SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 1995
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5911
SPARTECH CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 43-0761773
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7733 Forsyth Boulevard, Suite 1450, Clayton, Missouri, 63105
(Address of principal executive offices)
(314) 721-4242
(Registrant's telephone number, including area code)
Indicate by checkmark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding as of July 29, 1995
Common Stock,
$.75 par value
per share 23,209,169
<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
INDEX
July 29, 1995
PART I. FINANCIAL INFORMATION PAGE
CONSOLIDATED CONDENSED BALANCE SHEET -
July 29, 1995 and October 29, 1994 3
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - for the thirteen and
thirty-nine weeks ended July 29, 1995
and July 30, 1994 4
CONSOLIDATED CONDENSED STATEMENT OF
CASH FLOWS - for the thirty-nine weeks
ended July 29, 1995 and July 30, 1994 5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 12
PART II. OTHER INFORMATION 14
SIGNATURES 15
<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands, except per share amounts)
ASSETS
July 29, 1995 October 29,
(unaudited) 1994
Current Assets
Cash $ 1,702 $ 1,752
Accounts and notes receivable, net 48,309 40,493
Inventories 36,440 22,936
Prepayments and other 1,623 1,112
Total Current Assets 88,074 66,293
Plant and Equipment, net 61,660 46,656
Goodwill 24,197 21,044
Other Assets 1,070 1,727
$ 175,001 $ 135,720
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of
long-term debt $ 3,000 $ 2,750
Accounts payable 36,135 28,403
Accrued liabilities 12,584 8,789
Total Current Liabilities 51,719 39,942
Senior Long-Term Debt,
Less Current Maturities 43,831 26,285
9% Convertible Subordinated Debentures 10,134 10,134
Other Liabilities 675 1,126
Total Long-Term Liabilities 54,640 37,545
Shareholders' Equity
6% Cumulative Convertible Preferred
Stock, 776,700 shares issued and
outstanding in 1994 ($50 per share
liquidation value) - 777
Common stock, 23,220,456 and
8,629,947 shares issued in 1995
and 1994, respectively 17,415 6,472
Contributed capital 66,333 74,438
Retained deficit (15,039) (23,449)
Treasury stock, at cost, 11,287 and
1,324 shares in 1995 and 1994,
respectively (67) (5)
Total Shareholders' Equity 68,642 58,233
$ 175,001 $ 135,720
The accompanying notes are an integral part of this financial
statement.<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited and dollars in thousands, except per share amounts)
THIRTEEN THIRTY-NINE
WEEKS ENDED WEEKS ENDED
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
Net Sales $ 90,891 $ 69,765 $265,798 $183,273
Costs and Expenses
Cost of sales 76,694 58,959 224,715 154,618
Selling and
administrative 6,348 4,748 18,126 13,572
Depreciation and
amortization 1,544 1,159 4,533 3,249
84,586 64,866 247,374 171,439
Operating Earnings 6,305 4,899 18,424 11,834
Interest 1,285 824 3,779 2,290
Earnings Before
Income Taxes 5,020 4,075 14,645 9,544
Provision for
Income Taxes 1,200 1,000 3,750 1,570
Net Earnings 3,820 3,075 10,895 7,974
Preferred Stock
Accretion - 548 1,098 1,585
Net Earnings Applicable
to Common Shares $ 3,820 $ 2,527 $ 9,797 $ 6,389
Net Earnings Per Common Share:
Primary $ .16 $ .28 $ .68 $ .70
Fully diluted $ .16 $ .13 $ .45 $ .34
The accompanying notes are an integral part of this financial
statement.
<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited and dollars in thousands)
THIRTY-NINE WEEKS ENDED
July 29, July 30,
1995 1994
CASH FLOW FROM OPERATING ACTIVITIES
Net earnings $10,895 $ 7,974
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 4,533 3,249
Change in current assets and
liabilities, net of effects
of acquisitions (2,045) (1,763)
Other, net 222 852
Net cash provided by
operating activities 13,605 10,312
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (7,403) (5,921)
Retirement of assets, net 498 73
Business acquisitions (24,060) (6,840)
Proceeds from note receivable - 495
Net cash used for investing
activities (30,965) (12,193)
CASH FLOW FROM FINANCING ACTIVITIES
Net borrowings under revolving
credit loan 15,546 4,733
Term loan additions 5,000 -
Principal payments on term loan (2,750) (3,000)
Cash dividends on common stock (1,387) -
Stock options exercised 963 705
Treasury stock acquired (62) -
Net cash provided by financing
activities 17,310 2,438
INCREASE (DECREASE) IN CASH (50) 557
CASH AT BEGINNING OF PERIOD 1,752 1,449
CASH AT END OF PERIOD $ 1,702 $ 2,006
The accompanying notes are an integral part of this financial
statement.
<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
NOTE A - Basis of Presentation
The accompanying consolidated financial statements include the
accounts of Spartech Corporation and its wholly-owned subsidiaries
(the "Company"). These financial statements have been prepared on
a condensed basis and, accordingly, certain information and note
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management,
the financial statements contain all adjustments (consisting solely
of normal recurring adjustments) and disclosures necessary to make
the information presented therein not misleading. These financial
statements should be read in conjunction with the consolidated
financial statements and accompanying footnotes thereto included in
the Company's October 29, 1994 Annual Report on Form 10-K.
The Company manufactures products for specific customer orders
and for standard stock inventory. Revenues are recognized and
billings are rendered as the product is shipped to the customer.
Operating results for the thirteen and thirty-nine weeks ended
July 29, 1995 and July 30, 1994 are seasonal in nature and are not
necessarily indicative of the results expected for the full year.
NOTE B - Inventories
Inventories are valued at the lower of cost (first-in, first-
out) or market. Inventories at July 29, 1995 and October 29, 1994
are comprised of the following components:
1995 1994
Raw materials $ 26,376 $ 16,171
Finished goods 10,064 6,765
$ 36,440 $ 22,936
NOTE C - Income Taxes
The Company accounts for income taxes pursuant to SFAS No.
109, "Accounting for Income Taxes". Under SFAS No. 109, deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the
financial statement carrying amounts of assets and liabilities and
their respective tax bases. Deferred tax assets are also
recognized for credit carryforwards. Deferred tax assets and
liabilities are measured using the rates expected to apply to
taxable income in the years in which the temporary differences are
expected to reverse and the credits are expected to be used. The
effect of a change in tax rates on deferred tax assets and
liabilities is recognized in income in the period that includes the
enactment date. SFAS No. 109 requires an assessment, which
includes anticipating future income, in determining the likelihood
of realizing deferred tax assets.<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
NOTE D - Senior Long-Term Debt
On November 1, 1994, the Company acquired certain divisions of
Pawnee Industries, Inc. (see Note I, Acquisition, for a discussion
of this purchase). To facilitate the funding of this purchase, the
Company amended its Credit Facility with Chemical Bank effective
November 1, 1994, by increasing its Revolving Credit Loan from
$37,000 to $47,000 and its Term Loan commitment from $13,000 to
$18,000.
The Term Loan is due in quarterly payments of $500 to $1,000,
commencing on November 1, 1994, with the remaining principal
balance to be paid in full on April 30, 1998. Both the Revolving
Credit Loan and Term Loan are secured by receivables, inventories
and all of the property of the Company. Interest on these loans is
payable at a rate chosen by the Company of either Chemical's prime
rate plus 0.25% or the Adjusted LIBO rate plus 1.75%. Subsequent
to July 29, 1995, this Credit Facility was retired using funds
obtained from the new financing arrangements entered into by the
Company, as discussed in more detail below.
On August 15, 1995, the Company completed a $50 Million
Private Placement of 10-Year Unsecured Senior Notes at a Fixed Rate
of 7.21%. These Unsecured Senior Notes require equal annual
principal payments of approximately $7,143 commencing on August 15,
1999. Interest on these Notes is payable semi-annually on February
15 and August 15 of each year. In addition, the Company finalized
a new revolving Unsecured $40,000 Bank Credit Facility with Bank of
America. This new Facility has a 5-year term, with interest
payable at a rate chosen by the Company of either Bank of America's
prime rate or the adjusted LIBO rate plus .75%. As of July 29,
1995, Bank of America's prime rate was 8.75% and the six month
adjusted LIBO rate was 6.4375%.
The proceeds from these new financing arrangements were used
to pay off the Company's Senior Credit Facility with Chemical Bank,
referred to above, and will be used to redeem all of the Company's
9% Convertible Subordinated Debentures.
NOTE E - Earnings Per Share
Primary net earnings per common share are computed based upon
the weighted average number of common shares outstanding during
each period after consideration of the dilutive effect of stock
options and warrants. Such average shares were:
Period Ended Thirteen Weeks Thirty-Nine Weeks
July 29, 1995 24,134,938 14,379,699
July 30, 1994 9,389,000 9,188,000
Fully diluted net earnings per common share assumes conversion
of securities when the earnings per share result is dilutive.
Assumed conversions increased the weighted average number of common
shares outstanding by:<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
Period Ended Thirteen Weeks Thirty-Nine Weeks
July 29, 1995 - 9,665,063
July 30, 1994 14,275,000 14,275,000
For the 1994 computation of primary net earnings per common
share, net earnings applicable to common shares have been increased
for an after-tax interest expense reduction as computed under the
modified treasury stock method. Due to the May 1, 1995 conversion
of the Company's Preferred Stock into Common Stock, as discussed
below, the 1995 computation of primary net earnings per common
share was computed using the treasury stock method, which requires
no such adjustment to net earnings. For the computation of fully
diluted net earnings per common share, net earnings applicable to
common shares have been further increased for the elimination of
preferred stock accretion resulting from the assumed conversion of
preferred stock. Net earnings increases for the thirteen and
thirty-nine weeks ended July 29, 1995 and July 30, 1994 were as
follows:
Thirteen Weeks Thirty-Nine Weeks
1995 1994 1995 1994
Primary $ - $ 43 $ - $ 124
Fully Diluted $ - $ 548 $1,098 $1,585
Effective May 1, 1995, all of the Company's Preferred
Stockholders converted their securities into common stock. The
conversion increased the Company's outstanding shares by
14,274,635. If the Preferred Stockholders had converted their
securities at the beginning of 1994, the earnings per share
reported for the thirteen and thirty-nine weeks ended July 29, 1995
and July 30, 1994 would be equal to the amount reported as fully
diluted earnings per common share during these time periods, which
is as follows:
Thirteen Weeks Thirty-Nine Weeks
1995 1994 1995 1994
Earnings Per Common Share $ .16 $ .13 $ .45 $ .34
NOTE F - Cash Flow Information
Supplemental information on cash flows and noncash
transactions for the thirty-nine weeks ended July 29, 1995 and July
30, 1994 is as follows:
1995 1994
Cash paid for:
Interest (net of amounts capitalized) $ 3,463 $ 1,980
Income taxes $ 2,746 $ 778
Schedule of noncash transactions:
Business acquisition--
Fair value of assets acquired $26,330 $12,274
Liabilities assumed (2,270) (5,434)
Total cash paid for the net
assets acquired $24,060 $ 6,840
<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
NOTE G - Shareholders' Equity
The authorized capital stock of the Company consists of 35
million shares of $.75 par value common stock and 4 million shares
of $1 par value preferred stock.
Preferred stock outstanding as of October 29, 1994 consisted
of the following series of 6% Cumulative Convertible Preferred
Stock, which were convertible into the shares of common stock
indicated and which carried the equivalent common share voting
rights indicated prior to conversion:
Preferred Number of Common Stock Equivalent Common
Stock Preferred Shares Issuable Upon Share Voting
Series Outstanding Conversion Rights
Series L 373,500 6,884,987 1,721,247
Series M 343,200 6,289,998 1,572,500
Series N 60,000 1,099,650 274,913
These series of preferred stock were issued at an equivalent
price of $50 per share as part of a debt-to-equity restructuring
completed April 30, 1992. In total, the restructuring resulted in
the exchange of $30,163 of the Company's subordinated debt for
these issues of preferred and common stock.
Dividends were payable on each series of preferred stock
commencing April 30, 1995 at an annual rate of $3.00 per share.
Due to the absence of a dividend requirement until April 30, 1995
on these series of preferred stock, a noncash charge for the
accretion of the preferred stock has been recognized. Such charges
were:
Period Ended Thirteen Weeks Thirty-Nine Weeks
July 29, 1995 $ - $1,098
July 30, 1994 $ 548 $1,585
The charge results in no net change in shareholders' equity, as the
same amount charged to retained earnings each quarter is added back
to contributed capital. Effective May 1, 1995, all of the
Company's Preferred Stockholders converted their securities into
common stock. As such, this accretion, along with preferred stock
dividend payments, were not required during the thirteen weeks
ended July 29, 1995 and will not be required in the future.
NOTE H - Commitments and Contingencies
On June 2, 1992, Mr. Lawrence M. Powers, a former Director and
former Chairman of the Board and Chief Executive Officer of the
Company, filed a lawsuit in the United States District Court for
the Southern District of New York against the Company and certain
of its Directors and major shareholders. In the suit, Mr. Powers
claims that, by reason of the Company's April 30, 1992 debt-to-
equity restructuring (which he had previously, on April 13, 1992,
<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
voted in favor of as a Director), the Company should adjust his
existing stock options, provide for the issuance of 167,744
additional shares of common stock to him, and award to him
attorney's fees and interest. Mr. Powers seeks judgment against
the Company and the other defendants: (1) in excess of $13,000 plus
punitive damages, (2) requiring the Company to issue him an
additional 167,744 shares of common stock, (3) requiring an
adjustment increasing his then outstanding options to purchase the
Company's common stock from 1,871,201 shares to 4,080,000 shares,
and (4) for attorney's fees and interest. In June, 1993, in
responding to the Company's request for summary judgment, the Court
ruled the Board of Directors' decision to not adjust Mr. Powers'
options was "final, binding and conclusive" unless Mr. Powers can
establish the Board was not acting independently and that it could
not have acted appropriately. Discovery has concluded in the
litigation, and the Company, together with the other defendants,
have moved for summary judgment dismissing the complaint. The
Company believes Mr. Powers' litigation is without merit and will
continue defending against it vigorously.
The Company currently has no litigation with respect to any
environmental matters.
NOTE I - Acquisition
On November 1, 1994, the Company acquired Pawnee Industries,
Inc.'s ("Pawnee") Extrusion and Color Divisions. The purchase
included two rigid plastic sheet & rollstock manufacturing plants
(Extrusion Division), located in Wichita, Kansas and Paulding,
Ohio, along with a color concentrate manu-facturing plant (Color
Division), located in Goddard, Kansas. The purchase price for
Pawnee's net assets, exclusive of working capital purchased,
totaled $15,785, subject to post-closing adjustments. In addition,
the Company paid $8,275 for net working capital assets (inventory
and receivables net of assumed accrued liabilities). The
acquisition has been accounted for by the purchase method, and
accordingly, the results of operations of Pawnee are included in
the Company's Consolidated Statement of Operations from the date of
acquisition. The excess cost over the fair value of net assets
acquired is being amortized over a forty year period on a straight
line basis.
On February 2, 1994, the Company acquired certain assets of
Product Components, Inc. ("ProCom"). The purchase included two
rigid plastic sheet & rollstock manufacturing plants, located in
Richmond, Indiana and Clare, Michigan, along with various other
assets of ProCom. The purchase price for ProCom's net assets
totaled $8,160, subject to post-closing adjustments. Approximately
$6,800 of this purchase price was paid in cash, while the remaining
balance represented the net liabilities assumed by the Company.
The acquisition has been accounted for by the purchase method, and
accord-ingly, the results of operations of ProCom are included in
the Company's Consolidated Statement of Operations from the date of
acquisition. The excess cost over the fair value of net assets
acquired is being amortized over a forty year period on a straight
<PAGE>
SPARTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share amounts)
line basis.
The following summarizes unaudited pro forma consolidated
results of operations for the thirteen and thirty-nine weeks ended
July 30, 1994, assuming the Pawnee and ProCom acquisitions had
occurred at the beginning of fiscal year 1994. The results are not
necessarily indicative of what would have occurred had these
transactions been consummated as of the beginning of the fiscal
year presented, or of future operations of the consolidated
companies.
PRO FORMA
July 30, 1994
Thirteen Thirty-Nine
Weeks Ended Weeks Ended
Net Sales $ 85,156 $235,948
Earnings Before Income Taxes $ 4,560 $ 11,232
Net Earnings $ 3,440 $ 9,385
Net Earnings Per Common Share:
Primary $ .31 $ .86
Fully diluted $ .15 $ .41<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the thirteen and thirty-nine weeks ended July
29, 1995, increased from the similar periods in 1994, as the result
of sizable gains in pounds sold by both of the Company's operating
divisions. The rigid sheet & rollstock group experienced sales
volume increases of approximately 12% and 30%, respectively, for
the thirteen and thirty-nine weeks ended July 29, 1995, over the
similar periods of 1994. The majority of the gains in sales volume
during these periods were obtained from our November 1, 1994,
acquisition of Pawnee Industries, Inc.'s ("Pawnee") Extrusion
Division and our February 2, 1994, acquisition of certain assets of
Product Components, Inc. ("ProCom") (see "Financial Condition -
Investing Activities" below for a further discussion of these
acquisitions) and from increased product requests from the rigid
sheet & rollstock group's sign/advertising, home improvement and
material handling markets.
In addition, sales volume increases of approximately 16% and
26%, respectively, were achieved by our merchant compounding group
during the thirteen and thirty-nine weeks ended July 29, 1995, from
the similar periods in 1994. These increases were primarily the
result of stronger demand from the specialty extrusion, office
product, wallcovering, and footwear industries and the group's
newly acquired color concentrate facility.
Cost of sales showed a sizable increase for both the thirteen
and thirty-nine weeks ended July 29, 1995, compared with the
similar periods of 1994, but remained consistent when stated as a
percentage of net sales. This consistency was achieved, despite
higher material costs caused by the increase in worldwide demand
for plastic resins, as production efficiencies offset that portion
of the raw material increases not absorbed by customers.
Selling and administrative expense increased by more than 33%
for the thirteen and thirty-nine weeks ended July 29, 1995 from the
similar periods of 1994, a direct result of the ProCom and Pawnee
acquisitions. However, through the Company's cost containment
efforts, selling and administrative costs as a percentage of net
sales actually decreased during the thirty-nine weeks ended July
29, 1995.
The increase in depreciation and amortization during the
thirteen and thirty-nine weeks ended July 29, 1995 over the similar
periods of 1994 is the direct result of the capital assets and
goodwill associated with the ProCom and Pawnee acquisitions and the
sizable capital expenditures incurred by the Company during the
past eighteen months (approximately $13.1 million).
Operating earnings for the thirteen and thirty-nine weeks
ended July 29, 1995, also increased from the similar periods in
1994. The gains in operating earnings were achieved through the
increased sales volumes discussed above, production efficiencies,
cost containment efforts, and the benefits of the ProCom and Pawnee
acquisitions.<PAGE>
Interest expense for the thirteen and thirty-nine weeks ended
July 29, 1995, increased from the similar periods in 1994,
reflecting the additional borrowings incurred by the Company for
the acquisition of certain divisions of Pawnee. In addition, the
Company's borrowing rate was approximately 2 percentage points
higher during the thirteen and thirty-nine weeks ended July 29,
1995, compared to the similar periods of 1994, as a result of the
Federal Reserve Board's desire to keep inflation under control by
increasing interest rates.
The income tax provision was substantially higher during the
first three quarters of fiscal year 1995, compared to the similar
period in 1994, as a result of the utilization of substantially all
of the Company's book net operating loss carryforwards during
fiscal year 1994. The Company is projecting a 25-27% effective tax
rate for fiscal year 1995, with a full tax provision anticipated
for fiscal year 1996. Actual tax payments will only be 70-80% of
the book provision due to the tax net operating loss carryforwards
and depreciation timing differences.
Financial Condition
Operations
The improvement in cash flow from operations reflects the
Company's increase in profitability. On May 2, 1995, the Company's
Board of Directors declared a special dividend of three cents ($.03)
per share that was paid on May 31, 1995. In addition, the Board
also declared its first regular quarterly cash dividend on June 2,
1995, in the amount of three cents ($.03) per share, which was paid
on June 30 of this year.
Investing Activities
Capital expenditures for the thirty-nine weeks ended July 29,
1995 increased significantly as compared to the same period of
1994. The Company anticipates total capital expenditures for
fiscal year 1995 to be approximately $8.5 to $9.0 million. The
primary components of these capital expenditures will include the
purchase of four new rollstands and the upgrading of all
facilities, in particular those operations obtained through our
recent acquisitions of ProCom and Pawnee.
Reference is made to Note I, Acquisition, in Item 1 of this
report, which is incorporated herein by reference, for a discussion
of the Company's February 2, 1994, acquisition of certain assets of
ProCom and November 1, 1994, acquisition of certain divisions of
Pawnee.
The Company has not incurred any significant capital
expenditures in order to comply with the Clean Air Act Amendments
of 1990. In addition, the Company does not anticipate such capital
expenditures to be material in the future.<PAGE>
Financing Activities
On August 15, 1995, the Company completed a $50 Million
Private Placement of Unsecured Senior Notes at a fixed rate of
7.21% and shortly thereafter, finalized a new Unsecured $40,000
Bank Credit Facility with Bank of America. Reference is made to
Note D, Senior Long-Term Debt, in Item 1 of this report, which is
incorporated herein by reference, for a further discussion of the
Company's new financing arrangements.
The Company anticipates that cash flow from operations and the
borrowing capacity and funds received from the Company's new
financing arrangements will be adequate to provide necessary funds
for the balance of fiscal year 1995 and into the future.
<PAGE>
PART II - OTHER INFORMATION
Responses to Part II, Items 1, 2, 3, 4, and 5, are omitted
because the requested information has been previously reported, the
items are inapplicable or the answer is negative.
Item 6 (a). Exhibits
10(A) Second Amendment to the Amended and
Restated Employment Agreement, dated
July 1, 1995, between Bradley B.
Buechler and Spartech Corporation
10(B) Second Amendment to the Amended and
Restated Employment Agreement, dated
July 1, 1995, between David B.
Mueller and Spartech Corporation
10(C) Employment Agreement, dated June 30,
1995, between Daniel J. Yoder and
Spartech Corporation
10(D) $50 Million Senior Unsecured Note
Agreement
10(E) Bank of America Revolving Credit
Agreement
11 Statement re Computation of Per Share
Earnings
27 Financial Data Schedule
Item 6 (b). Reports on Form 8-K
None
<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 undersigned thereunto duly authorized.
SPARTECH CORPORATION
(Registrant)
Date: August 28, 1995 /s/ Bradley B. Buechler
Bradley B. Buechler
President and Chief
Executive Officer
(Principal Executive
Officer)
/s/ David B. Mueller
David B. Mueller
Vice President of Finance
and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
EXHIBIT 10(A)
SECOND AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
OF BRADLEY B. BUECHLER
This Second Amendment to the Amended and Restated Employment
Agreement of Bradley B. Buechler is entered into as of the 1st
day of July, 1995, by and between SPARTECH CORPORATION, a
Delaware Corporation ("Employer") and BRADLEY B. BUECHLER
("Employee").
WITNESSETH:
WHEREAS, Employer and Employee are parties to an Amended and
Restated Employment Agreement dated as of the 1st day of July,
1992, as amended on the 8th day of March, 1993 (the "Restated
Agreement");
WHEREAS, Employer and Employee desire to amend the Restated
Agreement as provided herein;
NOW, THEREFORE, for and in consideration of the mutual
premises set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree that the
Restated Agreement is hereby amended as follows:
1. Compensation. The first sentence of subparagraph (a)
of Section 2 of the Restated Agreement is amended to read in its
entirety as follows:
"(a) Subject to annual review (without
obligation to increase) for cost of living
and/or merit and other increases at the Board's
discretion, Employer agrees to compensate Employee
at the fixed rate of $330,000 annually ("Base
Salary"), such Base Salary to be paid in equal
weekly installments."
2. Term of Employment. The first sentence of Section 3 of
the Restated Agreement is amended to read in its entirety as
follows:
"Except as provided in Section 11 below, the
term of this Agreement shall commence July 1, 1992
and shall continue until terminated by two years'
written notice by Employer to Employee or by one
year's written notice from Employee to Employer,
such notice not to be given by Employer or
Employee before June 30, 1998."
3. Bonuses. Section 4 of the Restated Agreement is
amended in its entirety to read as follows:
"4. Bonuses.
"(a) Commencing with the Employer's fiscal
year ending October 31, 1995, Employee shall
receive an annual bonus equal to 1% of Employer's
earnings before interest and income taxes as
reported in Employer's audited financial
statements for each year that this Agreement is
in effect, adjusted, however, to exclude profit or
loss on extraordinary or nonrecurring items and
unusual items (such as sale of a significant
amount of assets or securities other than in the
ordinary course of business operations, one time
employee separation costs, and significant
litigation costs or recoveries) ("Adjusted EBIT"),
such determination to be made by Employer's
auditors based on generally accepted accounting
principles; provided, however, no such bonuses
will be paid with respect to any fiscal year in
which Employer's Adjusted EBIT is less than 66%
of the Company's Adjusted EBIT in its immediately
preceding fiscal year.
"(b) Each fiscal year, commencing with the
Company's fiscal year ending October 31, 1995, an
installment equal to 40% of the estimated bonus for
such fiscal year to be approved by the Compensation
Committee of Employer's Board of Directors shall be
paid to Employee in August, and the balance, if any, of
such bonus shall be paid as soon as practicable upon
completion of Employer's audited financial statements
for such fiscal year.
"(c) Should this Agreement terminate prior to the
close of a fiscal year of Employer, Employee shall be
entitled to a bonus with respect to such fiscal year
(in addition to such other amounts to which he may be
entitled on termination under other provisions of this
Agreement) equal to the bonus he would have earned had
this Agreement been in effect for the entire fiscal
year multiplied by a fraction, the numerator of which
shall be the number of days in such fiscal year prior
to termination of this Agreement, and the denominator
of which shall be 365."
4. Section 21 of the Restated Agreement is amended to read
in its entirety as follows:
"21. Governing Law. This Agreement shall be
construed and interpreted in accordance with, and
shall be governed by, the substantive laws, but
not the conflicts of law principles, of the State
of Missouri."
5. Reaffirmation of Restated Agreement. Except to
the extent amended by the preceding paragraphs, the Restated
Agreement, as previously amended, shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have duly executed this
Amendment to the Restated Agreement on the day and year first
above written.
SPARTECH CORPORATION
By:__________________________ ___________________________
Bradley B. Buechler
"Employer" "Employee"<PAGE>
EXHIBIT 10(B)
SECOND AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
OF DAVID B. MUELLER
This Second Amendment to the Amended and Restated Employment
Agreement of David B. Mueller is entered into as of the 1st day
of July, 1995, by and between SPARTECH CORPORATION, a Delaware
Corporation ("Employer") and DAVID B. MUELLER ("Employee").
WITNESSETH:
WHEREAS, Employer and Employee are parties to an Amended and
Restated Employment Agreement dated as of the 1st day of July,
1992, as amended on the 8th day of March, 1993 (the "Restated
Agreement");
WHEREAS, Employer and Employee desire to amend the Restated
Agreement as provided herein;
NOW, THEREFORE, for and in consideration of the mutual
premises set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree that the
Restated Agreement is hereby amended as follows:
1. Compensation. The first sentence of subparagraph (a)
of Section 2 of the Restated Agreement is amended to read in its
entirety as follows:
"(a) Subject to annual review (without
obligation to increase) for cost of living
and/or merit and other increases at the Board's
discretion, Employer agrees to compensate Employee
at the fixed rate of $200,000 annually ("Base
Salary"), such Base Salary to be paid in equal
weekly installments."
2. Term of Employment. The first sentence of Section 3 of
the Restated Agreement is amended to read in its entirety as
follows:
"Except as provided in Section 11 below, the
term of this Agreement shall commence July 1, 1992
and shall continue until terminated by two years'
written notice by Employer to Employee or by one
year's written notice from Employee to Employer,
such notice not to be given by Employer or
Employee before June 30, 1998."
3. Bonuses. Section 4 of the Restated Agreement is
amended in its entirety to read as follows:
"4. Bonuses.
"(a) Commencing with the Employer's fiscal
year ending October 31, 1995, Employee shall
receive an annual bonus equal to 0.55% of
Employer's earnings before interest and income
taxes as reported in Employer's audited financial
statements for each year that this Agreement is in
effect, adjusted, however, to exclude profit or
loss on extraordinary or nonrecurring items and
unusual items (such as sale of a significant
amount of assets or securities other than in the
ordinary course of business operations, one-time
employee separation costs, and significant
litigation costs or recoveries) ("Adjusted EBIT"),
such determination to be made by Employer's
auditors based on generally accepted accounting
principles; provided, however, no such bonuses
will be paid with respect to any fiscal year in
which Employer's Adjusted EBIT is less than 66%
of the Company's Adjusted EBIT in its immediately
preceding fiscal year.
