<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(x) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (fee required).
For the fiscal year ended December 31, 1993
-----------------
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (fee required).
For the transition period from
--------------- -----------
Commission file Number 0-14139
-------
VWR Corporation
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 91-1319190
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1310 Goshen Parkway, West Chester, PA 19380
- ------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 431-1700
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
Registered
None N/A
- ------------------- ----------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 Par Value
- ---------------------------------------------------------------------------
(Title of Class)
<PAGE>2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (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 XX NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ( 229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
As of February 28, 1994, the aggregate market value of the voting stock held
by non-affiliates was approximately $109 million. In calculating this value
registrant has treated as voting stock held by affiliates only the voting
stock held by all of its directors. This is not an admission by the Company
that any or all of its directors are in fact affiliates.
As of February 28, 1994, there were 11,020,849 shares of common stock issued
and outstanding.
<PAGE>3
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Company's definitive
Proxy Statement to be filed on or about
March 31, 1994 are incorporated by reference
into Part III, Item 10 (Directors Only),
Item 11, Item 12 and Item 13 of this Form 10-K
<PAGE>4
PART I.
ITEM I. - BUSINESS
- ------ --------
VWR Corporation ("VWR," "the Corporation," or "the Company") is one of the
nation's largest suppliers of laboratory equipment, chemicals, and supplies to
the scientific marketplace with sales of $509 million in 1993. VWR was
incorporated in Delaware on January 3, 1986, in order to complete the
Distribution Plan ("Distribution Plan") of Univar Corporation. Under the
Distribution Plan, common stock of VWR Corporation was distributed in a tax-
free distribution to shareholders of record of Univar Corporation on February
28, 1986.
Prior to March 1, 1990, the Company, through its subsidiaries, served four
major markets: laboratory equipment and supplies; photographic and graphic
arts supplies; construction textiles and supplies used in the manufacture of
upholstered furniture, bedding, and other products; covering fabrics and
leathers for furniture manufacturers and the interior design industry.
Effective March 1, 1990, the non-laboratory businesses were spun-off, in a
tax-free transaction, into a new public company, Momentum Corporation
(formerly Momentum Distribution, Inc., "Momentum"). Momentum shares were
distributed as a tax-free dividend to VWR shareholders of record on March 1,
1990. For each five shares of VWR stock held, shareholders received one share
of Momentum common stock. The distribution of shares was completed on March
16, 1990.
In October 1992 the Company acquired certain assets related to the laboratory
supply business of Johns Scientific, Inc. of Canada for approximately $7.4
million. In January 1993 the Company entered into an agreement with BDH Ltd.
of Canada to become their sole distributor of laboratory chemicals and
supplies.
In May 1992, the Company moved its headquarters from Media, Pennsylvania to
West Chester, Pennsylvania.
Principal Customers
- -------------------
VWR Corporation and its subsidiaries are not dependent on a single customer or
a few customers, the loss of any one or more of which would have a material
adverse effect on its operations.
<PAGE>5
Competition
- -----------
The Company competes in the industrial, governmental, biomedical, and
educational market for laboratory equipment and supplies with numerous
national and regional distributors. In addition, there are numerous
distributors of specialty lines and manufacturers who sell their product lines
direct. In the opinion of management, the Corporation is the nation's second
largest distributor of laboratory equipment and supplies.
As to all the activities of VWR, a combination of quality, price, and service
are the major determining competitive factors. All activities are considered
highly competitive.
Environmental Regulation
- ------------------------
VWR has been designated by the EPA as a potentially-responsible party in
connection with several sites. Management believes that the Company's alleged
contribution to each of these sites is de minimis and that the potential
financial impact of these matters is not material to the Company's
consolidated financial statements.
Employees
- ---------
Approximately 1,270 persons were employed by VWR Corporation as of February
28, 1994. Approximately 13% of the Company's employees are represented by
unions. The Company believes its relations with employees are excellent.
Methods of Distribution
- -----------------------
Approximately 19% of the Company's employees are outside sales personnel who
provide product information and technical support to our customers. Customers
also place individual orders by telephone with the nearest inside sales
representative or by computer. Orders are shipped from local or central
warehouses, depending on the nature of the product ordered.
Foreign Operations and Export Sales
- -----------------------------------
VWR acquired the scientific distribution business of Sargent-Welch Scientific
of Canada, Limited in September, 1989. In April, 1990, VWR purchased all the
outstanding stock of Oxford Laboratories Ltd. of London, Ontario, Canada. In
October, 1992 the Company acquired certain assets related to the laboratory
supply business of Johns Scientific, Inc. of Toronto, Canada. In 1993 the
Company entered into an agreement with BDH Ltd. of Canada to become their sole
distributor of laboratory chemicals and supplies.
<PAGE>6
For the year ended December 31, 1993, the Canadian sales and identifiable
assets attributable to these Canadian operations amounted to less than 10% of
the Company's totals in each category. During the year ended December 31,
1993, VWR also had sales made by domestic locations to certain non-Canadian
foreign customers.
Raw Materials
- -------------
Numerous sources of supply generally exist for all products essential to the
business of the Company.
Patents, Trademarks, and Trade names
- -----------------------------------
VWR Corporation and its subsidiaries own several trademarks and trade names,
none of which is considered material to the business as a whole.
Seasonality
- -----------
No material portion of the business of VWR Corporation and its subsidiaries is
regarded as seasonal. However, the majority of sales of the Sargent-Welch
science education business occur in the third quarter of the calendar year.
Working Capital Items
- ---------------------
It is anticipated that VWR's financial resources and funds generated by
operations will continue to be adequate to enable the Company to fund its
current business.
Backlog
- -------
Backlog figures for the Company are not maintained on a consolidated basis.
Such figures would not be meaningful because most orders received are for
merchandise held in inventory and available for immediate shipment.
Research and Development
- ------------------------
VWR Corporation and its subsidiaries do not manage or conduct significant
research activities relating to the development of new products, although the
Company periodically works with customers or suppliers to improve or develop
new uses for existing products. In addition, VWR develops proprietary
computer systems for internal use.
<PAGE>7
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE REGISTRANT
- ---------------------------
NAME AGE BUSINESS EXPERIENCE POSITION HELD
LAST FIVE YEARS SINCE
- -------------------- --- ------------------- -------------
<S> <C> <C> <C>
Jerrold B. Harris 51 President and Chief Executive March 1, 1990
President and Chief Officer of Registrant to Present
Executive Officer Executive Vice President 1988 - 1990
and Chief Operating Officer
of Registrant
Walter S. Sobon 45 Vice President Finance and March 1, 1990
Vice President Finance Corporate Secretary of to Present
Corporate Secretary Registrant
Vice President Finance, 1989 - 1990
VWR Scientific Inc.
Principal,Verus Corporation 1988 - 1989
Richard H. Serafin 47 Vice President Information 1991 to
Vice President Systems Present
Information Systems Director of Business 1989 - 1991
Systems Consulting, Arthur
Andersen & Company
Information Technology 1985 - 1989
Consulting Partner, Arthur
Young
Joseph A. Panozzo 56 Senior Vice President November 1, 1992
Senior Vice President to Present
Regional Vice President of 1988 - 1992
Southern Region
Paul J. Nowak 39 Senior Vice President November 1, 1992
Senior Vice President to Present
Vice President and 1989 - 1992
General Manager of
Sargent-Welch
Eastern Regional Manager 1988 - 1989
</TABLE>
<PAGE>8
ITEM 2 - PROPERTIES
- -------------------
VWR Corporation owns and leases office and warehouse space throughout the
United States and Canada for wholesale distribution of scientific equipment
and supplies as follows:
Batavia, Illinois Owned
Bridgeport, New Jersey Owned
Buffalo Grove, Illinois Owned
Cerritos, California Leased
San Francisco, California Leased
Houston, Texas Leased
Marietta, Georgia Leased
London, Ontario, Canada Leased
Catano, Puerto Rico Leased
Toronto, Ontario, Canada Leased
The Company leases office space in West Chester, Pennsylvania, for executive,
financial, information systems, marketing, and other administrative
activities.
The Company also leases twenty-five smaller facilities throughout the United
States and five smaller facilities in Canada which support the sales and
warehouse functions. All facilities have been designed to serve the Company's
purpose (generic office and warehouse functions) and are sufficient for its
current operations.
ITEM 3. - LEGAL PROCEEDINGS
- ------ -----------------
The Corporation is involved in various contractual, warranty, public liability
cases and environmental claims which are considered normal to the
Corporation's business.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1993.
<PAGE>9
PART II.
- --------
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
- ------------------------------------------------------------------------
VWR Corporation Common Stock, $1.00 par value, is traded on the
NASDAQ/National Market System under the VWRX symbol. On February 28, 1994,
there were approximately 6,000 shareholders represented by 1,837 holders of
record.
The market prices of the Corporation's common shares during the years ended
December 31, 1993, and 1992, are set forth below. The prices reflect bid
prices as reported by NASDAQ for the Company.
<TABLE>
<CAPTION>
Year Ended Year Ended
VWR Corporation Common Stock* December 31, 1993 December 31, 1992
- ---------------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Quarter High Low High Low
------- ---- --- ---- ---
First $17.00 $13.25 $14.13 $9.75
Second 16.00 11.75 14.75 12.25
Third 12.75 11.25 17.25 13.25
Fourth 13.75 12.00 16.00 13.50
</TABLE>
* All share and per share data reflect a two-for-one stock split effective
May 9,1992.
The Corporation declared quarterly dividends of $0.10 per share for each
quarter during the fiscal years ended December 31, 1993, and December 31,
1992. The Corporation's long-term debt agreements provide, among other terms,
limitations on working capital, tangible net worth, the current ratio, and the
debt-to-equity ratio which may restrict the Corporation's ability to declare
or pay dividends. Approximately $2 million of retained earnings was available
to pay dividends at December 31, 1993.
<PAGE>10
ITEM 6. - SELECTED FINANCIAL DATA
- ------ -----------------------
The following table of selected financial data should be read in conjunction
with the consolidated financial statements and notes thereto included
elsewhere herein.
<TABLE>
<CAPTION>
For the Years Ended December
31, 1993, 1992, 1991 and 1990, December 31
and Ten Months ended -------------------------------------------------
December 31, 1989 1993* 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operations
(Thousand of dollars)
Sales $509,235 $490,168 $440,983 $428,568 $311,832
Gross margin 116,274 114,431 104,924 102,823 70,250
Income from
continuing operations
before cumulative effect
of accounting change 3,890 9,430 7,743 6,970 3,872
Loss from
companies distributed (269) (9,217)
Cumulative effect of
accounting change (1,400)
Net income (loss) $ 2,490 $ 9,430 $ 7,743 $ 6,701 $ (5,345)
- ------------------------------------------------------------------------------
Per share Data**
Dividends $0.40 $0.40 $0.40 $0.40 $0.40
Book value for
continuing operations 3.68 3.80 3.34 3.02 2.85
Income from
continuing operations
before cumulative effect
of accounting change .35 0.85 0.71 0.66 .37
Loss from
companies distributed (0.03) (0.88)
Cumulative effect
of accounting change (.13)
-------------------------------------------------
Net income (loss) per share $0.22 $0.85 $0.71 $0.63 $(0.51)
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>11
<TABLE>
<CAPTION>
For the Years Ended December
31, 1993, 1992, 1991 and 1990, December 31
and Ten Months Ended ----------------------------------------------
December 31, 1989. 1993* 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Financial Position
(Continuing operations only,
thousands of dollars)
Working capital $ 65,197 $ 57,881 $ 52,928 $ 58,991 $ 54,638
Property and Equipment-net 41,562 33,608 32,662 33,320 31,345
Total assets 150,194 136,093 126,896 132,876 132,414
Short-term debt 150 218 272 944 370
Long-term debt 61,757 47,553 46,747 57,333 55,612
Shareholders' equity 41,057 42,257 36,832 32,847 29,917
Total invested capital 102,964 90,028 83,851 91,124 85,899
- ------------------------------------------------------------------------------
Operating & Financial Statistics
(Continuing Operations Only)
Gross margin to sales 22.8% 23.35% 23.79% 23.99% 22.53%
Income from Continuing
Operations to sales .76% 1.92% 1.76% 1.63% 1.24%
Current ratio 2.73 2.46 2.42 2.60 2.30
Return on Average
Shareholders' Equity 5.98% 23.85% 22.22% 22.21% 10.88%
- -------------------------------------------------------------------------------
* Results include restructuring and other charges of $3.3 million pre-tax ($1.9
million net of tax).
** All share and per share data reflect a two-for-one stock split effective
May 9, 1992.
</TABLE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
- -----------------------------------------------------------------------
Results of Operations
- ---------------------
Sales
1993 Increase 1992 Increase 1991
- ----------------------------------------------------------------------
$509.2 3.9% $490.2 11.2% $441.0
Sales increased by almost 4% in 1993 due primarily to strong growth rates in
our international export, high school science education (Sargent-Welch
<PAGE>12
division) businesses and the effects of the acquisition of Johns Scientific
and the distribution agreement with BDH Ltd. in Canada. Growth in Canada was
less than expected. Combining the operations and systems of the three
companies proved to be a more complex task than anticipated and we experienced
higher costs. In addition, sales of our principal U.S. operating unit (VWR
Scientific) lagged behind the market and we missed our internal target.
In 1992 each of our areas of business activity gained market share and
contributed to our growth from 1991. Sargent-Welch and our international
export business sales were very strong. The acquisition of Johns Scientific
in the fourth quarter of 1992 for approximately $7.4 million and a large
international order in the second half of 1992 accounted for about 1% of the
sales growth. Approximately 2% of the sales growth was due to price
increases.
Gross Margin
- -------------
1993 Increase 1992 Increase 1991
- --------------------------------------------------------------------
Margin $116.3 1.7% $114.4 9.1% $104.9
Percent
of Sales 22.8% 23.3% 23.8%
Over the three-year period, gross margin as a percent of sales declined
primarily as a result of customer mix and competitive price pressures.
Operating Expenses Before Restructuring and Other Charges
- ---------------------------------------------------------
1993 Increase 1992 Increase 1991
- ----------------------------------------------------------------------
Expenses $101.9 6.7% $95.5 8.2% $88.3
Percent
of Sales 20.0% 19.5% 20.0%
In 1993 the increase in operating expenses before restructuring and other
charges is primarily due to higher personnel costs and transition costs
associated with the acquisition of Johns Scientific and the distribution
agreement with BDH, Ltd., and our investment in a new direct marketing effort.
Excluding the impact from Canadian acquisitions and direct marketing,
operating expenses grew approximately 1.4%.
Operating expenses grew at a rate slower than sales in 1992. The reasons for
the slower growth rate were our continuous emphasis on cost containment and
the fact that fixed costs were stable while sales increased.
<PAGE>13
Restructuring and Other Charges
- -------------------------------
In the fourth quarter of 1993, the Company made the decision to refocus
certain information systems efforts into customer service systems and to take
actions that would reduce operating expenses. As a result of this effort, the
Company recorded a $3.3 million charge which included non-cash charges of $1.3
million (primarily for software development costs that do not have continuing
value) and $2 million related to the consolidation of functions and facilities
which consists primarily of severance and personnel-related costs.
Approximately $2 million is accrued at December 31, 1993, and is reflected in
current liabilities. It is anticipated that the impact of the consolidation
of certain functions will result in annualized cost savings of approximately
$2 million, beginning in the first half of 1994.
Interest Expense
- ----------------
1993 Increase 1992 Decrease 1991
- --------------------------------------------------------------------
Interest $4.5 15.4% $3.9 (7.1)% $4.2
Percent
of Sales .9% .8% 1.0%
In 1993 interest expense increased due to increased borrowing levels which
occurred primarily for the purchase of a new warehouse facility for the
Sargent-Welch division, system enhancements, and the 1992 acquisition of Johns
Scientific.
Interest expense decreased in 1992 primarily as a result of reduced debt
levels. Lower debt levels were achieved primarily by improvements in working
capital management.
Income Taxes
- ------------
1993 Decrease 1992 Increase 1991
- --------------------------------------------------------------------
Taxes $2.7 (52.6)% $5.7 23.9% $4.6
Percent
of Sales .5% 1.2% 1.0%
Effective
tax rate 40.6% 37.5% 37.5%
The income taxes footnote to the financial statements describes the difference
between the statutory and effective income tax rates. The higher effective
tax rate in 1993 reflects the impact of new U.S. federal tax legislation and
the carryforward to future years of Canadian tax benefits not recognized
currently.
In 1993 the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109 "Accounting for Income Taxes," which did not have a material effect on
the consolidated financial position or results of operations.
<PAGE>14
Income Before Cumulative Effect of Accounting Change and Per Share Data
- -----------------------------------------------------------------------
1993 Decrease 1992 Increase 1991
- --------------------------------------------------------------------
Income $3.9 (58.5)% $9.4 22.1% $7.7
Percent
of Sales .8% 1.9% 1.8%
Per Share $ .35 $ .85 $ .71
In addition to the impact of the restructuring and other charges, which were
$3.3 million pre-tax ($1.9 million net of tax or $.18 per share), income
before cumulative effect of accounting change decreased primarily due to
decreased operating income from lower than expected sales and margins, and
higher operating expenses along with higher interest costs.
In 1992 the improvement was the result of sales growth, improved profitability
in our newer areas of business activity, expense controls, lower debt levels,
and strong asset management.
Financial Condition and Liquidity
- ---------------------------------
The ratio of debt to equity over the past four years is as follows:
1993 1992 1991 1990
- --------------------------------------------------------------
1.5 1.1 1.3 1.8
The ratio of income before cumulative effect of accounting change, plus
depreciation and amortization, to interest expense over the past four years is
as follows:
1993 1992 1991 1990
- --------------------------------------------------------------
2.9 4.6 3.7 2.6
VWR continues to maintain a liquid financial position. VWR's current ratio
was 2.7 at December 31, 1993 and accounts receivable and inventory accounted
for 63% of total assets. For the year ended December 31, 1993 cash flow from
operations of $6.4 million and debt borrowings of $14 million were used to
finance investments in property and equipment of $13.4 million and to pay
dividends of $4.4 million. The significant investment in property and
equipment was due to the purchase of a new warehouse facility for the Sargent-
Welch division and system enhancements. Sufficient credit availability
existed at December 31, 1993 to provide for the amounts of bank checks
outstanding less cash in bank of $1.1 million. Cash requirements reach a low
toward the end of each calendar year due to the natural business cycle.
The Company has unsecured revolving credit loan agreements, expiring in 1996
which provide for committed facilities of $75 million. The Company is
obligated to make available an unsecured subordinated revolving line of credit
for approximately $5 million to Momentum Corporation (formerly Momentum
<PAGE>15
Distribution, Inc., the company spun off in 1990) through February 1995.
There have been no loans to Momentum Corporation through December 31, 1993.
VWR borrows at short-term interest rates. Our credit agreements give us the
option to convert up to $37.5 million to a five-year term loan. Interest rate
collars effectively establish a minimum and maximum rate on up to $55 million
of revolving credit debt. Collars of $25 million will expire in 1994 and are
expected to be replaced with interest rate swaps of $10 million at a fixed
rate. The remaining collar of $30 million will expire in 1996 and is expected
to be replaced at a fixed rate into 1999.
On January 1, 1994, the company formed a joint venture with E. Merck of
Germany to acquire an interest in Bender & Hobein GmbH, a distributor of
laboratory supplies and equipment in Germany. The investment will be
accounted for using the cost method of accounting and was funded through the
Company's revolving credit line.
VWR has been designated by the EPA as a potentially responsible party for
various sites. Management believes that any required expenditures would be
immaterial to the Company's consolidated financial statements.
The Company adopted SFAS No. 106 "Accounting For Postretirement Benefits Other
Than Pensions," in 1993, which resulted in a one-time non-cash charge of $1.4
million (net of deferred tax benefit of $.9 million). See notes to the
consolidated financial statements for further discussion.
Due to declining interest and inflation rates, the Company changed certain
pension and retiree medical actuarial assumptions, which included lowering the
discount rate to 7.75% and rate of compensation increase to 4%. These changes
will not have a material effect on the consolidated financial statements in
1994.
As of December 31, 1993 the estimated cost for capital improvement projects is
expected to range between $4-$5 million in 1994 related primarily to continued
investments in new computer and warehouse systems.
<PAGE>16
Operating Income Return on Average Invested Capital
- -----------------------------------------------------
1993 1992 1991 1990
- ---------------------------------------------------------------------
11.5% 21.8% 19.0% 19.1%
1993 before
restructuring
charges 14.9%
Operating Income to Sales
- -------------------------
1993 1992 1991 1990
- ---------------------------------------------------------------------
2.2% 3.9% 3.8% 3.9%
1993 before
restructuring
charges 2.8%
Average Invested Capital to Sales
- ---------------------------------
1993 1992 1991 1990
- ---------------------------------------------------------------------
18.9% 17.7% 19.8% 20.7%
Days Sales in Accounts Receivable
- ---------------------------------
1993 1992 1991 1990
- ---------------------------------------------------------------------
42.6 41.5 42.1 43.5
Inventory Turnover (Before LIFO)
- --------------------------------
1993 1992 1991 1990
- ---------------------------------------------------------------------
6.9 6.4 6.0 5.6
<PAGE>17
<TABLE>
<CAPTION>
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------ -------------------------------------------
VWR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
1993 1992 1991
- -------------------------------------------------------------------------------
(Thousands of dollars, except per share data)
<S> <C> <C> <C>
Sales $509,235 $490,168 $440,983
Cost of sales 392,961 375,737 336,059
------- ------- -------
Gross margin 116,274 114,431 104,924
Operating expenses 101,915 95,474 88,347
Restructuring and other
charges 3,300
------- ------- -------
Operating income 11,059 18,957 16,577
Interest expense 4,506 3,869 4,188
------- ------- -------
Income before income taxes
and cumulative effect of
accounting change 6,553 15,088 12,389
Income taxes 2,663 5,658 4,646
-------- ------- -------
Income before cumulative effect
of accounting change 3,890 9,430 7,743
Cumulative effect of change in
accounting for postretirement
benefits, net of income tax
benefit of $860 (1,400)
------- ------ -------
Net Income $ 2,490 $ 9,430 $ 7,743
======= ====== =======
Earnings (Loss) Per Share:
Income before cumulative effect
of accounting change $ 0.35 $ 0.85 $ 0.71
Cumulative effect of accounting
change (0.13)
` ------- ------ -------
Net Income $ 0.22 $ 0.85 $ 0.71
======= ====== =======
Weighted average number of common
shares outstanding (thousands) 11,153 11,128 10,960
------- ------- -------
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>18
<TABLE>
<CAPTION>
VWR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, December 31,
except share data) 1993 1992
---- ----
ASSETS
- -------------------------------------------------------------------------------
Current Assets:
<S> <C> <C>
Receivables--
Trade receivables,
less reserves of $259 and $222 $60,272 $ 56,442
Other receivables 3,906 3,712
Inventories 30,243 33,025
Other 8,484 4,281
------- -------
Total Current Assets 102,905 97,460
Property and Equipment--net 41,562 33,608
Other Assets 5,727 5,025
------- -------
$150,194 $136,093
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
Current Liabilities:
Bank checks outstanding, less cash in bank $ 1,062 $ 1,803
Accounts payable 28,160 29,009
Accrued liabilities 8,336 8,549
Current portion of long-term debt 150 218
------- -------
Total Current Liabilities 37,708 39,579
Long-Term Debt 61,757 47,553
Deferred Income Taxes and Other 9,672 6,704
Shareholders' Equity:
Preferred stock, $1 par value, 1,000,000
shares authorized, none issued
Common stock, $1 par value, 30,000,000
shares authorized, 11,316,592 issued 11,316 11,316
</TABLE>
<PAGE>19
<TABLE>
<CAPTION>
(Thousands of dollars, December 31,
except share data) 1993 1992
---- ----
<S> <C> <C>
Additional paid-in capital $29,137 $28,794
Retained earnings 6,651 8,561
Treasury shares at cost, 293,613
and 355,996 shares (2,882) (3,491)
Unamortized ESOP contribution (2,057) (2,474)
Unamortized restricted stock awards (541) (170)
Cumulative translation adjustment (567) (279)
------- -------
Total Shareholders' Equity 41,057 42,257
------- -------
$150,194 $136,093
======= =======
See Notes to Consolidated Financial Statements.
