FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1995
OR
[ ] 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 0-19768
THE SCOTTS COMPANY
(Exact name of registrant as specified in its charter)
Ohio
31-1199481
(State or other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
14111 Scottslawn Road
Marysville, Ohio 43041
(Address of principal executive offices)
(Zip Code)
(513) 644-0011
(Registrant's telephone number, including area code)
No change
(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 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest
practicable date.
18,667,064 Outstanding at May 8, 1995
Common Shares, voting, no par value
Page 1 of 163 pages
Exhibit Index at page 18
THE SCOTTS COMPANY AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Statements of Income - Three month and six
month periods ended April 2, 1994 and April 1, 1995 3
Consolidated Statements of Cash Flows - Six month periods
ended April 2, 1994 and April 1, 1995 4
Consolidated Balance Sheets - April 2, 1994,
April 1, 1995 and September 30, 1994 5
Notes to Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
Part II. Other Information
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security
Holders 14-15
Item 5. Other Information
16
Item 6. Exhibits and Reports on Form 8-K
16
Signatures 17
Exhibit Index 18
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE SCOTTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands except per share data)
Three Months Ended Six Months Ended
April 2 April 1 April 2 April 1
1994 1995 1994 1995
Net sales $207,424 $236,092 $275,750 $334,111
Cost of sales 109,100 123,890 146,464 177,410
Gross profit 98,324 112,202 129,286 156,701
Marketing 32,990 36,768 45,911 56,670
Distribution 24,888 30,479 35,864 45,019
General and administrative 9,331 6,997 14,341 12,964
Research and development 2,934 2,963 4,938 5,728
Other expenses, net 776 1,558 804 2,553
Income from operations 27,405 33,437 27,428 33,767
Interest expense 4,917 8,114 7,557 13,808
Income before taxes 22,488 25,323 19,871 19,959
Income taxes 9,475 10,509 8,415 8,282
Net income $ 13,013 $14,814 $11,456 $11,677
Net income per common share $ .69 $ .79 $ .61 $ .62
Weighted average number of
common shares outstanding 18,890 18,820 18,855 18,762
See Notes to Consolidated Financial Statements
Page 3
THE SCOTTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
April 2 April 1
1994 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $11,456 $11,677
Adjustments to reconcile net income
to net cash
used in operating activities:
Depreciation and amortization 10,777 11,908
Postretirement benefits 64 204
Net increase in certain
components of (120,160) (133,319)
working capital
Net change in other assets and
liabilities and other
adjustments 667 (504)
Net cash used in operating (97,196) (110,034)
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in plant and equipment, (12,436) (10,891)
net
Investment in software - (483)
Investment in Affiliate - (250)
Acquisition of Sierra, net of cash -
acquired (118,986) -
Net cash used in investing (131,422) (11,624)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under term debt 125,000 -
Payments on term and other debt (428) (1,197)
Revolving lines of credit and bank 106,295 118,378
line of credit, net
Issuance of Class A Common Stock 160 -
Deferred financing costs incurred - (275)
Net cash provided by 231,027 116,906
financing activities
Effect of exchange rate changes on cash (179) 676
Net increase (decrease) in cash 2,230 (4,076)
Cash at beginning of period 2,323 10,695
Cash at end of period $4,553 $6,619
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amount $3,005 $ 14,007
capitalized
Income taxes paid 9,164 996
Detail of entities acquired:
Fair value of assets acquired 144,501
Liabilities assumed (25,515)
Net cash paid for acquisition 118,986
See Notes to Consolidated Financial Statements
Page 4
THE SCOTTS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
ASSETS
April 2 April 1 September 30
1994 1995 1994
Current Assets:
Cash $4,553 $6,619 $10,695
Accounts receivable, less
allowances 200,763 252,509 115,772
of $2,784, $3,395 and $2,933,
respectively
Inventories 128,832 143,574 106,636
Prepaid and other assets 16,832 22,841 17,151
Total current assets 350,980 425,543 250,254
Property, plant and equipment, net 126,594 143,791 140,105
Patents and other intangibles, net 32,770 26,529 28,880
Goodwill 106,842 103,224 104,578
Other assets 4,957 9,755 4,767
Total Assets $622,143 $708,842 $528,584
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Revolving credit line $98,000 $39,852 $23,416
Current portion of term debt 20,417 - 3,755
Accounts payable 69,294 79,591 46,967
Accrued liabilities 33,425 24,258 31,167
Accrued taxes 7,990 22,331 4,383
Total current liabilities 229,126 166,032 109,688
Long-term debt, less current 205,917 324,630 220,130
portions
Postretirement benefits other than 26,710 27,218 27,014
pensions
Other liabilities 5,254 7,622 3,592
Total Liabilities 467,007 525,502 360,424
Shareholders' Equity:
Common Shares, no par value 211 211 211
Capital in excess of par value 193,618 193,155 193,450
Retained earnings 2,448 25,552 13,875
Cumulative translation gain 300 5,863 2,065
Treasury stock 2,415 shares at cost (41,441) (41,441) (41,441)
Total Shareholders' Equity 155,136 183,340 168,160
Total Liabilities and $ 622,143 $ 708,842 $528,584
Shareholders' Equity
See Notes to Consolidated Financial
Statements
Page 5
THE SCOTTS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation
The Scotts Company ("Scotts") and its wholly owned
subsidiaries, Hyponex Corporation ("Hyponex"), Republic
Tool and Manufacturing Corp. ("Republic") and Scott-
Sierra Horticultural Products Company ("Sierra"),
(collectively, the "Company"), are engaged in the
manufacture and sale of lawn care and garden products.
The Company's business is highly seasonal with
approximately 70% of sales occurring in the second and
third fiscal quarters.
The consolidated balance sheets as of April 2, 1994 and
April 1, 1995, the related consolidated statements of
income for the three and six month periods ended
April 2, 1994 and April 1, 1995 and the related
consolidated statements of cash flows for the six month
periods ended April 2, 1994 and April 1, 1995 are
unaudited; however, in the opinion of management, such
financial statements contain all adjustments necessary
for the fair presentation of the Company's financial
position and results of operations. Interim results
reflect all normal recurring adjustments and are not
necessarily indicative of results for a full year. The
interim financial statements and notes are presented as
specified by Regulation S-X of the Securities Exchange
Act of 1934, and should be read in conjunction with the
financial statements and accompanying notes in the
Company's fiscal 1994 Annual Report on Form 10-K.
2. Reclassifications
Certain reclassifications have been made to the prior
periods' financial statements to conform to April 1,
1995 presentation.
3. Inventories
(in thousands)
Inventories consisted of the following:
April 2 April 1 September 30
1994 1995 1994
Raw material $53,302 $56,326 $51,656
Finished products 75,530 87,248 54,980
Total Inventories $128,832 $143,574 $106,636
Page 6
THE SCOTTS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
4. Long-Term Debt
(in thousands)
9/30/94 4/1/95
Revolving Credit Line $53,416 $264,321
Senior Subordinated
Notes 99,221 99,267
($100 million face
amount)
Term Loan 93,598 -
Capital Lease 1,066 894
Obligations
247,301 364,482
Less current portions 27,171 39,852
$220,130 $324,630
On March 17, 1995, the Company entered into the Fourth
Amended and Restated Credit Agreement ("Agreement") with
Chemical Bank ("Chemical") and various participating
banks. The Agreement provides, on an unsecured basis,
up to $375 million to the Company, comprised of an
uncommitted competitive advance facility and a committed
revolving credit facility through the scheduled
termination date of March 31, 2000. The Agreement
contains a requirement limiting the maximum amount
borrowed to $225 million for a minimum of 30 consecutive
days each fiscal year. Expenses expected to be incurred
related to the Agreement are approximately $500,000 and
will be deferred.
Interest pursuant to the commercial paper/competitive
advance facility is determined by auction. Interest
pursuant to the revolving credit facility is at a
floating rate initially equal, at the Company's option,
to the Alternate Base Rate as defined in the Agreement
without additional margin or the Eurodollar Rate as
defined in the Agreement plus a margin of .3125% per
annum, which margin may be decreased to .25% or
increased up to .625% based on the higher of the
unsecured debt ratings of the Company. Applicable
interest rates for the facilities ranged from 6.33% to
9.00% at April 1, 1995. The Agreement provides for the
payment of an annual administration fee of $100,000 and
a facility fee of .1875% per annum, which fee may be
reduced to .15% or increased up to .375% based on the
higher of the unsecured debt ratings of the Company.
The Agreement contains certain financial and operating
covenants, including maintenance of interest coverage
ratios, maintenance of consolidated net worth, and
restrictions on additional indebtedness and capital
expenditures. The Company was in compliance with all
required covenants at April 1, 1995.
Maturities of term debt for the next five years are as
follows: (in thousands)
Fiscal Year
1995 $ 39,592
1996 404
1997 149
1998 68
1999 -
2000 and thereafter 325,000
Page 7
THE SCOTTS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
5. Foreign Exchange Instruments
The Company enters into forward foreign exchange and
currency options contracts to hedge its exposure to
fluctuations in foreign currency exchange rates. These
contracts generally involve the exchange of one currency
for a second currency at some future date.
Counterparties to these contracts are major financial
institutions. Gains and losses on these contracts
generally offset gains and losses on the assets,
liabilities and transactions being hedged.
Realized and unrealized foreign exchange gains and
losses are recognized and offset foreign exchange gains
or losses on the underlying exposures. Unrealized gains
and losses that are designated and effective as hedges
on such transactions are deferred and recognized in
income in the same period as the hedged transactions.
The net unrealized gain deferred totaled $646,715 at
April 1, 1995.
At April 1, 1995, the Company's European operations had
foreign exchange risk in various European currencies
tied to the Dutch guilder. These currencies are: the
Australian Dollar, Belgian Franc, German Mark, Spanish
Peseta, French Franc, British Pound and the U. S.
Dollar. The Company's U. S. operations have foreign
exchange rate risk in the Canadian Dollar, the Dutch
Guilder and the British Pound which are tied to the
U. S. Dollar. As of April 1, 1995, the Company had
outstanding forward foreign exchange contracts with a
contract value of approximately $26.7 million and
outstanding purchased currency options with a contract
value of approximately $3.3 million. These contracts
have maturity dates ranging from April 6, 1995 to July
13, 1995.
6. Acquisitions
Effective December 16, 1993 the Company completed the
acquisition of Grace-Sierra Horticultural Products
Company now known as Scotts-Sierra Horticultural
Products Company (all further references will be made as
"Sierra"). Sierra is a leading international
manufacturer and marketer of specialty fertilizers and
related products for the nursery, greenhouse, golf
course and consumer markets. Sierra manufactures
controlled-release fertilizers in the United States and
the Netherlands, as well as water-soluble fertilizers
and specialty organics in the United States.
Approximately one-quarter of Sierra's net sales are
derived from European and other international markets;
approximately one-quarter of Sierra's assets are
internationally based.
On January 26, 1995, the Company, the shareholders (the
"Miracle-Gro Shareholders") of Stern's Miracle-Gro
Products, Inc. and affiliated companies (the "Miracle-
Gro Companies"), and the Miracle Gro Companies entered
into an Agreement and Plan of Merger (the "Miracle-Gro
Agreement"). On April 6, 1995, the Company's
shareholders approved certain matters necessary to
permit the consummation of the transactions contemplated
by the Miracle-Gro Agreement. Such transactions still
require the approval of the Federal Trade Commission
(the "FTC") which is currently having discussions with
the Company. The Company expects a decision by the FTC
during May 1995. The Miracle-Gro Agreement, as amended,
provides that, upon consummation of the transactions
contemplated thereby, the Company will issue $195
million face amount of convertible preferred stock and
warrants to purchase three million common shares. The
convertible preferred stock will be convertible into
common shares at $19 per share (subject to adjustment),
will pay annual dividends at a rate of 5.0%, will not be
subject to redemption by the Company for five years and
will be subject to certain restrictions on transfer.
The warrants will be exercisable over eight and one half
years at prices ranging from $21 to $29 per share. The
transactions contemplated by the Miracle-Gro Agreement,
as amended, will be accounted for as a purchase, of
which the fair value was estimated to be approximately
$200 million as of January 26, 1995.
Page 8
THE SCOTTS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following pro forma results of operations give
effect to the above Sierra acquisition as if it had
occurred on October 1, 1992 and Miracle-Gro merger as if
it had occurred on October 1, 1993.
Six Months Ended
(in thousands, except per
share amounts)
April 2 April 1
1994 1995
Net sales $ 349,979 $ 393,618
Net income $ 19,179 $ 18,394
Net income per common
share - $ .66 $ .63
primary and fully-
diluted
Miracle-Gro contributes net sales of $59,507 and
$53,403, net income of $6,717 and $7,830 and net income
per common share of $.01 and $.06 for the six months ended
April 1, 1995 and April 2, 1994, respectively. For purposes
of computing earnings per share, the convertible preferred
stock is considered a common stock equivalent. Pro forma
primary and fully-diluted earnings per share for the six
months ended April 1, 1995 and April 2, 1994 are calculated
using the weighted average common shares outstanding for
Scotts of 18,762 and 18,855, respectively and the common shares
that would have been issued assuming conversion of preferred
stock at the beginning of the year to 10,263 common shares.
The computation of pro forma primary earnings per share assuming
reduction of earnings for preferred dividends and no conversion
of preferred stock was anti-dilutive.
The pro forma information provided does not purport to
be indicative of actual results of operations that would
have occurred had the Sierra acquisition and Miracle-Gro
merger occurred on October 1, 1992 and October 1, 1993,
respectively, and is not intended to be indicative of
future results or trends.
7. Contingencies
The Company is involved in various lawsuits and claims
which arise in the normal course of business. In the
opinion of management, these claims individually and in
the aggregate are not expected to result in a material
adverse effect on the Company's financial position or
result of operations, however, there can be no assurance
that future quarterly or annual operating results will
not be materially affected by final resolution of these
matters. The following details the more significant of
these matters.
The Company has been involved in studying a landfill to
which it is believed some of the Company's solid waste
had been hauled in the 1970s. In September 1991, the
Company was named by the Ohio Environmental Protection
Agency ("Ohio EPA") as a Potentially Responsible Party
("PRP") with respect to this landfill. Pursuant to a
consent order with the Ohio EPA, the Company together
with four other PRPs identified to date, is
investigating the extent of contamination at the
landfill and developing a remediation program.
In July 1990, the Company was directed by the Army Corps
of Engineers (the "Corps") to cease peat harvesting
operations at its New Jersey facility. The Corps has
alleged that the peat harvesting operations were in
violation of the Clean Water Act ("CWA"). The United
Page 9
THE SCOTTS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
States Department of Justice has commenced a legal
action to seek a permanent injunction against peat
harvesting at this facility and to recover civil
penalties under the CWA. This action had been suspended
while the parties engaged in discussion to resolve the
dispute. Those discussions have not resulted in a
settlement and accordingly the action has been
reinstated. The Company intends to defend the action
vigorously but if the Corps' position is upheld the
Company could be prohibited from further harvesting of
peat at this location and penalties could be assessed
against the Company. In the opinion of management, the
outcome of this action will not have a material adverse
effect on the Company's financial position or results of
operations. Furthermore, management believes the
Company has sufficient raw material supplies available
such that service to customers will not be adversely
affected by continued closure of this peat harvesting
operation.
Sierra has been named as a Potentially Responsible Party
("PRP") in an environmental contamination action in
connection with a landfill near Allentown, Pennsylvania.
By agreement with W. R. Grace-Conn., Sierra's liability
is limited to a maximum of $200,000 with respect to this
site. Based on estimates of the clean-up costs and that
the Company denies any liability in connection with this
matter, management believes that the ultimate outcome
will not have a material impact on the financial position
or results of operations of the Company.
Sierra is subject to potential fines in connection with
certain EPA labeling violations under the Federal
Insecticide, Fungicide and Rodenticide Act ("FIFRA").
The fines for such violations are based upon formulas as
stated in FIFRA. As determined by these formulas,
Sierra's maximum exposure for the violations is
approximately $810,000. The formulas allow for certain
reductions of the fines based upon achievable levels of
compliance. Based upon management's anticipated levels
of compliance, they estimate Sierra's liability to be
$200,000, which has been accrued in the financial
statements.
Page 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended April 1, 1995, versus Three Months Ended
April 2, 1994
Net sales increased 13.8% to $236,092,000. Consumer
Business Group sales of $181,975,000 increased by
approximately 15.1% resulting from sales volume increases
primarily in lawn fertilizers. Increased demand for seed,
organics and spreaders also contributed to the sales
increase, but to a lesser extent. Commercial Business Group
(previously referred to as the Professional Business Group)
sales of $34,610,000 increased by approximately 0.4%
reflecting a continuing trend by golf course customers to
order closer to spring usage. The peak Commercial selling
season is August to November. International sales increased
by approximately 30.9% to $19,507,000. Volume has been the
primary factor of the International sales increase
(approximately 19.4%) reflecting the continued positive
impact from the introduction of U.S. produced Scotts
products in the Sierra International distribution network.
In addition, sales were aided by favorable exchange rates
due to the weak dollar (approximately 11.5%).
Cost of sales for the three months ended April 1, 1995
comprised 52.5% of net sales, nearly flat with cost of sales
for the three months ended April 2, 1994, which represented
52.6%.
Operating expenses increased by approximately 11.1%
including increased marketing spending for national
advertising and promotion programs reflecting a continuing
commitment to supporting the brand and stimulating sales and
increased distribution expense related to increased sales
volume and higher freight rates. These increases were
partially offset by lower general and administrative
expenses due to synergies achieved from the integration of
Sierra.
Interest expense increased approximately 65%. The increase
is primarily the result of increased interest rates and a
modest increase in borrowing levels to support a higher
level of inventories and receivables resulting from
increases in sales.
Net income of $14,814,000 increased by $1,801,000 or
approximately 13.8%, as a result of increased operating
income offset in part by increased interest expense.
Six Months Ended April 1, 1995 versus Six Months Ended April
2, 1994
Net sales increased to $334,111,000, up approximately 21.2%.
Net sales included net sales for Sierra, which was acquired
by Scotts on December 16, 1993. On a pro forma basis,
assuming the acquisition had taken place on October 1, 1993,
net sales for the six months ended April 1, 1995 would have
increased by $37,535,000 or approximately 12.7%. Consumer
Business Group sales increased by approximately 17.5%,
resulting primarily from increased sales volume, a portion
of which relates to new pre-season promotion programs with
major retailers. Increased demand in lawn fertilizers and
to a lesser extent demand for seed, organics and spreaders
also contributed to the increase. Commercial Business Group
sales increased by 16.7% due to the inclusion of net sales
for Sierra. International sales increased by approximately
70.5% due to gains in these markets combined with continued
positive impact resulting from the introduction of U.S.
produced Scotts products into the Sierra International
distribution network (approximately 13.6%), the inclusion of
net sales for Sierra (41.9%) and favorable exchange rates
due to the weakening dollar (approximately 15%).
Page 11
Cost of sales represented 53.1% of net sales, flat with cost
of sales for the six months ended April 2, 1994.
Operating expenses increased approximately 20.7% which was
proportional to the sales increase. On a pro forma basis,
including Sierra from October 1, 1993, operating expenses
increased by approximately 10.1% reflecting higher marketing
expense and distribution expense related to higher sales
partially offset by lower general and administrative
expenses due to synergies of the Sierra integration.
Interest expense increased approximately 82.7%. The
increase was caused by higher interest rates on the floating-
rate bank debt and the 9 7/8% Senior Subordinated notes
compared with the floating rate bank debt the notes
replaced, borrowings to fund the Sierra acquisition, which
were outstanding for the full six months ended April 1,
1995, as compared to 3.5 months for the previous period and
an increase in borrowing levels to support increases in
accounts receivable and inventories resulting from increased
sales.
Net income of $11,677,000 increased by $221,000. The
increase was primarily attributable to increased operating
income offset by the higher interest expense discussed
above.
Financial Position as of April 1, 1995
Capital expenditures for the year ending September 30, 1995
are expected to be approximately $23,000,000, which will be
financed with cash provided by operations and utilization of
existing credit facilities.
The seasonal volume of the Company's business is reflected
in working capital requirements. Working capital
requirements are greatest from November through May, the
peak production period, and are at their highest in March.
Working capital needs are relatively low in the summer
months.
Current assets increased by $175,289,000 compared with
September 30, 1994, and by $74,563,000 compared with April
2, 1994. The increase compared with September 30, 1994 is
primarily attributable to the seasonal nature of Scotts'
business, with inventory and accounts receivable levels
generally being higher at the end of March relative to
September. The increase as compared with April 2, 1994 is
primarily due to higher level of receivables which is
consistent with the year-to-year sales increase and higher
inventory levels needed to support increased sales.
Current liabilities increased by $56,344,000 compared with
September 30, 1994 and decreased by $63,094,000 compared
with April 2, 1994. The increase compared with September
30, 1994 is primarily caused by the seasonality of Scotts'
business. The decrease compared with April 2, 1994 is
caused by a decrease in short term debt which resulted from
the requirements of the Fourth Amended and Restated Credit
Agreement ("the Agreement") dated as of March 17, 1995
entered into by the Company with Chemical Bank and various
participating banks which requires the Company to reduce
revolving credit borrowings to no more than $225,000,000 for
30 consecutive days each year as compared to $30,000,000 in
the Company's prior amended credit Agreement resulting in a
reclassification from short-term to long-term. The decrease
was partially offset by an increase in accounts payable
needed to support the increase in sales.
Long-term debt increased by $104,500,000 compared with
September 30, 1994 and increased $118,713,000 compared with
April 2, 1994. The increase compared with September 30,
1994 is caused by the seasonality of the business. The
increase compared with April 2, 1994 is caused by the
reclassification from short-term to long-term of the
borrowings under the Agreement discussed above and a
moderate increase in borrowings to support increases in
accounts receivable and inventories resulting from increased
sales.
Page 12
Shareholders' equity increased $15,180,000 compared with
September 30, 1994 primarily due to $11,677,000 of net
income for the six months ended April 1, 1995 and to the
change in the cumulative foreign currency adjustment related
to the translation of the assets and liabilities of foreign
subsidiaries to U.S. dollars. Shareholders' equity
increased $28,204,000 compared with April 2, 1994 primarily
due to net income of $23,104,000 for the twelve months ended
April 1, 1995 and the change in the cumulative foreign
currency adjustment related to the translation of the assets
and liabilities of foreign subsidiaries to U.S. dollars.
The primary sources of liquidity for the Company are funds
generated by operations and borrowings under the Company's
Credit Agreement. The Credit Agreement was amended in March
1995. As amended, the Credit Agreement provides, on an
unsecured basis, up to $375 million through March 31, 2000,
and does not contain a term loan facility. Additional
information on the Credit Agreement is described in Footnote
No. 4 on page 7 of this report.
The Company has foreign exchange rate risk related to
international earnings and cash flows. A management program
was designed to minimize the exposure to adverse currency
impacts on the cash value of the Company's non-local
currency receivables and payables, as well as the associated
earnings impact. Beginning in January 1995, the Company
entered into forward foreign exchange contracts and
purchased currency options tied to the economic value of
receivables and payables and expected cash flows denominated
in non-local foreign currencies. Management anticipates
that these financial instruments will act as an effective
hedge against the potential adverse impact of exchange rate
fluctuations on the Company's results of operations,
financial condition and liquidity. It is recognized,
however, that the program will minimize but not completely
eliminate the Company's exposure to adverse currency
movements.
As of April 1, 1995, the Company's European operations had
foreign exchange risk in various European currencies tied to
the Dutch guilder. These currencies are: the Australian
Dollar, Belgian Franc, German Mark, Spanish Peseta, French
Franc, British Pound and the U. S. Dollar. The Company's
U.S. operations have foreign exchange rate risk in the
Canadian Dollar, Dutch Guilder and the British Pound which
are tied to the U.S. Dollar. As of April 1, 1995,
outstanding foreign exchange forward contracts had a
contract value of approximately $26.7 million and
outstanding purchased currency options had a contract value
of approximately $3.3 million. These contracts have
maturity dates ranging from April 6, 1995 to July 13, 1995.
The pending transactions involving the Company and Stern's
Miracle-Gro Products, Inc. and its affiliated companies are
described in Footnote No. 6 to the Company's Consolidated
Financial Statements on pages 8 and 9 of this Report. Any
additional working capital needs resulting from those
transactions are expected to be financed through funds
available under the amended credit Agreement described
above.
In the opinion of the Company's management, cash flows from
operations and capital resources will be sufficient to meet
future debt service and working capital needs.
Accounting Issues
In March 1995 the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long Lived Assets
and for Long Lived Assets to be Disposed of" which
establishes accounting standards for the impairment of long
lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used for long lived
assets and certain identifiable intangibles to be disposed
of. The Company's current policies are in accordance with
SFAS No. 121.
Page 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Please see the information provided in Footnote 7 on
page 9 of this Report, which information is
incorporated herein by reference.
Item 2-3.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was
held in Dublin, Ohio on April 6, 1995. The meeting was
held for the purpose of electing a board of directors
and ratifying several proposals.
The results of the vote of the shareholders for each of
the proposals is as follows:
A. The proposal to elect three directors for terms of
one year, to elect three directors for terms of two
years and to elect three directors for terms of
three years:
Nominee Votes For Withheld Not Voted
For terms of one year:
Theodore Host 14,230,441 171,990 4,264,633
Karen Gordon 14,230,791 171,640 4,264,633
Mills
Tadd C. Seitz 14,232,781 169,650 4,264,633
For terms of
two years:
James B Beard 14,232,781 169,650 4,264,633
John M. 14,232,781 169,650 4,264,633
Sullivan
L. Jack Van 14,232,781 169,650 4,264,633
Fossen
For terms of
three years:
John S. 14,230,413 172,018 4,264,633
Chamberlin
Joseph P. 14,230,413 172,018 4,264,633
Flannery
Donald A. 14,232,781 169,650 4,264,633
Sherman
Each of the foregoing persons was elected as a director
of the Company.
B. The proposal to approve the acquisition of one-
third or more but less than a majority of the
voting power of the Company by the shareholders of
Stern's Miracle-Gro Products, Inc., Stern's
Nurseries, Inc., Miracle-Gro Lawn Products Inc.,
and Miracle-Gro Products Limited.
Broker
For Against Abstain Non Votes
12,386,583 113,192 70,473 6,096,816
This proposal was approved.
Page 14
C. The proposal to amend Article FOURTH of the Amended
Articles of Incorporation of the Company to
increase the authorized number of common shares
from 35,000,000 shares to 50,000,000 shares and to
authorize a class of 195,000 voting preferred
shares designated Class A Convertible Preferred
Stock.
Broker
For Against Abstain Non Votes
14,868,490 390,083 174,454 3,234,037
This proposal was approved.
D. The proposal to amend the Amended Articles of
Incorporation of the Company to add a new Article
NINTH - a procedure for further amending the
Amended Articles of Incorporation.
Broker
For Against Abstain Non Votes
12,499,636 1,800,798 174,599 4,192,031
This proposal was approved.
E. The proposal to amend Subparagraph (A) and (B) of
Section 2.02 of the Code of Regulations of the
Company to change the number and classification of
Directors and term of office.
Broker
For Against Abstain Non Votes
11,208,636 1,159,857 201,755 6,096,816
This proposal was approved.
F. The proposal to amend Subparagraph (C) of Section
2.02 of the Code of Regulations of the Company in
order to eliminate the authority of the directors
to increase the number of directors beyond twelve
directors.
Broker
For Against Abstain Non Votes
14,659,401 460,251 95,765 3,451,647
This proposal was approved.
G. The proposal to amend Section 6.01 of the Code of
Regulations of the Company to increase to two-
thirds the vote to amend Sections 1.02, 2.02 and
6.01 of the Code of Regulations.
Broker
For Against Abstain Non Votes
8,482,140 2,536,629 207,633 7,440,662
This proposal was defeated.
Page 15
Item 5. Other Information.
On January 26, 1995, the Company, the Miracle-Gro
Shareholders and the Miracle Gro Companies entered into
the Miracle-Gro Agreement. On April 6, 1995, the
Company's shareholders approved certain matters
necessary to permit the consummation of the
transactions contemplated by the Miracle-Gro Agreement.
Such transactions still require the approval of the FTC
which is currently having discussions with the Company.
A decision by the FTC should be made during May 1995.
The Miracle-Gro Agreement, as amended, provides that,
upon consummation of the transactions contemplated
thereby, the Company will issue $195 million face
amount of convertible preferred stock and warrants to
purchase three million common shares. The convertible
preferred stock will be convertible into common shares
at $19 per share (subject to adjustment), will pay
annual dividends at a rate of 5.0%, will not be subject
to redemption by the Company for five years and will be
subject to certain restrictions on transfer. The
warrants will be exercisable over eight and one half
years at prices ranging from $21 to $29 per share. The
transactions contemplated by the Miracle-Gro Agreement,
as amended, will be accounted for as a purchase, of
which the fair value was estimated to be approximately
$200 million as of January 26, 1995.
Item 6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index at page 18 for a list of the
exhibits included herewith.
(b) No reports on Form 8-K were filed during the
fiscal quarter ended
April 1, 1995.
Page 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE SCOTTS COMPANY
Date May 11, 1995 /s/ Paul D. Yeager
Paul D. Yeager
Executive Vice President
Chief Financial Officer
Principal Accounting Officer
Page 17
THE SCOTTS COMPANY
QUARTERLY REPORT ON FORM 10-Q FOR
FISCAL QUARTER ENDED APRIL 1, 1995
EXHIBIT INDEX
Exhibit Page
Number Description Number
2(a) Agreement and Plan of Merger Incorporated
dated as of January 26, 1995 herein by
among Stern's Miracle-Gro reference to
Products, Inc., Stern's the
Nurseries, Inc., Miracle-Gro Registration
Lawn Products Inc., and Statement on
Miracle-Gro Products Limited Form S-4 of The
(the "Miracle-Gro Scotts Company
Constituent Companies"), filed with the
Horace Hagedorn, James Securities and
Hagedorn, Katherine Hagedorn Exchange
Littlefield, Paul Hagedorn, Commission on
Peter Hagedorn, Robert February 4,
Hagedorn, Susan Hagedorn and 1995
John Kenlon, (the "Miracle- (Registration
Gro Shareholders"), The No.
Scotts Company and ZYX 33-57595)
Corporation (Exhibit 2)
2(b) Amendment No. 1, dated as of Pages 19
May 1, 1995, among the through 31
Miracle-Gro Constituent
Companies, the Miracle-Gro
Shareholders, The Scotts
Company, ZYX Corporation,
Hagedorn Partnership, L.P.
and Community Funds, Inc.
