FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1997
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Commission File Number 1-7283
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REGAL-BELOIT CORPORATION
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0875718
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
200 State Street, Beloit, Wisconsin 53511-6254
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(Address of principal executive offices)
(608) 364-8800
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(Registrant s telephone number, including area code)
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(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 issuers classes of
common stock as of the latest practicable date.
20,813,726 Shares, Common Stock, $.01 Par Value
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1<PAGE>
REGAL-BELOIT CORPORATION
FORM 10-Q
For Quarter Ended June 30, 1997
<TABLE>
<CAPTION>
INDEX
<S> <C>
Page No.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Balance Sheet . . . . . . . . . . . 3
Statement of Income . . . . . . . . . . . . . 4
Condensed Statement of Cash Flows . . . . . . 5
Notes to Financial Statements . . . . . . . . 6
Item 2 - Management s Discussion and Analysis of Financial
Condition and Results of Operations. . . . . 7-9
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders. . . 10
Item 6 - Reports on Form 8-K. . . . . . . . . . . . . . . . . . . 10
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
2<PAGE>
PART I
FINANCIAL INFORMATION
1. Financial Statements
--------------------
<TABLE>
<CAPTION>
REGAL-BELOIT CORPORATION
CONDENSED BALANCE SHEET
ASSETS
<S> <C> <C>
(In Thousands of Dollars)
(From Audited
(Unaudited) Statements)
------------- -------------
June 30, 1997 Dec. 31, 1996
------------- -------------
Current Assets:
Cash and cash equivalents . . . . . . . . . $6,725 $38,402
Receivables, less reserves of $2,587 in 1997
and $1,190 in 1996 . . . . . . . . . . . 73,524 32,796
Inventories. . . . . . . . . . . . . . . . . 81,392 45,908
Other current assets . . . . . . . . . . . . 15,471 4,925
--------- ---------
Total Current Assets. . . . . . . . . . . 177,112 122,031
--------- ---------
Property, Plant and Equipment at Cost. . . . . 225,180 142,740
Less - accumulated depreciation. . . . . . . (74,457) (68,124)
--------- ---------
Net Property, Plant and Equipment . . . . 150,723 74,616
Goodwill . . . . . . . . . . . . . . . . . . . 152,993 ------
Other Noncurrent Assets. . . . . . . . . . . . 10,631 349
--------- --------
Total Assets. . . . . . . . . . . . . . . $491,459 $196,996
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable . . . . . . . . . . . . . . $ 19,095 $ 9,481
Federal and state income taxes . . . . . . . 3,168 886
Other current liabilities. . . . . . . . . . 41,580 19,051
---------- ---------
Total Current Liabilities. . . . . . . 63,843 29,418
---------- ---------
Long-term Debt . . . . . . . . . . . . . . . . 227,865 2,168
Deferred Income Taxes. . . . . . . . . . . . . 25,452 5,387
Other Noncurrent Liabilities . . . . . . . . . 266 -----
Shareholders Investment:
Common stock, $.01 par value, 50,000,000 shares
authorized, 20,811,226 issued in 1997 and
20,644,843 issued in 1996 . . . . . . . . 208 206
Additional paid-in capital . . . . . . . . . 38,754 37,695
Retained earnings. . . . . . . . . . . . . . 134,972 121,453
Cumulative Translation Adjustments . . . . . 99 669
---------- ---------
Total Shareholders Investment . . . . . . 174,033 160,023
---------- ---------
Total Liabilities and Shareholders Investment $491,459 $196,996
<FN>
See accompanying notes.
</FN>
</TABLE>
3<PAGE>
<TABLE>
<CAPTION>
REGAL-BELOIT CORPORATION
STATEMENT OF INCOME
(In Thousands of Dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- ----------- ---------- -----------
Net Sales . . . . . . . . . . $ 143,610 $ 71,817 $ 214,180 $ 146,936
Cost of Sales . . . . . . . . 102,202 49,964 152,401 102,744
---------- ----------- ---------- ----------
Gross Profit . . . . . . . . 41,408 21,853 61,779 44,192
Operating Expenses . . . . . . 19,545 8,082 27,854 16,285
---------- ----------- ---------- ----------
Income from Operations . . . 21,863 13,771 33,925 27,907
Interest Expense . . . . . . . 4,077 91 4,130 191
Interest Income . . . . . . . 256 212 619 312
---------- ----------- ---------- ----------
Income Before Taxes. . . . . 18,042 13,892 30,414 28,028
Provision for Income Taxes . . 7,235 5,223 11,901 10,554
---------- ----------- ---------- ----------
Net Income . . . . . . . . $ 10,807 $ 8,669 $ 18,513 $ 17,474
========== ========== ========== ==========
Per Share of Common Stock:
Net Income . . . . . . . . $.52 $.42 $.89 $.85
========== ========== ========== ===========
Cash Dividends Declared . . $.12 $.12 $.24 $.24
========== ========== ========== ===========
Weighted Average Number of
Shares Outstanding . . . . 20,807,058 20,614,059 20,790,398 20,600,649
========== ========== ========== ==========
<FN>
See accompanying notes.
</FN>
</TABLE>
4<PAGE>
<TABLE>
<CAPTION>
REGAL-BELOIT CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
----------------------------
Six Months Ended June 30,
----------------------------
<S> <C> <C>
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,513 $ 17,474
Adjustments to reconcile net income to net cash provided
from operating activities:
Depreciation, amortization and deferred income taxes. . . . . . 8,224 5,373
Change in assets and liabilities:
Current assets, other than cash . . . . . . . . . . . . . . . 10,084 5,526
Current liabilities, other than notes payable . . . . . . . . (5,013) (1,638)
----------- ------------
Net cash provided from operating activities . . . . . . . 31,808 26,735
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net of retirements . . (6,352) (5,450)
Business acquisition . . . . . . . . . . . . . . . . . . . . . . . (279,224) -----
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 (294)
----------- ------------
Net cash used in investing activities . . . . . . . . . . . . . (285,220) (5,744)
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt. . . . . . . . . . . . . . . . . . . . 242,000 -----
Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . (16,287) (1,190)
Dividends to shareholders. . . . . . . . . . . . . . . . . . . . . (4,974) (4,528)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,060 434
----------- -------------
Net cash provided from (used in) financing activities . . . . . 221,799 (5,284)
EFFECT OF EXCHANGE RATE ON CASH. . . . . . . . . . . . . . . . . . . (64) (8)
----------- -------------
Net (decrease) increase in cash and cash equivalents . . . . . . . (31,677) 15,699
Cash and cash equivalents at beginning of period . . . . . . . . . 38,402 7,458
------------ -------------
Cash and cash equivalents at end of period . . . . . . . . . . . . $ 6,725 $ 23,157
============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during year for:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,329 $ 176
============ =============
Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,402 $ 10,940
============ =============
<FN>
See accompanying notes.
</FN>
</TABLE>
5<PAGE>
REGAL-BELOIT CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
1. BASIS OF PRESENTATION
The condensed financial statements include the accounts of Regal-Beloit
Corporation and its wholly owned subsidiaries and have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested these
statements be read in conjunction with the financial statements and the notes
thereto included in the Company s latest Annual Report on Form 10-K.
2. INVENTORIES
Cost for approximately 80% of the Company s inventory is determined using the
last-in, first-out (LIFO) inventory valuation method at June 30, 1997 and 67%
at December 31, 1996. The approximate percentage distribution between major
classes of inventories is as follows:
6-30 12-31
1997 1996
Raw Material 13% 17%
Work-in Process 23% 19%
Finished Goods 64% 64%
3. ACQUISITION
The condensed financial statements incorporate Marathon Electric Manufacturing
Corporation's results of operations for the second quarter of 1997 and their
assets and liabilities. Marathon Electric, which was acquired on March 26,
1997, did not have a material impact on operations in the first quarter of
1997.
4. IMPACT OF NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share, which established
new standards for computing and presenting net income per common share and
replaced the standards previously found in Accounting Principles Board Opinion
No. 15, Earnings Per Share. Regal-Beloit Corporation will begin reporting
within the Statement of Income net income per common share and net income per
common share assuming dilution according to this new standard in the fourth
quarter of 1997. For the second quarter and first six months of 1997 and
1996, net income per common share amounts computed under the new standard are:
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------- --------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
----- ----- ----- -----
Basic earnings per share $.52 $.42 $.89 $.85
Diluted earnings per share $.51 $.41 $.88 $.84
</TABLE>
6<PAGE>
5. DISCLOSURES
In the opinion of Management, all adjustments which were necessary for a fair
statement of the results of the interim periods have been included in the
preceding financial statements. These adjustments were considered to be
recurring in nature and there were no adjustments other than normal recurring
adjustments made to these statements for the periods reported. However, the
results of operations for the quarter are not necessarily indicative of results
to be expected for the year. Certain items, such as income taxes, LIFO
charges, profit sharing expenses and various other accruals, are included in
these statements based on estimates for the entire year.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
RESULTS OF OPERATIONS
- ---------------------
Net sales for the second quarter of 1997 were $143,610,000, or 100.0% greater
than net sales of $71,817,000 in 1996's second quarter. The net sales of the
Company's Electrical Group, which was formed when Marathon Electric
Manufacturing Corporation was acquired on March 26, 1997 (see "Acquisition"
following), were $70,596,000, or 49% of total Company sales, in the second
quarter of 1997, accounting for all but $1,197,000 of the Company's sales
increase from 1996. On a pro-forma basis the Electrical Group's net sales were
7.9% higher than the second quarter of 1996. The Company's Mechanical Group
(formerly the power transmission and cutting tool groups) net sales were
$73,014,000 in 1997's second quarter, 1.7% higher than comparable 1996, and
3.5% higher than the first quarter of 1997.
Generally, business conditions in the markets served by the Mechanical Group
improved in the second quarter of 1997, though a cool and wet spring resulted
in lower demand in the high performance automotive aftermarket and the marine
market. Business conditions in the Electrical Group were also generally
favorable, with export sales strong, but some softness was experienced in
heating, ventilating and air conditioning markets, due to the cool spring.
Net sales for the six months ended June 30, 1997, were $214,180,000, a 45.8%
increase from comparable 1996 sales of $146,936,000. The increase was entirely
due to Electrical Group sales as Mechanical Group net sales of $143,584,000
were 2.3% lower than the $146,936,000 in the first six months of 1996. The
first quarter last year was before the Mechanical Group's distributor and
original equipment manufacturer customers began reducing their inventories as
their markets slowed. After reaching a 1996 low in the fourth quarter of
last year, Mechanical Group sales increased sequentially in the first two
quarters of 1997.
Net income in the second quarter of 1997 of $10,807,000, or $.52 per share, was
$2,138,000 (24.7%) higher than the $8,669,000, or $.42 per share, earned in the
second quarter of 1996. The contribution of the Company's new Electrical Group
accounted for the improvement. Six months 1997 net income of $18,513,000, or
$.89 per share, compared to $17,474,000, or $.85 per share, in the first half
of 1996.
7<PAGE>
The margins of the Company were, as expected, significantly reduced following
the acquisition of Marathon Electric, whose margins, though in line with their
peers, were below those of Regal-Beloit. The following table compares the
second quarter and six month margins of 1997 to 1996:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(As a percent of Net Sales) June 30, June 30,
<S> <C> <C> <C> <C>
1997 1996 1997 1996
Net Sales 100.0% 100.0% 100.0% 100.0%
Gross Profit 28.8 30.4 28.8 30.1
Income From Operations 15.2 19.2 15.8 19.0
Pre-tax Income 12.6 19.3 14.2 19.1
Net Income 7.5 12.1 8.6 11.9
</TABLE>
While the impact of the lower Electrical Group margins decreased overall
margins, the operating income margins of both the Electrical Group and
Mechanical Group increased modestly in the second quarter of 1997 from the
first quarter of 1997 (Electrical Group on a pro-forma basis). Interest
expense of $4,077,000 in the second quarter of 1997 represented 2.8% of
sales, which accounted for the larger margin decline at the pre-tax income
level. In the first quarter of 1997, Company interest expense was
negligible. The operating expenses of the Company in the second quarter of
1997 included three months amortization of goodwill, acquisition costs, and
deferred financing fees.
ACQUISITION
- -----------
On March 26, 1997, the Company acquired 100% of the stock of Marathon Electric
Manufacturing Corporation, a private company, in a cash merger transaction
for approximately $278,000,000. The acquisition of Marathon Electric had no
material impact on the Company s first quarter 1997 Statement of Income.
Marathon Electric, which now comprises the Company's Electrical Group, is a
leading manufacturer of electric motors and generators and related products.
In 1996 its sales were $245,000,000 and its net income was $17,800,000.
The acquisition was financed with a combination of approximately $37,000,000 of
existing cash and $242,000,000 of debt. The debt was provided by Bank of
America and M&I Marshall & Ilsley Bank under a $280,000,000, 5-year, unsecured,
revolving credit facility. The loan agreement was amended to include seven
other banks on May 30, 1997. The interest rate the Company pays is based on
LIBOR (London Interbank Offered Rate), plus a variable margin based on the
Company's ratio of funded debt to EBITDA. Since March 26, 1997, the Company
has paid an annual interest rate of 6.2% under the facility.
In the month of June 1997, the assets and liabilities of Marathon Electric were
revalued in accordance with the purchase accounting requirements of generally
accepted accounting principles. The net asset value of Marathon Electric
increased approximately $27,000,000, the final value of goodwill being
$153,963,000.
8<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 1997 increased to $113,269,000 from $92,613,000
at December 31, 1996, due primarily to the acquisition of Marathon Electric
partly offset by the use of Company cash in the acquisition. (See
"Acquisition" preceding.) The current ratio of the Company decreased to 2.8:1
from 4.1:1 for the same reason.
At June 30, 1997, the Company had $227,865,000 of long-term debt, a $16,160,000
(6.6%) reduction from $244,025,000 outstanding at March 31, 1997. Of the total
debt at June 30, 1997, $226,000,000 was borrowed under the Company's
$280,000,000 revolving credit facility. At June 30, 1997, the Company had
$54,000,000 of available borrowing capacity under the revolving credit
facility. The Company's funded debt to EBITDA ratio at June 30, 1997 was
2.26:1, down from 2.45:1 at March 31, 1997, and its capitalization ratio was
56.8% as compared to 59.7% a quarter earlier. The Company paid an annual
interest rate of approximately 6.2% on its outstanding debt at June 30, 1997.
The Company generated $19,810,000 of cash flow from operations in the second
quarter of 1997 and $31,808,000 for the first six months of the year. Free
cash flow (cash flow from operations less net additions to property, plant and
equipment less dividends) was $12,932,000 and $20,482,000 for 1997's second
quarter and first six months, respectively. Net capital expenditures during
the second quarter were $4,381,000 and are $6,352,000 year-to-date. Outstanding
commitments for capital items at June 30, 1997 totaled approximately
$3,150,000. The Company believes that the combination of cash generated by
operations and available borrowing capacity is adequate to finance the Company
for the foreseeable future.
CAUTIONARY STATEMENT
- --------------------
The following is a "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995:
With the exception of historical facts, the statements contained in Item 2. of
this form 10-Q are forward looking statements. Actual results may differ
materially from those contemplated by the forward looking statements. These
forward looking statements involve risks and uncertainties, including but not
limited to, the following risks: 1) cyclical downturns affecting the markets
for capital goods, 2) substantial increases in interest rates,
3) availability of or material increases in the costs of select raw materials,
and 4) actions taken by competitors with regard to such matters as product
offerings, pricing, and delivery. Investors are directed to the Company's
documents, such as its Annual Report on Form 10-K, Form 10-Q's, and Annual
Report, filed with the Securities and Exchange Commission.
9<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Meeting of stockholders of Regal-Beloit Corporation was held on
April 24, 1997.
(b) The terms of Directors John M. Eldred, John A. McKay, G. Frederick
Kasten, Jr., J. Reed Coleman, Frank E. Bauchiero and Stephen N. Graff were
continued.
(c) Matters voted on at the Annual Meeting and the results of each vote were
as follows:
<TABLE>
<CAPTION>
(1) Elect three Class A Directors for a term of three years.
<S> <C> <C>
For Withheld
---------- --------
James L. Packard 18,780,073 25,006
Henry W. Knueppel 18,780,007 25,072
William W. Keefer 18,776,269 28,810
</TABLE>
<TABLE>
<CAPTION>
(2) Ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the year ending December 31, 1997.
