the Partnership of $355 at August 31,
1994 and $1,166 at February 28, 1994.
(4) Preferred Stock, $1.00 Par Value; 10,000,000 Shares Authorized, 7,500,000
Designated Series A Junior Participating Preferred; None Issued.
(5) Common Stock, $.02 Par Value; 20,000,000 Shares Authorized; 15,789,069
Shares Issued and 15,100,421 Shares Outstanding at August 31, 1994 and
15,697,732 Shares Issued and 15,009,084 Shares Outstanding at February 28,
1994.
(6) Treasury Stock atCost; 688,648 Shares at August 31 and February 28, 1994.
-6-
<PAGE>
SUMMARIZED INCOME STATEMENT INFORMATION (UNAUDITED)
Walbridge Coatings, An Illinois Partnership
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
(In thousands) 1994 1993 1994 1993
- - -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Revenues $15,271 $13,856 $30,714 $28,664
Gross Profit $ 1,068 $ 988 $ 2,298 $2,205
Income from Operations $ 472 $ 439 $ 1,117 $1,106
Net Loss $ (118) $ (318) $ (117) $(453)
</TABLE>
NOTE: The Net Loss shown above does not directly correlate to the Equity
in results of Partnership shown in the Company's Statements of Income due
to certain contractual allocation requirements of the Partnership. The
Company's primary financial benefit from participation in the Partnership
is in the form of revenues from operating the Walbridge, Ohio facility.
These revenues are included in the Company's net sales.
- 7 -
<PAGE>
MATERIAL SCIENCES CORPORATION
FORM 10-Q
For The Quarter Ended August 31, 1994
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Material Sciences Corporation ("MSC" or "Company") operates in one business
segment comprised of the following four product groups: laminates and
composites, metallizing and coating, coil coating, and electrogalvanizing.
RESULTS OF OPERATIONS
---------------------
NET SALES
Net sales in the second quarter of fiscal 1995 increased 24.7% over the second
quarter of fiscal 1994. Sales of laminates and composites grew 27.5%;
metallizing and coating 13.0%; coil coating 33.9%; and electrogalvanizing
12.2%. For the first six months of fiscal 1995, net sales grew by 32.4%
compared to the same period in the prior fiscal year. Sales of laminates and
composites grew 25.8%; metallizing and coating 32.6%; coil coating 52.1% and
electrogalvanizing 8.7%. Included in the above are coil coating sales from the
June 30, 1993 acquisition of the coil coating facility from Armco Steel
Company, L.P. in Middletown, Ohio.
LAMINATES AND COMPOSITES
Laminates and composites sales during the second quarter grew by 27.5% over the
same period of fiscal 1994. This increase was primarily the result of higher
sales of Polycore Composites(R), and disk brake noise damper materials.
Polycore Composite enjoyed strong demand for materials in automotive engine and
appliance-related products, including new automotive engine applications.
Brake damper material sales exhibited strong growth in both the OEM and
aftermarket. For the six month period ended August 31, 1994, laminates and
composites sales were 25.8% higher than the same period last fiscal year
primarily due to higher sales of Polycore Composites, disk brake noise damper
material, and Specular+(R).
METALLIZING AND COATING
Sales of metallizing and coating products increased 13.0% in the second quarter
of fiscal 1995 as compared to the same period in fiscal 1994. The increase is
due primarily to strong sales volume for solar control window film. Two items
that contributed to the strong sales volume were a new line of performance
films and the continued international demand for the Company's safety film.
For the first six months of fiscal 1995, sales of metallizing and coating
products increased 32.6% fueled by increased demand for solar control window
film and safety film as well as productivity improvements as a result of
equipment additions made last fiscal year which enable the Company to better
meet seasonal demand levels.
-8-
<PAGE>
COIL COATING
Coil coating sales were up 33.9% over the previous year's second quarter.
Growth in sales in the Company's fuel tank, appliance, and truck trailer
markets led a broad increase in sales revenues in this product group. A
portion of this sales increase is attributable to MSC's June, 1993 acquisition
of the Middletown coil coating facility. Comparable period-to-period sales in
the product group were up over 20% from the second quarter of fiscal 1994. On
a year-to-date basis, coil coating sales were 52.1% higher than the first six
months of the prior fiscal year. Sales increases across all major markets were
led by strong growth in the fuel tank, appliance, lighting, and truck trailer
markets.
ELECTROGALVANIZING
MSC participates in the electrogalvanizing market through Walbridge Coatings
(the "Partnership"), a partnership among subsidiaries of MSC, Bethlehem Steel
Corporation ("Bethlehem") and Inland Steel Industries, Inc. ("Inland"). MSC's
net sales for electrogalvanizing consist of various fees charged to the
Partnership for operating the facility. Bethlehem and Inland are primarily
responsible for the marketing activities of the Partnership.
In the second quarter of fiscal 1995, MSC's electrogalvanizing sales and volume
increased by approximately 12.2% and 7.5%, respectively, from the second
quarter of fiscal 1994, while for the first six months of fiscal 1995, sales
and volume increased by approximately 8.7% and 4.1%, respectively, over the
prior fiscal year. The increase in sales and volume over the prior year for
both the quarter and first six months resulted from a strong demand for new
autos and light trucks, plus a continuing shift to higher value-added products
requiring a combination of electrogalvanizing and coil coating.
On June 30, 1992, Inland assigned 50% of its interests in, and responsibilities
to, the Partnership to Bethlehem. The transfer increased the Partnership's
reliance upon Bethlehem for production orders, payment of fees, and financing
obligations. During the third quarter of fiscal 1994, Inland decided to reduce
its line time requirements to no greater than five percent going forward.
During the first quarter of fiscal 1995, Inland increased its utilization to
its full contractual 25% of available line time. During the second quarter of
fiscal 1995, Inland utilized only 17% of available line time rather than its
full 25%. Bethlehem and other customers utilized this additional available
line time. Inland is reviewing its future involvement in the Partnership and
therefore, there is no assurance that Inland will continue to utilize its 25%
of available line time on a long-term basis. The Company believes that any
short-term disruption in volume that might be caused by a potential reduction
in Inland's line time requirements could be replaced by additional volume from
Bethlehem and other customers.
GROSS PROFIT
MSC's gross profit margin was 26.2% in the second quarter of fiscal 1995 versus
23.5% in the previous year. For the first six months of fiscal 1995, MSC's
gross profit margin was 25.9% compared to 23.7% last year. This improvement
was due to increasing higher value-added product mix, higher line utilization,
and improving manufacturing efficiencies.
-9-
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (SG&A) expenses increased to 14.5% of sales
in the second quarter of fiscal 1995 from 13.2% of sales in the same period
last fiscal year. For the first six months of fiscal 1995, SG&A expenses
increased to 14.8% of sales from 14.1% of sales for the same period in the
prior fiscal year. This increase is primarily due to increased expenditures
for strategic purposes such as high-growth product marketing, research and
development, and international marketing efforts. This trend of increased
strategic expenditures over the prior year is expected to continue as MSC
increases its resources to take advantage of new opportunities.
TOTAL OTHER (INCOME) EXPENSE, NET AND INCOME TAXES
Total other (income) expense, net was income of $.2 million in the second
quarter of both fiscal 1995 and 1994 and income of $.6 million for the first
six months of both fiscal years. MSC's effective income tax rate was
approximately 38% for both fiscal years.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
During the second quarter of fiscal 1995, MSC's operating activities generated
$6.0 million of cash versus $6.1 million of cash during the second quarter last
year. For the first six months of fiscal 1995, operating activities generated
$5.0 million of cash versus $5.9 million last fiscal year. The decrease in
cash generation is due mainly to the timing of vendor payments of accounts
payable, offset, in part, by lower inventory levels and increased net income.
MSC's capital expenditures during the second quarter and first six months of
fiscal 1995 were $3.0 million and $3.2 million greater than those of the same
periods of fiscal 1994. The cash flow from investment in partnership, net of
distributions, was a positive $.2 million in the second quarter of fiscal 1995
and a negative $.2 million for the first six months of fiscal 1995 versus a
positive $.1 million and zero, respectively, for the same periods in the prior
fiscal year. Affecting the prior fiscal year's cash flows was the June 30,
1993 purchase of the Middletown coil coating facility.
MSC's long-term debt, less current portion decreased by $.7 million during the
first six months of fiscal 1995 due to normally scheduled debt amortization.
The Company maintains a $25 million unsecured line of credit which expires
August 31, 1997. There was no outstanding balance under this line of credit at
August 31, 1994 or at February 28, 1994. However, the Company has executed
letters of credit totalling $4.8 million against this line leaving an available
line of credit of $20.2 million at August 31, 1994. The Company believes that
its cash flow from operations together with available financing and cash on
hand will be sufficient to fund its working capital needs, capital expenditure
program, and debt amortization.
The Company has a capital lease obligation, which was $9.1 million as of
August 31, 1994, relating to a facility which the Company subleases to the
Partnership. In addition, throughout the term of the Partnership, the Company
is contingently responsible for 50% of the Partnership's financing
requirements, including the Company's share (approximately $6.0 million) of
$12.0 million in Partnership financing loans from third parties at
August 31, 1994.
MSC continues to participate in the implementation of settlements with the
government for clean-up of various Superfund sites. For additional
information, refer to MSC'S Form 10-K for the fiscal year ended February 28,
1994.
-10-
<PAGE>
MATERIAL SCIENCES CORPORATION
FORM 10-Q
For the Quarter Ended August 31, 1994
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - ------------------------------------------------------------
On June 16, 1994, the Company held its Annual Meeting of Shareholders.
Jerome B. Cohen, Roxanne J. Decyk, Eugene W. Emmerich, G. Robert Evans, E.
F. Heizer, Jr., J. Frank Leach and Irwin P. Pochter, being seven nominees named
in the Company's Proxy Statement, dated May 6, 1994, were elected at the Annual
Meeting to serve as the Board of Directors by a majority vote of shareholders.
No votes were cast for any other person. The details of the vote were as
follows:
<TABLE>
<CAPTION>
Name For* Against*
- - -------------------- --------- --------
<S> <C> <C>
Jerome B. Cohen 9,107,200 43,800
Roxanne J. Decyk 9,106,899 44,101
Eugene W. Emmerich 9,107,044 43,956
G. Robert Evans 9,106,234 44,766
E. F. Heizer, Jr. 9,105,690 45,310
J. Frank Leach 9,107,159 43,841
Irwin P. Pochter 9,106,899 44,101
</TABLE>
To the best of the Company's knowledge, there were no broker non-votes or
abstentions.
*These share votes do not reflect the stock dividend declared by the Board of
Directors on June 16, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - -----------------------------------------
(a)(10) Credit Agreement dated as of September 1, 1994 between Material
Sciences Corporation as the Borrower and Bank of America Illinois
(formerly Continental Bank), as the Lender.
