<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998
-------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-19983
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SYBRON CHEMICALS INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 51-0301280
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Birmingham Rd., P.O. Box 66, Birmingham New Jersey 08011
-------------------------------------------------- -----
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (609) 893-1100
-------------
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 shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1998
- ------------------------------------- -----------------------------------
Common stock, $.01 par value 5,697,572
<PAGE>
SYBRON CHEMICALS INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I Financial information
Item 1 - Financial Statements
Consolidated Balance Sheet -
June 30, 1998 and December 31, 1997 1
Consolidated Statement of Operations -
six months ended June 30, 1998 and 1997 2
Consolidated Statement of Operations -
three months ended June 30, 1998 and 1997 3
Consolidated Statement of Cash Flows -
six months ended June 30, 1998 and 1997 4
Notes to Consolidated Financial Statements 5 - 8
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9 - 14
Part II Other information
Item 1 Legal Proceedings 15
Item 2 Changes in Securities 15
Item 5 Other Information 16
Item 6 Exhibits 16 - 18
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
SYBRON CHEMICALS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited in thousands except share and per share data)
ASSETS
June 30, Dec. 31,
1998 1997
-------- --------
Current assets:
Cash and cash equivalents $ 6,597 $ 26,592
Accounts receivable, net 41,084 37,367
Inventories, net 27,360 28,205
Prepaid and other current assets 2,973 3,019
Deferred income taxes 108 140
-------- --------
Total current assets 78,122 95,323
Property, plant and equipment, net 36,848 34,224
Intangible assets, net 23,497 20,086
Other assets 845 600
-------- --------
$139,312 $150,233
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 2,181 $ 1,760
Current portion of long-term debt 2,429 2,429
Accounts payable 18,727 27,653
Accrued liabilities 14,209 16,087
Income taxes payable 2,261 3,951
Deferred income taxes 14 12
------- --------
Total current liabilities 39,821 51,892
Long-term debt 22,856 27,390
Deferred income taxes 2,401 2,502
Postretirement benefits 3,879 3,919
Other liabilities 2,169 2,119
-------- --------
Total liabilities 71,126 87,822
-------- --------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value -
500,000 shares authorized; none issued
Common stock - $.01 par value -
20,000,000 shares authorized;
issued 5,923,430 and 5,908,260 shares 59 59
Additional paid-in capital 23,905 23,580
Retained earnings 58,264 51,989
Accumulated other comprehensive losses (9,525) (8,544)
Treasury stock, at cost - 225,858
and 233,648 shares (4,517) (4,673)
-------- --------
Total shareholders' equity 68,186 62,411
-------- --------
$139,312 $150,233
======== ========
The accompanying notes are an integral part of
the financial statements
-1-
<PAGE>
SYBRON CHEMICALS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited in thousands except per share amounts)
Six months
ended
June 30,
-------------------
1998 1997
-------- --------
Net sales $ 97,555 $ 92,132
-------- --------
Cost of sales 58,754 55,858
Selling 18,481 16,338
General and administrative 5,626 5,245
Research and development 1,986 1,836
-------- --------
84,847 79,277
-------- --------
Operating income 12,708 12,855
-------- --------
Other income(expense)
Interest income 111 201
Interest expense (838) (853)
Amortization of intangible assets (1,035) (669)
Other - Net (278) (124)
-------- --------
(2,040) (1,445)
-------- --------
Income before income taxes 10,668 11,410
Provision for income taxes 4,393 4,679
--------- --------
Net income $ 6,275 $ 6,731
======== ========
Net income per share:
Basic $ 1.10 $ 1.19
======== ========
Diluted $ 1.07 $ 1.17
======== ========
Weighted average shares outstanding:
Basic 5,683,527 5,661,341
Diluted 5,881,397 5,736,702
-2-
<PAGE>
SYBRON CHEMICALS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited in thousands except per share amounts)
Three months
ended
June 30,
1998 1997
-------- --------
Net sales $ 48,983 $ 47,423
-------- --------
Cost of sales 29,961 28,458
Selling 9,434 8,364
General and administrative 2,656 2,616
Research and development 1,032 917
-------- --------
43,083 40,355
-------- --------
Operating income 5,900 7,068
-------- --------
Other income(expense)
Interest income 42 106
Interest expense (500) (401)
Amortization of intangible assets (570) (334)
Other - Net (583) (27)
-------- --------
(1,611) (656)
-------- --------
Income before income taxes 4,289 6,412
Provision for income taxes 1,778 2,655
--------- --------
Net income $ 2,511 $ 3,757
======== ========
Net income per share:
Basic $ .44 $ .66
======== ========
Diluted $ .43 $ .65
======== ========
Weighted average shares outstanding:
Basic 5,688,751 5,667,353
Diluted 5,881,019 5,743,488
The accompanying notes are an integral part of
the financial statements
-3-
<PAGE>
SYBRON CHEMICALS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited in thousands)
Six months
ended
June 30,
1998 1997
-------- -------
Cash flows from operating activities:
Net income $ 6,275 $ 6,731
------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,287 3,368
Provision for losses on accounts receivable 280 322
Changes in assets and liabilities:
Accounts receivable (2,837) (6,279)
Inventory 1,482 (1,892)
Other current assets 30 (108)
Accounts payable and accrued expenses (10,308) 2,500
Income taxes payable (1,621) 2,959
Other assets and liabilities - net (767) 104
------- -------
Net cash (used) provided by operating activities (4,179) 7,705
------- -------
Cash flows from investing activities:
Capital expenditures (4,967) (3,737)
Purchase of business assets (6,815) --
Other, net -- 23
------- -------
Net cash used by investing activities (11,782) (3,714)
------- -------
Cash flows from financing activities:
Net (repayments) borrowings under revolving
credit facilities (4,093) (288)
Proceeds from exercise of stock options 216 2
------- -------
Net cash (used) provided by financing activities (3,877) (286)
------- -------
Effect of exchange rate changes on cash (157) (1,409)
------- -------
Net (decrease) increase in cash and cash
equivalents (19,995) 2,296
Cash and cash equivalents at beginning of period 26,592 14,909
------- -------
Cash and cash equivalents at end of period $ 6,597 $17,205
======= =======
The accompanying notes are an integral part of
the financial statements
-4-
<PAGE>
SYBRON CHEMICALS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited in thousands)
NOTE 1 - ACCOUNTING POLICIES:
- -----------------------------
The accompanying consolidated financial statements are unaudited and have been
prepared by management pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, these consolidated
financial statements contain all of the adjustments, consisting only of normal
recurring adjustments, necessary to present fairly, in summarized form, the
financial position of the Company at June 30, 1998 and the results of its
operations and changes in its cash flows for the six months ended June 30,
1998 and 1997.
The Company presumes that users of this Quarterly Report on Form 10-Q have
read or have access to the audited financial statements for the year ended
December 31, 1997 contained in the Company's Form 10-K which was filed with
the Securities and Exchange Commission on March 31, 1998. Accordingly,
footnote disclosures which would substantially duplicate the disclosures
contained therein have been omitted.
NOTE 2 - COMPREHENSIVE INCOME:
- ------------------------------
The Company has adopted the Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income", which establishes
standards for the reporting and display of comprehensive income and its
components in general-purpose financial statements.
The tables below set forth "comprehensive income" and each components related
tax effect for the three and six months ended June 30:
Statement of Comprehensive Income
Three Months Ended June 30,
1998 1997
------- -------
Net income $ 2,511 $ 3,757
Other comprehensive income, net of tax:
Foreign currency translation adjustments 120 (1,058)
Minimum pension liability adjustment -- --
------ ------
Other comprehensive income 120 (1,058)
------ ------
Comprehensive income $ 2,631 $ 2,699
====== ======
-5-
<PAGE>
Statement of Comprehensive Income
Six Months Ended June 30,
1998 1997
Net income $ 6,275 $ 6,731
Other comprehensive income, net of tax:
Foreign currency translation adjustments (981) (3,506)
Minimum pension liability adjustment -- --
------ -------
Other comprehensive income (981) (3,506)
------ ------
Comprehensive income $ 5,294 $ 3,225
====== ======
Related Tax Effects of Each Component
of Comprehensive Income
Three Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
--------------------------- ------------------------------
Tax Net of Tax Net of
Pre-Tax (Expense) Tax Pre-Tax (Expense) Tax
Amount Benefit Amount Amount Benefit Amount
<S> <C> <C> <C> <C> <C> <C>
Foreign currency
translation adjustments 120 -- 120 (1,058) -- (1,058)
Minimum pension
liability adjustment -- -- -- -- -- --
----- ------ ------ ------ ------ ------
Total comprehensive
income 120 -- 120 (1,058) -- (1,058)
</TABLE>
Related Tax Effects of Each Component
of Comprehensive Income
Six Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
---------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax Net of Tax Net of
Pre-Tax (Expense) Tax Pre-Tax (Expense) Tax
Amount Benefit Amount Amount Benefit Amount
Foreign currency
translation adjustments (981) -- (981) (3,506) -- (3,506)
Minimum pension
liability adjustment -- -- -- -- -- --
----- ------ ------ ------ ------ ------
Total comprehensive
income (981) -- (981) (3,506) -- (3,506)
</TABLE>
The following table illustrates the components of accumulated other
comprehensive income and their associated changes for the six month period
ending June 30, 1998:
-6-
<PAGE>
Accumulated Other
Comprehensive Income Balances
Six Months Ending June 30, 1998
Current
Beginning Period Ending
Balance Change Balance
--------- ------- -------
Foreign currency translation adjustments (8,359) (981) (9,340)
Minimum pension liability adjustment (185) -- (185)
------- ------- -------
Accumulated other comprehensive loss (8,544) (981) (9,525)
======= ======= =======
NOTE 3 - ACCOUNTING PRONOUNCEMENTS:
- -----------------------------------
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131). This statement establishes
standards for reporting information about operating segments in annual
financial statements and requires the reporting of selected information about
operating segments in interim financial reports issued to stockholders. It
also establishes standards for related disclosures about products and
services, geographic areas, and major customers. SFAS No. 131 is effective for
financial statements for periods beginning after December 15, 1997, and in the
initial year of application, comparative information for earlier years is to
be restated. The Company will adopt this statement in the fourth quarter of
1998 and does not expect a significant impact on present segment reporting.
In February 1998, the Financial Accounting Standards Board issued Statement
No. 132, "Employers Disclosure About Pensions and Other Post-retirement
Benefits, an amendment of FASB Statements No. 87, 88, and 106" (SFAS 132).
This statement revises disclosures about pension and other post-retirement
benefit plans. It does not change the measurement or recognition of those
plans. The statement is effective for fiscal years beginning after December
15, 1997. The Company will adopt SFAS 132 in the fourth quarter of 1998.
NOTE 4 - INVENTORIES:
- ---------------------
Inventories are stated at the lower of cost or market. For U.S. operations,
cost is determined using the last-in, first-out (LIFO) method. For foreign
operations, cost is determined using the first-in, first-out (FIFO) method.
-7-
<PAGE>
The components of inventories are:
June 30, Dec. 31,
1998 1997
------- --------
Finished goods $20,860 $21,317
Raw materials 7,576 7,864
------- -------
28,436 29,181
Less reserves 1,076 976
------- -------
$27,360 $28,205
======= =======
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Six Months Ended June 30, 1998 compared to Six Months Ended June 30, 1997 and
Three Months Ended June 30, 1998 compared to Three Months Ended June 30, 1997.
The following tables set forth certain information about the Company's two
business segments, Environmental Products and Services and Textile Chemical
Specialties.
Six Months Ended June 30,
--------------------------------------
1998 1997
------------------ ------------------
% of % of
Amount Sales Amount Sales
-------- ------ ------- ------
(in thousands except percentages)
Sales
Environmental Products and Services $ 25,173 25.8% $ 28,443 30.9%
Textile Chemical Specialties 72,382 74.2 63,689 69.1
-------- ----- -------- -----
Total 97,555 100.0 92,132 100.0
Cost of Sales
Environmental Products and Services 16,433 65.3 19,463 68.4
Textile Chemical Specialties 42,321 58.5 36,395 57.1
-------- ------
Total 58,754 60.2 55,858 60.6
Gross Margin
Environmental Products and Services 8,740 34.7 8,980 31.6
Textile Chemical Specialties 30,061 41.5 27,294 42.9
-------- ------
Total 38,801 39.8 36,274 39.4
Operating Expense
Environmental Products and Services 5,700 22.6 5,912 20.8
Textile Chemical Specialties 20,393 28.1 17,507 27.5
-------- ------
Total 26,093 26.8 23,419 25.4
Operating Income
Environmental Products and Services 3,040 12.1 3,068 10.8
Textile Chemical Specialties 9,668 13.4 9,787 15.4
-------- ------
Total 12,708 13.0 12,855 14.0
Other Expense (2,040) (2.1) (1,445) (1.6)
-------- ----- -------- -----
Income Before Income Taxes 10,668 10.9 11,410 12.4
Provision for Income Taxes 4,393 4.5 4,679 5.1
-------- ----- -------- -----
Net Income $ 6,275 6.4% $ 6,731 7.3%
======== ===== ======== =====
-9-
<PAGE>
Three Months Ended June 30,
--------------------------------------
1998 1997
------------------ ------------------
% of % of
Amount Sales Amount Sales
-------- ------ ------- ------
(in thousands except percentages)
Sales
Environmental Products and Services $ 12,333 25.2% $ 14,488 30.6%
Textile Chemical Specialties 36,650 74.8 32,935 69.4
-------- ----- -------- -----
Total 48,983 100.0 47,423 100.0
Cost of Sales
Environmental Products and Services 8,123 65.9 9,822 67.8
Textile Chemical Specialties 21,838 59.6 18,636 56.6
-------- ------
Total 29,961 61.2 28,458 60.0
Gross Margin
Environmental Products and Services 4,210 34.1 4,666 32.2
Textile Chemical Specialties 14,812 40.4 14,299 43.4
-------- ------
Total 19,022 38.8 18,965 40.0
Operating Expense
Environmental Products and Services 2,756 22.3 3,010 20.8
Textile Chemical Specialties 10,366 28.3 8,887 27.0
-------- ------
Total 13,122 26.8 11,897 25.1
Operating Income
Environmental Products and Services 1,454 11.8 1,656 11.4
Textile Chemical Specialties 4,446 12.1 5,412 16.4
-------- -----
Total 5,900 12.0 7,068 14.9
Other Expense (1,611) (3.3) (656) (1.4)
-------- ----- -------- -----
Income Before Income Taxes 4,289 8.7 6,412 13.5
Provision for Income Taxes 1,778 3.6 2,655 5.6
-------- ----- -------- -----
Net Income $ 2,511 5.1% $ 3,757 7.9%
======== ===== ======== =====
-10-
<PAGE>
Operations
Sales for the six months and quarter ending June 30, 1998 were $97.6
million and $49.0 million, respectively, an increase of 5.9% and 3.2%,
compared with the same periods in 1997. The acquisitions of the Ivax Garment
and Textile Chemicals business in July 1997 and the garment processing
chemicals business of Ocean Wash in April 1998, favorably impacted both
periods, which resulted in a 13.6% and 11.3% sales increase in the Textile
Chemical Specialties segment for the six months and second quarter,
respectively. Six months sales in the Environmental Products and Services
segment declined 11.5% as compared with the similar period in 1997, while
quarterly sales decreased 14.9%. Part of the decline in this segment was due
to the sale of the reverse osmosis membrane business in December 1997.
In the Textile Chemical Specialties segment, combined North
America/Asia textile chemical sales for the six months and second quarter
increased 22.8% and 20.2%, respectively. These increases were the direct
result of the aforementioned acquisitions which more than offset the continued
soft conditions in the U.S. textile market and the unfavorable impact from a
style change in the garment sector from light colored denim to dark colors,
which requires less of the Company's enzyme products that create the
stone-washed effect. Strong sales in the related organic chemicals toll
manufacturing business also contributed to the six-month improvement. Europe
Division textile chemical sales for the six months and second quarter improved
3.1% and 0.7%, respectively, in U.S. dollars. Physical volume improved 7.9%
for the first six months of the year and 5.2% for the quarter, as both periods
were favorably impacted by strong sales in the Middle East and several Western
European countries. The continued stronger U.S. dollar versus the Dutch
guilder had a negative currency effect of 6.3% and 4.4%, respectively, on
Europe's six month and second quarter sales when compared to the prior
periods.
Sales in the Environmental Product and Services segment for the six
months and second quarter decreased 11.5% and 14.9%, respectively, due in
part, to the sale of the reverse osmosis membranes business in December 1997.
The ongoing operations in this segment showed declines of 6.5% and 9.7%,
versus the six months and second quarter of 1997. Both periods were negatively
impacted by the continued weak ion exchange industrial market conditions in
both the U.S. and Far East, partially offset by new product sales and major
growth at key customers in the toner polymer product line, especially in the
laser printer market. The second quarter was also adversely impacted by lower
biochemical sales, primarily for consumer products.
The overall gross margin for the six months and second quarter ending
June 30, 1998 were 39.8% and 38.8%, respectively, versus last year's similar
period result of 39.4% and 40.0%.
-11-
<PAGE>
In the Textile Chemical Specialties segment, both the six months
margin of 41.5% and the quarter's 40.4% were below their respective prior year
levels of 42.9% and 43.4%. Margins for the six months in North America/Asia
were essentially equal to the same period in 1997. However, for the quarter,
the margins declined primarily due to the impact of the additional sales from
the Ocean Wash acquisition which carry overall lower margins, an approximate
2% drop in average U.S. selling prices, increased fixed manufacturing spending
and unfavorable production variances. Overall average selling price decreases,
increased raw material costs, and unfavorable production related variances and
product mix resulted in a decline in both periods in the margins of the
related organics chemical business. Margins in Europe declined in both the six
month and second quarter periods as the continued favorable impact of a weaker
guilder as compared with certain other European currencies and a small selling
price increase were more than offset by higher raw material costs and an
unfavorable product mix.
The gross margin in the Environmental Products and Services segment
for the six months and quarter ending June 30, 1998 increased to 34.7% and
34.1%, respectively, versus the 31.6% and 32.2% experienced in the same
periods in 1997. Overall, both periods were positively impacted by the results
of several strategic action plans which were set in motion last year which
include the alliance with Dow Chemical for anion exchange resins, the switch
from purchasing a major raw material in the polymer product line to
manufacturing in-house, and the aforementioned divestiture of the reverse
osmosis membrane business which carried substantially lower margins. In
addition, for the six-month period, the biochemical product line showed
improved margins due to average selling price increases in the U.S. and a
favorable product/customer mix in France.
Operating expenses as a percent of sales increased to 26.8% in both the
six-month and second quarter periods, as compared with the 25.4% and 25.1%
experienced in the similar periods in 1997. While sales volumes increased
overall in the Textile Chemical Specialties segment, operating expenses grew
at a higher rate and, as a percent of sales, increased in both periods
primarily due to the added costs for the two acquisitions, higher legal
expenses in the U.S. and increased administration and computer related costs
in Europe. The lower sales volume caused the Environmental Products and
Services segment expenses as a percent of sales to increase substantially over
both similar 1997 periods despite an actual reduction of expenses.
Income Taxes and Other Items
The Company's provision for income taxes was computed using
applicable prevailing income tax rates.
-12-
<PAGE>
The Company's effective tax rate of 41.2% for the six months and
41.5% for the second quarter of 1998 were slightly higher than last year's
equivalent rates of 41.0% and 41.4%.
Other income (expense) was ($2.0) million and ($1.6 million) for the
year-to-date and second quarter, respectively, versus ($1.4) million and
($0.7) million experienced in last year's comparable periods. The increase for
the six months was primarily due to the amortization costs relating to the two
acquisitions partially offset by a favorable currency adjustment of $0.4
million. This currency impact primarily resulted from the Korean Won
strengthening against the U.S. dollar, reversing part of the loss experienced
in the last quarter of 1997. The increase for the quarter resulted from higher
interest costs and amortization expenses relating to the acquisitions, coupled
with an unfavorable currency adjustment of $0.3 million due to the impact on
U.S. dollar inter-company balances with the Company's subsidiaries in Canada,
Mexico and Taiwan.
Liquidity and Capital Resources
Cash and cash equivalents of $6.6 million as of June 30, 1998 were
$20.0 million below the December 31, 1997 balance of $26.6 million, primarily
the result of using cash from the Company's European subsidiary to pay off
revolving debt.
Operating activities generated a net cash flow usage of $4.2 million
for the first six months of 1998 versus a $7.7 million net cash provision for
the same period in 1997. This was primarily the result of a substantial
reduction in accounts payable and accrued expenses resulting from the return
to the taxing authorities of an erroneous tax refund in the Netherlands,
executive bonus payouts and annual pension funding, and payments for the
previously announced terminated merger agreement. In addition, unusually high
inventory and capital equipment purchased during the latter part of 1997 were
paid for in 1998.
Net cash used by investing activities totalled $11.8 million for the
first six months of 1998 as compared with $3.7 million for the comparable 1997
period. The year-to-year increase was the result of the aforementioned
purchase of the Ocean Wash businesses, coupled with the purchase of property
adjacent to the manufacturing site in Ede, Holland that will be used for
future expansion.
Financing activities used $3.9 million in net cash during the first
half of 1998 versus $0.3 million in the comparable 1997 period due to
repayment of revolving credit facilities.
As of June 30, 1998, the Company owed $13.1 million against the $40
million unsecured multi-currency revolving line of credit with CoreStates
Bank.
-13-
<PAGE>
On July 31, 1998 the Company purchased for $110 million in cash the
stock of Ruco Polymer Corporation and Ruco Polymer Company of Georgia LLC,
(collectively, "Ruco"). This acquisition was pursued as part of the Company's
strategic initiative to develop a "third leg" business to complement its
existing Textile Chemical Specialties and Environmental Products and Services
segments. Ruco produces and markets polymers for powder and high-solids
coatings applications.
Also on July 31, 1998, the Company obtained from Donaldson, Lufkin &
Jenrette Securities Corporation, J.P. Morgan Securities Inc., and Mellon Bank
N.A. a $185 million Senior Secured Credit Facility. The Senior Secured Credit
Facility consists of a $40 million Revolving Credit Facility (which replaces
the above-mentioned CoreStates Bank revolver) and a $145 million six-year Term
Loan Facility. The Term Loan was used to finance the $110 million acquisition
of Ruco, refinance existing debt, and pay fees and expenses. At July 31, 1998,
the Revolving Credit Facility was untapped. A portion of the $145 million Term
Loan Facility may be refinanced with proceeds from an offering of Senior
Subordinated Notes.
During 1998, the Company believes its capital expenditures for
existing operations can be funded from operating cash flow and are expected to
approximate 1997 levels. The Company further believes that between its
anticipated operating cash flow and present credit facilities, it will be able
to meet both short-term and long-term financial obligations in the foreseeable
future.
Foreign Exchange
The Company has foreign subsidiaries in Europe, Asia, Africa and the
Americas and, for all subsidiaries, except the Company's Mexican and Colombian
subsidiaries, the Company has determined the functional currencies are the
subsidiaries' local currency. The functional currency of the Mexican and
Colombian subsidiaries are considered to be the U.S. dollar because of those
countries designation as a highly inflationary economy. The Company has a
large manufacturing facility in Ede, Holland where chemicals are manufactured
and sold either directly to customers or to various subsidiaries, which are
principally in Europe. Intercompany balances arise between the Dutch operation
and various subsidiaries. Overall, the Company recognized an exchange gain of
$0.4 million in the first six months of 1998 versus $0.1 million in the
similar period in 1997.
-14-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
There have been no material developments in connection with any
pending legal proceedings as reported in the Registrant's Form 10-K Annual
Report which was filed with the Securities and Exchange Commission on March
31, 1998.
Item 2. Changes in Securities
- ------- ---------------------
On August 7, 1998, the Company's Board of Directors adopted a
Stockholder Rights Plan (the "Plan"). The Plan was adopted in an effort to
protect stockholders and their equity investment from potential acquirers who
would use coercive or unfair tactics to gain control of the Company. The Plan
would not preclude any fair acquisition proposal.
Under the Plan, which is similar to those adopted by many other
companies, Rights will be distributed as a dividend at the rate of one Right
for each share of Common Stock of the Company held by shareholders of record
as of the close of business on August 27, 1998. Each Right entitles the
registered holder to purchase from the Company one unit representing one
ten-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $0.01 per share, at a Purchase Price of $150.00 per unit, subject to
adjustment ("Purchase Price").
The Rights will separate from the Common Stock and will be
distributed upon the earlier of (i) ten days following a public announcement
that a person or group of affiliated or associated persons, excluding certain
exempt persons, has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock; or (ii)
ten business days (or such later date as may be determined by the Board of
Directors) following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 20% or more of such
outstanding shares of Common Stock. Following either of the above events, each
holder of a Right, except the person or group triggering such event, will
thereafter have the right to receive, upon exercise, Common Stock (or, in
certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the Purchase Price.
The description and terms of the Plan are set forth more fully in the
Rights Agreement dated as of August 7, 1998, between the Company and
BankBoston, N.A., as Rights Agent, which is attached as an exhibit to the
Company's Registration Statement on Form 8-A, filed on August 14, 1998 with
the Securities and Exchange Commission, and incorporated herein by reference.
-15-
<PAGE>
Item 5. Other
- ------- -----
Acquisition
-----------
On July 31, 1998, the Company acquired all of the outstanding capital
stock of Ruco Polymer Corporation ("Ruco NY"), and all of the outstanding
membership interests of Ruco Polymer Company of Georgia, LLC ("Ruco GA," and
together with Ruco NY, "Ruco"). The aggregate purchase price for the
acquisition was $110 million, including the repayment of bank debt owed by
Ruco. The purchase price is subject to certain post-closing adjustments. The
acquisition was pursued as part of the Company's strategic initiative to
develop a "third leg" business to complement its existing Textile Chemical
Specialties and Environmental Products and Services segments.
In connection with the acquisition of Ruco, each of Ruco's equity
holders entered into five-year non-compete agreements with the Company. In
addition, the Company entered into an agreement with Anthony F. Forgione, the
President and Chief Executive Officer of Ruco prior to the acquisition,
pursuant to which Mr. Forgione will serve as President of Ruco. The employment
agreement anticipates a minimum term of two years and will continue in full
force and effect until terminated by either party.
Financing
---------
On July 31, 1998, the Company obtained from Donaldson, Lufkin &
Jenrette Securities Corporation, Morgan Guaranty Trust Company of New York
Incorporated and Mellon Bank, N.A. a $185 million senior secured credit
facility. The facility consists of a $145 million term facility and a $40
million revolving facility. Proceeds of the term facility were used to
refinance the Company's outstanding indebtedness, to pay the cash
consideration for the acquisition of Ruco and to pay certain related fees and
expenses. The revolving facility will be available to fund the working capital
requirements of the Company.
Item 6. Exhibits
- ------- --------
Exhibit Description
- ------- -----------
2.1 Capital Stock and Membership Interest Purchase Agreement,
effective as of July 31, 1998, by and among Sybron
Chemicals Inc., Louis T. Camilleri, Anthony F. Forgione,
Joseph Mitola, and Joseph A. Ruffing, with exhibits:
A. Non-Competition Agreement, effective as of July 31,
1998, by and among Sybron Chemicals Inc., Ruco NY,
Ruco GA and Anthony Forgione (substantially similar
agreements with Messrs. Mitola, Camilleri and
Mitola not included).
-16-
<PAGE>
B. Employment Agreement by and among Ruco Polymer
Corp., Ruco Polymer Company of Georgia, LLC, Sybron
Chemicals Inc. and Anthony F. Forgione, dated as of
July 31, 1998, with material exhibits (attached as
Exhibit 10.1).
C. Form Opinion of Jacobson, Mermelstein & Squire,
dated as of July 31, 1998.
D. Amendment to Employment Agreement of Michael J.
McCann and Waiver of Certain Rights Thereunder,
dated as of July 31, 1998.
4 Rights Agreement, dated as of August 7, 1998, by and
between Sybron Chemicals Inc. and the Rights Agent, with
exhibits (incorporated herein by reference to Exhibit 1
to the Registration Statement on Form 8-A, filed on
August 14, 1998 with the Securities and Exchange
Commission).
10.1 Employment Agreement by and among Ruco Polymer Corp.,
Ruco Polymer Company of Georgia LLC, Sybron Chemicals
Inc. and Anthony F. Forgione, dated as of July 31, 1998,
with material exhibits:
C. Bonus Incentive Plan for Mr. Forgione.
10.2 Credit Agreement, dated as of July 31, 1998, by and among
Sybron Chemicals Inc., DLJ Capital Funding, Inc., Morgan
Guaranty Trust Company of New York and Mellon Bank, N.A.,
with certain exhibits
10.3 Promissory Notes, dated as of July 31, 1998, by Sybron
Chemicals Inc. in favor of DLJ Capital Funding, Inc., Morgan
Guaranty Trust Company of New York and Mellon Bank, N.A.
10.4 Security Agreement, dated as of July 31, 1998, among
Sybron Chemicals Inc. and Mellon Bank, N.A.
10.5 Trademark Security Agreement, dated as of July 31, 1998,
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Sybron
Chemicals Inc.'s trademarks and licenses.
10.6 Trademark Security Agreement, dated as of July 31, 1998,
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco NY's
trademarks and licenses.
10.7 Trademark Security Agreement, dated as of July 31, 1998,
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco GA's
trademarks and licenses.
-17-
<PAGE>
10.8 Patent Security Agreement, dated as of July 31, 1998,
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Sybron
Chemicals Inc.'s patents and licenses.
10.9 Patent Security Agreement, dated as of July 31, 1998,
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco NY's
patents and licenses.
10.10 Patent Security Agreement, dated as of July 31, 1998,
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco GA's
patents and licenses.
10.11 Subsidiary Guaranty Agreement, dated as of July 31, 1998,
by and among Sybron Chemical Holdings Inc., Ruco NY, Ruco
GA and DLJ Capital Funding, Inc., Morgan Guaranty Trust
Co. of New York and Mellon Bank, N.A.
10.12 Subordination Agreement, dated as of July 31, 1998 by
Sybron Chemie Nederland B.V.
10.13 Subordination Agreement, dated as of July 31, 1998 by
Sybron Chemical Industries Nederland B.V.
20.1 Press Release dated July 31, 1998
Re: The Company's Purchase of Ruco.
20.2 Press Release dated August 7, 1998
Re: The Company's Adoption of Stockholder Rights Plan.
27 Financial Data Schedule
-18-
<PAGE>
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.
SYBRON CHEMICALS INC.
/s/ Steven F. Ladin
-------------------------------
Steven F. Ladin
Vice President, Finance and
Chief Financial Officer
Date: August 14, 1998
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Method of
Exhibit Description Filing
- ------- ----------- ---------
<S> <C> <C>
2.1 Capital Stock and Membership Interest Purchase Agreement, *
effective as of July 31, 1998, by and among Sybron
Chemicals Inc., Louis T. Camilleri, Anthony F. Forgione,
Joseph Mitola, and Joseph A. Ruffing, with material exhibits:
A. Non-Competition Agreement, effective as of July 31,
1998, by and among Sybron Chemicals Inc., Ruco NY,
Ruco GA and Anthony Forgione (substantially similar
agreements with Messrs. Mitola, Camilleri and
Mitola not included).
B. Employment Agreement by and among Ruco Polymer
Corp., Ruco Polymer Company of Georgia, LLC, Sybron
Chemicals Inc. and Anthony F. Forgione, dated as of
July 31, 1998, with exhibits (attached as Exhibit
10.1).
C. Form Opinion of Jacobson, Mermelstein & Squire,
dated as of July 31, 1998.
D. Amendment to Employment Agreement of Michael J.
McCann and Waiver of Certain Rights Thereunder,
dated as of July 31, 1998.
4 Rights Agreement, dated as of August 7, 1998, by and Incorporated
between Sybron Chemicals Inc. and the Rights Agent, with herein by
exhibits (incorporated herein by reference to Exhibit 1 reference
to the Registration Statement on Form 8-A, filed on
August 14, 1998 with the Securities and Exchange
Commission).
10.1 Employment Agreement by and among Ruco Polymer Corp., *
Ruco Polymer Company of Georgia LLC, Sybron Chemicals
Inc. and Anthony F. Forgione, dated as of July 31, 1998,
with material exhibits:
C. Bonus Incentive Plan for Mr. Forgione.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Method of
Exhibit Description Filing
- ------- ----------- ---------
<S> <C> <C>
10.2 Credit Agreement, dated as of July 31, 1998, by and among *
Sybron Chemicals Inc., DLJ Capital Funding, Inc., Morgan
Guaranty Trust Company of New York and Mellon Bank, N.A.,
with certain exhibits.
10.3 Promissory Notes, dated as of July 31, 1998, by Sybron *
Chemicals Inc. in favor of DLJ Capital Funding, Inc., Morgan
Guaranty Trust Company of New York and Mellon Bank, N.A.
10.4 Security Agreement, dated as of July 31, 1998, among *
Sybron Chemicals Inc. and Mellon Bank, N.A.
10.5 Trademark Security Agreement, dated as of July 31, 1998, *
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Sybron
Chemicals Inc.'s trademarks and licenses.
10.6 Trademark Security Agreement, dated as of July 31, 1998, *
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco NY's
trademarks and licenses.
10.7 Trademark Security Agreement, dated as of July 31, 1998, *
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco GA's
trademarks and licenses.
10.8 Patent Security Agreement, dated as of July 31, 1998, *
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Sybron
Chemicals Inc.'s patents and licenses.
10.9 Patent Security Agreement, dated as of July 31, 1998, *
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco NY's
patents and licenses.
10.10 Patent Security Agreement, dated as of July 31, 1998, *
among Sybron Chemicals Inc., the Subsidiary Guarantors to
the Credit Agreement, and Mellon Bank, N.A. re: Ruco GA's
patents and licenses.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Method of
Exhibit Description Filing
- ------- ----------- ---------
<S> <C> <C>
10.11 Subsidiary Guaranty Agreement, dated as of July 31, 1998, *
by and among Sybron Chemical Holdings Inc., Ruco NY, Ruco
GA and DLJ Capital Funding, Inc., Morgan Guaranty Trust
Co. of New York and Mellon Bank, N.A.
10.12 Subordination Agreement, dated as of July 31, 1998 by *
Sybron Chemie Nederland B.V.
10.13 Subordination Agreement, dated as of July 31, 1998 by *
Sybron Chemical Industries Nederland B.V.
20.1 Press Release dated July 31, 1998 *
Re: The Company's Purchase of Ruco.
20.2 Press Release dated August 7, 1998 *
Re: The Company's Adoption of Stockholder Rights Plan.
27 Financial Data Schedule *
</TABLE>
* Filed electronically herewith.
<PAGE>
EXHIBIT 2.1
CAPITAL STOCK AND MEMBERSHIP INTEREST PURCHASE AGREEMENT
CAPITAL STOCK AND MEMBERSHIP INTEREST PURCHASE
AGREEMENT, made this 30th day of July, 1998, effective as of the close of
business on the 31st day of July, 1998, by and among Sybron Chemicals Inc., a
Delaware corporation ("Buyer"), Louis T. Camilleri ("Mr. Camilleri"), Anthony
F. Forgione ("Mr. Forgione"), Joseph Mitola ("Mr. Mitola") and Joseph A.
Ruffing ("Mr. Ruffing"). Messrs. Camilleri, Forgione, Mitola and Ruffing
hereinafter are referred to individually as a "Holder" and collectively as the
"Holders."
BACKGROUND
The Holders own all of the issued and outstanding shares of
capital stock (the "Shares") of Ruco Polymer Corporation, a New York
corporation (the "Corporation"), and all of the outstanding membership
interests (the "Membership Interests") of Ruco Polymer Company of Georgia,
LLC, a Delaware limited liability company (the "LLC"), the number of such
Shares and the number of such Membership Interests owned by each of the
Holders being set forth opposite the names of the respective Holders on
Schedule 5(d).
Buyer desires to purchase, and Holders desire to sell, all
of the issued and outstanding Shares and Membership Interests upon the terms
hereinafter set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
<PAGE>
1. Acquisition of Shares and Membership Interests. Holders
hereby convey, transfer and assign to Buyer, free and clear of all liens,
security interests, pledges, claims and encumbrances of every kind, nature and
description, and Buyer hereby accepts from the Holders, all of the Shares and
all of the Membership Interests for an aggregate of $110 million, including
the repayment of certain debt as described in sub Article 2(a)(i) (the
"Purchase Price"), payable in the manner set forth in Article 2, to each
Holder. Buyer and the Holders agree that the Purchase Price shall be allocated
as follows: $37,791,301 plus the repayment of $10,208,699 in debt shall be
allocated to the Shares, and $51,708,699 plus the repayment of $10,291,301 in
debt shall be allocated to the Membership Interests. Buyer and the Holders
further agree that each of them and the LLC will report the income tax
consequences of this Agreement in a manner fully consistent with the foregoing
allocation of the purchase price and that they will not take any income tax
position inconsistent with such allocation.
2. Purchase Price; Adjustment.
(a) Payment of Purchase Price.
(i Concurrently with the execution of this
Agreement:
(A) Buyer shall pay by wire
transfer $20,500,000 to State Street Bank (acting on behalf of itself and Sun
Trust) (collectively, the "Bank"), pursuant to wire transfer instructions
attached as Schedule 2(a)(i)(A), in full and final satisfaction of amounts
owed by the Corporation and/or the LLC to the Bank, in immediately available
funds; and
-2-
<PAGE>
(B) Buyer shall pay to the
Holders by wire transfer, pursuant to wire transfer instructions attached as
Schedule 2(a)(i)(B), an aggregate of $79,500,000 in immediately available
funds.
(ii The balance of the purchase price, in
the amount of $10 million, shall be paid in installments as follows; provided,
however, that such deferred payments shall be deemed subject to set off by the
Buyer pursuant to the "Holdback" provisions set forth in sub Article 2(a)(iii)
below:
(A) On the second anniversary of
the execution of this Agreement, Buyer shall pay to each of the Holders by
wire transfer or by such means as the Holders may otherwise reasonably
instruct $5,000, 000 in immediately available funds.
(B) On the third anniversary of
the execution of this Agreement, Buyer shall pay to each of the Holders by
wire transfer or by such means as the Holders may otherwise reasonably
instruct $1,666,666.66 in immediately available funds.
(C) On the fourth anniversary of
the execution of this Agreement, Buyer shall pay to each of the Holders by
wire transfer or by such means as the Holders may otherwise reasonably
instruct $1,666,666.66 in immediately available funds.
(D) On the fifth anniversary of
the execution of this Agreement, Buyer shall pay to each of the Holders by
wire transfer or by such means as the Holders may otherwise reasonably
instruct $1,666,666.67 in immediately available funds.
The amounts set forth in sub
Article 2(a)(ii) of this Agreement are hereinafter referred to as the
"Holdback." Until paid in accordance with its
-3-
<PAGE>
terms, the Holdback shall be invested by Buyer in accordance with the
investment guidelines and utilizing the services of the discretionary
investment manager and custodian set forth on Schedule 2(a). Subject to the
right of Buyer to set off any Deficiency (as hereinafter defined) against the
income generated by the investment of the Holdback as aforesaid (but subject
to the limitations set forth in sub Article 10(e)), such income shall be for
the benefit of the Holders and shall be paid to the Holders as soon as
practicable following the close of each calendar quarter.
(b) Post-Closing Adjustment. It is the intention of the
parties that, as of the date hereof, the Combined Working Capital (as
hereinafter defined) be equal to or greater than $6,664,050. As used herein,
"Combined Working Capital" means the combined current assets minus the
combined current liabilities of the Corporation and the LLC, determined in
accordance with the accounting procedures utilized in preparing the audited
financial statements as of September 30, 1997 of the Corporation and the LLC
(the "Accounting Procedures"). Buyer shall prepare and deliver to the Holders
within 90 days after the date hereof a balance sheet of the Corporation and
the LLC (collectively, the "Companies") as of the date hereof (the "Closing
Balance Sheet"), which Closing Balance Sheet shall be prepared in accordance
with the Accounting Procedures. From the Closing Balance Sheet, Buyer shall
determine the Combined Working Capital. The Closing Balance Sheet and Buyer's
determination of the Combined Working Capital shall be subject to verification
by Holders or their representatives within 30 days of the date of delivery of
such information to Holders, during which period Holders or their
representatives shall have access to the work papers and such other documents
and information relating to the preparation of the Closing Balance Sheet and
the determination of the Combined Working Capital as they shall reasonably
request. Within that 30 day period, Holders shall
-4-
<PAGE>
notify Buyer of any dispute with respect to the Closing Balance Sheet or the
determination of the Combined Working Capital. Any such dispute which cannot
be resolved after good faith negotiations within 30 days from the date Buyer
is so notified shall be referred to a nationally recognized firm of certified
public accountants chosen by the certified public accountants of Buyer and the
Holders, whose determination on such matters shall be final and binding on the
parties and whose fees and expenses shall be shared equally by the parties. If
the Combined Working Capital is determined to be less than $6,664,050, any
such deficiency shall be paid by Holders to Buyer, together with interest from
the date hereof until the date paid at the rate of 6% per annum, within 10
days of such determination , without regard to any limitations on the Sellers'
liability to Buyer under Article 10 of this Agreement.
3. Non-Compete Agreement. Concurrently with the execution of
this Agreement, each of the Holders shall enter into a Non-Compete Agreement
with Buyer in the form attached hereto as Exhibit "A".
4. Employment Agreement. Concurrently with the execution of
this Agreement, Buyer, the Companies and Mr. Forgione shall enter into an
Employment Agreement in the form attached hereto as Exhibit "B".
5. Representations and Warranties and Agreements of the
Holders. As material inducement to Buyer to enter into this Agreement and to
close hereunder, the Holders, jointly and severally, hereby make the following
representations and warranties to Buyer:
-5-
<PAGE>
(a) Corporate Status of the Corporation;
Outstanding Stock. The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, has the
power and authority to own its properties and to carry on its business as it
is now being conducted, and is duly qualified to do business as a foreign
corporation in the jurisdictions specified in Schedule 5(a), which
constitute(s) all the jurisdictions in which such qualification is required.
The Corporation has an authorized capital consisting of 500,000 shares of
Common Stock, $.01 par value per share, of which 428,640 shares, constituting
the Shares, are outstanding and owned by the Holders. All of the Shares are
validly issued, fully paid and non-assessable. There are no shares of the
Corporation's capital stock held in its treasury. There are no options,
warrants, rights, shareholder agreements or other instruments or agreements
outstanding giving any person the right to acquire any shares of capital stock
of the Corporation, nor are there any commitments to issue or execute any such
options, warrants, rights, shareholder agreements, or other instruments or
agreements. There are no outstanding stock appreciation rights or similar
rights measured with respect to any of the Corporation's capital stock, nor
are there any instruments or agreements giving anyone the right to acquire any
such rights. The minute books and stock records of the Corporation are
complete and accurate and all signatures included therein are the genuine
signatures of the persons indicated as signing. True, correct and complete
copies of the Corporation's minute books and stock records, including the
Corporation's Certificate of Incorporation and By-Laws and all amendments to
both, have been delivered to Buyer or made available for review.
-6-
<PAGE>
(b) Limited Liability Company Status of the LLC;
Outstanding Membership Interests. The LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of the State
of Delaware, has the power and authority to own its properties and to carry on
its business as it is now being conducted, and is duly qualified to do
business as a foreign limited liability company in the State of Georgia, which
constitutes the only jurisdiction in which such qualification is required. The
LLC is authorized to issue up to an unlimited number of voting and non-voting
units of Membership Interests ("Units"), of which 100,000 voting units,
constituting the Membership Interests, are outstanding and owned by the
Shareholders. All the Membership Interests are validly issued, fully paid and
non-assessable. There are no options, warrants, rights, member agreements or
other instruments or agreements outstanding giving any person the right to
acquire any units of Membership Interests of the LLC, nor are there any
commitments to issue or execute any such options, warrants, rights, member
agreements, or other instruments or agreements. The minute books and
Membership Interest records of the LLC are complete and accurate and all
signatures included therein are the genuine signatures of the persons
indicated as signing. True, correct and complete copies of the LLC's minute
books and Membership Interest records, including the LLC's Articles of
Organization and Operating Agreement and all amendments to both, have been
delivered to Buyer or made available for review.
(c) Subsidiaries and Joint Ventures. Neither the
Corporation nor the LLC directly or indirectly owns or controls any other
entities and neither the Corporation nor the LLC has any subsidiary or owns
any capital stock, security, partnership interest or other interests
-7-
<PAGE>
of any kind in any corporation, partnership, joint venture, association or
other entity.
(d) Ownership of the Corporation and the LLC.
(i) Ownership of the Corporation. Each of
the Holders is the beneficial and record owner of the Shares set forth next to
his name on Schedule 5(d). Each of the Holders has, and hereby transfers to
Buyer, good, marketable and unencumbered title to such Shares, free and clear
of all liens, security interests, pledges, claims, options and rights of
others. There are no restrictions on any Holder's right to transfer the Shares
to Buyer pursuant to this Agreement.
(ii) Ownership of the LLC. Each of the
Holders is the beneficial and record owner of the Membership Interests set
forth next to his name on Schedule 5(d). Each of the Holders has, and hereby
transfers to Buyer, good, marketable and unencumbered title to such Membership
Interests, free and clear of all liens, security interests, pledges, claims,
options and rights of others. There are no restrictions on any Holder's right
to transfer the Membership Interests to Buyer pursuant to this Agreement.
(e) Officers; Directors; Bank Accounts. Set forth
on Schedule 5(e) is a correct and complete list of all directors and officers
of the Corporation, all Managers of the LLC, all bank accounts and safe
deposit boxes of the Companies and all persons authorized to sign checks drawn
on such accounts and to have access to such safe deposit boxes.
(f) Financial Statements. The consolidating and
individual balance sheets of the Corporation and the LLC as at September 30,
1995, 1996 and 1997 and as at June 30, 1998, and the related statements of
income (loss) and cash flows for the fiscal years or the nine month period, as
the case may be, ended on the dates of such balance sheets, and all related
-8-
<PAGE>
schedules and notes to the foregoing, copies of all of which constitute
Schedule 5(f), were prepared in accordance with generally accepted accounting
principles and practices consistently applied throughout the periods reported
upon and with past periods subject, as to the interim statements, to customary
and non-material year end adjustments, and fairly and accurately present the
consolidating financial position of the Corporation and the LLC as at the
dates of such balance sheets, and the consolidating results of the operations
and cash flows of the Corporation and the LLC for the periods ended on such
dates. The financial statements for the one year periods ended on September
30, 1995, 1996 and 1997 were audited by Holtz Rubenstein & Co., LLP, certified
public accountants, whose reports are included with such financial statements.
Included as part of Schedule 5(f) are true and correct copies of all
correspondence sent by all legal counsel for the Corporation and the LLC to
the auditors which audited such financial statements in response to letters
from Corporation or the LLC to such counsel requesting that such counsel
supply the auditors with certain information regarding pending or threatened
litigation, unasserted claims and other matters relevant to the auditors'
audit of such financial statements.
(g) Valid and Binding Agreement. This Agreement and
the documents contemplated hereby have been duly executed and delivered by the
Holders and constitute, or will constitute when executed and delivered, the
legal, valid and binding obligations of the Holders, enforceable against the
Holders in accordance with their terms, except as the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, moratorium and other similar
laws affecting creditors' rights generally and by general principles of
equity.
-9-
<PAGE>
(h) Real Estate. (i) Neither the Corporation nor
the LLC has any obligation or duty relating to, or any right, title or
interest in, any real estate except those properties disclosed on Schedule
5(h) for which Corporation or the LLC alone holds fee simple title (the "Owned
Properties") and those properties disclosed on Schedule 5(h) which the
Corporation or the LLC leases or subleases, as tenant or subtenant (the
"Leased Properties," and together with the Owned Properties, the "Real
Properties"). Disclosed on Schedule 5(h) are all title insurance policies
insuring the Corporation's and the LLC's interest in any of the Real
Properties, true and correct copies of which are included in Schedule 5(h).
Except as described in Schedule 5(h), to the knowledge of the Holders: (A) all
Real Properties are available to be used without restriction in the conduct
and operation of the business of the Corporation and the LLC, (B) the Owned
Properties comply in all material respects with all applicable legal
requirements, including, without limitation, all environmental laws and the
Americans with Disabilities Act, (C) none of the Owned Properties is subject
to a permitted "non-conforming use" or permitted "non-conforming structure" or
similar zoning classification, (D) each of the Corporation and the LLC has
good and marketable title to each of the Owned Properties, free and clear of
all mortgages, liens or other encumbrances, ground leases, leases, exceptions
to title and rights of third parties, and (E) all buildings, structures and
improvements located on the Owned Properties are located wholly within the
boundaries thereof and do not encroach upon any easement under which such
encroachment was not permitted.
(ii) Except as disclosed on Schedule
5(h)(ii), to the knowledge of the Holders, all of the buildings, fixtures and
improvements situated on and comprising part of the Owned Properties and all
heating and air conditioning equipment and all plumbing, sprinkler,
-10-
<PAGE>
drainage, electrical and other mechanical facilities and building systems
which are part of, or which service, such buildings and improvements, subject
to the age and useful life of the foregoing, are in good structural and
operating condition and repair and do not require any repairs or replacements
other than routine maintenance to maintain them in good condition and repair.
(iii) Except as disclosed on Schedule
5(h)(iii), neither the Corporation nor the LLC has received any notice from
the holder of any mortgage presently encumbering any of the Owned Properties,
any insurance company which has issued a policy with respect to any of the
Real Properties or from any public official or board of fire underwriters (or
other body exercising similar functions) claiming any defects or deficiencies
in, or suggesting or requesting the performance of any repairs, alterations or
other work to, any of the Real Properties, except for any notices as to which
all defects and suggested repairs, alterations or other work have been fully
performed.
(iv) There are no property management,
employment, service, equipment, supply, security, maintenance, construction,
concession or other agreements with respect to or affecting the Real
Properties that will burden Buyer after the date hereof, except as disclosed
on Schedule 5(h)(iv).
(v) Except as disclosed on Schedule
5(h)(v), to the knowledge of the Holders, all certificates of occupancy and
all other licenses, permits, authorizations, consents, certificates and
approvals required by all governmental authorities having jurisdiction over
the Owned Properties (and to the Leased Properties to the extent required to
be obtained by the tenant under the leases for the Leased Properties) and any
requisite certificates of the local
-11-
<PAGE>
board of fire underwriters (or other body exercising similar functions) have
been issued for the Real Properties, have been paid for (to the extent
applicable), are valid and in full force and effect, and will not be
invalidated, violated or otherwise adversely affected by the execution or
performance of this Agreement or the consummation of any of the transactions
contemplated herein.
(vi) There are no condemnation proceedings
or any other proceeding in the nature of eminent domain (a "Taking") pending
against any of the Real Properties, and to Holders' knowledge, no Taking has
been threatened.
(vii) There are no leases, subleases or
other agreements for the use and occupancy of any of the Owned Properties,
whether oral or written, except as disclosed on Schedule 5(h)(vii) ("Tenant
Leases"). Holders have delivered to Buyer true, correct and complete copies of
the Tenant Leases and any and all amendments and supplements thereto. Neither
the execution and delivery of this Agreement nor the consummation of any of
the transactions contemplated herein will result in a breach of or constitute
a default under any Tenant Lease.
(viii) Except as disclosed on Schedule
5(h)(viii), no proceedings are pending for an increase or decrease in the
assessed valuation of the Owned Property for real estate tax purposes and
there are no real estate tax valuation appeals pending.
(ix) No part of the Owned Property
contains, is located within or directly abuts any navigable river or other
body of water, tideland, wetland, marsh land or any other similar surface area
which is subject to special state, federal or municipal, regulation, control
or protection.
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(x) Each of the Real Properties adjoins,
or is part of a building or development which adjoins, dedicated public
roadways and has, or is part of a building or development which has, access
for motor vehicles to such roadways by valid easements and, to the knowledge
of Holders, there are no conditions existing which could result in the
termination or reduction of the current access to existing roadways.
(xi) To the knowledge of the Holders, all
essential utilities (including, but not limited to, water, sanitary sewer,
storm sewer, gas, electricity and telephone service) are available to each of
the Real Properties.
(xii) (A) All leases or subleases and any
and all amendments and supplements thereto (collectively, the "Leases") of the
Leased Properties, whether oral or written, are disclosed on Schedule
5(h)(xii)(A), including for each its date, the name of the landlord (and owner
if different than the landlord), the name of the lessee and any sublessee, the
location and use of the property, the monthly base rental payment, any
scheduled or formula increases in base rent, a description of any provisions
for tax or expense pass-throughs, the amount of any security deposit, the
lease expiration date, all options to renew, expansion rights, termination
rights and rights of first offer or refusal to purchase or lease and whether
there are any non-disturbance agreements from mortgagees or paramount lessors;
(B) the Holders have delivered to Buyer true, correct and complete copies of
all Leases, and all such non-disturbance agreements; (C) except as disclosed
on Schedule 5(h)(xii)(C), the Corporation or the LLC is the holder of the
lessee's or sublessee's interest, as applicable, in each Lease and neither the
Corporation nor the LLC has assigned any Lease or any interest therein or
subleased any portion of the Leased Properties; (D) each Lease is in full
force and effect; (E) the Companies are not
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and, to the knowledge of Holders, each landlord under any Lease is not, in
default under any Lease, and no event has occurred which, with the giving of
notice or passage of time or both, would constitute a default by the
Corporation or the LLC or, to the knowledge of Holders, any landlord under any
Lease; and (F) neither the execution or performance of this Agreement nor the
consummation of any of the transactions contemplated herein will result in a
breach of or constitute a default under any of the Leases.
(i) Personal Property.
(i) Except as disclosed on Schedule
5(i)(i), (A) the Companies have good, valid and marketable title to all
personal property, tangible and intangible (including, but not limited to,
Intellectual Property, as defined below) owned by them, free and clear of all
liens, mortgages, pledges, security interests, restrictions, prior
assignments, licenses to third parties, encumbrances and claims of every kind
or character, and (B) the Companies are the owner of all the tangible personal
property now located in or upon the premises occupied by them and of all
personal property that they use in the operation of their business.
(ii) To the knowledge of the Holders,
except as disclosed on Schedule 5(i)(ii), all equipment, furniture and
fixtures, and other tangible personal property of the Companies, subject to
the age and useful life of the foregoing, is in good operating condition and
repair and does not require any repairs or replacement other than normal
routine maintenance to maintain such property in good operating condition and
repair.
(iii) To the knowledge of the Holders,
except as disclosed on Schedule 5(i)(iii) as to inventory graded "C", "D" and
"E", (A) the inventory of the Companies (including raw materials and work in
process and finished goods) is usable in the ordinary course
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of their business and all raw materials and work in process are free from
defects in workmanship and materials (B) all finished goods graded "A" are
saleable in the ordinary course of business within one year of production and
all finished goods rated "B" are designated for restricted sale and/or rework
within one year of production; and (C) the products sold by the Companies meet
the applicable products' and contracts' specifications.
(iv) The Intellectual Property listed on
Schedule 5(i)(iv) (collectively "IP") is the only IP used by the Corporation
or the LLC in the operation of its business, exclusive however, of shoprights,
knowhow and similar trade secrets. Except as disclosed on Schedule 5(i)(iv),
during the period for which the applicable statute of limitations has not
expired (the "Open Period"), no claim has been asserted against the
Corporation or the LLC involving any conflict or claim of conflict of the IP
with the Intellectual Property of others or asserting any rights in the IP.
Holders have no knowledge of any basis for any such claim of conflict. To the
knowledge of the Holders, the Corporation or the LLC is the sole and exclusive
owner of the IP listed on Schedule 5(i)(iv) and, except as set forth in
Schedule 5(i)(iv), has the sole and exclusive right to use such IP. As used
herein, "Intellectual Property" shall include trademarks, trade names, logos,
service marks, copyrights, patents, pending patent applications, shoprights,
know-how, trade secrets, computer programs and computer software and the like
and other items commonly known as intellectual property.
(v) The Corporation or the LLC is the
registered owner of the United States and foreign patents and trademarks
disclosed on Schedule 5(i)(v) and has applications pending with the U.S.
Patent Office and equivalent offices in other countries for the patents and
trademarks disclosed on Schedule 5(i)(v) as being pending. Holders have no
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knowledge of any adverse claim of any kind with respect to any of such
patents, trademarks or applications therefor, and have no knowledge, nor do
they believe there to be any reason, that any such application will not be
granted.
(j) Accounts Receivable. Each of the accounts
receivable of the Corporation and the LLC outstanding as of the date hereof
(an "AR") constitutes on the date hereof a valid claim in the full amount
thereof against the debtor charged therewith on the books of the Corporation
or the LLC and was acquired in the ordinary course of the Corporation's or the
LLC's business. Any AR not collected in full within 75 days after the date
hereof, except as a result of unknown defects in, or problems with, products
to which the accounts relate and except for accounts that are insured by U.S.
governmental agencies, shall conclusively be deemed to be uncollectible and
the amount of such AR shall be deducted from the calculation of the Combined
Working Capital for purposes of sub Article 2(b). Mr. Forgione (or such
designee reasonably acceptable to Buyer) shall have the right to interact with
the Companies' customers, in accordance with the credit practices of the
Companies currently in effect, to seek to achieve collection of such ARs. To
the extent of any amounts paid by the Holders under sub Article 2(b) of this
Agreement as a result of the application of the preceding sentence, any future
recoveries under such accounts receivable shall be for the benefit of the
Holders and the Holders shall have the authority to seek to achieve such
recoveries with the cooperation of Buyer.