<S> <C> <C>
For Against Abstain
---------- ------- -------
18,764,259 22,312 18,508
</TABLE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
--------
<TABLE>
<CAPTION>
The following exhibits are filed pursuant to Item 601 of Regulation S-K:
<S> <C>
Exhibit
Number Description
------- -----------
2.3 Amended and Restated Credit Agreement Dated as of
May 30, 1997 among Registrant, Bank of America
Illinois, as Documentation Agent, M&I Marshall &
Ilsley Bank, as Administrative Agent and Letter of
Credit Issuing Bank, Firstar Bank Milwaukee, N.A.,
Harris Trust and Savings Bank and The Northern Trust
Company, as Co-Agents, and The Other Financial
Institutions Party Hereto Arranged by Bancamerica
Securities, Inc. as Syndication Agent; Disclosure
Schedules and Attached Exhibits; and Promissory Note
</TABLE>
10<PAGE>
(b) Reports on Form 8-K
-------------------
On April 10, 1997, the Company filed a current report on Form 8-K and on
June 9, 1997, the Company filed Amendment No. 1 on Form 8-K/A, both
pertaining to its March 26, 1997, acquisition of Marathon Electric
Manufacturing Corporation. The June 9, 1997 amendment provided required
Marathon Electric historical financial statements and pro-forma financial
statements as if the acquisition had taken place on January 1, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGAL-BELOIT CORPORATION
(Registrant)
Kenneth F. Kaplan
_________________________
Kenneth F. Kaplan
Vice President - Chief Financial Officer
and Secretary
(Principal Accounting and Financial Officer)
DATE: August 8, 1997
11<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of May 30, 1997
among
REGAL-BELOIT CORPORATION,
BANK OF AMERICA ILLINOIS,
as Documentation Agent,
M&I MARSHALL & ILSLEY BANK,
as Administrative Agent
and
Letter of Credit Issuing Bank,
FIRSTAR BANK MILWAUKEE, N.A.,
HARRIS TRUST AND SAVINGS BANK
and
THE NORTHERN TRUST COMPANY,
as Co-Agents,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BANCAMERICA SECURITIES, INC.
as Syndication Agent
<PAGE>
TABLE OF CONTENTS
Section
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms
1.02 Other Interpretive Provisions
1.03 Accounting Principles
1.04 Restatement of Original Credit Agreement
ARTICLE II
THE CREDIT
2.01 Amounts and Terms of Commitments
2.02 Loan Accounts
2.03 Procedure for Borrowing
2.04 Conversion and Continuation Elections
2.05 Voluntary Termination or Reduction of Commitments
2.06 Optional Prepayments
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions
2.08 Repayment
2.09 Interest
2.10 Fees
(a) Syndication, Agency Fees
(b) Commitment Fees
2.11 Computation of Fees and Interest
2.12 Payments by the Company
2.13 Payments by the Banks to the Agent
2.14 Sharing of Payments, Etc.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility
3.02 Issuance, Amendment and Renewal of Letters of Credit
3.03 Existing M&I Letters of Credit; Risk Participations, Drawings
and Reimbursements
3.04 Repayment of Participations
<PAGE>
3.05 Role of the Issuing Bank
3.06 Obligations Absolute
3.07 Cash Collateral Pledge
3.08 Letter of Credit Fees
3.09 Uniform Customs and Practice
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes
4.02 Illegality
4.03 Increased Costs and Reduction of Return
4.04 Funding Losses
4.05 Inability to Determine Rates
4.06 Reserves on Offshore Rate Loans
4.07 Certificates of Banks
4.08 Substitution of Banks
4.09 Survival
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions
(a) Credit Agreement and Notes
(b) Subsidiary Guaranties
(c) Resolutions; Incumbency
(d) Organization Documents; Good Standing
(e) Legal Opinion
(f) Payment of Fees
(g) Certificate
(h) Closing Conditions Related to MEMC Acquisition
(i) Other Documents
5.02 Conditions to All Credit Extensions
(a) Notice, Application
(b) Continuation of Representations and Warranties
(c) No Existing Default
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
6.01 Corporate Existence and Power
6.02 Corporate Authorization; No Contravention
<PAGE>
6.03 Governmental Authorization
6.04 Binding Effect
6.05 Litigation
6.06 No Default
6.07 ERISA Compliance
6.08 Use of Proceeds; Margin Regulations
6.09 Title to Properties
6.10 Taxes
6.11 Financial Condition
6.12 Environmental Matters
6.13 Regulated Entities
6.14 No Burdensome Restrictions
6.15 Copyrights, Patents, Trademarks and Licenses, etc.
6.16 Subsidiaries
6.17 Insurance
6.18 Swap Obligations
6.19 Full Disclosure
ARTICLE VII
AFFIRMATIVE COVENANTS
7.01 Financial Statements
7.02 Certificates; Other Information
7.03 Notices
7.04 Preservation of Corporate Existence, Etc.
7.05 Maintenance of Property
7.06 Insurance
7.07 Payment of Obligations
7.08 Compliance with Laws
7.09 Compliance with ERISA
7.10 Inspection of Property and Books and Records
7.11 Environmental Laws
7.12 Use of Proceeds
7.13 Limitations on Non-Material Subsidiaries
ARTICLE VIII
NEGATIVE COVENANTS
8.01 Limitation on Liens
8.02 Disposition of Assets
8.03 Consolidations and Mergers
8.04 Loans and Investments
<PAGE>
8.05 Limitation on Indebtedness
8.06 Transactions with Affiliates
8.07 Use of Proceeds
8.08 Contingent Obligations
8.09 Joint Ventures
8.10 Lease Obligations
8.11 ERISA
8.12 Change in Business
8.13 Accounting Changes
8.14 Minimum Net Worth
8.15 Maximum Leverage Ratio
8.16 Minimum Interest Coverage Ratio
8.17 No Restrictions on Dividends
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default
(a) Non-Payment
(b) Representation or Warranty
(c) Specific Defaults
(d) Other Defaults
(e) Cross-Acceleration
(f) Insolvency; Voluntary Proceedings
(g) Involuntary Proceedings
(h) ERISA
(i) Monetary Judgments
(j) Non-Monetary Judgments
(k) Change of Control
(l) Adverse Change
(m) Subsidiary Guarantor Defaults
9.02 Remedies
9.03 Rights Not Exclusive
9.04 Certain Financial Covenant Defaults
ARTICLE X
THE AGENT
10.01 Appointment and Authorization
10.02 Delegation of Duties
10.03 Liability of Administrative Agent, Documentation Agent and
Syndication Agent
10.04 Reliance by Administrative Agent
10.05 Notice of Default
10.06 Credit Decision
10.07 Indemnification of Agent
10.08 Administrative Agent in Individual Capacity
10.09 Successor Administrative Agent
10.10 Withholding Tax
10.11 Documentation Agent; Co-Agents; Syndication Agent
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers
11.02 Notices
11.03 No Waiver; Cumulative Remedies
11.04 Costs and Expenses
11.05 Company Indemnification
11.06 Payments Set Aside
11.07 Successors and Assigns
11.08 Assignments, Participations, Etc.
11.09 Confidentiality
11.10 Set-off
11.11 Automatic Debits of Fees
11.12 Notification of Addresses, Lending Offices, Etc.
11.13 Counterparts
11.14 Severability
11.15 No Third Parties Benefited
11.16 Governing Law and Jurisdiction
11.17 Waiver of Jury Trial
11.18 Entire Agreement
Schedule 2.01 Commitments
Form of Promissory Note
<PAGE>
AMENDED AND RESTATED
--------------------
CREDIT AGREEMENT
----------------
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
May 30, 1997, among Regal-Beloit Corporation, a Wisconsin corporation
(the "Company"), the several financial institutions from time to time party to
-------
this Agreement (collectively, the "Banks"; individually, a "Bank"), Bank of
----- ----
America Illinois, as documentation agent, Firstar Bank Milwaukee, N.A.,
Harris Trust and Savings Bank and The Northern Trust Company, as co-agents for
the Banks, and M&I Marshall & Ilsley Bank, as letter of credit issuing bank
and as administrative agent for the Banks.
WHEREAS, the parties have agreed to amend and restate the Original Credit
Agreement (as defined below) and pursuant to this Amended and Restated Credit
Agreement the Banks have agreed to make available to the Company a revolving
credit facility with letter of credit subfacility upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree to amend and restate the Original
Credit Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Company or the Subsidiary is the
surviving entity.
<PAGE>
"Administrative Agent" means M&I in its capacity as administrative
agent for the Banks hereunder, and any successor administrative agent arising
under Section 10.09.
"Administrative Agent's Payment Office" means the address for
payments set forth on Schedule 11.02 or such other address as the
Administrative Agent may from time to time specify.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by
contract, or otherwise.
"Agent-Related Persons" means M&I, any successor administrative agent
arising under Section 10.09, any successor letter of credit issuing bank
hereunder and BAI as Documentation Agent, together with their respective
Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agreement" means this Amended and Restated Credit Agreement or the
Original Credit Agreement, as the context may require.
"Applicable Margin" means
(i) with respect to Base Rate Loans, 0.00%; and
(ii) with respect to Offshore Rate Loans, means the
applicable margin as determined pursuant to the matrix set forth
below, provided that the initial Applicable Margin shall be the
percentage corresponding to a proforma Leverage Ratio calculated
using the initial Revolving Loans made on the Closing Date plus
other Funded Debt of the Company as shown on the proforma balance
sheet provided by the Company as described in Section 6.11(c) and
using proforma EBITDA, on a combined basis for the Company and
MEMC, for the four quarters ending December 31, 1996;
<PAGE>
provided, however, that with respect to Offshore Rate Loans the
Applicable Margin shall be subject to adjustment on each Margin
Adjustment Date as follows:
<TABLE>
<CAPTION>
Offshore Loan
Leverage Ratio Applicable Margin
-------------- -----------------
<S> <C>
Less than 1.50:1.0 0.275%
Greater than or equal to 1.50:1.0 and
less than 2.0:1.0 0.375%
Greater than or equal to 2.0:1.0 and
less than 2.50:1.0 0.500%
Greater than or equal to 2.50:1.0 and
less than 3.0:1.0 0.625%
Greater than or equal to 3.0:1.0 0.875%
</TABLE>
Where,
"Margin Adjustment Date" means the first Business Day
following receipt by the Administrative Agent of the quarterly
financial statements specified in Section 7.01(b); provided,
however, that at such time as Company evidences its ability (to
the satisfaction of the Administrative Agent and the Majority
Banks) to calculate the Leverage Ratio on a monthly basis, then
during the remaining term of this Agreement the Margin
Adjustment Date shall be the first Business Day following
receipt by the Administrative Agent of a compliance certificate
in form and substance acceptable to the Administrative Agent
and the Majority Banks containing the calculations of the
Leverage Ratio as of the last day of the preceding month.
"Assignee" has the meaning specified in subsection 11.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the
allocated reasonable cost of internal legal services and all
reasonable disbursements of internal counsel.
<PAGE>
"Bank" has the meaning specified in the introductory clause
hereto. References to the "Banks" shall include M&I, including in
its capacity as Issuing Bank; for purposes of clarification only,
to the extent that M&I may have any rights or obligations in
addition to those of the Banks due to its status as Issuing Bank,
its status as such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act
of 1978 (11 U.S.C. Sec. 101, et seq.).
-------
"Base Rate" means, for any day, the higher of: (a) 0.50%
per annum above the latest Federal Funds Rate; and (b) the rate
of interest in effect for such day as publicly announced from time
to time by the Administrative Agent as its "prime rate." (The
"prime rate" is a rate set by the Administrative Agent based upon
various factors including the Administrative Agent's costs and
desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced
at, above, or below such announced rate.)
Any change in the prime rate announced by the
Administrative Agent shall take effect at the opening of business
on the day specified in the public announcement of such change.
"Base Rate Loan" means a Revolving Loan, or an L/C Advance,
that bears interest based on the Base Rate.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans of the same Type made to the Company on the same
day by the Banks under Article II, and, other than in the case of
Base Rate Loans, having the same Interest Period.
"BAI" means Bank of America Illinois, an Illinois banking
corporation, and its successors and assigns.
"Borrowing Date" means any date on which a Borrowing
occurs under Section 2.03.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks in New York City, Chicago,
Illinois or Milwaukee, Wisconsin are authorized or required by law
to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried
on in the applicable offshore dollar interbank market.
<PAGE>
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cash Collateralize" means to pledge and deposit with or
deliver to the Administrative Agent, for the benefit of the
Administrative Agent, the Issuing Bank and the Banks, as collateral
for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the
Administrative Agent and the Issuing Bank (which documents are hereby
consented to by the Banks). Derivatives of such term shall have
corresponding meaning. The Company hereby grants the Administrative
Agent, for the benefit of the Administrative Agent, the Issuing Bank
and the Banks, a security interest in all such cash and deposit
account balances. Cash collateral shall be maintained in blocked,
interest bearing deposit accounts at the Administrative Agent.
"Change of Control" means (a) any Person or group of Persons
acquiring beneficial ownership of 20% or more of the outstanding
shares of the common stock of the Company or (b) during any 12-month
period, the individuals who at the beginning of such period
constituted the Company s Board of Director s cease, for any reason,
to constitute a majority of the Company s Board of Directors.
"Closing Date" means the date on which all conditions precedent
set forth in Section 5.01 of the Original Credit Agreement were
satisfied (or, in the case of subsection 5.01(e), waived by the
Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified in
Section 2.01.
"Commitment Fee Percentage" means an amount per annum as
determined pursuant to the matrix set forth below, provided that the
initial Commitment Fee Percentage shall be the percentage
corresponding to a proforma Leverage Ratio calculated using the
initial Revolving Loans made on the Closing Date plus other Funded
Debt of the Company as shown on the proforma balance sheet provided
<PAGE>
by the Company as described in Section 6.11(c) and using proforma
EBITDA, on a combined basis for the Company and MEMC, for the four
quarters ending December 31, 1996; provided, however, that the
Commitment Fee Percentage shall be subject to adjustment on each
Commitment Fee Adjustment Date as follows:
<TABLE>
<CAPTION>
Commitment
Leverage Ratio Fee Percentage
-------------- --------------
<S> <C>
Less than 1.50:1.0 0.125%
Greater than or equal to 1.50:1.0 and
less than 2.0:1.0 0.150%
Greater than or equal to 2.0:1.0 and
less than 2.50:1.0 0.175%
Greater than or equal to 2.50:1.0 and
less than 3.0:1.0 0.200%
Greater than or equal to 3.0:1.0 0.250%
</TABLE>
Where,
"Commitment Fee Adjustment Date" means the first Business Day
following receipt by the Administrative Agent of the quarterly
financial statements specified in Section 7.01(b); provided, however,
that at such time as Company evidences its ability (to the
satisfaction of the Administrative Agent and the Majority Banks) to
calculate the Leverage Ratio on a monthly basis, then during the
remaining term of this Agreement the Commitment Fee Adjustment Date
shall be the first Business Day following receipt by the
Administrative Agent of a compliance certificate in form and
substance acceptable to the Administrative Agent and the Majority
Banks containing the calculations of the Leverage Ratio as of the
last day of the preceding month.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C.
---------
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
<PAGE>
obligations") of another Person (the "primary obligor"), including
any obligation of that Person (i) to purchase, repurchase or
otherwise acquire such primary obligations or any security therefor,
(ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (iv) otherwise
to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation");
-------- ----------
(b) with respect to any Surety Instrument (other than any Letter of
Credit) issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to
obtain the services of, another Person if the relevant contract or
other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Swap Contract. The
amount of any Contingent Obligation shall, in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of
the primary obligation in respect of which such Guaranty Obligation
is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and in the case
of other Contingent Obligations other than in respect of Swap
Contracts, shall be equal to the maximum reasonably anticipated
liability in respect thereof and, in the case of Contingent
Obligations in respect of Swap Contracts, shall be equal to the Swap
Termination Value.
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Loans of one Type to another
Type, or (b) continues as Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
<PAGE>
"Credit Extension" means and includes (a) the making of any
Revolving Loans hereunder, and (b) the Issuance of any Letters of
Credit hereunder (including the Existing M&I Letters of Credit).
"Date of Determination" means the last day of each fiscal
quarter or month, as the case may be, immediately preceding a Margin
Adjustment Date or a Commitment Fee Adjustment Date.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Documentation Agent means Bank of America Illinois, an
Illinois banking corporation.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"EBIT" means, as to any Person and for any period as to which
such amount is being determined, the sum of the amounts (on a
consolidated basis) for such period of (i) net income (excluding
extraordinary gains and extraordinary losses), (ii) interest expense
and (iii) provisions for taxes based on income; provided, however,
that for purposes of calculating EBIT for the Company's first four
fiscal quarters following the Closing Date, In-Process R&D Expense,
in an amount equal to the lesser of (i) the actual In-Process R&D
Expense charged by the Company or (ii) $25,000,000, shall be added
back to EBIT.
"EBITDA means , as to any Person and for any period as to which
such amount is being determined, the sum of the amounts (on a
consolidated basis) for such period of (a) EBIT, (b) depreciation
expense and (c) amortization expense.
"Effective Date" means the date on which this Agreement
supercedes the Original Credit Agreement as set forth in Section
1.04.
"Effective Amount" means (a) with respect to any Revolving Loans
on any date, the aggregate outstanding principal amount thereof after
giving effect to any Borrowings and prepayments or repayments of
Revolving Loans occurring on such date; and (b) with respect to any
outstanding L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the
<PAGE>
aggregate amount of the L/C Obligations as of such date, including as
a result of any reimbursements of outstanding unpaid drawings under
any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such
date.
"Eligible Assignee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (b) a
commercial bank organized under the laws of any other country which
is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or
agency located in the United States; (c) a Person that is primarily
engaged in the business of commercial banking and that is (i) a
Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank
is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary;
and (d) any Bank party to this Agreement on the Closing Date or any
Affiliate thereof; provided, however, that if an Event of Default
exists, then "Eligible Assignee" also includes (x) a pension fund or
-------- --------
other institutional lender or investor; and (y) a corporation (other
than a financial institution) organized under the laws of the State
of the United States of America and having total assets in excess of
$100,000,000.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law,
or for any material release, as such term is defined in the
Comprehensive Environmental Response, Compensation and Liability Act.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements
with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and regulations promulgated
thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the
<PAGE>
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412
of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan (other than a Mulitemployer Plan); (b) a withdrawal by
the Company or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension
Plan (other than a Multiemployer Plan); (e) an event or condition
which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan (other than a Multiemployer
Plan); or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing M&I Letters of Credit" means the letters of credit
described in Schedule 3.03.
-------------
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
<PAGE>
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by
the Administrative Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Funded Debt" means, for any Person and for any period for which
such amount is being determined, the sum (without duplication) of the
amounts for such period of (a) Indebtedness (other than that
described in clause (h) of the definition of Indebtedness and other
than that described in the second paragraph of the definition of
Indebtedness except to the extent a demand for payment of any such
Indebtedness has been made of the Company), (b) the aggregate drawn
amount of all outstanding Letters of Credit, (c) the aggregate amount
of payments which such Person is obligated to pay with respect to its
preferred stock and (d) the aggregate amount of obligations with
respect to capital leases.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings
or similar charges (including, without limitation, net income taxes
and franchise taxes), and all liabilities with respect thereto,
imposed by any jurisdiction on account of amounts payable or paid
pursuant to Section 4.01.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the Date
of Determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
<PAGE>
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Honor Date" has the meaning specified in subsection 3.03(c).
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary
course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or bank
under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with
respect to capital leases; (g) all indebtedness referred to in
clauses (a) through (f) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property (including accounts and
contracts rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness;
and (h) all Guaranty Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through
(g) above.