"(b) Each fiscal year, commencing with the
Company's fiscal year ending October 31, 1995, an
installment equal to 40% of the estimated bonus for
such fiscal year to be approved by the Compensation
Committee of Employer's Board of Directors shall be
paid to Employee in August, and the balance, if any, of
such bonus shall be paid as soon as practicable upon
completion of Employer's audited financial statements
such fiscal year.
"(c) Should this Agreement terminate prior to the
close of a fiscal year of Employer, Employee shall be
entitled to a bonus with respect to such fiscal year
(in addition to such other amounts to which he may be
entitled on termination under other provisions of this
Agreement) equal to the bonus he would have earned had
this Agreement been in effect for the entire fiscal
year multiplied by a fraction, the numerator of which
shall be the number of days in such fiscal year prior
to termination of this Agreement, and the denominator
of which shall be 365."
4. Section 21 of the Restated Agreement is amended to read
in its entirety as follows:
"21. Governing Law. This Agreement shall be
construed and interpreted in accordance with, and
shall be governed by, the substantive laws, but
not the conflicts of law principles, of the State
of Missouri."
5. Reaffirmation of Restated Agreement. Except to
the extent amended by the preceding paragraphs, the Restated
Agreement, as previously amended, shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have duly executed this
Amendment to the Restated Agreement on the day and year first
above written.
SPARTECH CORPORATION
By:__________________________ ___________________________
David B. Mueller
"Employer" "Employee"<PAGE>
EXHIBIT 10(C)
EMPLOYMENT AGREEMENT
AGREEMENT entered into this 30th day of June, 1995 by and
between Daniel J. Yoder (the "Employee") and Spartech
Corporation, a Delaware corporation (the "Employer").
WITNESSETH:
WHEREAS, Employer desires to employ Employee, and Employee
is willing to accept such employment on the terms hereinafter set
forth,
NOW, THEREFORE, the parties agree as follows:
1. Employment. Employer hereby employs Employee and
Employee agrees to accept such employment on the terms and
conditions hereinafter set forth.
2. Term. The term of this Agreement shall commence June
30, 1995 and, unless earlier terminated as provided herein,
continue through June 29, 1998.
3. Duties. Employer employs Employee to act in an
executive capacity, as Vice President-Engineering and Technology
for Employer, on all aspects of its business, as and when
requested, and at such times and places as Employer shall
reasonably request, subject always to the control and direction
of Employer's Board of Directors. During the term of this
Agreement, Employee (a) will serve Employer faithfully,
diligently and to the best of his ability, and (b) will devote
his best efforts and his entire working time, attention and skill
to the performance of his duties hereunder and to promoting and
furthering the interests of Employer. While he is so employed,
Employee will not, without the prior written consent of employer
render any services to any other business concern; provided,
however, that nothing herein shall prevent Employee from (i)
engaging in additional activities in connection with personal
investments which do not interfere or conflict with his duties
hereunder, or (ii) making any investment in any publicly traded
company so long as such investment does not exceed one percent of
the outstanding securities of any class.
4. Compensation. Subject to periodic review for cost of
living and/or merit and other increases, Employer agrees to
compensate Employee at the rate of $140,000 annually. Employer
shall further advance or reimburse to Employee such other monies
as Employer determines for credit cards, costs and other
reasonable expenses incurred by Employee in the discharge of
Employer's instructions hereunder, and consistent with the
necessities of the operation of the business. Subject to any
applicable waiting period, Employee may also participate in all
stock option and stock purchase plans, insurance, medical and
other employee benefit programs currently established and
hereafter instituted by Employer which are generally available to
other employees of comparable position.
5. Bonuses. Employee shall be eligible for an annual bonus
based upon his performance, and based upon the overall results of
the Employer's operations at the end of each year, paid in
accordance with the terms and conditions of Employer's Bonus
Program. Any such Bonus shall be subject to approval by the CEO,
and the Compensation Committee of the Board of Directors of
Employer, but will be a minimum of $25,000 per year.
6. Non-Disclosure. Employee acknowledges that as a result
of his employment by Employer he has acquired, and in the future,
will use and acquire knowledge and information utilized by
Employer in its business which may not be generally available to
the public or to other persons in the plastics business
("Confidential Information"), including, without limitation,
Employer's systems, procedures,
formulas, processes, confidential reports, lists of customers,
pricing structure, margins with respect to its products and
similar information. As a material inducement to Employer to
enter into this Agreement and to pay Employee the compensation
set forth herein,
Employee agrees that he will not, at any time, directly or
indirectly, divulge or disclose to any person, for any purpose,
any Confidential Information, except to those persons authorized
by Employer to receive Confidential Information and except for
information which becomes publicly available through no fault of
Employee.
7. Covenant Not To Compete; No Solicitation of Employees.
Employee agrees as follows:
(a) For as long as he is employed by Employer and for one
year after any termination of employment, Employee
agrees that he will not, directly or indirectly, except
as a passive investor in publicly held companies in
which he has less than a one percent interest, engage
in, own or control any interest in or act as director,
officer or employee of, or consultant to, any firm or
corporation, directly or indirectly engaged, as these
terms may be reasonably construed, in a business
substantially similar to that operated by Employer on
the date of termination, in the territories where
Employer manufactures or distributes its products. If
the Employee is terminated without cause pursuant to
Paragraph 12(a) hereof, the non-competition provisions
of this Paragraph 7(a) shall apply only so long as
Employer continues to pay Employee his base salary.
(b) Employee agrees that for one year after any
termination of his employment with Employer he
will not, directly or indirectly, induce, or
attempt to induce, any of the employees of
Employer to leave the employment of Employer, or
to employ any such employees within 90 days after
any termination of their employment with Employer.
8. Inventions. Employee acknowledges that all inventions,
production processes, techniques, programs, patents, discoveries,
formulas and improvements invented, discovered or learned by
Employee during employment hereunder, and relating to Employer's
business, will be disclosed to Employer and will be the sole
property of Employer.
Employee further acknowledges that information imparted to
him by Employer, relating to Employer's production and business
methods, techniques, customer lists, statistics, credit,
customers and suppliers is secret and confidential. Therefore,
Employee shall, upon termination of his employment hereunder and
as a prior condition to receiving final wages, return to Employer
all books, records and notes containing customer lists and
addresses, all duplicate invoices, all statements and
correspondence pertaining to such customers, and all information
and documents (including all copies thereof) relating to
customers, their needs, products of Employer used by them,
schedules of discussions with them, all formulas, code books,
price lists, products, manuals and equipment, production or
processing information or instructions, data applicable to
methods of manufacture, types, kinds, suppliers and costs of raw
materials, and all other information of confidential or secret
nature applicable to Employer, its customers and the manner of
conducting its business. Employer agrees, however, to provide
Employee, upon request, with copies of whatever documents he may
reasonably require. As a prior
condition to his receiving final wages, Employee, if requested,
shall also execute an affidavit to the effect that he has
complied with the provisions in this Paragraph 8.
The restraints on Employee, as set forth in this Paragraph
8, however, shall not apply to those inventions for which no
equipment, supplies, facility or trade secret information of
Employer was used and which was developed entirely on Employee's
own time and which does not relate to the business of the
Employer, to Employer's actual or demonstrably anticipated
research or development, or which did not result from any work
performed by Employee for Employer.
9. Remedies. By reason of the fact that irreparable harm
would be sustained by Employer if there is any breach by Employee
of the provisions of Paragraphs 6, 7 and 8 hereof, it is agreed
that, in addition to any other rights which Employer may have
under this Agreement or at law or in equity, Employer shall be
entitled to apply to any court of competent jurisdiction for, and
obtain, injunctive relief against Employee or against any third
party, in order to prevent any breach or threatened breach of the
provisions of such paragraph.
10. Death During Employment. If Employee should die during
the term of this Agreement, Employer's only obligation shall be
to pay Employee's spouse, or his estate if he has no spouse, his
base monthly salary to the month in which death occurs.
11. Disability. Employer, at its option, may terminate this
Agreement upon written notice to Employee if the Employee,
because of physical or mental incapacity or disability, fails in
any material respect to perform the services required of him
hereunder for a continuous period of 120 days, or for shorter
periods aggregating 180 days or more in any consecutive period of
240 days. Upon such termination, all obligations hereunder of
the Employer shall cease.
12. Termination. Anything herein to the contrary notwith-
standing, Employer shall have the right to terminate this
Agreement as follows:
(a) Employer may terminate this Agreement without
cause upon written notice to Employee. In the
event of such termination, Employee will be
entitled to receive the unpaid portion of base
salary for the remaining term of this Agreement,
paid out over the remaining term of this
Agreement.
(b) Employer may terminate this Agreement at any time
for cause. "Cause" as used herein shall mean
dishonesty, theft, conviction of a felony,
drunkenness or a material breach of this
Agreement. "Cause" shall also include the failure
of Employee, within ten days after receipt of
written notice thereof from Employer, for any
reason, to correct, cease or otherwise alter any
failure to comply with the lawful instructions of
the corporation's Board of Directors or other act
or omission which, in the sole opinion of the
Board of Directors, will materially adversely
affect Employer's business. In the event of
termination for cause, Employer shall have no
obligation to pay any compensation except to the
extent the Employee's base salary has been accrued
but is unpaid at the time of termination.
13. Severability. If any part of this Agreement is found to
be void or unenforceable for any reason, the remainder of this
Agreement shall be severable and may be enforced accordingly.
14. Benefit. This Agreement shall inure to the benefit of
and be binding upon Employee, his heirs, executors and
administrators, and upon the Employer and its successors, but
this Agreement may not
be assigned by either party except by operation of law by a
merger of the Employer into another corporation or by Employer in
connection with any sale of its business or parts thereof.
15. Headings. These headings have been inserted in this
Agreement for convenience only and shall not affect the
interpretation hereof.
16. Entire Agreement. This Agreement contains the entire
understanding of the parties and may not be amended or changed
except by an agreement in writing signed by the parties.
17. Notices. Any notices required or permitted hereunder
shall be addressed to Employer at its principal office and to
Employee at his address as it appears in the records of the
Employer, or at such other address as either party may have
furnished to the other for such purpose in writing.
18. Applicable Law. This Agreement has been entered into
in, and shall be construed under the laws of, the State of
Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
EMPLOYER:
SPARTECH CORPORATION
By:
Bradley B. Buechler
President and CEO
EMPLOYEE:
Daniel J. Yoder<PAGE>
EXHIBIT 10(D)
[COMPOSITE CONFORMED COPY]
SPARTECH CORPORATION
7.21% Senior Notes due 2005
NOTE PURCHASE AGREEMENT
Dated as of August 15, 1995
[Exhibits 4.4(a) and 4.4(b) to the Note Purchase Agreement are
photocopies of the legal opinions as delivered at the Closing.]<PAGE>
Table of Contents
Page
1. AUTHORIZATION OF NOTES 1
1.1. The Notes 1
1.2. The Subsidiary Guarantees 1
2. SALE AND PURCHASE OF NOTES 1
3. CLOSING 2
4. CONDITIONS TO CLOSING 2
4.1. Representations and Warranties 3
4.2. Performance; No Default 3
4.3. Compliance Certificates 3
4.4. Opinions of Counsel 3
4.5. Subsidiary Guarantees 3
4.6. Purchase Permitted by Applicable Law, 4
4.7. Sale of Notes to Other Purchasers 4
4.8. Payment of Special Counsel Fees 4
4.9. Private Placement Number 4
4.10. Changes in Corporate Structure 4
4.11. Contemporaneous Transactions 5
4.12. Proceedings and Documents 5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 5
5.1. Organization; Power and Authority 5
5.2. Authorization, etc. 5
5.3. Disclosure 6
5.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates 6
5.5. Financial Statements 7
5.6. Compliance with Laws, Other Instruments 7
5.7. Governmental Authorizations, etc. 8
5.8. Litigation; Observance of Agreements, Statutes
and Orders 8
5.9. Taxes 8
5.10. Title to Property; Leases 9
5.11. Licenses, Permits, etc 9
5.12. Compliance with ERISA 9
5.13. Private Offering by the Company 11
5.14. Use of Proceeds; Margin Regulations 11
5.15. Existing Indebtedness; Future Liens 11
5.16. Foreign Assets Control Regulations, etc. 12
5.17. Status Under Certain Statutes 12
5.18. Environmental Matters 12
5.19. Solvency 13
6. REPRESENTATIONS OF THE PURCHASER 13
6.1. Purchase of Notes 13
6.2. Source of Funds 13
7. INFORMATION AS TO COMPANY 15
7.1. Financial and Business Information 15
7.2. Officer's Certificate 18
7.3. Inspection 18
8. PREPAYMENT OF THE NOTES 19
8.1. Required Prepayments 19
8.2. Optional Prepayments 19
8.3. Allocation of Partial Prepayments 20
8.4. Maturity; Surrender, etc. 20
8.5. Purchase of Notes 20
8.6. Make-Whole Amount 21
9. AFFIRMATIVE COVENANTS 22
9.1. Compliance with Law 22
9.2. Insurance 23
9.3. Maintenance of Properties 23
9.4. Payment of Taxes and Claims 23
9.5. Corporate Existence, etc. 24
9.6. Additional Subsidiary Guarantees; Release of
Subsidiary Guarantees. 24
10. NEGATIVE COVENANTS. 25
10.1. Total Indebtedness; Subsidiary Indebtedness 25
10.2. Liens 25
10.3. Limitation on Sale and Leaseback Transactions 27
10.4. Maintenance of Net Worth 27
10.5. Asset Sales 28
10.6. Merger, Consolidation, etc 29
10.7. Transactions with Affiliates 30
11. EVENTS OF DEFAULT 30
12. REMEDIES ON DEFAULT, ETC. 32
12.1. Acceleration 32
12.2. Other Remedies 33
12.3. Rescission 33
12.4. No Waivers or Election of Remedies, Expenses,
etc. 34
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 34
13.1. Registration of Notes 34
13.2. Transfer and Exchange of Notes 34
13.3. Replacement of Notes 35
14. PAYMENTS ON NOTES 36
14.1. Place of Payment 36
14.2. Home Office Payment 36
15. EXPENSES, ETC 36
15.1. Transaction Expenses 36
15.2. Survival 37
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT 37
17. AMENDMENT AND WAIVER 38
17.1. Requirements 38
17.2. Solicitation of Holders of Notes 38
17.3. Binding Effect, etc. 39
17.4. Notes held by Company, etc. 39
18. NOTICES 39
19. REPRODUCTION OF DOCUMENTS 40
20. CONFIDENTIAL INFORMATION 40
21. SUBSTITUTION OF PURCHASER 41
22. MISCELLANEOUS 42
22.1. Successors and Assigns 42
22.2. Construction 42
22.3. Jurisdiction and Process; Waiver of Jury Trial.
42
22.4. Payments Due on Non-Business Days 43
22.5. Severability 43
22.6. Accounting Terms; Pro Forma Calculations 43
22.7. Counterparts 44
22.8. Governing Law 44
Exhibit 1.1 -- Form of 7.21% Senior Note due 2005
Exhibit 1.2 -- Form of Subsidiary Guarantee
Exhibit 4.4(a) -- Form of Opinion of Special Counsel for the
Company
Exhibit 4.4(b) -- Form of Opinion of Special Counsel for the
Purchasers
Schedule A -- Names and Addresses of Purchasers
Schedule B -- Defined Terms
Schedule 5.3 -- Disclosure Documents
Schedule 5.4 -- Subsidiaries
Schedule 5.5 -- Financial Statements
Schedule 5.8 -- Litigation
Schedule 5.11 -- Licenses, etc.
Schedule 5.15 -- Existing Indebtedness<PAGE>
SPARTECH CORPORATION
7733 Forsyth
Suite 1450
Clayton, MO 63105-1817
7.21% Senior Notes due 2005
As of August 15, 1995
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
SPARTECH CORPORATION, a Delaware corporation (the
"Company"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
1.1. The Notes.
The Company has duly authorized the issue and sale of
$50,000,000 aggregate principal amount of its 7.21% Senior Notes
due 2005 (the "Notes"), each such note to be in the form set out
in Exhibit 1.1. As used herein, the term "Notes" shall mean all
notes originally delivered pursuant to this Agreement and the
Other Agreements referred to below and all notes delivered in
substitution or exchange for any such note and, where applicable,
shall include the singular number as well as the plural. Certain
capitalized and other terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are,
unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
1.2. The Subsidiary Guarantees.
The Notes will be unconditionally guaranteed by each of
the Company's existing Subsidiaries (except the inactive
Subsidiaries listed in Schedule 5.4), pursuant to subsidiary
guarantees substantially in the form of Exhibit 1.2 (individually
a "Subsidiary Guarantee" and collectively the "Subsidiary
Guarantees", which terms shall include after the date of the
Closing all additional Subsidiary Guarantees from time to time
executed and delivered pursuant to Section 9.6).
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement,
the Company will issue and sell to you and you will purchase from
the Company, at the Closing provided for in Section 3, Notes in
the principal amount specified opposite your name in Schedule A
at the purchase price of 100% of the principal amount thereof.
Contemporaneously with entering into this Agreement, the Company
is entering into separate Note Purchase Agreements (the "Other
Agreements") identical with this Agreement (except for the
principal amounts of Notes to be purchased) with each of the
other purchasers named in Schedule A (the "Other Purchasers"),
providing for the sale at such Closing to each of the Other
Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements
are several and not joint obligations and you shall have no
obligation under any Other Agreement and no liability to any
Person for the performance or non-performance by any Other
Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by
you and the Other Purchasers shall occur at the offices of
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, New York, NY 10022 at 10:00 a.m., New York time, at a
closing (the "Closing") on August 15, 1995 or on such other Busi-
ness Day thereafter on or prior to August 31, 1995 as may be
agreed upon by the Company and you and the Other Purchasers. At
the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your
name (or in the name of your nominee), against delivery by you to
the Company or its order of immediately available funds in the
amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to
account number 801006953 at Chemical Bank, 55 Water Street, New
York, New York 10041, ABA number 021000128.
If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled
to your satisfaction, you shall, at your election, be relieved of
all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be
sold to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following
conditions:
<PAGE>
4.1. Representations and Warranties.
The representations and warranties of the Company in
this Agreement shall be correct when made and at the time of the
Closing.
4.2. Performance; No Default.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to
be performed or complied with by it prior to or at the Closing
and after giving effect to the issue and sale of the Notes (and
the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred
and be continuing. Neither the Company nor any Subsidiary shall
have entered into any transaction since the date of the
Memorandum that would have been prohibited by Section 10.1, 10.2,
10.3, 10.5, 10.6 or 10.7 had such Sections applied since such
date.
4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have
delivered to you an Officer's Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections
4.1, 4.2, 4.10 and 4.11 have been fulfilled.
(b) Secretary's Certificate. The Company shall have
delivered to you a certificate of the Secretary or an Assistant
Secretary of the Company certifying as to the resolutions
attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this
Agreement and the Other Agreements.
4.4. Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from
Armstrong, Teasdale, Schlafly & Davis, special counsel for the
Company, substantially in the form set forth in Exhibit 4.4(a)
and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such
opinion to you) and (b) from Willkie Farr & Gallagher, your
special counsel in connection with such transactions, sub-
stantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as you may
reasonably request.
4.5. Subsidiary Guarantees.
A Subsidiary Guarantee, dated as of a date on or before
the date of the Closing, shall have been executed and delivered
by each Subsidiary in the form hereinabove recited and shall be
in full force and effect.
4.6. Purchase Permitted by Applicable Law, etc.
On the date of the Closing your purchase of Notes shall
(a) be permitted by the laws and regulations of each jurisdiction
to which you are subject, without recourse to provisions (such as
Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as
to the character of the particular investment, (b) not violate
any applicable law or regulation (including without limitation
Regulation G, T or X of the Board of Governors of the Federal
Reserve System) and (c) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certifi-
cate certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so
permitted.
4.7. Sale of Notes to Other Purchasers.
The Company shall sell to the Other Purchasers and the
Other Purchasers shall purchase the Notes to be purchased by them
at the Closing as specified in Schedule A.
4.8. Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the
Company shall have paid on or before the Closing the reasonable
fees, charges and disbursements of your special counsel referred
to in Section 4.4 to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior
to the Closing.
4.9. Private Placement Number.
A Private Placement Number issued by Standard & Poor's
CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commis-
sioners) shall have been obtained for the Notes.
4.10. Changes in Corporate Structure.
The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the
liabilities of any other entity at any time following the date of
the most recent financial statements referred to in Schedule 5.5.
4.11. Contemporaneous Transactions.
(a) Termination of Existing Bank Facility. The
Company shall repay all outstanding Indebtedness under the
existing Amended and Restated Loan Agreement with Chemical Bank,
listed in Schedule 5.15, and said Amended and Restated Loan
Agreement shall have been terminated.
(b) Redemption of Debentures. The Company shall have
redeemed all of its outstanding 9% Convertible Subordinated
Debentures due 1999 (the "Subordinated Debentures") or shall have
caused irrevocable notice to be given to the holders of the
Subordinated Debentures in respect of the redemption in full of
all outstanding Subordinated Debentures on or before August 31,
1995.
4.12. Proceedings and Documents.
All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and all documents
and instruments incident to such transactions shall be satis-
factory to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may
reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. Organization; Power and Authority.
The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute
and deliver this Agreement and the Other Agreements and the Notes
and to perform the provisions hereof and thereof.
5.2. Authorization, etc.
This Agreement and the Other Agreements and the Notes
have been duly authorized by all necessary corporate action on
the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (b)
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
5.3. Disclosure.
The Company, through its agents, CS First Boston
Corporation and A.G. Edwards & Sons, Inc., has delivered to you a
copy of a Confidential Offering Memorandum, dated June 1995 (the
"Memorandum"), relating to the transactions contemplated hereby.
The Memorandum fairly describes, in all material respects, the
general nature of the business and principal properties of the
Company and its Subsidiaries. This Agreement, the Memorandum,
the documents, certificates or other writings delivered to you by
or on behalf of the Company in connection with the transactions
contemplated hereby and described in Schedule 5.3 (together with
the Memorandum, the "Disclosure Documents"), and the financial
statements listed in Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were
made. Since October 29, 1994, there has been no change in the
financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except as disclosed in
the Disclosure Documents or in the financial statements listed in
Schedule 5.5 and other changes that individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has
not been set forth herein or in the Disclosure Documents.
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein)
complete and correct lists of the Company's (i) Subsidiaries,
showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary, (ii)
Affiliates, other than Subsidiaries, and (iii) directors and
senior officers.
(b) All of the outstanding shares of capital stock or
similar equity interests of each Subsidiary shown in Schedule 5.4
as being owned by the Company and its Subsidiaries have been
validly issued, are fully paid and nonassessable and are owned by
the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. Each such Subsidiary has the corporate power and
authority to own or hold under lease the properties it purports
to own or hold under lease and to transact the business it
transacts and proposes to transact and to execute and deliver and
perform its obligations under its respective Subsidiary
Guarantee.
(d) No Subsidiary is a party to, or otherwise subject
to any legal restriction or any agreement (other than this
Agreement, the agreements listed in Schedule 5.4 and customary
limitations imposed by corporate law statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or
any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.
5.5. Financial Statements.
The Company has delivered to you copies of the
financial statements of the Company and its Subsidiaries listed
in Schedule 5.5. All of said financial statements (including in
each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified
in such Schedule and the consolidated results of their operations
and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes
thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company
of this Agreement and the Notes and by the Subsidiaries of their
respective Subsidiary Guarantees will not (i) contravene, result
in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the
Company or any Subsidiary is bound or by which the Company or any
Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (iii) violate any
provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsid-
iary.
5.7. Governmental Authorizations, etc.
No consent, approval or authorization of, or
registration, filing or declaration with, any Governmental
Authority is required for the validity of the execution, delivery
or performance by the Company of this Agreement or the Notes or
by the Subsidiaries of their respective Subsidiary Guarantees.
5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in
any court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
(b) Neither the Company nor any Subsidiary is in de-
fault under any term of any agreement or instrument to which it
is a party or by which it is bound, or any order, judgment,
decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental
Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
5.9. Taxes.
The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction,
and have paid all taxes shown to be due and payable on such
returns and all other taxes and assessments levied upon them or
their properties, assets, income or franchises, to the extent
such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments
(a) currently payable without penalty or interest, (b) the amount
of which is not individually or in the aggregate Material or
(c) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be,
has established adequate reserves in accordance with GAAP. The
Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of Federal, state or other taxes
for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been
determined by the Internal Revenue Service and paid for all
fiscal years up to and including the fiscal year ended
October 29, 1988.
5.10. Title to Property; Leases.
The Company and its Subsidiaries have good and
marketable title to their respective real properties and good and
sufficient title to their respective other properties that
individually or in the aggregate are Material, including all such
properties reflected in the most recent audited balance sheet
listed on Schedule 5.5 or purported to have been acquired by the
Company or any Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are Material are
valid and subsisting and are in full force and effect in all
material respects.
5.11. Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess
all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are
Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product
of the Company infringes in any material respect any
license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other
right owned by any other Person; and
(c) to the best knowledge of the Company, there is no
Material violation by any Person of any right of the Company
or any of its Subsidiaries with respect to any patent,
copyright, service mark, trademark, trade name or other
right owned or used by the Company or any of its
Subsidiaries.
5.12. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets
of the Company or any ERISA Affiliate, in either case pursuant to
Title I or IV of ERISA or to such penalty or excise tax
provisions or to section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not be individually or in
the aggregate Material.
(b) The present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer
Plans), determined as of the end of such Plan's most recently
ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit
liabilities. The term "benefit liabilities" has the meaning
specified in section 4001 of ERISA and the terms "current value"
and "present value" have the meaning specified in section 3 of
ERISA.
(c) The Company and its ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204 of
ERISA in respect of Multiemployer Plans that individually or in
the aggregate are Material.
(d) The expected postretirement benefit obligation
(determined as of the last day of the Company's most recently
ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by section 4980B
of the Code) of the Company and its Subsidiaries is not Material.
(e) With respect to each employee benefit plan, if
any, disclosed by you in writing to the Company in accordance
with Section 6.2(c), neither the Company nor any "affiliate" of
the Company (as defined in Section V(c) of the QPAM Exemption)
has at this time, nor has exercised at any time during the
immediately preceding year, the authority to appoint or terminate
the "QPAM" (as defined in Part V of the QPAM Exemption) disclosed
by you to the Company pursuant to Section 6.2(c) as manager of
any of the assets of any such plan or to negotiate the terms of
any management agreement with such QPAM on behalf of any such
plan, and the Company is not an "affiliate" (as so defined) of
such QPAM. The Company is not a party in interest with respect
to any employee benefit plan disclosed by you in accordance with
Section 6.2(b) or 6.2(e). The execution and delivery of this
Agreement and the issuance and sale of the Notes at the Closing
hereunder will not involve any prohibited transaction (as such
term is defined in section 406(a) of ERISA and sec-
tion 4975(c)(1)(A)-(D) of the Code), that could subject the
Company or any holder of a Note to any tax or penalty on
prohibited transactions imposed under said section 4975 of the
Code or by section 502(i) of ERISA. The representation by the
Company in the preceding sentence of this Section 5.12(e) is made
in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the source of the funds used
to pay the purchase price of the Notes to be purchased by you.
5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has
offered the Notes, the Subsidiary Guarantees or any similar
securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect
thereof with, any person other than you, the Other Purchasers and
not more than 70 other Institutional Investors, each of which has
been offered the Notes at a private sale for investment. Neither
the Company nor anyone acting on its behalf has taken, or will
take, any action that would subject the issuance or sale of the
Notes or the issuance of the Subsidiary Guarantees to the
registration requirements of Section 5 of the Securities Act.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the net proceeds of the sale of
the Notes to redeem outstanding Subordinated Debentures and to
repay revolving credit Indebtedness of the Company. No part of
the proceeds from the sale of the Notes hereunder will be used,
and no part of the proceeds of the Subordinated Debentures or
such revolving credit Indebtedness was used, directly or in-
directly, for the purpose of buying or carrying any margin stock
within the meaning of Regulation G of the Board of Governors of
the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regula-
tion X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the
Company does not have any present intention that margin stock
will constitute more than 5% of the value of such assets. As
used in this Section, the terms "margin stock" and "purpose of
buying or carrying" shall have the meanings assigned to them in
said Regulation G.