(k) Insurance. The Companies maintain insurance
policies bearing the numbers, for the terms, with the companies, in the
amounts, having the named insureds, providing the general coverage, and with
the premiums disclosed on Schedule 5(k). All of such policies are in full
force and effect, neither the Corporation nor the LLC is in default of any
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provision thereof and all premiums due (without regard to any grace period)
with respect to such policies have been paid. Except as disclosed on Schedule
5(k), neither the Corporation nor the LLC has been refused any insurance for
which it has applied and has not received notice from any issuer of any policy
issued to it of the insurer's intention to cancel or refusal to renew any such
policy issued by such insurer. The Holders believe that the amount of such
current insurance is adequate based upon their business evaluation of the
availability, affordability and cost-benefit justification for coverages at
the time they were procured, subject to a perceived desire for environmental
impairment liability coverage with limits and at premiums to be evaluated.
True, correct and complete copies of all such policies or other evidence of
coverage have been delivered to Buyer.
(l) Liabilities. To the Holders' knowledge, neither
the Corporation nor the LLC has any liabilities, whether fixed, contingent, or
otherwise, except as and to the extent reflected in the June 30, 1998 Balance
Sheet, incurred in the ordinary course of business since June 30, 1998 or
disclosed on Schedule 5(l) or in any other Schedule to this Agreement.
(m) Contracts, Leases, Agreements and Other
Commitments.
(i) Neither the Corporation nor the LLC is
a party to or bound by any written, oral or implied contract, agreement,
lease, power of attorney, guaranty, surety arrangement or other contractual
commitment presently in force or having a continuing impact, including but not
limited to any contract or agreement for the purchase or sale of merchandise
or for the rendition of services, except for the following (which are
hereinafter collectively called the "Company Agreements"):
(A) Leases and Tenant Leases
described on Schedule 5(h);
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(B) the 1982 and 1994 Agreement
described in sub Article 5(u)(ii);
(C) employment-related agreements
disclosed on Schedule 5(n)(i); and
(D) agreements involving a
maximum possible liability or obligation per agreement on the part of the
Corporation or the LLC of less than $25,000 in the aggregate; and
(E) agreements listed on Schedule
5(m)(i)(E). True, correct and complete copies of all of the Company Agreements
(including all amendments thereto) have been delivered to Buyer.
(ii) All of the Company Agreements are in
full force and effect and are valid, binding and enforceable against the
respective parties thereto in accordance with their respective terms. Except
as disclosed on Schedule 5(m)(ii), Corporation, the LLC and, to the knowledge
of the Holders, all other parties to all of the Company Agreements have
performed all obligations required to be performed to date under the Company
Agreements and none of the Corporation, the LLC or, to the knowledge of the
Holders, any such other party is in default or in arrears under the terms
thereof, and no condition exists or event has occurred which, with the giving
of notice or lapse of time or both, would constitute a default thereunder. The
execution of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice, the lapse
of time, or both, result in an impairment or termination of, or result in a
breach of any of the terms or provisions of, or constitute a default under, or
conflict with, any Company Agreement. Except as set forth in Schedule 5(m),
the
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Holders are not aware of any intention by any party to terminate or amend any
Company Agreement or, if the Corporation or the LLC intends to request a
renewal, of any intention to refuse to renew the same upon expiration of its
term, excluding, however, anticipated business negotiations regarding the term
of future contractual relationships. Schedule 5(m) sets forth all material
contracts up for renewal during the period commencing on June 1, 1998 and
terminating on December 31, 1998. Except as set forth in Schedule 5(m)(ii),
none of the terms or provisions of any Company Agreement (exclusive of any
warranty or similar obligations in respect of completed activities) results in
an obligation of the Corporation or the LLC for a duration in excess of an
additional 12 months after the date hereof or contains operative provisions
with any continuing effect after a period of 12 months from the date hereof
which the Holders believe now or with the passage of time is likely to
materially adversely affect the business, prospects, conditions, affairs or
operations of the Corporation or the LLC or any of its/their properties or
assets. Except as set forth in Schedule 5(m)(ii), excluding sales at a set
price within a subsequent period of six months, no Company Agreement restricts
the ability of the Companies to pass-along to customers price increases
commensurate with increases of 5% or more in the cost of any individual raw
material.
(n) Labor Relations, Employees.
(i) Set forth on Schedule 5(n)(i) is a
list of:
(A) all collective bargaining
agreements and any written amendments thereto, as well as all arbitration
awards decided under any such collective bargaining agreements, and to the
knowledge of the Holders all material and ongoing assurances
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or modifications, past practices, and/or arrangements made in relation
thereto, to which the Corporation or the LLC is a party or by which it is
bound; and
(B) all written employment,
managerial, or consulting agreements to which the Corporation or the LLC is a
party or by which it is bound. (ii) Set forth on Schedule 5(n)(ii) is a list
of all employees of the Corporation and the LLC, broken down by location,
together with their rate of compensation, compensation arrangement, title,
union affiliation (if any), original date of hire, accrued severance pay,
vacation benefits, sick leave benefits (if payable in cash upon termination of
employment) and any wage or salary increases, bonus or increase in any other
direct or indirect compensation for each employee of the Corporation or the
LLC performing services for the Corporation or the LLC.
(iii) Set forth on Schedule 5(n)(iii) is a
list of the names and ages of all retired or former employees of the
Corporation or the LLC, if any, who are receiving or are entitled to receive
(now or in the future) from the Corporation or the LLC any funded or unfunded
pensions, funded or unfunded welfare benefits, or any deferred compensation,
including their current annual funded or unfunded pension rates, their current
annual funded or unfunded welfare costs, and the amounts of such deferred
compensation to which they are entitled.
(iv) Holders have delivered to Buyer (or
made available for review) true, complete and correct copies of all of the
documents referred to in Schedule 5(n)(i) hereof and all of the personnel
policies, handbooks, procedures, and forms of employment applications relating
to the employees of the Corporation or the LLC.
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(v) Except as set forth on Schedule
5(n)(v):
(A) there is no union
representing or purporting to represent any of the employees of the
Corporation or the LLC and neither the Corporation nor the LLC is subject to
any collective bargaining agreements with any union representing or purporting
to represent the employees of the Corporation or the LLC;
(B) during the past five years,
there have been no strikes, slowdowns, or other work stoppages, lockouts,
grievance proceedings, arbitrations, labor dispute, lawsuit, administrative
proceeding or representation questions pending or, to the knowledge of the
Holders, threatened (other than a routine negotiation threat), between the
Corporation or the LLC on the one hand, and any labor union representing or
purporting to represent any employees of the Corporation or the LLC, on the
other;
(C) To the knowledge of the
Holders, the Corporation and the LLC have complied in all material respects
with all laws relating to the employment of labor, including any provisions
thereof relating to wages, overtime bonuses, severance pay, benefits, COBRA,
WARN, state and local equivalents to the WARN Act, FMLA, FLSA, state wage/hour
laws, hours, collective bargaining, and the payment of social security,
unemployment compensation and similar taxes, and neither the Corporation nor
the LLC is liable for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing; and
(D) there are no charges, suits,
actions, administrative proceedings or investigations, and/or claims,
instituted by or against, pending, affecting, naming and/or involving or, to
the knowledge of the Holders, threatened against the Corporation or the LLC,
whether domestic or foreign, before any court, governmental agency,
department, board of
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instrumentality, or before any arbitrator (collectively "Actions"), concerning
or in any way directly related to the employees of the Corporation or the LLC,
including, without limitation, Actions involving unfair labor practices,
wrongful discharge and/or any other restriction on the right of the
Corporation or the LLC to terminate its respective employees, employment
discrimination, occupational safety and health, and workers' compensation.
(vi) Except as shown on Schedule 5(n)(vi),
there are no express or implied agreements, policies, practices, or
procedures, whether written or verbal, pursuant to which any employee or agent
or service provider of the Corporation or the LLC is not terminable at will.
The Holders have no knowledge of, or reason to believe that, any senior
employee of the Companies will leave the employ of the Companies as a result
of the transactions contemplated hereby.
(o) Employee Benefit Plans.
(i) Schedule 5(o)(i) is a complete and
accurate list of all employee benefit plans which the Corporation, the LLC and
any of their respective ERISA Affiliates (as hereinafter defined) maintain,
sponsor, contribute to, are liable for (directly or indirectly) or are bound,
legally or otherwise, including, without limitation, any profit-sharing,
deferred compensation, bonus, payroll, sick leave, consulting, stock option,
stock purchase, pension, retainer, consulting, retirement, vacation, change of
control, disability, severance, welfare or incentive plan policy, agreement,
practice or arrangement; any plan, agreement or arrangement providing for
fringe benefits or perquisites to employees, officers, directors or agents of
the Corporation, the LLC and any of their respective ERISA Affiliates,
including but not limited to benefits relating to employer-supplied
automobiles, clubs, medical, dental,
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hospitalization, life insurance and other types of insurance, retiree medical,
retiree life insurance and any other type of benefits for retired and
terminated employees; any employment agreement; and any other "employee
benefit plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") through the date of this
Agreement) (herein referred to individually as "Plan" and collectively as
"Plans"). For purposes of this Agreement, "ERISA Affiliate" means all persons
and entities which are treated as being under common control with the
Corporation or the LLC, as the case may be, or any ERISA affiliate under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1996, as
amended ("Code").
(ii) True and complete copies of the
following documents with respect to any Plan of the Corporation, the LLC and
each ERISA Affiliate, as applicable, have been delivered to the Purchaser: (A)
the most recent Plan document and trust agreement (including any amendments
thereto and prior plan documents, if amended within the last two years), (B)
the last two IRS Form 5500 filings and schedules thereto, (C) the most recent
IRS determination letter, (D) all summary plan descriptions, (E) a written
description of each material non-written Plan, (F) each material written
communication to employees intended to describe a Plan or any benefit provided
by such Plan during the Open Period, (G) the most recent actuarial report, and
(H) all correspondence during the Open Period with the IRS, the Department of
Labor and the Pension Benefit Guaranty Corporation ("PBGC") concerning any
controversy. Each report described in clause (vii) accurately reflects the
funding status of the Plan to which it relates and subsequent to the date of
such report there has been no adverse change in the funding status or
financial condition of such Plan.
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(iii) Each Plan is and has been maintained
in compliance in all material respects with applicable law, including but not
limited to ERISA, and the Code and with any applicable collective bargaining
agreements or other contractual obligations.
(iv) With respect to any Plan that is
subject to Section 412 of the Code ("412 Plan"), there has been no failure to
make any contribution, pay any amount due or meet the minimum funding
standards as required by Section 412 of the Code, Section 302 of ERISA or the
terms of any such Plan. No 412 Plan has incurred a minimum funding deficiency
within the meaning of Section 412 of the Code whether or not waived. The
assets of the Corporation, the LLC and their ERISA Affiliates are not now, nor
will they after the passage of time, be subject to any lien imposed under Code
Section 412(n) or ERISA Section 302 by reason of a failure of the Corporation,
the LLC or any ERISA Affiliate to make timely installments or other payments
required under Code Section 412.
(v) As of the date hereof, no Plan that is
subject to Title IV of ERISA has any "Unfunded Pension Liability." For purpose
of this Agreement, Unfunded Pension Liability means, as of any determination
date, the amount, if any, by which the present value of all benefit
liabilities (as that term is defined in Section 4001(a)(16) of ERISA) of a
plan subject to Title IV of ERISA exceeds the fair market value of all assets
of such plan, all determined using the actuarial assumptions that would be
used by the PBGC in the event of a termination of the plan on such
determination date.
(vi) Except as reflected on Schedule
5(o)(vi), there are no pending or, to the knowledge of the Holders, threatened
claims, actions or lawsuits, other than routine claims for benefits in the
ordinary course, asserted or instituted against (A) any Plan or
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its assets, (B) any ERISA Affiliate with respect to any 412 Plan, or (C) any
fiduciary with respect to any Plan for which the Corporation, the LLC or any
ERISA Affiliate may be directly or indirectly be liable, through
indemnification obligations or otherwise.
(vii) None of the Corporation, the LLC or
any ERISA Affiliate has within the past six years incurred and or reasonably
expects to incur (A) any withdrawal liabilities as defined in Section 4201 of
ERISA or any actual or contingent liability under Section 4204 of ERISA
(collectively, "Withdrawal Liability") and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in Withdrawal
Liabilities, or any liability under Sections 4063, 4064, 4071 or 4243, or (B)
any outstanding liability under Title IV of ERISA with respect to any 412
Plan.
(viii) Except as reflected on Schedule
5(o)(viii), within the last six years, none of the Corporation, the LLC or any
ERISA Affiliate has transferred any assets or liabilities of a 412 Plan
subject to Title IV of ERISA which had, at the date of such transfer, an
Unfunded Pension Liability or has engaged in a transaction which may be
subject to Section 4212(c) or Section 4069 of ERISA.
(ix) None of the Corporation, the LLC or
any ERISA Affiliate has engaged, directly or indirectly, in a non-exempt
prohibited transaction (as defined in Section 4975 of the Code or Section 406
of ERISA) in connection with any Plan.
(x) Except as reflected on Schedule
5(o)(x), no Plan that is a non-tax qualified deferred compensation plan has
any unfunded liability.
(xi) Neither Buyer nor its affiliates will
have (A) an obligation to make contribution(s) to any multiemployer plan (as
defined in Section 3(37) of ERISA), or
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(B) any Withdrawal Liability (whether imposed and not yet paid or calculated
assuming a complete or partial withdrawal of the Corporation, the LLC or any
ERISA Affiliate as of such date not yet imposed) which it would not have had
it not entered into the transactions described in this Agreement.
(xii) Except as reflected on Schedule
5(o)(xii), during the last two years there have been no amendments to any
Plan, no written interpretation or announcement (whether or not written) by
the Corporation, the LLC or any ERISA Affiliate relating to any Plan, there
have been and are no negotiations, demands, or proposals which are pending
that concern any Plan, nor has any Plan been established, which resulted in or
could result in a material increase in (A) the accrued or promised benefits of
any employees of the Corporation, the LLC or any ERISA Affiliate and (B) any
material increase in the level of expense incurred in respect thereof.
(xiii) There has been no "Reportable
Event" with respect to any 412 Plan subject to Title IV of ERISA within the
last five years.
(xiv) Each Plan that provides welfare
benefits has been operated in compliance with all requirements of Sections 601
through 608 of ERISA and (A) Section 162(i)(2) and (k) of the Code and
regulations thereunder (prior to 1989) and (B) Section 4980B of the Code and
regulations thereunder after 1988, relating to the continuation of coverage
under certain circumstances in which coverage would otherwise cease. None of
the Corporation, the LLC or any ERISA Affiliate has contributed to a
nonconforming group health plan (as defined under Code Section 5000(c) and no
ERISA Affiliate has incurred a tax under Section 5000(a) of the Code which
could become a liability of the Corporation, the LLC or any ERISA Affiliate.
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Except as reflected on Schedule 5(o)(xiv), the Corporation, the LLC or any
ERISA Affiliate does not and has not maintained, sponsored or provided
post-retirement medical benefits, post-retirement death benefits or other
post-retirement welfare benefits to its current employees or former employees,
except as required by Section 4980B of the Code and at the sole expense of the
participant or the beneficiary of the participant. The Corporation and the LLC
have complied in all respects with the requirements of the Health Insurance
Portability and Accountability Act of 1996 with respect to each Plan that
provides welfare benefits. Neither the Corporation nor the LLC maintains any
plan which is an "employee welfare benefit plan" (as such term is defined
under Section (l) of ERISA) that has provided any "disqualified benefit" (as
such term is defined in Section 4976(b) of the Code) with respect to which an
excise tax could be imposed under Section 4976.
(xv) Each Plan that is intended to be a
tax qualified plan under Section 401(a) of the Code ("Tax Qualified Plan") has
been determined by the Internal Revenue Service to qualify under Section 401
of the Code, and the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501 of the Code, and nothing
has occurred, including the adoption of or failure to adopt any Plan
amendment, which would adversely affect its qualification or tax-exempt
status.
(xvi) No Tax Qualified Plan has been
amended since the date of its most recent IRS determination letter which would
materially increase its cost and no Plan has been amended in a manner that
would require security to be provided in accordance with Section 401(a)(29) of
the Code.
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(xvii) Except as contemplated herein or
required by law, the execution of this Agreement and the consummation of the
transactions contemplated hereby, do not constitute a triggering event under
any Plan, policy, arrangement, statement, commitment or agreement, whether or
not legally enforceable, which (either alone or upon the occurrence of any
additional or subsequent event) will result in any obligation of the
Corporation, the LLC or any ERISA Affiliates to make any payment (whether of
severance pay, including, and not limited to, salary, related vacation pay,
pension pay and other similar payments and costs, or otherwise) or to
accelerate, vest or increase the amount of benefits payable to any employee or
former employee or director of the Corporation, the LLC or any ERISA
Affiliates. Except as listed on Schedule 5(o)(xvii), no Plan or agreement
provides for the payment of severance benefits upon the termination of any
employee's employment. No amounts paid or payable by the Corporation or the
LLC will fail to be deductible for federal income tax purposes by reason of
Section 280G of the Code.
(p) Litigation. Except for the matters set forth on
Schedule 5(p), neither the Corporation nor the LLC is a party to or, to the
knowledge of the Holders, threatened with any suit, action, arbitration,
administrative or other proceeding, either at law or in equity, or
governmental investigation by or before any Court, governmental department,
commission, board, agency or instrumentality, domestic or foreign; to the
knowledge of the Holders, there is no basis for any suit, action, arbitration,
or administrative or other proceeding against the Corporation or the LLC
including, without limitation, as a result of any product deficiency; there is
no judgment, decree, award or order outstanding against the Corporation or the
LLC; and except as disclosed on Schedule 5(p) neither the Corporation nor the
LLC is contemplating the
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institution by it of any suit, action, arbitration, administrative or other
proceeding. Except as disclosed on Schedule 5(p), as to each of the matters
set forth on Schedule 5(p), subject to a retention no greater than $100,000
per claim (or as otherwise disclosed on Schedule 5(p)), the Companies'
insurance carrier has agreed to indemnify the Corporation or the LLC,
whichever applicable, against any loss (as defined in the applicable policy)
resulting to the Corporation therefrom.
(q) Suppliers and Customers. Schedule 5(q) is a
complete and accurate list of the names of all suppliers and customers of the
Corporation and the LLC which respectively contribute more than 5% of all
sales and services to, and orders and use of services from, the Corporation
and the LLC ("Suppliers" and "Customers", respectively). To the knowledge of
the Holders, except as set forth on Schedule 5(q), (A) the relationships of
each of the Corporation and the LLC with their Suppliers and Customers are
good commercial working relationships and no Supplier or Customer of the
Corporation or the LLC has canceled or otherwise terminated, or threatened to
cancel or otherwise terminate, its relationship with the Corporation or the
LLC, or has during the last twelve months decreased materially, or threatened
to decrease or limit materially, its business with the Corporation or the LLC,
(B) no interruptions or shortages in the supply of raw materials and other key
supplies are threatened or anticipated, and (C) no new products have been
developed by others that are being evaluated by the Companies' customers, nor
are new alternative products or uses being contemplated by the Companies'
customers, that would result in a material loss of business to the Companies,
render the Companies' products obsolete or otherwise place the Companies'
products at a competitive disadvantage. Holders have no knowledge, or specific
reason to believe that the acquisition of
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the Shares and Membership Interests by Buyer in particular, or by any other
entity in general, will adversely affect the relationship of the Corporation
or the LLC with any such Supplier or Customer but excluding any adverse effect
arising out of actual or potential prior evaluations by any such Supplier or
Customer of the Buyer unrelated to this transaction. Since October 1, 1997,
sales by Companies to Globe have been approximately 600,000 pounds of product,
the majority of which occurred since April 1, 1998 and Holders have no
specific reason to believe that Globe will disqualify the Companies as
continuing suppliers to such customer.
(r) Conflicting Interests. Except as disclosed on
Schedule 5(r), no director, officer, manager or employee of the Corporation or
the LLC and no Holder or relative or Affiliate of any of the foregoing (a) has
any pecuniary interest in any supplier or customer of the Corporation or the
LLC or in any other business enterprise with which the Corporation or the LLC
conducts business or with which the Corporation or the LLC is in competition;
(b) is indebted to the Corporation or the LLC; (c) is a party to any
transaction or agreement with the Corporation or the LLC (apart from such
person's status as an employee, consultant, member or stockholder as such); or
(d) has any business or other interest in conflict with the interests of the
Corporation or the LLC. The term "Affiliate" as used in this Agreement shall
have the meaning given to such term under the Securities Exchange Act of 1934,
as amended.
(s) Compliance with Law and Regulations. Except as
disclosed on Schedule 5(s), to the knowledge of the Holders, (i) each of the
Corporation and the LLC is in compliance in all material respects with all
requirements of law, federal, state and local, and all requirements of all
governmental bodies or agencies having jurisdiction over each of them, the
conduct of their respective business, the use of their respective properties
and assets, and all
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premises occupied by them, (ii) the Corporation and the LLC have obtained and
now hold all licenses, permits, certificates, and authorizations needed or
required for the conduct of their respective business and the use of their
respective properties and the premises occupied by them, and (iii) the
Corporation and the LLC have during the Open Period properly filed all reports
and other documents required to be filed with any federal, state, local and
foreign government or subdivision or agency thereof. Except as disclosed on
Schedule 5(s), neither the Corporation nor the LLC has received any notice
from any federal, state or municipal authority or any insurance or inspection
body that any of its respective properties, facilities, equipment, or business
procedures or practices fails to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public authority or
body. To the knowledge of the Holders, (i) all licenses, permits, orders and
approvals issued by any governmental body or agency currently in effect and
pertaining to the property, assets or business of the Corporation or the LLC
are listed on Schedule 5(s) and, (ii) except as noted on Schedule 5(s), none
of the items so listed will lapse or expire as a result of the transactions
contemplated hereby. To the knowledge of Holders, there are no specific
regulations or legislation pending before any federal, state, local or foreign
government agency, administration body or legislature which, if adopted,
should have a material adverse effect on the business of the Corporation or
the LLC.
(t) Agreement Not in Breach of Other Instruments
Affecting the Corporation or the LLC; Governmental Consent. Except as
disclosed on Schedule 5(t), the execution and delivery of this Agreement, the
consummation of the transactions provided for herein, and the fulfillment of
the terms hereof: (i) will not result in the imposition of any lien, security
interest or encumbrance on any asset of the Corporation or the LLC or in the
breach of
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any of the terms and provisions of, or result in a termination, impairment or
modification of or constitute a default under, or conflict with, or cause any
acceleration of any obligation of the Corporation or the LLC under, or permit
any other party to modify or terminate, any agreement or other instrument by
which the Corporation or the LLC is bound, any judgment, decree, order, or
award of any court, governmental body, or arbitrator, or any applicable law,
rule or regulation; (ii) do not require the consent of any governmental
authority or other person other than the Federal Trade Commission pursuant to
any Hart-Scott-Rodino Antitrust Improvements Act filings; and (iii) will not
contravene the Corporation's Certificate of Incorporation and bylaws or the
LLC's Certificate of Formation and Operating Agreement.
(u) Environmental Matters.
(i) Since February 26, 1982, the
Corporation has been the owner of the Owned Property located in Hicksville,
New York (the "Hicksville Site"). Immediately prior to February 1982, the
Hicksville Site was owned by Hooker Chemical & Plastics Corp. ("Hooker
Chemical"). In 1986, the United States Environmental Protection Agency ("EPA")
listed the Hicksville Site on the Superfund National Priorities List ("NPL").
(ii) Pursuant to an Agreement For Purchase
By the Corporation of the Specialty Polymers Business of Hooker Chemical dated
February 12, 1982 (the "1982 Agreement"), Occidental Chemical Corporation
("Occidental"), as successor to Hooker Chemical, has assumed all
responsibility for addressing "Environmental Problems" related to the
Hicksville Site as that term is defined in the 1982 Agreement (hereafter
"Environmental Problems") in accordance with the terms and conditions of such
agreement.
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(iii) In response to notices and orders
issued by EPA to Hooker and the Corporation, Occidental has advised EPA that
it will address Environmental Problems related to the Hicksville Site. The
Corporation has pledged and legally committed its cooperation as property
owner in accordance with requirements of law, agreements with the EPA and the
above-referenced agreement with Occidental. To the knowledge of the Holders,
except as disclosed on Schedule 5(u), EPA has not demanded that the
Corporation itself take or fund any investigatory or remedial action with
respect to the Hicksville Site.
(iv) Since February 26, 1982, the
Companies have disposed of all hazardous and non-hazardous wastes in full
compliance with all applicable Environmental Laws. A complete list of all
offsite locations at which the Companies engaged in such disposal is set forth
in Schedule 5(u)(iv). The Companies have not received any notice from any
governmental authority, employee, group or third party that they are
potentially responsible in connection with any waste disposal site or facility
used by the Companies.
(v) Except as set forth in Schedule
5(u)(v), the Companies are and at all times since February 26, 1982 have been
in full compliance with all material Environmental Laws governing their
business, operations, properties and assets, which compliance includes, but is
not limited to: (i) the possession by the Companies of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof; (ii) all requirements
relating to the Discharge and Handling of Regulated Substances and Wastes;
(iii) all requirements relating to notice, record keeping and reporting; and
(iv) all applicable writs, orders, judgments, injunctions, governmental
communications, decrees, informational requests or demands issued pursuant to,
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or arising under, any Environmental Law. The Companies have not received any
notice from any governmental authority, employee, group or third party
alleging that they are not in such full compliance and, to the Holders'
knowledge there are no circumstances that may prevent or interfere with such
full compliance in the future.
(vi) To the knowledge of Holders, except
as disclosed on Schedule 5(u) all documents filed by or on the behalf of the
Companies with any governmental authority pursuant to any Environmental Law
were when filed true, accurate and complete in all material respects and did
not omit to state any material fact.
(vii) Except as set forth in Schedule
5(u)(vii), there are no Environmental Claims threatened or pending against the
Companies. To the Holders' knowledge, since February 26, 1982, except as set
forth in Schedule 5(u)(vii), there are and have been no actions, activities,
circumstances, conditions, events, or incidents that could form the basis of
any Environmental Claim against the Companies. Occidental has not asserted or
threatened to assert any Environmental Claim against the Companies pursuant to
the 1982 Agreement or otherwise.
(viii) Except as set forth in Schedule
5(u)(viii), the Companies do not use, nor have they used, any aboveground or
underground storage tanks, and there are not now nor have there ever been any
underground storage tanks beneath any real property currently or previously
owned or leased by the Companies. All tanks currently or previously owned or
utilized by the Companies have been operated in full compliance with
applicable Environmental Laws. All tanks removed and/or decommissioned by the
Companies have been removed and/or decommissioned in full compliance with
applicable Environmental Laws. At the request of
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EPA, the Corporation has not removed a concrete vault at the Hicksville Site
pending review of submissions from Occidental currently pending before EPA.
(ix) Except as set forth in Schedule
5(u)(ix), the Companies do not and since February 26, 1982 have never used or
stored any polychlorinated biphenyls ("PCBs") at any site currently or
previously owned or leased by the Companies. There has been no discharge or
release of PCBs at the Hicksville Site on or after February 26, 1982.
(x) The Companies do not and since
February 26, 1982 have never produced, or to the Holders' knowledge, utilized,
polyvinyl chloride ("PVC") in their operations, excluding however, the use of
chemical compounds as to which PVC's may have been an immaterial component and
excluding PVC which is contained in piping and similar "finished products"
which the Companies procure for uses other than as chemical raw materials.
Other than in de minimis amounts that were remediated in full compliance with
all applicable Environmental Laws, and except as disclosed on Schedule
5(u)(x), there have been no discharges or releases of any Regulated Substance
at the Hicksville Site on or after February 26, 1982.
(xi) Except as set forth in Schedule
5(u)(xi), there is no asbestos or asbestos containing material ("ACM") in or
forming a part of any building, building component, structure, or office space
owned or leased by the Corporation or the LLC.
(xii) No approval, decision, authorization
or consent is required under any Environmental Law or under the 1982 Agreement
to complete the transaction contemplated by this Agreement, and no permit
transfer approval is required for any permit issued pursuant to any
Environmental Law.
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(xiii) For purposes of this Agreement:
(A) "Discharge" means any manner
of spilling, leaking, dumping, discharging, release or emitting, as any of
such terms may further be defined in any Environmental Law, into any medium
including, without limitation, groundwater, surface water, soil or air.
(B) "Environmental Claim" means
any notice, lien, claim, action, cause of action, order, communication,
investigation, or proceeding (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup, removal or remediation costs,
governmental response costs, natural resource damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from
(a) the presence, or release into the environment of any Regulated Substance
at any location, whether or not owned or operated by the Companies, and (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
(C) "Environmental Law" means any
and all federal, state, regional, county and local laws, regulations, codes,
orders, plans, injunctions, decrees, rulings, and judicial or administrative
interpretations thereof, which govern, purport to govern, or relate to
pollution, protection of the environment (including, without limitation,
ground water, surface water, soil and air) and public health and safety,
including, without limitation: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendment
and Reauthorization Act of 1986, 42 U.S.C. 9601, et seq. (collectively,
"CERCLA"); the Solid Waste Disposal Act, as amended by the Resource
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Conservation and Recovery Act of 1976 and subsequent Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. 6901, et seq. (collectively, "RCRA"); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.;
the Clean Water Act, as amended, 33 U.S.C. 1311, et seq.; the Toxic Substances
Control Act, as amended, 15 U.S.C. 2601, et seq.; the Emergency Planning and
Community Right-to-Know Act of 1986, as amended, 42 U.S.C. 11001, et seq.
("EPCRA"); and the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. 651, et seq. ("OSHA").
(D) "Handling" means any manner
of generating, accumulating, storing, treating, disposing of, transporting,
transferring, labeling, handling, manufacturing or using, as any such terms
may further be defined in any Environmental Law, of any Regulated Substance.
(E) "Regulated Substance" shall
be broadly construed to include without limitation any chemical, pollutant,
contaminant, material, waste, toxic or hazardous substance, petroleum,
petroleum product, asbestos, asbestos containing material, and PCB regulated,
listed, or controlled by, under or pursuant to any Environmental Law.
(F) "Waste" shall be broadly
construed to include bulky wastes, construction and demolition debris,
garbage, solid wastes, liquid wastes, recyclable materials, sludge, special
wastes, used oils, and plant and yard trash as those terms are defined under
any Environmental Law.
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(v) Tax Matters.
(i) Definitions. The following terms shall
have the meanings set forth in this sub Article 5(v) for purposes of this sub
Article 5(v) and Article 11 of this Agreement:
"Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute. All references to specific
sections of the Internal Revenue Code shall be deemed to include any
provisions of the Internal Revenue Code (or a related statute) which replace
or supersede the sections in effect at the time this Agreement is executed.
"Regulation" or "Treasury
Regulation" means regulations issued under the Code as such regulations may be
amended. All references herein to specific sections of the Regulations shall
be deemed also to refer to any provisions of the Regulations which replace or
supersede the sections in effect at the time of the execution of this
Agreement.
"Return" and "Returns" mean any
return, report, declaration, estimate, information statement, claim for
refund, notice, form or any other kind of document, including any schedule or
attachment thereto, and including amended versions of any of the foregoing,
relating to or required to be filed in connection with any Tax.
"Tax" and "Taxes" means any
federal, state (including District of Columbia), local, foreign (including
possessions or territories of the United States) or other tax (whether income,
gross receipts, franchise, excise, customs, sales, use, value added, ad
valorem, real or personal property, license, transfer, employment, social
security or any other kind of tax or payment in lieu of tax no matter how
denominated including any amount payable by the Corporation and the LLC
pursuant to a tax-sharing or other agreement relating to the
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sharing or payment of tax), or any assessment, levy, impost, withholding, fee
or other governmental charge in the nature of a tax, and shall include all
additions to tax, interest, penalties and fines with respect thereto.
(ii) Tax Matters Relating to Corporation and LLC.
Except as disclosed on Schedule 5(v), to the knowledge of the Holders:
(A) Each of the Corporation and
the LLC has filed when due in a timely fashion all Returns that are required
to be filed on or before the date hereof by or with respect to the Corporation
and the LLC. All such Returns are correct and complete. Neither the
Corporation nor the LLC is the current beneficiary of any extension of time
within which to file any Return. No claim has been made by a taxing authority
in a jurisdiction where the Corporation and the LLC do not file Returns that
any of them is or may be subject to or liable for any Tax imposed by that
jurisdiction.
(B) All Taxes for which each of
the Corporation and the LLC is liable and that are due on or before the date
hereof (whether or not shown to be due on any Return) have been paid when due
in a timely fashion. There are no liens on any assets of the Corporation or
the LLC that arose in connection with any failure (or alleged failure) to pay
any Tax other than liens for Taxes not yet due and payable or for Taxes that
the Corporation or the LLC or the Holders are contesting in good faith through
appropriate proceedings as set forth on Schedule 5(v)(ii)(B).
(C) Each of the Corporation and
the LLC has withheld or collected and paid or deposited all Taxes required to
have been withheld or collected and paid or
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deposited in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder, member, partner or other third
party.
(D) No taxing authority has
asserted, or threatened to assert, any adjustment, deficiency or assessment
for any Taxes against the Corporation, the LLC or the Holders (with respect to
Taxes of the Corporation or the LLC), and no basis exists for any such
adjustment, deficiency or assessment which would result in additional taxes
owed by the Corporation or the LLC or the Holders (with respect to the
Corporation or the LLC) for any period for which Returns have been filed.
Schedule 5(v)(ii)(D) lists all federal, state, local, and foreign income
Returns filed with respect to the Corporation and the LLC for taxable periods
ended on or after September 30, 1994 and indicates those Returns of the
Corporation and the LLC that have been audited and those Returns of the
Corporation, the LLC and Holders with respect to Taxes of the Corporation and
the LLC that currently are the subject of audit. The Holders have delivered to
Buyer correct and complete copies of all federal, state, local and foreign
income tax Returns filed, examination reports issued, and statements of
deficiencies assessed against or agreed to by the Corporation or the LLC or
the Holders (with respect to Taxes of the Corporation or the LLC) since
September 30, 1994.
(E) Neither the Corporation nor
the LLC nor the Holders (with respect to Taxes of the Corporation or the LLC)
have waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax adjustment, assessment or deficiency
except for such waivers or extensions which, by their terms, have elapsed as
of the date of this Agreement.
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(F) Except as set forth on
Schedule 5(v)(ii)(F), neither the Corporation nor the LLC has any income or
gain that may be reportable for a period ending after the date hereof without
the receipt of an equal amount of cash during such period, which is
attributable to a transaction occurring in, or a change in accounting method
made for, a period ending on or prior to the date hereof.
(G) There are no currently
outstanding requests made by any of the Corporation or the LLC or the Holders
(with respect to Taxes of the Corporation or the LLC) for tax rulings,
determinations or information that could affect the Taxes of the Corporation
or the LLC or the Holders (with respect to Taxes of the Corporation or the
LLC).
(H) Schedule 5(v)(ii)(H) lists
all Returns (other than income tax returns) filed with respect to the
Corporation and the LLC for taxable periods ending on or after September 30,
1994.
(I) Neither the Corporation nor
the LLC has been obligated to deduct and withhold Taxes under Code Section
1441.
(J) None of the Holders is a
nonresident alien individual within the meaning of Code Section 7701(b).
(K) Neither the Corporation nor
the LLC is or was, within the past six years, a party to any Tax allocation or
sharing agreement except as set forth on Schedule 5(v)(ii)(K). The Corporation
has not been a member of an affiliated group defined in Code Section 1504(a)
filing a consolidated federal income Tax Return and does not have any
liability for the Taxes of any person under Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor by contract or otherwise. Neither the
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Corporation nor the LLC has been a member of a group of companies filing a
unitary, consolidated or combined state Return except as set forth on Schedule
5(v)(ii)(K).
(iii) Tax Matters Relating to the LLC. The
LLC is, and has been since its creation, classified and taxed as a partnership
for federal, state, and local income tax purposes and has not made an election
that would result in the LLC being taxed as other than a "partnership" for
income tax purposes, including but not limited to, by filing Form 8832 "Entity
Classification Election."
(iv) Tax Matters Relating to Corporation.
The Corporation is, and at all times since March 1, 1986, has been, qualified
as an "S" corporation under the Code. The Corporation is, and at all times
since January 1, 1998, has been qualified as an "S" corporation in New York
State and under comparable laws of the states listed on Schedule 5 (v)(iv).
With respect to any tax periods ending on or before the date hereof, the
Corporation is and has not been subject to tax under Code Section 1374 or
1375. The Corporation has not made an election under Code Section 1361(b)(3)
with respect to any wholly owned subsidiary.
(w) Year 2000 Warranty. The Holders have no reason
to believe that the Companies will have to incur costs in excess of $250,000
for its software to be "year 2000 compliant".
(x) Conduct of Business; No Material Adverse
Change. Since September 30, 1997, (A) the Companies have conducted their
business in a good and diligent manner in the ordinary and usual course, and
(B) there has not been and, to the knowledge of the Holders, there is not
threatened, any material adverse change in the financial condition, business,
prospects or affairs of the Corporation or the LLC, or any material physical
damage or loss to
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any of their respective properties or assets or to the premises occupied by
them (whether or not such damage or loss is covered by insurance).
6. Representations and Warranties and Agreements of Buyer. As
material inducement to Holders to enter into this Agreement, Buyer makes the
following representations and warranties to Holders:
(a) Corporate Status and Authority. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has the corporate power to acquire the
Shares and the Membership Interests to be acquired hereunder. The execution,
delivery and performance of this Agreement by Buyer have been duly authorized
by all necessary corporate action on the part of Buyer, and this Agreement
constitutes the valid and binding obligation of Buyer, enforceable against it
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and by general principles of equity.
(b) Agreement Not in Breach of Other Instruments
Affecting Buyer. The execution and delivery of this Agreement, the
consummation of the transactions provided for herein, and the fulfillment of
the terms hereof by Buyer (i) do not and will not, with or without the giving
of notice, the lapse of time, or both, result in the breach of any of the
terms and provisions of, or constitute a default under, or conflict with, or
cause any acceleration of any obligation of Buyer under, any agreement,
indenture or other instrument by which Buyer is bound, Buyer's Certificate of
Incorporation or Bylaws, any judgment, decree, order, or award of any court,
governmental body, or arbitrator, or any applicable law, rule, or regulation,
and (ii) do
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not require the consent of any governmental authority or other person other
than the Federal Trade Commission pursuant to any Hart-Scott-Rodino Antitrust
Improvements Act filings.
(c) Solvency. As of the Date hereof and after
giving effect to all of Buyer's borrowings to finance the transactions
contemplated hereby, (i) the present fair saleable value of all properties of
the Buyer on a going concern basis (that is, the amount which may be realized
within a reasonable time under the circumstances then existing either through
collection or sale at the regular market value, conceiving the latter as the
amount which could be obtained for the property in question by a capable and
diligent business person from any interested buyer who is willing to purchase
under ordinary selling conditions), will exceed the amount of all debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of the Buyer; (ii) the Buyer will not have an unreasonably small
capital with which to conduct is business operations as proposed to be
conducted, and (iii) the Buyer will have sufficient cash flow to enable it to
pay its debts as they mature.
(d) Certain Indemnification and Protections.
(i Buyer has heretofore requested of
individuals who are Holders, Directors, Managers, Officers and Employees of
the Companies various actions (including assistance in the preparation of
financial information) to assist the Buyer in the preparation of an intended
Rule 144A Placement Memorandum which contemplates that the Buyer will incur
certain new indebtedness to refinance and/or increase its existing debt (the
"Institutional Note Indebtedness"). As regards any claims by any third party
(including and purchasers of the Institutional Note Indebtedness) relating to
or arising out of such Rule 144A Placement Memorandum (a "PM Claim"), Buyer
shall indemnify such individuals and hold them
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harmless against any loss or damage resulting to such individuals from a PM
Claim, unless such loss or damage resulted from the adjudicated or admitted
willful misrepresentation or gross negligence on the part of the indemnified
individuals in providing information used or relied upon for use within or in
connection with such Rule 144A Private Placement Memorandum.
(ii The provisions of sub Article 10(c)(i)
shall apply, mutatis mutandis, to any claim for indemnification hereunder.
(iii Nothing contained in sub Article
6(d)(i) above shall reduce, waive, limit or otherwise adversely affect the
obligations of the "Holders", or the rights of the Buyer, under this
Agreement.
7. Continuation and Survival of Representations and Warranties.
(a) All representations and warranties hereunder
shall survive the consummation of the transaction provided for in this
Agreement and shall expire on the second anniversary of the date hereof,
except that the representations set forth in sub Articles 5(a), 5(b), 5(d),
5(g), 5(o), 5(p), 5(u) and 5(v) shall expire upon expiration of the applicable
statute of limitations.
(b) Notwithstanding the foregoing, there shall be
no expiration with respect to knowing misrepresentations on the part of the
Holders. Knowing misrepresentation shall mean any breach of a representation
or warranty that is qualified as to the Holders' knowledge or any knowing
breach of a representation or warranty that is not qualified as to the
Holders' knowledge.
(c) Except as may be specifically cross referenced
in any Schedule hereto, each representation, warranty and covenant contained
herein is independent of all other
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representations, warranties and covenants contained herein (whether or not
covering an identical or a related subject matter) and must be independently
and separately complied with and satisfied. No representation or warranty of
the Holders contained herein shall be deemed to have been waived, affected or
impaired by any investigation conducted by Buyer. The representations and
warranties set forth hereinabove comprise all subjects which the Buyer has
deemed material, and no liability under sub Article 10(b)(i) shall arise or be
inferred based upon any subject which is not specifically encompassed by the
above representations and warranties.
(d) Whenever a representation is made to the
knowledge of the Holders, (i) such knowledge shall include the actual
knowledge of any of the Holders together with the knowledge that the Holders
reasonably should have acquired after inquiry by them to such officers or
managers of the Companies having responsibility for the subject matters to
which the representation or warranty relates, and the Holders shall be
entitled to rely on information obtained following inquiry made of such
officers and managers as are referred to above and (ii) there shall be no
obligation of supplemental inquiry (except as contemplated in (i) above) or of
independent investigation, unless the inquiry contemplated in (i) above
reasonably should have prompted the Holders to seek further clarification or
information from any personnel of the Companies or from the Companies'
existing professional advisors, customers and suppliers.
8. Deliveries by the Holders at Closing. Concurrently with
the execution of this Agreement, the Holders will deliver or cause to be
delivered to Buyer the following in form and substance reasonably acceptable
to counsel to Buyer:
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(a) stock certificates representing the Shares,
duly endorsed by the Holders in blank, or with stock transfer powers executed
by such Holders in blank attached;
(b) certificates representing all the issued and
outstanding Membership Interests of the LLC, duly endorsed by the Holders in
blank, or with stock transfer powers executed by such Holders in blank
attached;
(c) the written resignations of all directors of
the Corporation and all managers of the LLC, except Mr. Forgione, dated and
effective as of the date hereof in respect of all positions held by any of
them with the Corporation, the LLC or any Benefit Plan;
(d) general releases in favor of the Corporation
and the LLC (and their successors or assigns) executed by each director of the
Corporation and each Manager of the LLC; provided, however that all
protections in favor of the Holders (in whatever capacity as Holder, director,
officer, manager or employee may be applicable) which arise under any
indemnification obligation contained in the organizational documents or
by-laws or operating agreements of the Companies or in any actions taken by
any governing body of the Companies or as contained in any agreement or as may
arise by operation of law or pursuant to the coverage provided by any policy
of insurance shall continue in full force and effect in accordance with the
terms thereof, except if and to the extent that such indemnification relates
to an action or omission constituting a breach of any representation, warranty
or covenant hereunder in favor of the Buyer or for which Buyer is entitled to
indemnification as provided in Section 10 hereof;
(e) "good standing" and "no tax lien" certificates
for the Corporation and the LLC issued by each jurisdiction in which the
Corporation and the LLC is incorporated and qualified to do business as a
foreign corporation, a certified copy of the Certificate of
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Incorporation of the Corporation, and all amendments thereto, and the Articles
of Organization of the LLC, and all amendments thereto, issued by the
Department of State of their respective states of organization, all of which
shall be dated as of a date within fifteen days prior to the date hereof;
(f) the Non-Compete Agreements attached hereto as
Exhibit "A", duly executed by each of the Holders who is a party thereto;
(g) the Employment Agreement attached hereto as
Exhibit "B", duly executed by Mr. Forgione;
(h) the favorable legal opinion of Jacobson,
Mermelstein & Squire, LLP, counsel for Holders, dated the date hereof, as to
the matters set forth in Exhibit "C" attached hereto;
(i) all affidavits, indemnities and other
agreements required by the Title Company engaged by the Buyer to permit it to
issue to Buyer the Owner's Policy of Title Insurance with respect to the Owned
Properties;
(j) the agreement of Mr. McCann in the form
attached hereto as Exhibit "D"; and
(k) releases (in the form of a return of loan
documents marked "paid") from State Street Bank on behalf of itself and all
other lending banks confirming that all indebtedness has been repaid (based
upon the wire transfer made pursuant to Article 2(a)(i)(A)), accompanied by
executed U.C.-3 termination statements and mortgage releases to be available
for filing by the Buyer in respect of the Companies.
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9. Deliveries by Buyer at Closing. Concurrently with the
execution of this Agreement, Buyer will deliver or cause to be delivered to
Holders the following:
(a) evidence of payment to the Bank pursuant to sub
Article 2(a) of this Agreement in full;
(b) the aggregate amount of $110 million minus the
payment to the Bank pursuant to sub Article 2(a) of this Agreement;
(c) the Certificate of the President or Secretary
of Buyer, dated as of the date hereof, confirming that the necessary corporate
action has been taken to authorize the consummation by Buyer of the
transaction provided for herein;
(d) the Non-Compete Agreements attached hereto as
Exhibit "A", duly executed by Buyer; and
(e) the Employment Agreement attached hereto as
Exhibit "B", duly executed by Buyer and, pursuant to Buyer's authorization, by
each of the Companies.
10. Indemnification of Buyer.
(a) Basic Provision. The Holders hereby jointly and
severally indemnify and agree to hold harmless Buyer, the Corporation and the
LLC and each of their respective successors and assigns and each such entity's
officers, directors, shareholders and agents (each of whom shall be a third
party beneficiary hereof) from, against and in respect of the amount of any
and all Deficiencies (as hereinafter defined).
(b) Definition of "Deficiencies". As used in this
Article 10, "Deficiencies" means any and all loss or damage resulting from:
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(i) any breach of any representation or
warranty, or any non-fulfillment of any representation, warranty, covenant or
agreement on the part of the Holders contained herein;
(ii) all unfunded liabilities under any
Plan, and any tax or penalty incurred in connection with, or with respect to,
such unfunded liabilities; (iii) (A) any Taxes of the Corporation or the LLC
with respect to any Tax year or portion thereof ending on or before the date
hereof (or for any Tax year beginning before and ending after the date hereof
to the extent allocable (as determined in a manner consistent with sub Article
11(a) to the portion of such period beginning before and ending on the date
hereof);
(B) any unpaid Taxes of any person
(other than that of the Corporation or the LLC) under Regulation Section
1.1502-6 (or any similar provision of state, local, or foreign law), or as a
transferee or successor, by contract or operation of law, or otherwise;
(iv) any liabilities or obligations of the
Corporation or the LLC to any director, officer, employee, consultant or other
person (other than Holders) arising as a result of the acquisition by Buyer of
the Shares and the Membership Interests; and
(v) (i) any claim by McWorther
Technologies, Inc. with respect to US Patent No. 5,637,654 as described in
Schedule 5(i)(iv); and (ii) the claim by Leo R. Belanger and Patricia A.
Belanger described in Schedule 5(p), and the claims by Alliance Tech and
National Starch described in Schedule 5(l), but only to the extent such loss
or damage is not covered by insurance.
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(vi) any and all actions, suits,
proceedings, demands, assessments, penalties, liabilities, judgments,
reasonable attorneys' fees, costs, expenses and interest incident to any of
the foregoing, provided that the Deficiency shall have been established.
(c) Procedures for Establishment of Deficiencies.
(i) In the event that any claim shall be
asserted against Buyer, the Corporation or the LLC which, if sustained, would
result in a Deficiency, Buyer, within a reasonable time after learning of such
claim, shall notify the Holders of such claim, and shall extend to the Holders
a reasonable opportunity to defend against such claim, at the Holders' sole
expense and through legal counsel reasonably satisfactory to Buyer, provided
that the Holders proceed in good faith, expeditiously and diligently. Buyer
shall, at its option and expense, have the right to participate in any defense
undertaken by the Holders with legal counsel of its own selection. If the
Holders, in the reasonable judgment of Buyer, have failed to prosecute such
defense in good faith in an expeditious and diligent manner, Buyer shall have
the right to defend and/or settle such claim on behalf of the Holders. No
settlement or compromise of any claim which may result in a Deficiency may be
made by the Holders without the prior written consent of Buyer unless the
proposed settlement is solely a monetary settlement and prior to such
settlement or compromise, any Deficiency (including the costs of defense)
shall first be charged against and shall be payable out of the Holdback, or,
if the Holdback has been or is likely to be exhausted, the Holders acknowledge
in writing their obligation to pay in full the amount of the settlement and
all associated expenses and Buyer is furnished with either (A) security
reasonably
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satisfactory to Buyer that the Holders will in fact pay such amount and
expenses, or (B) a full release from the claimant in form and substance
reasonably satisfactory to Buyer.
(ii) In the event that Buyer asserts the
existence of any Deficiency, Buyer shall give written notice to the Holders of
the nature and amount of the Deficiency asserted. Buyers shall reasonably
cooperate with such actions as the Holders or their representative may seek to
take to mitigate the impact of any alleged breach. Such request shall not be
deemed to constitute an admission of liability on the part of the Holders. If
the Holders, within a period of 15 business days after the giving of such
notice by Buyer, shall not give written notice to Buyer announcing their
intention to contest such assertion of Buyer (such notice by the Holders being
hereinafter called the "Contest Notice"), such assertion of Buyer shall be
deemed accepted and the amount of the Deficiency shall be deemed established.
In the event, however, that a Contest Notice is given to Buyer within said
fifteen-day period, then the contested assertion of a Deficiency may be
established by judicial determination.
(iii) Buyer and the Holders may agree in
writing, at any time, as to the existence and amount of a Deficiency, and,
upon the execution of such agreement, such Deficiency shall be deemed
established.
(d) Payment of Deficiencies. Any Deficiency shall first be
payable out of the Holdback. Thereafter, the Holders, jointly and severally,
hereby agree to pay in cash the amount of each established Deficiency to Buyer
within five days after the final establishment thereof. Any amounts not paid
by the Holders when due under this sub Article 10(d) shall bear interest from
the due date thereof until the date paid at a rate equal to 3% over the "prime
rate" as published from time to time in the Wall Street Journal.
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(e) Limitation. Notwithstanding the foregoing, there shall
be no liability for any Deficiency: (a) unless the aggregate of all
Deficiencies exceeds $100,000, in which event there shall be liability for all
Deficiencies, and (b) to the extent that the aggregate of all Deficiencies
exceeds $10 million, in which event there shall be liability for all
Deficiencies up to an aggregate of $10 million. Notwithstanding the foregoing
provisions of this sub Article 10(e) or any other provisions in this
Agreement, there shall be no limitation on the joint and several liability of
the Holders to Buyer under this Article 10 for (i) any Deficiency described in
sub Articles 10(b)(ii), (iii), (iv) and (vi) (as it relates to sub Articles
10(b)(ii), (iii) and (iv)), (ii) any Deficiency relating to or arising from
any breach of a representation or warranty of the Holders that is qualified as
to the Holders' knowledge or any knowing breach of a representation or
warranty of Holders herein that is not qualified as to the Holders' knowledge,
or (iii) any Deficiency relating to or arising from the breach of the
representations or warranties set forth in sub Articles 5(a), 5(b), 5(d) and
5(g), provided, however, that the liability arising pursuant to this Article
10 shall in no event exceed the sum of $110,000,000.
11. Tax Covenants Relating to the Corporation and the LLC.
(a) The following provisions shall govern the
allocation of responsibility as between Buyer and Holders for certain Tax
matters following the date hereof.
(i) Holders at their expense shall timely
prepare or cause to be prepared and file or cause to be filed all Returns for
the Corporation and the LLC for all tax periods ending on or prior to the date
hereof which are filed after the date hereof. Copies of all such returns shall
be made available to Buyer at least 10 days prior to the date on which they
are to be filed. If any such Return indicated that the Corporation or the LLC
has incurred any
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liability for Tax, the Holders shall cause such Tax to be paid to the
appropriate tax authority on or before the last date on which payment thereof
may be made without penalty.
(ii) Buyer at its expense shall timely
prepare or cause to be prepared and file or cause to be filed all Returns for
the Corporation and the LLC for Tax periods which begin before the date hereof
and end after the date hereof and shall pay the Taxes due with respect to such
Returns. Holders shall pay to Buyer the excess of (1) a pro rated amount
(calculated as described in sub Article 11(a)(ii)(A), (B) or (C)) of the Taxes
of each of the Corporation and the LLC for any such period over (2) the amount
of the Taxes paid by each of the Corporation and the LLC (or by the Holders in
respect of attributed net income of the Corporation or the LLC) on or prior to
the date hereof with respect to such period. Such payment by Holder to the
Buyer shall be made within 15 days after receipt by the Holder of a request
for payment from Buyer which includes the Return, if available, or any other
document used to calculate the pro rated amount of the Taxes.
(A) In the case of Taxes imposed
upon or measured by net income (except if the Taxes arise by reason of an
election under Section 338(h)(10) of the Code), the pro rated amount shall be
the amount of the Taxes for the period, multiplied by a fraction, the
numerator of which shall be the net income and gain of the Corporation or the
LLC, as the case may be, for that portion of the tax period ending on the date
hereof, and the denominator or which shall be the net income and gain of the
Corporation or the LLC, as the case may be, for the period.
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(B) In the case of all Taxes
imposed upon or measured by property or capital, the pro rated amount shall be
based upon the number of days in the period up to and including the date
hereof divided by the total number of days in the tax period.
(C) In the case of all Taxes
other than those imposed upon or measured by net income (except if the Taxes
arise by reason of an election under Section 338(h)(10) of the Code)or
property or capital, including but not limited to gross receipts taxes, sales
and use taxes, and payroll taxes, the pro rated amount shall be based upon the
transactions occurring on or before the date hereof.
If the amount of any Taxes paid by the Corporation
or the LLC (or by the Holders in respect of attributed net income of the
Corporation or the LLC) on or prior to the date hereof with respect to any tax
period which includes the date hereof but which does not end on or before the
date hereof exceeds the amount of such Tax pro rated to the portion of the
period ending on the date hereof, Buyer shall at the expense of the Holders
and using such accountant or legal counsel as the Holders may reasonably
propose and who shall receive authorization by the Corporation, the LLC and/or
Buyer to act as attorney in respect of such tax matter: (i) cooperate to
enable the preparation, execution and filing of such claims for refund or
adjustment as the Holders may reasonably request, (ii) shall provide such
information as may reasonably be relevant or useful to enable such claims for
refund or adjustment to be filed and pursued, and (iii) shall pay to Holder
the amount of such excess within 15 days of its realization by Buyer. In
amplification and not in limitation of the foregoing, Buyer shall authorize a
continuation of the ongoing proceeding commenced by the Corporation and
seeking a refund of, and reduction of the value appraised in respect of,
applicable local real estate taxes. In the event of any refund,
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Holders agree that such recovery shall be reduced by 100% of all contingent
payments paid to the law firm representing the Corporation in such proceeding,
notwithstanding that such legal services have provided a future benefit to the
Buyer.
(iii) Holder and Buyer agree that payments made
pursuant to this sub Article are intended to be adjustments to the Purchase
Price for the Shares and Membership Interests purchased from Holders.
(b) All tax sharing agreements or similar agreements with
respect to or involving the Corporation shall be terminated as of the date
hereof and, after the date hereof, the Corporation shall not be bound thereby
or have any liability thereunder.
(c) All transfer (including real estate), documentary,
sales, use, stamp, registration and other such Taxes incurred in connection
with this Agreement shall be paid by Holders when due, and Holders shall, at
their own expense, file all necessary Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration and
other Taxes and, if required by applicable law, Buyer will, and will cause its
affiliates to, join in the execution of any such Returns and other
documentation.
(d) Buyer and the Holders shall cooperate fully (and cause
the Corporation and the LLC to cooperate fully), as and to the extent
reasonably requested by the other party, in connection with the preparation,
execution and filing of Returns and claims for refund of tax pursuant to this
Agreement and any audit, contest, litigation or other proceeding with respect
to Taxes. Such cooperation shall include retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
themselves, in the case of the Holders, and employees, in the
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case of the Buyer, available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Holders agree (1) to retain all books and records with respect to Tax matters
pertinent to the Corporation and the LLC relating to any Tax period beginning
before the date hereof until the expiration of the stature of limitations
(and, to the extent notified by Buyer, any extensions thereof) of the
respective taxable periods (unless such items were transferred pursuant to
this Agreement), and to abide by all record retention agreements entered into
with any Tax authority, and (2) to give Buyer reasonable written notice prior
to transferring, destroying or discarding any such books and records and, if
the Buyer so requests, Holders shall allow the Buyer to take possession of
such books and records.
(e) Buyer and the Holders agree, upon request, to use their
best effort to obtain any certificate or other document from any governmental
authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
(f) Buyer and Holders agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to Code Section 6043 and all Regulations promulgated thereunder.