For all purposes of this Agreement, the Indebtedness of any Person
shall include all recourse Indebtedness of any partnership or joint
venture or limited liability company in which such Person is a
general partner or a joint venturer or a member.
"Indemnified Liabilities" has the meaning specified in Section
11.05.
"Indemnified Person" has the meaning specified in Section 11.05.
"Independent Auditor" has the meaning specified in subsection
7.01(a).
<PAGE>
"Insolvency Proceeding" means, with respect to any Person,
(a) any case, action or proceeding with respect to such Person before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken
under U.S. Federal, state or foreign law, including the Bankruptcy
Code.
"Interest Payment Date" means, as to any Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such
Loan and, as to any Base Rate Loan, the last Business Day of each
calendar quarter and each date such Loan is converted into another
Type of Loan, provided, however, that if any Interest Period for an
-------- ------
Offshore Rate Loan exceeds three months, the date that falls three
months after the beginning of such Interest Period and after each
Interest Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/
Continuation Date on which the Loan is converted into or continued as
an Offshore Rate Loan, and ending on the date one, two, three or six
months thereafter (and any other period that is 12 months or less and
is consented to by all the Banks in the given instance) as selected
by the Company in its Notice of Borrowing or Notice of Conversion/
Continuation;
provided that:
--------
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless, in the case of
an Offshore Rate Loan, the result of such extension would be to
carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding Business
Day;
(ii) any Interest Period pertaining to an Offshore Rate
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 the calendar month at the end of
such Interest Period; and
<PAGE>
(iii) no Interest Period for any Loan shall extend beyond
the Revolving Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the
Code.
"Issuance Date" has the meaning specified in subsection 3.01(a).
"Issue" means, with respect to any Letter of Credit, to
incorporate the Existing M&I Letters of Credit into this Agreement,
or to issue or to extend the expiry of, or to renew or increase the
amount of, such Letter of Credit; and the terms "Issued," "Issuing"
------ -------
and "Issuance" have corresponding meanings.
--------
"Issuing Bank" means M&I in its capacity as issuer of one or
more Letters of Credit hereunder, together with any replacement
letter of credit issuer arising under subsection 10.01(b) or Section
10.09.
"Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other legal arrangement
(whether created by contract or conducted through a separate legal
entity) now or hereafter formed by the Company or any of its
Subsidiaries with another Person in order to conduct a common venture
or enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for
amendment of outstanding standby letters of credit as shall at any
time be in use at the Issuing Bank, as the Issuing Bank shall
request.
"L/C Application" means an application form for issuances of
standby letters of credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been
reimbursed on the date when made nor converted into a Borrowing of
Revolving Loans under subsection 3.03(c).
<PAGE>
"L/C Commitment" means the commitment of the Issuing Bank to
Issue, and the commitment of the Banks severally to participate in,
Letters of Credit (including the Existing M&I Letters of Credit)
from time to time Issued or outstanding under Article III, in an
aggregate amount not to exceed on any date the amount of
$10,000,000, as the same shall be reduced as a result of a reduction
in the L/C Commitment pursuant to Section 2.06; provided that the
--------
L/C Commitment is a part of the combined Commitments, rather than
a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus
(b) the amount of all unreimbursed drawings under all Letters of
Credit, including all outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing
Bank's standard form documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on
Schedule 11.02, or such other office or offices as such Bank may
--------------
from time to time notify the Company and the Administrative Agent.
"Leverage Ratio" means the relationship, expressed as a
numerical ratio, of (a) Funded Debt of the Company as of the Date of
Determination to (b) EBITDA of the Company for the 12-month period
preceding the Date of Determination.
"Letters of Credit" means the Existing M&I Letters of Credit and
any standby letters of credit Issued by the Issuing Bank pursuant to
Article III.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement
of any kind or nature whatsoever in respect of any property
(including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of
a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or
the filing of any financing statement naming the owner of the asset
to which such lien relates as debtor, under the Uniform Commercial
<PAGE>
Code or any comparable law) and any contingent or other agreement
to provide any of the foregoing, but not including the interest of a
lessor under an operating lease.
"Loan" means an extension of credit by a Bank to the Company
under Article II or Article III in the form of a Revolving Loan or
L/C Advance.
"Loan Documents" means this Agreement, any Notes, the Subsidiary
Guaranties, the Fee Letters, the L/C-Related Documents, and all other
documents delivered to the Administrative Agent, the Documentation
Agent or any Bank in connection herewith.
"M&I" means M&I Marshall & Ilsley Bank, a Wisconsin banking
corporation.
"Majority Banks" means at any time Banks then holding in excess
of 50% of the then aggregate unpaid principal amount of the Loans,
or, if no such principal amount is then outstanding, Banks then
having in excess of 50% of the Commitments.
"Margin Adjustment Date" has the meaning specified in the
definition of "Applicable Margin".
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of the Company or any Subsidiary Guarantor
to perform under any Loan Document and to avoid any Event of Default;
or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Company or any Subsidiary
Guarantor of any Loan Document.
"Material Subsidiary" means, at any time, (a) any Subsidiary
having at such time either (i) total revenues for the preceding four
fiscal quarter period in excess of 10% of the total revenues of the
Company and all its Subsidiaries during such period or (ii) total
assets, as of the last day of the preceding fiscal quarter, having a
net book value exceeding 10% of the total net book value of the
assets of the Company and all its Subsidiaries as of such date, in
<PAGE>
each case based upon the Company's most recent annual or quarterly
financial statements delivered to the Administrative Agent under
Section 7.01, and (b) any Subsidiary designated by the Company, in
writing to the Administrative Agent as a Material Subsidiary.
"MEMC" means Marathon Electric Manufacturing Corporation, a
Wisconsin corporation.
"MEMC Acquisition" means the merger of R-B Acquisition Corp., a
Wisconsin corporation, into MEMC with the result that MEMC becomes a
Wholly-Owned Subsidiary.
"MEMC Acquisition Documents" means the Agreement and Plan of
Merger dated as of February 26, 1997 (the "Merger Agreement") by and
----------------
among the Company, R-B Acquisition Corporation and MEMC (including
the exhibits and schedules thereto) and the other documents and
instruments necessary to effect the MEMC Acquisition.
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has
made, or been obligated to make, contributions.
"Net Worth" means, for any Person as of any date, an amount (on
a consolidated basis) equal to the total assets of a Person less the
total liabilities of such Person.
"Note" means a promissory note executed by the Company in favor
of a Bank pursuant to subsection 2.02(b), in substantially the form
of Exhibit F.
---------
"Notice of Borrowing" means a notice in substantially the form
of Exhibit A.
---------
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
---------
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to any Bank, the Administrative Agent,
or any Indemnified Person, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
<PAGE>
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate
of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Administrative Agent as follows:
Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on
such day (whether or not applicable to any Bank) under
regulations issued from time to time by the FRB for determining
the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by
the Administrative Agent to be the rate of interest at which
dollar deposits in the approximate amount of the amount of the
Loan to be made or continued as, or converted into, an Offshore
Rate Loan and having a maturity comparable to such Interest
Period would be offered by the Administrative Agent to major
banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days prior
to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to
all Offshore Rate Loans then outstanding as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
<PAGE>
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"Original Credit Agreement" means the Credit Agreement dated as
of March 26, 1997 among the Company, the Documentation Agent, the
Administrative Agent and Issuing Bank and BAI and M&I as the banks.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from
the execution, delivery, performance, enforcement or registration of,
or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participant" has the meaning specified in subsection 11.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Company sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 8.01.
"Permitted Swap Obligations" means all obligations (contingent
or otherwise) of the Company or any Subsidiary existing or arising
under Swap Contracts, provided that each of the following criteria
is satisfied: (a) such obligations are (or were) entered into by
such Person in the ordinary course of business for the purpose of
directly mitigating risks associated with liabilities, commitments or
assets held or reasonably anticipated by such Person, or changes in
the value of securities issued by such Person in conjunction with a
securities repurchase program not otherwise prohibited hereunder, and
not for purposes of speculation or taking a "market view;" and (b)
such Swap Contracts do not contain any provision ("walk-away"
provision) exonerating the non-defaulting party from its obligation
to make payments on outstanding transactions to the defaulting party.
<PAGE>
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which
the Company makes, is making, or is obligated to make contributions
and includes any Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Bank's Commitment divided by the
combined Commitments of all Banks.
"Replacement Bank" has the meaning specified in Section 4.08.
"Reportable Event" means, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than
any such event for which the 30-day notice requirement under ERISA
has been waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance
with financial covenants, the chief financial officer or the
treasurer of the Company, or any other officer having substantially
the same authority and responsibility.
"Revolving Loan" has the meaning specified in Section 2.01,
and may be a Base Rate Loan or an Offshore Rate Loan (each, a
"Type" of Revolving Loan).
"Revolving Termination Date" means the earlier to occur of:
(a) the date which is five years after the Closing Date; and
<PAGE>
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests
(in the case of Persons other than corporations), is owned or controlled
directly or indirectly by the Person, or one or more of the Subsidiaries of
the Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of the
Company.
"Subsidiary Guarantor" means MEMC, Hub City, Inc., each other Subsidiary
required under Section 8.04(e)(vii) to execute a Subsidiary Guaranty and any
successor or assign thereof.
"Subsidiary Guaranty" means a Guaranty Agreement in the form of Exhibit G
---------
attached hereto executed by a Subsidiary Guarantor, as amended, revised,
supplemented or restated from time to time.
"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing, relating to any
transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or option,
bond, note or bill option, interest rate option, forward foreign exchange
transaction, cap, collar or floor transaction, currency swap, cross-currency
rate swap, swaption, currency option or any other, similar transaction
(including any option to enter into any of the foregoing) or any combination of
the foregoing, and, unless the context otherwise clearly requires, any master
agreement relating to or governing any or all of the foregoing.
<PAGE>
"Swap Termination Value" means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the
date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined by the
Company based upon one or more mid-market or other readily available quotations
provided by any recognized dealer in such Swap Contracts (which may include any
Bank).
"Syndication Agent" means BancAmerica Securities, Inc., a Delaware corporation.
"Taxes" means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Administrative Agent, respectively, taxes imposed on or measured by its net
income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Bank or the Administrative Agent, as the case may be, is
organized or maintains a lending office.
"Type" has the meaning specified in the definition of "Revolving Loan."
"Unfunded Pension Liability" means the excess of a Pension Plan's actuarial
present value of accumulated Plan benefits under Statement of Financial
Accounting Standards No. 35, determined in accordance with the assumptions used
for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year over the fair market value of that Plan's assets.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than directors'
qualifying shares required by law) 100% of the capital stock of each class
having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made,
is owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both, including without limitation, MEMC
and its Wholly-Owned Subsidiaries.
1.02 Other Interpretive Provisions (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
<PAGE>
(b) The words "hereof", "herein", "hereunder" and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words "to" and
"until" each mean "to but excluding", and the word "through" means "to and
including."
(d) Unless otherwise expressly provided herein, (i) references to agreements
(including this Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute
or regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters.
All such limitations, tests and measurements are independent and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Administrative Agent, the Issuing Bank or
the Banks by way of consent, approval or waiver shall be deemed modified by the
phrase "in its/their sole discretion."
(g) This Agreement and the other Loan Documents are the result of negotiations
among and have been reviewed by counsel to the Administrative Agent, the
Documentation Agent, the Company and the other parties, and are the products of
all parties. Accordingly, they shall not be construed against the Banks or the
<PAGE>
Administrative Agent merely because of the Administrative Agent's, the
Documentation Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to such
fiscal periods of the Company.
1.04 Restatement of Original Credit Agreement. On such date as the
Administrative Agent notifies the Banks that the Obligations under the
Original Credit Agreement are to be replaced by the Obligations under this
Agreement (with each Bank funding its Pro Rata Share of the Loans outstanding
on such date and, pursuant to Section 3.03, acquiring an interest in all
Letters of Credit outstanding on such date) (the Effective Date ), this
---------------
Agreement amends and restates the Original Credit Agreement in its entirety.
The Banks shall make such arrangements among themselves as are necessary or
required so that each Bank owns its Pro Rata Share of the Obligations. Amounts
payable with respect to interest, commitment fees, letter of credit fees and
other amounts payable by the Company accrued as of the Effective Date shall,
upon receipt by the Administrative Agent, be paid to the Banks party to the
Original Credit Agreement according to its terms. It is the intent of the
parties hereto that this Agreement is not a novation and that as of the
Effective Date this Agreement replaces the Original Credit Agreement in its
entirety. Upon and as of the Effective Date (a) each Bank shall have a
Commitment in the amount set forth in Schedule 2.01 and the Commitments of
-------------
the Banks under the Original Credit Agreement shall terminate and (b) all
references in the Loan Documents to the Credit Agreement shall refer to this
Amended and Restated Credit Agreement.
ARTICLE II
THE CREDIT
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Company (each such
loan, a "Revolving Loan") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth on Schedule
--------
2.01 (such amount as the same may be reduced as set forth in Schedule 2.01 or
- ---- -------------
<PAGE>
under Section 2.05 or as a result of one or more assignments under Section
10.08, the Bank's "Commitment"); provided, however, that, after giving effect
---------- -------- -------
to any Borrowing of Revolving Loans, the Effective Amount of all outstanding
Revolving Loans and the Effective Amount of all L/C Obligations, shall not at
any time exceed the combined Commitments; and provided further, that the
--------------------
Effective Amount of the Revolving Loans of any Bank plus the participation of
such Bank in the Effective Amount of all L/C Obligations shall not at any time
exceed such Bank's Commitment. Within the limits of each Bank's Commitment,
and subject to the other terms and conditions hereof, the Company may borrow
under this Section 2.01, prepay under Section 2.06 and reborrow under this
Section 2.01.
2.02 Loan Accounts. (a) The Loans made by each Bank and the Letters of Credit
Issued by the Issuing Bank shall be evidenced by one or more accounts or
records maintained by such Bank or Issuing Bank, as the case may be, in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent, the Issuing Bank and each Bank shall be rebuttable
presumptive evidence of the amount of the Loans made by the Banks to the
Company and the Letters of Credit Issued for the account of the Company, and
the interest and payments thereon. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Company hereunder to pay any amount owing with respect to the Loans or any
Letter of Credit.
(b) Upon the request of any Bank made through the Administrative Agent, the
Loans made by such Bank may be evidenced by one or more Notes, instead of or in
addition to loan accounts. Each such Bank shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it
and the amount of each payment of principal made by the Company with respect
thereto. Each such Bank is irrevocably authorized by the Company to endorse
its Note(s) and each Bank's record shall be rebuttably presumptive evidence of
the date, amount and maturity of the Loans made by it and of the amount of each
such principal payment; provided, however, that the failure of a Bank to make,
-----------------
or an error in making, a notation thereon with respect to any Loan shall not
limit or otherwise affect the obligations of the Company hereunder or under any
such Note to such Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing of Revolving Loans shall be
made upon the Company's irrevocable written notice delivered to the
Administrative Agent in the form of a Notice of Borrowing or by telephonic
notice containing the information required to be included in a Notice of
Borrowing (and confirmed promptly in writing thereafter) (which notice must be
received by the Administrative Agent prior to 10:00 a.m, Milwaukee, Wisconsin
<PAGE>
time) (i) three Business Days prior to the requested Borrowing Date, in the
case of Offshore Rate Loans and (ii) on the requested Borrowing Date, in the
case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which, in the case of a Base Rate Loan,
shall be an aggregate minimum amount of $3,000,000 or any multiple of
$1,000,000 in excess thereof and, in the case of an Offshore Rate Loan, shall
be in an aggregate minimum amount of $10,000,000 or any multiple of $1,000,000
in excess thereof;
(B) the requested Borrowing Date, which shall be a Business Day;
(C) the Type of Loans comprising the Borrowing; and
(D) with respect to a Borrowing comprised (in whole or in part) of Offshore
Rate Loans only, the duration of the Interest Period applicable to such Loans
included in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised of Offshore Rate
Loans, such Interest Period shall be three months.
provided, however, that with respect to the Borrowing to be made on the Closing
- -------- -------
Date, the Notice of Borrowing shall be delivered to the Administrative Agent
not later than 2:00 p.m. (Milwaukee, Wisconsin time) on the Closing Date and
such Borrowing will consist of Base Rate Loans only; and further provided that
if so requested by the Administrative Agent, all Borrowings during the first 60
days following the Closing Date shall have the same Interest Period and shall
be Base Rate Loans or Offshore Rate Loans for Interest Periods no longer than
one month. In the event of any inconsistency between telephonic notice and the
written confirmation, the telephonic notice shall control.
(b) The Administrative Agent will promptly notify each Bank of its receipt of
any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each Borrowing
available to the Administrative Agent for the account of the Company at the
Administrative Agent's Payment Office by 12:00 noon (Milwaukee, Wisconsin time)
on the Borrowing Date requested by the Company in funds immediately available
<PAGE>
to the Administrative Agent. The proceeds of all such Loans will then be made
available to the Company by the Administrative Agent at such office by
crediting the account of the Company on the books of M&I with the aggregate of
the amounts made available to the Administrative Agent by the Banks and in like
funds as received by the Administrative Agent.
(d) After giving effect to any Borrowing, unless the Administrative Agent
shall otherwise consent, there may not be more than twelve different Interest
Periods in effect.