</TABLE
<PAGE>20
</TABLE>
<TABLE>
<CAPTION>
VWR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1993 1992 1991
- -------------------------------------------------------------------------------
(Thousands of dollars)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 2,490 $ 9,430 $ 7,743
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Cumulative effect of
accounting change 1,400
Depreciation and amortization 9,203 8,432 7,829
Change in assets and
liabilities, net of effect
of business acquired:
Receivables, net (4,024) (3,217) 1,147
Inventories 2,782 926 4,127
Other current assets (5,914) (1,462) (2,240)
Accounts payable (849) 4,834 3,255
Accrued liabilities 835 197 1,366
Deferred income taxes
and other 495 (36) 273
----- ------ -------
Cash Provided by
Operating Activities 6,418 19,104 23,500
----- ------ -------
INVESTING ACTIVITIES
Additions to property and
equipment, net (13,402) (5,184) (3,891)
Proceeds from sale of
operating assets 295
Acquisition of business
net of $1,600 note
payable (5,837)
Net additions to other assets (1,854) (931) (1,022)
------ ------- -----
Cash Used by
Investing Activities $(15,256) $(11,952) $(4,618)
------- ------- -----
</TABLE>
<PAGE>21
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
- -------------------------------------------------------------------------------
(Thousands of dollars)
FINANCING ACTIVITIES
<S> <C> <C> <C>
Proceeds from long-term debt $228,983 $136,493 $448,128
Repayment of long-term debt (214,847) (137,341) (459,386)
Cash dividends (4,395) (4,383) (4,363)
Purchase of treasury shares (286)
Proceeds from exercise of
stock options 88 249 5
Other (250) (266) (33)
------- ------- -------
Cash Provided (Used) by
Financing Activities 9,579 (5,534) (15,649)
------- ------- -------
Net Increase in Cash 741 1,618 3,233
Bank checks outstanding,
less cash in bank at
beginning of year (1,803) (3,421) (6,654)
------- ------- -------
Bank checks outstanding,
less cash in bank at
end of year $(1,062) $(1,803) $(3,421)
======= ======= =======
Supplemental disclosures of
cash flow information:
Cash paid during the year for:
Interest (net of
capitalized interest) $ 4,128 $ 3,493 $ 4,239
Income taxes 4,568 4,350 3,347
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>22
<TABLE>
<CAPTION>
VWR CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Thousands of dollars, Unamortized
except per share data) Restricted
Stock,
Common Unamortized
Stock Additional ESOP
$1 Par Paid-in Retained Treasury Contribution,
Value Capital Earnings Shares and Other
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance
December 31, 1990 $5,658 $34,451 $397 $(4,263) $(3,396)
Net income 7,743
Cash dividends
($.40 per share) (4,367)
Allocation of shares to
ESOP participants 191
Restricted stock awards-
15,116 shares (28) 147 (119)
Amortization of
restricted stock 265
Grant of treasury shares-
22,982 shares (43) 224
Exercise of stock options (5) 10
Foreign currency translation
adjustment (33)
----- ------ ------ ------ ------
Balance
December 31, 1991 $5,658 $34,451 $3,697 $(3,882) $(3,092)
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>23
<TABLE>
<CAPTION>
(Thousands of dollars, Unamortized
except per share data) Restricted
Stock,
Common Unamortized
Stock Additional ESOP
$1 Par Paid-in Retained Treasury Contribution,
Value Capital Earnings Shares and Other
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income $9,430
Two-for-one stock split $5,658 $(5,658)
Cash dividends
($.40 per share) (4,383)
Allocation of shares to
ESOP participants $235
Restricted stock awards -
7,580 shares 23 $74 (97)
Forfeiture of restricted
stock - 2,173 shares (26) 26
Amortization of restricted stock 279
Grant of treasury shares -
14,482 shares 44 141
Acquisition of treasury
stock - 21,756 shares (305)
Exercise of stock options (66) (183) 507
Foreign currency translation
adjustment (274)
Balance ------ ------ ----- ----- -----
December 31, 1992 $11,316 $28,794 $8,561 $(3,491) $(2,923)
- ------------------------------------------------------------------------------
<PAGE>24
(Thousands of dollars, Unamortized
except per share data) Restricted
Stock,
Common Unamortized
Stock Additional ESOP
$1 Par Paid-in Retained Treasury Contribution,
Value Capital Earnings Shares and Other
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income $2,490
Cash dividends
($.40 per share) (4,400)
Allocation of shares to
ESOP participants $417
Restricted stock awards -
45,219 shares $222 $439 (661)
Amortization of restricted stock 290
Grant of treasury shares -
4,478 shares 28 43
Acquisition of treasury
stock - 1,783 shares (22)
Exercise of stock options (61) 149
Tax benefit on ESOP dividends
and restricted stock 154
Foreign currency translation
adjustment (288)
Balance ------- ------- ------ ------- -------
December 31, 1993 $11,316 $29,137 $6,651 $(2,882) $(3,165)
======= ======= ====== ======== ========
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>25
VWR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------
Principles of Consolidation
- --------------------
The accompanying consolidated financial statements include the accounts of VWR
Corporation (the Company) and all of its subsidiaries (including its wholly
owned Canadian subsidiary). All significant intercompany accounts and
transactions have been eliminated.
Capitalization, Depreciation and Amortization
- ---------------------------------------
Land, buildings, and equipment are recorded at cost. Depreciation is computed
using the straight-line method for financial reporting purposes and,
generally, accelerated methods for income tax purposes. Acquisition and
development costs for significant business systems and related software for
internal use are capitalized on significant projects and amortized over their
estimated useful lives of seven years. Interest is capitalized on major
construction and development projects while in progress. The Company
capitalizes the costs of developing and producing catalogs, which are used by
customers for ordering products. Such costs are amortized over the period of
use, generally two years.
Income Taxes
- ------------
In 1993, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109 "Accounting for Income Taxes," which supersedes SFAS No. 96
previously followed by the Company. The adoption of SFAS 109 did not have a
material effect on the Company's financial position or results of operations.
SFAS 109 uses the asset and liability method under which deferred taxes are
determined based on the difference between the financial statement amounts and
tax bases of assets and liabilities using enacted tax rates. Deferred tax
expense is the result of changes in the asset or liability for deferred taxes.
Postretirement Benefits
- -----------------------
In 1993, the Company adopted SFAS No. 106 "Accounting for Postretirement
Benefits Other Than Pensions." This Statement requires the Company to accrue
the cost of retiree medical expenses over the period earned by the
participants, which is a change from the Company's prior practice of recording
these costs when incurred.
<PAGE>26
Earnings Per Share and 1992 Stock Split
- ----------------------------------
Earnings per share are based on the weighted average number of shares and
dilutive common share equivalents outstanding during the period.
On April 20, 1992, the Company's Board of Directors declared a two-for-one
stock split in the form of a stock dividend payable to shareholders of record
as of May 9, 1992. The aggregate par value, which did not change on a per-
share basis, of $5.6 million for the additional shares was transferred from
additional paid-in capital to common stock. All share and per-share data in
these financial statements have been restated to give effect to the stock
split.
Segment and Customer Information
- --------------------------------
The Company is engaged in one line of business, industrial distribution. No
single customer accounts for more than 10% of sales. The majority of the
Company's business activity pertains to, and accounts receivable result from,
sales of laboratory equipment and supplies to businesses across a wide
geographical area in various industries, mainly industrial, governmental,
biomedical, and educational. At December 31, 1993, the Company had no
significant concentrations of credit risk.
Reclassifications
- -----------------
Certain prior years' amounts have been reclassified to conform to the current
year's presentation.
INVENTORIES
- -----------
Inventories consist primarily of purchased goods for sale and are valued at
the lower of cost (substantially last-in, first-out method) or market.
LIFO cost at December 31, 1993, and 1992, was approximately $26.8 million and
$25.5 million, respectively, less than current cost. The effect of LIFO layer
liquidations decreased the cost of sales by $.6 million in 1993, and $.4
million in 1992 and 1991.
<PAGE>27
<TABLE>
<CAPTION>
FIXED ASSETS
- ------------
Net property and equipment at December 31, 1993, and 1992, is:
- -----------------------------------------------------------------------------
(Thousands of dollars) 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C>
Land $ 2,130 $ 728
Buildings 10,249 5,912
Equipment and computer software 49,771 42,068
Property under capital lease 568 568
Construction in progress 280 1,255
------- -------
62,998 50,531
Less accumulated depreciation (21,436) (16,923)
------ -------
Net property and equipment $41,562 $33,608
======= =======
</TABLE>
Depreciation expense for the years ended December 31, 1993, 1992, and 1991,
was $5.4 million, $4.3 million, and $4.0 million, respectively.
ACCRUED LIABILITIES
- -------------------
Included in accrued liabilities at December 31, 1993, and 1992, is accrued
compensation of approximately $4.2 million and $5.2 million respectively.
FOREIGN CURRENCY TRANSACTIONS
- ------------------------------
The Company has entered into forward exchange contracts to hedge foreign
currency transactions with its Canadian subsidiary. As of December 31, 1993,
the Company had approximately $3.4 million of forward exchange contracts
outstanding. Net transaction gains and losses are not material.
<PAGE>28
<TABLE>
<CAPTION>
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENTS
- ----------------------------------------------
The long-term debt of the Company at December 31, 1993, and 1992, is:
- -----------------------------------------------------------------------------
(Thousands of dollars) 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C>
Revolving Credit Agreements $60,107 $ 45,253
Other Debt 1,800 2,518
Less current portion (150) (218)
------- -------
Net long-term debt $61,757 $47,553
======= =======
</TABLE>
At December 31, 1993, the Company had unsecured revolving lines of credit of
$75 million. Under the terms of these agreements, which expire in 1996, the
Company may borrow U.S. dollars at various rates. In addition, the Company
can elect to convert up to $37.5 million of the line into term notes which can
extend into the year 2001. Principal amounts due on long-term debt, including
assumed conversion in 1995 of the revolving credit agreements to term notes,
in each of the five years beginning January 1, 1994, are $.1 million, $3.9
million, $32.1 million, $7.7 million and $7.6 million, respectively.
A principal payment of $1.1 million due in 1994 on other debt is expected to
be funded from the revolving credit facility and, accordingly, is classified
as long-term.
For the year ended December 31, 1993, the approximate weighted average
interest rate on borrowings made under the unsecured revolving lines was
7.88%, which approximates the year-end rate.
<PAGE>29
The Company has purchased interest rate collars on $55 million, of which $20
million expires on March 27, 1994, $5 million expires on May 3, 1994, and $30
million expires on March 1, 1996. The collars are based on the three-month
London Interbank Offered Rate ("LIBOR") and have a floor of 6.75% and a
ceiling of 9.5%. The cost of the collars is treated as a reduction of the
revolving credit debt and is being amortized as revolving credit interest
expense over the terms of the collars.
The Company's long-term debt agreement provides for, among other terms,
restrictive covenants with respect to working capital, tangible net worth, the
current ratio, and the debt-to-equity ratio, which may restrict the Company's
ability to declare or pay dividends. Under the most restrictive of these
terms, approximately $2 million of retained earnings at December 31, 1993, is
available to pay dividends.
INCOME TAXES
- ------------
During 1993, the Company adopted SFAS No. 109 "Accounting for Income Taxes."
The cumulative effect of the accounting change was not material.
The income (loss) before income taxes and cumulative effect of accounting
change is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(Thousands of dollars)
1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $7,447 $15,280 $12,368
Foreign (894) (192) 21
------- -------- --------
$6,553 $15,088 $12,389
======= ======== ========
<PAGE>30
The provision for income taxes on income before cumulative effect of accounting
change consists of:
- -------------------------------------------------------------------------------
(Thousands of dollars)
1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $2,320 $4,410 $3,404
State 200 772 835
------ ------ ------
2,520 5,182 4,239
------ ------ ------
Deferred:
Federal 286 351 332
State 7 125 75
Foreign (150)
------ ----- ------
143 476 407
------ ------ ------
Total tax provision $2,663 $5,658 $4,646
====== ====== ======
</TABLE>
The reconciliation of tax computed at the federal statutory tax rates of 35%
(1993) and 34% (1992 and 1991) of income before income taxes and cumulative
effect of accounting change to the actual income tax provision is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(Thousands of dollars)
1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory tax $2,293 $5,130 $4,212
State income taxes net
of federal tax benefit 137 592 600
Increase in statutory rate
on deferred tax items 164 0 0
Tax Benefit of foreign
net operating loss
not recognized 250
Other-net (181) (64) (166)
------ ------ ------
Total tax provision $2,663 $5,658 $4,646
====== ====== ======
</TABLE>
<PAGE>31
Deferred tax liabilities (assets) as of December 31, 1993 and 1992 are
comprised of the following:
- -----------------------------------------------------------------------------
(Thousands of dollars) 1993 1992
- -----------------------------------------------------------------------------
Depreciation $6,400 $6,539
Pension 1,918 884
----- -----
Deferred tax liabilities 8,318 7,423
----- -----
Postretirement benefits (809)
Other benefits (584) (485)
Restructuring charges (720)
Other-net (363) (578)
----- -----
Deferred tax assets (2,476) (1,063)
------ ------
Net deferred tax liability $5,842 $6,360
====== ======
Included in other current assets at December 31, 1993 are refundable income
taxes of approximately $2.1 Million and $.6 million of net current deferred
tax assets. The Company has Canadian tax loss carryforwards of approximately
$.9 million which expire at various dates through 2000.
SHAREHOLDER RIGHTS AGREEMENT
- ----------------------------
On May 20, 1988, the Company established a Shareholder Rights Agreement. The
Agreement is designed to deter coercive or unfair takeover tactics that could
deprive shareholders of an opportunity to realize the full value of their
shares.
Under the Agreement, the Company has distributed a dividend of one Right for
each outstanding share of the Company's stock. When exercisable, each Right
will entitle its holder to buy two shares of the Company's common stock at
$45.00 per share. The Rights will become exercisable if a purchaser acquires
or makes an offer to acquire 20 percent of the Company's common stock. In the
event that a purchaser acquires 20 percent of the common stock, each Right
shall entitle the holder, other than the acquirer, to purchase, at the Right's
then-current full exercise price, shares of the Company's common stock having
a market value of twice the then-current full exercise price of the Right. In
the event that, under certain circumstances, the Company is acquired in a
merger or transfers 50 percent or more of its assets or earnings to any one
entity, each Right entitles the holder to purchase common stock of the
surviving or purchasing company having a market value of twice the full
exercise price of the Right. The Rights, which expire on May 31, 1998, may be
redeemed by the Company at a price of $.005 per Right.
<PAGE>32
STOCK AND INCENTIVE PROGRAMS
- ----------------------------
Under the stock option and restricted stock plans, in addition to outstanding
options, 235,411 shares were reserved for issuance at December 31, 1993.
Restricted Stock Awards
- -----------------------
The Company's restricted stock award plan, provides for grants of common stock
to certain directors, officers, and managers. The vesting periods range from
one to eight years. The fair market value of the stock at the date of grant
establishes the compensation amount, which is amortized to operations over the
vesting period. During the years ended December 31, 1993, 1992 and 1991, the
Company granted 45,219, 7,580 and 15,116 shares, respectively, at fair market
values of approximately $.7 million, $.1 million and $.1 million,
respectively.
Stock Options
- -------------
Under the stock option plan, options, which vest over 3 to 10 years, have been
granted to certain officers and managers to purchase common stock of the
Company at its fair market value at date of grant. Changes in options
outstanding were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Shares Average Price
- ------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at December 31, 1990 424,572 $7.40
Exercised (1,066) 5.11
Granted 10,000 7.99
Cancelled (4,196) 7.89
-------
Outstanding at December 31, 1991 429,310 7.41
Exercised (44,301) 5.62
Cancelled (12,196) 7.82
------
Outstanding at December 31, 1992 372,813 7.61
Exercised (14,469) 6.07
Granted 59,921 13.88
Cancelled (12,446) 6.90
-------- -----
Outstanding at December 31, 1993 405,819 $8.61
======== ======
<PAGE>33
</TABLE>
At December 31, 1993, there were 98,871 options exercisable at an average
price of $7.50.
Savings Investment Plan
- -----------------------
The Company has a savings investment plan whereby it matches 50% of the
employee's contribution up to 3% of the employee's pay. For employee
contributions between 3% and 7.5% of their pay, the Company will match 50% of
the contribution within prescribed limits based on the Company's profitability
for the year. All Company contributions are used to buy shares of the
Company's stock. Expenses under this plan for the years ended December 31,
1993, 1992, and 1991, were $.5 million, $.6 million and $.4 million,
respectively. At December 31, 1993, there were approximately 538,000 shares
available for issuance under this Plan.
Employee Stock Ownership Plan
- -----------------------------
In September, 1990, the Company established an employee stock ownership plan
(ESOP) by, in effect, contributing 400,000 shares of treasury stock ($2.9
million fair value) to the ESOP. All full-time and part-time employees,
except certain union employees, are eligible to participate in the plan.
The ESOP shares will be allocated equally to individual participants' accounts
over a period up to ten years. Vesting occurs equally over an employment
period of five years at which time the employee is 100% vested in the plan.
Expenses are recognized based on shares to be allocated in the subsequent year
and are reduced for dividends paid, which approximated $.1 million in 1993,
and $.2 million in 1992 and 1991. The net expense for 1993, 1992, and 1991
was approximately $.1 million, $.3 million and $.2 million, respectively.
<PAGE>34
POSTRETIREMENT BENEFITS
- ------------------------
Pension Plans:
The Company has two defined benefit pension plans covering substantially all
of its domestic employees, except for employees covered by independently
operated collective bargaining plans. Pension benefits are based on years of
credited service and the highest five consecutive years' average compensation.
Contributions to the Company plans are based on funding standards established
by the Employee Retirement Income Security Act of 1974 (ERISA).
The total VWR Corporation plans' funding status and the amounts recognized in
the Company's Consolidated Balance Sheets at December 31, 1993, and 1992, are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(Thousands of dollars) 1993 1992
- -------------------------------------------------------------------------------
Actuarial present value of plan benefit obligations
<S> <C> <C>
Vested benefit obligation $31,240 $25,204
Nonvested benefit obligation 1,116 790
------- -------
Accumulated benefit obligation $32,356 $25,994
======= =======
Projected benefit obligation $37,848 $30,669
Plan assets at fair value (33,610) (28,870)
------- -------
Projected benefit obligation in
excess of plan assets 4,238 1,799
Prior service costs not yet recognized
in net periodic pension cost 336 397
Unrecognized net transition obligation (391) (450)
Unrecognized actuarial loss (8,222) (3,896)
----- -----
Prepaid pension expense included in
consolidated balance sheets $(4,039) $(2,150)
====== =====
</TABLE>
The assets of the Company plans consist predominantly of undivided interests
in several funds structured to duplicate the performance of various stock and
bond indexes.
<PAGE>35
Net pension expense under the Company plans includes the following components:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(Thousands of dollars) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service Cost (benefits earned
during the year) $1,252 $1,184 $ 957
Interest cost on projected
benefit obligation 2,758 2,503 2,281
Actual return on plan assets (3,412) (1,366) (5,169)
Net amortization and deferral 682 (1,370) 3,123
----- ----- -----
Net pension expense $1,280 $ 951 $1,192
===== ===== =====
The assumptions used were:
Discount rate 7.75% 9% 9%
Rate of increase in
compensation levels 4% 5% 5%
Expected long-term rate of
return on plan assets 10% 10% 10%
</TABLE>
The Company maintains a supplemental pension plan for certain senior officers.
Expenses incurred under this plan in 1993 were approximately $.3 million.
There were no expenses incurred under this plan for 1992 and 1991.
Certain employees are covered under union-sponsored, collectively bargained
plans. Expenses under these plans for the years ended December 31, 1993, 1992
and 1991, were $.2 million, $.2 million and $.1 million, respectively, as
determined in accordance with negotiated labor contracts.
Retiree Medical Benefits Program
- --------------------------------
The Company provides certain medical benefits for retired employees. In 1993,
the Company adopted SFAS No. 106 "Accounting for Postretirement Benefits Other
Than Pensions." The Company elected to immediately recognize the calculated
liability resulting in a one-time non-cash charge to income of approximately
$1.4 million, net of a deferred tax benefit of approximately $.9 million.
Employees retired as of December 31, 1992 and active employees who reached age
55 by December 31, 1992 are eligible to participate in the company's retiree
<PAGE>36
health plan (the "plan"). There are also certain provisions for participation
by spouses. The plan is contributory, with retiree contributions based on
years of service and includes other co-payment and co-insurance provisions.