4(a) Amended Articles of Incorporated
Incorporation of The Scotts herein by
Company as filed with the reference to
Ohio Secretary of State on the Annual
September 20, 1994 Report on Form
10-K for the
fiscal year
ended
September 30,
1994 of The
Scotts Company
(File No. 0-
19768)
(Exhibit 3(a))
4(b) Certificate of Amendment by Pages 32
Shareholders to the Articles through 41
of Incorporation of The
Scotts Company as filed with
the Ohio Secretary of State
on May 4, 1995
4(c) Regulations of The Scotts Pages 42
Company (reflecting through 58
amendments adopted by the
shareholders of The Scotts
Company on April 6, 1995)
4(d) Fourth Amended and Restated Pages 59
Credit Agreement dated as of through 161
March 17, 1995 among The
Scotts Company, Chemical
Bank, the lenders party
thereto and Chemical Bank,
as agent
11 Computation of Net Income Page 162
Per Common Share
27 Financial Data Schedule Page 163
Page 18
Amendment No. 1, dated as of May 1, 1995, among Stern's Miracle-Gro
Products, Inc., Stern's Nurseries, Inc., Miracle-Gro Lawn Products,
Inc., Miracle-Gro Products Limited, James Hagedorn, Katherine Hagedorn
Littlefield, Paul Hagedorn, Peter Hagedorn, Robert Hagedorn, Susan
Hagedorn, Horace Hagedorn, John Kenlon, The Scotts Company, ZYX
Corporation, Hagedorn Partnership, L.P. and Community Funds, Inc.
AMENDMENT No. 1
Amendment No. 1, dated as of May 1, 1995 (this
"Amendment" or this "Amendatory Agreement"), among
Stern's Miracle-Gro Products Inc., a New Jersey corpora
tion, Stern's Nurseries, Inc., a New York corporation,
Miracle-Gro Lawn Products Inc., a New York corporation,
Miracle-Gro Products Limited, a New York corporation
(collectively, the "Miracle-Gro Constituent Companies"),
James Hagedorn, Katherine Hagedorn Littlefield, Paul
Hagedorn, Peter Hagedorn, Robert Hagedorn and Susan
Hagedorn (such individuals being herein referred to as
the "General Partners"), Horace Hagedorn, John Kenlon,
The Scotts Company, an Ohio corporation ("Scotts"), ZYX
Corporation, an Ohio corporation and a direct, wholly-
owned subsidiary of Scotts ("ZYX"), Hagedorn Partnership,
L.P., a Delaware limited partnership (the "Partnership"),
and Community Funds, Inc., a New York not-for-profit
corporation (the "Charity"), to the Agreement and Plan of
Merger dated as of January 26, 1995 (the "Merger Agree
ment" and as amended hereby, the "Amended Merger
Agreement").
WHEREAS, the Miracle-Gro Constituent Companies, the
General Partners, Horace Hagedorn, John Kenlon, Scotts
and ZYX are parties to the Merger Agreement (capitalized
terms not otherwise defined herein shall have the
meanings assigned to them in the Merger Agreement); and
WHEREAS, simultaneously herewith, the General Part
ners are forming Hagedorn Partnership, L.P. (the "Part
nership") and contributing to the Partnership all of the
shares of stock of the Miracle-Gro Constituent Companies
held by such persons; and
WHEREAS, simultaneously herewith, Horace Hagedorn is
contributing to the Charity all of the shares of capital
stock of the Company and Miracle-Gro Delaware; and
WHEREAS, the parties wish to amend the Merger Agree
ment to, among other things, reflect these events.
NOW, THEREFORE, the parties hereto agree as follows:
1. The parties hereto agree that the Partnership
hereby assumes and shall be obligated to perform each and
every obligation and covenant to be observed or performed
by the Shareholders pursuant to the Merger Agreement as
if the Partnership had been an original signatory of the
Merger Agreement and had been defined therein as one of
the "Shareholders". The parties further agree that the
Partnership shall be entitled to each and every right and
benefit owing generally to the Shareholders pursuant to
the Merger Agreement and shall further be entitled to
receive the Merger Consideration, in accordance with the
terms and conditions of the Merger Agreement and Schedule
1.04 thereto, which the Merger Agreement and Schedule
1.04 provides will be owing in respect of all shares of
the Company and Miracle-Gro Delaware owned by any of the
General Partners. Notwithstanding anything is this Amend
ment to the contrary, each of the General Partners shall
continue to be obligated to perform each and every obliga
tion and covenant to be observed or performed by the
Shareholders under the Amended Merger Agreement and shall
continue to be deemed to have made, jointly and
severally, each and every representation and warranty in
Article III of the Amended Merger Agreement.
2. The parties hereto agree that the Charity
hereby assumes and shall be obligated to perform each and
every obligation and covenant to be observed or performed
by the Shareholders pursuant to the Merger Agreement as
if the Charity had been an original signatory of the
Merger Agreement and had been defined therein as one of
the "Shareholders"; provided that the Charity shall not
have any obligation pursuant to Section 3.12 or Article
XI (except to the extent that Article XI applies to
covenants to be performed by the Charity) of the Merger
Agreement, which shall continue to be the obligations of
the other Shareholders as provided in the Merger
Agreement. The parties further agree that the Charity
shall be entitled to each and every right and benefit
owing generally to the Shareholders pursuant to the
Merger Agreement and shall further be entitled to receive
the Merger Consideration, in accordance with the terms
and conditions of the Merger Agreement and Schedule 1.04
thereto, which the Merger Agreement and Schedule 1.04
provides will be owing in respect of all shares of the
Company and Miracle-Gro Delaware owned by Horace
Hagedorn. Notwithstanding anything in this Agreement to
the contrary, Horace Hagedorn shall continue to be
obligated to perform each and every obligation and
covenant to be observed or performed by him as a
Shareholder under the Amended Merger Agreement and shall
continue to be deemed to have made, jointly and severally
with the other Shareholders, each and every
representation and warranty in Article III of the Amended
Merger Agreement.
3. Notwithstanding anything in this Amendment to
the contrary, only the General Partners, Horace Hagedorn
and John Kenlon shall be entitled to the benefits of
Section 8.07 of the Merger Agreement.
4. The Shareholders repeat and reaffirm that each
of the Miracle-Gro Constituent Companies, other than
Nurseries, is and at all times since January 1, 1985 and
prior to the consummation of the transfers of shares of
capital stock of the Company, Miracle-Gro Delaware and
Miracle-Gro UK to the Partnership and the Charity, respec
tively, as contemplated by the Amended Merger Agreement,
has been, an S corporation within the meaning of Section
1361(a)(1) of the Code (or the corresponding provisions
of preceding law) and is not subject to the tax imposed
on certain built-in gains under Section 1374 of the Code
or the tax imposed under Section 1375 of the Code. Each
of the parties hereto acknowledges and agrees that,
effective upon the consummation of the transfers of
shares of capital stock of the Company, Miracle-Gro
Delaware and Miracle-Gro UK to the Partnership and the
Charity, respectively, as contemplated hereby, such
company's status as an S corporation shall terminate and
that for purposes of determining the satisfaction of the
condition set forth in Section 9.02(i) and the scope of
the obligations of the Shareholders pursuant to Article
XI, the immediately preceding sentence shall be substitut
ed for the ante-penultimate sentence of Section 3.12 of
the Merger Agreement.
5. Article I of the Merger Agreement is hereby
amended to provide that, in lieu of Miracle-Gro UK's merg
ing with and into the Company, Miracle-Gro UK shall be ac
quired by, and shall become a direct wholly owned subsid
iary of, the Company as follows: Immediately following
the Effective Time, the Partnership and John Kenlon shall
deliver to the Company certificates representing all of
the shares of outstanding capital stock of Miracle-Gro UK
(accompanied by stock powers properly executed in blank
or other appropriate instruments of transfer), and shall
receive, in consideration therefor, solely shares of Con
vertible Preferred Stock as set forth in Schedule
1.04(c), and such Merger Consideration shall be legally
and beneficially owned by the Partnership and John
Kenlon, respectively.
6. Article I of the Merger Agreement is hereby
amended to provide that, in lieu of Miracle-Gro
Delaware's merging with and into the Company, Miracle-Gro
Delaware shall be acquired by, and shall become a direct
wholly owned subsidiary of, the Company as follows: Imme
diately following the Effective Time, the Partnership,
the Charity and John Kenlon shall deliver to the Company
certificates representing all of the shares of outstand
ing capital stock of Miracle-Gro Delaware (accompanied by
stock powers properly executed in blank or other appro
priate instruments of transfer), and shall receive, in
consideration therefor, solely shares of Convertible Pre
ferred Stock as set forth in Schedule 1.04(b), and such
Merger Consideration shall be legally and beneficially
owned by the Partnership, the Charity and John Kenlon,
respectively.
7. Each of the Miracle-Gro Constituent Companies,
the General Partners, the Partnership, Horace Hagedorn
and John Kenlon, jointly and severally, represent and
warrant to Scotts and Merger Subsidiary that immediately
following the Effective Time they and the Charity shall
deliver to the Company all of the outstanding capital
stock of, or other ownership interest in, Miracle-Gro UK
and Miracle-Gro Delaware free and clear of any Lien and
free of any other limitation or restriction on the right
to vote, sell or otherwise dispose of such capital stock
or other ownership interest, and at such time there will
be no options or other rights to acquire from the
Company, or of Miracle-Gro UK or Miracle-Gro Delaware to
issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securi
ties or ownership interest in, Miracle-Gro UK or Miracle-
Gro Delaware, respectively.
8. This Amendment is intended to effect the amend
ments to the Merger Agreement provided herein and shall
be deemed to do so in accordance with Section 12.02 of
the Merger Agreement. Except as otherwise set forth
herein, the Merger Agreement (including the
representations made by the Shareholders in Article III
thereof and including the provisions of Section 11.01)
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendatory Agreement to be duly executed as of the
day and year first above written.
STERN'S MIRACLE-GRO PRODUCTS, INC.
By
Title: Chairman and Chief
Executive Officer
STERN'S NURSERIES, INC.
By
Title: Chief Executive Officer
MIRACLE-GRO LAWN PRODUCTS INC.
By
Title: President
MIRACLE-GRO PRODUCTS LIMITED
By
Title: Executive Vice President
HORACE HAGEDORN
JAMES HAGEDORN
KATHERINE HAGEDORN LITTLEFIELD
PAUL HAGEDORN
PETER HAGEDORN
ROBERT HAGEDORN
SUSAN HAGEDORN
JOHN KENLON
THE SCOTTS COMPANY
By
Title: Chief Executive Officer
ZYX CORPORATION, an Ohio corporation
By
Title: President
COMMUNITY FUNDS, INC.
By
HAGEDORN PARTNERSHIP, L.P.
By
A General Partner
Certificate of Amendment by Shareholders to the Articles of Incorporation
of The Scotts Company as filed with the Ohio Secretary of State on
May 4, 1995.
CERTIFICATE OF AMENDMENT
by Shareholders to the Articles of Incorporation of
THE SCOTTS COMPANY
(Name of Corporation)
Theodore J. Host, who is:
Chairman of the Board _X_President Vice President (check one)
and
Craig D. Walley, who is:
_X_Secretary Assistant Secretary (check one)
of the above named Ohio corporation for profit do hereby certify that:
(check the appropriate box and complete the appropriate statements)
a meeting of the shareholders was duly called for the purpose of
adopting this amendment and held on April 6, 1995 at which meeting a
quorum of the shareholders was present in person or by proxy, and by
the affirmative vote of the holders of shares entitling them to
exercise more than 66-2/3% of the voting power of the corporation.
in a writing signed by all of the shareholders who would be entitled
to notice of a meeting held for that purpose, the following resolution
to amend the articles was adopted:
RESOLVED, that Article FOURTH of the Corporation's Amended
Articles of Incorporation be amended and restated to read in its
entirety as set forth in Exhibit A hereto; and
FURTHER RESOLVED, that the Corporation's Amended Articles of
Incorporation be amended to include a new Article NINTH in the
form set forth in Exhibit B hereto.
IN WITNESS WHEREOF, the above named officers, acting for and on the
behalf of the corporation, have hereto subscribed their names this
20th day of April, 1995.
By /s/Theodore J. Host
(President)
By /s/Craig D. Walley
(Secretary)
NOTE: Ohio law does not permit one officer to sign in two capacities.
Two separate signatures are required, even if this necessitates the
election of a second officer before the filing can be made.
Exhibit A
FOURTH: The authorized number of shares of the corporation
shall be Fifty Million, One Hundred and Ninety-Five Thousand
(50,195,000), consisting of Fifty Million (50,000,000) common
shares, each without par value, and One Hundred and Ninety-Five
Thousand (195,000) shares of Class A Convertible Preferred Stock,
without par value (the "Class A Preferred").
The following is a statement of the express terms, powers,
preferences, rights, qualifications, limitations and restrictions
of the Class A Preferred:
1. Authorized Number. The number of shares constituting
the Class A Preferred shall be One Hundred Ninety-Five Thousand
(195,000) shares.
2. Dividends. (a) The holders of the Class A Preferred
shall be entitled to receive, ratably with the holders of any
other class of the corporation's capital stock with Parity Rights
(as defined below) as to dividends based on their respective
dividend rates, annual cumulative dividends in cash on each
outstanding share of Class A Preferred at the rate of $50.00 per
share per annum. Such cumulative dividends shall be paid in
equal amounts (other than with respect to the initial dividend
period) quarterly on June 30, September 30, December 31 and March
31 of each year (unless such day is not a business day, in which
event on the next business day) as declared by the directors to
the extent legally permitted, to holders of record as they appear
on the register for the Class A Preferred on the June 15,
September 15, December 15 and March 15 immediately preceding the
relevant Dividend Payment Date (as hereinafter defined), out of
any funds at the time legally available therefor; shall accrue
until so paid from the date of issuance of the applicable shares
of Class A Preferred; and shall be deemed to accrue from day to
day, whether or not declared. A quarterly dividend period shall
begin on the day following each June 30, September 30, December
31 and March 31 (each a "Dividend Payment Date," whether or not a
dividend is paid on such date) and end on the next succeeding
Dividend Payment Date. Notwithstanding the foregoing, the first
quarterly dividend period shall commence on the date of issue,
and such dividend shall be paid on June 30, 1995 for the actual
number of days in such period. If dividends shall not have been
paid, or declared and set apart for payment, upon all outstanding
shares of Class A Preferred at the aforesaid times and rates,
such deficiency shall be cumulative in full. Any accumulation of
dividends shall not bear interest.
(b) No dividends or other distribution (other than dividends
payable in common shares), and no redemption, purchase or other
acquisition for value (other than redemptions, purchases or
acquisitions payable in common shares or repurchases of common
shares from employees of the corporation pursuant to obligations
existing as of the date hereof or upon foreclosure pursuant to
loans existing as of the date hereof to employees of the
corporation secured by common shares), shall be made with respect
to the common shares or any other class or series of the
corporation's capital stock ranking junior to the Class A
Preferred with respect to dividends or liquidation preferences
until cumulative dividends on the Class A Preferred in the full
amounts as set forth above for all dividend periods ending, and
all amounts payable upon redemption of Class A Preferred, on or
prior to the date on which the proposed dividend or distribution
is paid, or the proposed redemption, purchase or other
acquisition is effected, have been declared and paid or set apart
for payment.
(c)(i) If on any Dividend Payment Date all or any portion
of any dividend payable on such date is not so paid and at such
time all or any portion of the dividend payable on the next
preceding Dividend Payment Date remains in arrears, then from
such second Dividend Payment Date, until all accrued and unpaid
dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Class A
Preferred then outstanding shall have been declared and paid
(herein a "Default Period"), the holders of Class A Preferred,
voting separately as a class, shall have the right to increase
the number of directors by three and to elect three directors
designated by the Shareholder Representative (as defined in the
Merger Agreement) to fill the vacancies so created.
(ii) After the holders of Class A Preferred shall have
exercised their right to elect directors pursuant to subparagraph
(i) hereof, and during the continuance of such Default Period,
the number of directors may not be increased or decreased except
by vote of the holders of Class A Preferred, voting separately as
a separate class.
(iii) Immediately upon the expiration of a Default Period,
(x) the right of the holders of Class A Preferred Stock as a
class to elect directors pursuant to this Section 2(c) shall
cease, (y) the term of any directors elected by the holders of
Class A Preferred as a class pursuant to this Section 2(c) shall
terminate, and (z) the number of directors shall be such number
as was in effect immediately prior to the increase pursuant to
this Section 2(c).
3. Liquidation Preference. In the event of any
liquidation, dissolution, or winding up of the corporation,
either voluntary or involuntary, distributions to the
shareholders of the corporation shall be made in the following
manner:
(a) The holders of the Class A Preferred shall be entitled
to receive, ratably with the holders of any other class or series
of the corporation's capital stock with Parity Rights (as defined
below) as to liquidation preferences based on their respective
preference amounts (which, in the case of the Class A Preferred,
shall include any amounts owing in respect of accrued and unpaid
dividends), prior and in preference to any distribution of any of
the assets or funds of the corporation to the holders of the
common shares (or any other securities of the corporation ranking
junior to the Class A Preferred as to liquidation preferences),
the preference amount (in cash) of $1,000 per share for each
share of Class A Preferred then held by them plus an amount equal
to all accrued but unpaid dividends (whether or not declared) on
the Class A Preferred to the date of liquidation, dissolution or
winding up. If the assets and funds thus distributed among the
holders of the Class A Preferred and of any other class or series
of the corporation's capital stock with Parity Rights as to
liquidation preferences are insufficient to permit the payment to
such holders of the full preferential amount described above,
then the entire assets and funds of the corporation legally
available for distribution shall be distributed among the holders
of the Class A Preferred and of any other class or series of the
corporation's capital stock with Parity Rights as to liquidation
preferences in the proportion that the aggregate preferential
amount of shares of Class A Preferred and of any other class or
series of the corporation's capital stock with Parity Rights as
to liquidation preferences held by each such holder bears to the
aggregate preferential amount of all shares of Class A Preferred
and of any other class or series of the corporation's capital
stock with Parity Rights as to liquidation preferences. After
payment has been made to the holders of the Class A Preferred and
of any other class or series of the corporation's capital stock
with Parity Rights as to liquidation preferences of the full
amounts to which they are entitled, no further amounts shall be
paid with respect to the Class A Preferred, and the remaining
assets of the corporation shall be distributed among the holders
of the common shares (and other junior securities with regard to
liquidation preferences) in accordance with the Amended Articles
of Incorporation and applicable law.
(b) For purposes of this Section 3, a merger or
consolidation of the corporation with or into any other
corporation or corporations in which the corporation is not the
surviving corporation, or a voluntary sale of all or
substantially all of the assets of the corporation, shall not be
treated as a liquidation, dissolution or winding up of the
corporation (unless in connection therewith, the liquidation,
dissolution or winding up of the corporation is specifically
approved), but shall be treated as provided in Section 6(e) of
this Article FOURTH.
4. Provisions Generally Applicable to Dividends and
Liquidation.
(a) The term "Parity Rights," as used in this Article FOURTH
of the Amended Articles of Incorporation, shall mean dividend
rights and liquidation preferences of any class or series of the
corporation's capital stock which has preferences upon any
liquidation, dissolution, or winding up of the corporation or
rights with respect to the declaration, payment and setting aside
of dividends on a parity with those of the Class A Preferred.
(b) Except as otherwise permitted by the Agreement and Plan
of Merger dated as of January 26, 1995 among Stern's Miracle-Gro
Products, Inc., Stern's Nurseries, Inc., Miracle-Gro Lawn
Products Inc., Miracle-Gro Products Limited, the Shareholders
listed therein, the corporation and ZYX Corporation (the "Merger
Agreement"), the corporation will not, by amendment of its
Amended Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the corporation, but will at
all times in good faith assist in the carrying out of all the
provisions of Sections 2 and 3 of this Article FOURTH and in the
taking of all such action as may be necessary or appropriate in
order to protect the dividend and liquidation rights of the
holders of the Class A Preferred against impairment; provided,
however, that nothing herein will prevent the corporation from
creating any new class or series of capital stock with higher
dividend rates or liquidation payments so long as the priority of
such rights is not senior to the rights of the Class A Preferred.
5. Voting Rights. Except as otherwise required by law, the
holder of each share of Class A Preferred shall be entitled to
the number of votes equal to the number of common shares into
which such share of Class A Preferred could be converted at the
record date for determination of the shareholders entitled to
vote on such matters, such votes to be counted together with all
other shares of capital stock of the corporation having general
voting power and not separately as a class or series. Holders of
Class A Preferred shall be entitled to receive the same notice of
any shareholders' meeting as is provided to holders of common
shares. Fractional votes by the holders of Class A Preferred
shall not, however, be permitted, and any fractional voting
rights shall (after aggregating all shares into which shares of
Class A Preferred held by each holder could be converted) be
rounded to the nearest whole number. The corporation will, or
will cause its transfer agent or registrar to, transmit to the
registered holders of the Class A Preferred all reports and
communications from the corporation that are generally mailed to
holders of its common shares.
6. Conversion. The holders of the Class A Preferred have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Class A Preferred shall
be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share and prior to the close
of business of the corporation on the business day next preceding
any date set for the redemption thereof (provided that funds
sufficient to redeem all shares to be redeemed on such date have
been paid or made available for payment as described in Section
7(b)(iii) of this Article FOURTH), at the office of the
corporation or any transfer agent for the Class A Preferred, into
such number of fully paid and nonassessable common shares as is
determined by dividing $1,000 by the Conversion Price, determined
as hereinafter provided, in effect at the time of conversion.
The price at which common shares shall be deliverable upon
conversion (the "Conversion Price") shall initially be $19 per
common share. Such initial Conversion Price shall be subject to
adjustment as hereinafter provided.
(b) Accrued Dividends and Fractional Shares. Dividends
shall cease to accrue on shares of Class A Preferred surrendered
for conversion into common shares; provided, however, that any
dividends (whether or not declared) upon such shares which were
accrued as of but not paid on or before the Dividend Payment Date
immediately preceding the conversion date shall be paid in cash
upon such conversion or as soon thereafter as permitted by law.
No fractional common shares shall be issued upon conversion
of Class A Preferred. In lieu of any fractional shares to which
the holder would otherwise be entitled, the corporation shall,
after aggregation of all fractional share interests held by each
holder, pay cash equal to such remaining fractional interest
multiplied by the Market Price (as defined in Section 11 of this
Article FOURTH) at the time of conversion.
(c) Mechanics of Conversion. Before any holder of Class A
Preferred shall be entitled to convert the same into full common
shares of the corporation and to receive certificates therefor,
such holder shall surrender the certificate or certificates for
the Class A Preferred to be converted, duly endorsed, at the
office of the corporation or of any transfer agent for the Class
A Preferred, and shall give written notice to the corporation at
such office that such holder elects to convert the same. The
corporation shall, as soon as practicable after such delivery,
issue and deliver at such office to such holder of Class A
Preferred (or to any other person specified in the notice
delivered by such holder), a certificate or certificates for the
number of common shares to which such holder shall be entitled as
aforesaid and a check payable to the holder for any cash amounts
payable as the result of a conversion into fractional common
shares. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the shares of Class A Preferred to be converted, and
the person or persons entitled to receive the common shares
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such common shares on such
date. In case any certificate for shares of Class A Preferred
shall be surrendered for conversion of only a part of the shares
represented thereby, the corporation shall deliver at such office
to or upon the written order of the holder thereof, a certificate
or certificates for the number of shares of Class A Preferred
represented by such surrendered certificate which are not being
converted. Notwithstanding the foregoing, the corporation shall
not be obligated to issue certificates evidencing the common
shares issuable upon such conversion unless the certificates
evidencing Class A Preferred are either delivered to the
corporation or its transfer agent, or the holder notifies the
corporation or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement
satisfactory to the corporation to indemnify the corporation from
any loss incurred by it in connection with such certificates.
The issuance of certificates for common shares issuable upon
conversion of shares of Class A Preferred shall be made without
charge to the converting holder for any tax imposed in respect of
the issuance thereof; provided that the corporation shall not be
required to pay any tax which may be payable with respect to any
transfer involved in the issue and delivery of any certificate in
a name other than that of the holder of the shares of Class A
Preferred being converted.
(d) Effects of Certain Events.
(i) Common Share Dividends, Subdivisions or Combinations.
In case the corporation shall (A) pay or make a dividend or other
distribution to all holders of its common shares in common
shares, (B) subdivide, split or reclassify the outstanding number
of common shares into a larger number of common shares or (C)
combine or reclassify the outstanding number of its common shares
into a smaller number of common shares, the Conversion Price in
effect immediately prior thereto shall be adjusted so that the
holder of each outstanding share of Class A Preferred shall
thereafter be entitled to receive upon the conversion of such
share the number of common shares which such holder would have
owned and been entitled to receive had such shares of Class A
Preferred been converted immediately prior to the happening of
any of the events described above or, in the case of a stock
dividend or other distribution, prior to the record date for
determination of shareholders entitled thereto. An adjustment
made pursuant to this clause (i) shall become effective
immediately after such record date in the case of a dividend or
distribution and immediately after the effective date in the case
of a subdivision, split, combination or reclassification.
(ii) Distributions of Assets or Securities Other Than Common
Shares. In case the corporation shall, by dividend or otherwise,
distribute to all holders of its common shares, shares of any of
its capital stock (other than common shares), rights or warrants
to purchase any of its securities (other than those referred to
in (iii) below), cash (other than any regular quarterly or semi-
annual dividend which the directors of the corporation declares),
other assets or evidences of its indebtedness, then in each such
case the Conversion Price shall be adjusted by multiplying the
Conversion Price in effect immediately prior to the date of such
dividend or distribution by a fraction, of which the numerator
shall be the Average Market Price (as defined in Section 11 of
this Article FOURTH) per common share at the record date for
determining shareholders entitled to such dividend or
distribution less the fair market value (as determined in good
faith by the directors) of the portion of the securities, cash,
assets or evidences of indebtedness so distributed applicable to
one common share, and of which the denominator shall be such
Average Market Price per common share. An adjustment made
pursuant to this clause (ii) shall become effective immediately
after such record date.
(iii) Below Market Distributions or Issuances. In case the
corporation shall issue common shares (or rights, warrants or
other securities convertible into or exchangeable or exercisable
for common shares) to all holders of common shares at a price per
share (or having an effective exercise, exchange or conversion
price per share) less than the Average Market Price per common
share at the record date for the determination of shareholders
entitled to receive such common shares (or rights, warrants or
other securities convertible into or exchangeable or exercisable
for common shares), then in each such case the Conversion Price
shall be adjusted by multiplying the Conversion Price in effect
immediately prior to the date of issuance of such common shares
(or rights, warrants or other securities) by a fraction, the
numerator of which shall be the sum of (A) the number of common
shares outstanding on the date of such issuance (without giving
effect to any such issuance) and (B) the number of common shares
which the aggregate consideration receivable by the corporation
for the total number of common shares so issued (or into or for
which such rights, warrants or other securities are convertible,
exchangeable or exercisable) would purchase at such Average
Market Price, and the denominator of which shall be the sum of
(A) the number of common shares outstanding on the date of such
issuance (without giving effect to any such issuance) and (B) the
number of additional common shares so issued (or into or for
which such rights, warrants or other securities are convertible,
exchangeable or exercisable). An adjustment made pursuant to
this clause (iii) shall become effective immediately after the
record date for determination of shareholders entitled to receive
or purchase such common shares (or rights, warrants or other
securities convertible into or exchangeable or exercisable for
common shares). For purposes of this clause (iii), the issuance
of any options, rights or warrants or any common shares (whether
treasury shares or newly issued shares) pursuant to any employee
(including consultants and directors) benefit or stock option or
purchase plan or program of the corporation shall not be deemed
to constitute an issuance of common shares or options, rights or
warrants to which this clause (iii) applies. Notwithstanding
anything herein to the contrary, no further adjustment to the
Conversion Price shall be made (i) upon the issuance or sale of
common shares upon the exercise of any rights or warrants or (ii)
upon the issuance or sale of common shares upon conversion or
exchange of any convertible securities, if any adjustment in the
Conversion Price was made or required to be made upon the
issuance or sale of such rights, warrants or securities.
(iv) Repurchases. In case at any time or from time to time
the corporation or any subsidiary thereof shall repurchase, by
self tender offer or otherwise, any common shares of the
corporation at a weighted average purchase price in excess of the
Average Market Price on the business day immediately prior to the
earliest of the date of such repurchase, the commencement of an
offer to repurchase or the public announcement of either (such
date being referred to as the "Determination Date"), the
Conversion Price in effect as of such Determination Date shall be
adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be (A) the product of (x) the number of
common shares outstanding on such Determination Date and (y) the
Average Market Price of the common shares on such Determination
Date minus (B) the aggregate purchase price of such repurchase
and the denominator of which shall be the product of (x) the
number of common shares outstanding on such Determination Date
minus the number of common shares repurchased by the corporation
or any subsidiary thereof in such repurchase and (y) the Average
Market Price of the common shares on such Determination Date.
For purposes of this clause (iv), the repurchase or repurchases
by the corporation or any subsidiary thereof within any 12 month
period of not more than 15% of the common shares outstanding as
of the first date of such period, at a price not in excess of
120% of the Average Market Price as of the Determination Date of
any such repurchase, shall not be deemed to constitute a
repurchase to which this clause (iv) applies. An adjustment made
pursuant to this clause (iv) shall become effective immediately
after the effective date of such repurchase.
(e) Certain Reorganizations. In the event of any change,
reclassification, conversion, exchange or cancellation of
outstanding common shares of the corporation (other than any
reclassification referred to in Section 6(d)(i) in this Article
FOURTH), whether pursuant to a merger, consolidation,
reorganization or otherwise, or the sale or other disposition of
all or substantially all of the assets and properties of the
corporation, the shares of Class A Preferred shall, after such
merger, consolidation, reorganization or other transaction, sale
or other disposition, be convertible into the kind and number of
shares of stock or other securities or property, of the
corporation or otherwise, to which such holder would have been
entitled if immediately prior to such event such holder had
converted its shares of Class A Preferred into common shares at
the Conversion Price in effect as of the consummation of such
event. The provisions of this Section 8(e) shall similarly apply
to successive changes, reclassifications, conversions, exchange
or cancellations.
(f) No Impairment. Except as permitted by the Merger
Agreement, the corporation will not, by amendment of its Amended
Articles of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times
in good faith assist in the carrying out of all the provisions of
this Section 6 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion
rights of the holders of the Class A Preferred against
impairment.
(g) Calculation of Adjustments. No adjustment in the
Conversion Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this
subsection (g) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 6 shall be made by the
corporation and shall be made to the nearest cent or to the
nearest one hundredth of a share, as the case may be. Anything
in this Section 6 to the contrary notwithstanding, the
corporation shall be entitled to make such reductions in the
Conversion Price, in addition to those required by this Section
6, as it in its sole discretion shall determine to be advisable
in order that any stock dividends, subdivision of shares,
distribution of rights to purchase stock or securities, or a
distribution of securities convertible into or exchangeable for
stock hereafter made by the corporation to its shareholders shall
not be taxable.
(h) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price pursuant
to this Section 6, the corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Class A Preferred a
certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written
request at any time of any holder of Class A Preferred, furnish
or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments; (ii) the
Conversion Price at the time in effect; and (iii) the number of
common shares and the amount, if any, of other property which at
the time would be received upon the conversion of Class A
Preferred.
(i) Notices.
(A) In the event that the corporation shall propose at
any time:
(1) to declare any dividend or distribution upon its
common shares;
(2) to offer for subscription pro rata to the holders
of any class or series of its capital stock any additional
shares of stock of any class or series or other rights; or
(3) to effect any transaction of the type described in
Section 6(e) hereof involving a change in the common shares;
then, in connection with each such event, the corporation shall
send to the holders of the Class A Preferred:
(i) at least 20 days' prior written notice of the
date on which a record shall be taken for such dividend
or distribution (and specifying the date on which the
holders of common shares shall be entitled thereto) or
for determining rights to vote in respect of the
matters referred to in (1) and (2) above; and
(ii) in the case of the matters referred to in (3)
above, at least 20 days' prior written notice of the
date when the same shall take place (and specifying the
date on which the holders of common shares shall be
entitled to exchange their common shares for securities
or other property deliverable upon the occurrence of
such event).