(g) Buyer shall promptly notify the Holders in writing of
the commencement of any claim, audit, examination, or other proposed change or
adjustment by any tax authority concerning any Tax or other similar claim or
assessment for which the Holders may be responsible (a "Tax Claim"); provided,
however, that failure to give such notice shall not relieve any party from its
obligation to indemnify with respect to any such Tax Claim except to the
extent of actual prejudice. Holders shall have the right to employ counsel of
their choice at their
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expense and to participate with Buyer, Corporation and the LLC in resolving
any dispute of Taxes with respect to tax periods beginning before the date
hereof through the appropriate administrative offices and in the courts, and
shall have primary responsibility for the conduct of any such proceedings
relating solely to periods ending on or before the date hereof.
(h) Except as otherwise provided in this Article 11, the
party preparing a Return or required to prepare a Return shall control
resolution of any audit or investigation, and any proceedings with taxing
authorities, with respect to the Tax liability relating to such Return.
However, the party entitled to control any such audit, investigation or
proceeding shall extend to the party with economic liability for any Taxes at
issue therein the opportunity to assume the defense of the matter using
accountants or tax counsel reasonably proposed by the party having such
economic liability.
(i) Tax Covenants Relating Solely to the LLC.
(i) The Holder shall include Buyer as a partner on
the LLC's federal partnership income tax return for the taxable period ending
at the close of business on the date hereof ("LLC's Final Return") and shall
provide Buyer respectively, with a separate Form K-1 prepared for each of
them. On such tax return and Form K-1, Buyer shall be shown as partners owning
100% of the capital interest and 100% of the profits interest of LLC at the
close of business on the date hereof, but no items of income, gain, loss, or
deduction shall be allocated to Buyer on such tax return or the Form K-1
prepared for each of them.
(ii) The Holders shall cause the LLC to timely file
with the LLC's Final Return, and no later than the time prescribed for filing
such Return, a statement conforming to the requirements prescribed in Treasury
Regulation ss.1.754-1(b)(1) making the election
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permitted under section 754 of the Code to adjust the basis of the LLC's
property in the manner provided in sections 743 and 755 of the Code.
(iii) Holders shall deliver to Buyer fifteen days
prior to the date it intends to file the LLC's Final Return a copy of such
Return (together with all attachments, schedules and elections) and Buyer
shall within five days of the receipt of such Return provide to Holders any
comments with respect to such Return. Holders agree to incorporate within such
Return any revisions to such Return proposed by Buyer unless Holders receive a
written opinion of Holtz Rubinstein) or of recognized tax counsel, (which is
provided to Buyer at least 5 days prior to the date Holders intend to file the
LLC's Final Return), that making such revisions would subject Holders to a
penalty or additions to tax.
(iv) Holders shall cause the LLC to timely file IRS
Form 8308 as required by and conforming to the requirements set forth in
Treasury Regulations ss.1.6050K-1 and section 6050K of the Code.
(v) Holders agree to promptly pay any tax liability
or to include on their individual tax returns their distributive share of each
item of income, gain, loss or deduction as determined by the Buyer's
accountant for the period included in any such Return which is attributable to
a period beginning before and ending on the date hereof, as if such period
constituted a separate taxable year with respect to which the books of the LLC
were closed when such period ended at the close of business on the date
hereof.
(j) Covenants Relating to the Corporation. Buyer
and Holders agree that each will join in making the election under Section
338(h)(10) of the Code with respect to the purchase by Buyer of all of the
Shares as contemplated by this Agreement. Buyer
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and Holders acknowledge that pursuant to such election, the Corporation will
be treated for federal income tax purposes (and under state and local income
tax laws, to the extent permitted) as having sold its assets in the manner set
forth in Treasury Regulation Section 1.338(h)(10)-1. The parties acknowledge
that (i) for federal income tax purposes, the Corporation shall be deemed to
have sold all of its assets at the date hereof and distributed the proceeds
received from the Buyer in liquidation of the Corporation, (ii) the
Corporation's final "S" corporation tax year will end at the close of business
on the date hereof, and (iii) as of the opening of business on the day after
the date hereof, Corporation will be deemed to be a new corporation which
purchased all of its assets. Buyer and Holders shall report all transactions
and make all filings with the Internal Revenue Service (and state and local
income tax authorities, to the extent permitted) consistent with this
election. The election under Section 338(h)(10) of the Code shall be made on
Form 8023 (revised September 1997), shall be prepared and filed by the Buyer
and four copies of Form 8023 shall on the date hereof be signed by the
appropriate corporate officers and each Holder. With respect to the Forms 8023
to be signed on the date hereof, the Buyer shall fill in as much of the
information required to be put on the Form and in attachments thereto with
respect to the Corporation, Buyer and the Holders as is reasonably
ascertainable by the date hereof. The balance of the information required on
or with the Forms shall be filled in and added as soon after the date hereof
as possible. Holders agree to provide Buyer with the information which Buyer
needs to include on the Form which relates to Holders and the Corporation.
Buyer shall file a completed and fully executed Form 8023 with the appropriate
District Director for the Internal Revenue district as is provided in the
instructions to the Form 8023. Buyer shall provide to the Holders copies of
the Form 8023 that is filed with the District Director as soon as it is
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completed and ready for filing. Each Holder agrees to timely file the copies
of the Form 8023 provided to it by the Buyer in the manner called for in the
instructions to the Form 8023.
12. Indemnity Against Brokerage Commissions; Certain Transaction Costs.
(a) Buyer and the Holders hereby represent and warrant to
one another that there is no corporation, firm or person entitled to receive
from any of them any brokerage commission or finder's fee in connection with
this Agreement or the transaction provided for herein as engaged by the Buyer
or by the Holders respectively, and each of Buyer, on the one hand, and the
Holders, on the other hand, hereby indemnifies and agrees to save the other
harmless from and against any claim for brokerage commission or finder's fee
based on any retention or alleged retention of a broker or finder by it or
them. In amplification and not in limitation of the foregoing, Buyer confirms
that no brokerage commission shall inure to DLJ or to JP Morgan, and that
their services shall be an expense of the Buyer.
(b) If and to the extent that the Working Capital of the
Companies as determined pursuant to Article 2(b) exceeds $6,664,050, the Buyer
shall, within 30 days following the determination pursuant to Article 2(b) and
based upon an invoice which Holders shall present, reimburse the Holders for
their reasonable and actual "Transaction Costs" not previously paid by the
Companies prior to the date hereof, up to the amount of such excess Working
Capital. "Transaction Costs" shall mean the professional fees and
disbursements as charged by the Companies' or Holders' legal and accounting
advisors in respect of this transaction.
13. Further Assurances; Rollover.
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(a) Buyer and Holders agree to execute and deliver all such
other instruments and take all such other action as any party may reasonably
request from time to time, after the date hereof and without payment of
further consideration, in order to effectuate the transaction provided for
herein. The parties shall cooperate fully with each other and with their
respective counsel and accountants in connection with any steps required to be
taken as part of their respective obligations under this Agreement, including,
without limitation, the preparation of financial statements and Tax Returns.
(b) The Companies will permit the Holders at any time or
from time to time hereafter to effect the withdrawal and roll-overs of amounts
from their accounts in any retirement or benefit plan in which the Holder is
currently a participant in accordance with the terms of such plans and
applicable law. Neither the Companies nor the Buyer shall have any liability
for the tax or other consequences of any actions which are taken or not taken
by the Holders in respect of their above accounts.
14. Consent to Jurisdiction, Service of Process, Appointment of Agent.
(a) Each of the Holders hereby irrevocably submits to the
jurisdiction of any New York State or Federal Court sitting in the City of New
York over any suit, action or proceeding arising out of or relating to this
Agreement. Holders hereby irrevocably waive, to the fullest extent permitted
by applicable law, any objection which they or any of them may now have or
hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such court and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum.
Each of the Holders agrees that, to the fullest extent permitted by applicable
law, a final judgment in any such suit, action, or proceeding brought in
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such a court shall be conclusive and binding upon the Holders, and may be
enforced in any courts of the jurisdiction of which the Holders are or may be
subject by a suit upon such judgment, provided that service or process is
effected upon the Holders in one of the manners specified in sub Article (b)
below or as otherwise permitted by applicable law.
(b) Each of the Holders hereby consents to process being
served in any suit, action or proceeding of the nature referred to in sub
Article (a) above by the mailing of a copy thereof by registered or certified
first-class air mail, postage prepaid, return receipt requested, to Leon I.
Jacobson at his address set forth is sub Article 15(c) hereof, as agent for
service of process, or, in the event of the unavailability of such agent for
service of process to such Holder at his address set forth in sub Article
15(c) hereof.
(c) Nothing in this Article 14 shall affect the right of
Buyer to serve process in any manner permitted by law or affect the right of
Buyer to bring proceedings against the Holders, or any of them, in the courts
of any jurisdiction or jurisdictions.
(d) Each of the Holders hereby irrevocably appoints Leon I
Jacobson, as such Holder's attorney-in-fact and agent (sometimes in this
Agreement referred to as the "Holders' Agent") to take any actions to execute
any documents on such Holder's behalf with respect to this Agreement and the
transactions provided for herein, including but not limited to the making and
execution of any amendments to this Agreement, the giving and receipt of any
notices pursuant hereto, the execution of any and all documents required to be
executed in order to complete closing hereunder, the acceptance of service of
process in connection with any claim related to this Agreement and the
compromise or settlement of any and all disputes which may hereafter arise
pursuant to an provision of this Agreement or any matter
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or thing growing out of this Agreement of the transaction provided for herein.
Such appointment shall, to the fullest extent permitted by law, survive the
death or incompetency of any Holder in the event of the incompetency,
incapacity, bankruptcy, death or resignation of the Holder's Agent, the
Holders shall appoint a successor to serve in such capacity and shall give
Buyer written notice of such appointment.
15. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on
the part of either party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the State of
New York, notwithstanding any conflict-of-laws doctrines of such state or
other jurisdiction to the contrary, and without the aid of any canon, custom
or rule of law requiring construction against the draftsman.
(c) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been
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duly given, made and received only when delivered (personally, by courier
service such as Fedex, or by other messenger), when sent by electronic
facsimile or four days following the day when deposited in the United States
mails, registered or certified air mail, postage prepaid, return receipt
requested, addressed as set forth below:
(i) If to Buyer:
Sybron Chemicals Inc.
Birmingham Road
Birmingham, NJ 08011
Fax #: 609-894-8641
Attention: Richard M. Klein,
President
with a copy, given in the manner prescribed above, to:
David Gitlin, Esquire
Wolf, Block, Schorr and Solis-Cohen LLP
Twelfth Floor, Packard Building
111 South Fifteenth Street
Philadelphia, PA 19102-2678
Fax: (215) 977-2740
(ii) If to Holders:
Louis T. Camilleri
1603 Dewey Drive
North Bellmore, NY 11710
Fax: (516) 679-5338
Anthony Forgione
2 20th Avenue
Bay Shore, NY 11706
Fax: (516) 665-6419
Joseph Mitola
18 Blanchard Street
West Babylon, NY 11704
Fax: (516) 587-8413
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Joseph A. Ruffing
125 Page Drive
Oakland, NJ 07436
Fax: (201) 337-4769
with a copy, given in the manner prescribed above, to:
Leon I. Jacobson, Esq.
Jacobson, Mermelstein & Squire, LLP
52 Vanderbilt Avenue
New York, New York 10017
Fax: (212) 697-1427
Any party may alter the address to which
communications or copies are to be sent by giving notice of such change of
address in conformity with the provisions of this sub Article for the giving
of notice.
(d) Exhibits and Schedules. All Exhibits and Schedules
attached hereto are hereby incorporated by reference into, and made a part of,
this Agreement.
(e) Binding Nature of Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
(f) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or
taken together, shall bear the signatures of all of the parties reflected
hereon as the signatories.
(g) Provisions Separable. The provisions of this Agreement
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or
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unenforceable by virtue of the fact that for any reason any other or others of
them may be invalid or unenforceable in whole or in part.
(h) Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or
written, except as herein contained.
(i) Article Headings. The Article and sub Article headings
in this Agreement are for convenience only; they form no part of this
Agreement and shall not affect its interpretation.
(j) Gender and Number. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context indicates is appropriate.
(k) Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and Holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or Holiday; then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or such Holiday. For
purposes of this sub Article, "Holiday" shall mean a day, other than a
Saturday or Sunday, on which national banks are or may elect to be closed.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their proper and duly authorized officers, on the
date first above written.
SYBRON CHEMICALS INC.
Attest: /s/ Albert L. Eilender By: /S/ Richard M. Klein
---------------------- ---------------------------------
Richard M. Klein,
President
/S/ Louis T. Camilleri
----------------------------
Louis T. Camilleri
/S/ Anthony F. Forgione
----------------------------
Anthony F. Forgione
/S/ Joseph Mitola
----------------------------
Joseph Mitola
/S/ Joseph A. Ruffing
----------------------------
Joseph A. Ruffing
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<PAGE>
EXHIBIT A
NON-COMPETITION AGREEMENT
THIS AGREEMENT is made this 30th day of July, 1998 effective the
close of business on July 31, 1998, by and among Sybron Chemicals Inc., a
Delaware corporation ("Sybron"), Ruco Polymer Corporation, a New York
corporation ("Ruco Corp."), Ruco Polymer Company of Georgia, LLC, a Delaware
limited liability company ("Ruco LLC"), and Anthony F. Forgione ("Holder").
Ruco Corp. and Ruco LLC are sometimes referred to collectively herein as the
"Company."
W I T N E S S E T H:
WHEREAS, Sybron and Holder are parties to a Capital Stock and
Membership Interest Purchase Agreement (the "Acquisition Agreement"), dated as
of the date hereof, pursuant to which Sybron is acquiring all of the issued
and outstanding shares of capital stock of Ruco Corp., and all of the
outstanding membership interests of Ruco LLC; and
WHEREAS, Holder owns a portion of the outstanding capital stock of
Ruco Corp. and a portion of the outstanding membership interests of Ruco LLC,
and will receive direct financial benefits from the consummation of the
transactions set forth in the Acquisition Agreement; and
WHEREAS, as a material and significant inducement to Sybron to enter
into and consummate the transactions set forth in the Acquisition Agreement,
Holder has agreed not to compete with Sybron or the Company or use or divulge
certain information with respect to the business of the Company or Sybron.
NOW, THEREFORE, in consideration of the foregoing, and as a condition
to Sybron's obligation to consummate the transactions contemplated in the
Acquisition Agreement, the parties, each intending to be legally bound, agree
as follows:
1. Non-Competition, Trade Secrets, Etc.
(a) Holder agrees that, for a period of five years from the
date hereof, he shall not, directly or indirectly:
(i) solicit, induce or encourage any employee of
Sybron or the Company to terminate his or her relationship with Sybron or the
Company; or
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<PAGE>
(ii) employ or establish a business relationship
with, or encourage or assist any individual or entity to employ or establish a
business relationship with, any individual who was employed by Sybron or the
Company during the preceding twelve month period; or
(iii) solicit, induce or encourage any clients,
prospective clients, customers, prospective customers or suppliers of Sybron
or the Company to terminate or reduce in scope their relationship with Sybron
or the Company; or
(iv) solicit or assist any individual or entity in
the solicitation of business from, or performance of work for, any clients or
prospective clients of Sybron or the Company; or
(v) engage in (as a principal, agent, consultant,
partner, director, officer, employee, stockholder, investor or otherwise),
alone or in association with any person or entity, or be financially
interested in, any business that is competitive with Sybron or the Company.
(b) For purposes of Paragraph 1, "clients" shall mean those
clients to whom Sybron or the Company sold products or for whom it performed
services during the twelve months preceding the date in question, and
"prospective clients" shall mean persons or entities whose business was
solicited by Sybron or the Company during the twelve months preceding the date
in question.
(c) Holder shall not use for his personal benefit, or
disclose, communicate or divulge to, or use for the direct or indirect benefit
of any person, firm, association or company, (i) any information regarding the
business methods, business policies, business strategies, marketing plans,
survey procedures, statistical techniques, research or development projects or
results, trade secrets or other confidential knowledge or processes of, or
developed by, the Company or Sybron, or (ii) any confidential data on or
relating to past, present or prospective clients of the Company or Sybron, or
(iii) budgets, forecasts, pricing information or unpublished financial
information or any other confidential information relating to or dealing with
the business operations or activities of the Company or Sybron. The
obligations of Holder under this Paragraph shall not relate to information:
(x) that is now or hereafter becomes generally known to the public (A) through
sources independent of Holder and neither directly nor indirectly through any
fault of Holder, or (B) through others entitled to disclose it; or (y) which
must be disclosed pursuant to a court order or otherwise as required by law
provided, however, that Holder shall give prior written notice of such
anticipated disclosure to the Company or Sybron.
(d) Holder acknowledges and agrees that (i) the covenants
set forth herein are essential elements of the transactions contemplated by
the Acquisition Agreement, that Holder is receiving adequate consideration
hereunder, and that such covenants are reasonable
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<PAGE>
and necessary in order to protect the legitimate interests of the Company and
Sybron; (ii) neither Sybron nor the Company will have any adequate remedy at
law if Holder violates the terms hereof or fails to perform any of his
obligations hereunder; and (iii) Sybron and the Company shall have the right,
in addition to any other rights either may have under applicable law, to
obtain from any court of competent jurisdiction preliminary and permanent
injunctive relief to restrain any breach or threatened breach of, or otherwise
to specifically enforce any such covenant or any other obligations of Holder
under, this Agreement, as well as to obtain damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other
rights or remedies to which Sybron or the Company may be entitled.
(e) If the period of time or scope of any restriction set
forth in Paragraph 1(a) should be adjudged unreasonable in any proceeding,
then the period of time shall be reduced by such number of months or the
territory shall be reduced by the elimination of such unreasonable portion
thereof, or both, so that such restrictions may be enforceable for such time
and in the manner adjudged to be reasonable. If Holder violates any of the
restrictions contained in Paragraph 1(a), then the restrictive period shall
not run in favor of Holder from the time of the commencement of any such
violation until such time as such violation shall be cured by Holder.
(f) Holder may, prior to entering upon any activity which
could be deemed in violation of this Section 8, submit to the Corporation and
Sybron a written description of the proposed activity accompanied by a request
that the Corporation and Sybron review such request and indicate whether the
proposed activity will be deemed violative of this Agreement. The Corporation
and Sybron shall use their reasonable efforts to respond to such request in
writing within 30 days after receipt thereof. If they indicate in writing that
they have no objection, Holder may rely upon such non-objection in entering
upon the proposed activity.
2. Compensation. As consideration for the restrictions set forth
in Paragraph 1 above, Holder hereby acknowledges receipt of the sum of
$10,000, constituting a portion of the consideration received and to
be received under Paragraph 2 of the Acquisition Agreement.
3. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on
the part of Sybron or the Company to exercise any right, remedy, power or
privilege under this Agreement (a "Right") shall operate as a waiver thereof,
nor shall any single or partial exercise of any Right preclude any other or
further exercise of the same or of any other Right, nor shall any waiver of
any Right with respect to any occurrence be construed as a waiver of such
Right with respect to any other occurrence. No waiver shall be effective
against Sybron or the Company unless it is in writing and is signed by Sybron
or the Company, as the case may be.
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<PAGE>
(b) Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or by
courier service or mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice, except
that notices of changes of address shall be effective upon receipt):
(i) If to Holder:
Anthony F. Forgione
2 20th Avenue
Bay Shore, NY 11706
Fax: 516-665-6419
with a copy, given in the manner prescribed
above, to:
Leon I. Jacobson
52 Vanderbilt Avenue
New York, New York 10017
Fax #: 212-697-1427
(ii) If to the Company or Sybron:
Sybron Chemicals Inc.
Birmingham Road
Birmingham, NJ 08011
Fax #: 609-894-8641
Attention: Richard M. Klein, President
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<PAGE>
with a copy, given in the manner prescribed
above, to:
David Gitlin, Esquire
Wolf, Block, Schorr and Solis-Cohen LLP
Twelfth Floor, Packard Building
15th and Chestnut Sts.
Philadelphia, PA 19102
Fax #: 215-977-2346
(c) Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(e) Consent to Jurisdiction. Executive hereby irrevocably
submits to the jurisdiction of any New York State or Federal court in any
action or proceeding arising out of or relating to this Agreement, and
Executive hereby irrevocably agrees that all claims in respect of such action
or proceeding may be heard and determined in such New York State or Federal
court.
(f) Binding Nature of Agreement. This Agreement shall be
binding upon and inure to the benefit of Sybron and the Company and their
respective successors and assigns and shall be binding upon Holder, his heirs
and legal representatives.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
SYBRON CHEMICALS INC.
By:______________________________________________
RUCO POLYMER CORPORATION
By:______________________________________________
RUCO POLYMER COMPANY OF GEORGIA, LLC
By:______________________________________________
_______________________________________(SEAL)
Anthony F. Forgione
____________________________________________
Witness:
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<PAGE>
EXHIBIT C
OPINION OF JACOBSON, MERMELSTEIN & SQUIRE, LLP
Sybron Chemicals Inc.
Birmingham Road
Birmingham, New Jersey 08011
Attention: Dr. Richard M. Klein, President
Dear Dr. Klein:
This opinion is provided pursuant to the CAPITAL STOCK AND MEMBERSHIP
INTEREST PURCHASE AGREEMENT made this 30th day of July, 1998 effective at the
close of business on July 31, 1998 by and among Sybron Chemicals Inc. and
Louis T. Camilleri, Anthony F. Forgione, Joseph Mitola, and Joseph A. Ruffing
(collectively, the "Holders").
1. Ruco Polymer Corporation (the "Corporation") is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of New York, is not required to be qualified to do business in any other
state and has the corporate power and authority to own its properties and to
conduct the business in which it is now engaged.
2. Ruco Polymer Company of Georgia, LLC (the "LLC") is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware, is duly qualified to do business in Georgia, is
not required to be qualified to do business in any other state and has the
power and authority to own its properties and to conduct the business in which
it is now engaged.
3. To our knowledge and based on the examination of the corporate
records of the Corporation, all of the issued and outstanding shares of
capital stock of the Corporation are owned by the Holders.
4. To our knowledge and based on the examination of the corporate
records of the LLC, all of the issued and outstanding Membership Interests of
the LLC are owned by the Holders.
5. The Agreement and the documents executed and delivered by the
Holders pursuant thereto have been duly executed and delivered by the Holders
and constitute the legal, valid and binding obligations of the Holders,
enforceable against the Holders in accordance with their terms.
6. The execution and delivery of the Agreement will not contravene
the Corporation's Certificate of Incorporation and bylaws or the LLC's
Certificate of Formation and Operating Agreement.
<PAGE>
7. Except as disclosed on Schedule 5(p) to the Agreement, to our
knowledge (a) neither the Corporation nor the LLC is a party to or threatened
with any material suit, action, arbitration, administrative or other
proceeding, either at law or in equity, or governmental investigation by or
before any court, governmental department, commission, board, agency or
instrumentality, and (b) there is no judgment, decree, award or order
outstanding against the Corporation or the LLC.
Very truly yours,
Jacobson, Mermelstein & Squire, LLP
By: _______________________________
Leon I. Jacobson
cc: Louis T. Camilleri
Anthony F. Forgione
Joseph Mitola
Joseph A. Ruffing
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<PAGE>
EXHIBIT D
AMENDMENT TO EMPLOYMENT AGREEMENT
OF
MICHAEL J. MCCANN
AND
WAIVER OF CERTAIN RIGHTS THEREUNDER
For good and lawful consideration, the receipt of which is hereby
acknowledged, the undersigned hereby acknowledges and agrees, effective at the
close of business on July 31, 1998 and subject to the acquisition by Sybron
Chemicals Inc. upon such date of all of the issued and outstanding shares of
Ruco Polymer Corporation and all of the interests in Ruco Polymer Company of
Georgia, LLC, as follows:
1. The undersigned agrees that: (a) all of the obligations of Ruco
Polymer Corporation and Ruco Polymer Company of Georgia, LLC (together,
"Ruco") under Subparagraphs 4(c) and 4(d) of the Agreement made as of May 1,
1996 between Ruco Polymer Corporation and the undersigned (the "Agreement")
arising or occurring on or before the date hereof have been satisfied in full
by Ruco and/or the equity holders of Ruco; (b) the Agreement is hereby
amended, effective as of the date hereof, by the deletion from the Agreement
of Subparagraphs 4(c) and 4(d) of the Agreement; and (c) any and all rights
that the undersigned has or may have against Ruco or any successor thereof
under Subparagraphs 4(c) and 4(d) of the Agreement are hereby irrevocably
waived.
2. The undersigned shall serve as an executive of Ruco having such title
or titles not less than that of Vice President or its equivalent as may from
time to time be assigned.
3. The duties of the undersigned may be revised to reduce or exclude
those incident to "chief operating officer", provided, however, that the
duties which shall apply shall be those appropriate to an executive.
4. Except as set forth above, all terms and conditions of the Agreement
including its attached Covenants shall continue unmodified and in full force
and effect.
__________________________
Michael J. McCann
Witnessed by:
_____________________
Date: July 30, 1998
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 30th day of July 1998, effective as of the
close of business on July 31, 1998, by and among Ruco Polymer Corporation, a
New York Corporation, Ruco Polymer Company of Georgia, LLC (collectively
"Corporation"), Sybron Chemicals Inc., a Delaware corporation (hereinafter
called "Sybron") and Anthony F. Forgione (hereinafter called "Executive").
W I T N E S S E T H:
Corporation is an indirect wholly owned subsidiary of Sybron. Executive
has been employed as Corporation's President under an Employment Agreement
dated December 20, 1989, extended from time to time by agreement of
Corporation and Executive, and which continues to remain in force and effect
(the "Existing Agreement"). On the effective date hereof, Sybron has acquired
all of the outstanding equity interests in Corporation. Corporation wishes to
continue to employ Executive as President of Corporation and Executive wishes
to remain in that capacity on the terms and conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and intending to be legally bound, Corporation and Executive agree
as follows:
1. Employment. The parties hereby agree to terminate the Existing
Agreement upon the effective date hereof. Upon the effective date this
Agreement, Corporation shall employ Executive and Executive shall accept
employment by Corporation for the period and upon the terms and
conditions contained in this Agreement.
2. Office and Duties.
<PAGE>
(a) Executive shall serve as President of Corporation,
carrying out all of the responsibilities set forth in the "Job Description"
attached hereto as Exhibit "A". As part of those responsibilities, Executive
shall serve as a member of Sybron's Management Committee and present to
Sybron's Board of Directors on a quarterly basis a report on Corporation's
operations. Executive also shall report to, and carry out the policies from
time to time established by, the Chief Executive Officer of Sybron and the
Board of Directors of Corporation. In addition, Executive shall have such
authority and such additional responsibilities as Corporation reasonably may
determine from time to time.
(b) Subject to vacation, illness and disability, throughout
the term of this Agreement, it is expected that Executive shall devote his
entire working time, energy, skill and best efforts to the performance of his
duties hereunder in a manner which will faithfully and diligently further the
business and interests of Corporation. Without limiting the foregoing,
Executive shall be permitted to spend a reasonable amount of time, on an as
needed basis only, to assist in protecting the Sellers' rights under that
Capital Stock and Membership Interest Agreement of even date herewith entered
into in connection with Sybron's acquisition of Corporation.
3. Term. Executive, Corporation and Sybron intend that Executive
remain in the employ of Corporation for a minimum period of two years,
commencing on the date hereof and ending on the second anniversary of the
date hereof, unless sooner terminated as hereinafter provided.
Notwithstanding the foregoing, this Agreement shall continue in full
force and effect until terminated by either party at any time and for any
reason by
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<PAGE>
written notice to the other party no less than six months prior to the
effective date of termination.
4. Compensation. For all of the service rendered by Executive to
Corporation, Executive shall receive the following compensation:
(a) An annual base salary of $200,000, subject to
discretionary annual increases as determined by the Corporation's Board of
Directors, payable in periodic installments and in accordance with
Corporation's regular payroll practices in effect from time to time.
(b) An option to purchase 25,000 shares of Sybron's Common
Stock (the "Stock"), in accordance with the Stock Option attached hereto as
Exhibit "B". The price of such options shall be the Stock's closing price at
the end of business on the day immediately preceding the effective date
hereof.
(c) Incentive compensation pursuant to a performance-based
incentive program to be established for Executive by Sybron. Such incentive
compensation program is attached hereto as Exhibit "C". Bonuses due under this
subparagraph shall be payable no later than 90 days after the end of the year
to which the bonus relates. In accordance with all applicable terms and
conditions of Sybron's existing Executive Bonus Plan attached hereto as
Exhibit "D", the first $50,000 in incentive bonus earned under this
subparagraph shall be paid in Stock.
(d) Except in the event the Executive's employment shall be
terminated by the Corporation with "Cause," as such term is defined in
Paragraph 6, the Corporation shall continue to provide at no expense to
Executive the health care benefits to be provided under Paragraph 4(e) hereof
until the earlier of Executive's 65th birthday or his death.
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<PAGE>
(e) Throughout the term of this Agreement and as long as
they are kept in force by Corporation, Executive shall be entitled to
participate in and continue to receive the benefits of any benefit plans or
programs made available to other similarly situated employees of Corporation,
except that Executive, in light of the six months notice provision set forth
in Paragraph 3, shall not be entitled to participate in any such severance
plans or programs. It is understood that Sybron or Corporation reserves the
right to supplement, modify or terminate any such programs.
(f) Executive shall be entitled to take five weeks paid
vacation per year, to be taken consistent with his ability to discharge
effectively his duties and responsibilities to the Corporation.
5. Automobile and Expenses.
(a) Executive shall be reimbursed up to $650 per month for
the expenses associated with the leasing of a vehicle used primarily for
business purposes, plus the costs of fuel and maintenance. In addition,
Corporation shall pay for the costs of insurance associated with the leasing
of such vehicle.
(b) Corporation will reimburse Executive for all reasonable
and necessary expenses incurred by Executive in connection with the
performance of Executive's duties hereunder upon receipt of vouchers therefor
and in accordance with Corporation's regular reimbursement procedures and
practices in effect from time to time.
6. Discharge for Cause. Corporation may discharge Executive at any
time for (a) criminal conduct which may result in harm to Corporation or
any other act or omission resulting or intended to result directly or
indirectly in gain to, or personal enrichment of,
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<PAGE>
Executive at the Corporation's expense, (b) habitual intoxication or drug
addiction, (c) any violation of any express direction or any reasonable
rule or regulation established by Corporation from time to time regarding
the conduct of its business, or any act or omission constituting gross
misconduct which is or is intended to be injurious to Corporation, (d)
the willful failure of Executive to perform his duties hereunder, which
failure continues uncured for 30 days after Executive receives notice
thereof from Corporation, or (e) any violation by Executive of the terms
and conditions of this Agreement.
6A. If Corporation terminates the services of the Executive for cause,
or in the event Executive terminates his employment with Corporation or
such employment terminates by reason of death or disability, Corporation
shall have no further obligations or liabilities to Executive after the
date of such discharge or termination, other than (i) the obligation to
pay any unpaid compensation and reimbursement for expenses through the
date of such discharge or termination; (ii) to fulfill its obligations
pursuant to Section 9 below and (iii) to continue health care benefits
pursuant to Section 4(d) unless termination arises under Section 6.
7. Corporation Property. All materials or data of any kind furnished
to Executive by Corporation or Sybron, or developed by Executive on
behalf of Corporation or Sybron, or at the direction of Corporation or
Sybron, or for the use of Corporation or Sybron, or otherwise in
connection with Executive's employment hereunder, are and shall remain
the sole and confidential property of Corporation or Sybron; if
Corporation or Sybron requests the return of such materials at any time
during, at or after the termination of Executive's employment, Executive
shall immediately deliver the same to Corporation or Sybron.
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<PAGE>
8. Noncompetition, Trade Secrets, Etc.
(a) During the term of this Agreement and for a period equal to
the longer of (i) five years after the effective date hereof, and (ii)
eighteen months after the termination of such employment with Corporation for
any reason whatsoever, Executive shall not, directly or indirectly:
(i) solicit, induce or encourage any Executive of
Sybron or Corporation to terminate his or her relationship with Sybron or
Corporation; or
(ii) employ or establish a business relationship
with, or encourage or assist any individual or entity to employ or establish a
business relationship with, any individual who was employed by Sybron or
Corporation during the preceding twelve month period; or
(iii) solicit, induce or encourage any clients or
prospective clients, customers, prospective customers or suppliers of Sybron
or Corporation to terminate or reduce in scope their relationship with Sybron
or Corporation; or
(iv) solicit or assist any individual or entity in
the solicitation of business from, or performance of work for, any clients or
prospective clients of Sybron or Corporation; or
(v) engage in (as a principal, agent, consultant,
partner, director, officer, Executive, stockholder, investor or otherwise),
alone or in association with any person or entity, or be financially
interested in, any business which is competitive with Sybron or Corporation.
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<PAGE>
(b) For purposes of subparagraph (a) above, "customers" shall mean
those customers to whom Sybron or Corporation sold products or for whom it
performed services during the twelve months preceding the date in question,
and "prospective customers" shall mean persons or entities whose business was
solicited by Sybron or Corporation during the twelve months preceding the date
in question.
(c) Executive shall not use for his personal benefit, or disclose,
communicate or divulge to, or use for the direct or indirect benefit of any
person, firm, association or company, (i) any information regarding the
business methods, business policies, business strategies, marketing plans,
survey procedures, statistical techniques, research or development projects or
results, trade secrets or other confidential knowledge or processes of, or
developed by, Corporation or Sybron, or (ii) any confidential data on or
relating to past, present or prospective customers of Corporation or Sybron,
or (iii) budgets, forecasts, pricing information or unpublished financial
information or any other confidential information relating to or dealing with
the business operations or activities of Corporation or Sybron. The
obligations of Executive under this Paragraph shall not relate to information:
(x) that is now or hereafter becomes generally known to the public (A) through
sources independent of Executive and neither directly nor indirectly through
any fault of Executive, or (B) through others entitled to disclose it; or (y)
which must be disclosed pursuant to a court order or otherwise as required by
law, provided, however, that Executive gives prior written notice of such
anticipated disclosure to Corporation or Sybron.
(d) Any and all writings, inventions, software, improvements,
processes, procedures and/or techniques which Executive may make, conceive,
discover or develop, either solely or
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<PAGE>
jointly with any other person or persons, at any time during the term of this
Agreement, whether during working hours or at any other time and whether at
the request or upon the suggestion of Corporation or Sybron or otherwise,
which relate to or are useful in connection with any business now or hereafter
carried on or contemplated by Corporation, including developments or
expansions of its present fields of operations, shall be the sole and
exclusive property of Corporation. Executive shall make full disclosure to
Corporation of all such writings, inventions, improvements, processes,
procedures and techniques, and shall do everything necessary or desirable to
vest the absolute title thereto in Corporation. Executive shall not be
entitled to any additional or special compensation or reimbursement regarding
any and all such writings, inventions, improvements, processes, procedures and
techniques.
(e) Executive acknowledges and agrees that (i) the covenants set
forth herein are reasonable and necessary in order to protect the legitimate
interests of Corporation and that he is receiving adequate consideration
hereunder; (ii) Corporation will not have any adequate remedy at law if
Executive violates the terms hereof or fails to perform any of his obligations
hereunder; and (iii) Corporation shall have the right, in addition to any
other rights either may have under applicable law, to obtain from any court of
competent jurisdiction preliminary and permanent injunctive relief to restrain
any breach or threatened breach of, or otherwise to specifically enforce any
such covenant or any other obligations of Executive under, this Agreement, as
well as to obtain damages and an equitable accounting of all earnings, profits
and other benefits arising from such violation, which rights shall be
cumulative and in addition to any other rights or remedies to which
Corporation may be entitled.
-8-
<PAGE>
(f) If the period of time or scope of any restriction set forth in
subparagraph (a) above should be adjudged unreasonable in any proceeding, then
the period of time shall be reduced by such number of months or the scope of
the restriction shall be reduced by the elimination of such unreasonable
portion thereof, or both, so that such restrictions may be enforceable for
such time and in the manner adjudged to be reasonable. If Executive violates
any of the restrictions contained in subparagraph (a) above, then the
restrictive period shall not run in favor of Executive from the time of the
commencement of any such violation until such time as such violation shall be
cured by Executive.
(g) Executive may, prior to entering upon any activity which could be
deemed in violation of this Section 8, submit to the Corporation and Sybron a
written description of the proposed activity accompanied by a request that the
Corporation and Sybron review such request and indicate whether the proposed
activity will be deemed violative of this Section 8. The Corporation and
Sybron shall use their reasonable efforts to respond to such request in
writing within 30 days after receipt thereof. If they indicate in writing that
they have no objection, the Executive may rely upon such non-objection in
entering upon the proposed activity.
9. Indemnification.
(a) The Executive shall be entitled to indemnification by the
Corporation and Sybron, and to inclusion in such directors and officers
liability insurance as the Corporation and/or Sybron may from time to time
maintain, on terms no less favorable to the Executive than those applying to
any senior officer of the Corporation and/or Sybron.
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<PAGE>
(b) Nothing contained in (a) above shall reduce, waive, limit or
otherwise adversely affect the obligations of the Executive as a "Holder", or
the rights of Sybron as the "Buyer" under the Capital Stock and Membership
Interest Purchase Agreement entered into effective at the close of business on
July 31, 1998.
10. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on the part
of the Corporation to exercise any right, remedy, power or privilege under
this Agreement (a "Right") shall operate as a waiver thereof, nor shall any
single or partial exercise of any Right preclude any other or further exercise
of the same or of any other Right, nor shall any waiver of any Right with
respect to any occurrence be construed as a waiver of such Right with respect
to any other occurrence. No waiver shall be effective against the Corporation
unless it is in writing and is signed by the Corporation.
(b) Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or by
courier service or mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice, except
that notices of changes of address shall be effective upon receipt):
(i) If to Executive:
Anthony F. Forgione
2 20th Avenue
Bay Shore, NY 11706
Fax #: 1 (516) 665-6419
with a copy, given in the manner prescribed
above, to:
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<PAGE>
Leon I. Jacobson, Esquire
Jacobson, Mermelstein & Squire LLP
52 Vanderbilt Avenue
New York, New York 10017
Fax: 1 212-697-1427
(ii) If to Corporation or Sybron:
Sybron Chemicals Inc.
Birmingham Road
Birmingham, NJ 08011
Fax #: 609-894-8641
Attention: Richard M. Klein, President
with a copy, given in the manner prescribed
above, to:
David Gitlin, Esquire
Wolf, Block, Schorr and Solis-Cohen LLP
Twelfth Floor, Packard Building
15th and Chestnut Sts.
Philadelphia, PA 19102
(c) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(e) Consent to Jurisdiction. Executive hereby irrevocably submits to
the jurisdiction of any New York State or Federal court in any action or
proceeding arising out of or relating to this Agreement, and Executive hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. Executive
hereby irrevocably waives, to the fullest extent he may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding.
-11-
<PAGE>
(f) Binding Nature of Agreement. This Agreement shall inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be binding upon the Corporation, Sybron, Executive and their respective
successors, heirs and legal representatives.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
RUCO POLYMER CORPORATION
By: /s/ Joseph A. Ruffing
-----------------------------------------
RUCO POLYMER COMPANY OF GEORGIA, LLC
By:/s/ Joseph A. Ruffing
-----------------------------------------
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------------
/s/ Anthony F. Forgione (SEAL)
-----------------------------------------
Anthony F. Forgione
-12-
<PAGE>
EXHIBIT C TO FORGIONE EMPLOYMENT AGREEMENT
Incentive Bonus
1. For the period August 1, 1998 through December 31, 1998, bonus
shall be paid based on the Variable Profit generated between July 1, 1998 and
December 31, 1998 at the following rates:
(a) 1% of the Variable Profit between $11.6 million and
$12.6 million.
(b) 2.7% of the Variable Profit in excess of $12.6 million.
2. For the year 1999, bonus shall be paid based on the Variable
Profit in excess of $25.2 million.
3. "Variable Profit" shall be Ruco's "variable margin" minus agents'
commissions not otherwise included in variable margin. All numbers to be
verified by SCI accounting department, whose determination shall be final.
Variable Profit generated by reversing reserves taken prior to 7/1/98 shall
not be included.
4. Variable profit from any acquisition relating to this segment,
calculated as defined above, shall be added on a proforma basis to the above
target numbers. For example, if an acquisition is made on November 1, 1998
that had $3 million in variable profit the preceding 12 months, $0.5 million
would be added to each of the 1998 target numbers and $3 million added to the
1999 target. Targets and percentages for future years shall be set prior to
each year based on the business status and objectives at the time.
<PAGE>
EXECUTION COPY
$185,000,000
CREDIT AGREEMENT
dated as of
July 31, 1998
among
Sybron Chemicals Inc.,
The Lenders Party Hereto,
The Swingline Bank Referred to Herein,
The Issuers Referred to Herein,
DLJ Capital Funding, Inc.,
as Syndication Agent,
Morgan Guaranty Trust Company of New York,
as Documentation Agent,
and
Mellon Bank, N.A.,
as Administrative Agent
-------------------------
Donaldson, Lufkin & Jenrette Securities Corporation,
as Lead Arranger
<PAGE>
TABLE OF CONTENTS
------------
PAGE
----
ARTICLE 1
Definitions
Section 1.01. Definitions.............................................1
Section 1.02. Accounting Terms and Determinations....................23
Section 1.03. Classes and Types of Loans and Borrowings..............23
Section 1.04. Other Definitional Provisions..........................23
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend....................................24
Section 2.02. Notice of Borrowing....................................25
Section 2.03. Notice to Lenders; Funding of Loans....................25
Section 2.04. Maturity of Loans; Contingent Prepayments..............26
Section 2.05. Interest Rates.........................................28
Section 2.06. Method of Electing Interest Rates......................30
Section 2.07. Fees...................................................32
Section 2.08. Termination or Reduction of Commitments................33
Section 2.09. Optional Prepayments...................................33
Section 2.10. General Provisions as to Payments......................34
Section 2.11. Funding Losses.........................................35
Section 2.12. Computation of Interest and Fees.......................35
Section 2.13. Notes..................................................35
Section 2.14. Letters of Credit......................................36
Section 2.15. Swingline Loans........................................42
Section 2.16. Registry...............................................45
Section 2.17. Monthly Statement......................................45
ARTICLE 3
Conditions
Section 3.01. Closing Date...........................................45
Section 3.02. Borrowings and Issuances of Letters of Credit..........49
<PAGE>
ARTICLE 4
Representations and Warranties
PAGE
----
Section 4.01. Corporate Existence and Power..........................50
Section 4.02. Corporate and Governmental Authorization; No
Contravention..........................................51
Section 4.03. Binding Effect; Liens Enforceable......................51
Section 4.04. Financial Information..................................51
Section 4.05. Litigation.............................................52
Section 4.06. Compliance with ERISA..................................53
Section 4.07. Environmental Matters..................................53
Section 4.08. Taxes..................................................54
Section 4.09. Subsidiaries...........................................55
Section 4.10. No Regulatory Restrictions on Borrowing................55
Section 4.11. Real Property Interests................................55
Section 4.12. Full Disclosure........................................55
Section 4.13. Solvency...............................................55
Section 4.14. Representations and Warranties Incorporated from
Acquisition Agreement..................................56
Section 4.15. Information Memorandum.................................56
Section 4.16. Year 2000..............................................56
ARTICLE 5
Covenants
Section 5.01. Information............................................57
Section 5.02. Payment of Obligations.................................60
Section 5.03. Maintenance of Property; Insurance.....................60
Section 5.04. Conduct of Business and Maintenance of Existence.......62
Section 5.05. Compliance with Laws...................................62
Section 5.06. Inspection of Property, Books and Records..............62
Section 5.07. Mergers and Sales of Assets............................62
Section 5.08. Use of Proceeds........................................63
Section 5.09. Negative Pledge........................................63
Section 5.10. Limitation on Debt.....................................64
Section 5.11. Leverage Ratio.........................................65
Section 5.12. Interest Coverage Ratio................................65
Section 5.13. Fixed Charge Coverage Ratio............................65
Section 5.14. Minimum Consolidated Tangible Net Worth................66
Section 5.15. Limitation on Capital Expenditures.....................66
Section 5.16. Restricted Payments; Voluntary Prepayments.............66
Section 5.17. Investments and Acquisitions...........................67
Section 5.18. Transactions with Affiliates...........................67
Section 5.19. Limitation on Restrictions Affecting Subsidiaries......68
Section 5.20. Fiscal Year............................................68
Section 5.21. Material Contracts; Occidental Indemnity...............68
Section 5.22. Change in Business.....................................68
Section 5.23. Further Assurances.....................................68
Section 5.24. Amendments to Acquisition Documents....................72
ii
<PAGE>
ARTICLE 6
Defaults
PAGE
----
Section 6.01. Events of Default......................................72
Section 6.02. Notice of Default......................................76
Section 6.03. Cash Collateral........................................76
ARTICLE 7
The Agents
Section 7.01. Appointment and Authorization..........................76
Section 7.02. Agents and Affiliates..................................77
Section 7.03. Action by Agents.......................................77
Section 7.04. Consultation with Experts..............................77
Section 7.05. Liability of Agents....................................77
Section 7.06. Indemnification........................................78
Section 7.07. Credit Decision........................................78
Section 7.08. Successor Agents.......................................78
Section 7.09. Agent's Fee............................................78
Section 7.10. Syndication Agent and Documentation Agent..............79
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or
Unfair.................................................79
Section 8.02. Illegality.............................................79
Section 8.03. Increased Cost and Reduced Return......................80
Section 8.04. Taxes..................................................82
Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar
Loans..................................................84
Section 8.06. Substitution of Bank...................................84
iii
<PAGE>
ARTICLE 9
Miscellaneous
PAGE
----
Section 9.01. Notices................................................85
Section 9.02. No Waivers.............................................85
Section 9.03. Expenses; Indemnification..............................86
Section 9.04. Set-Offs...............................................86
Section 9.05. Amendments and Waivers.................................87
Section 9.06. Successors; Participations and Assignments.............88
Section 9.07. Designated Lenders.....................................90
Section 9.08. No Reliance on Margin Stock............................91
Section 9.09. Governing Law; Submission to Jurisdiction..............91
Section 9.10. Counterparts; Integration; Effectiveness...............91
Section 9.11. WAIVER OF JURY TRIAL...................................92
COMMITMENT SCHEDULE
PRICING SCHEDULE
SCHEDULE 1.01 -- SELLERS
SCHEDULE 4.07 -- ENVIRONMENTAL MATTERS
SCHEDULE 4.11 -- REAL PROPERTY INTERESTS
SCHEDULE 5.17 -- INVESTMENTS
EXHIBIT A -- NOTES
EXHIBIT A-1 -- SWINGLINE NOTE
EXHIBIT B -- SECURITY AGREEMENT
EXHIBIT C -- SUBSIDIARY GUARANTY
EXHIBIT D -- OPINION OF COUNSEL TO THE BORROWER
EXHIBIT E -- LOCAL COUNSEL OPINIONS
EXHIBIT F -- OPINION OF COUNSEL TO THE AGENTS
EXHIBIT G -- ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT H -- DESIGNATION AGREEMENT
iv
<PAGE>
AGREEMENT dated as of July 31, 1998 among SYBRON CHEMICALS
INC., the LENDERS party hereto, the SWINGLINE BANK referred to herein, the
ISSUERS referred to herein, DLJ CAPITAL FUNDING, INC., as Syndication Agent,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Documentation Agent, and MELLON
BANK, N.A., as Administrative Agent.
ARTICLE 1
Definitions
Section 1.1. Definitions. The following terms, as used
herein, have the following meanings:
"Acquisition" means the acquisition by the Borrower of (i) 100%
of the outstanding capital stock of Ruco Corp. and (ii) 100% of the outstanding
membership interests of Ruco LLC, in each case from the Sellers pursuant to
the Acquisition Agreement on the Closing Date concurrently with the making of
the initial Loans hereunder.
"Acquisition Agreement" means the Capital Stock and Membership
Interest Purchase Agreement dated as of July __, 1998 among the Borrower and
the Sellers.
"Acquisition Documents" means the Acquisition Agreement and all
agreements, documents, instruments, certificates, filings, consents, approvals,
board of directors resolutions and opinions furnished pursuant to or in
connection with the Acquisition and the transactions contemplated thereby,
each as amended, supplemented, amended and restated or otherwise modified from
time to time as permitted in accordance with the terms hereof.
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.5(g).
"Administrative Agent" means Mellon Bank, N.A. in its capacity
as administrative agent for the Lenders under the Loan Documents, and its
successors in such capacity.
"Administrative Questionnaire" means, with respect to each
Lender, an administrative questionnaire in the form prepared by the
Administrative Agent, completed by such Lender and returned to the
Administrative Agent (with a copy to the Borrower).
<PAGE>
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a "Controlling
Person") or (ii) any Person (other than the Borrower or a Subsidiary
Guarantor) which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control" means possession,
directly or indirectly, of the power to vote 10% or more of any class of
voting securities of a Person or to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agents" means the Syndication Agent, the Documentation Agent
and the Administrative Agent, and "Agent" means any of them, as the context
may require.
"Aggregate LC Exposure" means, at any time, the sum, without
duplication, of (i) the aggregate amount that is (or may thereafter become)
available for drawing under all Letters of Credit outstanding at such time and
(ii) the aggregate unpaid amount of all Reimbursement Obligations at such time.
"Applicable Lending Office" means, with respect to any Lender,
(i) in the case of its Base Rate Loans and its participations in Letters of
Credit, its Domestic Lending Office and (ii) in the case of its Euro-Dollar
Loans, its Euro-Dollar Lending Office.
"Assessment Date" means the earlier of (i) the 60th calendar
day after the Closing Date and (ii) September 29, 1998.
"Asset Sale" means any sale, lease or other disposition
(including any such transaction effected by way of merger or consolidation) by
the Borrower or any of its Subsidiaries of any asset, including without
limitation any sale-leaseback transaction, whether or not involving a capital
lease, but excluding (i) dispositions of inventory or obsolete, worn out or
unnecessary equipment, in each case in the ordinary course of business, (ii)
dispositions of Temporary Cash Investments and cash payments otherwise
permitted under this Agreement and (iii) dispositions to the Borrower or a
Subsidiary of the Borrower.
"Assignee" has the meaning set forth in Section 9.6(c).
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
"Base Rate Loan" means a Loan which bears interest at the Base
Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.6(a) or Article 8.
"Base Rate Margin" means a rate per annum determined in
accordance with the Pricing Schedule; provided that with respect to Base Rate
Term A Loans prior to the Term B Repayment Date, "Base Rate Margin" means 1%.
2
<PAGE>
"Borrower" means Sybron Chemicals Inc., a Delaware corporation,
and its successors.
"Borrower Mortgage" means a mortgage or deed of trust, in a form
reasonably satisfactory to the Administrative Agent, entered into between the
Borrower, as mortgagor or trustor, and the Administrative Agent, as mortgagee
or beneficiary, as amended from time to time.
"Borrowing" has the meaning set forth in Section 1.3.
"Business Acquisition" means any acquisition (other than the
Acquisition), whether in a single transaction or series of related
transactions, by the Borrower or any one or more Subsidiaries, or any
combination thereof, of (i) all or a substantial part of the assets, or a
going concern business or division, of any Person, whether through purchase of
assets or securities, by merger or otherwise, (ii) control of securities of an
existing corporation or other Person having ordinary voting power (apart from
rights accruing under special circumstances) to elect a majority of the board
of directors of such corporation or other Person or (iii) control of a greater
than 50% ownership interest in any existing partnership, joint venture or
other Person.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and any rules or
regulations promulgated thereunder.
"Change of Control" shall occur if (i) any person or group of
persons (within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) other than Citicorp Venture Capital, Ltd. or any of its
affiliates or Richard Klein shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 25% or more of the outstanding shares of common
stock of the Borrower or (ii) during any period of twelve consecutive calendar
months, individuals who were directors of the Borrower on the first day of
such period (or who were appointed or nominated for election as directors of
the Borrower by at least a majority of the individuals who were directors on
the first day of such period or who were so elected or appointed) shall cease
to constitute a majority of the board of directors of the Borrower.
3
<PAGE>
"Class" has the meaning set forth in Section 1.3.
"Closing Date" means the date on which all of the conditions
set forth in Section 3.1 shall have been satisfied (or waived in accordance
with Section 9.5).
"Collateral" means the collateral purported to be subject to
the Liens of the Collateral Documents.
"Collateral Documents" means the Security Agreement, the
Mortgages (if any) and any additional security agreements, pledge agreements or
mortgages required to be delivered pursuant to the Loan Documents and any
instruments of assignment, lockbox letters or other instruments or agreements
executed pursuant to the foregoing; provided that, at all times prior to the
Assessment Date, "Collateral Documents" shall exclude the Mortgages.
"Commitment" means any Term Loan Commitment or Revolving Credit
Commitment, and "Commitments" means any or all of the foregoing, as the
context may require.
"Commitment Fee Rate" means a rate per annum determined in
accordance with the Pricing Schedule.
"Commitment Schedule" means the Schedule attached hereto and
identified as such.
"Consolidated Capital Expenditures" means, for any Fiscal Year,
the additions to property, plant and equipment and other capital expenditures
of the Borrower and its Consolidated Subsidiaries for such Fiscal Year, as the
same are set forth in a consolidated statement of cash flows of the Borrower
and its Consolidated Subsidiaries for such Fiscal Year.
"Consolidated Current Assets" means at any date the consolidated
current assets of the Borrower and its Consolidated Subsidiaries determined as
of such date.
"Consolidated Current Liabilities" means at any date (i) the
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries plus (ii) the current liabilities of any Person (other than the
Borrower or any of its Consolidated Subsidiaries) which are Guaranteed by the
Borrower or a Consolidated Subsidiary, all determined as of such date.
4
<PAGE>
"Consolidated Debt" means, at any date, the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis as of
such date.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period plus, to the extent deducted in determining
Consolidated Net Income for such period, the aggregate amount of (i)
Consolidated Interest Expense, (ii) income tax expense and (iii) depreciation,
amortization and other non-cash charges.
"Consolidated Interest Expense" means, for any period, the
interest expense of the Borrower and its Consolidated Subsidiaries, determined
on a consolidated basis for such period.
"Consolidated Net Income" means, for any period, the net income
of the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis for such period, adjusted to exclude the effect of any extraordinary or
other non-recurring gain (but not loss).
"Consolidated Net Working Investment" means at any date
Consolidated Current Assets (exclusive of cash and cash equivalents) minus
Consolidated Current Liabilities (exclusive of Debt).
"Consolidated Subsidiary" means, at any date, any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Tangible Net Worth" means, at any date, the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries less their consolidated Intangible Assets, all determined as of
such date. As used herein, "Intangible Assets" means the amount (to the extent
reflected in determining such consolidated stockholders' equity) of (i) all
write-ups (except write-ups resulting from foreign currency translations and
write-ups of assets of a going concern business made within twelve months
after the acquisition of such business) after March 31, 1998 in the book value
of any asset owned by the Borrower or a Consolidated Subsidiary, (ii) all
Investments in unconsolidated Subsidiaries and all equity Investments in
Persons which are not Subsidiaries and (iii) all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, anticipated future benefit of tax loss carry-forwards,
copyrights, organization or developmental expenses and other intangible assets.
5
<PAGE>
"Corestates Loan Agreement" means the Loan Agreement dated as of
February 18, 1997 between the Borrower and Corestates Bank N.A.
"Credit Exposure" means, with respect to any Lender at any
time, the sum of (i) the greater, at such time, of (A) such Lender's Term Loan
Commitments and (B) the outstanding principal amount of such Lender's Term
Loans plus (ii) the greater, at such time, of (A) such Lender's Revolving
Commitment and (B) such Lender's Outstanding Revolving Amount.
"Debt" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except (A) trade accounts payable arising in the ordinary
course of business and (B) obligations in respect of deferred purchase price
payments not exceeding $10,000,000 under the Acquisition Agreement, (iv) all
obligations of such Person as lessee which are capitalized in accordance with
GAAP, (v) all obligations (contingent or otherwise) of such Person to
reimburse any bank or other Person in respect of amounts paid under a letter
of credit or similar instrument, (vi) all Debt secured by a Lien on any asset
of such Person, whether or not such Debt is otherwise an obligation of such
Person and (vii) all Guarantees by such Person of Debt of another Person (each
such Guarantee to constitute Debt in an amount equal to the amount of such
other Person's Debt Guaranteed thereby).
"Debt Incurrence" means the incurrence of any Debt by the
Borrower or any of its Subsidiaries, other than Debt permitted by Section
5.10(a)(i), (ii), (v) or (vi).
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate Period" means, if an Event of Default shall have
occurred and be continuing, the period from the date the Required Lenders
notify the Borrower of the commencement of a Default Rate Period to the
earlier of the date on which such notice is rescinded by the Required Lenders
and the date no Event of Default shall have occured and be continuing.
6
<PAGE>
"Derivatives Obligations" of any Person means all obligations
of such Person in respect of any rate swap transaction, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
"Designated Lender" means, with respect to any Designating
Lender, an Eligible Designee designated by it pursuant to Section 9.7(a) as a
Designated Lender for purposes of this Agreement.
"Designating Lender" means, with respect to each Designated
Lender, the Lender that designated such Designated Lender pursuant to Section
9.7(a).
"Documentation Agent" means Morgan Guaranty Trust Company of
New York in its capacity as documentation agent in respect of the Loan
Documents.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required by law to close.