2.04 Conversion and Continuation Elections (a) The Company may, upon
irrevocable written notice to the Administrative Agent in accordance with
subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate Loans, or as of
the last day of the applicable Interest Period, in the case of Offshore Rate
Loans, to convert any such Loans (or any part thereof in an amount not less
than $3,000,000, or that is in an integral multiple of $1,000,000 in excess
thereof) into Loans of any other Type; or
(ii) elect as of the last day of the applicable Interest Period, to continue
any Revolving Loans having Interest Periods expiring on such day (or any part
thereof in an amount not less than $3,000,000, or that is in an integral
multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
- --------
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $3,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert such Loans into,
Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to be
received by the Administrative Agent not later than 10:00 a.m. (Milwaukee,
Wisconsin time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as Offshore Rate Loans; and (ii) on the Conversion/Continuation Date,
if the Loans are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
<PAGE>
(B) the aggregate amount of Loans to be converted or continued;
(C) the Type of Loans resulting from the proposed conversion or continuation;
and
(D) other than in the case of conversions into Base Rate Loans, the duration
of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable Offshore Rate
Loans, the Company has failed to select timely a new Interest Period to be
applicable to such Offshore Rate Loans, or if any Default or Event of Default
then exists, the Company shall be deemed to have elected to convert such
Offshore Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of its receipt of
a Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Administrative Agent will promptly notify each Bank of the details
of any automatic conversion. All conversions and continuations shall be made
ratably according to the respective outstanding principal amounts of the Loans
with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the existence of a
Default or Event of Default, the Company may not elect to have a Loan converted
into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans, unless the
Administrative Agent shall otherwise consent, there may not be more than twelve
different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The Company may, upon
not less than four Business Days' prior notice to the Administrative Agent,
terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $10,000,000 or any multiple of $1,000,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of Loans
------
made on the effective date thereof, (a) the Effective Amount of all Revolving
Loans and L/C Obligations together would exceed the amount of the combined
Commitments then in effect, or (b) the Effective Amount of all L/C Obligations
then outstanding would exceed the L/C Commitment. Once reduced in accordance
with this Section, the Commitments may not be increased. Any reduction of the
<PAGE>
Commitments shall be applied to each Bank according to its Pro Rata Share. If
and to the extent specified by the Company in the notice to the Administrative
Agent, some or all of the reduction in the combined Commitments shall be
applied to reduce the L/C Commitment. All accrued commitment and letter of
credit fees to, but not including, the effective date of any reduction or
termination of Commitments, shall be paid on the effective date of such
reduction or termination.
2.06 Optional Prepayments. Subject to Section 4.04, the Company may, at any
time or from time to time, upon not less than four Business Days' irrevocable
notice to the Administrative Agent in the case of a prepayment of an Offshore
Rate Loan, ratably prepay Loans in whole or in part, in minimum amounts of
$1,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and the Type(s)
of Loans to be prepaid. The Administrative Agent will promptly notify each
Bank of its receipt of any such notice, and of such Bank's Pro Rata Share of
such prepayment. If such notice is given by the Company, the Company shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and any amounts required pursuant to
Section 4.04.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. If on
any date the Effective Amount of L/C Obligations exceeds the L/C Commitment,
the Company shall Cash Collateralize on such date the outstanding Letters of
Credit in an amount equal to the excess of the maximum amount then available
to be drawn under the Letters of Credit over the L/C Commitment. Subject to
Section 4.04, if on any date after giving effect to any Cash Collateralization
made on such date pursuant to the preceding sentence, the Effective Amount of
all Revolving Loans then outstanding plus the Effective Amount of all L/C
Obligations exceeds the combined Commitments, the Company shall immediately,
and without notice or demand, prepay the outstanding principal amount of the
Revolving Loans and L/C Advances by an amount equal to the applicable excess.
Mandatory reductions in the Commitments are described in Schedule 2.01.
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2.08 Repayment. The Company shall repay to the Banks on the Revolving
Termination Date the aggregate principal amount of Revolving Loans outstanding
on such date.
2.09 Interest. (a) Each Revolving Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
<PAGE>
equal to the Offshore Rate or the Base Rate, as the case may be (and subject to
the Company's right to convert to other Types of Loans under Section 2.04),
plus the Applicable Margin.
- ----
(b) Interest on each Revolving Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Loans under Section 2.06 or 2.07 for the portion of the Loans so prepaid and
upon payment (including prepayment) in full thereof and, during the existence
of any Event of Default, interest shall be paid on demand of the Administrative
Agent at the request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, if any amount of principal
of or interest on any Loan, or any other amount payable hereunder or under any
other Loan Document is not paid in full when due (whether at stated maturity,
by acceleration, demand or otherwise), the Company agrees to pay interest on
such unpaid principal or other amount, from the date such amount becomes due
until the date such amount is paid in full, and after as well as before any
entry of judgment thereon to the extent permitted by law, payable on demand, at
a fluctuating rate per annum equal to the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations of the
Company to any Bank hereunder shall be subject to the limitation that payments
of interest shall not be required for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by such Bank would be contrary to the provisions of any
law applicable to such Bank limiting the highest rate of interest that may be
lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
2.10 Fees. In addition to certain fees described in Section 3.08:
a) Syndication, Agency Fees. The Company shall pay a syndication fee to the
Syndication Agent for the Syndication Agent's own account, and shall pay an
agency fee to the Administrative Agent for the Administrative Agent's own
account, as required by the letter agreement ("Fee Letter") between the
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Company, the Syndication Agent, the Documentation Agent and the Administrative
Agent dated March 18, 1997.
(b) Commitment Fees. The Company shall pay to the Administrative Agent for
the account of each Bank a commitment fee on the average daily unused portion
of such Bank's Commitment, computed on a quarterly basis in arrears on the last
<PAGE>
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Administrative Agent, equal to the Commitment Fee
Percentage as in effect from time to time. For purposes of calculating
utilization under this subsection, the Commitments shall be deemed used to the
extent of the Effective Amount of Revolving Loans then outstanding, plus the
Effective Amount of L/C Obligations then outstanding. Such commitment fee
shall accrue from the Effective Date to the Revolving Termination Date and
shall be due and payable quarterly in arrears on the last Business Day of each
quarter commencing on June 30, 1997 through the Revolving Termination Date,
with the final payment to be made on the Revolving Termination Date; provided
--------
that, in connection with any reduction or termination of Commitments under
Section 2.05 or Section 2.07, the accrued commitment fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment
date. The commitment fees provided in this subsection shall accrue at all
times after the above-mentioned commencement date, including at any time during
which one or more conditions in Article V are not met.
2.11 Computation of Fees and Interest. (a) All computations of interest for
Base Rate Loans when the Base Rate is determined by the Administrative Agent's
"prime rate" shall be made on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Administrative Agent shall
be conclusive and binding on the Company and the Banks in the absence of
manifest error. The Administrative Agent will, at the request of the Company
or any Bank, deliver to the Company or the Bank, as the case may be, a
statement showing the quotations used by the Administrative Agent in
determining any interest rate and the resulting interest rate.
2.12 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Banks at the Administrative Agent's
Payment Office, and shall be made in dollars and in immediately available
funds, no later than 12:00 noon (Milwaukee, Wisconsin time) on the date
<PAGE>
specified herein. The Administrative Agent will promptly distribute to each
Bank its Pro Rata Share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Any payment received by the
Administrative Agent later than 12:00 noon (Milwaukee, Wisconsin time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Administrative Agent receives notice from the Company prior to
the date on which any payment is due to the Banks that the Company will not
make such payment in full as and when required, the Administrative Agent may
assume that the Company has made such payment in full to the Administrative
Agent on such date in immediately available funds and the Administrative Agent
may (but shall not be so required), in reliance upon such assumption,
distribute to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent the Company has not made such payment in full
to the Administrative Agent, each Bank shall repay to the Administrative Agent
on demand such amount distributed to such Bank, together with interest thereon
at the Federal Funds Rate for each day from the date such amount is distributed
to such Bank until the date repaid.
2.13 Payments by the Banks to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Bank on or prior to the Closing
Date or, with respect to any Borrowing after the Closing Date, at least one
Business Day prior to the date of such Borrowing, that such Bank will not make
available as and when required hereunder to the Administrative Agent for the
account of the Company the amount of that Bank's Pro Rata Share of the
Borrowing, the Administrative Agent may assume that each Bank has made such
amount available to the Administrative Agent in immediately available funds on
the Borrowing Date and the Administrative Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent any Bank shall not have
made its full amount available to the Administrative Agent in immediately
available funds and the Administrative Agent in such circumstances has made
available to the Company such amount, that Bank shall on the Business Day
following such Borrowing Date make such amount available to the Administrative
Agent, together with interest at the Federal Funds Rate for each day during
such period. A notice of the Administrative Agent submitted to any Bank with
<PAGE>
respect to amounts owing under this subsection (a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the
Administrative Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to
the Administrative Agent on the Business Day following the Borrowing Date, the
Administrative Agent will notify the Company of such failure to fund and, upon
demand by the Administrative Agent, the Company shall pay such amount to the
Administrative Agent for the Administrative Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date shall not
relieve any other Bank of any obligation hereunder to make a Loan on such
Borrowing Date, but no Bank shall be responsible for the failure of any other
Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided elsewhere
herein, any Bank shall obtain on account of the Loans made by it any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) in excess of its ratable share (or other share contemplated
hereunder), such Bank shall immediately (a) notify the Administrative Agent of
such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all
-----------------
or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share (according
to the proportion of (i) the amount of such paying Bank's required repayment
to (ii) the total amount so recovered from the purchasing Bank) of any interest
or other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.10) with respect to such participation as fully as if such Bank
were the direct creditor of the Company in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under
this Section and will in each case notify the Banks following any such
purchases or repayments.
<PAGE>
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility. (a) On the terms and conditions set
forth herein (i) the Issuing Bank agrees, (A) from time to time on any Business
Day during the period from the Closing Date to the Revolving Termination Date
to issue Letters of Credit for the account of the Company, and to amend or
renew Letters of Credit previously issued by it, in accordance with subsections
3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of Credit; and
(ii) the Banks severally agree to participate in Letters of Credit Issued for
the account of the Company; provided, that the Issuing Bank shall not be
--------
obligated to Issue, and no Bank shall be obligated to participate in, any
Letter of Credit if as of the date of Issuance of such Letter of Credit (the
"Issuance Date") (1) the Effective Amount of all L/C Obligations plus the
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Effective Amount of all Revolving Loans exceeds the combined Commitments,
(2) the participation of any Bank in the Effective Amount of all L/C
Obligations plus the Effective Amount of the Revolving Loans of such Bank
exceeds such Bank's Commitment, or (3) the Effective Amount of L/C Obligations
exceeds the L/C Commitment. Within the foregoing limits, and subject to the
other terms and conditions hereof, the Company's ability to obtain Letters of
Credit shall be fully revolving, and, accordingly, the Company may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit which
have expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the Issuing Bank from Issuing
such Letter of Credit, or any Requirement of Law applicable to the Issuing Bank
or any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Bank shall prohibit,
or request that the Issuing Bank refrain from, the Issuance of letters of
credit generally or such Letter of Credit in particular or shall impose upon
the Issuing Bank with respect to such Letter of Credit any restriction, reserve
or capital requirement (for which the Issuing Bank is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the Issuing
Bank any unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which the Issuing Bank in good faith deems material to it;
<PAGE>
(ii) the Issuing Bank has received written notice from any Bank, the
Administrative Agent or the Company, on or prior to the Business Day prior to
the requested date of Issuance of such Letter of Credit, that one or more of
the applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A) more than one
year after the date of Issuance, unless the Majority Banks have approved such
expiry date in writing, or (B) after the Revolving Termination Date, unless all
of the Banks have approved such expiry date in writing;
(iv) any requested Letter of Credit is not in form and substance acceptable to
the Issuing Bank, or the Issuance of a Letter of Credit shall violate any
applicable policies of the Issuing Bank;
(v) any Letter of Credit is for the purpose of supporting the issuance of any
letter of credit by any other Person; or
(vi) such Letter of Credit is in a face amount less than $250,000 or to be
denominated in a currency other than Dollars.
3.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter of
Credit shall be issued upon the irrevocable written request of the Company
received by the Issuing Bank (with a copy sent by the Company to the
Administrative Agent) at least four Business Days (or such shorter time as the
Issuing Bank may agree in a particular instance in its sole discretion) prior
to the proposed date of issuance. Each such request for issuance of a Letter
of Credit shall be by facsimile, confirmed immediately in an original writing,
in the form of an L/C Application, and shall specify in form and detail
satisfactory to the Issuing Bank: (i) the proposed date of issuance of the
Letter of Credit (which shall be a Business Day); (ii) the face amount of the
Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name
and address of the beneficiary thereof; (v) the documents to be presented by
the beneficiary of the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the beneficiary in
case of any drawing thereunder; and (vii) such other matters as the Issuing
Bank may require.
(b) At least two Business Days prior to the Issuance of any Letter of Credit,
the Issuing Bank will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of the L/C
<PAGE>
Application or L/C Amendment Application from the Company and, if not, the
Issuing Bank will provide the Administrative Agent with a copy thereof. Unless
the Issuing Bank has received notice on or before the Business Day immediately
preceding the date the Issuing Bank is to issue a requested Letter of Credit
from the Administrative Agent (A) directing the Issuing Bank not to issue such
Letter of Credit because such issuance is not then permitted under subsection
3.01(a) as a result of the limitations set forth in clauses (1) through (3)
thereof or subsection 3.01(b)(ii); or (B) that one or more conditions specified
in Article V are not then satisfied; then, subject to the terms and conditions
hereof, the Issuing Bank shall, on the requested date, issue a Letter of Credit
for the account of the Company in accordance with the Issuing Bank's usual and
customary business practices.
(c) From time to time while a Letter of Credit is outstanding and prior to the
Revolving Termination Date, the Issuing Bank will, upon the written request of
the Company received by the Issuing Bank (with a copy sent by the Company to
the Administrative Agent) at least five Business Days (or such shorter time as
the Issuing Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of amendment, amend any Letter of Credit issued by
it. Each such request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the form of an
L/C Amendment Application and shall specify in form and detail satisfactory to
the Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed
date of amendment of the Letter of Credit (which shall be a Business Day);
(iii) the nature of the proposed amendment; and (iv) such other matters as the
Issuing Bank may require. The Issuing Bank shall be under no obligation to
amend any Letter of Credit if: (A) the Issuing Bank would have no obligation
at such time to issue such Letter of Credit in its amended form under the terms
of this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed amendment to the Letter of Credit. The Administrative
Agent will promptly notify the Banks of the receipt by it of any L/C
Application or L/C Amendment Application.
(d) The Issuing Bank and the Banks agree that, while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, at the option of the
Company and upon the written request of the Company received by the Issuing
Bank (with a copy sent by the Company to the Administrative Agent) at least
five Business Days (or such shorter time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the Issuing Bank shall be entitled to authorize the
automatic renewal of any Letter of Credit issued by it. Each such request for
renewal of a Letter of Credit shall be made by facsimile, confirmed immediately
<PAGE>
in an original writing, in the form of an L/C Amendment Application, and shall
specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of
Credit to be renewed; (ii) the proposed date of notification of renewal of the
Letter of Credit (which shall be a Business Day); (iii) the revised expiry date
of the Letter of Credit; and (iv) such other matters as the Issuing Bank may
require. The Issuing Bank shall be under no obligation so to renew any Letter
of Credit if: (A) the Issuing Bank would have no obligation at such time to
issue or amend such Letter of Credit in its renewed form under the terms of
this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed renewal of the Letter of Credit. If any outstanding Letter
of Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the Issuing Bank that such Letter of
Credit shall not be renewed, and if at the time of renewal the Issuing Bank
would be entitled to authorize the automatic renewal of such Letter of Credit
in accordance with this subsection 3.02(e) upon the request of the Company but
the Issuing Bank shall not have received any L/C Amendment Application from the
Company with respect to such renewal or other written direction by the Company
with respect thereto, the Issuing Bank shall nonetheless be permitted to allow
such Letter of Credit to renew, and the Company and the Banks hereby authorize
such renewal, and, accordingly, the Issuing Bank shall be deemed to have
received an L/C Amendment Application from the Company requesting such renewal.
(e) The Issuing Bank may, at its election (or as required by the
Administrative Agent at the direction of the Majority Banks), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Revolving
Termination Date.
(f) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Bank will also deliver to the Administrative Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or
amendment to or renewal of a Letter of Credit.
3.03 Existing M&I Letters of Credit; Risk Participations, Drawings and
Reimbursements. (a) On and after the Effective Date, the Existing M&I Letters
of Credit shall be deemed for all purposes, including for purposes of the fees
to be collected pursuant to subsections 3.08(a) and 3.08(c), and reimbursement
<PAGE>
of costs and expenses to the extent provided herein, Letters of Credit
outstanding under this Agreement and entitled to the benefits of this Agreement
and the other Loan Documents, and shall be governed by the applications and
agreements pertaining thereto and by this Agreement. Each Bank shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
Issuing Bank on the Closing Date a participation in each such Letter of Credit
and each drawing thereunder in an amount equal to the product of (i) such
Bank's Pro Rata Share times (ii) the maximum amount available to be drawn under
such Letter of Credit and the amount of such drawing, respectively. For
purposes of subsection 2.01(b) and subsection 2.10(b), the Existing M&I Letters
of Credit shall be deemed to utilize pro rata the Commitment of each Bank.
(b) Immediately upon the Issuance of each Letter of Credit in addition to
those described in subsection 3.03(a), each Bank shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Issuing Bank a
participation in such Letter of Credit and each drawing thereunder in an amount
equal to the product of (i) the Pro Rata Share of such Bank, times (ii) the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively. For purposes of subsection 2.01(b), each
Issuance of a Letter of Credit shall be deemed to utilize the Commitment of
each Bank by an amount equal to the amount of such participation.
(c) In the event of any request for a drawing under a Letter of Credit by the
beneficiary or transferee thereof, the Issuing Bank will promptly notify the
Company. The Company shall reimburse the Issuing Bank prior to 10:00 a.m.