(B) In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the corporation,
the corporation shall send to the holders of the Class A
Preferred at least 20 days' prior written notice.
(C) The corporation shall send written notice
immediately upon any public announcement with respect to an
open market repurchase program, any self tender offer for
common shares and any other repurchase other than a
repurchase of stock of an employee or consultant pursuant to
any benefit plan or agreement.
7. Redemption.
(a) Redemption. The Class A Preferred shall not be subject
to redemption prior to the last day of the month in which the
fifth anniversary of the original date of issuance occurs. On or
after such date, the corporation may, at its option, redeem all
or from time to time any part of the shares of Class A Preferred,
out of funds legally available therefor, upon giving the
Redemption Notice as set forth in Section 7(b) of this Article
FOURTH. The redemption payment for each share of Class A
Preferred shall be an amount (the "Redemption Payment") in cash
equal to the sum of (i) the amount of all accrued and unpaid
dividends (whether or not declared) thereon to and including the
date fixed for redemption, plus (ii) $1,000. In the event of a
redemption of only a part of the then outstanding Class A
Preferred, the corporation shall effect such redemption ratably
according to the number of shares held by each holder of Class A
Preferred.
(b) Mechanics of Redemption.
(i) At least 30 days, but no more than 60 days, prior to the
date fixed for any redemption pursuant to Section 7(a) of this
Article FOURTH (the "Redemption Date"), the corporation shall
send a written notice (the "Redemption Notice") to the holders of
shares to be redeemed on such date (the "Redemption Shares")
stating: (A) the total number of shares being redeemed; (B) the
number of Redemption Shares held by such holder; (C) the
Redemption Date and the Redemption Payment; (D) the date on which
such holder's conversion rights as to such shares shall
terminate; and (E) the manner in which and the place at which
such holder is to surrender to the corporation the certificate or
certificates representing the Redemption Shares.
(ii) Upon the surrender to the corporation, in the manner
and at the place designated, of a certificate or certificates
representing Redemption Shares, the Redemption Payment for such
shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof.
All such surrendered certificates shall be canceled. Upon
redemption of only a portion of the shares of Class A Preferred
represented by a certificate surrendered for redemption, the
corporation shall issue and deliver to or upon the written order
of the holder of the certificate so surrendered, at the expense
of the corporation (except for expenses relating to the issuance
of such shares to a person other than the record holder of the
Redemption Shares), a new certificate representing the unredeemed
shares of Class A Preferred represented by the certificate so
surrendered.
(iii) On or prior to the Redemption Date, the corporation
shall have the option to deposit the aggregate of all Redemption
Payments for all Redemption Shares (other than Redemption Shares
surrendered for conversion prior to such date) in a bank or trust
company (designated in the notice of such redemption) doing
business in the State of Ohio or the City of New York, having
aggregate capital and surplus in excess of $500,000,000, as a
trust fund for the benefit of the respective holders of
Redemption Shares, with irrevocable instructions and authority to
the bank or trust company to pay the appropriate Redemption
Payment to the holders of Redemption Shares upon receipt of
notification from the Company that such holder has surrendered
the certificate representing such shares to the corporation.
Such instructions shall also provide that any such moneys
remaining unclaimed at the expiration of one year following the
Redemption Date shall thereafter be returned to the corporation
upon its request as expressed in a resolution of its directors.
The holder of any Redemption Shares in respect of which such
deposit has been returned to the corporation pursuant to the
preceding sentence shall have a claim as an unsecured creditor
against the corporation for the Redemption Payment in respect
thereof, without interest.
(iv) Provided that the corporation has given the Redemption
Notice described in Section 7(b)(i) of this Article FOURTH and
has on or prior to the Redemption Date either paid or made
available (as described in Section 7(b)(iii) of this Article
FOURTH) Redemption Payments to the holders of Redemption Shares,
all Redemption Shares shall be deemed to have been redeemed as of
the close of business of the corporation on the applicable
Redemption Date. Thereafter, the holder of such shares shall no
longer be treated for any purposes as the record holder of such
shares of Class A Preferred, regardless of whether the
certificates representing such shares are surrendered to the
corporation or its transfer agent, excepting only the right of
the holder to receive the appropriate Redemption Payment, without
interest, upon such surrender. Such shares so redeemed shall not
be transferred on the books of the corporation or be deemed to be
outstanding for any purpose whatsoever.
(v) The corporation shall not be obligated to pay the
Redemption Payment to any holder of Redemption Shares unless the
certificates evidencing such shares are either delivered to the
corporation or its transfer agent, or the holder notifies the
corporation or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement
satisfactory to the corporation to indemnify the corporation from
any loss incurred by it in connection with such certificates.
(c) Limitation on Redemption. The corporation shall not be
obligated to redeem any shares of Class A Preferred which have
previously been converted into common shares. The corporation
shall not be obligated to redeem shares pursuant to this Section
7 if such redemption would violate any provisions of applicable
law. If, after giving the Redemption Notice, the corporation is
unable, pursuant to applicable law, to redeem some or all
unconverted Redemption Shares on any particular Redemption Date,
the corporation shall promptly notify the holders thereof of the
facts that prevent the corporation from so redeeming such shares.
Thereafter, the corporation shall redeem such unredeemed
Redemption Shares at such time as it is lawfully able to do so.
8. Status of Converted Shares. If shares of Class A
Preferred are converted pursuant to Section 6 of this Article
FOURTH or redeemed pursuant to Section 7 of this Article FOURTH,
the shares so converted or redeemed shall resume the status of
authorized but unissued shares of Class A Preferred unless
otherwise prohibited by applicable law.
9. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed
to have been duly given if delivered by hand or when sent by
telegram or telecopier (with receipt confirmed), provided a copy
is also sent by express (overnight, if possible) courier,
addressed (i) in the case of a holder of Class A Preferred, to
such holder's address of record, and (ii) in the case of the
corporation, to the corporation's principal executive offices to
the attention of the corporation's secretary.
10. Amendments and Waivers. Any right, preference,
privilege or power of, or restriction provided for the benefit
of, the Class A Preferred set forth herein may be amended and the
observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively)
with the written consent of the corporation and the affirmative
vote or written consent of the holders of not less than a
majority of the shares of Class A Preferred then outstanding, and
any amendment or waiver so effected shall be binding upon the
corporation and all holders of Class A Preferred.
11. Additional Definitions. As used herein the term
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is a day on which the New York Stock Exchange, Inc.
is open for trading.
As used herein, the term "Market Price" of a common share or
of any other security of the corporation on any date shall mean:
(i) the last reported sales price of the common shares or such
other security on the principal national securities exchange on
which such common shares or other security is listed or admitted
to trading or, if no such reported sale takes place on such date,
the average of the closing bid and asked prices thereon, as
reported in The Wall Street Journal, or (ii) if such common
shares or other security shall not be listed or admitted to
trading on a national securities exchange, the last reported
sales price on the NASDAQ National Market or, if no such reported
sales takes place on any such date, the average of the closing
bid and asked prices thereon, as reported in The Wall Street
Journal, or (iii) if such common shares or other security shall
not be quoted on such National Market nor listed or admitted to
trading on a national securities exchange, then the average of
the closing bid and asked prices, as reported by The Wall Street
Journal for the over-the-counter market, or (iv) if there is no
public market for such common shares or other security, the fair
market value of a share of such common shares or a unit of such
other security as determined in good faith by the Directors of
the corporation.
The term "Average Market Price" shall mean the average of
the 30 consecutive trading days immediately preceding the date in
question.
Exhibit B
NINTH: Notwithstanding any provision of the Ohio Revised
Code requiring for any purpose the vote, consent, waiver or
release of the holders of shares of the corporation entitling
them to exercise two-thirds or any other proportion of the voting
power of the corporation or of any class or classes thereof, such
action, unless expressly otherwise provided by statute, may be
taken by the vote, consent, waiver or release of the holders of
the shares entitling them to exercise not less than a majority of
the voting power of the corporation or of such class or classes;
provided, however, that the affirmative vote of the holders of
shares entitling them to exercise not less than two-thirds of the
voting power of the corporation, or two-thirds of the voting
power of any class or classes of shares of the corporation which
entitle the holders thereof to vote in respect of any such matter
as a class, shall be required to adopt:
(1) A proposed amendment to this Article NINTH to the
Amended Articles of Incorporation of the corporation;
(2) An agreement of merger or consolidation providing for
the proposed merger or consolidation of the corporation
with or into one or more other corporations and
requiring shareholder approval;
(3) A proposed combination or majority share acquisition
involving the issuance of shares of the corporation and
requiring shareholder approval;
(4) A proposal to sell, exchange, transfer or otherwise
dispose of all, or substantially all, the assets, with
or without the goodwill, of the corporation; or
(5) A proposed dissolution of the corporation.
Regulations of The Scotts Company (reflecting amendments adopted
by the shareholders of The Scotts Company on April 6, 1995).
CODE OF REGULATIONS
OF
THE SCOTTS COMPANY
(As amended through April 6, 1995)
CODE OF REGULATIONS
OF
THE SCOTTS COMPANY
(As amended through April 6, 1995)
INDEX
Section Page No.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
1.01. ANNUAL MEETINGS 1
1.02. CALLING OF MEETINGS 1
1.03. PLACE OF MEETINGS 1
1.04. NOTICE OF MEETINGS 1
1.05. WAIVER OF NOTICE 2
1.06. QUORUM 2
1.07. VOTES REQUIRED 2
1.08. ORDER OF BUSINESS 2
1.09. SHAREHOLDERS ENTITLED TO VOTE 2
1.10. PROXIES 3
1.11. INSPECTORS OF ELECTION 3
ARTICLE TWO
DIRECTORS
2.01. AUTHORITY AND QUALIFICATIONS 3
2.02. NUMBER AND CLASSIFICATION OF DIRECTORS AND TERM OF
OFFICE 3
2.03. ELECTION 4
2.04. REMOVAL 4
2.05. VACANCIES 4
2.06. MEETINGS 4
2.07. NOTICE OF MEETINGS 5
2.08. WAIVER OF NOTICE 5
2.09. QUORUM 5
2.10. EXECUTIVE AND OTHER COMMITTEES 5
2.11. COMPENSATION 6
2.12. BY-LAWS 6
SECTION PAGE NO.
ARTICLE THREE
OFFICERS
3.01. OFFICERS 6
3.02. TENURE OF OFFICE 6
3.03. DUTIES OF THE CHAIRMAN OF THE BOARD 6
3.04. DUTIES OF THE PRESIDENT 7
3.05. DUTIES OF THE VICE PRESIDENTS 7
3.06. DUTIES OF THE SECRETARY 7
3.07. DUTIES OF THE TREASURER 8
ARTICLE FOUR
SHARES
4.01. CERTIFICATES 9
4.02. TRANSFERS 9
4.03. TRANSFER AGENTS AND REGISTRARS 10
4.04. LOST, WRONGFULLY TAKEN OR DESTROYED CERTIFICATES 10
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
5.01. MANDATORY INDEMNIFICATION 10
5.02. COURT-APPROVED INDEMNIFICATION 11
5.03. INDEMNIFICATION FOR EXPENSES 11
5.04. DETERMINATION REQUIRED 11
5.05. ADVANCES FOR EXPENSES 12
5.06. ARTICLE FIVE NOT EXCLUSIVE 12
5.07. INSURANCE 13
5.08. CERTAIN DEFINITIONS 13
5.09. VENUE 13
ARTICLE SIX
MISCELLANEOUS
6.01. AMENDMENTS 14
6.02. ACTION BY SHAREHOLDERS OR DIRECTORS WITHOUT A MEETING 14
CODE OF REGULATIONS
OF
THE SCOTTS COMPANY
(As amended through April 6, 1995)
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of
the shareholders for the election of directors, for the
consideration of reports to be laid before such meeting and for
the transaction of such other business as may properly come
before such meeting, shall be held on the second Tuesday of March
in each year or on such other date as may be fixed from time to
time by the directors.
Section 1.02. Calling of Meetings. Meetings of the
shareholders may be called only by the chairman of the board, the
president, or, in case of the president's absence, death, or
disability, the vice president authorized to exercise the author
ity of the president; the secretary; the directors by action at a
meeting, or a majority of the directors acting without a meeting;
or the holders of at least a majority of all shares outstanding
and entitled to vote thereat.
Section 1.03. Place of Meetings. All meetings of
shareholders shall be held at the principal office of the corpo
ration, unless otherwise provided by action of the directors.
Meetings of shareholders may be held at any place within or
without the State of Ohio.
Section 1.04. Notice of Meetings. (A) Written notice
stating the time, place and purposes of a meeting of the share
holders shall be given either by personal delivery or by mail not
less than seven nor more than sixty days before the date of the
meeting, (1) to each shareholder of record entitled to notice of
the meeting, (2) by or at the direction of the chairman of the
board, the president or the secretary. If mailed, such notice
shall be addressed to the shareholder at his address as it
appears on the records of the corporation. Notice of adjournment
of a meeting need not be given if the time and place to which it
is adjourned are fixed and announced at such meeting. In the
event of a transfer of shares after the record date for
determining the shareholders who are entitled to receive notice
of a meeting of shareholders, it shall not be necessary to give
notice to the transferee. Nothing herein contained shall prevent
the setting of a record date in the manner provided by law, the
Articles or the Regulations for the determination of shareholders
who are entitled to receive notice of or to vote at any meeting
of shareholders or for any purpose required or permitted by law.
(B) Following receipt by the president or the
secretary of a request in writing, specifying the purpose or
purposes for which the persons properly making such request have
called a meeting of the shareholders, delivered either in person
or by registered mail to such officer by any persons entitled to
call a meeting of shareholders, such officer shall cause to be
given to the shareholders entitled thereto notice of a meeting to
be held on a date not less than seven nor more than sixty days
after the receipt of such request, as such officer may fix. If
such notice is not given within fifteen days after the receipt of
such request by the president or the secretary, then, and only
then, the persons properly calling the meeting may fix the time
of meeting and give notice thereof in accordance with the provi
sions of the Regulations.
Section 1.05. Waiver of Notice. Notice of the time,
place and purpose or purposes of any meeting of shareholders may
be waived in writing, either before or after the holding of such
meeting, by any shareholder, which writing shall be filed with or
entered upon the records of such meeting. The attendance of any
shareholder, in person or by proxy, at any such meeting without
protesting the lack of proper notice, prior to or at the
commencement of the meeting, shall be deemed to be a waiver by
such shareholder of notice of such meeting.
Section 1.06. Quorum. At any meeting of shareholders,
the holders of a majority of the voting shares of the corporation
then outstanding and entitled to vote thereat, present in person
or by proxy, shall constitute a quorum for such meeting. The
holders of a majority of the voting shares represented at a
meeting, whether or not a quorum is present, or the chairman of
the board, the president, or the officer of the corporation
acting as chairman of the meeting, may adjourn such meeting from
time to time, and if a quorum is present at such adjourned
meeting any business may be transacted as if the meeting had been
held as originally called.
Section 1.07. Votes Required. At all elections of
directors, the candidates receiving the greatest number of votes
shall be elected. Any other matter submitted to the shareholders
for their vote shall be decided by the vote of such proportion of
the shares, or of any class of shares, or of each class, as is
required by law, the Articles or the Regulations.
Section 1.08. Order of Business. The order of
business at any meeting of shareholders shall be determined by
the officer of the corporation acting as chairman of such meeting
unless otherwise determined by a vote of the holders of a major
ity of the voting shares of the corporation then outstanding,
present in person or by proxy, and entitled to vote at such
meeting.
Section 1.09. Shareholders Entitled to Vote. Each
shareholder of record on the books of the corporation on the
record date for determining the shareholders who are entitled to
vote at a meeting of shareholders shall be entitled at such
meeting to one vote for each share of the corporation standing in
his name on the books of the corporation on such record date.
The directors may fix a record date for the determination of the
shareholders who are entitled to receive notice of and to vote at
a meeting of shareholders, which record date shall not be a date
earlier than the date on which the record date is fixed and which
record date may be a maximum of sixty days preceding the date of
the meeting of shareholders.
Section 1.10. Proxies. At meetings of the share
holders, any shareholder of record entitled to vote thereat may
be represented and may vote by a proxy or proxies appointed by an
instrument in writing signed by such shareholder, but such
instrument shall be filed with the secretary of the meeting
before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of
eleven months after the date of its execution, unless the
shareholder executing it shall have specified therein the length
of time it is to continue in force.
Section 1.11. Inspectors of Election. In advance of
any meeting of shareholders, the directors may appoint inspectors
of election to act at such meeting or any adjournment thereof; if
inspectors are not so appointed, the officer of the corporation
acting as chairman of any such meeting may make such appointment.
In case any person appointed as inspector fails to appear or act,
the vacancy may be filled only by appointment made by the
directors in advance of such meeting or, if not so filled, at the
meeting by the officer of the corporation acting as chairman of
such meeting. No other person or persons may appoint or require
the appointment of inspectors of election.
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications. Except
where the law, the Articles or the Regulations otherwise provide,
all authority of the corporation shall be vested in and exercised
by its directors. Directors need not be shareholders of the
corporation.
Section 2.02. Number and Classification of Directors
and Term of Office.
(A) Until changed pursuant to Article FOURTH of the
Amended Articles of Incorporation, by the amendment of the
Regulations, by the adoption of new regulations or by action of
the directors pursuant to subsection (C) hereof, the number of
directors of the corporation shall be nine, divided into three
classes, each of which shall consist of not less than three
directors nor more than five directors as may be determined by
the directors or as may be required by the provisions of Section
2(c) of Article FOURTH of the Amended Articles of Incorporation.
The number of directors in each class shall be, to the greatest
extent possible, uniform. The election of each class of
directors shall be a separate election. At the 1995 annual
meeting of shareholders an election shall be held to elect three
persons to serve as directors for three years and until their
successors are elected, an election shall be held to elect three
persons to serve as directors for two years and until their
successors are elected and an election shall be held to elect
three persons to serve as directors for one year and until their
successors are elected.
(B) At each annual meeting of shareholders after the
1995 annual meeting, directors shall be elected to serve for
terms of three years, so that the term of office of one class of
directors shall expire in each year.
(C) The directors may change the number of directors
and may fill any vacancy that is created by an increase in the
number of directors; provided, however, that the directors may
not reduce the number of directors to less than three or increase
the number of directors to more than twelve.
Section 2.03. Election. At each annual meeting of
shareholders for the election of directors, the successors to the
directors whose term shall expire in that year shall be elected,
but if the annual meeting is not held or if one or more of such
directors are not elected thereat, they may be elected at a
special meeting called for that purpose. The election of
directors shall be by ballot whenever requested by the presiding
officer of the meeting or by the holders of a majority of the
voting shares outstanding, entitled to vote at such meeting and
present in person or by proxy, but unless such request is made,
the election shall be viva voce.
Section 2.04. Removal. A director or directors may be
removed from office, with or without assigning any cause, only by
the vote of the holders of shares entitling them to exercise not
less than a majority of the voting power of the corporation to
elect directors in place of those to be removed. In case of any
such removal, a new director may be elected at the same meeting
for the unexpired term of each director removed. Failure to
elect a director to fill the unexpired term of any director
removed shall be deemed to create a vacancy in the board.
Section 2.05. Vacancies. The remaining directors,
though less than a majority of the whole authorized number of
directors, may, by the vote of a majority of their number, fill
any vacancy in the board for the unexpired term. A vacancy in
the board exists within the meaning of this Section 2.05 in case
the shareholders increase the authorized number of directors but
fail at the meeting at which such increase is authorized, or an
adjournment thereof, to elect the additional directors provided
for, or in case the shareholders fail at any time to elect the
whole authorized number of directors.
Section 2.06. Meetings. A meeting of the directors
shall be held immediately following the adjournment of each
annual meeting of shareholders at which directors are elected,
and notice of such meeting need not be given. The directors
shall hold such other meetings as may from time to time be
called, and such other meetings of directors may be called only
by the chairman of the board, the president, or any two
directors. All meetings of directors shall be held at the
principal office of the corporation in Marysville or at such
other place within or without the State of Ohio, as the directors
may from time to time determine by a resolution. Meetings of the
directors may be held through any communications equipment if all
persons participating can hear each other and participation in a
meeting pursuant to this provision shall constitute presence at
such meeting.
Section 2.07. Notice of Meetings. Notice of the time
and place of each meeting of directors for which such notice is
required by law, the Articles, the Regulations or the By-Laws
shall be given to each of the directors by at least one of the
following methods:
(A) In a writing mailed not less than three days
before such meeting and addressed to the residence or
usual place of business of a director, as such address
appears on the records of the corporation; or
(B) By telegraph, cable, radio, wireless,
facsimile or a similar writing sent or delivered to the
residence or usual place of business of a director as
the same appears on the records of the corporation, not
later than the day before the date on which such
meeting is to be held; or
(C) Personally or by telephone not later than the
day before the date on which such meeting is to be
held.
Notice given to a director by any one of the methods specified in
the Regulations shall be sufficient, and the method of giving
notice to all directors need not be uniform. Notice of any
meeting of directors may be given only by the chairman of the
board, the president or the secretary of the corporation. Any
such notice need not specify the purpose or purposes of the
meeting. Notice of adjournment of a meeting of directors need
not be given if the time and place to which it is adjourned are
fixed and announced at such meeting.
Section 2.08. Waiver of Notice. Notice of any meeting
of directors may be waived in writing, either before or after the
holding of such meeting, by any director, which writing shall be
filed with or entered upon the records of the meeting. The
attendance of any director at any meeting of directors without
protesting, prior to or at the commencement of the meeting, the
lack of proper notice, shall be deemed to be a waiver by him of
notice of such meeting.
Section 2.09. Quorum. A majority of the whole
authorized number of directors shall be necessary to constitute a
quorum for a meeting of directors, except that a majority of the
directors in office shall constitute a quorum for filling a
vacancy in the board. The act of a majority of the directors
present at a meeting at which a quorum is present is the act of
the board, except as otherwise provided by law, the Articles or
the Regulations.
Section 2.10. Executive and Other Committees. The
directors may create an executive committee or any other
committee of directors, to consist of not less than three
directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the
directors, however conferred, other than that of filling
vacancies among the directors or in the executive committee or in
any other committee of the directors.
Such executive committee or any other committee of
directors shall serve at the pleasure of the directors, shall act
only in the intervals between meetings of the directors, and
shall be subject to the control and direction of the directors.
Such executive committee or other committee of directors may act
by a majority of its members at a meeting or by a writing or
writings signed by all of its members.
Any act or authorization of any act by the executive
committee or any other committee within the authority delegated
to it shall be as effective for all purposes as the act or
authorization of the directors. No notice of a meeting of the
executive committee or of any other committee of directors shall
be required. A meeting of the executive committee or of any
other committee of directors may be called only by the president
or by a member of such executive or other committee of directors.
Meetings of the executive committee or of any other committee of
directors may be held through any communications equipment if all
persons participating can hear each other and participation in
such a meeting shall constitute presence thereat.
Section 2.11. Compensation. Directors shall be
entitled to receive as compensation for services rendered and
expenses incurred as directors, such amounts as the directors may
determine.
Section 2.12. By-Laws. The directors may adopt, and
amend from time to time, By-Laws for their own government, which
By-Laws shall not be inconsistent with the law, the Articles or
the Regulations.
ARTICLE THREE
OFFICERS
Section 3.01. Officers. The officers of the
corporation to be elected by the directors shall be a chairman of
the board, a president, a secretary, a treasurer, and, if
desired, one or more vice presidents and such other officers and
assistant officers as the directors may from time to time elect.
The chairman of the board must be a director. Officers need not
be shareholders of the corporation, and may be paid such compen
sation as the board of directors may determine. Any two or more
offices may be held by the same person, but no officer shall
execute, acknowledge, or verify any instrument in more than one
capacity if such instrument is required by law, the Articles, the
Regulations or the By-Laws to be executed, acknowledged, or
verified by two or more officers.
Section 3.02. Tenure of Office. The officers of the
corporation shall hold office at the pleasure of the directors.
Any officer of the corporation may be removed, either with or
without cause, at any time, by the affirmative vote of a majority
of all the directors then in office; such removal, however, shall
be without prejudice to the contract rights, if any, of the
person so removed.
Section 3.03. Duties of the Chairman of the Board.
The chairman of the board shall preside at all meetings of the
shareholders and directors at which he is present, shall be the
chief executive officer of the corporation, and shall have
general control and supervision of the policies and operations of
the corporation and shall see that all orders and resolutions of
the board of directors are carried into effect. He shall manage
and administer the corporation's business and affairs and shall
also perform all duties and exercise all powers usually
pertaining to the office of a chief executive officer of a
corporation. He shall have the authority to sign, in the name
and on behalf of the corporation, checks, orders, contracts,
leases, notes, drafts and other documents and instruments in
connection with the business of the corporation, and together
with the secretary or an assistant secretary, conveyances of real
estate and other documents and instruments. He shall have the
authority to cause the employment or appointment of such
employees and agents of the corporation as the conduct of the
business of the corporation may require, and to fix their
compensation; and to remove or suspend any employee or agent
elected or appointed by the chairman of the board.
Section 3.04. Duties of the President. The president
shall be chief operating officer of the corporation, and, subject
to the control of the chairman of the board, shall have general
and active management of the ordinary business of the corporation
and shall see that all orders and resolutions of the board of
directors are carried into effect. In the absence of the
chairman of the board, the president shall exercise all the
powers of the chairman, including, without limitation, the
authority to: (A) sign, in the name and on behalf of the
corporation, checks, orders, contracts, leases, notes, drafts and
other documents and instruments in connection with the business
of the corporation, and, together with the secretary or an
assistant secretary, conveyances of real estate and other
documents and instruments; (B) cause the employment or
appointment of such employees and agents of the corporation as
the conduct of the business of the corporation may require and to
fix their compensation; and (C) remove or suspend any employee or
agent who shall not have been elected or appointed by the
chairman of the board or the board of directors. The president
shall perform such other duties and have such other powers as the
board of directors or the chairman of the board may from time to
time prescribe.
Section 3.05. Duties of the Vice Presidents. Each
vice president shall perform such duties and exercise such powers
as may be assigned to him from time to time by the chairman of
the board or the president. In the absence of the chairman of
the board or the president, the duties of the chairman of the
board or the president shall be performed and his powers may be
exercised by such vice president as shall be designated by the
chairman of the board or the president, or failing such
designation, such duties shall be performed and such powers may
be exercised by each vice president in the order of their
earliest election to that office, subject in any case to review
and superseding action by the chairman of the board or the
president.
Section 3.06. Duties of the Secretary. The secretary
shall have the following powers and duties:
(A) He shall keep or cause to be kept a record of
all the proceedings of the meetings of the shareholders
and of the board of directors in books provided for
that purpose.
(B) He shall cause all notices to be duly given
in accordance with the provisions of these Regulations
and as required by law.
(C) Whenever any committee shall be appointed
pursuant to a resolution of the board of directors, he
shall furnish a copy of such resolution to the members
of such committee.
(D) He shall be the custodian of the records of
the corporation.
(E) He shall properly maintain and file all
books, reports, statements, certificates and all other
documents and records required by law, the Articles or
these Regulations.
(F) He shall have charge of the stock books and
ledgers of the corporation and shall cause the stock
and transfer books to be kept in such manner as to show
at any time the number of shares of the corporation of
each class issued and outstanding, the names
(alphabetically arranged) and the addresses of the
holders of record of such shares, the number of shares
held by each holder and the date as of which each
became such holder of record.
(G) He shall sign (unless the treasurer, an
assistant treasurer or assistant secretary shall have
signed) certificates representing shares of the
corporation the issuance of which shall have been
authorized by the board of directors.
(H) He shall perform, in general, all duties
incident to the office of secretary and such other
duties as may be specified in these Regulations or as
may be assigned to him from time to time by the board
of directors, the chairman of the board or the
president.
Section 3.07. Duties of the Treasurer. The treasurer
shall have the following powers and duties:
(A) He shall have charge and supervision over and
be responsible for the moneys, securities, receipts and
disbursements of the corporation, and shall keep or
cause to be kept full and accurate records of all
receipts of the corporation.
(B) He shall cause the moneys and other valuable
effects of the corporation to be deposited in the name
and to the credit of the corporation in such banks or
trust companies or with such bankers or other
depositaries as shall be selected by the board of
directors, the chairman of the board or the president.
(C) He shall cause the moneys of the corporation
to be disbursed by checks or drafts upon the authorized
depositaries of the corporation and cause to be taken
and preserved proper vouchers for all moneys disbursed.
(D) He shall render to the board of directors,
the chairman of the board or the president, whenever
requested, a statement of the financial condition of
the corporation and of all his transactions as
treasurer, and render a full financial report at the
annual meeting of the shareholders, if called upon to
do so.
(E) He shall be empowered from time to time to
require from all officers or agents of the corporation
reports or statements giving such information as he may
desire with respect to any and all financial
transactions of the corporation.
(F) He may sign (unless an assistant treasurer or
the secretary or an assistant secretary shall have
signed) certificates representing shares of the
corporation the issuance of which shall have been
authorized by the board of directors.
(G) He shall perform, in general, all duties
incident to the office of treasurer and such other
duties as may be specified in these Regulations or as
may be assigned to him from time to time by the board
of directors, the chairman of the board or the
president.
ARTICLE FOUR
SHARES
Section 4.01. Certificates. Certificates evidencing
ownership of shares of the corporation shall be issued to those
entitled to them. Each certificate evidencing shares of the
corporation shall bear a distinguishing number; the signatures of
the chairman of the board, the president, or a vice president,
and of the secretary, an assistant secretary, the treasurer or an
assistant treasurer (except that when any such certificate is
countersigned by an incorporated transfer agent or registrar,
such signatures may be facsimile, engraved, stamped or printed);
and such recitals as may be required by law. Certificates
evidencing shares of the corporation shall be of such tenor and
design as the directors may from time to time adopt and may bear
such recitals as are permitted by law.
Section 4.02. Transfers. Where a certificate
evidencing a share or shares of the corporation is presented to
the corporation or its proper agents with a request to register
transfer, the transfer shall be registered as requested if:
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or trans
fer of shares evidenced by each such certificate, or signs a
power to assign or transfer such shares, or when the signature of
an appropriate person is written without more on the back of each
such certificate; and
(2) Reasonable assurance is given that the indorsement
of each appropriate person is genuine and effective; the
corporation or its agents may refuse to register a transfer of
shares unless the signature of each appropriate person is
guaranteed by a commercial bank or trust company having an office
or a correspondent in the City of New York or by a firm having
membership in the New York Stock Exchange; and
(3) All applicable laws relating to the collection of
transfer or other taxes have been complied with; and
(4) The corporation or its agents are not otherwise
required or permitted to refuse to register such transfer.
Section 4.03. Transfer Agents and Registrars. The
directors may appoint one or more agents to transfer or to
register shares of the corporation, or both.