The Company does not fund the plan. The liability of the plan at December 31,
1993 is as follows:
(Thousands of dollars)
Accumulated postretirement benefit obligation:
Retirees $1,604
Eligible active participants 183
Other active participants 21
Unrecognized net gain 266
-----
Accrued postretirement benefit obligation $2,074
=====
The net periodic postretirement benefit cost for 1993 includes the following
components:
Service cost $ 7
Interest cost 174
-----
$181
=====
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation is 10% through 1996 and declines 1% per year
to a level of 5.4% in 2001 and thereafter. The effect of a 1% annual increase
in the assumed cost trend rate would increase the accumulated postretirement
benefit obligation by approximately 8%; the annual service and interest cost
components in the aggregate would not be materially affected. A 7.75%
discount rate was used in determining the accumulated postretirement benefit
obligation.
Before the adoption of SFAS No. 106, the retiree health care expense was
recorded as claims were incurred. The expense for 1992 and 1991 was
approximately $.2 million.
LEASES
- ------
The Company leases office and warehouse space, computer equipment, and
automobiles under operating leases with terms ranging up to 15 years, subject
to renewal options.
Rental expense for continuing operations for the years ended December 31,
1993, 1992, and 1991, was approximately $5.2 million, $4.8 million, and $4.4
million, respectively.
<PAGE>37
Future minimum lease payments as of December 31, 1993, under noncancelable
operating leases, having initial lease terms of more than one year are:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Years Ending December 31
(Thousands of dollars)
- -------------------------------------------------------------------------------
<S> <C>
1994 $ 4,398
1995 3,924
1996 3,139
1997 2,738
1998 1,768
Thereafter 5,200
------
Total minimum payments $21,167
======
</TABLE>
CONTINGENCIES AND COMMITMENTS
- ------------------------------
The Company is involved in various environmental, contractual, warranty, and
public liability cases and claims, which are considered routine to the
Company's business. In the opinion of management, the potential financial
impact of these matters is not material to the consolidated financial
statements.
As a result of the March, 1990 spin-off of Momentum Corporation, VWR is
obligated to make available to the spun-off company, through February 1995, an
unsecured subordinated revolving line of credit of $5 million. There have
been no loans to Momentum Corporation under this facility.
ACQUISITION
- ----------
Effective October 5, 1992, the Company, through its wholly owned Canadian
subsidiary, acquired certain assets related to the laboratory supply business
of Johns Scientific, Inc. of Toronto, Canada for approximately $7.4 million.
This acquisition was accounted for under the purchase method of accounting
and was funded through the Company's revolving credit line, and a $1.6
million, 8% note payable expected to be refinanced through the revolving line
of credit. The acquisition is not material in relation to the Company's
consolidated financial statements. The $2.6 million excess purchase price
over net assets acquired is being amortized over a 15 year period.
<PAGE>38
RESTRUCTURING AND OTHER CHARGES
- -------------------------------
In the fourth quarter of 1993, the Company made the decision to refocus
certain information systems efforts into customer service systems and to take
actions that would reduce operating expenses. As a result of this effort, the
Company recorded a $3.3 million charge which included non-cash charges of $1.3
million (primarily for software development costs that do not have continuing
value) and $2 million related to the consolidation of functions and facilities
which consists primarily of severance and personnel-related costs. As of
December 31, 1993, approximately $2 million of these costs are accrued on the
Company's consolidated balance sheet as a current liability.
<TABLE>
QUARTERLY FINANCIAL DATA (Unaudited)
- -------------------------------------------------------------------------------
<CAPTION<
(Thousands of dollars, Gross Net Earnings
except per share data) Sales Margin Income (Loss) Per
(Loss)* Share*
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended - December 31, 1993
First Quarter $125,485 $ 28,554 $ (95) $ (.01)
Second Quarter 127,101 28,624 1,420 .13
Third Quarter 135,746 31,862 2,920 .26
Fourth Quarter 120,903 27,234 (1,755) (.16)
-------- -------- ------ ------
Total $509,235 $116,274 $2,490 $ .22
======== ======== ====== ======
Year Ended - December 31, 1992
First Quarter $116,649 $ 26,657 $1,533 $ .14
Second Quarter 119,545 27,592 2,090 .19
Third Quarter 131,602 30,556 3,541 .32
Fourth Quarter 122,372 29,626 2,266 .20
-------- -------- ------ ------
Total $490,168 $114,431 $9,430 $ .85
======== ======== ====== ======
*1993 amounts are after the cumulative effect of a first quarter accounting
change for postretirement benefits. Fourth quarter 1993 amounts have been
reduced by the effects of restructuring and other charges.
</TABLE>
<PAGE>39
REPORT OF INDEPENDENT AUDITORS
- ------------------------------
To The Shareholders of VWR Corporation:
We have audited the consolidated balance sheets of VWR Corporation as of
December 31, 1993 and 1992, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years
in the period ended December 31, 1993. Our audits also include the financial
statement schedules listed in the index at Item 14(a). These financial
statements and schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of VWR Corporation
at December 31, 1993 and 1992, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting principles. Also,
in our opinion, the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
As discussed in the notes to the consolidated financial statements
(postretirement benefits), in 1993, the Company changed its method of
accounting for postretirement benefits other than pensions.
BY (SIGNATURE)
ERNST & YOUNG
Philadelphia, Pennsylvania
February 11, 1994
<PAGE>40
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
- ------ --------------------------------------------------------------
None
PART III.
- --------
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- ---------------------------------------------------
The information required by this item is incorporated by reference from the
section captioned "Election of Directors" and the last paragraph of the
section captioned "Ownership of VWR Corporation Stock" contained in the
Company's definitive Proxy Statement, which the Company will have filed with
the Commission pursuant to Regulation 14A within 120 days after the close of
the fiscal year.
Information regarding executive officers of the Company is included in Part I
of this Form 10-K.
ITEM 11. - EXECUTIVE COMPENSATION
- ------- ----------------------
The information required by this item is incorporated by reference from the
Sections "Fees to Directors and Committees of the Board" and "Executive
Compensation" contained in the Company's definitive Proxy Statement which the
Company will have filed with the Commission pursuant to regulation 14A within
120 days after the close of the fiscal year.
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ---------- ----------------------------------------------------------
The information required by this item is incorporated by reference from the
section captioned "Ownership of VWR Corporation Stock" contained in the
Company's definitive Proxy Statement, which the Company will have filed with
the Commission pursuant to Regulation 14A within 120 days after the close of
the fiscal year.
<PAGE>41
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
None
PART IV.
- -------
ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------- ------------------------------------------------------------
(a)(1) Financial Statements
The following financial statements have been included as part of this report:
Form 10-K
Page
---------
Consolidated Statements of Operations 17
Consolidated Balance Sheets 18
Consolidated Statements of Cash Flows 20
Consolidated Statements of Shareholders' Equity 22
Notes to Consolidated Financial Statements 25
Report of Independent Auditors 39
(2) Financial Statement Schedules
(a) The following financial statement schedules are submitted
herewith:
-Schedule V - Property, Plant, and Equipment
-Schedule VI - Accumulated Depreciation, Depletion, and
Amortization of Property, Plant, and Equipment
-Schedule VIII - Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and have therefore been
omitted.
(b) Reports on Form 8-K
None
<PAGE>42
(3) Exhibits
Exhibit Number and Description
------------------------------
2 Agreement and Plan of Distribution between VWR Corporation and Momentum
Distribution, Inc.(1)
3 Restated Certificate of Incorporation dated July 9, 1987, as amended by
Certificate of Ownership and Merger dated March 1, 1990(1)
Bylaws as amended and restated as of February 27, 1992(1)
4 Credit Agreement by and among VWR Corporation and its Subsidiaries and
CoreStates Bank, N.A. for itself and as agent, Seattle-First National Bank and
PNC Bank, National Association dated December 20, 1993.
10 Change of Control Agreements between VWR Corporation and Jerrold B.
Harris, Gerard W. Cooney, Walter S. Sobon, and Richard H. Serafin(1)(3)
Change of Control Agreements between VWR Corporation and Joseph A.
Panozzo, Paul J. Nowak and Richard W. Amstutz(2)(3)
VWR Corporation Executive Bonus Plan dated January 1, 1990(1)
VWR Corporation Supplemental Benefits Plan dated November 1, 1990(1)
11 Computation of Per Share Earnings
21 Parent and Subsidiaries of the Company
23 Consent of Independent Auditors
24 Power of Attorney
(1) Filed as an Exhibit to the Company's Form 10-K Report for the year ended
December 31, 1991 and incorporated herein by reference.
(2) Filed as an Exhibit to the Company's Form 10-K Report for the year ended
December 31, 1992 and incorporated herein by reference.
(3) May be deemed a management contract or compensatory plan or arrangement.
<PAGE>43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
VWR CORPORATION
Date March 29, 1994 BY (SIGNATURE)
Jerrold B. Harris,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on the behalf of the
registrant in the capacities and on the dates indicated.
Date March 29, 1994 BY (SIGNATURE)
Walter S. Sobon,
Vice President Finance
(Principal Financial Officer)
DIRECTORS
James W. Bernard )
Richard E. Engebrecht )
Jerrold B. Harris )
Curtis P. Lindley ) BY (SIGNATURE)
Edward A. McGrath, Jr.)
Donald P. Nielsen )
N. Stewart Rogers ) Jerrold B. Harris
Robert S. Rogers ) Attorney-in-fact
James H. Wiborg ) Power of Attorney
dated February 28, 1994
Date: March 29, 1994
<PAGE>44
VWR CORPORATION
--------------------------------
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
-------------------------------------------
(thousands of dollars)
<TABLE>
<CAPTION>
Balance at Additions Other Balance at
Classifi- Beginning at Charges End of
cation of Year Cost Retirements Add(Deduct) Year
- ----------- --------- --------- ----------- ----- ----------
Year Ended December 31, 1993
<S> <C> <C> <C> <C> <C>
Land $ 728 $ 1,402 $2,130
Buildings 5,912 4,337 10,249
Equipment and
Computer
Software 42,068 5,396 $(1,004) $3,311 (5) 49,771
Property under
capital lease 568 568
Construction
in progress 1,255 2,336 (3,311) (1) 280
----- ------ ------ ------ ------
$50,531 $13,471 $(1,004) $ $62,998
====== ====== ====== ====== ======
- -------------------------------------------------------------------------------
Year Ended December 31, 1992
<S> <C> <C> <C> <C> <C>
Land $ 728 $ 728
Buildings 5,912 5,912
Equipment and
Computer
Software 37,283 $3,237(2) $ (516) $2,064 (3) 42,068
Property under
capital lease 568 568
Construction in
progress 1,091 2,228 (2,064) (1) 1,255
------ ------ ------ ------- -------
$45,582 $5,465 $(516) $ $50,531
====== ====== ====== ======= =======
- ------------------------------------------------------------------------------
<PAGE>45
Balance at Additions Other Balance at
Classifi- Beginning at Charges End of
cation of Year Cost Retirements Add(Deduct) Year
- ----------- --------- --------- ----------- ----- ----------
Year Ended December 31, 1991
Land $ 955 $ (77) $ (150) (4) $ 728
Buildings 6,232 (180) (140) (4) 5,912
Equipment and
Computer
Software 34,054 $2,262 (2,028) 2,995 (2) 37,283
Property
under
capital
lease 568 568
Construction
in progress 2,429 1,657 (2,995) (1) 1,091
------ ------ ------ ------ ------
$44,238 $3,919 $(2,285) $(290) $45,582
====== ====== ====== ====== ======
- -------------------------------------------------------------------------------
</TABLE>
(1) Construction in progress which was completed and transferred to
Equipment & Computer Software.
(2) Principally, new Distribution Systems and Software.
(3) Principally furniture, equipment and leasehold improvements for
headquarter's facility and financial software.
(4) Reallocation of purchase price of Canadian subsidiary acquired in 1990.
(5) Principally furniture, equipment and leasehold improvements for new
warehouse facility in Buffalo Grove, Illinois and distribution systems and
software.
(6) The annual provisions for depreciation have been computed principally in
accordance with the following lives:
- Buildings 40 years
- Equipment 3 - 10 years
- Computer Software 7 years
<PAGE>46
<TABLE>
<CAPTION>
VWR CORPORATION
--------------------------------
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT, AND EQUIPMENT
------------------------------
(thousands of dollars)
Balance at Additions Balance at
Beginning Charged to End of
Description of Year Expenses Retirements Other Year
- ----------- --------- --------- ----------- ----- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Buildings $ 1,879 $ 211 $ 2,090
Equipment and
Computer
Software 14,855 5,181 $ (936) 19,100
Property under
capital lease 189 57 246
----- ------ ------ ------
$16,923 $ 5,449 $ (936) $21,436
====== ====== ====== ======
- -------------------------------------------------------------------------------
Year Ended December 31, 1992
Buildings $ 1,719 $ 160 $ 1,879
Equipment and
Computer
Software 11,068 4,124 $ (337) 14,855
Property under
capital lease 133 56 189
------ ------ ----- ------
$12,920 $ 4,340 $(337) $16,923
====== ====== ===== ======
- -------------------------------------------------------------------------------
Year Ended December 31, 1991
Buildings $ 1,585 $ 151 $ (17) $ 1,719
Equipment and
Computer
Software 9,257 3,756 (1,945) 11,068
Property under
capital lease 76 57 133
------ ------ ------ ------
$10,918 $3,964 $(1,962) $12,920
====== ====== ====== ======
</TABLE>
<PAGE>47
<TABLE>
<CAPTION>
VWR CORPORATION
--------------------------------
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
-------------------------------------------------
(Thousands of dollars)
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Deductions (1) Other of Year
- ----------- --------- ---------- -------------- ----- ---------
Allowances for losses
(deducted from trade
receivables) for:
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1993 $222 $377 $340 $259
=== === === ===
Year Ended
December 31, 1992 $182 $482 $442 $222
=== === === ===
Year Ended
December 31, 1991 $497 $297 $612 $182
=== === === ===
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
<PAGE>48
Exhibit Index
- -------------
Exhibit Number and Description Page
- ------------------------------ ----
2 Agreement and Plan of Distribution between VWR Corporation
and Momentum Distribution, Inc. *
3 Restated Certificate of Incorporation dated July 9, 1987,
as amended by Certificate of Ownership and Merger dated
March 1, 1990 *
Bylaws as amended and restated as of February 27, 1992 *
4 Credit Agreement by and among VWR Corporation and its 49
Subsidiaries and CoreStates Bank, N.A. for itself and
as agent, Seattle-First National Bank and PNC Bank,
National Association dated December 20, 1993.
10 Change of Control agreements between VWR Corporation and
Jerrold B. Harris, Gerard W. Cooney, Walter S. Sobon, and
Richard H. Serafin *
Change of Control agreements between VWR Corporation and Joseph A.
Panozzo, Paul J. Nowak, and Richard W. Amstutz **
VWR Corporation Executive Bonus Plan dated January 1, 1990 *
VWR Corporation Supplemental Benefits Plan dated November 1,
1990 *
11 Computation of Per Share Earnings 98
21 Parent and Subsidiaries of the Company 100
23 Consent of Independent Auditors 101
24 Power of Attorney 102
* Filed as an Exhibit to the Company's Form 10-K Report for the year ended
December 31, 1991, and incorporated herein by reference
** Filed as an Exhibit to the Company's Form 10-K Report for the year ended
December 31, 1992.
<PAGE>49
Exhibit 4
CREDIT AGREEMENT
AMONG
VWR CORPORATION,
VWR SCIENTIFIC OF CANADA LTD.,
SCIENTIFIC HOLDINGS CORP.,
and
VWR SCIENTIFIC INTERNATIONAL CORPORATION
("Borrowers")
AND
CORESTATES BANK, N.A.,
for itself and as Agent,
SEATTLE-FIRST NATIONAL BANK,
and
PNC BANK, NATIONAL ASSOCIATION
("BANKS")
December 20, 1993
<PAGE>50
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS
1.1. Definitions
1.2. Accounting Terms
SECTION 2 - REVOLVING CREDIT AND TERM LOAN(S)
2.1. The Facilities
2.2. Promissory Notes
2.3. Banks' Participations
2.4. Use of Proceeds
2.5. Repayment
2.6. Interest
2.7. Pro Rata Advances
2.8. Reduction and Termination of Commitment
2.9. Prepayment; Repayment
2.10. Funding Costs; Loss of Earnings
2.11. Payments
2.12. Commitment Fee
2.13. Agent Fee
2.14. Regulatory Changes in Capital Requirements
SECTION 3 - REPRESENTATIONS AND WARRANTIES
3.1. Organization and Good Standing
3.2. Power and Authority; Validity of Agreement
3.3. No Violation of Laws or Agreements
3.4. Material Contracts
3.5. Compliance
3.6. Litigation
3.7. Title to Assets
3.8. Capital Stock
3.9. Accuracy of Information
3.10. Taxes and Assessments
3.11. Indebtedness
3.12. Investments
3.13. ERISA
3.14. Fees and Commissions
3.15. No Extension of Credit for Securities
3.16. Hazardous Wastes, Substances and Petroleum
Products
3.17. Solvency
3.18. Senior Debt Status
3.19. No Burdensome Agreements
3.20. Full Disclosure
SECTION 4 - CONDITIONS
4.1. First Advance
4.2. Subsequent Advances
4.3. Additional Condition to Banks' Obligations
4.4. Acceptance of Conversion Option
<PAGE>51
SECTION 5 - AFFIRMATIVE COVENANTS
5.1. Existence and Good Standing
5.2. Quarterly Financial Statements
5.3. Annual Financial Statements
5.4. Report of Money Market Advances
5.5. Books and Records
5.6. Insurance
5.7. Litigation; Event of Default
5.8. Taxes
5.9. Costs and Expenses
5.10. Compliance
5.11. ERISA
5.12. Consolidated Current Ratio
5.13. Minimum Consolidated Working Capital
5.14. Minimum Consolidated Tangible Net Worth
5.15. Consolidated Total Liabilities to Tangible Net
Worth Ratio
5.16. Minimum Consolidated Cash Flow Ratio
5.17. Consolidated Fixed Charge Coverage Ratio
5.18. Subsequent Credit Terms
5.19. Deposit Accounts
5.20. Management Changes
5.21. Other Documents/Information
5.22. Successor Agent
SECTION 6 - NEGATIVE COVENANTS
6.1. Guaranties
6.2. Loans
6.3. Liens and Encumbrances
6.4. Transfer of Assets; Liquidation
6.5. Acquisitions and Investments
6.6. Use of Proceeds
SECTION 7 - ADDITIONAL COLLATERAL AND RIGHT OF SET OFF
7.1. Additional Collateral
7.2. Right of Set-off
SECTION 8 - DEFAULT
8.1. Events of Default
8.2. Remedies
SECTION 9 - THE BANKS
9.1. Application of Payments
9.2. Setoff
9.3. Modifications and Waivers
9.4. Obligations Several
9.5. Banks' Representations
9.6. Investigation
9.7. Powers of Agent
9.8. General Duties of Agent, Immunity and Indemnity
<PAGE>52
9.9. No Responsibility for Representations or Validity, etc
9.10. Action on Instruction of Banks; Right to Indemnity
9.11. Employment of Agents
9.12. Reliance on Documents
9.13. Agent's Rights as a Bank
9.14. Expenses
9.15. Resignation of Agent
9.16. Successor Agent
9.17. Collateral Security
9.18. Enforcement by Agent
SECTION 10 - MISCELLANEOUS
10.1. Indemnification and Release Provisions
10.2. Participations and Assignments
10.3. Binding and Governing Law
10.4. Survival
10.5. No Waiver; Delay
10.6. Modification
10.7. Headings
10.8. Notices
10.9. Payment on Non-Business Days
10.10. Time of Day
10.11. Severability
10.12. Counterparts
10.13. Withholding Taxes Clause
10.14. Currency Conversion Clause
10.15. Submission to Jurisdiction
LIST OF EXHIBITS
Exhibit A: Advance Request Form
Exhibit B: Conversion Request Form
Exhibit C: Form of Revolving Credit Note
Exhibit D: Form of Term Note
Exhibit E: Funding Costs and Loss of Earnings Calculation
Exhibit F: Disclosure Pursuant to Representations and Warranties
Exhibit G-1: Form of Opinion of United States Counsel
Exhibit G-2: Form of Opinion of Canada Counsel
Exhibit G-3: Form of Opinion of Barbados Counsel
<PAGE>53
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made this 20 day of December, 1993, by and among VWR
CORPORATION, a Delaware corporation with offices at 1310 Goshen Parkway, West
Chester, PA 19380 ("VWR"), VWR SCIENTIFIC OF CANADA, LTD., an Ontario
corporation with offices at 77 Enterprise North, London, Ontario N6N 1A5 ("VWR
Canada"), SCIENTIFIC HOLDINGS CORP., a Delaware corporation with offices at
300 Delaware Avenue, Suite 519, Wilmington, DE 19801 ("Scientific Holdings")
and VWR SCIENTIFIC INTERNATIONAL CORPORATION, a Barbados corporation with
offices at Ernst & Young Building, Bay Street, St. Michael, Barbados ("VWR
International") (VWR, VWR Canada, Scientific Holdings, and VWR International
each individually a "Borrower," and individually and collectively,
"Borrowers"); CORESTATES BANK, N.A., a national banking association with
offices at Broad and Chestnut Streets, Philadelphia, PA 19101-7618
("CoreStates"), SEATTLE-FIRST NATIONAL BANK, a national banking association
with offices at 701 Fifth Ave., 12th Floor, Seattle, WA 98104 ("Seafirst"),
and PNC BANK, NATIONAL ASSOCIATION, a national banking association with
offices at Broad and Chestnut Streets, Philadelphia, PA 19110 ("PNC")
(CoreStates, Seafirst and PNC each individually a "Bank," and individually and
collectively, "Banks"); and CoreStates as Agent for the Banks ("Agent").
W I T N E S S E T H:
WHEREAS, Borrowers and CoreStates are parties to that certain Loan Agreement
dated March 1, 1990, as amended (as amended, the "CoreStates Loan Agreement")
pursuant to which CoreStates agreed to lend to Borrowers an aggregate amount
not to exceed Twenty-Five Million Dollars ($25,000,000) outstanding at any
time; and
WHEREAS, Borrowers and PNC are parties to that certain Loan Agreement dated
June 1, 1993 (the "PNC Loan Agreement") pursuant to which PNC agreed to lend
to Borrowers an aggregate amount not to exceed Twenty-Five Million Dollars
($25,000,000) outstanding at any time; and
WHEREAS, VWR and Seafirst are parties to that certain Loan Agreement dated as
of September 12, 1991, as amended (as amended, the "Seafirst Loan Agreement")
pursuant to which Seafirst agreed to lend to VWR an aggregate amount not to
exceed Twenty-Five Million Dollars ($25,000,000) outstanding at any time,
which is guaranteed by VWR Canada, Scientific Holdings and VWR International;
and
WHEREAS, the CoreStates Loan Agreement, the PNC Loan Agreement and the
Seafirst Loan Agreement (collectively the "Existing Facilities") are being
terminated and consolidated into a single facility under this Agreement,
pursuant to which Banks agree, subject to the terms and conditions hereof, to
lend to Borrowers up to Seventy-Five Million Dollars ($75,000,000) to
refinance the Existing Facilities and for working capital and general
corporate purposes.