(27) Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter for which this report
is filed.
-11-
<PAGE>
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 under-
signed, thereunto duly authorized, in Elk Grove Village, State of Illinois, on
the 7th day of October, 1994.
MATERIAL SCIENCES CORPORATION
By: /s/ G. Robert Evans
------------------------------
G. Robert Evans
Chairman and Chief Executive Officer
By: /s/ William H. Vrba
-------------------------------
William H. Vrba
Senior Vice President, Chief
Financial Officer, and Secretary
-12-
<PAGE>
MATERIAL SCIENCES CORPORATION
QUARTERLY REPORT ON FORM 10-Q
INDEX TO EXHIBITS
Sequentially
Exhibit Number Description of Exhibit Numbered Page
- - -------------- ---------------------- -------------
(10) Credit Agreement dated as of
September 1, 1994, between
Material Sciences Corporation,
as the Borrower, and Bank of
America Illinois, as the Lender
(27) Financial Data Schedule
<PAGE>
U.S. $25,000,000
CREDIT AGREEMENT,
dated as of September 1, 1994
between
MATERIAL SCIENCES CORPORATION
as the Borrower,
and
BANK OF AMERICA ILLINOIS
as the Lender.
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 1, 1994, between MATERIAL
SCIENCES CORPORATION, a Delaware corporation (the "Borrower"), and BANK OF
AMERICA ILLINOIS, an Illinois banking corporation (the "Lender"),
W I T N E S S E T H:
WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries in the business of developing, manufacturing and marketing
continuously processed, specialty coated materials and services; and
WHEREAS, the Borrower desires to obtain a Commitment from the Lender
pursuant to which Loans, in a maximum aggregate principal amount at any one time
outstanding not to exceed $25,000,000, will be made to the Borrower from time
to time prior to the Commitment Termination Date; and
WHEREAS, the Lender is willing, on the terms and subject to the conditions
hereinafter set forth (including Article V), to extend such Commitment and make
such Loans to the Borrower; and
WHEREAS, the proceeds of such Loans will be used for general corporate
purposes and working capital purposes of the Borrower and its Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
<PAGE>
(a) to vote 10% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Reference Rate" means, on any date and with respect to all
Reference Rate Loans, a fluctuating rate of interest per annum equal to the
higher of
(a) the rate of interest then most recently announced by the Lender at
Chicago, Illinois as its reference rate; and
(b) the Federal Funds Rate most recently determined by the Lender
plus 1/2%.
The Alternate Reference Rate is not necessarily intended to be the lowest rate
of interest determined by the Lender in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as
Reference Rate Loans will take effect simultaneously with each change in the
Alternate Reference Rate. The Lender will give notice promptly to the Borrower
of changes in the Alternate Reference Rate.
"Applicable Margin" means the following rates per annum at such times as
the Leverage Ratio is in the following amounts:
Leverage Ratio Rate
-------------- ----
Less than 1.0 to 1.0 0.50%
Greater than or equal to 0.675%
1.0 to 1.0 and less than
or equal to 1.1 to 1.0
Greater than 1.1 to 1.0 0.75%
The Applicable Margin shall be 0.50% on the date hereof and shall change,
if necessary, effective the first Business Day of the month following receipt of
the Compliance Certificate provided for under Section 7.1.1(c) hereof; provided,
however, if said Compliance Certificate shall not be delivered prior to the
first Business Day of each month following its due date, the Applicable Margin
shall be 0.75% for the period from said first Business Day
2
<PAGE>
until its delivery and shall change, if necessary, effective upon such delivery.
"Authorized Officer" means, relative to any Obligor, those of its officers
whose signatures and incumbency shall have been certified to the Lender pursuant
to Section 5.1.1.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same type and, in the case of Eurodollar
Rate Loans, having the same Interest Period made by the Lender on the same
Business Day and pursuant to the same Borrowing Request in accordance with
Section 2.1.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of Exhibit B
hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in Chicago; and
(b) relative to the making, continuing, prepaying or repaying of any
Eurodollar Rate Loans, any day on which dealings in Dollars are carried on
in the interbank eurodollar market.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the Borrower and its
Subsidiaries for fixed or capital assets made during such period which, in
accordance with GAAP, would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities incurred
during such period.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
3
<PAGE>
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the date
of issue, which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of the
District of Columbia and rated at least A-l by Standard & Poor's
Corporation or P-l by Moody's Investors Service, Inc., or
(ii) the Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, or
(ii) the Lender;
(d) any repurchase agreement entered into with the Lender (or other
commercial banking institution of the stature referred to in clause (c)(i))
which
(i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through (c);
and
(ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of the
Lender (or other commercial banking institution) thereunder; or
(e) mutual funds that buy and hold securities, at least 95% of which
securities are investment grade rated.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange
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Commission under the Securities Exchange Act of 1934) of 20% or more of the
outstanding shares of voting stock of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means the Lender's obligation to make Loans pursuant to
Section 2.1.1.
"Commitment Amount" means, on any date, $25,000,000, as such amount may be
reduced from time to time pursuant to Section 2.2.
"Commitment Termination Date" means the earliest of
(a) August 31, 1997 as such date may be extended pursuant to Section
2.6 hereof;
(b) the date on which the Commitment Amount is terminated in full or
reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Commitment
shall terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a) through (d)
of Section 8.1.9; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable pursuant
to Section 8.3, or
(ii) in the absence of such declaration, the giving of notice by
the Lender to the Borrower that the Commitment has been terminated.
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or
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guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"Credit Facility Agreement" means that certain Amended and Restated Credit
Facility Agreement, dated as of July 23, 1986, between Walbridge Coatings and
Creditanstalt-Bankverein.
"Current Ratio" means the ratio of
(a) consolidated current assets of the Borrower and its Subsidiaries
to
(b) consolidated current liabilities of the Borrower and its
Subsidiaries.
"Debt" means the consolidated Indebtedness of the Borrower and its
Subsidiaries.
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Lender.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means the office of the Lender designated as such below
its signature hereto or such other office of the Lender
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within the United States as may be designated from time to time by notice from
the Lender to the Borrower.
"DTI" means Deposition Technologies, Inc., a California corporation, a
wholly owned subsidiary of the Borrower.
"Effective Date" means the date this Agreement becomes effective pursuant
to Section 9.8.
"Environmental Laws" means all applicable federal, state or local statutes,
laws, ordinances, codes, rules, regulations and requirements (including consent
decrees and administrative orders) relating to public health and safety and
protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Eurocurrency Reserve Percentage" is defined in Section 3.2.1.
"Eurodollar Office" means the office of the Lender designated as such below
its signature hereto or such other office of the Lender as designated from time
to time by notice from the Lender to the Borrower, whether or not outside the
United States, which shall be making or maintaining Eurodollar Rate Loans of the
Lender hereunder.
"Eurodollar Rate" is defined in Section 3.2.1.
"Eurodollar Rate Loan" means a Loan bearing interest, at all times during
an Interest Period applicable to such Loan, at a fixed rate of interest
determined by reference to the Eurodollar Rate (Reserve Adjusted).
"Eurodollar Rate (Reserve Adjusted)" is defined in Section 3.2.1.
"Event of Default" is defined in Section 8.1.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to
(a) 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
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(b) 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 Lender from three federal funds brokers of recognized
standing selected by it.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months ending
on February 28 or February 29; references to a Fiscal Year with a number
corresponding to any calendar year (e.g. the "1994 Fiscal Year") refer to the
Fiscal Year ending on the February 28 or February 29 occurring during such
calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" is defined in Section 1.4.
"Guaranty" means the Guaranty of PFM and DTI executed and delivered
pursuant to Section 5.1.4, substantially in the form of Exhibit D hereto, as
amended, supplemented, restated or otherwise modified from time to time.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation and
Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance or material, all as amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all liabilities of
such Person under interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements, and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency exchange rates.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
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(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
the Borrower to be in default of any of its obligations under Section
7.2.4.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) all other items which, in accordance with GAAP, would be included
as liabilities on the liability side of the balance sheet of such Person as
of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging Obligations;
(f) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of
property or services, and indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any of the
foregoing.
For all purposes of this Agreement except as otherwise specified, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.
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"Indemnified Liabilities" is defined in Section 9.4.
"Indemnified Parties" is defined in Section 9.4.
"Interest Period" means, relative to any Eurodollar Rate Loans, the period
beginning on (and including) the date on which such Eurodollar Rate Loan is made
or continued as, or converted into, a Eurodollar Rate Loan pursuant to Section
2.3 or 2.4 and shall end on (but exclude) the day which numerically corresponds
to such date one, two, three or six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), in
either case as the Borrower may select in its relevant notice pursuant to
Section 2.3 or 2.4; provided, however, that
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than eight different dates;
(b) Interest Periods commencing on the same date for Loans comprising
part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless, if such Interest Period applies to Eurodollar Rate
Loans, such next following Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day); and
(d) no Interest Period may end later than the date set forth in clause
(a) of the definition of "Commitment Termination Date".
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in any other
Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer
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or exchange of property other than cash, be deemed to have been made in an
original principal or capital amount equal to the fair market value of such
property.
"Lender" is defined in the preamble.
"Leverage Ratio" means the ratio of the Debt (other than Indebtedness of
Pre Finish Metals (EG) Incorporated or PFM arising solely as a result of Pre
Finish Metals (EG) Incorporated being a general partner of Walbridge Coatings)
of the Borrower and its Subsidiaries to its Consolidated Tangible Net Worth.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" is defined in Section 2.1.1.
"Loan Document" means this Agreement, the Note, and the Guaranty.
"Note" means a promissory note of the Borrower payable to the Lender, in
the form of Exhibit A hereto (as such promissory note may be amended, endorsed
or otherwise modified from time to time), evidencing the aggregate Indebtedness
of the Borrower to the Lender resulting from outstanding Loans, and also means
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the Borrower
and each other Obligor arising under or in connection with this Agreement, the
Note and each other Loan Document.
"Obligor" means the Borrower or any other Person (other than the Lender)
obligated under any Loan Document.
"Organic Document" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.
"Participant" is defined in Section 9.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA
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(other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and
to which the Borrower or any corporation, trade or business that is, along with
the Borrower, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under section 4069 of ERISA.
"Person" means any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"PFM" means Pre Finish Metals Incorporated, an Illinois corporation, a
wholly owned Subsidiary of the Borrower.
"Plan" means any Pension Plan or Welfare Plan.
"Quarterly Payment Date" means the last day of each March, June, September,
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"Reference Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Reference Rate.
"Release" means a "release", as such term is defined in CERCLA.
"Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 690, et seq., as in effect from time to
time.
"Series A Notes", "Series B Notes" and "Series C Notes" shall have the
meanings set forth in the Term Loan Agreement.