Section 4.04. Lost, Wrongfully Taken or Destroyed
Certificates. Except as otherwise provided by law, where the
owner of a certificate evidencing shares of the corporation
claims that such certificate has been lost, destroyed or
wrongfully taken, the directors must cause the corporation to
issue a new certificate in place of the original certificate if
the owner:
(1) So requests before the corporation has notice that
such original certificate has been acquired by a bona fide
purchaser; and
(2) Files with the corporation, unless waived by the
directors, an indemnity bond, with surety or sureties satis
factory to the corporation, in such sums as the directors may, in
their discretion, deem reasonably sufficient as indemnity against
any loss or liability that the corporation may incur by reason of
the issuance of each such new certificate; and
(3) Satisfies any other reasonable requirements which
may be imposed by the directors, in their discretion.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. Mandatory Indemnification. The corpor
ation shall indemnify any officer or director of the corporation
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or
instituted by or in the right of the corporation), by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, member,
manager or agent of another corporation (domestic or foreign,
nonprofit or for profit), limited liability company, partnership,
joint venture, trust or other enterprise, against expenses
(including, without limitation, attorneys' fees, filing fees,
court reporters' fees and transcript costs), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful. A person
claiming indemnification under this Section 5.01 shall be
presumed, in respect of any act or omission giving rise to such
claim for indemnification, to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal
matter, to have had no reasonable cause to believe his conduct
was unlawful, and the termination of any action, suit or proceed
ing by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, rebut
such presumption.
Section 5.02. Court-Approved Indemnification.
Anything contained in the Regulations or elsewhere to the
contrary notwithstanding:
(A) the corporation shall not indemnify any officer or
director of the corporation who was a party to any completed
action or suit instituted by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the corpora
tion, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager or agent of
another corporation (domestic or foreign, nonprofit or for pro
fit), limited liability company, partnership, joint venture,
trust or other enterprise, in respect of any claim, issue or
matter asserted in such action or suit as to which he shall have
been adjudged to be liable for acting with reckless disregard for
the best interests of the corporation or misconduct (other than
negligence) in the performance of his duty to the corporation
unless and only to the extent that the Court of Common Pleas of
Union County, Ohio or the court in which such action or suit was
brought shall determine upon application that, despite such
adjudication of liability, and in view of all the circumstances
of the case, he is fairly and reasonably entitled to such
indemnity as such Court of Common Pleas or such other court shall
deem proper; and
(B) the corporation shall promptly make any such
unpaid indemnification as is determined by a court to be proper
as contemplated by this Section 5.02.
Section 5.03. Indemnification for Expenses. Anything
contained in the Regulations or elsewhere to the contrary notwith
standing, to the extent that an officer or director of the
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
Section 5.01, or in defense of any claim, issue or matter
therein, he shall be promptly indemnified by the corporation
against expenses (including, without limitation, attorneys' fees,
filing fees, court reporters' fees and transcript costs) actually
and reasonably incurred by him in connection therewith.
Section 5.04. Determination Required. Any indemni
fication required under Section 5.01 and not precluded under
Section 5.02 shall be made by the corporation only upon a
determination that such indemnification of the officer or
director is proper in the circumstances because he has met the ap
plicable standard of conduct set forth in Section 5.01. Such
determination may be made only (A) by a majority vote of a quorum
consisting of directors of the corporation who were not and are
not parties to, or threatened with, any such action, suit or
proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a
written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who
has been retained by or who has performed services for the
corporation, or any person to be indemnified, within the past
five years, or (C) by the shareholders, or (D) by the Court of
Common Pleas of Union County, Ohio or (if the corporation is a
party thereto) the court in which such action, suit or proceeding
was brought, if any; any such determination may be made by a
court under division (D) of this Section 5.04 at any time
[including, without limitation, any time before, during or after
the time when any such determination may be requested of, be
under consideration by or have been denied or disregarded by the
disinterested directors under division (A) or by independent
legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04]; and no failure for any reason
to make any such determination, and no decision for any reason to
deny any such determination, by the disinterested directors under
division (A) or by independent legal counsel under division (B)
or by shareholders under division (C) of this Section 5.04 shall
be evidence in rebuttal of the presumption recited in
Section 5.01. Any determination made by the disinterested
directors under division (A) or by independent legal counsel
under division (B) of this Section 5.04 to make indemnification
in respect of any claim, issue or matter asserted in an action or
suit threatened or brought by or in the right of the corporation
shall be promptly communicated to the person who threatened or
brought such action or suit, and within ten days after receipt of
such notification such person shall have the right to petition
the Court of Common Pleas of Union County, Ohio or the court in
which such action or suit was brought, if any, to review the
reasonableness of such determination.
Section 5.05. Advances for Expenses. Expenses
(including, without limitation, attorneys' fees, filing fees,
court reporters' fees and transcript costs) incurred in defending
any action, suit or proceeding referred to in Section 5.01 shall
be paid by the corporation in advance of the final disposition of
such action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only
if such officer or director shall first agree, in writing, to
repay all amounts so paid in respect of any claim, issue or other
matter asserted in such action, suit or proceeding in defense of
which he shall not have been successful on the merits or other
wise:
(A) if it shall ultimately be determined as provided
in Section 5.04 that he is not entitled to be indemnified by the
corporation as provided under Section 5.01; or
(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the corporation in such action or
suit, he shall have been adjudged to be liable for acting with
reckless disregard for the best interests of the corporation or
misconduct (other than negligence) in the performance of his duty
to the corporation, unless and only to the extent that the Court
of Common Pleas of Union County, Ohio or the court in which such
action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the
circumstances, he is fairly and reasonably entitled to all or
part of such indemnification.
Section 5.06. Article FIVE Not Exclusive. The
indemnification provided by this Article FIVE shall not be
exclusive of, and shall be in addition to, any other rights to
which any person seeking indemnification may be entitled under
the Articles or the Regulations or any agreement, vote of
shareholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office, and shall continue as to a
person who has ceased to be an officer or director of the
corporation and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
Section 5.07. Insurance. The corporation may purchase
and maintain insurance or furnish similar protection, including
but not limited to trust funds, letters of credit, or self-
insurance, on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee,
officer, employee, member, manager or agent of another
corporation (domestic or foreign, nonprofit or for profit),
limited liability company, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the
obligation or the power to indemnify him against such liability
under the provisions of this Article FIVE. Insurance may be
purchased from or maintained with a person in which the
corporation has a financial interest.
Section 5.08. Certain Definitions. For purposes of
this Article FIVE, and as examples and not by way of limitation:
(A) A person claiming indemnification under this
Article FIVE shall be deemed to have been successful on the
merits or otherwise in defense of any action, suit or proceeding
referred to in Section 5.01, or in defense of any claim, issue or
other matter therein, if such action, suit or proceeding shall be
terminated as to such person, with or without prejudice, without
the entry of a judgment or order against him, without a convic
tion of him, without the imposition of a fine upon him and
without his payment or agreement to pay any amount in settlement
thereof (whether or not any such termination is based upon a
judicial or other determination of the lack of merit of the
claims made against him or otherwise results in a vindication of
him); and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any
excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer,
employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the corporation" within the meaning of that term as
used in this Article FIVE.
Section 5.09. Venue. Any action, suit or proceeding
to determine a claim for indemnification under this Article FIVE
may be maintained by the person claiming such indemnification, or
by the corporation, in the Court of Common Pleas of Union County,
Ohio. The corporation and (by claiming such indemnification)
each such person consent to the exercise of jurisdiction over its
or his person by the Court of Common Pleas of Union County, Ohio
in any such action, suit or proceeding.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Amendments. The Regulations may be
amended, or new regulations may be adopted, at a meeting of
shareholders held for such purpose, only by the affirmative vote
of the holders of shares entitling them to exercise not less than
a majority of the voting power of the corporation on such
proposal, or without a meeting by the written consent of the
holders of shares entitling them to exercise not less than all of
the voting power of the corporation on such proposal.
Section 6.02. Action by Shareholders or Directors
Without a Meeting. Anything contained in the Regulations to the
contrary notwithstanding, any action which may be authorized or
taken at a meeting of the shareholders or of the directors or of
a committee of the directors, as the case may be, may be author
ized or taken without a meeting with the affirmative vote or
approval of, and in a writing or writings signed by, all the
shareholders who would be entitled to notice of a meeting of the
shareholders held for such purpose, or all the directors, or all
the members of such committee of the directors, respectively,
which writings shall be filed with or entered upon the records of
the corporation.
Fourth Amended and Restated Credit Agreement dated as of March 17, 1995
among The Scotts Company, Chemical Bank, the lenders party thereto and
Chemical Bank, as agent.
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of March 17, 1995, by and among THE SCOTTS COMPANY, an Ohio
corporation (the "Borrower" or "Scotts"), the several banks and
other financial institutions from time to time parties to this
Agreement (the "Lenders") and CHEMICAL BANK, a New York banking
corporation ("Chemical"), as agent for the Lenders hereunder (in
such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower is a party to that certain Third
Amended and Restated Revolving Credit Agreement dated as of April
7, 1992 (as amended, supplemented or otherwise modified from time
to time, the "Existing Credit Agreement"), among the Borrower,
the lenders parties thereto (the "Existing Banks") and Chemical
Bank, as agent for the Existing Banks, pursuant to which the
Existing Banks have made revolving credit and term loans to the
Borrower for the purposes set forth therein; and
WHEREAS, the Borrower has requested that the Existing
Credit Agreement be amended and restated on the terms and
conditions set forth herein to provide for, among other things,
(i) the repayment in full of the revolving credit loans and term
loans under the Existing Credit Agreement and the payment of any
and all other amounts owing to the Existing Banks thereunder,
(ii) the addition of certain lenders as parties thereto and (iii)
the release of the collateral pledged by the Borrower and its
Subsidiaries for the benefit of the Existing Banks;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein, it is hereby agreed that,
on the Restatement Date (as hereinafter defined), the Existing
Credit Agreement shall be amended and restated in entirety to
read as follows:
1. DEFINITIONS
1 Defined Terms. As used in this Agreement, the following
terms have the following meanings:
"ABR" shall mean for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b)
the Base CD Rate in effect on such day plus 1% and (c) the
Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to
time by the Agent as its prime rate in effect at its
principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by
Chemical Bank in connection with extensions of credit to
debtors); "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) a
fraction, the numerator of which is one and the denominator
of which is one minus the C/D Reserve Percentage and (b) the
C/D Assessment Rate; "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the
Federal Reserve System (the "Board") through the public
information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of
major money center banks in New York City received at
approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Agent from three New York
City negotiable certificate of deposit dealers of recognized
standing selected by it; and "Federal Funds Effective Rate"
shall mean, for any day, 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 on the next succeeding 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 the day of such transactions received
by the Agent from three federal funds brokers of recognized
standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate
or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change
in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans" shall mean the Loans at such time as they
are made and/or being maintained at a rate of interest based
upon the ABR.
"Affiliate" shall mean (a) any Person (other than a
Subsidiary of the Borrower) which, directly or indirectly,
controls, is controlled by or is under common control with,
the Borrower or (b) any Person who is a director or officer
of the Borrower, any Subsidiary of the Borrower or any
Person described in clause (a) of this definition. For
purposes of this definition, "control" of a Person means the
power, direct or indirect, to vote 20% or more of the
securities having voting power for the election of directors
of such Person or otherwise to direct or cause the direction
of the management and policies of such Person, whether by
contract or otherwise.
"Aggregate Outstanding Extensions of Credit" shall mean
an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans (including, without
limitation, Swing Line Loans) then outstanding, (b) the
aggregate principal amount of all Bid Loans then outstanding
and (c) the aggregate amount of all L/C Obligations then
outstanding.
"Agreement" shall mean this Fourth Amended and Restated
Credit Agreement, as the same may be amended, supplemented
or otherwise modified from time to time.
"Applicable Margin" shall mean, with respect to each
day for each Type of Loan, the rate per annum based on the
Ratings in effect on such day, as set forth under the
relevant column heading below:
Rating Eurodollar
Category Rate Loans ABR Loans
Rating I .2500% .0000%
Rating II .2750% .0000%
Rating III .3125% .0000%
Rating IV .5000% .0000%
Rating V .6250% .1250%;
provided, however, that the Applicable Margin shall be
deemed to be .3125% in respect of Eurodollar Rate Loans and
.0000% in respect of ABR Loans for the period from and
including the Restatement Date to and excluding the date on
which a change in either Rating shall occur.
"Application" shall mean an application, in such form
as the Issuing Lender may specify from time to time,
requesting such Issuing Lender to open a Letter of Credit.
"Assignment and Acceptance" shall mean an Assignment
and Acceptance, substantially in the form of Exhibit H
hereto.
"Available Commitment" shall mean, as to any Lender at
any time, the amount equal to the excess, if any, of (a)
such Lender's Revolving Credit Commitment over (b) the sum
of (i) the Revolving Credit Loans made by such Lender
(including, without limitation, such Lender's Commitment
Percentage of the then outstanding Swing Line Loans) then
outstanding, (ii) such Lender's Commitment Percentage of the
then outstanding Bid Loans and (iii) such Lender's
Commitment Percentage of the L/C Obligations then
outstanding.
"Bid Loan" shall mean each advance made to the Borrower
pursuant to subsection 2.5.
"Bid Loan Confirmation" shall mean a bid loan
confirmation, substantially in the form of Exhibit I, to be
delivered by the Borrower to the Agent in accordance with
subsection 2.5(b)(iv).
"Bid Loan Request" shall mean a bid loan request,
substantially in the form of Exhibit J, to be delivered by
the Borrower to the Agent in accordance with subsection
2.5(b)(i) in writing, by facsimile transmission, or by
telephone immediately confirmed by facsimile transmission.
"Bid Note" shall have the meaning assigned to such term
in subsection 2.6(e).
"Bid Quote" shall mean a bid quote substantially in the
form of Exhibit K, to be delivered by a Lender to the Agent
in accordance with subsection 2.5(b) in writing, by
facsimile transmission, or by telephone immediately
confirmed by facsimile transmission.
"Borrowing Date" shall mean, as to any Lender, any
Business Day specified in a notice transmitted pursuant to
subsection 2.2 or 2.3 as a date on which such Lender has
been requested by the Borrower to make Loans hereunder.
"Business Day" shall mean a day other than a Saturday,
Sunday or other day on which commercial banks in New York
City are authorized or required by law to close; provided,
however, that when used to describe the date of any
borrowing of, or any payment or interest rate determination
in respect of, a Eurodollar or a LIBOR Bid Loan, the term
"Business Day" shall also exclude any day on which
commercial banks are not open for dealings in Dollar
deposits in the London Interbank Market.
"Capital Stock" shall mean any and all shares,
interests, participations or other equivalents (however
designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase
any of the foregoing.
"Cash Equivalents" shall mean (a) securities with
maturities of one year or less from the date of acquisition
issued or fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of
deposit, eurodollar time deposits, overnight bank deposits,
and bankers acceptances, each with maturities of one year or
less from the date of the acquisition thereof, of any Lender
or any other commercial bank having capital and surplus in
excess of $300,000,000, and (c) commercial paper of the
Lenders or any of their affiliates or of a domestic issuer
rated at least A-1 by Standard & Poor's Corporation or P-1
by Moody's Investors Service, Inc.
"CBAS" shall mean Chemical Bank Agency Services.
"C/D Assessment Rate" shall mean, for any day as
applied to any ABR Loan, the annual assessment rate in
effect on such day which is payable by a member of the Bank
Insurance Fund maintained by the Federal Deposit Insurance
Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor
assessment risk classification) within the meaning of 12
C.F.R. 327.3(d) (or any successor provision) to the FDIC
(or any successor) for the FDIC's (or such successor's)
insuring time deposits at offices of such institution in the
United States.
"C/D Reserve Percentage" shall mean, for any day as
applied to any ABR Loan, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any
successor) (the "Board"), for determining the maximum
reserve requirement for a Depositary Institution (as defined
in Regulation D of the Board) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or
more.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commercial Paper Obligations" shall mean at any time,
the aggregate principal amount of commercial paper of the
Borrower then outstanding.
"Commitment Percentage" shall mean, as to any Lender at
any time, the percentage set forth opposite such Lender's
name on Schedule I hereto (or at any time after the
Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal
amount of such Lender's Loans then outstanding constitutes
of the aggregate principal amount of the Loans then
outstanding).
"Commonly Controlled Entity" shall mean an entity,
whether or not incorporated, which is under common control
with the Borrower within the meaning of Section 4001 of
ERISA.
"Consolidated Interest Expense" shall mean, for any
period of determination thereof, the interest expense of the
Borrower and its Subsidiaries for such period, as determined
in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period of
determination thereof, net income of the Borrower and its
Subsidiaries for such period, as determined in accordance
with GAAP.
"Consolidated Net Worth" shall mean, in respect of any
Person at a particular date, all amounts which, in
conformity with GAAP, would be included under the caption
"total shareholders' equity" (or any like caption) on a
consolidated balance sheet of such Person and its
Subsidiaries at such date.
"Contingent Obligation" shall mean as to any Person,
the outstanding amount of letters of credit with respect to
which such Person is the account party that have not been
drawn upon and any obligation of such Person guaranteeing or
in effect guaranteeing any Indebtedness, leases, dividends
or other obligations primarily to pay money ("primary
obligations") 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
obligation 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 obligation 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 obligee under any such primary obligation of the ability
of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the
obligee under such primary obligation against loss in
respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business.
"Contractual Obligation" shall mean, as to any Person,
any material provision of any material security issued by
such Person or of any material agreement, instrument or
undertaking to which such Person is a party or by which it
or any of its property is bound.
"Default" shall mean any of the events specified in
Section 8, whether or not any requirement for the giving of
notice, the lapse of time, or both, or any other condition,
has been satisfied.
"Dollars" and "$" shall mean dollars in lawful currency
of the United States of America.
"Domestic Subsidiary" shall mean any Subsidiary
incorporated under the laws of the United States or any
political subdivision thereof.
"EBITDA" shall mean without duplication, for any fiscal
period, the sum of the amounts for such fiscal period of (i)
Consolidated Net Income, (ii) provision for taxes based on
income, (iii) depreciation expense, (iv) Consolidated
Interest Expense, (v) amortization expense and (vi) other
non-recurring, non-cash items reducing Consolidated Net
Income (reduced by any non-recurring, non-cash items
increasing Consolidated Net Income), all as determined on a
consolidated basis for the Borrower and its Subsidiaries in
conformity with GAAP.
"Effective Federal Funds Rate" shall have the meaning
specified in subsection 2.15(b).
"Engagement Letter" shall mean the letter, dated
February 10, 1995, from the Agent to the Borrower.
"Environmental Laws" shall mean any and all foreign,
Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees,
requirements of any Governmental Authority or requirements
of law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may
at any time hereafter be in effect.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"Eurodollar Loans" shall mean the Loans hereunder at
such time as they are made and/or being maintained at a rate
of interest based upon the Eurodollar Rate.
"Eurodollar Base Rate" shall mean, with respect to each
day during each Interest Period pertaining to a Eurodollar
Loan, the rate per annum equal to the rate (rounded upward,
if necessary, to the next 1/16 of 1%) at which the Reference
Lender is offered Dollar deposits two Business Days prior to
the beginning of such Interest Period in the interbank
eurodollar market where the foreign currency and exchange
operations or eurodollar funding operations of the Reference
Lender are customarily conducted at or about 10:00 A.M., New
York City time, for delivery on the first day of such
Interest Period for the number of days comprised therein and
in an amount equal to the amount of the Eurodollar Loan to
be outstanding during such Interest Period.
"Eurodollar Rate" shall mean, with respect to each day
during each Interest Period pertaining to a Eurodollar Loan,
the rate per annum equal to the quotient (rounded upward to
the nearest 1/100 of 1%) of (a) the Eurodollar Base Rate,
divided by (b) a number equal to 1.00 minus the aggregate of
the rates (expressed as a decimal fraction) of reserve
requirements current on the date two Business Days prior to
the beginning of such Interest Period (including, without
limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of
the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto), as now and from
time to time hereafter in effect, dealing with reserve
requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of
such Board) maintained by a member bank of such System.
"Event of Default" shall mean any of the events
specified in Section 8, provided that any requirement for
the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Existing Banks" shall have the meaning assigned to
such term in the preamble to this Agreement.
"Existing Credit Agreement" shall have the meaning
assigned to such term in the preamble to this Agreement.
"Extension of Credit" shall mean (i) all Loans or
advances made to the Borrower hereunder and (ii) all Letters
of Credit issued for the account of the Borrower hereunder.
"Facility Fee Rate" shall mean, for each day during
each calculation period, a rate per annum based on the
Ratings in effect on such day, as set forth below:
Rating Facility
Category Fee Rate
Rating I .1500%
Rating II .1750%
Rating III .1875%
Rating IV .2500%
Rating V .3750%;
provided, however, that the Facility Fee Rate shall be
deemed to be .1875% for the period from and including the
Restatement Date to and excluding the date on which a change
in either Rating shall occur.
"Fixed Rate Bid Loan" shall mean any Bid Loan made at a
fixed rate (as opposed to a rate based upon the LIBOR Rate).
"Fixed Rate Bid Loan Request" shall mean any Bid Loan
Request requesting the Lenders to offer to make Fixed Rate
Bid Loans.
"GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from
time to time; provided, however, that if any modifications
in GAAP after the Restatement Date change any calculation of
any financial covenants under this Agreement, the Agent and
the Lenders agree to amend this Agreement to the effect that
each such financial covenant is no more restrictive than
such covenant was prior to such modification in GAAP.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Hedging Agreements" shall mean (a) any interest rate
protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap or other
interest rate hedge or arrangement under which the Borrower
is a party or a beneficiary and (b) any agreement or
arrangement designed to limit or eliminate the risk and/or
exposure of the Borrower to fluctuations in currency
exchange rates.
"Hedging Lender" shall mean any Lender which from time
to time enters into a Hedging Agreement with the Borrower.
"Indebtedness" shall mean, as to any Person, at a
particular time, (a) indebtedness of such Person for
borrowed money or for the deferred purchase price of
property or services (including, without limitation, any
such indebtedness which is non-recourse to the credit of
such Person but is secured by assets of such Person), (b)
obligations of such Person under leases which shall have
been or should be, in accordance with GAAP, recorded as
capitalized leases, (c) indebtedness of such Person arising
under acceptance facilities, (d) indebtedness of such Person
arising under unpaid reimbursement obligations in respect of
all drafts drawn under letters of credit issued for the
account of such Person, (e) the incurrence of withdrawal
liability under Title IV of ERISA by such Person or a
Commonly Controlled Entity to a Multiemployer Plan and (f)
liabilities arising under Hedging Agreements of such Person.
"Insolvency" shall mean, with respect to any
Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of such term as used in Section
4245 of ERISA.
"Interest Payment Date" shall mean (a) as to any ABR
Loan, the last day of each March, June, September and
December, commencing on the first of such days to occur
after such ABR Loan is made or Eurodollar Loans are
converted to such ABR Loan, (b) as to any Eurodollar Loan or
LIBOR Bid Loan in respect of which the Borrower has selected
an Interest Period of one month or three months or any Fixed
Rate Bid Loan having an Interest Period of 90 days or less,
the last day of such Interest Period, (c) as to any
Eurodollar Loan or LIBOR Bid Loan in respect of which the
Borrower has selected a longer Interest Period than the
periods described in preceding clause (b), the 90th day of
such Interest Period and the last day of such Interest
Period and (d) as to any Fixed Rate Bid Loan in respect of
which the Borrower has selected a longer Interest Period
than the period described in preceding clause (b), the last
day of each March, June, September and December falling
within such Interest Period and the last day of such
Interest Period.
"Interest Period" shall mean (a) with respect to any
Eurodollar Loan, (i) initially, the period commencing on, as
the case may be, the borrowing or conversion date with
respect to a Eurodollar Loan and ending one, three or six
months thereafter, as selected by the Borrower, as the case
may be, in its irrevocable written notice of borrowing as
provided in subsection 2.2 or 2.3 or its written irrevocable
notice of conversion as provided in subsection 2.11 and (ii)
thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar
Loan and ending one, three or six months thereafter, as
selected by the Borrower by irrevocable written notice to
the Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect to
such Eurodollar Loan and (b) with respect to any Bid Loan,
the period specified in the Bid Loan Confirmation with
respect to such Bid Loan; provided that all of the foregoing
provisions relating to Interest Periods are subject to the
following:
(A) if any Interest Period pertaining to a
Eurodollar Loan or a LIBOR Bid Loan would otherwise end
on a day which is not a Business Day, that Interest
Period shall be extended to the next succeeding
Business Day unless the result of such extension would
be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on
the next preceding Business Day;
(B) if the Borrower shall fail to give
notice as provided in clause (a)(ii) above, the
Borrower shall be deemed to have requested conversion
of the affected Eurodollar Loan to an ABR Loan on the
last day of the then current Interest Period with
respect thereto;
(C) if any Interest Period pertaining to a
Fixed Rate Bid Loan would otherwise end on a day that
is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day;
(D) any Interest Period that would otherwise
extend beyond the Termination Date shall end on the
Termination Date; and
(E) any Interest Period pertaining to a
Eurodollar Loan or LIBOR Bid Loan that begins on the
last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"Issuing Lender" shall mean, in respect of any Letter
of Credit, Chemical or, at the option of Chemical, any
Affiliate of Chemical, in its capacity as the issuer of such
Letter of Credit.
"L/C Commitment" shall mean the amount of $15,000,000.
"L/C Obligations" shall mean, at any time, an amount
equal to the sum of (a) the aggregate then undrawn and
unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of
Credit which have not then been reimbursed pursuant to
Section 3.
"L/C Participants" shall mean the collective reference
to all the Lenders other than the Issuing Lender.
"Letter of Credit" shall mean any Standby L/C or Trade
L/C.
"LIBOR Bid Loan" shall mean any Bid Loan made and/or
being maintained at a rate of interest based upon the LIBOR
Rate.
"LIBOR Bid Loan Request" shall mean any Bid Loan
Request requesting the Lenders to offer to make LIBOR Bid
Loans.
"LIBOR Rate" shall mean, in respect of any Bid Loan
requested pursuant to a LIBOR Bid Loan Request, the London
interbank offered rate for deposits in Dollars for the
period commencing on the date of such Bid Loan and ending on
the maturity date thereof which appears on Telerate Page
3750 as of 11:00 A.M., London time, two Business Days prior
to the beginning of such period.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, charge,
encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title
retention agreement, any financing lease having
substantially the same economic effect as any of the
foregoing, and the authorized filing by or against a Person
of any financing statement as debtor under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Loan" shall mean any Revolving Credit Loan, Swing Line
Loan and/or Bid Loan, as the context shall require;
collectively, the "Loans".
"Loan Documents" shall mean, collectively, this
Agreement, any Notes, the Applications, the Letters of
Credit, and the Subsidiaries Guarantee.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the business, operations, property, condition
(financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole or (b) the validity or
enforceability of any material term of this or any of the
other Loan Documents or the rights or remedies of the Agent
or the Lenders hereunder or thereunder.
"Material Environmental Amount" shall mean an amount
payable by the Borrower or any of its Subsidiaries in excess
of $10,000,000 in the aggregate for remedial costs,
compliance costs, compensatory damages, punitive damages,
fines, penalties, or any combination thereof.
"Material Subsidiary" shall mean at any time (a) any
Subsidiary of the Borrower created or acquired after the
Restatement Date which has a Total Capitalization of more
than $20,000,000, (b) any Subsidiary of the Borrower with
assets greater than or equal to 5% of all assets of the
Borrower and its Subsidiaries, computed and consolidated in
accordance with GAAP ("Consolidated Assets"), (c) any
Subsidiary with revenues greater than or equal to 5% of the
revenues of the Borrower and its Subsidiaries, computed and
consolidated in accordance with GAAP ("Net Revenues") or (d)
any Subsidiary designated in writing by the Borrower as a
Material Subsidiary; provided that if at any time (i) the
aggregate Total Capitalization of all Subsidiaries that are
not Material Subsidiaries shall exceed 10% of the Total
Capitalization of the Borrower and its Subsidiaries,
computed and consolidated in accordance with GAAP, (ii) the
aggregate assets of all Subsidiaries that are not Material
Subsidiaries shall exceed 10% of Consolidated Assets or
(iii) the aggregate revenues of all Subsidiaries that are
not Material Subsidiaries shall exceed 10% of Net Revenues,
then, in any such case, the term Material Subsidiary shall
be deemed to include such Subsidiaries (as determined
pursuant to the next following sentence) of the Borrower as
may be required so that none of preceding clauses (i), (ii)
or (iii) shall continue to be true. For purposes of the
proviso to the next preceding sentence, the Subsidiaries
which shall be deemed to be Material Subsidiaries shall be
determined based on the percentage that the assets of each
such Subsidiary are of Consolidated Assets, with the
Subsidiary with the highest such percentage being selected
first, and each other Subsidiary required to satisfy the
requirements set forth in such proviso being selected in
descending order of such percentage.
"Materials of Environmental Concern" shall mean any
gasoline or petroleum (including crude oil or any fraction
thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without
limitation, asbestos, polychlorinated biphenyls, and urea-
formaldehyde insulation.
"Merger Agreement" shall mean that certain Agreement
and Plan of Merger dated as of January 26, 1995 among
Miracle-Gro, the other Miracle-Gro Constituent Companies
party thereto, the shareholders of the Miracle-Gro
Constituent Companies party thereto, the Borrower and Merger
Subsidiary, the exhibits and schedules thereto, and the
agreements and documents executed in connection therewith,
copies of which have been delivered to the Agent and the
Lenders prior to the date hereof.
"Merger Subsidiary" shall have the meaning assigned to
such term in the Merger Agreement.
"Merger Transactions" shall have the meaning assigned
to such term in the Merger Agreement.
"Miracle-Gro" shall mean Miracle-Gro Products, Inc., a
New Jersey corporation.
"Miracle-Gro Constituent Companies" shall have the
meaning assigned to such term in the Merger Agreement.
"Miracle-Gro Shareholders" shall mean Horace Hagedorn,
James Hagedorn, Katherine Hagedorn Littlefield, Paul
Hagedorn, Peter Hagedorn, Robert Hagedorn, Susan Hagedorn
and John Kenlon.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"Net Cash Proceeds" shall mean, when used in respect of
any issuance of equity or subordinated notes, the aggregate
cash proceeds received by the Borrower from such issuance
(and any cash payments received in respect of promissory
notes or other non-cash consideration delivered to the
Borrower in respect of any such issuance), less (without
duplication) the reasonable fees and expenses (including
legal fees, consulting fees, accounting fees and brokers'
and underwriters' commissions paid to third parties which
are not Affiliates or Subsidiaries of the Borrower or the
Borrower) incurred in connection with such issuance.
"New Miracle-Gro" shall have the meaning assigned to
such term in the Merger Agreement.
"Note" shall mean (i) any Revolving Credit Note, (ii)
the Swing Line Note or (iii) any Bid Note, as the context
shall require; collectively, the "Notes".
"Obligations" shall mean the unpaid principal of and
interest on (including, without limitation, interest
accruing after the maturity of the Loans and interest
thereon accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Notes and all
other obligations and liabilities of the Borrower to the
Agent or the Lenders, whether direct or indirect, absolute
or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, the Notes or any other
document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and
disbursements of counsel to the Agent or any Lender) or
otherwise.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV
of ERISA.
"Person" shall mean an individual, a partnership, a
corporation, a limited liability company, a business trust,
a joint stock company, a trust, an unincorporated
association, a joint venture, a Governmental Authority or
any other entity of whatever nature.
