<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
- ---------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT Of 1934
For the quarterly period ended March 31, 1997
-------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT Of 1934
For the transition period from _________________ to ____________________
Commission File Number 0-15902
-------------------------------------------------------
ESSEF Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0777631
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 Park Drive, Chardon, Ohio 44024
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 286-2200
----------------------------
None
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No N/A
--- --- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common shares, as of the latest practicable date.
Class Outstanding at May 12, 1997
- --------------------------------------------------------------------------------
Common Shares, no par value 5,286,041 Shares
<PAGE> 2
ESSEF CORPORATION
Form 10-Q
For Quarter Ended March 31, 1997
INDEX
Sequential
Page No.
----------
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1997 and September 30, 1996.......... 3
Condensed Consolidated Statements of Income -
Three Months and Six Months Ended March 31, 1997
and 1996....................................... 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended March 31, 1997 and 1996....... 5
Notes to Condensed Consolidated Financial
Statements..................................... 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
Part II - Other Information
Item 1. Legal Proceedings............................ 11
Item 2. Changes in Securities........................ 11
Item 4. Submission of Matters to a Vote of Security
Holders...................................... 11
Item 6. Exhibits and Reports on Form 8-K............. 11
Page 2 of 13
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ESSEF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
----------- ------------
ASSETS (unaudited) (audited)
- ------
<S> <C> <C>
Current Assets
Cash and cash equivalents.............. $ 1,297 $ 2,620
Accounts receivable, net .............. 52,661 29,017
Inventories, net ...................... 22,388 19,445
Prepayments and other ................. 1,837 1,645
-------- --------
Total current assets................ 78,183 52,727
Property, plant and equipment, net......... 37,826 38,297
Real estate held for sale.................. 4,333 4,333
Goodwill, net.............................. 13,664 13,402
Other ..................................... 3,619 2,489
-------- --------
$137,625 $111,248
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Notes payable.......................... $ 5,859 $ 6,999
Current maturities of long-term debt... 1,467 1,467
Accounts payable....................... 17,314 12,247
Accrued expenses....................... 11,033 12,481
Accrued income taxes................... 7,105 4,332
-------- --------
Total current liabilities 42,778 37,526
Long-Term Debt ............................ 36,827 17,512
Deferred Income Taxes...................... 954 1,890
Other Long-Term Liabilities................ 1,117 982
Shareholders' Equity
Preferred shares without par value,
authorized 1,000,000 shares,
none issued......................... ----- -----
Common shares without par value,
authorized 15,000,000 shares, issued
5,787,650 and 5,786,906 shares,
respectively........................ 30,453 30,449
503,927 Treasury shares at cost .... (7,962) (7,962)
Retained earnings...................... 32,855 29,333
Foreign currency translation adjustment 603 1,518
-------- --------
Total shareholders' equity...... 55,949 53,338
-------- --------
$137,625 $111,248
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 13
<PAGE> 4
ESSEF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands,
except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................ $ 55,283 $ 51,965 $ 95,323 $ 89,715
Cost of sales.................... 39,016 37,011 68,150 64,236
-------- -------- -------- --------
Gross profit................ 16,267 14,954 27,173 25,479
Operating expenses............... 11,109 9,970 20,270 18,680
-------- -------- -------- --------
Income from operations....... 5,158 4,984 6,903 6,799
Interest and other expense....... 789 724 1,485 1,159
-------- -------- -------- --------
Income before income taxes....... 4,369 4,260 5,418 5,640
Provision for income taxes ...... 1,529 1,533 1,896 2,031
-------- -------- -------- --------
Income from continuing operations 2,840 2,727 3,522 3,609
Loss from discontinued
operations.................. - (30) - (22)
-------- -------- -------- --------
Net income.................. $ 2,840 $ 2,697 $ 3,522 $ 3,587
======== ======== ======= =======
Average shares and common share
equivalents outstanding.......... 6,338,621 6,668,518 6,336,550 6,671,907
Primary Earnings Per Share
Continuing operations....... $ .45 $ .41 $ .56 $ .54
Net income.................. $ .45 $ .40 $ .56 $ .54
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 13
<PAGE> 5
ESSEF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
-------------------
1997 1996
------- -------
<S> <C> <C>
Cash Flows from Operating Activities
Net income................................... $ 3,522 $ 3,587
Adjustments to reconcile net income
to net cash used in continuing operations
Discontinued operations - (22)
Depreciation and amortization............ 2,845 3,066
Other.................................... (234) (35)
Change in operating assets and liabilities
Accounts receivable......................... (25,931) (23,686)
Inventories................................. (4,295) (4,058)
Prepayments and other assets................ (1,096) (265)
Accounts payable............................ 6,703 7,663
Accrued expenses............................ (713) (165)
Accrued and deferred income taxes........... 1,869 1,960
Other long term liabilities................. 135 (1,015)
------- --------
Net cash used in continuing operations... (17,195) (12,970)
Net cash provided by discontinued
operations............................... - 197
------- --------
Net cash used in operating activities.... (17,195) (12,773)
------- --------
Cash Flows from Investing Activities
Additions to property, plant and
equipment................................ (6,132) (3,254)
Business acquisitions........................ (1,468) (936)
Proceeds from the sale of business unit....... 5,010 -
------- --------
Net cash used in investing activities.... (2,590) (4,190)
------- --------
Cash Flows from Financing Activities
Proceeds from long term debt................... 19,315 13,498
Increase (decrease) in notes payable........... (857) 934
Treasury stock acquired........................ - (393)
Proceeds from exercise of stock options........ 4 71
------- --------
Net cash provided by financing activities 18,462 14,110
------- --------
Net decrease in cash and cash equivalents......... (1,323) (2,853)
Cash and Cash Equivalents
Beginning of year............................... 2,620 3,870
------- --------
End of year..................................... $ 1,297 $ 1,017
======= ========
Supplemental Cash Flow Information
Interest paid $ 1,106 $ 1,102
======= ========
</TABLE>
See notes to condensed consolidated financial statements.
Page 5 of 13
<PAGE> 6
ESSEF CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) The accompanying unaudited Condensed Consolidated Financial Statements
contain all adjustments (consisting of only normal and recurring
adjustments) which, in the opinion of management, are necessary to present
fairly the consolidated financial position of Essef Corporation and
subsidiaries (the "Company") as of March 31, 1997, and the results of their
operations for the three month and six month periods ended March 31, 1997
and 1996 and their cash flows for the six month periods ended March 31,
1997 and 1996.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes
thereto included in the Company's 1996 Annual Report to Shareholders,
sections of which are incorporated into the Company's Form 10-K filed for
the fiscal year ended September 30, 1996. The results of operations for the
three month and six month periods ended March 31, 1997, may not necessarily
be indicative of the operating results for the full year.
(2) Inventories
<TABLE>
<CAPTION>
Inventories are valued as follows:
(Dollars in thousands) March 31, September 30,
1997 1996
---------- -------------
(unaudited) (audited)
<S> <C> <C>
FIFO COST
Raw materials...................... $11,853 $10,023
Work-in-process.................... 1,574 2,266
Finished goods..................... 10,502 8,529
------- -------
23,929 20,818
Excess of FIFO over LIFO cost.... (1,541) (1,373)
------- -------
Net Inventories............... $22,388 $19,445
======= =======
</TABLE>
(3) Long-Term Debt
The Company's European subsidiaries have lines of credit of approximately
$15,000,000 available for working capital. At March 31, 1997, interest was
at rates ranging from 3.70% to 10.375%. In addition, a note payable of
$2,008,000 relating to an acquisition was outstanding at March 31, 1997,
with an effective interest rate of 6.0%.
At March 31, 1997, the Company, through its bank group, had an unsecured
$33,000,000 revolving loan, an acquisition-related line of credit in the
maximum aggregate amount of $10,000,000, and an additional term loan
facility in the maximum aggregate amount of $10,000,000. There were no
outstanding borrowings on the acquisition-related line of credit at March
31, 1997. The revolving loan is due January 31, 1999, and may be extended
in one year increments with the approval of the bank group. The term loan
is payable in equal quarterly installments using a seven year amortization
schedule with the unpaid principal balance due January 31, 1999. Interest
rates for the revolver, acquisition-related line of credit and term loan
are based on increments of the lead bank's base
Page 6 of 13
<PAGE> 7
lending rate or LIBOR rate at the Company's option. A 3/8 percent
commitment fee is payable on the unused portion of the revolving loan and
the acquisition-related line of credit. The Company is in compliance with
all of its covenants under its credit facilities. As of March 31, 1997,
interest rates ranged from 6.4375% to 8.5%.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
----------- ------------
(Dollars in thousands) (unaudited) (audited)
<S> <C> <C>
Term loan $ 5,752 $ 6,428
Revolving loan 32,500 12,425
Other 42 126
-------- ---------
38,294 18,979
Less current maturities 1,467 1,467
-------- ---------
Long-term debt $ 36,827 $ 17,512
======== =========
</TABLE>
(4) Hobson Brothers Aluminium Foundry and Mould Works, Inc. Sale
The Company completed its divestiture of its subsidiary Hobson Brothers
Aluminium Foundry and Mould Works, Inc. on January 7, 1997. The subsidiary
has been designated as a discontinued operation in the financial
statements. No material gain or loss was recognized on the sale.
(5) Stock Dividend
On January 23, 1997, the Board of Directors authorized a 10% stock dividend
which was distributed on February 28, 1997 to shareholders of record on
February 7, 1997. The condensed consolidated financial statements have been
retroactively restated to reflect the number of shares outstanding
following the dividend.
(6) Subsequent Event
On May 1, 1997, the Company completed the acquisition of the assets of
privately held General Aquatics, Inc. and its subsidiaries for
approximately $68,550,000 and the assumption of $8,000,000 in working
capital debt. General Aquatics, with revenues of approximately
$166,000,000 for the year ended December 31, 1996, is a major manufacturer
of swimming pool equipment and accessories and is the largest swimming pool
construction company in the United States.
In conjunction with the completion of the acquistion, the Company, paid off
and terminated its existing bank loans and obtained, through a new bank
group, an unsecured $135,000,000 multi-currency revolving loan facility.
The loan matures April 30, 2002 and may be extended in one year increments
with the approval of the bank group. The facility includes commitment
reductions at specified dates and for events throughout the term of the
loan; however the commitment does not reduce below $100,000,000. Interest
rates are based on increments over the lead bank's base lending or LIBOR
(or its foreign currency equivalent) lending rate.
Page 7 of 13
<PAGE> 8
(7) Litigation
There has been no material change to the status of the litigation referred
to in the Company's 1996 Annual Report to Shareholders, sections of which
are incorporated in the Company's Form 10-K filed for the fiscal year ended
September 30, 1996.
(8) Earnings Per Share
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" which is
effective for financial statements issued for periods ending after
December 15, 1997. The Company is required to adopt SFAS 128 in the first
quarter of fiscal 1998. The Company does not expect SFAS 128 to have a
material effect on the computation of earnings per share.
Page 8 of 13
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH
THREE MONTHS ENDED MARCH 31, 1996
Net sales of $55,283,000 increased 6.4% over 1996 net sales of $51,965,000.
Domestic sales increased 7.1% over the same period last year, as a result of
expansion into new markets and new product lines. Sales by the Company's foreign
operations increased 2.1% over the same period last year, which represents
steady progress when considering the soft European economy. As of March 31, 1997
and 1996 the Company had a backlog of orders believed by it to be firm of
approximately $8.6 and $9.3 million, respectively.
Cost of sales decreased from 71.2% to 70.6% of net sales for the second quarter
which was attributable to slight decreases in material costs due mainly to
changes in product mix. Operating expenses, consisting of engineering and
development, selling, and administrative expenses, as a percentage of sales
increased from 19.2% to 20.1% for the second quarter primarily as a result of
costs incurred in connection with sales building activities.
Interest and other expense increased by $65,000 over the same period last year,
primarily as a result of expenses related to the real estate held for sale.
Interest expense was slightly lower than the same period last year due to a 6%
decrease in effective interest rates. Higher first quarter borrowings, which
related to the 1996 share buy-back activity were, offset in the second quarter
by proceeds from the sale of Hobson Brothers.
The Company's effective tax rate of 35% was lower than the 1996 rate of 36% due
to the impact of foreign taxes.
The above items resulted in net income of $2,840,000 in 1997 compared to
$2,697,000 in 1996, and an increase in earnings per share from $.40 in 1996 to
$.45 in 1997 which was also favorably impacted by the 1996 share buyback
activity.
SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH
SIX MONTHS ENDED MARCH 31, 1996
Net sales for the first six months of $95,323,000 increased 6.3% over 1996 net
sales of $89,715,000. Domestic sales increased 7.6% over the same period last
year, as a result of expansion into new markets and new product lines. Sales by
the Company's foreign operations decreased 0.8% from the same period last year
which reflects the effect of softness in the European economy.
Cost of sales remained constant at 71.5% of net sales for both 1997 and 1996.
Operating expenses, consisting of engineering and development, selling, and
administrative expenses, as a percentage of sales increased
Page 9 of 13
<PAGE> 10
from 20.8% to 21.3% for the six months primarily as a result of costs incurred
in connection with sales building activities.
Interest and other expense increased by $326,000, which was primarily
attributable to expenses related to the real estate held for sale. Interest
expense was consistent with the same period last year, as increases in average
outstanding borrowings, which were attributable to the 1996 share buy-back
activity, were offset by decreases in effective interest rates.
The Company's effective tax rate of 35% was lower than the 1996 rate of 36% due
to the impact of foreign taxes.
The above items resulted in net income of $3,522,000 in 1997 compared to
$3,587,000 in 1996 and an increase in earnings per share from $.54 in 1996 to
$.56 in 1997, which was also favorably impacted by the 1996 share buyback
activity.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $35,405,000 at March 31, 1997 compared to
$15,201,000 at September 30, 1996, and the ratio of current assets to current
liabilities increased to 1.83 to 1.00 from 1.41 to 1.00. The increase in working
capital is due to a $23.6 million increase in net accounts receivable, a $2.9
million increase in net inventories, offset by a $3.6 million increase in
accounts payable and accrued expenses. The changes in accounts receivable,
inventory and accounts payable reflect normal seasonal working capital
requirements.
Capital expenditures for fiscal 1997 totaled $6,132,000 compared to $3,254,000
for the same period last year, and were funded from net income, depreciation and
borrowings. The increase in capital expenditures relates primarily to
construction of a manufacturing plant in India as part of the global expansion
strategy and expansion of a plant in Chardon, Ohio, to increase capacity.
The Company is involved in various claims and lawsuits incidental to its
business, including product liability claims which are covered by insurance.
Although the Company believes that its reserves are adequate, a significant
increase in the aggregate amount of claims could have an adverse effect on the
deductible level or upon the Company's ability to obtain product liability
coverage for certain product lines. Management is addressing the issue in
various ways and is reasonably confident, but cannot guarantee, that the
situation will be managed with no material adverse impact on the Company.
On May 1, 1997, the Company paid off and terminated its existing bank loans and
obtained, through a new bank group, an unsecured $135,000,000 multi-currency
revolving loan facility. The proceeds from the new loan were used to repay the
existing loans and to finance the acquisition of General Aquatics. The new loan
matures April 30, 2002 and may be extended in one year increments with the
approval of the bank group. The facility includes commitment reductions at
specified dates and for events throughout the term of the loan, however the
commitment does not reduce below $100,000,000. The Company believes it has
adequate sources of funds to meet its needs.
Page 10 of 13
<PAGE> 11
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There has been no material change to the status of the legal
proceedings referred to in the 1996 Form 10-K during the period covered
by this report.
ITEM 2. CHANGES IN SECURITIES
No change.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10 Credit Agreement dated as of April
28, 1997 among Essef Corporation,
as borrower, and National City Bank
and ABN AMRO Bank N.V., as the
lending institutions
11 Computation of Per Share Earnings
13 Independent Public Accountants'
Review Report
15 Independent Public Accountants'
Awareness Letter
27 Financial Data Schedule
(b) Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this Report is filed.
Page 11 of 13
<PAGE> 12
Essef Corporation
Form 10Q
For the Quarter Ended March 31, 1997
Exhibit Volume - Table of Contents
Exhibits filed with and sequentially numbered as part of the report
Sequential
number of
Exhibit page of
Number Exhibit Description full report
- ------ ------------------- -----------
10.1 Credit Agreement dated as of April 28, 1997
among Essef Corporation, as borrower, and
National City Bank and ABN AMRO Bank N.V.,
as the lending institutions 14
11 Computation of Per Share Earnings 15
13 Independent Public Accountants' Review Report 16
15 Independent Public Accountants' Awareness Letter 17
27 Financial Data Schedule
Page 12 of 13
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ESSEF Corporation
(Registrant)
Thomas B. Waldin
-------------------------------------
Thomas B. Waldin
President and
Chief Executive Officer
(Principal Executive Officer)
Stuart D. Neidus
-------------------------------------
Stuart D. Neidus
Executive Vice President
and Chief Financial Officer
(Principal Accounting Officer)
Date: May 13, 1997
Page 13 of 13
<PAGE> 1
EXHIBIT 10.1
Credit Agreement dated as of April 28, 1997
among Essef Corporation, as borrower, and
National City Bank and ABN AMRO Bank N.V.,
as the lending institutions
<PAGE> 2
================================================================================
CREDIT AGREEMENT
DATED AS OF
APRIL 28, 1997
AMONG
ESSEF CORPORATION
AS BORROWER
THE LENDING INSTITUTIONS NAMED THEREIN
AS LENDERS
NATIONAL CITY BANK
AS ADMINISTRATIVE AGENT
ABN AMRO BANK N. V.
AS SYNDICATION AGENT
================================================================================
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. DEFINITIONS AND TERMS......................................................................... 1
1.1. CERTAIN DEFINED TERMS......................................................................... 1
1.2. COMPUTATION OF TIME PERIODS................................................................... 17
1.3. ACCOUNTING TERMS.............................................................................. 18
1.4. CURRENCY EQUIVALENTS.......................................................................... 18
SECTION 2. AMOUNT AND TERMS OF LOANS..................................................................... 18
2.1. COMMITMENTS FOR REVOLVING LOANS............................................................... 18
2.2. MINIMUM REVOLVING BORROWING AMOUNTS, ETC.; PRO RATA REVOLVING BORROWINGS...................... 19
2.3. NOTICE OF REVOLVING BORROWING................................................................. 19
2.4. DISBURSEMENT OF FUNDS FROM REVOLVING BORROWINGS; ASSIGNMENT OF SWING LINE
REVOLVING LOANS............................................................................... 21
2.5. THE COMPETITIVE BID LOANS..................................................................... 22
2.6. NOTES......................................................................................... 25
2.7. VOLUNTARY CONVERSION OF DOLLAR DENOMINATED REVOLVING LOANS.................................... 26
2.8. INTEREST ON REVOLVING LOANS................................................................... 26
2.9. INTEREST PERIODS.............................................................................. 28
2.10. INCREASED COSTS, ILLEGALITY, ETC.............................................................. 29
2.11. COMPENSATION.................................................................................. 30
2.12. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS.............................................. 30
SECTION 3. LETTERS OF CREDIT............................................................................. 31
3.1. LETTERS OF CREDIT............................................................................. 31
3.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE................................................ 32
3.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS.................................................. 32
3.4. LETTER OF CREDIT PARTICIPATIONS............................................................... 33
3.5. INCREASED COSTS............................................................................... 35
3.6. GUARANTY OF SUBSIDIARY LETTER OF CREDIT OBLIGATIONS........................................... 35
SECTION 4. FEES; COMMITMENTS............................................................................. 37
4.1. FEES.......................................................................................... 37
4.2. VOLUNTARY REDUCTION OF COMMITMENTS............................................................ 38
4.3. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC..................................................... 38
4.4. EXTENSION OF MATURITY DATE.................................................................... 39
SECTION 5. PAYMENTS...................................................................................... 39
5.1. VOLUNTARY PREPAYMENTS......................................................................... 39
5.2. MANDATORY PREPAYMENTS......................................................................... 39
5.3. METHOD AND PLACE OF PAYMENT................................................................... 41
5.4. NET PAYMENTS.................................................................................. 41
SECTION 6. CONDITIONS PRECEDENT.......................................................................... 42
6.1. CONDITIONS PRECEDENT AT INITIAL BORROWING DATE................................................ 42
6.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS (OTHER THAN COMPETITIVE BID
BORROWINGS)................................................................................... 44
6.3. CONDITIONS PRECEDENT TO EACH COMPETITIVE BID BORROWING........................................ 44
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7. REPRESENTATIONS AND WARRANTIES................................................................ 45
7.1. CORPORATE STATUS, ETC......................................................................... 45
7.2. SUBSIDIARIES.................................................................................. 45
7.3. CORPORATE POWER AND AUTHORITY, ETC............................................................ 45
7.4. NO VIOLATION.................................................................................. 45
7.5. GOVERNMENTAL APPROVALS........................................................................ 45
7.6. LITIGATION.................................................................................... 45
7.7. USE OF PROCEEDS; MARGIN REGULATIONS........................................................... 45
7.8. FINANCIAL STATEMENTS, ETC..................................................................... 46
7.9. NO MATERIAL ADVERSE CHANGE.................................................................... 47
7.10. TAX RETURNS AND PAYMENTS...................................................................... 47
7.11. TITLE TO PROPERTIES, ETC...................................................................... 47
7.12. LAWFUL OPERATIONS, ETC........................................................................ 47
7.13. ENVIRONMENTAL MATTERS......................................................................... 47
7.14. COMPLIANCE WITH ERISA......................................................................... 48
7.15. INTELLECTUAL PROPERTY, ETC.................................................................... 48
7.16. INVESTMENT COMPANY............................................................................ 48
7.17. BURDENSOME CONTRACTS; LABOR RELATIONS......................................................... 48
7.18. EXISTING INDEBTEDNESS......................................................................... 49
7.19. ACQUISITION DOCUMENTS, ETC.................................................................... 49
7.20. TRUE AND COMPLETE DISCLOSURE.................................................................. 49
SECTION 8. AFFIRMATIVE COVENANTS......................................................................... 50
8.1. REPORTING REQUIREMENTS........................................................................ 50
8.2. BOOKS, RECORDS AND INSPECTIONS................................................................ 52
8.3. INSURANCE..................................................................................... 52
8.4. PAYMENT OF TAXES.............................................................................. 52
8.5. CORPORATE FRANCHISES.......................................................................... 52
8.6. ADEQUATE REPAIR............................................................................... 53
8.7. COMPLIANCE WITH STATUTES, ETC................................................................. 53
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS............................................................ 53
8.9. FISCAL YEARS, FISCAL QUARTERS................................................................. 53
8.10. MOST FAVORED COVENANT STATUS.................................................................. 53
8.11. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY........................................... 54
8.12. HEDGE AGREEMENTS, ETC......................................................................... 54
8.13. SENIOR DEBT................................................................................... 54
SECTION 9. NEGATIVE COVENANTS............................................................................ 55
9.1. CHANGES IN BUSINESS........................................................................... 55
9.2. CONSOLIDATION, MERGER OR SALE OF ASSETS, ETC.................................................. 55
9.3. LIENS......................................................................................... 56
9.4. INDEBTEDNESS.................................................................................. 58
9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS......................................... 59
9.6. DIVIDENDS, ETC................................................................................ 60
9.7. TOTAL INDEBTEDNESS/EBITDA RATIO............................................................... 60
9.8. FIXED CHARGE COVERAGE RATIO................................................................... 61
9.9. PREPAYMENTS AND REFINANCINGS OF SUBORDINATED DEBT, ETC........................................ 61
9.10. TRANSACTIONS WITH AFFILIATES.................................................................. 61
9.11. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES............................................ 61
</TABLE>
ii
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<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 10. EVENTS OF DEFAULT............................................................................. 62
10.1. EVENTS OF DEFAULT............................................................................. 62
10.2. ACCELERATION, ETC............................................................................. 63
10.3. APPLICATION OF LIQUIDATION PROCEEDS........................................................... 63
SECTION 11. THE ADMINISTRATIVE AGENT...................................................................... 64
11.1. APPOINTMENT................................................................................... 64
11.2. DELEGATION OF DUTIES.......................................................................... 64
11.3. EXCULPATORY PROVISIONS........................................................................ 65
11.4. RELIANCE BY ADMINISTRATIVE AGENT.............................................................. 65
11.5. NOTICE OF DEFAULT............................................................................. 65
11.6. NON-RELIANCE.................................................................................. 65
11.7. INDEMNIFICATION............................................................................... 66
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY............................................... 66
11.9. SUCCESSOR ADMINISTRATIVE AGENT................................................................ 66
11.10. SYNDICATION AGENT............................................................................. 66
11.11. OTHER AGENTS.................................................................................. 66
SECTION 12. GUARANTY BY THE BORROWER...................................................................... 67
12.1. GUARANTY OF CERTAIN SUBSIDIARY BORROWINGS..................................................... 67
12.2. ADDITIONAL UNDERTAKING........................................................................ 67
12.3. GUARANTY UNCONDITIONAL, ETC................................................................... 67
12.4. BORROWER OBLIGATIONS TO REMAIN IN EFFECT; RESTORATION......................................... 68
12.5. WAIVER OF ACCEPTANCE, ETC..................................................................... 68
12.6. SUBROGATION................................................................................... 68
12.7. EFFECT OF STAY................................................................................ 68
SECTION 13. MISCELLANEOUS................................................................................. 68
13.1. PAYMENT OF EXPENSES ETC....................................................................... 68
13.2. RIGHT OF SETOFF............................................................................... 69
13.3. NOTICES....................................................................................... 69
13.4. BENEFIT OF AGREEMENT.......................................................................... 69
13.5. NO WAIVER: REMEDIES CUMULATIVE................................................................ 72
13.6. PAYMENTS PRO RATA............................................................................. 72
13.7. CALCULATIONS: COMPUTATIONS.................................................................... 72
13.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL........................ 72
13.9. COUNTERPARTS.................................................................................. 73
13.10. EFFECTIVENESS................................................................................. 73
13.11. HEADINGS DESCRIPTIVE.......................................................................... 73
13.12. AMENDMENT OR WAIVER........................................................................... 73
13.13. SURVIVAL...................................................................................... 74
13.14. DOMICILE OF LOANS............................................................................. 74
13.15. CONFIDENTIALITY............................................................................... 74
13.16. LENDER REGISTER............................................................................... 74
13.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS...................................... 75
13.18. GENERAL LIMITATION OF LIABILITY............................................................... 75
13.19. NO DUTY....................................................................................... 75
13.20. LENDERS AND AGENT NOT FIDUCIARY TO BORROWER, ETC.............................................. 75
13.21. JUDGMENT CURRENCY............................................................................. 75
13.22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................................................... 77
</TABLE>
iii
<PAGE> 6
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ANNEX I - INFORMATION AS TO LENDERS
ANNEX II - INFORMATION AS TO SUBSIDIARIES
ANNEX III - DESCRIPTION OF EXISTING INDEBTEDNESS
ANNEX IV - DESCRIPTION OF EXISTING LIENS
ANNEX V - DESCRIPTION OF EXISTING ADVANCES, LOANS,
INVESTMENTS AND GUARANTEES
ANNEX VI - DESCRIPTION OF LETTERS OF CREDIT DEEMED ISSUED
UNDER THE CREDIT AGREEMENT
EXHIBIT A-1 - FORM OF GENERAL REVOLVING NOTE
EXHIBIT A-2 - FORM OF SWING LINE REVOLVING NOTE
EXHIBIT A-3 - FORM OF COMPETITIVE BID NOTE
EXHIBIT B-1 - FORM OF NOTICE OF REVOLVING BORROWING
EXHIBIT B-2 - FORM OF NOTICE OF COMPETITIVE BID BORROWING
EXHIBIT B-3 - FORM OF NOTICE OF CONVERSION
EXHIBIT B-4 - FORM OF LETTER OF CREDIT REQUEST
EXHIBIT C - FORM OF SUBSIDIARY GUARANTEE
EXHIBIT D - FORM OF OPINION OF COUNSEL TO THE BORROWER
EXHIBIT E - FORM OF ASSIGNMENT AGREEMENT
EXHIBIT F - FORM OF DESIGNATION AGREEMENT
EXHIBIT G - FORM OF SECTION 5.4(b)(ii) CERTIFICATE
iv
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 28, 1997, among the
following:
(i) ESSEF CORPORATION, an Ohio corporation (herein, together with
its successors and assigns, the "BORROWER");
(ii) the lending institutions listed in Annex I hereto (each a
"LENDER" and collectively, the "LENDERS");
(iii) NATIONAL CITY BANK, a national banking association, as
administrative agent (the "ADMINISTRATIVE AGENT"); and
(iv) ABN AMRO BANK N. V., as syndication agent (the "SYNDICATION
AGENT"):
PRELIMINARY STATEMENTS:
(1) Unless otherwise defined herein, all capitalized terms used herein
and defined in section 1 are used herein as so defined.
(2) The Borrower has applied to the Lenders for credit facilities in
order to refinance certain indebtedness of the Borrower and in order to provide
working capital and funds for other lawful purposes.
(3) Subject to and upon the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrower the credit facilities
provided for herein.
NOW, THEREFORE, it is agreed:
SECTION 1. DEFINITIONS AND TERMS.
1.1. CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"ACQUISITION AGREEMENT" shall mean the Asset Purchase
Agreement, dated as of March 24, 1997, among GAI Acquisition Corp.,
General Aquatics Corporation, General Aquatics, Inc., Anthony and
Sylvan Pools, Inc. and KDI Paragon, Inc., as the same may be from time
to time modified, amended and/or supplemented.
"ACQUISITION DOCUMENT" shall mean (i) the Acquisition
Agreement; (ii) the General Conveyance, Assignment and Bill of Sale
delivered pursuant thereto; and (iii) the Assumption of Liabilities
delivered pursuant thereto.
"ADMINISTRATIVE AGENT" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to
the Administrative Agent appointed pursuant to section 11.9.
"AFFILIATE" shall mean, with respect to any person, any other
person directly or indirectly controlling, controlled by, or under
direct or indirect common control with such person. A person shall be
deemed to control a second person if such first person possesses,
directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors
or managers of such second person or (ii) to direct or cause the
direction of the management and policies of such second person, whether
through the ownership of voting securities, by contract or otherwise.
<PAGE> 8
Notwithstanding the foregoing, a director, officer or employee of a
person shall not, solely by reason of such status, be considered an
Affiliate of such person.
"AGREEMENT" shall mean this Credit Agreement, as the same may
be from time to time further modified, amended and/or supplemented.
"ALTERNATIVE CURRENCY" shall mean and include (i) Canadian
Dollars, Pounds Sterling, Belgian Francs, French Francs, Spanish
Pesetas, Italian Lira and Deutsche Marks, if at the time any such
currency is readily and freely transferable and convertible into
Dollars; and (ii) any other lawful currency other than Dollars which is
readily and freely transferable and convertible into Dollars and is
acceptable to the Required Lenders and any applicable Letter of Credit
Issuer.
"APPLICABLE EUROCURRENCY MARGIN" shall have the meaning
provided in section 2.8(g).
"APPLICABLE FACILITY FEE RATE" shall have the meaning provided
in section 4.1(a).
"APPLICABLE LENDING OFFICE" shall mean, with respect to each
Lender, (i) such Lender's Domestic Lending Office in the case of
Revolving Borrowings consisting of Prime Rate Loans, (ii) such Lender's
Eurocurrency Lending Office in the case of Revolving Borrowings
consisting of Eurocurrency Loans, and (iii) the office of such Lender
notified by such Lender to the Administrative Agent as its Applicable
Lending Office with respect to any particular Competitive Bid Loan made
by it.
"APPROVED EXECUTIVE OFFICER" shall mean Thomas B. Waldin,
Elliot B. Ross, Stuart D. Neidus, and any other person or persons
approved in writing by the Required Lenders as an Approved Executive
Officer.
"ASSET SALE" shall mean the sale, transfer or other
disposition (including by means of mergers, consolidations, and
liquidations of a corporation, partnership or limited liability company
of the interests therein of the Borrower or any Subsidiary) by the
Borrower or any Subsidiary to any person other than the Borrower or any
Subsidiary of any of their respective assets (other than sales,
transfers or other dispositions of obsolete or excess furniture,
fixtures, equipment or other property, tangible or intangible, in the
ordinary course of business). A sale of receivables in a transaction
permitted under section 9.4(d) shall not constitute an Asset Sale.
"ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement
substantially in the form of Exhibit E hereto.
"AUTHORIZED OFFICER" shall mean any officer or employee of the
Borrower designated as such in writing to the Administrative Agent by
the Borrower.