"Series A Promissory Note", "Series B Promissory Note" and "Series C
Promissory Note" shall have the meanings set forth in the Credit Facility
Agreement.
"Subsidiary" means, with respect to any Person, any corporation, voluntary
association, joint stock company, voting trust or similar organization of which
more than 50% of the outstanding capital stock or other interests having
ordinary voting power to elect a majority of the board of directors, managers,
trustee or other similar functions (irrespective of whether at the time capital
stock of any other class or classes or similar interests shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned by such Person, by such Person and one or more other
Subsidiaries of
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such Person, or by one or more other Subsidiaries of such Person and shall not
include Walbridge Coatings.
"Tangible Net Worth" means the consolidated net worth of the Borrower and
its Subsidiaries after subtracting therefrom the aggregate amount of any
intangible assets of the Borrower and its Subsidiaries, including goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks and brand names.
"Taxes" is defined in Section 4.6.
"Term Loan Agreement" means that certain Term Loan Agreement, dated as of
July 23, 1986, among Walbridge Coatings, Creditanstalt-Bankverein and Toledo
Trust Company.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Reference Rate Loan or a Eurodollar Rate Loan.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Walbridge Coatings" means Walbridge Coatings, an Illinois partnership.
"Welfare Plan" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and the Note and
in each Borrowing Request, Continuation/Conversion Notice, Loan Document, notice
and other communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3 Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4 Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles
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("GAAP") applied in the preparation of the financial statements referred to in
Section 6.5.
ARTICLE II
COMMITMENT, BORROWING PROCEDURES AND NOTE
SECTION 2.1 Commitment. On the terms and subject to the conditions of
this Agreement (including Article V), the Lender agrees to make Loans pursuant
to the Commitment described in this Section 2.1.
SECTION 2.1.1 Commitment To Make Loans. From time to time on any Business
Day occurring prior to the Commitment Termination Date, the Lender will make
loans of any type (the "Loans") to the Borrower equal to the aggregate amount of
the Borrowing requested by the Borrower to be made on such day. The commitment
of the Lender described in this Section 2.1.1 is herein referred to as its
"Commitment". On the terms and subject to the conditions hereof, the Borrower
may from time to time borrow, prepay and reborrow Loans.
SECTION 2.1.2 Lender Not Permitted or Required To Make Loans. The Lender
shall not be permitted or required to make any Loan if, after giving effect
thereto, the aggregate outstanding principal amount of all Loans would exceed
the Commitment Amount.
SECTION 2.2 Reduction of Commitment Amount. The Borrower may, from time
to time on any Business Day, voluntarily reduce the Commitment Amount; provided,
however, that all such reductions shall require at least three Business Days'
prior notice to the Lender and be permanent, and any partial reduction of the
Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral
multiple of $500,000.
SECTION 2.3 Borrowing Procedure. By delivering a Borrowing Request to the
Lender on or before 10:00 a.m., Chicago time, on the date of a proposed
Reference Rate Loan or at least two Business Days before a proposed Eurodollar
Rate Loan, the Borrower may from time to time irrevocably request that a
Borrowing be made in a minimum amount of $100,000 and an integral multiple of
$100,000, or in the unused amount of the Commitment. On the terms and subject
to the conditions of this Agreement, each Borrowing shall be comprised of the
type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. On or before 11:00 a.m. (Chicago time) on such Business Day,
the Lender shall make funds in an amount equal to the requested Borrowing
available to the Borrower by wire transfer to the accounts the Borrower shall
have specified in its Borrowing Request.
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SECTION 2.4 Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Lender on or before 10:00 a.m., Chicago
time, on the date of a proposed conversion into a Reference Rate Loan or at
least two Business Days prior to a conversion into or continuation of a
Eurodollar Rate Loan, the Borrower may from time to time irrevocably elect that
all, or any portion in an aggregate minimum amount of $100,000 and an integral
multiple of $100,000, of any Loans be, in the case of Reference Rate Loans,
converted into Eurodollar Rate Loans or, in the case of Eurodollar Rate Loans,
be converted into Reference Rate Loans or continued as Eurodollar Rate Loans (in
the absence of delivery of a Continuation/Conversion Notice with respect to any
Eurodollar Rate Loan at least prior to 10:00 a.m. two Business Days before the
last day of the then current Interest Period with respect thereto, such
Eurodollar Rate Loan shall, on such last day, automatically convert to a
Reference Rate Loan); provided, however, that no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into,
Eurodollar Rate Loans when any Default has occurred and is continuing.
SECTION 2.5 Funding. The Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurodollar Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by the Lender) to make or maintain such Eurodollar Rate Loan;
provided, however, that such Eurodollar Rate Loan shall nonetheless be deemed to
have been made and to be held by the Lender, and the obligation of the Borrower
to repay such Eurodollar Rate Loan shall nevertheless be to the Lender for the
account of such foreign branch, Affiliate or international banking facility. In
addition, the Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall
be conclusively assumed that the Lender elected to fund all Eurodollar Rate
Loans by purchasing, as the case may be, Dollar certificates of deposit in the
U.S. or Dollar deposits in its Eurodollar Office's interbank eurodollar market.
SECTION 2.6 Extension of Commitment Termination Date. The Borrower may
request an extension of the Commitment Termination Date by giving notice to the
Lender not more than 45 days and not less than 30 days prior to a date one year
after the date hereof. After such a request, the Lender may in its sole
discretion extend such Commitment Termination Date for one year by giving the
Borrower notice within 28 days after the request. After any such extension is
granted, the Borrower may request additional one year extensions on like notice
annually thereafter.
SECTION 2.7 Note. The Lender's Loans under its Commitment shall be
evidenced by the Note payable to the order of the Lender in a maximum principal
amount equal to the original Commitment Amount. The Borrower hereby irrevocably
authorizes the Lender to
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make (or cause to be made) appropriate notations on the grid attached to the
Lender's Note (or on any continuation of such grid), which notations, if made,
shall evidence, inter alia, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to the Loans evidenced thereby.
Such notations shall be conclusive and binding on the Borrower absent manifest
error; provided, however, that the failure of the Lender to make any such
notations shall not limit or otherwise affect any Obligations of the Borrower or
any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 Repayments and Prepayments. The Borrower shall repay in full
the unpaid principal amount of each Loan upon the Commitment Termination Date
therefor. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; provided, however, that all such voluntary partial prepayments shall
be in an aggregate minimum amount of $100,000 and an integral multiple of
$100,000; and
(b) shall, immediately upon any acceleration of the Commitment
Termination Date of any Loans pursuant to Section 8.2 or Section 8.3, repay
all Loans, unless, pursuant to Section 8.3, only a portion of all Loans is
so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount.
SECTION 3.2 Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1 Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Reference Rate
Loan, equal to the Alternate Reference Rate from time to time in effect;
(b) on that portion maintained as a Eurodollar Rate Loan, during each
Interest Period applicable thereto, equal to
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the sum of the Eurodollar Rate (Reserve Adjusted) for such Interest Period
plus the Applicable Margin.
The "Eurodollar Rate (Reserve Adjusted)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a Eurodollar Rate Loan for
any Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
Eurodollar Rate
Eurodollar Rate = --------------------------------------
(Reserve Adjusted) 1.00 - Eurocurrency Reserve Percentage
The Eurodollar Rate (Reserve Adjusted) for any Interest Period for
Eurodollar Rate Loans will be determined by the Lender on the basis of the
Eurocurrency Reserve Percentage in effect two Business Days before the first day
of such Interest Period.
"Eurodollar Rate" means, relative to any Interest Period for Eurodollar
Rate Loans, the rate of interest equal to the average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates per annum at which Dollar
deposits in immediately available funds are offered to the Lender's Eurodollar
Office in the interbank eurodollar market as at or about 10:00 a.m. Chicago time
two Business Days prior to the beginning of such Interest Period for delivery on
the first day of such Interest Period, and in an amount approximately equal to
the amount of the Lender's Eurodollar Rate Loan and for a period approximately
equal to such Interest Period.
"Eurocurrency Reserve Percentage" means, relative to any Interest Period
for Eurodollar Rate Loans, the reserve percentage (expressed as a decimal) equal
to the maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
All Eurodollar Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurodollar Rate Loan.
SECTION 3.2.2 Post-Maturity Rates. After the date any principal amount of
any Loan is due and payable (whether on the Commitment Termination Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the
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extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to the Alternate Reference Rate plus a margin
of 2%.
SECTION 3.2.3 Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Commitment Termination Date therefor;
(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on any Eurodollar Loan;
(c) with respect to Reference Rate Loans, on each Quarterly Payment
Date occurring after the date of the initial Borrowing hereunder;
(d) with respect to Eurodollar Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed three
months, on the day three months after the beginning of such Interest
Period); and
(e) on that portion of any Loans the Commitment Termination Date of
which is accelerated pursuant to Section 8.2 or Section 8.3, immediately
upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Commitment Termination Date, upon acceleration or
otherwise) shall be payable upon demand.
SECTION 3.3 Commitment Fee. The Borrower agrees to pay to the Lender a
commitment fee of 3/8 of 1% per annum on the daily average of the unused amount
of the Commitment during the period commencing on the date of this Agreement and
ending on the Commitment Termination Date, or, if earlier, the termination of
the Credit; provided, however, that for the period commencing the date hereof,
the Borrower has designated $15,000,000 of the Commitment as "Reserved Credit."
The commitment fee payable on the Reserved Credit portion of the Commitment
shall be only 1/4 of 1% per annum unless the Borrower shall at any time borrow
any portion of the Reserved Credit. If the Borrower shall borrow any portion of
the Reserved Credit during a Credit Year, the Borrower shall pay an additional
1/8 of 1% per annum commitment fee on the entire amount of the Reserved Credit
for the period commencing at the beginning of such Credit Year. "Credit Year"
shall mean a period of one year commencing the date hereof or on each
anniversary thereof. Said additional amount shall be payable on the date of the
advance of the Reserved Credit for the period from the beginning of such Credit
Year to the end of the next preceding calendar month and thereafter on the
Quarterly Payment Dates as provided below. The Borrower shall designate in
writing the amount of the Reserved
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Credit at least 30 days prior to the commencement of each Credit Year. Such
commitment fee shall be payable on each Quarterly Payment Date for the monthly
period ending the last day of the prior calendar month and on the Termination
Date or the date the Credit terminates, for any period then ending for which
such commitment fee shall not have been theretofore paid.
SECTION 3.4 Balance Deficiency Fee. The Borrower agrees to maintain with
the Lender net collected balances in non-interest-bearing accounts of at least
$500,000 at all times, in addition to such balances as may be required to
support other borrowings and services. In the event the Borrower shall fail to
maintain such balances, it shall pay such reasonable fee in lieu thereof as the
Lender and the Borrower shall agree in writing.