"Plan" shall mean, at any particular time, any employee
benefit plan which is covered by ERISA and in respect of
which the Borrower or a Commonly Controlled Entity is (or if
such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Rating" shall mean the respective rating, actual or
implied, of each of the Rating Agencies applicable to the
long-term senior unsecured non-credit enhanced debt of the
Borrower, as announced by the Rating Agencies from time to
time; provided, however, that if such a rating is not
available from Moody's, the rating of Moody's hereunder
shall be deemed to be the rating of Moody's immediately
higher than the rating of Moody's applicable to the
Subordinated Notes, as announced by Moody's from time to
time.
"Rating Agencies" shall mean collectively, S&P and
Moody's.
"Rating Category" shall mean each of Rating I, Rating
II, Rating III, Rating IV and Rating V.
"Rating I, Rating II, Rating III, Rating IV and Rating
V" shall mean the respective Ratings set forth below:
Rating
Category S&P Moody's
Rating I greater than or greater than or
equal to BBB+ equal to Baa1
Rating II equal to BBB equal to Baa2
Rating III equal to BBB- equal to Baa3
Rating IV equal to BB+ equal to Ba1
Rating V equal to BB equal to Ba2
or lower or lower;
provided, that (i) if on any day the Ratings of the Rating
Agencies do not fall in the same Rating Category, and the
lower of such Ratings is one Rating lower than the higher of
such Ratings, then the Rating Category of the higher of such
Ratings shall be applicable for such day, (ii) if on any day
the Ratings of the Rating Agencies do not fall in the same
Rating Category, and the lower of such Ratings is more than
one Rating lower than the higher of such Ratings, then the
Rating next lower from that of the higher of such Ratings
shall be used to determine the applicable Rating Category
for such day, (iii) if on any day the Rating of only one of
the Rating Agencies is available, then such Rating Category
shall be applicable for such day and (iv) if on any day a
Rating is available from neither of the Rating Agencies,
then Rating V shall be applicable for such day. Any change
in the applicable Rating Category resulting from a change in
the Rating of a Rating Agency shall become effective on the
date such change is publicly announced by such Rating
Agency.
"Reference Lender" shall mean Chemical Bank.
"Refunded Swing Line Loans" shall have the meaning
assigned to such term in subsection 2.3(b).
"Register" shall have the meaning specified in
subsection 10.6(d).
"Reimbursement Obligation" shall mean the Borrower's
obligation to reimburse the Agent on account of the Letters
of Credit as provided in Section 3.
"Reincorporation" shall have the meaning assigned to
such term in the Merger Agreement.
"Reorganization" shall mean, with respect to any
Multiemployer Plan, the condition that such Plan is in
reorganization within the meaning of such term as used in
Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set
forth in Section 4043(b) of ERISA or the regulations
thereunder (with respect to which the PBGC has not, by
regulation, waived the 30-day notice requirement).
"Required Lenders" shall mean, at any time, Lenders,
the Commitment Percentages of which aggregate in excess of
50%.
"Requirement of Law" shall mean, as to any Person, the
Certificate of Incorporation or Articles of Incorporation,
as the case may be, and Code of Regulations and/or By-Laws
or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Responsible Officer" shall mean, as to any Person, the
Chairman, President or a Vice President of such Person and,
with respect to financial matters, the Chief Financial
Officer, the Treasurer or the Controller of such Person.
"Restatement Date" shall mean the date upon which all
of the conditions precedent to the effectiveness of this
Fourth Amended and Restated Credit Agreement contained in
subsection 5.1 are satisfied or waived by the Agent and each
of the Lenders.
"Revolving Credit Commitment" shall mean, as to any
Lender, the amount set forth opposite its name on Schedule I
hereto under the heading "Revolving Credit Commitment", as
such amount may be reduced from time to time in accordance
with the provisions of subsection 2.8; collectively, as to
all the Lenders, the "Revolving Credit Commitments".
"Revolving Credit Commitment Period" shall mean the
period from and including the Restatement Date to, but not
including, the Termination Date or such earlier date as the
Revolving Credit Commitments may terminate as provided
herein.
"Revolving Credit Loan" shall mean any Loan made
pursuant to subsection 2.1; collectively, the "Revolving
Credit Loans".
"Revolving Credit Note" shall have the meaning assigned
to such term in subsection 2.6(e).
"S&P" shall mean Standard & Poor's Rating Group.
"Sierra-Sunpol" shall mean Sierra-Sunpol Resins, Inc.,
a California corporation and an indirect, non-wholly owned
Subsidiary of the Borrower.
"Single Employer Plan" shall mean any Plan which is
covered by Title IV of ERISA but which is not a
Multiemployer Plan.
"Standby L/C" and "Standby L/Cs" shall each have the
meaning specified in subsection 3.1(a).
"Subordinated Debt" shall mean the Indebtedness of the
Borrower pursuant to the Subordinated Note Indenture and the
Subordinated Notes.
"Subordinated Note Indenture" shall mean the Indenture
dated as of June 1, 1994 between the Borrower and Chemical
Bank as Trustee, as supplemented by the First Supplemental
Indenture dated as of July 12, 1994, the Second Supplemental
Indenture dated as of September 20, 1994 and the Third
Supplemental Indenture dated as of September 30, 1994, in
each case as the same may be amended, supplemented, waived
or otherwise modified from time to time in accordance with
the terms of subsection 7.12(b).
"Subordinated Notes" shall mean the subordinated notes
of the Borrower issued in the aggregate principal amount of
$100,000,000 pursuant to the Subordinated Note Indenture.
"Subsidiary" shall mean, as to any Person, a
corporation of which shares of stock having ordinary voting
power (other than stock having such power only by reason of
the happening of a contingency) to elect a majority of the
board of directors are at the time owned, or the management
of which is otherwise controlled, directly, or indirectly,
through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantors" shall mean (a) each Domestic
Subsidiary of the Borrower (other than Sierra-Sunpol) and
(b) each Domestic Subsidiary acquired or organized
subsequent to the Restatement Date.
"Subsidiaries Guarantee" shall mean the Subsidiaries
Guarantee dated as of the date hereof, substantially in the
form of Exhibit E hereto, as the same may be amended,
modified or supplemented from time to time.
"Swing Line Commitment" shall mean the obligation of
Chemical Bank, at any date, to make a Swing Line Loan
pursuant to subsection 2.3(a) in the amount referred to
therein.
"Swing Line Loan Participation Certificate" shall mean
a certificate, substantially in the form of Exhibit D
hereto.
"Swing Line Loans" shall have the meaning assigned to
such term in subsection 2.3(a).
"Swing Line Note" shall have the meaning assigned to
such term in subsection 2.6(e).
"Termination Date" shall mean the fifth anniversary of
the Restatement Date or such earlier date upon which the
Revolving Credit Commitments shall terminate as provided
herein.
"Total Capitalization" shall mean, in respect of any
Person at a particular date, the sum at such date of the
Total Indebtedness of such Person and the Consolidated Net
Worth of such Person.
"Total Indebtedness" shall mean, in respect of any
Person at a particular date, the sum at such date of (a) the
aggregate outstanding principal amount of all Indebtedness
for borrowed money of such Person and (b) all other items
which would properly be included as indebtedness, determined
in accordance with GAAP, on a consolidated balance sheet of
such Person and its Subsidiaries.
"Trade L/C" shall have the meaning assigned to such
term in subsection 3.1(a).
"Trade L/C Exposure" shall mean, at a particular date,
the sum of (a) the aggregate undrawn and unexpired face
amount of the Trade L/Cs at such date and (b) the aggregate
amount of any unpaid Reimbursement Obligations with respect
to Trade L/Cs at such date (after giving effect to any Loans
made on such date which are used to reimburse the Agent
pursuant to subsection 3.5).
"Transfer Effective Date", with respect to any
Assignment and Acceptance, shall have the meaning assigned
to such term in such Assignment and Acceptance.
"Type" as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Uniform Customs" shall mean the Uniform Customs and
Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, as
the same may be amended from time to time; provided,
however, that in respect of Letters of Credit issued prior
to January 1, 1994, the term "Uniform Customs" shall mean
the Uniform Customs and Practice for Documentary Credits
(1983 Revision), International Chamber of Commerce
Publication No. 400, as amended.
2 Other Definitional Provisions. (a) All terms defined in
this Agreement shall have the defined meanings when used in the
Notes, in any of the other Loan Documents or in any certificate
or other document made or delivered pursuant hereto or thereto
unless otherwise defined therein.
(a) As used herein, in the Notes, in any of the other Loan
Documents, or in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms, to the
extent not otherwise defined in subsection 1.1, shall have the
respective meanings given to them under GAAP.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified.
2. AMOUNT AND TERMS OF LOANS
1 Revolving Credit Commitment. Subject to and upon the
terms and conditions of this Agreement, each Lender severally
(but not jointly) agrees to make Revolving Credit Loans to the
Borrower from time to time during the Revolving Credit Commitment
Period in an amount not to exceed the Available Commitment;
provided that, after giving effect to the making of such
Revolving Credit Loans, the Aggregate Outstanding Extensions of
Credit will not exceed the Revolving Credit Commitments. During
the Revolving Credit Commitment Period the Borrower may use the
Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all
in accordance with the terms and conditions hereof.
2 Procedure for Revolving Credit Borrowing. (a) The
Borrower may borrow under the Revolving Credit Commitments during
the Revolving Credit Commitment Period on any Business Day;
provided that the Borrower shall give the Agent irrevocable
notice (1) (which notice must be received by the Agent prior to
11:00 A.M., New York City time) on the requested Borrowing Date,
in the case of ABR Loans, and (2) (which notice must be received
by the Agent prior to 1:00 P.M., New York City time) three
Business Days prior to the requested Borrowing Date, in the case
of Eurodollar Loans, specifying (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is
to be an ABR Loan or a Eurodollar Loan or a combination thereof,
and (iv) if the borrowing is to be entirely or partly a
Eurodollar Loan, the amount to be a Eurodollar Loan and the
length of the Interest Period for such Eurodollar Loan. Each
borrowing by the Borrower pursuant to the Revolving Credit
Commitments shall be in an aggregate principal amount equal to
$5,000,000 or a whole multiple of $2,500,000 in excess thereof.
(a) Upon receipt of any notice from the Borrower pursuant to
this subsection 2.2, the Agent shall promptly notify each Lender
thereof. Each Lender will make the amount of its pro rata share
of each borrowing available to the Agent for the account of the
Borrower at the office of the Agent specified in subsection 10.2
prior to 2:00 P.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the
Agent. Such borrowing will then be made available to the
Borrower by the Agent crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as
received by the Agent.
3 Swing Line Commitments. (a) Subject to the terms and
conditions hereof, Chemical agrees to make swing line loans
(individually, a "Swing Line Loan"; collectively, the "Swing Line
Loans") to the Borrower from time to time prior to the
Termination Date in an aggregate principal amount not to exceed
$10,000,000 at any one time outstanding, provided that, after
giving effect to the making of such Swing Line Loans, the
Aggregate Outstanding Extensions of Credit will not exceed the
Revolving Credit Commitments. Amounts borrowed by the Borrower
under this subsection 2.3 may be repaid and, during the Revolving
Credit Commitment Period, reborrowed. All Swing Line Loans shall
be made as ABR Loans and shall not be entitled to be converted
into Eurodollar Loans. The Borrower shall give Chemical
irrevocable notice (which notice must be received by Chemical
prior to 1:00 P.M., New York City time) on the requested
borrowing date specifying the amount of each requested Swing Line
Loan, which shall be in an aggregate minimum amount of $250,000
or a whole multiple thereof. The proceeds of each Swing Line
Loan will be made available by Chemical to the Borrower by
crediting the account of the Borrower designated to Chemical with
such proceeds on the requested Borrowing Date.
(a) Chemical, at any time and in its sole and absolute
discretion, may, on behalf of the Borrower (which hereby
irrevocably directs Chemical to act on its behalf), request each
Lender, including Chemical, to make a Revolving Credit Loan in an
amount equal to such Lender's Commitment Percentage of the amount
of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date such notice is given. Unless any of the
events described in paragraph (f) of Section 8 shall have
occurred (in which event the procedures of paragraph (c) of this
subsection 2.3 shall apply), each Lender shall make the proceeds
of its Revolving Credit Loan available to Chemical for the
account of Chemical at the office of Chemical prior to 12:00 Noon
(New York City time) in funds immediately available on the
Business Day next succeeding the date such notice is given. The
proceeds of such Revolving Credit Loans shall be immediately
applied to repay the Refunded Swing Line Loans.
(b) If, prior to the making of a Revolving Credit Loan
pursuant to paragraph (b) of subsection 2.3, one of the events
described in paragraph (f) of Section 8 shall have occurred, each
Lender hereby agrees to and will, on the date such Revolving
Credit Loan was to have been made, purchase an undivided
participating interest in the Refunded Swing Line Loan in an
amount equal to its Commitment Percentage of such Refunded Swing
Line Loan. Each Lender will immediately transfer to Chemical, in
immediately available funds, the amount of its participation and,
upon receipt thereof, Chemical will deliver to such Lender a
Swing Line Loan Participation Certificate dated the date of
receipt of such funds and in such amount.
(c) Whenever, at any time after Chemical has received from any
Lender such Lender's participating interest in a Refunded Swing
Line Loan and Chemical receives any payment on account thereof,
Chemical will distribute to such Lender its participating
interest in such amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which
such Lender's participating interest was outstanding and funded)
in like funds as received; provided, however, that in the event
that such payment received by Chemical is required to be
returned, such Lender will return to Chemical any portion thereof
previously distributed by Chemical to it in like funds as such
payment is required to be returned by Chemical.
4 Participation. Each Lender's obligation to purchase
participating interests pursuant to paragraph (c) of subsection
2.3 shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, (a) any set-
off, counterclaim, recoupment, defense or other right which such
Lender may have against Chemical, the Borrower or any other
Person for any reason whatsoever; (b) the occurrence or
continuance of an Event of Default; (c) any adverse change in the
condition (financial or otherwise) of the Borrower; (d) any
breach of this Agreement by the Borrower or any other Lender; or
(e) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. Notwithstanding
the foregoing, no Lender shall have any obligation to purchase
participating interests pursuant to paragraph (c) of subsection
2.3 or to make any Refunded Swing Line Loans in respect of any
Swing Line Loan which was made at any time following receipt by
the Agent of a notice from any Lender specifying that (x) a
Default or Event of Default has occurred and is continuing and
(y) explicitly stating that such Lender will not purchase such
participating interests or make Refunded Swing Line Loans with
respect to Swing Line Loans made after the date of receipt of
such notice, except to the extent that the Agent believes,
reasonably and in good faith, that the facts and circumstances
giving rise to such notice were no longer continuing at the time
that such Swing Line Loan was made or at the time that such
reimbursement is sought.
5 Bid Loans. (a) The Borrower may request one or more
Lenders to make offers to make Bid Loans from time to time on any
Business Day during the period from the Closing Date until the
date seven days prior to the Termination Date in the manner set
forth in this subsection 2.5, provided that, after giving effect
to the making of such Bid Loans, the Aggregate Outstanding
Extensions of Credit will not exceed the aggregate amount of the
Revolving Credit Commitments at such time. Each Lender may, but
shall have no obligation to, make such offers, and the Borrower
may, but shall have no obligation to, accept any such offers in
the manner set forth herein.
(b) (i) The Borrower may request Bid Loans by
delivering a Bid Loan Request to the Agent, not later than 10:00
A.M. (New York City time) three Business Days prior to the
proposed Borrowing Date (in the case of a LIBOR Bid Loan
Request), and not later than 3:00 P.M. (New York City time) one
Business Day prior to the proposed Borrowing Date (in the case of
a Fixed Rate Bid Loan Request). Each Bid Loan Request shall
solicit Bid Quotes for Bid Loans in an aggregate principal amount
of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof and for not more than four alternative maturity dates for
such Bid Loans, none of which shall be earlier than seven days
from the respective requested Borrowing Date or later than the
earlier of (A) the date (1) 180 days from the respective
requested Borrowing Date in the case of a Fixed Rate Bid Loan
Request and (2) 6 months from the respective requested Borrowing
Date in the case of a LIBOR Bid Loan Request and (B) the
Termination Date. Bid Loan Requests may be submitted no more
frequently than once during any period of three successive
Business Days. The Agent shall promptly notify each Lender by
facsimile transmission of the contents of each Bid Loan Request
received by it.
(ii) In the case of a LIBOR Bid Loan Request, upon
receipt of notice from the Agent of the contents of such Bid Loan
Request, any Lender that elects, in its sole discretion, to do
so, may irrevocably offer to make one or more Bid Loans at the
LIBOR Rate plus or minus a margin for each such Bid Loan
determined by such Lender in its sole discretion. Any such
irrevocable offer shall be made by delivering a Bid Quote to the
Agent, before 2:00 P.M. (New York City time) three Business Days
before the proposed Borrowing Date, setting forth the maximum
amount of Bid Loans for each maturity date which such Lender
would be willing to make (which amount may, subject to subsection
2.1, exceed such Lender's Revolving Credit Commitment) and the
margin above or below the LIBOR Rate at which such Lender is
willing to make each such Bid Loan; the Agent shall advise the
Borrower before 2:30 P.M. (New York City time) three Business
Days before the proposed Borrowing Date, of the contents of each
such Bid Quote received by it. If the Agent in its capacity as a
Lender shall, in its sole discretion, elect to make any such
offer, it shall advise the Borrower of the contents of its Bid
Quote before 1:45 P.M. (New York City time) three Business Days
before the proposed Borrowing Date.
(iii) In the case of a Fixed Rate Bid Loan Request,
upon receipt of notice from the Agent of the contents of such Bid
Loan Request, any Lender that elects, in its sole discretion, to
do so, may irrevocably offer to make one or more Bid Loans at a
rate or rates of interest for each such Bid Loan determined by
such Lender in its sole discretion. Any such irrevocable offer
shall be made by delivering a Bid Quote to the Agent, before 9:30
A.M. (New York City time) on the proposed Borrowing Date, setting
forth the maximum amount of Bid Loans for each maturity date
which such Lender would be willing to make (which amount may,
subject to subsection 2.1, exceed such Lender's Revolving Credit
Commitment) and the rate or rates of interest therefor; the Agent
shall advise the Borrower before 10:00 A.M. (New York City time)
on the proposed Borrowing Date of the contents of each such Bid
Quote received by it. If the Agent in its capacity as a Lender
shall, in its sole discretion, elect to make any such offer, it
shall advise the Borrower of the contents of its Bid Quote before
9:15 A.M. (New York City time) on the proposed Borrowing Date.
(iv) The Borrower shall before 3:00 P.M. (New York
City time) three Business Days before the proposed Borrowing Date
in the case of a LIBOR Bid Loan Request and before 10:30 A.M.
(New York City time) on the proposed Borrowing Date in the case
of a Fixed Rate Bid Loan Request either, in its absolute
discretion:
(A) cancel such Bid Loan Request by giving the Agent
telephone notice to that effect, or
(B) accept one or more of the offers made by any
Lender or Lenders pursuant to clause (ii) or clause (iii)
above, as the case may be, by giving telephone notice
(immediately confirmed by execution and facsimile
transmission of a Bid Loan Confirmation) to the Agent of the
amount of Bid Loans to be made by each Lender (which amount
shall be equal to or less than the maximum amount requested
to be made, but in each event an amount equal to $5,000,000
or a integral multiple of $1,000,000 in excess thereof,
notified to the Borrower by the Agent on behalf of such
Lender for such Bid Loans pursuant to clause (ii) or clause
(iii) above, as the case may be), provided that the Borrower
may not accept offers for Bid Loans in an aggregate
principal amount in excess of the maximum principal amount
requested in the related Bid Loan Request.
(v) If the Borrower notifies the Agent that a Bid
Loan Request is cancelled pursuant to clause (iv)(A) above, the
Agent shall give prompt telephone notice thereof to the Lenders,
and the Bid Loans requested thereby shall not be made.
(vi) If the Borrower accepts one or more of the
offers made by any Lender or Lenders pursuant to clause (iv)(B)
above, the Agent shall as promptly as practicable following
receipt of the Borrower's acceptance, three Business Days before
the proposed Borrowing Date in the case of a LIBOR Bid Loan
Request and on the proposed Borrowing Date in the case of a Fixed
Rate Bid Loan Request, notify each Lender which has made such an
offer of (A) the aggregate amount of such Bid Loans to be made on
such Borrowing Date for each maturity date and (B) the acceptance
or rejection of any offers to make such Bid Loans made by such
Lender. Each Lender which is to make a Bid Loan shall, before
12:00 Noon (New York City time) on the Borrowing Date specified
in the Bid Loan Request applicable thereto, make available to the
Agent at its office set forth in subsection 10.2 the amount of
such Lender's Bid Loans, in immediately available funds. The
Agent will make such funds available to the Borrower as soon as
practicable on such date at the Agent's aforesaid address.
(c) Within the limits and on the conditions set forth
in this subsection 2.5, the Borrower may from time to time borrow
under this subsection 2.5, repay pursuant to paragraph (d) below,
and reborrow under this subsection 2.5.
(d) The Borrower shall repay to the Agent for the
account of each Lender which has made a Bid Loan on the maturity
date of each Bid Loan (such maturity date being that specified by
the Borrower for repayment of such Bid Loan in the related Bid
Loan Request) or such earlier date on which the Bid Loans become
due and payable pursuant to Section 8 the then unpaid principal
amount of such Bid Loan. The Borrower shall not have the right
to prepay any principal amount of any Bid Loan without the prior
written consent of the applicable Lender then making such Bid
Loan.
(e) The Borrower shall pay interest on the unpaid
principal amount of each Bid Loan from the date of such Bid Loan
to the stated maturity date thereof, at the rate of interest for
such Bid Loan determined pursuant to paragraph (b) above
(calculated on the basis of a 360 day year for actual days
elapsed), payable on the Interest Payment Date specified by the
Borrower for such Bid Loan in the related Bid Loan Request.
6 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Agent for the
account of each Lender (i) the then unpaid principal amount of
each Revolving Credit Loan of such Lender on the Termination Date
(or such earlier date on which the Revolving Credit Loans become
due and payable pursuant to Section 8), (ii) the then unpaid
principal amount of the Swing Line Loans of the Swing Line Lender
on the Termination Date (or such earlier date on which the Swing
Line Loans become due and payable pursuant to Section 8) and
(iii) the then unpaid principal amount of the Bid Loans pursuant
to subsection 2.5(d). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in
subsection 2.12.
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from each Loan of such Lender
from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under
this Agreement.
(b) The Agent shall maintain the Register pursuant to
subsection 10.6(d), and a subaccount therein for each Lender, in
which shall be recorded (i) the amount of each Loan made
hereunder, the Type thereof and each Interest Period applicable
thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by
the Agent hereunder from the Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 2.6(b) shall, to the
extent permitted by applicable law, be prima facie evidence of
the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any
Lender or the Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest)
the Loans made to such Borrower by such Lender in accordance with
the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the Agent by
any Lender, the Borrower will execute and deliver to such Lender
(i) a promissory note of the Borrower evidencing the Revolving
Credit Loans of such Lender, substantially in the form of Exhibit
A, with appropriate insertions as to date and principal amount (a
"Revolving Credit Note"), (ii) in the case of the Swing Line
Lender, a promissory note of the Borrower evidencing the Swing
Line Loans of the Swing Line Lender, substantially in the form of
Exhibit B, with appropriate insertions as to date and principal
amount (the "Swing Line Note") and/or (iii) in the case of Bid
Loans, a promissory note of the Borrower evidencing the Bid Loans
of such Lender, substantially in the form of Exhibit C, with
appropriate insertions as to date, type and principal amount (the
"Bid Note").
7 Facility Fee. The Borrower agrees to pay to the Agent,
for the account of each Lender, a facility fee for the period
from and including the Restatement Date to the Termination Date,
calculated as an amount equal to the product of (a) the Facility
Fee Rate and (b) the average daily amount of the Revolving Credit
Commitment of such Lender (regardless of usage) during the period
for which such Facility Fee is calculated, payable quarterly in
arrears on the last day of each March, June, September and
December and on the Termination Date. Such payments shall
commence on March 31, 1995, and such first payments shall be for
the period from the Restatement Date through March 31, 1995. The
Borrower also agrees to pay to the Agent the fees described in
the Engagement Letter.
8 Termination or Reduction of Revolving Credit Commitments.
(a) Optional. The Borrower shall have the right, upon not less
than five Business Days' written notice to the Agent to terminate
the Revolving Credit Commitments or, from time to time, reduce
the amount of the Revolving Credit Commitments, provided that (i)
any such reduction shall be accompanied by prepayment of the
Loans made hereunder, together with accrued interest on the
amount so prepaid to the date of such prepayment, to the extent,
if any, that the amount of the Aggregate Outstanding Extensions
of Credit exceed the amount of the Revolving Credit Commitments
as then reduced, (ii) any such termination of the Revolving
Credit Commitments shall be accompanied by (A) prepayment in full
of the Loans then outstanding hereunder, (B) cash
collateralization of all L/C Obligations then outstanding in
accordance with the provisions of subsection 2.11, and (C)
payment of accrued interest thereon to the date of such
prepayment and the payment of any unpaid fees then accrued
hereunder (including, without limitation, in respect of any
Letters of Credit) and (iii) any termination of the Revolving
Credit Commitments while Eurodollar Loans are outstanding under
the Revolving Credit Commitments and any reduction of the
aggregate amount of the Revolving Credit Commitments that reduces
the amount of the Revolving Credit Commitments below the
principal amount of the Eurodollar Loans then outstanding under
the Revolving Credit Commitments may be made only on the last day
of the respective Interest Periods for such Eurodollar Loans.
Upon receipt of such notice, the Agent shall promptly notify each
Lender thereof. Any such reduction shall be in an amount of
$1,000,000 or a whole multiple of $1,000,000 in excess thereof
and shall reduce permanently the amount of the Revolving Credit
Commitments then in effect.
(a) Mandatory. The Revolving Credit Commitments shall
automatically terminate on the Termination Date and all Loans
shall be repaid and to the extent any Letter of Credit remains
outstanding after the Termination Date, the Borrower shall cash
collateralize such L/C Obligations (and the fees thereon) in
accordance with the provisions of subsection 2.10.
9 Prepayments. (a) Optional. The Borrower may, (i) at any
time and from time to time prepay the ABR Loans made to it
hereunder, and (ii) on the last day of the Interest Period with
respect thereto, prepay any Eurodollar Loans made to it
hereunder, in each case in whole or in part, without premium or
penalty, upon at least four Business Days' irrevocable notice to
the Agent in the case of Eurodollar Loans and two Business Days'
irrevocable notice to the Agent in the case of ABR Loans,
specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination
thereof, and, if a combination thereof, the amount of prepayment
allocable to each. If such notice is given, the Borrower shall
make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein,
together with accrued interest to such date on the amount
prepaid. Partial prepayments shall be in an aggregate principal
amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof, provided that unless a Eurodollar Loan is prepaid in
full, no prepayment shall be made in respect of Eurodollar Loans
if, after giving effect to such prepayment, the aggregate
principal amount of Eurodollar Loans outstanding with respect to
which a common Interest Period has been selected shall be less
than $5,000,000. The Borrower shall not have the right to prepay
any principal amount of any Bid Loan without the prior written
consent of the applicable Lender then making such Bid Loan.
(a) Mandatory. The Borrower, without notice or demand, shall
immediately prepay the Loans to the extent, if any, that the
Aggregate Outstanding Extensions of Credit exceed the Revolving
Credit Commitments then in effect, together with accrued interest
to the date of such prepayment on the amount so prepaid. In the
event that, after giving effect to any such prepayment, the L/C
Obligations then outstanding exceed the Revolving Credit
Commitments then in effect, the Borrower will cash collateralize
such L/C Obligations (and the fees thereon) in accordance with
the provisions of subsection 2.10.
10 Cash Collateralization of Letters of Credit. To the
extent that at any time and from time to time, the L/C
Obligations exceed the amount of the Revolving Credit Commitments
(whether pursuant to subsections 2.8, 2.9 or otherwise), the
Borrower shall cash collateralize (in a manner reasonably
satisfactory to the Agent) such portion of the L/C Obligations
(and the fees thereon through the stated expiration date of the
Letters of Credit giving rise to such L/C Obligations) which is
in excess of the Revolving Credit Commitments.
11 Conversion Options. (a) The Borrower may elect from time
to time to convert Eurodollar Loans to ABR Loans, and may elect
from time to time to convert ABR Loans to Eurodollar Loans, by
giving the Agent at least three Business Days' prior irrevocable
written notice of such election to convert (which date shall be a
Business Day and in the case of any conversion of any Eurodollar
Loans to ABR Loans, the last day of an Interest Period therefor),
the amount and type of conversion and, in the case of any
conversion of ABR Loans to Eurodollar Loans, the Interest Period
selected with respect thereto; provided, however, that (i) ABR
Loans may not be converted to Eurodollar Loans when any Default
or Event of Default has occurred and is continuing and (ii) Swing
Line Loans may not, at any time, be converted to Eurodollar
Loans. All or any part of outstanding Eurodollar Loans or ABR
Loans may be converted as provided herein, provided that partial
conversions of Eurodollar Loans to ABR Loans shall be in an
aggregate principal amount of $2,500,000 or a whole multiple
thereof and partial conversions of ABR Loans to Eurodollar Loans
with respect to which a common Interest Period has been selected
shall be in an aggregate principal amount of $5,000,000 or a
whole multiple of $2,500,000 in excess thereof, and provided,
further, that in the case of a partial conversion of Eurodollar
Loans to ABR Loans, after giving effect to such conversion, the
aggregate principal amount of the Eurodollar Loans outstanding
with respect to which a common Interest Period has been selected
shall be not less than $5,000,000.
(a) Any Eurodollar Loans may be continued as such upon the
expiration of an Interest Period by compliance by the Borrower
with the notice provisions contained in the definition of
Interest Period, provided that no Eurodollar Loan may be
continued as such when any Default or Event of Default has
occurred and is continuing, but shall be automatically converted
to an ABR Loan on the last day of the last Interest Period for
which a Eurodollar Rate was determined by the Agent on or prior
to the Agent's obtaining knowledge of such Default or Event of
Default.
12 Interest Rate and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such Interest Period plus the Applicable
Margin.
(a) Each ABR Loan shall bear interest for the period from and
including the date thereof until maturity at a rate per annum
equal to the ABR plus the Applicable Margin.
(b) If all or a portion of (i) the principal amount of any
Loan, (ii) any interest payable thereon or (iii) any facility
fee, commission or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per
annum which is (x) in the case of overdue principal, the higher
of (A) the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this subsection plus 2%
and (B) the rate described in paragraph (b) of this subsection
plus 2% or (y) in the case of overdue interest, facility fees,
commissions or other amounts, the rate described in paragraph (b)
of this subsection plus 2%, in each case from the date of such
non-payment until such amount is paid in full (as well after as
before judgment).
(c) Each Bid Loan shall bear interest as provided in
subsection 2.5.
(d) Interest shall be payable in arrears on each Interest
Payment Date, except that interest payable pursuant to subsection
2.12(c) shall be payable upon demand.