(Milwaukee, Wisconsin time), on each date that any amount is paid by the
Issuing Bank under any Letter of Credit (each such date, an "Honor Date"), in
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an amount equal to the amount so paid by the Issuing Bank and the processing
fee resulting therefrom. In the event the Company fails to reimburse the
Issuing Bank for the full amount of any drawing under any Letter of Credit by
10:00 a.m. (Milwaukee, Wisconsin time) on the Honor Date, the Issuing Bank will
promptly notify the Administrative Agent and the Administrative Agent will
promptly notify each Bank thereof, and the Company shall be deemed to have
requested that Base Rate Loans be made by the Banks to be disbursed on the
Honor Date under such Letter of Credit, subject to the amount of the unutilized
portion of the Commitment and subject to the conditions set forth in Section
5.02. Any notice given by the Issuing Bank or the Administrative Agent
pursuant to this subsection 3.03(c) may be oral if immediately confirmed in
writing (including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
<PAGE>
(d) Each Bank shall upon any notice pursuant to subsection 3.03(c) make
available to the Administrative Agent for the account of the relevant Issuing
Bank an amount in Dollars and in immediately available funds equal to its
Pro Rata Share of the amount of the drawing, whereupon the participating Banks
shall (subject to subsection 3.03(e)) each be deemed to have made a Revolving
Loan consisting of a Base Rate Loan to the Company in that amount. If any Bank
so notified fails to make available to the Administrative Agent for the account
of the Issuing Bank the amount of such Bank's Pro Rata Share of the amount of
the drawing by no later than 12:00 noon (Milwaukee, Wisconsin time) on the
Honor Date, then interest shall accrue on such Bank's obligation to make such
payment, from the Honor Date to the date such Bank makes such payment, at a
rate per annum equal to the Federal Funds Rate in effect from time to time
during such period. The Administrative Agent will promptly give notice of the
occurrence of the Honor Date, but failure of the Administrative Agent to give
any such notice on the Honor Date or in sufficient time to enable any Bank to
effect such payment on such date shall not relieve such Bank from its
obligations under this Section 3.03.
(e) With respect to any unreimbursed drawing that is not converted into
Revolving Loans consisting of Base Rate Loans to the Company in whole or in
part, because of the Company's failure to satisfy the conditions set forth in
Section 5.02 or for any other reason, the Company shall be deemed to have
incurred from the Issuing Bank an L/C Borrowing in the amount of such drawing,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at a rate per annum equal to the Base Rate plus 2% per
annum, and each Bank's payment to the Issuing Bank pursuant to subsection
3.03(d) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of
its participation obligation under this Section 3.03.
(f) Each Bank's obligation in accordance with this Agreement to make the
Revolving Loans or L/C Advances, as contemplated by this Section 3.03, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Bank and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against the Issuing
Bank, the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided, however, that each
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Bank's obligation to make Revolving Loans under this Section 3.03 is subject to
the conditions set forth in Section 5.02.
<PAGE>
3.04 Repayment of Participations. (a) Upon (and only upon) receipt by the
Administrative Agent for the account of the Issuing Bank of immediately
available funds from the Company (i) in reimbursement of any payment made by
the Issuing Bank under the Letter of Credit with respect to which any Bank has
paid the Administrative Agent for the account of the Issuing Bank for such
Bank's participation in the Letter of Credit pursuant to Section 3.03 or
(ii) in payment of interest thereon, the Administrative Agent will pay to each
Bank, in the same funds as those received by the Administrative Agent for the
account of the Issuing Bank, the amount of such Bank's Pro Rata Share of such
funds, and the Issuing Bank shall receive the amount of the Pro Rata Share of
such funds of any Bank that did not so pay the Administrative Agent for the
account of the Issuing Bank.
(b) If the Administrative Agent or the Issuing Bank is required at any time to
return to the Company, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Administrative Agent for the account of the Issuing Bank
pursuant to subsection 3.04(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Bank shall, on demand of the
Administrative Agent, forthwith return to the Administrative Agent or the
Issuing Bank the amount of its Pro Rata Share of any amounts so returned by the
Administrative Agent or the Issuing Bank plus interest thereon from the date
such demand is made to the date such amounts are returned by such Bank to the
Administrative Agent or the Issuing Bank, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Bank. (a) Each Bank and the Company agree that, in
paying any drawing under a Letter of Credit, the Issuing Bank shall not have
any responsibility to obtain any document (other than any sight draft,
document(s) or certificate(s) expressly required by the Letter of Credit) or
to ascertain or inquire as to the validity or accuracy of any such document or
the authority of the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective correspondents,
participants or assignees of the Issuing Bank shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Banks (including the Majority Banks, as applicable);
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
<PAGE>
(c) The Company hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
- --------
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.06; provided,
--------
however, anything in such clauses to the contrary notwithstanding, that the
Company may have a claim against the Issuing Bank, and the Issuing Bank may be
liable to the Company, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Company which
the Company proves were caused by the Issuing Bank's willful misconduct or
gross negligence or the Issuing Bank's willful failure to pay under any Letter
of Credit after the presentation to it by the beneficiary of any sight draft,
document(s) and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; (ii) the Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; and (iii) the Issuing Bank
may, at its sole discretion, accept the authorization of the Company to waive
any discrepancy between the documents presented to the Issuing Bank and those
required under the terms of the applicable Letter of Credit and authorize
payment to the beneficiary.
3.06 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of the Company in respect of any Letter
of Credit or any other amendment or waiver of or any consent to departure from
all or any of the L/C-Related Documents;
<PAGE>
(iii) the existence of any claim, set-off, defense or other right that the
Company may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any Letter of Credit;
(v) any payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by the Issuing Bank under
any Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with
any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or any release
or amendment or waiver of or consent to departure from any other guarantee, for
all or any of the obligations of the Company in respect of any Letter of
Credit; or
(vii) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Company or a
guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of the Administrative
Agent, (A) if the Issuing Bank has honored any full or partial drawing request
on any Letter of Credit and such drawing has resulted in an L/C Borrowing
hereunder, or (B) if, as of the Revolving Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or wholly undrawn,
or (ii) the occurrence of the circumstances described in Section 2.07 requiring
the Company to Cash Collateralize Letters of Credit, then, the Company shall
immediately Cash Collateralize the L/C Obligations in an amount equal to such
L/C Obligations.
<PAGE>
3.08 Letter of Credit Fees. (a) The Company shall pay to the Administrative
Agent for the account of each of the Banks a letter of credit fee with respect
to the Letters of Credit equal to the Applicable Margin for Offshore Rate Loans
in effect from time to time during the applicable period multiplied by the
average daily maximum amount available to be drawn on the outstanding Letters
of Credit, computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter based upon Letters of Credit outstanding for that quarter
as calculated by the Administrative Agent. Such letter of credit fees shall be
due and payable quarterly in arrears on the last Business Day of each calendar
quarter during which Letters of Credit are outstanding, commencing on the first
such quarterly date to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which the outstanding Letters of
Credit shall expire), with the final payment to be made on the Revolving
Termination Date (or such later expiration date).
(b) The Company shall pay to the Issuing Bank a letter of credit fronting fee
for each Letter of Credit Issued by the Issuing Bank equal to 0.125% of the
face amount (or increased face amount, as the case may be) of such Letter of
Credit. Such Letter of Credit fronting fee shall be due and payable on each
date of Issuance of a Letter of Credit.
(c) The Company shall pay to the Issuing Bank from time to time on demand the
normal issuance, presentation, amendment and other processing fees, and other
standard costs and charges, of the Issuing Bank relating to letters of credit
as from time to time in effect.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit, and other such
publications defining rules and/or practices relating to letters of credit
shall (unless otherwise expressly provided in the Letters of Credit) apply to
the Letters of Credit.
<PAGE>
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes. (a) Any and all payments by the Company to each Bank or the
Administrative Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes.
In addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold any Taxes,
Other Taxes or Further Taxes from or in respect of any sum payable hereunder to
any Bank or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that, after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section), such Bank or the
Administrative Agent, as the case may be, receives and retains an amount equal
to the sum it would have received and retained had no such deductions or
withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law;
and
(iv) the Company shall also pay to each Bank or the Administrative Agent for
the account of such Bank, at the time interest is paid, Further Taxes in the
amount that the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank and the
Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes, Other Taxes or
Further Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Bank or the
Administrative Agent makes written demand therefor.
<PAGE>
(d) Within 30 days after the date of any payment by the Company of Taxes,
Other Taxes or Further Taxes, the Company shall furnish to each Bank or the
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or the
Administrative Agent.
(e) If the Company is required to pay any amount to any Bank or the
Administrative Agent pursuant to subsection (b) or (c) of this Section, then
such Bank shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
4.02 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office
to make Offshore Rate Loans, then, on notice thereof by the Bank to the Company
through the Administrative Agent, any obligation of that Bank to make Offshore
Rate Loans shall be suspended until the Bank notifies the Administrative Agent
and the Company that the circumstances giving rise to such determination no
longer exist.
(b) If a Bank determines that it is unlawful to maintain any Offshore Rate
Loan, the Company shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the Administrative Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate Loans has
been so terminated or suspended, the Company may elect, by giving notice to the
Bank through the Administrative Agent that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
<PAGE>
(d) Before giving any notice to the Administrative Agent under this Section,
the affected Bank shall designate a different Lending Office with respect to
its Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
4.03 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any
change by way of imposition of or increase in reserve requirements included in
the calculation of the Offshore Rate) in or in the interpretation of any law
or regulation or (ii) the compliance by that Bank with any guideline or request
from any central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to such Bank of
agreeing to make or making, funding or maintaining any Offshore Rate Loans
participating in Letters of Credit, or, in the case of the Issuing Bank, any
increase in the cost to the Issuing Bank of agreeing to issue, issuing or
maintaining any Letter of Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit, then the Company
shall be liable for, and shall from time to time, within 15 days after the
date of written demand from any Bank so affected (with a copy of such demand to
be sent to the Administrative Agent), pay to the Administrative Agent for the
account of such Bank, additional amounts as are sufficient to compensate such
Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital
Adequacy Regulation by any central bank or other Governmental Authority charged
with the interpretation or administration thereof, or (iv) compliance by the
Bank (or its Lending Office) or any corporation controlling the Bank with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation
controlling the Bank and (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy and such Bank's desired
return on capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, within 15 days after the date of written demand from such
Bank to the Company through the Administrative Agent, the Company shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
<PAGE>
4.04 Funding Losses. The Company shall reimburse each Bank and hold each Bank
harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any payment of
principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a Loan after the
Company has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in accordance with any
notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day that
is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore Rate Loan to
a Base Rate Loan on a day that is not the last day of the relevant Interest
Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Company to the
Banks under this Section and under subsection 4.03(a), each Offshore Rate Loan
made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the LIBOR used
in determining the Offshore Rate for such Offshore Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Offshore Rate Loan is
in fact so funded.
4.05 Inability to Determine Rates. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.09(a) for any requested Interest Period with respect to a proposed Offshore
<PAGE>
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Administrative Agent will promptly so notify the Company
and each Bank. Thereafter, the obligation of the Banks to make or maintain
Offshore Rate Loans, as the case may be, hereunder shall be suspended until the
Administrative Agent upon the instruction of the Majority Banks revokes such
notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Company does not revoke such Notice, the Banks shall make, convert or
continue the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Offshore Rate Loans.
4.06 Reserves on Offshore Rate Loans. To the extent not included in the
Offshore Rate, the Company shall pay to each Bank, as long as such Bank shall
be required under regulations of the FRB to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as "Eurocurrency liabilities"), additional costs on the unpaid
principal amount of each Offshore Rate Loan equal to the actual costs of such
reserves allocated to such Loan by the Bank (as determined by the Bank in good
faith, which determination shall be conclusive), payable on each date on which
interest is payable on such Loan, provided the Company shall have received at
least 15 days' prior written notice (with a copy to the Administrative Agent)
of such additional interest from the Bank. If a Bank fails to give notice 15
days prior to the relevant Interest Payment Date, such additional interest
shall be payable 15 days from receipt of such notice.
4.07 Certificates of Banks. Any Bank claiming reimbursement or compensation
under this Article IV shall deliver to the Company (with a copy to the
Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder and such certificate shall be conclusive
and binding on the Company in the absence of manifest error.
4.08 Substitution of Banks. Upon the receipt by the Company from any Bank
(an "Affected Bank") of a claim for compensation under Section 4.03, the
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Company may: (i) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Company to
acquire and assume all or a ratable part of all of such Affected Bank's Loans
and Commitment (a "Replacement Bank"); (ii) request one more of the other Banks
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to acquire and assume all or part of such Affected Bank's Loans and Commitment;
or (iii) designate a Replacement Bank. Any such designation of a Replacement
Bank under clause (i) or (iii) shall be subject to the prior written consent of
the Administrative Agent (which consent shall not be unreasonably withheld).
4.09 Survival. The agreements and obligations of the Company in this Article
IV shall survive the payment of all other Obligations.
<PAGE>
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The obligation of each Bank to
make its initial Credit Extension hereunder is subject to the condition that
the Administrative Agent shall have received on or before the Effective Date
all of the following, in form and substance satisfactory to the Administrative
Agent and each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement and the Notes executed by each
party thereto;
(b) Subsidiary Guaranties. Subsidiary Guaranties duly executed by MEMC and
Hub City, Inc.;
(c) Resolutions; Incumbency
(i) Copies of the resolutions of the board of directors of the Company and
each Subsidiary Guarantor authorizing the transactions contemplated hereby
(including, in the case of the Company and MEMC, the MEMC Acquisition),
certified as of the Closing Date by the Secretary or an Assistant Secretary of
such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of
the Company and each Subsidiary Guarantor certifying the names and true
signatures of the officers of the Company or the Subsidiary Guarantor
authorized to execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered by it hereunder;
(d) Organization Documents; Good Standing. Each of the following documents:
(i) the articles or certificate of incorporation and the bylaws of the Company
and each Subsidiary Guarantor as in effect on the Closing Date, certified by
the Secretary or Assistant Secretary of the Company or such Subsidiary
Guarantor as of the Closing Date; and
<PAGE>
(ii) a good standing certificate for the Company and each Subsidiary Guarantor
from the Secretary of State (or similar, applicable Governmental Authority) of
its state of incorporation and each state where the Company or such Subsidiary
Guarantor is qualified to do business as a foreign corporation as of a recent
date, together (unless the applicable good standing certificate is dated within
21 calendar days of the Closing Date) with a bring-down certificate by
facsimile, dated the Closing Date;
(e) Legal Opinion. An opinion of Baker & McKenzie, special counsel to the
Company and the Subsidiary Guarantors and addressed to the Administrative
Agent, the Documentation Agent and the Banks, substantially in the form of
Exhibit D.
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(f) Payment of Fees. Evidence of payment by the Company of all accrued and
unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with Attorney Costs of the Documentation Agent to the
extent invoiced prior to or on the Closing Date, plus such additional amounts
of Attorney Costs as shall constitute the Documentation Agent's reasonable
estimate of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between the Company and the Documentation Agent);
including any such costs, fees and expenses arising under or referenced in
Sections 2.10 and 10.04;
(g) Certificate. A certificate signed by a Responsible Officer, dated as of
the Closing Date, stating that:
(i) the representations and warranties contained in Article VI are true and
correct on and as of such date, as though made on and as of such date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date);
(ii) no Default or Event of Default exists or would result from the Credit
Extension; and
(iii) there has occurred since December 31, 1996, no event or circumstance
that has resulted or could reasonably be expected to result in a Material
Adverse Effect; and
<PAGE>
(h) Closing Conditions Related to MEMC Acquisition.
(i) Copies, certified by the Secretary of the Company to be true and correct,
of the MEMC Acquisition Documents.
(ii) Evidence satisfactory to the Administrative Agent and the Banks that,
concurrently with the making of the Revolving Loans on the Closing Date, the
Articles of Merger (as defined in Section 1.3 of the Merger Agreement) are
being filed with the Wisconsin Department of Financial Institutions.
(iii) A certificate signed by a Responsible Officer, dated as of the Closing
Date, (a) stating that all of the conditions set forth in Sections 8.1 and 8.3
of the Merger Agreement have been satisfied or waived by the Company and
identifying the closing conditions, if any, which the Company waived and
(b) stating the percentage of the outstanding stock of MEMC with respect to
which the owners have delivered to MEMC a written notice to demand payment
pursuant to Wisconsin Statutes Section 180.1321 (after deducting any shares of
such stock with respect to which such owners have withdrawn such notice or
otherwise waived or forfeited their appraisal rights).
(iv) Evidence satisfactory to the Administrative Agent and the Banks
establishing that (a) the percentage referred to in clause (iii)(b) above does
not exceed 10% and (b) the "Purchase Price" (as defined in the Merger
Agreement) does not exceed $280,000,000.
(v) Evidence satisfactory to the Administrative Agent and the Banks of the
Company's capital contributions to R-B Acquisition Corp. and Hub City, Inc.
(vi) Copies, certified by the Secretary of the Company to be true and
correct, of the loan agreement and related documents evidencing the loan from
Hub City, Inc. to R-B Acquisition Corp.
(i) Other Documents. Such other approvals, opinions, documents or materials
as the Administrative Agent, the Documentation Agent or any Bank may
reasonably request.
5.02 Conditions to All Credit Extensions. The obligation of each Bank to make
any Revolving Loan to be made by it (including its initial Revolving Loan) or
to continue or convert any Revolving Loan under Section 2.04 and the obligation
of the Issuing Bank to Issue any Letter of Credit (including the initial Letter
of Credit) is subject to the satisfaction of the following conditions precedent
on the relevant Borrowing Date, Conversion/Continuation Date or Issuance Date:
<PAGE>
(a) Notice, Application. The Administrative Agent shall have received (with,
in the case of the initial Revolving Loan only, a copy for each Bank) a Notice
of Borrowing or a Notice of Conversion/Continuation, as applicable or in the
case of any Issuance of any Letter of Credit, the Issuing Bank and the
Administrative Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.02;
(b) Continuation of Representations and Warranties. The representations and
warranties in Article V shall be true and correct on and as of such Borrowing
Date or Conversion/Continuation Date or Issuance Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date or
Issuance Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist or shall
result from such Borrowing or continuation or conversion or Issuance.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application
or L/C Amendment Application submitted by the Company hereunder shall
constitute a representation and warranty by the Company hereunder, as of the
date of each such notice and as of each Borrowing Date, Conversion/Continuation
Date, or Issuance Date, as applicable, that the conditions in this Section 5.02
are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Administrative Agent and each Bank
that:
6.01 Corporate Existence and Power. The Company, each of its Material
Subsidiaries and each Subsidiary Guarantor:
(a) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
<PAGE>
(b) has the power and authority and all material governmental licenses,
authorizations, consents and approvals to own its material assets, carry on its
business in all material respects in the manner that they currently conduct
such business and to execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification or license except to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect; and
(d) except as specifically disclosed in Schedule 6.01(d), is in compliance in
----------------
all material respects with all Requirements of Law.