"BANKRUPTCY CODE" shall have the meaning provided in section
10.1(g).
"BORROWER" shall have the meaning provided in the first
paragraph of this Agreement.
"BORROWING" shall mean a Revolving Borrowing or a Competitive
Bid Borrowing, as the case may be.
"BUSINESS DAY" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and
any day which shall be in the city in which the applicable Payment
Office is located a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to
close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on,
Eurocurrency Loans, any day which is a Business Day described in clause
(i) and which is also a day on which dealings are carried on in the
London interbank
2
<PAGE> 9
market and banks are open for business in London and in the country of
issue of any Alternative Currency in which any applicable Eurocurrency
Loans are denominated.
"CAPITAL LEASE" as applied to any person shall mean any lease
of any property (whether real, personal or mixed) by that person as
lessee which, in conformity with GAAP, is accounted for as a capital
lease on the balance sheet of that person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations
under Capital Leases of the Borrower or any of its Subsidiaries in each
case taken at the amount thereof accounted for as liabilities in
accordance with GAAP.
"CASH EQUIVALENTS" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (PROVIDED that the
full faith and credit of the United States of America is pledged in
support thereof) having maturities of not more than one year from the
date of acquisition, (ii) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (x) any Lender or
(y) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank, an "APPROVED LENDER"), in each
case with maturities of not more than 90 days from the date of
acquisition, (iii) commercial paper issued by any Lender or Approved
Lender or by the parent company of any Lender or Approved Lender and
commercial paper issued by, or guaranteed by, any industrial or
financial company with a short- term commercial paper rating of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's, or guaranteed by any industrial company
with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be,
and in each case maturing within 90 days after the date of acquisition
and (iv) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in clauses
(i) through (iii) above.
"CASH PROCEEDS" shall mean, with respect to any Asset Sale,
the aggregate cash payments (including any cash received by way of
deferred payment pursuant to a note receivable issued in connection
with such Asset Sale, other than the portion of such deferred payment
constituting interest, but only as and when so received) received by
the Borrower and/or any Subsidiary from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended
from time to time, 42 U.S.C. ss. 9601 ET SEQ.
"CHANGE OF CONTROL" shall mean and include (i) during any
period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Borrower's Board of Directors
(together with any new directors whose election by the Borrower's Board
of Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors then in office, (ii) any person or group (as
such term is defined in section 13(d)(3) of the 1934 Act), other than
the Borrower, any trustee or other fiduciary holding securities under
an employee benefit plan of the Borrower, descendants of Jane B. King
or James A. Horner (and their family members) and trusts for the
benefit of any of the foregoing, or Thomas B. Waldin (or trusts for his
benefit or for the benefit of his descendants and their families and
relatives), shall acquire, directly or indirectly, beneficial ownership
(within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more
than 25%, on a fully diluted basis, of the economic or voting interest
in the Borrower's capital stock, (iii) during any period of 60
consecutive days ending on or prior to the date the Borrower's
financial statements for its fiscal year ended September 30, 1997 are
delivered to the Lenders pursuant to section 8.1(a), no Approved
Executive Officer shall be employed on a full time basis as an
executive officer of the Borrower, (iv) the shareholders of the
Borrower approve (A) a merger or consolidation of the Borrower with any
other person, other than a merger or consolidation which would result
in the
3
<PAGE> 10
voting securities of the Borrower outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted or exchanged for voting securities of the surviving or
resulting entity) more than 75% of the combined voting power of the
voting securities of the Borrower or such surviving or resulting entity
outstanding after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Borrower
(or similar transaction) in which no person or group (as hereinabove
defined) acquires more than 25% of the combined voting power, on a
fully diluted basis, of the Borrower's then outstanding voting
securities, (v) the shareholders of the Borrower approve a plan of
complete liquidation of the Borrower or an agreement or agreements for
the sale or disposition by the Borrower of all or substantially all of
the Borrower's assets, and/or (vi) any "change in control" or any
similar term as defined in any of the indentures, credit agreements or
other instruments governing any Indebtedness of the Borrower or any of
its Subsidiaries with an outstanding principal amount, or providing for
commitments to lend in an outstanding principal amount, of at least
$10,000,000 (or the equivalent amount in any other currency).
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to the Code are to the
Code, as in effect at the Effective Date and any subsequent provisions
of the Code, amendatory thereof, supplemental thereto or substituted
therefor.
"COMMITMENT" shall mean, with respect to each Lender, its
General Revolving Loan Commitment or its Swing Line Loan Commitment, or
both if such Lender shall have both a General Revolving Loan Commitment
or its Swing Line Loan Commitment.
"COMPETITIVE BID BORROWING" shall mean a borrowing consisting
of one or more Competitive Bid Loans made pursuant to section 2.5.
"COMPETITIVE BID LOAN" shall mean a loan denominated in U.S.
Dollars made pursuant to section 2.5.
"COMPETITIVE BID NOTE" shall have the meaning provided in
section 2.6(a).
"COMPETITIVE BID REDUCTION" shall have the meaning provided
in section 2.1.
"CONSOLIDATED NET INCOME" shall mean for any period, the net
income (or loss), without deduction for minority interests, of the
Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP.
"CONSOLIDATED NET WORTH" shall mean at any time for the
determination thereof all amounts which, in conformity with GAAP, would
be included under the caption "total stockholders' equity" (or any like
caption) on a consolidated balance sheet of the Borrower as at such
date.
"CREDIT DOCUMENTS" shall mean this Agreement, the Notes, the
Subsidiary Guaranty and any Letter of Credit Document.
"CREDIT EVENT" shall mean the making of any Loans and/or the
issuance of any Letter of Credit.
"CREDIT PARTY" shall mean the Borrower and each Subsidiary
which is a party to any Credit Document.
"DEFAULT" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with, respect to
which a Lender Default is in effect.
4
<PAGE> 11
"DESIGNATED BIDDER" shall mean (i) an Eligible Transferee or
(ii) a special purpose corporation which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary
course of its business and that issues (or the parent of which issues)
commercial paper rated at least Prime-1 (or the then equivalent grade)
by Moody's or A-1 (or the then equivalent grade) by S&P, that, in
either case, (A) is organized under the laws of the United States or
any State thereof, (B) shall have become a party hereto pursuant to
section 13.4(c) through (e), and (C) is not otherwise a Lender.
"DESIGNATION AGREEMENT" shall mean a designation agreement
entered into by a Lender (other than a Designated Bidder) and a
Designated Bidder, and accepted by the Administrative Agent, in
substantially the form of Exhibit F hereto.
"DOLLARS", "U.S. DOLLARS" and the sign "$" each means lawful
money of the United States.
"DOMESTIC LENDING OFFICE" shall mean, with respect to any
Lender, the office of such Lender specified as its Domestic Lending
Office in Annex I or in the Assignment Agreement pursuant to which it
became a Lender, or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Administrative Agent.
"EBIT" shall mean, for any period, (A) the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Total Interest Expense, and (iv)
amortization or write-off of deferred financing costs to the extent
deducted in determining Consolidated Net Income, LESS (B) gains on
sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains and other one-time non-cash gains, all as
determined for the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"EBITDA" shall mean, for any period, the sum of the amounts
for such period of (i) EBIT, (ii) depreciation and amortization, and
(iii) non-cash charges to the extent deducted in determining
Consolidated Net Income, all as determined for the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP; PROVIDED
that (A) if during any such period the Borrower or any Subsidiary shall
have completed the General Aquatics Acquisition, the foregoing amounts
shall be computed on a PRO FORMA basis as if the transaction had been
completed at the beginning of such period, and any Indebtedness assumed
or incurred to finance such transaction had been outstanding for such
entire period (without giving effect to any credit for unobtained or
unrealized gains in connection with the General Aquatics Acquisition,
but taking into account (i) such adjustments to the overhead of the
properties and assets acquired in the amount of approximately
$1,300,000 on an annual basis, for elimination of certain director and
officer insurance coverage and the termination of two executive
officers who were employed with respect to such properties and assets;
and (ii) such other adjustments as may reasonably be determined and
specified by the Borrower to reflect the overhead generally applicable
to similar properties and assets owned by the Borrower and its
Subsidiaries, as and to the extent all of the Lenders determine such
adjustments to be reasonable and appropriate under the particular
circumstances); (B) if during any such period the Borrower or any
Subsidiary shall have completed a Permitted Acquisition (other than the
General Aquatics Acquisition), the foregoing amounts shall be computed
on a PRO FORMA basis as if the transaction had been completed at the
beginning of such period, and any Indebtedness assumed or incurred to
finance such transaction had been outstanding for such entire period
(without giving effect to any credit for unobtained or unrealized gains
in connection with such Permitted Acquisition, but taking into account
such adjustments as may reasonably be determined and specified by the
Borrower to reflect the overhead generally applicable to similar
properties and assets owned by the Borrower and its Subsidiaries, as
and to the extent all of the Lenders determine (acting reasonably) that
such adjustments are reasonable and appropriate under the particular
circumstances); and (C) if during any such period the Borrower or any
Subsidiary shall have completed a transaction referred to in section
9.2(g) involving consideration in excess of $1,000,000, the foregoing
amounts shall be computed on a PRO FORMA basis to eliminate the effect
of such transaction after the date it was consummated and assuming that
the consideration received had been
5
<PAGE> 12
applied to reduce the Indebtedness outstanding hereunder on the date
such transaction was completed.
"EFFECTIVE DATE" shall have the meaning provided in
section 13.10.
"ELIGIBLE TRANSFEREE" shall mean and include a commercial
bank, financial institution or other "accredited investor" (as defined
in SEC Regulation D), in each case which (i) so long as no Event of
Default shall have occurred and be continuing, and so long as the
financial covenants contained in section 9.7 or 9.8 of this Agreement
have not been modified (or compliance therewith waived for a period
exceeding 90 days) following a deterioration in the financial condition
or results of operations of the Borrower and its Subsidiaries, is not
disapproved in writing by the Borrower in a notice given to a
requesting Lender and the Administrative Agent, specifying the reasons
for such disapproval, within five Business Days following the giving of
notice to the Borrower of the identity of any proposed transferee (any
such disapproval by the Borrower must be reasonable), and (ii) is not a
direct competitor of the Borrower or engaged in the same or similar
business as the Borrower, or any of its respective Subsidiaries or is
not an Affiliate of any such competitors of the Borrower or any of its
respective Subsidiaries.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of non-compliance or violation, investigations or
proceedings arising under any Environmental Law or any permit issued
under any such law (hereafter "CLAIMS"), including, without limitation,
(a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law, and (b) any and
all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from the storage, treatment or Release (as defined in CERCLA)
of any Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment.
"ENVIRONMENTAL LAW" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written
policy and rule of common law now or hereafter in effect and in each
case as amended, and any binding and enforceable judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment issued to or rendered
against the Borrower or any of its Subsidiaries relating to the
environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 U.S.C. ss. 2601 ET SEQ.; the Clean Air Act,
42 U.S.C. ss. 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. ss.
3803 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 ET
SEQ.; the Emergency Planning and the Community Right-to- Know Act of
1986, 42 U.S.C. ss. 11001 ET SEQ., the Hazardous Material
Transportation Act, 49 U.S.C. ss. 1801 ET SEQ. and the Occupational
Safety and Health Act, 29 U.S.C. ss. 651 ET SEQ. (to the extent it
regulates occupational exposure to Hazardous Materials); and any state
and local or foreign counterparts or equivalents, in each case as
amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder. Section references to ERISA are to
ERISA, as in effect at the Effective Date and any subsequent provisions
of ERISA, amendatory thereof, supplemental thereto or substituted
therefor.
"ERISA AFFILIATE" shall mean each person (as defined in
section 3(9) of ERISA) which together with the Borrower or a Subsidiary
of the Borrower would be deemed to be a "single employer" (i) within
the meaning of section 414(b), (c), (m) or (o) of the Code or (ii) as a
result of the Borrower or a Subsidiary of the Borrower being or having
been a general partner of such person.
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<PAGE> 13
"EUROCURRENCY LENDING OFFICE" shall mean, with respect to any
Lender, the office of such Lender specified as its Eurocurrency Lending
Office in Annex I or in the Assignment Agreement pursuant to which it
became a Lender, or such other office or offices (for Eurocurrency
Loans denominated in Dollars or particular Alternative Currencies) of
such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"EUROCURRENCY LOANS" shall mean each Loan, denominated in U.S.
Dollars or in an Alternative Currency, bearing interest at the rates
provided in section 2.8(a)(ii) or (b)(ii).
"EUROCURRENCY RATE" shall mean with respect to each Interest
Period for a Eurocurrency Loan, (A) either (i) the rate per annum for
deposits in Dollars or in the relevant Alternative Currency for a
maturity most nearly comparable to such Interest Period which appears
on page 3740 or 3750, as applicable, of the Dow Jones Telerate Screen
as of 11:00 A.M. (local time at the Notice Office) on the date which is
two Business Days prior to the commencement of such Interest Period, or
(ii) if such a rate does not appear on such a page, an interest rate
per annum equal to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in Dollars or in the
relevant Alternative Currency are offered by each of the Reference
Banks to prime banks in the London interbank Eurocurrency market for
deposits of amounts in same day funds comparable to the outstanding
principal amount of the Eurocurrency Loan for which an interest rate is
then being determined with maturities comparable to the Interest Period
to be applicable to such Eurocurrency Loan, determined as of 11:00 A.M.
(London time) on the date which is two Business Days prior to the
commencement of such Interest Period, in each case divided (and rounded
upward to the nearest whole multiple of 1/16th of 1%) by (B) a
percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D).
"EVENT OF DEFAULT" shall have the meaning provided in
section 10.1.
"EXISTING INDEBTEDNESS" shall have the meaning provided in
section 7.18.
"EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning
provided in section 7.18.
"EXISTING LETTER OF CREDIT" shall have the meaning provided
in section 3.1(d).
"FACILITY" shall mean either the General Revolving Facility or
the Swing Line Revolving Facility, or both if the context so requires.
"FACILITY FEE" shall have the meaning provided in
section 4.1(a).
"FACING FEE" shall have the meaning provided in section
4.1(c).
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal Funds transactions
with members of the Federal Reserve System arranged by Federal Funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative
Agent.
"FEES" shall mean all amounts payable pursuant to, or
referred to in, section 4.1.
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<PAGE> 14
"FINANCIAL PROJECTIONS" shall have the meaning provided in
section 7.8(c).
"FIXED CHARGE COVERAGE RATIO" shall mean, for any Testing
Period, the ratio of (i) EBITDA, plus Total Rental Expense, less
capital expenditures of the Borrower and its Subsidiaries on a
consolidated basis, to (ii) the sum of (A) Total Interest Expense, (B)
scheduled or mandatory repayments, prepayments or redemptions of the
principal of Indebtedness (including required reductions in committed
credit facilities, if the amount of such required reduction would have
required a prepayment of the outstanding Indebtedness thereunder if
such Indebtedness had been outstanding at the time of such scheduled
reduction in an aggregate amount equal to the weighted average amount
of such Indebtedness during the preceding 12-month period, but only to
the extent that a prepayment would have been required in such
circumstances), (C) Total Rental Expense, and (D) the amount of
dividends or other distributions paid or declared in respect of, and
the amount expended for any purchase or other acquisition of, the
Borrower's capital stock, in each case for such Testing Period;
PROVIDED, that (A) if any such period includes any fiscal quarter
ending on or prior to September 30, 1996, no amount shall be included
for purposes of the preceding clause (D) for any acquisitions of the
Borrower's capital stock; and (B) without duplication of any PRO FORMA
adjustments made to EBITDA pursuant to the PROVISO to the definition of
EBITDA, if any transaction of the nature referred to in the PROVISO to
the definition of EBITDA shall have occurred during such period, the
foregoing amounts shall be adjusted on a PRO FORMA basis consistent
with the provisions of such PROVISO.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary (i) which is
not incorporated in the United States and substantially all of whose
assets and properties are located, or substantially all of whose
business is carried on, outside the United States, or (ii)
substantially all of whose assets consist of Subsidiaries that are
Foreign Subsidiaries as defined in clause (i) of this definition.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time; it being
understood and agreed that determinations in accordance with GAAP for
purposes of section 9, including defined terms as used therein, are
subject (to the extent provided therein) to section 13.7(a).
"GENERAL AQUATICS ACQUISITION" shall mean the acquisition
contemplated by the Acquisition Agreement.
"GENERAL REVOLVING FACILITY" shall mean the Facility evidenced
by the Total General Revolving Commitment.
"GENERAL REVOLVING FACILITY PERCENTAGE" shall mean at any time
for any Lender with a General Revolving Loan Commitment, the percentage
obtained by dividing such Lender's General Revolving Loan Commitment by
the Total General Revolving Commitment, PROVIDED, that if the Total
General Revolving Commitment has been terminated, the General Revolving
Facility Percentage for each Lender shall be determined by dividing
such Lender's General Revolving Loan Commitment immediately prior to
such termination by the Total General Revolving Commitment immediately
prior to such termination.
"GENERAL REVOLVING LOAN" shall have the meaning provided in
section 2.1.
"GENERAL REVOLVING LOAN COMMITMENT" shall mean, with respect
to each Lender, the amount, if any, set forth opposite such Lender's
name in Annex I as its "General Revolving Loan Commitment" as the same
may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10
or adjusted from time to time as a result of assignments to or from
such Lender pursuant to section 13.4.
"GENERAL REVOLVING NOTE" shall have the meaning provided in
section 2.6(a).
"GUARANTEED OBLIGATIONS" shall have the meaning provided in
section 12.1.
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<PAGE> 15
"GUARANTY OBLIGATIONS" shall mean as to any person (without
duplication) any obligation of such person guaranteeing any
Indebtedness ("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such person, whether or not
contingent, (a) to purchase any such primary Indebtedness or any
property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such
primary Indebtedness or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary Indebtedness of the ability of the primary obligor
to make payment of such primary Indebtedness, or (d) otherwise to
assure or hold harmless the owner of such primary Indebtedness against
loss in respect thereof, PROVIDED, HOWEVER, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any
Guaranty Obligation shall be deemed to be an amount equal to the stated
or determinable amount of the primary Indebtedness in respect of which
such Guaranty Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming
such person is required to perform thereunder) as determined by such
person in good faith.
"HEDGE AGREEMENT" shall mean (i) any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar
agreement or other similar agreement or arrangement designed to protect
against fluctuations in interest rates, and (ii) any currency swap
agreement, forward currency purchase agreement or similar agreement or
arrangement designed to protect against fluctuations in currency
exchange rates.
"HAZARDOUS MATERIALS" shall mean (i) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; and (ii)
any chemicals, materials or substances defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "restricted hazardous materials", "extremely hazardous
wastes", "restrictive hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants" or "pollutants", or words of similar
meaning and regulatory effect under any applicable Environmental Law.
"INDEBTEDNESS" of any person shall mean without duplication:
(i) all indebtedness of such person for borrowed money,
(ii) all bonds, notes, debentures and similar debt
securities of such person,
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such person,
(iv) the face amount of all letters of credit issued
for the account of such person and, without duplication, all
drafts drawn thereunder,
(v) all Indebtedness of a second person secured by any
Lien on any property owned by such first person, whether or
not such indebtedness has been assumed,
(vi) all Capitalized Lease Obligations of such person,
(vii) all obligations of such person to pay a specified
purchase price for goods or services whether or not
delivered or accepted, I.E., take-or-pay and similar
obligations,
(viii) all net obligations of such person under Hedge
Agreements,
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<PAGE> 16
(ix) the full outstanding balance of trade receivables
sold with full or limited recourse, other than solely for
purposes of collection of delinquent accounts, and
(x) all Guaranty Obligations of such person,
PROVIDED that neither trade payables and accrued expenses, in each case
arising in the ordinary course of business, nor obligations in respect
of insurance policies or performance or surety bonds which themselves
are not guarantees of Indebtedness, shall constitute Indebtedness.
"INITIAL BORROWING DATE" shall mean the date, on or after the
Effective Date, upon which the conditions specified in section 6.1 are
satisfied.
"INTEREST PERIOD" with respect to any Eurocurrency Loan shall
mean the interest period applicable thereto, as determined pursuant to
section 2.9.
"LEASEHOLDS" of any person means all the right, title and
interest of such person as lessee or licensee in, to and under leases
or licenses of land, improvements and/or fixtures.
"LENDER" shall have the meaning provided in the first
paragraph of this Agreement.
"LENDER DEFAULT" shall mean (i) the refusal (which has not
been retracted) of a Lender in violation of the requirements of this
Agreement to make available its portion of any incurrence of Loans or
to fund its portion of any unreimbursed payment under section 3.4(c) or
(ii) a Lender having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with the obligations under
section 2.1 and/or section 3.4(c), in the case of either (i) or (ii) as
a result of the appointment of a receiver or conservator with respect
to such Lender at the direction or request of any regulatory agency or
authority.
"LENDER REGISTER" shall have the meaning provided in
section 13.16.
"LETTER OF CREDIT" shall have the meaning provided in
section 3.1(a).
"LETTER OF CREDIT DOCUMENTS" shall have the meaning specified
in section 3.2(a).
"LETTER OF CREDIT FEE" shall have the meaning provided in
section 4.1(b).
"LETTER OF CREDIT ISSUER" shall mean (i) NCB; (ii) ABN AMRO
Bank N.V.; (iii) in respect of each Existing Letter of Credit, the
Lender that has issued same as of the Effective Date; and/or (iv) any
other Lender that is requested, and agrees, to so act by the Borrower,
and is approved by the Administrative Agent and the Required Lenders.
Unless otherwise agreed by the Borrower, NCB and ABN AMRO Bank N. V.,
either NCB or ABN AMRO Bank N. V. will act as the Letter of Credit
Issuer for Letters of Credit issued after the Effective Date for any of
the purposes contemplated by clause (i) or (ii) of section 3.1(a), and
ABN AMRO Bank N. V. will act as the Letter of Credit Issuer for Letters
of Credit issued after the Effective Date for any of the purposes
contemplated by clause (iii) of section 3.1(a).
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at anytime, the
sum, without duplication, of (i) the aggregate Stated Amount of all
outstanding Letters of Credit and (ii) the aggregate amount of all
Unpaid Drawings.
"LETTER OF CREDIT REQUEST" shall have the meaning provided in
section 3.2(a).
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<PAGE> 17
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).
"LOAN" shall mean a Revolving Loan or a Competitive Bid Loan,
as the case may be.
"MARGIN STOCK" shall have the meaning provided in
Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on the business, operations, property, assets, liabilities or condition
(financial or otherwise) of, when used with reference to the Borrower,
the Borrower and its Subsidiaries, taken as a whole, or when used with
reference to any other person, such person and its Subsidiaries, taken
as a whole, as the case may be.
"MATERIAL SUBSIDIARY" shall mean, at any time, with reference
to any person, any Subsidiary of such person that (x) has assets at
such time comprising 5% or more of the consolidated assets of such
person and its Subsidiaries or (y) had net income in the most recently
ended fiscal year of such person comprising 5% or more of the
consolidated net income of such person and its Subsidiaries for such
fiscal year.
"MATURITY DATE" shall mean April 30, 2002, unless earlier
terminated, or extended in accordance with section 4.4.
"MINIMUM BORROWING AMOUNT" shall mean (i) for General
Revolving Loans which are Prime Rate Loans, $500,000, with minimum
increments thereafter of $100,000, (ii) for General Revolving Loans
which are Eurocurrency Loans, $1,000,000 (or the substantial equivalent
thereof in any Alternative Currency), with minimum increments
thereafter of $100,000 (or the substantial equivalent thereof in any
Alternative Currency), and (iii) for Swing Line Revolving Loans,
$100,000, with minimum increments thereafter of $100,000.
"MONEY MARKET RATE LOANS" shall mean Swing Line Revolving
Loans, denominated in U.S. Dollars, bearing interest at a Quoted Rate.
"MOODY'S" shall mean Moody's Investors Service, Inc. and its
successors.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as
defined in section 4001(a)(3) of ERISA to which the Borrower or any
ERISA Affiliate is making or accruing an obligation to make
contributions or has within any of the preceding three plan years made
or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan,
other than a Multiemployer Plan, to which the Borrower or any ERISA
Affiliate, and one or more employers other than the Borrower or an
ERISA Affiliate, is making or accruing an obligation to make
contributions or, in the event that any such plan has been terminated,
to which the Borrower or an ERISA Affiliate made or accrued an
obligation to make contributions during any of the five plan years
preceding the date of termination of such plan.
"NCB" shall mean National City Bank, a national banking
association, together with its successors and assigns.
"NET CASH PROCEEDS" shall mean, with respect to any Asset
Sale, the Cash Proceeds resulting therefrom net of (i) reasonable and
customary expenses of sale incurred in connection with such Asset Sale,
and other reasonable and customary fees and expenses incurred, and all
state, and local taxes paid or reasonably estimated to be payable by
such person, as a consequence of such Asset Sale and the
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<PAGE> 18
payment of principal, premium and interest of Indebtedness secured by
the asset which is the subject of the Asset Sale and required to be,
and which is, repaid under the terms thereof as a result of such Asset
Sale, (ii) amounts of any distributions payable to holders of minority
interests in the relevant person or in the relevant property or assets
and (iii) incremental income taxes paid or payable as a result thereof.
"1934 ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"NON-DEFAULTING LENDER" shall mean each Lender other than a
Defaulting Lender.
"NOTE" shall mean a Revolving Note or a Competitive Bid Note,
as the case may be.
"NOTICE OF COMPETITIVE BID BORROWING" shall have the meaning
provided in section 2.5.
"NOTICE OF REVOLVING BORROWING" shall have the meaning
provided in section 2.3(a).
"NOTICE OF CONVERSION" shall have the meaning provided in
section 2.7.
"NOTICE OFFICE" shall mean the office of the Administrative
Agent at National City Center, 1900 East Ninth Street, Cleveland,
Ohio 44114, Attention: Donald B. Hayes, Jr., Vice President
(telephone: (216) 575-2120; facsimile: (216) 575-9396), or such other
office, located in a city in the United States Eastern Time Zone, as
the Administrative Agent may designate to the Borrower from time to
time.
"OBLIGATIONS" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time
existing, owing to the Administrative Agent or any Lender pursuant to
the terms of this Agreement or any other Credit Document.
"PARTICIPANT" shall have the meaning provided in section
3.4(a).
"PAYMENT OFFICE" shall mean the office of the Administrative
Agent at National City Center, 1900 East Ninth Street, Cleveland, Ohio
44114, Attention: Connie Djukic (telephone: (216) 575-2578; facsimile:
(216) 575-9396), or such other office, located in a city in the United
States Eastern Time Zone, as the Administrative Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor
thereto.
"PERCENTAGE" shall mean, at any time for each Lender with a
Commitment, the percentage obtained by dividing such Lender's
Commitment by the Total Commitment, PROVIDED that if the Total
Commitment has been terminated, the Percentage of each Lender shall be
determined by dividing such Lender's Commitment immediately prior to
such termination by the Total Commitment immediately prior to such
termination. When used with reference to a particular Facility, the
terms General Revolving Facility Percentage or Swing Line Revolving
Facility Percentage, as the case may be, shall apply.
"PERMITTED ACQUISITIONS" shall mean and include, exclusive of
expenditures (including the purchase of adjacent land) to expand then
existing facilities owned by the Borrower or any Subsidiary on the
Effective Date or acquired pursuant to a Permitted Acquisition, and
exclusive of any loans, advances or investments otherwise permitted
pursuant to section 9.5: (i) acquisitions (whether by purchase, lease
or otherwise) of facilities and businesses operated by persons who are
not Subsidiaries of the Borrower, and (ii) acquisitions of equity or
other similar interests in such persons; PROVIDED, that, unless the
Required Lenders otherwise consent, with respect to any transaction
referred to in the foregoing clauses (i) and (ii), no such transaction
shall be considered a Permitted Acquisition if (A) such
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<PAGE> 19
transaction is actively opposed by the Board of Directors (or similar
governing body) of the selling person or the person whose equity
interests are to be acquired, (B) the aggregate consideration for such
transaction (including the principal amount of any assumed Indebtedness
and (without duplication) any Indebtedness of any acquired person)
would exceed $25,000,000, or (C) as a result thereof the Borrower or
any Subsidiary acquires any equity interest in any person and such
person does not by virtue of such transaction become a Subsidiary of
the Borrower.
"PERMITTED LIENS" shall mean Liens described in section 9.3.
"PERSON" shall mean any individual, partnership, joint
venture, firm, corporation, limited liability company, association,
trust or other enterprise or any government or political subdivision or
any agency, department or instrumentality thereof.
"PLAN" shall mean any multiemployer or single-employer plan as
defined in section 4001 of ERISA, which is maintained or contributed to
by (or to which there is an obligation to contribute by) the Borrower
or a Subsidiary of the Borrower or an ERISA Affiliate, and each such
plan for the five year period immediately following the latest date on
which the Borrower, or a Subsidiary of the Borrower or an ERISA
Affiliate maintained, contributed to or had an obligation to contribute
to such plan.
"PRIME RATE" shall mean, for any period, a fluctuating
interest rate per annum as shall be in effect from time to time which
rate per annum shall at all times be equal to the greater of (i) the
rate of interest established by NCB in Cleveland, Ohio, from time to
time, as its prime rate, whether or not publicly announced, which
interest rate may or may not be the lowest rate charged by it for
commercial loans or other extensions of credit; and (ii) the Federal
Funds Effective Rate in effect from time to time PLUS 1/2 of 1% per
annum.
"PRIME RATE LOAN" shall mean each Loan, denominated in U. S.
Dollars, bearing interest at the rates provided in section 2.8(a)(i) or
(b)(i).
"PROHIBITED TRANSACTION" shall mean a transaction with respect
to a Plan that is prohibited under section 4975 of the Code or section
406 of ERISA and not exempt under section 4975 of the Code or section
408 of ERISA.
"PURCHASING LENDER" shall have the meaning provided in section
2.4(c).
"QUOTED RATE" shall have the meaning provided in section
2.3(b).
"RCRA" shall mean the Resource Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C. ss. 6901 ET
SEQ.
"REAL PROPERTY" of any person shall mean all of the right,
title and interest of such person in and to land, improvements and
fixtures, including Leaseholds.
"RECEIVABLES PROGRAM REDUCTION" shall have the meaning
provided in section 2.1.
"REFERENCE BANKS" shall mean (i) NCB, (ii) ABN AMRO Bank
N.V., and (iii) any other Lender or Lenders selected as a Reference
Bank by the Administrative Agent and the Required Lenders, PROVIDED,
that if any of such Reference Banks is no longer a Lender, such other
Lender or Lenders as may be selected by the Administrative Agent acting
on instructions from the Required Lenders.
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<PAGE> 20
"REGULATION D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect
and any successor to all or a portion thereof establishing reserve
requirements.
"REGULATION U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect
and any successor to all or a portion thereof establishing margin
requirements.
"REPORTABLE EVENT" shall mean an event described in section
4043(c) of ERISA with respect to a Plan other than those events as to
which the 30-day notice period is waived under subsection .13, .14,
.16, .18, .19 or .20 of PBGC Regulation section 2615.
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose
outstanding Revolving Loans and Unutilized Commitments constitute at
least 66+2/3% of the sum of the total outstanding Revolving Loans and
Unutilized Commitments of Non-Defaulting Lenders (PROVIDED that, for
purposes hereof, neither the Borrower, nor any of its Affiliates, shall
be included in (i) the Lenders holding such amount of the Revolving
Loans or having such amount of the Unutilized Commitments, or (ii)
determining the aggregate unpaid principal amount of the Revolving
Loans or Unutilized Commitments).
"REVOLVING BORROWING" shall mean the incurrence of General
Revolving Loans or Swing Line Revolving Loans, as the case may be,
consisting of one Type of Loan, by the Borrower from all of the Lenders
having Commitments in respect thereof on a PRO RATA basis on a given
date (or resulting from conversions on a given date), having in the
case of Eurocurrency Loans the same Interest Period.
"REVOLVING LOAN" shall have the meaning provided in section
2.1.
"REVOLVING NOTE" shall mean a General Revolving Note or a
Swing Line Revolving Note, as the case may be.
"SALE AND LEASE-BACK TRANSACTION" shall mean any arrangement
with any person providing for the leasing by the Borrower or any
Subsidiary of the Borrower of any property (except for temporary leases
for a term, including any renewal thereof, of not more than one year
and except for leases between the Borrower and a Subsidiary or between
Subsidiaries), which property has been or is to be sold or transferred
by the Borrower or such Subsidiary to such person.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc., and its successors.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC REGULATION D" shall mean Regulation D as promulgated
under the Securities Act of 1933, as amended, as the same may be in
effect from time to time.