5.15. Existing Indebtedness; Future Liens.
(a) Schedule 5.15 sets forth a complete and correct
list of all outstanding Indebtedness of the Company and its
Subsidiaries in an unpaid principal amount exceeding $1,000,000
as of March 31, 1995, since which date there has been no Material
change in the amounts, interest rates, sinking funds, instalment
payments or maturities of the Indebtedness of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in de-
fault, and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the
Company or such Subsidiary in an unpaid principal amount
exceeding $1,000,000, and no event or condition exists with
respect to any such Indebtedness of the Company or any Subsidiary
that would permit (or that with the giving of notice or the lapse
of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity
or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the
Company nor any Subsidiary has agreed or consented to cause or
permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.2.
5.16. Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder
nor its use of the proceeds thereof will violate the Trading with
the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
5.17. Status Under Certain Statutes.
Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as
amended.
5.18. Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of
any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective
real properties now or formerly owned, leased or operated by any
of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to you in writing
prior to your execution and delivery of this Agreement,
(a) neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any claim,
public or private, of violation of Environmental Laws or
damage to the environment emanating from, occurring on or in
any way related to real properties now or formerly owned,
leased or operated by any of them or to other assets or
their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse
Effect;
(b) neither the Company nor any of its Subsidiaries
has stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them and has
not disposed of any Hazardous Materials in a manner contrary
to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse
Effect; and
(c) all buildings on all real properties now owned,
leased or operated by the Company or any of its Subsidiaries
are in compliance with applicable Environmental Laws, except
where failure to comply could not reasonably be expected to
result in a Material Adverse Effect.
5.19. Solvency.
The Company is, and after giving effect to the issuance
of the Notes on the Closing Date will be, a "solvent
institution", as said term is used in Section 1405(c) of the New
York Insurance Law, whose "obligations . . . are not in default
as to principal or interest", as said terms are used in said
Section 1405(c).
6.1. Purchase of Notes.
You represent that you are purchasing the Notes for
your own account or for one or more separate accounts maintained
by you or for the account of one or more pension or trust funds
and not with a view to the distribution thereof, provided that
the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have
not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an
exemption is required by law, and that the Company is not
required to register the Notes.
6.2. Source of Funds.
You represent that at least one of the following
statements is an accurate representation as to each source of
funds (a "Source") to be used by you to pay the purchase price of
the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general
account", as such term is defined in Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995), and there is
no plan with respect to which the aggregate amount of such
general account's reserves and liabilities for the contracts
held by or on behalf of such plan and all other plans
maintained by the same employer (and affiliates thereof as
defined in section V(a)(1) of PTE 95-60) or by the same
employee organization (in each case determined in accordance
with PTE 95-60) exceeds or will exceed 10% of the total of
all reserves and liabilities of such general account
(determined in accordance with PTE 95-60, exclusive of
separate account liabilities, plus any applicable surplus)
as of the date of the Closing; or
(b) the Source is either (i) an insurance company
pooled separate account, within the meaning of PTE 90-1
(issued January 29, 1990), or (ii) a bank collective
investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no
employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or
"QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed
20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM (applying the definition of "control"
in section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and (i) the identity of such QPAM
and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been
disclosed to the Company in writing pursuant to this
paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans,
or a separate account or trust fund comprised of one or more
employee benefit plans, each of which has been identified to
the Company in writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of
ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account"
shall have the respective meanings assigned to such terms in
section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information.
The Company shall deliver to each holder of Notes that
is an Institutional Investor:
(a) Quarterly Statements -- within 60 days after the
end of each quarterly fiscal period in each fiscal year of
the Company (other than the last quarterly fiscal period of
each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the figures
for the corresponding periods in the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly present-
ing, in all material respects, the financial position of the
companies being reported on and their results of operations
and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period
specified above of copies of the Company's Quarterly Report
on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of
this Section 7.1(a);
(b) Annual Statements -- within 105 days after the end
of each fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Subsidiaries for such year,
setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by
(A) an opinion thereon of independent public
accountants of recognized national standing, which
opinion shall state that such financial statements
present fairly, in all material respects, the financial
position of the companies being reported upon and their
results of operations and cash flows and have been pre-
pared in conformity with GAAP, and that the examination
of such accountants in connection with such financial
statements has been made in accordance with generally
accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating
that they have reviewed this Agreement and stating
further whether, in making their audit, they have
become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if
they are aware that any such condition or event then
exists, specifying the nature and period of the
existence thereof (it being understood that such
accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any
Default or Event of Default unless such accountants
should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified
above of the Company's Annual Report on Form 10-K for such
fiscal year (together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under
the Exchange Act) prepared in accordance with the require-
ments therefor and filed with the Securities and Exchange
Commission, together with the accountant's certificate
described in clause (B) above, shall be deemed to satisfy
the requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their be-
coming available, one copy of (i) each financial statement,
report, notice or proxy statement sent by the Company or any
Subsidiary generally to its shareholders or to its creditors
(other than the Company or another Subsidiary), and
(ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by
such holder), and each prospectus and all amendments thereto
filed by the Company or any Subsidiary with the Securities
and Exchange Commission and of each press release and other
statement made available generally by the Company or any
Subsidiary to the public concerning developments that are
Material;
( and in any event within five days after a Responsible
Officer becoming aware of the existence of any Default or
Event of Default or that any Person has given any notice or
taken any action with respect to a claimed default hereunder
or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in
Section 11(f), a written notice specifying the nature and
period of existence thereof and what action the Company is
taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within
five days after a Responsible Officer becoming aware of any
of the following, a written notice setting forth the nature
thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable
event, as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has
not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the termi-
nation of, or the appointment of a trustee to adminis-
ter, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with re-
spect to such Multiemployer Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any liability by the
Company or any ERISA Affiliate pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Mate-
rial Adverse Effect;
(f) Notices from Governmental Authority -- promptly,
and in any event within 30 days of receipt thereof, copies
of any notice to the Company or any Subsidiary from any
Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could
reasonably be expected to have a Material Adverse Effect;
and
(g) Requested Information -- with reasonable prompt-
ness, such other data and information relating to the
business, operations, affairs, financial condition, assets
or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its
obligations hereunder and under the Notes or relating to the
ability of a Subsidiary to perform its obligations under its
respective Subsidiary Guarantee, in each case as from time
to time may be reasonably requested by any such holder of
Notes.
7.2. Officer's Certificate.
Each set of financial statements delivered to a holder
of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be
accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish
whether the Company was in compliance with the requirements
of Sections 10.1 through 10.5, inclusive, during the
quarterly or annual period covered by the statements then
being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum
or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calcu-
lation of the amount, ratio or percentage then in
existence); and
(b) Default -- a statement that such Senior Financial
Officer has reviewed the relevant terms hereof and has made,
or caused to be made, under his or her supervision, a review
of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the
date of the certificate and that such review shall not have
disclosed the existence during such period of any condition
or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists (in-
cluding, without limitation, any such event or condition
resulting from the failure of the Company or any Subsidiary
to comply with any Environmental Law), specifying the nature
and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
7.3. Inspection.
The Company shall permit the representatives of each
holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default
then exists, at the expense of such holder and upon reason-
able prior notice to the Company, to visit the principal
executive office of the Company, to discuss the affairs,
finances and accounts of the Company and its Subsidiaries
with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld)
its independent public accountants, and (with the consent of
the Company, which consent will not be unreasonably with-
held) to visit the other offices and properties of the
Company and each Subsidiary, all at such reasonable times
and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then
exists, at the expense of the Company, to visit and inspect
any of the offices or properties of the Company or any
Subsidiary, to examine all their respective books of ac-
count, records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers,
employees and independent public accountants (and by this
provision the Company authorizes said accountants to discuss
the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE NOTES.
In addition to the payment of the entire unpaid
principal amount of the Notes at the final maturity thereof, the
Company will make required, and may make optional, prepayments in
respect of the Notes as hereinafter provided.
8.1. Required Prepayments.
On August 15, 1999 and on each August 15 thereafter to
and including August 15, 2004 the Company will prepay
$7,142,857.20 principal amount (or such lesser principal amount
as shall then be outstanding) of the Notes, such prepayment to be
made at the principal amount to be prepaid, together with accrued
interest thereon to the date of such prepayment, without premium
and allocated as provided in Section 8.3, provided that upon any
partial prepayment of the Notes pursuant to Section 8.2 or
purchase of Notes permitted by Section 8.5, the principal amount
of each required prepayment of the Notes becoming due under this
Section 8.1 on and after the date of such prepayment or purchase
shall be reduced in the same proportion as the aggregate unpaid
principal amount of the Notes is reduced as a result of such
prepayment or purchase.
8.2. Optional Prepayments.
The Company may, at its option and upon notice as
provided below, prepay at any time all, or from time to time any
part of, the Notes (in a minimum amount of $1,000,000 and
otherwise in multiples of $100,000) at the principal amount so
prepaid, together with interest accrued thereon to the date of
such prepayment, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The
Company will give each holder of Notes written notice of each
optional prepayment under this Section 8.2 not less than 30 days
and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify the date fixed for
such prepayment (which shall be a Business Day), the aggregate
principal amount of the Notes to be prepaid on such date, the
principal amount of Notes (if any) held by such holder to be
prepaid (determined in accordance with Section 8.3) and the
interest to be paid on the prepayment date with respect to such
principal amount being prepaid.
Each such notice of prepayment shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two
Business Days prior to such prepayment of Notes, the Company
shall deliver to each holder of the Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-
Whole Amount as of the specified prepayment date.
8.3. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes,
the principal amount of the Notes to be prepaid shall be
allocated among all the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof.
8.4. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to
this Section 8, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount
accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to
pay such principal amount when so due and payable, together with
the interest and Make-Whole Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any
Note paid or prepaid in full shall be surrendered to the Company
and cancelled and shall not be reissued, and no Note shall be
issued in lieu of any prepaid principal amount of any Note.
8.5. Purchase of Notes.
The Company will not and will not permit any Affiliate
to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the
payment or prepayment of the Notes in accordance with the terms
of this Agreement and the Notes or (b) pursuant to an offer made
by the Company or any such Affiliate to all holders of the Notes
to purchase Notes on the same terms and conditions, pro rata
among all Notes tendered, which offer shall remain outstanding
for a reasonable period of time (not to be less than 30 days).
Any Notes so repurchased shall immediately upon
acquisition thereof be cancelled and no Notes shall be issued in
substitution or exchange therefor.
Promptly and in any event within five Business Days
after each such purchase of Notes, the Company will furnish each
holder of the Notes with a certificate of a Senior Financial
Officer describing such purchase (including the aggregate
principal amount of Notes so purchased and the purchase price
therefor) and certifying that such purchase was made in
compliance with the requirements of this Section.
8.6. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any
Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context
requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting
all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that
on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New
York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on
the display designated as "Page 500" on the Telerate Access
Service (or such other display as may replace Page 500 on
Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or
(ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the
latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date.
Such implied yield will be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equiva-
lent yields in accordance with accepted financial practice
and (b) interpolating linearly between (1) the actively
traded U.S. Treasury security with a maturity closest to and
greater than the Remaining Average Life and (2) the actively
traded U.S. Treasury security with a maturity closest to and
less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any
Called Principal, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (i) such
Called Principal into (ii) the sum of the products obtained
by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by
(b) the number of years (calculated to the nearest one-
twelfth year) that will elapse between the Settlement Date
with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to
the Called Principal of any Note, all payments of such
Called Principal and interest thereon that would be due
after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made
prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are
due to be made under the terms of the Notes, then the amount
of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement
Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes
are outstanding:
9.1. Compliance with Law.
The Company will and will cause each of its Sub-
sidiaries to comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including
without limitation Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
9.2. Insurance.
The Company will and will cause each of its Sub-
sidiaries to maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties
and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a
similar business and similarly situated.
9.3. Maintenance of Properties.
The Company will and will cause each of its Sub-
sidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly
conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and
the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company will and will cause each of its Sub-
sidiaries to file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due
and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become
due and payable that have or might become a Lien on properties or
assets of the Company or any Subsidiary, provided that neither
the Company nor any Subsidiary need pay any such tax or
assessment or claim if (i) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a
timely basis in good faith and in appropriate proceedings, and
the Company or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Company or
such Subsidiary or (ii) the nonpayment of all such taxes and
assessments in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
9.5. Corporate Existence, etc.
The Company will at all times preserve and keep in full
force and effect its corporate existence. Subject to Sections
10.5 and 10.6, the Company will at all times preserve and keep in
full force and effect the corporate existence of each of its
Subsidiaries (unless merged into the Company or a Subsidiary) and
all rights and franchises (as franchisee) of the Company and its
Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force
and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse
Effect.
9.6. Additional Subsidiary Guarantees; Release of Subsidiary
Guarantees.
Forthwith after any Person becomes a Significant
Subsidiary after the date of the Closing, the Company will cause
such Person to execute and deliver a Subsidiary Guarantee and
promptly and in any event within ten Business Days thereafter the
Company will furnish each holder of the Notes with a counterpart
of such executed Subsidiary Guarantee, together with an opinion
of Armstrong, Teasdale, Schlafly & Davis or other counsel
reasonably satisfactory to the Required Holders (which opinion
shall be reasonably satisfactory to the Required Holders and may
be subject to customary exceptions, qualifications and
limitations under the circumstances) to the effect that such
Subsidiary Guarantee has been duly authorized, executed and
delivered by such Significant Subsidiary and is valid, binding
and enforceable in accordance with its terms. The Company will
cause each Subsidiary Guarantee to remain in full force and
effect at all times after the execution and delivery thereof.
Any Subsidiary the Voting Stock of which is being disposed of in
an Asset Sale in accordance with the provisions of Section 10.5
shall, at the Company's request, be discharged from all of its
obligations and liabilities under its Subsidiary Guarantee by the
Required Holders entering into a release in form and substance
reasonably satisfactory to the Required Holders, and you and each
other holder of a Note, by acceptance of such Note, agree to
enter into such a satisfactory release promptly upon request,
except that this sentence shall not apply (a) if a Default or
Event of Default has occurred and is continuing, (b) to a
Subsidiary if any amount is then due and payable under its
Subsidiary Guarantee or (c) to a Subsidiary which at the time is
a guarantor of any other Indebtedness of the Company or another
Subsidiary party to a Subsidiary Guarantee that is not also
concurrently being released.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes
are outstanding:
10.1. Total Indebtedness; Subsidiary Indebtedness.
(a) The Company will not and will not permit any
Subsidiary to create, assume, incur, guarantee or otherwise
become liable in respect of any Indebtedness unless immediately
after giving effect thereto and to the application of the
proceeds of such Indebtedness the pro forma Total Indebtedness to
EBITDA Ratio does not exceed 3.50 to 1.
(b) The Company will not permit any Subsidiary to
create, assume, incur, guarantee or otherwise become liable in
respect of any Indebtedness except
(i) Indebtedness secured by Liens permitted by Section
10.2(b) or (c),
(ii) Indebtedness owing to the Company or a Wholly-
Owned Subsidiary, and
(iii) other Indebtedness provided that immediately
after giving effect to such other Indebtedness the sum
(without duplication) of (A) the aggregate unpaid principal
amount of Indebtedness (including Capitalized Lease
Obligations) of the Company secured by Liens permitted by
Section 10.2(e) plus (B) the aggregate unpaid principal
amount of Indebtedness of all Subsidiaries (other than
Indebtedness permitted by clause (ii) above) plus (C) the
aggregate Attributable Debt in connection with all sale and
leaseback transactions of the Company and its Subsidiaries
entered into after the date of the Closing in accordance
with the provisions of Section 10.3, does not exceed 15% of
Consolidated Capitalization.
For purposes of this Section 10.1(b), a Subsidiary shall be
deemed to have incurred Indebtedness in respect of any obligation
previously owed to the Company or to a Wholly-Owned Subsidiary on
the date the obligee ceases for any reason to be the Company or a
Wholly-Owned Subsidiary, and a Person that hereafter becomes a
Subsidiary shall be deemed at that time to have incurred all of
its outstanding Indebtedness.
10.2. Liens.
The Company will not and will not permit any Subsidiary
to create, assume, incur or suffer to exist any Lien upon or with
respect to any property or assets, whether now owned or hereafter
acquired, securing any Indebtedness without making effective
provision (pursuant to documentation in form and substance
reasonably satisfactory to the Required Holders) whereby the
Notes shall be secured by such Lien equally and ratably with or
prior to any and all Indebtedness and other obligations to be
secured thereby, provided that nothing in this Section 10.2 shall
prohibit
(a) Liens in respect of property of the Company or a
Subsidiary existing on the date of the Closing and described
in Schedule 5.15, but no extension, renewal or replacement
of any such Lien except as permitted by Section 10.2(e);
(b) Liens in respect of property acquired or
constructed by the Company or a Subsidiary after the date of
the Closing, which are created at the time of or within 180
days after acquisition or completion of construction of such
property to secure Indebtedness assumed or incurred to
finance all or any part of the purchase price or cost of
construction of such property, provided that in any such
case
(i) no such Lien shall extend to or cover any
other property of the Company or such Subsidiary, as
the case may be, and
(ii) the aggregate principal amount of
Indebtedness secured by all such Liens in respect of
any such property shall not exceed the cost of such
property and any improvements then being financed;
(c) Liens in respect of property acquired by the
Company or a Subsidiary after the date of the Closing,
existing on such property at the time of acquisition thereof
(and not created in anticipation thereof), or in the case of
any Person that after the date of the Closing becomes a
Subsidiary or is consolidated with or merged with or into
the Company or a Subsidiary or sells, leases or otherwise
disposes of all or substantially all of its property to the
Company or a Subsidiary, Liens existing at the time such
Person becomes a Subsidiary or is so consolidated or merged
or effects such sale, lease or other disposition of property
(and not created in anticipation thereof), provided that in
any such case no such Lien shall extend to or cover any
other property of the Company or such Subsidiary, as the
case may be;
(d) Liens securing Indebtedness owed by a Subsidiary
to the Company or to a Wholly-Owned Subsidiary; and
(e) Liens which would otherwise not be permitted by
Section 10.2(a), (b), (c) or (d), securing additional
Indebtedness of the Company or a Subsidiary, provided that
after giving effect thereto the sum (without duplication) of
(i) the aggregate unpaid principal amount of Indebtedness
(including Capitalized Lease Obligations) of the Company
secured by such Liens permitted by this Section 10.2(e) plus
(ii) the aggregate unpaid principal amount of Indebtedness
of Subsidiaries (other than Indebtedness permitted by clause
(ii) of Section 10.1(b)) plus (iii) the aggregate
Attributable Debt in connection with all sale and leaseback
transactions of the Company and its Subsidiaries entered
into after the date of the Closing in accordance with the
provisions of Section 10.3, does not exceed 15% of
Consolidated Capitalization.
For purposes of this Section 10.2 any Lien existing in respect of
property at the time such property is acquired or in respect of
property of a Person at the time such Person is acquired,
consolidated or merged with or into the Company or a Subsidiary
shall be deemed to have been created at that time.
10.3. Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any
Subsidiary to sell, lease, transfer or otherwise dispose of
(collectively, a "transfer") any asset on terms whereby the asset
or a substantially similar asset is or may be leased or
reacquired by the Company or any Subsidiary over a period in
excess of three years, unless either
(a) after giving effect to such transaction and the
incurrence of Attributable Debt in respect thereof, the sum
(without duplication) of (i) the aggregate unpaid principal
amount of Indebtedness (including Capitalized Lease
Obligations) of the Company secured by such Liens permitted
by Section 10.2(e) plus (ii) the aggregate unpaid principal
amount of Indebtedness of Subsidiaries (other than
Indebtedness permitted by clause (ii) of Section 10.1(b))
plus (iii) the aggregate Attributable Debt in connection
with all sale and leaseback transactions of the Company and
its Subsidiaries entered into after the date of the Closing
in accordance with the provisions of this Section 10.3, does
not exceed 15% of Consolidated Capitalization, or
(b) the net proceeds realized from the transfer are
applied within 60 days after the receipt thereof to the
repayment of Indebtedness (and in that connection the
Company shall have made an offer to purchase, at not less
than par and otherwise in accordance with Section 8.5, Notes
in an unpaid principal amount at least equal to a pro rata
portion of all such Indebtedness to be repaid, allocated
among all Notes tendered).
10.4. Maintenance of Net Worth.
The Company will not at any time permit Consolidated
Net Worth to be less than the sum of (a) $50,000,000 plus (b) 25%
of Consolidated Net Income for each fiscal year (beginning with
the fiscal year ending on October 28, 1995) for which
Consolidated Net Income is positive.
10.5. Asset Sales.
The Company will not and will not permit any Subsidiary
to, directly or indirectly, make any sale, transfer, lease (as
lessor), loan or other disposition of any property or assets (an
"Asset Sale") other than
(a) Asset Sales in the ordinary course of business;
(b) Asset Sales of property or assets by a Subsidiary
to the Company or a Wholly-Owned Subsidiary; or
(c) other Asset Sales, provided that in each case
(i) immediately before and after giving effect
thereto, (A) no Default or Event of Default shall have
occurred and be continuing and (B) the Company would be
permitted to incur at least $1 of additional
Indebtedness under Section 10.1(a), and
(ii) the aggregate net book value of property or
assets disposed of in such Asset Sale and all other
Asset Sales by the Company and its Subsidiaries during
the immediately preceding twelve months does not exceed
15% of Consolidated Capitalization (as of the last day
of the quarterly accounting period ending on or most
recently prior to the last day of such twelve month
period),
and provided further that for purposes of clause (ii) above
there shall be excluded the net book value of property or
assets disposed of in an Asset Sale if and to the extent
such Asset Sale is made for cash, payable in full upon the
completion of such Asset Sale, and an amount equal to the
net proceeds realized upon such Asset Sale is applied by the
Company or such Subsidiary, as the case may be, within one
year after the effective date of such Asset Sale (x) to
reinvest in similar categories of property or assets for use
in the business of the Company and its Subsidiaries or (y)
to repay Indebtedness (and in that connection the Company
shall have made an offer to purchase, at not less than par
and otherwise in accordance with Section 8.5, Notes in an
unpaid principal amount at least equal to a pro rata portion
of all such Indebtedness to be repaid, allocated among all
Notes tendered).
For purposes of this Section 10.5 any shares of Voting
Stock of a Subsidiary that are the subject of an Asset Sale shall
be valued at the greater of (1) the fair market value of such
shares as determined in good faith by the Board of Directors of
the Company and (2) the aggregate net book value of the assets of
such Subsidiary multiplied by a fraction of which the numerator
is the aggregate number of shares of Voting Stock of such
Subsidiary disposed of in such Asset Sale and the denominator is
the aggregate number of shares of Voting Stock of such Subsidiary
outstanding immediately prior to such Asset Sale.
10.6. Merger, Consolidation, etc.
The Company will not and will not permit any Subsidiary
to consolidate with or merge with any other corporation or
convey, transfer or lease all or substantially all of its assets
in a single transaction or series of transactions to any Person
except:
(a) a Subsidiary may consolidate with or merge with
any other corporation or convey or transfer all or
substantially all of its assets to
(i) the Company (provided that the Company shall
be the continuing or surviving corporation) or a then
existing Wholly-Owned Subsidiary, or
(ii) any Person in an Asset Sale involving all of
the outstanding stock or all or substantially all of
the assets of such Subsidiary, in either case subject
to the limitations of Section 10.5; and
(b) the Company may consolidate with or merge with any
other corporation or convey or transfer all or substantially
all of its assets to a corporation organized and existing
under the laws of the United States or any State thereof,
provided that
(i) if the Company is not the continuing,
surviving or acquiring corporation (the "surviving
corporation"), the surviving corporation shall have (A)
executed and delivered to each holder of a Note its
assumption of the due and punctual performance and
observance of all obligations of the Company under this
Agreement, the Other Agreements and the Notes and (B)
caused to be delivered to each holder of a Note an
opinion of counsel reasonably satisfactory to the
Required Holders to the effect that all agreements or
instruments effecting such assumption are enforceable
in accordance with their terms and comply with the
terms hereof, and
(ii) immediately after giving effect to such
transaction, (A) no Default or Event of Default shall
have occurred and be continuing and (B) the Company
would be permitted to incur at least $1 of additional
Indebtedness under Section 10.1(a).
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the
Company or any successor corporation that shall theretofore have
become such in the manner prescribed in this Section 10.6 from
its liability under this Agreement or the Notes.
10.7. Transactions with Affiliates.
The Company will not and will not permit any Subsidiary
to enter into directly or indirectly any transaction or Material
group of related transactions (including without limitation the
purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the
Company or another Subsidiary), except in the ordinary course and
pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any
principal or Make-Whole Amount, if any, on any Note when the
same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any
interest on any Note for more than five Business Days after
the same becomes due and payable; or
(c) the Company defaults in the performance of or
compliance with any term contained in Section 7.1(d) or
Sections 10.1 to 10.6, inclusive (and, in the case of any
such default under Section 10.4, such default shall have
continued for a period of 30 days after a Responsible
Officer obtains knowledge thereof (if and so long as the
Company is proceeding diligently and in good faith, by
issuing equity securities or otherwise, to remedy such
default during such 30-day period); or
(d) the Company defaults in the performance of or
compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this
Section 11) and such default is not remedied within 30 days
after a Responsible Officer obtaining knowledge of such
default; or
(e) any representation or warranty made in writing by
or on behalf of the Company or by any officer of the Company
in this Agreement or in any writing furnished in connection
with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date
as of which made; or
(f) (i) the Company or any Subsidiary is in default
(as principal or as guarantor or other surety) in the
payment of any principal of or premium or make-whole amount
or interest on any Indebtedness (other than the Notes) that
is outstanding in an aggregate principal amount of at least
$1,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default
in the performance of or compliance with any term of any
evidence of any Indebtedness or of any mortgage, indenture
or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition
such Indebtedness has become, or has been declared, due and
payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity
interests or a sale of assets or other transaction that is
permitted if made in connection with a repayment of
Indebtedness), the Company or any Subsidiary has become
obligated to purchase or repay any Indebtedness before its
regular maturity or before its regularly scheduled dates of
payment; or
(g) the Company or any Significant Subsidiary (i) is
generally not paying, or admits in writing its inability to
pay, its debts as they become due, (ii) files, or consents
by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction,
(iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to
it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or
(vi) takes corporate action for the purpose of any of the
foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by
the Company or any Significant Subsidiary, a custodian,
receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the
Company or any such Subsidiary, or any such petition shall
be filed against the Company or any such Subsidiary and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of
money aggregating in excess of $500,000 are rendered against
one or more of the Company and its Subsidiaries which
judgments are not, within 60 days after entry thereof,
bonded, paid, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such
stay; or
(j) any Subsidiary Guarantee shall cease to be in full
force and effect as an enforceable instrument or any
Subsidiary (or any Person at its authorized direction or on
its behalf) shall assert in writing that the Subsidiary
Guarantee of such Subsidiary is unenforceable in any
material respect; or
(k) if (i) any Plan shall fail to satisfy the minimum
funding standards of ERISA or the Code for any plan year or
part thereof or a waiver of such standards or extension of
any amortization period is sought or granted under sec-
tion 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint
a trustee to administer any Plan or the PBGC shall have
notified the Company or any ERISA Affiliate that a Plan may
become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within
the meaning of section 4001(a)(18) of ERISA) under all
Plans, determined in accordance with Title IV of ERISA,
shall exceed $1,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of
the Company or any Subsidiary thereunder; and any such event
or events described in clauses (i) through (vi) above,
either individually or together with any other such event or
events, could reasonably be expected to have a Material
Adverse Effect.
As used in Section 11(k), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company
described in paragraph (g) or (h) of Section 11 has occurred, all
the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is
continuing, the Required Holders may at any time at its or their
option, by notice or notices to the Company, declare all the
Notes at the time outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a)
or (b) of Section 11 has occurred and is continuing, any holder
or holders of Notes at the time outstanding affected by such
Event of Default may at any time, at its or their option, by
notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this
Section 12.1, whether automatically or by declaration, such Notes
will forthwith mature and the entire unpaid principal amount of
such Notes, plus (x) all accrued and unpaid interest thereon and
(y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case with-
out presentment, demand, protest or further notice, all of which
are hereby waived. The Company acknowledges, and the parties
hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment by the
Company (except as herein specifically provided) and that the
provision for payment of a Make-Whole Amount by the Company in
the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such
circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section
12.1, the holder of any Note at the time outstanding may proceed
to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in
any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the
Required Holders, by written notice to the Company, may rescind
and annul any such declaration and its consequences if (a) the
Company has paid all overdue interest on the Notes, all principal
of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration,
and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate,
(b) all Events of Default and Defaults, other than the non-pay-
ment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Sec-
tion 17, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to
or affect any subsequent Event of Default or Default or impair
any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any
holder of any Note in exercising any right, power or remedy shall
operate as a waiver thereof or otherwise prejudice such holder's
rights, powers or remedies. No right, power or remedy conferred
by this Agreement or by any Note upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the
Company under Section 15, the Company will pay to the holder of
each Note on demand such further amount as shall be sufficient to
cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including
without limitation reasonable attorneys' fees, expenses and
disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive
office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of
each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer,
the Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all
purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly
upon request therefor, a complete and correct copy of the names
and addresses of all registered holders of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive
office of the Company for registration of transfer or exchange
(and in the case of a surrender for registration of transfer,
duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or his attor-
ney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), within
five Business Days thereafter the Company shall execute and
deliver, at the Company's expense (except as provided below), one
or more new Notes (as requested by the holder thereof) in
exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new
Note shall be payable to such Person as such holder may request.