13 Computation of Interest and Fees. (a) Facility fees and
interest in respect of the ABR Loans shall be calculated on the
basis of a 365 (or 366, as the case may be) day year for the
actual days elapsed. Interest in respect of the Eurodollar Loans
and letter of credit commissions shall be calculated on the basis
of a 360-day year for the actual days elapsed. The Agent shall
as soon as practicable notify the Borrower and the Lenders of
each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the ABR shall
become effective as of the opening of business on the day on
which such change in the ABR shall become effective.
(a) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive
and binding on the Borrower absent manifest error.
14 Inability to Determine Interest Rate. In the event that
the Reference Lender shall have reasonably determined (which
determination shall be conclusive and binding upon the Borrower)
that by reason of circumstances affecting the interbank
eurodollar market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate applicable pursuant to
subsection 2.12(a) for any Interest Period with respect to (a) a
proposed Loan that the Borrower has requested be made as a
Eurodollar Loan or LIBOR Bid Loan, (b) a Eurodollar Loan that
will result from the requested conversion of an ABR Loan into a
Eurodollar Loan or (c) the continuation of Eurodollar Loans
beyond the expiration of the then current Interest Period with
respect thereto, the Agent shall forthwith give telecopy or
telephonic notice of such determination, confirmed in writing, to
the Borrower and the Lenders at least one Business Day prior to,
as the case may be, the requested Borrowing Date for such
Eurodollar Loan or LIBOR Bid Loan, the conversion date of such
ABR Loan or the last day of such Interest Period. If such notice
is given (i) any requested Eurodollar Loan shall be made as an
ABR Loan and any requested LIBOR Bid Loan shall be made as Fixed
Rate Bid Loans based upon the ABR, (ii) any ABR Loan that was to
have been converted to a Eurodollar Loan shall be continued as an
ABR Loan and (iii) any outstanding Eurodollar Loan shall be
converted, on the last day of the then current Interest Period
with respect thereto, to an ABR Loan. Until such notice has been
withdrawn by the Agent, no further Eurodollar Loans or LIBOR Bid
Loans shall be made nor shall the Borrower have the right to
convert an ABR Loan to a Eurodollar Loan. Such notice shall be
withdrawn by the Agent when the Agent shall reasonably determine
that adequate and reasonable means exist for ascertaining the
Eurodollar Rate.
15 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the
Borrower on account of any facility fee hereunder and any
reduction of the Revolving Credit Commitments of the Lenders
shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and
interest on the Loans shall be made pro rata according to the
respective outstanding principal amounts of such Loans then held
by the Lenders. All payments (including prepayments) to be made
by the Borrower hereunder, whether on account of principal,
interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City
time, on the due date thereof to the Agent, for the account of
the Lenders, at the Agent's office specified in subsection 10.2,
in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Lenders promptly upon receipt in
like funds as received. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to
the next succeeding Business Day and such extension of time shall
in such case be included in the computation of the amount payable
hereunder. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day unless the
result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made
on the immediately preceding Business Day.
(a) Unless the Agent shall have been notified in writing by
any Lender prior to a Borrowing Date that such Lender will not
make the amount that would constitute its Commitment Percentage
of the borrowing on such date available to the Agent, the Agent
may assume that such Lender has made such amount available to the
Agent on such Borrowing Date, and the Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding
amount. If such amount is made available to the Agent on a date
after such Borrowing Date, such Lender shall pay to the Agent on
demand an amount equal to the product of (i) the daily average
Federal funds rate during such period as quoted by the Agent,
times (ii) the amount of such Lender's Commitment Percentage of
such borrowing, times (iii) a fraction the numerator of which is
the number of days that elapse from and including such Borrowing
Date to the date on which such Lender's Commitment Percentage of
such borrowing shall have become immediately available to the
Agent and the denominator of which is 360 (the "Effective Federal
Funds Rate"). A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such amount is
so made available, such payment to the Agent shall constitute
such Lender's Loan on such Borrowing Date for all purposes of
this Agreement. If such amount is not so made available to the
Agent, then the Agent shall notify the Borrower of such failure
and on the fourth Business Day following such Borrowing Date, the
Borrower shall pay to the Agent such ratable portion, together
with interest thereon for each day that the Borrower had the use
of such ratable portion, at the Effective Federal Funds Rate.
Nothing contained in this subsection 2.15(b) shall relieve any
Lender which has failed to make available its ratable portion of
any borrowing hereunder from its obligation to do so in
accordance with the terms hereof.
(b) The failure of any Lender to make the Loan to be made by
it on any Borrowing Date shall not relieve any other Lender of
its obligation, if any, hereunder to make its Loan on such
Borrowing Date, but no Lender shall be responsible for the
failure of any other Lender to make the Loan to be made by such
other Lender on such Borrowing Date.
16 Illegality. Notwithstanding any other provisions herein,
if any introduction of or change in any law, regulation, treaty
or directive or in the interpretation or application thereof
occurring after the date hereof shall make it unlawful for any
Lender to make or maintain Eurodollar Loans or LIBOR Bid Loans as
contemplated by this Agreement, (a) such Lender shall forthwith
give telecopy or telephonic notice of such circumstances,
confirmed in writing, to the Borrower (which notice shall be
withdrawn by such Lender when such Lender shall reasonably
determine that it shall no longer be illegal for such Lender to
make or maintain Eurodollar Loans or LIBOR Bid Loans or to
convert ABR Loans to Eurodollar Loans), (b) the commitment of
such Lender hereunder to make Eurodollar Loans or to convert ABR
Loans to Eurodollar Loans shall forthwith be cancelled and (c)
such Lender's Loans then outstanding as Eurodollar Loans or LIBOR
Bid Loans, if any, shall be converted automatically to ABR Loans
or Fixed Rate Bid Loans based upon the ABR on the respective last
days of the then current Interest Periods with respect to such
Loans or within such earlier period as may be required by law.
The Borrower hereby agrees promptly to pay the Agent for the
account of each Lender, upon demand by the Agent, any additional
amounts necessary to compensate the Lenders for any costs
incurred by the Lenders in making any conversion in accordance
with this subsection 2.16, including, but not limited to, any
interest or fees payable by the Lenders to lenders of funds
obtained by them in order to make or maintain their Eurodollar
Loans or LIBOR Bid Loans hereunder (the Agent's notice of such
costs, as certified to the Borrower, to be conclusive, absent
manifest error).
17 Requirements of Law. (a) In the event that any
introduction of or change in any law, regulation, treaty or
directive or in the interpretation or application thereof
occurring after the date hereof or compliance by any Lender with
any request or directive (whether or not having the force of law)
from any central bank or other governmental authority, agency or
instrumentality:
(i) shall subject such Lender to any tax of any kind,
whatsoever with respect to this Agreement, any Note, any Letter
of Credit, any Application or any Loan made hereunder, or change
the basis of taxation of payments to such Lender of principal,
facility fee, interest or any other amount payable hereunder
(other than withholding tax imposed by the United States of
America and other than any other tax of any kind whatsoever that
is measured with respect to the overall net income of such Lender
or of a lending office of such Lender, and that is imposed by the
United States of America, or by the jurisdiction in which such
Lender is organized or has its principal office (or any political
subdivision or taxing authority thereof or therein), or by the
jurisdiction in which such Lender is managed and controlled (or
any political subdivision or taxing authority thereof or therein)
or by the jurisdiction in which such Lender has its Eurodollar
lending office (or any political subdivision or taxing authority
thereof or therein)), or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of such Lender
which are not otherwise included in the determination of the
Eurodollar Rate hereunder or the interest rate applicable to any
Bid Loan hereunder, or
(iii) shall impose on such Lender or the eurodollar market
any other condition;
and the result of any of the foregoing is to increase the cost to
such Lender (which increase in cost shall be the result of such
Lender's reasonable allocation of the aggregate of such cost
increases resulting from such events), of making, renewing or
maintaining Eurodollar Loans or Bid Loans or issuing or
participating in Letters of Credit or to reduce any amount
receivable thereunder then, in any such case, the Borrower shall,
upon notice to it from such Lender (with a copy to the Agent)
certifying that (x) one of the events described in this
subsection 2.17(a) has occurred and the nature of such event, (y)
the increased cost or reduced amount resulting from such event
and (z) the additional amounts demanded by such Lender and a
reasonably detailed explanation of the calculation thereof,
promptly pay to the Agent for the account of the applicable
Lender, upon demand by the Agent, without duplication, any
additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable which such Lender
deems to be material as determined in good faith by such Lender
with respect to this Agreement or the Loans made hereunder,
provided that, in any such case, the Borrower may elect to
convert the Eurodollar Loans made hereunder to ABR Loans by
giving such Lender and the Agent at least one Business Day's
prior irrevocable notice of such election in which case the
Borrower shall promptly pay the Agent for the account of the
applicable Lender, upon demand by the Agent, without duplication,
any loss or expense incurred by such Lender in liquidating or
re-employing the deposits from which the funds were obtained by
such Lender for the purpose of making and/or maintaining such
Eurodollar Loans. If such Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly
notify the Borrower of the event by reason of which it has become
so entitled.
(b) In the event that any Lender shall have determined that
any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by
such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not
having the force of law) from any Governmental Authority made
subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations
hereunder or under any Letters of Credit to a level below that
which such Lender or such corporation could have achieved but for
such change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then
from time to time, within 15 days after submission by such Lender
to the Borrower (with a copy to the Agent) of a written request
therefor certifying that (x) one of the events described in this
subsection 2.17(b) has occurred and the nature of such event, (y)
the increased cost or reduced amount resulting from such event
and (x) the additional amounts demanded by such Lender and a
reasonably detailed explanation of the calculation thereof, the
Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) A certificate as to any additional amounts payable
pursuant to paragraphs (a) and (b) above submitted by any Lender
to the Borrower shall be conclusive absent manifest error.
18 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which
such Lender may sustain or incur as a consequence of (a) default
by the Borrower in payment of the principal amount of or interest
on any Eurodollar Loans or Bid Loan, including, but not limited
to, any such loss or expense arising from interest or fees
payable by such Lender to lenders of funds obtained by them in
order to maintain their Eurodollar Loans hereunder, (b) default
by the Borrower in making a Eurodollar Loan or conversion after
the Borrower has given a notice in accordance with subsection 2.2
or 2.11, (c) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have
given) a notice in accordance with subsection 2.5 (so long as the
Borrower shall have accepted a Bid Loan offered in connection
with any such notice), (d) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a
notice in accordance with subsection 2.8, and (e) the making of
any payment or conversion of Eurodollar Loans, LIBOR Bid Loans or
Fixed Rate Bid Loans on a day which is not the last day of the
applicable Interest Period with respect thereto, including, but
not limited to, any such loss or expense arising from interest or
fees payable by the Lenders to lenders of funds obtained by them
in order to maintain their Eurodollar Loans hereunder. This
covenant shall survive termination of this Agreement and payment
of the outstanding Notes.
19 Use of Proceeds. The proceeds of the Loans shall be used
by the Borrower (i) for the repayment in full of the revolving
credit loans and term loans under the Existing Credit Agreement
and the payment in full of any and all other amounts owing to the
Existing Banks under the Existing Credit Agreement, (ii) for the
issuance of Letters of Credit, (ii) for working capital and other
general corporate purposes of the Borrower and its Subsidiaries,
including, without limitation, stock repurchases in accordance
with subsection 7.5 and (iii) for acquisitions in accordance with
the terms and provisions of subsections 7.4(c) and 7.4(d).
3. LETTER OF CREDIT FACILITIES
1 L/C Commitment. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the
other Lenders set forth in subsection 3.4(a), agrees to issue
letters of credit ("Letters of Credit") for the account of the
Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender
shall not have any obligation to issue any Letter of Credit if,
after giving effect to such issuance, (i) the L/C Obligations
would exceed the L/C Commitment or (ii) the Aggregate Outstanding
Extensions of Credit would exceed the Revolving Credit
Commitments. Each Letter of Credit shall (i) be denominated in
Dollars, (ii) be either (x) a standby letter of credit issued to
support obligations of the Borrower, contingent or otherwise,
with an expiry date occurring not later than 360 days after such
standby letter of credit was issued (a "Standby L/C") or (y) a
documentary letter of credit in respect of the purchase of goods
or services by the Borrower and its Subsidiaries in the ordinary
course of business with an expiry date occurring not later than
180 days after such documentary letter of credit was issued and,
in the case of any such documentary letter of credit which is to
be accepted by the Issuing Lender pending payment at a date after
presentation of sight drafts, with a payment date no more than
180 days after such drafts were presented for acceptance (a
"Trade L/C") and (iii) expire no later than the Termination Date.
(a) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws
of the State of New York.
(b) The Issuing Lender shall at no time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict
with, or cause the Issuing Lender or any L/C Participant to
exceed any limits imposed by, any applicable Requirement of Law.
(c) Notwithstanding anything to the contrary contained herein,
each Letter of Credit outstanding under the Existing Credit
Agreement on the date hereof shall be deemed to be issued and
outstanding under this Agreement.
2 Procedure for Issuance of Letters of Credit. The Borrower
may from time to time request that the Issuing Lender issue a
Letter of Credit by delivering to the Issuing Lender (with a copy
to the Agent) at its address for notices specified herein an
Application therefor, completed to the satisfaction of the
Issuing Lender, and such other certificates, documents and other
papers and information as the Issuing Lender may reasonably
request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and
other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no
event shall the Issuing Lender be required to issue any Letter of
Credit earlier than five Business Days after its receipt of the
Application therefor and all such other certificates, documents
and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by the Issuing Lender and the
Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower and to the Agent promptly following the
issuance thereof.
3 Fees, Commissions and Other Charges. (a) The Borrower
shall pay to the Agent, for the ratable account of the Issuing
Lender and the L/C Participants, a letter of credit commission
with respect to each Trade L/C issued by the Issuing Lender (i)
in an amount equal to 1/4 of 1% of the face amount of each such
Letter of Credit which is payable upon presentation of sight
drafts (plus an additional 1/4 of 1% which shall be payable for
the account of the Issuing Lender) and (ii) in an amount equal to
the product of, on the date on which such commission is
calculated, (A) the rate equal to the Applicable Margin in
respect of Eurodollar Rate Loans and (B) the aggregate amount
available to be drawn under each Letter of Credit in respect of
which a draft is to be accepted by the Issuing Lender pending
payment thereon at a later date (plus an additional 1/4 of 1% per
annum which shall be payable for the account of the Issuing
Lender). Such letter of credit commissions shall be payable in
arrears on the last day of each March, June, September and
December and shall be nonrefundable.
(a) The Borrower shall pay to the Agent, for the ratable
account of the Issuing Lender and the L/C Participants, a letter
of credit commission with respect to each Standby Letter of
Credit issued by the Issuing Lender, computed for the period from
the date of such payment to the date upon which the next such
payment is due hereunder in an amount equal to the product of (i)
the rate equal to the Applicable Margin in respect of Eurodollar
Rate Loans in effect on the date on which such commission is
calculated and (ii) the aggregate amount available to be drawn
under such Standby Letter of Credit on the date on which such
commission is calculated. The Borrower shall also pay to the
Agent, for the account of the Issuing Lender, an additional 1/4
of 1% per annum of the aggregate amount available to be drawn
under such Standby Letter of Credit on the date on which such fee
is calculated. Such letter of credit commissions shall be
payable in arrears on the last day of each March, June, September
and December and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such
normal and customary costs and expenses as are incurred or
charged by the Issuing Lender in issuing, effecting payment
under, amending or otherwise administering any Letter of Credit
issued by it.
(c) The Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all
fees and commissions received by the Agent for their respective
accounts pursuant to this subsection 3.3.
4 L/C Participation. (a) The Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and,
to induce the Issuing Lender to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and
purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such
L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Commitment Percentage in the
Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally
and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender
is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the
Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C
Participant's Commitment Percentage of the amount of such draft,
or any part thereof, which is not so reimbursed.
(a) If any amount required to be paid by any L/C Participant
to the Issuing Lender pursuant to subsection 3.4(a) in respect of
any unreimbursed portion of any payment made by the Issuing
Lender under any Letter of Credit is not paid to the Issuing
Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on
demand an amount equal to the product of (i) such amount, times
(ii) the daily average Federal funds rate, as quoted by the
Issuing Lender, during the period from and including the date
such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant
to subsection 3.4(a) is not in fact made available to the Issuing
Lender by such L/C Participant within three Business Days after
the date such payment is due, the Issuing Lender shall be
entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans hereunder. A certificate
of the Issuing Lender submitted to any L/C Participant with
respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
(b) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C
Participant its pro rata share of such payment in accordance with
subsection 3.4(a), the Issuing Lender receives any payment
related to such Letter of Credit (whether directly from the
Borrower or otherwise), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C
Participant its pro rata share thereof; provided, however, that
in the event that any such payment received by the Issuing Lender
shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the
Issuing Lender notifies the Borrower of the date and amount of a
draft presented under any Letter of Credit and paid by the
Issuing Lender for the amount of (a) such draft so paid and (b)
any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment; provided that
upon the acceleration of such reimbursement obligations in
accordance with Section 8, the Borrower agrees to reimburse the
Issuing Lender for the amount equal to the then maximum liability
(whether direct or contingent) of the Issuing Lender and the L/C
Participants under each Letter of Credit. Each such payment
shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States of America
and in immediately available funds. Interest shall be payable on
any and all amounts remaining unpaid by the Borrower under this
subsection from the date such amounts become payable (whether at
stated maturity, by acceleration or otherwise) until payment in
full at the rate which would be payable on any outstanding ABR
Loans which were then overdue.
6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and
all circumstances and irrespective of any set-off, counterclaim
or defense to payment which the Borrower may have or have had
against the Issuing Lender or any beneficiary of a Letter of
Credit. The Borrower also agrees with the Issuing Lender that
the Issuing Lender shall not be responsible for, and the
Borrower's Reimbursement Obligations under subsection 3.5 shall
not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any other
party to which such Letter of Credit may be transferred or any
claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of
Credit issued by it, except for errors or omissions caused by the
Issuing Lender's gross negligence or willful misconduct. The
Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit issued by
it or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the
standards or care specified in the Uniform Commercial Code of the
State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower.
7 Increased Costs. If the adoption of or any change in any
law or regulation or in the interpretation thereof by any court
or administrative or Governmental Authority charged with the
administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement
against letters of credit issued by the Issuing Lender or
participated in by the Lenders or (ii) impose on any Lender any
other condition regarding any Letter of Credit, and the result of
any event referred to in clauses (i) or (ii) above shall be to
increase the cost to the Issuing Lender or any Lender of issuing
or maintaining such Letter of Credit (or its participation
therein, as the case may be) (which increase in cost shall be the
result of the Issuing Lender's or such Lender's reasonable
allocation of the aggregate of such cost increases resulting from
such events), then, upon notice to it from the Issuing Lender or
such Lender (with a copy to the Agent) certifying that (x) one of
the events hereinabove described has occurred and the nature of
such event, (y) the increased cost or reduced amount resulting
from such event and (z) the additional amounts demanded by the
Issuing Lender or such Lender, as the case may be, and a
reasonably detailed explanation of the calculation thereof, the
Borrower shall immediately pay to such Issuing Lender or such
Lender, as the case may be, from time to time as specified by the
Agent or such Lender, additional amounts which shall be
sufficient to compensate such Issuing Lender or such Lender for
such increased cost, together with interest on each such amount
from the date demanded until payment in full thereof at the rate
provided in subsection 3.3. A certificate as to the fact and
amount of such increased cost incurred by the Issuing Lender or
such Lender as a result of any event mentioned in clauses (i) or
(ii) above, submitted by the Issuing Lender or such Lender to the
Borrower, shall be conclusive, absent manifest error.
8 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing
Lender shall promptly notify the Borrower and the Agent of the
date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection
with such presentment are in conformity with such Letter of
Credit.
9 Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with
the provisions of this Agreement, the provisions of this
Agreement shall apply.
10 Purpose of the Letters of Credit. The Letters of Credit
shall be used for any lawful purposes requested by the Borrower.
4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter
into this Agreement and to make the Loans and issue or
participate in the Letters of Credit herein provided for, the
Borrower hereby represents and warrants to the Agent and to each
Lender that:
1 Financial Condition. The consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at September
30, 1994 and the related consolidated statements of income and of
cash flows for the fiscal year ended on such date, reported on by
Coopers & Lybrand, L.L.P., copies of which have heretofore been
delivered to each of the Lenders, are complete and correct and
present fairly the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. The
unaudited interim consolidated balance sheet of the Borrower and
its Subsidiaries as at December 31, 1994, and the related
unaudited interim consolidated statements of income and of cash
flows for the three month period ended on such date, certified by
a Responsible Officer, copies of which have heretofore been
furnished to each Lender, are complete and correct in all
material respects and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at
such date, and the consolidated results of their operations and
their cash flows for the three-month period then ended (subject
to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such
accountants, as the case may be, and as disclosed therein).
Neither the Borrower nor any of its consolidated Subsidiaries
had, at the date of the most recent balance sheet referred to
above, any material obligation, contingent liability or liability
for taxes, or any long-term lease or unusual forward or long-term
commitment, including without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto.
Since December 31, 1994, there has been no development or event
which has had or could reasonably be expected to have a Material
Adverse Effect.
2 Corporate Existence; Compliance with Law. Each of the
Borrower and its Material Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has the corporate power
and authority and the legal right to own and operate its
property, to lease the property it leases and to conduct the
business in which it is currently engaged, (c) is duly qualified
as a foreign corporation and in good standing under the laws of
any jurisdiction where its ownership, lease or operation of
property or the conduct or proposed conduct of its business
requires such qualification, except where the failure to so
qualify could not, in any instance or in the aggregate,
reasonably be expected to have a Material Adverse Effect and (d)
is in compliance with all material Requirements of Law applicable
to it or its business.
3 Corporate Power; Authorization; Enforceable Obligations.
Each of the Borrower and its Subsidiaries has the corporate power
and authority and the legal right to make, deliver and perform
this Agreement and the other Loan Documents to which it is a
party and to borrow hereunder (in the case of the Borrower) and
has taken all corporate action necessary to be taken by it to
authorize such actions. No consent, waiver or authorization of,
filing with, or other act by or in respect of, any Governmental
Authority or any other Person is required to be made or obtained
by the Borrower or its Subsidiaries in connection with the
borrowings hereunder or the execution, delivery, performance,
validity or enforceability of this Agreement and the other Loan
Documents to which it is a party. This Agreement constitutes,
and the other Loan Documents to which the Borrower or any
Subsidiary is a party when executed and delivered hereunder will
constitute, a legal, valid and binding obligation of the Borrower
and such Subsidiary, enforceable against the Borrower and such
Subsidiary in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by
proceedings in equity or at law).
4 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the borrowings
hereunder and the use of the proceeds thereof do not and will not
violate any usury law applicable to the Borrower or any other
Requirement of Law or Contractual Obligation of the Borrower or
any of its Material Subsidiaries and do not and will not result
in, or require, the creation or imposition of any Lien on any of
its or their respective properties or revenues pursuant to any
such Requirement of Law or Contractual Obligation which could
reasonably be expected to have a Material Adverse Effect.
5 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority
is pending or, to the best knowledge of the Borrower, threatened
by or against the Borrower or any of its Subsidiaries or against
any of its or their respective properties or revenues (a) with
respect to this Agreement, any of the other Loan Documents or any
of the transactions contemplated hereby or thereby except as set
forth on Schedule 4.5 or (b) which could reasonably be expected
to have a Material Adverse Effect.
6 Federal Regulations. No part of the proceeds of any Loans
will be used for (i) any purpose which violates, or which would
be inconsistent with, the provisions of the Regulations of the
Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect, and if deemed necessary in the
reasonable judgment of the Agent or its counsel, the Borrower
will furnish to the Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form
U-1 referred to in Regulation U of said Board or (ii) except as
set forth on Schedule 4.6, purchasing any security in any
transaction which is subject to Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended.
7 Investment Company Act; Other Regulations. Neither the
Borrower nor any of its Subsidiaries is an "investment company",
or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
Neither the Borrower nor any of its Subsidiaries is subject to
regulation under any Federal or State statute or regulation which
limits its ability to incur indebtedness.
8 Subsidiaries. The Subsidiaries listed on Schedule 4.8
constitute all of the subsidiaries of the Borrower in existence
on the date hereof.
9 Disclosure. No representations or warranties made by, or
information supplied by, the Borrower or any of its Subsidiaries
in this Agreement, any other Loan Document or in any other
document furnished to the Lenders from time to time in connection
herewith or therewith (as such other documents may be
supplemented from time to time) contains or will contain any
untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were
made, not misleading. Except as disclosed in the Loan Documents
or as otherwise disclosed in writing to the Lenders, there is no
fact known to the Borrower or any of its Subsidiaries which has,
or which could reasonably be expected in the future to have, in
the Borrower's or such Subsidiary's reasonable judgment, a
Material Adverse Effect.
10 Schedules. Each of the Schedules to this Agreement
contains true, complete and correct information in all material
respects.
11 ERISA. No "prohibited transaction" or "accumulated
funding deficiency" (each as defined in Section 8) or Reportable
Event has occurred and has not been cured since July 1, 1974 with
respect to any Single Employer Plan. The present value of all
benefits vested under all Single Employer Plans maintained by the
Borrower or a Commonly Controlled Entity (based on those
assumptions used to fund such Plans) did not, as of the last
annual valuation date, which in the case of any one such Plan was
not earlier than September 30, 1991, exceed the value of the
assets of such Plan allocable to such vested benefits. The
liability to which the Borrower or any Commonly Controlled Entity
would become subject under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all
Plans as of the valuation date most closely preceding the date
hereof is not in excess of $3,000,000. The Borrower does not
currently participate in any Multiemployer Plans.
12 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be
expected to have a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing. Neither the Borrower
nor any of its Subsidiaries is in default under any order, award
or decree of any arbitrator or Governmental Authority binding
upon or affecting it or by which any of its properties or assets
may be bound or affected, where such default could reasonably be
expected to have a Material Adverse Effect.
13 Title to Real Property, Etc. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple
to, or a valid and subsisting leasehold interest in, all its real
property and good title to all its other property, except where
the failure to have such good record or marketable title could
not reasonably be expected to have a Material Adverse Effect, and
none of such property is subject to any Lien, except (a) as
permitted by subsection 7.2 of this Agreement and (b) Liens
granted to the Agent and the Lenders pursuant to the Existing
Credit Agreement (it being understood that the Liens referred to
in preceding clause (b) are in the process of being released).
14 Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which, to the
knowledge of the Borrower, are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the
Borrower or its Subsidiaries, as the case may be) except where
the failure to file such returns or pay such taxes and/or
assessments could not reasonably be expected to have a Material
Adverse Effect; no tax Lien has been filed, and, to the knowledge
of the Borrower, no claim is being asserted, with respect to any
such tax, fee or other charge.
15 Environmental Matters. To the best knowledge of the
Borrower, each of the representations and warranties set forth in
paragraphs (a) through (f) of this subsection is true and correct
with respect to each parcel of real property owned or operated by
the Borrower or any its Subsidiaries (the "Properties"), except
to the extent that the facts and circumstances giving rise to all
such failures to be so true and correct could not reasonably be
expected by the Borrower to result in the payment of a Material
Environmental Amount:
(a) The Properties do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation
of, or (ii) could reasonably give rise to liability under,
Environmental Laws except in either case insofar as such
violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material
Environmental Amount.
(b) The Properties and all operations at the Properties have
been in compliance in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or
about the Properties, or violation of any Environmental Law with
respect to the Properties which, in the aggregate with all other
contaminations and violations, could materially interfere with
the continued operation of the Properties taken as a whole or
materially impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-
compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties, nor does the Borrower have
knowledge or reason to believe that any such notice will be
received or is being threatened except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a
matter or matters that is or are reasonably likely to result in
the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of,
or in a manner or to a location which could reasonably give rise
to liability under, Environmental Laws, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a
manner that could reasonably give rise to liability under, any
applicable Environmental Laws except insofar as any such
violation or liability referred to above, or any aggregation
thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(e) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the Borrower,
threatened, under any Environmental Law to which the Borrower or
any of its Subsidiaries is or will be named as a party with
respect to the Properties, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the
Properties or the Borrower or any of its Subsidiaries except
insofar as such proceeding, action, decree, order or other
requirement, or any aggregation thereof, is not reasonably likely
to result in the payment of a Material Environmental Amount.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
of its Subsidiaries in connection with the Properties or
otherwise in connection with the Borrower or any of its
Subsidiaries, in violation of or in amounts or in a manner that
could reasonably give rise to liability under Environmental Laws
except insofar as any such violation or liability referred to
above, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
16 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is
pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, and the Borrower does not know of
any valid basis for any such claim, except for such claims which
have previously been disclosed to the Lenders and could not
reasonably be expected to have a Material Adverse Effect. The
use of such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect.
5. CONDITIONS PRECEDENT
1 Conditions to Effectiveness of this Agreement. This
Agreement shall become effective on the date upon which the
conditions set forth in this Section 5 shall have been satisfied
(the "Restatement Date") and the obligation of each Lender to
make its initial Loan and of the Issuing Lender to issue any
Letter of Credit requested to be issued by it hereunder is
subject to the satisfaction or waiver by the Agent and each of
the Lenders of the following conditions precedent on or prior to
the Restatement Date:
(a) Execution of Agreement. The Agent shall have received
this Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart for each Lender.
(b) Subsidiaries Guarantee. The Agent shall have received the
Subsidiaries Guarantee, duly executed and delivered by a duly
authorized officer of each Subsidiary Guarantor.
(c) Legal Opinion of Counsel to the Borrower. The Agent and
each Lender shall have received an executed legal opinion of
Vorys, Sater, Seymour and Pease, special counsel to the Borrower,
dated the Restatement Date and addressed to the Agent and the
Lenders substantially in the form of Exhibit F. Such legal
opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Lenders may
reasonably require in form and substance satisfactory to the
Agent.
(d) Corporate Proceedings of the Borrower and its
Subsidiaries. The Agent shall have received a copy of the
resolutions (in form and substance reasonably satisfactory to the
Agent and its counsel) of the Board of Directors of each of the
Borrower and each of its Subsidiaries executing any Loan Document
authorizing (i) the execution, delivery and performance of each
of the Loan Documents to which it is a party on the Restatement
Date, (ii) the consummation of the transactions contemplated
hereby and thereby and (iii) the borrowings herein provided for,
all certified by the Secretary or the Assistant Secretary of the
Borrower or such Subsidiary, as the case may be, on the
Restatement Date. Each such certificate shall (A) state that the
resolutions set forth therein have not been amended, modified,
revoked or rescinded as of the date of such certificate, (B)
specify the names and titles of the officers of the Borrower or
such Subsidiary, as the case may be, authorized to sign the Loan
Documents to which it is a party and (C) contain specimens of the
signatures of such officers.
(e) No Proceeding or Litigation; No Injunctive Relief. No
action, suit, investigation or other proceeding (including,
without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority
shall be threatened or pending and no preliminary or permanent
injunction or order by a state or federal court shall have been
entered (i) in connection with this Agreement or any transaction
contemplated hereby except as set forth in Schedule 5.1(e) or
(ii) which, in any case, in the reasonable judgment of the Agent,
could reasonably be expected to have a Material Adverse Effect.
(f) Consents, Licenses, Approvals, etc. The Agent shall have
received true copies (certified to be such by the Borrower or
other appropriate party) of all consents, licenses and approvals
required in accordance with applicable law in connection with the
execution, delivery, performance, validity and enforceability of
this Agreement and the other Loan Documents to be delivered on or
before the Restatement Date, and the Borrower and its Material
Subsidiaries shall have all such material consents, licenses and
approvals required in connection with the continued operation of
the Borrower and its Material Subsidiaries, and such approvals
shall be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or
threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on this Agreement
and the actions contemplated hereby.