"SECTION 5.4(B)(II) CERTIFICATE" shall have the meaning
provided in section 5.4(b)(ii).
"SELLING SWING LINE LENDER" shall have the meaning provided in
section 2.4(c).
"STATED AMOUNT" of each Letter of Credit shall mean the
maximum available to be drawn thereunder (regardless of whether any
conditions or other requirements for drawing could then be met).
"SUBSIDIARY" of any person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having
by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of
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<PAGE> 21
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such person
directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity in which such person
directly or indirectly through Subsidiaries, has more than a 50% equity
interest at the time. Unless otherwise expressly provided, all
references herein to "Subsidiary" shall mean a Subsidiary of the
Borrower.
"SUBSIDIARY GUARANTY" shall have the meaning provided in
section 6.1(b).
"SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which
has been subordinated to the Obligations in such manner and to such
extent as the Required Lenders may require.
"SWING LINE REVOLVING FACILITY" shall mean the Facility
evidenced by the Total Swing Line Revolving Commitment.
"SWING LINE REVOLVING FACILITY PERCENTAGE" shall mean at any
time for any Lender with a Swing Line Revolving Loan Commitment, the
percentage obtained by dividing such Lender's Swing Line Revolving Loan
Commitment by the Total Swing Line Revolving Commitment, PROVIDED, that
if the Total Swing Line Revolving Commitment has been terminated, the
Swing Line Revolving Facility Percentage for each Lender shall be
determined by dividing such Lender's Swing Line Revolving Loan
Commitment immediately prior to such termination by the Total Swing
Line Revolving Commitment immediately prior to such termination.
"SWING LINE REVOLVING LOAN" shall have the meaning provided in
section 2.1.
"SWING LINE REVOLVING LOAN COMMITMENT" shall mean, with
respect to each Lender, the amount, if any, set forth opposite such
Lender's name in Annex I as its "Swing Line Revolving Loan Commitment"
as the same may be reduced from time to time pursuant to section 4.2,
4.3 and/or 10 or adjusted from time to time as a result of assignments
to or from such Lender pursuant to section 2.4(c) or 13.4.
"SWING LINE REVOLVING NOTE" shall have the meaning provided in
section 2.6(a).
"SYNDICATION AGENT" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to
the Syndication Agent appointed by the Borrower and the original
Lenders.
"TESTING PERIOD" shall mean for any determination a single
period consisting of the four consecutive fiscal quarters of the
Borrower then last ended (whether or not such quarters are all within
the same fiscal year).
"TOTAL CAPITALIZATION" shall mean the sum of Total
Indebtedness and Consolidated Net Worth.
"TOTAL COMMITMENT" shall mean the sum of the Commitments of
the Lenders.
"TOTAL GENERAL REVOLVING COMMITMENT" shall mean the sum of the
General Revolving Commitments of the Lenders.
"TOTAL INDEBTEDNESS" shall mean the sum (without duplication)
of the following, for the Borrower and/or any of its Subsidiaries, all
as determined on a consolidated basis of:
(i) all indebtedness for borrowed money,
(ii) all bonds, notes, debentures and similar debt
securities,
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<PAGE> 22
(iii) the deferred purchase price of capital assets
or services which in accordance with GAAP would be shown on
the liability side of a consolidated balance sheet of the
Borrower and its Subsidiaries,
(iv) the face amount of all letters of credit issued
for the account of the Borrower or any Subsidiary (except that
in the case of any letter of credit supporting Indebtedness of
the Borrower or any Subsidiary, the excess of such face amount
over the outstanding principal amount of such Indebtedness
shall be excluded), and, without duplication, all drafts drawn
thereunder],
(v) all Indebtedness of a second person secured by
any Lien on any property owned by such first person, whether
or not such Indebtedness has been assumed,
(vi) all Capitalized Lease Obligations,
(vii) all obligations of the Borrower or any
Subsidiary to pay a specified purchase price for goods or
services whether or not delivered or accepted, I.E.,
take-or-pay and similar obligations,
(viii) the full outstanding balance of trade
receivables sold with full or limited recourse, other than
solely for purposes of collection of delinquent accounts,
PROVIDED that if the structure of any receivables sales
program provides for "over-collateralization", the outstanding
balance of the trade receivables attributable to the
"over-collateralization" may be excluded, and
(ix) all Guaranty Obligations of such person,
PROVIDED that neither trade payables and accrued expenses, in each case
arising in the ordinary course of business, nor obligations in respect
of insurance policies or performance or surety bonds which themselves
are not guarantees of Indebtedness, shall be included.
"TOTAL INTEREST EXPENSE" shall mean, for any period, (i) total
interest expense (including that which is capitalized and that which is
attributable to Capital Leases, in accordance with GAAP) of the
Borrower and its Subsidiaries on a consolidated basis with respect to
all outstanding Indebtedness of the Borrower and its Subsidiaries
including, without limitation, all commissions, discounts and other
fees and charges owed with respect to letters of credit and net costs
under Hedge Agreements, but excluding, however, any amortization of
deferred financing costs, all as determined in accordance with GAAP;
and (ii) regardless of the manner in which the Borrower or any
Subsidiary accounts for the same, and without regard to the accounting
treatment thereof under GAAP, all discounts, fees and charges (other
than "up-front" or "closing" fees and any amortization thereof)
attributable to the sale, with full or limited recourse, of trade
receivables by the Borrower or any Subsidiary (other than solely for
purposes of collection of delinquent accounts) to any person other than
the Borrower or any of its Subsidiaries.
"TOTAL NET ASSETS" shall mean, at any date, the total assets,
net of depreciation and reserves, which would be reflected on a
consolidated balance sheet of the Borrower and its Subsidiaries as of
such date prepared in accordance with GAAP.
"TOTAL RENTAL EXPENSE" shall mean, for any period, total
rental expense (other than that which is attributable to Capitalized
Leases and is included in Total Interest Expense) of the Borrower and
its Subsidiaries on a consolidated basis, all as determined in
accordance with GAAP.
"TOTAL SWING LINE REVOLVING COMMITMENT" shall mean the sum of
the Swing Line Revolving Commitments of the Lenders.
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"TYPE" shall mean any type of Loan determined with respect to
the interest option applicable thereto, I.E., a Prime Rate Loan, a
Eurocurrency Loan or a Money Market Rate Loan.
"UCC" shall mean the Uniform Commercial Code.
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated
plan benefits under the Plan as of the close of its most recent plan
year exceeds the fair market value of the assets allocable thereto,
each determined in accordance with Statement of Financial Accounting
Standards No. 87, based upon the actuarial assumptions used by the
Plan's actuary in the most recent annual valuation of the Plan.
"UNITED STATES" and "U.S." each means United States of
America.
"UNPAID DRAWING" shall have the meaning provided in section
3.3(a).
"UNUTILIZED COMMITMENT" for any Lender at any time shall mean
the excess of (i) such Lender's Commitment at such time over (ii) the
sum of the principal amount of Loans made by such Lender and
outstanding at such time and (y) such Lender's General Revolving
Facility Percentage of Letter of Credit Outstandings at such time,
taking into account any Competitive Bid Reductions and Receivables
Program Reductions.
"UNUTILIZED TOTAL COMMITMENT" shall mean, at any time, the
excess of (i) the Total Commitment at such time over (ii) the sum of
(x) the aggregate principal amount of all Revolving Loans then
outstanding plus (y) the aggregate Letter of Credit Outstandings at
such time, taking into account any Competitive Bid Reductions and
Receivables Program Reductions.
"UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT" shall mean, at
any time, the excess of (i) the Total General Revolving Commitment at
such time over (ii) the sum of (x) the aggregate principal amount of
all General Revolving Loans then outstanding plus (y) the aggregate
Letter of Credit Outstandings at such time, taking into account any
Competitive Bid Reductions and Receivables Program Reductions.
"UNUTILIZED TOTAL SWING LINE REVOLVING COMMITMENT" shall mean,
at any time, the excess of (i) the Total Swing Line Revolving
Commitment at such time over (ii) the aggregate principal amount of all
Swing Line Revolving Loans then outstanding.
"VALUE" shall mean, with respect to a Sale and Lease-Back
Transaction, as of any particular time, the amount equal to the greater
of (i) the net proceeds of the sale or transfer of the property leased
pursuant to such Sale and Lease-Back Transaction or (ii) the fair value
in the opinion of the Borrower, acting in good faith, of such property
at the time of entering into such Sale and Lease-Back Transaction.
"WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the
Borrower at least 95% of whose capital stock, equity interests and
partnership interests, other than director's qualifying shares or
similar interests, are owned directly or indirectly by the Borrower.
"WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of
written communication or a communication by means of telex, facsimile
transmission, telegraph or cable.
1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
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1.3. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in section 7.8(a).
1.4. CURRENCY EQUIVALENTS. For purposes of this Agreement, except as
otherwise specified herein, (i) the equivalent in Dollars of any Alternative
Currency shall be determined by using the quoted spot rate at which the
Administrative Agent offers to exchange Dollars for such Alternative Currency at
its Payment Office at 9:00 A.M. (local time at the Payment Office) two Business
Days prior to the date on which such equivalent is to be determined, (ii) the
equivalent in any Alternative Currency of any other Alternative Currency shall
be determined by using the quoted spot rate at which the Administrative Agent's
Payment Office offers to exchange such Alternative Currency for the equivalent
in Dollars of such other Alternative Currency at such Payment Office at 9:00
A.M. (local time at the Payment Office) two Business Days prior to the date on
which such equivalent is to be determined, and (iii) the equivalent in any
Alternative Currency of Dollars shall be determined by using the quoted spot
rate at which the Administrative Agent's Payment Office offers to exchange such
Alternative Currency for Dollars at the Payment Office at 9:00 A.M. (local time
at the Payment Office) two Business Days prior to the date on which such
equivalent is to be determined; PROVIDED, that (A) the equivalent in Dollars of
each Eurocurrency Loan made in an Alternative Currency shall be recalculated
hereunder on each date that it shall be necessary (or the Administrative Agent
shall elect) to determine the unused portion of each Lender's Commitment, or any
or all Loan or Loans outstanding on such date; (B) the equivalent in Dollars of
any Unpaid Drawing in respect of any Letter of Credit denominated in an
Alternative Currency shall be determined at the time the drawing under such
Letter of Credit was paid or disbursed by the applicable Letter of Credit
Issuer; (C) for purposes of sections 2.1(a), 3.1(b) and 5.2(a), the equivalent
in Dollars of the Stated Amount of any Letter of Credit denominated in an
Alternative Currency shall be calculated (x) on the date of the issuance of the
respective Letter of Credit, (y) on the first Business Day of each calendar
month thereafter and (z) in any other case where the same is required or
permitted to be calculated, on such other day as the Administrative Agent may,
in its sole discretion, consider appropriate; and (D) for purposes of sections
4.1(b) and (c), the equivalent in Dollars of the Stated Amount of any Letter of
Credit denominated in an Alternative Currency shall be calculated on the first
day of each calendar month in the quarterly period in which the respective
payment is due pursuant to said sections.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1. COMMITMENTS FOR REVOLVING LOANS. Subject to and upon the terms and
conditions herein set forth, each Lender severally agrees to make a loan or
loans (each a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS") to the
Borrower, which Revolving Loans shall be drawn, to the extent such Lender has a
commitment under a Facility for the Borrower, under the applicable Facility, as
set forth below:
(a) GENERAL REVOLVING FACILITY. Revolving Loans to the
Borrower under the General Revolving Facility (each a "GENERAL
REVOLVING LOAN" and, collectively, the "GENERAL REVOLVING LOANS"): (i)
may be made at any time and from time to time on and after the Initial
Borrowing Date and prior to the Maturity Date; (ii) except as otherwise
provided, may, at the option of the Borrower, be incurred and
maintained as, or converted into, General Revolving Loans which are
Prime Rate Loans, or Eurocurrency Loans denominated in Dollars or in an
Alternative Currency, PROVIDED that all General Revolving Loans made as
part of the same Revolving Borrowing shall, unless otherwise
specifically provided herein, consist of General Revolving Loans of the
same currency and Type; (iii) may be repaid or prepaid and reborrowed
in accordance with the provisions hereof; (iv) may only be made if
after giving effect thereto the Unutilized Total General Revolving
Commitment (after giving effect to any Competitive Bid Reductions and
Receivables Program Reductions) exceeds the outstanding Swing Line
Revolving Loans; and (v) shall not exceed for any Lender at any time
outstanding that aggregate principal amount which, when added to the
product at such time of (A) such Lender's General Revolving Facility
Percentage, TIMES (B) the aggregate Letter of Credit Outstandings,
equals the General Revolving Commitment of such Lender at such time.
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(b) SWING LINE FACILITY. Revolving Loans to the Borrower under
the Swing Line Facility (each a "SWING LINE REVOLVING LOAN" and,
collectively, the "SWING LINE REVOLVING LOANS"): (i) may be made at any
time and from time to time on and after the Initial Borrowing Date and
prior to the Maturity Date; (ii) except as otherwise provided, may, at
the option of the Borrower, be incurred and maintained as, or converted
into, Swing Line Revolving Loans which are Prime Rate Loans,
Eurocurrency Loans denominated in Dollars, or Money Market Rate Loans,
PROVIDED that all Swing Line Revolving Loans made as part of the same
Revolving Borrowing shall, unless otherwise specifically provided
herein, consist of Swing Line Revolving Loans of the same Type; (iii)
may be repaid or prepaid and reborrowed in accordance with the
provisions hereof; (iv) may only be made if after giving effect thereto
the Unutilized Total General Revolving Commitment (after giving effect
to any Competitive Bid Reductions and Receivables Program Reductions)
exceeds the outstanding Swing Line Revolving Loans; and (v) shall not
exceed for any Lender at any time outstanding the Swing Line Revolving
Commitment of such Lender at such time.
Notwithstanding anything to the contrary contained herein, (A) the aggregate
amount of the General Revolving Loan Commitments of the Lenders shall be deemed
used from time to time to the extent of the aggregate amount of the Competitive
Bid Loans then outstanding and such deemed usage of the aggregate amount of the
General Revolving Loan Commitments shall be applied to the Lenders having such
Commitments ratably according to their respective Commitments (such deemed usage
of the aggregate amount of the General Revolving Loan Commitments being a
"COMPETITIVE BID REDUCTION"); and (B) if at any time the Borrower and/or its
Subsidiaries shall have sold trade receivables as contemplated by section
9.4(d), the aggregate amount of the General Revolving Loan Commitments of the
Lenders shall be deemed used from time to time to the extent of the aggregate
outstanding balance of the receivables so sold (exclusive of any balance thereof
attributable to the "over-collateralization" of such receivables program) which
is then outstanding and such deemed usage of the aggregate amount of the General
Revolving Loan Commitments shall be applied to the Lenders having such
Commitments ratably according to their respective Commitments (such deemed usage
of the aggregate amount of the General Revolving Loan Commitments being a
"RECEIVABLES PROGRAM REDUCTION").
2.2. MINIMUM REVOLVING BORROWING AMOUNTS, ETC.; PRO RATA REVOLVING
BORROWINGS. (a) The aggregate principal amount of each Revolving Borrowing by
the Borrower shall not be less than the Minimum Borrowing Amount for such
Borrowing. More than one Revolving Borrowing may be incurred by the Borrower on
any day, PROVIDED that if there are two or more Revolving Borrowings on a single
day under the same Facility which consist of Eurocurrency Loans denominated in
the same currency, each such Borrowing shall have a different initial Interest
Period.
(b) All Borrowings of Revolving Loans under a Facility shall be made by
the Lenders having Commitments under such Facility PRO RATA on the basis of
their respective Commitments under such Facility. It is understood that no
Lender shall be responsible for any default by any other Lender in its
obligation to make Loans hereunder and that each Lender shall be obligated to
make the Loans provided to be made by it hereunder, regardless of the failure of
any other Lender to fulfill its Commitments hereunder.
2.3. NOTICE OF REVOLVING BORROWING. (a) Whenever the Borrower desires
to incur Revolving Loans, it shall give the Administrative Agent at its Notice
Office,
(A) prior to 12:00 noon (local time at its Notice Office), at
least three Business Days' prior written or telephonic notice (in the
case of telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent) of each Revolving Borrowing of
Eurocurrency Loans denominated in Dollars to be made hereunder,
(B) prior to 12:00 noon (local time at its Notice Office), at
least five Business Days' prior written or telephonic notice (in the
case of telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent) of each Revolving Borrowing of
General Revolving Loans consisting of Eurocurrency Loans denominated in
an Alternative Currency to be made hereunder, and
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(C) prior to 12:00 noon (local time at its Notice Office) on
the proposed date thereof written or telephonic notice (in the case of
telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent) of each Revolving Borrowing of Prime Rate Loans
to be made hereunder.
Each such notice (each such notice, a "NOTICE OF REVOLVING BORROWING") shall (if
requested by the Administrative Agent to be confirmed in writing), be
substantially in the form of Exhibit B-1, and in any event shall be irrevocable
and shall specify: (i) the Facility under which the Revolving Borrowing is to be
incurred; (ii) the aggregate principal amount of the Revolving Loans to be made
pursuant to such Revolving Borrowing; (iii) the date of the Revolving Borrowing
(which shall be a Business Day); (iv) whether the respective Revolving Borrowing
shall consist of Prime Rate Loans, Eurocurrency Loans or Money Market Rate
Loans; (v) if the requested Revolving Borrowing consists of Eurocurrency Loans,
the Interest Period to be initially applicable thereto; (vi) if the Requested
Revolving Borrowing consists of Swing Line Revolving Loans which are Money
Market Rate Loans, the Quoted Rate therefor and the maturity date thereof (which
shall not be more than one month in the case of any Money Market Rate Loan); and
(vii) in the case of a requested Revolving Borrowing consisting of General
Revolving Loans which are Eurocurrency Loans, the currency, if other than
Dollars, in which such General Revolving Loans are requested. The Administrative
Agent shall promptly give each Lender which has a commitment under any
applicable Facility written notice (or telephonic notice promptly confirmed in
writing) of each proposed Revolving Borrowing under such Facility, of such
Lender's proportionate share thereof and of the other matters covered by the
Notice of Revolving Borrowing relating thereto.
(b) Whenever the Borrower proposes to submit a Notice of Revolving
Borrowing with respect to Swing Line Revolving Loans which will be Money Market
Rate Loans, it will prior to submitting such Notice of Revolving Borrowing
notify the Administrative Agent of its intention and request the Administrative
Agent to quote a fixed or floating interest rate (the "QUOTED RATE") to be
applicable thereto prior to the proposed maturity thereof. The Administrative
Agent will immediately so notify the Lenders with Commitments under the Swing
Line Revolving Facility, and if all of such Lenders are agreeable to a
particular interest rate for the proposed maturity of such Money Market Rate
Loans if such Loans are made on or prior to a specified date, the Administrative
Agent shall quote such interest rate to the Borrower as the Quoted Rate
applicable to such proposed Money Market Rate Loans if made on or before such
specified date for a maturity as so proposed by the Borrower. The Lenders with
Commitments under the Swing Line Revolving Facility contemplate that any Quoted
Rate will be a rate of interest which reflects a margin corresponding to the
Applicable Eurocurrency Margin in effect at the time of quotation of any Quoted
Rate over the then prevailing Federal Funds Effective Rate or a commercial
paper, call money, overnite repurchase or other rate selected by such Lenders.
Nothing herein shall obligate any Lender to approve or agree to a Quoted Rate.
(c) In the case of a proposed Revolving Borrowing comprised of General
Revolving Loans which are Eurocurrency Loans denominated in an Alternative
Currency, the obligation of each affected Lender to make its Eurocurrency Loan
in the requested Alternative Currency as part of such Revolving Borrowing is
subject to:
(A) if such requested Alternative Currency is an Alternative
Currency described in clause (i) of the definition of the term
Alternative Currency, the confirmation by the Administrative Agent to
the Borrower not later than the fourth Business Day before the
requested date of such Revolving Borrowing that such Alternative
Currency is readily and freely transferable and convertible into
Dollars, or
(B) if such requested Alternative Currency is not an
Alternative Currency described in clause (i) of the definition of the
term Alternative Currency, the confirmation by such Lender to the
Administrative Agent not later than the fourth Business Day before the
requested date of such Revolving Borrowing that such Alternative
Currency is acceptable to such Lender, which confirmation shall be
notified immediately by the Administrative Agent to the Borrower.
If the Administrative Agent shall not have provided the confirmation referred to
in clause (A) above, or any affected Lender shall not have so provided to the
Administrative Agent the confirmation referred to in clause
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(B) above, the Administrative Agent shall promptly notify the Borrower and each
affected Lender that a Lender has not provided any such confirmation referred to
in such clause (B), whereupon the Borrower may, by notice to the Administrative
Agent not later than the third Business Day before the requested date of such
Revolving Borrowing, withdraw the Notice of Revolving Borrowing relating to such
requested Revolving Borrowing. If the Borrower does so withdraw such Notice of
Revolving Borrowing, the Revolving Borrowing requested in such Notice of
Revolving Borrowing shall not occur and the Administrative Agent shall promptly
so notify each affected Lender. If the Borrower does not so withdraw such Notice
of Revolving Borrowing, the Administrative Agent shall promptly so notify each
affected Lender and such Notice of Revolving Borrowing shall be deemed to be a
Notice of Revolving Borrowing which requests a Revolving Borrowing of General
Revolving Loans comprised of Eurocurrency Loans in an aggregate amount in
Dollars equivalent, on the date the Administrative Agent so notifies each
affected Lender, to the amount of the originally requested Revolving Borrowing
in an Alternative Currency; and in such notice by the Administrative Agent to
each affected Lender the Administrative Agent shall state such aggregate
equivalent amount of such Revolving Borrowing in Dollars and such Lender's
ratable portion of such Revolving Borrowing.
(d) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may act prior to receipt of written confirmation without
liability upon the basis of such telephonic notice believed by the
Administrative Agent in good faith to be from an Authorized Officer of the
Borrower entitled to give telephonic notices under this Agreement on behalf of
the Borrower. In each such case, the Administrative Agent's record of the terms
of such telephonic notice shall be conclusive absent manifest error.
2.4. DISBURSEMENT OF FUNDS FROM REVOLVING BORROWINGS; ASSIGNMENT OF
SWING LINE REVOLVING LOANS. (a) No later than 2:00 P.M. (local time at the
Payment Office of the Administrative Agent) on the date specified in each Notice
of Revolving Borrowing relating to Eurocurrency Loans, and no later than 2:00
P.M. (local time at the Payment Office of the Administrative Agent) on the date
specified in each Notice of Revolving Borrowing relating to Prime Rate Loans or
Money Market Rate Loans, each Lender with a Commitment under the respective
Facility relating to such Revolving Loans will make available its PRO RATA
share, if any, of each Revolving Borrowing under such Facility requested to be
made on such date in the manner provided below. All amounts relating to any
Revolving Borrowing by the Borrower shall be made available to the
Administrative Agent in U.S. dollars or the applicable Alternative Currency and
immediately available funds at the Administrative Agent's Payment Office and the
Administrative Agent promptly will make available to the Borrower by depositing
to its account at such Payment Office the aggregate of the amounts so made
available in the currency and type of funds received. Unless the Administrative
Agent shall have been notified by any Lender prior to the date of a Revolving
Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Revolving Borrowing or Borrowings to be
made on such date, the Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on such date of Revolving
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender and the Administrative
Agent has made available same to the Borrower, the Administrative Agent shall be
entitled to recover such corresponding amount from such Lender. If such Lender
does not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent at a
rate per annum equal to (x) if paid by such Lender, the overnight Federal Funds
Effective Rate or (y) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with section 2.8, for the respective Loans
(but without any requirement to pay any amounts in respect thereof pursuant to
section 2.11).
(b) Nothing herein and no subsequent termination of the Commitments
pursuant to section 4.2 or 4.3 shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder and in
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existence from time to time or to prejudice any rights which the Borrower may
have against any Lender as a result of any default by such Lender hereunder.
(c) Upon written demand by any Lender having an outstanding Swing Line
Revolving Loan or Loans (a "SELLING SWING LINE LENDER"), with a copy of such
demand to the Administrative Agent, each other Lender with a General Revolving
Loan Commitment (a "PURCHASING LENDER") shall purchase from such Selling Swing
Line Lender, and such Selling Swing Line Lender shall sell and assign to such
Purchasing Lender, such Purchasing Lender's General Revolving Facility
Percentage of such outstanding Swing Line Revolving Loan or Loans, as of the
date of such demand, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of the Selling Swing
Line Lender, by deposit to the Administrative Agent's account at the Payment
Office, in same day funds, an amount equal to the portion of the outstanding
principal amount of such Swing Line Revolving Loan or Loans to be purchased by
such Purchasing Lender. Each Purchasing Lender agrees to purchase its General
Revolving Facility Percentage of an outstanding Swing Line Loan as provided
herein, regardless of whether any conditions to any Credit Event could then be
satisfied and regardless of the existence of a Default or Event of Default, on
(i) the Business Day on which demand therefor is made by the Selling Swing Line
Lender, PROVIDED that notice of such demand is given not later than 11:00 A.M.
(local time at the Domestic Lending Office of such Purchasing Lender) on such
Business Day, or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by a
Selling Swing Line Lender to any Purchasing Lender of a portion of a Swing Line
Revolving Loan, the Selling Swing Line Lender represents and warrants to such
Purchasing Lender that the Selling Swing Line Lender is the legal and beneficial
owner of such interest being assigned by it, but makes no other representation
or warranty and assumes no responsibility with respect to such Swing Line
Revolving Loan or Loans, the Credit Documents or any Credit Party. If and to the
extent that any Purchasing Lender shall not have so made the amount of such
Swing Line Revolving Loan or Loans available to the Administrative Agent, such
Purchasing Lender agrees to pay to the Administrative Agent forthwith on demand,
for the account of the Selling Swing Line Lender, such amount together with
interest thereon, for each day from the date of demand by the Selling Swing Line
Lender until the date such amount is paid to the Administrative Agent, at the
Federal Funds Effective Rate. If such Purchasing Lender shall pay to the
Administrative Agent such amount for the account of the Selling Swing Line
Lender on any Business Day, such amount so paid in respect of principal shall
constitute a Swing Line Revolving Loan made by such Purchasing Lender for
purposes of this Agreement, and the outstanding principal amount of the Swing
Line Revolving Loan or Loans made by the Selling Swing Line Lender shall be
reduced by such amount on such Business Day. The Borrower hereby (i) approves
and agrees to each such sale and assignment, and (ii) agrees upon demand to
issue to each Purchasing Lender which does not have a Swing Line Revolving Loan
Commitment a Swing Line Revolving Note to evidence any Swing Line Revolving Loan
resulting from any such purchase hereunder.
2.5. THE COMPETITIVE BID LOANS. (a) Each Lender severally agrees that
the Borrower may make Competitive Bid Borrowings under this section 2.5 from
time to time on any Business Day during the period from the Initial Borrowing
Date until the date occurring 30 days prior to the Maturity Date in the manner
set forth below; PROVIDED that notwithstanding anything to the contrary
contained herein, (x) the Borrower may not make any Competitive Bid Borrowing
unless (A) its ratio of EBIT to Total Interest for the most recent Testing
Period prior thereto is at least 3.00 to 1.00, and (B) as of the end of such
Testing Period, the ratio of the Borrower's Total Indebtedness to Total Capital,
expressed as a percentage, does not exceed 45%, in each case as evidenced by
financial statements delivered pursuant to section 8.1(a) or (b) hereof and
supported by such computations made by the Borrower as the Administrative Agent
may reasonably request, and (y) following the making of each Competitive Bid
Borrowing, the sum of the aggregate amount of the Letter of Credit Outstandings,
the aggregate outstanding General Revolving Loans, and the aggregate outstanding
Competitive Bid Loans shall not exceed the Total General Revolving Commitment
(computed without regard to any Competitive Bid Reduction).
(i) The Borrower may request a Competitive Bid Borrowing under
this section 2.5 by delivering to the Administrative Agent, by
telecopier, telex or cable, confirmed immediately in writing, a notice
of a Competitive Bid Borrowing (a "NOTICE OF COMPETITIVE BID
BORROWING"), in substantially the form of Exhibit B-2 hereto,
specifying the date and aggregate amount of the proposed Competitive
Bid
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Borrowing, the maturity date for repayment of each Competitive Bid Loan
to be made as part of such Competitive Bid Borrowing (which maturity
date may not be earlier than the date occurring 30 days after the date
of such Competitive Bid Borrowing or later than the Maturity Date), the
interest payment date or dates relating thereto, and any other terms to
be applicable to such Competitive Bid Borrowing, not later than 10:00
A.M. (local time at the Notice Office) (A) at least one Business Day
prior to the date of the proposed Competitive Bid Borrowing, if the
Borrower shall specify in the Notice of Competitive Bid Borrowing that
the rates of interest to be offered by the Lenders shall be fixed rates
per annum and (B) at least four Business Days prior to the date of the
proposed Competitive Bid Borrowing, if the Borrower shall instead
specify in the Notice of Competitive Bid Borrowing a different basis to
be used by the Lenders in determining the rates of interest to be
offered by them. Competitive Bid Loans shall only be made in U.S.
Dollars. If the Borrower and the Administrative Agent shall have so
agreed, the Borrower shall pay to the Administrative Agent, for its own
account, in connection with each request for a Competitive Bid
Borrowing, promptly after receipt of an invoice therefor, a competitive
bid administrative fee in such amount as has been so agreed. The
Administrative Agent shall in turn promptly notify each Lender of each
request for a Competitive Bid Borrowing received by it from the
Borrower by sending such Lender a copy of the related Notice of
Competitive Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to
do so, irrevocably offer to make one or more Competitive Bid Loans to
the Borrower as part of such proposed Competitive Bid Borrowing at a
rate or rates of interest specified by such Lender in its sole
discretion, by notifying the Administrative Agent (which shall give
prompt notice thereof to the Borrower), before 10:00 A.M. (local time
at the Notice Office) (A) on the date of such proposed Competitive Bid
Borrowing, in the case of a Notice of Competitive Bid Borrowing
delivered pursuant to clause (A) of paragraph (i) above and (B) three
Business Days before the date of such proposed Competitive Bid
Borrowing, in the case of a Notice of Competitive Bid Borrowing
delivered pursuant to clause (B) of paragraph (i) above, of the minimum
amount and maximum amount of each Competitive Bid Loan which such
Lender would be willing to make as part of such proposed Competitive
Bid Borrowing (which amounts may, subject to the proviso to the first
sentence of this section 2.5(a), exceed such Lender's Commitment), the
rate or rates of interest therefor (specified to the nearest 1/10,000th
of 1%) and such Lender's Applicable Lending Office with respect to such
Competitive Bid Loan; PROVIDED that if the Administrative Agent in its
capacity as a Lender shall, in its sole discretion, elect to make any
such offer, it shall notify the Borrower of such offer before 9:00 A.M.
(local time at the Notice Office) on the date on which notice of such
election is to be given to the Administrative Agent by the other
Lenders. If any Lender shall elect not to make such an offer, such
Lender shall so notify the Administrative Agent, before 10:00 A.M.
(local time at the Notice Office) on the date on which notice of such
election is to be given to the Administrative Agent by the other
Lenders, and such Lender shall not be obligated to, and shall not, make
any Competitive Bid Loan as part of such Competitive Bid Borrowing;
PROVIDED that the failure by any Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive Bid Loan as
part of such proposed Competitive Bid Borrowing. It is understood and
agreed that the Borrower may not accept any offer to make a Competitive
Bid Loan if such offer is not made on a timely basis or otherwise fails
to comply with the requirements of this Agreement.
(iii) The Borrower shall, in turn, (A) before 12:00 noon
(local time at the Notice Office) on the date of such proposed
Competitive Bid Borrowing, in the case of a Notice of Competitive Bid
Borrowing delivered pursuant to clause (A) of paragraph (i) above and
(B) before 12:00 noon (local time at the Notice Office) three Business
Days before the date of such proposed Competitive Bid Borrowing, in the
case of a Notice of Competitive Bid Borrowing delivered pursuant to
clause (B) of paragraph (i) above, either
(x) cancel such Competitive Bid Borrowing by
giving the Administrative Agent notice to that effect, or
(y) accept one or more of the offers made by any
Lender or Lenders pursuant to paragraph (ii) above, in
ascending order, from the lowest cost to the highest cost
acceptable to
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<PAGE> 30
the Borrower in its sole discretion (subject, if necessary, to
ratable allocation between or among Lenders offering the same
interest rates), by giving notice to the Administrative Agent
of the amount of each Competitive Bid Loan (which amount shall
be equal to or greater than the minimum amount, and equal to
or less than the maximum amount, notified to the Borrower by
the Administrative Agent on behalf of such Lender for such
Competitive Bid Loan pursuant to paragraph (ii) above) to be
made by each Lender as part of such Competitive Bid Borrowing,
and reject any remaining offers made by Lenders pursuant to
paragraph (ii) above by giving the Administrative Agent notice
to that effect, PROVIDED that the aggregate principal amount
of each Competitive Bid Borrowing may not exceed the
applicable amount requested in the relevant Notice of
Competitive Bid Borrowing.