Each such new Note shall be dated and bear interest from the date
to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have
been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed
in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $1,000,000, provided
that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000.
You agree that the Company shall not be required to
register the transfer of any Note to any Person (other than your
nominee) or to any separate account maintained by you unless the
Company receives from the transferee a representation to the
Company (and appropriate information as to any separate accounts
or other matters) to the same or similar effect with respect to
the transferee as is contained in Section 6.2 or other assurances
reasonably satisfactory to the Company that such transfer does
not involve a prohibited transaction (as such term is used in
Section 5.12(e). You shall not be liable for any damages in
connection with any such representations or assurances provided
to the Company by any transferee.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be,
in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if
the holder of such Note is, or is a nominee for, an original
Purchaser or any other Institutional Investor, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
within five Business Days thereafter the Company at its own
expense shall execute and deliver, in lieu thereof, a new Note,
dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal,
premium, if any, and interest becoming due and payable on the
Notes shall be made at the principal office of Citibank, N.A. in
New York City. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so
long as such place of payment shall be either the principal
office of the Company in New York City or the principal office of
a bank or trust company in New York City.
14.2. Home Office Payment.
So long as you or your nominee shall be the holder of
any Note, and notwithstanding anything contained in Section 14.1
or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if
any, and interest by the method and at the address specified for
such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose,
without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note
or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that
is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.
15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of your special counsel
and, if reasonably required, local or other counsel) incurred by
you and each Other Purchaser or holder of a Note in connection
with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes
effective), including without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agree-
ment or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection
with this Agreement or the Notes, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated
hereby and by the Notes. The Company will pay, and will save you
and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and
finders (other than those retained by you).
In furtherance of the foregoing, on the date of the
Closing the Company will pay or cause to be paid the reasonable
fees and disbursements (including estimated unposted
disbursements as of the date of the Closing) of your special
counsel which are reflected in the statement of such special
counsel submitted to the Company on or prior to the date of the
Closing. The Company will also pay, promptly upon receipt of
supplemental statements therefor, reasonable additional fees, if
any, and disbursements of such special counsel in connection with
the transactions hereby contemplated (including disbursements
unposted as of the date of the Closing to the extent such
disbursements exceed estimated disbursements paid as aforesaid).
15.2. Survival.
The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this
Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein
shall survive the execution and delivery of this Agreement and
the Notes, the purchase or transfer by you of any Note or portion
thereof or interest therein and the payment of any Note, and may
be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certifi-
cate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and
warranties of the Company under this Agreement. Subject to the
preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company
and supersede all prior agreements and understandings relating to
the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of
Section 1, 2, 3, 4, 5, 6 or 21, or any defined term (as it is
used therein), will be effective as to you unless consented to by
you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or
change the rate or the time of payment or method of computation
of interest or of the Make-Whole Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes
the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a),
11(b), 12, 17 or 20.
17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each
holder of the Notes (irrespective of the amount of Notes then
owned by it) with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such holder
to make an informed and considered decision with respect to any
proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Company will deliver
executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to
each holder of outstanding Notes promptly following the date on
which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or
indirectly pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, or
grant any security, to any holder of Notes as consideration for
or as an inducement to the entering into by any holder of Notes
of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security
is concurrently granted, on the same terms, ratably to each
holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in
this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and
upon the Company without regard to whether such Note has been
marked to indicate such amendment or waiver. No such amendment
or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon. No course of
dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As
used herein, the term "this Agreement" and references thereto
shall mean this Agreement as it may from time to time be amended
or supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the
holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or
the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly
owned by the Company or any of its Affiliates shall be deemed not
to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder
shall be in writing and sent (a) by telecopy if the sender on the
same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by
registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or
at such other address as you or it shall have specified to
the Company in writing,
(ii) if to any other holder of any Note, to such
holder at such address as such other holder shall have
specified to the Company in writing, or
(iii) if to the Company, to the Company at its address
set forth at the beginning hereof to the attention of the
Chief Financial Officer, or at such other address as the
Company shall have specified to the holder of each Note in
writing.
Notices under this Section 18 will be deemed given only when
actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto,
including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents
received by you at the Closing (except the Notes themselves), and
(c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and you may
destroy any original document so reproduced. The Company agrees
and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not
such reproduction was made by you in the regular course of
business) and any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
This Section 19 shall not prohibit the Company or any other
holder of Notes from contesting any such reproduction to the same
extent that it could contest the original, or from introducing
evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential
Information" means information delivered to you by or on behalf
of the Company or any Subsidiary in connection with the
transactions contemplated by or otherwise pursuant to this Agree-
ment that is proprietary in nature and that was clearly marked or
labeled or otherwise adequately identified when received by you
as being confidential information of the Company or such
Subsidiary, provided that such term does not include information
that (a) was publicly known or otherwise known to you prior to
the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than
through disclosure by the Company or any Subsidiary or (d)
constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance
with procedures adopted by you in good faith to protect confiden-
tial information of third parties delivered to you, provided that
you may deliver or disclose Confidential Information to (i) your
directors, officers, trustees, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes),
(ii) your financial advisors and other professional advisors
whose duties require them to hold confidential the Confidential
Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Insti-
tutional Investor to which you sell or offer to sell such Note or
any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20),
(v) any Person from which you offer to purchase any security of
the Company (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the
provisions of this Section 20), (vi) any federal or state regu-
latory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may
be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response
to any subpoena or other legal process, (y) in connection with
any litigation to which you are a party or (z) if an Event of
Default has occurred and is continuing, to the extent you may
reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the
rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of
this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered
to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the
Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to
purchase hereunder, by written notice to the Company, which
notice shall be signed by both you and such Affiliate, shall
contain such Affiliate's agreement to be bound by this Agreement
and shall contain a confirmation by such Affiliate of the
accuracy with respect to it of the representations set forth in
Section 6. Upon receipt of such notice, wherever the word "you"
is used in this Agreement (other than in this Section 21), such
word shall be deemed to refer to such Affiliate in lieu of you.
In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of
the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, wherever the word "you" is
used in this Agreement, such word shall no longer be deemed to
refer to such Affiliate, but shall refer to you, and you shall
have all the rights of an original holder of the Notes under this
Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto bind and
inure to the benefit of their respective successors and assigns
(including without limitation any subsequent holder of a Note)
whether so expressed or not.
22.2. Construction.
Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with
any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be
taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is
taken directly or indirectly by such Person.
22.3. Jurisdiction and Process; Waiver of Jury Trial.
(a) The Company irrevocably submits to the
non-exclusive in personam jurisdiction of any New York State or
federal court sitting in the Borough of Manhattan, The City of
New York, over any suit, action or proceeding arising out of or
relating to this Agreement or the Notes. To the fullest extent
permitted by applicable law, the Company irrevocably waives and
agrees not to assert, by way of motion, as a defense or
otherwise, any claim that it is not subject to the in personam
jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that
any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
(b) The Company agrees, to the fullest extent
permitted by applicable law, that a final judgment in any suit,
action or proceeding of the nature referred to in Section 22.3(a)
brought in any such court shall be conclusive and binding upon
the Company subject to rights of appeal, as the case may be, and
may be enforced in the courts of the United States of America or
the State of New York (or any other courts to the jurisdiction of
which the Company is or may be subject) by a suit upon such
judgment.
(c) The Company consents to process being served in
any suit, action or proceeding of the nature referred to in
Section 22.3(a) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to the
Company at its address specified in Section 18 or at such other
address of which you shall then have been notified pursuant to
said Section. The Company agrees that such service upon receipt
(i) shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding and (ii) shall, to
the fullest extent permitted by applicable law, be taken and held
to be valid personal service upon and personal delivery to the
Company. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the
United States Postal Service or any reputable commercial delivery
service.
(d) Nothing in this Section 22.3 shall affect the
right of any holder of a Note to serve process in any manner
permitted by law, or limit any right that the holders of any of
the Notes may have to bring proceedings against the Company in
the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction.
(e) THE COMPANY WAIVES TRIAL BY JURY IN ANY ACTION
BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE OTHER
AGREEMENTS, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.
22.4. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding (but without limiting the requirement in Section
8.2 that notice of any optional prepayment specify a Business Day
as the date fixed for such prepayment), any payment of principal
of or Make-Whole Amount (if any) or interest on any Note that is
due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next
succeeding Business Day.
22.5. Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the fullest extent permitted by applicable
law) not invalidate or render unenforceable such provision in any
other jurisdiction.
22.6. Accounting Terms; Pro Forma Calculations.
All accounting terms used herein which are not
expressly defined in this Agreement have the meanings
respectively given to them in accordance with GAAP. Except as
otherwise specifically provided herein, all computations made
pursuant to this Agreement shall be made in accordance with GAAP
and all balance sheets and other financial statements with
respect thereto shall be prepared in accordance with GAAP.
Except as otherwise specifically provided herein, any
consolidated financial statement or financial computation shall
be done in accordance with GAAP; and, if at the time that any
such statement or computation is required to be made the Company
shall not have any Subsidiary, such terms shall mean a financial
statement or a financial computation, as the case may be, with
respect to the Company only.
Any pro forma computation required to be made hereby
shall include adjustments (without limitation as to other
appropriate pro forma adjustments in accordance with generally
accepted financial practice) giving effect to all acquisitions
and dispositions made during the period with respect to which
such computation is being made as if such acquisitions and
dispositions were made on the first day of such period.
22.7. Counterparts.
This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than
all, but together signed by all, of the parties hereto.
22.8. Governing Law.
This Agreement and the Notes shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York excluding
choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than
such State.
<PAGE>
If you are in agreement with the foregoing, please sign
the form of agreement in the space below provided on a
counterpart of this Agreement and return it to the Company,
whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
SPARTECH CORPORATION
By DAVID B. MUELLER
Vice President of Finance
The foregoing is hereby agreed
to as of the date thereof.
[The forms of signature by each of the purchasers, as they appear
in the respective Note Purchase Agreements, are set forth below.]
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK
By FRANK G. SIMUNEK
Managing Director
THE TRAVELERS INSURANCE COMPANY
By JOHN W. PETCHLER
Second Vice President
CONNECTICUT MUTUAL LIFE
INSURANCE COMPANY
By WALTER T. DWYER
Senior Investment Officer
C M LIFE INSURANCE COMPANY
By WALTER T. DWYER
Senior Investment Officer
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By MARK S. JORDAHL
Authorized Representative
<PAGE>
UNITED SERVICES LIFE
INSURANCE COMPANY
By MARK S. JORDAHL
Assistant Treasurer
TMG INSURANCE COMPANY
By THE MUTUAL GROUP, its Agent
By ROBERT R. LAPOINTE
Vice President
By MICHAEL J. CAREW
Assistant Vice President
THE SECURITY MUTUAL LIFE INSURANCE
COMPANY OF LINCOLN, NEBRASKA
By BRYAN D. GROSSCUP
Vice President,
Secretary & Treasurer
<PAGE>
SCHEDULE A
This Schedule A shows the names and addresses of the
Purchasers under the foregoing Note Purchase Agreement and the
Other Agreements referred to therein and the respective principal
amounts of Notes to be purchased by each.
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
THE MUTUAL LIFE INSURANCE COMPANY $13,500,000
OF NEW YORK
(1) All payments on or in respect of
the Notes to be by bank wire or
intrabank transfer of Federal or
other immediately available funds
(identifying the issue upon which
payment is being made and the
application of the payment as
between interest, principal and
premium) to:
Chemical Bank, ABA #021000128, for
credit to The Mutual Life Insurance
Company of New York, Account No.
321-023803
(2) Address for all notices in respect
of payments:
Glenpointe Marketing & Operations
Center - MONY
Glenpointe Center West
500 Frank W. Burr Blvd.
Teaneck, NJ 07666-6888
Attn: Securities Custody
Telecopy: (201) 907-6979
Attn: Securities Custody
(3) Address for all other communications:
The Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019
Attn: MONY Capital Management Unit
(4) Tax Identification Number: 13-1632487
<PAGE>
THE MUTUAL LIFE INSURANCE COMPANY $1,500,000
OF NEW YORK
(1) All payments on or in respect of
the Notes to be by bank wire or
intrabank transfer of Federal or
other immediately available funds
(identifying the issue upon which
payment is being made and the
application of the payment as
between interest, principal and
premium) to:
Chemical Bank, ABA #021000128, for
credit to The Mutual Life Insurance
Company of New York, Account No.
323-161235
(2) Address for all notices in respect
of payments:
Glenpointe Marketing & Operations
Center - MONY
Glenpointe Center West
500 Frank W. Burr Blvd.
Teaneck, NJ 07666-6888
Attn: Securities Custody
Telecopy: (201) 907-6979
Attn: Securities Custody
(3) Address for all other communications:
The Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019
Attn: MONY Capital Management Unit
(4) Tax Identification Number: 13-1632487
<PAGE>
THE TRAVELERS INSURANCE COMPANY $15,000,000
(Notes registered in the name
of Tral & Co)
(1) All payments on account of the
Notes shall be made by wire
transfer of federal or other
immediately available funds to The
Travelers Insurance Company--
Consolidated Private Placement
Account No. 910-2-587434 at The
Chase Manhattan Bank, N.A., One
Chase Plaza, New York, New York
10081, ABA# 021-000021, with
sufficient information (including
interest rate and maturity) to
identify the source and application
of such funds, including the PPN:
847220 A@ 9 of the Notes.
(2) Address for all notices in respect
of payment:
One Tower Square
Hartford, CT 06183-2030
Attn: Securities Department-
Cashier
(3) Address for all other
communications:
One Tower Square
Hartford, CT 06183-2030
Attention: Securities Department-
Private Placements
Telecopy: (203) 954-5243
(4) Tax Identification No.: 06-0566090
<PAGE>
CONNECTICUT MUTUAL LIFE INSURANCE
$7,000,000
COMPANY
(3 Notes in the following denominations: $3,000,000
$2,000,000
$2,000,000)
(1) All payments on account of the
Notes shall be made by wire
transfer of immediately available
funds, providing sufficient
information (including issuer,
interest rate, PPN: 847220 A@ 9 of
the Notes, maturity, and whether
payment is of interest, principal
and/or premium) to identify the
source and application of funds to:
The Bank of New York
ABA No.: 021000018 BNF: IOC566
Attn: P&I Department
For: Connecticut Mutual Life
Insurance Co.
(2) All notices of payment and in
respect of the Notes and written
confirmation of each such payment
shall be sent to:
Connecticut Mutual Life Ins. Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
Audit confirmations can be sent via
fax to (212) 495-2730
<PAGE>
(3) Address for all other
communications (such as annual
reports, statements, waivers and
amendments):
Connecticut Mutual Life Insurance
Company
140 Garden Street
Hartford, CT 06154
Attn: Private Placements, MS 272
with a copy to:
Connecticut Mutual Life Ins. Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
(4) Tax Identification No.: 06-0304620
<PAGE>
C M LIFE INSURANCE COMPANY
$3,000,000
(1) All payments on account of the
Notes shall be made by wire
transfer of immediately available
funds, providing sufficient
information (including issuer,
interest rate, PPN: 847220 A@ 9 of
the Notes, maturity, and whether
payment is of interest, principal
and/or premium) to identify the
source and application of funds to:
The Bank of New York
ABA No.: 021000018 BNF: IOC566
Attn: P&I Department
For: C M Life Insurance Co.
(2) All notices of payment and in
respect of the Notes and written
confirmation of each such payment
shall be sent to:
C M Life Ins. Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
Audit confirmations can be sent via
fax to (212) 495-2730
<PAGE>
(3) Address for all other
communications (such as annual
reports, statements, waivers and
amendments):
C M Life Insurance Company
140 Garden Street
Hartford, CT 06154
Attn: Private Placements, MS 272
with a copy to:
C M Life Ins. Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
(4) Tax Identification No.: 06-1041383
<PAGE>
NORTHWESTERN NATIONAL LIFE INSURANCE
$3,000,000
COMPANY
(1) All payments by wire transfer of
immediately available funds to:
First National Bank N.A./Mpls
601 2nd Ave. S.
Acct. # 1102-4001-4461
Bank ABA # 091000022
Attn: Securities Accounting
with sufficient information
(including issuer, interest rate,
PPN: 847220 A@ 9 of the Notes,
maturity, and whether payment is of
interest, principal and/or premium)
to identify the source and
application of funds.
(2) All notices of payments and written
confirmations of such wire
transfers:
Washington Square Capital, Inc.
Private Placement Servicing
Becky Loeffelholz
100 Washington Square
Suite 800, Route 5729
Minneapolis, MN 55401-2147
Telephone: (612) 342-7528
Telecopy: (612) 342-3575
(3) All other communications:
Washington Square Capital, Inc.
Private Placement Underwriting
100 Washington Square
Suite 800, Route 3041
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Telephone: (612) 372-5413
Telecopy: (612) 372-5368
(4) Tax Identification No.: 41-0451140<PAGE>
UNITED SERVICES LIFE INSURANCE
$3,000,000
COMPANY
(Notes registered in the name of
SIEGLER & CO.)
(1) All payments by wire transfer of
immediately available funds to:
Chemical NYC/GEOCUST
New York, New York
Account Name/# N9207267
Bank ABA # 021000128
with sufficient information
(including issuer, interest rate,
PPN: 847220 A@ 9 of the Notes,
maturity, and whether payment is of
interest, principal and/or premium)
to identify the source and
application of funds.
(2) All notices of payments and written
confirmations of such wire
transfers:
Washington Square Capital, Inc.
Private Placement Servicing
Becky Loeffelholz
100 Washington Square
Suite 800, Route 5729
Minneapolis, MN 55401-2147
Telephone: (612) 342-7528
Telecopy: (612) 342-3575
(3) All other communications:
Washington Square Capital, Inc.
Private Placement Underwriting
100 Washington Square
Suite 800, Route 3041
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Telephone: (612) 372-5413
Telecopy: (612) 372-5368
(4) Tax Identification No.: 53-0159267<PAGE>
TMG LIFE INSURANCE COMPANY
$3,000,000
(1) All payments by wire trans-
fer of immediately available
funds to:
Norwest Bank MN, N.A.
ABA: 091000019
Trust Acct#: 08-40-245
Attn: Michael Eiynck
FFC to Acct#: 12244600
with sufficient information
to identify the source and
application of such funds.
(2) All notices of payments and
written confirmations of such
wire transfers:
Ms. Lisa Harris
Investment Department
The Mutual Group (U.S.), Inc.
401 North Executive Drive
Brookfield, WI 53008-0980
Phone: (414) 797-2305
Fax: (414) 797-2318
(3) All other communications:
Ms. Lisa Harris
Investment Department
The Mutual Group (U.S.), Inc.
401 North Executive Drive
Brookfield, WI 53008-0980
Phone: (414) 797-2305
Fax: (414) 797-2318
(4) Tax Identification No.: 45-0208990
<PAGE>
THE SECURITY MUTUAL LIFE INSURANCE
$1,000,000
COMPANY OF LINCOLN, NEBRASKA
(1) All payments by wire trans-
fer of immediately available
funds to:
National Bank of Commerce
13th & "O" Streets
Lincoln, NE
Bank ABA # 1040-00045
Credit: Security Mutual Life
Account Number 40-797-624
with sufficient information
(including issuer, interest rate,
PPN: 847220 A@ 9 of the Notes,
maturity, and whether payment is of
interest, principal and/or premium)
to identify the source and
application of such funds.
(2) All notices of payments and
written confirmations of such
wire transfers:
The Security Mutual Life Insurance
Company of Lincoln, Nebraska
200 Centennial Mall North (68508)
P.O. Box 82248
Lincoln, NE 68501
Attention: Investment Department
(3) All other communications:
The Security Mutual Life Insurance
Company of Lincoln, Nebraska
200 Centennial Mall North (68508)
P.O. Box 82248
Lincoln, NE 68501
Attention: Investment Department
(4) Tax Identification No.: 47-0293990
<PAGE>
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof
following such term:
"Affiliate" means, at any time, (a) with respect to any
Person (including without limitation the Company), any other
Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under
common Control with, such first Person, and (b) with respect to
the Company, any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity
interests of the Company or any Subsidiary or any corporation of
which the Company and its Subsidiaries beneficially own or hold,
in the aggregate, directly or indirectly, 10% or more of any
class of voting or equity interests. As used in this definition,
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of the Company.
"Attributable Debt" means, as to any particular lease
relating to a sale and leaseback transaction, the total amount of
rent (discounted semiannually from the respective due dates
thereof at the interest rate implicit in such lease) required to
be paid by the lessee under such lease during the remaining term
thereof. The amount of rent required to be paid under any such
lease for any such period shall be (a) the total amount of the
rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of maintenance
and repairs, insurance, taxes, assessments, utilities, operating
and labor costs and similar charges plus (b) without duplication,
any guaranteed residual value in respect of such lease to the
extent such guarantee would be included in indebtedness in
accordance with GAAP.
"Business Day" means (a) for the purposes of Section
8.6 only, any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required or
authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City or St.
Louis, Missouri are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with
respect to which the lessee is required concurrently to recognize
the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.
"Capitalized Lease Obligations" means with respect to
any Person, all outstanding obligations of such Person in respect
of Capital Leases, taken at the capitalized amount thereof
accounted for as indebtedness in accordance with GAAP.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations
promulgated thereunder from time to time.
"Company" means Spartech Corporation, a Delaware
corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Capitalization" means, at any date, the
sum of (a) Consolidated Indebtedness plus (b) Consolidated Net
Worth plus (c) deferred tax liabilities (if any), all as
determined on a consolidated basis for the Company and its
Subsidiaries in accordance with GAAP.
"Consolidated Indebtedness" means, at any date, all
Indebtedness of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" for any period means
the sum for the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, of all amounts which
would be deducted in computing Consolidated Net Income on account
of interest on Indebtedness (including imputed interest in
respect of Capitalized Lease Obligations and amortization of debt
discount and expense).
"Consolidated Net Income" for any period means the net
income of the Company and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP,
excluding
(a) the proceeds of any life insurance policy,
(b) any gains arising from (i) the sale or other
disposition of any assets (other than current assets) to the
extent that the aggregate amount of the gains during such
period exceeds the aggregate amount of the losses during
such period from the sale, abandonment or other disposition
of assets (other than current assets), (ii) any write-up of
assets or (iii) the acquisition of outstanding securities of
the Company or any Subsidiary,
(c) any amount representing any interest in the
undistributed earnings of any other Person (other than a
Subsidiary),
(d) any earnings, prior to the date of acquisition, of
any Person acquired in any manner, and any earnings of any
Subsidiary prior to its becoming a Subsidiary,
(e) any earnings of a successor to or transferee of
the assets of the Company prior to its becoming such
successor or transferee,
(f) any deferred credit (or amortization of a deferred
credit) arising from the acquisition of any Person, and
(g) any extraordinary gains not covered by clause (b)
above.
"Consolidated Net Worth" means, at any date, on a
consolidated basis for the Company and its Subsidiaries, (a) the
sum of (i) capital stock taken at par or stated value plus (ii)
capital in excess of par or stated value relating to capital
stock plus (iii) retained earnings (or minus any retained earning
deficit) minus (b) the sum of treasury stock, capital stock
subscribed for and unissued and other contra-equity accounts, all
determined in accordance with GAAP.
"Default" means an event or condition the occurrence or
existence of which would, with the giving of notice or the lapse
of time, or both, become an Event of Default.
"Default Rate" means that rate of interest that is the
greater of (i) 9.21% and (ii) 2% above the rate of interest
publicly announced by Citibank, N.A. from time to time at its
principal office in New York City as its prime rate.
"EBITDA" for any period means Consolidated Net Income
plus all amounts deducted in the computation thereof on account
of (a) Consolidated Interest Expense, (b) depreciation and
amortization expenses and other non-cash charges and (c) income
and profits taxes.
"Environmental Laws" means any and all Federal, state,
local, and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or
the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) that is treated as a single employer
together with the Company under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
"GAAP" means generally accepted accounting principles
as in effect from time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obli-
gation (except the endorsement in the ordinary course of business
of negotiable instruments for deposit or collection) of such
Person guaranteeing or in effect guaranteeing any Indebtedness,
dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including without limitation
obligations incurred through an agreement, contingent or other-
wise, by such Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such Indebtedness or obligation, or (ii) to
maintain any working capital or other balance sheet
condition or any income statement condition of any other
Person or otherwise to advance or make available funds for
the purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of any other
Person to make payment of the Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness
or obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of
the obligor under any Guaranty, the Indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants,
toxic or hazardous wastes or any other substances that might pose
a hazard to health or safety, the removal of which may be
required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or
penalized by any applicable law (including without limitation
asbestos, urea formaldehyde foam insulation and polycholorinated
biphenyls).
"holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by
the Company pursuant to Section 13.1.
"Indebtedness" with respect to any Person means, at any
time, without duplication,
(a) its liabilities for borrowed money or its
mandatory purchase, redemption or other retirement
obligations in respect of mandatorily redeemable Preferred
Stock,
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business and not overdue
but including all liabilities created or arising under any
conditional sale or other title retention agreement with
respect to any such property),
(c) its Capitalized Lease Obligations,
(d) all liabilities for borrowed money secured by any
Lien with respect to any property owned by such Person
(whether or not it has assumed or otherwise become liable
for such liabilities),
(e) all its liabilities in respect of letters of
credit or instruments serving a similar function issued or
accepted for its account by banks and other financial
institutions (whether or not representing obligations for
borrowed money),
(f) Swaps of such Person, and
(g) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a)
through (f) above.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g)
above to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"Institutional Investor" means (a) any original
purchaser of a Note, (b) any holder of a Note holding (together
with one or more of its Affiliates) more than 2% of the aggregate
principal amount of the Notes then outstanding, and (c) any bank,
trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Lien" means, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or
any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with
respect to any property or asset of such Person (including in the
case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or
prospects of the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse
effect on (a) the business, operations, affairs, financial con-
dition, assets or properties of the Company and its Subsidiaries
taken as a whole, (b) the ability of the Company to perform its
obligations under this Agreement and the Notes or (c) the
validity or enforceability of this Agreement, the Notes or any
Subsidiary Guarantee.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a
"multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
"Notes" is defined in Section 1.1.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such
certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"Plan" means an "employee benefit plan" (as defined in
section 3(3) of ERISA) that is or, within the preceding five
years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
"Preferred Stock", as applied to any corporation, means
shares of such corporation that shall be entitled to preference
or priority over any other shares of such corporation in respect
of either the payment of dividends or the distribution of assets
upon liquidation, or both.
"property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, inchoate or otherwise.
"PTE" is defined in Section 6.2.
"QPAM Exemption" means Prohibited Transaction Class
Exemption 84-14 issued on March 13, 1984 by the United States
Department of Labor.
"Required Holders" means, at any time, the holders of
at least a majority in unpaid principal amount of the Notes at
the time outstanding.
"Responsible Officer" means any Senior Financial
Officer and any other officer of the Company with responsibility
for the administration of the relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Senior Financial Officer" means the chief financial
officer, principal accounting officer, treasurer or comptroller
of the Company.
"Significant Subsidiary" means, at any date, a
Subsidiary (a) which, together with its Subsidiaries, produced
more than 5% of Consolidated Net Income for the fiscal year then
most recently ended (calculated on a pro forma basis in the case
of any Person which became a Subsidiary during or after the end
of such fiscal year) or (b) the assets of which, together with
the assets of its Subsidiaries, exceeded 5% of the consolidated
total assets (fixed and current) of the Company and its
Subsidiaries as of the last day of such fiscal year (calculated
on a pro forma basis as of the last day of such fiscal year in
the case of any Person which became a Subsidiary thereafter).
"Subordinated Debentures" is defined in Section
4.11(b).
"Subsidiary" means, as to any Person, any corporation
or other business entity a majority of the combined voting power
of all Voting Stock of which is owned by such Person or one or
more of its Subsidiaries or such Person and one or more of its
Subsidiaries. Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the
Company.
"Subsidiary Guarantee" is defined in Section 1.2.
"Swaps" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For
the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case,
the amount of such obligation shall be the net amount so
determined.
"Total Indebtedness to EBITDA Ratio" means, at any
date, the ratio of (a) Consolidated Indebtedness as at such date
to (b) EBITDA for the four consecutive fiscal quarters then most
recently ended.