NOW, THEREFORE, in consideration of the promises and the agreements
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
<PAGE>54
SECTION 1
DEFINITIONS
1.1. Definitions. When used in this Agreement, the following terms shall
have the respective meanings set forth below. Certain terms relating to
interest rates are defined in Paragraph 2.6 and shall have the respective
meanings set forth therein.
"Advance" means a borrowing under the Commitment pursuant to Money Market
Advance or a Pro Rata Advance.
"Advance Request Form" means the certificate in the form attached hereto as
Exhibit A to be delivered by Borrowers to Agent as a condition of each Pro
Rata Advance.
"Affiliate" of any Person means: (i) any Person who directly or indirectly
owns, controls or holds five percent (5%) or more of the outstanding
beneficial interest in such Person; (ii) any entity of which five percent (5%)
or more of the outstanding beneficial interest is directly or indirectly
owned, controlled, or held by such Person; (iii) any entity which directly or
indirectly is under common control with such Person; or (iv) any officer,
director, partner or employee of such Person or of any entity that is an
Affiliate of such Person.
"Agent" means CoreStates in its capacity as agent for the Banks hereunder, and
its successors and assigns in such capacity.
"Agreement" means this Credit Agreement and all exhibits and schedules hereto,
as each may be amended, modified or supplemented from time to time.
"Bank" means individually, and "Banks" means individually and collectively,
CoreStates, Seafirst and PNC, and their respective successors and assigns.
"Borrower" means individually, and "Borrowers" means individually and
collectively, VWR, VWR Canada, Scientific Holdings and VWR International,
together with such additional entities as may become parties hereto pursuant
to Paragraph 6.5(iv) hereof.
"Business Day" means any day not a Saturday, Sunday or public holiday under
the laws of the Commonwealth of Pennsylvania.
"Capital Leases" means capital leases and subleases, as defined in Statement
13 of the Financial Accounting Standards Board dated November 1976, as amended
and updated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and all rules and regulations in effect from time to time thereunder.
"Commitment" means, as of any date of determination, the sum of the Revolving
Credit Commitment and the Term Commitment as from time to time in effect.
"Consolidated Cash Flow Ratio" means for VWR and its Consolidated
Subsidiaries, as of the date of determination, with respect to the four most
recently-ended fiscal quarters, the ratio of: (a) earnings before interest
<PAGE>55
and taxes (excluding for the first quarter of 1993 any non-cash expense
adjustment made in such quarter as a result of Standard 106 of the Financial
Accounting Standards Board) plus depreciation and amortization, to (b)
interest expense, in each case as defined in accordance with GAAP.
"Consolidated Current Ratio" means for VWR and its Consolidated Subsidiaries,
as of the date of determination, the ratio of Current Assets to Current
Liabilities.
"Consolidated Fixed Charge Coverage Ratio" means for VWR and its Consolidated
Subsidiaries, as of the date of determination, for any period, the ratio of:
(a) the sum of earnings before interest expense and taxes (excluding for the
first quarter of 1993 any non-cash expense adjustment made in such quarter as
a result of Standard 106 of the Financial Accounting Standards Board) plus
depreciation and amortization, less capital expenditures, dividends and tax
expense for such period, to (b) the current portion of long term debt plus
interest expense, in each case as defined in accordance with GAAP.
"Consolidated Subsidiary" means individually and "Consolidated Subsidiaries"
means individually and collectively, all Subsidiaries whether now existing or
hereafter created or acquired whose financial results or position are
consolidated with VWR in its regular financial statements or for federal
income tax purposes.
"Consolidated Tangible Net Worth" means, as of the date of determination,
Tangible Net Worth of VWR and its Consolidated Subsidiaries.
"Consolidated Total Liabilities" means, as of the date of determination, Total
Liabilities for VWR and its Consolidated Subsidiaries.
"Consolidated Working Capital" means, as of the date of determination, Current
Assets minus Current Liabilities.
"Conversion Option" shall have the meaning set forth in Paragraph 2.1(b)(i)
hereof.
"Conversion Request Form" means the certificate in the form attached hereto as
Exhibit B to be delivered by Borrowers to Agent as a condition to each
exercise of the Conversion Option pursuant to Paragraph 2.1(b) hereof.
"CoreStates" means CoreStates Bank, N.A., a national banking association.
"Current Assets" means all assets of VWR and its Consolidated Subsidiaries
which should be properly classified as current assets in accordance with GAAP;
provided, that short term investments shall be valued at cost or market,
whichever is lower.
"Current Liabilities" means all indebtedness of VWR and its Consolidated
Subsidiaries maturing on demand or within a period of one (1) year from the
date of determination and which should be properly classified as current
liabilities in accordance with GAAP.
"Default" means an event, condition or circumstance the occurrence of which,
with the giving of notice or the passage of time or both, would constitute an
Event of Default.
<PAGE>56
"EPA" means the United States Environmental Protection Agency or any successor
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and all rules and regulations in effect from time to time
thereunder.
"ERISA Affiliate" means any person that is a member of any group or
organization within the meaning of Code Sections 414(b), (c), (m) or (o) of
which a Borrower is a member.
"ESOP" means an employee stock ownership plan of VWR which satisfies Section
4975(e)(7) of the Code, or any subsequent provision(s) of the Code amendatory
thereof, supplemental thereto, or substituted therefor.
"Event of Default" means an event described in Paragraph 8.1 hereof.
"Existing Facilities" means the existing credit facilities with CoreStates,
Seafirst and PNC pursuant to the CoreStates Loan Agreement, the Seafirst Loan
Agreement and the PNC Loan Agreement, respectively.
"GAAP" means generally accepted accounting principles applied on a consistent
basis, set forth in the Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or in such other statements by such
other entity as Agent may reasonably approve, which are applicable in the
circumstances as of the date in question; and the requisite that such
principles be applied on a consistent basis shall mean that the accounting
principles observed in a current period are comparable in all material
respects to those applied in a preceding period.
"Loan" means the outstanding principal balance of indebtedness advanced under
the Commitment, being the sum of the Revolving Credit Loan and the Term
Loan(s), together with all fees, premiums and expenses hereunder.
"Material Adverse Effect" means either singly or in the aggregate, a material
adverse effect on the business, financial condition or prospects of VWR and
its Consolidated Subsidiaries taken as a whole as a result of any condition,
circumstance or contingency.
"Maximum Principal Amount" means the maximum principal amount of the Revolving
Credit Commitment which each Bank has agreed to lend as set forth in Paragraph
2.3 hereof, provided that such Maximum Principal Amount shall be reduced
proportionately in the event of any reduction of the Revolving Credit
Commitment.
"Money Market Advance" means an Advance made by a Bank individually under the
Revolving Credit Commitment pursuant to Paragraph 2.6(b)(iii) hereof.
"Note" means individually, and "Notes" means individually and collectively,
the Revolving Credit Notes in the form of Exhibit C attached hereto to be
delivered by Borrowers to Banks pursuant to Paragraph 4.1(a) hereof, and the
Term Notes in the form of Exhibit D attached hereto delivered by Borrowers to
Banks from time to time pursuant to Paragraph 4.4(a) hereof, as each such Note
may be amended, modified, extended or restated from time to time.
<PAGE>57
"Participation Percentage" shall mean, as to each Bank, its percentage of the
aggregate Commitment, as set forth in Paragraph 2.3 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA, or any successor thereto.
"Person" means any individual, corporation, partnership or other entity.
"PNC" means PNC Bank, National Association, a national banking association.
"Prohibited Transaction" means any prohibited transaction as defined in
Section 4975 of the Code or Section 406 of ERISA for which neither an
individual nor a class exemption has been issued by the United States
Department of Labor.
"Pro Rata Advance" means an Advance in which Banks participate according to
their respective Participation Percentages, made in accordance with Paragraph
2.7 hereof.
"Reportable Event" means a reportable event described in Section 4043 of
ERISA.
"Required Banks" means those Banks (which may include Agent) holding
Participation Percentages aggregating sixty-five percent (65%) or more;
provided, however, that after the occurrence and during the continuance of an
Event of Default, solely for purposes of determining whether to declare the
indebtedness hereunder to be due and payable, Required Banks shall be those
Banks (which may include Agent) holding sixty-five percent (65%) or more of
the aggregate indebtedness (including Money Market Advances, Pro Rata Advances
and Term Loans) outstanding on the date of determination.
"Revolving Credit Commitment" means the maximum aggregate principal amount
which Banks have severally agreed to advance to Borrowers under Paragraph
2.1(a) hereof, being on the date of this Agreement Seventy-Five Million
Dollars ($75,000,000), as reduced by the aggregate principal amount of the
Revolving Credit Loan converted to Term Loans pursuant to Paragraph 2.1(b) and
as may be reduced from time to time pursuant to Paragraph 2.8 hereof.
"Revolving Credit Loan" means the aggregate principal balance of indebtedness
advanced under the Revolving Credit Commitment.
"Revolving Credit Note" means individually, and "Revolving Credit Notes" means
individually and collectively, the Revolving Credit Notes in the form of
Exhibit C attached hereto to be delivered by Borrowers to Banks pursuant to
Paragraph 4.1(a) hereof evidencing Borrowers' indebtedness to Banks under the
Revolving Credit Commitment.
"Scientific Holdings" means Scientific Holdings Corp., a Delaware corporation.
"Seafirst" means Seattle-First National Bank, a national banking association.
"Subsidiary" means any corporation of which any of the Borrowers, directly or
indirectly, owns more than fifty percent (50%) of any class or classes of
securities.
<PAGE>58
"Tangible Net Worth" means, as of the date of determination, the excess of (A)
total assets plus the amount of any non-cash expense adjustment made in the
first quarter of 1993 as a result of Standard 106 of the Financial Accounting
Standards Board but excluding from the determination of total assets all
assets which should be properly classified as intangible assets under GAAP
over (B) the sum of total liabilities and deferred items.
"Term Commitment" means the aggregate principal amount which Banks have agreed
to convert to Term Loans under Paragraph 2.1(b) hereof.
"Term Loan" means individually, and "Term Loans" means individually and
collectively, the outstanding principal balance of indebtedness converted from
time to time under the Term Commitment.
"Term Note" means individually, and "Term Notes" means individually and
collectively the Term Notes in the form of Exhibit D attached hereto to be
delivered by Borrowers to Banks pursuant to Paragraph 4.4(a) hereof evidencing
Borrowers' indebtedness to Banks under the Term Loans.
"Termination Date" means the earlier of (i) October 30, 1996 (or such later
date to which Banks shall have agreed to extend the Commitment in writing
pursuant to Paragraph 2.5(a)(ii) hereof) or (ii) the date on which the
Commitment is terminated pursuant to Paragraph 2.8 hereof.
"Total Liabilities" means, at any time, all liabilities and deferred items
which should be properly classified as liabilities in accordance with GAAP.
"VWR" means VWR Corporation, a Delaware corporation.
"VWR Canada" means VWR Scientific of Canada, Ltd., an Ontario corporation.
"VWR International" means VWR Scientific International Corporation, a Barbados
company.
1.2. Accounting Terms. Except as otherwise provided herein, financial and
accounting terms used in the foregoing definitions or elsewhere in this
Agreement shall be defined in accordance with GAAP. In the event that any
future change in GAAP, without more, materially affects the Borrowers'
compliance with any financial covenant herein, Borrowers and Banks shall use
their best efforts to modify such covenant in order to account for such change
and to secure for Banks the intended benefits of such covenant.
SECTION 2
REVOLVING CREDIT AND TERM LOAN(S)
2.1. The Facilities.
(a) Revolving Credit Commitment. From time to time prior to the
Termination Date, subject to the provisions hereof, each Bank on a several
basis will make Advances to Borrowers, which Borrowers may repay and reborrow
on a revolving basis, up to an aggregate outstanding principal amount not to
exceed at any time the amount of the Revolving Credit Commitment as from
timeto time in effect; provided, however, that the maximum principal amount
which may be advanced to VWR International shall not exceed One Million
<PAGE>59
Dollars ($1,000,000) outstanding at any time. Borrowings under the Revolving
Credit Commitment shall be either (i) Pro Rata Advances, in which Banks shall
participate in accordance with their respective Participation Percentages, or
(ii) Money Market Advances which may be provided by a Bank individually up to
such Bank's Maximum Principal Amount. No Pro Rata Advance shall be made or be
outstanding at any time that any Money Market Advance is outstanding, and no
Money Market Advance shall be made or be outstanding at any time that any Pro
Rata Advance is outstanding.
(b) Conversion to Term Loans.
(i) Conversion Option. Subject to the terms and conditions hereof,
including subparagraphs (b)(ii) and (iii) below and Paragraph 4.4 hereof, from
time to time prior to the Termination Date, in the absence of an Event of
Default or Default hereunder, Borrowers shall have the option to convert all
or a part of the outstanding Revolving Credit Loan (other than Money Market
Advances) into one or more Term Loans (hereinafter the "Conversion Option").
Banks shall participate in each Term Loan based on their respective
Participation Percentages. Upon any exercise of the Conversion Option, the
Revolving Credit Commitment shall be permanently reduced by an amount equal to
the principal amount converted into a Term Loan.
(ii) Procedure for Exercise of Conversion Option. Borrowers shall
give Agent irrevocable telephonic or written notice of Borrowers' election to
convert a portion of the Revolving Credit Loan to a Term Loan on or before
9:30 a.m. Philadelphia time one (1) Business Day prior to the date of the
requested conversion, provided, however, that with respect to Portions to bear
interest based on the Adjusted Libor Rate, Borrowers shall give Agent two (2)
Business Days prior written notice of such election, specifying in such
notice:
(A) Amount to be Converted. The aggregate principal amount of
Revolving Credit Loan to be converted to a Term Loan;
(B) Type of Interest. Whether the amount to be converted is
to initially bear interest based on the Adjusted CD Rate, Adjusted Libor Rate,
Fixed Rate or Base Rate, or a combination thereof; and
(C) Duration of Interest Period. The duration(s) of the
initial Interest Period(s) elected.
(iii) Limitations. Each Term Loan shall be in the minimum amount
of Two Million Five Hundred Thousand Dollars ($2,500,000). In no event may
the Term Loan(s) in the aggregate be in the original principal amount of more
than Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000); and in
no event shall a Conversion Option be exercised if following such exercise the
aggregate original principal amount of the Term Loan(s) would be in excess of
fifty percent (50%) of the then effective Commitment. Except with respect to
conversions of Portions of the Revolving Credit Loan which bear interest based
on the Base Rate, the effective date of each Conversion Option shall be on the
last day of the Interest Period(s) of the applicable Portion(s) of the
Revolving Credit Loan being converted to a Term Loan.
(c) Joint and Several Obligation. The obligations of Borrowers
hereunder are and shall be joint and several.
<PAGE>60
(d) Authority of VWR. Each of the Borrowers hereby irrevocably
authorizes and requests that VWR execute all Advance Request Forms, make all
elections as to interest rates, and take any other actions required or
permitted of Borrowers hereunder, on its respective behalf, in each case with
the same force and effect as if such entity had executed such Advance Request
Form, made such election or taken such other action itself.
2.2. Promissory Notes. The indebtedness of Borrowers to each Bank under the
Loan will be evidenced by Notes executed by Borrowers in favor of such Bank in
the form of Exhibit C with respect to the Revolving Credit Commitment and
Exhibit D with respect to the Term Commitment (with appropriate insertions as
to date of execution and principal amount). The original principal amount of
each Bank's Revolving Credit Note will be the amount identified in Paragraph
2.3 hereof as its respective Maximum Principal Amount; provided, however, that
notwithstanding the face amount of each such Note, Borrowers' liability under
each such Note shall be limited at all times to the actual indebtedness,
principal, interest and fees, then outstanding thereunder. The original
principal amount of each Bank's Term Note(s) will be in the amount of the
corresponding Term Loan multiplied by such Bank's Participation Percentage.
2.3. Banks' Participations. Banks shall participate in the Loan up to the
Maximum Principal Amounts and in the Participation Percentages set forth in
the schedule below:
Maximum Participation
Bank Principal Amount Percentage
CoreStates $25,000,000 33.33334%
Seafirst $25,000,000 33.33333%
PNC $25,000,000 33.33333%
--------------- --------------
TOTAL: $75,000,000 100.00000%
2.4. Use of Proceeds. Funds advanced under the Loan shall be used solely for
repayment in full of all amounts outstanding under the Existing Facilities and
for Borrowers' working capital and general corporate purposes; provided,
however, that the maximum principal amount which may be advanced to VWR
International shall not exceed One Million Dollars ($1,000,000) outstanding at
any time.
2.5. Repayment.
(a) Revolving Credit Loan.
(i) The aggregate outstanding principal balance under the Revolving
Credit Loan shall be due and payable on the Termination Date; provided,
however, that each Money Market Advance shall be repaid in full on the earlier
to occur of the Termination Date or expiration of the Interest Period with
respect to such Money Market Advance.
(ii) The Termination Date may be extended not more than twice, each
time for an additional one (1) year period, if (A) between August 1 and
<PAGE>61
September 1 of each of 1994 and 1995, Borrowers submit to Agent a written
request for such extension, which request Agent shall promptly forward to the
Banks, and (B) all of the Banks agree in writing to such requested extension
not later than October 1 of 1994 or 1995, as applicable. Each Bank's decision
to approve or decline an extension request shall be in its sole discretion,
without any obligation, express or implied, to grant such extension, and may
be based, without limitation, upon (A) such Bank's full credit assessment of
Borrowers at the time of the request and (B) the ability of each Bank to
propose to Agent, which will negotiate with Borrowers on behalf of Banks,
revised terms of and conditions to this Agreement. If all of the Banks have
not agreed in writing to extend the Termination Date on or before October 1 of
1994 or 1995, as applicable, then the Termination Date shall not be extended
and the Termination Date then in effect shall continue to apply as to all
Banks.
(b) Term Loans. Notwithstanding the provisions of subparagraph (a)
above, if Borrowers shall have exercised the Conversion Option and any Term
Loans are then outstanding, then the aggregate outstanding principal balance
under each Term Loan shall be payable in sixty (60) equal consecutive monthly
installments on the first day of each month commencing on the first day of the
first month after the applicable conversion to a Term Loan and continuing
thereafter until Borrowers' indebtedness under each such Term Loan has been
paid in full, provided that all Term Loans shall have a maturity date no later
than the fifth anniversary of the Termination Date as from time to time in
effect.
(c) Event of Default. Notwithstanding the immediately preceding
subparagraphs, the aggregate outstanding balance of the Loan shall be due and
payable on the date of acceleration of the Loan in accordance with Paragraph
8.2 hereof.
2.6. Interest. Portions of the Loan shall bear interest on the outstanding
principal amount thereof in accordance with the following provisions:
(a) Definitions. When used in this Agreement, the following words and
terms shall have the respective meanings set forth below:
"Adjusted Base Rate" means the Base Rate plus the applicable increment, if
any, provided in Paragraph 2.6(b)(i)(A) (as to the Revolving Credit Loan) or
2.6(b)(ii)(A) (as to Term Loans).
"Adjusted CD Rate" means, for any Interest Period, as applied to a Portion,
the rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%)
determined pursuant to the following formula:
Adjusted CD Rate = Certificate of Deposit Rate + AR
---------------------------------
1 - RP
where RP = Reserve Percentage
AR = Assessment Rate
For purposes hereof, "Certificate of Deposit Rate" means, as applied to a
Portion, the arithmetic average of the prevailing rates per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) bid on or about 9:00 a.m.
<PAGE>62
Philadelphia time or as soon thereafter as practicable on the first day of
such Interest Period by two (2) or more New York certificate of deposit
dealers of recognized standing for the purchase at face value of negotiable
certificates of deposit of Agent in amounts substantially equal to the Portion
as to which Borrowers may elect the Adjusted CD Rate to be applicable and with
a maturity of comparable duration to the Interest Period selected by Borrowers
for such Portion. The Adjusted CD Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage or the Assessment Rate.
"Adjusted Libor Rate" means, for any Interest Period, as applied to a Portion,
the rate per annum (rounded upwards, if necessary to the next 1/16 of 1%)
determined pursuant to the following formula:
Libor Rate
----------------------
1 - Reserve Percentage
For purposes hereof, "Libor Rate" shall mean the rate which appears on the
Telerate Page 3750 at approximately 9:00 a.m. Philadelphia time two Business
Days prior to the commencement of such Interest Period for the offering to
leading banks in the London Interbank Market of deposits in United States
dollars ("Eurodollars") or, if such rate does not appear on the Telerate Page
3750, the rate which appears (or, if two or more such rates appear, the
average rounded up to the nearest 1/16 of 1% of the rates which appear) on the
Reuters Screen LIBO Page as of 9:00 a.m. Philadelphia time two Business Days
prior to the commencement of the Interest Period, in either case for an amount
substantially equal to such Portion as to which Borrowers may elect the
Adjusted Libor Rate to be applicable with a maturity of comparable duration to
the Interest Period selected by Borrowers. The Adjusted Libor Rate shall be
adjusted on and as of the effective date of any change in the Reserve
Percentage.
"Assessment Rate" means, for any Interest Period, the annual assessment rate
(rounded upwards, if necessary, to the next higher 1/100 of 1%) incurred by a
Bank to the Federal Deposit Insurance Corporation (or any successor) for such
Corporation's (or such successor's) insuring time deposits made in United
States dollars at offices of such Bank in the United States during the most
recent annual period for which such rate has been determined prior to the
commencement of any Interest Period during which the Adjusted CD Rate is
applicable.
"Base Rate" means the higher of (a) the Federal Funds Rate plus one half of
one percent (1/2%) per annum or (b) the Prime Rate.
"Base Rate Portion" means a Portion of the Loan as to which Borrowers have
elected (or are deemed to have elected), the interest rate based on the Base
Rate to be applicable.