(iv) If the Borrower notifies the Administrative Agent that
such Competitive Bid Borrowing is cancelled pursuant to paragraph
(iii)(x) above, the Administrative Agent shall give prompt notice
thereof to the Lenders and such Competitive Bid Borrowing shall not be
made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to paragraph (iii)(y) above, the
Administrative Agent shall in turn promptly notify (A) each Lender that
has made an offer as described in paragraph (ii) above, of the date and
aggregate amount of such Competitive Bid Borrowing and whether or not
any offer or offers made by such Lender pursuant to paragraph (ii)
above have been accepted by the Borrower, (B) each Lender that is to
make a Competitive Bid Loan as part of such Competitive Bid Borrowing,
of the amount of each Competitive Bid Loan to be made by such Lender as
part of such Competitive Bid Borrowing and (C) each Lender that is to
make a Competitive Bid Loan as part of such Competitive Bid Borrowing,
upon receipt, that the Administrative Agent has received forms of
documents appearing to fulfill the applicable conditions set forth in
section 6. Each Lender that is to make a Competitive Bid Loan as part
of such Competitive Bid Borrowing shall, before 12:00 noon (local time
at the Notice Office) on the date of such Competitive Bid Borrowing
specified in the notice received from the Administrative Agent pursuant
to clause (A) of the preceding sentence or any later time when such
Lender shall have received notice from the Administrative Agent
pursuant to clause (C) of the preceding sentence, make available for
the account of its Applicable Lending Office to the Administrative
Agent at its Payment Office such Lender's portion of such Competitive
Bid Borrowing, in same day funds. Upon fulfillment of the applicable
conditions set forth in section 6 and after receipt by the
Administrative Agent of such funds, the Administrative Agent will make
such funds available to the Borrower at the Administrative Agent's
Payment's Office. Promptly after each Competitive Bid Borrowing the
Administrative Agent will notify each Lender of the amount of the
Competitive Bid Borrowing, the consequent Competitive Bid Reduction and
the dates upon which such Competitive Bid Reduction commenced and will
terminate.
(b) Each Competitive Bid Borrowing shall be in an aggregate amount not
less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof
and, following the making of each Competitive Bid Borrowing, the Borrower shall
be in compliance with the limitations set forth in the proviso to the first
sentence of section 2.5(a) above.
(c) Within the limits and on the conditions set forth in this section
2.5, the Borrower may from time to time borrow under this section 2.5, repay or
prepay pursuant to section 2.5(d) below, and reborrow under this section 2.5,
PROVIDED that a Competitive Bid Borrowing shall not be made within 10 Business
Days of the date of any other Competitive Bid Borrowing.
(d) The Borrower shall repay to the Administrative Agent for the
account of each Lender which has made a Competitive Bid Loan, or each other
holder of a Competitive Bid Note, on the maturity date of each Competitive Bid
Loan (such maturity date being that specified by the Borrower for repayment of
such Competitive Bid Loan in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and provided in the Competitive
Bid Note evidencing such Competitive Bid Loan), the then unpaid principal amount
of such Competitive Bid Loan. The Borrower shall have no right to prepay any
principal amount of any Competitive Bid Loan unless, and then only on the terms,
specified by the Borrower for such
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<PAGE> 31
Competitive Bid Loan in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and set forth in the Competitive
Bid Note evidencing such Competitive Bid Loan.
(e) The Borrower shall pay interest on the unpaid principal amount of
each Competitive Bid Loan from the date of such Competitive Bid Loan to the date
the principal amount of such Competitive Bid Loan is repaid in full, at the rate
of interest for such Competitive Bid Loan specified by the Lender making such
Competitive Bid Loan in its notice with respect thereto delivered pursuant to
subsection (a)(ii) above, payable on the interest payment date or dates
specified by the Borrower for such Competitive Bid Loan in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as
provided in the Competitive Bid Note evidencing such Competitive Bid Loan.
(f) The indebtedness of the Borrower resulting from each Competitive
Bid Loan made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced by a separate Competitive Bid Note of the Borrower payable to the
order of the Lender making such Competitive Bid Loan.
2.6. NOTES. (a) The respective Borrower's obligation to pay the
principal of, and interest on, the Loans made to it by each Lender shall be
evidenced (i) if General Revolving Loans, by a promissory note substantially in
the form of Exhibit A-1 with blanks appropriately completed in conformity
herewith (each a "GENERAL REVOLVING NOTE" and, collectively, the "GENERAL
REVOLVING NOTES"), (ii) if Swing Line Revolving Loans, by a promissory note
substantially in the form of Exhibit A-2 with blanks appropriately completed in
conformity herewith (each a "SWING LINE REVOLVING NOTE" and, collectively, the
"SWING LINE REVOLVING NOTES"), and (iii) if a Competitive Bid Loan, by a
separate promissory note for each such Competitive Bid Loan substantially in the
form of Exhibit A-3 with blanks appropriately completed in conformity herewith
(each a "COMPETITIVE BID NOTE" and, collectively, the "COMPETITIVE BID NOTES").
(b) The General Revolving Note issued to a Lender with a General
Revolving Loan Commitment shall: (i) be executed by the Borrower; (ii) be
payable to the order of such Lender and be dated on or prior to the Initial
Borrowing Date; (iii) be in a stated principal amount equal to the General
Revolving Loan Commitment of such Lender and be payable in the principal amount
of General Revolving Loans evidenced thereby; (iv) mature on the Maturity Date;
(v) bear interest as provided in section 2.8 in respect of the Prime Rate Loans
or Eurocurrency Loans, as the case may be, evidenced thereby; (vi) be subject to
mandatory prepayment as provided in section 5.2; and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(c) The Swing Line Revolving Note issued to a Lender with a Swing Line
Revolving Loan Commitment shall: (i) be executed by the Borrower; (ii) be
payable to the order of such Lender and be dated on or prior to the Initial
Borrowing Date; (iii) be in a stated principal amount equal to the Swing Line
Revolving Loan Commitment of such Lender and be payable in the principal amount
of Swing Line Revolving Loans evidenced thereby; (iv) mature on the Maturity
Date, in the case of Prime Rate Loans or Eurocurrency Loans, and on the maturity
date specified in the applicable Notice of Revolving Borrowing, in the case of
any Money Market Rate Loans; (v) bear interest as provided in section 2.8 in
respect of the Prime Rate Loans, Eurocurrency Loans or Money Market Rate Loans,
as the case may be, evidenced thereby; (vi) be subject to mandatory prepayment
as provided in section 5.2; and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(d) A separate Competitive Bid Note shall be issued to a Lender for
each Competitive Bid Loan made by such Lender and each Competitive Bid Note
shall: (i) be executed by the Borrower; (ii) be payable to the order of such
Lender and be dated on or prior to the date such Competitive Bid Loan is made;
(iii) be in the principal amount of the Competitive Bid Loan evidenced thereby;
(iv) mature on the maturity date selected therefor in the applicable Notice of
Competitive Bid Borrowing; (v) bear interest at the rate and payable on the
dates provided therefor as contemplated by section 2.5(e); (vi) be subject to
optional or mandatory prepayment only as contemplated by section 2.5(d); and
(vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
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<PAGE> 32
(e) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of the Note issued to it by the Borrower, endorse on the reverse side
thereof or the grid attached thereto the outstanding principal amount of Loans
evidenced thereby. Failure to make any such notation or any error in any such
notation shall not affect the Borrower's obligations in respect of such Loans.
2.7. VOLUNTARY CONVERSION OF DOLLAR DENOMINATED REVOLVING LOANS. The
Borrower shall have the option to convert on any Business Day all or a portion
at least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Revolving Loans denominated in Dollars of one Type owing
by it pursuant to a single Facility into a Revolving Borrowing or Borrowings
pursuant to such Facility of another Type of Revolving Loans denominated in
Dollars which can be made pursuant to such Facility, PROVIDED that: (i) no
partial conversion of a Revolving Borrowing of Eurocurrency Loans shall reduce
the outstanding principal amount of the Eurocurrency Loans made pursuant to such
Revolving Borrowing to less than the Minimum Borrowing Amount applicable
thereto; (ii) any conversion of Eurocurrency Loans into Prime Rate Loans or
Money Market Rate Loans shall be made on, and only on, the last day of an
Interest Period for such Eurocurrency Loans; (iii) any conversion of Money
Market Rate Loans into Prime Rate Loans or Eurocurrency Loans shall be made on,
and only on, the applicable maturity date of such Money Market Rate Loans; (iv)
Prime Rate Loans and Money Market Rate Loans may only be converted into
Eurocurrency Loans, and Prime Rate Loans and Eurocurrency Loans may only be
converted into Money Market Rate Loans, if no Default under section 10.1(a) or
Event of Default is in existence on the date of the conversion unless the
Required Lenders otherwise agree; and (v) Revolving Borrowings of Eurocurrency
Loans resulting from this section 2.7 shall conform to the requirements of
section 2.2. Each such conversion shall be effected by the Borrower giving the
Administrative Agent at its Notice Office, prior to 12:00 noon (local time at
such Notice Office), at least three Business Days' (or prior to 12:00 noon
(local time at such Notice Office) same Business Day's, in the case of a
conversion into Prime Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing if so requested by the Administrative Agent) (each
a "NOTICE OF CONVERSION"), substantially in the form of Exhibit B-3, specifying
the Revolving Loans to be so converted, the Type of Loans to be converted into
and, if to be converted into a Borrowing of Eurocurrency Loans, the Interest
Period to be initially applicable thereto, and, if to be converted into Money
Market Rate Loans, the Quoted Rate and maturity date thereof determined as
provided in section 2.3. The Administrative Agent shall give each Lender prompt
notice of any such proposed conversion affecting any of its Revolving Loans. For
the avoidance of doubt, the prepayment or repayment of any Revolving Loans out
of the proceeds of other Loans is not considered a conversion of Loans into
other Loans.
2.8. INTEREST ON REVOLVING LOANS. (a) The unpaid principal amount of
each General Revolving Loan which is (i) a Prime Rate Loan shall bear interest
from the date of the Revolving Borrowing thereof until maturity (whether by
acceleration or otherwise) at a fluctuating rate per annum which shall at all
times be equal to the Prime Rate in effect from time to time; and (ii) a
Eurocurrency Loan shall bear interest from the date of the Revolving Borrowing
thereof until maturity (whether by acceleration or otherwise) at a rate per
annum which shall at all times be the Applicable Eurocurrency Margin (as defined
below) for such General Revolving Loan PLUS the relevant Eurocurrency Rate.
(b) The unpaid principal amount of each Swing Line Revolving Loan which
is (i) a Prime Rate Loan shall bear interest from the date of the Revolving
Borrowing thereof until maturity (whether by acceleration or otherwise) at a
fluctuating rate per annum which shall at all times be equal to the Prime Rate
in effect from time to time; (ii) a Eurocurrency Loan shall bear interest from
the date of the Revolving Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurocurrency Margin (as defined below) for such Swing Line Revolving
Loan PLUS the relevant Eurocurrency Rate; and (iii) a Money Market Rate Loan
shall bear interest from the date of the Revolving Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which shall
be equal to the Quoted Rate therefor.
(c) Notwithstanding the above provisions, if a Default under section
10.1(a) or Event of Default is in existence, all outstanding amounts of
principal and, to the extent permitted by law, all overdue interest, in
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<PAGE> 33
respect of each Revolving Loan shall bear interest, payable on demand, at a rate
per annum equal to 2% per annum above the interest rate otherwise applicable
thereto. If any amount (other than the principal of and interest on the
Revolving Loans) payable by the Borrower under the Credit Documents is not paid
when due, such amount shall bear interest, payable on demand, at a rate per
annum equal to the Prime Rate in effect from time to time PLUS 2% per annum.
(d) Interest shall accrue from and including the date of any Revolving
Borrowing to but excluding the date of any prepayment or repayment thereof and
shall be payable (i) in respect of each Prime Rate Loan, quarterly in arrears on
the last Business Day of January, April, July and October, (ii) in respect of
each Eurocurrency Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months, on the
dates which are successively three months after the commencement of such
Interest Period, and (iii) in respect of each Loan, on any prepayment or
conversion (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance
with section 13.7(b).
(f) Each Reference Bank agrees to furnish the Administrative Agent
timely information for the purpose of determining the Eurocurrency Rate for any
Borrowing consisting of Eurocurrency Loans. If any one or more of the Reference
Banks shall not timely furnish such information, the Administrative Agent shall
determine the Eurocurrency Rate on the basis of timely information furnished by
the remaining Reference Banks. The Administrative Agent upon determining the
interest rate for any Borrowing shall promptly notify the Borrower and the
Lenders thereof.
(g) As used herein, the term "APPLICABLE EUROCURRENCY MARGIN", as
applied to any Loan which is a Eurocurrency Loan, means 82.50 basis points per
annum; PROVIDED, that subsequent to the fiscal quarter of the Borrower ended
nearest to June 30, 1997, the Applicable Eurocurrency Margin will change to the
rate per annum indicated in the Pricing Grid Table which appears below, based on
the ratio referred to in section 9.7 and identified in such Table. Changes in
the Applicable Eurocurrency Margin based upon changes in such ratio shall become
effective on the first day of the month following the receipt by the
Administrative Agent pursuant to section 8.1(a) or (b) of the financial
statements of the Borrower, accompanied by the certificate referred to in
section 8.1(d), demonstrating the computation of such ratio, based upon the
ratio in effect at the end of the applicable period covered (in whole or in
part) by such financial statements; PROVIDED that if any financial statements
referred to in section 8.1(a) or (b), or the related certificate referred to in
section 8.1(d), are not timely delivered, the Administrative Agent may determine
the Applicable Eurocurrency Margin based upon a good faith estimate by the
Borrower of such ratio as in effect at the end of the applicable period to be
covered (in whole or in part) by such financial statements, PROVIDED, FURTHER,
that if upon delivery of such delinquent financial statements and related
certificate, such financial statements indicate that such good faith estimate
was incorrect and, as a result thereof, the Applicable Eurocurrency Margin for
any Revolving Loans was too low at such determination, the Applicable
Eurocurrency Margin for such Revolving Loans shall be increased, as appropriate,
with retroactive effect to the date of the change made on the basis of such
determination, and the Borrower will immediately pay to the Administrative
Agent, for the account of the Lenders having Commitments in respect of the
Facility under which such Revolving Loans were incurred all additional interest
due by reason of such increased Applicable Eurocurrency Margin. Any changes in
the Applicable Eurocurrency Margin shall be determined by the Administrative
Agent and the Administrative Agent will promptly provide notice of such
determinations to the Borrower and the Lenders. Any such determination by the
Administrative Agent pursuant to this section 2.8(g) shall be conclusive and
binding absent manifest error.
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<PAGE> 34
PRICING GRID TABLE
(EXPRESSED IN BASIS POINTS)
<TABLE>
<CAPTION>
=============================================================================================================
Applicable Applicable
TOTAL DEBT/EBITDA RATIO Eurocurrency Margin Facility Fee Rate
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than 3.50 to 1.00 82.50 30.00
- -------------------------------------------------------------------------------------------------------------
Greater than 3.00 to 1.00 but less than or equal to 3.50 to 1.00 75.00 25.00
- -------------------------------------------------------------------------------------------------------------
Greater than 2.75 to 1.00 but less than or equal to 3.00 to 1.00 50.00 25.00
- -------------------------------------------------------------------------------------------------------------
Greater than 2.25 to 1.00 but less than or equal to 2.75 to 1.00 42.50 20.00
- -------------------------------------------------------------------------------------------------------------
Greater than 1.75 to 1.00 but less than or equal to 2.25 to 1.00 32.50 17.50
- -------------------------------------------------------------------------------------------------------------
Greater than 1.25 to 1.00 but less than or equal to 1.75 to 1.00 27.50 12.50
- -------------------------------------------------------------------------------------------------------------
Less than or equal to 1.25 to 1.00 22.50 10.00
=============================================================================================================
</TABLE>
2.9. INTEREST PERIODS. (a) At the time the Borrower gives a Notice of
Revolving Borrowing or Notice of Conversion in respect of the making of, or
conversion into, a Revolving Borrowing of Eurocurrency Loans (in the case of the
initial Interest Period applicable thereto) or prior to 12:00 noon (local time
at the applicable Notice Office) on the third Business Day prior to the
expiration of an Interest Period applicable to a Borrowing of Eurocurrency
Loans, it shall have the right to elect by giving the Administrative Agent
written or telephonic notice (in the case of telephonic notice, promptly
confirmed in writing if so requested by the Administrative Agent) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of
Eurocurrency Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Prime Rate
Loans) and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period for any Loan may be selected which
would end after the Maturity
Date; and
(v) no Interest Period may be elected at any time when a
Default under section 10.1(a) or an Event of Default is then in
existence unless the Required Lenders otherwise agree.
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<PAGE> 35
(b) If upon the expiration of any Interest Period the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurocurrency Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing to Prime Rate Loans
effective as of the expiration date of such current Interest Period.
2.10. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender, shall have determined on a reasonable
basis (which determination shall, absent manifest error, be final and conclusive
and binding upon all parties hereto):
(i) on any date for determining the Eurocurrency Rate for
Eurocurrency Loans for any Interest Period that, by reason of any
changes arising after the Effective Date affecting the interbank
Eurocurrency market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurocurrency Rate; or
(ii) at any time, that such Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder in an
amount which such Lender deems material with respect to any
Eurocurrency Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a
change in the rate of taxes or similar charges) because of any change
since the Effective Date in any applicable law, governmental rule,
regulation, guideline, order or request (whether or not having the
force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves includable in the Eurocurrency Rate pursuant
to the definition thereof); or
(iii) at any time, that the making or continuance of any
Eurocurrency Loan denominated in Dollars or in an Alternative Currency
has become unlawful by compliance by such Lender in good faith with any
change since the Effective Date in any law, governmental rule,
regulation, guideline or order, or the interpretation or application
thereof, or would conflict with any thereof not having the force of law
but with which such Lender customarily complies;
THEN, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) within 10 Business Days
of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other applicable Lenders). Thereafter (x) in the case of clause (i)
above, Eurocurrency Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the applicable Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Revolving Borrowing or Notice of Conversion given by
the Borrower with respect to Eurocurrency Loans which have not yet been incurred
or converted shall be deemed rescinded by the Borrower or, in the case of a
Notice of Revolving Borrowing, shall, at the option of the Borrower, be deemed
converted into a Notice of Revolving Borrowing for Prime Rate Loans to be made
on the date of Borrowing contained in such Notice of Revolving Borrowing, (y) in
the case of clause (ii) above, the Borrower shall pay to such Lender, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender shall determine) as shall be required to compensate such Lender, for such
increased costs or reductions in amounts receivable hereunder (a written notice
as to the additional amounts owed to such Lender, showing the basis for the
calculation thereof, which basis must be reasonable, submitted to the Borrower
by such Lender shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in section 2.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurocurrency Loan is affected by the
circumstances described in section 2.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurocurrency Loan affected pursuant to section 2.10(a)(iii) the
Borrower shall) either (i) if the affected Eurocurrency Loan is then being made
pursuant to a
29
<PAGE> 36
Borrowing, by giving the Administrative Agent telephonic notice (confirmed
promptly in writing if requested) thereof on the same date that the Borrower was
notified by a Lender pursuant to section 2.10(a)(ii) or (iii), cancel said
Borrowing, convert the related Notice of Revolving Borrowing into one requesting
a Borrowing of Prime Rate Loans or require the affected Lender to make its
requested Loan as a Prime Rate Loan, or (ii) if the affected Eurocurrency Loan
is then outstanding, upon at least one Business Day's notice to the
Administrative Agent, require the affected Lender to convert each such
Eurocurrency Loan into a Prime Rate Loan, PROVIDED that if more than one Lender
is affected at any time, then all affected Lenders must be treated the same
pursuant to this section 2.10(b).
(c) If any Lender shall have determined that after the Effective Date,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by such Lender or its parent corporation with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank, or comparable agency, in each case made
subsequent to the Effective Date, has or would have the effect of reducing by an
amount reasonably deemed by such Lender to be material the rate of return on
such Lender's or its parent corporation's capital or assets as a consequence of
such Lender's commitments or obligations hereunder to a level below that which
such Lender or its parent corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's or
its parent corporation's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or its parent corporation for
such reduction. Each Lender, upon determining in good faith that any additional
amounts will be payable pursuant to this section 2.10(c), will give prompt
written notice thereof to the Borrower, which notice shall set forth, in
reasonable detail, the basis of the calculation of such additional amounts,
which basis must be reasonable, although the failure to give any such notice
shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this section 2.10(c) upon the subsequent receipt
of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, (i) no
Lender shall be entitled to compensation or payment or reimbursement of other
amounts under section 2.10 or 3.5 for any amounts incurred or accruing more than
180 days prior to the giving of notice to the Borrower of additional costs or
other amounts of the nature described in such sections, and (ii) no Lender shall
demand compensation for any reduction referred to in section 2.10(c) or payment
or reimbursement of other amounts under section 3.5 if it shall not at the time
be the general policy or practice of such Lender to demand such compensation,
payment or reimbursement in similar circumstances under comparable provisions of
other credit agreements.
2.11. COMPENSATION. The Borrower shall compensate each applicable
Lender, upon its written request (which request shall set forth the detailed
basis for requesting and the method of calculating such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund its Eurocurrency
Loans or Money Market Rate Loans) which such Lender may sustain: (i) if for any
reason (other than a default by such Lender or the Administrative Agent) a
Borrowing of Eurocurrency Loans or Money Market Rate Loans by the Borrower does
not occur on a date specified therefor in a Notice of Revolving Borrowing or
Notice of Conversion (whether or not withdrawn by or on behalf of the Borrower
or deemed withdrawn pursuant to section 2.10(a)); (ii) if any repayment,
prepayment or conversion of any of its Eurocurrency Loans occurs on a date which
is not the last day of an Interest Period applicable thereto; (iii) if any
repayment, prepayment or conversion of any of its Money Market Rate Loans occurs
on a date which is not the maturity date applicable thereto; (iv) if any
prepayment of any of its Eurocurrency Loans is not made on any date specified in
a notice of prepayment given by or on behalf of the Borrower; or (v) as a
consequence of (x) any other default by the Borrower to repay its Eurocurrency
Loans or Money Market Rate Loans when required by the terms of this Agreement or
(y) an election made pursuant to section 2.10(b).
2.12. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
section 2.10(a)(ii) or (iii), 2.10(c) or 3.5 with respect to
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such Lender, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
Applicable Lending Office for any Loans or Commitment affected by such event,
PROVIDED that such designation is made on such terms that such Lender and its
Applicable Lending Office suffer no economic, legal or regulatory disadvantage,
with the object of avoiding the consequence of the event giving rise to the
operation of any such section.
(b) If any Lender requests any compensation, reimbursement or other
payment under section 2.10(a)(ii) or (iii), 2.10(c) or 3.5 with respect to such
Lender, or if any Lender is a Defaulting Lender, then the Borrower may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with the restrictions contained in section 13.4(b)), all its
interests, rights and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); PROVIDED that (i) the Borrower shall have received the
prior written consent of the Administrative Agent, which consent shall not be
unreasonably withheld, (ii) such Lender shall have received payment of an amount
equal to the outstanding principal of its Loans, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts), and (iii) in the case of any
such assignment resulting from a claim for compensation, reimbursement or other
payments required to be made under section 2.10(a)(ii) or (iii), 2.10(c) or 3.5
with respect to such Lender, such assignment will result in a reduction in such
compensation, reimbursement or payments. A Lender shall not be required to make
any such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
(c) Nothing in this section 2.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in section 2.10
or 3.5.
SECTION 3. LETTERS OF CREDIT.
3.1. LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Initial Borrowing Date and
prior to the date that is 15 Business Days prior to the Maturity Date to issue,
for the account of the Borrower or any of its Subsidiaries and in support of (i)
trade obligations of the Borrower and its Subsidiaries incurred in the ordinary
course of business, (ii) worker compensation, liability insurance, releases of
contract retention obligations, contract performance guarantee requirements and
other bonding obligations of the Borrower or any such Subsidiary incurred in the
ordinary course of its business, and such other standby obligations of the
Borrower and its Subsidiaries that are acceptable to the Letter of Credit
Issuer, and/or (iii) Indebtedness of any Foreign Subsidiary of the Borrower to
any other person or persons that are acceptable to the Letter of Credit Issuer,
and subject to and upon the terms and conditions herein set forth such Letter of
Credit Issuer agrees to issue from time to time, irrevocable documentary or
standby letters of credit denominated in Dollars or an Alternative Currency in
such form as may be approved by such Letter of Credit Issuer and the
Administrative Agent (each such letter of credit (and each Existing Letter of
Credit described in section 3.1(d)), a "LETTER OF CREDIT" and collectively, the
"LETTERS OF CREDIT").
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed either (x) $25,000,000 or (y) when added
to the aggregate principal amount of all General Revolving Loans then
outstanding, an amount equal to the Total General Revolving Commitment at such
time; (ii) no Letter of Credit shall be issued in support of Indebtedness of any
Foreign Subsidiary of the Borrower if after giving effect thereto the Letter of
Credit Outstandings at such time in respect of all Letters of Credit issued to
support any Indebtedness of the Foreign Subsidiaries of the Borrower would
exceed $15,000,000, and (iii) each Letter of Credit shall have an expiry date
(including any renewal periods) occurring not later than the earlier of (A) one
year from the date of issuance thereof, unless a longer period is approved by
the relevant Letter of Credit Issuer and Lenders (other than any Defaulting
Lender) holding a majority of the Total General Revolving Commitment, and (B) 15
Business Days
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prior to the Maturity Date, in each case on terms acceptable to the
Administrative Agent and the relevant Letter of Credit Issuer.
(c) Notwithstanding the foregoing, in the event a Lender Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless either (i) such Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Lender or Lenders, including by cash collateralizing such
Defaulting Lender's or Lenders' Percentage of the Letter of Credit Outstandings;
or (ii) the issuance of such Letter of Credit, taking into account the potential
failure of the Defaulting Lender or Lenders to risk participate therein, will
not cause the Letter of Credit Issuer to incur aggregate credit exposure
hereunder with respect to General Revolving Loans and Letter of Credit
Outstandings in excess of its General Revolving Loan Commitment, and the
Borrower has undertaken, for the benefit of such Letter of Credit Issuer,
pursuant to an instrument satisfactory in form and substance to such Letter of
Credit Issuer, not to thereafter incur Loans or Letter of Credit Outstandings
hereunder which would cause the Letter of Credit Issuer to incur aggregate
credit exposure hereunder with respect to General Revolving Loans and Letter of
Credit Outstandings in excess of its General Revolving Loan Commitment.
(d) Annex VI hereto contains a description of all letters of credit
outstanding on, and to continue in effect after, the Initial Borrowing Date.
Each such letter of credit issued by a bank that is or becomes a Lender under
this Agreement on the Effective Date (each, an "EXISTING LETTER OF CREDIT")
shall constitute a "Letter of Credit" for all purposes of this Agreement,
issued, for purposes of section 3.4(a), on the Initial Borrowing Date, and the
Borrower, the Administrative Agent and the applicable Lenders hereby agree that,
from and after such date, the terms of this Agreement shall apply to such
Letters of Credit, superseding any other agreement theretofore applicable to
them to the extent inconsistent with the terms hereof.
3.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE. (a) Whenever it
desires that a Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written or telephonic
notice (in the case of telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent) which, if in the form of written notice
shall be substantially in the form of Exhibit B-4, prior to 12:00 noon (local
time at its Notice Office) at least three Business Days (or such shorter period
as may be acceptable to the relevant Letter of Credit Issuer) prior to the
proposed date of issuance (which shall be a Business Day) (each a "LETTER OF
CREDIT REQUEST"), which Letter of Credit Request shall include such supporting
documents that such Letter of Credit Issuer customarily requires in connection
therewith (including, in the case of a Letter of Credit for an account party
other than the Borrower, an application for, and if applicable a reimbursement
agreement with respect to, such Letter of Credit). Any such documents executed
in connection with the issuance of a Letter of Credit, including the Letter of
Credit itself, are herein referred to as "LETTER OF CREDIT DOCUMENTS". In the
event of any inconsistency between any of the terms or provisions of any Letter
of Credit Document and the terms and provisions of this Agreement respecting
Letters of Credit, the terms and provisions of this Agreement shall control. The
Administrative Agent shall promptly notify each Lender of each Letter of Credit
Request.
(b) Each Letter of Credit Issuer shall, on the date of each issuance of
a Letter of Credit by it, give the Administrative Agent, each applicable Lender
and the Borrower written notice of the issuance of such Letter of Credit,
accompanied by a copy to the Administrative Agent of the Letter of Credit or
Letters of Credit issued by it. Each Letter of Credit Issuer shall provide to
the Administrative Agent a quarterly (or monthly if requested by any applicable
Lender) summary describing each Letter of Credit issued by such Letter of Credit
Issuer and then outstanding and an identification for the relevant period of the
daily aggregate Letter of Credit Outstandings represented by Letters of Credit
issued by such Letter of Credit Issuer.
3.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse (or cause any Subsidiary for whose account a Letter
of Credit was issued to reimburse) each Letter of Credit Issuer, by making
payment directly to such Letter of Credit Issuer in immediately available funds
at the payment office of such Letter of Credit Issuer, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
(each such amount so paid or disbursed until reimbursed, an "UNPAID DRAWING")
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immediately after, and in any event on the date on which, such Letter of Credit
Issuer notifies the Borrower (or any such Subsidiary for whose account such
Letter of Credit was issued) of such payment or disbursement (which notice to
the Borrower (or such Subsidiary) shall be delivered reasonably promptly after
any such payment or disbursement), such payment to be made in Dollars (and in
the amount which is the Dollar equivalent of any such payment or disbursement
made or denominated in an Alternative Currency), with interest on the amount so
paid or disbursed by such Letter of Credit Issuer, to the extent not reimbursed
prior to 1:00 P.M. (local time at the payment office of the Letter of Credit
Issuer) on the date of such payment or disbursement, from and including the date
paid or disbursed to but not including the date such Letter of Credit Issuer is
reimbursed therefor at a rate per annum which shall be the rate then applicable
to General Revolving Loans which are Prime Rate Loans (plus an additional 3% per
annum if not reimbursed by the third Business Day after the date of such payment
or disbursement), any such interest also to be payable on demand.
(b) The Borrower's obligation under this section 3.3 to reimburse, or
cause a Subsidiary to reimburse, each Letter of Credit Issuer with respect to
Unpaid Drawings (including, in each case, interest thereon) shall be absolute
and unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which the Borrower may have or have
had against such Letter of Credit Issuer, the Administrative Agent, any other
Letter of Credit Issuer or any Lender, including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing, PROVIDED,
HOWEVER that the Borrower shall not be obligated to reimburse, or cause a
Subsidiary to reimburse, a Letter of Credit Issuer for any wrongful payment made
by such Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or negligence on the part of such
Letter of Credit Issuer.
3.4. LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the issuance
by a Letter of Credit Issuer of any Letter of Credit (and on the Initial
Borrowing Date with respect to any Existing Letter of Credit), such Letter of
Credit Issuer shall be deemed to have sold and transferred to each Lender with a
Commitment under the General Revolving Loan Facility, and each such Lender (each
a "PARTICIPANT") shall be deemed irrevocably and unconditionally to have
purchased and received from such Letter of Credit Issuer, without recourse or
warranty, an undivided interest and participation, to the extent of such
Lender's General Revolving Facility Percentage, in such Letter of Credit, each
substitute letter of credit, each drawing made thereunder, the obligations of
the Borrower under this Agreement with respect thereto (although Letter of
Credit Fees shall be payable directly to the Administrative Agent for the
account of the Lenders as provided in section 4.1(b) and the Participants shall
have no right to receive any portion of any fees of the nature contemplated by
section 4.1(c)), the obligations of any Subsidiary of the Borrower under any
Letter of Credit Documents pertaining thereto, and any security for, or guaranty
pertaining to, any of the foregoing. Upon any change in the General Revolving
Loan Commitments of the Lenders pursuant to section 13.4(b), it is hereby agreed
that, with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to the participations pursuant to this
section 3.4 to reflect the new General Revolving Facility Percentages of the
assigning and assignee Lender.