"Voting Stock" means, with respect to any Person, any
shares of stock or other equity interests of any class or classes
of such Person whose holders are entitled under ordinary
circumstances (irrespective of whether at the time stock or other
equity interests of any other class or classes shall have or
might have voting power by reason of the happening of any
contingency) to vote for the election of a majority of the
directors, managers, trustees or other governing body of such
Person.
"Wholly-Owned Subsidiary" means, at any time, any
Subsidiary all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any
one or more of the Company and the Company's other Wholly-Owned
Subsidiaries at such time.<PAGE>
EXHIBIT 1.1
[FORM OF NOTE]
SPARTECH CORPORATION
7.21% SENIOR NOTE DUE 2005
No. [_____]
New York, New York
$[_______]
August 15, 1995
PPN: 847220 A@ 9
FOR VALUE RECEIVED, the undersigned, SPARTECH
CORPORATION (the "Company"), a Delaware corporation, hereby
promises to pay to [ ], or registered
assigns, the principal sum of [ ]
DOLLARS on August 15, 2005, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) from the date
hereof on the unpaid balance thereof at the rate of 7.21% per
annum, payable semiannually on February 15 and August 15 in each
year, until the principal hereof shall have become due and
payable, and (b) on any overdue payment of principal, any overdue
payment of interest (to the extent permitted by applicable law)
and any overdue payment of any premium or Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below),
payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand) at a rate per annum from
time to time equal to the greater of (i) 9.21% and (ii) 2% above
the rate of interest publicly announced by Citibank, N.A. from
time to time at its principal office in New York City as its
prime rate.
Payments of principal of, interest on and any Make-
Whole Amount with respect to this Note are to be made in lawful
money of the United States of America at said principal office of
Citibank, N.A. in New York City or at such other place as the
Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreements referred to
below.
This Note is one of an issue of Senior Notes issued
pursuant to separate Note Purchase Agreements dated as of August
15, 1995 (as from time to time amended, the "Note Purchase
Agreements") between the Company and the respective Purchasers
named therein and is entitled to the benefits thereof. This Note
is also entitled to the benefits of certain Subsidiary Guarantees
that were executed and delivered pursuant to the Note Purchase
Agreements. Each holder of this Note will be deemed, by its
acceptance hereof, to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase
Agreements.
This Note is a registered Note and, as provided in the
Note Purchase Agreements, upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued
to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal
on the dates and in the amounts specified in the Note Purchase
Agreements. This Note is also subject to optional prepayment, in
whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, at the price (including any applicable premium or Make-
Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance
with, and the rights of the Company and the holder hereof shall
be governed by, the laws of the State of New York, excluding
choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than
such State.
SPARTECH CORPORATION
By_________________________
Title:<PAGE>
EXHIBIT 1.2
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of August 15, 1995 made by
________________________, a _________________ corporation (the
"Guarantor"), in favor of the holders from time to time of the
Notes referred to below (collectively the "Obligees").
WHEREAS, Spartech Corporation, a Delaware corporation
(the "Company"), has entered into several Note Purchase
Agreements dated as of August 15, 1995 (as amended or otherwise
modified from time to time, collectively the "Note Agreements"
and terms defined therein and not otherwise defined herein are
being used herein as so defined) with the institutional
purchasers listed in Schedule A thereto, pursuant to which the
Company proposes to issue and sell to such purchasers $50,000,000
aggregate principal amount of its 7.21% Senior Notes due 2005
(the "Notes"); and
WHEREAS, it is a [condition precedent to the purchase
of the Notes by such purchasers under/requirement of] the Note
Agreements that the Guarantor shall execute and deliver this
Guarantee Agreement;
NOW, THEREFORE, in consideration of the premises the
Guarantor hereby agrees as follows:
SECTION 1. Guarantee. The Guarantor unconditionally
and irrevocably guarantees, as primary obligor and not merely as
surety,
A. the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations
of the Company arising under the Notes and the Note
Agreements, including all extensions, modifications,
substitutions, amendments and renewals thereof, whether for
principal, interest (including without limitation interest
on any overdue principal, premium and interest at the rate
specified in the Notes and interest accruing or becoming
owing both prior to and subsequent to the commencement of
any proceeding against or with respect to the Company under
any chapter of the Bankruptcy Code of 1978, 11 U.S.C. 101
et seq.), Make-Whole Amount, fees, expenses, indemnification
or otherwise, and
B. the due and punctual performance and observance by
the Company of all covenants, agreements and conditions on
its part to be performed and observed under the Notes and
the Note Agreements;
(all such obligations are called the "Guaranteed Obligations");
provided that the aggregate liability of the Guarantor hereunder
in respect of the Guaranteed Obligations shall not exceed at any
time the lesser of (1) the amount of the Guaranteed Obligations
and (2) the maximum amount for which the Guarantor is liable
under this Guarantee Agreement without such liability being
deemed a fraudulent transfer under applicable Debtor Relief Laws
(as hereinafter defined), as determined by a court of competent
jurisdiction. As used herein, the term "Debtor Relief Laws"
means any applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, reorganization or similar
debtor relief laws affecting the rights of creditors generally
from time to time in effect.
The Guarantor also agrees to pay, in addition to the
amount stated above, any and all reasonable expenses (including
reasonable counsel fees and expenses) incurred by any Obligee in
enforcing any rights under this Guarantee Agreement or in
connection with any amendment of this Guarantee Agreement.
Without limiting the generality of the foregoing, this
Guarantee Agreement guarantees, to the extent provided herein,
the payment of all amounts which constitute part of the
Guaranteed Obligations and would be owed by any other Person to
any Obligee but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving such Person.
SECTION 2. Guarantee Absolute. The obligations of the
Guarantor under Section 1 of this Guarantee Agreement constitute
a present and continuing guaranty of payment and not of
collectability and the Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of
the Notes and the Note Agreements, regardless of any law,
regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any
Obligee with respect thereto. The obligations of the Guarantor
under this Guarantee Agreement are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guarantee
Agreement, irrespective of whether any action is brought against
the Company or any other Person liable for the Guaranteed
Obligations or whether the Company or any other such Person is
joined in any such action or actions. The liability of the
Guarantor under this Guarantee Agreement shall be primary,
absolute, irrevocable, and unconditional irrespective of:
A. any lack of validity or enforceability of any
Guaranteed Obligation, any Note, the Note Agreements or any
agreement or instrument relating thereto;
B. 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 amendment or waiver of or any
consent to departure from any Note, the Note Agreements or
this Guarantee Agreement;
C. any taking, exchange, release or non-perfection of
any collateral, or any taking, release or amendment or
waiver of or consent to departure by the Guarantor or other
Person liable, or any other guarantee, for all or any of the
Guaranteed Obligations;
D. any manner of application of collateral, or
proceeds thereof, to all or any of the Guaranteed
Obligations, or any manner of sale or other disposition of
any collateral or any other assets of the Company or any
other Subsidiary;
E. any change, restructuring or termination of the
corporate structure or existence of the Company or any other
Subsidiary; or
F. any other circumstance (including without
limitation any statute of limitations) that might otherwise
constitute a defense, offset or counterclaim available to,
or a discharge of, the Company or the Guarantor.
This Guarantee Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded or
must otherwise be returned by any Obligee, or any other Person
upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.
SECTION 3. Waivers. The Guarantor hereby irrevocably
waives, to the extent permitted by applicable law:
A. promptness, diligence, presentment, notice of
acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guarantee Agreement;
B. any requirement that any Obligee or any other
Person protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any
action against the Company or any other Person or any
collateral;
C. any defense, offset or counterclaim arising by
reason of any claim or defense based upon any action by any
Obligee;
D. any duty on the part of any Obligee to disclose to
the Guarantor any matter, fact or thing relating to the
business, operation or condition of any Person and its
assets now known or hereafter known by such Obligee; and
E. any rights by which it might be entitled to
require suit on an accrued right of action in respect of
any of the Guaranteed Obligations or require suit against
the Company or the Guarantor or any other Person.
SECTION 4. Waiver of Subrogation and Contribution.
The Guarantor shall not assert, enforce, or otherwise exercise
(A) any right of subrogation to any of the rights, remedies,
powers, privileges or liens of any Obligee or any other
beneficiary against the Company or any other obligor on the
Guaranteed Obligations or any collateral or other security, or
(B) any right of recourse, reimbursement, contribution,
indemnification, or similar right against the Company, and the
Guarantor hereby waives any and all of the foregoing rights,
remedies, powers, privileges and the benefit of, and any right to
participate in, any collateral or other security given to any
Obligee or any other beneficiary to secure payment of the
Guaranteed Obligations, until such time as the Guaranteed
Obligations have been paid in full.
SECTION 5. Representations and Warranties. The
Guarantor hereby represents and warrants as follows:
A. The Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation. The execution, delivery and
performance of this Guarantee Agreement have been duly
authorized by all necessary action on the part of the
Guarantor.
B. The execution, delivery and performance by the
Guarantor of this Guarantee Agreement will not (i) contra-
vene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of
any property of the Guarantor or any Subsidiary of the
Guarantor under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other material agreement or
instrument to which the Guarantor or any Subsidiary of the
Guarantor is bound or by which the Guarantor or any Sub-
sidiary of the Guarantor or any of their respective
properties may be bound or affected, (ii) conflict with or
result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to
the Guarantor or any Subsidiary of the Guarantor or (iii)
violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the
Guarantor or any Subsidiary of the Guarantor.
C. The Guarantor and the Company are members of the
same consolidated group of companies and are engaged in
related businesses and the Guarantor will derive
substantial direct and indirect benefit from the execution
and delivery of this Guarantee Agreement.
SECTION 6. Amendments, Etc. No amendment or waiver
of any provision of this Guarantee Agreement and no consent to
any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the
Required Holders, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given; provided that no amendment, waiver or
consent shall, unless in writing and signed by all Obligees, (i)
limit the liability of or release the Guarantor hereunder, (ii)
postpone any date fixed for, or change the amount of, any payment
hereunder or (iii) change the percentage of Notes the holders of
which are, or the number of Obligees, required to take any action
hereunder.
SECTION 7. Addresses for Notices. All notices and
other communications provided for hereunder shall be in writing
and (A) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (B) by registered or certified mail
with return receipt requested (postage prepaid), or (C) by a
recognized overnight delivery service (with charges prepaid).
Such notice if sent to the Guarantor shall be addressed to it at
the address of the Guarantor provided below its name on the
signature page of this Guarantee Agreement or at such other
address as the Guarantor may hereafter designate by notice to
each holder of Notes, or if sent to any holder of Notes, shall be
addressed to it as set forth in the Note Agreements. Any notice
or other communication herein provided to be given to the holders
of all outstanding Notes shall be deemed to have been duly given
if sent as aforesaid to each of the registered holders of the
Notes at the time outstanding at the address for such purpose of
such holder as it appears on the Note register maintained by the
Company in accordance with the provisions of Section 13.1 of the
Note Agreements. Notices under this Section 7 will be deemed
given only when actually received.
SECTION 8. No Waiver; Remedies. No failure on the
part of any Obligee 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 9. Continuing Guarantee. This Guarantee
Agreement is a continuing guarantee of payment and performance
and shall (A) remain in full force and effect until payment in
full of the Guaranteed Obligations and all other amounts payable
under this Guarantee Agreement, (B) be binding upon the
Guarantor, its successors and assigns and (C) inure to the
benefit of and be enforceable by the Obligees and their
successors, transferees and assigns.
SECTION 10. Jurisdiction and Process; Waiver of Jury
Trial. The Guarantor irrevocably submits to the non-exclusive in
personam jurisdiction of any New York State or federal court
sitting in the Borough of Manhattan, The City of New York, over
any suit, action or proceeding arising out of or relating to this
Guarantee Agreement. To the fullest extent permitted by
applicable law, the Guarantor irrevocably waives and agrees not
to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the in personam jurisdiction of any
such court, any objection that it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit,
action or proceeding brought in any such court has been brought
in an inconvenient forum.
The Guarantor consents to process being served in any
suit, action or proceeding of the nature referred to in this
Section by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to the Guarantor
at its address specified in Section 7 or at such other address of
which you shall then have been notified pursuant to said Section.
The Guarantor agrees that such service upon receipt (i) shall be
deemed in every respect effective service of process upon it in
any such suit, action or proceeding and (ii) shall, to the
fullest extent permitted by applicable law, be taken and held to
be valid personal service upon and personal delivery to the
Guarantor. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the
United States Postal Service or any recognized courier or
overnight delivery service.
Nothing in this Section 10 shall affect the right of
any holder of a Note to serve process in any manner permitted by
law, or limit any right that the holders of any of the Notes may
have to bring proceedings against the Guarantor in the courts of
any appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.
THE GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION
BROUGHT ON OR WITH RESPECT TO THIS GUARANTEE AGREEMENT OR ANY
OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH.
SECTION 11. Governing Law. This Guarantee Agreement
shall be construed and enforced in accordance with, and the
rights of the Guarantor and the Obligees shall be governed by,
the laws of the State of New York excluding choice-of-law
principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
IN WITNESS WHEREOF, the Guarantor has caused this
Guarantee Agreement to be duly executed and delivered as of the
date first above written.
[GUARANTOR]
By________________________
Title:
Address:
Attention:
Telephone:
Telecopy:<PAGE>
EXHIBIT 10(E)
CREDIT AGREEMENT
Dated as of August 15, 1995
among
SPARTECH CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
<PAGE>
|| TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms 1
1.2 Other Interpretive Provisions 19
1.3 Accounting Principles 20
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments 20
2.2 Loan Accounts 21
2.3 Procedure for Borrowing 21
2.4 Conversion and Continuation Elections 22
2.5 Voluntary Termination or Reduction of Commitments 23
2.6 Optional Prepayments 23
2.7 Interest 24
2.8 Fees 24
(a) Agency Fees 24
(b) Non-Use Fees 25
2.9 Computation of Fees and Interest 25
2.10 Payments by the Company 25
2.11 Payments by the Lenders to the Agent 26
2.12 Sharing of Payments, Etc. 27
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes 27
3.2 Illegality 28
3.3 Increased Costs and Reduction of Return 29
3.4 Funding Losses 30
3.5 Inability to Determine Rates 31
3.6 Certificates of Lenders 31
3.7 Substitution of Lenders 31
3.8 Survival 31
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions of Initial Loans 32
(a) Credit Agreement and Notes 32
(b) Resolutions; Incumbency 32
(c) Good Standing 32
(d) Guaranty 32
(e) Legal Opinions 32
(f) Payment of Fees 32
(g) Certificate 33
(h) Other Documents 33
4.2 Conditions to All Loans 33
(a) Notice, Application 33
(b) Continuation of Representations and
Warranties 33
(c) No Existing Default 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Corporate Existence and Power 34
5.2 Corporate Authorization; No Contravention 34
5.3 Governmental Authorization 34
5.4 Binding Effect 35
5.5 Litigation 35
5.6 No Default 35
5.7 ERISA Compliance 35
5.8 Use of Proceeds; Margin Regulations 36
5.9 Title to Properties 36
5.10 Taxes 36
5.11 Financial Condition 37
5.12 Environmental Matters 37
5.13 Regulated Entities 37
5.14 No Burdensome Restrictions 37
5.15 Copyrights, Patents, Trademarks and Licenses 38
5.16 Subsidiaries 38
5.17 Insurance 38
5.18 Full Disclosure 38
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Financial Statements 39
6.2 Certificates; Other Information 40
6.3 Notices 40
6.4 Preservation of Corporate Existence, Etc 41
6.5 Maintenance of Property 42
6.6 Insurance 42
6.7 Payment of Obligations 42
6.8 Compliance with Laws 43
6.9 Compliance with ERISA 43
6.10 Inspection of Property and Books and Records 43
6.11 Environmental Laws 43
6.12 Use of Proceeds 43
6.13 Further Assurances 43
ARTICLE VII
NEGATIVE COVENANTS
7.1 Limitation on Liens 44
7.2 Disposition of Assets 45
7.3 Consolidations and Mergers 46
7.4 Loans and Investments 46
7.5 Limitation on Indebtedness 46
7.6 Consolidated Net Worth 47
7.7 Debt Service Coverage Ratio 48
7.8 Senior Debt to Net Assets Ratio 48
7.9 Sale/Leasebacks 48
7.10 Transactions with Affiliates 48
7.11 Use of Proceeds 48
7.12 Contingent Obligations 48
7.13 Restricted Payments 49
7.14 ERISA 49
7.15 Change in Business 49
7.16 Accounting Changes 50
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default 50
(a) Non-Payment 50
(b) Representation or Warranty 50
(c) Specific Defaults 50
(d) Other Defaults 50
(e) Cross-Default 50
(f) Insolvency; Voluntary Proceedings 51
(g) Involuntary Proceedings 51
(h) ERISA 51
(i) Monetary Judgments or Settlements 52
(j) Non-Monetary Judgments 52
(k) Change of Control 52
(l) Guaranty 52
8.2 Remedies 52
8.3 Rights Not Exclusive 53
ARTICLE IX
THE AGENT
9.1 Appointment and Authorization; "Agent" 53
9.2 Delegation of Duties 54
9.3 Liability of Agent 54
9.4 Reliance by Agent 54
9.5 Notice of Default 55
9.6 Credit Decision 55
9.7 Indemnification of Agent 56
9.8 Agent in Individual Capacity 56
9.9 Successor Agent 56
9.10 Withholding Tax 57
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers 58
10.2 Notices 59
10.3 No Waiver; Cumulative Remedies 60
10.4 Costs and Expenses 60
10.5 Company Indemnification 60
10.6 Payments Set Aside 61
10.7 Successors and Assigns 61
10.8 Assignments, Participations, etc. 61
10.9 Confidentiality 63
10.10 Set-off 64
10.11 Automatic Debits of Fees 64
10.12 Notification of Addresses, Lending Offices, Etc. 64
10.13 Counterparts 64
10.14 Severability 64
10.15 No Third Parties Benefited 65
10.16 Governing Law and Jurisdiction 65
10.17 Waiver of Jury Trial 65
10.18 Entire Agreement 65
||<PAGE>
SCHEDULES
Schedule 1.1 Pricing Schedule
Schedule 2.1 Commitments and Pro Rata Shares
Schedule 4.1 Debt to be Repaid
Schedule 5.5 Litigation
Schedule 5.7 ERISA
Schedule 5.11 Permitted Liabilities
Schedule 5.12 Environmental Matters
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 5.17 Insurance Matters
Schedule 7.1 Permitted Liens
Schedule 7.12 Contingent Obligations
Schedule 10.2 Offshore and Domestic Lending Offices;
Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Counsel to the Company
and the Guarantors
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
Exhibit G Form of Guaranty
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of August 15, 1995,
among SPARTECH CORPORATION, a Delaware corporation (the
"Company"), the several financial institutions from time to time
party to this Agreement (collectively the "Lenders"; individually
each a "Lender"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as agent for the Lenders.
WHEREAS, the Lenders have agreed to make available to the
Company a revolving credit facility upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
ARTICLE XXIII
DEFINITIONS
23.1 Certain Defined Terms. The following terms have the
following meanings:
Account Debtor means any Person who is obligated to the
Company or any Guarantor under, with respect to, or on
account of an Account Receivable.
Account Receivable means, with respect to any Person,
any right of such person to payment for goods sold or leased
or for services rendered, whether or not evidenced by an
instrument or chattel paper and whether or not yet earned by
performance.
Acquisition means any transaction or series of related
transactions for the purpose of or resulting, directly or
indirectly, in (a) the acquisition of all or substantially
all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any
Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person
(other than a Person that is a Subsidiary) provided that the
Company or the Subsidiary is the surviving entity.
Affiliate means, as to any Person, any other Person
which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.
A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership
of voting securities, membership interests, by contract, or
otherwise.
Agent means BofA in its capacity as agent for the
Lenders hereunder, and any successor agent arising under
Section 9.9.
Agent-Related Persons means BofA and any successor
agent arising under Section 9.9, together with their
respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and
Affiliates.
Agent's Payment Office means the address for payments
set forth on Schedule 10.2 or such other address as the
Agent may from time to time specify.
Agreement means this Credit Agreement.
Applicable Margin means the percentage set forth in
Schedule 1.1 opposite the applicable Total
Indebtedness/EBITDA Ratio.
Asset Sale - see Section 7.2.
Assignee - see subsection 10.8(a).
Attorney Costs means and includes all fees and
disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all
disbursements of internal counsel.
Attributable Debt means, as to any particular lease
relating to a sale and leaseback transaction, the total
amount of rent (discounted semiannually from the respective
due dates thereof at the interest rate implicit in such
lease) required to be paid by the lessee under such lease
during the remaining term thereof. The amount of rent
required to be paid under any such lease for any such period
shall be (a) the total amount of the rent payable by the
lessee with respect to such period after excluding amounts
required to be paid on account of maintenance and repairs,
insurance, taxes, assessments, utilities, operating and
labor costs and similar charges plus (b) without
duplication, any guaranteed residual value in respect of
such lease to the extent such guarantee would be included in
indebtedness in accordance with GAAP.
BAI means Bank of America Illinois, an Illinois banking
corporation.
Bankruptcy Code means the Federal Bankruptcy Reform Act
of 1978 (11 U.S.C. 101, et seq.).
Base Rate means, for any day, the higher of: (a)
0.50% per annum above the latest Federal Funds Rate; and (b)
the rate of interest in effect for such day as publicly
announced from time to time by BAI in Chicago, Illinois, as
its "reference rate." (The "reference rate" is a rate set
by BAI based upon various factors including BAI's costs and
desired return, general economic conditions and other
factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced
by BAI shall take effect at the opening of business on the
day specified in the public announcement of such change.
Base Rate Loan means a Loan that bears interest based
on the Base Rate.
Beneficial Owner shall have the meaning assigned
thereto in Rule 13d-3 of the SEC under the Exchange Act as
in effect on the date hereof.
BofA means Bank of America National Trust and Savings
Association, a national banking association.
Borrowing means a borrowing hereunder consisting of
Loans of the same Type made to the Company on the same day
by the Lenders under Article II, and, in the case of
Offshore Rate Loans, having the same Interest Period.
Borrowing Date means any date on which a Borrowing
occurs under Section 2.3.
Business Day means any day other than a Saturday,
Sunday or other day on which commercial banks in New York
City, Chicago or San Francisco are authorized or required by
law to close and, if the applicable Business Day relates to
any Offshore Rate Loan, means such a day on which dealings
are carried on in the applicable offshore dollar interbank
market.
Capital Adequacy Regulation means any guideline,
request or directive of any central bank or other
Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
Capital Lease means, at any time, a lease with respect
to which the lessee is required concurrently to recognize
the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
Capitalized Lease Obligations means, with respect to
any Person, all outstanding obligations of such Person in
respect of Capital Leases, taken at the capitalized amount
thereof accounted for as indebtedness in accordance with
GAAP.
Change of Control shall mean that (a) any Person or
group (within the meaning of Rule 13d-5 of the SEC under the
Exchange Act), other than British Vita PLC ("BV"), Trust
Company of the West ("TCW") or any Affiliate or nominee of
BV or TCW, shall become the Beneficial Owner of 15% or more
of the Voting Stock of the Company or (b) a majority of the
members of the Board of Directors of the Company shall cease
to be Continuing Members.
Closing Date means the date on which all conditions
precedent set forth in Section 4.1 are satisfied or waived
by all Lenders (or, in the case of subsection 4.1(f), waived
by the Person entitled to receive the applicable payment).
Code means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
Commitment - see Section 2.1.
Company - see the Preamble.
Compliance Certificate means a certificate
substantially in the form of Exhibit C.
Consolidated Accounts Payable means all accounts
payable of the Company and the Guarantors, determined on a
consolidated basis.
Consolidated Capitalization means at any date the sum
of (x) Consolidated Senior Funded Indebtedness plus (y)
Subordinated Debt plus (z) Consolidated Net Worth, all as
determined on a consolidated basis for the Company and its
Subsidiaries.
Consolidated Senior Funded Indebtedness means, at any
date, all Indebtedness of the Company and its Subsidiaries,
excluding (i) any Subordinated Debt and (ii) contingent
obligations in respect of any letter of credit or any Swap,
determined on a consolidated basis.
Consolidated Indebtedness means, at any date, all
Indebtedness of the Company and its Subsidiaries, determined
on a consolidated basis.
Consolidated Interest Expense for any period means the
sum for the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, of all amounts
which would be deducted in computing Consolidated Net Income
on account of interest on Indebtedness (including imputed
interest in respect of Capitalized Lease Obligations and
amortization of debt discount and expense).
Consolidated Net Income for any period means the net
income of the Company and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP,
excluding
(a) the proceeds of any life insurance policy;
(b) any gains arising from (i) the sale or other
disposition of any assets (other than current assets) to the
extent that the aggregate amount of the gains during such
period exceeds the aggregate amount of the losses during
such period from the sale, abandonment or other disposition
of assets (other than current assets), (ii) any write-up of
assets or (iii) the acquisition of outstanding securities of
the Company or any Subsidiary;
(c) any amount representing any interest in the
undistributed earnings of any other Person (other than a
Subsidiary);
(d) any earnings, prior to the date of acquisition, of
any Person acquired in any manner, and any earnings of any
Subsidiary acquired prior to its becoming a Subsidiary;
(e) any earnings of a successor to or transferee of
the assets of the Company prior to its becoming such
successor or transferee;
(f) any deferred credit (or amortization of a deferred
credit) arising from the acquisition of any Person; and
(g) any extraordinary gains not covered by clause (b)
above.
Consolidated Net Worth means, at any date, on a
consolidated basis for the Company and its Subsidiaries, (a)
the sum of (i) capital stock taken at par or stated value
plus (ii) capital in excess of par or stated value relating
to capital stock plus (iii) retained earnings (or minus any
retained earning deficit) minus (b) the sum of Treasury
stock, capital stock subscribed for and unissued and other
contra-equity accounts, all determined in accordance with
GAAP.
Contingent Obligation means, as to any Person, any
direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to
any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person
(the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (iv) otherwise
to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of
drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related
document or obligation requires that payment for such
materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered;
or (d) in respect of any Swap. The amount of any Contingent
Obligation shall (a) in the case of Guaranty Obligations, be
deemed equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable,
the maximum reasonably anticipated liability in respect
thereof, (b) in the case of Swaps, be determined in
accordance with the definition of "Swap" herein and (c) in
the case of other Contingent Obligations, be equal to the
maximum reasonably anticipated liability in respect thereof.
Continuing Member means a member of the Board of
Directors of the Company who either (a) was a member of the
Company's Board of Directors on the Closing Date and has
been such continuously thereafter or (b) became a member of
such Board of Directors after the Closing Date and whose
election or nomination for election was approved by a vote
of the majority of the Continuing Members then members of
the Company's Board of Directors.
Contractual Obligation means, as to any Person, any
provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed
of trust or other instrument, document or agreement to which
such Person is a party or by which it or any of its property
is bound.
Conversion/Continuation Date means any date on which,
under Section 2.4, the Company (a) converts Loans of one
Type to another Type or (b) continues as Loans of the same
Type, but with a new Interest Period, Loans having an
Interest Period expiring on such date.
Debt to be Repaid means all Indebtedness listed on
Schedule 4.1.
Dollars, dollars and $ each mean lawful money of the
United States.
EBITDA for any period means Consolidated Net Income for
such period plus all amounts deducted in the computation
thereof on account of (a) Consolidated Interest Expense, (b)
depreciation and amortization expenses and other non-cash
charges and (c) income and profits taxes.
Effective Date means the date on which the Agent has
received counterparts of this Agreement executed by the
parties hereto.
Eligible Account Receivable means an Account Receivable
owing to the Company or a Guarantor which meets the
following requirements:
(1) it is evidenced by an invoice rendered to the
Account Debtor with respect thereto which is dated not
earlier than the date of shipment;
(2) it is not subject to any assignment, claim or Lien
other than Liens consented to by the Required Lenders;
(3) it is a valid, legally enforceable and
unconditional obligation of the Account Debtor with respect
thereto, and is not subject to any claim by such Account
Debtor denying liability thereunder in whole or in part;
(4) the Company does not have knowledge of (a) any
Insolvency Proceeding by or against the Account Debtor with
respect thereto or (b) any other proceeding or action which
is threatened or pending against such Account Debtor or to
which such Account Debtor is a party which is likely to
result in any material adverse change in such Account
Debtor's ability to pay such Account Receivable in full when
due;
(5) the Account Debtor with respect thereto is not an
Affiliate of the Company or a director, officer, employee or
agent of the Company or any such Affiliate;
(6) it arises in the ordinary course of the Company's
or the applicable Guarantor's business;
(7) the Account Debtor is not the United States or any
department, agency or instrumentality thereof;
(8) such Account Receivable is not more than (a) 60
days past the due date thereof or (b) 270 days past the
original invoice date thereof, in each case according to the
original terms of sale; and
(9) not more than 50% of the amount of all Accounts
Receivable owing by the Account Debtor thereunder to the
Company and the Guarantors remains unpaid 60 days past the
due date thereof according to the original terms of sale.