"Domestic Lending Office" means, as to each Lender, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Lender may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Administrative Agent.
"Eligible Designee" means a special purpose corporation that
(i) is organized under the laws of the United States or any state thereof,
(ii) is engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and (iii) issues (or the parent
of which issues) commercial paper rated at least A-1 or the equivalent thereof
by S&P or P-1 or the equivalent thereof by Moody's.
"Environmental Laws" means any federal, state, local or foreign
law, treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, agreement or governmental restriction or requirement,
whether now or hereafter in effect, relating to human health, the environment
or to pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
7
<PAGE>
"Environmental Liabilities" means any and all liabilities of or
relating to the Borrower and any Subsidiary (including any entity which is, in
whole or in part, a predecessor of the Borrower or any Subsidiary), whether
vested or unvested, contingent or fixed, actual or potential, known or
unknown, which arise under or relate to matters covered by applicable
Environmental Laws (including without limitation any matter disclosed or
required to be disclosed in Schedule 4.07 hereto).
"Equity Issuance" means any issuance of equity securities by the
Borrower or any of its Subsidiaries, other than any such issuance to the
Borrower or any of its Subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the Borrower or
any Subsidiary, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other office, branch
or affiliate of such Lender as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Administrative Agent.
"Euro-Dollar Loan" means a Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule; provided that with respect to
Euro-Dollar Term A Loans prior to the Term B Repayment Date, "Euro-Dollar
Margin" means 2.25%.
"Euro-Dollar Rate" means a rate of interest determined pursuant
to Section 2.5(b) or 2.5(d) on the basis of a London Interbank Offered Rate.
8
<PAGE>
"Euro-Dollar Reserve Percentage" means, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank
of the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Lender to United States residents). The Adjusted London Interbank Offered
Rate shall be adjusted automatically on and as of the effective date of any
change in the Euro-Dollar Reserve Percentage.
"Events of Default" has the meaning set forth in Section 6.1.
"Evergreen Letter of Credit" means a Letter of Credit that is
automatically extended unless the relevant Issuer gives notice to the
beneficiary thereof stating that such Letter of Credit will not be extended.
"Excess Cash Flow" means, for any period:
(a) the sum of (i) Consolidated EBITDA for such period, and
(ii) any decrease in Consolidated Net Working Investment between the beginning
and the end of such period;
less
(b) the sum of (i) Consolidated Capital Expenditures for such
period, (ii) any increase in Consolidated Net Working Investment between the
beginning and the end of such period, (iii) mandatory and voluntary repayments
during such period of the non-revolving Debt of the Borrower and its
Consolidated Subsidiaries which were not made with the proceeds of other Debt
(adjusted to eliminate the effect of prepayments on account of Excess Cash
Flow for a prior period), (iv) Consolidated Interest Expense to the extent
paid or payable in cash for such period, (iv) income taxes paid or payable in
cash for such period and (v) to the extent not deducted in calculating
Consolidated EBITDA for such period, cash payments made to any third parties
during such period in connection with any Business Acquisition permitted under
Section 5.17(b).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Mellon
Bank, N.A. such day on such transactions as determined by the Administrative
Agent.
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"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"Fixed Charge Coverage Ratio" means, at any date, the ratio of
(i) Consolidated EBITDA for the period of four consecutive Fiscal Quarters
ended on or most recently prior to such date to (ii) the sum of (A)
Consolidated Interest Expense for such period, plus (B) income tax expense
for such period plus (C) Consolidated Capital Expenditures for such period
plus (D) the aggregate principal amount of long term Debt of the Borrower and
its Consolidated Subsidiaries scheduled to be amortized during such period.
"Foreign Subsidiary" means any Subsidiary organized under the
laws of a jurisdiction, and conducting substantially all of its operations,
outside of the United States, other than any such Subsidiary that shall have
elected to be treated as a partnership or a branch of the Borrower or any U.S.
Subsidiary for United States income tax purposes.
"GAAP" means generally accepted accounting principles as in
effect on the date hereof, applied on a basis consistent with the financial
statements referred to in Section 4.4(a).
"Group of Loans" means at any time a group of Loans of any Class
consisting of (i) all Loans of such Class which are Base Rate Loans at such
time or (ii) all Loans of such Class which are Euro-Dollar Loans having the
same Interest Period at such time, provided that, if a Loan of any particular
Lender is converted to or made as a Base Rate Loan pursuant to Article 8, such
Loan shall be included in the same Group or Groups of Loans from time to time
as it would have been in if it had not been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by virtue of an agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise), (ii) to reimburse a bank for amounts drawn
under a letter of credit for the purpose of paying such Debt or other
obligation or (iii) entered into for the purpose of assuring in any other
manner the holder of such Debt or other obligation of the payment thereof or
to protect such holder against loss in respect thereof (in whole or in part),
provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
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"Hazardous Substances" means any pollutant, contaminant, waste
or chemical or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substance, waste or material, or any substance, waste or
material having any constituent elements displaying any of the foregoing
characteristics, including, without limitation, petroleum, its derivatives,
by-products and other hydrocarbons, and any substance, waste or material
regulated under applicable Environmental Laws.
"Hicksville Facility" means Ruco Corp.'s facility in
Hicksville, New York.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Interest Coverage Ratio" means, at any date, the ratio of (i)
Consolidated EBITDA for the period of four consecutive Fiscal Quarters ended
on or most recently prior to such date to (ii) Consolidated Interest Expense
for such period.
"Interest Period" means, with respect to each Euro-Dollar Loan,
the period commencing on the date of borrowing specified in the applicable
Notice of Borrowing or on the date specified in an applicable Notice of
Interest Rate Election and ending one, two, three or six months thereafter, as
the Borrower may elect in such notice; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls
in another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
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(b) any Interest Period which begins on the last Euro-Dollar
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, subject to clauses (c) and (d) below, end on the last
Euro-Dollar Business Day of a calendar month;
(c) no Interest Period for any Revolving Loan shall extend
beyond the Revolving Credit Termination Date; and
(c) no Interest Period applicable to any Term Loan shall
extend beyond any date upon which is due any scheduled principal payment in
respect of the Term Loans unless the aggregate principal amount of Term Loans
represented by Base Rate Loans and Euro-Dollar Loans having Interest Periods
which end on or prior to such date equals or exceeds the amount of such
principal payment.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, Guarantee, time deposit or
otherwise (but not including any demand deposit).
"Issuers" means Mellon Bank, N.A. (and any other Revolving
Lender which, at the Borrower's request, shall have agreed to issue Letters of
Credit hereunder and confirmed such agreement in a notice to the Administrative
Agent), each in its capacity as an Issuer under the letter of credit facility
described in Section 2.14.
"JPMSI" means J.P. Morgan Securities Inc.
"LC Exposure" means, with respect to any Revolving Lender at any
time, an amount equal to its Revolving Commitment Percentage of the Aggregate
LC Exposure at such time.
"LC Indemnitees" has the meaning set forth in Section 2.14(k).
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"LC Office" means, with respect to any Issuer, the office at
which it books any Letter of Credit issued by it.
"LC Payment Date" has the meaning set forth in Section 2.14(g).
"LC Reimbursement Due Date" has the meaning set forth in Section
2.14(h).
"Lender" means (i) each lender listed on the Commitment
Schedule, (ii) each Assignee which becomes a Lender pursuant to Section 9.6(c)
and (iii) their respective successors. The term "Lender" does not include the
Swingline Bank in its capacity as such.
"Lender Parties" means the Lenders, the Issuers, the Swingline
Bank and the Agents.
"Letter of Credit" means a letter of credit issued hereunder by
an Issuer.
"Lead Arranger" means Donaldson, Lufkin & Jenrette Securities
Corporation and its successors.
"Leverage Ratio" means, at any date, the ratio of (i)
Consolidated Debt at such date to (ii) Consolidated EBITDA for the period of
four consecutive Fiscal Quarters most recently ended on or prior to such date.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other
type of preferential arrangement that has substantially the same practical
effect as a security interest, in respect of such asset. For purposes hereof,
the Borrower or any Subsidiary shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means a Base Rate Loan or a Euro-Dollar Loan and "Loans"
means any combination of the foregoing, as the context may require; provided
that, if any such Loan or Loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Loan"
shall refer to the combined principal amount resulting from such combination
or to each of the separate principal amounts resulting from such subdivision,
as the case may be. The term "Loan" does not include a Swingline Loan.
"Loan Documents" means this Agreement, the Notes, the Swingline
Note, the Subsidiary Guarantee and the Collateral Documents.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.5(h).
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"Major Casualty Proceeds" means (i) the aggregate insurance
proceeds received in connection with one or more related events by the
Borrower and its Subsidiaries under any Property Insurance Policy or (ii) any
award or other compensation with respect to any condemnation of property (or
any transfer or disposition of property in lieu of condemnation) received by
the Borrower and its Subsidiaries, if the amount of such aggregate insurance
proceeds or award or other compensation exceeds $500,000; provided that Major
Casualty Proceeds shall exclude up to $2,000,000 recovered from insurers in
respect of environmental clean up expenses incurred by the Borrower prior to
the Closing Date.
"Material Adverse Effect" means (i) any material adverse effect
upon the condition (financial or otherwise), results of operations,
properties, assets, business or prospects of the Borrower and its
Subsidiaries, taken as a whole; (ii) a material adverse effect on the ability
of the Borrower or any other Person to consummate the transactions
contemplated hereby to occur on the Closing Date; (iii) a material adverse
effect on the ability of any Obligor to perform its obligations under this
Agreement, the Notes and the other Loan Documents or (iv) a material adverse
effect on the rights and remedies of the Agents, the Issuers, the Swingline
Bank and the Lenders under this Agreement, the Notes, the Swingline Note and
the other Loan Documents.
"Material Debt" means Debt (other than the Loans, Swingline
Loans and Reimbursement Obligations) of the Borrower and/or one or more of its
Subsidiaries, arising in one or more related or unrelated transactions, in an
aggregate principal or face amount exceeding $3,500,000.
"Material Financial Obligations" means a principal or face
amount of Debt (other than the Loans, Swingline Loans and Reimbursement
Obligations) and/or payment or collateralization obligations in respect of
Derivatives Obligations of the Borrower and/or one or more of its
Subsidiaries, arising in one or more related or unrelated transactions,
exceeding in the aggregate $3,500,000.
"Material Plan" means, at any time, a Plan or Plans having
aggregate Unfunded Liabilities in excess of $1,000,000.
"Mexican Subsidiary Debt" means mortgage Debt of Sybron Quimica
S.A. de C.V., a Mexican company and wholly-owned Subsidiary of the Borrower,
in an aggregate principal amount not exceeding 12,000,000 Mexican pesos, the
proceeds of which have been or will be used to repay outstanding intercompany
Debt owed to the Borrower and any refinancing thereof which does not increase
the outstanding principal amount thereof and is not secured by additional
collateral owned by any Person other than Sybron Quimica S.A. de C.V.
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"Moody's" means Moody's Investors Service, Inc.
"Mortgages" means the Borrower Mortgages and the Subsidiary
Mortgages, and "Mortgage" means any of them, as the context may require.
"Multiemployer Plan" means, at any time, an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"Net Cash Proceeds" means, with respect to any Reduction Event,
an amount equal to the cash proceeds received by the Borrower or any of its
Subsidiaries from or in respect of such Reduction Event (including any cash
proceeds received as interest or similar income or other proceeds of any
noncash proceeds of any Asset Sale), less (a) any fees, costs and expenses
reasonably incurred by such Person in respect of such Reduction Event, (b) if
such Reduction Event is an Asset Sale, (i) the amount of any Debt secured by
a Lien on any asset disposed of in such Asset Sale and required to be, and
actually, discharged from the proceeds thereof and (ii) any taxes actually paid
or to be payable by such Person (as estimated by a senior financial or
accounting officer of the Borrower, giving effect to the overall tax position
of the Borrower) in respect of such Asset Sale and (c) if such Reduction Event
is the receipt of Major Casualty Proceeds and if the Borrower shall have
notified the Administrative Agent within 30 days after the receipt of such
Major Casualty Proceeds of its intent to use some or all of such Major Casualty
Proceeds to repair or replace the affected assets within 180 days after the
receipt thereof, the amount so specified by the Borrower; provided that the
portion of the Net Cash Proceeds not so used in such 180 day period shall be
deemed to have been received and shall be applied to prepayments required
under Section 2.4(c) on such 180th day; provided, further, that Major Casualty
Proceeds in excess of $5,000,000 shall be held and dispensed by the
Administrative Agent in accordance with Section 5 of the Security Agreement.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A-1 hereto, evidencing the Borrower's obligation to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.2.
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"Notice of Swingline Borrowing" has the meaning set forth in
Section 2.15(b).
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.6.
"Obligor" means the Borrower and each Subsidiary Guarantor.
"Occidental" means Occidental Chemical Corporation (formerly
known as Hooker Chemicals & Plastics Corp.) and its successors.
"Occidental Indemnity" means the obligations of Occidental under
Sections 7.01, 7.02 and 7.03 of the Agreement for the Purchase by Ruco Corp.
of the Specialty Polymers Business of Hooker Chemicals & Plastics Corp. dated
February 12, 1982.
"Outstanding Revolving Amount" means, with respect to any
Revolving Lender at any time, the sum of (i) the aggregate outstanding
principal amount of its Revolving Loans, (ii) its LC Exposure and (iii) its
Swingline Exposure, all determined at such time after giving effect to any
prior assignments by or to such Revolving Lender pursuant to Section 9.6(c).
"Parent" means, with respect to any Lender, any Person
controlling such Lender.
"Participant" has the meaning set forth in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means, at any time, an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"Pricing Schedule" means the Pricing Schedule attached hereto.
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"Prime Rate" means the rate of interest publicly announced by
Mellon Bank, N.A. from time to time as its Prime Rate.
"Property Insurance Policy" means any insurance policy
maintained by the Borrower or any of its Subsidiaries covering losses with
respect to tangible real or personal property or improvements or losses from
business interruption.
"Quarterly Payment Dates" means each March 31, June 30,
September 30 and December 31.
"Reduction Event" means (i) any Asset Sale in any Fiscal Year
if, and solely to the extent that, the aggregate Net Cash Proceeds from such
Asset Sale, when combined with all other Asset Sales previously made during
such Fiscal Year, exceed $1,000,000, (ii) any Debt Incurrence, (iii) any Equity
Issuance or (iv) receipt of Major Casualty Proceeds. The description of any
transaction as falling within the above definition does not affect any
limitation on such transaction imposed by Article 5 of this Agreement.
"Reduction Percentage" means (i) with respect to any Debt
Incurrence, any Asset Sale or receipt of Major Casualty Proceeds, 100% and
(ii) with respect to any Equity Issuance, 50%.
"Reference Lender" means Mellon Bank, N.A.
"Register" has the meaning set forth in Section 2.16.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" means the obligation of the Borrower
to reimburse an Issuer for amounts paid by such Issuer in respect of drawings
under a Letter of Credit, including any portion of any such obligation to which
a Lender has become subrogated pursuant to Section 2.14(i).
"Release" means any discharge, emission or release, including a
Release as defined in CERCLA at 42 U.S.C. Section 9601(22).
"Required Lenders" means, at any time, Lenders (which shall
include at least two Lenders if there shall be more than two Lenders) having
at least a majority in aggregate amount of the Revolving Credit Exposures at
such time and a majority in aggregate amount of the Term Credit Exposures at
such time.
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"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock (except dividends
payable solely in shares of its capital stock other than mandatorily
redeemable capital stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock or (b) any option, warrant or other right to acquire shares of
the Borrower's capital stock (but not including payments of principal, premium
(if any) or interest made pursuant to the terms of convertible debt securities
prior to conversion).
"Revolving Commitment Percentage" means, with respect to any
Revolving Lender at any time, the percentage which the amount of its Revolving
Commitment at such time represents of the aggregate amount of all the
Revolving Commitments at such time. At any time after the Revolving
Commitments shall have terminated, the term "Revolving Commitment Percentage"
shall refer to a Revolving Lender's Revolving Commitment Percentage
immediately before such termination, adjusted to reflect any subsequent
assignments pursuant to Section 9.6(c).
"Revolving Commitment" means,
(i) with respect to each Revolving Lender listed on the
signature pages hereof, the amount set forth opposite the name of such Lender
under the heading "Revolving Commitment" in the Commitment Schedule, and
(ii) with respect to each Assignee which becomes a Revolving
Lender pursuant to Section 9.6(c), the amount of the Revolving Commitment
thereby assumed by it,
in each case as such amount may be reduced from time to time pursuant to
Section 2.8 or increased or reduced by reason of an assignment to or by such
Lender in accordance with Section 9.6(c). The term "Revolving Commitment" does
not include the Swingline Commitment.
"Revolving Credit Exposure" means, with respect to any Lender at
any time, the greater, at such time, of (A) such Lender's Revolving Commitment
and (B) such Lender's Outstanding Revolving Amount.
"Revolving Credit Period" means the period from and including
the Closing Date to but not including the Revolving Credit Termination Date.
"Revolving Credit Termination Date" means the sixth anniversary
of the Closing Date (or, if such date is not a Euro-Dollar Business Day, the
next preceding Euro-Dollar Business Day).
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"Revolving Lender" means each Lender identified in the
Commitment Schedule as having a Revolving Commitment and each Assignee which
acquires a Revolving Commitment and/or Revolving Loans pursuant to Section
9.6(c), and their respective successors.
"Revolving Loan" means a loan made by a Revolving Lender
pursuant to Section 2.1(b).
"Ruco" means Ruco Corp. and Ruco LLC, collectively.
"Ruco Corp" means Ruco Polymer Corporation, a New York
corporation.
"Ruco LLC" means Ruco Polymer Company of Georgia, LLC, a
Delaware limited liability company.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"Security Agreement" means the Security Agreement dated as of
the Closing Date among the Borrower, the Subsidiary Guarantors party thereto
and the Administrative Agent, substantially in the form of Exhibit B hereto, as
amended from time to time.
"Sellers" means each Person listed on Schedule 1.01.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
Unless otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
"Subsidiary Guarantee" means the Subsidiary Guarantee dated as
of the Closing Date from each Subsidiary Guarantor in favor of the
Administrative Agent, substantially in the form of Exhibit C, as amended from
time to time.
"Subsidiary Guarantors" means each Subsidiary of the Borrower
(other than a Foreign Subsidiary) on the Closing Date, after giving effect to
the Acquisition, and any other Person that becomes a party to the Subsidiary
Guarantee pursuant to Section 5.23, and "Subsidiary Guarantor" means any one
of them.
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"Subsidiary Mortgage" means a mortgage or deed of trust, in a
form reasonably satisfactory to the Administration Agent, between a Subsidiary
Guarantor, as mortgagor or trustor, and the Administrative Agent, as mortgagee
or beneficiary, as amended from time to time.
"Swingline Availability Period" means the period from and
including the Closing Date to but excluding the Swingline Maturity Date.
"Swingline Bank" means Mellon Bank, N.A., in its capacity as the
Swingline Bank under the Swingline facility described in Section 2.15, and its
successors in such capacity.
"Swingline Borrowing" means a borrowing of a Swingline Loan
pursuant to Section 2.15(a).
"Swingline Commitment" means the obligation of the Swingline
Bank to make Swingline Loans to the Borrower in an aggregate principal amount
at any one time outstanding not to exceed $5,000,000, as such amount may be
reduced pursuant to Section 2.15(j).
"Swingline Exposure" means, with respect to any Revolving
Lender at any time, an amount equal to its Revolving Commitment Percentage of
the aggregate outstanding principal amount of Swingline Loans at such time.
"Swingline Loan" means a loan made by the Swingline Bank
pursuant to Section 2.15(a).
"Swingline Maturity Date" means the Revolving Credit Termination
Date.
"Swingline Note" has the meaning set forth in Section 2.15(d).
"Syndication Agent" means DLJ Capital Funding, Inc. in its
capacity as syndication agent in respect of the Loan Documents.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by S&P and P-1 by Moody's, (iii) time deposits with,
including certificates of deposit issued by, any office located in the United
States of any bank or trust company which is organized or licensed under the
laws of the United States or any State thereof and has capital, surplus and
undivided profits aggregating at least $1,000,000,000, (iv) repurchase
agreements with respect to securities described in clause (i) above entered
into with an office of a bank or trust company meeting the criteria specified
in clause (iii) above, or (v) in the case of Investments made by a Foreign
Subsidiary, substantially similar investments denominated in the currency of
the jurisdiction in which such Foreign Subsidiary is organized or conducts its
business, provided in each case that such Investment matures within one year
after it is acquired by the Borrower or a Subsidiary.
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"Term A Commitment" means, (i) with respect to each Term A
Lender listed on the signature pages hereof, the amount set forth opposite the
name of such Lender under the heading "Term A Commitment" in the Commitment
Schedule, and (ii) with respect to each Assignee which becomes a Term A Lender
pursuant to Section 9.6(c), the amount of the Term A Commitment thereby
assumed by it, in each case as such amount may be reduced from time to time
pursuant to Section 2.8 or increased or reduced by reason of an assignment to
or by such Lender in accordance with Section 9.6(c).
"Term A Lender" means each Lender identified in the Commitment
Schedule as having a Term A Commitment and each Assignee which acquires a Term
A Commitment and/or Term A Loans pursuant to Section 9.6(c), and their
respective successors.
"Term A Loan" means a loan made by a Term A Lender pursuant to
Section 2.1(a)(i).
"Term B Repayment Date" means the first date after the Closing
Date upon which the principal amount of the Term B Loans shall have been
repaid in full.
"Term B Commitment" means, (i) with respect to each Term B
Lender listed on the signature pages hereof, the amount set forth opposite the
name of such Lender under the heading "Term B Commitment" in the Commitment
Schedule, and (ii) with respect to each Assignee which becomes a Term B Lender
pursuant to Section 9.6(c), the amount of the Term B Commitment thereby
assumed by it, in each case as such amount may be reduced from time to time
pursuant to Section 2.8 or increased or reduced by reason of an assignment to
or by such Lender in accordance with Section 9.6(c).
"Term B Lender" means each Lender identified in the Commitment
Schedule as having a Term B Commitment and each Assignee which acquires a Term
B Commitment and/or Term B Loans pursuant to Section 9.6(c), and their
respective successors.
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"Term B Loan" means a loan made by a Term B Lender pursuant to
Section 2.1(a)(ii).
"Term Commitment" means a Term A Commitment or a Term B
Commitment.
"Term Credit Exposure" means, with respect to any Lender at any
time, the sum of the greater, at such time, of (A) such Lender's Term Loan
Commitments and (B) the outstanding principal amount of such Lender's Term
Loans.
"Term Lender" means a Term A Lender or a Term B Lender.
"Term Loan" means a Term A Loan or a Term B Loan.
"Term Loan Final Maturity Date" means the sixth anniversary of
the Closing Date (or, if such date is not a Euro-Dollar Business Day, the next
preceding Euro-Dollar Business Day).
"Total Outstanding Revolving Amount" means, at any time, the sum
of (i) the aggregate outstanding principal amount of the Revolving Loans, (ii)
the Aggregate LC Exposure and (iii) except for purposes of Section 2.07, the
aggregate outstanding principal amount of the Swingline Loans.
"Type" has the meaning set forth in Section 1.3.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined
as of the then most recent valuation date for such Plan, but only to the
extent that such excess represents a potential liability of a member of the
ERISA Group to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America.
"U.S. Subsidiary" means a Subsidiary other than a Foreign
Subsidiary.
"Working Capital Facility" means a committed or uncommitted
revolving credit facility entered into by a Foreign Subsidiary to obtain
working capital financing in the ordinary course of business.
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Section 1.2. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP; provided that any calculation of Consolidated EBITDA,
the Leverage Ratio, the Interest Coverage Ratio or the Fixed Charge Coverage
Ratio for any period all or a portion of which precedes the date of any
Business Acquisition (including the Acquisition) shall be made on a pro forma
basis as if such Business Acquisition had occurred, all Debt incurred in
connection therewith had been incurred and all Debt repaid in connection
therewith had been repaid, on the first day of such period. All financial
statements required to be delivered hereunder shall be prepared in accordance
with generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks
Section 1.3. Classes and Types of Loans and Borrowings. The
term "Borrowing" denotes the aggregation of Loans of one or more Lenders to be
made to the Borrower pursuant to Article 2 on the same date, all of which
Loans are of the same Class and Type (subject to Article 8) and, in the case of
Euro-Dollar Loans, have the same initial Interest Period. Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan (or of a
Commitment to make such a Loan or of a Borrowing comprised of such Loans)
refers to the determination whether such Loan is a Term A Loan, Term B Loan or
Revolving Loan, each of which constitutes a Class. The "Type" of a Loan
refers to the determination whether such Loan is a Euro-Dollar Loan or a Base
Rate Loan, each of which constitutes a "Type". Identification of a Loan (or a
Borrowing) by both Class and Type (e.g., a "Euro-Dollar Term A Loan")
indicates that such Loan is both a Term A Loan and a Euro-Dollar Loan (or that
such Borrowing is comprised of such Loans).
Section 1.4. Other Definitional Provisions. References in this
Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to
Articles, Sections, Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.1 may,
unless the context otherwise requires, be used in the singular or plural
depending on the reference. "Include" or "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing and other means of reproducing
words in a visible form. References to any agreement or contract are to such
agreement or contract as amended, modified or supplemented from time to time
in accordance with the terms hereof and thereof. References to any Person
include the successors and assigns of such Person. References "from" or
"through" any date mean, unless otherwise specified, "from and including" or
"through and including", respectively.
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ARTICLE 2
The Credits
Section 2.1. Commitments to Lend. (a) Term Loan Facility.
(i) On the Closing Date each Term A Lender severally agrees,
on the terms and conditions set forth in this Agreement, to make
a Term A Loan to the Borrower in a principal amount not to exceed
the amount of its Term A Commitment. The Term A Commitments are
not revolving in nature, and amounts repaid or prepaid pursuant
to Section 2.4 or Section 2.9 shall not be reborrowed.
(ii) On the Closing Date each Term B Lender severally agrees,
on the terms and conditions set forth in this Agreement, to make
a Term B Loan to the Borrower in a principal amount not to exceed
the amount of its Term B Commitment. The Term B Commitments are
not revolving in nature, and amounts repaid or prepaid pursuant
to Section 2.4 or Section 2.9 shall not be reborrowed.
(b) Revolving Credit Facility. During the Revolving Credit Period,
each Revolving Lender severally agrees, on the terms and conditions set forth
in this Agreement, to make Revolving Loans to the Borrower from time to time
in an aggregate amount at any time outstanding not to exceed the amount of its
Revolving Commitment less its then outstanding LC Exposure. Within the limits
specified in this Agreement, the Borrower may borrow under this Section
2.1(b), prepay Revolving Loans to the extent permitted by Section 2.9 and
reborrow at any time during the Revolving Credit Period pursuant to this
Section 2.1(b).
(c) Minimum Amount. Each Term Borrowing under Section 2.1(a)
shall be in the aggregate principal amount of $1,000,000 or any larger multiple
thereof, and each Revolving Borrowing under Section 2.1(b) shall be in the
aggregate principal amount of $500,000 or any larger multiple thereof (except
that, in either case, any such Borrowing may be in the aggregate amount of the
unused Commitments of the relevant Class) and shall be made from the several
Lenders ratably in proportion to their respective Commitments of the relevant
Class.
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Section 2.2. Notice of Borrowing. The Borrower shall give the
Administrative Agent notice (a "Notice of Borrowing") not later than 10:30
A.M. (New York City time) (i) on the third Euro-Dollar Business Day before
each Euro-Dollar Borrowing, and (ii) on the Domestic Business Day before each
Base Rate Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-
Dollar Business Day in the case of a Euro-Dollar Borrowing;
(b) the aggregate amount of such Borrowing;
(c) the Class and initial Type of Loans comprising such
Borrowing; and
(d) in the case of a Euro-Dollar Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period; provided that
the duration of the initial Interest Period applicable to any
Euro-Dollar Borrowing to be made at any time on or prior to the
earlier of (i) the Assessment Date and (ii) the successful
completion of the syndication of this Agreement, as notified to
the Borrower by the Syndication Agent, shall be one month.
Section 2.3. Notice to Lenders; Funding of Loans. (a)
Promptly after receiving a Notice of Borrowing, the Administrative Agent shall
notify each Lender of the contents thereof and of such Lender's share of such
Borrowing and such Notice of Borrowing shall not thereafter be revocable by the
Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Lender participating therein shall make available its
share of such Borrowing, in Federal or other funds immediately available in
New York City, to the Administrative Agent at its address specified in or
pursuant to Section 9.1. Unless the Administrative Agent determines that any
applicable condition specified in Article 3 has not been satisfied, the
Administrative Agent will make the funds so received from the Lenders
available to the Borrower at the Administrative Agent's aforesaid address.
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(c) Unless the Administrative Agent shall have received notice
from a Lender before the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's share of such Borrowing,
the Administrative Agent may assume that such Lender has made such share
available to the Administrative Agent on the date of such Borrowing in
accordance with Section 2.3(b) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such share available to the Administrative Agent, such Lender and the
Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date
such amount is repaid to the Administrative Agent, at (i) if such amount is
repaid by the Borrower, a rate per annum equal to the higher of the Federal
Funds Rate and the interest rate applicable to such Borrowing pursuant to
Section 2.5 and (ii) if such amount is repaid by such Lender, the Federal
Funds Rate. If such Lender shall repay to the Administrative Agent such
corresponding amount, the Borrower shall not be required to repay such amount
and the amount so repaid by such Lender shall constitute such Lender's Loan
included in such Borrowing for purposes of this Agreement. The Administrative
Agent shall be entitled to recover any and all actual losses and damages
(including, without limitation, reasonable attorneys' fees) from any Lender
failing to so repay upon demand of the Administrative Agent. The
Administrative Agent may set off the obligations of a Lender under this
paragraph against any distributions or payments in respect of the Loans which
the Administrative Agent would otherwise make available to such Lender at any
time.
(d) To the extent and during the time period in which any Lender
fails to provide or delays in providing its respective payment to the
Administrative Agent pursuant to clause (b) or (c) above, such Lender's
percentage of all payments in respect of Revolving Loans (but not its
Revolving Commitment with respect to future Borrowings) shall decrease to
reflect the actual percentage which its actual Revolving Credit Exposure bears
to the aggregate Revolving Credit Exposures.
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Section 2.4. Maturity of Loans; Contingent Prepayments.
(a) On each date set forth below, the Borrower shall repay Term
Loans in an aggregate principal amount equal to the amount set forth below
opposite such date:
Date Amount
---- ------
December 31, 1998 $1,812,500
March 31, 1999 $1,812,500
June 30, 1999 $1,812,500
September 30, 1999 $1,812,500
December 31, 1999 $3,625,000
March 31, 2000 $3,625,000
June 30, 2000 $3,625,000
September 30, 2000 $3,625,000
December 31, 2000 $5,437,500
March 31, 2001 $5,437,500
June 30, 2001 $5,437,500
September 30, 2001 $5,437,500
December 31, 2001 $7,250,000
March 31, 2002 $7,250,000
June 30, 2002 $7,250,000
September 30, 2002 $7,250,000
December 31, 2002 $9,062,500
March 31, 2003 $9,062,500
June 30, 2003 $9,062,500
September 30, 2003 $9,062,500
December 31, 2003 $9,062,500
March 31, 2004 $9,062,500
June 30, 2004 $9,062,500
Term Loan Final
Maturity Date $9,062,500
(b) Each Revolving Loan shall mature, and the principal amount
thereof shall be due and payable, together with accrued interest thereon, on
the Revolving Credit Termination Date.
(c) (i) If the Borrower or any of its Subsidiaries receives any Net
Cash Proceeds in respect of any Reduction Event, the Borrower shall, on the
first day of the next Interest Period applicable to any Term Loans, prepay the
Term Loans in an amount equal to the Reduction Percentage of such Net Cash
Proceeds; provided that if such first day of the next Interest Period shall be
more than 30 days after the receipt of such Net Cash Proceeds and if the
foregoing prepayment shall not have been made, then on the 30th day after such
receipt, the Borrower shall pay the amount required to be prepaid, to be held
in escrow by the Administrative Agent and invested in such Temporary Cash
Investments as the Borrower may direct the Administrative Agent until such
first day of the next Interest Period, at which time such prepayment shall be
made; provided, further, that (x) if the Net Cash Proceeds in respect of any
Reduction Event are less than $1,000,000, no such prepayment shall be required
until the amount of such Net Cash Proceeds, together with the amount of all
other Net Cash Proceeds in respect of which no prepayment under this
subsection (c)(i) shall have theretofore been made, are equal to at least
$1,000,000 and (y) any such prepayment to be made on account of a Debt
Incurrence consisting of the incurrence by the Borrower of any subordinated
Debt shall be applied, first, to the outstanding Term B Loans, until all
outstanding Term B Loans are repaid in full, and, second, to the outstanding
Term A Loans. The Borrower shall give the Administrative Agent at least five
Euro-Dollar Business Days' notice of each prepayment required to be made
pursuant to this subsection (c)(i).
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(ii) On the 90th day following the last day of each Fiscal
Year, beginning with the Fiscal Year ending December 31, 1999,
the Borrower shall prepay the Term Loans in an amount equal to
50% of the Excess Cash Flow for such Fiscal Year.
(iii) The amount of any prepayments of Term Loans pursuant to
Section 2.9 or subsection (c) shall be applied to reduce pro rata
the amount of the scheduled prepayments of the Term Loans
required pursuant to subsection (a).
(iv) Each payment of principal of the Term Loans shall be
made together with interest accrued and unpaid on the amount
repaid to the date of payment.
(v) Each payment of the Term Loans shall be applied to such
Group or Groups of Term Loans as the Borrower may designate (or,
failing such designation, as determined by the Administrative
Agent).
(d) If on any date the Total Outstanding Revolving Amount exceeds
the Revolving Commitments, the Borrower shall repay Revolving Loans in an
aggregate amount equal to such excess.
Section 2.5. Interest Rates. (a) Each Base Rate Term A Loan
and each Base Rate Revolving Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until
it becomes due, at a rate per annum equal to the sum of the Base Rate Margin
for such day plus the Base Rate for such day. Such interest shall be payable
monthly in arrears on the first Domestic Business Day of each month. Any
overdue principal of or interest on any Base Rate Term A Loan or Base Rate
Revolving Loan (and, during any Default Rate Period, any principal of any Base
Rate Term A Loan or Base Rate Revolving Loan) shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the rate otherwise applicable to such Base Rate Term A Loan or Base Rate
Revolving Loan, as the case may be, for such day.
(b) Each Euro-Dollar Term A Loan and each Euro-Dollar Revolving
Loan shall bear interest on the outstanding principal amount thereof, for each
day during each Interest Period applicable thereto, at a rate per annum equal
to the sum of the Euro-Dollar Margin for such day plus the Adjusted London
Interbank Offered Rate applicable to such Interest Period. Such interest shall
be payable for each Interest Period applicable to such Loans on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof.
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(c) Any overdue principal of or interest on any Euro-Dollar Term A
Loan or Euro-Dollar Revolving Loan (and, during any Default Rate Period, any
principal of any Euro-Dollar Term A Loan or Euro-Dollar Revolving Loan) shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Loan on
the day before such payment was due and (ii) the sum of 2% plus the
Euro-Dollar Margin for such day plus a rate per annum equal to the quotient
obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by
dividing (x) the rate per annum at which one day (or, if such amount due
remains unpaid more than three Euro-Dollar Business Days, then for such other
period of time not longer than three months as the Administrative Agent may
select) deposits in dollars in an amount approximately equal to such overdue
payment due to the Reference Lender are offered to the Reference Lender in the
London interbank market for the applicable period determined as provided above
by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause 8.1(a) or 8.1(b) shall exist, at a rate per annum equal to
the sum of 2% plus the rate otherwise applicable to Base Rate Term A Loans or
Base Rate Revolving Loans for such day).
(d) Each Base Rate Term B Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to the sum of 1.00% plus
the Base Rate for such day. Such interest shall be payable monthly in arrears
on the first Domestic Business Day of each month. Any overdue principal of or
interest on any Base Rate Term B Loan (and, during any Default Rate Period,
any principal of any Base Rate Term B Loan) shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 3.00%
plus the Base Rate for such day.
(e) Each Euro-Dollar Term B Loan shall bear interest on the
outstanding principal amount thereof, for each day during each Interest Period
applicable thereto, at a rate per annum equal to the sum of 2.25% plus the
Adjusted London Interbank Offered Rate applicable to such Interest Period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
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(f) Any overdue principal of or interest on any Euro-Dollar Term B
Loan (and, during any Default Rate Period, any principal of any Euro-Dollar
Term B Loan) shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the higher of (i) the sum of 4.25% plus the
Adjusted London Interbank Offered Rate applicable to such Loan on the day
before such payment was due and (ii) the sum of 4.25% plus a rate per annum
equal to the quotient obtained (rounded upward, if necessary, to the next
higher 1/100 of 1%) by dividing (x) the rate per annum at which one day (or,
if such amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than three months as the
Administrative Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to the Reference Lender are
offered to the Reference Lender in the London interbank market for the
applicable period determined as provided above by (y) 1.00 minus the
Euro-Dollar Reserve Percentage (or, if the circumstances described in clause
8.1(a) or 8.1(b) shall exist, at a rate per annum equal to the sum of 2% plus
the rate otherwise applicable to Base Rate Term B Loans for such day).
(g) The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii)1.00 minus the Euro-Dollar
Reserve Percentage.
(h) The "London Interbank Offered Rate" applicable to any Interest
Period means the rate per annum at which deposits in dollars are offered to the
Reference Lender in the London interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of
the Euro-Dollar Loan of the Reference Lender to which such Interest Period is
to apply and for a period of time comparable to such Interest Period.
(i) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall promptly
notify the Borrower and the Lenders of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
(j) The Reference Lender agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If the
Reference Lender does not furnish a timely quotation, the provisions of
Section 8.1 shall apply.
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Section 2.6. Method of Electing Interest Rates. (a) The Loans
included in each Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Borrowing. Thereafter,
the Borrower may from time to time elect to change or continue the type of
interest rate borne by each Group of Loans (subject to subsection (d) and the
provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may
elect to convert such Loans to Euro-Dollar Loans as of any Euro-
Dollar Business Day; and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans as of any Domestic
Business Day or elect to continue such Loans as Euro-Dollar Loans
for an additional Interest Period, subject to Section 2.11 if any
such conversion is effective on any day other than the last day
of an Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a
"Notice of Interest Rate Election") to the Administrative Agent not later than
10:30 A.M. (New York City time) on the third Euro-Dollar Business Day before
the conversion or continuation selected in such notice is to be effective. A
Notice of Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the Loans comprising
such Group and (ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each at least $1,000,000
(unless such portion is comprised of Base Rate Loans). If no such notice is
timely received before the end of an Interest Period for any Group of
Euro-Dollar Loans, the Borrower shall be deemed to have elected that such
Group of Loans be converted to Base Rate Loans at the end of such Interest
Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply
with the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new Type of Loans and, if the Loans resulting from such
conversion are to be Euro-Dollar Loans, the duration of the next
succeeding Interest Period applicable thereto; provided that with
respect to any such conversion that is to be effective at any
time on or prior to the earlier of (x) the Assessment Date and
(y) the successful completion of the syndication of this
Agreement, as notified to the Borrower by the Syndication Agent,
the duration of such next succeeding Interest Period shall be one
month; and
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(iv) if such Loans are to be continued as Euro-Dollar Loans
for an additional Interest Period, the duration of such
additional Interest Period; provided that with respect to any
such continuation that is to be effective at any time on or prior
to the earlier of (x) the Assessment Date and (y) the successful
completion of the syndication of this Agreement, as notified to
the Borrower by the Syndication Agent, the duration of such next
succeeding Interest Period shall be one month.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election
from the Borrower pursuant to subsection (a) above, the Administrative Agent
shall notify each applicable Lender of the contents thereof and such notice
shall not thereafter be revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Loans to, or continue any Loans for an additional Interest Period as
Euro-Dollar Loans if (i) the aggregate principal amount of any Group of
Euro-Dollar Loans created or continued as a result of such election would be
less than $1,000,000 or (ii) an Event of Default has occurred and is
continuing.
(e) If any Loan is converted to a different Type of Loan, the
Borrower shall pay, on the date of such conversion, the interest accrued to
such date on the principal amount being converted.
Section 2.7. Fees. (a) The Borrower shall pay to the
Administrative Agent, for the account of the Revolving Lenders in proportion
to their Revolving Commitment Percentages, a commitment fee calculated for
each day at the Commitment Fee Rate on the amount by which the aggregate
amount of the Revolving Commitments exceeds the Total Outstanding Revolving
Amount on such day. Such commitment fee shall accrue from and including the
Closing Date to but excluding the date on which the Revolving Commitments
terminate in their entirety.
(b) The Borrower shall pay to the Administrative Agent, for the
account of the Revolving Lenders ratably in proportion to their Revolving
Commitment Percentages, a letter of credit fee calculated for each day at a
rate equal to the Euro-Dollar Margin for such day on the aggregate amount
available for drawing (whether or not conditions for drawing have been
satisfied) under all Letters of Credit outstanding at the close of business on
such day.
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(c) The Borrower shall pay to each Issuer (i) a fronting fee
calculated for each day at a rate of 0.25% per annum on the aggregate amount
available for drawing (whether or not conditions for drawing have then been
satisfied) under all Letters of Credit issued by such Issuer that are
outstanding at the close of business on such day and (ii) other customary
charges, in each case at the times agreed between the Borrower and such
Issuer.
(d) Fees accrued for the account of the Revolving Lenders under
subsections (a) and (b) of this Section shall be payable quarterly in arrears
on each Quarterly Payment Date and on the day on which the Revolving
Commitments terminate in their entirety (and, if later, on the day on which the
Credit Exposures are reduced to zero).
Section 2.8. Termination or Reduction of Commitments. (a) The
Borrower may, upon at least three Domestic Business Days' notice to the
Administrative Agent, (i) terminate the Commitments of any Class at any time,
if no Loans of such Class are outstanding at such time (after giving effect to
any mandatory or optional prepayments to be made at such time) or (ii) ratably
reduce from time to time by an aggregate amount of $1,000,000 or a larger
multiple of $500,000, the aggregate amount of the Commitments of any Class
in excess of the aggregate outstanding amount of the Loans of such Class.
(b) The Term Commitments shall terminate in their entirety on the
close of business (New York City time) on the Closing Date.
(c) Unless previously terminated, the Revolving Commitments shall
terminate in their entirety on the Revolving Credit Termination Date.
Section 2.9. Optional Prepayments. (a) Subject in the case of
Euro-Dollar Loans to Section 2.11, the Borrower may (i) upon at least one
Domestic Business Day's notice to the Administrative Agent, prepay any Group
of Base Rate Loans of any Class or (ii) upon at least three Euro-Dollar
Business Days' notice to the Administrative Agent, prepay any Group of
Euro-Dollar Loans of any Class, in each case in whole at any time, or from
time to time in part in amounts aggregating $1,000,000 in the case of Term
Loans or $500,000 in the case of Revolving Loans or in each case any larger
multiple of $100,000, by paying the principal amount to be prepaid together
with interest accrued thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Lenders
included in such Group of Loans.
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(b) Promptly after receiving a notice of prepayment pursuant to
this Section, the Administrative Agent shall notify each applicable Lender of
the contents thereof and of such Lender's ratable share (if any) of such
prepayment, and such notice shall not thereafter be revocable by the Borrower.
Section 2.10. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans,
Swingline Loans and Reimbursement Obligations and each payment of fees
hereunder (other than fees payable directly to the Issuers and the Swingline
Bank) not later than 12:00 Noon (New York City time) on the date when due, in
Federal or other funds immediately available in New York City, to the
Administrative Agent at its address specified in or pursuant to Section 9.1.
The Administrative Agent will promptly distribute to each applicable Lender its
ratable share of each such payment received by the Administrative Agent for
the account of the Lenders, to each Issuer each such payment received by the
Administrative Agent for the account of such Issuer and to the Swingline Bank
each such payment received by the Administrative Agent for the account of the
Swingline Bank. Whenever any payment of principal of, or interest on, the
Base Rate Loans, Swingline Loans or Reimbursement Obligations or any payment
of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another calendar
month, in which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.
(b) Unless the Borrower notifies the Administrative Agent before
the date on which any payment is due to the Lenders hereunder that the Borrower
will not make such payment in full, the Administrative Agent may assume that
the Borrower has made such payment in full to the Administrative Agent on such
date and the Administrative Agent may, in reliance on such assumption, cause
to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent that the Borrower shall not
have so made such payment, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Rate.
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Section 2.11. Funding Losses. If the Borrower makes any
payment of principal with respect to any Euro-Dollar Loan or any Euro-Dollar
Loan is converted to a Base Rate Loan (whether such payment or conversion is
pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day
of the Interest Period applicable thereto, or the last day of an applicable
period fixed pursuant to Section 2.5(c), or if the Borrower fails to borrow,
prepay, convert or continue any Euro-Dollar Loan after notice has been given
to any Lender in accordance with Section 2.2, 2.4(c) or 2.9, the Borrower shall
reimburse each Lender within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after such payment or conversion or failure to borrow,
prepay, convert or continue; provided that such Lender shall have delivered to
the Borrower a certificate in reasonable detail as to the amount of such loss
or expense, which certificate shall be conclusive in the absence of manifest
error.
Section 2.12. Computation of Interest and Fees. Interest
based on the Prime Rate hereunder shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and fees shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first day but
excluding the last day).
Section 2.13. Notes. (a) The Borrower's obligation to repay
the Loans of each Lender shall be evidenced by a single Note payable to the
order of such Lender for the account of its Applicable Lending Office.
(b) Each Lender may, by notice to the Borrower and the
Administrative Agent, request that the Borrower's obligation to repay such
Lender's Loans of a particular Type or Class be evidenced by a separate Note.
Each such Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it relates solely to Loans
of the relevant Type or Class. Each reference in this Agreement to the "Note"
of such Lender shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Promptly after it receives each Lender's Note pursuant to
Section 3.1(b), the Administrative Agent shall forward such Note to such
Lender. Each Lender shall record the date, amount, Class and Type of each
Loan made by it and the date and amount of each payment of principal made by
the Borrower with respect thereto, and may, if such Lender so elects in
connection with any transfer or enforcement of its Note, endorse on the
schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding;
provided that a Lender's failure to make (or any error in making) any such
recordation or endorsement shall not affect the Borrower's obligations
hereunder or under the Notes. Each Lender is hereby irrevocably authorized by
the Borrower so to endorse its Note and to attach to and make a part of its
Note a continuation of any such schedule as and when required.
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Section 2.14. Letters of Credit. (a) Issuance. Each Issuer
agrees, on the terms and conditions set forth in this Agreement, to issue
letters of credit hereunder at the request of the Borrower from time to time
prior to the date that is 30 days before the Revolving Credit Termination
Date; provided that, immediately after each such letter of credit is issued
and participations therein are sold to the Revolving Lenders as provided in
this subsection:
(i) the Aggregate LC Exposure shall not exceed $5,000,000;
and
(ii) in the case of each Revolving Lender, its Outstanding
Revolving Amount shall not exceed its Revolving Commitment.
Whenever an Issuer issues a Letter of Credit hereunder, such Issuer shall
be deemed, without further action by any party hereto, to have sold to each
Lender, and each Lender shall be deemed, without further action by any
party hereto, to have purchased from such Issuer, a participation (on the
terms specified in this Section) in such Letter of Credit equal to such
Lender's Revolving Commitment Percentage thereof.
(b) Notice of Proposed Issuance. With respect to each Letter of
Credit, the Borrower shall give the relevant Issuer and the Administrative
Agent at least five Domestic Business Days' prior notice (i) specifying the
date such Letter of Credit is to be issued and (ii) describing the proposed
terms of such Letter of Credit (which shall not be an Evergreen Letter of
Credit without the consent of the Issuer thereof) and the nature of the
transactions to be supported thereby. Promptly after it receives such notice,
the Administrative Agent shall notify each Revolving Lender of the contents
thereof.
(c) Conditions to Issuance. No Issuer shall issue any Letter of
Credit unless:
(i) such Letter of Credit shall be reasonably satisfactory
in form and substance to such Issuer,
(ii) the Borrower shall have executed and delivered such
other instruments and agreements relating to such Letter of
Credit as such Issuer shall have reasonably requested,
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(iii) such Issuer shall have confirmed with the Administrative
Agent on the date of such issuance that the limitations specified
in Section 2.14(a) will not be exceeded immediately after such
Letter of Credit is issued, and
(iv) such Issuer shall not have been notified in writing by
the Borrower or the Administrative Agent expressly to the effect
that any condition specified in clause 3.2(c) or 3.2(d) is not
satisfied at the time such Letter of Credit is to be issued.
(d) Notice of Actual Issuance. Promptly after it issues any
Letter of Credit, the relevant Issuer shall notify the Administrative Agent of
the date, face amount, beneficiary or beneficiaries and expiry date of such
Letter of Credit. Promptly after it receives such notice, the Administrative
Agent shall notify each Revolving Lender of the contents thereof and the
amount of such Lender's participation in such Letter of Credit. Promptly
after it issues any Letter of Credit, the relevant Issuer shall send a copy of
such Letter of Credit to the Administrative Agent.
(e) Expiry Dates. No Letter of Credit shall have an expiry date
later than the fifth Domestic Business Day before the Revolving Credit
Termination Date. Subject to the preceding sentence, each Letter of Credit
shall expire on or before the first anniversary of the date of its issuance;
provided that the expiry date of any Letter of Credit may be extended from
time to time (i) at the Borrower's request or (ii) in the case of an Evergreen
Letter of Credit, automatically, in each case so long as such extension is for
a period not exceeding one year and is granted (or the last day on which
notice can be given to prevent such extension occurs) no earlier than 90 days
before the then existing expiry date thereof.
(f) Notice of Proposed Extensions of Expiry Dates. The relevant
Issuer shall give the Administrative Agent at least three Domestic Business
Days' notice before such Issuer extends (or allows an automatic extension of)
the expiry date of any Letter of Credit issued by it. Such notice shall
identify such Letter of Credit, the date on which it is to be extended (or the
last day on which notice can be given to prevent such extension) and the date
to which it is to be extended. Promptly after it receives such notice, the
Administrative Agent shall notify each Revolving Lender of the contents
thereof. No Issuer shall extend (or allow the extension of) the expiry date
of any Letter of Credit if:
(i) such extension does not comply with Section 2.14(e), or
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(ii) such Issuer shall have been notified by the Borrower or
the Administrative Agent expressly to the effect that any
condition specified in clause 3.2(c) or 3.2(d) is not satisfied
at the time of such proposed extension.
If any Letter of Credit is not extended after notice of a
proposed extension thereof has been given to the Revolving Lenders, the
relevant Issuer shall promptly notify the Administrative Agent of such failure
to extend. Promptly after it receives such notice, the Administrative Agent
shall notify each Revolving Lender thereof.
(g) Drawings. If an Issuer receives a demand for payment under any
Letter of Credit issued by it and determines that such demand should be
honored, such Issuer shall (i) promptly notify the Borrower and the
Administrative Agent as to the amount to be paid by such Issuer as a result of
such demand and the date of such payment (an "LC Payment Date") and (ii) make
such payment in accordance with the terms of such Letter of Credit.
(h) Reimbursement by the Borrower. (i) If any amount is drawn
under any Letter of Credit, the Borrower irrevocably and unconditionally
agrees to reimburse the relevant Issuer for such amount, together with any and
all reasonable charges and expenses which such Issuer may pay or incur
relative to such drawing. Such reimbursement shall be due and payable on the
relevant LC Payment Date or the date on which such Issuer notifies the
Borrower of such drawing, whichever is later; provided that, if such notice is
given after 12:00 Noon (New York City time) on the later of such dates, such
reimbursement shall be due and payable on the next following Domestic Business
Day (the date on which it is due and payable being an "LC Reimbursement Due
Date").
(ii) In addition, the Borrower agrees to pay, on the
applicable LC Reimbursement Due Date, interest on each amount
drawn under a Letter of Credit, for each day from and including
the date such amount is drawn to but excluding such LC
Reimbursement Due Date, at the rate applicable to Base Rate
Revolving Loans for such day. The Borrower also agrees to pay,
on demand, interest on any overdue amount (including any overdue
interest) payable under this Section 2.14(h), for each day from
and including the day such amount becomes due to but excluding
the day such amount is paid in full, at a rate per annum equal to
the sum of 2% plus the rate applicable to Base Rate Revolving
Loans for such day.
(iii) Each payment by the Borrower pursuant to this Section
2.14(h) shall be made to the relevant Issuer in Federal or other
funds immediately available to it at its address specified in or
pursuant to Section 9.1.
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(i) Payments by Lenders.
(i) If the Borrower fails to pay any Reimbursement
Obligation in full when due, the relevant Issuer may notify the
Administrative Agent of the unreimbursed amount and request that
the Revolving Lenders reimburse such Issuer for their respective
Revolving Commitment Percentages thereof. Promptly after it
receives any such notice, the Administrative Agent shall notify
each Revolving Lender of the unreimbursed amount and such
Revolving Lender's Revolving Commitment Percentage thereof. Upon
receiving such notice from the Administrative Agent, each
Revolving Lender shall make available to such Issuer, at its
address specified in or pursuant to Section 9.1, an amount equal
to such Revolving Lender's Revolving Commitment Percentage of such
unreimbursed amount, in Federal or other funds immediately
available to such Issuer, by 3:00 P.M. (New York City time) (A) on
the day such Revolving Lender receives such notice if it is
received at or before 12:00 Noon (New York City time) on such day
or (B) on the next Domestic Business Day if such notice is
received after 12:00 Noon (New York City time) on the date of
receipt, in each case together with interest on such amount for
each day from and including the relevant LC Payment Date to but
excluding the day such payment is due from such Revolving Lender
at the Federal Funds Rate for such day. Upon payment in full
thereof, such Revolving Lender shall be subrogated to the rights
of such Issuer against the Borrower to the extent of such
Revolving Lender's Revolving Commitment Percentage of the related
Reimbursement Obligation (including interest accrued thereon).
(ii) If any Revolving Lender fails to pay when due any amount
to be paid by it pursuant to clause (i) of this subsection,
interest shall accrue on such Revolving Lender's obligation to
make such payment, for each day from and including the date
such payment became due to but excluding the date such
Revolving Lender makes such payment, at a rate per annum equal
to (x) for each day from the day such payment is due to the
third succeeding Domestic Business Day, inclusive, the Federal
Funds Rate for such day and (y) for each day thereafter the sum
of 2% plus the rate applicable to Base Rate Revolving Loans for
such day.
(iii) If the Borrower shall reimburse any Issuer for any
drawing with respect to which any Revolving Lender shall have
made funds available to such Issuer in accordance with clause
(i) of this subsection, such Issuer shall promptly upon receipt
of such reimbursement distribute to such Revolving Lender its
Revolving Commitment Percentage thereof, including interest, to
the extent received by such Issuer.
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(j) Exculpatory Provisions. The obligations of the Borrower and
the Revolving Lenders under this Section shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower or any Revolving Lender may have or have
had against any Issuer, any Lender, any beneficiary of any Letter of Credit or
any other Person. The Borrower assumes all risks of the acts or omissions of
any beneficiary of any Letter of Credit with respect to the use of such Letter
of Credit by such beneficiary. None of the Issuers, the Lenders and their
respective officers, directors, employees and agents shall be responsible for,
and the obligations of each Revolving Lender to make payments to each Issuer
and of the Borrower to reimburse each Issuer for drawings pursuant to this
Section shall not be excused or affected by, among other things, (i) the use
which may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) the validity,
sufficiency or genuineness of documents presented under any Letter of Credit
or of any endorsements thereon, even if such documents should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged; (iii)
payment by any Issuer against presentation of documents to it which do not
comply with the terms of the relevant Letter of Credit or (iv) any dispute
between or among the Borrower, any beneficiary of any Letter of Credit or any
other Person or any claims or defenses whatsoever of the Borrower or any other
Person against any beneficiary of any Letter of Credit. No Issuer shall be
liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. Any action taken or omitted by any
Issuer in connection with any Letter of Credit and the related drafts and
documents shall be binding upon the Borrower and shall not place any Issuer or
any Lender under any liability to the Borrower. Notwithstanding the
foregoing, the provisions of this subsection shall not relieve any Issuer from
responsibility for its own gross negligence or willful misconduct.
(k) Indemnification by Borrower. The Borrower agrees to indemnify
and hold harmless each Lender, each Issuer and the Agents (collectively, the
"LC Indemnitees") from and against any and all claims, damages, losses,
liabilities, costs or expenses (including, without limitation, the reasonable
fees and disbursements of counsel) which such LC Indemnitee may reasonably
incur (or which may be claimed against such LC Indemnitee by any Person
whatsoever) by reason of or in connection with any execution and delivery or
transfer of or payment or failure to pay under any Letter of Credit or any
actual or proposed use of any Letter of Credit; provided that the Borrower
shall not be required to indemnify any Issuer for any such claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (i) its own willful misconduct or gross negligence or (ii) its
failure to pay under any Letter of Credit issued by it after the presentation
to it of a request strictly complying with the terms and conditions of such
Letter of Credit. Nothing in this subsection is intended to limit the
obligations of the Borrower under any other provision of this Section.