(b) In determining whether to pay under any Letter of Credit, a Letter
of Credit Issuer shall not have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by a Letter of Credit Issuer under or in connection with any Letter
of Credit if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Letter of Credit Issuer any resulting
liability.
(c) In the event that a Letter of Credit Issuer makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed (or caused any
applicable Subsidiary to reimburse) such amount in full to such Letter of Credit
Issuer pursuant to section 3.3(a), such Letter of Credit Issuer shall promptly
notify the Administrative Agent, and the Administrative Agent shall promptly
notify each Participant of such failure, and each Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Letter
of Credit Issuer, the amount of such Participant's General Revolving Facility
Percentage of such payment in U.S. Dollars (the Administrative Agent having
determined in the case of any payment by a Letter of Credit
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Issuer made in an Alternative Currency the equivalent thereof in Dollars) and in
same day funds, PROVIDED, HOWEVER, that no Participant shall be obligated to pay
to the Administrative Agent its General Revolving Facility Percentage of such
unreimbursed amount for any wrongful payment made by such Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of such Letter of Credit
Issuer. If the Administrative Agent so notifies any Participant required to fund
a payment under a Letter of Credit prior to 11:00 A.M. (local time at its Notice
Office) on any Business Day, such Participant shall make available to the
Administrative Agent for the account of the relevant Letter of Credit Issuer
such Participant's General Revolving Facility Percentage of the amount of such
payment on such Business Day in same day funds. If and to the extent such
Participant shall not have so made its General Revolving Facility Percentage of
the amount of such payment available to the Administrative Agent for the account
of the relevant Letter of Credit Issuer, such Participant agrees to pay to the
Administrative Agent for the account of such Letter of Credit Issuer, forthwith
on demand such amount, together with interest thereon, for each day from such
date until the date such amount is paid to the Administrative Agent for the
account of such Letter of Credit Issuer at the Federal Funds Effective Rate. The
failure of any Participant to make available to the Administrative Agent for the
account of the relevant Letter of Credit Issuer its General Revolving Facility
Percentage of any payment under any Letter of Credit shall not relieve any other
Participant of its obligation hereunder to make available to the Administrative
Agent for the account of such Letter of Credit Issuer its General Revolving
Facility Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to the Administrative Agent
for the account of such Letter of Credit Issuer such other Participant's General
Revolving Facility Percentage of any such payment.
(d) Whenever a Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the Participants
pursuant to section 3.4(c) above, such Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its General Revolving Facility Percentage thereof, in
U.S. dollars and in same day funds, an amount equal to such Participant's
General Revolving Facility Percentage of the principal amount thereof and
interest thereon accruing after the purchase of the respective participations,
as and to the extent so received.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of each Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, set-off defense or other
right which the Borrower (or any Subsidiary) may have at any time
against a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any person for whom any such transferee may be
acting), the Administrative Agent, any Letter of Credit Issuer, any
Lender, or other person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
(or any Subsidiary) and the beneficiary named in any such Letter of
Credit), other than any claim which the Borrower (or any Subsidiary
which is the account party with respect to a Letter of Credit) may have
against any applicable Letter of Credit Issuer for gross negligence or
wilful misconduct of such Letter of Credit Issuer in making payment
under any applicable Letter of Credit;
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
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(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents: or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by the
Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective General Revolving Loan Facility
Percentages, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Letter of Credit Issuer in performing its respective duties in
any way related to or arising out of its issuance of Letters of Credit, PROVIDED
that no Participants shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements resulting from the Letter of Credit Issuer's gross
negligence or willful misconduct.
3.5. INCREASED COSTS. If after the Effective Date, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Letter of Credit Issuer or any Lender with any
request or directive (whether or not having the force of law) by any such
authority, central bank or comparable agency (in each case made subsequent to
the Effective Date) shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by such Letter of Credit Issuer or such Lender's participation
therein, or (ii) shall impose on such Letter of Credit Issuer or any Lender any
other conditions affecting this Agreement, any Letter of Credit or such Lender's
participation therein; and the result of any of the foregoing is to increase the
cost to such Letter of Credit Issuer or such Lender of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Lender hereunder
(other than any increased cost or reduction in the amount received or receivable
resulting from the imposition of or a change in the rate of taxes or similar
charges), then, upon demand to the Borrower by such Letter of Credit Issuer or
such Lender (a copy of which notice shall be sent by such Letter of Credit
Issuer or such Lender to the Administrative Agent), the Borrower shall pay to
such Letter of Credit Issuer or such Lender such additional amount or amounts as
will compensate any such Letter of Credit Issuer or such Lender for such
increased cost or reduction. A certificate submitted to the Borrower by any
Letter of Credit Issuer or any Lender, as the case may be (a copy of which
certificate shall be sent by such Letter of Credit Issuer or such Lender to the
Administrative Agent), setting forth, in reasonable detail, the basis for the
determination of such additional amount or amounts necessary to compensate any
Letter of Credit Issuer or such Lender as aforesaid shall be conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this section 3.5. Reference is
hereby made to the provisions of section 2.10(d) for certain limitations upon
the rights of a Letter of Credit Issuer or Lender under this section.
3.6. GUARANTY OF SUBSIDIARY LETTER OF CREDIT OBLIGATIONS. (a) The
Borrower hereby unconditionally guarantees, for the benefit of the
Administrative Agent and the Lenders, the full and punctual payment of the
Obligations of each Subsidiary under each Letter of Credit Document to which
such Subsidiary is now or hereafter becomes a party. Upon failure by any such
Subsidiary to pay punctually any such amount, the Borrower shall forthwith on
demand by the Administrative Agent pay the amount not so paid at the place and
in the currency and otherwise in the manner specified in this Agreement or any
applicable Letter of Credit Document.
(b) As a separate, additional and continuing obligation, the Borrower
unconditionally and irrevocably undertakes and agrees, for the benefit of the
Administrative Agent and the Lenders, that, should any amounts not be
recoverable from the Borrower under section 3.6(a) for any reason whatsoever
(including, without limitation, by reason of any provision of any Credit
Document or any other agreement or instrument executed in connection therewith
being or becoming void, unenforceable, or otherwise invalid under any applicable
law) then, notwithstanding any notice or knowledge thereof by any Lender, the
Administrative Agent, any of their respective Affiliates, or any other person,
at any time, the Borrower as sole, original and independent obligor, upon demand
by the Administrative Agent, will make payment to the Administrative Agent, for
the
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account of the Lenders and the Administrative Agent, of all such obligations not
so recoverable by way of full indemnity, in such currency and otherwise in such
manner as is provided in the Credit Documents.
(c) The obligations of the Borrower under this section shall be
unconditional and absolute and, without limiting the generality of the foregoing
shall not be released, discharged or otherwise affected by the occurrence, one
or more times, of any of the following:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect to any obligation of any Subsidiary under any Letter
of Credit Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, any Note or any other Credit Document;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of the Borrower under this
Agreement, any Note or any other Credit Document or of any Subsidiary
under any Letter of Credit Document;
(iv) any change in the corporate existence, structure or
ownership of any Subsidiary or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Subsidiary or
its assets or any resulting release or discharge of any obligation of
any Subsidiary contained in any Letter of Credit Document;
(v) the existence of any claim, set-off or other rights which
the Borrower may have at any time against any Subsidiary, the
Administrative Agent, any Lender or any other person, whether in
connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against
any Subsidiary for any reason of any Letter of Credit Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by any Subsidiary of any Obligations in respect of any Letter
of Credit; or
(vii) any other act or omission to act or delay of any kind by
any Subsidiary, the Administrative Agent, any Lender or any other
person or any other circumstance whatsoever which might, but for the
provisions of this section, constitute a legal or equitable discharge
of the Borrower's obligations under this section.
(d) The Borrower's obligations under this section shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Borrower under
the Credit Documents and by any Subsidiary under the Letter of Credit Documents
shall have been paid in full. If at any time any payment of any of the
Obligations of any Subsidiary in respect of any Letter of Credit Documents is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Subsidiary, the Borrower's obligations
under this section with respect to such payment shall be reinstated at such time
as though such payment had been due but not made at such time.
(e) The Borrower irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against any
Subsidiary or any other person, or against any collateral or guaranty of any
other person.
(f) Until the indefeasible payment in full of all of the Obligations
and the termination of the Commitments of the Lenders hereunder, the Borrower
shall have no rights, by operation of law or otherwise, upon making any payment
under this section to be subrogated to the rights of the payee against any
Subsidiary with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by any Subsidiary in respect thereof.
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(g) In the event that acceleration of the time for payment of any
amount payable by any Subsidiary under any Letter of Credit Document is stayed
upon insolvency, bankruptcy or reorganization of such Subsidiary, all such
amounts otherwise subject to acceleration under the terms of any applicable
Letter of Credit Document shall nonetheless be payable by the Borrower under
this section forthwith on demand by the Administrative Agent.
SECTION 4. FEES; COMMITMENTS.
4.1. FEES. (a) The Borrower agrees to pay to the Administrative Agent a
Facility Fee ("FACILITY FEE") for the account of each Non-Defaulting Lender
which has a General Revolving Commitment or Swing Line Revolving Commitment, as
the case may be, for the period from and including the Effective Date to but not
including the date the Total General Revolving Commitment or the Total Swing
Line Revolving Commitment, as the case may be, has been terminated, on the
average daily amount of the Total General Revolving Commitment and/or Total
Swing Line Revolving Commitment, as the case may be, in each case whether used
or unused, at the Applicable Facility Fee Rate, payable quarterly in arrears on
the first Business Day of each April, July, October and January, commencing on
the first Business Day of July 1997. As used herein, the term "APPLICABLE
FACILITY FEE RATE" means 30.00 basis points per annum; PROVIDED, that subsequent
to the fiscal quarter of the Borrower ended nearest to June 30, 1997, the
Applicable Facility Fee Rate for each Facility will change to the rate per annum
indicated in the Pricing Grid Table which appears in section 2.8(g), based on
the ratio referred to in such Table. Changes in the Applicable Facility Fee Rate
based upon changes in such ratio shall become effective on the first day of the
month following the receipt by the Administrative Agent pursuant to section
8.1(a) or (b) of the financial statements of the Borrower, accompanied by the
certificate referred to in section 8.1(d), demonstrating the computation of such
ratio, based upon the ratio in effect at the end of the applicable period
covered (in whole or in part) by such financial statements; PROVIDED that if any
financial statements referred to in section 8.1(a) or (b), or the related
certificate referred to in section 8.1(d), are not timely delivered, the
Administrative Agent may determine the Applicable Facility Fee Rate based upon a
good faith estimate by the Borrower of such ratio as in effect at the end of the
applicable period to be covered (in whole or in part) by such financial
statements, PROVIDED, FURTHER, that if upon delivery of such delinquent
financial statements and related certificate, such financial statements indicate
that such good faith estimate was incorrect and, as a result thereof, the
Applicable Facility Fee Rate was too low at such determination, the Applicable
Facility Fee Rate shall be increased, as appropriate, with retroactive effect to
the date of the change made on the basis of such determination, and the Borrower
will immediately pay to the Administrative Agent for the account of the Lenders
all additional Facility Fee due by reason of such increased Applicable Facility
Fee Rate. Any changes in the Applicable Facility Fee Rate shall be determined by
the Administrative Agent and the Administrative Agent will promptly provide
notice of such determinations to the Borrower and the Lenders. Any such
determination by the Administrative Agent pursuant to this section 4.1(a) shall
be conclusive and binding absent manifest error.
(b) The Borrower agrees to pay to the Administrative Agent, for the
account of each Non- Defaulting Lender, PRO RATA on the basis of its General
Revolving Facility Percentage, a fee in respect of each Letter of Credit (the
"LETTER OF CREDIT FEE"), computed at the rate per annum in effect at the time
any Letter of Credit Fee is payable equal to the Applicable Eurocurrency Margin
in effect at such time for General Revolving Loans made at such time, in each
case on the average daily Stated Amount of such Letter of Credit. Accrued Letter
of Credit Fees shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December and on the date on
which the Total General Revolving Commitment is terminated.
(c) The Borrower agrees to pay directly to each Letter of Credit Issuer
a fee in respect of each Letter of Credit (a "FACING FEE") computed for each day
at the rate per annum of 1/8 of 1% on the Stated Amount of all Letters of Credit
on such day, PROVIDED that in no event shall the annual Facing Fee for any
Letter of Credit be less than $500. Accrued Facing Fees shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December and on the date on which the Total General Revolving Commitment is
terminated.
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(d) The Borrower agrees to pay directly to each Letter of Credit Issuer
upon each drawing under, and/or amendment, extension, renewal or transfer of, a
Letter of Credit issued by it such amount as shall at the time of such drawing,
amendment, extension, renewal or transfer be the administrative charge which
such Letter of Credit Issuer is customarily charging for drawings under or
amendments, extensions, renewals or transfers of, letters of credit issued by
it.
(e) The Borrower shall pay to the Administrative Agent on the Effective
Date and thereafter for its own account and/or for distribution to the Lenders
such fees as heretofore agreed by the Borrower and the Administrative Agent.
(f) All computations of Fees shall be made in accordance with section
13.7(b).
4.2. VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three Business
Days' prior written notice (or telephonic notice confirmed in writing) to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Lenders), the Borrower shall have the
right, without premium or penalty, to terminate or to partially and permanently
reduce the Unutilized Total General Revolving Commitment or the Unutilized Total
Swing Line Revolving Commitment, PROVIDED that (i) any such termination or
reduction shall apply to proportionately and permanently reduce the General
Revolving Loan Commitment or Swing Line Revolving Loan Commitment, as the case
may be, if any, of each of the affected Lenders, (ii) any partial reduction of
the Unutilized Total General Revolving Loan Commitment or Unutilized Total Swing
Line Revolving Loan Commitment, as the case may be, pursuant to this section 4.2
shall be in the amount of at least $5,000,000 (or, if greater, in integral
multiples of $1,000,000),in the case of a reduction of the Unutilized Total
General Revolving Loan Commitment, or $1,000,000 (or, if greater, in integral
multiples of $100,000), in the case of a reduction of the Unutilized Total Swing
Line Revolving Loan Commitment, (iii) the Total General Revolving Loan
Commitment may not be terminated prior to termination of the Total Swing Line
Revolving Commitment, and (iv) the Total General Revolving Loan Commitment may
not be reduced below an amount equal to the Total Swing Line Revolving
Commitment.
4.3. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total General
Revolving Loan Commitment (and the General Revolving Loan Commitment of each
Lender) shall terminate on the earlier of (x) the Maturity Date and (y) the date
on which a Change of Control occurs.
(b) The Total Swing Line Revolving Loan Commitment (and the Swing Line
Revolving Loan Commitment of each Lender) shall terminate on the earlier of (x)
the Maturity Date and (y) the date on which a Change of Control occurs.
(c) The Total General Revolving Loan Commitment shall be permanently
reduced, without premium or penalty, at the time that any mandatory prepayment
of General Revolving Loans would be made pursuant to section 5.2(c), (d) or (e)
if General Revolving Loans were then outstanding in the full amount of the Total
General Revolving Commitment, in an amount at least equal to the required
prepayment of principal of General Revolving Loans which would be required to be
made in such circumstance; PROVIDED, that no such reduction occasioned by
reference to section 5.2(c), (d) or (e) shall be required to be made which would
have the effect of reducing the Total General Revolving Commitment below $100
million. Any such reduction shall apply to proportionately and permanently
reduce the General Revolving Loan Commitment of each of the affected Lenders,
and any partial reduction of the Total General Revolving Loan Commitment
pursuant to this section 4.3(c) shall be in the amount of at least $1,000,000
(or, if greater, in integral multiples of $100,000). The Borrower will provide
at least three Business Days' prior written notice (or telephonic notice
confirmed in writing) to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the Lenders),
of any reduction of the Total General Revolving Loan Commitment pursuant to this
section 4.3(c), specifying the date and amount of the reduction.
(d) The Borrower will, pursuant to section 4.2 or this section 4.3(d),
without premium or penalty, permanently reduce the Total General Revolving Loan
Commitment by (i) at least $5,000,000, on or before September 30, 1998, (ii) at
least an additional $7,500,000, on or before September 30, 1999, (iii) at least
an
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additional $10,000,000, on or before September 30, 2000, and (iv) at least an
additional $12,500,000, on or before September 30, 2001. Any such reduction
shall apply to proportionately and permanently reduce the General Revolving Loan
Commitment of each of the affected Lenders, and any partial reduction of the
Total General Revolving Loan Commitment pursuant to this section 4.3(d) shall be
in an amount which is an integral multiple of $500,000. The Borrower will
provide prompt written notice to the Administrative Agent at its Notice Office
(which notice the Administrative Agent shall promptly transmit to each of the
Lenders) of any reduction of the Total General Revolving Loan Commitment
pursuant to this section 4.3(d), specifying the date and amount of the
reduction.
4.4. EXTENSION OF MATURITY DATE. At any time after February 1, 2000 and
during the 30 day period following delivery by the Borrower pursuant to section
8.1(a) of its consolidated financial statements for its fiscal year then most
recently ended, and annually thereafter during the 30 day period following
delivery by the Borrower of its consolidated financial statements pursuant to
section 8.1(a), the Borrower may request the Administrative Agent to determine
if all of the Lenders are then willing to extend the Maturity Date for a single
additional year. If the Borrower so requests, the Administrative Agent will so
advise the Lenders. If the Lenders in their sole discretion are all willing to
so extend the Maturity Date, after taking into account such considerations as
any Lender may deem relevant, the Borrower, the Administrative Agent and all of
the Lenders (including each Letter of Credit Issuer) shall execute and deliver a
definitive written instrument so extending the Maturity Date. No such extension
of the Maturity Date shall be valid or effective for any purpose unless such
definitive written instrument is so signed and delivered within 60 days
following the giving by the Administrative Agent of notice to the Lenders that
the Borrower has requested such an extension.
SECTION 5. PAYMENTS.
5.1. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay
Revolving Loans, in whole or in part, without premium or penalty, from time to
time on the following terms and conditions: (i) the Borrower shall give the
Administrative Agent at the Payment Office written or telephonic notice (in the
case of telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent) of its intent to prepay the Revolving Loans, whether such
Loans are General Revolving Loans or Swing Line Revolving Loans, the amount of
such prepayment and (in the case of Eurocurrency Loans) the specific
Borrowing(s) pursuant to which made, which notice shall be received by the
Administrative Agent by (x) 12:00 noon (local time at the Notice Office) three
Business Days prior to the date of such prepayment, in the case of any
prepayment of Eurocurrency Loans, or (y) 12:00 noon (local time at the Notice
Office) on the date of such prepayment, in the case of any prepayment of Prime
Rate Loans or Money Market Rate Loans, and which notice shall promptly be
transmitted by the Administrative Agent to each of the affected Lenders; (ii)
each partial prepayment of any Borrowing shall be in an aggregate principal of
at least $500,000 or an integral multiple of $100,000 in excess thereof, in the
case of General Revolving Loans which are Prime Rate Loans, at least $5,000,000
or an integral multiple of $1,000,000 in excess thereof, in the case of General
Revolving Loans which are Eurocurrency Loans, and $100,000 or an integral
multiple of $100,000 in excess thereof, in the case of Swing Line Revolving
Loans PROVIDED that no partial prepayment of Eurocurrency Loans made pursuant to
a Revolving Borrowing shall reduce the aggregate principal amount of the Loans
outstanding pursuant to such Revolving Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto; (iii) each prepayment in respect of
any Revolving Loans made pursuant to a Borrowing shall be applied PRO RATA among
such Loans; and (iv) each prepayment of Eurocurrency Loans or Money Market Rate
Loans pursuant to this section 5.1 on any date other than the last day of the
Interest period applicable thereto, in the case of Eurocurrency Loans, or the
maturity thereof (as identified in the applicable Notice of Revolving
Borrowing), in the case of Money Market Rate Loans, shall be accompanied by any
amounts payable in respect thereof under section 2.11.
5.2. MANDATORY PREPAYMENTS. (a) If on any date (after giving effect to
any other payments on such date) the sum of (i) the aggregate outstanding
principal amount of General Revolving Loans PLUS (ii) the aggregate outstanding
principal amount of Competitive Bid Loans PLUS (iii) the aggregate amount of
Letter of Credit Outstandings, exceeds the Total General Revolving Commitment as
then in effect, the Borrower shall prepay on such date that principal amount of
General Revolving Loans and, after General Revolving Loans have
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been paid in full, that principal amount of Competitive Bid Loans and, after
Competitive Bid Loans have been paid in full, Unpaid Drawings, in an aggregate
amount equal to such excess. If, after giving effect to the prepayment of
General Revolving Loans, Competitive Bid Loans and Unpaid Drawings, the
aggregate amount of Letter of Credit Outstandings exceeds the Total General
Revolving Commitment as then in effect, the Borrower shall pay to the
Administrative Agent an amount in cash and/or Cash Equivalents equal to such
excess and the Administrative Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower (which shall permit certain investments in
Cash Equivalents satisfactory to the Administrative Agent and the Borrower until
the proceeds are applied to the secured obligations).
(b) If on any date (after giving effect to any other payments on such
date) the aggregate outstanding principal amount of Swing Line Revolving Loans
exceeds:
(i) the Total Swing Line Revolving Commitment as then in
effect, or
(ii) the Unutilized Total Revolving Loan Commitment as then in
effect (taking into account any Competitive Bid Reductions and
Receivables Program Reductions),
the Borrower shall prepay on such date Swing Line Revolving Loans in an
aggregate principal amount at least equal to such excess.
(c) Not later than the third Business Day following the date of receipt
thereof by the Borrower and/or any of its Subsidiaries of the Cash Proceeds from
any Asset Sale as to which a mandatory prepayment of Loans is required by
section 9.2(g), an amount equal to 75% of the Net Cash Proceeds then received
from such Asset Sale shall be applied as a mandatory prepayment of principal of
(x) FIRST, the then outstanding General Revolving Loans and (y) SECOND, once no
General Revolving Loans remain outstanding, the then outstanding Competitive Bid
Loans; PROVIDED, that the Borrower may upon written notice to the Administrative
Agent postpone the application of all or any portion of such amount as is
designated by the Borrower in such notice for a period of up to 12 months if the
Borrower intends to reinvest the designated amount in capital expenditures or
Permitted Acquisitions, and if such designated amount is so reinvested, no
prepayment of Loans shall be required by reason of such Asset Sale. However,
immediately after it becomes evident that any portion of any such designated
amount will not be so reinvested, the Borrower will immediately apply such
portion as a mandatory prepayment as aforesaid.
(d) Not later than the Business Day following the date of the receipt
thereof by the Borrower, an amount equal to 100% of the cash proceeds (net of
underwriting discounts and commissions, placement agent commissions and other
customary fees and costs associated therewith) from the public sale or private
placement of debt securities, or any similar incurrence of Indebtedness for
borrowed money, by the Borrower as contemplated by section 9.4(c), shall be
applied as a mandatory prepayment of principal of (x) FIRST, the then
outstanding General Revolving Loans, and (y) SECOND, once no General Revolving
Loans remain outstanding, the then outstanding Competitive Bid Loans.
(e) Not later than the Business Day following the date of the receipt
thereof by the Borrower and/or any Subsidiary, an amount equal to 50% of the
cash proceeds (net of underwriting discounts and commissions, placement agent
fees and other customary fees and costs associated therewith) from any sale or
issuance of equity securities by the Borrower or any Subsidiary after the
Initial Borrowing Date (other than (i) any inter-company sale to the Borrower or
any Subsidiary and (ii) any sale or issuance to management, employees (or key
employees) or directors pursuant to stock option or similar plans for the
benefit of management, employees (key employees) or directors generally) shall
be applied as a mandatory repayment of principal of (x) FIRST, the then
outstanding General Revolving Loans, and (y) SECOND, once no General Revolving
Loans remain outstanding, the then outstanding Competitive Bid Loans.
(f) On the date of which a Change of Control occurs, notwithstanding
anything to the contrary contained in this Agreement, no further Borrowings
shall be made and the then outstanding principal amount
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of all Loans, if any, shall become due and payable and shall be prepaid in full,
and the Borrower shall contemporaneously either (i) cause all outstanding
Letters of Credit to be surrendered for cancellation (any such Letters of Credit
to be replaced by letters of credit issued by other financial institutions), or
(ii) the Borrower shall pay to the Administrative Agent an amount in cash and/or
Cash Equivalents equal to 100% of the Letter of Credit Outstandings and the
Administrative Agent shall hold such payment as security for the obligations of
the Borrower hereunder pursuant to a cash collateral agreement to be entered
into in form and substance reasonably satisfactory to the Administrative Agent
and the Borrower (which shall permit certain investments in Cash Equivalents
satisfactory to the Administrative Agent and the Borrower until the proceeds are
applied to the secured obligations).
(g) With respect to each prepayment of Loans required by this section
4.2, the Borrower shall designate the Types of Loans which are to be prepaid,
whether such Loans are General Revolving Loans or Swing Line Revolving Loans and
the specific Borrowing(s) pursuant to which such prepayment is to be made,
PROVIDED that (i) the Borrower shall first so designate all Loans that are Prime
Rate Loans and Eurocurrency Loans with Interest Periods ending on the date of
prepayment prior to designating any other Eurocurrency Loans for prepayment,
(ii) if the outstanding principal amount of Eurocurrency Loans made pursuant to
a Borrowing is reduced below the applicable Minimum Borrowing Amount as a result
of any such prepayment, then all the Loans outstanding pursuant to such
Borrowing shall be converted into Prime Rate Loans, and (iii) each prepayment of
any Loans made pursuant to a Borrowing shall be applied PRO RATA among such
Loans. In the absence of a designation by the Borrower as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under section 2.11. Any prepayment of Eurocurrency
Loans pursuant to this section 4.2 shall in all events be accompanied by such
compensation as is required by section 2.11.
5.3. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its PRO RATA share) account of
the Lenders entitled thereto, not later than 12:00 noon (local time at the
Payment Office) on the date when due and shall be made in immediately available
funds and in lawful money of the United States of America at the Payment Office,
it being understood that written notice by the Borrower to the Administrative
Agent to make a payment from the funds in the Borrower's account at the Payment
Office shall constitute the making of such payment to the extent of such funds
held in such account. Any payments under this Agreement which are made later
than 12:00 noon (local time at the Payment Office) shall be deemed to have been
made on the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.
5.4. NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as otherwise provided for in section
5.4(c), all such payments will be made free and clear of, and without deduction
or withholding for, any present or future United States withholding taxes. The
Borrower will furnish to the Administrative Agent within 45 days after the date
of any withholding or deduction on account of United States withholding taxes
certified copies of tax receipts, or other evidence satisfactory to the Lender,
evidencing payment thereof by the Borrower.
(b) Each Lender that is not a United States person (as such term is
defined in section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to provide to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the cases of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to section 13.4 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer and such Lender is in compliance with the provisions of
this section 5.4(b)), on the date of such assignment or transfer to such Lender,
(i) two accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement
to a complete exemption from United States withholding tax with respect to
payments to be made under this Agreement, any Note or any other Credit Document,
or (ii) if the Lender is not a "bank" within the
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meaning of section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit G (any such certificate, a
"SECTION 5.4(b)(ii) CERTIFICATE") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement, any Note or any other Credit Document. In addition, each Lender
agrees that from time to time after the Effective Date, when a lapse in time or
change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section 5.4(b)(ii)
Certificate, as the case may be, and such other forms as may be required in
order to confirm or establish the entitlement of such Lender to a continued
exemption from or reduction in United States withholding tax with respect to
payments under this Agreement, any Note or any other Credit Document, or it
shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which case such Lender
shall not be required to deliver any such Form or Certificate pursuant to this
section 5.4(b).
(c) Notwithstanding anything to the contrary contained in section
5.4(a), the Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold income or other similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Lender which is not a United States person (as such term is defined in section
7701(a)(30) of the Code) for United States federal income tax purposes and which
has not provided to the Borrower such forms that establish a complete exemption
from such deduction or withholding (i) if such Lender has not provided to the
Borrower the Internal Revenue Service forms required to be provided to the
Borrower pursuant to section 5.4(b), or (ii) in the case of a payment other than
interest, to a Lender described in clause (ii) of section 5.2(b) above, to the
extent that such forms do not establish a complete exemption from withholding of
such taxes.
SECTION 6. CONDITIONS PRECEDENT.
6.1. CONDITIONS PRECEDENT AT INITIAL BORROWING DATE. The obligation of
the Lenders to make Revolving Loans, and of any Letter of Credit Issuer to issue
Letters of Credit, is subject to the satisfaction of each of the following
conditions on the Initial Borrowing Date:
(A) EFFECTIVENESS; REVOLVING NOTES. On or prior to the Initial
Borrowing Date, (i) the Effective Date shall have occurred and (ii)
there shall have been delivered to the Administrative Agent for the
account of each Lender each appropriate Revolving Note executed by the
Borrower, in each case, in the amount, maturity and as otherwise
provided herein.
(B) SUBSIDIARY GUARANTY. Each of the Credit Parties named
therein shall have entered into the Subsidiary Guaranty (the
"SUBSIDIARY GUARANTY"), substantially in the form attached as Exhibit
C, and the Subsidiary Guaranty shall be in full force and effect.
(C) FEES, ETC. The Borrower shall have paid or caused to be
paid all fees required to be paid by it on or prior to such date
pursuant to section 4 hereof and all reasonable fees and expenses of
the Administrative Agent and of special counsel to the Administrative
Agent which have been invoiced on or prior to such date in connection
with the preparation, execution and delivery of this Agreement and the
other Credit Documents and the consummation of the transactions
contemplated hereby and thereby.
(D) CORPORATE RESOLUTIONS AND APPROVALS. The Administrative
Agent shall have received, in sufficient quantity for the
Administrative Agent and the Lenders, certified copies of the
resolutions of the Board of Directors of the Borrower and each other
Credit Party, approving the Credit Documents to which the Borrower or
any such other Credit Party, as the case may be, is or may become a
party, and of all documents evidencing other necessary corporate action
and governmental approvals, if any,
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with respect to the execution, delivery and performance by the Borrower
or any such other Credit Party of the Credit Documents to which it is
or may become a party.
(E) INCUMBENCY CERTIFICATE. The Administrative Agent shall
have received, in sufficient quantity for the Administrative Agent and
the Lenders, a certificate of the Secretary or an Assistant Secretary
of the Borrower and of each other Credit Party, certifying the names
and true signatures of the officers of the Borrower or such other
Credit Party, as the case may be, authorized to sign the Credit
Documents to which the Borrower or such other Credit Party is a party
and any other documents to which the Borrower or any such other Credit
Party is a party which may be executed and delivered in connection
herewith.
(F) OPINION OF COUNSEL. On the Initial Borrowing Date, the
Administrative Agent shall have received an opinion, addressed to the
Administrative Agent and each of the Lenders and dated the Initial
Borrowing Date, from Squire, Sanders & Dempsey P.L.L., counsel to the
Borrower, substantially in the form of Exhibit D hereto and covering
such other matters incident to the transactions contemplated hereby as
the Administrative Agent may reasonably request, such opinion to be in
form and substance satisfactory to the Administrative Agent.
(G) EXISTING CREDIT AGREEMENT. Contemporaneously with the
initial Borrowing hereunder, the Borrower shall have terminated the
commitments of the lenders under its Credit Agreement, dated as of
March 1, 1994, as amended, prepaid all borrowings thereunder, and if
required in connection with such termination, made effective provision
for any letters of credit issued thereunder to be supported by Letters
of Credit issued hereunder.
(H) COMPLETION OF GENERAL AQUATICS ACQUISITION.
Contemporaneously with the initial Borrowing hereunder, (i) the
Borrower shall have completed the General Aquatics Acquisition pursuant
to the Acquisition Agreement in compliance with all applicable laws;
(ii) there shall have been no amendment to or other modification of the
terms or conditions of any Acquisition Document, or any waiver of
performance of any of the terms thereof, which in the opinion of the
Required Lenders is materially adverse; (iii) the acquisition price for
the General Aquatics Acquisition shall not exceed $69,000,000, plus
assumed working capital debt of the seller of not more than
$13,000,000; and (iv) the Borrower shall have made arrangements,
satisfactory to the Required Lenders, to pay or prepay any Indebtedness
so assumed or to which the acquired assets may be subject.