6.02 Corporate Authorization; No Contravention. The execution, delivery and
performance by the Company and the Subsidiary Guarantors of this Agreement and
each other Loan Document to which the Company or a Subsidiary Guarantor is
party, have been duly authorized by all necessary corporate action, and do not
and will not:
(a) contravene the terms of any of that Person's Organization Documents;
(b) conflict with or result in any breach or contravention of, or the creation
of any Lien under, any document evidencing any Contractual Obligation in an
amount exceeding $500,000 to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Person
or its property is subject; or
(c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of the Agreement or any other Loan Document.
6.04 Binding Effect. This Agreement and each other Loan Document to which the
Company or a Subsidiary Guarantor is a party constitute the legal, valid and
binding obligations of the Company and such Subsidiary Guarantor to the extent
<PAGE>
it is a party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
6.05 Litigation. Except as specifically disclosed in Schedule 6.05, there are
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no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Company, a
Subsidiary Guarantor, or a Material Subsidiary or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or any other Loan Document,
or any of the transactions contemplated hereby or thereby; or
(b) as to which it is more likely than not that an adverse determination will
result, which determination would reasonably be expected to have a Material
Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin
or restrain the execution, delivery or performance of this Agreement, any other
Loan Document or any of the MEMC Acquisition Documents, or directing that the
transactions provided for herein or therein not be consummated as herein or
therein provided.
6.06 No Default. No Default or Event of Default exists or would result from
the incurring of any Obligations by the Company, excluding any Default or Event
of Default arising as a result of any default or event of default under any
evidence of the Company s Indebtedness listed on Schedule 8.05 provided that
no other defaults or events of default occur under such Indebtedness and such
Indebtedness is satisfied in full on or before October 15, 1997. As of the
Closing Date, neither the Company, any Subsidiary Guarantor nor any Material
Subsidiary is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if
such default had occurred after the Closing Date, create an Event of Default
under subsection 9.01(e).
6.07 ERISA Compliance. Except as specifically disclosed in Schedule 6.07:
<PAGE>
(a) Each Plan (other than a Multiemployer Plan) is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law. Each Plan which is intended to qualify under Section
401(a) of the Code (other than a Multiemployer Plan) has received a favorable
determination letter from the IRS and to the best knowledge of the Company,
nothing has occurred which would cause the loss of such qualification. The
Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code. No application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made by the Company, any Material Subsidiary or any Subsidiary
Guarantor with respect to any Plan (other than a Multiemployer Plan). The
Company and each ERISA Affiliate has made all required contributions to any
Multiemployer Plan to the extent required by any applicable collective
bargaining agreements.
(b) There are no pending or, to the best knowledge of Company, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan (other than a Multiemployer Plan) which has resulted or
could reasonably be expected to result in a Material Adverse Effect. There has
been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan (other than a Multiemployer Plan) by the
Company, any Material Subsidiary or any Subsidiary Guarantor which has resulted
or could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan (other than a Multiemployer Plan) has any Unfunded Pension
Liability in excess of $1,000,000; (iii) neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than a Multiemployer
Plan) (other than premiums due and not delinquent under Section 4007 of ERISA);
(iv) neither the Company nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan in
excess of $1,000,000; and (v) neither the Company nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be
used solely for the purposes set forth in and permitted by Section 7.12 and
Section 8.07. Neither the Company nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
<PAGE>
6.09 Title to Properties. Except as specifically disclosed in Schedule 6.09,
-------- ----
the Company, each Subsidiary Guarantor and each Material Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company, each Subsidiary Guarantor and each Material Subsidiary
is subject to no Liens, other than Permitted Liens.
6.10 Taxes. Except as specifically disclosed in Schedule 6.10, the Company,
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each Subsidiary Guarantor and each Material Subsidiary have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
in accordance with GAAP. To the best knowledge of the Company, there is no
proposed tax assessment against the Company, any Subsidiary Guarantor or any
Material Subsidiary that would, if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The audited consolidated financial statements
of the Company and its Subsidiaries dated December 31, 1996, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal year ended on that date:
(i) were prepared in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein
(ii) fairly present the financial condition of the Company and its Subsidiaries
as of the date thereof and results of operations for the period covered
thereby; and
<PAGE>
(iii) except as specifically disclosed in Schedule 6.11, show all material
indebtedness and other liabilities, direct or contingent, of the Company and
its consolidated Subsidiaries as of the date thereof that are required to be
reflected or reserved against in accordance with GAAP, including liabilities
for taxes, material commitments and Contingent Obligations.
(b) Since December 31, 1996 there has been no Material Adverse Effect.
(c) The Company has furnished to the Administrative Agent and the Banks a pro
forma balance sheet of the Company and its consolidated Subsidiaries,
reflecting the MEMC Acquisition, dated as of February 28, 1997 (the "Pro Forma
---------
Balance Sheet"). To the best knowledge of the Company, after taking into
- -------------
account the MEMC Acquisition, the Pro Forma Balance Sheet fairly presents the
assets, liabilities and financial condition of the Company and its consolidated
Subsidiaries and there are no omissions from the Pro Forma Balance Sheet, or
other facts and circumstances not reflected in the Pro Forma Balance Sheet,
which would be material under GAAP.
6.12 Environmental Matters. The Company conducts in the ordinary course of
business a review of the effect of existing Environmental Laws (excluding
health, safety and land use matters) and existing Environmental Claims
(excluding health, safety and land use matters) on its business, operations and
properties, and as a result thereof the Company has reasonably concluded that
such Environmental Laws and Environmental Claims, including those specifically
disclosed in Schedule 6.12, could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
6.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act, any state public utilities code, or any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness.
6.14 No Burdensome Restrictions. Neither the Company, any Subsidiary
Guarantor nor any Material Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization Document, or any
Requirement of Law, which (a) could reasonably be expected to have a Material
Adverse Effect or (b) restricts or limits in any way the ability of a
Subsidiary Guarantor or a Material Subsidiary to declare or pay dividends to
its shareholder(s); provided, however, that the representations and warranties
contained in this Section 6.14, as they relate to MEMC, shall be limited to
matters within the best knowledge of the Company.
<PAGE>
6.15 Copyrights, Patents, Trademarks and Licenses, etc. Except as specifically
disclosed in Schedule 6.15, the Company, its Material Subsidiaries and the
-------------
Subsidiary Guarantors own or are licensed or otherwise have the right to use
all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of the Company,
no slogan or other advertising device, product, process, method, substance,
part or other material now employed, or now contemplated to be employed, by the
Company or any Subsidiary infringes upon any rights held by any other Person.
Except as specifically disclosed in Schedule 6.05, no claim or litigation
-------------
regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a
Material Adverse Effect. Notwithstanding the foregoing, the representations
and warranties contained in this Section 6.15, as they relate to MEMC, shall be
limited to matters within the best knowledge of the Company.
6.16 Subsidiaries. As of the Closing Date and after giving effect to the MEMC
Acquisition, the Company has no Subsidiaries other than those specifically
disclosed in part (a) of Schedule 6.16 hereto and has no equity investments in
-------------
any other corporation or entity (including investments in Joint Ventures) other
than those specifically disclosed in part (b) of Schedule 6.16.
-------------
6.17 Insurance. Except as specifically disclosed in Schedule 6.17, the
-------------
properties of the Company, its Material Subsidiaries and the Subsidiary
Guarantors are insured with financially sound and reputable insurance companies
not Affiliates of the Company, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Company, such
Subsidiary Guarantor or such Material Subsidiary operates.
6.18 Swap Obligations. Neither the Company nor any of its Subsidiaries has
incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations. The Company has undertaken its own independent
assessment of its consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks associated with
such matters and has not relied on any swap counterparty or any Affiliate of
any swap counterparty in determining whether to enter into any Swap Contract.
<PAGE>
6.19 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary Guarantor in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary Guarantor in connection with
the Loan Documents (including the offering and disclosure materials delivered
by or on behalf of the Company to the Banks prior to the Closing Date),
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered; provided, however, that the representations
and warranties contained in this Section 6.19, as they relate to MEMC, shall be
limited to matters within the best knowledge of the Company.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, unless the Majority Banks waive compliance in writing:
7.01 Financial Statements. The Company shall deliver to the Administrative
Agent, in form and detail satisfactory to the Administrative Agent and the
Majority Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the end of each
fiscal year, a copy of the audited consolidated balance sheet of the Company
and its Subsidiaries as at the end of such year and the related consolidated
statements of income or operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of Arthur Andersen LLP or
another nationally-recognized independent public accounting firm ("Independent
-----------
Auditor") which report shall state that such consolidated financial statements
- -------
present fairly the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years. Such opinion shall
not be qualified or limited because of a restricted or limited examination by
the Independent Auditor of any material portion of the Company's or any
Subsidiary's records;
(b) as soon as available, but not later than 60 days after the end of each of
the first three fiscal quarters of each fiscal year, a copy of the unaudited
<PAGE>
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day and ending on
the last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of the
Company and the Subsidiaries; and
(c) (i) within 21 days of the Closing Date, combined balance sheet of the
Company and MEMC, dated as of the Closing Date, but without purchasing
accounting adjustments and (ii) within 45 days and simultaneously with the
delivery of the financial statements to the SEC, combined balance sheet of the
Company and MEMC with preliminary purchase accounting adjustments, in each case
certified by a Responsible Officer as fairly representing, in accordance with
GAAP (subject to ordinary good faith year-end adjustments), the financial
position of the Company and MEMC.
7.02 Certificates; Other Information. The Company shall furnish to the
Administrative Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements referred to in
subsection 7.01(a), a certificate of the Independent Auditor 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;
(b) concurrently with the delivery of the financial statements referred to in
subsections 7.01(a) and (b), a Compliance Certificate executed by a Responsible
Officer;
(c) promptly, copies of all financial statements and reports that the Company
sends to its shareholders, and copies of all financial statements and regular,
periodical or special reports (including Forms 10K, 10Q and 8K) that the
Company or any Subsidiary may make to, or file with, the SEC within 15 days
after such filing; and
(d) if the Applicable Margin and Commitment Fee Percentage are to be
determined on a monthly basis, a certificate containing the computations
necessary to establish the Applicable Margin and Commitment Fee Percentage, in
form and detail acceptable to the Administrative Agent and the Banks, within 20
days after the end of each month; and
<PAGE>
(e) promptly, such additional information regarding the business, financial or
corporate affairs of the Company or any Subsidiary as the Administrative Agent,
at the request of any Bank, may from time to time reasonably request.
7.03 Notices. The Company shall promptly notify the Administrative Agent and
each Bank:
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that likely will become a
Default or Event of Default;
(b) of any matter that has resulted or may result in a Material Adverse
Effect, including (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Company or any Material Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary; including pursuant to any applicable
Environmental Laws;
(c) of the occurrence of any of the following events affecting the Company or
any ERISA Affiliate (but in no event more than 10 days after such event), and
deliver to the Agent and each Bank a copy of any notice with respect to such
event that is filed with a Governmental Authority and any notice delivered by
a Governmental Authority to the Company or any ERISA Affiliate with respect to
such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of any Pension Plan;
(iii) the adoption of, or the commencement of contributions to, any Plan
subject to Section 412 of the Code by the Company or any ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section 412 of the
Code, if such amendment results in a material increase in contributions or
Unfunded Pension Liability.
<PAGE>
(d) of any material change in accounting policies or financial reporting
practices by the Company or any of its consolidated Subsidiaries;
(e) upon the request from time to time of the Administrative Agent, the Swap
Termination Values, together with a description of the method by which such
values were determined, relating to any then-outstanding Swap Contracts to
which the Company or any of its Subsidiaries is party; and
(f) upon the request from time to time of the Administrative Agent, the
outstanding principal balance of the loan from Hub City, Inc. to MEMC.
Each notice under subsections 7.03(a), (b), (c) and (d) of this Section shall be
accompanied by a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what action the
Company or any affected Subsidiary proposes to take with respect thereto and at
what time. Each notice under subsection 7.03(a) shall describe with
particularity any and all clauses or provisions of this Agreement or other Loan
Document that have been (or likely will be) breached or violated.
7.04 Preservation of Corporate Existence, Etc. The Company shall, and shall
cause each Material Subsidiary to:
(a) preserve and maintain in full force and effect its corporate existence and
good standing under the laws of its state or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.03 and sales of assets permitted by Section
8.02;
(c) use reasonable efforts, in the ordinary course of business, to preserve
its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks, trade names
and service marks, the non-preservation of which could reasonably be expected
to have a Material Adverse Effect.
7.05 Maintenance of Property. The Company shall maintain, and shall cause
each Material Subsidiary to maintain, and preserve all its property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted and make all necessary repairs thereto and renewals and
<PAGE>
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, except as permitted by Section
8.02. The Company and each Material Subsidiary shall use the standard of care
typical in the industry in the operation and maintenance of its facilities.
7.06 Insurance. The Company shall maintain, and shall cause each Material
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
7.07 Payment of Obligations. The Company shall, and shall cause each Material
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or levies upon
it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Material Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon its
property; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 Compliance with Laws. The Company shall comply, and shall cause each
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.09 Compliance with ERISA. The Company shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
<PAGE>
7.10 Inspection of Property and Books and Records. The Company shall maintain
and shall cause each Subsidiary to maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Company and such Subsidiary. The Company shall
permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of the Administrative Agent or any Bank to visit and
inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent public
accountants, all at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when an Event of Default exists the Administrative
-----------------
Agent or any Bank may do any of the foregoing at the expense of the Company at
any time during normal business hours and without advance notice.
7.11 Environmental Laws. The Company shall, and shall cause each Subsidiary
to, conduct its operations and keep and maintain its property in compliance in
all material respects with all Environmental Laws.
7.12 Use of Proceeds. The Company shall use the proceeds of the Loans to
finance the MEMC Acquisition (by capital contributions to R-B Acquisition Corp.
and Hub City, Inc.), any Acquisition permitted under Section 8.04(e) and for
working capital and other general corporate purposes not in contravention of
any Requirement of Law or of any Loan Document.
7.13 Limitations on Non-Material Subsidiaries. The Company shall designate a
Subsidiary (or Subsidiaries, as necessary) as a Material Subsidiary in order to
prevent (a) the total revenues of all Subsidiaries which are not Material
Subsidiaries for the preceding four fiscal quarter period from equaling or
exceeding 20% of the total revenues of the Company and all its Subsidiaries
during such period or (b) the total net book value of the assets of all
Subsidiaries which are not Material Subsidiaries, as of the last day of the
preceding fiscal quarter, from equaling or exceeding 20% of the total net book
value of the assets of the Company and all its Subsidiaries as of such date,
in each case based upon the Company s most recent annual or quarterly financial
statements delivered to the Administrative Agent under Section 7.01.
<PAGE>
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, unless the Majority Banks waive compliance in writing:
8.01 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume
or suffer to exist, or enter into any agreement with a third party not to
create, any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):
--------- -----
(a) any Lien existing on property of the Company or any Subsidiary on the
Closing Date securing Indebtedness outstanding on such date, provided that the
Indebtedness secured thereby does not exceed $3,000,000 in the aggregate;
(b) any Lien created under any of the Loan Documents;
(c) Liens for taxes, fees, assessments or other governmental charges which are
not delinquent or remain payable without penalty, or to the extent that
non-payment thereof is permitted by Section 7.07, provided that no notice of
lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject
thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges or
deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Company or its Subsidiary securing (i) the
non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) contingent obligations on surety
and appeal bonds, and (iii) other non-delinquent obligations of a like nature;
in each case, incurred in the ordinary course of business, provided all such
Liens in the aggregate would not (even if enforced) cause a Material Adverse
Effect;
<PAGE>
(g) Liens consisting of judgment or judicial attachment liens, provided that
the enforcement of such Liens is effectively stayed and all such liens in the
aggregate at any time outstanding for the Company and its Subsidiaries do not
exceed $2,000,000;
(h) easements, rights-of-way, restrictions and other similar encumbrances
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 businesses of the Company and its Subsidiaries;
(i) Liens on assets of corporations which become Subsidiaries after the date
of this Agreement, provided, however, that such Liens existed at the time the
-----------------
respective corporations became Subsidiaries and were not created in
anticipation thereof;
(j) purchase money security interests on any property acquired or held by the
Company or its Subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part
of the cost of acquiring such property; provided that (i) any such Lien
-------------
attaches to such property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the property so acquired
in such transaction, (iii) the principal amount of the debt secured thereby
does not exceed 100% of the cost of such property, and (iv) the principal
amount of the Indebtedness secured by any and all such purchase money security
interests, together with Indebtedness permitted under subsection 8.05(d), shall
not at any time exceed $10,000,000;
(k) Liens securing obligations in respect of capital leases on assets subject
to such leases, provided that such capital leases are otherwise permitted
hereunder;
(l) Liens arising solely by virtue of any statutory or common law provision
relating to banker's liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution; provided that (i) such deposit account is not a dedicated cash
-------------
collateral account and is not subject to restrictions against access by the
Company in excess of those set forth by regulations promulgated by the FRB,
and (ii) such deposit account is not intended by the Company or any Subsidiary
to provide collateral to the depository institution; and
<PAGE>
(m) Liens consisting of pledges of cash collateral or government securities to
secure on a mark-to-market basis Permitted Swap Obligations only, provided that
(i) the counterparty to any Swap Contract relating to such Permitted Swap
Obligation is under a similar requirement to deliver similar collateral from
time to time to the Company or the Subsidiary party thereto on a mark-to-market
basis; and (ii) the aggregate value of such collateral so pledged by the
Company and the Subsidiaries together in favor of any counterparty does not at
any time exceed $1,000,000 and, together with the Indebtedness permitted under
Sections 8.01(i) and (j) and Section 8.05(d), does not exceed $10,000,000.