"CD Portion" means a Portion of the Loan as to which Borrowers have elected
the interest rate based on the Adjusted CD Rate to be applicable.
"Federal Funds Rate" means, for any day, the effective rate of interest for
such day, as announced from time to time by the Board of Governors of the
Federal Reserve System as shown in publication H.15 as the "Federal Funds
Rate."
<PAGE>63
"Fixed Rate" means the Treasury Rate plus two and one-half percent (2_%) per
annum.
"Fixed Rate Portion" means a Portion of the Term Loan as to which Borrowers
have elected the interest rate based on the Fixed Rate to be applicable.
"Interest Period" means (i) with respect to CD Portions, a period of thirty
(30), sixty (60), ninety (90) or one hundred eighty (180) days' duration, as
Borrowers may elect, (ii) with respect to Libor Portions, a period of one (1),
two (2), three (3) or six (6) months' duration, as Borrowers may elect, (iii)
with respect to Money Market Advances, a period of any number of days up to
thirty (30) days, as Borrowers may elect and (iv) with respect to Fixed Rate
Portions, a period of up to five (5) years' duration, as Borrowers may elect;
provided, however, that (a) if any Interest Period would otherwise end on a
day which is not a Business Day, or London Business Day in the case of (ii)
above, such Interest Period shall be extended to the next succeeding Business
Day or London Business Day in the case of (ii) above, subject to clauses (c)
and (d) below; (b) interest shall accrue from and including the first day of
each Interest Period to, but excluding, the day on which any Interest Period
expires; (c) with respect to any Interest Period for a Libor Portion, any
Interest Period which would otherwise end on a day which is not a London
Business Day shall be extended to the next succeeding London Business Day
unless such London Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding London Business Day; and
(d) with respect to any Interest Period for a Libor Portion which begins on
the last London 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 London Business Day of a calendar
month.
"London Business Day" means any Business Day on which banks in London, England
are open for business.
"Money Market Rate" shall mean, for any Money Market Advance, the per annum
rate of interest offered by a Bank in its sole discretion (including the
refusal to quote a rate) for the Interest Period requested by Borrowers, and
selected by Borrowers in accordance with Paragraph 2.6(b)(iii) hereof.
"Portion" means a portion of a Loan as to which Borrowers have elected a
specific interest rate and, except with respect to a Base Rate Portion, an
Interest Period.
"Prime Rate" means the rate of interest announced by Agent from time to time
as its prime rate.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations,
as amended and as may be amended from time to time, and any successor thereto.
"Reserve" means, for any day, that reserve (expressed as a decimal) which is
in effect (whether or not actually incurred) with respect to a Bank on such
day, as prescribed by the Board of Governors of the Federal Reserve System (or
any successor or any other banking authority to which a Bank is subject
including any board or governmental or administrative agency of the United
States or any other jurisdiction to which a Bank is subject), for determining
<PAGE>64
the maximum reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for (i) such Bank's negotiable
non-personal time deposits in United States dollars of $100,000 or more with
maturities of comparable duration to the Interest Period elected by Borrowers,
or (ii) Eurocurrency liabilities as defined in Regulation D.
"Reserve Percentage" means, for Agent on any day, that percentage (expressed
as a decimal) prescribed by the Board of Governors of the Federal Reserve
System (or any successor or any other banking authority to which Agent is
subject, including any board or governmental or administrative agency of the
United States or any other jurisdiction to which Agent is subject), for
determining the reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for: (a) Agent's negotiable,
non-personal time deposits in United States dollars of $100,000 or more with
maturities of comparable duration to the Interest Period selected by
Borrowers, or (b) deposits of United States Dollars in a non-United States or
an international banking office of Agent used to fund a Libor Portion or any
loan made with the proceeds of such deposit.
"Treasury Rate" means for any Interest Period, the rate of interest per annum
on a debt obligation of the United States Treasury having a maturity date
nearest in time to such Interest Period, as determined on the basis of
quotations published in the Wall Street Journal on the first day of such
Interest Period.
(b) Interest on Revolving Credit and Term Loan(s).
(i) Revolving Credit Loan. At Borrowers' election in accordance
with the provisions of Paragraph 2.6(c) below, in the absence of an Event of
Default or Default hereunder, any Portion of the Revolving Credit Loan shall
bear interest at any one of the following rates, except with respect to Money
Market Advances which shall bear interest in accordance with Paragraph
2.6(b)(iii) below:
(A) Base Rate. The Base Rate, such rate to change when and as
the Prime Rate or Federal Funds Rate, as applicable, changes.
(B) Adjusted Libor Rate. The Adjusted Libor Rate plus seven-
eighths of one percent (7/8%) per annum.
(C) Adjusted CD Rate. The Adjusted CD Rate plus seven-eighths
of one percent (7/8%) per annum.
(ii) Term Loans. At Borrowers' election in accordance with the
provisions of Paragraph 2.6(c) below, in the absence of an Event of Default or
Default hereunder, any Portion of the Term Loan(s) shall bear interest at any
one of the following rates:
(A) Adjusted Base Rate. The Base Rate plus one-quarter of one
percent (1/4%) per annum, such rate to change when and as the Prime Rate or
the Federal Funds Rate, as applicable, changes.
(B) Adjusted Libor Rate. The Adjusted Libor Rate plus one and
one-eighth percent (1-1/8%) per annum.
<PAGE>65
(C) Adjusted CD Rate. The Adjusted CD Rate plus one and one-
eighth percent (1-1/8%) per annum.
(D) Fixed Rate. The Fixed Rate.
(iii) Money Market Rate. In addition to the foregoing, Borrowers
may request and a Bank may offer in its sole discretion a Money Market Advance
at any time that there are no Pro Rata Advances outstanding, which Money
Market Advances shall bear interest, in the absence of an Event of Default or
Default hereunder, at the applicable Bank's Money Market Rate, and shall be
repaid in full on the last day of the Interest Period with respect thereto.
Upon each request for a Money Market Advance, Borrowers shall be deemed to
have made the representations and warranties set forth in Paragraph 2.7(a)(iv)
and (v) hereof. Each request for a Money Market Advance shall be irrevocable
and binding upon Borrowers, and Borrowers shall indemnify the applicable Bank
against any loss, cost or expense incurred as a result of any failure of
Borrowers to meet on or before the date specified in any such request for a
Money Market Advance the applicable conditions set forth in Section 4 hereof,
including without limitation any loss (including loss of margin and
anticipated profits), cost or expense as calculated in accordance with Exhibit
E attached hereto. Subject to satisfaction of the terms and conditions hereof
the applicable Bank shall make such Money Market Advances to Borrowers by
crediting VWR's account with such Bank. If any Bank so requests in connection
with a Money Market Advance, Borrowers shall provide such Bank with written
confirmation of such Money Market Advance in the form requested by such Bank.
Money Market Advances with an Interest Period of two weeks or less shall be in
an amount not less than $2,000,000, and Money Market Advances with an Interest
Period in excess of two weeks shall be in an amount not less than $500,000.
(iv) Default Rate. Notwithstanding the foregoing, upon the
occurrence and during the continuance of an Event of Default or Default
hereunder, Borrowers hereby agree to pay to Banks interest on the outstanding
principal balance of the Loan at the rate of two percent (2%) per annum in
excess of the rates then available to and elected by Borrowers for each
Portion then outstanding through the end of the applicable Interest Periods
and, thereafter, at the rate of two percent (2%) per annum in excess of the
Adjusted Base Rate.
(c) Procedure for Determining Rates of Interest for Pro Rata Advances
and Term Loan(s). The following procedures shall apply to the determination
of the rates of interest and Interest Periods to be applicable to the Term
Loan(s) and Portions of the Revolving Credit Loan advanced pursuant to Pro
Rata Advances:
(i) If Borrowers elect the Fixed Rate or the Adjusted Base Rate to
be applicable to a Portion of the Loan, Borrowers must notify Agent of such
election prior to twelve o'clock (12:00) noon Philadelphia time on the date of
the proposed application of such Rate. If Borrowers elect the Adjusted Libor
Rate to be applicable to a Portion of the Loan, Borrowers must notify Agent of
such election prior to twelve o'clock (12:00) noon Philadelphia time at least
two (2) London Business Days prior to the commencement of the proposed
Interest Period. If Borrowers elect the Adjusted CD Rate to be applicable to
a Portion of the Loan, Borrowers must notify Agent of such election prior to
twelve o'clock (12:00) noon at least one Business Day prior to the
commencement of the proposed Interest Period. Agent shall send notice to
<PAGE>66
Banks by twelve thirty (12:30) p.m. on the Business Day of such request. If
Borrowers do not provide the applicable notice for the Fixed Rate, Adjusted
Libor Rate or Adjusted CD Rate, then Borrowers shall be deemed to have
requested that the Adjusted Base Rate shall apply to any Portion which was
subject to the rate of interest applicable during an expiring Interest Period
and to any new advance of the Loan until Borrowers shall have given proper
notice of a change in or determination of the rate of interest in accordance
with this Paragraph 2.6(c).
(ii) Borrowers shall not elect more than five (5) different
Portions (other than Portions bearing interest at the Adjusted Base Rate) to
be applicable to the Loan at one time.
(d) Payment and Calculation of Interest. Interest on Fixed Rate
Portions, Money Market Portions, Libor Portions and CD Portions shall be due
and payable on the last day of the Interest Period for each such Portion;
provided, however, that with respect to Fixed Rate Portions and CD Portions
having an Interest Period in excess of ninety (90) days, and Libor Portions
having an Interest Period in excess of three (3) months, interest shall be
payable on the ninetieth (90th) day and on the last day of such Interest
Period. Interest with respect to Base Rate Portions shall be due and payable
on the last day of each month. Interest shall be calculated in accordance with
the provisions of Paragraph 2.6(b) hereof; interest based on the Prime Rate
shall be calculated on the basis of the actual number of days elapsed over a
year of three hundred sixty-five (365) days or three hundred sixty-six (366)
days, as the case may be, and interest based on the Fixed Rate, the Federal
Funds Rate, the Money Market Rate, the Adjusted CD Rate, and the Adjusted
Libor Rate shall be calculated in accordance with the provisions of Paragraph
2.6(b) on the basis of the actual number of days elapsed over a year of three
hundred sixty (360) days. For the purposes of the Interest Act (Canada), in
order to effectuate the agreed rates of interest provided herein, (i) the
principle of deemed reinvestment of interest shall not apply to any interest
calculation under this Agreement or the Notes, (ii) the rates of interest
stipulated under this Agreement and the Notes are intended to be nominal rates
and not effective rates or yields, and (iii) each rate of interest determined
pursuant to such calculation expressed as an annual rate is equivalent to such
rate as so determined multiplied by the actual number of days in the calendar
year in which the same is to be ascertained and divided by 365 (for interest
based on the Prime Rate) or 360 (in the case of interest based on the Fixed
Rate, the Federal Funds Rate, the Money Market Rate, the Adjusted CD Rate or
the Adjusted LIBOR Rate).
(e) Reserves. If at any time a Libor or CD Portion is outstanding and a
Bank is subject to and incurs a Reserve, Borrowers hereby agree to pay within
five (5) Business Days of written demand thereof from time to time, as billed
by Agent on behalf of itself or a Bank, such additional amount as is necessary
to reimburse such Bank for its costs in maintaining such Reserve. Such amount
shall be computed by taking into account the cost incurred by the Bank in
maintaining such Reserve in an amount equal to such Bank's ratable share of
the Portion on which such Reserve is incurred. The determination by Agent or
a Bank of such costs incurred and the allocation, if any, of such costs among
Borrowers and other customers which have similar arrangements with such Bank
shall be prima facie evidence of the correctness of the fact and the amount of
such additional costs.
<PAGE>67
(f) Special Provisions Applicable to Adjusted CD Rate.
(i) Change of CD Rates. The Adjusted CD Rate may be automatically
adjusted by Agent on a prospective basis to take into account additional or
increased costs incurred by Banks due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period,
including but not limited to changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System
(or any successor), including the Reserve Percentage, and assessments imposed
by the Federal Deposit Insurance Corporation (or any successor), (including
the Assessment Rate as provided in the definition of "Assessment Rate" above),
that increase the cost to Banks of funding the Loan or a Portion thereof
bearing interest at the Adjusted CD Rate. Agent shall give Borrowers notice
of such determination and adjustment, and Borrowers may, by notice to Agent,
require Agent to furnish to Borrowers a statement setting forth the basis for
adjusting such Adjusted CD Rate and the method for determining the amount of
such adjustment. Thereafter, Borrower shall either pay interest on the
affected Portion(s) at the increased rate or repay the Portion with respect to
which such adjustment is made in accordance with Paragraphs 2.9 and 2.10
hereof.
(ii) Unavailability of Adjusted CD Rate. In the event that
Borrowers shall have requested a quotation of the Adjusted CD Rate in
accordance with Paragraph 2.6(c) hereof and Agent shall have reasonably
determined that the Adjusted CD Rate will not adequately and fairly reflect
the cost of making or maintaining the principal amount of the Loan or a
Portion thereof specified by Borrowers during the Interest Period selected
because of the inability of Agent to obtain bids in the amount of a requested
Advance in accordance with the terms of the definition of Certificate of
Deposit Rate set forth above, Agent shall promptly give notice of such
determination to Borrowers. A determination by such Bank or Agent hereunder
shall be prima facie evidence of the correctness of the fact. Upon such a
determination, (i) the Banks' obligation to advance or maintain CD Portions
shall be suspended until Agent shall have notified Borrowers and Banks that
such conditions shall have ceased to exist, and (ii) Borrowers shall elect the
Fixed Rate (if available), Adjusted Libor Rate, Adjusted Base Rate or Money
Market Rate to be applicable to Portions.
(g) Special Provisions Applicable to Adjusted Libor Rate. The following
special provisions shall apply to the Adjusted Libor Rate:
(i) Change of Adjusted Libor Rate. The Adjusted Libor Rate may be
automatically adjusted by Agent on a prospective basis to take into account
the additional or increased cost of maintaining any necessary reserves for
Eurodollar deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest
Period, including but not limited to changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System
(or any successor), including the Reserve Percentage, that increase the cost
to Banks of funding the Loan or a Portion thereof bearing interest at the
Adjusted Libor Rate. Agent shall give Borrowers notice of such a determination
and adjustment, and Borrowers may, by notice to Agent require Agent to furnish
to Borrowers a statement setting forth the basis for adjusting such Adjusted
<PAGE>68
Libor Rate and the method for determining the amount of such adjustment.
Thereafter, Borrowers shall either pay interest on the affected Portion(s) of
the increased rate or repay the Portion with respect to which such adjustment
is made in accordance with Paragraphs 2.9 and 2.10 hereof.
(ii) Unavailability of Eurodollar Funds. In the event that
Borrowers shall have requested a quotation of the Adjusted Libor Rate in
accordance with Paragraph 2.6(c) hereof and any Bank shall have reasonably
determined that Eurodollar deposits equal to the amount of the principal of
the Portion and for the Interest Period specified are unavailable, or that the
Adjusted Libor Rate will not adequately and fairly reflect the cost of making
or maintaining the principal amount of the Portion specified by Borrowers
during the Interest Period specified or that by reason of circumstances
affecting Eurodollar markets, adequate and reasonable means do not exist for
ascertaining the Adjusted Libor Rate applicable to the specified Interest
Period, Agent shall promptly give notice of such determination to Borrowers
that the Adjusted Libor Rate is not available. A determination by any Bank
hereunder shall be prima facie evidence of the correctness of the fact. Upon
such a determination, (i) the Banks' obligation to advance or maintain
Portions at the Adjusted Libor Rate shall be suspended until Agent shall have
notified Borrowers and Banks that such conditions shall have ceased to exist,
and (ii) Borrowers shall elect the Fixed Rate (if available), Adjusted CD
Rate, Adjusted Base Rate or Money Market Rate to be applicable to Portions.
(iii) Illegality. In the event that it becomes unlawful for a Bank
to maintain Eurodollar liabilities sufficient to fund such Bank's share of any
Portion subject to the Adjusted Libor Rate, then such Bank shall immediately
notify Borrowers thereof (with a copy to Agent) and such Bank's obligations
hereunder to make or maintain Advances at the Adjusted Libor Rate shall be
suspended until such time as such Bank may again cause the Adjusted Libor Rate
to be applicable to its share of any Portion of the outstanding principal
balance of the Loan and such Bank's share of any Portion shall then be subject
to the Fixed Rate (if available), the Adjusted Base Rate or the Adjusted CD
Rate, as Borrowers may elect in accordance with the provisions of this
Paragraph 2.6.
2.7. Pro Rata Advances.
(a) Borrowers shall give Agent written notice of each requested Pro Rata
Advance under the Revolving Credit Commitment, specifying the date and amount
thereof, prior to twelve o'clock (12:00) noon at least two (2) London Business
Days prior to Pro Rata Advances to bear interest based on the Adjusted Libor
Rate, at least one Business Day prior to Pro Rata Advances to bear interest
based on the Adjusted CD Rate, and on the date of each requested Pro Rata
Advance to bear interest based on the Base Rate. Such notice shall be made by
delivery of the Advance Request Form and shall contain a statement certified
by the chief financial officer or other authorized officer of VWR, for itself
and on behalf of Borrowers, containing the following information and
representations, which shall be deemed affirmed and true and correct as of the
date of the Advance Request Form and the date of the requested Pro Rata
Advance:
(i) the aggregate amount of the requested Pro Rata Advance, which
shall be in multiples of $250,000 but not less than the lesser of $1,000,000
or the unborrowed balance of the Revolving Credit Commitment;
<PAGE>69
(ii) confirmation of the interest rate(s) Borrowers have elected to
apply to the Pro Rata Advance and, if more than one Portion has been elected,
the amount of the Portion as to which each interest rate shall apply, together
with the Interest Period applicable thereto;
(iii) certification that there are no Money Market Advances
outstanding or that there will be no Money Market Advances outstanding on the
date of the requested Pro Rata Advance;
(iv) confirmation of Borrowers' compliance with Paragraphs 5.12
through 5.17 and 6.1 through 6.5 thereof following such Pro Rata Advance; and
(v) statements that the representations and warranties set forth in
Section 3 hereof are true and correct as of the applicable dates; that no
Event of Default or Default hereunder has occurred and is then continuing; and
that there has been no Material Adverse Effect since the date of this
Agreement.
(b) (i) Upon receiving a request for a Pro Rata Advance in
accordance with subparagraph (a) above, Agent shall send notice to Banks by
twelve thirty (12:30) p.m. on such day requesting that each Bank advance funds
to Agent so that each Bank participates in the requested Pro Rata Advance in
the same percentage as it participates in the Commitment. Each Bank shall
advance its Participation Percentage of the requested Pro Rata Advance to
Agent by delivering federal funds immediately available at Agent's offices
prior to two o'clock (2:00) p.m. on the date of the Pro Rata Advance. Subject
to the satisfaction of the terms and conditions hereof, Agent shall make the
requested Pro Rata Advance available to Borrowers by crediting such amount to
VWR's deposit account with Agent not later than three o'clock (3:00) p.m. on
the day of the requested Pro Rata Advance; provided, however, that in the
event Agent does not receive a Bank's share of the requested Pro Rata Advance
by such time as provided above, Agent shall not be obligated to advance such
Bank's share.
(ii) Unless Agent shall have been notified by a Bank prior to the
date such Bank's share of any such Pro Rata Advance is to be made by such Bank
that such Bank does not intend to make its share of such requested Pro Rata
Advance available to Agent, Agent may assume that such Bank has made such
proceeds available to Agent on such date, and Agent may, in reliance upon such
assumption (but shall not be obligated to), make available to Borrowers a
corresponding amount. If such corresponding amount is not in fact made
available to Agent by such Bank on the date the Pro Rata Advance is made,
Agent shall be entitled to recover such amount, on demand from such Bank,
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to Borrowers and ending
on (but excluding) the date Agent recovers such amount, from such Bank, at a
rate per annum equal to the effective rate for overnight federal funds in New
York as reported by the Federal Reserve Bank of New York for such day or, if
such day is not a Business Day, for the next preceding Business Day); or, if
such Bank fails to pay such amount forthwith upon such demand, from Borrowers
together with interest at the Adjusted Base Rate.
(iii) Each Bank shall receive interest on its share of any Pro Rata
Advance from the date on which the amount of its share of such Pro Rata
Advance is received by Agent and not from the date on which Agent makes such
<PAGE>70
Pro Rata Advance (if it elects to do so as permitted in clause (ii) of
subparagraph 2.7(b)) unless such dates are the same.
(c) Each request for a Pro Rata Advance pursuant to this Paragraph 2.7
shall be irrevocable and binding on Borrowers. In the case of any Pro Rata
Advance which is to be based upon the Adjusted CD Rate or Adjusted Libor Rate,
Borrowers shall indemnify each Bank against any loss, cost or expense incurred
by such Bank as a result of any failure to fulfill on or before the date
specified in such request for a Pro Rata Advance the applicable conditions set
forth in Section 4, including, without limitation, any loss (including loss of
margin), cost or expense incurred by reason of the liquidation or redeployment
of deposits or other funds acquired by such Bank to fund the Pro Rata Advance
to be made by such Bank when such Pro Rata Advance, as a result of such
failure, is not made on such date, as calculated by Agent in accordance with
Exhibit E attached hereto.
2.8. Reduction and Termination of Commitment.
(a) Borrowers. Borrowers shall have the right at any time and from time
to time, upon three (3) Business Days' prior written notice to Agent, to
reduce the Revolving Credit Commitment in whole or in part pro rata among the
Banks without penalty or premium, provided that: (i) any such reduction shall
be in an aggregate amount not less than Five Million Dollars ($5,000,000);
(ii) on the effective date of such reduction Borrowers shall make a prepayment
of the Revolving Credit Loan in an amount, if any, by which the aggregate
outstanding principal balance of the Revolving Credit Loan exceeds the amount
of the Revolving Credit Commitment as then so reduced, together with accrued
interest on the amount so prepaid; and (iii) if a Portion is paid prior to the
last day of an Interest Period, Borrowers shall pay any funding costs and loss
of earnings and anticipated profits which may arise in connection with such
prepayment or repayment, as calculated by Agent in accordance with Exhibit E
attached hereto. A reduction in the Revolving Credit Commitment pursuant to
this Paragraph 2.8(a) shall not require Borrowers to prepay the Term Loan(s)
or a portion thereof, notwithstanding that following such reduction in the
Revolving Credit Commitment the aggregate original principal amounts of the
Term Loan(s) is then in excess of 50% of the Revolving Credit Commitment.