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(l) Indemnification by Revolving Lenders. The Revolving Lenders
shall, ratably in proportion to their Revolving Commitment Percentages,
indemnify each Issuer (to the extent not reimbursed by the Borrower) against
any claims, damages, losses, liabilities, reasonable costs and reasonable
expenses (including, without limitation, reasonable fees and disbursements of
counsel) that such Issuer may suffer or incur in connection with this Section
or any action taken or omitted by it under this Section; provided that the
Revolving Lenders shall not be required to indemnify any Issuer for any such
claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (i) its own gross negligence or willful
misconduct, (ii) its failure to pay under any Letter of Credit issued by it
after the presentation to it of a request strictly complying with the terms
and conditions of such Letter of Credit, (iii) its failure to comply with
Section 2.14(e), (iv) its liabilities under any Letter of Credit issued by it
in contravention of clause 2.14(c)(iii) (to the extent that the limitations
referred to therein were in fact exceeded) or clause 2.14(c)(iv) or (v) its
liabilities under any Letter of Credit extended (or allowed to be
automatically extended) by it in contravention of clause 2.14(f)(ii).
(m) Liability for Damages. Nothing in this Section shall preclude
the Borrower or any Lender from asserting against any Issuer any claim for
damages suffered by the Borrower or such Lender to the extent, but only to the
extent, caused by (i) the willful misconduct or gross negligence of such
Issuer or (ii) such Issuer's failure to pay under any Letter of Credit issued
by it after the presentation to it of a request strictly complying with the
terms and conditions thereof.
(n) Dual Capacities. In its capacity as a Revolving Lender, each
Issuer and the Swingline Bank shall have the same rights and obligations under
this Section as any other Revolving Lender.
(o) Information to be Provided to Agent. Each Issuer and the
Swingline Bank shall furnish to the Administrative Agent upon request such
information as the Administrative Agent shall reasonably request in order to
calculate (i) the Aggregate LC Exposure existing from time to time, (ii) the
aggregate principal amount of Swingline Loans outstanding from time to time
and (iii) the amount of any fee payable for the account of the Revolving
Lenders under Section 2.7.
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Section 2.15. Swingline Loans. (a) Swingline Commitment.
The Swingline Bank agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower pursuant to this Section from time
to time during the Swingline Availability Period for any purpose for which
Revolving Loans may be borrowed; provided that, immediately after each such
loan is made (and after giving effect to any substantially concurrent
application of the proceeds thereof to repay outstanding Revolving Loans or
pay Reimbursement Obligations):
(i) the aggregate outstanding principal amount of the
Swingline Loans shall not exceed the Swingline Commitment; and
(ii) in the case of each Revolving Lender, its Outstanding
Revolving Amount shall not exceed its Revolving Commitment.
Within the foregoing limits, the Borrower may borrow Swingline Loans, prepay
Swingline Loans and reborrow Swingline Loans at any time during the Swingline
Availability Period.
(b) Notice of Swingline Borrowing. The Borrower shall give the
Swingline Bank notice (a "Notice of Swingline Borrowing"), not later than
10:30 a.m. (New York City time) on the date of each Swingline Borrowing,
specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day; and
(ii) the amount of such Borrowing.
(c) Funding of Swingline Loans. Not later than 12:00 Noon (New
York City time) on the date of each Swingline Borrowing, the Swingline Bank
shall, unless the Swingline Bank determines that any applicable condition
specified in Article 3 has not been satisfied, make available the amount of
such Swingline Borrowing, in Federal or other funds immediately available to
the Borrower at the Swingline Bank's address specified in or pursuant to
Section 9.01.
(d) Swingline Note. The Borrower's obligation to repay the
Swingline Loans shall be evidenced by a single Note payable to the order of
the Swingline Bank for the account of its Domestic Lending Office
substantially in form of Exhibit A-2 hereto (the "Swingline Note"). Promptly
after it receives the Swingline Note pursuant to Section 3.01(b), the
Administrative Agent shall forward the Swingline Note to the Swingline Lender.
The Swingline Bank shall record the date and amount of each Swingline Loan
made by it and the date and amount of each payment of principal made by the
Borrower with respect thereto, and may, if the Swingline Lender so elects in
connection with any transfer or enforcement of the Swingline Note, endorse on
the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Swingline Loan then
outstanding; provided that the Swingline Bank's failure to make (or any error
in making) any such recordation or endorsement shall not affect the Borrower's
obligations hereunder or under the Swingline Note. The Swingline Bank is
hereby irrevocably authorized by the Borrower so to endorse the Swingline Note
and to attach to and make a part of the Swingline Note a continuation of any
such schedule as and when required.
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(e) Interest. Each Swingline Loan shall bear interest on the
outstanding principal amount thereof, for each day from and including the day
such Swingline Loan is made to but excluding the day it becomes due, at a rate
per annum equal to the rate applicable to Base Rate Revolving Loans for such
day. Such interest shall be payable quarterly in arrears on the last Domestic
Business Day of each calendar quarter. Any overdue principal of or interest
on any Swingline Loan (and, during any Default Rate Period, any principal of
any Swingline Loan) shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the rate applicable to
Base Rate Revolving Loans for such day.
(f) Optional Prepayment of Swingline Loans. The Borrower may
prepay the Swingline Loans in whole at any time, or from time to time in part,
by giving notice of such prepayment to the Swingline Bank not later than 10:30
A.M. (New York City time) on the date of prepayment and paying the principal
amount to be prepaid, together with interest accrued thereon to the date of
prepayment, to the Swingline Bank at its address specified in or pursuant to
Section 9.01, in Federal or other funds immediately available at such address,
not later than 12 Noon (New York City time) on the date of prepayment.
(g) Maturity of Swingline Loans. All Swingline Loans outstanding
on the Swingline Maturity Date shall be due and payable on such date, together
with interest accrued thereon to such date.
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(h) Refunding Unpaid Swingline Loans. If (x) the Swingline Loans
are not paid in full on the Swingline Maturity Date, (y) the Swingline
Commitment is terminated (whether pursuant to Section 2.15(j), Article 6 or
otherwise) or (z) the Swingline Loans become immediately due and payable
(whether pursuant to Section 2.15(g), Article 6 or otherwise), the Swingline
Bank (or the Administrative Agent on its behalf) may, by notice to the
Revolving Lenders (including the Swingline Bank, in its capacity as a
Revolving Lender), require each Revolving Lender to pay to the Swingline Bank
an amount equal to such Lender's Revolving Commitment Percentage of the
aggregate unpaid principal amount of the Swingline Loans then outstanding.
Such notice shall specify the date on which such payments are to be made,
which shall be the first Domestic Business Day after such notice is given.
Not later than 12:00 Noon (New York City time) on the date so specified, each
Revolving Lender shall pay the amount so notified to it to the Swingline Bank
at its address specified in or pursuant to Section 9.01, in Federal or other
funds immediately available at such address. The amount so paid by each
Revolving Lender shall constitute a Base Rate Loan to the Borrower; provided
that, if the Revolving Lenders are prevented from making such Base Rate Loans
to the Borrower by the provisions of the United States Bankruptcy Code or
otherwise, the amount so paid by each Revolving Lender shall constitute a
purchase by it of a participation in the unpaid principal amount of the
Swingline Loans and interest accruing thereon after the date of such payment
at the rate specified in the last sentence of Section 2.15(e). Each Revolving
Lender's obligation to make such payment to the Swingline Bank under this
subsection shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Revolving Lender
or any other Person may have against the Swingline Bank, the Borrower or any
other Person, (ii) the occurrence or continuance of a Default or an Event of
Default or the termination of the Revolving Commitments, (iii) any adverse
change in the condition (financial or otherwise) of the Borrower or any other
Person, (iv) any breach of this Agreement by any party hereto (other than the
Swingline Bank) or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided that no Revolving
Lender shall be obligated to make any payment to the Swingline Bank under this
subsection with respect to a Swingline Loan made by the Swingline Bank at a
time when it had determined that any applicable condition precedent set forth
in Section 3.02(c) or 3.02(d) was not satisfied. The Swingline Bank shall be
entitled to recover any and all actual losses and damages (including, without
limitation, reasonable attorneys' fees) from any Lender failing to make any
such payment to the Swingline Lender. The Swingline Bank may set off the
obligations of a Lender under this paragraph against any distributions or
payments in respect of the Loans which the Swingline Bank would otherwise make
available to such Lender at any time.
(i) To the extent and during the time period in which any Lender
fails to provide or delays in providing its respective payment to the Swingline
Bank pursuant to clause (h) above, such Lender's percentage of all payments
in respect of Revolving Loans (but not its Revolving Commitment with respect
to future Borrowings) shall decrease to reflect the actual percentage which its
actual Revolving Credit Exposure less the amount of such unmade payment bears
to the aggregate Revolving Credit Exposures.
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(j) Termination of Swingline Commitment. The Borrower may, upon
at least three Domestic Business Days' notice to the Swingline Bank and the
Administrative Agent, terminate the Swingline Commitment at any time, if no
Swingline Loans are outstanding at such time. Unless previously terminated,
the Swingline Commitment shall terminate at the close of business on the
Swingline Maturity Date.
Section 2.16. Registry. The Administrative Agent shall
maintain a register (the "Register") on which it will record the Commitments
of each Lender, each Loan made by such Lender and each repayment of any Loan
made by such Lender. Any such recordation by the Administrative Agent on the
Register shall be conclusive, absent manifest error. With respect to any
Lender, the assignment or other transfer of the Commitments of such Lender and
the rights to the principal of, and interest on, any Loan made and Note issued
pursuant to this Agreement shall not be effective until such assignment or
other transfer is recorded on the Register and otherwise complies with Section
9.6(c). The registration of assignment or other transfer of all or part of any
Commitments, Loans and Notes for a Lender shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement referred to in Section 9.6(c). The Register shall be
available at the offices where kept by the Administrative Agent for inspection
by the Borrower and any Lender at any reasonable time upon reasonable prior
notice to the Administrative Agent. Each Lender shall record on its internal
records (including computerized systems) the foregoing information as to its
own Commitments and Loans. Failure to make any such recordation, or any error
in such recordation, shall not affect the obligations of any Obligor under the
Loan Documents.
Section 2.17. Monthly Statement. The Administrative Agent
shall provide the Borrower with a monthly statement of account, setting forth
the principal amount of each Class of Loans outstanding at the beginning and
end of the period covered thereby, the amount of any prepayments in such period
and the amount of interest accrued in such period.
ARTICLE 3
Conditions
Section 3.1. Closing Date. The Closing Date shall occur on
the first date on which all the following conditions have been satisfied
(or waived in accordance with Section 9.5), it being understood that with
respect to the conditions set forth in clauses (f) - (o), (r), (s) and (v),
each Lender shall be deemed to have determined that such conditions shall
have been satisfied unless the Syndication Agent shall have received notice
from such Lender prior to the Closing Date that such Lender does not
consider such conditions to have been satisfied (or, solely with respect to
the conditions set forth in clauses (i), (m), (n) and (v) the Lenders shall
not have received any documents referred to therein):
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(a) receipt by each Agent of counterparts hereof signed by each of
the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by each Agent in form
reasonably satisfactory to it of telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
party);
(b) receipt by the Administrative Agent (with copies for the
Documentation Agent and the Administrative Agent) of a duly executed Note for
the account of each Lender and a duly executed Swingline Note for the account
of the Swingline Bank, each dated on or before the Closing Date and complying
with the provisions of Section 2.13 or 2.15(d), as the case may be;
(c) receipt by each Agent of duly executed counterparts of each
Collateral Document (other than the Mortgages), together with evidence
reasonably satisfactory to it in its sole good faith discretion of the
effectiveness of the security contemplated thereby and of the perfection of
the Liens created thereunder, including the filing of UCC-1s and the delivery
of any stock certificates or promissory notes comprising the Collateral, or of
arrangements satisfactory to the Agents to effect such perfection;
(d) receipt by each Agent of duly executed counterparts of the
Subsidiary Guarantee signed on behalf of each Subsidiary Guarantor;
(e) receipt by each Agent of a true, correct and complete copy of
each Acquisition Document as in effect on the Closing Date, certified on
behalf of the Borrower by a senior officer of the Borrower;
(f) completion by the Lenders of a due diligence review with
respect to the Borrower, Ruco and their respective Subsidiaries, including,
without limitation, as to business, tax, accounting, legal and environmental
matters and other structural and ownership matters, and reasonable
satisfaction by the Lenders in their sole good faith discretion with the scope
and results of such review;
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(g) (i) receipt by each Agent of evidence reasonably satisfactory
to it in its sole good faith discretion (x) of the satisfaction (without
waiver) of all conditions to the closing of the Acquisition on the Closing
Date, (y) that all transactions contemplated by the Acquisition Documents to
be consummated on or before the closing date of the Acquisition will take
place prior to or simultaneously with the making of the initial Loans and the
other transactions hereunder contemplated to take place on the Closing Date,
and (z) that the Acquisition will be consummated concurrently with the making
of the initial Loans hereunder, and (ii) reasonable satisfaction of the
Lenders in their sole good faith discretion with the form and substance of (x)
the Acquisition Agreement and (y) the structure (including, without
limitation, the corporate, capital and tax structure of the Borrower, Ruco and
their respective Subsidiaries), terms, conditions and documentation of the
Acquisition;
(h) receipt by each Agent of (i) evidence reasonably satisfactory
to it in its sole good faith discretion of the effectiveness of all Acquisition
Documents, and (ii) each opinion, report, and other document required to be
delivered pursuant to the Acquisition Documents in connection with the
Acquisition, all in form and substance satisfactory to the Agents and the
Lenders;
(i) the fact that, and receipt by the Lenders of a certificate of
the Borrower executed on its behalf by its chief financial officer to the
effect that, the ratio of Consolidated Debt less cash and Temporary Cash
Investments as of the end of the Fiscal Quarter most recently ended on or
prior to the Closing Date to Consolidated EBITDA for the period of four Fiscal
Quarters then ended (in each case calculated on a pro forma basis as of the
Closing Date, after giving effect to the Acquisition, the financing
contemplated hereby and the other transactions contemplated in connection with
the Acquisition) does not exceed 3.5:1.0, which certificate shall set forth in
reasonable detail the calculation of such ratio;
(j) receipt by each Agent and the Lenders of an opinion (addressed
to the Agents, the Issuers, the Swingline Bank and the Lenders) of Wolf,
Block, Schorr and Solis-Cohen, LLP, counsel for the Obligors, substantially in
the form of Exhibit D hereto, dated the Closing Date and covering such
additional matters relating to the transactions contemplated hereby as the
Required Lenders may reasonably request;
(k) receipt by each Agent and the Lenders of an opinion (addressed
to the Agents, the Issuers, the Swingline Bank and the Lenders) of Davis Polk &
Wardwell, special counsel for the Agents and the Lead Arranger, substantially
in the form of Exhibit F hereto, dated the Closing Date and covering such
additional matters relating to the transactions contemplated hereby as the
Required Lenders may reasonably request;
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(l) receipt by each Agent, the Lead Arranger, JPMSI and the Lenders
of all costs, fees and expenses (including, without limitation, legal fees and
expenses) and other compensation payable to any of the foregoing on or prior
to the Closing Date in connection with the Loan Documents;
(m) receipt by the Lenders of the pro forma balance sheet and
financial statements referred to in Section 4.15, which pro forma balance sheet
and financial statements shall be satisfactory to the Lenders;
(n) receipt by the Lenders of environmental reports prepared by
Strata Environmental and Mclaren/Hart Inc., reasonably satisfactory to the
Lenders in their sole good faith discretion;
(o) the fact that (i) all necessary anti-trust and other
governmental, shareholder and third party consents and approvals necessary or
reasonably desirable in connection with the Acquisition and the related
transactions contemplated by the Acquisition Documents and the Loan Documents
shall have been obtained and all applicable waiting periods shall have expired
without any action to affect the Acquisition; and (ii) the Lenders shall have
received evidence that the Acquisition, the financing contemplated hereby and
the other transactions contemplated pursuant to the Acquisition Documents and
the Loan Documents will not violate, or constitute a default under, any
applicable law or regulation, which evidence shall be reasonably satisfactory
to the Lenders;
(p) the fact that (i) there shall not be any disruption or change
in financial, banking or capital markets or in the regulatory environment that
in the good faith judgment of the Lead Arranger is reasonably likely to
adversely affect the syndication of the Commitments and the Loans and (ii) the
Borrower, Ruco and their respective Subsidiaries shall have fully cooperated
with the syndication efforts, including, without limitation, by promptly
providing the Lead Arranger and the Lenders with all information deemed
necessary to complete successfully such syndication;
(q) the fact that there shall have been no material adverse change
in the condition (financial or otherwise), business, results of operations,
properties, liabilities or prospects of the Borrower, Ruco or any of their
respective Subsidiaries, in each case since the most recently ended fiscal year
of such entity for which audited financial statements have been delivered to
the Lenders;
(r) the fact that there shall not be any pending or threatened
litigation or proceeding against the Borrower, Ruco or any of their respective
Subsidiaries or affiliates, or otherwise relating to the Acquisition or the
financing contemplated hereby, which seeks to enjoin or challenge the
Acquisition, the financing contemplated hereby or any other transaction
contemplated by the Acquisition Documents or the Loan Documents or which could
reasonably be expected in the Lenders' judgment to have a material adverse
effect on the condition (financial or otherwise), business, results of
operations, properties, liabilities or prospects of the Borrower, Ruco or any
of their respective Subsidiaries;
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(s) receipt by the Lenders of evidence of insurance (including
environmental insurance) maintained by the Borrower, Ruco and their respective
Subsidiaries reasonably satisfactory to the Lenders;
(t) receipt by each Agent of evidence reasonably satisfactory to
it in its sole good faith discretion that (i) all outstanding Debt and other
obligations of the Borrower and its Subsidiaries under the Corestates Loan
Agreement have been paid in full, all commitments thereunder have been
terminated and all Liens securing such obligations and all guarantees thereof
have been released, (ii) all other outstanding Debt of the Borrower, Ruco and
their respective Subsidiaries (other than the Mexican Subsidiary Debt and Debt
of Foreign Subsidiaries under Working Capital Facilities in an aggregate
principal amount not exceeding $3,000,000) has been repaid in full, together
with accrued interest thereon and any prepayment premiums or penalties with
respect thereto, and (iii) on the Closing Date, immediately after giving effect
to the Acquisition, the borrowings to be made hereunder and the other
transactions contemplated by the Acquisition Documents and the Loan Documents,
the Borrower and its Subsidiaries (including Ruco and its Subsidiaries) shall
have no Debt outstanding other than the Loans, the Mexican Subsidiary Debt and
Debt of Foreign Subsidiaries under Working Capital Facilities in an aggregate
principal amount not exceeding $3,000,000; and
(u) receipt by each Agent of all documents it may reasonably
request relating to the existence of each Obligor, the corporate authority for
and the validity of the Loan Documents and the Acquisition Documents, and any
other matters relevant hereto, all in form and substance satisfactory to such
Agent in its sole good faith discretion; and
(v) receipt by the Agents and the Lenders of a certificate of the
Borrower, executed on its behalf by its chief financial officer, as to the
solvency (after giving effect to the Acquisition, the financing contemplated
hereby and the other transactions contemplated pursuant to the Acquisition
Documents and the Loan Documents) of each Obligor in a form reasonably
acceptable to the Lenders.
Promptly after the Closing Date occurs, the Syndication Agent shall notify
the Borrower, the other Agents and the Lenders thereof, and such notice
shall be conclusive and binding on all parties hereto.
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Section 3.2. Borrowings and Issuances of Letters of Credit.
The obligation of any Lender to make a Loan on the occasion of any Borrowing,
the obligation of any Issuer to issue (or extend or allow an extension of the
expiry date of) any Letter of Credit and the obligation of the Swingline Bank
to make a Swingline Loan on the occasion of any Swingline Borrowing are each
subject to the satisfaction of the following conditions:
(a) the fact that the Closing Date shall have occurred on or before
August 31, 1998;
(b) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.2, receipt by the relevant Issuer of a notice of proposed
issuance or extension as required by Section 2.14(b) or 2.14(f) or receipt by
the Swingline Bank of a Notice of Swingline Borrowing as required by Section
2.15(b), as the case may be;
(c) the fact that, immediately before and after such Borrowing or
issuance or extension of a Letter of Credit, no Default shall have occurred and
be continuing; and
(d) the fact that the representations and warranties of the
Obligors contained in the Loan Documents shall be true on and as of the date
of such Borrowing or issuance or extension of a Letter of Credit (or, in the
case of any representation or warranty which by its terms relates solely to an
earlier date, on and as of such earlier date).
Each Borrowing and each issuance or extension of a Letter of Credit hereunder
shall be deemed to be a representation and warranty by the Borrower on the
date of such Borrowing or issuance or extension of a Letter of Credit as to
the facts specified in the foregoing clauses 3.2(c) and 3.2(d).
ARTICLE 4
Representations and Warranties
The Borrower represents and warrants (including, in the case of
any such representation and warranty made or deemed made before the
consummation of the Acquisition, at the time such representation and warranty
is made or deemed made and immediately after giving effect to the consummation
of the Acquisition) that:
Section 4.1. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and all
material governmental licenses, consents, authorizations and approvals
required to carry on its business as now conducted.
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Section 4.2. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by each Obligor of the
Loan Documents to which it is a party are within its corporate powers, have
been duly authorized by all necessary corporate action, require no action by
or in respect of, or filing with, any governmental body, agency or official
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation, by-laws or
other constitutive documents of such Obligor or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries or result in the creation or imposition of
any Lien on any asset of the Borrower or any of its Subsidiaries (other than
Liens created under the Collateral Documents).
Section 4.3. Binding Effect; Liens Enforceable. (a) Each Loan
Document (other than the Notes) constitutes a valid and binding agreement of
each Obligor party thereto, and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Borrower, in each case enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity.
(b) The Collateral Documents create valid security interests
in, and first mortgage Liens on, the Collateral purported to be covered
thereby, which security interests and mortgage Liens are and will remain
perfected security interests and mortgage Liens, prior to all other Liens
other than Liens permitted by Section 5.09. Each of the representations and
warranties made by each Obligor in the Collateral Documents to which it is a
party is true and correct.
Section 4.4. Financial Information. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of December
31, 1997 and the related consolidated statements of operations, cash flows and
stockholders' equity for the Fiscal Year then ended, reported on by Price
Waterhouse LLP and set forth in the Borrower's 1997 Form 10-K, fairly present,
in conformity with GAAP, the consolidated financial position of the Borrower
and its Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such Fiscal Year.
(b) The unaudited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of March 31, 1998 and the related unaudited
consolidated statements of operations, cash flows and stockholders' equity for
the three months then ended, set forth in the Borrower's latest Form 10-Q,
fairly present, on a basis consistent with the financial statements referred
to in subsection (a), the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such three month period (subject to normal
year-end adjustments).
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(c) The combined balance sheet of Ruco Corp. and Ruco LLC as of
September 30, 1997 and the related combined statements of operations, cash
flows and stockholders' equity for the fiscal year then ended, reported on by
Holtz Rubenstein & Co., LLP, copies of which have been provided to each of the
Lenders, fairly present, in conformity with GAAP, the combined financial
position of Ruco Corp. and Ruco LLC as of such date and their combined results
of operations and cash flows for such fiscal year.
(d) The unaudited combined balance sheet of Ruco Corp. and Ruco
LLC as of June 30, 1998 and the related unaudited combined statements of
operations, cash flows and stockholders' equity for the nine months then
ended, copies of which have been provided to each of the Lenders, fairly
present, on a basis consistent with the financial statements referred to in
subsection (c) above, the combined financial position of Ruco Corp. and Ruco
LLC as of such date and their combined results of operations and cash flows
for such nine month period (subject to normal year-end adjustments).
(e) Since March 31, 1998, there has been no material adverse change
in the business, condition (financial or otherwise), operations, properties,
liabilities or prospects of the Borrower and its Consolidated Subsidiaries,
considered as a whole, and, on or prior to the Closing Date, since June 30,
1998, there has been no material adverse change in the business, condition
(financial or otherwise), operations, properties, liabilities or prospects of
Ruco and its Subsidiaries, considered as a whole.
Section 4.5. Litigation. There is no action, suit or
proceeding pending against, or to the Borrower's knowledge threatened against
or affecting, the Borrower or any Subsidiary before any court or arbitrator or
any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which is reasonably likely to materially
adversely affect the condition (financial or otherwise), business, results of
operations, properties, liabilities or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole, after giving effect to the
Acquisition or which in any manner draws into question the Acquisition or the
validity or enforceability of any Loan Document or Acquisition Document.
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Section 4.6. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of
the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed
to make any contribution or payment to any Plan or Multiemployer Plan, or made
any amendment to any Plan, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Internal Revenue Code or (iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA.
Section 4.7. Environmental Matters. (a) Except as set forth in
Schedule 4.07 and to the extent that the liabilities of the Borrower and its
Subsidiaries, taken as a whole (and after considering any applicable third
party indemnification which has been provided and remains in full force and
effect and/or to the extent a solvent insurer has agreed in writing to provide
coverage), relating to or resulting from the matters referred to in clauses (i)
through (vi) below, inclusive, would not reasonably be expected to exceed
$750,000 for any one occurrence or $5,000,000 in the aggregate:
(i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been received, no
penalty has been assessed and no investigation or review is
pending, or to the Borrower's knowledge, threatened by any
governmental or other entity relating to the Borrower or any
Subsidiary and relating to or arising out of any applicable
Environmental Law;
(ii) there are no liabilities of the Borrower or any
Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or
relating to any Environmental Law;
(iii) no polychlorinated biphenyls, radioactive material,
lead, lead paint, asbestos-containing material, incinerator,
sump, surface impoundment, lagoon, landfill, septic, wastewater
treatment or other disposal system or underground storage tank
(active or inactive) that requires remediation, or could
reasonably be expected to lead to liability under, applicable
Environmental Laws is or has been present at any property now or
previously owned, operated or leased by the Borrower or any
Subsidiary;
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(iv) no Hazardous Substance has been discharged, disposed of,
dumped, injected, pumped, deposited, spilled, leaked, emitted or
released at, on or under any property now or previously owned,
operated or leased by the Borrower or any Subsidiary other than
in compliance in all material respects with, and in a manner that
could not reasonably be expected to lead to liability under,
applicable Environmental Laws;
(v) no property now or previously owned, leased or operated
by the Borrower or any Subsidiary nor any property to which the
Borrower or any Subsidiary has, directly or indirectly,
transported or arranged for the transportation of any Hazardous
Substances, is listed or, to the Borrower's knowledge, proposed
for listing, on the National Priorities List promulgated pursuant
to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar
federal, state or foreign list of sites requiring investigation
or clean-up; and
(vi) the Borrower and its Subsidiaries are in compliance with
all Environmental Laws and have obtained and are in compliance
with all permits, licenses, authorizations, certificates and
approvals of governmental authorities relating to or required by
applicable Environmental Laws and necessary or proper for the
business of the Borrower or any Subsidiary as currently
conducted.
(b) There has been no material environmental investigation, study,
audit, test, review or other analysis conducted of which the Borrower has
control or possession in relation to the current or prior business of the
Borrower or any Subsidiary or any property or facility now or previously
owned, leased or operated by the Borrower or any Subsidiary, which has not
been delivered to the Lenders at least five days prior to the date hereof.
(c) For purposes of this Section, the terms "Borrower" and
"Subsidiary" shall include any business or business entity (including a
corporation) which is, in whole or in part, a predecessor of the Borrower or
any Subsidiary.
Section 4.8. Taxes. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Borrower or any Subsidiary, except to the extent that any such assessment is
being contested in good faith by appropriate proceedings. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the Borrower's opinion,
adequate.
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Section 4.9. Subsidiaries. Each of the Borrower's Subsidiaries
is duly organized, validly existing and, where applicable, in good standing
under the laws of its jurisdiction of organization, and has all powers and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. The Borrower has no
Subsidiaries other than its Foreign Subsidiaries and the Subsidiary Guarantors.
Section 4.10. No Regulatory Restrictions on Borrowing. No
Obligor is (i) an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (iii) otherwise subject to any regulatory
scheme which restricts its ability to incur or guarantee debt.
Section 4.11. Real Property Interests. Except for the
ownership, leasehold or other interests set forth in Schedule 4.11, the
Borrower and its Subsidiaries have, as of the Closing Date, no ownership,
leasehold or other interest in real property located in the United States.
Section 4.12. Full Disclosure. All information (excluding
projections) heretofore furnished by the Borrower to any Agent or any Lender
for purposes of or in connection with the Loan Documents or any transaction
contemplated thereby is, and all such information hereafter furnished by the
Borrower to any Agent or any Lender will be, true and accurate in all material
respects on the date as of which such information is stated or certified. The
Borrower has disclosed to the Lenders any and all facts (other than general
economic or political conditions) which materially and adversely affect, or may
affect (to the extent the Borrower can now reasonably foresee), the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of any Obligor to perform its
obligations under the Loan Documents. All projections heretofore furnished
by the Borrower to any Agent or any Lender for purposes of or in connection
with the Loan Documents or any transaction contemplated thereby were, and all
projections hereafter furnished by the Borrower to any Agent or any Lender
will be, based on reasonable assumptions and as of their date represented the
Borrower's best estimate of future performance of the Borrower and its
Subsidiaries.
Section 4.13. Solvency. As of the Closing Date, after giving
effect to the transactions contemplated to occur on the Closing Date, and at
all times thereafter: (i) the aggregate fair market value of the assets of the
Borrower and each Subsidiary Guarantor will exceed the liabilities of the
Borrower and each Subsidiary Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities (taking into account the amount and
probability of the conversion thereof into actual non-contingent
liabilities)), (ii) the Borrower and each Subsidiary Guarantor will have
sufficient cash flow to enable it to pay its debts as they mature and (iii)
the Borrower and each Subsidiary Guarantor will not have unreasonably small
capital for the business in which the Borrower and each of its Subsidiaries
are engaged.
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Section 4.14. Representations and Warranties Incorporated from
Acquisition Agreement. As of the Closing Date, each of the representations
and warranties made in the Acquisition Agreement by the Borrower is, and to
the best of the Borrower's knowledge after diligent inquiry each of the
representations and warranties made in the Acquisition Agreement by any other
party thereto is, true and correct in all material respects and such
representations and warranties are hereby so incorporated herein by reference
with the same effect as though set forth in their entirety herein, as qualified
therein. The Acquisition Agreement has not as of the Closing Date been
modified or amended in any respect and no provision or condition contained
therein has been waived, except with the express written consent of the
Required Lenders.
Section 4.15. Information Memorandum. (a) The pro forma
balance sheet of the Borrower and its Subsidiaries as of June 30, 1998 and the
related pro forma statements of operations and cash flows for the twelve
months then ended, in each case as set forth in the Information Memorandum
fairly presents, in conformity with generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
Section 4.4(a), the consolidated financial position of the Borrower and its
Subsidiaries as of such date and their results of operations and cash flows
for the twelve months then ended, adjusted to give effect (as if such events
had occurred on such date, in the case of such balance sheet, or on the first
day of such period, in the case of such statements of operations and cash
flows) to (i) the transactions contemplated by the Acquisition Documents and
the Loan Documents to occur on the Closing Date, (ii) the application of the
proceeds therefrom as contemplated by the Acquisition Documents and the Loan
Documents and (iii) the payment of all legal, accounting and other fees
related thereto. As of the date of such balance sheet and the Closing Date,
the Borrower and its Subsidiaries had and have no material liabilities,
contingent or otherwise, including liabilities for taxes, long-term leases or
forward or long-term commitments, which are not properly reflected on such
balance sheet. The projections set forth in the Information Memorandum were
based on reasonable assumptions and as of their date represented the best
estimate of future performance of the Borrower and its Subsidiaries.
Section 4.16. Year 2000. The Borrower will use its best
efforts to provide that any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the computer systems of
the Borrower and its Subsidiaries and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
the systems of the Borrower or any of its Subsidiaries interface) and the
testing of all such systems and equipment, as so reprogrammed, will be
completed by June 30, 1999. The cost to the Borrower and its Subsidiaries of
such reprogramming and testing and of the reasonably foreseeable consequences
of the year 2000 to the Borrower and its Subsidiaries (including, without
limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect. Except
for such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement, to be sufficient to permit the
Borrower and its Subsidiaries to conduct their businesses without Material
Adverse Effect.
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ARTICLE 5
Covenants
The Borrower agrees that, so long as any Lender has any Credit
Exposure hereunder or any interest or fees accrued hereunder remain unpaid:
Section 5.1. Information. The Borrower will deliver to each
of the Lenders:
(a) within 90 days after the end of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as of the end of such Fiscal Year and the related consolidated statements of
operations, cash flows and stockholders' equity for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal
Year, all reported on without material qualification by Price Waterhouse LLP
or other independent public accountants of nationally recognized standing;
(b) within 45 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such Fiscal Quarter, the related
consolidated statement of operations for such Fiscal Quarter and the related
consolidated statements of cash flows and stockholders' equity for the portion
of the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in
the case of each such statement of operations, cash flows and stockholders'
equity in comparative form the figures for the corresponding period in the
previous Fiscal Year, all certified (subject to normal year-end adjustments)
as to fairness of presentation and consistency with GAAP by the Borrower's
chief financial officer or chief accounting officer;
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(c) simultaneously with the delivery of each set of financial
statements referred to in clauses 5.1(a) and 5.1(b) above, a certificate of the
Borrower signed on its behalf by its chief financial officer or chief
accounting officer (i) setting forth in reasonable detail (x) the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.11 to 5.15, inclusive, on the date of such
financial statements and (y) a calculation of the Leverage Ratio as of the
date of such financial statements, (ii) stating whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth
the details thereof and the action which the Borrower is taking or proposes to
take with respect thereto and (iii) if there shall have been a change in
generally accepted accounting principles from GAAP, setting forth a
reconciliation of such financial statements to GAAP;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause 5.1(a) above, a statement of the firm of
independent public accountants which reported on such statements (i) stating
whether anything has come to their attention to cause them to believe that any
Default existed on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause 5.1(c) above;
(e) on or prior to 90 days after the end of each Fiscal Year,
commencing with the Fiscal Year ending December 31, 1999, a certificate of the
Borrower signed on its behalf by its chief financial officer or chief
accounting officer setting forth in reasonable detail the calculation of Excess
Cash Flow for such Fiscal Year;
(f) within 45 days after the beginning of each Fiscal Year, copies
of monthly operating budgets for such Fiscal Year, containing such information
and in such form as shall be reasonably satisfactory to the Required Lenders;
(g) within three Domestic Business Days after any executive or
financial officer of the Borrower obtains knowledge of any Default, if such
Default is then continuing, a certificate of the Borrower's chief financial
officer or chief accounting officer setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto;
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(h) promptly after the mailing thereof to the Borrower's
shareholders generally, copies of all financial statements, reports and proxy
statements so mailed;
(i) promptly after the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) filed by the Borrower with the SEC;
(j) as soon as reasonably practicable following the date, if any,
when any member of the ERISA Group (i) gives or is required to give notice to
the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, other than under Section 4041(b) of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan with unfunded liabilities is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code, a copy of such application; (v) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or Multiemployer Plan
or makes any amendment to any Plan which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a certificate
of the Borrower's chief financial officer or chief accounting officer setting
forth details as to such occurrence and the action, if any, which the Borrower
or applicable member of the ERISA Group is required or proposes to take;
(k) as soon as reasonably practicable after any executive or
financial officer of the Borrower obtains knowledge thereof, notice of any
event or condition which has had or threatens to have a Material Adverse
Effect and the nature of such Material Adverse Effect;
(l) as soon as reasonably practicable after any officer of the
Borrower obtains knowledge of the commencement of, or of a threat of the
commencement of, an action, suit or proceeding against the Borrower or any of
its Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which is reasonably likely to have a Material Adverse
Effect or which in any manner questions the validity of the Loan Documents, a
certificate of a senior financial officer of the Borrower setting forth the
nature of such pending or threatened action, suit or proceeding and such
additional information with respect thereto as may be reasonably requested by
any Lender;
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(m) promptly upon receipt of any complaint, order, citation,
notice or other written communication from any Person with respect to, or upon
the Borrower's obtaining knowledge of, (i) the existence or alleged existence
of a violation of any applicable Environmental Law or any Environmental
Liability in connection with any property now or previously owned, leased or
operated by the Borrower or any of its Subsidiaries, (ii) any Release on such
property or any part thereof in a quantity that is reportable under any
applicable Environmental Law, and (iii) any pending or threatened proceeding
for the termination, suspension or non-renewal of any permit required under any
applicable Environmental Law, in each case (x) which could result in liability
or expenses in excess of $1,000,000 or (y) which individually or in the
aggregate could have a Material Adverse Effect, notice thereof; and
(n) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Administrative Agent, at the request of any Lender, may reasonably request.
Section 5.2. Payment of Obligations. The Borrower (i) will
pay and discharge, and will cause each Subsidiary to pay and discharge, at or
before maturity, all their respective material obligations and liabilities
(including, without limitation, tax liabilities and claims of materialmen,
warehousemen and the like which if unpaid might by law give rise to a Lien),
except where the same are contested in good faith by appropriate proceedings,
(ii) will maintain, and will cause each Subsidiary to maintain, in accordance
with GAAP, appropriate reserves for the accrual thereof and (iii) shall not
breach or permit any of its Subsidiaries to breach, in any material respect,
or permit to exist any material default under, the terms of any lease,
commitment, contract, instrument or obligation to which it is a party, or by
which its properties or assets are bound, except where the failure to do the
foregoing would not in the aggregate have a Material Adverse Effect.
Section 5.3. Maintenance of Property; Insurance. (a) The
Borrower will keep, and will cause each Subsidiary to keep, all property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted.
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(b) The Borrower will maintain, and will cause each of its
Subsidiaries to maintain (either in the Borrower's name or in such Subsidiary's
own name) with financially sound and responsible insurance companies, (i)
insurance on all their respective properties in at least such amounts (with no
greater risk retention) and against at least such risks as are usually
maintained, retained or insured against in the same general area by companies
of established repute engaged in the same or a similar business and (ii)
environmental insurance in respect of the Hicksville Facility in amounts (which
shall not, in any event, be less than aggregate coverage of $10,000,000) and
on terms reasonably satisfactory to the Lenders. The Borrower will furnish to
the Lenders, upon request from the Administrative Agent, information presented
in reasonable detail as to the insurance so carried. All such insurance shall
be provided by insurers having an A.M. Best policyholders rating of not less
than B+ or such other insurers as the Required Lenders may approve in writing.
(c) On or prior to the Closing Date, the Borrower shall cause the
Administrative Agent to be named as an additional insured and loss payee on
each insurance policy required to be maintained pursuant to this Section. The
Borrower will deliver to the Lenders (i) on the Closing Date, a certificate
from the Borrower's insurance broker dated such date showing the amount of
coverage as of such date, and certifying that, in the opinion of such broker,
such amounts are reasonable and customary for companies of established repute
engaged in the same or a similar business, that such policies will include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all loss payees and
additional insureds and all rights of subrogation against all loss payees and
additional insureds, and that if all or any part of such policy is canceled,
terminated or expires, the insurer will forthwith give notice thereof to each
additional insured and loss payee and that no cancellation, reduction in
amount or material change in coverage thereof shall be effective until at least
30 days after receipt by each additional insured and loss payee of written
notice thereof, (ii) upon the request of any Lender through the Administrative
Agent from time to time, full information as to the insurance carried, (iii)
within five days of receipt of notice from any insurer, a copy of any notice of
cancellation, nonrenewal or material change in coverage from that existing on
the date of this Agreement and (iv) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower.
(d) Any proceeds in excess of $5,000,000 from any Property
Insurance Policy which are payable to the insured in respect of any claim, or
any condemnation award or other compensation in respect of a condemnation (or
any transfer or disposition of property in lieu of condemnation) for which the
Borrower or any of its Subsidiaries receives a condemnation award or other
compensation in excess of $5,000,000, shall be paid to the Administrative
Agent to be held, applied or released for application in accordance with
Section 5 of the Security Agreement and each Property Insurance Policy shall
provide that all insurance proceeds in excess of $5,000,000 per claim which
are payable to the insured shall be adjusted with and payable to the
Administrative Agent. The Borrower hereby appoints the Administrative Agent
as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to execute or endorse all documents, checks or
drafts in connection with payments under Property Insurance Policies.
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Section 5.4. Conduct of Business and Maintenance of Existence.
The Borrower and its Subsidiaries will continue to engage in business of the
same general type as now conducted by the Borrower and its Subsidiaries, and
will preserve, renew and keep in full force and effect their respective
corporate existences and their respective rights, privileges and franchises
necessary or desirable in the normal conduct of business; provided that
nothing in this Section shall prohibit any merger or consolidation expressly
permitted by Section 5.7.
Section 5.5. Compliance with Laws. The Borrower will comply,
and will cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations and requirements of
governmental authorities (including, without limitation, applicable
Environmental Laws and ERISA and the rules and regulations thereunder), except
(i) where the necessity of compliance therewith is contested in good faith by
appropriate proceedings and (ii) where non-compliance would not have a
Material Adverse Effect.
Section 5.6. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any
Lender at such Lender's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books
and records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times upon reasonable prior notice and as often as may
reasonably be requested.
Section 5.7. Mergers and Sales of Assets. The Borrower will
not, and will not permit any of its Subsidiaries to, consolidate or merge with
or into any other Person; provided that nothing in this Section shall prohibit
(i) the Borrower from merging with any Subsidiary if the Borrower is the entity
surviving such merger, (ii) any Subsidiary from merging with any Subsidiary
Guarantor if the corporation surviving the merger is the Borrower or a
Subsidiary Guarantor or (iii) any Subsidiary that is not a Subsidiary Guarantor
from merging with any Subsidiary that is not a Subsidiary Guarantor if the
entity surviving such mergers is a wholly-owned Subsidiary, so long as, in
each case, immediately after giving effect to such merger, no Default shall
have occurred and be continuing. Except for Investments permitted under
Section 5.17, the Borrower will not, and will not permit any of its
Subsidiaries to, make any Asset Sale unless (i) the consideration therefor is
not less than the fair market value of the related asset (as determined in
good faith by the chief financial officer of the Borrower), (ii) the
consideration therefor consists at least 80% of cash and (iii) after giving
effect thereto, the aggregate fair market value of the assets disposed of in
all Asset Sales after the Closing Date would not exceed $20,000,000.
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Section 5.8. Use of Proceeds. The proceeds of the Term Loans
will be used by the Borrower to (a) refinance in full all outstanding Debt
(other than the Mexican Subsidiary Debt and up to $3,000,000 of Debt of Foreign
Subscribers under Working Capital Facilities) of the Borrower, Ruco and their
respective Subsidiaries, and (b) to pay the cash consideration for the
Acquisition (including without limitation to pay related fees and expenses and
to refinance existing Debt of Ruco) in an aggregate amount not to exceed
$118,000,000. The proceeds of the Revolving Loans and the Letters of Credit
will be used by the Borrower (a) to refinance in full all Debt of the Borrower
outstanding under the Corestates Loan Agreement and (b) for general corporate
purposes, including, without limitation, working capital purposes. Neither any
proceeds of the Loans nor any Letter of Credit will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
Section 5.9. Negative Pledge. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens created under the Collateral Documents;
(b) mortgage Liens securing the Mexican Subsidiary Debt;
(c) Liens on assets of Foreign Subsidiaries securing Debt of
Foreign Subsidiaries under Working Capital Facilities in an aggregate amount
not exceeding $3,000,000;
(d) Liens arising in the ordinary course of its business which
(i) do not secure Debt or Derivatives Obligations and (ii) do not secure any
single obligation (or class of obligations having a common cause) in an amount
exceeding $5,000,000; and
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(e) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or leasing
(pursuant to a capital lease) such asset, provided that (i) the aggregate
principal amount of such Debt shall not exceed $5,000,000 and (ii) such Lien
attaches to such asset concurrently with or within 90 days after the
acquisition thereof.
Section 5.10. Limitation on Debt. (a) The Borrower will not,
and will not permit any of its Subsidiaries to, incur or at any time be liable
with respect to any Debt except:
(i) Debt under the Loan Documents;
(ii) intercompany Debt owing to any Obligor;
(iii) unsecured Debt of the Borrower which has no scheduled
principal repayments prior to the first anniversary of the
Revolving Credit Termination Date, that is subordinated on terms
that include blockage of payment on such debt in liquidation and
upon a payment default (unless cured or waived) until all
principal and interest on the Debt hereunder has been paid in
full and blockage of such payment upon any other event of default
at the election of the holders of senior debt or a portion
thereof or agent therefor for a period of up to at least 150 days
(or such lesser period as is customary in the market at the time
of issuance of such debt) and which has other covenants and
events of default that, taken as a whole are no more stringent
than those contained herein, the proceeds of which Debt are used
to prepay the Term Loans and to pay fees and expenses (including,
without limitation, underwriting discounts) related to the
incurrence of such Debt or such prepayment of Term Loans;
(iv) unsecured, subordinated Guarantees by Subsidiary
Guarantors of Debt permitted under clause (iii) above;
(v) the Mexican Subsidiary Debt;
(vi) Debt of Foreign Subsidiaries under Working Capital
Facilities in an amount not exceeding $3,000,000;
(vii) Debt of the Borrower and its Subsidiaries not otherwise
permitted by this Section incurred after the Closing Date in an
aggregate principal amount at any time outstanding not to exceed
$10,000,000; and
(viii) Debt of the Borrower to Sybron Chemie Nederland B.V. and
Sybron Chemical Industries Nederland B.V. outstanding on the date
hereof in an aggregate principal amount not exceeding 34,000,000
Dutch flourins and $4,000,000, respectively, that is subordinated
on terms satisfactory to the Required Lenders.
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(b) The Borrower will not, and will not permit any of its
Subsidiaries to, incur or at any time be liable with respect to any Guarantee
other than the Subsidiary Guarantees and the Guarantees of Debt permitted
under Section 5.10(a).
(c) The Borrower will not, and will not permit any of its
Subsidiaries to, incur or at any time be liable with respect to any
Derivatives Obligations other than Derivatives Obligations for bona fide
hedging purposes (and not for speculative purposes) to protect the Borrower
and its Subsidiaries against interest rate, currency exchange rate or
commodity price risk arising in the ordinary course of its business.
Section 5.11. Leverage Ratio. At any date during any period
set forth below, the Leverage Ratio will not exceed the ratio set forth below
opposite such period:
Period Ratio
------ -----
Closing Date - December 31, 1998 4.00 : 1.00
January 1, 1999 - June 30, 1999 3.75 : 1.00
July 1, 1999 - December 31, 1999 3.50 : 1.00
January 1, 2000 and thereafter 3.00 : 1.00
Section 5.12. Interest Coverage Ratio. The Interest Coverage
Ratio during any period set forth below will not be less than the ratio set
forth below opposite such period:
Period Ratio
------ -----
Closing Date - December 31, 1998 3.00 : 1.00
January 1, 1999 - December 31, 1999 3.25 : 1.00
January 1, 2000 and thereafter 3.50 : 1.00
Section 5.13. Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio will at no time be less than 1.00:1.00.
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Section 5.14. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time be less than an amount equal
to the sum of (i) pro forma Consolidated Tangible Net Worth as at June 30,
1998, after giving effect to the Acquisition and the incurrence and repayment
of Debt effected in connection therewith as if such events had occurred on
such date, less $10,000,000 plus (ii) an amount equal to 50% of the
consolidated net income of the Borrower and its Consolidated Subsidiaries for
each Fiscal Quarter ending after June 30, 1998 but before the date of
determination, in each case, for which such consolidated net income is positive
(but with no deduction on account of negative consolidated net income for any
Fiscal Quarter) plus (iii) 100% of the amount by which Consolidated Tangible
Net Worth is increased after the Closing Date as a result of the issuance and
sale of capital stock of the Borrower or the conversion or exchange of Debt of
the Borrower into capital stock of the Borrower.
Section 5.15. Limitation on Capital Expenditures. Consolidated
Capital Expenditures for the period from the Closing Date through December 31,
1998 will not exceed $7,000,000 and Consolidated Capital Expenditures for each
Fiscal Year thereafter shall not exceed $14,000,000; provided that (i) if the
aggregate amount of Consolidated Capital Expenditures actually made in such
period or any such Fiscal Year shall be less than the limit with respect
thereto set forth above (before giving effect to any increase therein pursuant
to this proviso) (the "Base Amount"), then the amount of such shortfall may be
added to the amount of such Consolidated Capital Expenditures permitted for
the immediately succeeding Fiscal Year (such shortfall amount in any Fiscal
Year, the "Rollover Amount"), any Consolidated Capital Expenditures made
during any Fiscal Year for which any Rollover Amount shall have been so added
being applied, first, to the Base Amount for such Fiscal Year and, second, to
the Rollover Amount added for such Fiscal Year and (ii) for any Fiscal Year
(or portion thereof) following any Business Acquisition permitted under
Section 5.17(b), the Base Amount for such Fiscal Year (or portion) shall be
increased, for each such Business Acquisition, by an amount equal to the
product of (A) the lesser of (x) $5,000,000 and (y) 5% of revenues of the
business acquired in such Business Acquisition for the period of four Fiscal
Quarters most recently ended on or prior to the date of such Business
Acquisition multiplied by (B) (x) in the case of any partial Fiscal Year, a
fraction, the numerator of which is the number of days remaining in such
Fiscal Year after the date of such Business Acquisition and the denominator of
which is 365 (or 366 in a leap year), and (y) in the case of any full Fiscal
Year, 1.
Section 5.16. Restricted Payments; Voluntary Prepayments. (a)
The Borrower will not declare or make any Restricted Payment.
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(b) Neither the Borrower nor any Subsidiary will pay, repay,
prepay, redeem, purchase, acquire or make any other payment in respect of the
principal of any subordinated Debt, except any such Debt owed to the Borrower.
Section 5.17. Investments and Acquisitions. (a) Neither the
Borrower nor any Subsidiary will hold, make or acquire any Investment in any
Person other than:
(i) Investments by the Borrower or any Subsidiary in any of
their respective Subsidiaries;
(ii) Investments in the Borrower or a Subsidiary Guarantor;
(iii) Temporary Cash Investments;
(iv) the Acquisition;
(v) Investments in any Subsidiary that was a Foreign
Subsidiary on the Closing Date if, immediately after such
Investment is made or acquired, the aggregate net book value of
all Investments permitted by this clause does not exceed
$10,000,000;
(vi) Investments by Foreign Subordinates in Foreign
Subsidiaries;
(vii) Investments consisting of Business Acquisitions permitted
under Section 5.17(b)(ii); and
(viii) other Investments made after the Closing Date in an
aggregate amount not to exceed $5,000,000.
(b) Neither the Borrower nor any Subsidiary will consummate any
Business Acquisition other than (i) the Acquisition and (ii) Business
Acquisitions made on or after the Term B Repayment Date in an aggregate amount
not exceeding (a) at any time that the Leverage Ratio is greater than or equal
to 2.5 to 1.0, $15,000,000 and (b) at any time that Leverage Ratio is less
than 2.5 to 1.0, $20,000,000.
Section 5.18. Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, (i) except
for Investments permitted by Section 5.17, pay any funds to or for the account
of any Affiliate, (ii) except for Investments permitted by Section 5.17, make
any investment in any Affiliate (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise), (iii) lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to any Affiliate, or (iv) participate in, or effect,
any transaction with any Affiliate, except in each case on an arms-length
basis on terms at least as favorable to the Borrower or such Subsidiary as
could have been obtained from a third party that was not an Affiliate;
provided that the foregoing provisions of this Section shall not prohibit any
Subsidiary from declaring or paying any lawful dividend or other payment
ratably in respect of all its capital stock of the relevant class.
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Section 5.19. Limitation on Restrictions Affecting
Subsidiaries. Neither the Borrower nor any of its Subsidiaries will enter
into, or suffer to exist, any agreement with any Person, other than the Loan
Documents, which (a) prohibits or limits the ability of any Subsidiary to (i)
pay dividends or make other distributions or pay any Debt owed to the Borrower
or any Subsidiary, (ii) make loans or advances to the Borrower or any
Subsidiary or (iii) transfer any of its properties or assets to the Borrower
or any Subsidiary or (b) prohibits or limits the ability of the Borrower or
any Subsidiary to create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
except with respect to clauses (a)(iii) and (b) above, restrictions imposed by
purchase money Liens or capital leases permitted by Section 5.9 on the assets
financed or leased thereby.
Section 5.20. Fiscal Year. The Borrower will not change its
Fiscal Year from a fiscal year ending December 31.
Section 5.21. Material Contracts; Occidental Indemnity. (a)
The Borrower will not, and will not permit any of its Subsidiaries to,
voluntarily terminate any license or contract without the written consent of
the Required Lenders, except where such terminations would not in the
aggregate have a Material Adverse Effect.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, take or omit to take any action that would cause or permit
the Occidental Indemnity to cease to be in full force and effect.
Section 5.22. Change in Business. The Borrower will not, and
will not permit any of its Subsidiaries to, engage in any material line of
business substantially different from the specialty chemical business and
those other lines of business carried on by it on the date hereof and any
related businesses.
Section 5.23. Further Assurances. (a) The Borrower will, and
will cause each Subsidiary Guarantor to, at the Borrower's sole cost and
expense, do, execute, acknowledge and deliver all such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment and transfers as
the Administrative Agent shall from time to time reasonably request, which may
be necessary in the reasonable judgment of the Administrative Agent from time
to time to assure, perfect, convey, assign and transfer to the Administrative
Agent the property and rights conveyed or assigned pursuant to the Collateral
Documents.
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(b) All costs and expenses in connection with the grant of any
security interests under the Collateral Documents, including without limitation
reasonable legal fees and other reasonable costs and expenses in connection
with the granting, perfecting and maintenance of any security interests under
the Collateral Documents or the preparation, execution, delivery, recordation
or filing of documents and any other acts as the Administrative Agent may
reasonably request in connection with the grant of such security interests
shall be paid by the Borrower promptly upon demand.
(c) The Borrower will not, and will not permit any of its
Subsidiaries to, enter into or become subject to any agreement which would
impair their ability to comply, or which would purport to prohibit them from
complying, with the provisions of this Section.
(d) The Borrower will:
(i) not later than 30 days after the Closing Date, deliver
to each Agent and each Lender an opinion (addressed to the
Agents, the Issuers, the Swingline Bank and the Lenders) of local
counsel for the Obligors reasonably satisfactory to the
Administrative Agent in each United States jurisdiction in which
an Obligor has its chief executive office or holds a material
amount of inventory or equipment, substantially in the form of
Exhibit E hereto, and covering such additional matters relating
to the transactions contemplated hereby as the Required Lenders
may reasonably request;
(ii) cause each Person which becomes a U.S. Subsidiary after
the Closing Date to (x) become a party to the Subsidiary
Guarantee as guarantor by executing a supplement thereof in form
and substance satisfactory to the Administrative Agent, (y) enter
into the Security Agreement and any other agreements, each in
form and substance satisfactory to the Administrative Agent, as
may be necessary or desirable in order to grant perfected first
priority security interests upon (I) all of its U.S. assets
(including, without limitation, assets acquired by such Person
after it becomes a U.S. Subsidiary, but excluding, (i) motor
vehicles the perfection of a security interest in which is
excluded from the Uniform Commercial Code in the relevant
jurisdiction, equipment subject to purchase money Liens permitted
under Section 5.9 and rights under agreements the grant of a
security interest in which would cause such agreements to be void
or voidable or would constitute a default thereunder; (ii) and
at all times prior to the Assessment Date (and thereafter if the
Term Loans have been repaid in full on or prior to the Assessment
Date), real property and intellectual property assets) and (II)
all of the capital stock and equity interests owned by it
(including, without limitation, capital stock and equity
interests acquired by such Person after it becomes a U.S.
Subsidiary), to secure its obligations under the Subsidiary
Guarantee, provided that not more than 65% of the voting stock of
any Foreign Subsidiary will be required to be so pledged;
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(iii) pledge, or cause to be pledged, pursuant to the Security
Agreement, (x) in the case of any Subsidiary described in clause
(ii) above, all of the capital stock or other equity interests of
such Subsidiary owned directly or indirectly by the Borrower, and
(y) in the case of any Foreign Subsidiary which becomes a
Subsidiary of the Borrower after the Closing Date, 65% of the
voting stock or other voting equity interests of such Foreign
Subsidiary, and 100% of any other capital stock or other equity
interest, owned directly or indirectly by the Borrower;
(iv) take, and cause its Subsidiaries to take, such actions as
may be necessary or desirable to effect the foregoing within 30
days after such Subsidiary is acquired or becomes a U.S.
Subsidiary, including without limitation (x) executing and
delivering, or causing such Subsidiary to execute and deliver, to
the Administrative Agent such number of copies as the
Administrative Agent may specify of such supplements, Security
Agreement and other documents creating security interests and (y)
delivering, or causing Subsidiaries to deliver, such
certificates, evidences of corporate action, legal opinions or
other documents as the Administrative Agent may reasonably
request, all in form and substance reasonably satisfactory to the
Administrative Agent, relating to the satisfaction of the
Borrower's obligations under this Section; and
(v) use commercially reasonable efforts to deliver to the
Administrative Agent, within 60 days after the Closing Date,
waivers of contractual and statutory landlord's, landlord's
mortgagee's and warehouseman's Liens in form and substance
satisfactory to the Administrative Agent under each existing
lease, warehouse agreement or similar agreement to which any
Obligor is a party; provided that such waivers will in any event
be incorporated when the existing lease, warehouse agreement or
similar agreement is amended, renewed or extended and the
Borrower will use commercially reasonable efforts obtain waivers
of both contractual and statutory landlord's, landlord's
mortgagee's and warehouseman's Liens in form and substance
reasonably satisfactory to the Administrative Agent in connection
with each new lease, warehouse agreement or similar agreement
entered into by the any Obligor.