(I) APPROVALS, ETC. On the Initial Borrowing Date, (i) all
material governmental and third party approvals in connection with the
transactions contemplated by the Credit Documents and the Acquisition
Documents and otherwise referred to herein or therein shall have been
obtained and remain in effect, and all applicable waiting periods shall
have expired without any action being taken by any competent authority
(including any court having jurisdiction) which restrains or prevents
such transactions or imposes, in the judgment of the Required Lenders
or the Administrative Agent, materially adverse conditions upon the
consummation of such transactions; and (ii) there shall be no legal
restriction upon any Lender which prohibits, or imposes any material
burdens upon any Lender in connection with, the extensions of credit
contemplated by the Credit Documents.
(J) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incidental to the transactions
contemplated hereby shall be satisfactory in substance and form to the
Administrative Agent and the Lenders and the Administrative Agent and
its special counsel and the Lenders shall have received all such
counterpart originals or certified or other copies of such documents as
the Administrative Agent or its special counsel or any Lender (other
than any Designated Bidder) may reasonably request.
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6.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS (OTHER THAN COMPETITIVE
BID BORROWINGS). The obligations of the Lenders to make each Revolving Loan
and/or of a Letter of Credit Issuer to issue each Letter of Credit is subject,
at the time thereof, to the satisfaction of the following conditions:
(A) NOTICE OF REVOLVING BORROWING, ETC. The Administrative
Agent shall have received a Notice of Revolving Borrowing meeting the
requirements of section 2.3 with respect to the incurrence of Loans or
a Letter of Credit Request meeting the requirement of section 3.2 with
respect to the issuance of a Letter of Credit.
(B) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time
thereof and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of
such Revolving Loan or issuance of such Letter of Credit, except to the
extent that such representations and warranties expressly relate to an
earlier date.
The acceptance of the benefits of each Revolving Loan or issuance of a Letter of
Credit shall constitute a representation and warranty by the Borrower to each of
the Lenders that all of the applicable conditions specified in section 6.1
and/or 6.2, as the case may be, exist as of that time. All of the certificates,
legal opinions and other documents and papers referred to in section 6.1 or this
section 6.2, unless otherwise specified, shall be delivered to the
Administrative Agent for the account of each of the Lenders and, except for the
Notes, in sufficient counterparts for each of the Lenders, and the
Administrative Agent will promptly distribute to the Lenders their respective
Revolving Notes and the copies of such other certificates, legal opinions and
documents.
6.3. CONDITIONS PRECEDENT TO EACH COMPETITIVE BID BORROWING. The
obligation of each Lender which is to make a Competitive Bid Loan on the
occasion of a Competitive Bid Borrowing (including the initial Competitive Bid
Borrowing) to make such Competitive Bid Loan as part of such Competitive Bid
Borrowing is subject to satisfaction of each of the following conditions;
(A) NOTICE OF COMPETITIVE BID BORROWING. The
Administrative Agent shall have received the written confirmatory
Notice of Competitive Bid Borrowing with respect thereto.
(B) COMPETITIVE BID NOTE. On or before the date of such
Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing,
the Administrative Agent shall have received a Competitive Bid Note
payable to the order of such Lender for each of the one or more
Competitive Bid Loans to be made by such Lender as part of such
Competitive Bid Borrowing, in a principal amount equal to the principal
amount of the Competitive Bid Loan to be evidenced thereby and
otherwise on such terms as were agreed to for such Competitive Bid Loan
in accordance with section 2.5.
(C) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time
thereof and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of
such Competitive Bid Loan, except to the extent that such
representations and warranties expressly relate to an earlier date.
The acceptance of the benefits of each Competitive Bid Loan shall constitute a
representation and warranty by the Borrower to each of the Lenders that all of
the applicable conditions specified in this section 6.3 exist as of that time.
The Administrative Agent will promptly distribute to the Lenders participating
in such Competitive Bid Borrowing their respective Competitive Bid Notes.
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SECTION 7. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to make
the Loans, and/or to issue and/or to participate in the Letters of Credit
provided for herein, the Borrower makes the following representations and
warranties to, and agreements with, the Lenders, all of which shall survive the
execution and delivery of this Agreement and each Credit Event:
7.1. CORPORATE STATUS, ETC. Each of the Borrower and its Subsidiaries
(i) is a duly organized or formed and validly existing corporation, partnership
or limited liability company, as the case may be, in good standing under the
laws of the jurisdiction of its formation and has the corporate, partnership or
limited liability company power and authority, as applicable, to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage, and (ii) has duly qualified and is authorized to
do business in all jurisdictions where it is required to be so qualified except
where the failure to be so qualified would not have a Material Adverse Effect.
7.2. SUBSIDIARIES. Annex II hereto lists, as of the date hereof,
each Subsidiary of the Borrower (and the direct and indirect ownership
interest of the Borrower therein).
7.3. CORPORATE POWER AND AUTHORITY, ETC. The Borrower has the corporate
power and authority to execute, deliver and carry out the terms and provisions
of the Credit Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Credit Documents to which it is party. The Borrower has duly executed and
delivered each Credit Document to which it is party and each Credit Document to
which it is party constitutes the legal, valid and binding agreement or
obligation of the Borrower enforceable in accordance with its terms, except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).
7.4. NO VIOLATION. Neither the execution, delivery and performance by
the Borrower of the Credit Documents to which it is party nor compliance with
the terms and provisions thereof, nor the consummation of the loan transactions
contemplated therein (i) will contravene any provision of any law, statute,
rule, regulation, order, writ, injunction or decree of any court or governmental
instrumentality applicable to the Borrower or its properties and assets, (ii)
will conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of the Borrower or any of its Subsidiaries
pursuant to the terms of any promissory note, bond, debenture, indenture,
mortgage, deed of trust, credit or loan agreement, or any other material
agreement or other instrument, to which the Borrower or any of its Subsidiaries
is a party or by which it or any of its property or assets are bound or to which
it may be subject, or (iii) will violate any provision of the articles of
incorporation or code of regulations of the Borrower.
7.5. GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required as a
condition to (i) the execution, delivery and performance by the Borrower of any
Credit Document or (ii) the legality, validity, binding effect or enforceability
of any Credit Document.
7.6. LITIGATION. There are no actions, suits or proceedings pending or,
to, the knowledge of the Borrower, threatened with respect to the Borrower or
any of its Subsidiaries (i) that have, or could reasonably be expected to have,
a Material Adverse Effect, or (ii) which question the validity or enforceability
of any of the Credit Documents, or of any action to be taken by the Borrower
pursuant to any of the Credit Documents.
7.7. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of
all Loans shall be utilized (i) to retire the Indebtedness referred to in
section 6.1(f), (ii) to finance the acquisition of General Aquatics, and (iii)
for other lawful purposes not inconsistent with the requirements of this
Agreement.
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(b) No part of the proceeds of any Credit Event will be used directly
or indirectly to purchase or carry Margin Stock, or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock. Neither any Credit
Event, nor the use of the proceeds thereof, will violate or be inconsistent with
the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. At no time
would more than 25% of the value of the assets of the Borrower or of the
Borrower and its consolidated Subsidiaries that are subject to any "arrangement"
(as such term is used in section 221.2(g) of such Regulation U) hereunder be
represented by Margin Stock.
7.8. FINANCIAL STATEMENTS, ETC. (a) The Borrower has furnished to the
Lenders and the Administrative Agent complete and correct copies of (i) the
audited consolidated balance sheets of the Borrower and its consolidated
subsidiaries as of September 30, 1996 and September 30, 1995 and the related
audited consolidated statements of income, shareholders' equity, and cash flows
of the Borrower and its consolidated subsidiaries for the fiscal years then
ended, accompanied by the report thereon of Deloitte & Touche LLP; and (ii) the
condensed consolidated balance sheets of the Borrower and its consolidated
subsidiaries as of December 31, 1996 and September 30, 1996, and the related
condensed consolidated statements of income and of cash flows of the Borrower
and its consolidated subsidiaries for the three months ended December 31, 1996
and December 31, 1995, as included in the Borrower's Report on Form 10-Q filed
with the SEC. All such financial statements have been prepared in accordance
with GAAP, consistently applied (except as stated therein), and fairly present
the financial position of the Borrower and its consolidated subsidiaries as of
the respective dates indicated and the consolidated results of their operations
and cash flows for the respective periods indicated, subject in the case of any
such financial statements which are unaudited, to normal audit adjustments, none
of which will involve a Material Adverse Effect.
(b) The Borrower has received consideration which is the reasonable
equivalent value of the obligations and liabilities that the Borrower has
incurred to the Administrative Agent and the Lenders. The Borrower now has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage and is now solvent and able to
pay its debts as they mature and the Borrower, as of the Initial Borrowing Date,
owns property having a value, both at fair valuation and at present fair salable
value, greater than the amount required to pay the Borrower's debts; and the
Borrower is not entering into the Credit Documents with the intent to hinder,
delay or defraud its creditors. Without limitation of the foregoing, on and as
of the Initial Borrowing Date on a PRO FORMA basis after giving effect to the
acquisition of General Aquatics and to all Indebtedness incurred and to be
incurred by the Borrower in connection therewith, (i) the sum of the assets, at
a fair valuation, of the Borrower will exceed its debts, (ii) the Borrower will
not have incurred or intended to, or believe that it will, incur debts beyond
its ability to pay such debts as such debts mature and (iii) the Borrower will
have sufficient capital with which to conduct its business. For purposes of this
section 7.8(b), "DEBT" means any liability on a claim, and "CLAIM" means (x)
right to payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(c) The Borrower has delivered to the Lenders prior to the execution
and delivery of this Agreement (i) a copy of the Borrower's Report on Form 10-K
as filed (without Exhibits) with the SEC for its fiscal year ended September 30,
1996, which contains a general description of the business and affairs of the
Borrower and its Subsidiaries, and (ii) financial projections prepared by
management of the Borrower for the Borrower and its Subsidiaries for the fiscal
years 1997-2001 which take into account, on a PRO FORMA basis, the General
Aquatics Acquisition (the "FINANCIAL PROJECTIONS"). The Financial Projections
were prepared on behalf of the Borrower in good faith after taking into account
the existing and historical levels of business activity of the Borrower and its
Subsidiaries, historical financial information with respect to the properties
and business acquired in the General Aquatics Acquisition, as supplied by the
seller, known trends, including general economic trends, and all other
information, assumptions and estimates considered by management of the Borrower
and its Subsidiaries to be pertinent thereto, taking into account the fact that
such management is not intimately familiar with the properties and business
acquired in the General Aquatics Acquisition. The Financial Projections
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were considered by management of the Borrower, as of such date of preparation,
to be realistically achievable; PROVIDED, that no representation or warranty is
made as to the impact of future general economic conditions or as to whether the
Borrower's projected consolidated results as set forth in the Financial
Projections will actually be realized; and PROVIDED, FURTHER, that the Borrower
undertakes no responsibility for the accuracy of any historical information
concerning the business or operations acquired in the General Aquatics
Acquisition which is included in the Financial Projections. No facts are known
to the Borrower at the date hereof which, if reflected in the Financial
Projections, would result in a material adverse change in the assets,
liabilities, results of operations or cash flows reflected therein.
7.9. NO MATERIAL ADVERSE CHANGE. Since September 30, 1996, there has
been no change in the condition, business or affairs of the Borrower and its
Subsidiaries taken as a whole, or their properties and assets considered as an
entirety, except for changes none of which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect.
7.10. TAX RETURNS AND PAYMENTS. Each of the Borrower and each of its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Borrower and each of its Subsidiaries has established on its books such charges,
accruals and reserves in respect of taxes, assessments, fees and other
governmental charges for all fiscal periods as are required by GAAP. The
Borrower knows of no proposed assessment for additional federal, foreign or
state taxes for any period, or of any basis therefor, which, individually or in
the aggregate, taking into account such charges, accruals and reserves in
respect thereof as the Borrower and its Subsidiaries have made, could reasonably
be expected to have a Material Adverse Effect.
7.11. TITLE TO PROPERTIES, ETC. The Borrower and each of its
Subsidiaries has good and marketable title, in the case of real property, and
good title (or valid leasehold interests, in the case of any leased property),
in the case of all other property, to all of its properties and assets free and
clear of Liens other than Liens permitted by section 9.3. The interests of the
Borrower and each of its Subsidiaries in the properties reflected in the most
recent balance sheet referred to in section 7.8, taken as a whole, were
sufficient, in the judgment of the Borrower, as of the date of such balance
sheet for purposes of the ownership and operation of the businesses conducted by
the Borrower and such Subsidiaries.
7.12. LAWFUL OPERATIONS, ETC. Except for known situations or incidents
which are reserved for on the most recent consolidated balance sheet referred to
in section 7.8 or which, if not so reserved, could not reasonably be expected to
have a Material Adverse Effect, the Borrower and each of its Subsidiaries is in
full compliance with all material requirements imposed by law, whether federal
or state, including (without limitation) Environmental Laws and zoning
ordinances.
7.13. ENVIRONMENTAL MATTERS. (a) The Borrower and each of its
Subsidiaries is in compliance with all Environmental Laws governing its business
except to the extent that any such failure to comply (together with any
resulting penalties, fines or forfeitures) would not reasonably be expected to
have a Material Adverse Effect. All licenses, permits, registrations or
approvals required for the business of the Borrower and each of its
Subsidiaries, as conducted as of the Initial Borrowing Date, under any
Environmental Law have been secured and the Borrower and each of its
Subsidiaries is in substantial compliance therewith, except for such licenses,
permits, registrations or approvals the failure to secure or to comply therewith
is not reasonably likely to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries has received written notice, or otherwise knows,
that it is in any respect in noncompliance with, breach of or default under any
applicable writ, order, judgment, injunction, or decree to which the Borrower or
such Subsidiary is a party or which would affect the ability of the Borrower or
such Subsidiary to operate any real property and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both,
would constitute noncompliance, breach of or default thereunder, except in each
such case, such noncompliance, breaches or defaults as would not reasonably be
expected to, in the aggregate, have a Material Adverse Effect. There are as of
the Initial Borrowing Date no Environmental Claims pending or, to the best
knowledge of the Borrower, threatened wherein an unfavorable decision, ruling or
finding would reasonably be expected to have a Material Adverse
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Effect. There are no facts, circumstances, conditions or occurrences on any Real
Property now or at any time owned, leased or operated by the Borrower or any of
its Subsidiaries or on any property adjacent to any such Real Property, which
are known by the Borrower or as to which the Borrower or any such Subsidiary has
received written notice, that could reasonably be expected (i) to form the basis
of an Environmental Claim against the Borrower or any of its Subsidiaries or any
Real Property of the Borrower or any of its Subsidiaries, or (ii) to cause such
Real Property to be subject to any restrictions on the ownership, occupancy, use
or transferability of such Real Property under any Environmental Law, except in
each such case, such Environmental Claims or restrictions that individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect.
(b) Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any such Real Property,
in each case where such occurrence or event is not in compliance with
Environmental Laws and is reasonably likely to have a Material Adverse Effect.
7.14. COMPLIANCE WITH ERISA. Compliance by the Borrower with the
provisions hereof and Credit Events contemplated hereby will not involve any
prohibited transaction within the meaning of ERISA or section 4975 of the Code.
The Borrower and each of its Subsidiaries, (i) has fulfilled all obligations
under minimum funding standards of ERISA and the Code with respect to each Plan
that is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has satisfied
all respective contribution obligations in respect of each Multiemployer Plan
and each Multiple Employer Plan, (iii) is in compliance in all material respects
with all other applicable provisions of ERISA and the Code with respect to each
Plan, each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not
incurred any liability under the Title IV of ERISA to the PBGC with respect to
any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust
established thereunder. No Plan or trust created thereunder has been terminated,
and there have been no Reportable Events, with respect to any Plan or trust
created thereunder or with respect to any Multiemployer Plan or Multiple
Employer Plan, which termination or Reportable Event will or could result in the
termination of such Plan, Multiemployer Plan or Multi Employer Plan and give
rise to a material liability of the Borrower or any ERISA Affiliate in respect
thereof. Neither the Borrower nor any ERISA Affiliate is at the date hereof, or
has been at any time within the two years preceding the date hereof, an employer
required to contribute to any Multiemployer Plan or Multiple Employer Plan, or a
"contributing sponsor" (as such term is defined in section 4001 of ERISA) in any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any ERISA
Affiliate has any contingent liability with respect to any post-retirement
"welfare benefit plan" (as such term is defined in ERISA) except as has been
disclosed to the Lenders in writing.
7.15. INTELLECTUAL PROPERTY, ETC. The Borrower and each of its
Subsidiaries has obtained or has the right to use all material patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights
with respect to the foregoing necessary for the present and planned future
conduct of its business, without any known conflict with the rights of others,
EXCEPT for such patents, trademarks, servicemarks, trade names, copyrights,
licenses and rights, the loss of which, and such conflicts, which in any such
case individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
7.16. INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of its
Subsidiaries is subject to regulation with respect to the creation or incurrence
of Indebtedness under the Investment Borrower Act of 1940, as amended, the
Interstate Commerce Act, as amended, the Federal Power Act, as amended, the
Public Utility Holding Company Act of 1935, as amended, or any applicable state
public utility law.
7.17. BURDENSOME CONTRACTS; LABOR RELATIONS. The Borrower and the
Subsidiaries (i) are not subject to any burdensome contract, agreement,
corporate restriction, judgment, decree or order, (ii) are not parties to any
labor dispute, (iii) are not subject to any material strikes, slow downs,
workouts or other concerted interruptions of operations by employees of the
Borrower or any Subsidiary, whether or not relating to any labor contracts, (iv)
are not subject to any significant pending or, to the knowledge of the Borrower,
threatened, unfair labor practice complaint, before the National Labor Relations
Board, and (v) are not subject to any significant pending or, to the knowledge
of the Borrower, threatened, grievance or significant arbitration proceeding
arising
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out of or under any collective bargaining agreement, (vi) are not subject to any
significant pending or, to the knowledge of the Borrower, threatened,
significant strike, labor dispute, slowdown or stoppage, and (vii) to the
knowledge of the Borrower, no union representation question exists with respect
to the employees of the Borrower or any of its Subsidiaries, EXCEPT (with
respect to any matter specified in any of the above clauses), for such matters
as, individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
7.18. EXISTING INDEBTEDNESS. Annex III sets forth a true and complete
list, as of the date or dates set forth therein, of all Indebtedness of the
Borrower and each of its Subsidiaries which (i) has an outstanding principal
amount of at least $5,000,000 (all such Indebtedness, whether or not so listed,
the "EXISTING INDEBTEDNESS") or (ii) is secured by any Lien on any property of
the Borrower or any Subsidiary, and which will be outstanding on the Initial
Borrowing Date after giving effect to the initial Borrowing hereunder, other
than the Indebtedness created under the Credit Documents. The Borrower has
provided to the Administrative Agent prior to the date of execution hereof true
and complete copies of all agreements and instruments governing the Indebtedness
listed on Annex III (the "EXISTING INDEBTEDNESS AGREEMENTS").
7.19. ACQUISITION DOCUMENTS, ETC. (a) The Borrower has delivered to the
Lenders prior to the execution and delivery of this Agreement (i) true and
correct copies of all Acquisition Documents relating to the General Aquatics
Acquisition, and (ii) a copy of the audited consolidated balance sheets of
General Aquatics, Inc. and its consolidated subsidiaries as at December 31, 1996
and December 31, 1995, and the related audited consolidated statements of
income, of cash flows and of shareholders' equity of General Aquatics and its
consolidated subsidiaries.
(b) On and as of the Initial Borrowing Date, (i) all material consents
and approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
to be obtained, given, filed or taken by the Borrower in order to make or
consummate the acquisition of General Aquatics in accordance with the
Acquisition Documents will have been obtained, given, filed or taken and are or
will be in full force and effect, except for filings, consents or notices not
required by United States federal or state laws to be made at such time, which
filings, consents or notices have been or will be made during the period in
which they are required to be made and (ii) each component of the acquisition of
General Aquatics shall have been consummated in accordance, in all material
respects, with the applicable Acquisition Documents and in compliance, in all
material respects, with all applicable laws.
7.20. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the Borrower
or any of its Subsidiaries in writing to the Administrative Agent or any Lender
for purposes of or in connection with this Agreement or any transaction
contemplated herein, other than the Financial Projections (as to which
representations are made only as provided in section 7.8), is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of such person in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided, except that any such
future information consisting of financial projections prepared by the Borrower
is only represented herein as being based on good faith estimates and
assumptions believed by such persons to be reasonable at the time made, it being
recognized by the Lenders that such projections as to future events are not to
be viewed as facts and that actual results during the period or periods covered
by any such projections may differ materially from the projected results.
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SECTION 8. AFFIRMATIVE COVENANTS.
The Borrower hereby covenants and agrees that so long as this Agreement
is in effect and until such time as the Total Commitment has been terminated, no
Notes are outstanding and the Loans, together with interest, Fees and all other
Obligations hereunder, have been paid in full:
8.1. REPORTING REQUIREMENTS. The Borrower will furnish to each Lender
and the Administrative Agent:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within 90 days after the close of each fiscal year of the
Borrower, the consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income, of stockholder's equity and
of cash flows for such fiscal year, in each case setting forth
comparative figures for the preceding fiscal year, all in reasonable
detail and accompanied by the opinion with respect to such consolidated
financial statements of independent public accountants of recognized
national standing selected by the Borrower, which opinion shall be
unqualified and shall (i) state that such accountants audited such
consolidated financial statements in accordance with generally accepted
auditing standards, that such accountants believe that such audit
provides a reasonable basis for their opinion, and that in their
opinion such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Borrower
and its consolidated subsidiaries as at the end of such fiscal year and
the consolidated results of their operations and cash flows for such
fiscal year in conformity with generally accepted accounting
principles, or (ii) contain such statements as are customarily included
in unqualified reports of independent accountants in conformity with
the recommendations and requirements of the American Institute of
Certified Public Accountants (or any successor organization).
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event within 45 days after the close of each of the first three
quarterly accounting periods in each fiscal year of the Borrower, the
unaudited condensed consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarterly period and
the related unaudited condensed consolidated statements of income and
of cash flows for such quarterly period, and setting forth, in the case
of such unaudited consolidated statements of income and of cash flows,
comparative figures for the related periods in the prior fiscal year,
and which shall be certified on behalf of the Borrower by the Chief
Financial Officer or other Authorized Officer of the Borrower, subject
to changes resulting from normal year-end audit adjustments.
(c) BUDGET. Not later than 90 days after the commencement of
any fiscal year of the Borrower and its Subsidiaries, a consolidated
budget in reasonable detail for each of the four fiscal quarters of
such fiscal year, and (if and to the extent prepared by management of
the Borrower) for any subsequent fiscal years, as customarily prepared
by management for its internal use, setting forth, with appropriate
discussion, the forecasted balance sheet, income statement, operating
cash flows and capital expenditures of the Borrower and its
Subsidiaries for the period covered thereby, and the principal
assumptions upon which forecasts and budget are based.
(d) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the
delivery of the financial statements provided for in sections 8.1(a)
and (b), a certificate on behalf of the Borrower of the Chief Financial
Officer or other Authorized Officer of the Borrower to the effect that,
to the best knowledge of the Borrower, no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying
the nature and extent thereof, which certificate shall set forth the
calculations required to establish compliance with the provisions of
sections 9.4, 9.5, 9.6, 9.7 and 9.8 of this Agreement and any
additional calculations necessary for purposes of section 2.5(a) or
2.8(g).
(e) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any
event within three Business Days after the Borrower or any of its
Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of
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any event which constitutes a Default or Event of Default, which notice
shall specify the nature thereof, the period of existence thereof and
what action the Borrower proposes to take with respect thereto, and
(ii) any litigation or governmental or regulatory proceeding pending
against the Borrower or any of its Subsidiaries which is likely to have
a Material Adverse Effect or a material adverse effect on the ability
of any the Borrower to perform its obligations hereunder or under any
other Credit Document.
(f) AUDITORS' INTERNAL CONTROL COMMENT LETTERS, ETC. Promptly
upon receipt thereof, a copy of each letter or memorandum commenting on
internal accounting or auditing controls or procedures which is
submitted to the Borrower by its independent accountants in connection
with any annual audit made by them of the books of the Borrower.
(g) ERISA. Promptly, and in any event within 10 days after the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows
of the occurrence of any of the following, the Borrower will deliver to
each of the Lenders a certificate on behalf of the Borrower of an
Authorized Officer of the Borrower setting forth the full details as to
such occurrence and the action, if any, that the Borrower, such
Subsidiary or such ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed
with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant or the Plan administrator with respect thereto:
(i) that a Reportable Event has occurred with respect
to any Plan;
(ii) the institution of any steps by the Borrower,
any ERISA Affiliate, the PBGC or any other person to terminate
any Plan;
(iii) the institution of any steps by the Borrower or
any ERISA Affiliate to withdraw from any Plan;
(iv) the institution of any steps by the Borrower or
any Subsidiary to withdraw from any Multiemployer Plan or
Multiple Employer Plan, if such withdrawal could result in
withdrawal liability (as described in Part 1 of Subtitle E of
Title IV of ERISA) in excess of $2,000,000;
(v) a non-exempt "prohibited transaction" within the
meaning of section 406 of ERISA in connection with any Plan;
(vi) that a Plan has an Unfunded Current Liability
exceeding $2,000,000;
(vii) any material increase in the contingent
liability of the Borrower or any Subsidiary with respect to
any post-retirement welfare liability; or
(viii) the taking of any action by, or the
threatening of the taking of any action by, the Internal
Revenue Service, the Department of Labor or the PBGC with
respect to any of the foregoing.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event
within 10 Business Days after, an officer of the Borrower or any of its
Subsidiaries obtains knowledge thereof, notice of one or more of the
following environmental matters: (i) any pending or threatened (in
writing) material Environmental Claim against the Borrower or any of
its Subsidiaries or any Real Property owned or operated by the Borrower
or any of its Subsidiaries; (ii) any condition or occurrence on or
arising from any Real Property owned or operated by the Borrower or any
of its Subsidiaries that (A) results in material noncompliance by the
Borrower or any of its Subsidiaries with any applicable Environmental
Law or (B) would reasonably be expected to form the basis of a material
Environmental Claim against the Borrower or any of its Subsidiaries or
any such Real Property; (iii) any condition or occurrence on any Real
Property owned, leased or operated by the Borrower or any of its
Subsidiaries that could
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reasonably be expected to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or
transferability by the Borrower or any of its Subsidiaries of such Real
Property under any Environmental Law; and (iv) the taking of any
material removal or remedial action in response to the actual or
alleged presence of any Hazardous Material on any Real Property owned,
leased or operated by the Borrower or any of its Subsidiaries as
required by any Environmental Law or any governmental or other
administrative agency. All such notices shall describe in reasonable
detail the nature of the Environmental Claim and the Borrower's or such
Subsidiary's response thereto.
(i) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly upon
transmission thereof or other filing with the SEC, copies of all
registration statements (other than the exhibits thereto and any
registration statement on Form S-8 or its equivalent) and annual,
quarterly or current reports that the Borrower or any of its
Subsidiaries files with the SEC.
(j) OTHER INFORMATION. With reasonable promptness, such other
information or documents (financial or otherwise) relating to the
Borrower or any of its Subsidiaries as any Lender may reasonably
request from time to time.
8.2. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause
each of its Subsidiaries to, (i) keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Borrower or such Subsidiaries, as the case may
be, in accordance with GAAP; and (ii) permit, upon at least five Business Days'
notice to the Chief Financial Officer or any other Authorized Officer of the
Borrower, officers and designated representatives of the Administrative Agent or
any of the Lenders to visit and inspect any of the properties or assets of the
Borrower and any of its Subsidiaries in whomsoever's possession (but only to the
extent the Borrower or such Subsidiary has the right to do so to the extent in
the possession of another person), and to examine the books of account of the
Borrower and any of its Subsidiaries and discuss the affairs, finances and
accounts of the Borrower and of any of its Subsidiaries with, and be advised as
to the same by, its and their officers and independent accountants and
independent actuaries, if any, all at such reasonable times and intervals and to
such reasonable extent as the Administrative Agent or any of the Lenders may
request; PROVIDED, that unless an Event of Default shall have occurred and be
continuing or the Borrower shall otherwise agree (which agreement must be made
on a basis of equivalent access by all Lenders), no individual Lender may
require any such visit, inspection or examination on more than one occasion in
any 12-month period.
8.3. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, (a) maintain insurance coverage by such insurers and in such
forms and amounts and against such risks as are generally consistent with the
insurance coverage maintained by the Borrower and its Subsidiaries at the date
hereof, and (b) forthwith upon any Lender's written request, furnish to such
Lender such information about such insurance as such Lender may from time to
time reasonably request, which information shall be prepared in form and detail
satisfactory to such Lender and certified by an Authorized Officer of the
Borrower.
8.4. PAYMENT OF TAXES. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of the Borrower or any of its Subsidiaries; PROVIDED that
neither the Borrower nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings if it has maintained adequate reserves with
respect thereto in accordance with GAAP; and PROVIDED, FURTHER, that the
Borrower will not be considered to be in default of any of the provisions of
this sentence if the Borrower or any Subsidiary fails to pay any such amount
which, individually or in the aggregate, is immaterial.
8.5. CORPORATE FRANCHISES. The Borrower will do, and will cause each of
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its corporate existence, rights and authority,
PROVIDED that any transaction permitted by section 9.2 will not constitute a
breach of this section 8.5.
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8.6. ADEQUATE REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business in whomsoever's possession they may be, are kept in
adequate repair, working order and condition, normal wear and tear excepted, and
that from time to time there are made in such properties and equipment all
needful and proper repairs, renewals, replacements, extensions, additions,
betterments and improvements, thereto, to the extent and in the manner customary
for companies in similar businesses.
8.7. COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause
each of its Subsidiaries to, comply, in all material respects, with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, other than those the
noncompliance with which would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse effect on the
ability of the Borrower to perform its obligations under any Credit Document.
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of the
covenants contained in section 8.7, the Borrower will comply, and will cause
each of its Subsidiaries to comply, in all material respects, with all
Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws which are not permitted under section 9.3. Neither the
Borrower nor any of its Subsidiaries will generate, use, treat, store, release
or dispose of, or permit the generation, use, treatment, storage, release or
disposal of, Hazardous Materials on any Real Property now or hereafter owned,
leased or operated by the Borrower or any of its Subsidiaries or transport or
permit the transportation of Hazardous Materials to or from any such Real
Property other than in compliance with applicable Environmental Laws and in the
ordinary course of business, except for such noncompliance as would not have,
and which would not be reasonably expected to have, a Material Adverse Effect or
a material adverse effect on the ability of the Borrower to perform its
obligations under any Credit Document. If required to do so under any applicable
order of any governmental agency, the Borrower will undertake, and cause each of
its Subsidiaries to undertake, any clean up, removal, remedial or other action
necessary to remove and clean up any Hazardous Materials from any Real Property
owned, leased or operated by the Borrower or any of its Subsidiaries in
accordance with, in all material respects, the requirements of all applicable
Environmental Laws and in accordance with, in all material respects, such orders
of all governmental authorities, except to the extent that the Borrower or such
Subsidiary is contesting such order in good faith and by appropriate proceedings
and for which adequate reserves have been established to the extent required by
GAAP.
8.9. FISCAL YEARS, FISCAL QUARTERS. If the Borrower shall change any of
its or any of its Subsidiaries' fiscal years or fiscal quarters (other than the
fiscal year or fiscal quarters of a person which becomes a Subsidiary, made at
the time such person becomes a Subsidiary to conform to the Borrower's fiscal
year and fiscal quarters), the Borrower will promptly, and in any event within
30 days following any such change, deliver a notice to the Administrative Agent
and the Lenders describing such change and any material accounting entries made
in connection therewith and stating whether such change will have any impact
upon any financial computations to be made hereunder, and if any such impact is
foreseen, describing in reasonable detail the nature and extent of such impact.
If the Required Lenders determine that any such change will have any impact upon
any financial computations to be made hereunder which is adverse to the Lenders,
the Borrower will, if so requested by the Administrative Agent, enter into an
amendment to this Agreement, in form and substance satisfactory to the
Administrative Agent and the Required Lenders, modifying any of the financial
covenants or related provisions hereof in such manner as the Required Lenders
determine is necessary to eliminate such adverse effect.