(b) Banks. Pursuant to Paragraph 8.2 hereof, Required Banks shall have
the right to terminate the Commitment at any time, in their discretion and
upon notice to Borrowers, upon the occurrence of any Event of Default here-
under. Any payment following the occurrence of an Event of Default,
acceleration and demand for payment shall include the payment of any amounts
due pursuant to Paragraph 2.10 hereof.
(c) Restoration Only With Consent. Any termination or reduction of the
Commitment pursuant to subparagraphs 2.8(a) and (b) shall be permanent, and
the Commitment cannot thereafter be restored or increased without the written
consent of all Banks.
2.9. Prepayment; Repayment. Upon one (1) Business Day's prior written notice
by Borrowers to Agent, Borrowers may prepay the outstanding principal balance
of the Revolving Credit Loan or the Term Loan(s) as specified by Borrowers at
any time without premium or penalty, except as provided in Paragraph 2.10
below, provided that repayments of the Revolving Credit Loan prior to the
Termination Date shall not reduce the Revolving Credit Commitment and may be
<PAGE>71
reborrowed and partial prepayments of the Term Loan will be applied first to
accrued interest and then to the outstanding principal balance of the Term
Loans, pro rata, in the inverse order of the maturity of the installments
thereof. Any prepayment shall be in an amount equal to or in excess of
$250,000.
2.10. Funding Costs; Loss of Earnings. In connection with any prepayment or
repayment of a Portion bearing interest based on the Fixed Rate, Adjusted
Libor Rate, Adjusted CD Rate or Money Market Rate made on other than the last
day of the applicable Interest Period, whether such prepayment or repayment is
voluntary, mandatory, by demand, acceleration or otherwise, Borrowers shall
pay to Banks all funding costs and loss of margin which may arise in
connection with such prepayment or repayment, as calculated by Agent or the
applicable Bank in accordance with Exhibit E attached hereto.
2.11. Payments. All payments of principal, interest, fees and other amounts
due hereunder, including any prepayments thereof, shall be made by Borrowers
to Agent in immediately available funds before twelve o'clock (12:00) noon on
any Business Day at the principal office of Agent set forth at the beginning
of this Agreement (except for payments of principal and interest with respect
to Money Market Advances and payments of the commitment fees provided in
Paragraph 2.12 hereof, which shall be paid directly to the applicable Bank).
Borrowers hereby authorize Agent and each Bank to charge any Borrower's
account with Agent or such Bank for all payments of principal, interest and
fees not paid when due hereunder.
2.12. Commitment Fee. Borrowers shall pay to each Bank a non-refundable
commitment fee at the rate of (i) one-eighth of one percent (1/8%) per annum
on the unborrowed portion of each Bank's Maximum Principal Amount up to Five
Million Dollars ($5,000,000), plus (ii) three-eighths of one percent (3/8%)
per annum on the unborrowed portion of each Bank's Maximum Principal Amount in
excess of Five Million Dollars ($5,000,000). Such commitment fee shall be
payable at the offices of each Bank quarterly in arrears on the first Business
Day of each January, April, July and October, as billed by each Bank. The
commitment fee shall be calculated on the daily unborrowed portions of each
Bank's Maximum Principal Amount and on the basis of the actual number of days
elapsed over a year of three hundred sixty (360) days.
2.13. Agent Fee. Borrowers will pay to Agent an agent fee in accordance with
the letter agreement between Borrowers and Agent dated of even date herewith.
2.14. Regulatory Changes in Capital Requirements. If any Bank shall have
determined that the adoption after the date hereof of any law, rule,
regulation or guideline regarding capital adequacy, or any change in any of
the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
such Bank (or any lending office of such Bank) or such Bank's holding company
with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Bank's capital or on the capital of such Bank's holding company if any, as a
consequence of this Agreement or the Advances made by such Bank pursuant
hereto to a level below that which such Bank or its holding company could have
achieved but for such adoption, change or compliance (taking into
<PAGE>72
consideration such Bank's policies and the policies of such Bank's holding
company with respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time Borrowers shall pay to such Bank on demand
such additional amount or amounts as will compensate such Bank or its holding
company for any such reduction suffered together with interest on each such
amount from the date demanded until payment in full thereof at the rate
provided in Paragraph 2.6(b)(iv) hereof with respect to amounts not paid when
due. Such Bank will notify Borrowers of any event occurring after the date of
this Agreement that will entitle such Bank to compensation pursuant to this
Paragraph 2.14 as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation.
A certificate of such Bank setting forth such amount or amounts as shall be
necessary to compensate such Bank or its holding company as specified above
shall be delivered to Borrowers and shall be conclusive absent manifest error.
Borrowers shall pay such Bank the amount shown as due on any such certificate
delivered by such Bank within five (5) days after its receipt of the same.
Failure on the part of any Bank to demand compensation for increased costs or
reduction in amounts received or receivable or reductions in return on capital
with respect to any period shall not constitute a waiver of such Bank's right
to demand compensation with respect to such period or any other period.
SECTION 3
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Banks as follows:
3.1. Organization and Good Standing. Each Borrower is duly organized and
existing and in good standing, under the laws of the jurisdiction of its
incorporation, has the power and authority to carry on its business as now
conducted, and is qualified to do business in all other jurisdictions in which
the nature of its activities or the character of its properties requires such
qualification.
3.2. Power and Authority; Validity of Agreement. Each Borrower has the power
and authority under the law of the jurisdiction of its incorporation, and
under its articles of incorporation and by-laws, to enter into and perform
this Agreement, the Notes, and all other agreements, documents and actions
required hereunder; and all actions (corporate or otherwise) necessary or
appropriate for Borrowers' execution and performance of this Agreement, the
Notes, and all other agreements, documents and actions required hereunder have
been taken, and, upon their execution, the same will constitute the valid and
binding obligations of Borrowers to the extent they are a party thereto,
enforceable in accordance with their respective terms.
3.3. No Violation of Laws or Agreements. The making and performance of this
Agreement, the Notes, and the other documents, agreements and actions required
of Borrowers hereunder will not violate any provisions of any law or
regulation, federal state or local, foreign or domestic, or the articles of
incorporation or by-laws of any Borrower or result in any breach or violation
of, or constitute a default under, any agreement or instrument by which any
Borrower or its or their property may be bound.
<PAGE>73
3.4. Material Contracts. There exists no material default under any
contracts or agreements material to any Borrower or its or their respective
businesses.
3.5. Compliance. Each Borrower is in compliance in all material respects
with all applicable laws and regulations, federal, state and local, foreign
and domestic, material to the conduct of its business and operations; each
Borrower possesses all the franchises, permits, licenses and grants of
authority necessary or required in the conduct of its business, except for
those franchises, permits, licenses and grants of authority the failure of
which to obtain would not have a material adverse effect on the financial
condition of the applicable Borrower and/or the conduct of its business; and
the same are valid, binding and enforceable and are not subject to any
proceedings or claims opposing the issuance, development or use thereof or
contesting the validity thereof; and no approvals, waivers or consents,
governmental (federal, state or local), or non-governmental under the terms of
contracts or otherwise, are required by reason of or in connection with its
execution and performance of this Agreement, the Notes, and all other
agreements, documents and actions required hereunder.
3.6. Litigation. Except as set forth on Exhibit F attached hereto, there are
no actions, suits, proceedings or claims which are pending or, to the best of
its knowledge or information, threatened against a Borrower which, if
adversely resolved, would substantially or materially affect its financial
condition or business.
3.7. Title to Assets. Each Borrower has good and marketable title to all of
its properties and assets free and clear of any liens and encumbrances, except
the liens and encumbrances permitted pursuant to Paragraph 6.3 hereof, and all
such assets are in good order and repair and fully covered by the insurance
required under Paragraph 5.5 hereof.
3.8. Capital Stock. The shares of the capital stock of each Borrower are
validly issued, fully paid and non-assessable, and the issuance and sale
thereof was in compliance with all applicable federal and state securities and
other applicable laws and other contractual restrictions.
3.9. Accuracy of Information. All information furnished to Banks concerning
the financial condition of Borrowers, including the annual financial statement
for VWR and its Consolidated Subsidiaries for the period ending December 31,
1992, copies of which have been furnished to Banks, have been prepared in
accordance with GAAP and fairly present the financial condition of VWR and its
Consolidated Subsidiaries as of the dates and for the periods covered and
disclose all liabilities required to be disclosed by GAAP of VWR and its
Consolidated Subsidiaries and there have been no material adverse changes in
the financial condition or business(es) of VWR and its Consolidated
Subsidiaries from the date of such statements to the date hereof.
3.10. Taxes and Assessments. Each Borrower has filed all required tax
returns or has filed for extensions of time for the filing thereof, and has
paid all applicable federal, state and local taxes, other than (i) taxes not
yet due or which may be paid hereafter without penalty, or (ii) taxes which
are being contested by applicable proceedings and for which reserves are being
maintained in accordance with GAAP, and no Borrower has any knowledge of any
<PAGE>74
deficiency or additional assessment in connection therewith not provided for
in the financial statements required hereunder.
3.11. Indebtedness. Borrowers have no presently outstanding indebtedness or
obligations, including contingent obligations and obligations under leases of
property from others, except the indebtedness and obligations described in
Exhibit F hereto and in the financial statements which have been furnished to
Banks.
3.12. Investments. Borrowers have no: (i) Subsidiaries or Affiliates, except
that VWR owns Scientific Holdings and VWR International, and Scientific
Holdings owns VWR Canada, and (ii) investments in or loans to any other
individuals or business entities, except as described in Exhibit F hereto.
3.13. ERISA. Each Borrower is in compliance in all material respects with
all applicable provisions of ERISA; and,
(a) Neither a Borrower, any Subsidiary nor any ERISA Affiliate maintains
or contributes to any multiemployer plan (as defined in Section 4001 of ERISA)
under which a Borrower, any Subsidiary or any ERISA Affiliate has any unfunded
obligation to contribute or has incurred any other unfunded liability or would
have any withdrawal liability if they fully withdrew as of the date the
representation is being made.
(b) Neither a Borrower, nor any Subsidiary nor any ERISA Affiliate,
sponsors or maintains any defined benefit pension plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code,
whether or not waived.
(c) The liability for accrued benefits under each defined benefit
pension plan that will be sponsored or maintained by each Borrower, any
Subsidiary or any ERISA Affiliate (determined on the basis of the actuarial
assumptions utilized by the actuary for the plan in preparing the most recent
Annual Report) does not exceed the aggregate fair market value of the assets
under each such defined benefit pension plan.
(d) The aggregate liability of Borrowers and any Subsidiary and any
ERISA Affiliate arising out of or relating to a failure of any employee
pension benefit plan within the meaning of Section 3(2) of ERISA or any
multiemployer pension plan to which a Borrower, any Subsidiary or any ERISA
Affiliate is or has been required to contribute, to comply with the provisions
of ERISA or the Code, will not have a material adverse effect upon the
business, operations or financial condition of the Borrowers or any
Subsidiary.
(e) There does not exist any unfunded liability (determined on the basis
of actuarial assumptions utilized by the actuary for the plan in preparing the
most recent Annual Report) of a Borrower, any Subsidiary or ERISA Affiliate
under any plan, program or arrangement providing post-retirement life or
health benefits, except for the unfunded liability for retiree health benefits
reflected in the financial statements of Borrowers as a result of the
implementation of Standard 106 of the Financial Accounting Standards Board.
(f) There has been no Prohibited Transaction with respect to any
employee benefit plan which could result in any material adverse effect upon
<PAGE>75
the business, operations or financial condition of Borrowers or any
Subsidiary.
(g) Neither a Borrower, any Subsidiary nor any other ERISA Affiliate has
instituted or intends to institute proceedings to terminate any employee
pension benefit plan and no multiemployer pension plan is in reorganization
(as defined in Section 4241(a) of ERISA).
3.14. Fees and Commissions. No Borrower owes any fees or commissions of any
kind, and knows of no claim for any fees or commissions, in connection with
Borrowers' obtaining the Commitment or the Loan from Banks, except those
provided herein.
3.15. No Extension of Credit for Securities. No Borrower is now, nor at any
time has it been engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
any securities. The proceeds of the Loan shall be used by Borrowers as set
forth in Paragraph 2.4 hereof and none of the proceeds of the Loan will be
used, directly or indirectly, to purchase or carry margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System.
3.16. Hazardous Wastes, Substances and Petroleum Products.
(a) Each Borrower: (i) has received all permits, licenses,
authorizations and approvals and filed all notifications and reports necessary
to carry on its businesses; and (ii) is in compliance with all material
federal, state or local, foreign or domestic, laws and regulations governing
the control, removal, spill, release or discharge of hazardous or toxic
wastes, substances and petroleum products, including without limitation as
provided in the provisions of and the regulations under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendment and Reauthorization Act of 1986, the Solid Waste
Disposal Act, the Clean Water Act and the Clean Air Act, and any regulations
thereunder, the Resource Conservation and Recovery Act of 1976, the Federal
Water Pollution Control Act Amendments of 1972, and the Hazardous Materials
Transportation Act (all of the foregoing enumerated and non-enumerated
statutes, including without limitation any applicable state or local statutes,
as amended, collectively the "Environmental Control Statutes").
(b) Except as set forth on Exhibit F attached hereto, no Borrower has
given any written or oral notice to the Environmental Protection Agency
("EPA") or any state or local or foreign agency or governmental body with
regard to any actual or imminently threatened removal, spill, release or
discharge of hazardous or toxic wastes, substances or petroleum products on
properties owned or leased by such Borrowers or in connection with the conduct
of its business and operations and, to the best of Borrowers' knowledge, there
are no circumstances, processes, facilities, operations, equipment or any
other activities at, on or under any such properties that constitute a
material breach of or material non-compliance with any of the Environmental
Control Statutes.
(c) Except as set forth on Exhibit F attached hereto, no Borrower has
received notice that it is potentially responsible for costs of clean-up of
any actual or imminently threatened spill, release or discharge of hazardous
<PAGE>76
or toxic wastes or substances or petroleum products pursuant to any
Environmental Control Statute. Exhibit F attached hereto does not include
notice with respect to matters that are no longer pending.
3.17. Solvency. To the best of VWR's knowledge, VWR is, and after receipt
and application of the first advance will be, solvent such that: (i) the fair
value of its assets (including without limitation the fair salable value of
the goodwill and other intangible property of VWR) is greater than the total
amount of its liabilities, including without limitation, contingent
liabilities, (ii) the present fair salable value of its assets (including
without limitation the fair salable value of the goodwill and other intangible
property of VWR) is not less than the amount that will be required to pay the
probable liability on its debts as they become absolute and matured, and (iii)
it is able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal
course of business. VWR (i) does not intend to, and does not believe that it
will, incur debts or liabilities beyond its ability to pay as such debts and
liabilities mature, and (ii) is not engaged in a business or transaction, or
about to engage in a business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice and industry in which it is engaged. For purposes of this
Paragraph 3.17, in computing the amount of contingent liabilities at any time,
it is intended that such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual mature liability.
3.18. Senior Debt Status. The obligations of Borrowers under this Agreement
and the Notes do rank and will rank at least pari passu in priority of payment
with all other indebtedness of Borrowers except indebtedness of Borrowers to
the extent secured by liens permitted pursuant to Paragraph 6.3 hereof.
3.19. No Burdensome Agreements. No Borrower is a party to or bound by any
agreement, contract, instrument, understanding or commitment of any kind or
subject to any corporate or other restriction the performance or observance of
which now has or, as far as Borrowers can reasonably foresee, would have a
Material Adverse Effect.
3.20. Full Disclosure. As of the date hereof, neither this Agreement, nor
any certificate, statement, agreement or other documents furnished to Banks in
connection herewith or therewith, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which they were made, not misleading. There is no fact pertaining
specifically to Borrowers known to Borrowers which could have a Material
Adverse Effect, which has not been set forth in this Agreement or in the
certificates, statements, agreements or other documents furnished in writing
to Banks prior to or at the date hereof in connection with the transactions
contemplated hereby or in the Borrowers' filings with the Securities and
Exchange Commission.
<PAGE>77
SECTION 4
CONDITIONS
4.1. First Advance. The obligation of Banks or any one of them to make the
first Advance under the Revolving Credit Commitment shall be subject to Banks'
receipt of the following documents, each in form and substance satisfactory to
Banks:
(a) Revolving Credit Notes. The Revolving Credit Notes duly executed by
Borrowers.
(b) Authorization Documents. Certified copies of the articles of
incorporation, bylaws and resolutions of the Board of Directors of each
Borrower authorizing each such Borrower's execution and full performance of
this Agreement, the Notes (with respect to VWR, those officers authorized to
request Advances hereunder) and all other documents and actions required
hereunder, and an incumbency certificate setting forth the officers of
Borrowers.
(c) Opinion of Counsel. Opinion letters from United States, Canada and
Barbados counsel for Borrowers, in the form of Exhibits G-1, G-2 and G-3
attached hereto.
(d) Insurance. Certificates of insurance with respect to each
Borrower's fire, casualty, liability and other insurance covering its
respective property and business.
(e) Good Standing Certificates. Certificates of good standing or
subsistence dated a recent date from the Secretary of State or appropriate
taxing authority in the state of incorporation and each state of qualification
with respect to each Borrower.
(f) Lien Searches. Uniform Commercial Code, tax, judgment lien searches
against Borrowers in such jurisdictions as Agent shall reasonably request.
(g) Advance Request. In the case of a Pro Rata Advance, a completed
Advance Request Form required under Paragraph 2.7(a) hereof, and any other
documents or information reasonably required by Banks in connection therewith.
(h) Termination of Existing Facilities. The Existing Facilities shall
be irrevocably terminated and all indebtedness thereunder paid in full.
(i) Other Documents. Such additional documents as Banks reasonably
may request.
4.2. Subsequent Advances. The obligation of any Bank to make additional Pro
Rata Advances under the Revolving Credit Commitment shall be subject to
receipt of a completed Advance Request Form.
4.3. Additional Condition to Banks' Obligations. It shall be a condition to
any Bank's obligation hereunder to make any Advance or to accept Borrowers'
exercise of the Conversion Option that the representations and warranties set
forth herein shall be true and correct as if made on the date of such Advance
or conversion, that no Event of Default or Default shall have occurred and be
<PAGE>78
continuing on the date of such Advance or conversion or be caused by such
Advance or conversion, and that there shall have been no material adverse
change in any Borrower's financial condition or business since the date
hereof.
4.4. Acceptance of Conversion Option. Any Bank's obligation to accept each
exercise of the Conversion Option pursuant to Paragraph 2.1(b) hereof shall be
subject to Agent's receipt on behalf of the Banks of the following documents,
each in form and substance satisfactory to Banks:
(a) Term Note. The Term Notes in the form of Exhibit D attached hereto
duly executed by Borrowers and with the amount, date and maturity thereof duly
completed.
(b) Conversion Request. A completed Conversion Request Form.
SECTION 5
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that so long as the Commitment of Banks to
Borrowers or any indebtedness of Borrowers to Banks is outstanding, it will:
5.1. Existence and Good Standing. Preserve and maintain its existence as a
corporation and its good standing in all states and other jurisdictions in
which it conducts business and the validity of all its franchises, licenses,
permits, certificates of compliance or grants of authority required in the
conduct of its business.
5.2. Quarterly Financial Statements. Furnish Agent as soon as practicable
but in no event later than forty-five (45) days after the end of each of the
first three quarterly fiscal periods hereafter with unaudited, quarterly
consolidated and consolidating financial statements, in form and substance as
required by Required Banks, including a balance sheet, an income statement and
a statement of cash flows, prepared for VWR and its Consolidated Subsidiaries
and the information required to apply the criteria prescribed in Paragraphs
5.12 through 5.17 and 6.1 through 6.5 hereof, prepared in accordance with
GAAP, together with a certificate executed by the chief financial officer of
VWR stating that the financial statements fairly present the financial
condition of VWR and its Consolidated Subsidiaries as of the date and for the
periods covered and that as of the date of such certificate there has not been
any violation of any provision of this Agreement or the happening of any Event
of Default or Default hereunder.
5.3. Annual Financial Statements. Furnish Agent as soon as practicable but
in no event later than ninety (90) days after the close of each fiscal year
commencing with fiscal 1993 (or the date of filing VWR's 10-K report with the
Securities and Exchange Commission if VWR has obtained an extension for such
filing, but in no event more than one hundred twenty (120) days after the
close of VWR's fiscal year) with audited consolidated and consolidating annual
financial statements, including the financial statements and information
required under Paragraph 5.2 hereof, which financial statements shall be
prepared in accordance with GAAP and shall be certified without qualification
by an independent certified public accounting firm satisfactory to Banks (it
being acknowledged and agreed that Ernst and Young is satisfactory to Banks);
<PAGE>79
and cause Banks to be furnished, at the time of the completion of the annual
audit, with a certificate signed by such accountants to the effect that to the
best of their knowledge there have been no violations of any provisions of
this Agreement or the happening of any Event of Default or Default hereunder.
5.4. Report of Money Market Advances. On the first Business Day of each
month deliver to Agent a report detailing the amount of Money Market Advances
outstanding from each Bank on each day of the prior month.
5.5. Books and Records. Keep and maintain satisfactory and adequate books
and records of account in accordance with GAAP and make or cause the same to
be made available to Banks or their agents or nominees at any reasonable time
upon reasonable notice for inspection and to make extracts thereof.
5.6. Insurance. Keep and maintain all of its property and assets in good
order and repair and fully covered by insurance with reputable and financially
sound insurance companies against such hazards and in such amounts as is
customary in the industry, and upon any Bank's request, furnish to Banks
evidence of such insurance.
5.7. Litigation; Event of Default. Notify Agent in writing immediately of:
(a) the institution of any litigation, the commencement of any administrative
proceedings, the happening of any event or the assertion or threat of any
claim which could materially adversely affect its business, operations or
financial condition, and (b) the occurrence of any Event of Default or Default
hereunder and immediately upon the occurrence of any Event of Default, deliver
a certificate of the chief financial officer of Borrowers setting forth the
details thereof and the action which the applicable Borrower is taking or
proposes to take with respect thereto.
5.8. Taxes. Pay and discharge all taxes, assessments or other governmental
charges or levies imposed on it or any of its property or assets prior to the
date on which any penalty for non-payment or late payment is incurred, unless
the same are currently being contested in good faith by appropriate
proceedings.