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(e) On or before the Assessment Date (unless the Term Loans are
repaid in full on or before the Assessment Date), the Borrower shall, and shall
cause each Subsidiary Guarantor to:
(i) execute and deliver a Borrower Mortgage or a Subsidiary
Mortgage, as the case may be, and such other security documents
as may be necessary, or as the Administrative Agent may
reasonably request, to subject all of the parcels of real
property designated as "Mortgage Property" on Schedule 4.11 to a
first Lien securing the obligations of the Obligors under the
Loan Documents;
(ii) furnish the Administrative Agent within 60 days after the
Assessment Date with an ALTA extended coverage lender's policy of
title insurance in an aggregate amount reasonably acceptable to
the Agents insuring each Mortgage as a valid, enforceable first
Lien on the applicable Obligor's interest in the real property
purportedly covered thereby, in each case subject only to such
exceptions as are reasonably satisfactory to the Administrative
Agent; provided, that if at any time any such real property is
appraised at a value that is higher than the amount of title
insurance covering such real property, the Borrower shall
promptly increase (or cause the relevant Subsidiary to increase)
the amount of such title insurance to an amount equal to the
appraised value. On or prior to the Assessment Date (unless the
Term Loans shall be repaid in full on or before the Assessment
Date), the Borrower shall furnish a title commitment for such
policy to the Administrative Agent, together with legible copies
of all documents affecting title, which shall show all recording
information. The policy, including each of the exceptions to
coverage contained therein, shall be subject to the approval of
the Administrative Agent, and shall be issued by a title company
acceptable to the Administrative Agent;
(iii) furnish the Administrative Agent with an ALTA survey
with respect to the real property designated as "Mortgage
Property" on Schedule 4.11, in form and substance reasonably
satisfactory to the Administrative Agent, together with the
following endorsements to the title policy referred to in clause
(iv) above: (A) a comprehensive endorsement (ALTA 100 or
equivalent) covering restrictions and other matters, (B) a broad
form zoning endorsement, which specifically ensures that
applicable parking requirements, if any, have been satisfied, (C)
an endorsement ensuring that the Lien of each Mortgage is valid
against any applicable usury laws or other laws prohibiting the
charging of interest on interest, (D) an endorsement ensuring
that the applicable real property has access to a dedicated
public street, (E) a revolving credit endorsement, (F) a
contiguity endorsement, (G) a survey and "same as" endorsement
and (H) an endorsement deleting the so-called "doing business"
exclusion; and
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(iv) deliver to each Agent and each Lender an opinion
(addressed to the Agents, the Issuers, the Swingline Bank and the
Lenders) of local counsel for the Obligors reasonably
satisfactory to the Administrative Agent in the jurisdiction of
organization of each material Foreign Subsidiary any of whose
capital stock is pledged, or required to be pledged, under the
Loan Documents, as to the perfection of such pledge, and covering
such additional matters relating to the transactions contemplated
hereby as the Required Lenders may reasonably request.
Section 5.24. Amendments to Acquisition Documents. The
Borrower will not, and not permit any Subsidiary to, enter into any amendment
or waiver of any material term of any Acquisition Document which would
adversely affect the Lenders without the prior written consent of the Required
Lenders.
ARTICLE 6
Defaults
Section 6.1. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan, any Swingline Loan or any Reimbursement Obligation;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three days;
(c) the Borrower shall fail to observe or perform any covenant
contained in Section 5.1(g) or Section 5.7 through 5.24, inclusive;
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(d) the Borrower shall fail to observe or perform any covenant or
agreement (other than those covered by clause 6.1(a), 6.1(b) or 6.1(c) above)
contained in this Agreement or any other Loan Document or any amendment hereof
or thereof for 20 days after the Administrative Agent gives notice thereof to
the Borrower at the request of any Lender;
(e) any representation, warranty, certification or statement made
by any Obligor in any Loan Document or any amendment thereof or in any
certificate, financial statement or other document delivered pursuant to any
Loan Document shall prove to have been incorrect in any material respect when
made (or deemed made);
(f) the Borrower or any Subsidiary shall fail to make one or more
payments in respect of Material Financial Obligations when due or within any
applicable grace period;
(g) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of such
Debt or any Person acting on such holder's behalf to accelerate the maturity
thereof;
(h) the Borrower or any Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to
the appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action to authorize any
of the foregoing;
(i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90 days; or an order for
relief shall be entered against the Borrower or any Subsidiary under the
federal bankruptcy laws as now or hereafter in effect;
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(j) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to terminate
a Material Plan shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer, any Material
Plan; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group
to incur a current payment obligation in excess of $1,000,000;
(k) judgments or orders for the payment of money exceeding
$2,500,000 in aggregate amount shall be rendered against the Borrower or any
Subsidiary and such judgments or orders shall continue unsatisfied and
unstayed for a period of 10 days;
(l) a Change of Control shall have occurred;
(m) any Lien (other than Liens on Collateral with a value of less
than $100,000) created by any of the Collateral Documents shall at any time
fail to constitute a valid and (to the extent required by the Collateral
Documents) perfected Lien on all of the Collateral purported to be subject
thereto, securing the obligations purported to be secured thereby, with the
priority required by the Loan Documents, or any Obligor shall so assert in
writing;
(n) any Guarantee by any Subsidiary Guarantor pursuant to the
Subsidiary Guarantee shall cease for any reason (other than the merger out of
existence of such Subsidiary Guarantor pursuant to a transaction permitted
hereunder) to be in full force and effect, or any Obligor shall so assert in
writing;
(o) any license of the Borrower or any Subsidiary shall be
terminated or revoked or shall expire unrenewed and unreplaced, except where
such termination, revocation or expiration would not have a Material Adverse
Effect; or
(p) both (i) any of (x) the Occidental Indemnity shall cease for
any reason to be in full force and effect or Occidental shall so assert in
writing, (y) Occidental shall fail, within 90 days of demand therefor, to pay
or reimburse the Borrower or any of its Subsidiaries for any costs,
liabilities or expenses in an aggregate amount exceeding $500,000 arising from
or relating to actual or alleged actions, practices or omissions occurring or
commencing prior to February 12, 1982 relating to possible groundwater, soil
or air contamination at or from the Hicksville Facility itself and operations
there conducted and from the disposal of waste materials from the operations
of the specialty polymer business of Hooker Chemicals & Plastics Corp. at the
Hicksville Facility or (z) any event of the type specified in clause 6.1(h) or
6.1(i) above shall occur with respect to Occidental and (ii) any of (x) the
Borrower shall fail to maintain at least $10,000,000 of insurance covering
environmental remediation costs in respect of the Hicksville Facility, (y) the
provider of such insurance shall deny coverage thereunder, shall fail to pay
claims thereunder in an aggregate amount exceeding $500,000 within 90 days of
demand therefore or shall become subject to an event of the type referred to
in Section 6.01(h) or 6.01(i) or (z) the Borrower and its Subsidiaries shall
incur environmental remediation costs in respect of the Hicksville Facility in
an aggregate amount exceeding $1,000,000 which is not covered by any such
insurance;
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then, and in every such event, the Administrative Agent shall:
(i) if requested by Lenders having more than 50% in
aggregate amount of the then outstanding Commitments, by notice
to the Borrower terminate the Commitments and the Commitments and
the Swingline Commitment shall thereupon terminate;
(ii) if requested by Lenders having more than 50% of the
Aggregate LC Exposure, by notice to each Issuer instruct such
Issuer (x) not to extend the expiry date of any outstanding
Letter of Credit and/or (y) in the case of any Evergreen Letter
of Credit, to give notice to the beneficiary thereof terminating
such Letter of Credit as soon as is permitted by the provisions
thereof, whereupon such Issuer shall deliver notice to that
effect promptly (or as soon thereafter as is permitted by the
provisions of the relevant Letter of Credit) to the beneficiary
of each such Letter of Credit and the Borrower; and
(iii) if requested by Lenders holding Notes (or Swingline
Exposures) evidencing or representing more than 50% in aggregate
outstanding principal amount of the Loans and Swingline Loans, by
notice to the Borrower declare the Loans and Swingline Loans
(together in each case with accrued interest thereon) to be, and
the Loans and Swingline Loans (together in each case with accrued
interest thereon) shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower;
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provided that, if any Event of Default specified in clause 6.1(h) or 6.1(i)
occurs with respect to the Borrower, then without any notice to the
Borrower or any other act by the Administrative Agent, the Lenders or the
Swingline Bank, the Commitments and the Swingline Commitment shall
thereupon terminate, the Loans and Swingline Loans (together in each case
with accrued interest thereon) shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower, and each Issuer shall not extend
the expiry of any outstanding Letter of Credit and/or in the case of any
Evergreen Letter of Credit, shall give notice to the beneficiary thereof
terminating such Letter of Credit as soon as is permitted by the provisions
thereof.
Section 6.2. Notice of Default. The Administrative Agent
shall give notice to the Borrower under Section 6.1(d) promptly upon being
requested to do so by any Lender and shall thereupon notify all the Lenders
thereof.
Section 6.3. Cash Collateral. If an Event of Default shall
have occurred and be continuing and Lenders having more than 50% of the
Aggregate LC Exposure instruct the Administrative Agent to request cash
collateral pursuant to this Section, the Borrower will, promptly after it
receives such request from the Administrative Agent, pay to the Administrative
Agent an amount in immediately available funds equal to the then aggregate
amount available for subsequent drawings under all outstanding Letters of
Credit, to be held by the Administrative Agent, under arrangements
satisfactory to it, to secure the payment of all Reimbursement Obligations
arising from subsequent drawings under such Letters of Credit; provided that,
if any Event of Default specified in clause 6.1(h) or 6.1(i) occurs with
respect to the Borrower, the Borrower shall pay such amount to the
Administrative Agent forthwith without any notice, demand or other act by the
Administrative Agent or the Lenders.
ARTICLE 7
The Agents
Section 7.1. Appointment and Authorization. Each Lender
irrevocably appoints and authorizes each Agent to take such action as agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to such Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.
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Section 7.2. Agents and Affiliates. Each financial
institution serving as an Agent shall have the same rights and powers under
the Loan Documents as any other Lender and may exercise or refrain from
exercising the same as though it were not an Agent, and such financial
institution and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary
or affiliate of the Borrower as if it were not an Agent.
Section 7.3. Action by Agents. The obligations of each Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agents shall not be required to take any
action with respect to any Default, except, in the case of the Administrative
Agent, as expressly provided in Article 6.
Section 7.4. Consultation with Experts. Each Agent may consult
with legal counsel (who may be counsel for any Obligor), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
Section 7.5. Liability of Agents. None of the Agents, their
respective affiliates and the directors, officers, agents and employees of the
Agents and their respective affiliates shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request
of the Required Lenders (or such different number of Lenders as any provision
hereof expressly requires for such consent or request) or (ii) in the absence
of its own gross negligence or willful misconduct. None of the Agents, their
respective affiliates and the directors, officers, agents and employees of the
Agents and their respective affiliates shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any condition specified
in Article 3, except receipt of items required to be delivered to such Agent;
(iv) the validity, effectiveness or genuineness of any Loan Document or any
other instrument or writing furnished in connection herewith or (v) the
existence, validity or sufficiency of any Collateral. No Agent shall incur
any liability by acting in reliance upon any notice, consent, certificate,
statement or other writing (which may be a bank wire, telex, facsimile or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties. Without limiting the generality of the foregoing, the use
of the term "agent" in this Agreement with reference to any Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is
used merely as a matter of market custom and is intended to create or reflect
only an administrative relationship between independent contracting parties.
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Section 7.6. Indemnification. The Lenders shall, ratably in
proportion to their Credit Exposures, indemnify each Agent, its affiliates and
the directors, officers, agents and employees of each such Agent and its
affiliates (to the extent not reimbursed by the Borrower) against any cost,
expense (including counsel fees and disbursements), claim, demand, action,
loss or liability (except such as result from such indemnitees' gross
negligence or willful misconduct) that such indemnitees may suffer or incur in
connection with this Agreement or any action taken or omitted by such
indemnitees hereunder.
Section 7.7. Credit Decision. Each Lender acknowledges that
it has, independently and without reliance on any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance on any
Agent, any Issuer or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement.
Section 7.8. Successor Agents. Each Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower. Upon any such
resignation of the Administrative Agent, the Required Lenders shall have the
right to appoint a successor for such resigning Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized or licensed
under the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $100,000,000. Upon the acceptance
of its appointment as an Administrative Agent hereunder by a successor, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any Agent's resignation hereunder, the provisions
of this Article shall inure to its benefit as to actions taken or omitted to be
taken by it while it was an Agent.
Section 7.9. Agent's Fee. The Borrower shall pay to each
Agent for its own account fees in the amounts and at the times previously
agreed upon by the Borrower and such Agent.
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Section 7.10. Syndication Agent and Documentation Agent.
Morgan Guaranty Trust Company of New York shall have no responsibility,
obligation or liability under the Loan Documents in its capacity as
Documentation Agent.
ARTICLE 8
Change in Circumstances
Section 8.1. Basis for Determining Interest Rate Inadequate or
Unfair. If on or before the first day of any Interest Period for any
Euro-Dollar Loans of any Class:
(a) the Administrative Agent is advised by the Reference Lender
that deposits in dollars in the applicable amounts are not being offered to the
Reference Lender in the relevant market for such Interest Period, or
(b) Lenders having at least 50% in aggregate amount of the
Commitments of such Class (or, in the case of Term Lenders after the Closing
Date, holding at least 50% in aggregate amount of the Term Loans then
outstanding) advise the Administrative Agent that the London Interbank
Offered Rate, as determined by the Administrative Agent will not adequately
and fairly reflect the cost to such Lenders of funding their Euro-Dollar Loans
for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Lenders, whereupon until the Administrative Agent notifies
the Borrower that the circumstances giving rise to such suspension no
longer exist (which notice the Administrative Agent shall give promptly),
(i) the obligations of the Lenders to make Euro-Dollar Loans or to continue
or convert outstanding Loans as or into Euro-Dollar Loans, as the case may
be, shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be
converted into a Base Rate Loan on the last day of the then current
Interest Period applicable thereto. Unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before the date of
any affected Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, such Borrowing shall
instead be made as a Base Rate Borrowing.
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Section 8.2. Illegality. If the adoption on or after the date
hereof of any applicable law, rule or regulation, or any change on or after
the date hereof in any applicable law, rule or regulation, or any change on or
after the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Euro-Dollar Lending Office) with any request or directive on or after the date
hereof (whether or not having the force of law) of any such authority, central
bank or comparable agency, shall make it unlawful or impossible for any Lender
(or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Lender shall so notify the Administrative Agent, the
Administrative Agent shall forthwith give notice thereof to the other Lenders
and the Borrower, whereupon until such Lender notifies the Borrower and the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, (which notice shall be given promptly) the obligation of such
Lender to make Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans or continue outstanding Loans as Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Administrative Agent pursuant to
this Section, such Lender shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Lender, be otherwise disadvantageous to such
Lender. If such notice is given, each Euro-Dollar Loan of such Lender then
outstanding shall be converted to a Base Rate Loan either (i) on the last day
of the then current Interest Period applicable to such Euro-Dollar Loan if such
Lender may lawfully continue to maintain and fund such Loan as a Euro-Dollar
Loan to such day or (ii) immediately if such Lender shall determine that it
may not lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan
to such day. Interest and principal on any such Base Rate Loan shall be
payable on the same dates as, and on a pro rata basis with, the interest and
principal payable on the related Euro-Dollar Loans of the other Lenders.
Section 8.3. Increased Cost and Reduced Return. (a) If the
adoption on or after the date hereof of any applicable law, rule or
regulation, or any change on or after the date hereof in any applicable law,
rule or regulation, or any change on or after the date hereof in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) or any Issuer with any request or directive on or after the date
hereof (whether or not having the force of law) of any such authority, central
bank or comparable agency, shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding, with respect to any
Euro-Dollar Loan, any such requirement included in the applicable Euro-Dollar
Reserve Percentage), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
(including letters of credit and participations therein) extended by, any
Lender (or its Applicable Lending Office) or any Issuer or shall impose on any
Lender (or its Applicable Lending Office) or any Issuer or on the London
interbank market any other condition affecting its Euro-Dollar Loans, its
Notes or its obligation to make Euro-Dollar Loans or its obligations hereunder
in respect of Letters of Credit and the result of any of the foregoing is to
increase the cost to such Lender (or its Applicable Lending Office) or such
Issuer of making or maintaining any Euro-Dollar Loan or issuing or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Lender (or its Applicable Lending Office) or
such Issuer under this Agreement or under its Note with respect thereto, by an
amount deemed by such Lender or Issuer to be material, then, within 30 days
after demand by such Lender (with a copy to the Administrative Agent) setting
forth in reasonable detail the facts or circumstances giving rise to such
demand, the Borrower shall pay to such Lender or Issuer such additional amount
or amounts as will compensate such Lender or Issuer for such increased cost or
reduction.
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(b) If any Lender shall have determined that the adoption on or
after the date hereof of any applicable law, rule or regulation regarding
capital adequacy, or any change on or after the date hereof in any such law,
rule or regulation, or any change on or after the date hereof in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive on or after the date
hereof regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender (or its
Parent) as a consequence of such Lender's obligations hereunder to a level
below that which such Lender (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, within 15 days after demand by such Lender
(with a copy to the Administrative Agent), the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender (or
its Parent) for such reduction.
(c) Each Lender and Issuer will promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Lender or Issuer to compensation
pursuant to this Section and will designate a different Applicable Lending
Office or LC Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of such Lender or
Issuer, be otherwise disadvantageous to it. A certificate of any Lender or
Issuer claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Lender or
Issuer may use any reasonable averaging and attribution methods.
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Section 8.4. Taxes. (a) For the purposes of this Section, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any
payment by the Borrower pursuant to this Agreement or under any Note or
Swingline Note, and all liabilities with respect thereto, excluding (i) in the
case of each Lender Party, taxes imposed on its net income, gross receipts,
capital stock and franchise or similar taxes imposed on it, by a jurisdiction
under the laws of which it is organized or in which its principal executive
office is located or in which its Applicable Lending Office or LC Office is
located and (ii) in the case of each Lender or the Swingline Bank, any United
States withholding tax imposed on such payment, but not excluding any portion
of such tax that exceeds the United States withholding tax which would have
been imposed on such a payment to such Lender or Swingline Bank under the laws
and treaties in effect when such Lender or Swingline Bank first becomes a
party to this Agreement.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or the Swingline Note or from the execution, delivery, registration or
enforcement of, or otherwise with respect to, this Agreement or any Note or
the Swingline Note.
(b) All payments by the Borrower to or for the account of any
Lender Party hereunder or under any Note shall be made without deduction for
any Taxes or Other Taxes; provided that, if the Borrower shall be required by
law to deduct any Taxes or Other Taxes from any such payment, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) such Lender Party receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law and (iv) the Borrower shall promptly furnish to the Administrative Agent,
at its address specified in or pursuant to Section 9.1, the original or a
certified copy of a receipt evidencing payment thereof. If any Lender Party
shall receive from a taxing authority (as a result of any error in the
imposition of Taxes by such taxing authority) a refund of any Taxes paid by
the Borrower pursuant to this subsection 8.04(b) (or in lieu of receiving such
refund, such taxing authority has applied the amount of such refund against
the amount otherwise due from such Lender Party to such taxing authority),
such Lender Party shall promptly pay to the Borrower the amount so received
(or credited) without interest (other than interest received from the taxing
authority with respect to such refund) and net of reasonable out-of-pocket
expenses incurred with respect to receiving such refund (or credit).
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(c) The Borrower agrees to indemnify each Lender Party for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted (whether or not correctly) by any jurisdiction
on amounts payable under this Section) paid by such Lender Party and any
liability (including penalties, interest and expenses other than those
resulting from the failure of such Lender Party to pay to the applicable
taxing authority any Taxes or Other Taxes for which it has received an
indemnity payment from the Borrower) arising therefrom or with respect
thereto. This indemnification shall be paid within 30 days after such Lender
Party makes demand therefor (which demand shall set forth in reasonable detail
the facts or circumstances giving rise to such demand).
(d) Each Lender Party organized under the laws of a jurisdiction
outside the United States, before it signs and delivers this Agreement in the
case of each Lender Party listed on the signature pages hereof and before it
becomes a Lender Party in the case of each other Lender Party, and from time
to time thereafter if requested in writing by the Borrower (but only so long as
such Lender Party remains lawfully able to do so pursuant to United States law
or any applicable treaty), shall provide each of the Borrower and the
Administrative Agent with Internal Revenue Service form 1001, 4224 or W-8, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender Party is entitled to benefits under an income tax
treaty to which the United States is a party which exempts such Lender Party
from United States withholding tax or reduces the rate of withholding tax on
payments of interest for the account of such Lender Party or certifying that
the income receivable by it pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States. Each
Lender Party other than a corporation that is a "United States person" as
defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended, shall upon request from Borrower, deliver to the Borrower two duly
completed Forms W-9, or a successor applicable form.
(e) For any period with respect to which a Lender Party has failed
to timely provide the Borrower or the Administrative Agent with the
appropriate, accurate and complete form or successor form referred to in
Section 8.4(d) (unless such failure is due to a change in a United States law,
regulation or applicable treaty occurring after the date on which such form
originally was required to be provided), such Lender Party shall not be
entitled to indemnification under Section 8.4(b) or 8.4(c) with respect to
Taxes imposed by the United States; provided that if a Lender Party, that is
otherwise exempt from or subject to a reduced rate of withholding tax, becomes
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Lender Party shall reasonably
request to assist such Lender Party to recover such Taxes; provided that such
Lender Party shall reimburse the Borrower for any reasonable out of pocket
costs or expenses the Borrower incurs in taking such steps.
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(f) If the Borrower is required to pay additional amounts to or
for the account of any Lender pursuant to this Section as a result of a change
in law or treaty occurring after such Lender first became a party to this
Agreement, then such Lender will, at the Borrower's request, change the
jurisdiction of its Applicable Lending Office if, in the judgment of such
Lender, such change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Lender.
Section 8.5. Base Rate Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Lender to make, or to
continue or convert outstanding Loans as or to, Euro-Dollar Loans has been
suspended pursuant to Section 8.2 or (ii) any Lender has demanded compensation
under Section 8.3 or 8.4 with respect to its Euro-Dollar Loans, and in any
such case the Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Lender through the Administrative Agent, have elected
that the provisions of this Section shall apply to such Lender, then, unless
and until such Lender notifies the Borrower that the circumstances giving rise
to such suspension or demand for compensation no longer exist (which notice
shall be given promptly), all Loans which would otherwise be made by such
Lender as (or continued as or converted to) Euro-Dollar Loans shall instead be
Base Rate Loans on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Lenders. If
such Lender notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Base Rate Loan shall be converted into a Euro-Dollar Loan on the
first day of the next succeeding Interest Period applicable to the related
Euro-Dollar Loans of the other Lenders.
Section 8.6. Substitution of Bank. If (i) the obligation of
any Lender to make or to convert or continue outstanding Loans as or into
Euro-Dollar Loans has been suspended pursuant to Section 8.2 or (ii) any
Lender has demanded compensation under Section 8.3 or 8.4, the Borrower shall
have the right, with the assistance of the Administrative Agent, to designate
a substitute bank or banks (which may be one or more of the Lenders) mutually
satisfactory to the Borrower and the Agents (and, in the case of a Revolving
Lender, the Issuers and the Swingline Bank) to purchase for cash, pursuant to
an Assignment and Assumption Agreement in substantially the form of Exhibit
G hereto, the outstanding Loans and LC Exposure of such Lender and assume the
Commitment(s) of such Lender, without recourse to or warranty (except a
warranty of title with respect to such Loans and LC Exposure) by, or expense
to, such Lender, for a purchase price equal to the principal amount of all of
such Lender's outstanding Loans and Reimbursement Obligations plus any accrued
but unpaid interest thereon and the accrued but unpaid fees for the account of
such Lender hereunder plus such amount, if any, as would be payable pursuant
to Section 2.11 if the outstanding Loans of such Lender were prepaid in their
entirety on the date of consummation of such assignment.
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<PAGE>
ARTICLE 9
Miscellaneous
Section 9.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, facsimile or similar writing) and shall be given to such party:
(a) in the case of the Borrower, any Issuer or Swingline Bank listed on the
signature pages hereof or any Agent, at its address, facsimile number or telex
number set forth on the signature pages hereof, (b) in the case of any Lender,
at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (c) in the case of any party, at such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Administrative Agent and the Borrower. Each
such notice, request or other communication shall be effective (i) if given by
telex, when transmitted to the telex number referred to in this Section and
the appropriate answerback is received, (ii) if given by facsimile, when
transmitted to the facsimile number referred to in this Section and
confirmation of receipt is received, (iii) if given by mail, three Business
Days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address referred to in this Section; provided that
notices to the Administrative Agent or any Issuer under Article 2 or Article 8
shall not be effective until received.
Section 9.2. No Waivers. No failure or delay by any party
hereto in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
85
<PAGE>
Section 9.3. Expenses; Indemnification. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses of the Agents, including
reasonable fees and disbursements of special counsel for the Agents, in
connection with the preparation and administration (provided that expenses of
administration shall not include any Agent's normal operating or overhead
expenses) of the Loan Documents, any waiver or consent thereunder or any
amendment thereof or any Default or alleged Default thereunder and (ii) if an
Event of Default occurs, all out-of-pocket expenses incurred by each Lender
Party, including (without duplication) the fees and disbursements of outside
counsel and the allocated cost of inside counsel, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Borrower agrees to indemnify each Lender Party, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind (including without limitation reasonable expenses of
investigation by engineers, environmental consultants and similar technical
personnel), including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee (x) in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of any Loan Document or any actual or
proposed use of any Commitments, any Letter of Credit or any proceeds of Loans
hereunder or (y) arising out of, in respect of or in connection with any and
all Environmental Liabilities; provided that no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee's own gross negligence
or willful misconduct as determined by a court of competent jurisdiction.
Without limiting the generality of the foregoing, the Borrower hereby waives
all rights for contribution or any other rights of recovery with respect to
liabilities, losses, damages, costs and expenses arising under or related to
Environmental Laws that it might have by statute or otherwise against any
Lender, except for such that relate to any property with respect to any period
after the Lenders shall have foreclosed on, or otherwise dispossessed the
Borrower and its Subsidiaries of, such property and that arise from such
Lender's gross negligence or willful misconduct as determined by a court of
competent jurisdiction.
86
<PAGE>
Section 9.4. Set-Offs. Each Lender agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest then due with
respect to the Loans of any Class and participations in Reimbursement
Obligations held by it which is greater than the proportion received by any
other Lender in respect of the aggregate amount of principal and interest then
due with respect to the Loans of such Class and participations in
Reimbursement Obligations held by such other Lender, the Lender receiving such
proportionately greater payment shall purchase such participations in the
Loans and participations in Reimbursement Obligations held by the other
Lenders, and such other adjustments shall be made, as may be required so that
all such payments of principal and interest with respect to the Loans of such
Class and participations in Reimbursement Obligations held by the Lenders
shall be shared by the Lenders pro rata; provided that nothing in this Section
shall impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of the Borrower other than its indebtedness in
respect of the Loans and Reimbursement Obligations. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Loan or Reimbursement Obligation, whether or
not acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation.
Section 9.5. Amendments and Waivers. (a) Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Lenders (and, if the rights or duties of any Agent, Issuer or
Swingline Bank are affected thereby, by such Agent, Issuer or Swingline Bank,
as relevant); provided that no such amendment or waiver shall:
(i) unless signed by all the affected Term Lenders, (A)
increase or decrease the Term Commitment of any Lender (except
for a ratable decrease in the Term Commitments of all Term
Lenders) (B) reduce the principal of or rate of interest on any
Term Loan or (C) postpone the date fixed for any payment of
principal of or interest on any Term Loan or for the termination
of any Term Commitment;
(ii) unless signed by all the affected Revolving Lenders, (A)
increase or decrease the Revolving Commitment of any Revolving
Lender (except for a ratable decrease in the Revolving
Commitments of all the Revolving Lenders), (B) reduce the
principal of or rate of interest on any Revolving Loan, (C)
postpone the date fixed for any payment of any Reimbursement
Obligation or any principal of or interest on any Revolving Loan
or any overdue Reimbursement Obligation or any fees payable with
respect to Letters of Credit or the Revolving Commitments or for
the termination of any Revolving Commitment or (D) amend or waive
Section 2.4(d);
87
<PAGE>
(iii) unless signed by all the Lenders, (A) change the
percentage of the Commitments of any Class or of the aggregate
unpaid principal amount of the Loans of any Class, or the number
of Lenders, which shall be required for the Lenders or any of
them to take any action under this Section or any other provision
of this Agreement, (B) permit termination of the Subsidiary
Guarantee or (C) effect or permit the release of all or
substantially all of the Collateral;
(iv) unless signed by Term Lenders holding a majority in
aggregate principal amount of the then outstanding Term A
Commitments or Term A Loans and a majority in aggregate principal
amount of the then outstanding Term B Commitments or Term B
Loans, amend clause (c)(i)(y) of Section 2.4; and
(v) unless signed by a Designated Lender or its Designating
Lender, subject such Designated Lender to any additional
obligation or affect its rights hereunder (unless the rights of
all the Lenders of the applicable Class hereunder are similarly
affected).
(b) Any provision of the Collateral Documents or the Subsidiary
Guarantee may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by each Obligor party thereto and the
Administrative Agent with the consent of the Required Lenders; provided that
no such amendment or waiver shall, unless signed by all the Lenders, effect or
permit a release of all or substantially all of the Collateral or permit
termination of the Subsidiary Guarantee.
Section 9.6. Successors; Participations and Assignments. (a)
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 Borrower may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of all the
Lender Parties.
88
<PAGE>
(b) Any Lender may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment
or any or all of its Loans and participations in Letters of Credit. If a
Lender grants any such participating interest to a Participant, whether or not
upon notice to the Borrower and the Administrative Agent, such Lender shall
remain responsible for the performance of its obligations hereunder, and the
Borrower, the Issuers, the Swingline Bank and the Agents shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement pursuant to which
any Lender may grant such a participating interest shall provide that such
Lender shall retain the sole right and responsibility to enforce the
obligations of the Borrower, the Issuers and the Swingline Bank hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that such Lender will not agree to any
modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii)(B) or (iii)(C) of Section 9.5 without the consent of the
Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of
Article 8 with respect to its participating interest. An assignment or other
transfer which is not permitted by Section 9.6(c) or 9.6(d) below shall be
given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection.
(c) Any Lender may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
Commitment of any Class, its Loans of any Class or its Letter of Credit
Liabilities and such Assignee shall assume such rights and obligations,
pursuant to an Assignment and Assumption Agreement substantially in the form
of Exhibit G hereto signed by such Assignee and such transferor Lender, with
(and subject to) the subscribed consent of the Borrower and the Syndication
Agent (which shall not be unreasonably withheld or delayed) and solely with
respect to any assignments of the Revolving Commitments, the Issuers and the
Swingline Bank; provided that (i) after giving effect to any proposed
assignment, the Credit Exposure of the transferor Lender shall be equal to $0
or at least $1,000,000 and the Credit Exposure of the proposed Assignee shall
be at least equal to $1,000,000, (ii) if a proposed Assignee is an affiliate
of a transferor Lender or was a Lender immediately before such assignment, no
such consent of the Borrower, the Administrative Agent or, where applicable,
the Issuers and Swingline Bank, shall be required, (iii) if any Agent or any
affiliate of any Agent is a party to such assignment, no such consent of the
Administrative Agent shall be required and (iv) if a Default under Section
6.1(b) or any Event of Default shall have occurred and be continuing, no such
consent of the Borrower shall be required. When such instrument has been
signed and delivered by the parties thereto and recorded as provided in
Section 2.16, and such Assignee has paid to such transferor Lender the
purchase price agreed between them, such Assignee shall be a Lender party to
this Agreement and shall have all the rights and obligations of a Lender with
a Commitment and/or Loans and Reimbursement Obligations as set forth in such
instrument of assumption, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection, the transferor Lender, the
Administrative Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to the Assignee. In connection with
any such assignment (other than an assignment to which any Agent or any
affiliate of any Agent is a party), the transferor Lender shall pay to the
Administrative Agent an administrative fee for processing such assignment in
the amount of $3,000. If the Assignee is not incorporated under the laws of
the United States or a State thereof, it shall deliver to the Borrower and the
Administrative Agent certification as to exemption from deduction or
withholding of United States federal income taxes in accordance with Section
8.4.
89
<PAGE>
(d) Any Lender may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under Section 8.3 or
8.4 than such Lender would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.2, 8.3 or 8.4
requiring such Lender to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
Section 9.7. Designated Lenders. (a) Subject to the
provisions of this Section 9.7(a), any Lender may from time to time elect to
designate an Eligible Designee to provide all or a portion of the Loans to be
made by such Lender pursuant to this Agreement; provided that such designation
shall not be effective unless the Borrower and the Administrative Agent
consent thereto. When a Lender and its Eligible Designee shall have signed an
agreement substantially in the form of Exhibit H hereto (a "Designation
Agreement") and the Borrower and the Administrative Agent shall have signed
their respective consents thereto, such Eligible Designee shall become a
Designated Lender for purposes of this Agreement. The Designating Lender shall
thereafter have the right to permit such Designated Lender to provide all or a
portion of the loans to be made by such Designating Lender pursuant to Section
2.1 and the making of such Loans or portions thereof shall satisfy the
obligation of the Designating Lender. As to any Loans or portion thereof made
by it, each Designated Lender shall have all the rights that a Lender making
such Loans or portion thereof would have had under this Agreement and
otherwise; provided that (x) its voting rights under this Agreement shall be
exercised solely by its Designating Lender and (y) its Designating Lender shall
be deemed to hold its Note as agent for its Designated Lender to the extent of
the Loans or portion thereof funded by such Designated Lender. Each
Designating Lender shall act as administrative agent for its Designated Lender
and give and receive notices and other communications on its behalf. Any
payments for the account of any Designated Lender shall be paid to its
Designating Lender as administrative agent for such Designated Lender and
neither the Borrower nor the Administrative Agent shall be responsible for any
Designating Lender's application of such payments. In addition, any
Designated Lender may (i) with notice to, but without the prior written consent
of, the Borrower and the Administrative Agent, provide liquidity and/or credit
facilities to or for the account of such Designated Lender to support the
funding of Loans or portions thereof made by such Designated Lender and (ii)
disclose on a confidential basis any non-public information relating to its
Loans or portions thereof to any rating agency, commercial paper dealer or
provider of any guarantee, surety, credit or liquidity enhancement to such
Designated Lender.
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<PAGE>
(b) Each party to this Agreement agrees that it will not institute
against, or join any other person in instituting against, any Designated Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or
similar law, for one year and a day after all outstanding senior indebtedness
of such Designated Lender is paid in full. The Designating Lender for each
Designated Lender agrees to indemnify, save, and hold harmless each other
party hereto for any loss, cost, damage and expense arising out of its
inability to institute any such proceeding against such Designated Lender.
This Section 9.7(b) shall survive the termination of this Agreement.
Section 9.8. No Reliance on Margin Stock. Each of the Lenders
represents to each Agent and each of the other Lenders that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U) as collateral
in the extension or maintenance of the credit provided for in this Agreement.
Section 9.9. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
Section 9.10. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective on the date
that the Administrative Agent shall have received counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the
Administrative Agent in the form satisfactory to it of facsimile or other
written confirmation from such party of execution of a counterpart hereof by
such party). This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof, other
than the provisions regarding the syndication of the Commitments and the Loans
set forth in the Commitment Letter dated July 29, 1998 among the Borrower, DLJ
Capital Funding, Inc., Donaldson, Lufkin & Jenrette Securities Corporation,
Morgan Guaranty Trust Company of New York, JPMSI and Mellon Bank, N.A.
Section 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
Address: Birmingham Road
P.O. Box 66
Birmingham, NJ 08011
Facsimile: 609-892-8641
DLJ CAPITAL FUNDING, INC., as Syndication
Agent and as Lender
By: /s/ Harold Philipps
-----------------------------------
Name: Harold Philipps
Title: Managing Director
Address: 277 Park Avenue
New York, NY 10172
Facsimile:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent and as Lender
By: /s/ Steven Hannan
-----------------------------------
Name: Steven Hannan
Title: Vice President
Address: 60 Wall Street
New York, NY 10260
Facsimile:
<PAGE>
MELLON BANK, N.A., as Administrative
Agent, as Lender, as Swingline Bank and as
Issuer
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
Address: One Mellon Bank Center
Pittsburgh, PA 15258-0001
Facsimile:
<PAGE>
COMMITMENT SCHEDULE
- ------------------------------------------------------------------------------
BANK TERM A TERM B REVOLVER
- ------------------------------------------------------------------------------
Mellon Bank, N.A. $25.0 million -0- $40.0 million
- ------------------------------------------------------------------------------
DLJ Capital Funding, $13.0 million $65.0 million -0-
Inc.
- ------------------------------------------------------------------------------
Morgan Guaranty Trust $7.0 million $35.0 million -0-
Company of New York
- ------------------------------------------------------------------------------
Total $45.0 million $100.0 million $40.0 million
- ------------------------------------------------------------------------------
PRICING SCHEDULE
The "Euro-Dollar Margin", "Base Rate Margin" and "Commitment
Fee Rate" for any day are the respective percentages set forth below in
the applicable row under the column corresponding to the Status that
exists on such day:
==============================================================================
Status Level I Level II Level III Level IV Level V
==============================================================================
Euro-Dollar Margin 1.25% 1.50% 1.75% 2.00% 2.25%
- ------------------------------------------------------------------------------
Base Rate Margin 0% 0.25% 0.50% 0.75% 1.00%
- ------------------------------------------------------------------------------
Commitment Fee Rate 0.25% 0.30% 0.35% 0.40% 0.50%
==============================================================================
For purposes of this Schedule, the following terms have the
following meanings:
"Applicable Leverage Ratio" means, in respect of any day,
the Leverage Ratio as at the last day of the most recent Fiscal Quarter in
respect of which the Borrower shall have delivered, on or prior to such
day, a certificate pursuant to Section 5.1(c); provided that (i) if the
Borrower shall fail to deliver any such certificate on or prior to the day
so required pursuant to Section 5.1(c), the "Applicable Leverage Ratio"
shall be deemed to be greater than 3.25 to 1.0 from and including the day
upon which such certificate was required to have been delivered to, but
excluding, the day upon which such certificate is delivered and (ii) for
any day from and including the Closing Date to but excluding the first day
upon which such a certificate is or is required to be delivered, the
Applicable Leverage Ratio shall be the Leverage Ratio set forth in the
certificate delivered pursuant to Section 3.1(i).
"Level I Status" exists at any day if the Applicable Leverage
Ratio in respect of such day is less than or equal to 1.75 to 1.0.
"Level II Status" exists at any day if (i) the Applicable
Leverage Ratio in respect of such day is less than or equal to 2.25 to 1.0 and
(ii) Level I Status does not exist.
"Level III Status" exists at any day if (i) the Applicable
Leverage Ratio in respect of such day is less than or equal to 2.75 to 1.0 and
(ii) neither Level I Status nor Level II Status exists.
<PAGE>
"Level IV Status" exists at any day if (i) the Applicable
Leverage Ratio in respect of such day is less than or equal to 3.25 to 1.0 and
(ii) none of Level I Status, Level II Status and Level III Status exists.
"Level V Status" exists at any date if, at such date, no other
Status exists.
"Status" refers to the determination which of Level I Status,
Level II Status, Level III Status, Level IV Status or Level V Status exists at
any day.
<PAGE>
DISCLOSURE SCHEDULE TO CREDIT AGREEMENT AMONG
SYBRON CHEMICALS INC., DLJ CAPITAL FUNDING, INC.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
AND MELLON BANK, N.A.
SCHEDULE 1.01 -- Sellers
------------- -------
The Sellers are the following:
1. Louis T. Camilleri
2. Anthony F. Forgione
3. Joseph Mitola
4. Joseph A. Ruffing
<PAGE>
DISCLOSURE SCHEDULE TO CREDIT AGREEMENT AMONG
SYBRON CHEMICALS INC., DLJ CAPITAL FUNDING, INC.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
AND MELLON BANK, N.A.
SCHEDULE 4.07 -- Environmental
------------- -------------
Possible additional remediation of areas of concern relating
to removal of Tank T1, low pH, and groundwater contamination assessed by the
N.J. Department of Environmental Protection and identified in the Phase I
Environmental Site Assessment for the Birmingham, NJ site prepared by Strata
Environmental dated June 1998 (estimated cost $400,000).
Ongoing groundwater remediation (20 years) identified in the
Phase I Environmental Site Assessment for the Ede Holland site prepared by
Strata Environmental dated June 1998 (estimated cost $70,000 per year for up
to 20 years).
<PAGE>
DISCLOSURE SCHEDULE TO CREDIT AGREEMENT AMONG
SYBRON CHEMICALS INC., DLJ CAPITAL FUNDING, INC.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
AND MELLON BANK, N.A.
SCHEDULE 4.11 -- Real Estate
------------- -----------
Borrower owns the following real property located within the
United States:
1. Corporate Headquarters and Manufacturing Facility-Ion
Exchange and Toner Polymers (Environmental Products) encompassing
approximately 75 acres of total 500 acre site at P.O. Box 66, Birmingham Road,
Birmingham, NJ 08011
2. Manufacturing Facility-Biochem (Environmental
Products) encompassing approximately 2 acres at P.O. Box 808, 111 Kessler Mill
Road, Salem, VA 24153.
3. Packaging and Warehouse Facility encompassing
approximately 5 acres at P.O. Box 808, 114 Kessler Mill Road, Salem, VA 24153.
4. Manufacturing Facility-Textile Chemicals encompassing
approximately 22 acres at P.O. Box 125, Highway 29A, Wellford, SC 29385.
5. Manufacturing Facility - Textile Chemicals encompassing
approximately 9 acres at 29 Stott Avenue, Norwich Industrial Park, Norwich,
CT 06360.
Borrower leases the following real property located within
the United States:
6. Warehouse - approximately 2 acres located at P.O. Box
1503, 221 Threadmill Road, Dalton, GA 30722.
7. Warehouse located at 320 Elizabeth Avenue, Newark, NJ
07112.
<PAGE>
8. Warehouse located at 9721 Carnegie, El Paso, TX 79925.
9. Warehouse located at 6459 Fleet Street, Commerce, CA
79925.
10. Warehouse and office space located at 465 Boulevard,
Elmwood Park 07407.
Ruco Polymer Corporation owns the following real property
located within the United States:
11. Property encompassing approximately 17 acres in
Hicksville, New York.
Ruco Polymer Company of Georgia, LLC owns the following real
property located within the United States:
12. Property encompassing approximately 30 acres in
Columbus, Georgia.
<PAGE>
DISCLOSURE SCHEDULE TO CREDIT AGREEMENT AMONG
SYBRON CHEMICALS INC., DLJ CAPITAL FUNDING, INC.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
AND MELLON BANK, N.A.
SCHEDULE 5.17 -- Investments
------------- -----------
None.
<PAGE>
DISCLOSURE SCHEDULE TO SECURITY AGREEMENT
AMONG SYBRON CHEMICALS INC.,
SYBRON CHEMICALS HOLDINGS INC.,
RUCO POLYMER CORPORATION,
RUCO POLYMER COMPANY OF GEORGIA, LLC
AND MELLON BANK, N.A.
SCHEDULE 1 -- Equity Interests
---------- ----------------
Sybron Chemicals Inc.
- ---------------------
100 shares of common stock of Sybron Chemicals Holdings Inc.
100,000 Units of Membership Interests in Ruco Polymer Company
of Georgia, LLC
128,640 shares of common stock of Ruco Polymer Corp.
Sybron Chemical Holdings Inc.
- -----------------------------
40,000 shares of Sybron Chemical Japan Ltd.
1 share of Sybron Chemicals Canada Ltd.
72,959,362 shares of Sybron Quimica, S.A. de C.V.
1,000 shares of Sybron Chemicals International Holdings Limited
1.6 million shares of common stock of Sybron Chemicals Taiwan
Ltd.
<PAGE>
DISCLOSURE SCHEDULE TO SECURITY AGREEMENT
AMONG SYBRON CHEMICALS INC.,
SYBRON CHEMICALS HOLDINGS INC.,
RUCO POLYMER CORPORATION,
RUCO POLYMER COMPANY OF GEORGIA, LLC
AND MELLON BANK, N.A.
SCHEDULE 2(f)
-------------
List of Pledged Instruments and Pledged Certificates of Stock for Borrower's
Subsidiaries:
Sybron Chemical Holdings Inc.
-----------------------------
1. 40,000 shares of Sybron Chemical Japan Ltd.
2. 1 share of Sybron Chemicals Canada Ltd.
3. 72,959,362 shares of Sybron Quimica, S.A. de C.V.
4. 1,000 shares of Sybron Chemicals International Holdings Ltd.
5. 1.6 million shares of common stock of Sybron Chemicals Taiwan
Ltd.
6. January 3, 1997 $916,253.65 promissory note from Sybron
Quimica, S.A. de C.V. of Calle Rio Ocoyoacac #433
7. June 30, 1997 $100,000.00 promissory note from Sybron Quimica,
S.A. de C.V. of Calle Rio Ocoyoacac #433
8. April 7, 1998 $785,000.00 promissory note from Sybron Quimica,
S.A. de C.V. of Calle Rio Ocoyoacac #433
<PAGE>
DISCLOSURE SCHEDULE TO SECURITY AGREEMENT
AMONG SYBRON CHEMICALS INC.,
SYBRON CHEMICALS HOLDINGS INC.,
RUCO POLYMER CORPORATION,
RUCO POLYMER COMPANY OF GEORGIA, LLC
AND MELLON BANK, N.A.
SCHEDULE OF PATENTS, TRADEMARKS AND COPYRIGHTS
----------------------------------------------
In addition to the Patents, Patent Licenses, Trademarks,
Trademark Applications and Trademark Licenses on the lists attached hereto,
Borrower is the registered owner of the following patents and trademarks:
Patents:
US Patent # 5,102,977 McLafferty et al. Issued: April 7, 1992
Internally Catalyzed Sulfonate Bearing Hydroxyl Terminated
Powder Coating Polyesters
US Patent # 4,910,287 McLafferty et al. Issued: March 20, 1990
1-Methyl Imidazole Catalyzed Terminated Polyester
Trademark:
Name Country Number Renewal Date
---- ------- ------ ------------
RUCOFLEX Benelux 305,289 12/6/01
France 1,715,467 11/9/01
Italy 627,465 11/7/01
Switzerland 400,092 10/27/01
United Stated 854,396 8/13/08
RUCOTHANE Benelux 305,288 12/6/01
France 1,662,797 5/17/01
Italy 608,092 12/17/00
Switzerland 389,053 11/15/10
United Stated 881,925 12/9/99
RUCOTE United States 1,589,575 4/3/00
Canada TMA 490,595 2/26/13
Mexico 526,838 6/13/06
CTM (ECC) SN 550,418 Pending
Trademark:
Name Country Number Renewal Date
---- ------- ------ ------------
RUCO United States 1,728,749 11/3/02
Canada TMA 467,850 12/18/11
Mexico SM 197,903 Pending
CTM (EEC) SN 266,395 Pending
<PAGE>
EXHIBIT A
[TERM A/TERM B/REVOLVING] NOTE
New York, New York
___________ __, _____
For value received, SYBRON CHEMICALS INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of
______________________ (the "Lender"), for the account of its Applicable
Lending Office, the unpaid principal amount of each [Term A/TermB/Revolving]
Loan made by the Lender to the Borrower pursuant to the Credit Agreement
referred to below on the maturity date provided for in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each
such [Term A/TermB/Revolving]Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or
other immediately available funds at the office of Mellon Bank N.A., at its
address specified in or pursuant to Section 9.01 of the Credit Agreement.
All [Term A/TermB/Revolving] Loans made by the Lender, the
[respective Classes and] Types thereof and all repayments of the principal
thereof shall be recorded by the Lender and, if the Lender so elects in
connection with any transfer or enforcement hereof, appropriate notations to
evidence the foregoing information with respect to each such [Term
A/TermB/Revolving] Loan then outstanding may be endorsed by the Lender on the
schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Lender to make (or
any error in making) any such recordation or endorsement shall not affect the
Borrower's obligations hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of July 31, 1998 among Sybron Chemicals Inc., certain
financial institutions, Mellon Bank N.A., as Administrative Agent, DLJ Capital
Funding Inc., as Syndication Agent, and Morgan Guaranty Trust Company of New
York, as Documentation Agent (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
SYBRON CHEMICALS INC.
By:
--------------------------------
Name:
Title:
2
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------------------
[Class and] Amount of
Amount of Type of Principal Notation Made
Date Loan Loan Repaid By
- ------------------------------------------------------------------------------
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<PAGE>
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [NAME OF ASSIGNOR]
(the "Assignor") and [NAME OF ASSIGNEE] (the "Assignee").
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of July __, 1998 among
SYBRON CHEMICALS INC. (the "Borrower"), the Assignor and the other Lenders
party thereto, DLJ CAPITAL FUNDING, INC., as Syndication Agent (the
"Syndication Agent"), [MELLON BANK, N.A.], as Administrative Agent (the
"Administrative Agent"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent (together with the Administrative Agent and the Syndication
Agent, the "Agents") (as amended from time to time, the "Credit Agreement");
[WHEREAS, as provided under the Credit Agreement, the Assignor
has a Term A Commitment to make Term A Loans to the Borrower in an aggregate
principal amount at any time outstanding not to exceed $____________;]
[WHEREAS, Term A Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________
are outstanding at the date hereof;]
[WHEREAS, as provided under the Credit Agreement, the Assignor
has a Term B Commitment to make Term B Loans to the Borrower in an aggregate
principal amount at any time outstanding not to exceed $____________;]
[WHEREAS, Term B Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________
are outstanding at the date hereof;]
[WHEREAS, as provided under the Credit Agreement, the Assignor
has a Revolving Commitment to make Revolving Loans to the Borrower and
participate in Letters of Credit in an aggregate principal amount at any time
outstanding not to exceed $____________;]
[WHEREAS, Revolving Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof;]
<PAGE>
[WHEREAS, Letters of Credit with a total amount available for
drawing thereunder of $__________ are outstanding at the date hereof;] and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of [all] [a
portion] of its [Term A] [Term B] [Revolving] Commitment thereunder in an
amount equal to $__________ (the "Assigned Amount"), together with a
corresponding portion of each of its outstanding [Term A Loans] [Term B Loans]
[Revolving Loans and Letter of Credit Liabilities], and the Assignee proposes
to accept such assignment and assume the corresponding obligations of the
Assignor under the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit Agreement.
Section 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement
to the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the corresponding portion of the
principal amount of the [Term A Loans] [Term B Loans] [Revolving Loans and
Letter of Credit Liabilities] of the Assignor outstanding at the date hereof.
Upon the execution and delivery hereof by the Assignor and the Assignee [and
the execution of the consent attached hereto by the Borrower[, the Issuing
Banks,] and the Administrative Agent](1) and the payment of the amounts
specified in Section ? required to be paid on the date hereof and the
satisfaction of all other applicable conditions referred to in Section 9.06(c)
of the Credit Agreement (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Lender under
the Credit Agreement with a [Term A] [Term B] [Revolving] Commitment in an
amount equal to the Assigned Amount and acquire the rights of the Assignor
with respect to a corresponding portion of each of its outstanding [Term A
Loans] [Term B Loans] [Revolving Loans and Letter of Credit Liabilities] and
(ii) the [Term A] [Term B] [Revolving] Commitment of the Assignor shall, as
of the date hereof, be reduced by the Assigned Amount, and the Assignor shall
be released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
Section 3. Payments. As consideration for the assignment and
sale contemplated in Section ? hereof, the Assignee shall pay to the Assignor
on the date hereof in Federal funds the amount heretofore agreed between
them.(2) It is understood that commitment fees accrued before the date hereof
are for the account of the Assignor and such fees accruing on and after the
date hereof with respect to the Assigned Amount are for the account of the
Assignee. Each of the Assignor and the Assignee agrees that if it receives
any amount under the Credit Agreement which is for the account of the other
party hereto, it shall receive the same for the account of such other party to
the extent of such other party's interest therein and promptly pay the same to
such other party.
[Section 4. Consent of the Borrower[, the Issuing Banks,] and
the Administrative Agent. This Agreement is conditioned upon the consent of
the Borrower[, the Issuing Banks, the Swing Loan Lender] and the
Administrative Agent pursuant to Section 9.06(c) of the Credit Agreement.](3)
[Section 5. Note. Pursuant to Section 9.06(c) of the Credit
Agreement, the Borrower has agreed to execute and deliver a Note payable to
the order of the Assignee to evidence the assignment and assumption provided
for herein.](4)
- ------------
(1) Delete if consent is not required.
(2) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee. It
may be preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
(3) Delete if consent is not required.
(4) Delete if (i) the Assignee is already a Lender, since it already has a
Note or (ii) Assignee does not have a Note because it has not
requested one under the Credit Agreement.
2
<PAGE>
Section 6. No Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition or
statements of any Obligor, or the validity and enforceability of the
obligations of any Obligor in respect of the Credit Agreement or any Note or
any other Loan Document. The Assignee acknowledges that it has, independently
and without reliance on the Assignor, and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and financial
condition of the Obligors.
Section 7. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
Section . Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
[NAME OF ASSIGNOR]
By:
-------------------------------
Name:
Title:
[NAME OF ASSIGNEE]
By:
-------------------------------
Name:
Title:
3
<PAGE>
[The undersigned consent to the foregoing assignment.
[NAME OF BORROWER]
By:
-------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent
By:
-------------------------------
Name:
Title: ]
[NAME OF EACH ISSUING BANK]
By:
-------------------------------
Name:
Title: ]
4
<PAGE>
EXHIBIT H
DESIGNATION AGREEMENT
dated as of ________________, _____
Reference is made to the Credit Agreement dated as of July __,
1998 (as amended from time to time, the "Credit Agreement") among Sybron
Chemicals Inc., a Delaware corporation (the "Borrower"), the lenders party
thereto (the "Lenders"), DLJ Capital Funding, Inc., as Syndication Agent,
Morgan Guaranty Trust Company of New York, as Documentation Agent, and Mellon
Bank, N.A., as Administrative Agent (the "Administrative Agent"). Terms
defined in the Credit Agreement are used herein with the same meaning.
_________________ (the "Designator") and ________________ (the
"Designee") agree as follows:
1. The Designator designates the Designee as its Designated Lender
under the Credit Agreement and the Designee accepts such designation.
2. The Designator makes no representations or warranties and assumes
no responsibility with respect to the financial condition of the Borrower or
any other Obligor or the performance or observance by the Borrower or any
other Obligor of any of its obligations under the Credit Agreement, any other
Loan Document or any other instrument or document furnished pursuant thereto.
3. The Designee confirms that it is an Eligible Designee, appoints
and authorizes the Designator as its administrative agent and attorney-in-fact
and grants the Designator an irrevocable power of attorney to receive payments
made for the benefit of the Designee under the Credit Agreement and the other
Loan Documents and to deliver and receive all communications and notices under
the Credit Agreement and the other Loan Documents, if any, that the Designee
is obligated to deliver or has the right to receive thereunder, and
acknowledges that the Designator retains the sole right and responsibility to
vote under the Credit Agreement and the other Loan Documents, including,
without limitation, the right to approve any amendment or waiver of any
provision of the Credit Agreement or any other Loan Document, and agrees that
the Designee shall be bound by all such votes, approvals, amendments and
waivers and all other agreements of the Designator pursuant to or in
connection with the Credit Agreement or any other Loan Document, all subject
to Section 9.05(a)(ii) of the Credit Agreement.
<PAGE>
4. The Designee confirms that it has received a copy of the Credit
Agreement and each other Loan Document, together with copies of the most recent
financial statements referred to in Article 4 or delivered pursuant to Article
5 of the Credit Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Designation Agreement, agrees that it will, independently and without
reliance upon the Administrative Agent, the Designator or any other Agent,
Issuer, Swingline Bank or Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action it may be permitted to take under
the Credit Agreement or any other Loan Document.
5. Following the execution of this Designation Agreement by the
Designator and the Designee and the consent hereto by the Borrower, it will be
delivered to the Administrative Agent for its consent. This Designation
Agreement shall become effective when the Administrative Agent consents hereto
or on any later date specified on the signature page hereof.
6. Upon the effectiveness hereof, (a) the Designee shall have the
right to make Loans or portions thereof as a Lender pursuant to Section 2.01
of the Credit Agreement and the rights of a Lender related thereto and (b) the
making of any such Loans or portions thereof by the Designee shall satisfy the
obligations of the Designator under the Credit Agreement to the same extent,
and as if, such Loans or portions thereof were made by the Designator.
7. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Designation
Agreement to be executed by their respective officers hereunto duly
authorized, as of the date first above written.
Effective Date(5):______ , ____
- ------------
(5) This date should be no earlier than the date of the Administrative Agent's
consent hereto.
<PAGE>
[NAME OF DESIGNATOR]
By:
-------------------------------
Title:
Name:
[NAME OF DESIGNEE]
By:
-------------------------------
Title:
Name:
The undersigned consent to the foregoing designation.
SYBRON CHEMICALS INC.
By:
-------------------------------
Title:
Name:
, as Administrative Agent
MELLON BANK, N.A.