8.02 Disposition of Assets. The Company shall not, and shall not suffer or
permit any Material Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory, or used, worn-out or surplus equipment, all in
the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment;
(c) dispositions of inventory and equipment by the Company or any Subsidiary
to the Company or any domestic Subsidiary pursuant to reasonable business
requirements;
(d) dispositions not otherwise permitted hereunder which are made for fair
market value; provided, that (i) at the time of any disposition, no Event of
--------
Default shall exist or shall result from such disposition, (ii) the aggregate
sales price from such disposition shall be paid in cash or by a promissory note
payable to the Company or the selling Subsidiary in form and substance
acceptable to the Majority Banks (provided that the aggregate outstanding
--------
principal balance of all such promissory notes shall not exceed $10,000,000 at
any time), and (iii) as of the date of each disposition, the aggregate value
of all assets so sold by the Company and its Subsidiaries, together, from and
after the Closing Date shall not exceed an amount equal to 25% of the total
assets of the Company and its Subsidiaries as shown on the balance sheet for
the most recent fiscal quarter then ended.
<PAGE>
8.03 Consolidations and Mergers. The Company shall not, and shall not suffer
or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions all or substantially all of its assets (whether
now owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the Company shall
be the continuing or surviving corporation, or with any one or more
Subsidiaries, provided that if any transaction shall be between a Subsidiary
and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the
continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise), to the Company or another Wholly-Owned
Subsidiary; and
(c) the merger between R-B Acquisition Corp. and MEMC to effect the MEMC
Acquisition.
8.04 Loans and Investments. The Company shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan, extension of credit
or capital contribution to or any other investment in, any Person including
any Affiliate of the Company (together, "Investments"), except for:
-----------
(a) Investments held by the Company or Subsidiary in the form of cash
equivalents or short term marketable securities, provided that the aggregate
fair market value of all noninvestment grade and short-term marketable
securities shall not exceed $1,000,000;
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(c) extensions of credit by the Company to any of its Wholly-Owned
Subsidiaries or by any of its Wholly-Owned Subsidiaries to another of its
Wholly-Owned Subsidiaries, provided that the aggregate unpaid principal amount
of extensions of credit by the Company and Material Subsidiaries to
<PAGE>
Subsidiaries which are not Material Subsidiaries shall not at any time exceed
5% of the Net Worth of the Company and its consolidated Subsidiaries based upon
the most recent annual or quarterly financial statements delivered to the
Administrative Agent under Section 7.01 and provided further, there shall be no
limitation on accounts receivable arising from the sale or lease of goods or
services in the ordinary course of business provided that no account receivable
may be outstanding more than 90 days;
(d) extensions of credit by the Company or any Subsidiary to any of its
officers or employees, provided that the aggregate unpaid principal amount of
all such extensions of credit outstanding at any time shall not exceed
$2,000,000 at any time;
(e) Investments incurred in order to consummate Acquisitions, provided that
--------
(i) the Company provides 15 days advance written notice of such Acquisition to
the Agent accompanied by pro forma financial information reflecting such
Acquisition which indicates that the consummation of such Acquisition will not
result in a violation of the covenants set forth in sections 8.14, 8.15 and
8.16; (ii) such Acquisitions are undertaken in accordance with all applicable
Requirements of Law; (iii) the prior, effective written consent or approval to
such Acquisition of the board of directors or equivalent governing body of the
acquiree is obtained; (iv) no Default or Event of Default then exists or would
be created thereby; (v) such Acquisition is in a related or compatible line of
business; (vi) the aggregate consideration paid (whether as cash payments, debt
assumed or issued, fees or otherwise, excluding equity) for all such
Acquisitions occurring after the Closing Date (excluding the consideration paid
to consummate the MEMC Acquisition) shall not exceed [a] $50,000,000 during the
12-month period following the Closing Date and [b] thereafter (including any
Acquisition permitted under clause (v)[a]), (1) $75,000,000 if the Leverage
Ratio is greater than 2.00:1.00 either before or after giving effect thereto or
(2) $100,000,000 if the Leverage Ratio is less than or equal to 2.00:1.00
both before and after giving effect thereto (provided, however, that the
permitted amount of aggregate consideration permitted to be paid under each
clause of this subsection (vi) shall be reduced by the amount by which the
aggregate Investments in Joint Ventures exceed $5,000,000); and (vii) if the
aggregate consideration paid for an Acquisition exceeds $25,000,000, the
resulting Subsidiary shall, within 10 Business Days after the consummation of
the Acquisition, execute and deliver to the Administrative Agent a Subsidiary
Guaranty together with such supporting documents as the Administrative Agent
may reasonably request.
<PAGE>
(f) Investments in Joint Ventures not exceeding $25,000,000 as to all such
Investments in the aggregate; and
(g) subject to the limitation in Section 8.05(f), Investments constituting
Permitted Swap Obligations or payments or advances under Swap Contracts
relating to Permitted Swap Obligations.
8.05 Limitation on Indebtedness. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted pursuant to
Section 8.08;
(c) Indebtedness existing on the Closing Date and set forth in Schedule 8.05;
-------------
(d) Indebtedness secured by Liens permitted by subsection 8.01(i), (j) and (m)
in an aggregate amount outstanding (together with Indebtedness under capital
leases permitted under Section 8.10(d)) not to exceed $10,000,000 at any time;
(e) Indebtedness incurred in connection with leases permitted pursuant to
Section 8.10;
(f) unsecured Indebtedness not otherwise permitted under this Section 8.05 in
an aggregate principal amount (together with the Swap Termination Value of
Permitted Swap Obligations) outstanding not exceeding $10,000,000 at any time;
and
(g) Indebtedness permitted under Section 8.04(c).
8.06 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Material Subsidiary to, enter into any transaction with
any Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company or such Subsidiary, provided that Hub City, Inc. may loan an amount not
--------
exceeding $210,000,000 to R-B Acquisition Corp. in order to effect the MEMC
Acquisition.
<PAGE>
8.07 Use of Proceeds. (a) The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds or any Letter of
Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Company or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any portion of the Loan
proceeds or any Letter of Credit (i) knowingly to purchase Ineligible
Securities from the Syndication Agent during any period in which the
Syndication Agent makes a market in such Ineligible Securities, (ii) knowingly
to purchase during the underwriting or placement period Ineligible Securities
being underwritten or privately placed by the Syndication Agent, or (iii) to
make payments of principal or interest on Ineligible Securities underwritten
or privately placed by the Syndication Agent and issued by or for the benefit
of the Company or any Affiliate of the Company. The Arranger is a registered
broker-dealer and permitted to underwrite and deal in certain Ineligible
Securities; and "Ineligible Securities" means securities which may not be
---------------------
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Sec. 24, Seventh), as amended.
8.08 Contingent Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of business;
(b) subject to the limits in Section 8.05(f), Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries existing as of
the Closing Date and listed in Schedule 8.08; and
-------------
(d) Contingent Obligations incurred in the ordinary course of business and not
exceeding (together with the Contingent Obligations described in Section
8.08(c)) at any time $10,000,000 in the aggregate in respect of the Company and
its Subsidiaries together.
<PAGE>
8.09 Joint Ventures. The Company shall not, and shall not suffer or permit
any Subsidiary to enter into any Joint Venture, other than in the ordinary
course of business, except Joint Ventures of the Company and its Subsidiaries
listed in part (b) of Schedule 6.16.
-------------
8.10 Lease Obligations. The Company shall not, and shall not suffer or permit
any Subsidiary to, create or suffer to exist any obligations for the payment of
rent for any property under lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in existence on the Closing
Date;
(b) operating leases entered into by the Company or any Subsidiary after the
Closing Date in the ordinary course of business;
(c) subject to the limits in Section 8.05(d), leases entered into by the
Company or any Subsidiary after the Closing Date pursuant to sale-leaseback
transactions permitted under subsection 8.02(d); and
(d) subject to the limits in Section 8.05(d), capital leases other than those
permitted under clauses (a) and (c) of this Section, entered into by the
Company or any Subsidiary after the Closing Date to finance the acquisition of
equipment.
8.11 ERISA. The Company shall not, and shall not suffer or permit any of its
ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably expected to result in liability of the Company in an
aggregate amount in excess of $1,000,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
8.12 Change in Business. The Company shall not, and shall not suffer or
permit any Material Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Company
and its Subsidiaries on the date hereof.
8.13 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment
or reporting practices, except as permitted by GAAP, or change the fiscal year
of the Company or of any Subsidiary.
<PAGE>
8.14 Minimum Net Worth. The Company (on a consolidated basis with its
Subsidiaries) shall not permit its Net Worth as of the end of each fiscal
quarter to be less than (a) $135,000,000 plus (b) 50% of the Company's
----
cumulative net income (not to be reduced by losses) during the period
commencing January 1, 1997 and ending on the Date of Determination plus (c) 75%
----
of the net proceeds of equity issued by the Company after January 1, 1997.
8.15 Maximum Leverage Ratio. The Company (on a consolidated basis with its
Subsidiaries) shall not permit the Leverage Ratio as of the end of each fiscal
quarter during the following periods to be greater than the corresponding
ratios:
<TABLE>
<CAPTION>
Period Maximum Ratio
------ -------------
<S> <C>
Closing Date through March 31, 1998 3.25:1.00
April 1, 1998 through March 31, 1999 3.00:1.00
Thereafter 2.75:1.00
</TABLE>
8.16 Minimum Interest Coverage Ratio. The Company (on a consolidated basis
with its Subsidiaries) shall not permit the ratio of (a) EBIT for the preceding
four fiscal quarters to (b) interest expense for the four preceding fiscal
quarters, at the end of each fiscal quarter during the following periods to be
less than the corresponding ratios:
<TABLE>
<CAPTION>
Period Minimum Ratio
------ -------------
<S> <C>
Closing Date through March 31, 1998 3.50:1.00
April 1, 1998 through March 31, 2000 3.75:1.00
Thereafter 4.00:1.00
</TABLE>
8.17 No Restrictions on Dividends. The Company shall not, and shall not
permit any Material Subsidiary to, enter into or become bound by any agreement
which limits or restricts the ability of a Material Subsidiary to declare or
pay dividends to its shareholder(s).
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an "Event of
--------
Default":
- -------
<PAGE>
(a) Non-Payment. The Company fails to pay, (i) when and as required to be
paid herein, any amount of principal of any Loan or of any L/C Obligation, or
(ii) within five days after the same becomes due, any interest, fee or any
other amount payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Company or any Subsidiary Guarantor made or deemed made herein, in any other
Loan Document, or which is contained in any certificate, document or financial
or other statement by the Company, any Subsidiary Guarantor, or any Responsible
Officer, furnished at any time under this Agreement, or in or under any other
Loan Document, is incorrect in any material respect on or as of the date made
or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any term,
covenant or agreement contained in any of (i) Section 7.01, 7.02(a) or 7.02(b)
and such failure continues uncured for a period of five days, or (ii) Section
7.02(c)-(e), 7.03, 7.06, 7.07, 7.08, 7.09 or 7.11 or in Article VIII; or
(d) Other Defaults. The Company or any Subsidiary Guarantor fails to perform
or observe any other term or covenant contained in this Agreement or any other
Loan Document, and such default shall continue unremedied for a period of 25
days after the earlier of (i) the date upon which a Responsible Officer knew or
reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Company by the Administrative Agent or
any Bank; or
(e) Cross-Acceleration. The Company or any Material Subsidiary fails to make
any payment in respect of any Indebtedness or Contingent Obligation or fails to
perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation, if the effect of such failure,
event or condition is to cause or result in such Indebtedness becoming due and
payable prior to its stated maturity, or such Contingent Obligation becoming
payable or cash collateral in respect thereof to be demanded, or such
Indebtedness becomes due and payable at its stated maturity and is not repaid
in full on the maturity date; or
(f) Insolvency; Voluntary Proceedings. The Company or any Material Subsidiary
(i) ceases or fails to be solvent, or generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course;
(iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes
any action to effectuate or authorize any of the foregoing; or
<PAGE>
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Company or any Material Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's or any Material Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not
be released, vacated or fully bonded within 60 days after commencement, filing
or levy; (ii) the Company or any Material Subsidiary admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company or any Material Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $1,000,000;
the aggregate amount of Unfunded Pension Liability among all Pension Plans at
any time exceeds $1,000,000; or (iii) the Company or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$1,000,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $2,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30 days
after the entry ; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree is
entered against the Company or any Material Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be
any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
<PAGE>
(k) Change of Control. There occurs any Change of Control; or
(l) Adverse Change. There occurs a Material Adverse Effect; or
(m) Subsidiary Guarantor Defaults. A Subsidiary Guarantor fails in any
material respect to perform or observe any term, covenant or agreement in the
Subsidiary Guaranty; or the Subsidiary Guaranty is for any reason partially
(including with respect to future advances) or wholly revoked or invalidated,
or otherwise ceases to be in full force and effect, or a Subsidiary Guarantor
or any other Person contests in any manner the validity or enforceability
thereof or denies that it has any further liability or obligation thereunder;
or any event described at subsections (f) or (g) of this Section occurs with
respect to a Subsidiary Guarantor.
9.02 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans and any obligation of
the Issuing Bank to Issue Letters of Credit to be terminated, whereupon such
commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is or at any
time thereafter may become available for drawing under any outstanding Letters
of Credit (whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable, and
declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in
- -------- -------
subsection (f) or (g) of Section 9.01 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Bank to make Loans and any obligation of the Issuing Bank to Issue
Letters of Credit shall automatically terminate and the unpaid principal amount
<PAGE>
of all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Administrative
Agent, the Issuing Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
9.04 Certain Financial Covenant Defaults. In the event that, after taking
into account any extraordinary charge to earnings taken or to be taken as of
the end of any fiscal period of the Company (a "Charge"), and if solely by
------
virtue of such Charge, there would exist an Event of Default due to the breach
of any of Sections 8.14, 8.15 or 8.16 as of such fiscal period end date, such
Event of Default shall be deemed to arise upon the earlier of (a) the date
after such fiscal period end date on which the Company announces publicly it
will take, is taking or has taken such Charge (including an announcement in
the form of a statement in a report filed with the SEC) or, if such
announcement is made prior to such fiscal period end date, the date that is
such fiscal period end date, and (b) the date the Company delivers to the
Administrative Agent its audited annual or unaudited quarterly financial
statements in respect of such fiscal period reflecting such Charge as taken.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization; "Administrative Agent". (a) Each Bank
hereby irrevocably (subject to Section 10.09) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Administrative Agent have or
be deemed to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise
exist against the Administrative Agent. Without limiting the generality of
the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Administrative Agent, the Documentation Agent and the
Syndication Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any
<PAGE>
applicable law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks with respect to any
Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Administrative Agent may agree at the
request of the Majority Lenders to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the
-------- -------
benefits and immunities (i) provided to the Administrative Agent in this
Article X with respect to any acts taken or omissions suffered by the Issuing
Bank in connection with Letters of Credit Issued by it or proposed to be Issued
by it and the application and agreements for letters of credit pertaining to
the Letters of Credit as fully as if the term "Administrative Agent", as used
in this Article X, included the Issuing Bank with respect to such acts or
omissions, and (ii) as additionally provided in this Agreement with respect
to the Issuing Bank.
10.02 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
10.03 Liability of Administrative Agent, Documentation Agent and Syndication
Agent. None of the Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Company or any Subsidiary or Affiliate
of the Company, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by any Agent-Related Persons under
or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Company or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
<PAGE>
10.04 Reliance by Administrative Agent. (a) The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Company), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Majority Banks and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions specified in
Section 5.01, each Bank that has executed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter either sent by the Administrative Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
10.05 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Administrative Agent for the account of the Banks,
unless the Administrative Agent shall have received written notice from a
Bank or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default
or Event of Default as may be requested by the Banks in accordance with Article
IX; provided, however, that unless and until the Administrative Agent has
-------- -------
received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of the Banks.
<PAGE>
10.06 Credit Decision. Each Bank acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by any
Agent-Related Person hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Administrative Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company and its Subsidiaries, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the
Administrative Agent, no Agent-Related Person shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Company which may come into the
possession of any of the Agent-Related Persons.
10.07 Indemnification of Agent-Related Persons. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities; provided,
--------
however, that no Bank shall be liable for the payment to the Agent-Related
- -------
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank shall reimburse an Agent-Related Person upon demand
for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by such Agent-Related Person in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that such Agent-Related Person is not reimbursed for such
expenses by or on behalf of the Company. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of the Administrative Agent.
<PAGE>
10.08 Administrative Agent in Individual Capacity. M&I and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though M&I were not the Administrative Agent
or the Issuing Bank hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, M&I or its Affiliates
may receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Administrative Agent shall
be under no obligation to provide such information to them. With respect to
its Loans, M&I shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not the
Administrative Agent or the Issuing Bank.
10.09 Successor Administrative Agent. The Administrative Agent may, and at
the request of the Majority Banks shall, resign as Administrative Agent upon 30
days' notice to the Banks. If the Administrative Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks. If no successor agent is appointed prior to the effective
date of the resignation of the Administrative Agent, the Administrative Agent
may appoint, after consulting with the Banks and the Company, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Administrative Agent and the term " Administrative
Agent" shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article X and Sections 11.04 and
11.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
agent has accepted appointment as Administrative Agent by the date which is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Banks shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Majority Banks appoint a
<PAGE>
successor agent as provided for above. Notwithstanding the foregoing, however,
M&I may not be removed as the Administrative Agent at the request of the
Majority Banks unless M&I shall also simultaneously be replaced as "Issuing
Bank" hereunder pursuant to documentation in form and substance reasonably
satisfactory to M&I.
10.10 Withholding Tax. (a) If any Bank is a "foreign corporation, partnership
or trust" within the meaning of the Code and such Bank claims exemption from,
or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the
Code, such Bank agrees with and in favor of the Administrative Agent, to
deliver to the Administrative Agent:
(i) if such Bank claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty, two properly completed and executed copies
of IRS Form 1001 before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected with a
United States trade or business of such Bank, two properly completed and
executed copies of IRS Form 4224 before the payment of any interest is due in
the first taxable year of such Bank and in each succeeding taxable year of such
Bank during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding tax under
a United States tax treaty by providing IRS Form 1001 and such Bank sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank, such Bank agrees to notify the
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Administrative Agent will treat such Bank's IRS
Form 1001 as no longer valid.