ARTICLE IV
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 4.1 Eurodollar Rate Lending Unlawful. If the Lender shall
determine (which determination shall, upon notice thereof to the Borrower, be
conclusive and binding on the Borrower) that the introduction of or any change
in or in the interpretation of any law after the date hereof makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for the Lender to make, continue or maintain any Loan as, or to convert any Loan
into, a Eurodollar Rate Loan, the obligations of the Lender to make, continue,
maintain or convert any such Loans shall, upon such determination, forthwith be
suspended until the Lender shall notify the Borrower that the circumstances
causing such suspension no longer exist, and all Eurodollar Rate Loans shall
automatically convert into Reference Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
The Lender agrees to give the Borrower prompt notice of the occurrence of
any circumstances described in this Section 4.1.
SECTION 4.2 Deposits Unavailable. If the Lender shall have determined
that
(a) Dollar certificates of deposit or Dollar deposits, as the case may
be, in the relevant amount and for the relevant Interest Period are not
available to the Lender in its relevant market; or
(b) by reason of circumstances affecting the Lender's relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to Eurodollar Rate Loans,
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then, upon notice from the Lender to the Borrower, which the Lender agrees to
give promptly, the obligations of the Lender under Section 2.3 and Section 2.4
to make or continue any Loans as, or to convert any Loans into, Eurodollar Rate
Loans shall forthwith be suspended until the Lender shall notify the Borrower
that the circumstances causing such suspension no longer exist.
SECTION 4.3 Increased Eurodollar Rate Loan Costs, etc. The Borrower
agrees to reimburse the Lender for any increase in the cost to the Lender of, or
any reduction in the amount of any sum receivable by the Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, Eurodollar Rate Loans. The Lender shall promptly notify the
Borrower in writing of the occurrence of any such event, such notice to state,
in reasonable detail, the reasons therefor and the additional amount required
fully to compensate the Lender for such increased cost or reduced amount. Such
additional amounts shall be payable by the Borrower to the Lender within five
days of its receipt of such notice, and such notice shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
SECTION 4.4 Funding Losses. In the event the Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by the Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a Eurodollar Rate
Loan) as a result of
(a) any conversion or repayment or prepayment of the principal amount
of any Eurodollar Rate Loans on a date other than the scheduled last day of
the Interest Period applicable thereto, whether pursuant to Section 3.1 or
otherwise;
(b) any Loans not being made as Eurodollar Rate Loans in accordance
with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, Eurodollar
Rate Loans in accordance with the Continuation/ Conversion Notice therefor,
then, upon the written notice of the Lender to the Borrower, which the Lender
agrees to give promptly, the Borrower shall, within five days of its receipt
thereof, pay to the Lender such amount as will (in the reasonable determination
of the Lender) reimburse the Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
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SECTION 4.5 Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority after the date hereof affects or would affect
the amount of capital required or expected to be maintained by the Lender or any
Person controlling the Lender, and the Lender determines (in its sole and
absolute discretion) that the rate of return on its or such controlling Person's
capital as a consequence of its Commitment or the Loans made by the Lender is
reduced to a level below that which such Lender or such controlling Person could
have achieved but for the occurrence of any such circumstance, then, in any such
case upon notice from time to time by the Lender to the Borrower, which notice
the Lender agrees to give promptly, the Borrower shall immediately pay directly
to the Lender additional amounts sufficient to compensate the Lender or such
controlling Person for such reduction in rate of return. A statement of the
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower. In determining such amount, the Lender
may use any reasonable method of averaging and attribution that it (in its sole
and absolute discretion) shall deem applicable.
SECTION 4.6 Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or other taxes, fees, duties, withholdings or other charges of any
nature whatsoever imposed by any taxing authority, other than franchise taxes
and taxes imposed on or measured by the Lender's net income or receipts (such
non-excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Lender an official receipt or other
documentation satisfactory to the Lender evidencing such payment to such
authority; and
(c) pay to the Lender such additional amount or amounts as is
necessary to ensure that the net amount actually received by the Lender
(net of any credit or other benefit to the Lender from withholding) will
equal the full amount the Lender would have received had no such
withholding or deduction been required.
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Moreover, if any Taxes are directly asserted against the Lender with respect to
any payment received by the Lender hereunder, the Lender may pay such Taxes and
the Borrower will promptly pay such additional amounts (including any penalties,
interest or expenses net of any credit or other benefit to the Lender from such
withholding) as is necessary in order that the net amount received by such
person after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount such person would have received had not such
Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Lender the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
incremental Taxes, interest or penalties that may become payable by the Lender
as a result of any such failure.
SECTION 4.7 Payments, Computations, etc. All payments by the Borrower
pursuant to this Agreement, the Note or any other Loan Document shall be made by
the Borrower to the Lender, without setoff, deduction or counterclaim, not later
than 11:00 a.m., Chicago time, on the date due, in same day or immediately
available funds, to such account as the Lender shall specify from time to time
by notice to the Borrower. Funds received after that time shall be deemed to
have been received by the Lender on the next succeeding Business Day. All
interest and fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest or fee is payable over a year comprised of 360 days.
Whenever any payment to be made shall otherwise be due on a day which is not a
Business Day, such payment shall (except as otherwise required by clause (c) of
the definition of the term "Interest Period" with respect to Eurodollar Rate
Loans) be made on the next succeeding Business Day and such extension of time
shall be included in computing interest and fees, if any, in connection with
such payment.
SECTION 4.8 Setoff. The Lender shall, upon the occurrence of any Default
described in clauses (a) through (d) of Section 8.1.9 or upon the occurrence of
any other Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due), and (as
security for such Obligations) the Borrower hereby grants to the Lender a
continuing security interest in, any and all balances, credits, deposits,
accounts or moneys of the Borrower then or thereafter maintained with the
Lender. The Lender agrees promptly to notify the Borrower after any such setoff
and application made by the Lender; provided, however, that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of the Lender under this Section are in addition to other rights and
remedies
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(including other rights of setoff under applicable law or otherwise) which the
Lender may have.
SECTION 4.9 Use of Proceeds. The Borrower shall apply the proceeds of
each Borrowing in accordance with the fourth recital; without limiting the
foregoing, no proceeds of any Loan will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or any "margin stock", as defined in F.R.S. Board Regulation U.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1 Initial Borrowing. The obligation of the Lender to fund the
initial Borrowing shall be subject to the prior or concurrent satisfaction of
each of the conditions precedent set forth in this Section 5.1.
SECTION 5.1.1 Resolutions, etc. The Lender shall have received from each
Obligor a certificate, dated the date of the initial Borrowing, of its Secretary
or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Note and each other Loan Document to be executed by it; and
(b) the incumbency and signatures of those of its officers authorized
to act with respect to this Agreement, the Note and each other Loan
Document executed by it,
upon which certificate the Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.
SECTION 5.1.2 Delivery of Note. The Lender shall have received the Note
duly executed and delivered by the Borrower.
SECTION 5.1.3 Termination of Existing Credit Agreement. The Credit
Agreement dated as of February 25, 1987, as amended, between PFM, the Borrower
and the Lender shall be terminated (except for such sections thereof as are
stated to survive termination) and all indebtedness thereunder shall be paid
contemporaneously with the initial Borrowing.
SECTION 5.1.4 Guaranties. The Lender shall have received the Guaranty,
dated the date hereof, duly executed by PFM and DTI.
SECTION 5.1.5 Opinion of Counsel. The Lender shall have received an
opinion, dated the date of the initial Borrowing and
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addressed to the Lender, from Kirkland & Ellis, counsel to the Obligors,
substantially in the form of Exhibit E hereto.
SECTION 5.2 All Borrowings. The obligation of the Lender to fund any Loan
on the occasion of any Borrowing (including the initial Borrowing) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 5.2.
SECTION 5.2.1 Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Borrowing the following statements shall be true
and correct
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in Section 6.7) shall be true and
correct with the same effect as if then made (unless stated to relate
solely to an early date, in which case such representations and warranties
shall be true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Lender pursuant to
Section 6.7
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries which is reasonably likely to materially adversely
affect the Borrower's consolidated business, operations, assets,
revenues, properties or profitability or which purports to affect the
legality, validity or enforceability of this Agreement, the Note or
any other Loan Document; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental investigation or
proceeding disclosed pursuant to Section 6.7 which is reasonably
likely to materially adversely affect the consolidated businesses,
operations, assets, revenues, properties or profitability of the
Borrower and its Subsidiaries; and
(c) no Default shall have then occurred and be continuing, and neither
the Borrower, any other Obligor, nor any of its Subsidiaries are in
violation of any law or governmental regulation or court order or decree
which violation is reasonably likely to materially adversely affect the
consolidated business, operations, assets, revenues, properties, or
profitability of the Borrower and its Subsidiaries.
SECTION 5.2.2 Borrowing Request. The Lender shall have received a
Borrowing Request for such Borrowing. Each of the
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delivery of a Borrowing Request and the acceptance by the Borrower of the
proceeds of such Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing (both immediately before and after
giving effect to such Borrowing and the application of the proceeds thereof) the
statements made in Section 5.2.1 are true and correct in all material respects.
SECTION 5.2.3 Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors shall be reasonably satisfactory in form and
substance to the Lender and its counsel; the Lender and its counsel shall have
received all information, approvals, opinions, documents or instruments as the
Lender or its counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants unto the Lender as set
forth in this Article VI.
SECTION 6.1 Organization, etc. The Borrower and each of its Subsidiaries
is a corporation validly organized and existing and in good standing under the
laws of the State of its incorporation, is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction where the nature
of its business requires such qualification and except where the failure to be
so qualified would not have a material adverse effect on the Borrower and its
Subsidiaries taken as a whole, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Agreement, the Note and each other Loan
Document to which it is a party and to own and hold under lease its property and
to conduct its business substantially as currently conducted by it, except for
those licenses, permits and approvals the failure of which to obtain is not
reasonably likely to have a material adverse effect on the consolidated
businesses, operations, assets, revenues, properties or profitability of the
Borrower and its Subsidiaries.
SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement and the Note and the
execution, delivery and performance by each other Obligor of each Loan Document
executed or to be executed by it are within the Borrower's and each such
Obligor's corporate powers, have been duly authorized by all necessary corporate
action, and do not
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(a) contravene the Borrower's or any such Obligor's Organic Documents;
(b) contravene any material contractual restriction, law or
governmental regulation or court decree or order binding on or affecting
the Borrower or any such Obligor; or
(c) result in, or require the creation or imposition of, any Lien on
any of any Obligor's properties.
SECTION 6.3 Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower or any other Obligor of this Agreement,
the Note or any other Loan Document to which it is a party. Neither the
Borrower nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4 Validity, etc. This Agreement constitutes, and the Note will,
on the due execution and delivery thereof, constitute, the legal, valid and
binding obligations of the Borrower enforceable in accordance with their
respective terms subject to applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and to equitable
principles of general applicability; and each Loan Document executed pursuant
hereto by each other Obligor will, on the due execution and delivery thereof by
such Obligor, be the legal, valid and binding obligation of such Obligor
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally and to equitable principles of general applicability.