5.9. Costs and Expenses. Pay or reimburse Agent for all reasonable out-of-
pocket costs and expenses (including but not limited to attorneys' fees and
disbursements) Agent may pay or incur in connection with the preparation,
review and negotiation of this Agreement and all waivers, consents and
amendments in connection with this Agreement and all other documentation
related thereto, and pay or reimburse Banks for all costs and expenses
(including without limitation attorney's fees and disbursements) in connection
with the collection or enforcement of this Agreement, the Notes or the Loan,
including without limitation any fees and disbursements incurred in defense of
or to retain amounts of principal, interest or fees paid. All obligations
provided for in this Paragraph 5.9 shall survive any termination of this
Agreement or the Commitment and the repayment of the Loan.
5.10. Compliance.
(a) Comply in all respects with all local, state and federal, foreign
and domestic, laws and regulations applicable to its business, including
without limitation the Environmental Control Statutes, the Securities Act of
1933, the Securities Exchange Act of 1934, and the provisions and requirements
<PAGE>80
of all franchises, permits, certificates of compliance and approval issued by
regulatory authorities and other like grants of authority held by Borrowers,
except where failure to be in compliance would not have a material adverse
effect on the financial condition of the applicable Borrower; and notify Agent
immediately in detail of any such actual or alleged failure to comply with or
perform, breach, violation or default under any such laws or regulations or
under the terms of any of such franchises or licenses, grants of authority, or
of the occurrence or existence of any facts or circumstances which with the
passage of time, the giving of notice or otherwise could create such a breach,
violation or default or could occasion the termination of any of such
franchises or grants of authority.
(b) With respect to the Environmental Control Statutes, notify Agent
when, in connection with the conduct of Borrowers' business or operations, any
person, or EPA or any state or local or foreign agency or governmental body
provides oral or written notification to any Borrower or any Subsidiary with
regard to an actual or imminently threatened removal, spill, release or
discharge of hazardous or toxic wastes, substances or petroleum products to
the extent that any action taken with respect to the subject of such
notification could have a material adverse effect on the financial condition
of the applicable Borrower; and notify Agent in detail immediately upon the
receipt by a Borrower or any Subsidiary of an assertion of liability under the
Environmental Control Statutes, any actual or alleged failure to comply with
or perform, breach, violation or default under any such laws or regulations or
under the terms of any of such franchises or grants of authority, or of the
occurrence or existence of any facts, events or circumstances which with the
passage of time, the giving of notice, or both, could create such a breach,
violation or default or could occasion the termination of any of such
franchises or grants of authority.
5.11. ERISA.
(a) Comply in all material respects with the provisions of ERISA to the
extent applicable to any employee benefit plan maintained for any of
Borrowers' or a Subsidiary's employees or any multiemployer pension plan to
which a Borrower, any Subsidiary or any ERISA Affiliate is required to
contribute; not incur any material accumulated funding deficiency or
withdrawal liability (within the meaning of ERISA), or any material liability
to the PBGC; and not permit any Prohibited Transaction or Reportable Event or
other event to occur which could have a material adverse effect on the
financial condition of Borrowers or any of them or any employee benefit plan
or which may be the basis for the PBGC to assert a material liability against
it or which may result in the imposition of a lien on Borrowers' properties or
assets.
(b) Notify Agent in writing promptly after it has come to the attention
of senior management of Borrowers of the assertion or threat of any Prohibited
Transaction or Reportable Event, the existence of any fact or set of facts or
event (including without limitation any change in the actuarial assumptions or
funding methods of any employee benefit plan or the incurrence of any
withdrawal liability under any multiemployer plan) which could have a Material
Adverse Effect or may be the basis for the PBGC to assert a material liability
against it or impose a lien on Borrowers' properties or assets. Borrowers
shall also provide to Agent promptly after receipt thereof, copies of (i) all
notices received by any of Borrowers or any ERISA Affiliate of the
<PAGE>81
reorganization of any multiemployer pension plan or the PBGC's intent to
terminate any employee benefit plan or multiemployer pension plan administered
or maintained by any of Borrowers or any ERISA Affiliate, or to have a trustee
appointed to administer any such employee benefit plan; and (ii) at the
request of a Bank each annual report and all accompanying schedules, the most
recent actuarial reports, the most recent financial information concerning the
financial status of each employee benefit plan or multiemployer plan
administered or maintained by any of Borrowers or any ERISA Affiliate or to
which any of them makes contributions, and schedules showing the amounts
contributed to each such plan by or on behalf of any of Borrowers or any ERISA
Affiliate in which any of their personnel participate or from which such
personnel may derive a benefit, and each Schedule B (Actuarial Information) to
the annual report filed by any of Borrowers or any ERISA Affiliate with the
Internal Revenue Service with respect to each such plan.
5.12. Consolidated Current Ratio. Maintain at all times a Consolidated
Current Ratio of not less than 1.8 to 1.
5.13. Minimum Consolidated Working Capital. Maintain as of the last day of
each fiscal quarter Consolidated Working Capital of not less than Forty
Million Dollars ($40,000,000).
5.14. Minimum Consolidated Tangible Net Worth. Maintain as of the last day of
each fiscal quarter (A) Consolidated Tangible Net Worth of not less than
(B) Thirty-Three Million Seven Hundred Thousand Dollars ($33,700,000) as of
December 31, 1992, increased for each fiscal quarter thereafter as of the last
day of each such fiscal quarter on a cumulative basis, by an amount equal to
fifty percent (50%) of net profit after taxes for such fiscal quarter (as
determined in accordance with GAAP, but excluding for the first quarter of
1993 any non-cash expense adjustment made in such quarter as a result of
Standard 106 of the Financial Accounting Standards Board) with no reduction
for losses accrued during any such fiscal quarter.
5.15. Consolidated Total Liabilities to Tangible Net Worth Ratio. Maintain,
during the periods or on the dates set forth in the left hand column, as of
the last day of each fiscal quarter, the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth in an amount not to exceed the
ratios set forth in the right hand column:
Period or Quarter Ending Ratio
Date hereof
through 3/31/94 3.00:1
6/30/94 3.20:1
9/30/94-3/31/95 3.00:1
6/30/95 3.20:1
9/30/95-12/31/95 3.00:1
3/31/96-12/31/96 2.80:1
3/31/97 and thereafter 2.60:1
5.16. Minimum Consolidated Cash Flow Ratio. Maintain as of the last day of
each fiscal quarter, for the four most recently-ended fiscal quarters, a
Consolidated Cash Flow Ratio of not less than 3 to 1.
<PAGE>82
5.17. Consolidated Fixed Charge Coverage Ratio. So long as any Term Note is
outstanding, maintain as of the last day of each fiscal quarter, for such
fiscal quarter as to the quarters ended December 31, 1993, March 31, 1994,
June 30, 1994 and September 30, 1994, and thereafter for the four most
recently-ended fiscal quarters, a Consolidated Fixed Charge Coverage Ratio of
not less than 1.25 to 1.
5.18. Subsequent Credit Terms. Notify Agent in writing not less than five
(5) Business Days prior to entering into any new credit arrangement or any
amendment or modification of any credit arrangement. Upon Borrowers' entry
into any such new arrangement or modification or amendment pursuant to which
Borrowers or any of them agree to financial covenants which are more
restrictive to VWR and its Consolidated Subsidiaries than those contained in
Sections Five and Six hereof, the corresponding covenants, terms and
conditions of this Agreement shall be and shall be deemed to be automatically
and immediately amended to conform with and to include the applicable
covenants, terms and/or conditions of such other agreement; provided, however,
that this paragraph 5.18 shall not be applicable or be deemed to affect any
provision of this Agreement if any new arrangement or any amendment or
modification is less restrictive to VWR and its Consolidated Subsidiaries.
Borrowers hereby agree promptly to execute and deliver any and all such
documents and instruments and to take all such further actions as Agent may
deem necessary or appropriate to effectuate the provisions of this Paragraph
5.18.
5.19. Deposit Accounts. Maintain a deposit account with each Bank.
5.20. Management Changes. Notify Agent in writing within thirty (30) days
after any change of its executive officers.
5.21. Other Documents/Information. Deliver to Agent any and all other
documents, instruments and information, financial or otherwise, reasonably
requested by Agent on behalf of Banks from time to time and promptly upon the
mailing thereof to the shareholders of VWR, copies of all financial
statements, reports and proxy statements so mailed, and upon the filing
thereof, copies of all registration statements and annual, quarterly or
current reports which VWR shall have filed with the Securities and Exchange
Commission.
5.22. Successor Agent. In the event of the appointment of any successor
Agent pursuant to Paragraph 9.15 hereof, execute and deliver any documents
reasonably requested by Banks to effectuate and confirm the transfer to such
successor Agent of all rights, powers, duties, obligations and property vested
in its predecessor Agent hereunder.
SECTION 6
NEGATIVE COVENANTS
So long as the Commitment or any indebtedness of Borrowers to Banks remains
outstanding hereunder, each Borrower covenants and agrees that without Banks'
prior written consent, it will not and it will not permit any Subsidiary to:
6.1. Guaranties. Guarantee or assume or agree to become liable in any way
for, either directly or indirectly, any indebtedness or liability of others
<PAGE>83
except: (i) as set forth on Exhibit F attached hereto; (ii) to endorse checks
or drafts in the ordinary course of business; (iii) other guaranties in the
ordinary course of business up to a maximum aggregate principal amount of
$500,000; and (iv) guaranties of indebtedness of Subsidiaries to the extent
the incurrence of such indebtedness would be otherwise permitted hereunder.
6.2. Loans. Make any loans or advances to others except: (i) loans or
advances to another Borrower; (ii) loans or advances to employees in an
aggregate principal amount not in excess of One Million Dollars ($1,000,000)
outstanding at any time; (iii) a five-year subordinated line of credit not to
exceed the aggregate principal amount of $5,000,000 to Momentum Graphics Inc.
("Momentum") and which matures February 28, 1995; provided, that VWR
acknowledges and agrees that it will not make any advance to Momentum if: (a)
after giving effect to such advance, there would exist an Event of Default or
Default under the terms of this Agreement; (b) as of the date of any such
advance the amount of the advance were subtracted from total assets in
calculating Consolidated Tangible Net Worth, on a pro forma basis as of the
most recently-ended fiscal quarter, and as a result thereof VWR and its
Consolidated Subsidiaries would not be in compliance with Paragraph 5.14
hereof; or (c) as of the date of any such advance the amount of the advance
were written off by VWR and as a result thereof, VWR and its Consolidated
Subsidiaries would fail to meet, on a pro forma basis as of the most recently-
ended fiscal quarter, any of the covenants set forth in this Agreement; and
(iv) VWR may lend up to Four Million Dollars ($4,000,000) to an ESOP.
6.3. Liens and Encumbrances. Create or suffer to exist any mortgage, deed of
trust, security interest or lien on any of its or its Subsidiaries' property
or assets of any kind or nature other than those which are:
(a) pledges and deposits made in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, pensions and
other social security benefits;
(b) liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations,
surety, customs and appeal bonds and other obligations of like nature,
incurred as an incident to and in the ordinary course of business;
(c) liens imposed by law, such as carriers', warehousemen's, mechanics',
materialmen's and vendors' liens, incurred in good faith in the ordinary
course of business and securing obligations which are not yet due or which are
being contested in good faith by appropriate proceedings;
(d) liens securing the payment of taxes, assessments, and governmental
charges or levies, either (i) not delinquent or (ii) being contested in good
faith by appropriate legal or administrative proceedings and as to which the
applicable Borrower or a Subsidiary, as the case may be, shall have set aside
on its books adequate reserves as required by GAAP;
(e) zoning restrictions, easements, licenses, reservations, provisions,
covenants, conditions, waivers, restrictions on the use of property or minor
irregularities of title (and with respect to leasehold interests, mortgages,
obligations, liens and other encumbrances incurred, created, assumed or
permitted to exist and arising by, through or under or asserted by a landlord
<PAGE>84
or owner of the leased property, with or without consent of the lessee), none
of which materially impairs (i) the use of any parcel of property material to
the operation of the business of a Borrower or any Subsidiary or (ii) the
value of such property for the purpose of such business;
(f) liens upon any property acquired or newly constructed by a Borrower
or any Subsidiary which are created or incurred contemporaneously with or
within ninety (90) days after such acquisition or construction to secure or
provide for the payment of any part of the purchase price of such property or
the cost of such construction (but no additional amounts); provided that any
such mortgage or security interest shall not apply to any other property of a
Borrower or any Subsidiary;
(g) liens on property existing at the time such property is acquired by
a Borrower or a Subsidiary, and liens on property of a Subsidiary existing at
the time it becomes a Subsidiary provided, in each case, that such liens were
not created in contemplation of the acquisition by a Borrower or such
Subsidiary of such property or the acquisition by a Borrower of such
Subsidiary;
(h) liens on the property or assets of a Subsidiary in favor of VWR or
another Subsidiary;
(i) liens existing on the date of this Agreement and disclosed in the
financial statements referred to in Paragraph 3.9 hereof or the notes thereto;
(j) extensions, renewals and replacements of liens referred to in
subparagraphs (a) through (i) of this Paragraph 6.3; provided, that any such
extension, renewal or replacement lien shall be limited to property or assets
secured by the lien extended, renewed or replaced and that the obligations
secured by such extension, renewal or replacement lien shall be in an amount
not greater than the amount of the obligations secured by the lien extended,
renewed or replaced; and
(k) other liens incurred in the ordinary course of business of a
Borrower and its Subsidiaries securing indebtedness not in excess of the
aggregate principal amount of One Million Dollars ($1,000,000) for all
Borrowers and Subsidiaries; provided, however, that there shall be no liens or
encumbrances against inventory, accounts, contract rights, chattel paper,
instruments or documents of any kind derived from the sale of goods or
services, and that such liens shall not be covered by subparagraph (j) above.
6.4. Transfer of Assets; Liquidation. Sell, lease, transfer or otherwise
dispose of any part or amount of its assets, real or personal, other than such
transactions in the normal and ordinary course of business for value received;
or discontinue or liquidate any substantial part of its operations or
business.
6.5. Acquisitions and Investments. (i) Except in the ordinary course of
business, purchase or otherwise acquire (including without limitation by way
of share exchange) any part or amount of the capital stock or assets of, or
make any investments in, any other firm or corporation; (ii) merge or
consolidate with or into any other firm or corporation; (iii) enter into any
new business activities or ventures not directly related to its present
business; or (iv) create any Subsidiary unless within thirty (30) days of its
<PAGE>85
formation such Subsidiary becomes a party to this Agreement and executes and
becomes jointly and severally liable on any and all Notes which are then or
thereafter outstanding and executes such documents and joinders as Required
Banks shall request; provided, however, that Borrowers may take such actions
enumerated in subparagraphs (i) and (ii) above provided that VWR is the
surviving corporation and any such action shall not create and there shall not
be an Event of Default or Default hereunder.
6.6. Use of Proceeds. Use any of the proceeds of the Loan, directly or
indirectly, to purchase or carry margin securities within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System; or
engage as its principal business in the extension of credit for purchasing or
carrying such securities.
SECTION 7
ADDITIONAL COLLATERAL AND RIGHT OF SET OFF
7.1. Additional Collateral. As additional collateral for the payment of any
and all of Borrowers' indebtedness and obligations to Banks, whether matured
or unmatured, now existing or hereafter incurred or created hereunder or
otherwise, Borrowers hereby grant to Banks a security interest in and lien
upon all funds, balances or other property of any kind of Borrowers, or in
which any Borrower has an interest, limited to the interest of Borrowers
therein, but only to the extent such funds, balances or other property are now
or hereafter in the possession, custody or control of any Bank.
7.2. Right of Set-off. Each Bank is hereby authorized at any time and from
time to time, 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 and other indebtedness at any time owing by such Bank to or for
the credit or the account of each Borrower against any and all of the
obligations of Borrowers now or hereafter existing under this Agreement and
the Note held by such Bank, irrespective of whether such Bank shall have made
any demand under this Agreement or such Notes and although such obligations
may be unmatured. Each Bank agrees promptly to notify Borrowers after any
such set-off and application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section 7 are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) which such Bank may have.
SECTION 8
DEFAULT
8.1. Events of Default. Each of the following events shall be an Event of
Default hereunder:
(a) If Borrowers shall fail to pay when due any installment of principal
or any other sum payable to Banks hereunder or otherwise or if Borrowers shall
fail to pay when due, or within three (3) Business Days thereafter, any
interest payable to Banks hereunder;
<PAGE>86
(b) If any representation or warranty made herein or in connection
herewith or in any statement, certificate or other document furnished
hereunder is or becomes false or misleading in any material respect;
(c) If any Borrower shall default in the payment or performance of any
obligation or indebtedness to another in excess of $1,000,000 aggregate
principal amount, whether now existing or hereafter incurred;
(d) If any Borrower shall default in or fail to observe at any test date
the covenants set forth in Paragraphs 5.12 through 5.17 or 6.1 through 6.5
hereof;
(e) If any Borrower shall default in the performance of any other
agreement or covenant contained herein (other than as provided in
subparagraphs (a), (b) or (d) above) or in any document executed or delivered
in connection herewith, and such default shall continue uncured for twenty
(20) days after notice thereof to Borrowers given by Agent pursuant to the
direction of Required Banks;
(f) If: (i) any person or group within the meaning of Section 13(d) (3)
of the Securities Exchange Act of 1934, as amended (the "1934 Act") and the
rules and regulations promulgated thereunder shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act), directly or
indirectly, of securities of VWR (or other securities convertible into such
securities) representing 10% of the combined voting power of all securities of
VWR entitled to vote in the election of directors (hereinafter called a
"Controlling Person"); or (ii) a majority of the Board of Directors of VWR
shall cease for any reason to consist of (A) individuals who on the date
hereof were serving as directors of VWR or (B) individuals who subsequently
become members of the Board if such individuals' nomination for election or
election to the Board is recommended or approved by a majority of the Board of
Directors of VWR. For purposes of clause (i) above, a person or group shall
not be a Controlling Person if such person or group holds voting power in good
faith and not for the purpose of circumventing this subparagraph (f) as an
agent, bank, broker, nominee, trustee, or holder of revocable proxies given in
response to a solicitation pursuant to the 1934 Act, for one or more
beneficial owners who do not individually, or, if they are a group acting in
concert, as a group, have the voting power specified in clause (i) above;
(g) If VWR ceases to own, directly or indirectly, one-hundred percent
(100%) of the legal and beneficial ownership of VWR Canada, of Scientific
Holdings and of VWR International, or if any additional Subsidiary that has
executed a joinder hereto pursuant to Paragraph 6.5 hereof ceases to be a
Subsidiary, except if such cessation of ownership results from such entity
being dissolved in accordance with Paragraph 6.4 hereof;
(h) If custody or control of any substantial part of the property of any
Borrower shall be assumed by any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency; or if any
governmental regulatory authority or judicial body shall make any other final
non-appealable determination the effect of which would be to affect materially
and adversely the operations of any Borrower as now conducted;
(i) If any Borrower shall become insolvent, bankrupt or generally fail to pay
its debts as such debts become due; if any Borrower is adjudicated insolvent
<PAGE>87
or bankrupt; or if any Borrower admits in writing its inability to pay its
debts; or if any Borrower shall suffer the appointment of a custodian,
receiver or trustee for it or substantially all of its property and if
appointed without its consent, not be discharged within thirty (30) days; or
if any Borrower makes an assignment for the benefit of creditors; or if any
Borrower suffers proceedings under any law related to bankruptcy, insolvency,
liquidation or the reorganization, readjustment or the release of debtors to
be instituted against it and if contested by it not dismissed or stayed within
twenty (20) days; or if proceedings under any law related to bankruptcy,
insolvency, liquidation, or the reorganization, readjustment or the release of
debtors is instituted or commenced by any Borrower; or if any order for relief
is entered relating to any of the foregoing proceedings; or if any Borrower
shall call a meeting of its creditors with a view to arranging a composition
or adjustment of its debt; or if any Borrower shall by any act or failure to
act indicate its consent to, approval of or acquiescence in any of the
foregoing; or
(j) If any judgment, writ, warrant or attachment or execution or similar
process which calls for payment or presents liability in excess of $1,000,000
shall be rendered or issued against or levied against any Borrower or its
property and such process shall not be paid, waived, stayed, vacated,
discharged, settled, satisfied or fully bonded within sixty (60) days after
its issuance or levy.
8.2. Remedies. Upon the happening of any Event of Default and at any time
thereafter, at the election of Required Banks, and by notice by Agent to
Borrowers (except if an Event of Default described in Paragraph 8.1(j) shall
occur in which case acceleration shall occur automatically without notice),
Required Banks may declare the entire unpaid balance, principal, interest and
fees, of all indebtedness of Borrowers to Banks, hereunder or otherwise, to be
immediately due and payable. Upon such declaration or deemed declaration, the
Commitment shall immediately and automatically terminate and Banks shall have
no further obligation to make any Advances and shall have the immediate right
to enforce or realize on any collateral security granted therefor in any
manner or order they deem expedient without regard to any equitable principles
of marshalling or otherwise. In addition to any rights granted hereunder or
in any documents delivered in connection herewith, Banks shall have all the
rights and remedies granted by any applicable law, all of which shall be
cumulative in nature.
SECTION 9
THE BANKS
This Section sets forth the relative rights and duties of Agent and Banks
respecting the Loan and does not confer any enforceable rights on Borrowers
against Banks or create on the part of Banks any duties or obligations to
Borrowers.
9.1. Application of Payments.
(a) Except as provided in subparagraph (b) below, Agent shall apply all
payments of principal, interest, fees or other amounts hereunder made to Agent
by or on behalf of Borrowers, to Banks on the basis of their respective
Participation Percentages, except that (i) all payments of principal and
<PAGE>88
interest with respect to any Money Market Advance shall be paid to the Bank
which made such Money Market Advance, (ii) the fee payable under Paragraph
2.12 shall be paid directly to each Bank in accordance with the terms thereof,
and (iii) the fee payable under Paragraph 2.13 hereof shall be paid solely to
Agent. Such distribution of payments shall be made promptly in federal funds
immediately available at the office of each Bank set forth above.
(b) Payments (whether voluntary, involuntary, or otherwise, except as
provided in Paragraph 9.2 hereof with respect to the exercise of set-off
rights) received by a Bank after the occurrence and during the continuance of
an Event of Default shall be paid to Agent for distribution to the Banks pro
rata on the basis of the ratio which each Bank's total amount of outstanding
Advances (including Money Market Advances and Pro Rata Advances) and Term
Loans bears to the aggregate principal amount of all Advances (including Money
Market Advances and Pro Rata Advances) and Term Loans then outstanding.