An Account Receivable which is at any time an Eligible
Account Receivable, but which subsequently fails to meet any
of the foregoing requirements, shall forthwith cease to be
an Eligible Account Receivable. Further, with respect to
any Account Receivable, if the Required Lenders at any time
hereafter determine in their reasonable (from the
perspective of a prudent lender administering credit
facilities of a similar type extended to borrowers of
comparable credit quality) discretion that the prospect of
payment or performance by the Account Debtor with respect
thereto is or will be materially impaired for any reason
whatsoever, such Account Receivable shall cease to be an
Eligible Account Receivable five Business Days after notice
of such determination is given to the Company. In addition,
for purposes of calculating the aggregate amount of Eligible
Accounts Receivable at any time, all Accounts Receivable
that have due dates more than 90 days after the original
invoice date shall be excluded to the extent that the amount
of such Accounts Receivable exceeds 10% of the amount of all
Eligible Accounts Receivable.
Eligible Assignee means (a) a commercial bank organized
under the laws of the United States, or any state thereof,
and having a combined capital and surplus of at least
$100,000,000; (b) a commercial bank organized under the laws
of any other country which is a member of the Organization
for Economic Cooperation and Development (the OECD), or a
political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency
located in the United States; and (c) a Person that is
primarily engaged in the business of commercial banking and
that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a
Person of which a Lender is a Subsidiary, or (iii) a Person
of which a Lender is a Subsidiary.
Eligible Inventory means Inventory which meets the
following requirements:
(1) it is not subject to any assignment, claim or Lien
other than Liens consented to by the Required Lenders;
(2) it is (except as the Required Lenders may
otherwise consent in writing) in first-class, saleable
condition;
(3) it is not Inventory produced in violation of the
Fair Labor Standards Act and subject to the "hot goods"
provisions contained in Title 29 U.S.C. 215 or any
successor statute or section;
(4) it is located in the United States or Canada;
(5) the Required Lenders shall not have determined
(which determination shall be effective only upon five
Business Days' notice to the Company) in their reasonable
discretion that it is unacceptable due to age, type,
category, quality and/or quantity.
Inventory of the Company which is at any time Eligible
Inventory but which subsequently fails to meet any of the
foregoing requirements shall forthwith cease to be Eligible
Inventory.
Environmental Claims means all claims, however
asserted, by any Governmental Authority or other Person
alleging potential liability or responsibility for violation
of any Environmental Law, or for release or injury to the
environment.
Environmental Laws means all federal, state or local
laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative
orders, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health,
safety and land use matters.
ERISA means the Employee Retirement Income Security Act
of 1974, and regulations promulgated thereunder.
ERISA Affiliate means any trade or business (whether or
not incorporated) under common control with the Company
within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
ERISA Event means (a) a Reportable Event with respect
to a Pension Plan; (b) a withdrawal by the Company or any
ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a
substantial cessation of operations which is treated as such
a withdrawal; (c) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization;
(d) the filing of a notice of intent to terminate, the
treatment of a Pension Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might
reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
Eurodollar Reserve Percentage has the meaning specified
in the definition of "Offshore Rate".
Event of Default - see Section 8.1.
Exchange Act means the Securities Exchange Act of 1934,
and regulations promulgated thereunder.
Federal Funds Rate means, for any day, the rate set
forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the
Federal Reserve Bank of New York (including any such
successor, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if for
any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each
of three leading brokers of Federal funds transactions in
New York City selected by the Agent.
Fee Letter - see subsection 2.8(a).
FRB means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of
its principal functions.
Further Taxes means any and all present or future
taxes, levies, assessments, imposts, duties, deductions,
fees, withholdings or similar charges (including net income
taxes and franchise taxes), and all liabilities with respect
thereto, imposed by any jurisdiction on account of amounts
payable or paid pursuant to Section 3.1.
GAAP means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements
of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
(or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which
are applicable to the circumstances as of the date of
determination.
Governmental Authority means any nation or government,
any state or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
Guarantor means each of Alchem Plastics, Inc., Alchem
Plastics Corporation, Midland Optical Corporation, The Resin
Exchange, Inc., Atlas Alchem Plastics, Inc., Franklin-
Burlington Plastics, Inc. and any other Person which
executes and delivers a counterpart of the Guaranty.
Guaranty - see subsection 4.1(d).
Guaranty Obligation has the meaning specified in the
definition of Contingent Obligation.
Inactive Subsidiary means any Subsidiary of the Company
which does not actively conduct business and which does not
own any material assets.
Indebtedness with respect to any Person means, at any
time, without duplication,
(a) its liabilities for borrowed money and its
mandatory purchase, redemption or other retirement
obligations in respect of its mandatorily redeemable
Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business and not overdue
but including all liabilities created or arising under any
conditional sale or other title retention agreement with
respect to any such property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any
Lien on any property owned by such Person (whether or not it
has assumed or otherwise become liable for such
liabilities);
(e) all its liabilities in respect of Surety
Instruments;
(f) all Swaps of such Person; and
(g) all Guaranty Obligations of such Person with
respect to liabilities of any other Person of a type
described in any of clause (a) through (f) above.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g)
above to the extent such Person remains legally liable in respect
thereof notwithstanding than any such obligation is deemed to be
extinguished under GAAP.
Indemnified Liabilities - see Section 10.5.
Indemnified Person - see Section 10.5.
Independent Auditor - see subsection 6.1(a).
Insolvency Proceeding means, with respect to any
Person, (a) any case, action or proceeding with respect to
such Person before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors,
or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors;
undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
Interest Payment Date means, as to any Loan other than
a Base Rate Loan, the last day of each Interest Period
applicable to such Loan and, as to any Base Rate Loan, the
last Business Day of each calendar quarter, provided that if
any Interest Period for an Offshore Rate Loan exceeds three
months, the date that falls three months after the beginning
of such Interest Period shall also be an Interest Payment
Date.
Interest Period means, as to any Offshore Rate Loan,
the period commencing on the Borrowing Date of such Loan or
on the Conversion/Continuation Date on which the Loan is
converted into or continued as an Offshore Rate Loan, and
ending on the date one, two, three or six months thereafter
as selected by the Company in its Notice of Borrowing or
Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, such Interest Period
shall be extended to the following Business Day unless
the result of such extension would be to carry such
Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding
Business Day;
(ii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(iii) no Interest Period for any Loan shall
extend beyond the Termination Date.
Inventory means any and all of the goods of the Company
or any Guarantor (including goods in transit) wheresoever
located, which are or may at any time be leased by the
Company or such Guarantor to a lessee, held for sale or
lease, or held as raw materials, work in process, or
supplies or materials used or consumed in the Company's or
such Guarantor's business, or which are held for use in
connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods.
Investments - See Section 7.4.
IRS means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal
functions under the Code.
Lender - see the Preamble.
Lending Office means, as to any Lender, the office or
offices of such Lender specified as its "Lending Office" or
"Domestic Lending Office" or "Offshore Lending Office", as
the case may be, on Schedule 10.2, or such other office or
offices as such Lender may from time to time notify the
Company and the Agent.
Lien means any security interest, mortgage, deed of
trust, pledge, hypothecation, assignment, charge or deposit
arrangement, encumbrance, lien (statutory or other) or
preferential arrangement of any kind or nature whatsoever in
respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a
capital lease, or any financing lease having substantially
the same economic effect as any of the foregoing, but not
including the interest of a lessor under an operating lease.
Loan means an extension of credit by a Lender to the
Company under Article II. A Loan may be a Base Rate Loan or
an Offshore Rate Loan (each a "Type" of Loan).
Loan Documents means this Agreement, any Notes, the Fee
Letter, the Guaranty and all other documents delivered to
the Agent or any Lender in connection herewith.
Margin Stock means "margin stock" as such term is
defined in Regulation G, T, U or X of the FRB.
Material Adverse Effect means (a) a material adverse
change in, or a material adverse effect upon, the
operations, business, properties, condition (financial or
otherwise) or prospects of the Company or the Company and
its Subsidiaries taken as a whole; (b) a material impairment
of the ability of the Company or any Subsidiary to perform
its obligations under any Loan Document; or (c) a material
adverse effect upon the legality, validity, binding effect
or enforceability against the Company or any Subsidiary of
any Loan Document.
Multiemployer Plan means a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA, with respect to
which the Company or any ERISA Affiliate may have any
liability.
Net Property Plant and Equipment means all equipment
and real estate of the Company which is not subject to any
Lien other than Permitted Liens.
Non-Use Fee Rate means the percentage set forth in
Schedule 1.1 opposite the applicable Total
Indebtedness/EBITDA Ratio.
Note means a promissory note executed by the Company in
favor of a Lender pursuant to subsection 2.2(b), in
substantially the form of Exhibit F.
Notice of Borrowing means a notice in substantially the
form of Exhibit A.
Notice of Conversion/Continuation means a notice in
substantially the form of Exhibit B.
Obligations means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan
Document owing by the Company to any Lender, the Agent or
any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or
contingent, due or to become due, or now existing or
hereafter arising.
Offshore Rate means, for any Interest Period, with
respect to Offshore Rate Loans comprising part of the same
Borrowing, the rate of interest per annum (rounded upward to
the next 1/16th of 1%) determined by the Agent as follows:
Offshore Rate = IBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for
any Interest Period the maximum reserve percentage
(expressed as a decimal, rounded upward to the next
1/100th of 1%) in effect on such day (whether or not
applicable to any Lender) under regulations issued from
time to time by the FRB for determining the maximum
reserve requirement (including any emergency,
supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
IBOR means the rate of interest per annum
determined by the Agent as the rate at which dollar
deposits in the approximate amount of BAI's Offshore
Rate Loan for such Interest Period would be offered by
BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or
such other office as may be designated for such purpose
by BofA), to major banks in the offshore dollar
interbank market at their request at approximately
11:00 a.m. (New York City time) two Business Days prior
to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically
as to all Offshore Rate Loans then outstanding as of
the effective date of any change in the Eurodollar
Reserve Percentage.
Offshore Rate Loan means a Loan that bears interest
based on the Offshore Rate.
Organization Documents means, for any corporation, the
certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the
rights of preferred shareholders of such corporation, any
shareholder rights agreement, and all applicable resolutions
of the board of directors (or any committee thereof) of such
corporation.
Other Taxes means any present or future stamp, court or
documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made
hereunder or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect
to, this Agreement or any other Loan Document.
Participant - see subsection 10.8(c).
PBGC means the Pension Benefit Guaranty Corporation, or
any Governmental Authority succeeding to any of its
principal functions under ERISA.
Pension Plan means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA with
respect to which the Company or any ERISA Affiliate may have
any liability.
Permitted Acquisition means an Acquisition (a) (i)
which is non-hostile, (ii) which occurs when no Event of
Default or Unmatured Event of Default exists or will result
therefrom, (iii) after giving effect to which no Event of
Default or Unmatured Event of Default will exist on a pro
forma basis (assuming that such Acquisition had occurred on
the last day of the fiscal quarter most recently ended from
the date which is one year prior to the date of such
Acquisition), (iv) the consideration for which is less than
$20,000,000 and (iv) which will not result in the aggregate
consideration for all Acquisitions since the Closing Date
being more than $30,000,000; or (b) is approved in writing
by the Required Lenders.
Permitted Liens means Liens permitted pursuant to
Section 7.1.
Person means an individual, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture or
Governmental Authority.
Plan means an employee benefit plan (as defined in
Section 3(3) of ERISA) with respect to which the Company may
have any liability.
Preferred Stock, as applied to any corporation, means
shares of such corporation that shall be entitled to
preference or priority over any other shares of such
corporation in respect of either the payment of dividends or
the distribution of assets upon liquidation, or both.
Pro Rata Share means, as to any Lender at any time, the
percentage equivalent (expressed as a decimal, rounded to
the ninth decimal place) at such time of such Lender's
Commitment divided by the combined Commitments of all
Lenders.
Replacement Lender - see Section 3.7.
Reportable Event means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder,
other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations
issued by the PBGC.
Required Lenders means at any time Lenders then holding
at least 66-2/3% of the then aggregate unpaid principal
amount of the Loans, or, if no amounts are outstanding,
Lenders then having at least 66-2/3% of the aggregate amount
of the Commitments.
Requirement of Law means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental
Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any
of its property is subject.
Responsible Officer means the chief executive officer
or the president of the Company, or any other officer having
substantially the same authority and responsibility; or,
with respect to compliance with financial covenants, the
chief financial officer or the treasurer of the Company, or
any other officer having substantially the same authority
and responsibility.
Restricted Payment - see Section 7.13.
SEC means the Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its
principal functions.
Senior Notes means senior unsecured notes of the
Company due 2005 having terms and conditions substantially
as set forth in the several Note Purchase Agreements dated
August 15, 1995 pursuant to which 7.21% Senior Notes due
2005 have been issued.
Subsidiary of a Person means any corporation,
association, partnership, limited liability company, joint
venture or other business entity of which more than 50% of
the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations),
is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
Subordinated Debt means any Indebtedness of the Company
having maturities and other terms, and which is subordinated
to the Obligations in a manner, approved in writing by the
Required Lenders.
Surety Instruments means all letters of credit
(including standby and commercial), banker's acceptances,
bank guaranties, surety bonds and similar instruments.
Swap means, with respect to any Person, any payment
obligation with respect to any interest rate swap, currency
swap or similar obligation obligating such Person to make
payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount
of the obligation under any Swap shall be the amount
determined in respect thereof as of the end of the then most
recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such
fiscal quarter, and in making such determination, if any
agreement relating to such Swap provides for the netting of
amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the
amount of such obligation shall be the net amount so
determined.
Taxes means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, charges or
withholdings, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of
each Lender and the Agent, such taxes (including income
taxes or franchise taxes) as are taxes imposed on or
measured by each Lender's its net income by the jurisdiction
(or any political subdivision thereof) under the laws of
which such Lender or the Agent, as the case may be, is
organized or maintains a lending office.
Termination Date means the earlier to occur of:
(a) August 15, 2000; and
(b) the date on which the Commitments terminate
in accordance with the provisions of this Agreement.
Total Indebtedness/Consolidated Capitalization means,
at any date, the ratio of (a) Consolidated Indebtedness as
at such date to (b) Consolidated Capitalization as at such
date.
Total Indebtedness/EBITDA Ratio means, at any date, the
ratio of (a) Consolidated Indebtedness as at such date to
(b) EBITDA for the four consecutive fiscal quarters then
most recently ended.
Type has the meaning specified in the definition of
"Loan."
Unfunded Pension Liability means the excess of a
Pension Plan's benefit liabilities under Section 4001(a)(16)
of ERISA, over the current value of that Plan's assets,
determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code
for the applicable plan year.
United States and U.S. each means the United States of
America.
Unmatured Event of Default means any event or
circumstance which, with the giving of notice, the lapse of
time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
Voting Stock means, with respect to any Person, any
shares of stock or other equity interests of any class or
classes of such Person whose holders are entitled under
ordinary circumstances (irrespective of whether at the time
stock or other equity interests of any other class or
classes shall have or might have voting power by reason of
the happening of any contingency) to vote for the election
of a majority of the directors, managers, trustees or other
governing body of such Person.
Wholly-Owned Subsidiary means any corporation in which
(other than directors' qualifying shares required by law)
100% of the capital stock of each class having ordinary
voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of
record, by the Company, or by one or more of the other
Wholly-Owned Subsidiaries, or both.
23.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and subsection, Section,
Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(ii) The term "including" is not limiting and
means "including without limitation."
(iii) In the computation of periods of time from
a specified date to a later specified date, the word "from"
means "from and including"; the words "to" and "until" each
mean "to but excluding", and the word "through" means "to
and including."
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are
for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate
the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in
accordance with their terms. Unless otherwise expressly provided
herein, any reference to any action of the Agent, the Lenders or
the Required Lenders by way of consent, approval or waiver shall
be deemed modified by the phrase "in its/their sole discretion."
(g) This Agreement and the other Loan Documents are
the result of negotiations among and have been reviewed by
counsel to the Agent, the Company and the other parties, and are
the products of all parties. Accordingly, they shall not be
construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
23.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement
shall be made, in accordance with GAAP, consistently applied;
provided that if the Company notifies the Agent that the Company
wishes to amend any covenant in Article VII to eliminate the
effect of any change in GAAP on the operation of such covenant
(or if the Agent notifies the Company that the Required Lenders
wish to amend Article VII for such purpose), then the Company's
compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and
the Required Lenders.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
ARTICLE XXIV
THE CREDITS
24.1 Amounts and Terms of Commitments. Each Lender
severally agrees, on the terms and conditions set forth herein,
to make loans to the Company (each such loan, a "Loan") from time
to time on any Business Day during the period from the Closing
Date to the Termination Date, in an aggregate amount not to
exceed at any time outstanding the amount set forth on Schedule
2.1 (such amount, as the same may be reduced under Section 2.5 or
as a result of one or more assignments under Section 10.8, such
Lender's "Commitment"); provided, however, that the aggregate
principal amount of all outstanding Loans shall not at any time
exceed the combined Commitments; and provided, further, that the
aggregate principal amount of the Loans of any Lender shall not
at any time exceed such Lender's Commitment. Within the limits
of each Lender's Commitment, and subject to the other terms and
conditions hereof, the Company may borrow under this Section 2.1,
prepay under Section 2.6 and reborrow under this Section 2.1.
24.2 Loan Accounts. (a) The Loans made by each Lender
shall be evidenced by one or more accounts or records maintained
by such Lender in the ordinary course of business. The accounts
or records maintained by the Agent and each Lender shall be
conclusive (absent manifest error) of the amount of the Loans
made by the Lenders to the Company, and the interest and payments
thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the
Company hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of any Lender made through the
Agent, the Loans made by such Lender may be evidenced by one or
more Notes, instead of or in addition to loan accounts. Each
such Lender shall endorse on the schedules annexed to its Note(s)
the date, amount and maturity of each Loan made by it and the
amount of each payment of principal made by the Company with
respect thereto. Each such Lender is irrevocably authorized by
the Company to endorse its Note(s) and each Lender's record shall
be conclusive absent manifest error; provided, however, that the
failure of a Lender to make, or an error in making, a notation
thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Company hereunder or under any such
Note to such Lender.
24.3 Procedure for Borrowing. (a) Each Borrowing shall be
made upon the Company's irrevocable written notice delivered to
the Agent in the form of a Notice of Borrowing, which notice must
be received by the Agent prior to 10:00 a.m. (Chicago time) (i)
two Business Days prior to the requested Borrowing Date, in the
case of Offshore Rate Loans, and (ii) on the requested Borrowing
Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall
be in an aggregate amount not less than $1,000,000 or a
higher multiple of $500,000;
(B) the requested Borrowing Date, which
shall be a Business Day;
(C) the Type of Loans comprising such
Borrowing; and
(D) in the case of Offshore Rate Loans, the
duration of the Interest Period therefor.
(b) The Agent will promptly notify each Lender of its
receipt of any Notice of Borrowing and of the amount of such
Lender's Pro Rata Share of such Borrowing.
Share of each Borrowing available to the Agent for the account of
the Company at the Agent's Payment Office by 12:00 noon (Chicago
time) on the Borrowing Date requested by the Company in funds
immediately available to the Agent. The proceeds of all such
Loans will then be made available to the Company by the Agent at
such office by crediting the account of the Company on the books
of BAI with the aggregate of the amounts made available to the
Agent by the Lenders and in like funds as received by the Agent.
(d) After giving effect to any Borrowing, unless the
Agent otherwise consents, there may not be more than five
different Interest Periods in effect.
24.4 Conversion and Continuation Elections. (a) The
Company may, upon irrevocable written notice to the Agent in
accordance with subsection 2.4(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable
Interest Period, in the case of Offshore Rate Loans, to
convert any such Loans (or any part thereof in an aggregate
amount not less than $1,000,000 or a higher integral
multiple of $500,000) into Loans of any other Type; or
(ii) elect as of the last day of the applicable
Interest Period, to continue any Loans having Interest
Periods expiring on such day (or any part thereof in an
amount not less than $1,000,000 or a higher integral
multiple of $500,000);
provided that if at any time the aggregate amount of Offshore
Rate Loans in respect of any Borrowing is reduced, by payment,
prepayment, or conversion of part thereof, to be less than
$1,000,000, such Offshore Rate Loans shall automatically convert
into Base Rate Loans.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later
than 10:00 a.m. (Chicago time) at least (i) two Business Days in
advance of the Conversion/Continuation Date, if the Loans are to
be converted into or continued as Offshore Rate Loans; and (ii)
on the Conversion/Continuation Date, if the Loans are to be
converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation
Date;
(B) the aggregate amount of Loans to be
converted or continued;
(C) the Type of Loans resulting from the
proposed conversion or continuation; and
(D) in the case of conversions into Offshore
Rate Loans, the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to
select timely a new Interest Period to be applicable to such
Offshore Rate Loans, the Company shall be deemed to have elected
to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/Continuation, or, if no timely
notice is provided by the Company, the Agent will promptly notify
each Lender of the details of any automatic conversion. All
conversions and continuations shall be made ratably according to
the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Lender.
(e) Unless the Required Lenders otherwise consent,
during the existence of an Event of Default or Unmatured Event of
Default, the Company may not elect to have a Loan converted into
or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or
continuation of Loans, unless the Agent shall otherwise consent,
there may not be more than five different Interest Periods in
effect.
24.5 Voluntary Termination or Reduction of Commitments.
The Company may, upon not less than five Business Days' prior
notice to the Agent, terminate the Commitments, or permanently
reduce the Commitments by an aggregate amount of $5,000,000 or a
higher integral multiple of $1,000,000; unless, after giving
effect thereto and to any prepayments of Loans made on the
effective date thereof, the aggregate principal amount of all
Loans would exceed the amount of the combined Commitments then in
effect. Once reduced in accordance with this Section, the
Commitments may not be increased. Any reduction of the
Commitments shall be applied to each Lender according to its Pro
Rata Share. All accrued commitment fees to, but not including,
the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such
reduction or termination.
24.6 Optional Prepayments. Subject to Section 3.4, the
Company may, from time to time, upon irrevocable notice to the
Agent not later than 10:00 a.m. (Chicago time) on any Business
Day, ratably prepay Loans in whole or in part, in minimum amounts
of $1,000,000 or a higher integral multiple of $500,000. Such
notice of prepayment shall specify the date and amount of such
prepayment and the Loans to be prepaid. The Agent will promptly
notify each Lender of its receipt of any such notice, and of such
Lender's Pro Rata Share of such prepayment. If such notice is
given by the Company, the Company shall make such prepayment and
the payment amount specified in such notice shall be due and
payable on the date specified therein, together with, in the case
of Offshore Rate Loans, accrued interest to each such date on the
amount prepaid and any amounts required pursuant to Section 3.4.
24.7 Interest. (a) Each Loan shall bear interest on the
outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the Offshore Rate or
the Base Rate, as the case may be (and subject to the Company's
right to convert to the other Type of Loan under Section 2.4),
plus the Applicable Margin as in effect from time to time.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest also shall be paid on the
date of any prepayment of Loans under Section 2.6 for the portion
of the Loans so prepaid and upon payment (including prepayment)
in full thereof. During the existence of any Event of Default,
interest shall be paid on demand of the Agent at the request or
with the consent of the Required Lenders.
(c) Notwithstanding subsection (a) of this Section,
while any Event of Default exists or after acceleration, the
Company shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal
amount of all outstanding Loans and, to the extent permitted by
applicable law, on any other amount payable hereunder or under
any other Loan Document, at a rate per annum equal to the rate
otherwise applicable thereto pursuant to the terms hereof or such
other Loan Document (or, if no such rate is specified, the Base
Rate) plus 2%. All such interest shall be payable on demand.
(d) Anything herein to the contrary notwithstanding,
the obligations of the Company to any Lender hereunder shall be
subject to the limitation that payments of interest shall not be
required for any period for which interest is computed hereunder,
to the extent (but only to the extent) that contracting for or
receiving such payment by such Lender would be contrary to the
provisions of any law applicable to such Lender limiting the
highest rate of interest that may be lawfully contracted for,
charged or received by such Lender, and in such event the Company
shall pay such Lender interest at the highest rate permitted by
applicable law.
24.8 Fees.
(a) Agency Fees. The Company shall pay an agency fee
to the Agent for the Agent's own account as required by the
letter agreement ("Fee Letter") between the Company and the Agent
dated August 15, 1995.
(b) Non-Use Fees. The Company shall pay to the Agent
for the account of each Lender a non-use fee on the average daily
unused portion of such Lender's Commitment, computed on a
quarterly basis in arrears on the last Business Day of each
calendar quarter based upon the daily utilization for that
quarter as calculated by the Agent, at the Non-Use Fee Rate.
Such non-use fee shall accrue from the Effective Date to the
Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter
commencing on September 29, 1995 through the Termination Date,
with the final payment to be made on the Termination Date;
provided that, in connection with any reduction or termination of
Commitments under Section 2.5, the accrued non-use fee calculated
for the period ending on such date shall also be paid on the date
of such reduction or termination, with (in the case of a
reduction) the following quarterly payment being calculated on
the basis of the period from such reduction date to the quarterly
payment date. The non-use fees shall accrue at all times after
the above-mentioned commencement date, including at any time
during which one or more conditions in Article IV are not met.
24.9 Computation of Fees and Interest. (a) All
computations of interest for Base Rate Loans when the Base Rate
is determined by BAI's "reference rate" shall be made on the
basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days
elapsed. Interest and fees shall accrue during each period
during which interest or such fees are computed from the first
day thereof to the last day thereof.
(b) Each determination of an interest rate by the
Agent shall be conclusive and binding on the Company and the
Lenders in the absence of manifest error. The Agent will, at the
request of the Company or any Lender, deliver to the Company or
such Lender, as the case may be, a statement showing the
quotations used by the Agent in determining any interest rate and
the resulting interest rate.
24.10 Payments by the Company. (a) All payments to be
made by the Company shall be made without set-off, recoupment or
counterclaim. Except as otherwise expressly provided herein, all
payments by the Company shall be made to the Agent for the
account of the Lenders at the Agent's Payment Office, and shall
be made in Dollars and in immediately available funds, no later
than 12:00 noon (Chicago time) on the date specified herein. The
Agent will promptly distribute to each Lender its Pro Rata Share
(or other applicable share as expressly provided herein) of such
payment in like funds as received. Any payment received by the
Agent later than 12:00 noon (Chicago time) shall be deemed to
have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following
Business Day (unless, in the case of an Offshore Rate Loan, the
following Business Day is in another calendar month, in which
case such payment shall be made on the preceding Business Day),
and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Company
prior to the date on which any payment is due to the Lenders that
the Company will not make such payment in full as and when
required, the Agent may assume that the Company has made such
payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender.
If and to the extent the Company has not made such payment in
full to the Agent, each Lender shall repay to the Agent on demand
such amount distributed to such Lender, together with interest
thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
24.11 Payments by the Lenders to the Agent. (a) Unless the
Agent receives notice from a Lender on or prior to the date of a
Borrowing that such Lender will not make available as and when
required hereunder to the Agent for the account of the Company
the amount of such Lender's Pro Rata Share of such Borrowing, the
Agent may assume that such Lender has made such amount available
to the Agent in immediately available funds on the Borrowing Date
and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date
a corresponding amount. If and to the extent any Lender shall
not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances
has made available to the Company such amount, such Lender shall
on the Business Day following such Borrowing Date make such
amount available to the Agent, together with interest at the
Federal Funds Rate for each day during such period. A notice of
the Agent submitted to any Lender with respect to amounts owing
under this subsection (a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the
Agent shall constitute such Lender's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is
not made available to the Agent on the Business Day following the
Borrowing Date, the Agent will notify the Company of such failure
to fund and, upon demand by the Agent, the Company shall pay such
amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any
Borrowing Date shall not relieve any other Lender of any
obligation hereunder to make a Loan on such Borrowing Date, but
no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender on any
Borrowing Date.
24.12 Sharing of Payments, Etc. If, other than as
expressly provided elsewhere herein, any Lender shall obtain on
account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Pro Rata Share (or other share
contemplated hereunder), such Lender shall immediately (a) notify
the Agent of such fact and (b) purchase from the other Lenders
such participations in the Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess
payment pro rata with each of them; provided that if all or any
portion of such excess payment is thereafter recovered from the
purchasing Lender, such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing
Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the
proportion of (i) the amount of such paying Lender's required
repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount
so recovered. The Company agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 10.10) with respect
to such participation as fully as if such Lender were the direct
creditor of the Company in the amount of such participation. The
Agent will keep records (which shall be conclusive and binding in
the absence of manifest error) of participations purchased under
this Section and will in each case notify the Lenders following
any such purchases or repayments.