SECTION 6.5 Financial Information. The audited consolidated financial
statement of the Borrower and its Subsidiaries as at February 28, 1994, and the
unaudited consolidated financial statements of the Borrower and its Subsidiaries
as at May 31, 1994, copies of which have been furnished to the Lender, have been
prepared in accordance with GAAP consistently applied, and present fairly the
consolidated financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
SECTION 6.6 No Material Adverse Change. Since the date of the financial
statements described in Section 6.5, there has been no material adverse change
in the financial condition, operations,
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assets, business, properties or profitability of the Borrower and its
Subsidiaries taken as a whole.
SECTION 6.7 Litigation, Labor Controversies, etc. There is no pending or,
to the knowledge of the Borrower, threatened litigation, action, proceeding or
labor controversy affecting the Borrower or any of its Subsidiaries, or any of
their respective properties, assets or revenues, which is reasonably likely to
materially adversely affect the consolidated financial condition, operations,
assets, business, properties or profitability of the Borrower and its
Subsidiaries or which purports to affect the legality, validity or
enforceability of this Agreement, the Note or any other Loan Document, except as
disclosed in Item 6.7 ("Litigation") of the Disclosure Schedule.
SECTION 6.8 Subsidiaries. The Borrower has no Subsidiaries, except those
Subsidiaries
(a) which are identified in Item 6.8 ("Existing Subsidiaries") of the
Disclosure Schedule;
(b) which are permitted to have been acquired in accordance with
Section 7.2.5 or 7.2.8; or
(c) which are wholly owned by the Borrower and which shall have
delivered to the Lender a guaranty in form reasonably satisfactory to the
Lender together with such related documents, including such resolutions
and opinions of counsel as the Lender may reasonably request.
SECTION 6.9 Ownership of Properties. The Borrower and each of its
Subsidiaries owns good and marketable title to all of its material properties
and assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights), free
and clear of all Liens, charges or claims (including infringement claims with
respect to patents, trademarks, copyrights and the like) except as permitted
pursuant to Section 7.2.3.
SECTION 6.10 Taxes. The Borrower and each of its Subsidiaries has filed
all material tax returns and reports required by law to have been filed by it
and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 6.11 Pension and Welfare Plans. During the twelve-consecutive-
month period prior to the date of the execution and delivery of this Agreement
and prior to the date of any Borrowing hereunder, no steps have been taken to
terminate any Pension Plan
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(other than any Pension Plan which has been fully funded and with respect to
which termination, neither the Borrower nor any of its Subsidiaries shall have
any continuing liability), and no contribution failure has occurred with respect
to any Pension Plan sufficient to give rise to a Lien under section 302(f) of
ERISA. No condition exists or event or transaction has occurred with respect to
any Pension Plan which might reasonably result in the incurrence by the Borrower
or any member of the Controlled Group of any material liability, fine or
penalty. Except as disclosed in Item 6.11 ("Employee Benefit Plans") of the
Disclosure Schedule, neither the Borrower nor any member of the Controlled Group
has any contingent liability with respect to any post-retirement benefit under a
Welfare Plan, other than liability for continuation coverage described in Part 6
of Title I of ERISA.
SECTION 6.12 Environmental Warranties. Except as set forth in Item 6.12
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower and its Subsidiaries in
material compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or, to the best
of the knowledge of the Borrower, threatened
(i) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries from governmental
authorities with respect to any alleged violation of any Environmental
Law if said alleged violation could reasonably be expected to have a
material adverse effect on the consolidated financial condition,
operations, assets, business properties or profitability of the
Borrower and its Subsidiaries, and,
(ii) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries from any Person
other than a governmental authority with respect to any alleged
violation of any Environmental Law, if said alleged violation could
reasonably be expected to have a material adverse effect on the
consolidated financial condition, operation, assets, business,
properties or profitability of the Borrower and its Subsidiaries.
(c) there have been no Releases of Hazardous Materials at, on or under
any property now or previously owned or leased by the Borrower or any of
its Subsidiaries that, singly or in the aggregate, have, or may reasonably
be expected to have, a
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material adverse effect on the consolidated financial condition,
operations, assets, business, properties or profitability of the Borrower
and its Subsidiaries;
(d) the Borrower and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary or
material for their businesses;
(e) no property now or previously owned or leased by the Borrower or
any of its Subsidiaries is listed or, to the best of the knowledge of the
Borrower, proposed for listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean-up;
(f) to the best of the Borrower's knowledge, there are no underground
storage tanks, active or abandoned, including petroleum storage tanks, on
or under any property now or previously owned or leased by the Borrower or
any of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
consolidated financial condition, operations, assets, business, properties
or profitability of the Borrower and its Subsidiaries;
(g) to the best of the knowledge of the Borrower, neither Borrower nor
any Subsidiary of the Borrower has directly transported or directly
arranged for the transportation of any Hazardous Material to any location
which is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list of sites
requiring investigation or cleanup or which is the subject of federal,
state or local enforcement actions or other investigations which may lead
to material claims against the Borrower or such Subsidiary thereof for any
remedial work, damage to natural resources or personal injury, including
claims under CERCLA;
(h) to the best of the knowledge of the Borrower, there are no
polychlorinated biphenyls or friable asbestos present at any property now
or previously owned or leased by the Borrower or any Subsidiary of the
Borrower that, singly or in the aggregate, have, or may reasonably be
expected to have, a material adverse effect on the consolidated financial
condition, operations, assets, business, properties or profitability of the
Borrower and its Subsidiaries; and
(i) to the best of the knowledge of the Borrower, no conditions exist
at, on or under any property now or
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previously owned or leased by the Borrower which, with the passage of time,
or the giving of notice or both, would give rise to liability under any
Environmental Law which would be reasonably expected to have a material
adverse effect on the consolidated financial condition, operations, assets,
business, properties or profitability of the Borrower and its Subsidiaries.
SECTION 6.13 Regulations G, U and X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section with such meanings.
SECTION 6.14 Accuracy of Information. All factual information heretofore
or contemporaneously furnished by or on behalf of the Borrower in writing to the
Lender as specifically required in this Agreement is, and all other such factual
information hereafter so furnished by the Borrower to the Lender will be, true
and accurate in every material respect on the date as of which such information
is dated or certified and as of the date of execution and delivery of this
Agreement by the Lender, and such information is not, or shall not be, as the
case may be, incomplete by omitting to state any material fact necessary to make
such information not misleading considered as a whole.
ARTICLE VII
COVENANTS
SECTION 7.1 Affirmative Covenants. The Borrower agrees with the Lender
that, until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
Section 7.1.
SECTION 7.1.1 Financial Information, Reports, Notices, etc. The Borrower
will furnish, or will cause to be furnished, to the Lender copies of the
following financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrower, consolidated balance sheets of the Borrower and its Subsidiaries
as of the end of such Fiscal Quarter and consolidated statements of
earnings and cash flow of the Borrower and its Subsidiaries for such Fiscal
Quarter and for the period commencing at the end of the
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previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the chief financial Authorized Officer of the Borrower or his
designee;
(b) as soon as available and in any event within 90 days after the end
of each Fiscal Year of the Borrower, a copy of the annual audit report for
such Fiscal Year for the Borrower and its Subsidiaries, including therein
consolidated balance sheets of the Borrower and its Subsidiaries as of the
end of such Fiscal Year and consolidated statements of earnings and cash
flow of the Borrower and its Subsidiaries for such Fiscal Year, in each
case certified (without any Impermissible Qualification) in a manner
reasonably acceptable to the Lender by Arthur Andersen or other independent
public accountants reasonably acceptable to the Lender, together with a
certificate from such accountants containing a computation of, and showing
compliance with, each of the financial ratios and restrictions contained in
Section 7.2.4 and to the effect that, in making the examination necessary
for the signing of such annual report by such accountants, they have not
become aware of any Default or Event of Default that has occurred and is
continuing, or, if they have become aware of such Default or Event of
Default, describing such Default or Event of Default and the steps, if any,
being taken to cure it;
(c) as soon as available and in any event within 45 days after the end
of each Fiscal Quarter (or 90 days after the end of the last Fiscal Quarter
of any Fiscal Year), a certificate, executed by the chief financial
Authorized Officer of the Borrower or his designee, showing (in reasonable
detail and with appropriate calculations and computations in all respects
reasonably satisfactory to the Lender) compliance with the financial
covenants set forth in Section 7.2.4. and calculating the Applicable
Margin;
(d) as soon as possible and in any event within three days after the
occurrence of each Default, a statement of the chief financial Authorized
Officer of the Borrower or his designee setting forth details of such
Default and the action which the Borrower has taken and proposes to take
with respect thereto;
(e) as soon as possible and in any event within three days after (x)
the occurrence of any material adverse development with respect to any
litigation, action, proceeding or labor controversy described in Section
6.7 or (y) the commencement of any labor controversy, litigation, action or
proceeding of the type described in Section 6.7, notice thereof and copies
of all documentation relating thereto;
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(f) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends generally to its securityholders, and all
reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(g) immediately upon becoming aware of the institution of any steps by
the Borrower or any other Person to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such failure
is sufficient to give rise to a Lien under section 302(f) of ERISA, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the Borrower of
any material liability, fine or penalty, or any material increase in the
contingent liability of the Borrower with respect to any post-retirement
Welfare Plan benefit, notice thereof and copies of all documentation
relating thereto;
(h) within 30 days after receipt thereof by the Borrower, a copy of
the management letter delivered to the Borrower in connection with its
annual audit by the certified public accountants carrying out such audit;
and
(i) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the
Lender may from time to time reasonably request.
SECTION 7.1.2 Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation as necessary in the conduct of its
business; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its property
except to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
SECTION 7.1.3 Maintenance of Properties. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its
properties in good repair, working order and
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condition, and make necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be properly conducted
at all times unless the Borrower determines in good faith that the continued
maintenance of any of its properties is no longer economically desirable.
SECTION 7.1.4 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business (including
business interruption insurance) against such casualties and contingencies and
of such types and in such amounts as is customary in the case of similar
businesses and will, upon request of the Lender, furnish to the Lender at
reasonable intervals a certificate of an Authorized Officer of the Borrower
setting forth the nature and extent of all insurance maintained by the Borrower
and its Subsidiaries in accordance with this Section.