9.2. Setoff. In the event a Bank, by exercise of its right of setoff, or
otherwise, reduces indebtedness owing to it hereunder by an amount greater
than its pro rata share of such amount based upon the Banks' respective shares
of principal indebtedness outstanding immediately before such setoff or other
reduction, such Bank shall purchase a portion of the indebtedness hereunder
owing to each other Bank so that after such purchase each Bank shall hold its
pro rata share of all the indebtedness then outstanding hereunder, based upon
the Banks' respective shares of principal indebtedness outstanding immediately
before such setoff or other reduction, provided that if all or any portion of
such excess payment is thereafter recovered from such Bank, such purchase
shall be rescinded and the purchase price restored to the extent of any such
recovery, but without interest.
9.3. Modifications and Waivers. No modification or amendment hereof, consent
hereunder or waiver of any Event of Default shall be effective except by
written consent of the Required Banks, provided, however, that the written
consent of all Banks shall be required to (a) decrease the rate of interest,
(b) change the amount of the Commitment or the Revolving Credit Commitment, or
the Banks' respective Maximum Principal Amounts, except as provided in the
definition of such terms and in Paragraph 2.8 hereof, or the definition of
Required Banks, (iii) amend, modify, wave, discharge or suspend compliance
with any date of payment hereunder or the definition of the Termination Date,
(iv) modify, amend, waive, discharge or suspend compliance with the commitment
fee, or (v) modify, amend, waive, discharge or suspend compliance with this
Paragraph 9.3 hereof. Any amendment or waiver made pursuant to this Paragraph
9.3 shall apply to and bind all of the Banks and any future holder of any
Notes.
9.4. Obligations Several. The obligations of the Banks hereunder are
several, and each Bank hereunder shall not be responsible for the obligations
of the other Banks hereunder, nor, will the failure of one Bank to perform any
of its obligations hereunder relieve the other Banks from the performance of
their respective obligations hereunder.
9.5. Banks' Representations. Each Bank represents and warrants to the other
Banks that (i) it has been furnished all information it has requested for the
purpose of evaluating its proposed participation under this Agreement; and
(ii) it has decided to enter into this Agreement on the basis of its
independent review and credit analysis of Borrowers, this Agreement and the
<PAGE>89
documentation in connection therewith and has not relied for such analysis on
any information or analysis provided by any other Bank.
9.6. Investigation. No Bank shall have any obligation to the others to
investigate the condition of Borrowers or any of the Collateral or any other
matter concerning the Loan.
9.7. Powers of Agent. Agent shall have and may exercise those powers
specifically delegated to Agent herein, together with such powers as are
reasonably incidental thereto.
9.8. General Duties of Agent, Immunity and Indemnity. Agent will promptly
deliver to Banks financial information and other material information
regarding Borrowers received by it from Borrowers, and which has not been
delivered by Borrowers to Banks. In performing its duties as Agent hereunder,
Agent will take the same care as it takes in connection with loans in which it
alone is interested, subject to the limitations on liabilities contained
herein; provided that Agent shall not be obligated to ascertain or inquire as
to the performance of any of the terms, covenants or conditions hereof by
Borrowers. Neither Agent nor any of its directors, officers, agents or
employees shall be liable for any action or omission by any of them hereunder
or in connection herewith except for gross negligence or willful misconduct.
Subject to such exception, each of the Banks hereby indemnifies Agent on the
basis of such Bank's Participation Percentage, against any such liability,
claim, loss or expense.
9.9. No Responsibility for Representations or Validity, etc. Each Bank
agrees that Agent shall not be responsible to any Bank for any
representations, statements, or warranties of Borrowers herein. Neither Agent
nor any of its directors, officers, employees or agents shall be responsible
for the validity, effectiveness, sufficiency, perfection or enforceability of
this Agreement and any collateral security therefor, or any documents relating
thereto or for the priority of any of Banks' security interests in any such
collateral security.
9.10. Action on Instruction of Banks; Right to Indemnity. Agent shall in all
cases be fully protected in acting or refraining from acting hereunder in
accordance with written instructions to it signed by Required Banks unless the
consent of all the Banks is expressly required hereunder in which case Agent
shall be so protected when acting in accordance with such instructions from
all the Banks. Such instructions and any action taken or failure to act
pursuant thereto shall be binding on all the Banks, provided that except as
otherwise provided herein, Agent may act hereunder in its own discretion
without requesting such instructions. Agent shall be fully justified in
failing or refusing to take any action hereunder unless it shall first be
specifically indemnified to its satisfaction by the other Banks on the basis
of their respective Participation Percentages, against any and all liability
and expense which it may incur by reason of taking or continuing to take any
such action.
9.11. Employment of Agents. In connection with its activities hereunder,
Agent may employ agents and attorneys-in-fact and shall not be answerable,
except as to money or securities received by it or its authorized agents, for
the default or misconduct of agents or attorneys-in-fact selected with
reasonable care.
<PAGE>90
9.12. Reliance on Documents. Agent shall be entitled to rely upon (a) any
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons and (b) upon the opinion of its
counsel with respect to legal matters.
9.13. Agent's Rights as a Bank. With respect to its share of the
indebtedness hereunder, Agent shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not Agent. Each
of the Banks may accept deposits from, lend money to, and generally engage in
any kind of banking or trust business with Borrowers as if it were not Agent
or a Bank hereunder.
9.14. Expenses. Each of the Banks shall reimburse Agent, from time to time
at the request of Agent, for its share of any expenses incurred by Agent,
based on such Bank's Participation Percentage, in connection with the
performance of its functions hereunder (excluding, however, unless an Event of
Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder), provided
however that in the event Banks shall reimburse Agent for expenses for which
Borrowers subsequently reimburse Agent, Agent shall remit to each Bank the
respective amount received from such Bank against such expenses, and provided
further, that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of Agent.
9.15. Resignation of Agent. Agent may at any time resign its position as
Agent, without affecting its position as a Bank, by giving written notice to
Banks and Borrowers. The Borrowers and Required Banks may at any time request
that Agent resign its position as Agent and Agent agrees to so resign in
accordance with the provisions hereof. Any such resignation shall take effect
upon the appointment of a successor agent in accordance with this Paragraph.
In the event Agent shall resign, Banks shall appoint a Bank as successor
agent, which successor Agent shall be subject to the approval of Borrowers.
If within thirty (30) days of the Agent's notice of resignation no successor
agent shall have been appointed by Banks and approved by Borrowers and
accepted such appointment, then Agent, in its discretion may appoint any other
Bank as a successor agent.
9.16. Successor Agent. The successor Agent appointed pursuant to Paragraph
9.15 shall execute and deliver to its predecessor and Banks an instrument in
writing accepting such appointment, and thereupon such successor, without any
further act, deed or conveyance, shall become fully vested with all the
properties, rights, duties and obligations of its predecessor Agent. The
predecessor Agent shall deliver to its successor Agent forthwith all
collateral security, documents and moneys held by it as Agent, if any,
whereupon such predecessor Agent shall be discharged from its duties and
obligations as Agent under this Agreement.
9.17. Collateral Security. Agent will hold, administer and manage any
collateral security pledged from time to time hereunder either in its own name
or as Agent, but each Bank shall hold a direct, undivided beneficial interest
therein, on the basis of its share of the indebtedness outstanding hereunder,
by reason of and as evidenced by this Agreement, in accordance with Paragraph
9.1 hereof.
<PAGE>91
9.18. Enforcement by Agent. All rights of action under this Agreement and
under the Notes and all rights to the collateral security, if any, hereunder
may be enforced by Agent and any suit or proceeding instituted by Agent in
furtherance of such enforcement shall be brought in its name as Agent without
the necessity of joining as plaintiffs or defendants any other Banks, and the
recovery of any judgment shall be for the benefit of Banks subject to the
expenses of Agent.
SECTION 10
MISCELLANEOUS
10.1. Indemnification and Release Provisions. Borrowers hereby agree to
defend Agent and each Bank and their respective directors, officers, agents,
employees and counsel from, and hold each of them harmless against, any and
all losses, liabilities (including without limitation settlement costs and
amounts, transfer taxes, documentary taxes, or assessments or charges made by
any governmental authority), claims, damages, interest judgments, costs, or
expenses, including without limitation fees and disbursements of counsel,
incurred by any of them arising out of or in connection with or by reason of
this Agreement, the Commitment, or the making of the Loan, including without
limitation, any and all losses, liabilities, claims, damages, interests,
judgments, costs or expenses relating to or arising under any Environmental
Control Statute or the application of any such Statute to any Borrower's or a
Subsidiary's properties or assets. All obligations provided for in this
Paragraph 10.1 shall survive any termination of this Agreement or the
Commitment and the repayment of the Loan.
10.2. Participations and Assignments. Borrowers hereby acknowledge and agree
that a Bank may at any time: (a) grant participations in all or any portion of
its Maximum Principal Amount of the Loan or any Note or of its right, title
and interest therein or in or to this Agreement (collectively,
"Participations") to any other lending office or to any other bank, lending
institution or other entity which has the requisite sophistication to evaluate
the merits and risks of investments in Participations ("Participants");
provided, however, that: (i) all amounts payable by Borrowers hereunder shall
be determined as if such Bank had not granted such Participation; and (ii) any
agreement pursuant to which any Bank may grant a Participation: (x) shall
provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of Borrowers hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provisions
of this Agreement; (y) may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement without the consent of the
Participant if such amendment, modification or waiver would reduce the
principal of or rate of interest on the Loan or postpone the date fixed for
any payment of principal of or interest on the Loan; and (z) shall not relieve
such Bank from its obligations, which shall remain absolute, to make Advances
hereunder; and (b) assign all or any portion of its rights under the Loan with
the prior written consent of the Agent and Borrowers together with the payment
to the Agent of a $2,000 transfer fee.
10.3. Binding and Governing Law. This Agreement and all documents executed
hereunder shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns and shall be governed as to
<PAGE>92
their validity, interpretation and effect by the laws of the Commonwealth of
Pennsylvania.
10.4. Survival. All agreements, representations, warranties and covenants of
Borrowers contained herein or in any documentation required hereunder shall
survive the execution of this Agreement and the making of the Loan hereunder
and except for Paragraphs 5.9 and 10.1 which provide otherwise, will continue
in full force and effect as long as any indebtedness or other obligation of
Borrowers to any Bank remains outstanding.
10.5. No Waiver; Delay. If Banks or any of them shall waive any power, right
or remedy arising hereunder or under any applicable law, such waiver shall not
be deemed to be a waiver upon any other Bank or the later occurrence or
recurrence of any of said events with respect to any Bank. No delay by Banks
in the exercise of any power, right or remedy shall, under any circumstances,
constitute or be deemed to be a waiver, express or implied, of the same and
no course of dealing between the parties hereto shall constitute a waiver of
Banks' powers, rights or remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
10.6. Modification; Waiver. No modification or waiver of any provision of
this Agreement or any Note, nor any consent to any departure by Borrowers
herefrom or therefrom, shall in any case be effective unless the same be in
writing, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No notice to
or demand on Borrowers in any case shall entitle Borrowers to any other or
further notice or demand in any similar or other circumstances.
10.7. Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
10.8. Notices. Any notice, request or consent required hereunder or in
connection herewith shall be deemed satisfactorily given if in writing
(including facsimile transmissions) and delivered by hand, transmitted or
mailed (registered or certified mail) to the parties at their respective
addresses or telecopier number set forth below or such other addresses or
telecopier numbers as may be given by any party to the others in writing:
if to Borrowers or any of them:
c/o VWR Corporation
1310 Goshen Parkway
West Chester, PA 19380
Attention: Walter S. Sobon, Vice President
of Finance and Chief Financial Officer
Telecopier: (215) 436-1760
<PAGE>93
with a copy to:
Drinker, Biddle & Reath
1000 Westlakes Drive
Suite 300
Berwyn, PA 19312
Attention: Thomas E. Wood, Esq.
Telecopier: (215) 993-8585
if to CoreStates:
CoreStates Bank, N.A.
1500 Market Street
Philadelphia, PA 19101-7618
Attention: Joseph Herbst, Vice President
Telecopier: (215) 973-6745
if to Seafirst:
Seattle-First National Bank
Northwest National Division
701 Fifth Ave., 12th Floor
Seattle Washington 98104
Attention: John Wilson
Telecopier: (206) 358-3113
if to PNC:
PNC Bank, National Association
P.O. Box 7648
Broad and Chestnut Streets
Philadelphia, PA 19101
Attention: Victoria Ziff, Vice President
Telecopier: (215) 585-5972
Failure to provide notice to Drinker, Biddle & Reath as provided above shall
not cause to be ineffective any notice provided to Borrowers which is
otherwise in accordance with the terms hereof.
10.9. Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, provided however that
such extension of time shall be included in the computation of interest due in
conjunction with such payment or other fees due hereunder, as the case may be.
10.10. Time of Day. All time of day restrictions imposed herein shall be
calculated using Agent's local time.
10.11. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
<PAGE>94
10.12. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such
counterparts appeared on one document, and each such counterpart shall be
deemed to be an original.
10.13. Withholding Taxes Clause. All amounts payable under this Agreement,
whether principal, interest or otherwise, shall be paid in full, free and
clear of any present or future taxes, levies, imposts, duties, charges, fees
or withholdings and without set-off or counterclaim or any restriction or
condition or deduction whatsoever. If Borrowers or any of them are compelled
by law to make any deduction or withholding, it or they will ensure that the
same does not exceed the minimum liability therefor and will promptly pay
Agent (for the benefit of Banks) such additional amount as will result in the
net amount received by Banks being equal to the full amount which would have
been receivable had there been no deduction or withholding.
10.14. Currency Conversion Clause.
(a) All payments due hereunder shall be made in United States currency.
If any amount due from Borrowers under this Agreement or any order or judgment
given or made in relation hereto has to be converted from United States
currency (the "first currency") in which the same is payable hereunder or
under such order or judgment into another currency (the "second currency") for
the purpose of (i) making or filing a claim or proof against Borrowers, (ii)
obtaining an order or judgment in any court or other tribunal, or (iii)
enforcing any order or judgment given or made in relation hereto, Borrowers
hereby undertake to indemnify Banks from and against any loss suffered as a
result of any discrepancy between (a) the rate of exchange used for such
purpose to convert the amount in question from the first currency into the
second currency and (b) the rate or rates of exchange of which Banks may in
the ordinary course of business purchase the first currency with the second
currency upon receipt of an amount paid to it in satisfaction, in whole or in
part, of any such order, judgment, claim or proof.
(b) Any such conversion shall be made at the buying spot rate of
exchange at which Banks could purchase the first currency with the second
currency at the close of business on the day before the day on which the
judgment is given at the place where such court is located. If there is a
change in such rate of exchange prevailing between the day before the judgment
is given and the date of payment thereof, Borrowers agree to pay such
additional amounts (if any) as may be necessary to ensure that the amount paid
on such date is the amount in the second currency which, when converted into
the first currency at such rate of exchange in effect on the date of payment,
is the amount then due under this Agreement in the first currency.
(c) Any amount due from Borrowers under this Paragraph 10.14 will be due
as a separate debt and shall not be affected by or merged into any judgment
being obtained for any other amounts due under or in respect of this
Agreement. In no event, however, shall Borrowers be required to pay more in
the first currency at such rate of exchange when payment is made than the
amount of the first currency stated to be due hereunder, so that in any event
Borrowers' obligations hereunder will be effectively maintained as obligations
in the first currency.
<PAGE>95
10.15. Submission to Jurisdiction.
(a) Borrowers hereby irrevocably submit to the jurisdiction of any
Commonwealth of Pennsylvania or Federal court sitting in Philadelphia,
Pennsylvania, over any action or proceeding arising out of or relating to this
Agreement. VWR Canada, Scientific Holdings and VWR International each hereby
irrevocably appoint VWR (the "Process Agent"), as its agent to receive on its
behalf service of copies of summons and complaints and any other process which
may be served in any action or proceeding arising hereunder. Such service may
be made by mailing or delivering a copy of such process by registered or
certified mail, postage prepaid, to VWR Canada, Scientific Holdings or VWR
International, as the case may be, in care of VWR at its address set forth at
the beginning of this Agreement, and VWR Canada, Scientific Holdings and VWR
International each hereby irrevocably authorizes and directs the Process Agent
to accept such service on its behalf. Borrowers agree that a final
judgment in any such action or proceeding shall be conclusive, subject to
appellate relief, and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Nothing in this Paragraph 10.15 shall affect the right of Banks to
serve legal process in any other manner permitted by law or affect the right
of Banks to bring any action or proceeding against Borrowers or any of its or
their properties in the courts of other jurisdictions to the extent otherwise
permitted by law.
(c) To the extent that Borrowers have or hereafter may acquire (i) any
immunity from jurisdiction of any court of the Commonwealth of Pennsylvania or
any federal court sitting in Philadelphia, PA or from any legal process out of
any such court (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, or (ii) any objection to the laying of the venue or
of an inconvenient forum of any suit, action or proceeding, if brought in the
Commonwealth of Pennsylvania or Federal court sitting in Philadelphia,
Pennsylvania under process served in accordance with subparagraph (a) above,
Borrowers hereby irrevocably waive such immunity or objection in respect of
any suit, action or proceeding arising out of or relating to this Agreement or
the Loan.
IN WITNESS WHEREOF, the undersigned have executed this Agreement the day and
year first above written.
ATTEST: VWR CORPORATION
By:_______________________ By:____________________________
Name: Name:
Title: Title:
[CORPORATE SEAL]
<PAGE>96
ATTEST: VWR SCIENTIFIC OF CANADA LTD.
By:_______________________ By:____________________________
Name: Name:
Title: Title:
[CORPORATE SEAL]
[EXECUTIONS CONTINUED]
ATTEST: SCIENTIFIC HOLDINGS CORP.
By:_______________________ By:____________________________
Name: Name:
Title: Title:
[CORPORATE SEAL]
ATTEST: VWR SCIENTIFIC INTERNATIONAL CORPORATION
By:_______________________ By:____________________________
Name: Name:
Title: Title:
[CORPORATE SEAL]
CORESTATES BANK, N.A., for itself and as Agent
By:____________________________
Name:
Title:
SEATTLE-FIRST NATIONAL BANK
By:____________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By:____________________________
Name:
Title:
<PAGE>97
CoreStates Bank, N.A. also conducts business as Philadelphia National Bank,
as CoreStates First Pennsylvania Bank and as CoreStates Hamilton Bank.
<PAGE>98
EXHIBIT 11
----------
<TABLE>
<CAPTION>
COMPUTATION OF PER SHARE EARNINGS
Year Ended December 31,
1993 1992 1991
- -------------------------------------------------------------------------------
(Amounts in thousands, except per share data)
<S> <C> <C> <C>
PRIMARY
Average shares
outstanding 10,998 10,949 10,906
Net effect of
dilutive stock
options-based on
the treasury stock
method using average
market price 155 179 54
------ ------ ------
TOTAL 11,153 11,128 10,960
====== ====== ======
Income before cumulative
effect of accounting
change $3,890 $9,430 $7,743
====== ===== ======
Per share amount $0.35 $ 0.85 $ 0.71
====== ===== ======
Cumulative effect of
accounting change $(1,400) $ --- $ ---
===== ===== =====
Per share amount $(0.13) $ --- $ ___
===== ===== ======
Net income $2,490 $9,430 $7,743
===== ===== ======
Per share amount $ 0.22 $ 0.85 $ 0.71
===== ===== ======
</TABLE>
<PAGE> 99
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
FULLY DILUTED *
Average shares
outstanding 10,998 10,949 10,906
Net effect of
dilutive stock
options-based on
the treasury stock
method using period-
end market price,
if greater than
average market price 161 185 60
------ ----- ------
TOTAL 11,159 11,134 10,966
====== ===== ======
Income before cumulative
effect of accounting
change $3,890 $9,430 $7,743
====== ===== ======
Per share amount $0.35 $ 0.85 $ 0.71
====== ===== ======
Cumulative effect of
accounting change $(1,400) $ --- $ ---
===== ===== =====
Per share amount $(0.13) $ --- $ ---
===== ===== =====
Net income $2,490 $9,430 $7,743
====== ===== ======
Per share amount $0.22 $0.85 $0.71
====== ===== ======
</TABLE>
On April 20, 1992, the Company's Board of Directors authorized a two-for-one
stock split payable on June 3, 1992, to shareholders of record as of May
9,1992. All share and per-share data give effect to the stock split.
* This information is presented for informational purposes.
<PAGE> 100
EXHIBIT 21
----------
PARENT & SUBSIDIARIES
DECEMBER 31, 1993
There is no parent of the registrant.
Wholly-owned subsidiaries are:
VWR Scientific of Canada Ltd. - a Canadian Corporation.
Scientific Holdings Corporation - a Delaware Corporation
<PAGE> 101
EXHIBIT 23
------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statements No.
33-49807, 33-35684, 33-03991, 33-34262, 33-05816, and 33-07590 on Forms S-8
and the related prospectus and No. 33-32002 on Form S-3 and the related
prospectus of our report dated February 11, 1994, with respect to the
consolidated financial statements and schedules of VWR Corporation included in
this Annual Report (Form 10-K) for the year ended December 31, 1993.
BY (SIGNATURE)
ERNST & YOUNG
Philadelphia, Pennsylvania
March 22, 1994
<PAGE> 102
EXHIBIT 24
----------
POWER OF ATTORNEY
- -----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Jerrold B. Harris and Walter S. Sobon, or either of
them, their attorneys-in-fact, for them in any and all capacities, to sign the
Annual Report on Form 10-K of VWR Corporation for the twelve months ended
December 31, 1993, and to file same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys-in-fact,
or their substitute or substitutes, may do or cause to be done by virtue
hereof.
Signature Title Date
--------- ----- ----
BY (SIGNATURE)
James W. Bernard
Director February 28, 1994
BY (SIGNATURE)
Richard E. Engebrecht
Director February 28, 1994
BY (SIGNATURE)
Jerrold B. Harris
Director February 28, 1994
BY (SIGNATURE)
Edward A. McGrath, Jr.
Director February 28, 1994
BY (SIGNATURE)
Curtis P. Lindley
Director February 28, 1994
BY (SIGNATURE)
Donald P. Nielsen
Director February 28, 1994
<PAGE> 103
BY (SIGNATURE)
N. Stewart Rogers
Director February 28, 1994
BY (SIGNATURE)
Robert S. Rogers
Director February 28, 1994
BY (SIGNATURE)
James H. Wiborg
Director February 28, 1994