(g) Representations and Warranties. Each of the
representations and warranties made by the Borrower and its
Subsidiaries in or pursuant to this Agreement or any other Loan
Document to which it is a party and the representations of the
Borrower and its Subsidiaries which are contained in any
certificate, document or financial or other statement furnished
pursuant hereto or thereto on or before the Restatement Date
shall be true and correct in all material respects on and as of
the Restatement Date as if made on and as of such date both
before and after giving effect to the making of the Loans
hereunder.
(h) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing hereunder after
giving effect to the making of any Extension of Credit hereunder.
(i) Financial Statements. The Agent shall have received (i)
all financial statements of the Borrower for the fiscal year of
the Borrower ended on September 30, 1994 and (ii) unaudited
interim consolidated financial statements of the Borrower for the
fiscal quarter of the Borrower ended December 31, 1994.
(j) Borrowing Certificate. The Agent shall have received,
with a counterpart for each Lender, a Borrowing Certificate,
dated the Restatement Date, substantially in the form of Exhibit
G hereto, with appropriate insertions, executed by a duly
authorized Responsible Officer of the Borrower.
(k) Certificate as to Consents. The Agent shall have received
a certificate setting forth the consents and approvals of third
parties necessary in connection with the execution, delivery,
performance, validity and enforceability of this Agreement and
the other Loan Documents that have not been obtained, and
certifying that the failure to obtain such consents and the
violation of any Contractual Obligations could not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(l) Fees; Interest Accrued on Existing Notes. The Agent shall
have received for its account or on behalf of the Lenders or the
Existing Banks, as the case may be, all fees and any other
amounts payable on the Restatement Date pursuant to the
Engagement Letter, this Agreement or the Existing Credit
Agreement, including, but not limited to, the interest accrued
but unpaid on the revolving credit notes and term notes under the
Existing Credit Agreement to (but not including) the Restatement
Date and amounts payable pursuant to subsection 2.18 of the
Existing Credit Agreement.
(m) Additional Matters. All corporate and other proceedings
and all other documents and legal matters in connection with the
transactions contemplated by this Agreement and the other Loan
Documents, including, without limitation, documentation
concerning the status of all labor, tax, employee benefit and
health and safety matters involving the Borrower and its
Subsidiaries shall be reasonably satisfactory in form and
substance to the Agent and its counsel.
(n) Additional Information. The Agent shall have received
such additional information which the Agent shall have reasonably
requested, including, without limitation, copies of any debt
agreements, security agreements, tax sharing agreements,
employment agreements, management compensation arrangements,
financing arrangements and other material contracts, and such
agreements or arrangements shall be reasonably satisfactory in
form and substance to the Agent and its counsel.
2 Conditions to All Extensions of Credit. The obligation of
each Lender to make any Loan (other than any Loan the proceeds of
which are to be used exclusively to repay Refunded Swing Line
Loans) or of the Issuing Lender to issue any Letter of Credit
requested to be issued by it hereunder on any date (including,
without limitation, the Restatement Date) is subject to the
satisfaction of the following conditions precedent as of such
date:
(a) Representations and Warranties. The representations and
warranties made by the Borrower or any of its Subsidiaries in the
Loan Documents to which it is a party and any representations and
warranties made by the Borrower or any of its Subsidiaries which
are contained in any certificate, document or financial or other
statement furnished at any time pursuant hereto or thereto shall
be true and correct in all material respects on and as of the
date thereof as if made on and as of such date unless stated to
relate to a specific earlier date.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or
after giving effect to the Extension of Credit to be made on such
date.
(c) Bid Loan Confirmation. With respect to any Bid Loan, a
Bid Loan Confirmation shall have been delivered in accordance
with subsection 2.5(b)(iv).
Each borrowing by the Borrower under this Agreement,
each conversion of any Loan pursuant to subsection 2.11 of this
Agreement and each issuance of any Letter of Credit hereunder
shall constitute a representation and warranty by the Borrower as
of the date of such borrowing, conversion or issuance that the
conditions contained in the foregoing paragraphs (a) and (b) of
this subsection 5.2 have been satisfied.
6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Revolving Credit Commitments remain in effect or any amount is
owing to any Lender or the Agent hereunder or under any other
Loan Document, the Borrower shall, and in the case of the
agreements set forth in subsections 6.3, 6.4, 6.5, 6.6, and 6.13,
shall cause each of its Material Subsidiaries to:
1 Financial Statements. Furnish to the Agent and each
Lender:
(a) as soon as available, but in any event within ninety days
after the end of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such year and the related statements of
consolidated income and retained earnings and of cash flows for
such year, setting forth in each case in comparative form the
figures for the previous year; provided that the consolidated
statements shall be certified without a "going concern" or like
qualification or exception or qualification arising out of the
scope of the audit by independent certified public accountants of
nationally recognized standing; and
(b) as soon as available, but in any event not later than
forty-five days after the end of each of the first three
quarterly periods of each fiscal year of the Borrower, a copy of
the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of each such quarter and the related
unaudited statements of consolidated income and retained earnings
and of cash flows for such quarter and the portion of the fiscal
year through such date setting forth in each case in comparative
form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material
respects;
all such financial statements to be complete and correct in all
material respects and prepared in reasonable detail and in
accordance with GAAP (except, in the case of the financial
statements referred to in subparagraph (b), such financial
statements need not contain footnotes and shall be prepared
substantially in accordance with GAAP) applied consistently
throughout the periods reflected therein, except as otherwise
disclosed in the notes thereto.
2 Certificates; Other Information. Furnish to the Agent and
each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a) above, a certificate of the
independent certified public accountants certifying such
financial statements (i) stating that in making the examination
necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate and
(ii) showing in detail the calculations supporting such statement
in respect of subsections 6.8, 6.9, 6.10, 7.1, 7.6, 7.7 and 7.8;
(b) concurrently with the delivery of the financial statements
referred to above, a certificate from the auditing accountants
(for the year-end statements) or a Responsible Officer of the
Borrower (for all statements) stating that, to the best of such
officer's knowledge, the Borrower and each of its Material
Subsidiaries during such period has observed or performed in all
material respects all of its material covenants and other
agreements, and satisfied every condition contained in this
Agreement, any Notes and the Subsidiaries Guarantee to be
observed, performed or satisfied by it, and that such Officer has
obtained no knowledge of any Default or Event of Default except
as specified in such certificate, and showing in detail the
calculations supporting such statement in respect of subsections
6.8, 6.9, 6.10, 7.1, 7.6, 7.7 and 7.8;
(c) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a) and (b) above, a written
discussion and analysis (in a form and detail substantially
similar to that contained in the Form 10-K or Form 10-Q filed by
the Borrower with the Securities and Exchange Commission for the
period covered by such financial statements) by the Borrower with
respect to the period covered by such financial statements;
(d) promptly after the same are sent and received, copies of
all financial statements, reports and notices which the Borrower
or any of its Subsidiaries sends to its shareholders and promptly
after the same are filed and received, copies of all financial
statements and reports which the Borrower or any of its
Subsidiaries may make to, or file with, and copies of all
material notices the Borrower or any such Subsidiary receives
from, the Securities and Exchange Commission or any public body
succeeding to any or all of the functions of the Securities and
Exchange Commission;
(e) promptly upon receipt thereof, copies of all final reports
submitted to the Borrower by independent certified public
accountants in connection with each annual, interim or special
audit of the books of the Borrower or any of its Subsidiaries
made by such accountants, including, without limitation, any
final comment letter submitted by such accountants to management
in connection with their annual audit; and
(f) promptly, on reasonable notice to the Borrower, such
additional financial and other information as the Agent may from
time to time reasonably request.
3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent,
as the case may be, all its Indebtedness and other material
obligations of whatever nature, except, without prejudice to the
effectiveness of paragraph (e) of Section 8 hereof for any
Indebtedness or other obligations (including any obligations for
taxes), when the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided
on the books of the Borrower or its Subsidiaries, as the case may
be, and except for trade accounts payable incurred in the
ordinary course of business which are paid in accordance with
normal industry practice.
4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now
conducted by it and, except as may be permitted under subsection
7.4, preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain
all rights, privileges, contracts, copyrights, patents,
trademarks, tradenames and franchises necessary or desirable in
the normal conduct of its business; and comply with all of its
Contractual Obligations and Requirements of Law except to the
extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
5 Maintenance of Property, Insurance. Keep all property
useful and necessary in its business in good working order and
condition; maintain with financially sound and reputable
insurance companies insurance on all its property in at least
such amounts and against at least such risks (but including in
any event public liability, product liability and business
interruption insurance) as are usually insured against in the
same general area by companies engaged in the same or a similar
business; and furnish to each Lender, upon written request,
reasonable information as to the insurance carried.
6 Inspection of Property; Books and Records; Discussions.
Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all Requirements of
Law shall be made of all dealings and transactions in relation to
its business and activities; and permit representatives of the
Agent to visit and inspect any of its properties, and examine and
make abstracts from any of its books and records at the
Borrower's expense, at any reasonable time and as often as may
reasonably be requested, and to discuss the business, operations,
properties and financial and other condition of the Borrower and
its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public
accountants.
7 Notices. Promptly give notice to the Agent and each
Lender (and, in the case of clauses (a), (b) and (c), in any
event within five Business Days after learning thereof):
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any material
Contractual Obligation of the Borrower or any of its Material
Subsidiaries or (ii) litigation, investigation or proceeding
which may exist at any time between the Borrower or any of its
Subsidiaries and any Governmental Authority, which, if adversely
determined, could reasonably be expected to have a Material
Adverse Effect;
(c) of any litigation or proceeding affecting the Borrower or
any of its Subsidiaries (i) (A) in which the amount of liability
asserted against the Borrower and its Subsidiaries is $5,000,000
or more and not covered by insurance or (B) which, in the
reasonable opinion of a Responsible Officer of the Borrower, if
adversely determined, could reasonably be expected to have a
Material Adverse Effect or (ii) in which injunctive or similar
relief is sought and which, in the reasonable opinion of a
Responsible Officer of the Borrower, if adversely determined,
could reasonably be expected to have a Material Adverse Effect;
(d) of the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to
know thereof: (i) the occurrence of any Reportable Event with
respect to any Plan, or (ii) the institution of proceedings or
the taking or expected taking of any other action by PBGC or the
Borrower or any Commonly Controlled Entity to terminate or
withdraw or partially withdraw from any Plan under circumstances
which could lead to material liability to the PBGC or, with
respect to a Multiemployer Plan, the Reorganization or Insolvency
(as each such term is defined in ERISA) of the Plan and in
addition to such notice, deliver to the Agent and each Lender
whichever of the following may be applicable: (A) a certificate
of a Responsible Officer of the Borrower setting forth details as
to such Reportable Event and the action that the Borrower or a
Commonly Controlled Entity proposes to take with respect thereto,
together with a copy of any notice of such Reportable Event that
may be required to be filed with PBGC, or (B) any notice
delivered by PBGC evidencing its intent to institute such
proceedings or any notice to PBGC that such Plan is to be
terminated, as the case may be; and
(e) of any event, act or omission which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to subsections (a) through (e) of this
subsection 6.7 shall be accompanied by a statement of the Chief
Executive Officer or Chief Financial Officer or other Responsible
Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes
to take with respect thereto. For all purposes of clause (d) of
this subsection 6.7, the Borrower shall be deemed to have
knowledge of all facts attributable to the administrator of such
Plan.
8 Interest Coverage. Maintain the ratio of (a) EBITDA as of
the end of each fiscal quarter of the Borrower (commencing with
the fiscal quarter ended June 30, 1995) for the preceding twelve
months to (b) the sum of (i) Consolidated Interest Expense as of
the end of such fiscal quarter for the preceding twelve months
and (ii) the amount accrued by the Borrower or any of its
Subsidiaries in respect of any series of preferred stock of the
Borrower or such Subsidiary as of the end of such fiscal quarter
for the preceding twelve months at not less than 3.0 to 1.0.
9 Maintenance of Leverage Ratio. At each date set forth
below with respect to the fiscal year of the Borrower then
ending, maintain the ratio of Total Indebtedness of the Borrower
to Total Capitalization of the Borrower at not greater than the
ratio set forth opposite each such date:
Date Ratio
September 30, 1995 0.55 to 1.00
September 30, 1996 0.55 to 1.00
September 30, 1997 0.50 to 1.00
September 30, 1998 0.50 to 1.00
September 30, 1999 0.50 to 1.00
10 Maintenance of Consolidated Net Worth. Maintain
Consolidated Net Worth of the Borrower in an amount at all times
equal to the sum of (a) $110,000,000, (b) the aggregate amount of
Net Cash Proceeds and the fair market value of any other
consideration received by the Borrower or any of its Subsidiaries
from any issuance of equity securities of the Borrower or any
such Subsidiary (including, without limitation, equity securities
of the Borrower issued pursuant to any of the Merger
Transactions) and (c) the amount equal to 50% of Consolidated Net
Income at the end of each fiscal quarter of the Borrower for the
fiscal quarter of the Borrower then ended, provided that
Consolidated Net Income for such fiscal quarter is a positive
amount (commencing with the fiscal quarter ending March 31,
1995).
11 New Subsidiaries. (a) Upon the creation or acquisition
of a Domestic Subsidiary by the Borrower or any of its
Subsidiaries, and upon the written request of the Agent, cause
such Domestic Subsidiary to become a Subsidiary Guarantor.
(a) Immediately after the Reincorporation, cause New Miracle-
Gro to become a Subsidiary Guarantor.
(b) If Sierra-Sunpol were to become a wholly owned Subsidiary
of the Borrower, cause Sierra-Sunpol to become a Subsidiary
Guarantor.
12 Clean Down. For a period of 30 consecutive days during
each fiscal year of the Borrower, not have the aggregate amount
of Indebtedness for borrowed money outstanding at any one time
pursuant to subsections 7.1(a), (e) and (j) during such period
exceed $225,000,000.
13 Environmental, Health and Safety Matters. (a) Comply
with, and ensure compliance by all tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and
comply with and maintain, and ensure that all tenants and
subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except to the extent
that any such failure to so comply could not reasonably be
expected to result in the payment of a Material Environmental
Amount.
(a) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply with all lawful
orders and directives of all Governmental Authorities regarding
Environmental Laws, except to the extent that the amount or
validity thereof is currently being contested in good faith by
appropriate proceedings and (to the extent required by GAAP)
reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or any of its Subsidiaries,
as the case may be.
(b) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective parents, subsidiaries, affiliates,
employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of the
Borrower or the Properties, or any orders, requirements or
demands of Governmental Authorities related thereto, including,
without limitation, attorney's and consultant's fees,
investigation and laboratory fees, response costs, court costs
and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct
of the party seeking indemnification therefor. This indemnity
shall continue in full force and effect regardless of the
termination of this Agreement.
7. NEGATIVE COVENANTS
The Borrower hereby agrees that, from the Restatement
Date and so long as the Revolving Credit Commitments remain in
effect or any amount is owing to any Lender or the Agent
hereunder or under any other Loan Document, the Borrower shall
not, nor shall it permit any of its Subsidiaries to, directly or
indirectly:
1 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness in respect of capitalized lease obligations
and purchase money obligations for fixed or capital assets within
the limitations set forth in subsection 7.2(a) on terms and
conditions reasonably satisfactory to the Required Lenders;
provided, however, that the aggregate amount of any such
Indebtedness at any one time outstanding shall not exceed
$15,000,000;
(c) Indebtedness in existence on the Restatement Date (other
than the Subordinated Debt) and listed on Schedule 7.1(c) (and
any extensions, renewals or replacements of such Indebtedness so
long as the principal amount of such Indebtedness is not
increased);
(d) Indebtedness to financial institutions under one or more
unsecured credit line agreements in an aggregate amount not to
exceed $15,000,000;
(e) Indebtedness in respect of Commercial Paper Obligations;
(f) Indebtedness permitted pursuant to subsection 7.7(e);
(g) Indebtedness under Hedging Agreements entered into with
any Hedging Lender in the ordinary course of business;
(h) until September 30, 1995, Indebtedness of New Miracle-Gro
to The Chase Manhattan Bank, N.A, (the "Chase Debt"), provided
that the aggregate principal amount of such Indebtedness shall
not exceed $57,000,000 (it being further understood and agreed by
the parties to this Agreement that any obligation of New Miracle-
Gro under the Subsidiary Guarantee shall be subordinate to its
obligations to pay the Chase Debt);
(i) the Subordinated Debt (as the same may hereafter be
refinanced by the Borrower in accordance with terms and
provisions reasonably satisfactory to the Agent and the Required
Lenders); and
(j) additional Indebtedness of the Borrower and its
Subsidiaries not exceeding $40,000,000 in aggregate principal
amount at any one time outstanding.
2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except:
(a) Liens securing Indebtedness permitted under subsection
7.1(b); provided that (i) such Liens do not at any time encumber
any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby shall not
exceed the cost or fair market value, whichever is lower, of the
property being acquired on the date of acquisition;
(b) Liens for taxes and special assessments not yet due or
which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are
maintained on the books of the Borrower and its Subsidiaries in
accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30
days or which are being contested in good faith and by
appropriate proceedings;
(d) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation;
(e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory and
other obligations required by law, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
other Liens incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount, and which do not in
any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the
business of the Borrower or its Subsidiaries;
(g) Liens resulting from judgments of any court or
governmental proceeding, provided such Liens in the aggregate do
not constitute an Event of Default under subsection 8(h);
(h) Liens in existence on the Restatement Date and reflected
in the financial statements of the Borrower for the fiscal year
ended September 30, 1994 or described in Schedule 7.2(h);
(i) Liens of landlords or of mortgagees of landlords, arising
solely by operation of law, on fixtures located on premises
leased in the ordinary course of business, provided that the
rental payments secured thereby are not yet due; and
(j) Liens (not otherwise permitted hereunder) which secure
Indebtedness permitted pursuant to subsection 7.1 in an aggregate
amount not exceeding $40,000,000 at any time outstanding.
3 Limitation on Contingent Obligations. Agree to or assume,
guarantee, indorse or otherwise in any way be or become
responsible or liable for, directly or indirectly, any Contingent
Obligation except for (i) the guarantees contemplated by the
Subsidiaries Guarantee and (ii) Contingent Obligations in an
aggregate amount not to exceed $10,000,000 at any one time
outstanding.
4 Limitation on Fundamental Changes. Except as permitted or
contemplated by this Agreement, any other Loan Documents or the
Merger Agreement, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any material part of its business
or assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all the business or
assets of, or stock or other evidence of beneficial ownership of,
any Person, or make any material change in the method by which it
conducts business, except that:
(a) any Subsidiary of the Borrower may be merged, amalgamated
or consolidated with or into the Borrower or any wholly owned
Subsidiary of the Borrower (provided that in the case of each
such merger or consolidation, the Borrower or such wholly owned
Subsidiary, as the case may be, shall be the continuing or
surviving corporation) and such wholly owned Subsidiary shall be
a Subsidiary Guarantor;
(b) any Subsidiary of the Borrower may be liquidated, wound up
or dissolved into, or all or substantially all, or such lesser
amount thereof as the Borrower shall determine, of its business,
property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of
transactions, to, (i) the Borrower or any wholly owned Subsidiary
of the Borrower (provided that such wholly owned Subsidiary shall
be a Subsidiary Guarantor) or (ii) to any other Person (provided
that the aggregate Net Cash Proceeds received by the Borrower and
its Subsidiaries in respect of any such liquidation, winding up,
dissolution, conveyance, sale, lease, transfer or other
disposition, as the case may be, shall not exceed $25,000,000);
(c) the Borrower or any Subsidiary of the Borrower may acquire
by purchase or otherwise all or substantially all the business or
assets of, or stock or other evidence of beneficial ownership of,
any Person (including, without limitation, any Affiliate of the
Borrower), in the same or similar line of business as the
Borrower or such Subsidiary, as the case may be (provided that
(i) the aggregate consideration derived from one or more equity
issuances of the Borrower and paid or payable by the Borrower for
all such acquisitions during any fiscal year of the Borrower
shall not exceed $50,000,000, (ii) the sum of (A) the aggregate
consideration paid or payable by the Borrower or such Subsidiary
for all such acquisitions (including the amount of any debt
incurred or assumed by the Borrower or such Subsidiary in respect
thereof) other than pursuant to preceding clause (i) and (B) the
aggregate consideration paid or payable pursuant to subsection
7.4(d)(i) shall not exceed $75,000,000 and (iii) at the time of
and immediately after giving effect to any such acquisition, no
Default or Event of Default shall have occurred and be
continuing); and
(d) the Borrower or any Subsidiary of the Borrower may acquire
by purchase or otherwise less than substantially all the business
or assets of, or stock or other evidence of beneficial ownership
of, any Person (including, without limitation, any Affiliate of
the Borrower), in the same or similar line of business as the
Borrower or such Subsidiary, as the case may be (provided that
(i) the aggregate consideration paid or payable by the Borrower
or such Subsidiary for all such acquisitions (including the
amount of any debt incurred or assumed by the Borrower or such
Subsidiary in respect thereof) shall not exceed $10,000,000 and
(ii) the aggregate consideration paid or payable pursuant to
subsection 7.4(c)(ii) (A) and preceding clause (i) shall not
exceed $75,000,000 and (iii) at the time of and immediately after
giving effect to any such acquisition, no Default or Event of
Default shall have occurred and be continuing).
5 Limitation on Dividends and Stock Repurchases. (a) At
any time that a Default or Event of Default shall have occurred
and be continuing, declare any dividends (other than dividends
payable solely in common shares of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, retirement or other
acquisition of, any shares of any class of stock of the Borrower
or any of its Subsidiaries, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in
obligations of the Borrower or any of its Subsidiaries.
(a) At any time, make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase,
redemption, retirement or other acquisition of, any shares of any
class of stock of the Borrower or any of its Subsidiaries,
whether now or hereafter outstanding, except that (i) the
Borrower and its Subsidiaries may make such payments and set
apart such assets in an aggregate amount not to exceed
$30,000,000 and (ii) in addition to the $30,000,000 provided for
in preceding clause (i), the Borrower may use any funds received
by the Borrower from the exercise of employee stock options
granted after January 26, 1995 to repurchase the Borrower's
common stock through the open market or privately negotiated
transactions (provided that at the time of and immediately after
giving effect to any such payment, setting apart or repurchase,
no Default or Event of Default shall have occurred and be
continuing).
6 Limitation on Capital Expenditures. Directly or
indirectly (by way of the acquisition of the securities of a
Person or otherwise) make or commit to make any expenditure in
respect of the purchase or other acquisition of any fixed or
capital asset (excluding (i) normal replacements and maintenance
which are properly charged to current operations or replacements
and maintenance which are payable from the proceeds of insurance
received by the Borrower or any of its Subsidiaries and (ii)
transactions permitted by subsection 7.4(b)) by the expenditure
of cash or the incurrence of Indebtedness except for the purchase
or other acquisition in any fiscal year of any such asset the
cost of which (or, in the case of any acquisition not in the
nature of an ordinary purchase, the book value of the
consideration given for which), when aggregated with the costs of
all other such assets purchased or otherwise acquired by the
Borrower and its Subsidiaries taken as a whole during such fiscal
year, does not exceed $50,000,000; provided that (i) if such
$50,000,000 is not so utilized during any fiscal year (commencing
with the fiscal year ending September 30, 1996), the unutilized
amount for such fiscal year may be utilized in the next
succeeding fiscal year, but not in any subsequent fiscal year and
(ii) Capital Expenditures unutilized during the fiscal year
ending on September 30, 1995 up to the amount of $12,500,000 may
be utilized during the fiscal year of the Borrower beginning
October 1, 1995 but not in any subsequent fiscal year.
7 Limitation on Investments, Loans and Advances. Make or
commit to make any advance, loan, extension of credit or capital
contribution to, or purchase of any stock, bonds, notes,
debentures or other securities of, or make any other investment
in, any Person except:
(a) investments in Cash Equivalents;
(b) loans and advances to officers and directors of
the Borrower or any of its Subsidiaries (or
employees thereof or manufacturers' representatives provided such
loans and advances are approved by an officer of the Borrower)
for travel, entertainment and relocation expenses in the ordinary
course of business which do not exceed at any time outstanding an
aggregate amount in excess of $5,000,000;
(c) investments in Subsidiaries existing on the Restatement
Date;
(d) investments in notes and other securities received in the
settlement of overdue debts and accounts payable in the ordinary
course of business and for amounts which, individually or in the
aggregate, are not material to the Borrower and its Subsidiaries
taken as a whole;
(e) loans by the Borrower to any Subsidiary Guarantor for
working capital purposes;
(f) pursuant to the Merger Transactions as set forth in the
Merger Agreement as in effect on the date hereof;
(g) as otherwise provided pursuant to subsection 7.4; and
(h) insofar as not otherwise permitted pursuant to preceding
clauses (a) through (g), loans to or investments in Affiliates in
an aggregate amount not in excess of $10,000,000.
8 Limitation on Leases. Enter into any agreement, or be or
become liable under any agreement, for the lease, hire or use of
any real or personal property, except for (a) any such agreement
in the nature of an operating lease the payment obligations for
any fiscal year of the Borrower under which, when aggregated with
the payment obligations for such fiscal year under all other
operating leases to which the Borrower or any of its
Subsidiaries, respectively, are parties, do not exceed
$30,000,000, and (b) any such agreement in the nature of a
capitalized lease the payment obligations under which are
permitted by subsection 7.1(b).
9 Transactions with Affiliates and Officers. Except for
transactions associated with the relocation expenses of officers
of the Borrower in the ordinary course of business, (a) enter
into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any
services, with any Affiliate or any officer or director thereof,
or enter into, assume or suffer to exist any employment or
consulting contract with any Affiliate or any officer or director
thereof, except any transaction or contract which is in the
ordinary course of the Borrower's or such Subsidiary's business
and which is upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than it would obtain in a
comparable arm's length transaction with a Person not an
Affiliate, (b) make any advance or loan to any Affiliate (except
as otherwise made pursuant to subsection 7.7(h)) or any director
or officer thereof or to any trust of which any of the foregoing
is a beneficiary, or to any Person on the guarantee of any of the
foregoing or (c) pay any fees (other than reasonable directors'
fees or expenses) or expenses to, or reimburse or assume any
obligation for the reimbursement of any expenses incurred by, any
Affiliate or any officer or director thereof; provided that,
subject to subsection 7.5, nothing contained in this subsection
7.9 shall be deemed to prohibit the transactions contemplated by
the Merger Agreement, including, without limitation, the payment
of dividends on, or the redemption of, the Borrower's Class A
Convertible Preferred Stock in the exercise of any right of first
refusal by the Borrower pursuant to the terms of the Merger
Agreement.
10 Limitation on Sale of Assets. Except as permitted or
contemplated by this Agreement or any other Loan Document, sell,
lease, assign, transfer or otherwise dispose of any of its assets
(including, without limitation, receivables and leasehold
interests, but excluding obsolete or worn out property or
property (including inventory) disposed of in the ordinary course
of business), whether now owned or hereafter acquired, except
that the Borrower or any of its Subsidiaries may sell, lease,
assign, transfer or otherwise dispose of assets provided that (i)
the fair market value of all such assets disposed of in any
fiscal year shall not exceed $25,000,000 in the aggregate (which
amount shall be inclusive of amounts in respect of transactions
pursuant to subsection 7.4(b)(ii), but exclusive of transactions
permitted under 7.11), (ii) if such $25,000,000 is not so
utilized during any fiscal year (commencing with the fiscal year
ending September 30, 1996), the unutilized amount for such fiscal
year may be utilized in the succeeding fiscal year, but not in
any subsequent fiscal year and (iii) up to $12,500,000 of the
unutilized amount for the fiscal year ending on September 30,
1995 may be utilized for the fiscal year beginning October 1,
1995, but not in any subsequent fiscal year.
11 Sale and Leaseback. Enter into any arrangement with any
Person providing for the leasing by the Borrower or any of its
Subsidiaries of real or personal property which has been or is to
be sold or transferred by the Borrower or any such Subsidiary to
such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or
rental obligations of the Borrower or any such Subsidiary, except
with respect to any such transactions which in any fiscal year
shall not have an aggregate fair market value in excess of
$10,000,000.
12 Limitation on Prepayments of Subordinated Debt and
Modification of the Subordinated Notes. (a) Directly or
indirectly prepay, purchase, redeem, retain or otherwise acquire
any of its Subordinated Debt; provided, however, that discharges
of Subordinated Debt by mandatory prepayments or by scheduled
installments and payments in full at their stated maturities
shall not be deemed to violate this subsection 7.12 or (b)
directly or indirectly, without the consent of the Required
Lenders, permit the modification, waiver or amendment of any of
the material terms (including, without limitation, the
subordination provisions) of the Subordinated Notes (other than a
consent from the holders thereof in respect of the Merger
Transactions).
13 Fiscal Year. Permit the fiscal year of the Borrower and
its Subsidiaries to end on a day other than September 30.
14 Sierra-Sunpol. Permit the Total Capitalization of Sierra-
Sunpol to exceed $2,000,000 at any time.
8. EVENTS OF DEFAULT
Upon the occurrence of any of the following
events:
(a) Payments. The Borrower shall fail to pay any principal of
any Loan or any Reimbursement Obligation within two days after
any such amount becomes due in accordance with the terms thereof
or hereof (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder); or the Borrower shall fail to pay any
interest on any Loan or any fee or other amount payable
hereunder, within five days after any such interest, fee or
amount becomes due in accordance with the terms thereof or hereof
(including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters
of Credit shall have presented the documents required
thereunder); or
(b) Representations and Warranties. Any representation or
warranty made or deemed made by the Borrower or any of its
Subsidiaries in any of the Loan Documents to which it is a party
or which is contained in any certificate, document or financial
or other statement furnished at any time under or in connection
herewith or therewith shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) Certain Covenants. The Borrower shall default in the
observance or performance of any covenant or agreement contained
in subsection 2.9(b), subsections 6.8, 6.9, 6.10 or 6.12; or
(d) Other Covenants. The Borrower or any of its Subsidiaries
or any other party thereto shall default in the observance or
performance of any covenant or agreement (i) contained in
subsections 7.4, 7.5, 7.6, 7.10, 7.11 or 7.12 and such default
shall continue unremedied for a period of 10 days or (ii)
contained in this Agreement or in any other Loan Document not
referred to in preceding clause (i) or Section 8(c) and such
default shall continue unremedied for a period of 30 days; or
(e) Cross-Default. The Borrower or any of its Subsidiaries
shall (i) default in any payment of principal of or interest on
any Indebtedness (other than the Loans) or in the payment of any
Contingent Obligation, the aggregate principal amount of which
exceeds $5,000,000, beyond the period of grace (not to exceed 30
days), if any, provided in the instrument or agreement under
which such Indebtedness or Contingent Obligation was created; or
(ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or
Contingent Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, 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 beneficiary or beneficiaries of
such Contingent Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Contingent
Obligation to become payable; or (iii) any such Indebtedness or
Contingent Obligation shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or
(f) Commencement of Bankruptcy or Reorganization Proceedings.