SECTION 7.1.5 Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep books and records which accurately reflect in all
material respects all of its business affairs and transactions and permit the
Lender or any of its representatives, at reasonable times and intervals, to
visit all of its offices, to discuss its financial matters with its officers and
independent public accountant (and the Borrower hereby authorizes such
independent public accountant to discuss the Borrower's financial matters with
the Lender or its representatives whether or not any representative of the
Borrower is present) and to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other corporate records. The
Borrower shall pay any reasonable fees of such independent public accountant
incurred in connection with the Lender's exercise of its rights pursuant to this
Section.
SECTION 7.1.6 Environmental Covenant. The Borrower will, and will cause
each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance with
all applicable Environmental Laws;
(b) immediately notify the Lender and provide copies upon receipt of
all written claims, complaints, notices or inquiries alleging actual or
material noncompliance with Environmental Laws, and shall use its best
efforts to promptly resolve any actions and proceedings relating to
material noncompliance with Environmental Laws; and
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(c) provide such information and certifications which the Lender may
reasonably request from time to time to evidence compliance with this
Section 7.1.6.
SECTION 7.2 Negative Covenants. The Borrower agrees with the Lender that,
until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
Section 7.2.
SECTION 7.2.1 Business Activities. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity, except those
described in the first recital and such activities as may be incidental or
related thereto.
SECTION 7.2.2 Indebtedness. The Borrower will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or
be liable in respect of any Indebtedness, other than the following:
(a) Indebtedness in respect of the Loans and other Obligations;
(b) Indebtedness existing as of the Effective Date which is identified
in Item 7.2.2(b) ("Ongoing Indebtedness") of the Disclosure Schedule;
(c) Indebtedness in an aggregate principal amount not to exceed
$10,000,000 at any time outstanding which is incurred by any Subsidiaries
to a vendor of any assets or other financing party or source to finance the
acquisition of such assets;
(d) unsecured Indebtedness incurred in the ordinary course of business
(including open accounts extended by suppliers on normal trade terms in
connection with purchases of goods and services, but excluding Indebtedness
incurred through the borrowing of money or Contingent Liabilities);
(e) Indebtedness of any Subsidiary at the time it becomes a Subsidiary
or of a Subsidiary created for the purpose of a merger arising as a result
of the merger;
(f) Indebtedness of the Borrower's Subsidiaries owing to the Borrower
or other Subsidiaries of the Borrower;
(g) Indebtedness of PFM or Pre Finish Metals (EG) Incorporated arising
solely as a result of Pre Finish Metals (EG) Incorporated being a general
partner of Walbridge Coatings;
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(h) other Indebtedness of the Subsidiaries in an aggregate amount not
to exceed $10,000,000; and
(i) refinancing of Indebtedness permitted under clauses (b) and (e)
above so long as the Indebtedness shall not be increased and the terms
thereof shall be not less favorable to the Borrower and its Subsidiaries;
provided, however, that no Indebtedness otherwise permitted by clauses (c), (d),
(e), (f), (h) or (i) shall be incurred if, after giving effect to the incurrence
thereof, any Default under another Section of this Agreement shall have occurred
and be continuing.
SECTION 7.2.3 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens granted to secure payment of Indebtedness of the type
permitted and described in clause (c) or (e) of Section 7.2.2 and covering
only those assets acquired with the proceeds of such Indebtedness;
(b) Liens existing as of the Effective Date which are identified in
Item 7.2.2(b) ("Liens") of the Disclosure Statement;
(c) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside
on its books;
(d) Liens of carriers, warehousemen, mechanics, materialmen and
landlords and other similar liens incurred in the ordinary course of
business for sums not overdue or being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(e) Liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(f) judgment Liens in existence less than 15 days after the entry
thereof or with respect to which execution has been
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stayed or the payment of which is covered in full (subject to a customary
deductible) by insurance maintained with responsible insurance companies;
(g) Liens created by or pursuant to this Agreement;
(h) leases or subleases granted to third Persons not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement or from precautionary UCC financing statements
with respect to the Borrower or any of its Subsidiaries as lessee, bailee
or in a similar capacity;
(j) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement;
(k) Liens created pursuant to Capital Leases permitted by this
Agreement;
(l) with respect to real property (A) those liens, encumbrances and
other matters affecting title to any mortgaged property listed in the title
insurance policies in respect thereof but not securing any obligation for
borrowed money, (B) easements, encroachments, covenants, rights of way,
restrictions, minor defects, irregularities and encumbrances on title and
other similar charges and encumbrances that do not, individually or in the
aggregate, interfere in any material respect with the ordinary conduct of
the business of the Borrower and its Subsidiaries, (C) municipal and zoning
ordinances that are not violated by the existing improvements and the
present and proposed uses by the Borrower and its Subsidiaries and (D)
general real estate taxes and assessments not yet delinquent; and
(m) Liens arising pursuant to purchase money interests or mortgages
securing Indebtedness representing the purchase price (or financing of the
purchase price within 90 days after the respective purchase) of assets
acquired after the date hereof, provided that (i) any such Lien attach only
to the assets so purchased, (ii) the Indebtedness secured by any such Lien
does not exceed 100%, nor is less than 70%, of the lesser of the fair
market value or the purchase price of the related assets and (iii) the
Indebtedness secured by any such Lien is permitted under Section 7.2.2.
SECTION 7.2.4 Financial Condition. The Borrower will not permit:
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(a) Its Tangible Net Worth to be less than $80,000,000 plus 90% of
the net cash proceeds received by the Borrower from the sale of any of its
capital stock on or after May 31, 1994 plus 60% of the consolidated net
income (if positive) of the Borrower and its Subsidiaries for each Fiscal
Quarter commencing after May 31, 1994;
(b) Its Leverage Ratio to be greater than 1.5 to 1.0;
(c) The ratio ("Interest Coverage Ratio") for any Fiscal Quarter of
its consolidated earnings before interest and taxes to consolidated
interest expense to be less than 2.0 to 1.0;
(d) Its Current Ratio to be less than 1.2 to 1.0.
SECTION 7.2.5 Investments. The Borrower will not, and will not permit any
of its Subsidiaries to, make, incur, assume or suffer to exist any Investment in
any other Person, except:
(a) Investments existing on the Effective Date and identified in Item
7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Indebtedness
pursuant to Section 7.2.2;
(d) Capital Expenditures;
(e) in the ordinary course of business, Investments by the Borrower in
any of its Subsidiaries, or by any such Subsidiary in the Borrower or any
of the other Subsidiaries, by way of contributions to capital or loans,
advances or guarantees provided that any such Subsidary shall have
delivered a guaranty in form reasonably satisfactory to the Lender and such
related documents as the Lender may reasonably request;
(f) Investments by any Subsidiary outstanding at the time it becomes a
Subsidiary insofar as no Default shall occur as a result; and
(g) loans or capital contributions to Walbridge Coatings in an
aggregate amount not to exceed $4,000,000 in any Fiscal Year;
(h) guaranties by Pre Finish Metals (EG) arising solely as a result of
its being a general partner of Walbridge Coatings; and
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(i) short term loans to officers and employees of the Borrower and
its Subsidiaries not to exceed $500,000 in the aggregate at any time
outstanding;
provided, however, that
(j) any Investment which when made complies with the requirements of
the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not
comply with such requirements; and
(k) no Investment otherwise permitted by clause (e) or (f) shall be
made if, immediately before or after giving effect thereto, any Default
under another Section of this Agreement shall have occurred and be
continuing.
SECTION 7.2.6 Rental Obligations. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into at any time any arrangement which
does not create a Capitalized Lease Liability and which involves the leasing by
the Borrower or any of its Subsidiaries from any lessor of any real or personal
property (or any interest therein), except arrangements which, together with all
other such arrangements which shall then be in effect, will not require the
payment of an aggregate amount of rentals by the Borrower and its Subsidiaries
in excess of (excluding escalations resulting from a rise in the consumer price
or similar index) $10,000,000 for any Fiscal Year, other than leasing
obligations of any Subsidiary at the time the Subsidiary becomes a Subsidiary
insofar as no Default shall occur as a result; provided, however, that any
calculation made for purposes of this Section shall exclude any amounts required
to be expended for maintenance and repairs, insurance, taxes, assessments, and
other similar charges.
SECTION 7.2.7 Take or Pay Contracts. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into or be a party to any arrangement
for the purchase of materials, supplies, other property or services (involving
in the aggregate expenditures of more than $1,000,000 per year at any time] if
such arrangement by its express terms requires that payment be made by the
Borrower or such Subsidiary regardless of whether such materials, supplies,
other property or services are delivered or furnished to it.
SECTION 7.2.8 Consolidation, Merger, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with,
or merge into or with, any other corporation, or purchase or otherwise acquire
all or substantially all of the assets of any Person (or of any division
thereof) unless after giving effect thereto no Default shall have occurred and
be continuing, except for liquidation of an immaterial Subsidiary or
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the merger of a wholly owned Subsidiary into Borrower or another wholly owned
Subsidiary or the creation of a wholly owned Subsidiary provided that in the
event of the creation of a Subsidiary, such Subsidiary shall deliver a guaranty
in form reasonably satisfactory to the Lender and such related documents,
including such resolutions and opinions of counsel as the Lender may reasonably
request.
SECTION 7.2.9 Asset Dispositions, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any substantial part of its assets (including accounts receivable and
capital stock of Subsidiaries) to any Person (other than the Borrower or any of
its Subsidiaries) unless
(a) such sale, transfer, lease, contribution or conveyance is in the
ordinary course of its business or is permitted by Section 7.2.8; or
(b) after giving effect thereto no Default shall have occurred and be
continuing.
SECTION 7.2.10 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates
unless such arrangement or contract is fair and equitable to the Borrower or
such Subsidiary and is an arrangement or contract of the kind which would be
entered into by a prudent Person in the position of the Borrower or such
Subsidiary with a Person which is not one of its Affiliates.
SECTION 7.2.11 Negative Pledges, etc. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any agreement (excluding this
Agreement and any other Loan Document and any agreement governing any
Indebtedness permitted by clause (c) or (e) of Section 7.2.2 as to the assets
financed with the proceeds of such Indebtedness) prohibiting
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or the ability
of the Borrower or any other Obligor to amend or otherwise modify this
Agreement or any other Loan Document (other than any such prohibition in
any documentation related to a Subsidiary hereafter becoming a Subsidiary
of the Borrower, existing at the time of its becoming Subsidiary not
created in contemplation of its becoming a Subsidiary and attaching only to
assets of such Subsidiary); or
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(b) the ability or any Subsidiary to make any payments, directly or
indirectly, to the Borrower by way of dividends, advances, repayments of
loans or advances, reimbursements of management and other intercompany
charges, expenses and accruals or other returns on investments, or any
other agreement or arrangement which restricts the ability of any such
Subsidiary to make any payment, directly or indirectly, to the Borrower.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1 Non-Payment of Obligations. The Borrower shall default
(which default shall continue for five days) in the payment or prepayment when
due of any principal of or interest on any Loan, or in the payment when due of
any commitment fee or of any other Obligation.