ARTICLE XXV
TAXES, YIELD PROTECTION AND ILLEGALITY
25.1 Taxes. (a) Any and all payments by the Company to
each Lender or the Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction
or withholding for, any Taxes. In addition, the Company shall
pay all Other Taxes.
(b) If the Company shall be required by law to deduct
or withhold any Taxes, Other Taxes or Further Taxes from or in
respect of any sum payable hereunder to any Lender or the Agent,
then:
(i) the sum payable shall be increased as
necessary so that, after making all required deductions and
withholdings (including deductions and withholdings
applicable to additional sums payable under this Section),
such Lender or the Agent, as the case may be, receives and
retains an amount equal to the sum it would have received
and retained had no such deductions or withholdings been
made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount
deducted or withheld to the relevant taxing authority or
other authority in accordance with applicable law; and
(iv) the Company shall also pay to each Lender or
the Agent for the account of such Lender, at the time
interest is paid, all additional amounts which such Lender
specifies as necessary to preserve the after-tax yield the
Lender would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless
each Lender and the Agent for the full amount of Taxes, Other
Taxes and Further Taxes in the amount that such Lender specifies
as necessary to preserve the after-tax yield such Lender would
have received if such Taxes, Other Taxes or Further Taxes had not
been imposed, and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date such
Lender or the Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by
the Company of Taxes, Other Taxes or Further Taxes, the Company
shall furnish to each Lender and the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to such Lender or the Agent.
(e) If the Company is required to pay any amount to
any Lender or the Agent pursuant to subsection (b) or (c) of this
Section, then such Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if
such change in the sole judgment of such Lender is not otherwise
disadvantageous to such Lender.
25.2 Illegality. (a) If any Lender determines that the
introduction of any Requirement of Law, or any change in any
Requirement of Law, or in the interpretation or administration of
any Requirement of Law, has made it unlawful, or that any central
bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Lender to the
Company through the Agent, any obligation of that Lender to make
Offshore Rate Loans shall be suspended until the Lender notifies
the Agent and the Company that the circumstances giving rise to
such determination no longer exist.
(b) If a Lender determines that it is unlawful to
maintain any Offshore Rate Loan, the Company shall, upon its
receipt of notice of such fact and demand from such Lender (with
a copy to the Agent), prepay in full such Offshore Rate Loans of
that Lender then outstanding, together with interest accrued
thereon and amounts required under Section 3.4, either on the
last day of the Interest Period thereof, if the Lender may
lawfully continue to maintain such Offshore Rate Loans to such
day, or immediately, if the Lender may not lawfully continue to
maintain such Offshore Rate Loan. If the Company is required to
so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Lender, in
the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or
maintain Offshore Rate Loans has been so terminated or suspended,
the Company may elect, by giving notice to the Lender through the
Agent that all Loans which would otherwise be made by the Lender
as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this
Section, the affected Lender shall designate a different Lending
Office with respect to its Offshore Rate Loans if such
designation will avoid the need for giving such notice or making
such demand and will not, in the judgment of the Lender, be
illegal or otherwise disadvantageous to the Lender.
25.3 Increased Costs and Reduction of Return. (a) If after
the date hereof any Lender determines that, due to either (i) the
introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate) in or in the interpretation of
any law or regulation or (ii) the compliance by that Lender with
any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any Offshore
Rate Loan, then the Company shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent
to the Agent), pay to the Agent for the account of such Lender,
additional amounts as are sufficient to compensate such Lender
for such increased costs.
(b) If after the date hereof any Lender shall have
determined that (i) the introduction of any Capital Adequacy
Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Lender (or its
Lending Office) or any corporation controlling the Lender with
any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the
Lender or any corporation controlling the Lender and (taking into
consideration such Lender's or such corporation's policies with
respect to capital adequacy and such Lender's desired return on
capital) determines that the amount of such capital is increased
as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Lender to the
Company through the Agent, the Company shall pay to the Lender,
from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase.
(c) Notwithstanding the foregoing Section 3.3(a) and
(b), if any Lender fails to notify the Company of any event which
will entitle such Lender to compensation pursuant to this Section
3.3 within 180 days after such Lender obtains knowledge of such
event, then such Lender shall not be entitled to any compensation
from the Company for any such increased cost or reduction of
return arising prior to the date which is 180 days before the
date on which such Lender notifies the Company of such event.
25.4 Funding Losses. The Company shall reimburse each
Lender and hold each Lender harmless from any loss or expense
which the Lender may sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely
basis any payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/
Continuation;
(c) the failure of the Company to make any prepayment
in accordance with any notice delivered under Section 2.6;
(d) the prepayment or other payment (including after
acceleration thereof) of an Offshore Rate Loan on a day that is
not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the
last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its Offshore
Rate Loans or from fees payable to terminate the deposits from
which such funds were obtained. For purposes of calculating
amounts payable by the Company to the Lenders under this Section
and under subsection 3.3(a), each Offshore Rate Loan made by a
Lender (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at
the IBOR used in determining the Offshore Rate for such Offshore
Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in
fact so funded.
25.5 Inability to Determine Rates. If the Agent determines
that for any reason adequate and reasonable means do not exist
for determining the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan, or any
Lender determines that the Offshore Rate applicable pursuant to
subsection 2.7(a) for any requested Interest Period with respect
to a proposed Offshore Rate Loan does not adequately and fairly
reflect the cost to such Lender of funding such Loan the Agent
will promptly so notify the Company and each Lender. Thereafter,
the obligation of the Lenders to make or maintain Offshore Rate
Loans, hereunder shall be suspended until the Agent revokes such
notice in writing. Upon receipt of such notice, the Company may
revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company
does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but
such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loan.
25.6 Certificates of Lenders. Any Lender claiming
reimbursement or compensation under this Article III shall
deliver to the Company (with a copy to the Agent) a certificate
setting forth in reasonable detail the amount payable to the
Lender hereunder and such certificate shall be conclusive and
binding on the Company in the absence of manifest error.
25.7 Substitution of Lenders. Upon the receipt by the
Company from any Lender (an "Affected Lender") of a claim for
compensation under Section 3.3, the Company may: (i) request the
Affected Lender to use its best efforts to obtain a replacement
bank or financial institution satisfactory to the Company to
acquire and assume all or a ratable part of all of such Affected
Lender's Loans and Commitment (a "Replacement Lender"); (ii)
request one more of the other Lenders to acquire and assume all
or part of such Affected Lender's Loans and Commitment; or (iii)
designate a Replacement Lender. Any such designation of a
Replacement Lender under clause (i) or (iii) shall be subject to
the prior written consent of the Agent (which consent shall not
be unreasonably withheld).
25.8 Survival. The agreements and obligations of the
Company in this Article III shall survive the payment of all
other Obligations.
ARTICLE XXVI
CONDITIONS PRECEDENT
26.1 Conditions of Initial Loans. The obligation of each
Lender to make its initial Loan is subject to the condition that
(i) the Company shall have submitted evidence reasonably
satisfactory to the Agent that all Debt to be Repaid has been (or
concurrently with the initial Borrowing will be) paid in full and
that all Liens securing such Debt to be Repaid have been
terminated, (ii) the Company shall have issued, or shall
concurrently issue, not less than $50,000,000 of Senior Notes
(and the net proceeds to the Company of such issuance shall have
been, or shall be, not less than $49,000,000) and (iii) the Agent
shall have received all of the following, in form and substance
satisfactory to the Agent and each Lender, and in sufficient
copies for each Lender:
(a) Credit Agreement and Notes. This Agreement and
the Notes executed by each party thereto:
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of the Company and each Guarantor authorizing the
transactions contemplated hereby, certified as of the
Closing Date by the Secretary or an Assistant Secretary of
such Person; and
(ii) a certificate of the Secretary or Assistant
Secretary of the Company and each Guarantor certifying the
names and true signatures of the officers of such Person
authorized to execute and deliver this Agreement and all
other Loan Documents to be delivered by it hereunder.
(c) Good Standing. A copy of a good standing
certificate as of a recent date for the Company and each
Guarantor from the Secretary of State (or similar, applicable
Governmental Authority) of its state of incorporation.
(d) Guaranty. A guaranty (the "Guaranty"),
substantially in the form of Exhibit G, executed by each
Guarantor.
(e) Legal Opinions. An opinion of Armstrong,
Teasdale, Schlafly & Davis, counsel to the Company and the
Guarantors, substantially in the form of Exhibit D.
(f) Payment of Fees. Evidence of payment by the
Company of all accrued and unpaid fees, costs and expenses to the
extent then due and payable on the Closing Date, together with
Attorney Costs of the Agent to the extent invoiced prior to or on
the Closing Date, plus such additional amounts of Attorney Costs
as shall constitute the Agent's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter
preclude final settling of accounts between the Company and the
Agent), including any such costs, fees and expenses arising under
or referenced in Sections 2.8 and 10.4.
(g) Certificate. A certificate signed by a
Responsible Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained
in Article V are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Event of Default or Unmatured Event of
Default exists or would result from the initial Borrowing;
and
(iii) since October 29, 1994, no event or
circumstance has occurred that has resulted or could
reasonably be expected to result in a Material Adverse
Effect.
(h) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Lender may request.
26.2 Conditions to All Loans. The obligation of each
Lender to make any Loan to be made by it is subject to the
satisfaction of the following conditions precedent on the
relevant Borrowing Date:
(a) Notice, Application. The Agent shall have
received (with, in the case of the initial Loan only, a copy for
each Lender) a Notice of Borrowing.
(b) Continuation of Representations and Warranties.
The representations and warranties in Article V shall be true and
correct on and as of such Borrowing Date with the same effect as
if made on and as of such Borrowing Date (except to the extent
such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such
earlier date).
(c) No Existing Default. No Event of Default or
Unmatured Event of Default shall exist or shall result from such
Borrowing.
Each Notice of Borrowing submitted by the Company hereunder shall
constitute a representation and warranty by the Company that, as
of the date of such notice and as of the applicable Borrowing
Date, the conditions in this Section 4.2 are satisfied.
ARTICLE XXVII
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each
Lender that:
27.1 Corporate Existence and Power. The Company and each
of its Subsidiaries:
(a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
(b) has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its
assets, to carry on its business and to execute, deliver, and
perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the
conduct of its business requires such qualification or license;
and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to
the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
27.2 Corporate Authorization; No Contravention. The
execution, delivery and performance by the Company and the
Guarantors of this Agreement and each other Loan Document to
which such Person is party have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of such Person's
Organization Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document
evidencing any Contractual Obligation to which such Person is a
party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
27.3 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or
enforcement against, the Company or any Guarantor of the
Agreement or any other Loan Document.
27.4 Binding Effect. This Agreement and each other Loan
Document to which the Company or any Guarantor is a party
constitute the legal, valid and binding obligations of the
Company and such Guarantor (to the extent it is a party thereto),
enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
27.5 Litigation. Except as specifically disclosed in
Schedule 5.5, there are no actions, suits, proceedings, claims or
disputes pending or, to the best knowledge of the Company,
threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Company, or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(b) if determined adversely to the Company or its
Subsidiaries, would reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order
or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein
provided.
27.6 No Default. No Event of Default or Unmatured Event of
Default exists or would result from the incurring of any
Obligations by the Company. As of the Closing Date, neither the
Company nor any Subsidiary is in default under or with respect to
any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to
have a Material Adverse Effect, or that would, if such default
had occurred after the Closing Date, create an Event of Default
under subsection 8.1(e).
27.7 ERISA Compliance. Except as specifically disclosed in
Schedule 5.7:
(a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and
other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS and to the best knowledge of
the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has
made all required contributions to any Plan subject to Section
412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of
the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has
resulted or could reasonably be expected to result in a Material
Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no contribution failure has occurred with
respect to a Pension Plan sufficient to give rise to a Lien under
Section 312(f) of ERISA; (iii) no Pension Plan has any Unfunded
Pension Liability; (iv) neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension
Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (v) neither the Company nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability (and
no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (vi) neither the Company nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
27.8 Use of Proceeds; Margin Regulations. The proceeds of
the Loans are to be used solely for the purposes set forth in and
permitted by Section 6.12 and Section 7.11. Neither the Company
nor any Subsidiary is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
27.9 Title to Properties. The Company and each Subsidiary
have good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in
the ordinary conduct of their respective businesses, except for
such defects in title as could not, individually or in the
aggregate, have a Material Adverse Effect. As of each of the
Effective Date and the Closing Date, the property of the Company
and its Subsidiaries is subject to no Liens, other than Permitted
Liens.
27.10 Taxes. The Company and its Subsidiaries have filed
all Federal and other material tax returns and reports required
to be filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise
due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves
have been provided in accordance with GAAP. There is no proposed
tax assessment against the Company or any Subsidiary that would,
if made, have a Material Adverse Effect.
27.11 Financial Condition. (a) The audited consolidated
financial statements of the Company and its Subsidiaries dated
October 29, 1994, and the unaudited consolidated financial
statements of the Company and its Subsidiaries dated April 29,
1995, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal
periods ended on such dates:
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein;
(ii) fairly present the financial condition of
the Company and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby; and
(iii) except as specifically disclosed in
Schedule 5.11, show all material indebtedness and other
liabilities, direct or contingent, of the Company and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent
Obligations.
(b) Since October 29, 1994, there has been no Material
Adverse Effect.
27.12 Environmental Matters. The Company conducts in the
ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its
business, operations and properties, and as a result thereof the
Company has reasonably concluded that, except as specifically
disclosed in Schedule 5.12, such Environmental Laws and
Environmental Claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
27.13 Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary, is an "Investment
Company" within the meaning of the Investment Company Act of
1940. The Company is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability
to incur Indebtedness.
27.14 No Burdensome Restrictions. Neither the Company nor
any Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be
expected to have a Material Adverse Effect.
27.15 Copyrights, Patents, Trademarks and Licenses, etc.
The Company or its Subsidiaries own or are licensed or otherwise
have the right to use all of the patents, trademarks, service
marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of
the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed,
or now contemplated to be employed, by the Company or any
Subsidiary infringes upon any rights held by any other Person.
Except as specifically disclosed in Schedule 5.5, no claim or
litigation regarding any of the foregoing is pending or
threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed, which,
in either case, could reasonably be expected to have a Material
Adverse Effect.
27.16 Subsidiaries. As of the Closing Date, the Company
has no Subsidiaries other than those specifically disclosed in
part (a) of Schedule 5.16 hereto and has no equity investments in
any other corporation or entity other than those specifically
disclosed in part (b) of Schedule 5.16.
27.17 Insurance. Except as specifically disclosed in
Schedule 5.17, the properties of the Company and its Subsidiaries
are insured with financially sound and reputable insurance
companies not Affiliates of the Company, in such amounts, with
such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such
Subsidiary operates.
27.18 Full Disclosure. None of the representations or
warranties made by the Company or any Subsidiary in the Loan
Documents as of the date such representations and warranties are
made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on
behalf of the Company or any Subsidiary in connection with the
Loan Documents (including the offering and disclosure materials
delivered by or on behalf of the Company to the Lenders prior to
the Closing Date), contains any untrue statement of a material
fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the
time when made or delivered.
ARTICLE XXVIII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder,
or any Loan or other Obligation shall remain unpaid or
unsatisfied, unless the Required Lenders waive compliance in
writing:
28.1 Financial Statements. The Company shall deliver to
the Agent, in form and detail satisfactory to the Agent and the
Required Lenders, with sufficient copies for each Lender:
(a) as soon as available, but not later than 90 days
after the end of each fiscal year, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as
at the end of such year and the related consolidated statements
of income or operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by the
opinion of Arthur Andersen LLP or another nationally-recognized
independent public accounting firm ("Independent Auditor") which
report (x) shall state that such consolidated financial
statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent
with prior years and (y) shall not be qualified or limited
because of a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any
Subsidiary's records;
(b) as soon as available, but not later than 45 days
after the end of each of the first three fiscal quarters of each
fiscal year, a copy of the unaudited consolidated balance sheet
of the Company and its Subsidiaries as of the end of such quarter
and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP
(subject to ordinary, good faith year-end audit adjustments), the
financial position and the results of operations of the Company
and the Subsidiaries;
(c) as soon as available, but not later than 90 days
after the end of each fiscal year, a copy of an unaudited
consolidating balance sheet of the Company and its Subsidiaries
as at the end of such year and the related consolidating
statement of income, shareholders' equity and cash flows for such
year, certified by a Responsible Officer as having been developed
and used in connection with the preparation of the financial
statements referred to in subsection 6.1(a);
(d) as soon as available, but not later than 45 days
after the end of each of the first three fiscal quarters of each
fiscal year, a copy of the unaudited consolidating balance sheets
of the Company and its Subsidiaries, and the related
consolidating statements of income, shareholders' equity and cash
flows for such quarter, all certified by a Responsible Officer as
having been developed and used in connection with the preparation
of the financial statements referred to in subsection 6.1(b);
(e) as soon as practicable and in any event within 90
days after the commencement of each fiscal year, a consolidated
plan and financial forecast for such fiscal year and each
subsequent fiscal year through the fiscal year in which the
scheduled Termination Date occurs, including, without limitation,
a forecasted consolidated balance sheet, consolidated income
statement and consolidated statement of cash flow of the Company
for each such year.
28.2 Certificates; Other Information. The Company shall
furnish to the Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsection 6.1(a), a certificate of the
Independent Auditor stating that in making the examination
necessary therefor no knowledge was obtained of any Event of
Default or Unmatured Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 6.1(a) and (b), a
Compliance Certificate executed by a Responsible Officer;
(c) promptly, copies of all financial statements and
reports that the Company sends to its shareholders, and copies of
all financial statements and regular, periodical or special
reports (including Forms 10K, 10Q and 8K) that the Company or any
Subsidiary may make to, or file with, the SEC;
(d) promptly, such additional information regarding
the business, financial or corporate affairs of the Company or
any Subsidiary as the Agent, at the request of any Lender, may
from time to time request; and
(e) upon the request from time to time of any Lender,
a list of the obligations of the Company and its Subsidiaries in
respect of Swaps.
28.3 Notices. The Company shall promptly notify the Agent
and each Lender promptly after a Responsible Office obtains
knowledge of:
(a) the occurrence of any Event of Default or
Unmatured Event of Default;
(b) any of the following matters that has resulted or
may reasonably be expected to result in a Material Adverse
Effect: (i) any breach or non-performance of, or any default
under, a Contractual Obligation of the Company or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or
suspension between the Company or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any
material development in, any litigation or proceeding affecting
the Company or any Subsidiary including pursuant to any
applicable Environmental Law;
(c) the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event
more than 10 days after such event; provided that the Company
shall notify the Agent and each Lender not less than ten days
before the occurrence of any event described in clause (ii)
below), and deliver to the Agent and each Lender a copy of any
notice with respect to such event that is filed with a
Governmental Authority and any notice delivered by a Governmental
Authority to the Company or any ERISA Affiliate with respect to
such event:
(i) an ERISA Event;
(ii) a contribution failure with respect to a
Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA;
(iii) a material increase in the Unfunded Pension
Liability of any Pension Plan;
(iv) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the
Code by the Company or any ERISA Affiliate; or
(v) the adoption of any amendment to a Plan
subject to Section 412 of the Code, if such amendment
results in a material increase in contributions or Unfunded
Pension Liability; and
(d) any material change in accounting policies or
financial reporting practices by the Company or any of its
consolidated Subsidiaries.
Each notice under this Section shall be accompanied by
a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what
action the Company or any affected Subsidiary proposes to take
with respect thereto and at what time. Each notice under
subsection 6.3(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document
that have been breached or violated.
28.4 Preservation of Corporate Existence, Etc. The Company
shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state
or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal
conduct of its business except in connection with transactions
permitted by Section 7.3 and sales of assets permitted by Section
7.2;
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation
of which could reasonably be expected to have a Material Adverse
Effect.
Notwithstanding the provisions of this Section 6.4, the
Company may dissolve or liquidate any one or more Inactive
Subsidiaries.
28.5 Maintenance of Property. The Company shall, and shall
cause each Subsidiary to, maintain and preserve all its property
which is used or useful in its business in good working order and
condition, ordinary wear and tear excepted and make all necessary
repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to
have a Material Adverse Effect. The Company and each Subsidiary
shall use the standard of care typical in the industry in the
operation and maintenance of its facilities.
28.6 Insurance. The Company shall, and shall cause each
Subsidiary to, maintain with financially sound and reputable
independent insurers, insurance with respect to its properties
and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
28.7 Payment of Obligations. The Company shall, and shall
cause each Subsidiary to, pay and discharge as the same shall
become due and payable all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings
and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law
become a Lien upon its property; and
(c) all indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.
28.8 Compliance with Laws. The Company shall, and shall
cause each Subsidiary to, comply in all material respects with
all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair
Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist.
28.9 Compliance with ERISA. The Company shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (b)
cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.
28.10 Inspection of Property and Books and Records. The
Company shall, and shall cause each Subsidiary to, maintain
proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving
the assets and business of the Company and such Subsidiary. The
Company shall, and shall cause each Subsidiary to, permit
representatives and independent contractors of the Agent or any
Lender to visit and inspect any of their respective properties,
to examine their respective corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public
accountants, all at the expense of the Company and at such
reasonable times during normal business hours and as often as may
be reasonably desired, upon reasonable advance notice to the
Company; provided that when an Event of Default exists the Agent
or any Lender may do any of the foregoing at the expense of the
Company at any time during normal business hours without advance
notice.
28.11 Environmental Laws. The Company shall, and shall
cause each Subsidiary to, conduct its operations and keep and
maintain its property in compliance with all Environmental Laws.
28.12 Use of Proceeds. The Company shall use the proceeds
of the Loans to repay Debt to be Repaid and for working capital
and other general corporate purposes (including Permitted
Acquisitions) not in contravention of any Requirement of Law or
of any Loan Document.
28.13 Further Assurances. The Company shall cause each of
its Subsidiaries to take such actions as are reasonably
necessary, or as the U.S. Agent or any Lender may reasonably
request from time to time, to ensure that each Subsidiary (other
than Inactive Subsidiaries) of the Company shall have guaranteed
the Obligations.
ARTICLE XXIX
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder,
or any Loan or other Obligation shall remain unpaid or
unsatisfied, unless the Required Lenders waive compliance in
writing:
29.1 Limitation on Liens. The Company will not, and will
not permit any Subsidiary to, create, assume, incur or suffer to
exist any Lien upon or with respect to any property or assets,
whether now owned or hereafter acquired; except
(a) Liens in respect of property of the Company or a
Subsidiary existing on the Effective Date and described in
Schedule 7.1, but no extension, renewal or replacement of
any such Lien except as permitted by Section 7.1(e);
(b) Liens in respect of property acquired or
constructed by the Company or a Subsidiary after the
Effective Date, which are created at the time of or within
180 days after acquisition or completion of construction of
such property to secure Indebtedness assumed or incurred to
finance all or any part of the purchase price or cost of
construction of such property, provided that in any such
case;
(i) no such Lien shall extend to or cover any
other property of the Company or such Subsidiary, as
the case may be, and
(ii) the aggregate principal amount of
Indebtedness secured by all such Liens in respect of
any such property shall not exceed the cost of such
property and any improvements then being financed;
(c) Liens in respect of property acquired by the
Company or a Subsidiary after the Effective Date, existing
on such property at the time of acquisition thereof (and not
created in anticipation thereof), or in the case of any
Person that after the Effective Date becomes a Subsidiary or
is consolidated with or merged with or into the Company or a
Subsidiary or sells, leases or otherwise disposes of all or
substantially all of its property to the Company or a
Subsidiary, Liens existing at the time such Person becomes a
Subsidiary or is so consolidated or merged or effects such
sale, lease or other disposition of property (and not
created in anticipation thereof), provided that in any such
case no such Lien shall extend to or cover any other
property of the Company or such Subsidiary, as the case may
be;
(d) Liens securing Indebtedness owed by a Subsidiary
to the Company or to a Wholly-Owned Subsidiary; and
(e) Liens which would otherwise not be permitted by
subsections 7.1(a), (b), (c) or (d), securing additional
Indebtedness of the Company or a Subsidiary, provided that
after giving effect thereto the aggregate unpaid principal
amount of Indebtedness (including Capitalized Lease
Obligations) of the Company and its Subsidiaries secured by
such Liens permitted by this subsection 7.1(e) shall not
exceed 5% of Consolidated Net Worth.
For purposes of this Section 7.1 any Lien existing in respect of
property at the time such property is acquired or in respect of
property of a Person at the time such Person is acquired,
consolidated or merged with or into the Company or a Subsidiary
shall be deemed to have been created at that time.
29.2 Disposition of Assets. The Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, make
any sale, transfer, lease (as lessor), loan or other disposition
of any property or assets (an "Asset Sale"), other than
(a) Asset Sales in the ordinary course of business;
(b) Asset Sales of property or assets by a Subsidiary
to the Company or a Wholly-Owned Subsidiary; or
(c) other Asset Sales, provided that in each case
(i) immediately before and after giving
effect thereto, no Event of Default or Unmatured
Event of Default shall have occurred and be
continuing, and
(ii) the aggregate net book value of the
property or assets disposed of in such Asset Sale
and all other Asset Sales by the Company and its
Subsidiaries during the immediately preceding
twelve months does not exceed 15% of Consolidated
Net Worth (as of the last day of the quarterly
accounting period ending on or most recently prior
to the last day of such twelve month period).
For purposes of this Section 7.2, any shares of Voting
Stock of a Subsidiary that are the subject of an Asset Sale shall
be valued at the greater of (1) the fair market value of such
shares as determined in good faith by the Board of Directors of
the Company and (2) the aggregate net book value of the assets of
such Subsidiary multiplied by a fraction of which the numerator
is the aggregate number of shares of Voting Stock of such
Subsidiary disposed of in such Asset Sale and the denominator is
the aggregate number of shares of Voting Stock of such Subsidiary
outstanding immediately prior to such Asset Sale.
29.3 Consolidations and Mergers. The Company shall not,
and shall not permit any Subsidiary to, consolidate with or merge
with any other corporation or convey, transfer or lease all or
substantially all of its assets in a single transaction or series
of transactions to any Person except a Subsidiary may consolidate
with or merge with any other corporation or convey or transfer
all or substantially all of its assets to (i) the Company
(provided that the Company shall be the continuing or surviving
corporation) or a then-existing Wholly-Owned Subsidiary and (ii)
any Person in an Asset Sale involving all of the outstanding
stock or all or substantially all of the assets of such
Subsidiary, in either case subject to the limitation of Section
7.2.
29.4 Loans and Investments. The Company shall not, and
shall not permit any Subsidiary to, purchase or acquire, or make
any commitment therefor, any capital stock, equity interest, or
any obligations or other securities of, or any interest in, any
Person, or make or commit to make any Acquisitions, or make or
commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person including
any Affiliate of the Company (together, "Investments"), except
for:
(a) Investments held by the Company or any Subsidiary
in the form of in cash equivalents or short term marketable
securities;
(b) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of
goods or services in the ordinary course of business;
(c) extensions of credit by the Company to any of its
Wholly-Owned Subsidiaries or by any of its Wholly-Owned
Subsidiaries to another of its Wholly-Owned Subsidiaries;
(d) pledges or deposits as required in the ordinary
course of business in connection with workmen's compensation,
unemployment insurance and other social security legislation;
(e) advances, loans or extensions of credit in the
ordinary course of business to employees; provided that the
aggregate amount thereof shall not exceed $1,000,000;
(f) Investments incurred in order to consummate
Permitted Acquisitions; and
(g) purchases and other acquisitions by the Company of
stock of the Company to the extent permitted by Section 7.13.
29.5 Limitation on Indebtedness. (a) The Company shall
not, and shall not permit any Subsidiary to, create, assume,
incur, guarantee or otherwise become liable in respect of any
Indebtedness unless immediately after giving effect thereto and
to the application of the proceeds of such Indebtedness (x) the
pro forma Total Indebtedness/EBITDA Ratio does not exceed (i)
from the Effective Date through July 31, 1998, 3.50 to 1 and (ii)
thereafter, 3.25 to 1 and (y) the pro forma Total Indebtedness/
Consolidated Capitalization Ratio does not exceed (i) at any time
on or before July 31, 1998, 0.60 to 1 and (ii) thereafter, 0.55
to 1.
(b) The Company shall not permit any Subsidiary to
create, assume, incur, guarantee or otherwise become liable in
respect of any Indebtedness except:
(i) Indebtedness securing Liens permitted by
subsection 7.1(b), (c) or (d),
(ii) Indebtedness owing to the Company or a Wholly-
Owned Subsidiary,
(iii) Indebtedness under the Guaranty and under the
Subsidiary Guaranty (as defined in the Note Purchase
Agreements pursuant to which the Senior Notes were issued),
and
(iv) other Indebtedness, provided that immediately
after giving effect to such other Indebtedness the sum of
(x) the aggregate unpaid principal amount of Indebtedness of
all Subsidiaries (other than Indebtedness permitted by
clauses (ii) and (iii) above) plus (y) Indebtedness of the
Company (other than Indebtedness under this Agreement and
the Senior Notes) does not exceed the lesser of (1) 5% of
Consolidated Net Worth and (2) $5,000,000.