8.10. MOST FAVORED COVENANT STATUS. Should the Borrower at any time
after the Effective Date, issue or guarantee any unsecured Indebtedness
denominated in U.S. dollars for money borrowed or represented by bonds, notes,
debentures or similar securities in an aggregate amount exceeding $10,000,000,
to any lender or group of lenders acting in concert with one another, or one or
more institutional investors, pursuant to a loan agreement, credit agreement,
note purchase agreement, indenture, guaranty or other similar instrument, which
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agreement, indenture, guaranty or instrument, includes affirmative or negative
business or financial covenants (or any events of default or other type of
restriction which would have the practical effect of any affirmative or negative
business or financial covenant, including, without limitation, any "put" or
mandatory prepayment of such Indebtedness upon the occurrence of a "change of
control") which are applicable to the Borrower, other than those set forth
herein or in any of the other Credit Documents, the Borrower shall promptly so
notify the Administrative Agent and the Lenders and, if the Administrative Agent
shall so request by written notice to the Borrower (after a determination has
been made by the Required Lenders that any of the above-referenced documents or
instruments contain any such provisions, which either individually or in the
aggregate, are more favorable to the Lenders than any of the provisions set
forth herein), the Borrower, the Administrative Agent and the Lenders shall
promptly amend this Agreement to incorporate some or all of such provisions, in
the discretion of the Administrative Agent and the Required Lenders, into this
Agreement and, to the extent necessary and reasonably desirable to the
Administrative Agent and the Required Lenders, into any of the other Credit
Documents, all at the election of the Administrative Agent and the Required
Lenders. Notwithstanding the foregoing, the following types of covenants of the
Borrower which are included in guaranties of Indebtedness of Foreign
Subsidiaries (including so-called "comfort letters" issued by the Borrower in
respect of Indebtedness of Foreign Subsidiaries) shall not be subject to the
requirements of this section 8.10: (i) covenants of the Borrower to maintain the
net worth or financial ratios of a Foreign Subsidiary at specified levels; (ii)
covenants of the Borrower to loan or advance funds or make capital contributions
to, or otherwise make investments in, a Foreign Subsidiary; and (iii) covenants
of the Borrower to cause loans or advances to a Foreign Subsidiary which are
made by the Borrower or its other Subsidiaries to be subordinated to other
Indebtedness of such Foreign Subsidiary.
8.11. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY. In the event
that at any time after the Initial Borrowing Date the Borrower has any Material
Subsidiary (other than a Foreign Subsidiary) which is not a party to the
Subsidiary Guaranty, the Borrower will notify the Administrative Agent in
writing of such event, identifying the Material Subsidiary in question and
referring specifically to the rights of the Agent and the Banks under this
section. The Borrower will, within 30 days following request therefor from the
Administrative Agent, cause such Material Subsidiary to deliver to the
Administrative Agent, in sufficient quantities for the Lenders, (i) a joinder
supplement, satisfactory in form and substance to the Administrative Agent and
the Required Lenders, duly executed by such Material Subsidiary, pursuant to
which such Material Subsidiary joins in the Subsidiary Guaranty as a guarantor
thereunder, and (ii) if such Material Subsidiary is a corporation, resolutions
of the Board of Directors of such Material Subsidiary, certified by the
Secretary or an Assistant Secretary of such Material Subsidiary as duly adopted
and in full force and effect, authorizing the execution and delivery of such
joinder supplement, or if such Material Subsidiary is not a corporation, such
other evidence of the authority of such Material Subsidiary to execute such
joinder supplement as the Administrative Agent may reasonably request.
8.12. HEDGE AGREEMENTS, ETC. The Borrower will, and will cause each of
its Subsidiaries to, enter into Hedge Agreements (i) in order to provide
protection to the Borrower or any such Subsidiary from fluctuations and other
changes in interest rates and currency exchange rates, as and to the extent
considered reasonably necessary by the Borrower, but without exposing the
Borrower or its Subsidiaries to predominantly speculative risks unrelated to the
amount of Indebtedness or assets intended to be subject to coverage on a
notional basis under all such Hedge Agreements; and (ii) in the case of any
Hedge Agreement entered into after the Effective Date, only if the proposed form
thereof (including any proposed pricing or other material terms) has been
provided to the Administrative Agent contemporaneously with the entry into such
Hedge Agreement.
8.13. SENIOR DEBT. The Borrower will at all times ensure that (a) the
claims of the Lenders in respect of the Obligations of the Borrower will not be
subordinate to, and will in all respects at least rank PARI PASSU with, the
claims of every other senior unsecured creditor of the Borrower, and (b) any
Indebtedness subordinated in any manner to the claims of any other senior
unsecured creditor of the Borrower will be subordinated in like manner to such
claims of the Lenders.
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SECTION 9. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that on the Effective Date and
thereafter for so long as this Agreement is in effect and until such time as the
Total Commitment has been terminated, no Notes remain outstanding and the Loans,
together with interest, Fees and all other Obligations incurred hereunder are
paid in full:
9.1. CHANGES IN BUSINESS. Neither the Borrower nor any of its
Subsidiaries will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Borrower and its Subsidiaries, would be substantially changed from the
general nature of the business engaged in by the Borrower and its Subsidiaries
on the date hereof.
9.2. CONSOLIDATION, MERGER OR SALE OF ASSETS, ETC. The Borrower will
not, and will not permit any Subsidiary to, wind up, liquidate or dissolve its
affairs, or enter into any transaction of merger or consolidation or sell or
otherwise dispose of any of its property or assets (but excluding any sale or
disposition of obsolete or excess furniture, fixtures or equipment or excess
vacant land in the ordinary course of business), or purchase, lease or otherwise
acquire (in one transaction or a series of related transactions) all or any part
of the property or assets of any person (excluding any purchases, leases or
other acquisitions of property or assets in, and for use in, the ordinary course
of business) or agree to do any of the foregoing at any future time, EXCEPT that
the following shall be permitted:
(a) CAPITAL EXPENDITURES: capital expenditures by the Borrower
and its Subsidiaries for furniture, fixtures, equipment, improvements
to Real Property, or for the acquisition of improved or unimproved
facilities or Real Property other than on a "going concern" basis;
(b) SALES OF RECEIVABLES: sales of receivables in transactions
permitted by section 9.4(d);
(c) PERMITTED INVESTMENTS: the investments permitted pursuant
to section 9.5;
(d) GENERAL AQUATICS ACQUISITION: the General Aquatics
Acquisition as contemplated by the Acquisition Documents;
(e) CERTAIN INTERCOMPANY MERGERS, ETC.: if no Default or Event
of Default shall have occurred and be continuing or would result
therefrom, (i) the merger or consolidation of any Wholly- Owned
Subsidiary with or into the Borrower or another Wholly-Owned
Subsidiary, so long as in any merger or consolidation involving the
Borrower the Borrower is the surviving or continuing corporation, or
the liquidation or dissolution of any Subsidiary, or (ii) the transfer
or other disposition of any property by the Borrower to any
Wholly-Owned Subsidiary or by any Wholly-Owned Subsidiary to the
Borrower or any other Wholly-Owned Subsidiary of the Borrower;
(f) PERMITTED ACQUISITIONS: if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any Subsidiary may make Permitted Acquisitions, PROVIDED
that (i) at least five Business Days prior to the date of any such
Permitted Acquisition which involves consideration (including the
amount of any assumed Indebtedness and (without duplication) any
outstanding Indebtedness of any person which becomes a Subsidiary as a
result of such Permitted Acquisition) of $10,000,000 or more, the
Borrower shall have delivered to the Administrative Agent an officer's
certificate executed on behalf of the Borrower by an Authorized Officer
of the Borrower, which certificate shall (A) contain the date such
Permitted Acquisition is scheduled to be consummated, (B) contain the
estimated purchase price of such Permitted Acquisition, (C) contain a
description of the property and/or assets acquired in connection with
such Permitted Acquisition, (D) demonstrate that at the time of making
any such Permitted Acquisition the covenants contained in sections 9.7
and 9.8 shall be complied with on a PRO FORMA basis as if the
properties and/or assets so acquired had been owned by the Borrower,
and the Indebtedness assumed and/or incurred to acquire and/or finance
same has been outstanding, for the 12 month period immediately
preceding such acquisition (without giving
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effect to any credit for unobtained or unrealized gains in connection
with such Permitted Acquisition, but taking into account such
adjustments to the overhead of such properties and assets as may
reasonably determined and specified by the Borrower to reflect the
overhead generally applicable to similar properties and assets owned by
the Borrower and its Subsidiaries, as and to the extent the
Administrative Agent determines (acting on instructions from the
Required Lenders) such adjustments to be reasonable and appropriate
under the particular circumstances), and (E) if requested by the
Administrative Agent, attach thereto a true and correct copy of the
then proposed purchase agreement, merger agreement or similar
agreement, partnership agreement and/or other contract entered into in
connection with such Permitted Acquisition; and (ii) the cumulative
aggregate consideration (including the amount of any assumed
Indebtedness and (without duplication) any outstanding Indebtedness of
any person which becomes a Subsidiary as a result of a Permitted
Acquisition) for all Permitted Acquisitions completed after the Initial
Borrowing Date and on or prior to September 30, 1998 does not exceed
$40,000,000;
(g) PERMITTED DISPOSITIONS: if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any of its Subsidiaries may (i) sell any property, land or
building (including any related receivables or other intangible assets)
to any person which is not a Subsidiary of the Borrower, or (ii) sell
the entire capital stock (or other equity interests) and Indebtedness
of any Subsidiary owned by the Borrower or any other Subsidiary to any
person which is not a Subsidiary of the Borrower, or (iii) permit any
Subsidiary to be merged or consolidated with a person which is not an
Affiliate of the Borrower, or (iv) consummate any other Asset Sale with
a person who is not a Subsidiary of the Borrower; PROVIDED that (A) the
consideration for such transaction represents fair value (as determined
by management of the Borrower), (B) all such assets, capital stock (or
other equity interests) and Indebtedness or Subsidiary so disposed of
during any fiscal year of the Borrower shall not have an aggregate fair
value which is greater than an amount equal to 5% of the Total Net
Assets of the Borrower as at the end of its most recently completed
fiscal year prior thereto for which financial statements have been
delivered pursuant to section 8.1(a), (C) all such assets, capital
stock (or other equity interests) and Indebtedness or Subsidiary so
disposed of after March 31, 1997 shall not at any time on a cumulative
basis have an aggregate fair value which is greater than an amount
equal to 10% of the Total Net Assets of the Borrower as at the end of
its most recently completed fiscal year prior thereto for which
financial statements have been delivered pursuant to section 8.1(a),
(D) in the case of any such transaction involving consideration in
excess of $10,000,000, at least five Business Days prior to the date of
completion of such transaction the Borrower shall have delivered to the
Administrative Agent an officer's certificate executed on behalf of the
Borrower by an Authorized Officer of the Borrower, which certificate
shall contain a description of the proposed transaction, the date such
transaction is scheduled to be consummated, the estimated purchase
price or other consideration for such transaction, financial
information pertaining to compliance with the preceding clauses (B) and
(C), and which shall (if requested by the Administrative Agent) include
a certified copy of the draft or definitive documentation pertaining
thereto, and (E) contemporaneously therewith, the Borrower prepays
Loans as and to the extent contemplated by section 5.2(c); and
PROVIDED, FURTHER, that the restrictions contained in this section
9.2(g) shall not apply to, and there shall be excluded from any
computations under this section 9.2(g), any isolated sales or other
dispositions of assets having a value less than $500,000, the sale of
certain currently-owned Real Property located in Daytona Beach,
Florida, and any dispositions of certain property, assets and business
identified to the Lenders in a letter dated as of the date hereof which
makes reference to this section 9.2(g); and
(h) LEASES: the Borrower or any of its Subsidiaries may enter
into leases of property or assets not constituting Permitted
Acquisitions in the ordinary course of business not otherwise in
violation of this Agreement.
9.3. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase
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such property or assets (including sales of accounts receivable or notes with or
without recourse to the Borrower or any of its Subsidiaries, other than for
purposes of collection in the ordinary course of business) or assign any right
to receive income, or file or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar recording or
notice statute, EXCEPT that the foregoing restrictions shall not apply to:
(a) Liens for taxes not yet delinquent or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
(b) Liens in respect of property or assets imposed by law
which were incurred in the ordinary course of business, such as
carriers', warehousemen's, materialmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, which do not
in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the
business of the Borrower or any Subsidiary;
(c) Liens created by this Agreement or the other Credit
Documents;
(d) Liens (i) in existence on the Initial Borrowing Date which
are listed, and the Indebtedness secured thereby and the property
subject thereto on the Initial Borrowing Date described, in Annex IV,
or (ii) arising out of the refinancing, extension, renewal or refunding
of any Indebtedness secured by any such Liens, PROVIDED that the
principal amount of such Indebtedness is not increased and such
Indebtedness is not secured by any additional assets;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under section
10.1(f);
(f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; and mechanic's Liens, carrier's Liens, and other Liens to
secure the performance of tenders, statutory obligations, contract
bids, government contracts, performance and return-of-money bonds and
other similar obligations, incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed
money), whether pursuant to statutory requirements, common law or
consensual arrangements;
(g) Leases or subleases granted to others not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries and any interest or title of a lessor under any lease not
in violation of this Agreement;
(h) easements, rights-of-way, zoning or deed restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material, respect with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(i) Liens arising from financing statements regarding leases
not in violation of this Agreement;
(j) Liens created by virtue of Capitalized Lease Obligations,
PROVIDED that such Liens are only in respect of the property or assets
subject to, and secure only, the respective Capital Lease;
(k) Liens (i) placed upon equipment or machinery used in the
ordinary course of business of the Borrower or any Subsidiary at the
time of (or within 180 days after) the acquisition thereof by the
Borrower or any such Subsidiary to secure Indebtedness incurred to pay
all or a portion of the purchase price thereof, PROVIDED that the Lien
encumbering the equipment or machinery so acquired does not encumber
any other asset of the Borrower or any such Subsidiary; or (ii)
existing on property
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or other assets at the time acquired by the Borrower or any Subsidiary
or on assets of a person at the time such person first becomes a
Subsidiary of the Borrower, PROVIDED that (A) any such Liens were not
created at the time of or in contemplation of the acquisition of such
assets or person by the Borrower or any of its Subsidiaries, (B) in the
case of any such acquisition of a person, any such Lien attaches only
to the property and assets of such person, (C) in the case of any such
acquisition of property or assets by the Borrower or any Subsidiary,
any such Lien attaches only to the property and assets so acquired and
not to any other property or assets of the Borrower or any Subsidiary,
(D) the Indebtedness secured by any such Lien does not exceed 100% of
the fair market value of the property and assets to which such Lien
attaches, determined at the time of the acquisition of such property or
asset or the time at which such person becomes a Subsidiary of the
Borrower (except in the circumstances described in this clause (ii)
above to the extent such Liens constituted customary purchase money
Liens at the time of incurrence and were entered into in the ordinary
course of business), and (E) the Indebtedness secured thereby is
permitted by section 9.4(b); and
(l) Liens and security interests arising under and securing
sales of receivables permitted under section 9.4(d).
9.4. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT:
(a) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower or any Subsidiary (i) subject
to Liens permitted by section 9.3(k), or (ii) in respect of Capital
Leases; PROVIDED that the aggregate principal amount of such
Indebtedness referred to in the preceding clause (i) and the aggregate
amount of Capitalized Lease Obligations under such Capital Leases
referred to in the preceding clause (ii), shall not exceed in the
aggregate at any time outstanding an amount equal to 15% of the
Borrower's Consolidated Net Worth as at the end of its most recently
completed fiscal quarter prior thereto for which financial statements
have been delivered pursuant to section 8.1(a) or (b);
(c) unsecured Indebtedness of the Borrower in the aggregate
principal amount of up to $50,000,000, having a weighted average life
to maturity (computed in accordance with standard financial practices)
at the time of incurrance thereof in excess of 5 years, incurred
pursuant to a private placement or public offering of the Borrower's
debt securities;
(d) Indebtedness of the Borrower and/or any of its
Subsidiaries under one or more sale of receivables programs which apply
only to the Borrower's and/or any Subsidiary's trade receivables and
under which the Borrower and/or any Subsidiary may sell, with full or
limited recourse, trade receivables arising in the ordinary course of
business, PROVIDED that the aggregate outstanding balance of the trade
receivables involved in any such program (including any such
receivables which are attributable to "over-collateralization") do not
exceed $35,000,000 at any time;
(e) Indebtedness of Foreign Subsidiaries of the Borrower, and
Indebtedness of branches of the Borrower that are incorporated under
the laws of a country other than the United States, not in excess of
$15,000,000 (or the equivalent in any applicable currency or
currencies) outstanding at any time, whether or not supported by
Letters of Credit issued hereunder;
(f) Existing Indebtedness, to the extent not otherwise
permitted pursuant to the foregoing clauses; and any refinancing,
extension, renewal or refunding of any such Existing Indebtedness not
involving an increase in the principal amount thereof or a reduction of
more than 10% in the remaining weighted average life to maturity
thereof (computed in accordance with standard financial practice);
(g) Indebtedness of the Borrower under Hedge Agreements;
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(h) Indebtedness of the Borrower to any of its Subsidiaries,
and Indebtedness of any of the Borrower's Subsidiaries to the Borrower
or to another Subsidiary of the Borrower, in each case to the extent
permitted under section 9.5;
(i) Indebtedness in respect of letters of credit other than
Letters of Credit issued hereunder, PROVIDED that (without duplication
for Letters of Credit which support any such letters of credit) the
face amount of such letters of credit outstanding at any time, plus the
Letter of Credit Outstandings does not exceed $25,000,000;
(j) to the extent not otherwise permitted by the foregoing
clauses, Subordinated
Indebtedness of the Borrower; and
(k) Guaranty Obligations permitted under section 9.5.
9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS. The
Borrower will not, and will not permit any of its Subsidiaries to, (a) lend
money or credit or make advances to any person, (b) purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any person, (c) create, acquire or hold any Subsidiary,
(d) be or become a party to any joint venture or partnership, or (e) be or
become obligated under any Guaranty Obligations, EXCEPT:
(i) the Borrower or any of its Subsidiaries may invest in cash
and Cash Equivalents;
(ii) the Borrower and its Subsidiaries may acquire and hold
receivables owing to them in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(iii) loans and advances to employees for business-related
travel expenses, moving expenses, costs of replacement homes and other
similar expenses, in each case incurred in the ordinary course of
business, shall be permitted;
(iv) investments in the capital of Wholly-Owned Subsidiaries
which are not Foreign Subsidiaries;
(v) existing investments in Subsidiaries which are not
Wholly-Owned Subsidiaries (and any increases thereof attributable to
increases in retained earnings);
(vi) the existing investments and guarantees described on
Annex V hereto;
(vii) loans and advances by any Subsidiary of the Borrower to
the Borrower, PROVIDED that the Indebtedness represented thereby
constitutes Subordinated Indebtedness;
(viii) loans and advances by the Borrower or by any Subsidiary
of the Borrower to, or other investments in, any Subsidiary of the
Borrower; PROVIDED that the cumulative aggregate amount of all such
loans, advances and investments after March 31, 1997 to or in all
Foreign Subsidiaries of the Borrower and all Subsidiaries of the
Borrower which are not Wholly-Owned Subsidiaries, shall not exceed
$20,000,000;
(ix) investments acquired by the Borrower or any of its
Subsidiaries (A) in exchange for any other investment held by the
Borrower or any such Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other investment, or (B) as a result of a foreclosure by the
Borrower or any of its Subsidiaries with respect to any secured
investment or other transfer of title with respect to any secured
investment in default;
(x) any unsecured guaranty of the Indebtedness described in
section 9.4(e) or (i);
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(xi) investments of the Borrower and its Subsidiaries in Hedge
Agreements;
(xii) Guaranty Obligations of (A) the Borrower or any
Subsidiary in respect of leases which are not prohibited by under this
Agreement and (B) the Borrower or any Subsidiary in respect of any
other person (other than in respect of indebtedness for borrowed money)
arising as a matter of applicable law because the Borrower or such
Subsidiary is or is deemed to be a general partner of such other
person;
(xiii) any endorsement of a check or other medium of payment
for deposit or collection, or any similar transaction in the normal
course of business;
(xiv) any loans, advances and investments, including
investments in joint ventures, in or to any person which is not a
Subsidiary of the Borrower and which are not otherwise permitted by the
foregoing clauses, made after March 31, 1997 which, on a cumulative
basis taking into account the repayment of any such loans or advances,
does not at any time exceed $10,000,000; and
(xv) any Guaranty Obligations not otherwise permitted under
the foregoing clauses, PROVIDED the amount thereof does not exceed
$5,000,000 at any time.
9.6. DIVIDENDS, ETC. The Borrower will not declare or pay any dividends
(other than dividends payable solely in common stock of the Borrower) on, or
make any other distribution or payment on account of (other than in shares of
the common stock of the Borrower), and the Borrower will not, and will not
permit any of its Subsidiaries to, purchase, redeem, retire or otherwise
acquire, any shares of any class of the capital stock of the Borrower, whether
now or hereafter outstanding, UNLESS at the time of such declaration, payment,
distribution, purchase, redemption, retirement or other acquisition, and after
giving effect thereto, (i) no Default or Event of Default shall have occurred
and be continuing or shall result therefrom, and (ii) the sum of (A) the
aggregate amount of all dividends declared on, and distributions and payments
made with respect to such capital stock (except in shares of common stock of the
Borrower) subsequent to September 30, 1996, PLUS (B) the aggregate amount of all
purchases, redemptions, retirements and other acquisitions of shares of capital
stock of the Borrower made subsequent to September 30, 1996, will not be in
excess of an amount equal to 50% of the Consolidated Net Income of the Borrower
for the period (considered as a single accounting period) which commenced
October 1, 1996 and which terminates at the end of the last calendar month
preceding the date of such proposed declaration, payment, distribution,
purchase, redemption, retirement or other acquisition (or, in case such
Consolidated Net Income of the Borrower shall be a loss for such period, then
$-0-), excluding from such Consolidated Net Income any gains on sales of assets
(excluding sales in the ordinary course of business) and other extraordinary
gains and other one-time non-cash gains, which are included therein. The
provisions of this section 9.6 shall not prevent the payment of any dividend
which on the date of its declaration shall not be prohibited by this section
9.6, PROVIDED that such declaration shall have been within 60 days of the
payment date and no Default or Event of Default shall otherwise have occurred
and be continuing on the payment date.
9.7. TOTAL INDEBTEDNESS/EBITDA RATIO. The Borrower will not at any time
permit the ratio of (i) the amount of Total Indebtedness to (ii) EBITDA for any
Testing Period to exceed the ratio shown below for any applicable period:
<TABLE>
<CAPTION>
================================================================================
PERIOD RATIO
- --------------------------------------------------------------------------------
<S> <C>
Initial Borrowing Date 4.00 to 1.00
through 9/30/98
- --------------------------------------------------------------------------------
10/1/98 through 9/30/99 3.50 to 1.00
- --------------------------------------------------------------------------------
Thereafter 3.00 to 1.00
================================================================================
</TABLE>
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9.8. FIXED CHARGE COVERAGE RATIO. The Borrower will not permit its
Fixed Charge Coverage Ratio for any Testing Period to be less than 1.40 to 1.00.
9.9. PREPAYMENTS AND REFINANCINGS OF SUBORDINATED DEBT, ETC. The
Borrower will not, and will not permit any of its Subsidiaries to, make (or give
any notice in respect thereof) any voluntary or optional payment or prepayment
or redemption or acquisition for value of (including, without limitation, by way
of depositing with the trustee with respect thereto money or securities before
due for the purpose of paying when due) or exchange of, or refinance or refund,
any Subordinated Indebtedness of the Borrower referred to in section 9.4(i);
PROVIDED that the Borrower may refinance or refund any such Subordinated
Indebtedness if the aggregate principal amount thereof is not increased, the
weighted average life to maturity thereof (computed in accordance with standard
financial practice) is not reduced by more than 10%, and there is no change in
the subordination provisions applicable thereto which is materially adverse to
the Lenders.
9.10. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and
in the case of a Subsidiary, the Borrower or another Subsidiary) other than in
the ordinary course of business of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a person other than an Affiliate,
EXCEPT (i) loans, advances and investments permitted by section 9.5, (ii) sales
of goods to an Affiliate for use or distribution outside the United States which
in the good faith judgment of the Borrower complies with any applicable legal
requirements of the Code, or (iii) agreements and transactions with and payments
to officers, directors and shareholders which are either (A) entered into in the
ordinary course of business and not prohibited by any of the provisions of this
Agreement, or (B) entered into outside the ordinary course of business, approved
by the directors or shareholders of the Borrower, and not prohibited by any of
the provisions of this Agreement.
9.11. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. The Borrower
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
contractual encumbrance or restriction in or on the ability of any such
Subsidiary to (a) pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profits owned by the
Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the
Borrower or a Subsidiary of the Borrower, (b) make loans or advances to the
Borrower or any of the Borrower's other Subsidiaries, or transfer any of its
property or assets to the Borrower or any of the Borrower's other Subsidiaries,
EXCEPT for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Agreement and the other Credit Documents, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of a Subsidiary of the Borrower, (iv) customary provisions
restricting assignment of any licensing agreement entered into by any Subsidiary
of the Borrower in the ordinary course of business, (v) customary provisions
restricting the transfer of assets subject to Liens permitted under section
9.3(k), (vi) encumbrances and restrictions contained in the Existing
Indebtedness Agreements as in effect on the Effective Date and customary
restrictions governing any of the Indebtedness of a Subsidiary permitted
pursuant to 9.4, (vii) any document relating to Indebtedness secured by a Lien
permitted by section 9.3, insofar as the provisions thereof limit grants of
junior liens on the assets securing such Indebtedness, and (viii) any operating
lease or Capital Lease, insofar as the provisions thereof limit grants of a
security interest in, or other assignments of, the related leasehold interest to
any other person.
9.12. LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. The Borrower will
not, nor will it permit any Subsidiary to, enter into any Sale and Lease-Back
Transaction involving any individual property (or related group of properties as
part of the same Sale and Lease-Back Transaction) having a Value over $2,000,000
unless either (a) the Borrower or such Subsidiary would be entitled to incur
Indebtedness secured by a Lien on such property pursuant to section 9.4(b), or
(b) the Borrower shall voluntarily permanently reduce the Unutilized Total
General Revolving Commitment by an amount at least equal to the Value of such
Sale and Lease-Back Transaction.
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SECTION 10. EVENTS OF DEFAULT.
10.1. EVENTS OF DEFAULT. Upon the occurrence of any of the following
specified events (each an "EVENT OF DEFAULT"):
(a) PAYMENTS: the Borrower shall (i) default in the payment
when due of any principal of the Loans or any reimbursement obligation
in respect of any Unpaid Drawing or (ii) default, and such default
shall continue for five or more Business Days, in the payment when due
of any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document; or
(b) REPRESENTATIONS, ETC.: any representation, warranty or
statement made by the Borrower or any other Credit Party herein or in
any other Credit Document or in any statement or certificate delivered
or required to be delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or
deemed made; or
(c) COVENANTS: the Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement
contained in section 9.2, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8 or 9.12 of this
Agreement, or (ii) default in the due performance or observance by it
of any term, covenant or agreement (other than those referred to in
clause (a) or (b) above or the preceding clause (i) of this clause (c))
contained in this Agreement or any other Credit Document and such
default shall continue unremedied for a period of at least 30 days
after notice by the Administrative Agent or the Required Lenders; or
(d) CROSS DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any
of its Subsidiaries shall (i) default in any payment with respect to
any Indebtedness (other than the Obligations) having an unpaid
principal amount of $5,000,000 or greater, and such default shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness, or (ii) default
in the observance or performance of any agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (and all grace periods
applicable to such observance, performance or condition shall have
expired), or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause any such Indebtedness to
become due prior to its stated maturity; or any such Indebtedness of
the Borrower or any of its Subsidiaries shall be declared to be due and
payable, or shall be required to be prepaid (other than by a regularly
scheduled required prepayment or redemption, prior to the stated
maturity thereof); or
(e) SUBSIDIARY GUARANTY: the Subsidiary Guaranty (once
executed and delivered) shall cease for any reason (other than
termination in accordance with its terms) to be in full force and
effect; or any Credit Party shall default in any payment obligation
thereunder; or any Credit Party shall default in any material respect
in the due performance and observance of any other obligation
thereunder and such default shall continue unremedied for a period of
at least 30 days after notice by the Administrative Agent or the
Required Lenders; or any Credit Party shall (or seek to) disaffirm or
otherwise limit its obligations thereunder otherwise than in strict
compliance with the terms thereof; or
(f) JUDGMENTS: one or more judgments or decrees shall be
entered against the Borrower and/or any of its Subsidiaries involving a
liability (whether or not covered by insurance) of $5,000,000 or more
in the aggregate for all such judgments and decrees for the Borrower
and its Subsidiaries) and any such judgments or decrees shall not have
been vacated, discharged or stayed or bonded pending appeal within 30
days from the entry thereof; or
(g) BANKRUPTCY, ETC.: the Borrower or any of its Material
Subsidiaries shall commence a voluntary case concerning itself under
Title 11 of the United States Code entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE");
or an involuntary case is
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commenced against the Borrower or any of its Material Subsidiaries and
the petition is not controverted within 10 days, or is not dismissed
within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of,
all or substantially all of the property of the Borrower or any of its
Material Subsidiaries; or the Borrower or any of its Material
Subsidiaries commences (including by way of applying for or consenting
to the appointment of, or the taking of possession by, a rehabilitator,
receiver, custodian, trustee, conservator or liquidator (collectively,
a "CONSERVATOR") of itself or all or any substantial portion of its
property) any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency,
liquidation, rehabilitation, conservatorship or similar law of any
jurisdiction whether now or hereafter in effect relating to the
Borrower or any of its Material Subsidiaries; or any such proceeding is
commenced against the Borrower or any of its Material Subsidiaries to
the extent such proceeding is consented by such person or remains
undismissed for a period of 60 days; or the Borrower or any of its
Material Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is
entered; or the Borrower or any of its Material Subsidiaries suffers
any appointment of any conservator or the like for it or any
substantial part of its property which continues undischarged or
unstayed for a period of 60 days; or the Borrower or any of its
Material Subsidiaries makes a general assignment for the benefit of
creditors; or any corporate (or similar organizational) action is taken
by the Borrower or any of its Material Subsidiaries for the purpose of
effecting any of the foregoing; or
(h) ERISA: (i) any of the events described in clauses (i)
through (viii) of section 8.1(g) shall have occurred; or (ii) there
shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk
of incurring a liability; and (iii) any such event or events or any
such lien, security interest or liability, individually, and/or in the
aggregate, in the opinion of the Required Lenders, has had, or could
reasonably be expected to have, a Material Adverse Effect; or
(i) MATERIAL ADVERSE EFFECT: any event or circumstance shall
occur or exist which has a Material Adverse Effect upon the Borrower,
as compared to the business, operations, property, assets, liabilities
or condition (financial or otherwise) of the Borrower and its
Subsidiaries as reflected in the financial statements and the Financial
Projections referred to in section 7.8.
10.2. ACCELERATION, ETC. Upon the occurrence of any Event of Default,
and at any time thereafter, if any Event of Default shall then be continuing,
the Administrative Agent shall, upon the written request of the Required
Lenders, by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Administrative Agent or any
Lender to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (PROVIDED that, if an Event of
Default specified in section 10.1(g) shall occur with respect to the Borrower,
the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Lender shall forthwith
terminate immediately without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans, all Unpaid
Drawings and all obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; and (iv) direct the Borrower to pay (and the Borrower
hereby agrees that on receipt of such notice or upon the occurrence of an Event
of Default with respect to the Borrower under section 10.1(g), it will pay) to
the Administrative Agent an amount of cash equal to the aggregate Stated Amount
of all Letters of Credit then outstanding (such amount to be held as security
after the Borrower's reimbursement obligations in respect thereof).
10.3. APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the
Administrative Agent or any Lender from the exercise of remedies hereunder or
under the other Credit Documents or under any other documents relating to this
Agreement shall, unless otherwise required by the terms of the other Credit
Documents or by applicable law, be applied as follows:
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(i) FIRST, to the payment of all expenses (to the extent not
paid by the Borrower) incurred by the Administrative Agent and the
Lenders in connection with the exercise of such remedies, including,
without limitation, all reasonable costs and expenses of collection,
attorneys' fees, court costs and any foreclosure expenses;
(ii) SECOND, to the payment PRO RATA of interest then accrued
on the outstanding Loans;
(iii) THIRD, to the payment PRO RATA of any fees then accrued
and payable to the Administrative Agent, any Letter of Credit Issuer or
any Lender under this Agreement in respect of the Loans or the Letter
of Credit Outstandings;
(iv) FOURTH, to the payment PRO RATA of (A) the principal
balance then owing on the outstanding Loans, and (B) the Stated Amount
of the Letter of Credit Outstandings (to be held and applied by the
Administrative Agent as security for the reimbursement obligations in
respect thereof);
(v) FIFTH, to the payment to the Lenders of any amounts then
accrued and unpaid under sections 2.10, 2.11 and 3.5 hereof, and if
such proceeds are insufficient to pay such amounts in full, to the
payment of such amounts PRO RATA;
(vi) SIXTH, to the payment PRO RATA of all other amounts owed
by the Borrower to the Administrative Agent, to any Letter of Credit
Issuer or any Lender under this Agreement or any other Credit Document,
and if such proceeds are insufficient to pay such amounts in full, to
the payment of such amounts PRO RATA; and
(vii) FINALLY, any remaining surplus after all of the
Obligations have been paid in full, to the Borrower or to whomsoever
shall be lawfully entitled thereto.