SECTION 8.1.2 Breach of Warranty. Any representation or warranty of the
Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by the Borrower or any other Obligor to the Lender for the purposes of or in
connection with this Agreement or any such other Loan Document (including any
certificates delivered pursuant to Article V) is or shall be incorrect when made
in any material respect.
SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations. The
Borrower shall default in the due performance and observance of any of its
obligations under Section 7.1 or 7.2.
SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Borrower by the Lender.
SECTION 8.1.5 Default on Other Indebtedness. A default shall occur in the
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of $500,000, or a
default shall occur in the performance or observance of any
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obligation or condition with respect to such Indebtedness if the effect of such
default is to accelerate the maturity of any such Indebtedness or such default
shall continue unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity, including without limitation the occurrence of any
"Designated Event" as defined in Section 6.02 of the Credit Facility Agreement
and Section 6.02 of the Term Loan Agreement, which relates to the Borrower, PFM
or to Pre Finish Metals (EG) Incorporated; provided, however, that (i) no such
default in the payment when due of the Series A Promissory Note, the Series B
Promissory Note, the Series A Notes or the Series B Notes and (ii) no such
default in the performance or observance of any obligation or condition with
respect to the Series A Promissory Note, the Series B Promissory Note, the
Series A Notes or the Series B Notes, shall constitute an Event of Default or a
Default under this Agreement unless such default shall also constitute an event
of default (beyond any applicable grace period) with respect to the Series C
Promissory Note or the Series C Notes.
SECTION 8.1.6 Judgments. Any judgment or order for the payment of money
in excess of $1,000,000 shall be rendered against the Borrower or any of its
Subsidiaries and either
(a) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order and it remains unpaid and unstayed; or
(b) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION 8.1.7 Pension Plans. Any of the following events shall occur with
respect to any Pension Plan
(a) the institution of any steps by the Borrower, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as a
result of such termination, the Borrower or any such member could be
required to make a contribution to such Pension Plan, or could reasonably
expect to incur a liability or obligation to such Pension Plan, in excess
of $1,000,000; or
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 8.1.8 Control of the Borrower. Any Change in Control shall occur.
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SECTION 8.1.9 Bankruptcy, Insolvency, etc. The Borrower or any of its
Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit in writing its
inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or any
of its Subsidiaries or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its Subsidiaries
or for a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within 60
days, provided that the Borrower, each Subsidiary hereby expressly
authorizes the Lender to appear in any court conducting any relevant
proceeding during such 60-day period to preserve, protect and defend its
rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Borrower or any of its Subsidiaries and, if
any such case or proceeding is not commenced by the Borrower or such
Subsidiary, such case or proceeding shall be consented to or acquiesced in
by the Borrower or such Subsidiary or shall result in the entry of an order
for relief or shall remain for 60 days undismissed, provided that the
Borrower, each Subsidiary hereby expressly authorizes the Lender to appear
in any court conducting any such case or proceeding during such 60-day
period to preserve, protect and defend its rights under the Loan Documents;
or
(e) take any corporate action authorizing, or in furtherance of, any
of the foregoing.
SECTION 8.2 Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the Commitment (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand.
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SECTION 8.3 Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Lender may by notice to the Borrower declare all or any portion
of the outstanding principal amount of the Loans and other Obligations to be due
and payable and/or the Commitment (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Loans and other Obligations
which shall be so declared due and payable shall be and become immediately due
and payable, without further notice, demand or presentment, and/or, as the case
may be, the Commitment shall terminate.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Lender. No failure or delay on the part of the Lender
or the holder of the Note in exercising any power or right under this Agreement
or any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the Lender
or the holder of the Note under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 9.2 Notices. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
or by Telex or by facsimile and addressed, delivered or transmitted to such
party at its address, Telex or facsimile number set forth below its signature
hereto or at such other address, Telex or facsimile number as may be designated
by such party in a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid or if properly addressed and sent by
pre-paid courier service, shall be deemed given when received; any notice, if
transmitted by Telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of Telexes).
SECTION 9.3 Payment of Costs and Expenses. The Borrower agrees to pay on
demand all reasonable expenses of the Lender
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(including the reasonable fees and out-of-pocket expenses of counsel to the
Lender and of local counsel, if any, who may be retained by counsel to the
Lender) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time
to time hereafter be required, whether or not the transactions contemplated
hereby are consummated, and
(b) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Lender harmless from all
liability for, any stamp or other taxes which may be payable in connection with
the execution or delivery of this Agreement, the borrowings hereunder, or the
issuance of the Note or any other Loan Documents. The Borrower also agrees to
reimburse the Lender upon demand for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses) incurred by the Lender in
connection with (x) the negotiation of any restructuring or "work-out", whether
or not consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 9.4 Indemnification. In consideration of the execution and
delivery of this Agreement by the Lender and the extension of the Commitment,
the Borrower hereby indemnifies, exonerates and holds the Lender and each of its
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan;
(b) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Lender is party thereto;
44
<PAGE>
(c) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by the Borrower or any of its
Subsidiaries of any Hazardous Material; or
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of any
Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Borrower or
such Subsidiary,
except for any such Indemnified Liabilities arising by reason of any Indemnified
Party's gross negligence or wilful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
SECTION 9.5 Survival. The obligations of the Borrower under Sections 4.3,
4.4, 4.5, 4.6, 9.3 and 9.4 shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by the Borrower in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 9.6 Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 9.7 Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 9.8 Execution in Counterparts, Effectiveness, etc. This Agreement
may be executed by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective when
counterparts
45
<PAGE>
hereof executed on behalf of the Borrower and the Lender (or notice thereof
satisfactory to the Lender) shall have been received by the Lender and notice
thereof shall have been given by the Lender to the Borrower.
SECTION 9.9 Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTE AND
EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This Agreement, the
Note and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 9.10 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of the Lender; and provided, further, that the Borrower shall not be responsible
for any higher cost to an assignee under Sections 4.3, 4.5 and 4.6 than it would
have been responsible to the Lender if no such assignment had been made.
SECTION 9.11 Other Transactions. Nothing contained herein shall preclude
the Lender from engaging in any transaction, in addition to those contemplated
by this Agreement or any other Loan Document, with the Borrower or any of its
Affiliates in which the Borrower or such Affiliate is not restricted hereby from
engaging with any other Person.
SECTION 9.12 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWER SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE LENDER'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF
46
<PAGE>
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 9.13 Waiver of Jury Trial. THE LENDER AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE LENDER OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MATERIAL SCIENCES CORPORATION
By /s/ William H. Vrba
--------------------
Title: Sr. Vice President
Address: _______________________
_______________________
Facsimile No.: _________________
Telex No.: _____________________
(Answerback _______________)
Attention: ______________________
______________________
47
<PAGE>
BANK OF AMERICA ILLINOIS
By /s/ Richard A. Beutel
---------------------
Title: Sr. Vice President
Address: _________________________
_________________________
Facsimile No.: ___________________
Telex No.: _______________________
(Answerback __________)
Attention: _______________________
_______________________
Domestic
Office: _________________________
_________________________
Facsimile No.: ___________________
Telex No.: _______________________
(Answerback _________)
Attention: _______________________
_______________________
Eurodollar
Office: _________________________
_________________________
Facsimile No.: ___________________
Telex No.: _______________________
(Answerback _________)
Attention: _______________________
_______________________
48
<PAGE>
SCHEDULE I
DISCLOSURE SCHEDULE
-------------------
ITEM 6.7 Litigation.
----------
Description of Proceeding Action or Claim Sought
------------------------- ----------------------
ITEM 6.8 Existing Subsidiaries.
---------------------
State of Ownership Business
Name Incorporation % Description
- - ---- ------------- --------- -----------
ITEM 6.11 Employee Benefit Plans.
----------------------
ITEM 6.12 Environmental Matters.
---------------------
ITEM 7.2.2(b) Ongoing Indebtedness.
--------------------
Creditor Lien Outstanding Principal Amount
-------- ---- ----------------------------
ITEM 7.2.5(a) Ongoing Investments.
-------------------
<PAGE>
EXHIBIT A
NOTE
$25,000,000 September 1, 1994
FOR VALUE RECEIVED, the undersigned, MATERIAL SCIENCES CORPORATION, a
Delaware corporation (the "Borrower"), promises to pay to the order of BANK OF
AMERICA ILLINOIS (the "Lender") on the Commitment Termination Date (as defined
in the Credit Agreement hereinafter referred to) the principal sum of TWENTY-
FIVE MILLION DOLLARS ($25,000,000) or, if less, the aggregate unpaid principal
amount of all Loans properly shown on the schedule attached hereto (and any
continuation thereof) made by the Lender pursuant to that certain Credit
Agreement, dated as of September 1, 1994 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), between the Borrower and the Lender.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Lender pursuant to the Credit Agreement.
This Note is the Note referred to in, and evidences Indebtedness incurred
under, the Credit Agreement, to which reference is made for a statement of the
terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
<PAGE>
THIS NOTE HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
MATERIAL SCIENCES CORPORATION
By_______________________________
Title:
2
<PAGE>
LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------
Amount of Unpaid
Amount of Principal Principal
Loan Made Repaid Balance
----------------- ---------------- ------------------
Refer- Euro- Interest Refer- Euro- Refer- Euro-
rence dollar Period (if ence dollar ence dollar Notation
Date Rate Rate applicable) Rate Rate Rate Rate Total Made By
- - ---- ------ ------ ---------- ------ ------ ------ ------ ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
EXHIBIT B
BORROWING REQUEST
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention:
MATERIAL SCIENCES CORPORATION
-----------------------------
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.3 of the
Credit Agreement, dated as of September 1, 1994 (together with all amendments,
if any, from time to time made thereto, the "Credit Agreement"), between
Material Sciences Corporation, a Delaware corporation (the "Borrower"), and you.
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that a Loan be made in the aggregate principal
amount of $_____________ on ________________, 19__ as a [Eurodollar Rate Loan
having an Interest Period of ___________ months] [Reference Rate Loan].
The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit
Agreement, each of the delivery of this Borrowing Request and the acceptance by
the Borrower of the proceeds of the Loans requested hereby constitute a
representation and warranty by the Borrower that, on the date of such Loans, and
before and after giving effect thereto and to the application of the proceeds
therefrom, all statements set forth in Section 5.2.1 are true and correct in all
material respects.
The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify you. Except to the extent,
if any, that prior to the time of the Borrowing requested hereby you shall
receive written notice to the contrary from the Borrower, each matter certified
to herein shall be deemed once again to be certified as true and correct at the
date of such Borrowing as if then made.
<PAGE>
The Borrower has caused this Borrowing Request to be executed and delivered,
and the certification and warranties contained herein to be made, by its duly
Authorized Officer this _____ day of ________________, 19____.