By:
-------------------------------
Title:
Name:
<PAGE>
NOTE
New York, New York
July 31, 1998
For value received, SYBRON CHEMICALS INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of DLJ CAPITAL
FUNDING, INC. (the "Lender"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Loan made by the Lender to the
Borrower pursuant to the Credit Agreement referred to below on the maturity
date provided for in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Mellon Bank
N.A., at its address specified in or pursuant to Section 9.01 of the Credit
Agreement.
All Loans made by the Lender, the respective Classes and Types
thereof and all repayments of the principal thereof shall be recorded by the
Lender and, if the Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be endorsed by
the Lender on the schedule attached hereto, or on a continuation of such
schedule attached to and made a part hereof; provided that the failure of the
Lender to make (or any error in making) any such recordation or endorsement
shall not affect the Borrower's obligations hereunder or under the Credit
Agreement.
<PAGE>
This note is one of the Notes referred to in the Credit
Agreement dated as of July 31, 1998 among Sybron Chemicals Inc., certain
financial institutions, Mellon Bank N.A., as Administrative Agent, DLJ Capital
Funding, Inc., as Syndication Agent, and Morgan Guaranty Trust Company of New
York, as Documentation Agent (as the same may be amended from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
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Class and Amount of
Amount of Type of Principal
Date Loan Loan Repaid Notation Made By
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<PAGE>
NOTE
New York, New York
July 31, 1998
For value received, SYBRON CHEMICALS INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of MORGAN GUARANTY
TRUST COMPANY OF NEW YORK (the "Lender"), for the account of its Applicable
Lending Office, the unpaid principal amount of each Loan made by the Lender to
the Borrower pursuant to the Credit Agreement referred to below on the
maturity date provided for in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal amount of each such Loan on the dates and
at the rate or rates provided for in the Credit Agreement. All such payments
of principal and interest shall be made in lawful money of the United States
in Federal or other immediately available funds at the office of Mellon Bank
N.A., at its address specified in or pursuant to Section 9.01 of the Credit
Agreement.
All Loans made by the Lender, the respective Classes and Types
thereof and all repayments of the principal thereof shall be recorded by the
Lender and, if the Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be endorsed by
the Lender on the schedule attached hereto, or on a continuation of such
schedule attached to and made a part hereof; provided that the failure of the
Lender to make (or any error in making) any such recordation or endorsement
shall not affect the Borrower's obligations hereunder or under the Credit
Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of July 31, 1998 among Sybron Chemicals Inc., certain
financial institutions, Mellon Bank N.A., as Administrative Agent, DLJ Capital
Funding, Inc., as Syndication Agent, and Morgan Guaranty Trust Company of New
York, as Documentation Agent (as the same may be amended from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------------------
Class and Amount of
Amount of Type of Principal
Date Loan Loan Repaid Notation Made By
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<PAGE>
TERM A NOTE
New York, New York
July 31, 1998
For value received, SYBRON CHEMICALS INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of MELLON BANK,
N.A. (the "Lender"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Term A Loan made by the Lender to the Borrower
pursuant to the Credit Agreement referred to below on the maturity date
provided for in the Credit Agreement. The Borrower promises to pay interest
on the unpaid principal amount of each such Term A Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Mellon Bank
N.A., at its address specified in or pursuant to Section 9.01 of the Credit
Agreement.
All Term A Loans made by the Lender, the Types thereof and all
repayments of the principal thereof shall be recorded by the Lender and, if the
Lender so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to
each such Term A Loan then outstanding may be endorsed by the Lender on the
schedule attached hereto, or on a continuation of such schedule attached to and
made a part hereof; provided that the failure of the Lender to make (or any
error in making) any such recordation or endorsement shall not affect the
Borrower's obligations hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of July 31, 1998 among Sybron Chemicals Inc., certain
financial institutions, Mellon Bank N.A., as Administrative Agent, DLJ Capital
Funding, Inc., as Syndication Agent, and Morgan Guaranty Trust Company of New
York, as Documentation Agent (as the same may be amended from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------------------
Amount of
Amount of Type of Principal
Date Loan Loan Repaid Notation Made By
- ------------------------------------------------------------------------------
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<PAGE>
REVOLVING NOTE
New York, New York
July 31, 1998
For value received, SYBRON CHEMICALS INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of MELLON BANK,
N.A. (the "Lender"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Revolving Loan made by the Lender to the
Borrower pursuant to the Credit Agreement referred to below on the maturity
date provided for in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such Revolving Loan on the
dates and at the rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of Mellon
Bank N.A., at its address specified in or pursuant to Section 9.01 of the
Credit Agreement.
All Revolving Loans made by the Lender, the Types thereof and
all repayments of the principal thereof shall be recorded by the Lender and,
if the Lender so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to
each such Revolving Loan then outstanding may be endorsed by the Lender on the
schedule attached hereto, or on a continuation of such schedule attached to and
made a part hereof; provided that the failure of the Lender to make (or any
error in making) any such recordation or endorsement shall not affect the
Borrower's obligations hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of July 31, 1998 among Sybron Chemicals Inc., certain
financial institutions, Mellon Bank N.A., as Administrative Agent, DLJ Capital
Funding, Inc., as Syndication Agent, and Morgan Guaranty Trust Company of New
York, as Documentation Agent (as the same may be amended from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------------------
Amount of
Amount of Type of Principal
Date Loan Loan Repaid Notation Made By
- ------------------------------------------------------------------------------
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<PAGE>
SWINGLINE NOTE
New York, New York
July 31, 1998
For value received, SYBRON CHEMICALS INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of MELLON BANK,
N.A. (the "Swingline Bank"), the unpaid principal amount of each Swingline
Loan made by the Swingline Bank to the Borrower pursuant to the Credit
Agreement referred to below on the maturity date provided for in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Swingline Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or
other immediately available funds at the office of Mellon Bank N.A., at its
address specified in or pursuant to Section 9.01 of the Credit Agreement.
All Swingline Loans made by the Swingline Bank and all
repayments of the principal thereof shall be recorded by the Swingline Bank
and, if the Swingline Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Swingline Loan then outstanding may be
endorsed by the Swingline Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; provided
that the failure of the Swingline Bank to make (or any error in making) any
such recordation or endorsement shall not affect the Borrower's obligations
hereunder or under the Credit Agreement.
<PAGE>
This swingline note is one of the Swingline Notes referred to
in the Credit Agreement dated as of July 31, 1998 among Sybron Chemicals Inc.,
certain financial institutions, Mellon Bank N.A., as Administrative Agent, DLJ
Capital Funding, Inc., as Syndication Agent, and Morgan Guaranty Trust Company
of New York, as Documentation Agent (as the same may be amended from time to
time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
<PAGE>
SWINGLINE LOANS AND PAYMENTS OF PRINCIPAL
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Amount of Amount of
Swingline Principal
Date Loan Repaid Notation Made By
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<PAGE>
SECURITY AGREEMENT
dated as of
July 31, 1998
among
SYBRON CHEMICALS INC.
THE SUBSIDIARY GUARANTORS PARTY HERETO
and
MELLON BANK, N.A.,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definitions................................................... 1
Section 2. Representations and Warranties................................ 9
Section 3. The Security Interests........................................ 11
Section 4. Delivery of Certain Collateral................................ 12
Section 5. Further Assurances; Covenants................................. 13
Section 6. Record Ownership of Pledged Equity Securities................. 18
Section 7. Right to Vote Pledged Equity Interests........................ 19
Section 8. Right to Receive Distributions on Collateral.................. 19
Section 9. General Authority............................................. 20
Section 10. Remedies upon Event of Default................................ 20
Section 11. Limitation on Duty of Administrative Agent in Respect
of Collateral............................................... 23
Section 12. Application of Proceeds....................................... 24
Section 13. Concerning the Administrative Agent........................... 26
Section 14. Appointment of Co-Agents...................................... 26
Section 15. Expenses...................................................... 26
Section 16. Termination of Security Interests; Release of Collateral...... 27
Section 17. Additional Subsidiary Guarantors.............................. 28
Section 18. Notices....................................................... 28
Section 19. Waivers, Remedies Not Exclusive............................... 28
Section 20. Successors and Assigns........................................ 28
Section 21. Changes in Writing............................................ 28
Section 22. New York Law.................................................. 28
Section 23. Severability.................................................. 29
Schedule 1 -- Equity Interests
Exhibit A -- Form of Security Agreement Supplement
Exhibit B -- Form of Copyright Security Agreement
Exhibit C -- Form of Patent Security Agreement
Exhibit D -- Form of Trademark Security Agreement
Exhibit E -- Form of Perfection Certificate
i
<PAGE>
SECURITY AGREEMENT
AGREEMENT dated as of July 31, 1998 among SYBRON CHEMICALS
INC., the SUBSIDIARY GUARANTORS party hereto and MELLON BANK, N.A., as
Administrative Agent.
WHEREAS, the Borrower is entering into the Credit Agreement
described in Section 1 below, pursuant to which the Borrower intends to borrow
funds and obtain letters of credit, all on the terms and conditions set forth
therein;
WHEREAS, the Borrower is willing to secure its obligations
under the Credit Agreement and the other Financing Documents by granting Liens
on its assets to the Administrative Agent as provided in this Agreement and
the other Collateral Documents;
WHEREAS, each of the Borrower's U.S. Subsidiaries has guaranteed
the foregoing obligations of the Borrower pursuant to the Subsidiary Guaranty
Agreement and is willing to secure its obligations under such Subsidiary
Guaranty by granting Liens on its assets to the Administrative Agent as
provided in this Agreement and the other Collateral Documents; and
WHEREAS, the Lenders and the LC Issuing Bank are not willing to
make loans or maintain, issue or participate in letters of credit under the
Credit Agreement unless (i) the foregoing obligations of the Borrower are
secured by Liens on its assets as provided in the Collateral Documents, (ii)
the foregoing obligations of the Borrower are guaranteed by each of the
Borrower's U.S. Subsidiaries and (iii) each such guarantee is secured by Liens
on the assets of the relevant Subsidiary Guarantor as provided in the
Collateral Documents;
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement
and not otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used herein, have the
following meanings:
<PAGE>
"Accounts" means, with respect to any Lien Grantor, all
"accounts" (as defined in the UCC) now owned or hereafter acquired by such Lien
Grantor, and also means and includes all accounts receivable, contract rights,
book debts, notes, drafts and other obligations or indebtedness owing to such
Lien Grantor arising from the performance of services by it and/or the sale,
lease or exchange of goods or other property by it (including, without
limitation, any such obligation or indebtedness which might be characterized as
an account, contract right or general intangible under the Uniform Commercial
Code in effect in any jurisdiction) and all of such Lien Grantor's rights in,
to and under all contracts or purchase orders for goods, services or other
property, and all of such Lien Grantor's rights to any goods, services or other
property represented by any of the foregoing (including returned or
repossessed goods and unpaid sellers' rights of recission, replevin,
reclamation and rights to stoppage in transit) and all monies due to or to
become due to such Lien Grantor under all contracts for the performance of
services by it and/or the sale, lease or exchange of goods or other property
by it (whether or not yet earned by performance on the part of such Lien
Grantor), in each case whether now existing or hereafter arising or acquired,
including, without limitation, the right to receive the proceeds of said
contracts and purchase orders and all collateral security and guarantees of
any kind given by any Person with respect to any of the foregoing.
"Collateral" means all property, whether now owned or hereafter
acquired, in which a security interest or other Lien is granted or purported to
be granted to the Administrative Agent pursuant to the Collateral Documents.
When used with respect to a specific Lien Grantor, the term "Collateral" means
all such property in which such a security interest or other Lien is granted
or purported to be granted to the Administrative Agent by such Lien Grantor.
"Collateral Documents" means this Agreement, the Security
Agreement Supplements, the Intellectual Property Security Agreements and all
other supplemental or additional security agreements, mortgages or similar
instruments delivered pursuant hereto or thereto.
"Contingent Secured Obligation" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature at such time,
including (without limiting the generality of the foregoing) any obligation to
reimburse the LC Issuing Bank for drawings not yet made under a Letter of
Credit.
"Copyright License" means any agreement now or hereafter in
existence granting to any Lien Grantor, or pursuant to which any Lien Grantor
has granted to any other Person, any right to use, copy, reproduce, distribute,
prepare derivative works, display or publish any records or other materials on
which a Copyright is in existence or may come into existence, including,
without limitation, any agreement identified in Schedule 1 to a Copyright
Security Agreement.
2
<PAGE>
"Copyrights" means all the following: (i) all copyrights under
the laws of the United States or any other country (whether or not the
underlying works of authorship have been published), all registrations and
recordings thereof, all copyrightable works of authorship (whether or not
published), and all applications for copyrights under the laws of the United
States or any other country, including, without limitation, registrations,
recordings and applications in the United States Copyright Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, including, without limitation,
those described in Schedule 1 to any Copyright Security Agreement, (ii) all
renewals thereof, (iii) all claims for, and rights to sue for, past or future
infringements of any of the foregoing, and (iv) all income, royalties, damages
and payments now or hereafter due or payable with respect to any of the
foregoing, including, without limitation, damages and payments for past or
future infringements thereof.
"Copyright Security Agreement" means a Copyright Security
Agreement, substantially in the form of Exhibit B hereto, executed and
delivered by a Lien Grantor in favor of the Administrative Agent, for the
benefit of the Secured Parties, as amended from time to time.
"Credit Agreement" means the Credit Agreement dated as of July
31, 1998 among Sybron Chemicals Inc., the Lenders, DLJ Capital Funding, Inc.,
as Syndication Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and Mellon Bank, N.A., as Administrative Agent, Swingline
Bank and LC Issuing Bank (as amended, supplemented or otherwise modified from
time to time.
"Documents" means, with respect to any Lien Grantor, all
"documents" (as defined in the UCC) or other receipts covering, evidencing or
representing goods, now owned or hereafter acquired by such Lien Grantor.
"Equipment" means, with respect to any Lien Grantor, all
"equipment" (as defined in the UCC) now owned or hereafter acquired by it,
located in the United States, other than motor vehicles the perfection of a
security interest in which is excluded from the Uniform Commercial Code in the
relevant jurisdiction and other than any equipment leased by a Lien Grantor
the terms of which lease prohibit the granting of a Lien thereunder.
"Equity Interest" means (i) in the case of a corporation, any
shares of its capital stock, (ii) in the case of a limited liability company,
any membership interest therein, (iii) in the case of a partnership, any
partnership interest (whether general or limited) therein, (iv) in the case of
any other business entity, any participation or other interest in the equity
or profits thereof or (v) any warrant, option or other right to acquire any
Equity Interest described in the foregoing clauses (i), (ii), (iii) and (iv).
3
<PAGE>
"Foreign Person" means any Person organized under the laws of a
jurisdiction, and conducting substantially all of its operations, outside of
the United States, other than any such Person that is, whether as a matter of
law, pursuant to an election by such Person or otherwise, treated as a
partnership in which any Lien Grantor is a partner or a branch of any Lien
Grantor for United States income tax purposes.
"General Intangibles" means, with respect to any Lien Grantor,
all "general intangibles" (as defined in the UCC) now owned or hereafter
acquired by such Lien Grantor, including, without limitation, (i) all
obligations or indebtedness owing to such Lien Grantor (other than Accounts)
from whatever source arising, (ii) all Intellectual Property, goodwill, trade
names, service marks, trade secrets, permits and licenses, (iii) all rights or
claims in respect of refunds for taxes paid and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of any member
of the ERISA Group.
"Instruments" means, with respect to any Lien Grantor, all
"instruments", "chattel paper" or "letters of credit" (each as defined in the
UCC) evidencing, representing, arising from or existing in respect of, relating
to, securing or otherwise supporting the payment of, any of the Accounts owing
to such Lien Grantor, including (but not limited to) promissory notes, drafts,
bills of exchange and trade acceptances, now owned or hereafter acquired by
such Lien Grantor.
"Insurance Account" has the meaning set forth in Section 5(p).
"Intellectual Property" means (i) Patents, (ii) Patent
Licenses, (iii) Trademarks, (iv) Trademark Licenses, (v) Copyrights and (vi)
Copyright Licenses, and all rights in or under any of the foregoing.
"Intellectual Property Filing" means (i) with respect to any
Patent, Patent License, Trademark or Trademark License, the filing of the
applicable Patent Security Agreement or Trademark Security Agreement with the
United States Patent and Trademark Office, together with an appropriately
completed recordation form, and (ii) with respect to any Copyright or
Copyright License, the filing of the applicable Copyright Security Agreement
with the United States Copyright Office, together with an appropriately
completed recordation form, in each case sufficient to record the Security
Interest granted to the Administrative Agent in such Intellectual Property.
4
<PAGE>
"Intellectual Property Security Agreement" means a Copyright
Security Agreement, a Patent Security Agreement or a Trademark Security
Agreement.
"Inventory" means, with respect to any Lien Grantor, all
"inventory" (as defined in the UCC), now owned or hereafter acquired by it,
located in the United States, and shall also mean and include, without
limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto.
"Investment Property" means, with respect to any Lien Grantor,
all "investment property" (as defined in the UCC) now owned or hereafter
acquired by such Lien Grantor including, without limitation, all "securities",
"security entitlements", "securities accounts", "commodity contracts" and
"commodity accounts" (each as defined in the UCC).
"Lien Grantor" means the Borrower or any Subsidiary Guarantor
and "Lien Grantors" means all of the foregoing.
"Non-Contingent Secured Obligation" means at any time any
Secured Obligation (or portion thereof) that is not a Contingent Secured
Obligation at such time.
"Opinion of Counsel" means a written opinion of legal counsel
(who may be counsel to a Lien Grantor or other counsel, in either case
approved by the Syndication Agent and the Administrative Agent or the Required
Lenders in a writing delivered to the Administrative Agent) addressed and
delivered to the Administrative Agent.
"Original Lien Grantor" means the Borrower or any Subsidiary
Guarantor that grants a Lien on any of its assets hereunder on the Closing
Date, and "Original Lien Grantors" means all of the foregoing.
"Other Investment Property" means, with respect to any Lien
Grantor, all Investment Property now owned or hereafter acquired by it, other
than any such Investment Property constituting an Equity Interest.
"Other Pledged Securities" means, with respect to any Lien
Grantor, all "securities" (as such term is defined in Article 8 of the UCC)
now owned or hereafter acquired by such Lien Grantor, other than any Pledged
Equity Securities of such Lien Grantor.
5
<PAGE>
"Patent License" means any agreement now or hereafter in
existence granting any Lien Grantor, or pursuant to which any Lien Grantor has
granted to any other Person, any right with respect to any Patent or any
invention now or hereafter in existence, whether patentable or not, whether a
patent or application for patent is in existence on such invention or not, and
whether a patent or application for patent on such invention may come into
existence or not, including, without limitation, any agreement identified in
Schedule 1 to a Patent Security Agreement.
"Patents" means (i) all letters patent and design letters
patent of the United States or any other country and all applications for
letters patent and design letters patent of the United States or any other
country, including, without limitation, applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, (ii) all reissues, divisions, continuations, continuations-in-part,
revisions and extensions thereof, (iii) all claims for, and rights to sue for,
past or future infringements of any of the foregoing and (iv) all income,
royalties, damages and payments now or hereafter due or payable with respect
to any of the foregoing, including, without limitation, damages and payments
for past or future infringements thereof.
"Patent Security Agreement" means a Patent Security Agreement,
substantially in the form of Exhibit C hereto, executed and delivered by a Lien
Grantor in favor of the Administrative Agent, for the benefit of the Secured
Parties, as amended from time to time.
"Perfection Certificate" means, with respect to any Lien
Grantor, a certificate substantially in the form of Exhibit E hereto,
completed and supplemented with the schedules and attachments contemplated
thereby to the reasonable satisfaction of the Administrative Agent, and duly
executed by a duly authorized officer of such Lien Grantor.
"Permitted Liens" means (i) the Security Interests and (ii) the
other Liens on the Collateral permitted to be created, to be assumed or to
exist pursuant to Section 5.09 of the Credit Agreement.
"Pledged Certificates" means at any time all "certificated
securities" (as such term is defined in Article 8 of the UCC) that evidence or
represent Pledged Equity Interests or Other Pledged Securities at such time.
"Pledged Equity Interests" means at any time all Equity
Interests included in the Collateral at such time.
6
<PAGE>
"Pledged Instruments" means at any time all Instruments
included in the Collateral at such time.
"Pledged LLC Interest" means at any time any membership
interest or similar interest in a limited liability company that is included
in the Pledged Equity Interests at such time.
"Pledged Partnership Interest" means at any time any partnership
interest (whether general or limited) that is included in the Pledged Equity
Interests at such time.
"Post-Petition Interest" means any interest which accrues after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower or would accrue but
for the operation of applicable bankruptcy or insolvency laws, whether or not
such interest is allowed or allowable as a claim in any such proceeding.
"Proceeds" means, with respect to any Lien Grantor, all
proceeds of, and all other profits, products, rents or receipts, in whatever
form, arising from the collection, sale, lease, exchange, assignment,
licensing or other disposition of, or other realization upon, its Collateral,
including without limitation all claims of such Lien Grantor against third
parties for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance in respect
of, any of its Collateral, and any condemnation or requisition payments with
respect to any of its Collateral, in each case whether now existing or
hereafter arising.
"Secured Obligations" means:
(a) with respect to the Borrower, all principal of all Loans,
Swingline Loans and LC Reimbursement Obligations outstanding from time to time
under the Credit Agreement, all interest (including, without limitation,
Post-Petition Interest) on such Loans, Swingline Loans and LC Reimbursement
Obligations and all other amounts now or hereafter payable by the Borrower
pursuant to any Loan Document;
(b) with respect to any Subsidiary Guarantor, all
obligations of such Subsidiary Guarantor under the Subsidiary Guaranty
Agreement or any other Loan Document (including, without limitation,
obligations in respect of Post-Petition Interest); and
(c) with respect to any Lien Grantor, any renewals or
extensions of any Secured Obligations.
7
<PAGE>
"Secured Parties" means the holders from time to time of the
Secured Obligations.
"Security Agreement Supplement" means a letter substantially in
the form of Exhibit A hereto, executed and delivered to the Administrative
Agent pursuant to Section 17 for the purpose of adding a new Subsidiary
Guarantor as a party hereto and/or adding additional property to the
Collateral.
"Security Interests" means the security interests in Collateral
granted by the Lien Grantors under the Collateral Documents securing the
Secured Obligations.
"Subsidiary Guarantors" means each Person listed on the
signature pages hereof under the caption "Subsidiary Guarantors" and each
Person that shall, at any time after the date hereof, become a party hereto
and a "Subsidiary Guarantor" as provided in Section 17.
"Trademark License" means any agreement now or hereafter in
existence granting to any Lien Grantor, or pursuant to which any Lien Grantor
has granted to any other Person, any right to use any Trademark, including,
without limitation, any agreement identified in Schedule 1 to any Trademark
Security Agreement.
"Trademarks" means: (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos, brand names, trade dress, prints and labels on which any
of the foregoing have appeared or appear, package and other designs, and any
other source or business identifiers, and general intangibles of like nature,
and the rights in any of the foregoing which arise under applicable law, (ii)
the goodwill of the business symbolized thereby or associated with each of
them, (iii) all registrations and applications in connection therewith,
including, without limitation, registrations and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, including, without limitation, those described in
Schedule 1 to any Trademark Security Agreement, (iv) all renewals thereof, (v)
all claims for, and rights to sue for, past or future infringements of any of
the foregoing and (vi) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past or future infringements
thereof.
8
<PAGE>
"Trademark Security Agreement" means a Trademark Security
Agreement, substantially in the form of Exhibit D hereto, executed and
delivered by a Lien Grantor in favor of the Administrative Agent, for the
benefit of the Secured Parties, as amended from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided that if, by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of any Security Interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, "UCC"
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
"U.S. Person" means any Person other than a Foreign Person.
Section 2. Representations and Warranties. Each Lien Grantor
represents and warrants that:
(a) Such Lien Grantor owns the Equity Interests listed as
being owned by it in Schedule 1 hereto or to any Security Agreement
Supplement to which it is a party, free and clear of any Lien other than
the Security Interests. All shares of capital stock identified in any such
Schedule as being beneficially owned by such Lien Grantor have been duly
authorized and validly issued, are fully paid and non-assessable, and are
subject to no option to purchase or similar right of any Person. Such Lien
Grantor is not and will not become a party to or otherwise bound by any
agreement, other than the Financing Documents, which restricts in any
manner the rights of any present or future holder of any Equity Interest
with respect thereto.
(b) Such Lien Grantor has good and marketable title to all
of its Collateral, other than such exceptions to title as are immaterial in
nature, free and clear of any Liens other than Permitted Liens. Such Lien
Grantor has taken all actions, if any, necessary under the UCC to perfect
its interest in any Accounts purchased or otherwise acquired by it, as
against its assignors and creditors of its assignors.
(c) Such Lien Grantor has not performed any acts that would be
reasonably likely to prevent the Administrative Agent from enforcing any of
the provisions of the Collateral Documents or that would limit the
Administrative Agent in any such enforcement. No financing statement,
security agreement, mortgage or similar or equivalent document or instrument
covering all or any part of the Collateral owned by it is on file or of record
in any jurisdiction in which such filing or recording would be effective to
perfect or record a Lien on such Collateral, except financing statements,
mortgages or other similar or equivalent documents with respect to Permitted
Liens. After the Closing, no Collateral owned by it will be in the possession
of any Person (other than such Lien Grantor) asserting any claim thereto or
security interest therein (other than a Lien permitted under Section 5.09(d)
of the Credit Agreement), except that the Administrative Agent or its designee
may have possession of Collateral as contemplated hereby.
9
<PAGE>
(d) Such Lien Grantor has delivered a Perfection
Certificate to the Administrative Agent. The information set forth therein
is correct and complete as of the Closing Date. Not later than 60 days
after the Closing Date, such Lien Grantor shall furnish to the
Administrative Agent file search reports from each UCC filing office set
forth in Schedule 7 to the Perfection Certificate.
(e) The Security Interests constitute, under the UCC, valid
security interests in all Collateral owned by such Lien Grantor, securing its
Secured Obligations other than any Collateral the grant of a security in which
is excluded from Section 9-104 of the UCC.
(f) Upon the delivery of actual possession of the Pledged
Instruments (if any) and the Pledged Certificates owned by such Lien Grantor
to the Administrative Agent in accordance with Section 4, the Security
Interests in such Collateral will be perfected, subject to no prior Lien and,
in the case of any Pledged Certificates evidencing "securities" (as defined in
the UCC) the Administrative Agent will have "control" (as defined in Section
8-106 of the UCC) thereof and will be a "protected purchaser" (as defined in
Section 8-303 of the UCC) of such Security Interests therein.
(g) When UCC financing statements in the form specified in
Exhibit 6(A) to such Lien Grantor's Perfection Certificate shall have been
filed in the offices specified in such Lien Grantor's Perfection
Certificate, the Security Interests will constitute perfected security
interests in the Collateral (except Inventory in transit and Intellectual
Property) owned by such Lien Grantor to the extent that a security interest
therein may be perfected by filing pursuant to the UCC, prior to all Liens
and rights of others therein except Permitted Liens. When, in addition to
the filing of such UCC financing statements, the applicable Intellectual
Property Filings have been made with respect to such Lien Grantor's
Intellectual Property (including any future filings required pursuant to
Section 5(c) and 5(d), the Security Interests will constitute perfected
security interests in all right, title and interest of such Lien Grantor in
its Intellectual Property to the extent that security interests therein may
be perfected by such filings, prior to all other Liens and rights of others
therein except Permitted Liens. Except for the filing of such UCC
financing statements and such Intellectual Property Filings, no
registration, recordation or filing with any governmental body, agency or
official is required in connection with the execution or delivery of the
Collateral Documents or is necessary for the validity or enforceability
thereof or for the perfection or due recordation of the Security Interests
or for the enforcement of the Security Interests.
10
<PAGE>
(h) Such Lien Grantor's Collateral is insured in accordance
with the requirements of the Credit Agreement.
(i) All Inventory has or will have been produced in
compliance with the applicable requirements of the Fair Labor Standards
Act, as amended.
Section 3. The Security Interests.
(a) In order to secure the full and punctual payment of its
Secured Obligations in accordance with the terms thereof, each Lien Grantor
hereby grants to the Administrative Agent for the benefit of the Secured
Parties a continuing security interest in and to all of the following
property of such Lien Grantor, whether now owned or existing or hereafter
acquired or arising and regardless of where located:
(i) all Accounts;
(ii) all Documents;
(iii) all Equipment;
(iv) all General Intangibles, except to the extent that, in
the case of contract rights, a grant of such a security interest would cause
the applicable contract to be void or voidable or would constitute a default
under such contract;
(v) all Instruments;
(vi) all Inventory;
(vii) (x) all Equity Interests in any U.S. Person now owned or
hereafter beneficially owned by such Lien Grantor, (y) the lesser of all
voting Equity Interests in any Foreign Person now owned or hereafter
beneficially acquired by such Lien Grantor and 65% of all voting Equity
Interests in such Foreign Person held by any Person and (z) all non-voting
Equity Interests in any Foreign Person now owned or hereafter beneficially
acquired by such Lien Grantor and, in each case, all rights and privileges of
such Lien Grantor with respect to such Equity Interests, and all dividends,
distributions and other payments with respect thereto;
11
<PAGE>
(viii) all Other Investment Property;
(ix) the Insurance Account, all cash deposited in either of
the foregoing from time to time and the Temporary Cash Investments therein
from time to time;
(x) all books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other computer
materials and records) of such Lien Grantor pertaining to any of its
Collateral; and
(xi) all Proceeds of the collateral described in the
foregoing clauses(i) through (x).
(b) The Security Interests are granted as security only and
shall not subject the Administrative Agent or any other Secured Party to,
or transfer or in any way affect or modify, any obligation or liability of
any Lien Grantor with respect to any of the Collateral or any transaction
in connection therewith.
Section 4. Delivery of Certain Collateral. (a) On the
Closing Date, each Original Lien Grantor is delivering to the Administrative
Agent as Collateral hereunder (i) with respect to each U.S. Person, all stock
certificates or other certificates representing Equity Interests in such U.S.
Person then owned by such Original Lien Grantor, (ii) with respect to each
Foreign Person, stock certificates or other certificates representing (A) the
lesser of (1) all voting Equity Interests in such Foreign Person then owned by
such Original Lien Grantor and (2) 65% of all voting Equity Interests in such
Foreign Person and (B) all non-voting equity Interests in such Foreign Person
then owed by such Original Lien Grantor and (iii) all Instruments and all
certificates evidencing Other Pledged Securities then owned by such Person.
(b) On the date it signs and delivers its Security Agreement
Supplement, each Lien Grantor (other than an Original Lien Grantor) will
deliver to the Administrative Agent as Collateral hereunder (i) with respect to
each U.S. Person, all stock certificates or other certificates representing
Equity Interests in such U.S. Person then owned by it, (ii) with respect to
each Foreign Person stock certificates or other certificates representing (A)
the lesser of (1) all voting Equity Interests in such Foreign Person then
owned by such Original Lien Grantor and (2) 65% of all voting Equity Interests
in such Foreign Person and (B) all non-voting equity Interests in such Foreign
Person then owed by such Original Lien Grantor and (iii) all Instruments and
all certificates evidencing Other Pledged Securities then owned by such
Person.
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(c) After the Closing Date (in the case of an Original Lien
Grantor) or the date of its Security Agreement Supplement (in the case of any
other Lien Grantor), if any Lien Grantor receives (i) any stock certificate or
other certificate representing Equity Interests in another Person then owned
by it (provided that no Lien Grantor shall be required to pledge more than 65%
of the voting Equity Interests in any Foreign Person), (ii) any certificate
representing any Other Pledged Securities then owned by it or (iii) any
Instrument, in which a security interest is granted pursuant to Section 3
hereof or pursuant to the Security Agreement Supplement signed by it, such Lien
Grantor will immediately deliver such certificate or Instrument to the
Administrative Agent to be held by it as Collateral hereunder.
(d) Notwithstanding the foregoing, so long as no Event of
Default shall have occurred and be continuing, each Lien Grantor may retain
for collection in the ordinary course any Instruments received by it in the
ordinary course of business, and the Administrative Agent shall, promptly
upon request by such Lien Grantor, make appropriate arrangements for making
any other Instrument pledged by such Lien Grantor hereunder available to it
for purposes of presentation, collection or renewal (any such arrangement
to be effected, to the extent deemed appropriate by the Administrative
Agent, against trust receipt or like document).
(e) All Pledged Certificates delivered to the
Administrative Agent hereunder will be delivered in suitable form for
transfer by delivery, or accompanied by duly executed instruments of
transfer or assignment in blank and accompanied by any required transfer
tax stamps, all in form and substance satisfactory to the Administrative
Agent. All Pledged Instruments delivered to the Administrative Agent
hereunder will be endorsed to the order of the Administrative Agent and
accompanied by any required transfer tax stamps, all in form and substance
satisfactory to the Administrative Agent.
Section 5. Further Assurances; Covenants. Each Lien Grantor
covenants as follows:
(a) It will not change its name, identity or corporate
structure in any manner unless such Lien Grantor shall have given the
Administrative Agent prior notice thereof and delivered an Opinion of
Counsel with respect thereto in accordance with Section 5(e).
(b) It will not change the location of (i) its chief
executive office or chief place of business or (ii) the locations where it
keeps or holds any Collateral or any records relating thereto from the
applicable locations described in its Perfection Certificate (other than
with respect to Inventory in transit from one such location to another such
location), unless such Lien Grantor shall have given the Administrative
Agent prior notice thereof and delivered an Opinion of Counsel with respect
thereto in accordance with Section 5(e). It will not in any event change
the location of any Collateral owned by it if such change would cause the
Security Interests in such Collateral to lapse or cease to be perfected.
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(c) It will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including, without
limitation, any filings of financing or continuation statements under the
UCC and any Intellectual Property Filings) that from time to time may be
necessary or desirable, or that the Administrative Agent may reasonably
request, in order to create, preserve, perfect, confirm or validate the
Security Interests in such Lien Grantor's Collateral or to enable the
Administrative Agent and the other Secured Parties to obtain the full
benefits of the Collateral Documents, or to enable the Administrative Agent
to exercise and enforce any of its rights, powers and remedies thereunder
with respect to any of such Lien Grantor's Collateral. To the extent
permitted by applicable law, such Lien Grantor authorizes the
Administrative Agent to execute and file such financing statements or
continuation statements without such Lien Grantor's signature appearing
thereon. Such Lien Grantor agrees that a carbon, photographic, photostatic
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement. Such Lien Grantor shall pay the costs
of, or incidental to, any recording or filing of any such financing or
continuation statements in which it is named as the debtor. Such Lien
Grantor hereby constitutes the Administrative Agent its attorney-in-fact to
execute and file all Intellectual Property Filings required or so requested
for the foregoing purposes, all acts of such attorney being hereby ratified
and confirmed; and such power, being coupled with an interest, shall be
irrevocable until such Lien Grantor's Collateral is released pursuant to
Section 16.
(d) On the Closing Date (in the case of an Original Lien
Grantor) or the date of its Security Agreement Supplement (in the case of
any other Lien Grantor), it will sign and deliver to the Administrative
Agent Intellectual Property Security Agreements with respect to all
Intellectual Property owned by it on such date. Within 30 days of each
March 31 and September 30 thereafter, it will sign and deliver to the
Administrative Agent Intellectual Property Security Agreements with respect
to all Intellectual Property owned by it on such March 31 or September 30
that is not covered by Intellectual Property Security Agreements previously
so signed and delivered by it. In each case, it will make all Intellectual
Property Filings necessary to record the Security Interests in such
Intellectual Property.
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(e) At least 30 days before it takes any action
contemplated by Section 5(a) or 5(b), such Lien Grantor will, at its
expense, cause to be delivered to the Administrative Agent an Opinion of
Counsel, in form and substance satisfactory to the Administrative Agent, to
the effect that all financing statements and amendments or supplements
thereto, continuation statements and other documents required to be
recorded or filed in order to perfect the Security Interests against all
creditors of and purchasers from such Lien Grantor (except any continuation
statements specified in such Opinion of Counsel that are to be filed more
than six months after the date thereof) have been filed in each filing
office necessary for such purpose and that all filing fees and taxes, if
any, payable in connection with such filings have been paid in full.
(f) If any of its Collateral is at any time in the
possession or control of any warehouseman, bailee or agent, such Lien
Grantor will notify such warehouseman, bailee or agent of the Security
Interests and instruct it to hold all such Collateral for the
Administrative Agent's account subject to the Administrative Agent's
instructions (which shall permit such Collateral to be removed by such Lien
Grantor in the ordinary course of business until the Administrative Agent
notifies such warehouseman, bailee or agent of the occurrence of an Event
of Default).
(g) It shall keep full and accurate books and records
relating to its Collateral, and stamp or otherwise mark such books and
records in such manner as the Administrative Agent may reasonably request
in order to reflect the Security Interests.
(h) It shall use commercially reasonable efforts, in
accordance with its regular business practices, to cause to be collected
from its account debtors, as and when due, any and all amounts owing under
or on account of each of its Accounts (including, without limitation,
Accounts which are delinquent, such Accounts to be collected in accordance
with lawful collection procedures) and shall apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of
such Accounts. Subject to the rights of the Administrative Agent and the
other Secured Parties hereunder if an Event of Default shall have occurred
and be continuing, such Lien Grantor may allow in the ordinary course of
business as adjustments to amounts owing under its Accounts (i) an
extension or renewal of the time or times of payment, or settlement for
less than the total unpaid balance, which such Lien Grantor finds
appropriate in accordance with sound business judgment and (ii) refunds or
credits, all in accordance with such Lien Grantor's ordinary course of
business consistent with its historical collection practices. The costs
and expenses (including, without limitation, attorney's fees) of
collection, whether incurred by such Lien Grantor or the Administrative
Agent, shall be borne by such Lien Grantor.
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(i) If an Event of Default shall have occurred and be
continuing, such Lien Grantor will, if requested to do so by the
Administrative Agent, promptly notify (and such Lien Grantor hereby
authorizes the Administrative Agent so to notify) each account debtor in
respect of any of its Accounts or Instruments that such Collateral has been
assigned to the Administrative Agent hereunder, and that any payments due
or to become due in respect of such Collateral are to be made directly to
the Administrative Agent or its designee.
(j) Such Lien Grantor will not sell, lease, exchange,
assign or otherwise dispose of, or grant any option with respect to, any of
its Collateral; provided that, unless an Event of Default shall have
occurred and be continuing, (i) such Lien Grantor may sell, lease or
otherwise dispose of its Inventory and obsolete, worn out or unnecessary
Equipment in the ordinary course of business and (ii) such Lien Grantor may
sell any of its other Collateral if (x) the sale thereof does not violate
any covenant in the Credit Agreement and (y) in the case of an Asset Sale,
the Net Cash Proceeds thereof are applied as provided in Section 2.13 of
the Credit Agreement. Concurrently with any sale or exchange permitted by
the foregoing proviso, the Security Interests in the assets sold or
exchanged (but not in any Proceeds arising from such sale or exchange)
shall cease immediately without any further action on the part of the
Administrative Agent or any other Secured Party.
(k) Such Lien Grantor will, promptly upon request, provide
to the Administrative Agent all information and evidence it may reasonably
request concerning its Collateral to enable the Administrative Agent to
enforce the provisions of the Collateral Documents.
(l) From time to time upon request by the Administrative
Agent, such Lien Grantor shall, at its expense, cause to be delivered to
the Secured Parties an Opinion of Counsel satisfactory to the
Administrative Agent as to such matters relating to the transactions
contemplated hereby as the Required Lenders may reasonably request.
(m) Unless the Term Loans are repaid in full on or prior to
the Assessment Date, such Lien Grantor shall, at its expense, on the
Assessment Date (or, if later, the date of such Lien Grantor's Security
Agreement Supplement) and on each date on which an Equity Interest in a
Foreign Person is pledged hereunder, cause to be delivered to the Secured
Parties an Opinion of Counsel (from the jurisdiction in which such Foreign
Person is organized) satisfactory to the Administrative Agent as to the
perfection of the Security Interests therein.
(n) (i) Such Lien Grantor shall notify the Administrative
Agent promptly if it has actual knowledge that any application or
registration relating to any material Intellectual Property owned or
licensed by it is reasonably likely to become abandoned or dedicated to the
public, or of any materially adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States
Copyright Office, the United States Patent and Trademark Office or any
court) regarding such Lien Grantor's ownership of such material
Intellectual Property, its right to register or patent the same, or its
right to keep and maintain the same and (ii) if such Lien Grantor has
actual knowledge that any of such Lien Grantor's rights to any material
Intellectual Property are infringed, misappropriated or diluted by a third
party, such Lien Grantor shall notify the Administrative Agent within 30
days after it learns thereof and shall, unless such Lien Grantor shall
reasonably determine that any such action would be of negligible value,
economic or otherwise, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as such Lien
Grantor shall reasonably deem appropriate under the circumstances to
protect such Intellectual Property.
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(o) Such Lien Grantor shall, (i) on or prior to the date of
the first Borrowing, in the case of Equipment now owned and (ii) within 10
days of acquiring any other Equipment, deliver to the Administrative Agent
any and all certificates of title, applications for title or similar
evidence of ownership of such Equipment and shall cause the Administrative
Agent to be named as lienholder on any such certificate of title or other
evidence of ownership. Such Lien Grantor shall promptly inform the
Administrative Agent of any additions to or deletions from the Equipment
and shall not permit any such items to become a fixture to real estate or
an accession to other personal property.
(p) There is hereby established with the Administrative
Agent a cash collateral account (the "Insurance Account") in the name and
under the control of the Administrative Agent into which there shall be
deposited any amounts required to be paid to the Administrative Agent
pursuant to Section 5.03(d) of the Credit Agreement. Any income received
by the Administrative Agent with respect to the balance from time to time
standing to the credit of the Collateral Account, including any interest or
capital gains on Temporary Cash Investments, shall remain, or be deposited,
in the Insurance Account. All right, title and interest in and to the cash
amounts on deposit from time to time in the Insurance Account, together
with any Temporary Cash Investments from time to time made pursuant to
Section 5(s) hereof shall vest in the Agent, shall constitute part of the
Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied thereto as hereinafter provided.
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(q) The Agent shall apply to repayment of the Term Loans those
amounts on deposit in the Insurance Account which are required to be applied
to the repayment of the Term Loans in accordance with Section 2.04(c)(i) of
the Credit Agreement.
(r) Except upon the occurrence and continuation of an Event of
Default, the Administrative Agent agrees to distribute such amounts to the
Borrower at such times and in such amounts as the Borrower shall request for
the purpose of repairing, reconstructing or replacing the property in respect
of which such Major Casualty Proceeds were received. Any such request shall
be accompanied by a certificate of the chief financial officer or treasurer of
the Borrower setting forth in detail reasonably satisfactory to the
Administrative Agent the repair, reconstruction or replacement for which such
funds will be expended and distributions shall be requested by the Borrower
only when and as needed to the pay the costs of such repair, reconstruction or
replacement. If immediately available cash on deposit in the Insurance
Account is not sufficient to make any distribution to the Borrower referred to
in the previous sentence of this paragraph, the Administrative Agent shall
cause to be liquidated as promptly as practicable such Temporary Cash
Investments in the Insurance Account designated by the Borrower as required to
obtain sufficient cash to make such distribution and, notwithstanding any
other provision of this paragraph, such distribution shall not be made until
such liquidation has taken place. Upon the occurrence and continuation of an
Event of Default, the Agent shall, if so instructed by the Required Lenders,
apply or cause to be applied (subject to collection) any or all of the balance
from time to time standing to the credit of the Insurance Account in the
manner specified in Section 12.
(s) Amounts on deposit in the Insurance Account shall be
invested and re-invested from time to time in such Temporary Cash
Investments as the Borrower shall determine, which Temporary Cash
Investments shall be held in the name and be under the control of the
Administrative Agent; provided that, if an Event of Default has occurred
and is continuing, the Administrative Agent shall, if instructed by the
Required Lenders, cause such Temporary Cash Investments to be liquidated
and apply or cause to be applied the proceeds thereof to the payment of the
Secured Obligations in the manner specified in Section 12.
Section 6. Record Ownership of Pledged Equity Securities. The
Administrative Agent may at any time or from time to time, in its sole
discretion cause the Pledged Equity Interests (or any portion thereof) to be
transferred of record into the name of the Administrative Agent or its
nominee. Each Lien Grantor will promptly give to the Administrative Agent
copies of any notices and other communications received by it with respect to
Pledged Equity Interests registered in its name, and the Administrative Agent
will promptly give to such Lien Grantor copies of any notices and other
communications received by the Administrative Agent with respect to such Lien
Grantor's Pledged Equity Interests registered in the name of the
Administrative Agent or its nominee.
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Section 7. Right to Vote Pledged Equity Interests. (a) Unless
an Event of Default shall have occurred and be continuing, each Lien Grantor
shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Equity Interests owned by
it, and the Administrative Agent shall, upon receiving a written request from
such Lien Grantor, deliver to such Lien Grantor or as specified in such request
such proxies, powers of attorney, consents, ratifications and waivers in
respect of any of such Pledged Equity Interests which are registered in the
name of the Administrative Agent or its nominee as shall be specified in such
request and be in form and substance satisfactory to the Administrative Agent.
Unless an Event of Default shall have occurred and be continuing, the
Administrative Agent shall have no right to take any action which the owner of
a Pledged Partnership Interest or Pledged LLC Interest is entitled to take
with respect thereto, except the right to receive and retain payments and
other distributions to the extent provided in Section 8.
(b) If an Event of Default shall have occurred and be
continuing, the Administrative Agent shall have the right to the extent
permitted by law (and, in the case of a Pledged Partnership Interest or
Pledged LLC Interest, by the relevant partnership agreement, limited
liability company agreement, operating agreement or other governing
document) and each Lien Grantor shall take all such action as may be
necessary or appropriate to give effect to such right, to vote and to give
consents, ratifications and waivers, and take any other action with respect
to any or all of the Pledged Equity Interests with the same force and
effect as if the Administrative Agent were the absolute and sole owner
thereof.
Section 8. Right to Receive Distributions on Collateral.
Subject to Section 16, the Administrative Agent shall have the right to
receive and to retain as Collateral hereunder all dividends, interest and
other payments and distributions made upon or with respect to the Pledged
Equity Interests and the Other Investment Property and each Lien Grantor shall
take all such action as the Administrative Agent may deem necessary or
appropriate to give effect to such right; provided that, unless an Event of
Default shall have occurred and be continuing, this sentence shall not apply
to dividends, interest and other payments and distributions made in cash or
cash equivalents ("Cash Distributions"). All such dividends, interest and
other payments and distributions which are received by any Lien Grantor
(except Cash Distributions received when no Event of Default shall have
occurred and be continuing) shall be received in trust for the benefit of the
Secured Parties and shall be segregated from other assets of such Lien Grantor
and shall, promptly upon such Lien Grantor's receipt thereof, be delivered or
paid over to the Administrative Agent in the same form as received (with any
necessary endorsements or executed assignments in blank), together with a
statement identifying the source of such Collateral and stating that it is
being delivered to the Administrative Agent to be held as Collateral under
this Agreement.
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Section 9. General Authority. Each Lien Grantor hereby
irrevocably appoints the Administrative Agent its true and lawful attorney,
with full power of substitution, in the name of such Lien Grantor, any Secured
Party or otherwise, for the sole use and benefit of the Secured Parties, but at
the expense of such Lien Grantor, to the extent permitted by law to exercise,
at any time and from time to time while an Event of Default shall have
occurred and be continuing, all or any of the following powers with respect to
all or any of such Lien Grantor's Collateral:
(i) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due upon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as if the
Administrative Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Administrative Agent shall give such Lien Grantor not
less than ten days' prior written notice of the time and place of any sale
or other intended disposition of any Collateral owned by such Lien Grantor,
except any such Collateral which threatens to decline speedily in value or
is of a type customarily sold on a recognized market. The Administrative
Agent and each Lien Grantor agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
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Section 10. Remedies upon Event of Default. (a) If an Event of
Default shall have occurred and be continuing, the Administrative Agent may
exercise on behalf of the Secured Parties all the rights of a secured party
under the UCC (whether or not in effect in the jurisdiction where such rights
are exercised) with respect to any Collateral and, in addition, the
Administrative Agent may, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of law, apply
cash, if any, then held by it as Collateral as specified in Section 12 and, if
there shall be no such cash or if such cash shall be insufficient to pay all
the Secured Obligations in full, sell the Collateral or any part thereof at
public or private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery, and at such price or prices as
the Administrative Agent may deem satisfactory. Any Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if
the Collateral is of a type customarily sold in a recognized market or is of a
type which is the subject of widely distributed standard price quotations, at
any private sale). The Administrative Agent is authorized, in connection with
any such sale, if it deems it advisable so to do, to restrict the prospective
bidders on or purchasers of any of the securities included in the Collateral
to a limited number of sophisticated investors who will represent and agree
that they are purchasing for their own account for investment and not with a
view to the distribution or sale of any of such securities, to cause to be
placed on any security included in the Collateral a legend to the effect that
such security has not been registered under the Securities Act of 1933 and may
not be disposed of in violation of the provisions of said Act, and to impose
such other limitations or conditions in connection with any such sale as the
Administrative Agent deems necessary or advisable in order to comply with said
Act or any other law. Each Lien Grantor agrees that it will execute and
deliver such documents and take such other action as the Administrative Agent
deems necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Administrative Agent shall have
the right to deliver, assign and transfer to the purchaser thereof the
Collateral so sold. Each purchaser at any such sale shall hold the Collateral
so sold to it absolutely and free from any claim or right of whatsoever kind,
including any equity or right of redemption of any Lien Grantor which may be
waived, and each Lien Grantor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has
or may have under any law now existing or hereafter adopted. Notice of any
such sale shall be given to the relevant Lien Grantor(s) as required by
Section 9 and shall in case of a public sale, state the time and place fixed
for such sale, in case of sale at a broker's board or on a securities
exchange, state the board or exchange at which such sale is to be made and the
day on which the Collateral, or the portion thereof so being sold, will first
be offered for sale at such board or exchange, and in case of a private sale,
state the day after which such sale may be consummated. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Administrative Agent may fix in the notice of such
sale. At any such sale the Collateral may be sold in one lot as an entirety
or in separate parcels, as the Administrative Agent may determine. The
Administrative Agent shall not be obligated to make any such sale pursuant to
any such notice. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such
sale may be made at any time or place to which the same may be so adjourned.
In the case of any sale of all or any part of the Collateral on credit or for
future delivery, the Collateral so sold may be retained by the Administrative
Agent until the selling price is paid by the purchaser thereof, but the
Administrative Agent shall not incur any liability in the case of the failure
of such purchaser to take up and pay for the Collateral so sold and, in the
case of any such failure, such Collateral may again be sold upon like notice.
The Administrative Agent, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
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(b) For the purpose of enforcing any and all rights and
remedies under this Agreement the Administrative Agent may (i) require each
Lien Grantor to, and each Lien Grantor agrees that it will, at its expense
and upon the request of the Administrative Agent, forthwith assemble all or
any part of its Collateral as directed by the Administrative Agent and make
it available at a place designated by the Administrative Agent which is, in
its opinion, reasonably convenient to the Administrative Agent and such
Lien Grantor, whether at the premises of such Lien Grantor or otherwise,
(ii) to the extent permitted by applicable law, enter, with or without
process of law and without breach of the peace, any premises where any of
the Collateral is or may be located, and without charge or liability to it
seize and remove such Collateral from such premises, (iii) have access to
and use such Lien Grantor's books and records relating to its Collateral
and (iv) prior to the disposition of its Collateral, store or transfer it
without charge in or by means of any storage or transportation facility
owned or leased by such Lien Grantor, process, repair or recondition it or
otherwise prepare it for disposition in any manner and to the extent the
Administrative Agent deems appropriate and, in connection with such
preparation and disposition, use without charge any trademark, trade name,
copyright, patent or technical process used by such Lien Grantor. The
Administrative Agent may also render any or all of such Collateral unusable
at such Lien Grantor's premises and may dispose of such Collateral on such
premises without liability for rent or costs.
(c) Without limiting the generality of the foregoing, if an
Event of Default shall have occurred and be continuing,
(i) the Administrative Agent may license, or sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Intellectual Property included in the Collateral
throughout the world for such term or terms, on such conditions and in such
manner as the Administrative Agent shall in its sole discretion determine;
provided that such licenses do not conflict with any existing license a copy
of which has been delivered to the Administrative Agent;
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(ii) the Administrative Agent may (without assuming any
obligations or liability thereunder), at any time and from time to time, in
its sole and reasonable discretion, enforce (and shall have the exclusive
right to enforce) against any licensee or sublicensee all rights and remedies
of any Lien Grantor in, to and under any of its Intellectual Property and take
or refrain from taking any action under any thereof, and each Lien Grantor
hereby releases the Administrative Agent and each of the other Secured Parties
from, and agrees to hold the Administrative Agent and each of the other
Secured Parties free and harmless from and against any claims and expenses
arising out of, any lawful action so taken or omitted to be taken with respect
thereto, except for claims and expenses arising from the Administrative Agent's
or such Secured Party's gross negligence or willful misconduct; and
(iii) upon request by the Administrative Agent (which shall not
be construed as implying any limitation on the rights or powers of the
Administrative Agent), each Lien Grantor will execute and deliver to the
Administrative Agent a power of attorney, in form and substance satisfactory
to the Administrative Agent, for the implementation of any lease, assignment,
license, sublicense, grant of option, sale or other disposition of any
Intellectual Property owned by such Lien Grantor or any action related
thereto. In the event of any such disposition pursuant to this Section,
subject to confidentiality restrictions imposed on such Lien Grantor in any
license or similar agreement, such Lien Grantor shall supply its know-how and
expertise relating to or the products or services made or rendered in
connection with Patents, and its customer lists and other records relating to
such Intellectual Property and to the distribution of said products or
services, to the Administrative Agent.
Section 11. Limitation on Duty of Administrative Agent in
Respect of Collateral. Beyond the exercise of reasonable care in the custody
thereof, the Administrative Agent shall have no duty as to any Collateral in
its possession or control or in the possession or control of any agent or
bailee or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. The Administrative Agent
shall be deemed to have exercised reasonable care in the custody of the
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which it accords its own property, and shall not
be liable or responsible for any loss or damage to any of the Collateral, or
for any diminution in the value thereof, by reason of any act or omission of
any agent or bailee selected by the Administrative Agent in good faith or by
reason of any act or omission by the Administrative Agent pursuant to
instructions from the Required Lenders (including, without limitation, any
voting instruction pursuant to Section 7), except to the extent that such
liability arises from the Administrative Agent's gross negligence or willful
misconduct.
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Section 12. Application of Proceeds. (a) Upon and during the
continuance of an Event of Default the Administrative Agent shall apply any
cash held by it as Collateral and the proceeds of any sale of, or other
realization upon, all or any part of the Collateral:
first, to pay the expenses of such sale or other realization,
including reasonable compensation to agents of and counsel for the
Administrative Agent, and all expenses, liabilities and advances
incurred or made by the Administrative Agent in connection with the
Collateral Documents, and any other amounts then due and payable
to the Administrative Agent pursuant to Section 15 hereof and to
the other Agents pursuant to Section 9.03 of the Credit Agreement;
second, to pay the unpaid principal of the Secured
Obligations ratably (or provide for the payment thereof pursuant
to subsection (b) of this Section), until payment in full of the
principal of all Secured Obligations shall have been made (or so
provided for);
third, to pay all interest (including Post-Petition
Interest) on the Secured Obligations and all letter of credit fees
and commitment fees payable under the Credit Agreement ratably,
until payment in full of all such interest and fees shall have
been made;
fourth, to pay all other Secured Obligations ratably (or
provide for the payment thereof pursuant to subsection (b) of this
Section), until payment in full of all such other Secured
Obligations shall have been made (or so provided for); and
finally, to pay to the relevant Lien Grantor or its
successors or assigns, or as a court of competent jurisdiction may
direct, any surplus then remaining from the proceeds of the
Collateral owned by it;
provided that Collateral owned by a Subsidiary Guarantor and any proceeds
thereof shall be applied pursuant to the foregoing clauses first, second, third
and fourth only to the extent of the Secured Obligations of such Subsidiary
Guarantor and subject to the limitation in Section 9 of the Subsidiary Guaranty
Agreement). The Administrative Agent may make such distributions hereunder in
cash or in kind or, on a ratable basis, in any combination thereof.
24
<PAGE>
(b) If at any time any portion of any monies collected or
received by the Administrative Agent would, but for the provisions of this
subsection (b), be payable pursuant to subsection (a) of this Section in
respect of a Contingent Secured Obligation, the Administrative Agent shall
not apply any monies to pay such Contingent Secured Obligation but (i) in
the case of any Contingent Secured Obligations other than contingent LC
Reimbursement Obligations, shall request the holder thereof, at least three
Domestic Business Days before each proposed distribution hereunder, to
notify the Administrative Agent as to the maximum amount of such Contingent
Secured Obligation if then ascertainable and if the holder of such
Contingent Secured Obligation does not notify the Administrative Agent of
the maximum ascertainable amount thereof at least two Domestic Business
Days before such distribution, such holder shall not be entitled to share
in such distribution. In the case of any holder of Contingent Secured
Obligations consisting of contingent LC Reimbursement Obligations or other
Contingent Secured Obligations as to which the Administrative Agent shall
have received notice from the holder thereof in accordance with the
preceding sentence, the Administrative Agent will allocate to such holder a
portion of the monies to be distributed in such distribution, calculated as
if such Contingent Secured Obligation were outstanding in such maximum
ascertainable amount. However, the Administrative Agent shall not apply
such portion of such monies to pay such Contingent Secured Obligation, but
instead shall hold such monies or invest such monies in Temporary Cash
Investments at the direction of the holder of such Contingent Secured
Obligation. All such monies and Temporary Cash Investments shall
constitute collateral hereunder and shall be subject to the Security
Interests, but shall be subject to distribution in accordance with this
subsection (b) rather than subsection (a) above. The Administrative Agent
shall hold all such monies and all such Temporary Cash Investments and the
net proceeds thereof in trust until such time as all or part of such
Contingent Secured Obligation becomes a Non-Contingent Secured Obligation,
whereupon the Administrative Agent at the request of the relevant Secured
Party shall apply the amount so held in trust to pay such Non-Contingent
Secured Obligation; provided that, if the other Secured Obligations
theretofore paid pursuant to the same clause of subsection (a) (i.e.,
clause second or fourth) were not paid in full, the Administrative Agent
shall apply the amount so held in trust to pay the same percentage of such
Non-Contingent Secured Obligation as the percentage of such other Secured
Obligations theretofore paid pursuant to the same clause of subsection (a).