SECTION 11. THE ADMINISTRATIVE AGENT.
11.1. APPOINTMENT. Each Lender hereby irrevocably designates and
appoints NCB as Administrative Agent to act as specified herein and in the other
Credit Documents, and each such Lender hereby irrevocably authorizes NCB as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
The Administrative Agent agrees to act as such upon the express conditions
contained in this section 11. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Credit Documents, nor any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this section 11 are solely for the benefit of the
Administrative Agent, and the Lenders, and the Borrower and its Subsidiaries
shall not have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the
Administrative Agent shall act solely as agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation or relationship of
agency or trust with or for the Borrower or any of its Subsidiaries.
11.2. DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by section 11.3.
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11.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such person under or in connection with this Agreement (except
for its or such person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or of its Subsidiaries or any
of their respective officers contained in this Agreement, any other Credit
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Credit Document or for any failure
of the Borrower or any Subsidiary of the Borrower or any of their respective
officers to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Borrower or any of its Subsidiaries. The Administrative Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Credit
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Administrative
Agent to the Lenders or by or on behalf of the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default.
11.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or conversation believed by it, in good faith, to be genuine and
correct and to have been signed, sent or made by the proper person or persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrower or any of its Subsidiaries), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Credit Documents in accordance with a request of the Required Lenders, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders.
11.5. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders, PROVIDED that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
11.6. NON-RELIANCE. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the
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Borrower and its Subsidiaries and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent, or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries. The Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, assets, property,
financial and other conditions, prospects or creditworthiness of the Borrower or
any of its Subsidiaries which may come into the possession of the Administrative
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
11.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective Revolving Loans and Unutilized Commitments, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, reasonable expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment of the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Agreement or any other Credit Document, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Administrative Agent under or in
connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by the Borrower, PROVIDED that no Lender shall be liable
to the Administrative Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting solely from the Administrative
Agent's gross negligence or willful misconduct. If any indemnity furnished to
the Administrative Agent for any purpose shall, in the opinion of the
Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this section 11.7 shall survive the payment of all Obligations.
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its Subsidiaries
and their Affiliates as though not acting as Administrative Agent hereunder.
With respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
11.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as the Administrative Agent upon 20 days' notice to the Lenders and the
Borrower. The Required Lenders shall appoint from among the Lenders a successor
Administrative Agent for the Lenders subject to prior approval by the Borrower
(such approval not to be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall include such
successor agent effective upon its appointment, and the resigning Administrative
Agent's rights, powers and duties as the Administrative Agent shall be
terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After the retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this section 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.
11.10. SYNDICATION AGENT. ABN AMRO Bank N. V. will act as Syndication
Agent for the original Lenders named herein as contemplated by the letter
agreement dated April 14, 1996 with the Borrower.
11.11. OTHER AGENTS. Any Lender identified herein as a Co-Agent,
Documentation Agent or any other corresponding title, other than "Administrative
Agent" or "Syndication Agent", shall have no right, power, obligation,
liability, responsibility or duty under this Agreement or any other Credit
Document except those
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applicable to all Lenders as such. Each Lender acknowledges that it has not
relied, and will not rely, on any Lender so identified in deciding to enter into
this Agreement or in taking or not taking any action hereunder.
SECTION 12. GUARANTY BY THE BORROWER.
12.1. GUARANTY OF CERTAIN SUBSIDIARY BORROWINGS. The Borrower hereby
unconditionally guarantees, for the benefit of the Administrative Agent and the
Lenders, the full and punctual payment by each Foreign Subsidiary of the
Borrower of all Indebtedness of such Foreign Subsidiary which is supported by a
Letter of Credit issued to a holder of such Indebtedness which is a Lender or a
branch, agency or Affiliate of a Lender (or any agent therefor) (herein, the
"GUARANTEED OBLIGATIONS"). Upon failure by any such Foreign Subsidiary to pay
punctually any such amount, the Borrower shall forthwith on demand by the
Administrative Agent pay the amount not so paid at the place and in the currency
and otherwise in the manner specified in this Agreement or any other applicable
Credit Document.
12.2. ADDITIONAL UNDERTAKING. As a separate, additional and continuing
obligation, the Borrower unconditionally and irrevocably undertakes and agrees,
for the benefit of the Administrative Agent and the Lenders, that, should any
amounts not be recoverable from the Borrower under section 12.1 for any reason
whatsoever (including, without limitation, by reason of any provision of any
Credit Document or any other agreement or instrument executed in connection
therewith being or becoming void, unenforceable, or otherwise invalid under any
applicable law) then, notwithstanding any notice or knowledge thereof by any
Lender, the Administrative Agent, any of their respective Affiliates, or any
other person, at any time, the Borrower as sole, original and independent
obligor, upon demand by the Administrative Agent, will make payment to the
Administrative Agent, for the account of the Lenders and the Administrative
Agent, of all such obligations not so recoverable by way of full indemnity, in
such currency and otherwise in such manner as is provided in the Credit
Documents.
12.3. GUARANTY UNCONDITIONAL, ETC. The obligations of the Borrower
under this section shall be unconditional and absolute and, without limiting the
generality of the foregoing shall not be released, discharged or otherwise
affected by the occurrence, one or more times, of any of the following:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect to any Guaranteed Obligation of any Foreign
Subsidiary under any agreement or instrument, by operation of law or
otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, any Note, any other Credit Document, or any agreement or
instrument evidencing or relating to any Guaranteed Obligation;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any Guaranteed Obligation of any Foreign
Subsidiary under any agreement or instrument evidencing or relating to
any Guaranteed Obligation;
(iv) any change in the corporate existence, structure or
ownership of any Foreign Subsidiary or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Foreign
Subsidiary or its assets or any resulting release or discharge of any
obligation of any Foreign Subsidiary contained in any agreement or
instrument evidencing or relating to any Guaranteed Obligation;
(v) the existence of any claim, set-off or other rights which
the Borrower may have at any time against any Foreign Subsidiary, the
Administrative Agent, any Lender or any other person, whether in
connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against
any Foreign Subsidiary for any reason of any agreement or instrument
evidencing or relating to any Guaranteed Obligation, or any
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provision of applicable law or regulation purporting to prohibit the
payment by any Foreign Subsidiary of any Guaranteed Obligations; or
(vii) any other act or omission to act or delay of any kind by
any Foreign Subsidiary, the Administrative Agent, any Lender or any
other person or any other circumstance whatsoever which might, but for
the provisions of this section, constitute a legal or equitable
discharge of the Borrower's obligations under this section.
12.4. BORROWER OBLIGATIONS TO REMAIN IN EFFECT; RESTORATION. The
Borrower's obligations under this section shall remain in full force and effect
until the Commitments shall have terminated and the principal of and interest on
the Notes and all other amounts payable by the Borrower under the Credit
Documents shall have been paid in full. If at any time any payment of any of the
Guaranteed Obligations of any Foreign Subsidiary in respect of any Guaranteed
Obligations is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of such Foreign Subsidiary, the
Borrower's obligations under this section with respect to such payment shall be
reinstated at such time as though such payment had been due but not made at such
time.
12.5. WAIVER OF ACCEPTANCE, ETC. The Borrower irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any Foreign Subsidiary or any other person, or against any
collateral or guaranty of any other person.
12.6. SUBROGATION. Until the indefeasible payment in full of all of the
Obligations and the termination of the Commitments of the Lenders hereunder, the
Borrower shall have no rights, by operation of law or otherwise, upon making any
payment under this section to be subrogated to the rights of the payee against
any Foreign Subsidiary with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by any Foreign Subsidiary in respect
thereof.
12.7. EFFECT OF STAY. In the event that acceleration of the time for
payment of any amount payable by any Foreign Subsidiary under any Guaranteed
Obligation is stayed upon insolvency, bankruptcy or reorganization of such
Foreign Subsidiary, all such amounts otherwise subject to acceleration under the
terms of any applicable agreement or instrument evidencing or relating to any
Guaranteed Obligation shall nonetheless be payable by the Borrower under this
section forthwith on demand by the Administrative Agent.
SECTION 13. MISCELLANEOUS.
13.1. PAYMENT OF EXPENSES ETC. The Borrower agrees to: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the negotiation, preparation, execution and delivery of the Credit Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of Jones, Day, Reavis & Pogue, special counsel to the
Administrative Agent), and of the Administrative Agent and each of the Lenders
in connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and disbursements of counsel for the Administrative Agent and for each of
the Lenders); (ii) in the event of the bankruptcy, insolvency, rehabilitation or
other similar proceeding in respect of the Borrower or any of its Subsidiaries,
pay all costs of collection and defense, including reasonable attorneys' fees in
connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable together
with all required service or use taxes; (iii) pay and hold each of the Lenders
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and (iv) indemnify each Lender, its officers,
directors, employees, representatives and agents (collectively, the
"INDEMNITEES") from and hold each of them harmless against any and all losses,
liabilities, claims,
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damages or expenses reasonably incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of (a) any investigation,
litigation or other proceeding (whether or not any Lender is a party thereto)
related to the entering into and/or performance of any Credit Document or the
use of the proceeds of any Loans hereunder or the consummation of any
transactions contemplated in any Credit Document, other than any such
investigation, litigation or proceeding arising out of transactions solely
between any of the Lenders or the Administrative Agent, transactions solely
involving the assignment by a Lender of all or a portion of its Loans and
Commitment, or the granting of participations therein, as provided in this
Agreement, or arising solely out of any examination of a Lender by any
regulatory authority having jurisdiction over it, or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or on
the surface or subsurface of any Real Property owned, leased or at any time
operated by the Borrower or any of its Subsidiaries, the release, generation,
storage, transportation, handling or disposal of Hazardous Materials at any
location, whether or not owned or operated by the Borrower or any of its
Subsidiaries, if the Borrower or any such Subsidiary could have or is alleged to
have any responsibility in respect thereof, the non-compliance of any Real
Property with foreign, federal, state and local laws, regulations and ordinances
(including applicable permits thereunder) applicable to any Real Property, or
any Environmental Claim asserted against the Borrower or any of its
Subsidiaries, in respect of any Real Property owned, leased or at any time
operated by the Borrower or any of its Subsidiaries, including, in each case,
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the negligence or willful misconduct of the person
to be indemnified or of any other Indemnitee who is such person or an Affiliate
of such person). To the extent that the undertaking to indemnify, pay or hold
harmless any person set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrower shall make the
maximum contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
13.2. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender (including, without limitation, by
branches and agencies of such Lender wherever located) to or for the credit or
the account of the Borrower against and on account of the Obligations and
liabilities of the Borrower to such Lender under this Agreement or under any of
the other Credit Documents, including, without limitation, all interests in
Obligations purchased by such Lender pursuant to section 13.4(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such
Lender shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
13.3. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission or cable communication)
and mailed, telegraphed, telexed, transmitted, cabled or delivered, (a) if to
the Borrower, at 220 Park Drive, Chardon, Ohio 44024, attention: Stuart D.
Neidus, Executive Vice President & Chief Financial Officer (facsimile: (216)
286-2206); (b) if to any Lender at its address specified for such Lender on
Annex I hereto; (c) if to the Administrative Agent, at its Notice Address; or
(d) at such other address as shall be designated by any party in a written
notice to the other parties hereto. All such notices and communications shall be
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, and shall be effective when received.
13.4. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, PROVIDED that no Borrower may assign or
transfer any of its rights or obligations hereunder without the prior written
consent of all the Lenders. Each Lender may at any time grant participations in
any of its rights hereunder or under any of the Notes to another financial
institution or any other "accredited investor" (as defined in SEC Regulation D),
PROVIDED that in the case of any such participation, (i) the participant shall
not have any rights under this
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Agreement or any of the other Credit Documents, including rights of consent,
approval or waiver (the participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto), (ii) such Lender's
obligations under this Agreement (including, without limitation, its Commitment
hereunder) shall remain unchanged, (iii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iv) such Lender shall remain the holder of any Note for all purposes of this
Agreement and (v) the Borrower, the Administrative Agent, and the other Lenders
shall continue to deal solely and directly with the selling Lender in connection
with such Lender's rights and obligations under this Agreement, and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation, except that the participant shall be entitled to the
benefits of sections 2.10, 2.11 and 5.4 of this Agreement to the extent that
such Lender would be entitled to such benefits if the participation had not been
entered into or sold, and, PROVIDED FURTHER, that no Lender shall transfer,
grant or sell any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (x) extend the
final scheduled maturity of the Loans in which such participant is participating
(it being understood that any waiver of the making of, or the application of any
amortization payment or other prepayment or the method of any application of any
prepayment to the amortization of the Loans shall not constitute an extension of
the final maturity date thereof), or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of any mandatory prepayment
or a mandatory reduction in the Total Commitment, or a mandatory prepayment,
shall not constitute a change in the terms of any Commitment) or (y) consent to
the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement.
(b) Notwithstanding the foregoing, assignments under section 2.4(c)
shall be permitted, and (x) any Lender may assign all or a portion of its Loans
and/or Commitments, which does not have to be PRO RATA among the Facilities, and
its rights and obligations hereunder to another Lender that is not a Defaulting
Lender, or to an Affiliate of any Lender (including itself) which is not a
Defaulting Lender which is a commercial bank, financial institution or other
"accredited investor" (as defined in SEC Regulation D), and (y) any Lender may
assign all, or if less than all, a portion equal to at least $10,000,000 in the
aggregate for the assigning Lender or assigning Lenders, of its Revolving Loans
and/or Commitments and its rights and obligations hereunder, which assignment
does not have to be PRO RATA between the Facilities, to one or more Eligible
Transferees, each of which assignees shall become a party to this Agreement as a
Lender by execution of an Assignment Agreement, PROVIDED that, (i) at the time
of any such assignment Annex I shall be deemed modified to reflect the
Commitments of such new Lender and of the existing Lenders, (ii) upon surrender
of the old Revolving Notes, new Revolving Notes will be issued, at the
Borrower's expense, to such new Lender and to the assigning Lender, such new
Revolving Notes to be in conformity with the requirements of section 2.5 (with
appropriate modifications) to the extent needed to reflect the revised
Commitments, (iii) in the case of clause (y) only, the consent of the
Administrative Agent and each Letter of Credit Issuer shall be required in
connection with any such assignment (which consent shall not be unreasonably
withheld or delayed), and (iv) the Administrative Agent shall receive at the
time of each such assignment, from the assigning or assignee Lender, the payment
of a non-refundable assignment fee of $3,000 and, PROVIDED FURTHER, that such
transfer or assignment will not be effective until recorded by the applicable
Agent on the Lender Register maintained by it as provided herein. To the extent
of any assignment pursuant to this section 13.4(b), the assigning Lender shall
be relieved of its obligations hereunder with respect to its assigned
Commitments. At the time of each assignment pursuant to this section 13.4(b) to
a person which is not already a Lender hereunder and which is not a United
States person (as such term is defined in section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Lender shall provide to the
Borrower and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable a Section 5.4(b)(ii) Certificate) described in section
5.4(b). To the extent that an assignment of all or any portion of a Lender's
Commitment and related outstanding Obligations pursuant to this section 13.4(b)
would, at the time of such assignment, result in increased costs under section
2.10 from those being charged by the respective assigning Lender prior to such
assignment, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to any other increased costs of
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the type described above resulting from changes after the date of the respective
assignment). Nothing in this section 13.4(b) shall prevent or prohibit any
Lender from pledging its Notes or Loans to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
(c) Notwithstanding the foregoing, each Lender may assign to one or
more banks or other entities any Competitive Bid Note or Notes held by it. In
addition, each Lender (other than the Designated Bidders) may designate one or
more banks or other entities to have a right to make Competitive Bid Advances as
a Lender pursuant to section 2.5; PROVIDED, HOWEVER, that (i) no such Lender
shall be entitled to make more than three such designations, (ii) each such
Lender making one or more of such designations shall retain the right to make
Competitive Bid Loans as a Lender pursuant to section 2.5, (iii) each such
designation shall be to a Designated Bidder and (iv) the parties to each such
designation shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Lender Register, a Designation Agreement. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Designation Agreement, the designee thereunder shall be a
party hereto with a right to make Competitive Bid Loans as a Lender pursuant to
section 2.5 and the obligations related thereto.
(d) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower or any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
section 7.8(a) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into the
Designation Agreement; (iv) such designee will, independently and without
reliance upon the Administrative Agent, such designating Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such designee confirms that it is a Designated
Bidder; (vi) such designee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii) such
designee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(e) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Administrative Agent shall, if such Designation Agreement has been completed
and is substantially in the form of Exhibit F hereto, (i) accept such
Designation Agreement, (ii) record the information contained therein in the
Lender Register and (iii) give prompt notice thereof to the Borrower.
(f) Notwithstanding any other provisions of this section 13.4, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(g) Each Lender initially party to this Agreement hereby represents,
and each person that became a Lender pursuant to an assignment permitted by this
section 13.4 will, upon its becoming party to this Agreement, represent that it
is a commercial lender, other financial institution or other "accredited"
investor (as defined in SEC Regulation D) which makes or acquires loans in the
ordinary course of its business and that it will make or acquire Loans for its
own account in the ordinary course of such business, PROVIDED that subject to
the preceding sections 13.4(a) and (b), the disposition of any promissory notes
or other evidences of or interests in Indebtedness held by such Lender shall at
all times be within its exclusive control.
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13.5. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Administrative Agent or any Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Lender would otherwise have. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand.
13.6. PAYMENTS PRO RATA. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations, it shall distribute such payment to the Lenders
(other than any Lender that has expressly waived in writing its right to receive
its PRO RATA share thereof) PRO RATA based upon their respective shares, if any,
of the Obligations with respect to which such payment was received. As to any
such payment received by the Administrative Agent prior to 1:00 P.M. (local time
at its Payment Office) in funds which are immediately available on such day, the
Administrative Agent will use all reasonable efforts to distribute such payment
in immediately available funds on the same day to the Lenders as aforesaid.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount, PROVIDED that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding sections 13.6(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Lenders which are not Defaulting Lenders, as opposed to
Defaulting Lenders.
13.7. CALCULATIONS: COMPUTATIONS. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders); PROVIDED, that if at any time the computations
determining compliance with sections 5.2(b) and 9 utilize accounting principles
different from those utilized in the financial statements furnished to the
Lenders, such computations shall set forth in reasonable detail a description of
the differences and the effect upon such computations.
(b) All computations of interest on Eurocurrency Loans hereunder and
all computations of Facility Fees, Letter of Credit Fees and other Fees
hereunder shall be made on the actual number of days elapsed over a year of 360
days; and all computations of interest on Prime Rate Loans hereunder shall be
made on the actual number of days elapsed over a year of 364 or 365 days, as the
case may be.
13.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO. TO THE FULLEST
EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO
72
<PAGE> 79
ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO GOVERNS
THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal action or
proceeding with respect to this Agreement or any other Credit Document may be
brought in the Court of Common Pleas of Cuyahoga County, Ohio, or of the United
States for the Northern District of Ohio, and, by execution and delivery of this
Agreement, each Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Borrower hereby further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Borrower at its address for notices pursuant to section 13.3,
such service to become effective 30 days after such mailing or at such earlier
time as may be provided under applicable law. Nothing herein shall affect the
right of the Administrative Agent or any Lender to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
(b) Each Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in section 13.8(a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement, the other Credit Documents or the transactions
contemplated hereby or thereby.
13.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10. EFFECTIVENESS. This Agreement shall become effective on the date
(the "EFFECTIVE DATE") on which each Borrower and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at the Notice Office of the
Administrative Agent or, in the case of the Lenders, shall have given to the
Administrative Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
13.11. HEADINGS DESCRIPTIVE. The headings of the several sections and
other portions of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
13.12. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof
or thereof may be changed, waived, discharged or terminated UNLESS such change,
waiver, discharge or termination is in writing signed by the Borrower and the
Required Lenders, PROVIDED that no such change, waiver, discharge or termination
shall, without the consent of each Lender (other than a Defaulting Lender)
affected thereby, (i) extend any interim or final maturity date provided for
herein (including any extension of any interim maturity date to be effected in
accordance with section 4.4 hereof) applicable to a Loan or a Commitment (it
being understood that any waiver of the making of, or application of any
prepayment of or the method of application of any amortization payment or other
prepayment to, the amortization of, the Loans shall not constitute an extension
of such final maturity thereof), reduce the rate or extend the time of payment
of interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, or increase the Commitment of any Lender over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of any mandatory prepayment or a mandatory reduction in
the Total Commitment shall not constitute a change in the terms of any
Commitment of any Lender), (ii) release the Borrower from any obligations as a
guarantor of its Subsidiaries' obligations under any Credit Document or
Guaranteed Obligation, (iii) release any Credit Party from the Subsidiary
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<PAGE> 80
Guaranty, except in connection with a transaction permitted by section 9.2((g),
(iv) change the definition of the term "Change of Control" or any of the
provisions of section 5.2(f) which are applicable upon a Change of Control, (v)
amend, modify or waive any provision of this section 13.12, or section 11.7,
13.1, 13.4, 13.6 or 13.7(b), (vi) reduce the percentage specified in, or
otherwise modify, the definition of Required Lenders, or (vii) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement. No provision of section 3 or 11 may be amended without the
consent of (x) any Letter of Credit Issuer adversely affected thereby or (y) the
Administrative Agent, respectively.
13.13. SURVIVAL. All indemnities set forth herein including, without
limitation, in section 2.10, 2.11, 3.5, 11.7 and 13.1, shall survive the
execution and delivery of this Agreement and the making and repayment of Loans.
13.14. DOMICILE OF LOANS. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender, PROVIDED that the Borrower shall not be responsible for costs arising
under section 2.10 resulting from any such transfer (other than a transfer
pursuant to section 2.12) to the extent not otherwise applicable to such Lender
prior to such transfer.
13.15. CONFIDENTIALITY. Subject to section 13.4, the Lenders shall hold
all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any BONA FIDE transferee or participant in
connection with the contemplated transfer of any Loans or Commitment or
participation therein (PROVIDED that each such prospective transferee and/or
participant shall execute an agreement for the benefit of the Borrower with such
prospective transferor Lender containing provisions substantially identical to
those contained in this section 13.15), to its auditors, attorneys or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process, PROVIDED that, unless specifically prohibited by
applicable law or court order, each Lender shall notify the Borrower of any
request by any governmental agency or representative thereof (other than any
such request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information, and PROVIDED FURTHER that
in no event shall any Lender be obligated or required to return any materials
furnished by or on behalf of the Borrower or any of its Subsidiaries. Each
Borrower hereby agrees that the failure of a Lender to comply with the
provisions of this section 13.15 shall not relieve the Borrower of any of the
obligations to such Lender under this Agreement and the other Credit Documents.
13.16. LENDER REGISTER. The Borrower hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this section
13.16, to retain a copy of each Assignment Agreement and each Designation
Agreement delivered to and accepted by it and to maintain a register (the
"LENDER REGISTER") on or in which it will record the names and addresses of the
Lenders, and with respect to Lenders other than Designated Bidders the
Commitments from time to time of each of such Lenders to the Borrower, the Loans
made to the Borrower by each of such Lenders and each repayment or prepayment in
respect of the principal amount of such Loans of each such Lender. Failure to
make any such recordation, or (absent manifest error) any error in such
recordation, shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Lender, the transfer of the Commitments of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Commitments shall not be effective until such transfer is
recorded on the Lender Register maintained by the applicable Agent with respect
to ownership of such Commitments and Loans and prior to such recordation all
amounts owing to the transferor with respect to such Commitments and Loans shall
remain owing to the transferor. The registration of assignment or transfer of
all or part of any Commitments and Revolving Loans shall be recorded by the
Administrative Agent on the Lender Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment Agreement
pursuant to section 13.4(b). The registration of designations to make
Competitive Bid Loans shall be recorded by the Administrative Agent on the
Lender Register only upon the acceptance by the Administrative Agent of a
properly executed and delivered Designation Agreement pursuant to section
13.4(e). The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of
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<PAGE> 81
whatsoever nature which may be imposed on, asserted against or incurred by such
Agent in performing its duties under this section 13.16. The Lender Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
13.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS. The
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letters of
Credit. Neither any Letter of Credit Issuer nor any of its officers or directors
shall be liable or responsible for: (a) the use which may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by a
Letter of Credit Issuer against presentation of documents that do not comply
with the terms of a Letter of Credit, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, EXCEPT that the Borrower (or a Subsidiary which is the account party
in respect of the Letter of Credit in question) shall have a claim against a
Letter of Credit Issuer, and a Letter of Credit Issuer shall be liable to the
Borrower (or such Subsidiary), to the extent of any direct, but not
consequential, damages suffered by the Borrower (or such Subsidiary) which the
Borrower (or such Subsidiary) proves were caused by (i) such Letter of Credit
Issuer's willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (ii) such Letter of Credit Issuer's willful failure to make lawful
payment under any Letter of Credit after the presentation to it of documentation
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, a Letter of Credit Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation.
13.18. GENERAL LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any Lender, the Administrative Agent, any Letter of Credit Issuer or
any other person against the Administrative Agent, any Letter of Credit Issuer,
or any other Lender or the Affiliates, directors, officers, employees, attorneys
or agents of any of them for any damages other than actual compensatory damages
in respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
any of the other Credit Documents, or any act, omission or event occurring in
connection therewith; and each Borrower, each Lender, each Agent and each Letter
of Credit Issuer hereby, to the fullest extent permitted under applicable law,
waives, releases and agrees not to sue or counterclaim upon any such claim for
any special, consequential or punitive damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
13.19. NO DUTY. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Credit Documents
shall have the right to act exclusively in the interest of the applicable Agent
or such Lender, as the case may be, and shall have no duty of disclosure, duty
of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, to any of its Subsidiaries, or to any other person,
with respect to any matters within the scope of such representation or related
to their activities in connection with such representation.
13.20. LENDERS AND AGENT NOT FIDUCIARY TO BORROWER, ETC. The
relationship among the Borrower and its Subsidiaries, on the one hand, and the
Administrative Agent, each Letter of Credit Issuer and the Lenders, on the other
hand, is solely that of debtor and creditor, and the Administrative Agent, each
Letter of Credit Issuer and the Lenders have no fiduciary or other special
relationship with the Borrower and its Subsidiaries, and no term or provision of
any Credit Document, no course of dealing, no written or oral communication, or
other action, shall be construed so as to deem such relationship to be other
than that of debtor and creditor.
13.21. JUDGMENT CURRENCY. (a) The Credit Parties' obligations hereunder
and under the other Credit Documents to make payments in U.S. dollars shall not
be discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than U.S. dollars, except to
the extent that such tender or recovery results in the effective receipt by the
Administrative Agent or the applicable
75
<PAGE> 82
Lender of the full amount of U.S. dollars expressed to be payable to the
Administrative Agent or such Lender under this Agreement or the other Credit
Documents. If, for the purpose of obtaining or enforcing judgment against any
Credit Party in any court or in any jurisdiction, it becomes necessary to
convert into or from any currency other than U.S. dollars (such other currency
being hereinafter referred to as the "JUDGMENT CURRENCY") an amount due in U.S.
dollars, the conversion shall be made at the equivalent thereof in Dollars
determined as of the Business Day immediately preceding the day on which the
judgment is given (such Business Day being hereinafter referred to as the
"JUDGMENT CURRENCY CONVERSION DATE").
(b) If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, the Borrower covenants and agrees to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of U.S. dollars which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or judicial award at the
rate of exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the equivalent in Dollars for this
section, such amount shall include any premium and costs payable in connection
with the conversion into or from the Judgment Currency.
[The balance of this page is intentionally blank.]
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<PAGE> 83
13.22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties herein shall survive the making of Loans and the issuance of
Letters of Credit hereunder, the execution and delivery of this Agreement, the
Notes and the other documents the forms of which are attached as Exhibits
hereto, the issue and delivery of the Notes, any disposition thereof by any
holder thereof, and any investigation made by the Administrative Agent or any
Lender or any other holder of any of the Notes or on its behalf. All statements
contained in any certificate or other document delivered to the Administrative
Agent or any Lender or any holder of any Notes by or on behalf of the Borrower
or of its Subsidiaries pursuant hereto or otherwise specifically for use in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower hereunder, made as of the
respective dates specified therein or, if no date is specified, as of the
respective dates furnished to the Administrative Agent or any Lender.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
ESSEF CORPORATION
BY: /s/ STUART NEIDUS
---------------------------------------
VICE PRESIDENT
NATIONAL CITY BANK, INDIVIDUALLY
AND AS ADMINISTRATIVE AGENT
BY: /s/ DONALD B. HAYES, JR.
---------------------------------------
VICE PRESIDENT
ABN AMRO BANK N. V.,
INDIVIDUALLY AND AS
SYNDICATION AGENT
BY: /s/ KATHRYN C. TOTH
---------------------------------------
TITLE: GVP
AND: /s/ CHRISTOPHER HELNECI
---------------------------------------
TITLE: ASST. VICE PRESIDENT
77
<PAGE> 1
COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11
The computation of primary earnings per share, (restated where appropriate to
give effect to the 10% stock dividend distributed February 28, 1997) is as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31
----------------------- ------------------------
1997 1996 1997 1996
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding 5,283,470 5,697,104 5,283,236 5,699,356
Add equivalent shares for
stock options (a) 1,055,151 971,414 1,053,314 972,551
---------- ---------- ---------- ----------
Average shares outstanding
for computation of primary
earnings per share 6,338,621 6,668,518 6,336,550 6,671,907
========== ========== ========== ==========
Income from continuing $2,840,000 $2,727,000 $3,522,000 $3,609,000
operations ========== ========== ========== ==========
Net Income $2,840,000 $2,697,000 $3,522,000 $3,587,000
========== ========== ========== ==========
PRIMARY EARNINGS PER COMMON SHARE:
From continuing operations $ .45 $ .41 $ .56 $ .54
====== ====== ====== ======
Net Income $ .45 $ .40 $ .56 $ .54
====== ====== ====== ======
</TABLE>
(a) Computed under the "Treasury Stock Method" using the average market price
for the respective period.
<PAGE> 1
EXHIBIT 13
INDEPENDENT PUBLIC ACCOUNTANTS' REVIEW REPORT
To the Board of Directors of
Essef Corporation
Chardon, Ohio
We have reviewed the accompanying condensed consolidated balance sheet of Essef
Corporation and Subsidiaries (the "Company) as of March 31, 1997, and the
related condensed consolidated statements of operations for the three-month and
six-month periods ended March 31, 1997 and 1996 and the related condensed
consolidated statements of cash flows for the six-month periods ended March 31,
1997 and 1996. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of September 30,
1996, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented herein) and in our
report dated November 19, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of September 30, 1996
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
April 22, 1997
<PAGE> 1
EXHIBIT 15
INDEPENDENT PUBLIC ACCOUNTANTS' AWARENESS LETTER
May 13, 1997
To the Board of Directors
of Essef Corporation
220 Park Drive
Chardon, Ohio
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Essef Corporation and Subsidiaries for the periods ended March
31, 1997 and 1996, as indicated in our report dated April 22, 1997; because we
did not do an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, is
incorporated by reference in Registration Statement No. 33-17758 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,297
<SECURITIES> 0
<RECEIVABLES> 52,661
<ALLOWANCES> 0
<INVENTORY> 22,388
<CURRENT-ASSETS> 78,183
<PP&E> 85,650
<DEPRECIATION> (47,824)
<TOTAL-ASSETS> 137,625
<CURRENT-LIABILITIES> 42,778
<BONDS> 0
<COMMON> 22,491
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 137,625
<SALES> 55,283
<TOTAL-REVENUES> 55,283
<CGS> 39,016
<TOTAL-COSTS> 50,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 789
<INCOME-PRETAX> 4,369
<INCOME-TAX> 1,529
<INCOME-CONTINUING> 2,840
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,840
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