(i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its
Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the
Borrower or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the
Borrower or any of its Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or
(iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(g) ERISA. (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975
of the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which
Reportable Event or institution of proceedings is, in the
reasonable opinion of the Required Lenders, likely to result in
the termination of such Plan for purposes of Title IV of ERISA in
a "distress termination" (within the meaning of Section 4041(c)
of ERISA, and, in the case of a Reportable Event, the continuance
of such Reportable Event unremedied for ten days after notice of
such Reportable Event pursuant to Section 4043(a), (c) or (d) of
ERISA is given or, in the case of institution of proceedings, the
continuance of such proceedings for ten days after commencement
thereof, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA in a "distress termination" (within
the meaning of Section 4041(c) of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or is, in the reasonable
opinion of the Required Lenders, likely to, incur any liability
in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event
or condition shall occur or exist with respect to a Single
Employer Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such
events or conditions, if any, could subject the Borrower or any
of its Subsidiaries to any tax, penalty or other liabilities in
the aggregate material in relation to the business, operations,
property or financial or other condition of the Borrower and its
Subsidiaries taken as a whole; or
(h) Material Judgments. One or more judgments or decrees
shall be entered against the Borrower or any of its Subsidiaries
involving in the aggregate a liability (not covered by insurance)
of $5,000,000 or more and all such judgments or decrees shall not
have been vacated, satisfied, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or
(i) Change in Control. (i) Any Person (other than one or more
of the Miracle-Gro Shareholders and their Permitted Transferees
(as such term is defined in the Merger Agreement)) shall at any
time own, directly or indirectly, shares representing more than
30% of the aggregate ordinary voting power represented by the
issued and outstanding Capital Stock of the Borrower or (ii) one
or more of the Miracle-Gro Shareholders or their Permitted
Transferees shall at any time own, directly or indirectly, shares
representing more than 44% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the
Borrower or (iii) a "Change of Control" as defined in Section
1008 of the Subordinated Note Indenture (as in effect on the
Restatement Date), following the waiver of such Section in
respect of the Miracle-Gro Shareholders and the consummation of
the transactions contemplated by the Merger Transactions, shall
occur; or
(j) Effectiveness of the Subsidiaries Guarantee. The
Subsidiaries Guarantee shall cease for any reason (other than
pursuant to the terms and conditions of this Agreement or the
other Loan Documents) to be in full force and effect in
accordance with its terms or any party thereto shall so assert in
writing;
then, and in any such event, (a) if such event is an Event of
Default specified in paragraph (f) above, automatically the
Revolving Credit Commitments, the Swing Line Commitment and the
L/C Commitment shall immediately terminate and the Bid Loans, the
Swing Line Loans, the Revolving Credit Loans and the
Reimbursement Obligations hereunder (with accrued interest
thereon), the maximum amount available to be drawn under all
outstanding Letters of Credit and all other amounts owing under
this Agreement shall immediately become due and payable, and (b)
if such event is any other Event of Default and is continuing,
either or both of the following actions may be taken: (i) with
the consent of the Required Lenders, the Agent may or upon the
request of the Required Lenders, the Agent shall, by notice to
the Borrower, declare the Revolving Credit Commitments, the Swing
Line Commitment and the L/C Commitment to be terminated
forthwith, whereupon the Revolving Credit Commitments, the Swing
Line Commitment and the L/C Commitment shall immediately
terminate; and (ii) with the consent of the Required Lenders, the
Agent may or upon the request of the Required Lenders, the Agent
shall, by notice of default to the Borrower, declare the Bid
Loans, the Swing Line Loans, the Revolving Credit Loans and the
Reimbursement Obligations hereunder (with accrued interest
thereon), the maximum amount available to be drawn under all
outstanding Letters of Credit and all other amounts owing under
this Agreement to be due and payable forthwith, whereupon the
same shall immediately become due and payable. Any amounts paid
by the Borrower in respect of such undrawn Letters of Credit
shall be returned to the Borrower after the last expiry date of
the Letters of Credit and after all Obligations under the Loan
Documents have been paid in full.
With respect to all Letters of Credit for which
presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, the Borrower
shall at such time deposit in a cash collateral account opened by
the Agent an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit. Amounts held in such
cash collateral account shall be applied by the Agent to the
payments of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied
to repay other obligations of the Borrower hereunder. After all
such Letters of Credit shall have expired or been fully drawn
upon, all Reimbursement Obligations shall have been satisfied and
all other obligations of the Borrower hereunder shall have been
paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower.
Except as expressly provided above in this Section 8,
presentment, demand, protest and all other notices of any kind
are hereby expressly waived.
9. THE AGENT
1 Appointment. (a) Each Lender hereby irrevocably
designates and appoints Chemical Bank as the Agent of such Lender
under this Agreement and the Subsidiaries Guarantee, and each
such Lender hereby irrevocably authorizes Chemical Bank, as the
Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the Subsidiaries Guarantee
and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement
and the Subsidiaries Guarantee, together with such other powers
as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or the
Subsidiaries Guarantee, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or the Subsidiaries Guarantee
or otherwise exist against the Agent.
(a) Any proceeds received by the Agent pursuant to the terms
of the Subsidiaries Guarantee shall be applied first to the
payment in full of the Obligations and then, after all the
Obligations have been paid in full and the Revolving Credit
Commitments have been terminated, second to the payment of all
obligations of the Borrower or any of its Subsidiaries to any
Hedging Lender under any Hedging Agreement provided by such
Hedging Lender. Each Hedging Lender agrees that (i) if at any
time it shall receive any proceeds pursuant to the terms of the
Subsidiaries Guarantee (other than through application by the
Agent in accordance with this subsection 9.1(b)), it shall
promptly turn the same over to the Agent for application in
accordance with the provisions hereof and (ii) it will not take
or cause to be taken any action, including, without limitation,
the commencement of any legal or equitable proceedings, the
purpose of which is or could be to give such Hedging Lender any
preference or priority against the other Lenders with respect to
such proceeds.
2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
Without limiting the foregoing, the Agent may appoint CBAS as its
agent to perform the functions of the Agent hereunder relating to
the advancing of funds to the Borrower and distribution of funds
to the Lenders and to perform such other related functions of the
Agent hereunder as are reasonably incidental to such functions.
3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates (including, without limitation, CBAS) 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 or the
Subsidiaries Guarantee (except for its or such Person's own gross
negligence or wilful misconduct) or (ii) responsible in any
manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or the Subsidiaries Guarantee
or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or
in connection with, this Agreement or the Subsidiaries Guarantee
or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, any Notes or the
Subsidiaries Guarantee or for any failure of the Borrower to
perform its obligations hereunder or thereunder. Neither the
Agent nor CBAS shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this
Agreement or the Subsidiaries Guarantee, or to inspect the
properties, books or records of the Borrower.
4 Reliance by Agent. Each of the Agent and CBAS shall be
entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy or teletype
message, statement, order or other document or conversation
reasonably believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and
other experts selected by the Agent. The Agent and CBAS may deem
and treat the payee of any Note as the owner thereof for all
purposes unless (a) a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Agent and (b)
the Agent shall have received the written agreement of such
assignee that such assignee is bound hereby as it would have been
had it been an original Lender party hereto, in each case in form
and substance satisfactory to the Agent. The Agent shall be
fully justified in failing or refusing to take any action under
this Agreement or the Subsidiaries Guarantee 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 Agent shall in all cases
be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan 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 and all future holders of the Loans.
5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the 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 Agent receives such
a notice, the Agent shall give notice thereof to the Lenders.
The 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 Agent shall have
received such directions, the 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.
6 Non-Reliance on Agent, Other Lenders and CBAS. Each
Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or
affiliates (including, without limitation, CBAS) has made any
representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to
the Agent and CBAS that it has, independently and without
reliance upon the Agent or any other Lender or CBAS, and based on
such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to
make its extensions of credit hereunder and enter into this
Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent, CBAS 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 or the Subsidiaries Guarantee, and to
make such investigation as it deems necessary to inform itself as
to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business,
operations, property, financial and other condition or
creditworthiness of the Borrower which may come into the
possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
7 Indemnification. The Lenders agree to indemnify each of
the Agent and CBAS in its capacity as such (to the extent not
reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to the respective
amounts of their Revolving Credit Commitments in effect on the
date on which indemnification is sought (or, if indemnification
is sought after the date upon which the Revolving Credit
Commitments shall have terminated and the Loans shall have been
paid in full, ratably according to the respective amounts of
their Revolving Credit Commitments immediately prior to such
date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the
payment of the Loans) be imposed on, incurred by or asserted
against the Agent or CBAS in any way relating to or arising out
of this Agreement, any of the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken
or omitted by the Agent or CBAS under or in connection with any
of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's or CBAS' gross
negligence or wilful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other
amounts payable hereunder.
8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the
Agent were not the Agent hereunder. With respect to its Loans
made or renewed by it and any Note issued to it and with respect
to any Letter of Credit issued or participated in by it, the
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
Agent, and the terms "Lender" and "Lenders" shall include the
Agent in its individual capacity.
9 Successor Agent. The Agent may resign as Agent upon 10
days' notice to the Lenders. If the Agent shall resign as Agent
under this Agreement, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders (with
the approval of the Borrower, which approval shall not be
unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the
term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as
Agent shall be terminated, without any other or further act or
deed on the part of such former Agent or any of the parties to
this Agreement or any holders of the Loans. After any retiring
Agent's resignation hereunder as Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this
Agreement.
10. MISCELLANEOUS
1 Amendments and Waivers. The Agent and the Borrower may,
from time to time, with the written consent of the Required
Lenders, enter into written amendments, supplements or
modifications for the purpose of adding any provisions to this
Agreement, the Subsidiaries Guarantee or any other Loan Document
or changing in any manner the rights of the Lenders or the
Borrower hereunder or thereunder, and, with the consent of the
Required Lenders, the Agent, on behalf of the Lenders, may
execute and deliver to the Borrower a written instrument waiving,
on such terms and conditions as the Agent may specify in such
instrument, any of the requirements of this Agreement or any
other Loan Document or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (a) extend the final
maturity of any Loan or reduce the rate or extend the time of
payment of interest or fees thereon, or reduce the principal
amount thereof, or change the amount or terms of any Lender's
Revolving Credit Commitment, or amend, modify or waive any
provision of this subsection, or reduce the percentage specified
in the definition of Required Lenders, or consent to the
assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement, or release all or substantially
all of the guarantee obligations under the Subsidiaries
Guarantee, in each case without the written consent of each
Lender affected thereby, (b) amend, modify or waive any provision
of Section 9 without the written consent of the then Agent, or
(c) amend, modify or waive the provisions of any Letters of
Credit or Reimbursement Obligation, without the written consent
of the Borrower and the Issuing Lender. Any such waiver and any
such amendment, supplement or modification shall be binding upon
the Borrower, the Lenders and all future holders of the Loans.
In the case of any waiver, the Borrower and the Lenders shall be
restored to their former position and rights hereunder and under
the other Loan Documents, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
2 Notices. Subject to the provisions of subsection 2.2(a),
all notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing or by telecopy
and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered by hand, or when
deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when received, addressed as follows in the case
of each of the Borrower and the Agent, and as set forth in
Schedule I in the case of the Lenders, or to such address or
other address as may be hereafter notified by the respective
parties hereto and any future holders of the Loans:
The Borrower: The Scotts Company
14111 Scottslawn Road
Marysville, Ohio 43041
Attention: Mr. Paul D. Yeager
Telecopy: (513) 644-7568
The Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Credit and Lending Group
Telecopy: (212) 972-0009
CBAS: Chemical Bank Agency Services
140 East 45th Street, 29th
Floor
New York, New York 10017
Attention: Maxeen Francis
Telecopy: (212) 622-0122
provided that any notice, request or demand to or upon the Agent
or the Lenders shall not be effective until received.
3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any
Lender, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative
and not exclusive of any rights, remedies, powers and privileges
provided by law.
4 Survival of Representations, Warranties and Indemnities.
All representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or
in connection herewith shall survive the execution and delivery
of this Agreement and the making of the Loans hereunder. The
obligation of the Borrower to make payments or to provide
indemnities as provided for in this Agreement shall survive
payment in full of the Loans, expiration of all Letters of Credit
and termination of the Revolving Credit Commitments and this
Agreement.
5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Agent for all its reasonable out-of-pocket
costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the Notes, the Subsidiaries
Guarantee and any other documents prepared in connection herewith
or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation,
the reasonable fees and disbursements of counsel to the Agent,
(b) to pay or reimburse each Lender and the Agent for all its
costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Notes, the
Subsidiaries Guarantee and any such other documents, including,
without limitation, the reasonable fees and disbursements of
counsel (including, without limitation, in-house counsel) to the
Agent and to the several Lenders, (c) to pay, indemnify and hold
each Lender and the Agent harmless from any and all recording and
filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other
similar taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, the Notes, the
Subsidiaries Guarantee and any such other documents, and (d) to
pay, indemnify, and hold each Lender and the Agent harmless from
and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and
administration of this Agreement, the Notes, the Subsidiaries
Guarantee and any such other documents; provided, however, that
with respect to subparagraphs (c) and (d), the Borrower shall not
be liable for the payment of any losses, costs, penalties,
judgments, suits, liabilities, damages, penalties, actions,
expenses or disbursements resulting solely from the gross
negligence or wilful misconduct of any such Lender. The
agreements in this subsection shall survive repayment of the
Loans, the Reimbursement Obligations and all other amounts
payable hereunder.
6 Successors and Assigns; Participants; Agency.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agent, all future
holders of the Loans and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any
time sell to one or more banks or other financial institutions
("Participants") participating interests in any Loan owing to
such Lender, any Reimbursement Obligation with respect to such
Lender, any Revolving Credit Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, and such Lender shall
remain the holder of any such Loan or Swing Line Participation
Certificate for all purposes under this Agreement and the other
Loan Documents, and the Borrower and the Agent shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the
other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be
deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interests
were owing directly to it as a Lender under this Agreement;
provided that such right of setoff shall be subject to the
obligation of such Participant to share with the Lenders, and the
Lenders agree to share with such Participant, as provided in
subsection 10.7. The Borrower also agrees that each Participant
shall be entitled to the benefits of subsections 2.16, 2.17 and
2.18 as if it were a Lender; provided, that, no Participant shall
be entitled to receive any greater amount pursuant to any such
subsection than the transferor Lender would have been entitled to
receive in respect of the amount of the participation transferred
by such transferor Lender to such Participant had no such
transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any
time sell to any Lender or any affiliate thereof and, with the
consent of the Borrower and the Agent (which in each case shall
not be unreasonably withheld), to one or more additional banks or
financial institutions (including, without limitation, "prime
rate" funds, insurance companies and other institutions which
purchase performing bank loans in the ordinary course of
business) ("Purchasing Lenders") all or any part of its rights
and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, executed by such
Purchasing Lender, such transferor Lender (and, in the case of a
Purchasing Lender that is not then a Lender or an affiliate
thereof, by the Borrower and the Agent) and delivered to the
Agent for its acceptance and recording in the Register; provided
that any sale by any Lender of all or any part of its Revolving
Credit Commitment and/or Loans need not be made ratably in
accordance with the respective amounts of such Revolving Credit
Commitment or Loans, if any, held by such Lender immediately
prior to such sale. Upon such execution, delivery, acceptance
and recording, from and after the Transfer Effective Date
determined pursuant to such Assignment and Acceptance, (x) the
Purchasing Lender thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a Revolving
Credit Commitment and/or Loans as set forth therein, and (y) the
transferor Lender thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of a Assignment and
Acceptance covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such
transferor Lender shall cease to be a party hereto). Such
Assignment and Acceptance shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment
of Commitment Percentages and amounts of affected Revolving
Credit Commitments arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the other Loan
Documents. Anything in this subsection 10.6(c) to the contrary
notwithstanding, (i) no transfer to any Lender party to this
Agreement on the Restatement Date (an "Original Lender") or any
affiliate thereof by any other Original Lender or any affiliate
thereof shall be made pursuant to this subsection 10.6(c) if such
transfer is in respect of less than $5,000,000 in the aggregate
of the Revolving Credit Commitment of such transferor Original
Lender, (ii) except as provided in preceding clause (i), no
transfer to a Purchasing Lender shall be made pursuant to this
subsection 10.6(c) if such transfer is in respect of less than
$10,000,000 in the aggregate of the Revolving Credit Commitment
of such transferor Lender, (iii) no transfer to a Purchasing
Lender shall be made pursuant to this subsection 10.6(c) if such
transfer shall reduce the transferor Lender's Revolving Credit
Commitment to less than $10,000,000 and (iv) the consent of the
Borrower shall not be required, and, unless requested by the
Purchasing Lender and/or the transferor Lender, new Notes shall
not be required to be executed and delivered by the Borrower, for
any assignment which occurs at any time when any of the events
described in Section 8(f) shall have occurred and be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at
its address referred to in subsection 10.2 a copy of each
Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the
Lenders and the Revolving Credit Commitments of, and principal
amount and types of Loans owing to, each Lender from time to
time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Agent and the
Lenders may (and, in the case of any Loan or other obligation
hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of
this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in
the Register. The 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.
(e) Upon its receipt of an Assignment and Acceptance executed
by a transferor Lender and a Purchasing Lender together with
payment to the Agent (by the transferor Lender or the Purchasing
Lender, as agreed between them) of a registration and processing
fee of $3,000 for each Purchasing Lender listed in such
Assignment and Acceptance, the Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice of such
acceptance and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender (each a "Transferee") and any
prospective Transferee any and all financial information in such
Lender's possession concerning the Borrower which has been
delivered to such Lender by the Borrower pursuant to this
Agreement or which has been delivered to such Lender by the
Borrower in connection with such Lender's credit evaluation of
the Borrower prior to entering into this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning
assignments of Loans and Notes relate only to absolute
assignments and that such provisions do not prohibit assignments
creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of
its Loans or the Reimbursement Obligations owing to it, or
interest thereon (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred
to in clause (f) of Section 8, or otherwise), in a greater
proportion than any such payment to any other Lender, if any, in
respect of such other Lender's Loans or the Reimbursement
Obligations owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders such
portion of each such other Lender's Loan or the Reimbursement
Obligations owing to it as shall be necessary to cause such
benefitted Lender to share the excess payment ratably with each
of the Lenders; provided, however, that if all or any portion of
such excess payment is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded and the purchase price
returned to the extent of such recovery, but without interest.
The Borrower agrees that each Lender so purchasing a portion of
another Lender's Loan or the Reimbursement Obligations owing to
it may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion.
(a) In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence of an Event of Default and
acceleration of the obligations owing in connection with this
Agreement, each Lender shall have the right, without prior notice
to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, to set off,
appropriate and apply against any indebtedness, whether matured
or unmatured, of the Borrower to such Lender, any amount held by
or owing from such Lender to or for the credit or the account of
the Borrower at, or at any time after, the happening of any of
the above mentioned events, and the aforesaid right of set-off
may be exercised by such Lender against the Borrower or against
any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver, custodian or execution, judgment
or attachment creditor of the Borrower, or against anyone else
claiming through or against the Borrower or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, custodian or execution, judgment or
attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Lender prior to the
making, filing or issuance of, or service upon such Lender of, or
of notice of, any such petition, assignment for the benefit of
creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena, order or warrant.
Each Lender agrees promptly to notify the Borrower after any such
set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such
set-off and application.
8 Merger Transactions. If consummated, the Merger
Transactions shall be consummated on terms reasonably acceptable
to the Agent and the Lenders and all necessary governmental and
third party waivers shall have been obtained. For purposes
hereof, the Agent and the Lenders shall be deemed to have
approved the terms of the Merger Transactions, provided that the
material terms thereof are, in the reasonable judgment of the
Agent and the Required Lenders, substantially similar to the
terms and conditions set forth in the copy of the Merger
Agreement heretofore delivered to the Agent and the Lenders.
9 Non-U.S. Lenders. Each Lender that is not incorporated
under the laws of the United States of America or a state thereof
shall:
(i) deliver to the Borrower and the Agent (A) two duly
completed copies of United States Internal Revenue Service
Form 1001 or 4224, or successor applicable form, as the case may
be, and (B) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be;
(ii) deliver to the Borrower and the Agent two further copies
of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Agent;
unless in any such case an event (including, without limitation,
any change in treaty, law or regulation) has occurred prior to
the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent
such Lender from duly completing and delivering any such form
with respect to it and such Lender so advises the Borrower and
the Agent. Such Lender shall certify (i) in the case of a Form
1001 or 4224, that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes and (ii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Transferee
pursuant to subsection 10.6(f) shall, upon the effectiveness of
the related transfer, be required to provide all of the forms and
statements required pursuant to this subsection, provided that,
in the case of a Participant, such Participant shall furnish all
such required forms and statements to the Lender from which the
related participation shall have been purchased.
10 Counterparts. This Agreement may be executed by one or
more of the parties hereto on any number of separate counterparts
and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of
this Agreement signed by all the parties hereto shall be
delivered to the Borrower and the Agent.
11 Governing Law; No Third Party Rights. This Agreement and
the Notes and the rights and obligations of the parties under
this Agreement and the Notes shall be governed by, and construed
and interpreted in accordance with, the law of the State of New
York. This Agreement is solely for the benefit of the parties
hereto and their respective successors and assigns, and no other
Person shall have any right, benefit, priority or interest under,
or because of the existence of, this Agreement.
12 Headings. The headings of the Sections and subsections of
this Agreement are inserted for convenience only and shall not be
deemed to constitute a part hereof.
13 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to the Borrower at its address set
forth in subsection 10.2 or at such other address of which the
Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
14 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the
other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship to the Borrower, and the relationship between Agent
and Lenders, on one hand, and the Borrower, on the other hand, is
solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the
Borrower and the Lenders.
15 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR THE NOTES OR ANY LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
16 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York
by their proper and duly authorized officers as of the day and
year first above written.
THE SCOTTS COMPANY
By:
Title:
CHEMICAL BANK, as Agent and as a
Lender
By:
Title:
BANK ONE, COLUMBUS, N.A.
By:
Title:
COMERICA BANK
By:
Title:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
Title:
NATIONAL CITY BANK, COLUMBUS
By:
Title:
NBD BANK
By:
Title:
PNC BANK, OHIO, NATIONAL
ASSOCIATION
By:
Title:
ROYAL BANK OF SCOTLAND
By:
Title:
SOCIETE GENERALE
By:
Title:
SOCIETY NATIONAL BANK
By:
Title:
THE BANK OF NOVA SCOTIA
By:
Title:
THE BANK OF TOKYO TRUST COMPANY
By:
Title:
THE CHASE MANHATTAN BANK, N.A.
By:
Title:
THE NORTHERN TRUST COMPANY
By:
Title:
THE SANWA BANK, LIMITED, CHICAGO
BRANCH
By:
Title:
THE TOKAI BANK, LIMITED
By:
Title:
THE TORONTO-DOMINION BANK
By:
Title:
UNION BANK
By:
Title:
THE SCOTTS COMPANY
___________________________________________
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
dated as of March 17, 1995
___________________________________________
CHEMICAL BANK,
THE LENDERS PARTY HERETO
and
CHEMICAL BANK
as Agent
TABLE OF CONTENTS
SECTION 1. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Definitional Provisions 19
SECTION 2. AMOUNT AND TERMS OF LOANS 19
2.1 Revolving Credit Commitment 19
2.2 Procedure for Revolving Credit Borrowing 19
2.3 Swing Line Commitments 20
2.4 Participation 21
2.5 Bid Loans 22
2.6 Repayment of Loans; Evidence of Debt 24
2.7 Facility Fee 26
2.8 Termination or Reduction of Revolving Credit
Commitments 26
2.9 Prepayments 27
2.10 Cash Collateralization of Letters of Credit 27
2.11 Conversion Options 27
2.12 Interest Rate and Payment Dates 28
2.13 Computation of Interest and Fees 29
2.14 Inability to Determine Interest Rate 29
2.15 Pro Rata Treatment and Payments 30
2.16 Illegality 31
2.17 Requirements of Law 31
2.18 Indemnity 33
2.19 Use of Proceeds 34
SECTION 3. LETTER OF CREDIT FACILITIES 34
3.1 L/C Commitment 34
3.2 Procedure for Issuance of Letters of Credit 35
3.3 Fees, Commissions and Other Charges 35
3.4 L/C Participation 36
3.5 Reimbursement Obligation of the Borrower 37
3.6 Obligations Absolute 38
3.7 Increased Costs 38
3.8 Letter of Credit Payments 39
3.9 Application 39
3.10 Purpose of the Letters of Credit 39
SECTION 4. REPRESENTATIONS AND WARRANTIES 39
4.1 Financial Condition 39
4.2 Corporate Existence; Compliance with Law 40
4.3 Corporate Power; Authorization;
Enforceable
Obligations 40
4.4 No Legal Bar 41
4.5 No Material Litigation 41
4.6 Federal Regulations 41
4.7 Investment Company Act; Other Regulations 41
4.8 Subsidiaries. 42
4.9 Disclosure 42
4.10 Schedules 42
4.11 ERISA 42
4.12 No Default 42
4.13 Title to Real Property, Etc. 43
4.14 Taxes 43
4.15 Environmental Matters 43
4.16 Intellectual Property 45
SECTION 5. CONDITIONS PRECEDENT 45
5.1 Conditions to Effectiveness of this Agreement 45
5.2 Conditions to All Extensions of Credit 48
SECTION 6. AFFIRMATIVE COVENANTS 49
6.1 Financial Statements 49
6.2 Certificates; Other Information 49
6.3 Payment of Obligations 51
6.4 Conduct of Business and Maintenance of
Existence 51
6.5 Maintenance of Property, Insurance 51
6.6 Inspection of Property; Books and
Records;
Discussions 51
6.7 Notices 52
6.8 Interest Coverage 53
6.9 Maintenance of Leverage Ratio 53
6.10 Maintenance of Consolidated Net Worth 53
6.11 New Subsidiaries 53
6.12 Clean Down 54
6.13 Environmental, Health and Safety Matters 54
SECTION 7. NEGATIVE COVENANTS 55
7.1 Limitation on Indebtedness 55
7.2 Limitation on Liens 56
7.3 Limitation on Contingent Obligations 57
7.4 Limitation on Fundamental Changes 57
7.5 Limitation on Dividends and Stock Repurchases 58
7.6 Limitation on Capital Expenditures 59
7.7 Limitation on Investments, Loans and Advances 59
7.8 Limitation on Leases 60
7.9 Transactions with Affiliates and Officers 60
7.10 Limitation on Sale of Assets 61
7.11 Sale and Leaseback 61
7.12 Limitation on Prepayments of
Subordinated Debt
and Modification of the Subordinated Notes 61
7.13 Fiscal Year 62
7.14 Sierra-Sunpol 62
SECTION 8. EVENTS OF DEFAULT 62
SECTION 9. THE AGENT 66
9.1 Appointment 66
9.2 Delegation of Duties 67
9.3 Exculpatory Provisions 67
9.4 Reliance by Agent 67
9.5 Notice of Default 68
9.6 Non-Reliance on Agent, Other Lenders and CBAS 68
9.7 Indemnification 69
9.8 Agent in Its Individual Capacity 69
9.9 Successor Agent 70
SECTION 10. MISCELLANEOUS 70
10.1 Amendments and Waivers 70
10.2 Notices 71
10.3 No Waiver; Cumulative Remedies 71
10.4 Survival of Representations,
Warranties and
Indemnities 71
10.5 Payment of Expenses and Taxes 72
10.6 Successors and Assigns; Participants; Agency 72
10.7 Adjustments; Set-off 75
10.8 Merger Transactions 76
10.9 Non-U.S. Lenders 77
10.10 Counterparts 77
10.11 Governing Law; No Third Party Rights 77
10.12 Headings 78
10.13 Submission To Jurisdiction; Waivers 78
10.14 Acknowledgements 78
10.15 WAIVERS OF JURY TRIAL 79
10.16 Severability 79
SCHEDULES
Schedule I Lenders; Revolving Credit Commitments;
Commitment Percentages; Lender Addresses
Schedule 4.5 Litigation
Schedule 4.6 Certain Transactions
Schedule 4.8 Subsidiaries
Schedule 5.1(e) Proceedings
Schedule 7.1(c) Existing Indebtedness
Schedule 7.2(h) Existing Liens and Encumbrances
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Bid Note
Exhibit D Form of Swing Line Participation Certificate
Exhibit E Form of Subsidiaries Guarantee
Exhibit F Form of Opinion of Vorys, Sater, Seymour
and Pease
Exhibit G Form of Borrowing Certificate
Exhibit H Form of Assignment and Acceptance
Exhibit I Form of Bid Loan Confirmation
Exhibit J Form of Bid Loan Request
Exhibit K Form of Bid Quote
THE SCOTTS COMPANY
Computation of Net Income Per Common Share
Primary (Unaudited)
(Dollars in thousands except per share amounts)
For the Six Months Ended For the Three Months Ended
April 2 April 1 April 2 April 1
1994 1995 1994 1995
Net income for computing
net income per common
share:
Net income $ 11,456 $ 11,677 $ 13,013 $ 14,815
Net income per common
share:
Net income per common
share $ .61 $ .62 $ .69 $ .79
Computation of Weighted Average Number
of Common Shares Outstanding (Unaudited)
For the Six Months Ended For the Three Months Ended
April 2 April 1 April 2 April 1
1994 1995 1994 1995
Weighted average common shares
outstanding during the
period 18,659,472 18,667,064 18,658,999 18,667,064
Effect of options outstanding
based upon the Treasury
Stock Method:
Performance shares 102,484 84,961
January 1992 - 136,364
at $9.90 73,326 68,495 71,598 64,097
June 1992 - 15,000
at $16.25 2,245 - 1,896 -
November 1992 - 522,175
at $16.25 21,540 44,127 18,184 13,156
December 1992 - 300,000
at $18.00 17,425 - 9,678 -
March 1993 - 24,000
at $18.25 1,080 - 452 -
October 1993 - 247,170
at $17.25 12,649 6,963 9,432 -
October 1994 - 254,420
at $18.25 - 32,250 - 17,857
January 1995 - 18,000
at $16.50 - 1,268 - 184
Weighted average common shares
outstanding during the period for
computing net income per
common share 18,890,221 18,820,167 18,855,200 18,762,358
Fully diluted weighted average shares outstanding were not materially
different than primary weighted average shares outstanding for the
periods presented.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet at April 1, 1995 and statement of income for
the six months ended April 1, 1995 of The Scotts Company and its
subsidiaries and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> APR-01-1995
<EXCHANGE-RATE> 1
<CASH> 6,619
<SECURITIES> 0
<RECEIVABLES> 255,904
<ALLOWANCES> 3,395
<INVENTORY> 143,574
<CURRENT-ASSETS> 425,543
<PP&E> 218,905
<DEPRECIATION> 75,114
<TOTAL-ASSETS> 708,842
<CURRENT-LIABILITIES> 166,032
<BONDS> 0
<COMMON> 211
0
0
<OTHER-SE> 183,129
<TOTAL-LIABILITY-AND-EQUITY> 708,842
<SALES> 334,111
<TOTAL-REVENUES> 335,106
<CGS> 177,410
<TOTAL-COSTS> 297,791
<OTHER-EXPENSES> 3,548
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,808
<INCOME-PRETAX> 19,959
<INCOME-TAX> 8,282
<INCOME-CONTINUING> 11,677
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,677
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