MATERIAL SCIENCES CORPORATION
By ___________________________
Title:
2
<PAGE>
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention:
MATERIAL SCIENCES CORPORATION
-----------------------------
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to Section
2.4 of the Credit Agreement, dated as of September 1, 1994 (together with all
amendments, if any, from time to time made thereto, the "Credit Agreement"),
between Material Sciences Corporation, a Delaware corporation (the "Borrower"),
and you. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that on __________________, 19____,
(1) $___________ of the presently outstanding principal amount of the
Loans originally made on ________________, 19__ [and $_________ of the
presently outstanding principal amount of the Loans originally made on
_________________, 19_____],
(2) and all presently being maintained as *[Reference Rate Loans]
[Eurodollar Rate Loans],
(3) be [converted into] [continued as],
(4) **[Eurodollar Rate Loans having an Interest Period of _________
months] [Reference Rate Loans].
* Select appropriate interest rate option.
** Insert appropriate interest rate option.
<PAGE>
The Borrower hereby:
(a) certifies and warrants that no Default has occurred and is
continuing; and
(b) agrees that if prior to the time of such continuation or conversion
any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify you.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby you shall receive written notice to the contrary
from the Borrower, each matter certified to herein shall be deemed to be
certified at the date of such continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this ________ day of ________________, 19____.
MATERIAL SCIENCES CORPORATION
By _____________________________
Title:
2
<PAGE>
EXHIBIT D
GUARANTY
--------
THIS GUARANTY (this "Guaranty"), dated as of September 1, 1994, made by PRE
FINISH METALS INCORPORATED, an Illinois corporation (the "Guarantor"), in favor
of Bank of America Illinois, an Illinois banking corporation (the "Lender").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to a Credit Agreement, dated as of September 1, 1994
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "Credit Agreement"), between Material Sciences
Corporation, a Delaware corporation (the "Borrower") and the Lender, the Lender
has extended a Commitment to make Loans to the Borrower; and
WHEREAS, as a condition precedent to the making of the initial Loans under
the Credit Agreement, the Guarantor is required to execute and deliver this
Guaranty;
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty;
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower by the Lender
pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lender to make the Loans
(including the initial Loan) to the Borrower pursuant to the Credit Agreement,
the Guarantor agrees, for the benefit of the Lender, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Borrower" is defined in the first recital.
<PAGE>
"Credit Agreement" is defined in the first recital.
"Guaranteed Obligations" is defined in Section 2.1.
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender" is defined in the preamble.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1 Guaranty. The Guarantor hereby absolutely,
unconditionally and irrevocably (all of the following guaranteed and indemnified
obligations being collectively called the "Guaranteed Obligations")
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand
or otherwise, of all Obligations of the Borrower now or hereafter existing
under the Credit Agreement, the Note and each other Loan Document, whether
for principal, interest, fees, expenses or otherwise, and all other
obligations of the Borrower to the Lender with respect to any overdrafts of
the Borrower, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent or now or hereafter existing or due or to
become due (including in all cases all such amounts which would become due
but for the operation of the automatic stay under section 362(a) of the
United States Bankruptcy Code, 11 U.S.C. (S)362(a), and the operation of
sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C.
(S)502(b) and (S)506(b)), and
(b) in addition to the foregoing, but without duplication, indemnifies
and holds harmless the Lender and each holder of the Note for any and all
costs and expenses (including reasonable attorney's fees and expenses)
incurred by the Lender or such holder, as the case may be, in enforcing any
rights under this Guaranty;
4
<PAGE>
provided, however, that the Guarantor shall be liable under this Guaranty for
the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to the Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount. This Guaranty constitutes a guaranty of payment when due
and not of collection, and the Guarantor specifically agrees that it shall not
be necessary or required that the Lender or any holder of the Note exercise any
right, assert any claim or demand or enforce any remedy whatsoever against the
Borrower (or any other Person) before or as a condition to the obligations of
the Guarantor hereunder.
SECTION 2.2 Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Guaranteed
Obligations have been paid in full, all obligations of the Guarantor hereunder
shall have been paid in full and the Commitment shall have terminated. The
Guarantor guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Credit Agreement and each other Loan Document
under which they arise, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Lender or any holder of the Note with respect thereto. To the
extent permitted by applicable law, the liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, or enforceability of the Credit Agreement,
the Note or any other Loan Document;
(b) the failure of the Lender or any holder of the Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Person (including any other
guarantor) under the provisions of the Credit Agreement, the Note, any
other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral, if any, securing, any Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other
extension, compromise or renewal of any Guaranteed Obligation;
(d) any reduction, limitation, impairment or termination of any
Guaranteed Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise,
5
<PAGE>
and shall not be subject to (and the Guarantor hereby waives any right to
or claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Guaranteed Obligations;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
the Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral, if any, or any amendment to or waiver or release or
addition of, or consent to departure from, any other guaranty, held by the
Lender or any holder of the Note securing any of the Guaranteed
Obligations; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Borrower, any
surety or any guarantor.
SECTION 2.3 Reinstatement, etc. The Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Guaranteed
Obligations is rescinded or must otherwise be restored by the Lender or any
holder of the Note, upon the insolvency, bankruptcy or reorganization of the
Borrower, or otherwise, as though such payment had not been made.
SECTION 2.4 Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the Lender or
any holder of the Note protect, secure, perfect or insure any security interest
or Lien, or any property subject thereto, to the extent applicable, or exhaust
any right or take any action against the Borrower or any other Person (including
any other guarantor) or entity or any collateral securing any Guaranteed
Obligations.
SECTION 2.5 Waiver of Subrogation. The Guarantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Borrower that arise from the existence, payment, performance or enforcement
of the Guarantor's obligations under this Guaranty or any other Loan Document,
including any right of subrogation, reimbursement, exoneration, or
indemnification, any right to participate in any claim or remedy of the Lender
against the Borrower or any collateral which the Lender now has or hereafter
acquires, whether or not such claim, remedy or
6
<PAGE>
right arises in equity, or under contract, statute or common law, including the
right to take or receive from the Borrower, directly or indirectly, in cash or
other property or by set-off or in any manner, payment or security on account of
such claim or other rights. If any amount shall be paid to the Guarantor in
violation of the preceding sentence and the Guaranteed Obligations shall not
have been paid in cash in full and the Commitment and any other commitments by
the Lender to the Borrower have not been terminated, such amount shall be deemed
to have been paid to the Guarantor for the benefit of, and held in trust for,
the Lender, and shall forthwith be paid to the Lender to be credited and applied
upon the Guaranteed Obligations, whether matured or unmatured. The Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the waiver
set forth in this Section is knowingly made in contemplation of such benefits.
SECTION 2.6 Successors, Transferees and Assigns; Transfers of Notes,
etc. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors, transferees and
assigns; and
(b) inure to the benefit of and be enforceable by the Lender, each
holder of the Note and each of their respective successors, transferees and
assigns.
Without limiting the generality of the foregoing clause (b), the Lender may
assign or otherwise transfer (in whole or in part) the Note or Loan held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all rights and benefits in respect thereof granted to the
Lender under any Loan Document (including this Guaranty) or otherwise.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.1 Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 3.2 Binding on Successors, Transferees and Assigns; Assignment
of Guaranty. In addition to, and not in limitation of, Section 2.6, this
Guaranty shall be binding upon the Guarantor and its successors, transferees and
assigns and shall inure to the benefit of and be enforceable by the Lender and
each
7
<PAGE>
holder of the Note and their respective successors, transferees and assigns (to
the full extent provided pursuant to Section 2.6); provided, however, that the
Guarantor may not assign any of its obligations hereunder without the prior
written consent of the Lender and each holder of the Note.
SECTION 3.3 Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 3.4 Addresses for Notices to the Guarantor. All notices and
other communications hereunder to the Guarantor shall be in writing (including
telegraphic communication) and mailed or telegraphed or delivered to it,
addressed to it at the address set forth below its signature hereto or at such
other address as shall be designated by the Guarantor in a written notice to the
Lender at the address specified in the Credit Agreement complying as to delivery
with the terms of this Section. All such notices and other communications
shall, when mailed or telegraphed, respectively, be effective when deposited in
the mails or delivered to the telegraph company, respectively, addressed as
aforesaid.
SECTION 3.5 No Waiver; Remedies. In addition to, and not in
limitation of, Section 2.3 and Section 2.5, no failure on the part of the Lender
or any holder of the Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 3.6 Section Captions. Section captions used in this Guaranty
are for convenience of reference only, and shall not affect the construction of
this Guaranty.
SECTION 3.7 Setoff. In addition to, and not in limitation of, any
rights of the Lender or any holder of the Note under applicable law, the Lender
and each such holder shall, upon the occurrence of any Event of Default have the
right to appropriate and apply to the payment of the obligations of the
Guarantor owing to it hereunder, whether or not then due, and the Guarantor
hereby grants to the Lender and each such holder a continuing security interest
in, any and all balances, credits, deposits, accounts or moneys of the Guarantor
then or thereafter maintained with the Lender or such holder and any and all
property of every kind or description of or in the name of the Guarantor now or
hereafter, for any reason or purpose whatsoever, in the
8
<PAGE>
possession or control of, or in transit to, the Lender, such holder or any agent
or bailee for the Lender or such holder.
SECTION 3.8 Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 3.9 Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH INTERNAL LAWS OF THE STATE OF
ILLINOIS. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 3.10 Forum Selection And Consent To Jurisdiction.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE
GUARANTOR SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
PROPERTY MAY BE BROUGHT, AT THE LENDER'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. THE GUARANTOR HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH SUCH LITIGATION. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF ILLINOIS. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS GUARANTY.
9
<PAGE>
SECTION 3.11 Waiver of Jury Trial. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE
GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THE CREDIT AGREEMENT.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PRE FINISH METALS INCORPORATED
By _________________________________
Title:
Address: ___________________________
___________________________
Attention: _________________________
Telex: _________________________
Telecopy: _________________________
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the Consolidated Statements of Income and Consolidated Balance Sheets and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> AUG-31-1994
<CASH> 6,756
<SECURITIES> 0
<RECEIVABLES> 30,062
<ALLOWANCES> 3,703
<INVENTORY> 16,691
<CURRENT-ASSETS> 59,756
<PP&E> 138,723
<DEPRECIATION> 61,405
<TOTAL-ASSETS> 154,515
<CURRENT-LIABILITIES> 27,807
<BONDS> 8,140
<COMMON> 316
0
0
<OTHER-SE> 95,421
<TOTAL-LIABILITY-AND-EQUITY> 154,515
<SALES> 118,237
<TOTAL-REVENUES> 118,237
<CGS> 87,598
<TOTAL-COSTS> 87,598
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> 13,782
<INCOME-TAX> 5,238
<INCOME-CONTINUING> 8,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,544
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
</TABLE>