For purposes of this subsection 7.5(b), a Subsidiary shall be
deemed to have incurred Indebtedness in respect of any obligation
previously owed to the Company or to a Wholly-Owned Subsidiary on
the date the obligee ceases for any reason to be the Company or a
Wholly-Owned Subsidiary, and a Person that hereafter becomes a
Subsidiary shall be deemed at that time to have incurred all of
its outstanding Indebtedness.
(c) The Company shall not at any time permit the sum
of (x) the aggregate principal amount of Indebtedness of the
Company (other than Indebtedness under this Agreement and under
the Senior Notes) plus (y) the aggregate principal amount of all
Indebtedness of Subsidiaries (other than Indebtedness permitted
by clauses (b)(ii) and (b)(iii) above) to exceed the lesser of
(1) 5% of Consolidated Net Worth and (2) $5,000,000.
29.6 Consolidated Net Worth. The Company shall not permit
Consolidated Net Worth at any time to be less than the sum of (i)
$50,000,000 plus (ii) 50% of Consolidated Net Income for each
fiscal year beginning with the fiscal year ending on October 28,
1995 (excluding any fiscal year in which Consolidated Net Income
is not positive).
29.7 Debt Service Coverage Ratio. The Company will not
permit, as of the last day of any fiscal quarter, the ratio of
(a)(i) EBITDA less (ii) capital expenditures less (iii)
Restricted Payments plus (iv) rent expense for the period of 12
consecutive months ending on the last day of such quarter to
(b)(i) Consolidated Interest Expense plus (ii) rent expense for
such period to be less than (x) 2.00 to 1 for any quarter ending
on or before July 31, 1998 and (y) 2.25 to 1 for any quarter
ending thereafter.
29.8 Senior Debt to Net Assets Ratio. The Company shall
not permit, as of the end of any fiscal quarter, the Company's
Consolidated Senior Funded Indebtedness to be greater than (a)
85% of Eligible Accounts Receivables, plus (b) 65% of Eligible
Inventory, plus (c) 40% of Net Property Plant and Equipment minus
(d) 25% of Consolidated Accounts Payable.
29.9 Sale/Leasebacks. The Company shall not, and shall not
permit any Subsidiary to, sell, lease, transfer or otherwise
dispose of (collectively, a "transfer") any asset on terms
whereby the asset or a substantially similar asset is or may be
leased or reacquired by the Company or any Subsidiary over a
period in excess of three years, unless after giving effect to
such transaction and the incurrence of Attributable Debt in
respect thereof, the aggregate Attributable Debt in connection
with all sale and leaseback transactions of the Company and its
Subsidiaries entered into after the Effective Date in accordance
with the provisions of this Section 7.9, does not exceed 5% of
Consolidated Net Worth.
29.10 Transactions with Affiliates. The Company shall not,
and shall not permit any Subsidiary to, enter into any
transaction with any Affiliate of the Company (other than a
Subsidiary), except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in
a comparable arm's-length transaction with a Person not an
Affiliate of the Company.
29.11 Use of Proceeds. The Company shall not, and shall
not permit any Subsidiary to, use any portion of the Loan
proceeds, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the
Company or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange
Act.
29.12 Contingent Obligations. The Company shall not, and
shall not permit any Subsidiary to, create, incur, assume or
suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Contingent Obligations which constitute
Indebtedness, to the extent permitted hereunder, provided that
all Contingent Obligations in respect of Swaps shall arise under
contracts entered into in the ordinary course of business as bona
fide hedging transactions;
(c) Contingent Obligations of the Company and its
Subsidiaries existing as of the Effective Date and listed in
Schedule 7.12; and
(d) Guaranty Obligations of the Company or any
Subsidiary in respect of the obligations of (i) in the case of
the Company, any Subsidiary, and (ii) in the case of any
Subsidiary, any Subsidiary of such Subsidiary or any other
Subsidiary.
29.13 Restricted Payments. The Company shall not, and
shall not permit any Subsidiary to, declare or make any dividend
payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any
class of its capital stock, purchase, redeem or otherwise acquire
for value any shares of its capital stock or any warrants, rights
or options to acquire such shares, now or hereafter outstanding
(any of the foregoing a "Restricted Payment"); except that (i)
any Subsidiary may declare and pay dividends to the Company or a
Wholly-Owned Subsidiary; and (ii) the Company may:
(a) declare and make dividend payments or other
distributions payable solely in its common stock;
(b) purchase, redeem or otherwise acquire shares of
its common stock or warrants or options to acquire any such
shares with the proceeds received from the substantially
concurrent issue of new shares of its common stock; and
(c) as long as no Event of Default or Unmatured Event
of Default exists or would result therefrom, declare and pay
dividends during the term of this Agreement in an amount not
exceeding 50% of Consolidated Net Income for the period beginning
with the fiscal year ending October 28, 1995 and ending on the
last day of the most recently ended fiscal quarter.
29.14 ERISA. The Company shall not, and shall not permit
any of its ERISA Affiliates to: (a) engage in a prohibited
transaction or violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or could reasonably
be expected to result in liability of the Company in an aggregate
amount in excess of $500,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
29.15 Change in Business. The Company shall not, and shall
not permit any Subsidiary to, engage in any material line of
business substantially different from those lines of business
carried on by the Company and its Subsidiaries on the date
hereof.
29.16 Accounting Changes. The Company shall not, and shall
not permit any Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required
by GAAP, or change the fiscal year of the Company or of any
Subsidiary.
ARTICLE XXX
EVENTS OF DEFAULT
constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when
and as required to be paid herein, any amount of principal of any
Loan, or (ii) within five days after the same becomes due, any
interest, fee or any other amount payable hereunder or under any
other Loan Document.
(b) Representation or Warranty. Any representation or
warranty by the Company or any Subsidiary made or deemed made
herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the
Company, any Subsidiary, or any Responsible Officer, furnished at
any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the
date made or deemed made.
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in any of
Section 6.3(a), 7.1, 7.2, 7.3, 7.5, 7.6 or 7.9 (and, in the case
of any such default under Section 7.6, such default shall have
continued for a period of 30 days after a Responsible Officer
obtains knowledge thereof (if and so long as the Company is
proceeding diligently and in good faith, by issuing equity
securities or otherwise, to remedy such default during such 30-
day period).
(d) Other Defaults. The Company or any Guarantor
party thereto fails to perform or observe any other term or
covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 30
days after the earlier of (i) the date upon which a Responsible
Officer knew or reasonably should have known of such failure or
(ii) the date upon which written notice thereof is given to the
Company by the Agent or any Lender.
(e) Cross-Default. The Company or any Guarantor (A)
fails to make any payment in respect of any Indebtedness or
Contingent Obligation having an aggregate principal amount
(including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $1,000,000 when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace
or notice period, if any, specified in the relevant document on
the date of such failure; or (B) fails to perform or observe any
other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to
any such Indebtedness or Contingent Obligation, and such failure
continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if
the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary
or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries)
to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be
demanded.
(f) Insolvency; Voluntary Proceedings. The Company or
any Guarantor (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if
any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the
foregoing.
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company
or any Guarantor, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a
substantial part of the Company's or any Guarantor's properties,
and any such proceeding or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60
days after commencement, filing or levy; (ii) the Company or any
Guarantor admits the material allegations of a petition against
it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company or any Guarantor acquiesces in
the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its
property or business.
(h) ERISA. (i) An ERISA Event shall occur with
respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability
of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess
of $500,000; (ii) a contribution failure shall have occurred with
respect to a Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA; (iii) the aggregate amount of Unfunded
Pension Liability among all Pension Plans at any time exceeds
$500,000; or (iv) the Company or any ERISA Affiliate shall fail
to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan
in an aggregate amount in excess of $500,000.
(i) Monetary Judgments or Settlements. One or more
non-interlocutory judgments, non-interlocutory orders, decrees or
arbitration awards is entered against the Company or any
Guarantor involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the
insurer does not dispute coverage), as to any single or related
series of transactions, incidents or conditions, of $1,00,000 or
more, and the same shall remain unsatisfied, unvacated and
unstayed pending appeal for a period of 30 days after the entry
thereof, or the Company or any Guarantor shall enter into any
agreement to settle or compromise any pending or threatened
litigation, as to any single or related series of claims,
involving payment by the Company or any Guarantor of $500,000 or
more.
(j) Non-Monetary Judgments. Any non-monetary
judgment, order or decree is entered against the Company or any
Guarantor which does or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of 60
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.
(k) Change of Control. Any Change of Control occurs.
(l) Guaranty. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in
the Guaranty; or the Guaranty is for any reason partially
(including with respect to future advances) or wholly revoked or
invalidated, or otherwise ceases to be in full force and effect,
or any Guarantor any other Person contests in any manner the
validity or enforceability thereof or denies that it has any
further liability or obligation thereunder.
30.2 Remedies. If any Event of Default occurs, the Agent
shall, at the request of, or may, with the consent of, the
Required Lenders,
(a) declare the commitment of each Lender to make
Loans to be terminated, whereupon such commitments and obligation
shall be terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other
Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all
rights and remedies available to it and the Lenders under the
Loan Documents or applicable law;
provided, however, that upon the occurrence of any event
specified in subsection (f) or (g) of Section 8.1 (in the case of
clause (i) of subsection (g) upon the expiration of the 60-day
period mentioned therein), the obligation of each Lender to make
Loans shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable
without further act of the Agent or any Lender.
30.3 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies
provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising.
ARTICLE XXXI
THE AGENT
31.1 Appointment and Authorization; "Agent". Each Lender
hereby irrevocably (subject to Section 9.9) appoints, designates
and authorizes the Agent to take such action on its behalf under
the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the
Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the
use of the term "agent" in this Agreement with reference to the
Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an
administrative relationship between independent contracting
parties.
31.2 Delegation of Duties. The Agent may execute any of
its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care.
31.3 Liability of Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken
by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or
(ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any
officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent
under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in,
or conditions of, this Agreement or any other Loan Document, or
to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
31.4 Reliance by Agent. (a) The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the
conditions specified in Section 4.1, each Lender that has
executed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or
other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to
be consented to or approved by or acceptable or satisfactory to
the Lender.
31.5 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Event of
Default or Unmatured Event of Default, except with respect to
defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Lenders, unless
the Agent shall have received written notice from a Lender or the
Company referring to this Agreement, describing such Event of
Default or Unmatured Event of Default and stating that such
notice is a "notice of default". The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take
such action with respect to such Event of Default or Unmatured
Event of Default as may be requested by the Required Lenders in
accordance with Article VIII; provided, however, that unless and
until the Agent has received any such request, the Agent may (but
shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the
best interest of the Lenders.
31.6 Credit Decision. Each Lender acknowledges that none
of the Agent-Related Persons has made any representation or
warranty to it, and that no act by the Agent hereinafter taken,
including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender
represents to the Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such
documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all
applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company hereunder. Each
Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of
the Company which may come into the possession of any of the
Agent-Related Persons.
31.7 Indemnification of Agent. Whether or not the
transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand the Agent-Related Persons (to the
extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata, from
and against any and all Indemnified Liabilities; provided,
however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of the Indemnified
Liabilities resulting solely from such Person's gross negligence
or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document,
or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or
on behalf of the Company. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
31.8 Agent in Individual Capacity. BofA and its Affiliates
may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent
hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, BofA or
its Affiliates may receive information regarding the Company or
its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to
its Loans, BofA and any Affiliate thereof shall have the same
rights and powers under this Agreement as any other Lender and
may exercise the same as though BofA were not the Agent.
31.9 Successor Agent. The Agent may, and at the request of
the Required Lenders shall, resign as Agent upon 30 days' notice
to the Lenders. If the Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders. If no successor agent is appointed prior
to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Lenders and the Company, a
successor agent from among the Lenders. Upon the acceptance of
its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article IX and
Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Agent hereunder
until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.
31.10 Withholding Tax. (a) If any Lender is a "foreign
corporation, partnership or trust" within the meaning of the Code
and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the Code, such
Lender agrees with and in favor of the Agent, to deliver to the
Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 before the
payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this
Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States
withholding tax because it is effectively connected with a
United States trade or business of such Lender, two properly
completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of
such Lender and in each succeeding taxable year of such
Lender during which interest may be paid under this
Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Each such Lender agrees to promptly notify the Agent of any
change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing
IRS Form 1001 and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the
Obligations of the Company to such Lender, such Lender agrees to
notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such
Lender. To the extent of such percentage amount, the Agent will
treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United
States withholding tax by filing IRS Form 4224 with the Agent
sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Company to such Lender,
such Lender agrees to undertake sole responsibility for complying
with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any
interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent,
then the Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not
delivered or was not properly executed, or because such Lender
failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify
the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the
amounts payable to the Agent under this Section, together with
all costs and expenses (including Attorney Costs). The
obligation of the Lenders under this subsection shall survive the
payment of all Obligations and the resignation or replacement of
the Agent.
ARTICLE XXXII
MISCELLANEOUS
32.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by the Company or any
applicable Subsidiary therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders (or
by the Agent at the written request of the Required Lenders) and
the Company and acknowledged by the Agent, and then any such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided
that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders and the Company and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender
(or reinstate any Commitment terminated pursuant to Section 8.2);
(b) postpone or delay any date fixed by this Agreement
or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of
them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on, any Loan, or (subject to clause (ii) below)
reduce any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required
for the Lenders or any of them to take any action hereunder; or
(e) amend this Section, or Section 2.12, or any
provision herein providing for consent or other action by all
Lenders;
and, provided further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to
the Required Lenders or all the Lenders, as the case may be,
affect the rights or duties of the Agent under this Agreement or
any other Loan Document, and (ii) the Fee Letters may be amended,
or rights or privileges thereunder waived, in a writing executed
by the parties thereto.
32.2 Notices. (a) All notices, requests and other
communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided
that any matter transmitted by the Company by facsimile (i) shall
be immediately confirmed by a telephone call to the recipient at
the number specified on Schedule 10.2, and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified
for notices on Schedule 10.2; or, as directed to the Company or
the Agent, to such other address as shall be designated by such
party in a written notice to the other parties, and as directed
to any other party, at such other address as shall be designated
by such party in a written notice to the Company and the Agent.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be
effective when delivered or transmitted in legible form by
facsimile machine, respectively, or if mailed, upon the third
Business Day after the date deposited into the U.S. mail; except
that notices pursuant to Article II or IX to the Agent shall not
be effective until actually received by the Agent.
(c) Any agreement of the Agent and the Lenders herein
to receive certain notices by telephone or facsimile is solely
for the convenience and at the request of the Company. The Agent
and the Lenders shall be entitled to rely on the authority of any
Person purporting to be a Person authorized by the Company to
give such notice and the Agent and the Lenders shall not have any
liability to the Company or any other Person on account of any
action taken or not taken by the Agent or the Lenders in reliance
upon such telephonic or facsimile notice. The obligation of the
Company to repay the Loans shall not be affected in any way or to
any extent by any failure by the Agent and the Lenders to receive
written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Lenders of a confirmation which is
at variance with the terms understood by the Agent and the
Lenders to be contained in the telephonic or facsimile notice.
32.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Lender, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
32.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated
hereby are consummated, pay or reimburse the Agent within five
Business Days after demand (subject to subsection 4.1(f)) for all
costs and expenses incurred by the Agent in connection with the
development, preparation, delivery, administration and execution
of, and any amendment, supplement, waiver or modification to (in
each case, whether or not consummated), this Agreement, any Loan
Document and any other documents prepared in connection herewith
or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable Attorney
Costs incurred by the Agent with respect thereto; and
(b) pay or reimburse the Agent and each Lender within
five Business Days after demand (subject to subsection 4.1(f))
for all costs and expenses (including Attorney Costs) incurred by
them in connection with the enforcement, attempted enforcement,
or preservation of any rights or remedies under this Agreement or
any other Loan Document during the existence of an Event of
Default or after acceleration of the Loans (including in
connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate
proceeding).
32.5 Company Indemnification. Whether or not the
transactions contemplated hereby are consummated, the Company
shall indemnify and hold the Agent-Related Persons, and each
Lender and each of their respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each an
"Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which
may at any time (including at any time following repayment of the
Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by
or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby or
thereby, or any action taken or omitted by any such Person under
or in connection with any of the foregoing, including with
respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement or the Loans or the use of the
proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this
Section shall survive payment of all other Obligations.
32.6 Payments Set Aside. To the extent that the Company
makes a payment to the Agent or the Lenders, or the Agent or the
Lenders exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by
the Agent or such Lender in its discretion) to be repaid to a
trustee receiver, or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of
such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and
effect as if such payment had not been made or such set-off had
not occurred and (b) each Lender severally agrees to pay to the
Agent upon demand its pro rata share of any amount so recovered
from or repaid by the Agent.
32.7 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of the Agent and each Lender.
32.8 Assignments, Participations, etc. (a) Any Lender may,
with the written consent of the Company at all times other than
during the existence of an Event of Default and the Agent, which
consent of the Company shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company or the Agent
shall be required in connection with any assignment and
delegation by a Lender to an Eligible Assignee that is an
Affiliate of such Lender) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitment and the other
rights and obligations of such Lender hereunder, in a minimum
amount of $5,000,000 (or, if less, all of such Lender's
remaining rights and obligations hereunder); provided, however,
that the Company and the Agent may continue to deal solely and
directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been
given to the Company and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered
to the Company and the Agent an Assignment and Acceptance in the
form of Exhibit E ("Assignment and Acceptance") together with any
Note or Notes subject to such assignment and (iii) the assignor
Lender or Assignee has paid to the Agent a processing fee in the
amount of $2,500.
(b) From and after the date that the Agent notifies
the assignor Lender that it has received and provided its consent
(and received, if applicable, the consent of the Company) with
respect to an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations
of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder
and under the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Loan Documents.
(c) Any Lender may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company
(a "Participant") participating interests in any Loans, the
Commitment of such Lender and the other interests of such Lender
(the "originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the
performance of such obligations, (iii) the Company and the Agent
shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents,
and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of
the Lenders as described in the first proviso to Section 10.1. In
the case of any such participation, the Participant shall be
entitled to the benefit of Sections 3.1, 3.3 and 10.5 as though
it were also a Lender hereunder, and if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under this Agreement.
(d) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest
in, or pledge, all or any portion of its rights under and
interest in this Agreement and any Note held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
32.9 Confidentiality. Each Lender agrees to take and to
cause its Affiliates to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the
Company and provided to it by the Company or any Subsidiary, or
by the Agent on the Company's or such Subsidiary's behalf, under
this Agreement or any other Loan Document, and neither such
Lender nor any of its Affiliates shall use any such information
other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business
now or hereafter existing or contemplated with the Company or any
Subsidiary; except to the extent such information (i) was or
becomes generally available to the public other than as a result
of disclosure by such Lender, or (ii) was or becomes available on
a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality
agreement with the Company or any Subsidiary known to such
Lender; provided, however, that any Lender may disclose such
information (A) at the request or pursuant to any requirement of
any Governmental Authority to which such Lender is subject or in
connection with an examination of such Lender by any such
authority; (B) pursuant to subpoena or other court process; (C)
when required to do so in accordance with the provisions of any
applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which
the Agent or any Lender or any of their respective Affiliates may
be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Lender's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual
or potential, provided that such Person agrees in writing to keep
such information confidential to the same extent required of the
Lenders hereunder; (H) as to any Lender or its Affiliate, as
expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Lender or such
Affiliate; and (I) to its Affiliates.
32.10 Set-off. In addition to any rights and remedies of
the Lenders provided by law, if an Event of Default exists, or
the Loans have been accelerated, each Lender is authorized at any
time and from time to time, without prior notice to the Company,
any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such
Lender to or for the credit or the account of the Company against
any and all Obligations owing to such Lender, now or hereafter
existing, irrespective of whether or not the Agent or such Lender
shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to notify the Company and
the Agent after any such set-off and application made by such
Lender; provided that the failure to give such notice shall not
affect the validity of such set-off and application.
32.11 Automatic Debits of Fees. With respect to any non-
use fee, arrangement fee or other fee, or any other cost or
expense (including Attorney Costs) due and payable to the Agent,
BofA under the Loan Documents, the Company hereby irrevocably
authorizes BofA (and, if requested by BofA, BAI) to debit any
deposit account of the Company with BofA or BAI in an amount such
that the aggregate amount debited from all such deposit accounts
does not exceed such fee or other cost or expense. If there are
insufficient funds in such deposit accounts to cover the amount
of the fee or other cost or expense then due, such debits will be
reversed (in whole or in part, in BofA's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such
debit under this Section shall be deemed a set-off.
32.12 Notification of Addresses, Lending Offices, Etc.
Each Lender shall notify the Agent in writing of any change in
the address to which notices to such Lender should be directed,
of addresses of any Lending Office, of payment instructions in
respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably
request.
32.13 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed,
shall be deemed an original, and all of which taken together
shall be deemed to constitute but one and the same instrument.
32.14 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or such instrument or agreement.
32.15 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Company, the Lenders, the Agent and the Agent-Related Persons,
and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with,
this Agreement or any other Loan Document.
32.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT
AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED THAT THE AGENT
AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH OF THE COMPANY, THE
AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN
RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY ILLINOIS LAW.
32.17 Waiver of Jury Trial. THE COMPANY, THE LENDERS AND
THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
32.18 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and
understanding among the Company, the Lenders and the Agent, and
supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
SPARTECH CORPORATION
By:
Title:
By:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By:
Title:
<PAGE>
Commitment: $25,000,000 BANK OF AMERICA ILLINOIS, as a
Lender
By:
Title:
Commitment: $15,000,000 MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as a Lender
By:
Title:
<PAGE>
SCHEDULE 1.1
PRICING SCHEDULE
The Applicable Margin and Non-Use Fee Rate shall be
determined based on the applicable Total Indebtedness/EBITDA
Ratio as set forth below.
Applicable Applicable
Total Margin for Margin for
Indebtedness/EBITDA Offshore Base Rate Non-Use
Ratio Rate Loans Loans Fee Rate
Less than 1.5 to 1 0.625% 0.000% 0.225%
Equal to or greater
than 1.5 to 1 but
less than 2.0 to 1 0.750% 0.000% 0.250%
Equal to or greater
than 2.0 to 1 but
less than 2.5 to 1 1.000% 0.000% 0.300%
Equal to or greater
than 2.5 to 1 but
less than 3.0 to 1 1.250% 0.000% 0.350%
Equal to or greater
than 3.0 to 1 1.500% 0.250% 0.400%
The applicable Margin for Offshore Rate Loans initially
shall be 1.000%, the Applicable Margin for Base Rate Loans
initially shall be 0%, and the Non-Use Fee Rate initially shall
be 0.300%. Each of the foregoing shall be adjusted, to the
extent applicable, 45 days (or, in the case of the last fiscal
quarter of any fiscal year, 90 days) after the end of each
fiscal quarter based on the Total Indebtedness/EBITDA Ratio as
of the last day of such fiscal quarter; provided that if the
Company fails to deliver the financial statements required by
Section 6.1 and the related Compliance Certificate by the 45th
day (or, if applicable, the 90th day) after any fiscal quarter,
the Applicable Margin and Non-Use Fee Rate that would apply if
the Total Indebtedness/EBITDA Ratio were equal to or greater
than 3.0 to 1 shall apply until such financial statements are
delivered.<PAGE>
SCHEDULE 2.1
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Lender Commitment
Share
Bank of America Illinois $25,000,000 62.5%
Mercantile Bank $15,000,000 37.5%
TOTAL $40,000,000 100%
<PAGE>
SCHEDULE 10.2
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Bank of America National Trust
and Savings Association
Agency Management Services #69596
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Senior Agency Officer
Telephone: (312) 828-7933
Facsimile: (312) 974-9102
BANK OF AMERICA ILLINOIS,
as a Lender
Domestic and Offshore Lending Office:
231 South LaSalle Street
Chicago, Illinois 60697
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Carol Werner
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION,
as a lender
Domestic and Offshore Lending Office:
One Mercantile Center
St. Louis, Missouri 63101
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Mercantile Bank of St. Louis National Association
One Mercantile Center
St. Louis, Missouri 63101
Attention: Institutional Banking Division
<PAGE>
SPARTECH CORPORATION
Address for Notices
7733 Forsyth
Suite 1450
Clayton, Missouri 63105-1817
Attention: David Mueller
<PAGE>
EXHIBIT F
FORM OF
PROMISSORY NOTE
$ _____________, 199_
FOR VALUE RECEIVED, the undersigned, Spartech
Corporation, a Delaware corporation (the "Company"), hereby
promises to pay to the order of (the
"Lender") the principal sum of Dollars ($ )
or, if less, the aggregate unpaid principal amount of all Loans
made by the Lender to the Company pursuant to the Credit
Agreement dated as of August 15, 1995 (as amended or otherwise
modified from time to time, the "Credit Agreement") among the
Company, various financial institutions (including the Lender),
and Bank of America National Trust and Savings Association, as
Agent for the Lenders, on the dates and in the amounts provided
in the Credit Agreement. The Company further promises to pay
interest on the unpaid principal amount of the Loans evidenced
hereby from time to time at the rates, on the dates, and
otherwise as provided in the Credit Agreement.
The Lender is authorized to endorse the amount of
each loan and the date on which such Loan is made and each
payment of principal with respect thereto on the schedules
annexed hereto and made a part hereof, or on continuations
thereof which shall be attached hereto and made a part hereof;
provided that any failure to endorse such information on such
schedule or continuation thereof shall not in any manner affect
any obligation of the Company under the Credit Agreement and
this Promissory Note (this "Note").
This Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, which Credit
Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of
certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Terms defined in the Credit Agreement are used
herein with their defined meanings therein unless otherwise
defined herein. This Note shall be governed by, and construed
and interpreted in accordance with, the laws of the State of
Illinois <PAGE>
applicable to contracts made and to be performed entirely within
such State.
SPARTECH CORPORATION
By:
Title:
EXHIBIT 11
SPARTECH CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share amounts)
<TABLE>
<S> <C> <C> <C> <C>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
NET EARNINGS
Net Earnings $ 3,820 $ 3,075 $ 10,895 $ 7,974
Preferred stock dividend requirements - (548) (1,098) (1,585)
Add: Interest savings, net of tax effect, on retirement
of debt from the proceeds received from the exercise
of options and warrants in excess of 20% limitation - 43 - 124
Primary net earnings applicable to common shares 3,820 2,570 9,797 6,513
Add: Preferred stock dividend elimination resulting from
the assumed conversion of preferred stock - 548 1,098 1,585
Fully diluted net earnings applicable to common shares $ 3,820 $ 3,118 $ 10,895 $ 8,098
WEIGHTED AVERAGE SHARES OUTSTANDING
Weighted average common shares outstanding 23,137 8,296 13,518 8,140
Add: Shares issuable from assumed exercise of options and
warrants in excess of 20% limitation 998 1,093 862 1,048
Primary weighted average shares outstanding 24,135 9,389 14,380 9,188
Add: Shares issuable from assumed conversion of preferred
stock - 14,275 9,516 14,275
Additional shares issuable from assumed exercise of
options and warrants in excess of 20% limitation due
to the difference in the share repurchase price under
the fully diluted computation - - 149 -
Fully diluted weighted average shares outstanding 24,135 23,664 24,045 23,463
NET EARNINGS PER SHARE
Primary $ .16 $ .28 $ .68 $ .70
Fully Diluted $ .16 $ .13 $ .45 $ .34
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
CONDENSED BALANCE SHEET AND THE CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-29-1994
<PERIOD-END> JUL-29-1995
<CASH> 1,702
<SECURITIES> 0
<RECEIVABLES> 50,108
<ALLOWANCES> 1,924
<INVENTORY> 36,440
<CURRENT-ASSETS> 88,074
<PP&E> 89,131
<DEPRECIATION> 27,471
<TOTAL-ASSETS> 175,001
<CURRENT-LIABILITIES> 51,719
<BONDS> 0
<COMMON> 17,415
0
0
<OTHER-SE> 51,227
<TOTAL-LIABILITY-AND-EQUITY> 175,001
<SALES> 265,798
<TOTAL-REVENUES> 265,798
<CGS> 224,715
<TOTAL-COSTS> 247,374
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,779
<INCOME-PRETAX> 14,645
<INCOME-TAX> 3,750
<INCOME-CONTINUING> 10,895
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,895
<EPS-PRIMARY> .68
<EPS-DILUTED> .45
</TABLE>