<PAGE>
(c) If any Bank claiming exemption from United States withholding tax by
filing IRS Form 4224 with the Administrative Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable withholding tax,
the Administrative Agent may withhold from any interest payment to such Bank an
amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
subsection (a) of this Section are not delivered to the Administrative Agent,
then the Administrative Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount equivalent to
the applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that the Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed,
or because such Bank failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by
the Administrative Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Administrative Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Administrative Agent.
10.11 Documentation Agent; Co-Agents; Syndication Agent. None of the Persons
identified on the facing page or signature pages of this Agreement as the
Documentation Agent, a co-agent or the Syndication Agent shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Banks as such. Without limiting the foregoing,
none of the Banks so identified shall have or be deemed to have any fiduciary
relationship with any Bank. Each Bank acknowledges that it has not relied, and
will not rely, on any of the Banks so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Administrative Agent at the written request of the Majority Banks)
and the Company and acknowledged by the Administrative Agent, and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
-------- -------
amendment, or consent shall, unless in writing and signed by all the Banks and
the Company and acknowledged by the Administrative Agent, do any of the
following:
(a) increase or extend the Commitment of any Bank (or reinstate any Commitment
terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due to
the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein on any
Loan, or (subject to clause (iii) below) any fees or other amounts payable
hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Banks or any of them to
take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision herein providing for
consent or other action by all Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless
-------- -------
in writing and signed by the Issuing Bank in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to
the Majority Banks or all the Banks, as the case may be, affect the rights or
duties of the Administrative Agent under this Agreement or any other Loan
Document, and (iii) the Fee Letters may be amended, or rights or privileges
thereunder waived, in a writing executed by the parties thereto.
<PAGE>
11.02 Notices. (a) Except for telephonic notices permitted under Section
2.03, all notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 11.02,
--------------
and (ii) shall be followed promptly by delivery of a hard copy original
thereof) and mailed, faxed or delivered, to the address or facsimile number
specified for notices on Schedule 11.02; or, as directed to the Company or the
--------------
Administrative Agent, to such other address as shall be designated by such
party in a written notice to the other parties, and as directed to any other
party, at such other address as shall be designated by such party in a written
notice to the Company and the Administrative Agent.
(b) All such notices, requests and communications shall, when transmitted by
overnight delivery, or faxed, be effective when delivered for overnight
(next-day) delivery, or transmitted in legible form by facsimile machine,
respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or X to the Administrative Agent shall not
be effective until actually received by the Administrative Agent, and notices
pursuant to Article III to the Issuing Bank shall not be effective until
actually received by the Issuing Bank at the address specified for the "Issuing
Bank" on Schedule 11.02.
--------------
(c) Any agreement of the Administrative Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Administrative Agent and the Banks shall be
entitled to rely on the authority of any Person purporting to be a Person
authorized by the Company to give such notice and the Administrative Agent and
the Banks shall not have any liability to the Company or other Person on
account of any action taken or not taken by the Administrative Agent or the
Banks in reliance upon such telephonic or facsimile notice. The obligation of
the Company to repay the Loans and L/C Obligations shall not be affected in any
way or to any extent by any failure by the Administrative Agent and the Banks
to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Administrative Agent and the Banks of a confirmation which is at
variance with the terms understood by the Administrative Agent and the Banks to
be contained in the telephonic or facsimile notice.
<PAGE>
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Bank, 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.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are consummated, pay
or reimburse M&I (including in its capacity as Administrative Agent and Issuing
Bank) and the Documentation Agent within five Business Days after demand
(subject to subsection 5.01(e)) for all costs and expenses incurred by M&I
(including in its capacity as Administrative Agent and Issuing Bank) and the
Documentation Agent in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement,
any Loan Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including reasonable Attorney Costs incurred by M&I (including in its
capacity as Administrative Agent and Issuing Bank) and the Documentation Agent
with respect thereto; and
(b) pay or reimburse the Administrative Agent, the Syndication Agent and each
Bank within five Business Days after demand (subject to subsection 5.01(e)) for
all costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
11.05 Company Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Company shall indemnify, defend and hold the
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
------------------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
<PAGE>
repayment of the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the Agent or replacement of any
Bank) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of this Agreement or any document contemplated
by or referred to herein, or the transactions contemplated hereby, or any
action taken or omitted by any such Person under or in connection with any of
the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding)
related to or arising out of this Agreement or the Loans or Letters of Credit
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
----------- -----------
provided, that the Company shall have no obligation hereunder to any
- --------
Indemnified Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified Person.
The agreements in this Section shall survive payment of all other Obligations.
11.06 Payments Set Aside. To the extent that the Company makes a payment to
the Administrative Agent or the Banks, or the Administrative Agent or the Banks
exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent or such Bank upon demand
its pro rata share of any amount so recovered from or repaid by the
Administrative Agent or such Bank.
11.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and each Bank.
11.08 Assignments, Participations, etc. (a) Any Bank may, with the written
consent of the Company (at all times other than during the existence of an
Event of Default when no written consent of the Company is required) and the
Administrative Agent and the Issuing Bank, which consents shall not be
unreasonably withheld, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Company, the Agent or the
Issuing Bank shall be required in connection with any assignment and delegation
by a Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an
"Assignee") all, or any ratable part of all, of the Loans, the Commitments, the
--------
<PAGE>
L/C Obligations and the other rights and obligations of such Bank hereunder, in
a minimum amount of $5,000,000; provided, however, that the Company and the
-------- -------
Administrative Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Company and the Administrative Agent by such Bank and the Assignee; (ii) such
Bank and its Assignee shall have delivered to the Company and the
Administrative Agent an Assignment and Acceptance in the form of Exhibit E
---------
("Assignment and Acceptance") together with any Note or Notes subject to such
-------------------------
assignment and (iii) the assignor Bank or Assignee has paid to the
Administrative Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Administrative Agent notifies the
assignor Bank that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, (and provided that it consents to such
assignment in accordance with subsection 11.08(a)), the Company shall execute
and deliver to the Administrative Agent, new Notes evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Bank has retained a portion
of its Loans and its Commitment, replacement Notes in the principal amount of
the Revolving Loans retained by the assignor Bank (such Notes to be in exchange
for, but not in payment of, the Notes held by such Bank). Immediately upon
each Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Bank
pro tanto.
- --- -----
(d) Any Bank may at any time sell to one or more commercial banks or other
Persons not Affiliates of the Company (a "Participant") participating interests
-----------
in any Loans, the Commitment of that Bank and the other interests of that Bank
(the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
- -------- -------
<PAGE>
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company, the
Issuing Bank and the Administrative Agent shall continue to deal solely and
directly with the originating Bank in connection with the originating Bank's
rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Bank shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent of the
Banks as described in subsections (a), (b), (c) and (e) with respect to matters
relating to subsections (a), (b) and (c), of the first proviso to Section
----- -------
11.01. In the case of any such participation, the Participant shall be entitled
to the benefit of Sections 4.01, 4.03 and 11.05 as though it were also a Bank
hereunder, and if amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement and the Note held by it in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Sec. 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
11.09 Confidentiality. Each Bank agrees to take and to cause its Affiliates
to take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret"
by the Company and provided to it by the Company or any Subsidiary, or by the
Administrative Agent on the Company's or such Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents or in connection with other
business now or hereafter existing or contemplated with the Company or any
Subsidiary; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
<PAGE>
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Bank; provided, however, that any Bank
-------- -------
may disclose such information (A) at the request or pursuant to any requirement
of any Governmental Authority to which the Bank is subject or in connection
with an examination of such Bank by any such authority; (B) pursuant to
subpoena or other court process; (C) when required to do so in accordance with
the provisions of any applicable Requirement of Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which
any Agent-Related Person, any Bank or their respective Affiliates may be party;
(E) to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Loan Document; (F) to such Bank's
independent auditors and other professional advisors; (G) to any Participant
or Assignee, actual or potential, provided that such Person agrees in writing
to keep such information confidential to the same extent required of the Banks
hereunder; (H) as to any Bank or its Affiliate, as expressly permitted under
the terms of any other document or agreement regarding confidentiality to which
the Company or any Subsidiary is party or is deemed party with such Bank or
such Affiliate; and (I) to its Affiliates.
11.10 Set-off. In addition to any rights and remedies of the Banks provided
by law, if an Event of Default exists or the Loans have been accelerated, each
Bank is authorized at any time and from time to time, without prior notice to
the Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the
account of the Company against any and all Obligations owing to such Bank, now
or hereafter existing, irrespective of whether or not the Administrative Agent
or such Bank shall have made demand under this Agreement or any Loan Document
and although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Administrative Agent after any such
set-off and application made by such Bank; provided, however, that the failure
-------- -------
to give such notice shall not affect the validity of such set-off and
application.
11.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, letter of credit fee or other fee, or any other cost or
expense (including Attorney Costs) due and payable to the Administrative Agent,
the Documentation Agent, the Issuing Bank, M&I or the Syndication Agent under
the Loan Documents, the Company hereby irrevocably authorizes M&I, during the
continuance of any Default or Event of Default, to debit any deposit account of
the Company with M&I in an amount such that the aggregate amount debited from
all such deposit accounts does not exceed such fee or other cost or expense.
If there are insufficient funds in such deposit accounts to cover the amount of
the fee or other cost or expense then due, such debits will be reversed (in
whole or in part, in M&I's sole discretion) and such amount not debited shall
be deemed to be unpaid. No such debit under this Section shall be deemed a
set-off.
<PAGE>
11.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall notify
the Administrative Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Administrative Agent shall
reasonably request.
11.13 Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one
and the same instrument.
11.14 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.15 No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and legal benefit of the Company, the Banks, the
Administrative Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.
11.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE BANKS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND
THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
---------
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
- ----------
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY, THE ADMINISTRATIVE AGENT AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.
<PAGE>
11.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE ADMINISTRATIVE
AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE COMPANY, THE BANKS AND THE ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
11.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Administrative Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
REGAL-BELOIT CORPORATION
BY Kenneth F. Kaplan
-----------------------------------------
Title: Vice President, CFO and Secretary
-----------------------------------
BANK OF AMERICA ILLINOIS,
as Documentation Agent
BY Ron Benishay
-----------------------------------------
Title: Vice President
-----------------------------------
M&I MARSHALL & ILSLEY BANK,
as Administrative Agent
BY Stephen F. Geimer
-----------------------------------------
Title: Vice President
-----------------------------------
BY James R. Miller
-----------------------------------------
Title: Vice President
-----------------------------------
M&I MARSHALL & ILSLEY BANK,
as Issuing Bank
BY Stephen F. Geimer
-----------------------------------------
Title: Vice President
-----------------------------------
BY James R. Miller
-----------------------------------------
Title: Vice President
-----------------------------------
<PAGE>
Commitment: $50,000,000 BANK OF AMERICA ILLINOIS, as a Bank
BY Ron Benishay
-----------------------------------------
Title: Vice President
-----------------------------------
Commitment: $50,000,000 M&I MARSHALL & ILSLEY BANK, as a Bank
BY Stephen F. Geimer
----------------------------------------
Title: Vice President
----------------------------------
BY James R. Miller
----------------------------------------
Title: Vice President
----------------------------------
Commitment: $30,000,000 FIRSTAR BANK MILWAUKEE, N.A.
BY Randy Olver
----------------------------------------
Title: Vice President
----------------------------------
Commitment: $30,000,000 HARRIS TRUST AND SAVINGS BANK
BY Lee A. Vandermyde
----------------------------------------
Title:
----------------------------------
Commitment: $30,000,000 THE NORTHERN TRUST COMPANY
BY Jeffrey B. Clark
----------------------------------------
Title: Second Vice President
----------------------------------
Commitment: $25,000,000 THE BANK OF NEW YORK
BY Mark T. Familo
----------------------------------------
Title: Assistant Vice President
----------------------------------
Commitment: $25,000,000 THE BANK OF NOVA SCOTIA
BY F.C.H. Ashby
----------------------------------------
Title: Senior Manager Loan Operations
----------------------------------
<PAGE>
Commitment: $25,000,000 THE FUJI BANK, LIMITED
BY Peter L. Chinniei
---------------------------------------
Title: Joint General Manager
---------------------------------
Commitment: $15,000,000 BANK ONE, WISCONSIN
BY Fred J. Nehriling
--------------------------------------
Title: Vice President
--------------------------------
DISCLOSURE SCHEDULES
TO
CREDIT AGREEMENT
DATED AS OF MARCH 26, 1997
AMONG
REGAL-BELOIT CORPORATION
BANK OF AMERICA ILLINOIS, as Documentation Agent,
M&I MARSHALL & ILSLEY BANK, as Administrative Agent
and Letter of Credit Issuing Bank
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY THERETO
ARRANGED BY
BANCAMERICA SECURITIES, INC., as Syndication Agent
REGAL-BELOIT CORPORATION (hereinafter referred to as the "Company") hereby
makes the following disclosures to the Administrative Agent and each Bank as
provided by the Credit Agreement.
Certain information set forth in the Schedules has been included and disclosed
solely for informational purposes and may not be required to be disclosed
pursuant to the terms and conditions of the Credit Agreement.
The disclosure of any information shall not be deemed to constitute an
acknowledgment or agreement that the information is required to be disclosed in
connection with the representations and warranties or covenants made in the
Credit Agreement or that the information is material, nor shall any information
so included and disclosed be deemed to establish a standard of materiality or
otherwise used to determine whether any other information is material.
Subject to the foregoing, the Company hereby makes the following disclosures
(all capitalized terms used herein without definitions shall have the meanings
ascribed thereto in the Credit Agreement):
<PAGE>
SCHEDULE 2.01
<TABLE>
<CAPTION>
COMMITMENTS
-----------
AND PRO RATA SHARES
-------------------
<S> <C> <C>
Pro Rata
Bank Commitment Share
---- ---------- -----
Bank of America Illinois $50,000,000 17.8571429%
M&I Marshall & Ilsley Bank 50,000,000 17.8571429%
Firstar Bank Milwaukee, N.A. 30,000,000 10.7142857%
Harris Trust and Savings Bank 30,000,000 10.7142857%
The Northern Trust Company 30,000,000 10.7142857%
The Bank of New York 25,000,000 8.9285714%
The Bank of Nova Scotia 25,000,000 8.9285714%
The Fuji Bank, Limited 25,000,000 8.9285714%
Bank One, Wisconsin 15,000,000 5.3571429%
------------ ----------
TOTAL $280,000,000 100%
============ ==========
</TABLE>
The aggregate Commitments shall reduce on each of the following dates in the
amount necessary so that the aggregate Commitments on such date (after giving
effect to reductions pursuant to Section 2.05) do not exceed the following
amounts:
<TABLE>
<CAPTION>
Commitment
Date Remaining
---- ----------
<S> <C>
1st Anniversary of Closing $260,000,000
2nd Anniversary of Closing $240,000,000
3rd Anniversary of Closing $210,000,000
4th Anniversary of Closing $180,000,000
<FN>
The Commitment of each Bank will be reduced on each such date by such Banks
Pro Rata Share of the reduction in the aggregate Commitments.
</FN>
</TABLE>
<PAGE>
FORM OF PROMISSORY NOTE
-----------------------
$ , 1997
-------------------------- --------------------------
FOR VALUE RECEIVED, the undersigned, REGAL-BELOIT CORPORATION, a Wisconsin
corporation (the "Company"), hereby promises to pay to the order of
------- -----------
(the "Bank") the principal sum of Dollars ($ )
- ----------------- ---- ----------------
or, if less, the aggregate unpaid principal amount of all Loans made by the Bank
to the Company pursuant to the Amended and Restated Credit Agreement, dated as
of May 30, 1997 (such Credit Agreement), as it may be amended, restated,
supplemented or otherwise modified from time to time, being hereinafter called
the "Credit Agreement"), among the Company, the Bank, the other banks parties
----------------
thereto, Bank of America Illinois, as Documentation Agent, certain banks
designated as co-agents, and M&I Marshall & Ilsley Bank, as Administrative
Agent for the Banks, on the dates and in the amounts provided in the Credit
Agreement. The Company further promises to pay interest on the unpaid
principal amount of the Loans evidenced hereby from time to time at the rates,
on the dates, and otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on which
each Loan is made, the maturity date therefor and each payment of principal
with respect thereto on the schedules annexed hereto and made a part hereof,
or on continuations thereof which shall be attached hereto and made a part
hereof; provided, that any failure to endorse such information on such schedule
or continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Promissory Note (the "Note").
----
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, which Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.
Terms defined in the Credit Agreement are used herein, with their
defined meanings therein unless otherwise defined herein. This Note shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of Illinois applicable to contracts made and to be performed entirely
within such State.
REGAL-BELOIT CORPORATION
By: Kenneth F. Kaplan
---------------------------
Title: Vice President, Chief Financial Officer
and Secretary
---------------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,725,000
<SECURITIES> 0
<RECEIVABLES> 73,524,000
<ALLOWANCES> 2,587,000
<INVENTORY> 81,392,000
<CURRENT-ASSETS> 177,112,000
<PP&E> 225,180,000
<DEPRECIATION> 74,457,000
<TOTAL-ASSETS> 491,459,000
<CURRENT-LIABILITIES> 63,843,000
<BONDS> 227,865,000
0
0
<COMMON> 208,000
<OTHER-SE> 173,825,000
<TOTAL-LIABILITY-AND-EQUITY> 491,459,000
<SALES> 214,180,000
<TOTAL-REVENUES> 214,180,000
<CGS> 152,401,000
<TOTAL-COSTS> 152,401,000
<OTHER-EXPENSES> 27,854,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,130,000
<INCOME-PRETAX> 30,414,000
<INCOME-TAX> 11,901,000
<INCOME-CONTINUING> 18,513,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,513,000
<EPS-PRIMARY> .89
<EPS-DILUTED> 0
</TABLE>