If (i) the holder of such Contingent Secured Obligation shall advise the
Administrative Agent that no portion thereof remains in the category of a
Contingent Secured Obligation and (ii) the Administrative Agent still holds
any amount held in trust pursuant to this subsection (b) in respect of such
Contingent Secured Obligation (after paying all amounts payable pursuant to
the preceding sentence with respect to any portions thereof that became
Non-Contingent Secured Obligations), such remaining amount shall be applied
by the Administrative Agent in the order of priorities set forth in
subsection (a) of this Section.
25
<PAGE>
(c) All distributions made by the Administrative Agent
pursuant to this Section shall be final (except in the event of manifest
error) and the Administrative Agent shall have no duty to inquire as to the
application by the Secured Parties of any amount distributed to them.
Section 13. Concerning the Administrative Agent. (a) The
provisions of Article 7 of the Credit Agreement shall inure to the benefit of
the Administrative Agent in respect of this Agreement and shall be binding
upon the parties to the Credit Agreement in such respect. In furtherance
and not in derogation of the rights, privileges and immunities of the
Administrative Agent therein set forth:
(b) The Administrative Agent is authorized to take all such
action as is provided to be taken by it as Administrative Agent hereunder
and all other action reasonably incidental thereto. As to any matters not
expressly provided for herein (including, without limitation, the timing
and methods of realization upon the Collateral) the Administrative Agent
shall act or refrain from acting in accordance with written instructions
from the Required Lenders, or in the absence of such instructions, in
accordance with its discretion.
(c) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the validity,
perfection, priority or enforceability of the Security Interests in any of the
Collateral, whether impaired by operation of law or by reason of any action or
omission to act on its part hereunder. The Administrative Agent shall have no
duty to ascertain or inquire as to the performance or observance of any of the
terms of this Agreement by any Lien Grantor.
Section 14. Appointment of Co-Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction, the
Administrative Agent may appoint another bank or trust company or one or more
other persons, either to act as co-agent or co-agents, jointly with the
Administrative Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions of any Collateral Document and may be
specified in the instrument of appointment (which may, in the discretion of the
Administrative Agent, include provisions for the protection of such co-agent or
separate agent similar to the provisions of Section 13).
26
<PAGE>
Section 15. Expenses. In the event that any Lien Grantor
fails to comply with the provisions of any Loan Document, such that the value
of any Collateral or the validity, perfection, rank or value of any Security
Interest is thereby diminished or reasonably likely to be diminished or put at
risk, the Administrative Agent if requested by the Required Lenders may, but
shall not be required to, effect such compliance on behalf of such Lien
Grantor, and the Borrower shall reimburse the Administrative Agent for the
costs thereof on demand. All insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling, maintaining,
and shipping the Collateral, any and all excise, property, sales, and use
taxes imposed by any state, federal, or other local authority on any of the
Collateral, or in respect of periodic appraisals and inspections of the
Collateral to the extent the same may be requested by the Required Lenders
from time to time, or in respect of the sale or other disposition thereof
shall be borne and paid by the Borrower; and if the Borrower fails to pay
promptly any portion thereof when due, the Administrative Agent or any Lender
may, at its option, but shall not be required to, pay the same and charge the
Borrower's account therefor, and the Borrower agreed to reimburse the
Administrative Agent or such Lender therefor on demand. All sums so paid or
incurred by the Administrative Agent or any Lender for any of the foregoing
and any and all other sums for which the Borrower may become liable hereunder
and all costs and expenses (including attorneys' fees, legal expenses and
court costs) reasonably incurred by the Administrative Agent or any Lender in
enforcing or protecting the Security Interests or any of their rights or
remedies under this Agreement, shall, together with interest thereon until
paid at the rate applicable to Base Rate Revolving Loans plus 2%, be
additional Secured Obligations hereunder.
Section 16. Termination of Security Interests; Release of
Collateral. (a) When (i) all the Commitments shall have expired or been
terminated, (ii) all Letters of Credit shall have expired or been canceled or
been secured with cash collateral in an amount and on terms satisfactory to
the relevant LC Issuing Bank and (iii) all outstanding Secured Obligations
shall have been paid in full, the Security Interests shall terminate and all
rights to each item of Collateral shall revert to the Lien Grantor that owns
such item of Collateral.
(b) At any time before the Security Interests terminate
pursuant to subsection (a) of this Section, the Administrative Agent may,
upon the written request of the Borrower, (i) release any of the Collateral
(but not all or substantially all of the Collateral) with the prior written
consent of the Required Lenders or (ii) release all or substantially all of
the Collateral with the prior written consent of all of the Lenders.
(c) Upon any such termination of the Security Interests or
release of Collateral, the Administrative Agent will, at the expense of the
relevant Lien Grantor, execute and deliver to such Lien Grantor such
documents as such Lien Grantor shall reasonably request to evidence the
termination of the Security Interests or the release of such Collateral, as
the case may be.
27
<PAGE>
Section 17. Additional Subsidiary Guarantors. Any Subsidiary
of the Borrower which is not a party hereto may become a party hereto by
executing and delivering to the Administrative Agent a Security Agreement
Supplement, whereupon such Subsidiary shall become a "Subsidiary Guarantor", a
"Lien Grantor" and a party hereto.
Section 18. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party (i) in the
case of any Lien Grantor, to it at the address, telex number or facsimile
number of the Borrower set forth or referred to in or pursuant to Section 9.01
of the Credit Agreement or Section 11 of the Subsidiary Guaranty or (ii) in
the case of any Lender Party, at its address or facsimile number specified in
or pursuant to Section 9.01 of the Credit Agreement. Each such notice, request
or other communication shall be effective in accordance with Section 9.01 of
the Credit Agreement.
Section 19. Waivers, Remedies Not Exclusive. No failure on
the part of the Administrative Agent to exercise, and no delay in exercising
and no course of dealing with respect to, any right or remedy under any
Collateral Document shall operate as a waiver thereof; nor shall any single or
partial exercise by the Administrative Agent of any right or remedy under the
Credit Agreement or any Collateral Document preclude any other or further
exercise thereof or the exercise of any other right or remedy. The rights and
remedies specified in the Collateral Documents and the Credit Agreement are
cumulative and are not exclusive of any other rights or remedies provided by
law.
Section 20. Successors and Assigns. This Agreement is for the
benefit of the Administrative Agent and the Secured Parties and their
respective successors and assigns, and in the event of an assignment of all or
any of the Secured Obligations, the rights of the holder thereof hereunder, to
the extent applicable to the indebtedness so assigned, shall be transferred
with such indebtedness. This Agreement shall be binding on the Lien Grantors
and their respective successors and assigns.
Section 21. Changes in Writing. Neither this Agreement nor any
provision hereof may be amended, waived, discharged or terminated except in
accordance with Section 9.05(b) of the Credit Agreement.
Section 22. New York Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as
otherwise required by mandatory provisions of law and except to the extent
that remedies provided by the laws of any jurisdiction other than the State of
New York are governed by the laws of such jurisdiction.
28
<PAGE>
Section 23. Severability. If any provision of any Collateral
Document is invalid or unenforceable in any jurisdiction, then, to the fullest
extent permitted by law, the other provisions of the Collateral Documents shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Administrative Agent and the Secured Parties in
order to carry out the intentions of the parties thereto as nearly as may be
possible; and the invalidity or unenforceability of any provision thereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
SYBRON CHEMICAL HOLDINGS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Chairman
RUCO POLYMER CORPORATION
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Chairman
RUCO POLYMER COMPANY OF
GEORGIA, LLC
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Chairman
MELLON BANK, N.A., as Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
<PAGE>
EXHIBIT A
to Security Agreement
SECURITY AGREEMENT SUPPLEMENT
SECURITY AGREEMENT SUPPLEMENT dated as of _______, ____,
between [name of Subsidiary Guarantor] (the "New Lien Grantor") and Mellon
Bank, N.A., as Administrative Agent.
WHEREAS, Sybron Chemicals Inc., the Lien Grantors party thereto
and Mellon Bank, N.A., as Administrative Agent, are parties to a Security
Agreement dated as of ________, 1998 (as heretofore amended, supplemented or
otherwise modified, the "Security Agreement");
WHEREAS, terms defined in the Security Agreement (or whose
definitions are incorporated by reference in Section 1 of the Security
Agreement) and not otherwise defined herein have, as used herein, the
respective meanings provided for therein; and
WHEREAS, [name of New Lien Grantor] desires to become a party to
the Security Agreement as an additional Lien Grantor thereunder;
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. (a) In order to secure the
full and punctual payment of the Secured Obligations in accordance with the
terms thereof, the New Lien Grantor grants to the Administrative Agent for
the benefit of the Secured Parties a continuing security interest in all of
the following assets of the New Lien Grantor, whether now owned or existing
or hereafter acquired or arising and regardless of where located (the "New
Collateral"):
(i) all Accounts;
(ii) all Documents;
(iii) all Equipment;
(iv) all General Intangibles, except to the extent that, in
the case of contract rights, a grant of such a security interest would cause
the applicable contract to be void or voidable or would constitute a default
under such contract;
A-1
<PAGE>
(v) all Instruments;
(vi) all Inventory;
(vii) (x) all Equity Interests in any U.S. Person now owned or
hereafter beneficially owned by such Lien Grantor, (y) the lesser of all
voting Equity Interests in any Foreign Person now owned or hereafter
beneficially acquired by such Lien Grantor and 65% of all voting Equity
Interests in such Foreign Person held by any Person and (z) all non-voting
Equity Interests in any Foreign Person now owned or hereafter beneficially
acquired by such Lien Grantor and, in each case, all rights and privileges of
such Lien Grantor with respect to such Equity Interests, and all dividends,
distributions and other payments with respect thereto;
(viii) all Other Investment Property;
(ix) the Insurance Account, all cash deposited in either of
the foregoing from time to time and the Temporary Cash Investments therein
from time to time;
(x) all books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other computer
materials and records) of such Lien Grantor pertaining to any of its
Collateral; and
(xi) all Proceeds of the collateral described in the foregoing
clauses(i) through (x).
(b) The Security Interests are granted as security only and
shall not subject the Administrative Agent or any other Secured Party to, or
transfer or in any way affect or modify, any obligation or liability of any
Lien Grantor with respect to any of the Collateral or any transaction in
connection therewith.
2. Delivery of Collateral. Concurrently with delivering this
Security Agreement Supplement to the Administrative Agent, the New Lien
Grantor is complying with the provisions of Section 4 of the Security
Agreement with respect to all stock certificates and other certificates
representing Equity Interests or Other Pledged Securities (if any) included in
the New Collateral and all Instruments (if any) included in the New
Collateral.
3. Party to Security Agreement. Upon delivery of this
Security Agreement Supplement to the Administrative Agent, the New Lien
Grantor will become a party to the Security Agreement and will thereafter
have all of the rights and obligations of a Lien Grantor thereunder and be
bound by all of the provisions thereof as fully as if the New Lien Grantor
were one of the original parties thereto.
A-2
<PAGE>
4. Representations and Warranties.(1) (a) The New Lien
Grantor is a corporation duly incorporated, validly existing and in good
standing under the laws of [jurisdiction of incorporation].
(b) The New Lien Grantor has delivered a Perfection
Certificate to the Administrative Agent. The information set forth therein
is correct and complete as of the date hereof. Within 60 days of the date
hereof, the Subsidiary Guarantor shall furnish to the Administrative Agent
file search reports from each UCC filing office confirming the filing
information set forth in such Perfection Certificate.
(c) The execution and delivery of this Security Agreement
Supplement by the New Lien Grantor and the performance by it of its
obligations under the Security Agreement as supplemented hereby are within its
corporate or other powers, have been duly authorized by all necessary
corporate or other action, require no action by or in respect of, or filing
with, any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation or
of its articles or certificate of incorporation or by-laws or other
constitutive documents, or of any agreement, judgment, injunction, order,
decree or other instrument binding upon it or result in the creation or
imposition of any Lien (other than the Liens created by the Collateral
Documents) on any of its assets.
(d) The Security Agreement as supplemented hereby
constitutes a valid and binding agreement of the New Lien Grantor,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and
general principles of equity.
(e) Each of the representations and warranties set forth in
Section 2 of the Security Agreement is true and correct as applied to the New
Lien Grantor and the New Collateral.
5. Governing Law. This Security Agreement Supplement shall be
construed in accordance with and governed by the laws of the State of New
York.
- ----------
(1) Modify as needed for any Subsidiary Grantor that is not a corporation.
A-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Security
Agreement Supplement to be duly executed by their respective authorized
officers as of the day and year first above written.
[Name of New Lien Grantor]
By:___________________________
Name:
Title:
MELLON BANK, N.A.,
as Administrative Agent
By:___________________________
Name:
Title:
A-4
<PAGE>
SCHEDULE 1
to Security Agreement
Supplement
EQUITY INTERESTS OWNED BY
NEW LIEN GRANTOR
Number of
State of Percentage Shares or Units
Name Organization Owned (if certificated)
---- ------------ ---------- -----------------
<PAGE>
EXHIBIT B
to Security Agreement
COPYRIGHT SECURITY AGREEMENT
(Copyrights, Copyright Registrations, Copyright
Applications and Copyright Licenses)
WHEREAS, [Name of Lien Grantor], a _____________ corporation(1)
(herein referred to as the "Lien Grantor") owns, or in the case of licenses, is
a party to, the Copyright Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated
as of ________, 1998 (as amended, supplemented or otherwise modified from time
to time, the "Security Agreement") among Sybron Chemicals Inc., the Subsidiary
Guarantors party thereto and Mellon Bank, N.A., as Administrative Agent for
the Secured Parties referred to therein (in such capacity, together with its
successors in such capacity, the "Grantee"), the Lien Grantor has granted to
the Grantee for the benefit of such Secured Parties a continuing security
interest in or other Lien on substantially all the personal property of the
Lien Grantor (except certain excluded property), including all right, title
and interest of the Lien Grantor in, to and under the Copyright Collateral (as
defined below), whether now owned or existing or hereafter acquired or
arising, to secure the Secured Obligations (as defined in the Security
Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Lien Grantor does hereby
grant to the Grantee, to secure the Secured Obligations of the Lien Grantor, a
continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Copyright
Collateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Copyright (as defined in the Security Agreement)
owned by the Lien Grantor, including, without limitation, each Copyright
registration or application therefor referred to in Schedule 1 hereto;
- ----------
(1) Modify as needed for any Lien Grantor that is not a corporation.
B-1
<PAGE>
(ii) each Copyright License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Copyright License identified in Schedule 1 hereto; and
(iii) all proceeds of and revenues from, accounts and general
intangibles arising out of, the foregoing, including, without limitation, all
proceeds of and revenues from any claim by the Lien Grantor against third
parties for past, present or future infringement of any Copyright, including,
without limitation, any Copyright owned by the Lien Grantor referred to in
Schedule 1, and all rights and benefits of the Lien Grantor under any
Copyright License, including, without limitation, any Copyright License
identified in Schedule 1 hereto.
The Lien Grantor hereby irrevocably constitutes and appoints the
Grantee and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as any Event of Default shall have occurred and be
continuing, to take with respect to the Copyright Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Copyright Collateral and to execute any and all documents and instruments
which may be necessary or desirable to carry out the terms of this Copyright
Security Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the
Credit Agreement, the Lien Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the foregoing Copyright
Collateral.
The foregoing security interest is granted in conjunction with
the security interests granted by the Lien Grantor to the Grantee pursuant to
the Security Agreement. The Lien Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Grantee with respect to the security
interest in the Copyright Collateral granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
B-2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Copyright
Security Agreement to be duly executed by its officer thereunto duly
authorized as of the ____ day of _______, ____.
[NAME OF LIEN GRANTOR]
By:_______________________________
Title:
Acknowledged:
MELLON BANK, N.A.,
as Administrative Agent
By:____________________________
Title:
B-3
<PAGE>
STATE OF ____________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County,
in the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument
as such _________________, appeared before me this day in person and
acknowledged that (s)he signed, executed and delivered the said instrument as
her/his own free and voluntary act and as the free and voluntary act of said
Company, for the uses and purposes therein set forth being duly authorized so
to do.
GIVEN under my hand and Notarial Seal this ___ day of
_______________, ____.
[Seal]
________________________________
Signature of notary public
My Commission expires __________
B-4
<PAGE>
Schedule 1
to Copyright
Security Agreement
[NAME OF LIEN GRANTOR]
COPYRIGHT REGISTRATIONS
Registration Registration Expiration
No. Date Title Date
------------ ------------ ------- ----------
COPYRIGHT LICENSES
1
<PAGE>
EXHIBIT C
to Security Agreement
PATENT SECURITY AGREEMENT
(Patents, Patent Applications and Patent Licenses)
WHEREAS, [Name of Lien Grantor], a _____________ corporation(1)
(herein referred to as the "Lien Grantor") owns, or in the case of licenses, is
a party to, the Patent Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated
as of ________, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Sybron Chemicals Inc., the Subsidiary Guarantors
party thereto and Mellon Bank, N.A., as Administrative Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the "Grantee"), the Lien Grantor has granted to the Grantee for
the benefit of such Secured Parties a continuing security interest in or other
Lien on substantially all the personal property of Lien Grantor (except
certain excluded property), including all right, title and interest of the
Lien Grantor in, to and under the Patent Collateral (as defined below),
whether now owned or existing or hereafter acquired or arising, to secure the
Secured Obligations (as defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Lien Grantor does hereby
grant to the Grantee, to secure the Secured Obligations of the Lien Grantor, a
continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Patent Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Patent (as defined in the Security Agreement) owned
by the Lien Grantor, including, without limitation, each Patent referred to in
Schedule 1 hereto;
(ii) each Patent License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Patent License identified in Schedule 1 hereto; and
- ----------
(1) Modify as needed for any Lien Grantor that is not a corporation.
C-1
<PAGE>
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any claim by
the Lien Grantor against third parties for past, present or future
infringement of any Patent owned by the Lien Grantor, including, without
limitation, any Patent referred to in Schedule 1 hereto, and all rights and
benefits of the Lien Grantor under any Patent License, including, without
limitation, any Patent License identified in Schedule 1 hereto.
The Lien Grantor hereby irrevocably constitutes and appoints the
Grantee and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as an Event of Default shall have occurred and be
continuing to take with respect to the Patent Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Patent Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the
Credit Agreement, the Lien Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the Patent Collateral.
The foregoing security interest is granted in conjunction with
the security interests granted by the Lien Grantor to the Grantee pursuant to
the Security Agreement. The Lien Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Grantee with respect to the security
interest in the Patent Collateral granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
C-2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Patent
Security Agreement to be duly executed by its officer thereunto duly
authorized as of the ____ day of ____________, ____.
[NAME OF LIEN GRANTOR]
By:_____________________________
Title:
Acknowledged:
MELLON BANK, N.A.,
as Administrative Agent
By:_________________________
Title:
C-3
<PAGE>
STATE OF __________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County,
in the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument
as such _________________, appeared before me this day in person and
acknowledged that (s)he signed, executed and delivered the said instrument as
her/his own free and voluntary act and as the free and voluntary act of said
Company, for the uses and purposes therein set forth being duly authorized so
to do.
GIVEN under my hand and Notarial Seal this ___ day of
_______________, ____.
[Seal]
- --------------------------------
Signature of notary public
My Commission expires __________
<PAGE>
Schedule 1
to Patent
Security Agreement
[NAME OF LIEN GRANTOR]
PATENTS AND PATENT APPLICATIONS
Issue or Filing
Patent No. or Date or Expected
Country Serial No. Filing Date Inventor Title
- --------- --------------- ------------------ ---------- -------
PATENT LICENSES
Effective Expiration Subject
Country Licensor Licensee Date Date Matter
- -------- --------- --------- ---------- ---------- --------
1
<PAGE>
EXHIBIT D
to Security Agreement
TRADEMARK SECURITY AGREEMENT
(Trademarks, Trademark Registrations, Trademark
Applications and Trademark Licenses)
WHEREAS, [Name of Lien Grantor], a _____________ corporation(1)
(herein referred to as the "Lien Grantor") owns, or in the case of licenses, is
a party to, the Trademark Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated as
of ________, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Sybron Chemicals Inc., the Subsidiary Guarantors
party thereto and Mellon Bank, N.A., as Administrative Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the "Grantee"), the Lien Grantor has granted to the Grantee for
the benefit of such Secured Parties a continuing security interest in or other
Lien on substantially all the personal property (except certain excluded
property) of the Lien Grantor, including all right, title and interest of Lien
Grantor in, to and under the Trademark Collateral (as defined below), whether
now owned or existing or hereafter acquired or arising, to secure the Secured
Obligations (as defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Lien Grantor does hereby
grant to the Grantee, to secure the Secured Obligations of the Lien Grantor, a
continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Trademark
Collateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Trademark (as defined in the Security Agreement)
owned by Lien Grantor, including, without limitation, each Trademark
registration and application referred to in Schedule 1 hereto, and all of the
goodwill of the business connected with the use of, or symbolized by, each
Trademark;
- ----------
(1) Modify as needed for any Lien Grantor that is not a corporation.
D-1
<PAGE>
(ii) each Trademark License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Trademark License identified in Schedule 1 hereto, and all of
the goodwill of the business connected with the use of, or symbolized by, each
Trademark licensed pursuant thereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any claim by
the Lien Grantor against third parties for past, present or future unfair
competition with, or violation of intellectual property rights in connection
with or injury to, or infringement or dilution of, any Trademark owned by the
Lien Grantor, including, without limitation, any Trademark referred to in
Schedule 1 hereto, and all rights and benefits of the Lien Grantor under any
Trademark License, including, without limitation, any Trademark License
identified in Schedule 1 hereto, or for injury to the goodwill associated with
any of the foregoing.
The Lien Grantor hereby irrevocably constitutes and appoints the
Grantee and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as any Event of Default shall have occurred and be
continuing, to take with respect to the Trademark Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Trademark Collateral and to execute any and all documents and instruments
which may be necessary or desirable to carry out the terms of this Trademark
Security Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the
Credit Agreement, the Lien Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the foregoing Trademark
Collateral.
The foregoing security interest is granted in conjunction with the
security interests granted by the Lien Grantor to the Grantee pursuant to the
Security Agreement. The Lien Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Grantee with respect to the security
interest in the Trademark Collateral granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
D-2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark
Security Agreement to be duly executed by its officer thereunto duly
authorized as of the ____ day of __________, ____.
[NAME OF LIEN GRANTOR]
By:_____________________________
Title:
Acknowledged:
MELLON BANK, N.A.
as Administrative Agent
By:_________________________
Title:
D-3
<PAGE>
STATE OF _____________ )
)ss.:
COUNTY OF ___________ )
I, ______________________, a Notary Public in and for said County,
in the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument
as such _________________, appeared before me this day in person and
acknowledged that (s)he signed, executed and delivered the said instrument as
her/his own free and voluntary act and as the free and voluntary act of said
Company, for the uses and purposes therein set forth being duly authorized so
to do.
GIVEN under my hand and Notarial Seal this ___ day of
_______________, ____.
[Seal]
- --------------------------------
Signature of notary public
My Commission expires __________
D-4
<PAGE>
Schedule 1
to Trademark
Security Agreement
[NAME OF LIEN GRANTOR]
U.S. TRADEMARK REGISTRATIONS
- ------------------------------------------------------------------------------
TRADEMARK REG. NO. REG. DATE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
U.S. TRADEMARK APPLICATIONS
- ------------------------------------------------------------------------------
TRADEMARK REG. NO. REG. DATE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
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1
<PAGE>
EXCLUSIVE TRADEMARK LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
- --------------- ------------------- ----------- ---------
2
<PAGE>
TRADEMARK SECURITY AGREEMENT
(Trademarks, Trademark Registrations, Trademark
Applications and Trademark Licenses)
WHEREAS, SYBRON CHEMICALS INC., a Delaware corporation (herein
referred to as the "Lien Grantor") owns, or in the case of licenses, is a
party to, the Trademark Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement date
as of July 31, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Sybron Chemicals Inc., the Subsidiary Guarantors
party thereto and Mellon Bank, N.A., as Administrative Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the "Grantee"), the Lien Grantor has granted to the Grantee for
the benefit of such Secured Parties a continuing security interest in or other
Lien on substantially all the personal property (except certain excluded
property) of the Lien Grantor, including all right, title and interest of Lien
Grantor in, to and under the Trademark Collateral (as defined below), whether
now owned or existing or hereafter acquired or arising, to secure the Secured
Obligations (as defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lien Grantor
does hereby grant to the Grantee, to secure the Secured Obligations of the
Lien Grantor, a continuing security interest in all of the Lien Grantor's
right, title and interest in, to and under the following (all of the
following items or types of property being herein collectively referred to
as the "Trademark Collateral"), whether now owned or existing or hereafter
acquired or arising:
(i) each Trademark (as defined in the Security Agreement)
owned by Lien Grantor, including, without limitation, each Trademark
registration and application referred to in Schedule 1 hereto, and all of the
goodwill of the business connected with the use of, or symbolized by, each
Trademark;
(ii) each Trademark License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Trademark License identified in Schedule 1 hereto, and all
of the goodwill of the business connected with the use of, or symbolized by,
each Trademark licensed pursuant thereto; and
<PAGE>
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any claim
by the Lien Grantor against third parties for past, present or future
unfair competition with, or violation of intellectual property rights in
connection with or injury to, or infringement or dilution of, any Trademark
owned by the Lien Grantor, including, without limitation, any Trademark
referred to in Schedule 1 hereto, and all rights and benefits of the Lien
Grantor under any Trademark License, including, without limitation, any
Trademark License identified in Schedule 1 hereto, or for injury to the
goodwill associated with any of the foregoing.
The Lien Grantor hereby irrevocably constitutes and appoints
the Grantee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Lien Grantor or in its name, from time to
time, in the Grantee's discretion, so long as any Event of Default shall
have occurred and be continuing, to take with respect to the Trademark
Collateral any and all appropriate action which the Lien Grantor might take
with respect to the Trademark Collateral and to execute any and all
documents and instruments which may be necessary or desirable to carry out
the terms of this Trademark Security Agreement and to accomplish the
purposes hereof.
Except to the extent permitted in the Security Agreement or
the Credit Agreement, the Lien Grantor agrees not to sell, license,
exchange, assign or otherwise transfer or dispose of, or grant any rights
with respect to, or mortgage or otherwise encumber, any of the foregoing
Trademark Collateral.
The foregoing security interest is granted in conjunction
with the security interests granted by the Lien Grantor to the Grantee
pursuant to the Security Agreement. The Lien Grantor does hereby further
acknowledge and affirm that the rights and remedies of the Grantee with
respect to the security interest in the Trademark Collateral granted hereby
are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set
forth herein.
2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this
Trademark Security Agreement to be duly executed by its officer thereunto
duly authorized as of the 31st day of July, 1998.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
Acknowledged:
MELLON BANK, N.A.
as Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
3
<PAGE>
STATE OF _____________)
) ss.:
COUNTY OF ___________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of SYBRON CHEMICALS INC. (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument
as such _________________, appeared before me this day in person and
acknowledged that (s)he signed, executed and delivered the said instrument as
her/his own free and voluntary act and as the free and voluntary act of said
Company, for the uses and purposes therein set forth being duly authorized so
to do.
GIVEN under my hand and Notarial Seal this ____ day of July, 1998.
[Seal]
- --------------------------------
Signature of notary public
My Commission expires __________
4
<PAGE>
TRADEMARK SECURITY AGREEMENT
(Trademarks, Trademark Registrations, Trademark
Applications and Trademark Licenses)
WHEREAS, RUCO POLYMER CORPORATION, a New York corporation
(herein referred to as the "Lien Grantor") owns, or in the case of
licenses, is a party to, the Trademark Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement
dated as of July 31, 1998 (as such agreement may be amended from time to
time, the "Security Agreement") among Sybron Chemicals Inc., the Subsidiary
Guarantors party thereto and Mellon Bank, N.A., as Administrative Agent for
the Secured Parties referred to therein (in such capacity, together with
its successors in such capacity, the "Grantee"), the Lien Grantor has
granted to the Grantee for the benefit of such Secured Parties a continuing
security interest in or other Lien on substantially all the personal
property (except certain excluded property) of the Lien Grantor, including
all right, title and interest of Lien Grantor in, to and under the
Trademark Collateral (as defined below), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as
defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lien Grantor
does hereby grant to the Grantee, to secure the Secured Obligations of the
Lien Grantor, a continuing security interest in all of the Lien Grantor's
right, title and interest in, to and under the following (all of the
following items or types of property being herein collectively referred to
as the "Trademark Collateral"), whether now owned or existing or hereafter
acquired or arising:
(i) each Trademark (as defined in the Security
Agreement) owned by Lien Grantor, including, without limitation, each
Trademark registration and application referred to in Schedule 1 hereto,
and all of the goodwill of the business connected with the use of, or
symbolized by, each Trademark;
(ii) each Trademark License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Trademark License identified in Schedule 1 hereto, and all
of the goodwill of the business connected with the use of, or symbolized
by, each Trademark licensed pursuant thereto; and
<PAGE>
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any claim
by the Lien Grantor against third parties for past, present or future
unfair competition with, or violation of intellectual property rights in
connection with or injury to, or infringement or dilution of, any Trademark
owned by the Lien Grantor, including, without limitation, any Trademark
referred to in Schedule 1 hereto, and all rights and benefits of the Lien
Grantor under any Trademark License, including, without limitation, any
Trademark License identified in Schedule 1 hereto, or for injury to the
goodwill associated with any of the foregoing.
The Lien Grantor hereby irrevocably constitutes and appoints
the Grantee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Lien Grantor or in its name, from time to
time, in the Grantee's discretion, so long as any Event of Default shall
have occurred and be continuing, to take with respect to the Trademark
Collateral any and all appropriate action which the Lien Grantor might take
with respect to the Trademark Collateral and to execute any and all
documents and instruments which may be necessary or desirable to carry out
the terms of this Trademark Security Agreement and to accomplish the
purposes hereof.
Except to the extent permitted in the Security Agreement or
the Credit Agreement, the Lien Grantor agrees not to sell, license,
exchange, assign or otherwise transfer or dispose of, or grant any rights
with respect to, or mortgage or otherwise encumber, any of the foregoing
Trademark Collateral.
The foregoing security interest is granted in conjunction
with the security interests granted by the Lien Grantor to the Grantee
pursuant to the Security Agreement. The Lien Grantor does hereby further
acknowledge and affirm that the rights and remedies of the Grantee with
respect to the security interest in the Trademark Collateral granted hereby
are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set
forth herein.
2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark
Security Agreement to be duly executed by its officer thereunto duly
authorized as of the 31st day of July, 1998.
RUCO POLYMER CORPORATION
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
Acknowledged:
MELLON BANK, N.A.
as Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
3
<PAGE>
STATE OF _____________ )
) ss.:
COUNTY OF ___________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of RUCO POLYMER CORPORATION (the "Company"), personally known
to me to be the same person whose name is subscribed to the foregoing
instrument as such _________________, appeared before me this day in person
and acknowledged that (s)he signed, executed and delivered the said instrument
as her/his own free and voluntary act and as the free and voluntary act of
said Company, for the uses and purposes therein set forth being duly authorized
so to do.
GIVEN under my hand and Notarial Seal this ___ day of July, 1998.
[Seal]
________________________________
Signature of notary public
My Commission expires __________
4
<PAGE>
TRADEMARK SECURITY AGREEMENT
(Trademarks, Trademark Registrations, Trademark
Applications and Trademark Licenses)
WHEREAS, RUCO POLYMER COMPANY OF GEORGIA, LLC, a Delaware
corporation (herein referred to as the "Lien Grantor") owns, or in the case
of licenses, is a party to, the Trademark Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement
dated as of July 31, 1998 (as such agreement may be amended from time to
time, the "Security Agreement") among Sybron Chemicals Inc., the Subsidiary
Guarantors party thereto and Mellon Bank, N.A., as Administrative Agent for
the Secured Parties referred to therein (in such capacity, together with
its successors in such capacity, the "Grantee"), the Lien Grantor has
granted to the Grantee for the benefit of such Secured Parties a continuing
security interest in or other Lien on substantially all the personal
property (except certain excluded property) of the Lien Grantor, including
all right, title and interest of Lien Grantor in, to and under the
Trademark Collateral (as defined below), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as
defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lien Grantor
does hereby grant to the Grantee, to secure the Secured Obligations of the
Lien Grantor, a continuing security interest in all of the Lien Grantor's
right, title and interest in, to and under the following (all of the
following items or types of property being herein collectively referred to
as the "Trademark Collateral"), whether now owned or existing or hereafter
acquired or arising:
(i) each Trademark (as defined in the Security Agreement)
owned by Lien Grantor, including, without limitation, each Trademark
registration and application referred to in Schedule 1 hereto, and all of the
goodwill of the business connected with the use of, or symbolized by, each
Trademark;
(ii) each Trademark License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Trademark License identified in Schedule 1 hereto, and all
of the goodwill of the business connected with the use of, or symbolized by,
each Trademark licensed pursuant thereto; and
<PAGE>
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any claim
by the Lien Grantor against third parties for past, present or future
unfair competition with, or violation of intellectual property rights in
connection with or injury to, or infringement or dilution of, any Trademark
owned by the Lien Grantor, including, without limitation, any Trademark
referred to in Schedule 1 hereto, and all rights and benefits of the Lien
Grantor under any Trademark License, including, without limitation, any
Trademark License identified in Schedule 1 hereto, or for injury to the
goodwill associated with any of the foregoing.
The Lien Grantor hereby irrevocably constitutes and appoints
the Grantee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Lien Grantor or in its name, from time to
time, in the Grantee's discretion, so long as any Event of Default shall
have occurred and be continuing, to take with respect to the Trademark
Collateral any and all appropriate action which the Lien Grantor might take
with respect to the Trademark Collateral and to execute any and all
documents and instruments which may be necessary or desirable to carry out
the terms of this Trademark Security Agreement and to accomplish the
purposes hereof.
Except to the extent permitted in the Security Agreement or
the Credit Agreement, the Lien Grantor agrees not to sell, license,
exchange, assign or otherwise transfer or dispose of, or grant any rights
with respect to, or mortgage or otherwise encumber, any of the foregoing
Trademark Collateral.
The foregoing security interest is granted in conjunction
with the security interests granted by the Lien Grantor to the Grantee
pursuant to the Security Agreement. The Lien Grantor does hereby further
acknowledge and affirm that the rights and remedies of the Grantee with
respect to the security interest in the Trademark Collateral granted hereby
are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set
forth herein.
2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this
Trademark Security Agreement to be duly executed by its officer thereunto
duly authorized as of the 31st day of July, 1998.
RUCO POLYMER COMPANY OF
GEORGIA, LLC
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
Acknowledged:
MELLON BANK, N.A.
as Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
3
<PAGE>
STATE OF _____________ )
) ss.:
COUNTY OF ___________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of RUCO POLYMER COMPANY OF GEORGIA, LLC (the "Company"),
personally known to me to be the same person whose name is subscribed to the
foregoing instrument as such _________________, appeared before me this day in
person and acknowledged that (s)he signed, executed and delivered the said
instrument as her/his own free and voluntary act and as the free and voluntary
act of said Company, for the uses and purposes therein set forth being duly
authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of July, 1998.
[Seal]
- --------------------------------
Signature of notary public
My Commission expires __________
4
<PAGE>
PATENT SECURITY AGREEMENT
(Patents, Patent Applications and Patent Licenses)
WHEREAS, SYBRON CHEMICALS INC., a Delaware corporation (herein
referred to as the "Lien Grantor") owns, or in the case of licenses, is a
party to, the Patent Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated
as of July 31, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Sybron Chemicals Inc., the Subsidiary Guarantors
party thereto and Mellon Bank, N.A., as Administrative Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the "Grantee"), the Lien Grantor has granted to the Grantee for
the benefit of such Secured Parties a continuing security interest in or other
Lien on substantially all the personal property of Lien Grantor (except
certain excluded property), including all right, title and interest of the
Lien Grantor in, to and under the Patent Collateral (as defined below),
whether now owned or existing or hereafter acquired or arising, to secure the
Secured Obligations (as defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lien Grantor
does hereby grant to the Grantee, to secure the Secured Obligations of the
Lien Grantor, a continuing security interest in all of the Lien Grantor's
right, title and interest in, to and under the following (all of the following
items or types of property being herein collectively referred to as the
"Patent Collateral"), whether now owned or existing or hereafter acquired or
arising:
(i) each Patent (as defined in the Security Agreement)
owned by the Lien Grantor, including, without limitation, each Patent referred
to in Schedule 1 hereto;
(ii) each Patent License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Patent License identified in Schedule 1 hereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any claim
by the Lien Grantor against third parties for past, present or future
infringement of any Patent owned by the Lien Grantor, including, without
limitation, any Patent referred to in Schedule 1 hereto, and all rights and
benefits of the Lien Grantor under any Patent License, including, without
limitation, any Patent License identified in Schedule 1 hereto.
<PAGE>
The Lien Grantor hereby irrevocably constitutes and appoints
the Grantee and any officer or agent thereof, with full power of substitution,
as its true and lawful attorney-in-fact with full power and authority in the
name of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as an Event of Default shall have occurred and be
continuing to take with respect to the Patent Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Patent Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the
Credit Agreement, the Lien Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the Patent Collateral.
The foregoing security interest is granted in conjunction with
the security interests granted by the Lien Grantor to the Grantee pursuant to
the Security Agreement. The Lien Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Grantee with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Patent
Security Agreement to be duly executed by its officer thereunto duly
authorized as of the 31st day of July, 1998.
SYBRON CHEMICALS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
Acknowledged:
MELLON BANK, N.A.
as Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
3
<PAGE>
STATE OF __________ )
) ss.:
COUNTY OF __________)
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of SYBRON CHEMICALS INC. (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument
as such _________________, appeared before me this day in person and
acknowledged that (s)he signed, executed and delivered the said instrument as
her/his own free and voluntary act and as the free and voluntary act of said
Company, for the uses and purposes therein set forth being duly authorized so
to do.
GIVEN under my hand and Notarial Seal this ___ day of July, 1998.
[Seal]
________________________________
Signature of notary public
My Commission expires __________
<PAGE>
PATENT SECURITY AGREEMENT
(Patents, Patent Applications and Patent Licenses)
WHEREAS, RUCO POLYMER CORPORATION, a New York corporation
(herein referred to as the "Lien Grantor") owns, or in the case of licenses,
is a party to, the Patent Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated
as of July 31, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Sybron Chemicals Inc., the Subsidiary Guarantors
party thereto and Mellon Bank, N.A., as Administrative Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the "Grantee"), the Lien Grantor has granted to the Grantee for
the benefit of such Secured Parties a continuing security interest in or other
Lien on substantially all the personal property of Lien Grantor (except
certain excluded property), including all right, title and interest of the
Lien Grantor in, to and under the Patent Collateral (as defined below),
whether now owned or existing or hereafter acquired or arising, to secure the
Secured Obligations (as defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lien Grantor
does hereby grant to the Grantee, to secure the Secured Obligations of the
Lien Grantor, a continuing security interest in all of the Lien Grantor's
right, title and interest in, to and under the following (all of the following
items or types of property being herein collectively referred to as the
"Patent Collateral"), whether now owned or existing or hereafter acquired or
arising:
(i) each Patent (as defined in the Security Agreement)
owned by the Lien Grantor, including, without limitation, each Patent referred
to in Schedule 1 hereto;
(ii) each Patent License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Patent License identified in Schedule 1 hereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any claim
by the Lien Grantor against third parties for past, present or future
infringement of any Patent owned by the Lien Grantor, including, without
limitation, any Patent referred to in Schedule 1 hereto, and all rights and
benefits of the Lien Grantor under any Patent License, including, without
limitation, any Patent License identified in Schedule 1 hereto.
<PAGE>
The Lien Grantor hereby irrevocably constitutes and appoints
the Grantee and any officer or agent thereof, with full power of substitution,
as its true and lawful attorney-in-fact with full power and authority in the
name of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as an Event of Default shall have occurred and be
continuing to take with respect to the Patent Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Patent Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the
Credit Agreement, the Lien Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the Patent Collateral.
The foregoing security interest is granted in conjunction with
the security interests granted by the Lien Grantor to the Grantee pursuant to
the Security Agreement. The Lien Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Grantee with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Patent
Security Agreement to be duly executed by its officer thereunto duly
authorized as of the 31st day of July, 1998.
RUCO POLYMER CORPORATION
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
Acknowledged:
MELLON BANK, N.A.
as Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
3
<PAGE>
STATE OF __________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of RUCO POLYMER CORPORATION (the "Company"), personally known
to me to be the same person whose name is subscribed to the foregoing
instrument as such _________________, appeared before me this day in person
and acknowledged that (s)he signed, executed and delivered the said instrument
as her/his own free and voluntary act and as the free and voluntary act of
said Company, for the uses and purposes therein set forth being duly authorized
so to do.
GIVEN under my hand and Notarial Seal this ___ day of July, 1998.
[Seal]
- --------------------------------
Signature of notary public
My Commission expires __________
<PAGE>
PATENT SECURITY AGREEMENT
(Patents, Patent Applications and Patent Licenses)
WHEREAS, RUCO POLYMER COMPANY OF GEORGIA, LLC, a Delaware
corporation (herein referred to as the "Lien Grantor") owns, or in the case of
licenses, is a party to, the Patent Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated
as of July 31, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Sybron Chemicals Inc., the Subsidiary Guarantors
party thereto and Mellon Bank, N.A., as Administrative Agent for the Secured
Parties referred to therein (in such capacity, together with its successors in
such capacity, the "Grantee"), the Lien Grantor has granted to the Grantee for
the benefit of such Secured Parties a continuing security interest in or other
Lien on substantially all the personal property of Lien Grantor (except
certain excluded property), including all right, title and interest of the
Lien Grantor in, to and under the Patent Collateral (as defined below),
whether now owned or existing or hereafter acquired or arising, to secure the
Secured Obligations (as defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lien Grantor
does hereby grant to the Grantee, to secure the Secured Obligations of the
Lien Grantor, a continuing security interest in all of the Lien Grantor's
right, title and interest in, to and under the following (all of the following
items or types of property being herein collectively referred to as the
"Patent Collateral"), whether now owned or existing or hereafter acquired or
arising:
(i) each Patent (as defined in the Security Agreement)
owned by the Lien Grantor, including, without limitation, each Patent referred
to in Schedule 1 hereto;
(ii) each Patent License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Patent License identified in Schedule 1 hereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future infringement of any
Patent owned by the Lien Grantor, including, without limitation, any Patent
referred to in Schedule 1 hereto, and all rights and benefits of the Lien
Grantor under any Patent License, including, without limitation, any Patent
License identified in Schedule 1 hereto.
<PAGE>
The Lien Grantor hereby irrevocably constitutes and appoints
the Grantee and any officer or agent thereof, with full power of substitution,
as its true and lawful attorney-in-fact with full power and authority in the
name of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as an Event of Default shall have occurred and be
continuing to take with respect to the Patent Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Patent Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the
Credit Agreement, the Lien Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the Patent Collateral.
The foregoing security interest is granted in conjunction with
the security interests granted by the Lien Grantor to the Grantee pursuant to
the Security Agreement. The Lien Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Grantee with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Patent
Security Agreement to be duly executed by its officer thereunto duly
authorized as of the 31st day of July, 1998.
RUCO POLYMER COMPANY OF
GEORGIA, LLC
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: President
Acknowledged:
MELLON BANK, N.A.
as Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
3
<PAGE>
STATE OF __________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of RUCO POLYMER COMPANY OF GEORGIA, LLC (the "Company"),
personally known to me to be the same person whose name is subscribed to the
foregoing instrument as such _________________, appeared before me this day in
person and acknowledged that (s)he signed, executed and delivered the said
instrument as her/his own free and voluntary act and as the free and voluntary
act of said Company, for the uses and purposes therein set forth being duly
authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of July, 1998.
[Seal]
- --------------------------------
Signature of notary public
My Commission expires __________
<PAGE>
SUBSIDIARY GUARANTY AGREEMENT
Guaranty Agreement dated as of July 31, 1998 (as amended from
time to time, this "Subsidiary Guaranty Agreement") by the undersigned
Subsidiaries (the "Subsidiary Guarantors") of Sybron Chemicals Inc., a
Delaware corporation (the "Borrower"), for the benefit of the Lender Parties
(as defined in the Credit Agreement referred to below).
WHEREAS, the Borrower has entered into a Credit Agreement dated
as of July 31, 1998 among the Borrower, the Lenders, DLJ Capital Funding,
Inc., as Syndication Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and Mellon Bank, N.A., as Administrative Agent, LC
Issuing Bank and Collateral Agent (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"); and
WHEREAS, the Lenders and the LC Issuing Bank are not willing to
make loans or maintain, issue or participate in letters of credit under the
Credit Agreement unless the Borrower causes each of its U.S. Subsidiaries to
guarantee the performance of the Borrower's obligations under the Loan
Documents referred to therein;
NOW, THEREFORE, each Subsidiary Guarantor agrees as follows:
Section 1. Definitions. Terms defined in the Credit Agreement
and not otherwise defined herein have, as used herein, the respective meanings
provided for therein.
Section 2. The Guarantees. Subject to Section 9 hereof, each
Subsidiary Guarantor, jointly and severally, unconditionally and irrevocably
guarantees the full and punctual payment of all present and future indebtedness
and other obligations of the Borrower evidenced by or arising under any Loan
Document as and when the same shall become due and payable, whether at
maturity or by declaration or otherwise, according to the terms hereof and
thereof (including any interest which accrues on any of the foregoing
obligations after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the Borrower,
whether or not allowed or allowable as a claim in any such proceeding). If the
Borrower fails punctually to pay any indebtedness or other obligation
guaranteed hereby, each Subsidiary Guarantor, jointly and severally,
unconditionally agrees to cause such payment to be made punctually as and when
the same shall become due and payable, whether at maturity or by declaration
or otherwise.
<PAGE>
Section 3. Taxes. Each Subsidiary Guarantor agrees to comply
with Section 8.04 of the Credit Agreement as if it were a party thereto and
each reference in such Section to the Borrower was a reference to such
Subsidiary Guarantor.
Section 4. Guarantee Unconditional. Except as provided in
Section 9 hereof, the obligations of each Subsidiary Guarantor under this
Subsidiary Guaranty Agreement shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any other Subsidiary
Guarantor under any Loan Document, by operation of law or otherwise;
(b) any modification, amendment or waiver of or supplement to
any Loan Document;
(c) any release, impairment, non-perfection or invalidity of
any direct or indirect security, or of any guarantee or other liability of any
third party, for any obligation of the Borrower or any Subsidiary Guarantor
under any Loan Document;
(d) any change in the corporate existence, structure or
ownership of the Borrower or any Subsidiary Guarantor, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Borrower
or any other Subsidiary Guarantor or its assets, or any resulting release or
discharge of any obligation of the Borrower or any other Subsidiary Guarantor
contained in any Financing Document;
(e) the existence of any claim, set-off or other rights which
such Subsidiary Guarantor may have at any time against the Borrower or any
other Subsidiary Guarantor, any Lender Party or any other Person, whether
or not arising in connection with this Subsidiary Guaranty Agreement;
provided that nothing herein shall prevent the assertion of any such claim
by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against
the Borrower or any other Subsidiary Guarantor for any reason of any Loan
Document, or any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower or any other Subsidiary Guarantor of any
amount payable by it under any Loan Document; or
2
<PAGE>
(g) any other act or omission to act or delay of any kind by
the Borrower or any Subsidiary Guarantor, any Lender Party or any other Person
or any other circumstance whatsoever that might, but for the provisions of
this Section, constitute a legal or equitable discharge of such Subsidiary
Guarantor's obligations under this Subsidiary Guaranty Agreement.
Section 5. Discharge Only Upon Payment in Full; Reinstatement
in Certain Circumstances. Each Subsidiary Guarantor's obligations under this
Subsidiary Guaranty Agreement constitute a continuing guaranty and shall
remain in full force and effect until the Credit Exposure of each Lender shall
have been reduced to zero and all amounts payable by the Borrower under the
Loan Documents shall have been paid in full. If at any time any amount
payable by the Borrower under any Loan Document is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, each Subsidiary Guarantor's
obligations under this Subsidiary Guaranty Agreement with respect to such
payment shall be reinstated at such time as though such payment had become due
but had not been made at such time.
Section 6. Waiver. Each Subsidiary Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against the Borrower or any other Person or against any
security.
Section 7. Subrogation and Contribution. When any Subsidiary
Guarantor makes any payment hereunder with respect to the obligations of the
Borrower, such Subsidiary Guarantor shall be subrogated to the rights of the
payee against the Borrower with respect to the portion of such obligations paid
by such Subsidiary Guarantor, and shall also have a right of contribution in
respect of such payment against all other Subsidiary Guarantors pro rata among
them based on their respective net fair value as enterprises; provided that
such Subsidiary Guarantor shall not enforce any payment by way of subrogation
against the Borrower or contribution against any other Subsidiary Guarantor so
long as any Lender has any Credit Exposure under the Credit Agreement or any
amount payable by the Borrower under any Loan Document remains unpaid.
Section 8. Stay of Acceleration. If acceleration of the time
for payment of any amount payable by the Borrower under any Loan Document is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of such Loan
Document shall nonetheless be payable by each Subsidiary Guarantor hereunder
forthwith on demand by the Administrative Agent made at the request of the
requisite number of Lenders specified in Article 6 of the Credit Agreement.
3
<PAGE>
Section 9. Limit of Liability. The Subsidiary Guarantors and
the beneficiaries of this Subsidiary Guaranty Agreement intend that this
Subsidiary Guaranty Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If and to the extent that the obligations of any
Subsidiary Guarantor under this Subsidiary Guaranty Agreement would, in the
absence of this sentence, be adjudicated to be invalid or unenforceable
because of any applicable state or federal law relating to fraudulent
conveyances or transfers, then the amount of such Subsidiary Guarantor's
liability hereunder in respect of the obligations of the Borrower guaranteed
hereunder shall be deemed to be reduced ab initio to the maximum amount which
would be permitted without causing such Subsidiary Guarantor's obligations
hereunder to be so invalidated.
Section 10. Additional Subsidiary Guarantors. Any Subsidiary
which is not a Subsidiary Guarantor may execute and deliver to the
Administrative Agent a letter substantially in the form of Exhibit A hereto,
whereupon such Subsidiary shall be both a Subsidiary Guarantor and an Obligor
for all purposes of the Loan Documents.
Section 11. Notices. Notices and other communications
hereunder shall be given, and take effect, in the manner specified in or
pursuant to Section 9.01 of the Credit Agreement and (i) in the case of any
Lender Party, shall be given to such Lender Party at the address, telex number
or facsimile number specified for it in or pursuant to such Section and (ii)
in the case of any Subsidiary Guarantor, shall be given to such Subsidiary
Guarantor at the address, telex number or facsimile number specified for the
Borrower in or pursuant to such Section.
Section 12. Governing Law; Submission to Jurisdiction. This
Subsidiary Guaranty Agreement shall be governed by and construed in accordance
with the laws of the State of New York. Each Subsidiary Guarantor hereby
submits to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York and of any New York State court sitting
in New York City for purposes of all legal proceedings arising out of or
relating to the Loan Documents or the transactions contemplated thereby. Each
Subsidiary Guarantor irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
Section 13. Successors and Assigns. This Subsidiary Guaranty
Agreement is for the benefit of the Lender Parties and their respective
successors and assigns. If any Loans, participations in Letters of Credit,
Notes or other amounts payable under the Loan Documents are assigned pursuant
to and in accordance with the terms of Section 9.06 of the Credit Agreement,
the rights hereunder, to the extent applicable to the indebtedness so
assigned, shall be transferred with such indebtedness. All the provisions of
this Subsidiary Guaranty Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
4
<PAGE>
Section 14. No Waiver. No failure or delay by any Lender
Party in exercising any right, power or privilege under any Loan Document shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in the Loan
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 15. Amendments and Waivers. Any provision of this
Subsidiary Guaranty Agreement may be amended, supplemented, modified or waived
as (and only as) provided in Section 9.05(b) of the Credit Agreement.
Section 16. Counterparts and Effectiveness. This Subsidiary
Guaranty Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures hereto and
thereto were upon the same instrument. This Subsidiary Guaranty Agreement
shall become effective as to each Subsidiary Guarantor when the Administrative
Agent shall have received a counterpart hereof signed by such Subsidiary
Guarantor and the Credit Agreement shall have become effective in accordance
with its terms. Thereafter, upon execution and delivery of a letter
substantially in the form of Exhibit A hereto on behalf of any other
Subsidiary, this Subsidiary Guaranty Agreement shall become effective with
respect to such other Subsidiary as of the date of such delivery.
Section 17. WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR,
AND EACH LENDER PARTY, UPON ITS ACCEPTANCE OF THIS SUBSIDIARY GUARANTY
AGREEMENT, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTY
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
EACH SUBSIDIARY GUARANTOR (A) WARRANTS AND REPRESENTS THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY LENDER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH LENDER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES TO THE
LOAN DOCUMENTS HAVE BEEN INDUCED TO ENTER INTO THIS SUBSIDIARY GUARANTY
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY (AMONG OTHER THINGS)
THE WAIVERS, REPRESENTATIONS AND WARRANTIES IN THIS SECTION 16 AND SECTION
9.11 OF THE CREDIT AGREEMENT.
5
<PAGE>
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this
Subsidiary Guaranty Agreement to be duly executed by its authorized officer
as of the day and year first above written.
SYBRON CHEMICAL HOLDINGS INC.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Chairman
RUCO POLYMER CORPORATION
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Chairman
RUCO POLYMER COMPANY OF GEORGIA, LLC
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Chairman
Accepted and Acknowledged:
MELLON BANK, N.A., as
Administrative Agent
By: /s/ Stephen M. Wilus
-----------------------------------
Name: Stephen M. Wilus
Title: Vice President
<PAGE>
EXHIBIT A
to the Subsidiary
Guaranty Agreement
[Date]
Mellon Bank, N.A.,
as Administrative Agent
[Address]
Gentlemen:
Reference is made to the Credit Agreement dated as of
__________, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Sybron Chemicals Inc., the Lenders, DLJ
Capital Funding, Inc., as Syndication Agent, Morgan Guaranty Trust Company, as
Documentation Agent, and Mellon Bank, N.A., as Administrative Agent, LC
Issuing Bank and Collateral Agent, and to the Subsidiary Guaranty Agreement
referred to therein, copies of each of which have been furnished to the
undersigned.
The undersigned hereby agrees and confirms that effective as of
the date hereof, the undersigned is a party to the Subsidiary Guaranty
Agreement and is a "Subsidiary Guarantor" and an "Obligor" for all purposes of
the Loan Documents (as defined in the Credit Agreement).
Very truly yours,
[Name of Subsidiary]
By:__________________________
Name:
Title:
<PAGE>
SUBORDINATION AGREEMENT
AGREEMENT made as of the 31st day of July, 1998 by Sybron
Chemie Nederland B.V., a Dutch corporation (together with and on behalf of its
successors and assigns of the Note referred to below, "Chemie") in favor of
the holders from time to time of the Senior Debt referred to below.
Chemie hereby agrees as follows:
Section 1. Subordination. The indebtedness evidenced by the
Dfl 34,000,000 Demand Note dated December 29, 1997 (the "Note") made by Sybron
Chemicals Inc., a Delaware corporation ("Sybron"), and held by Chemie shall be
subordinated and junior to the extent set forth in the following subsections
(a) to (c), inclusive, to all Senior Debt (as defined in subsection (d)
hereof) of Sybron:
(a) So long as any Senior Debt is outstanding, (i) no
payment on account of principal of or any other amount (other than
interest) payable in respect of the Note shall be made or accepted,
including by right of set-off, and no purchase of the Note directly or
indirectly by Sybron shall be made and (ii) if an Event of Default with
respect to any Senior Debt (as defined therein or in the instrument or
agreement under which the Senior Debt is outstanding) shall have occurred
and be continuing, no payment on account of interest on the Note shall be
made or accepted, including by right of set-off.
(b) In the event of any insolvency, bankruptcy, liquidation
(whether voluntary or involuntary), reorganization or other similar
proceedings, or any receivership proceedings in connection therewith,
relative to Sybron or its property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of Sybron, whether
voluntary or involuntary, or any assignment for the benefit of creditors or
other marshalling of assets or liabilities of Sybron, whether or not
involving insolvency or bankruptcy proceedings, then all Senior Debt shall
first be paid in full in cash or provision for such payment satisfactory to
the holders of the majority in principal amount of the Senior Debt shall be
made, before any payment on account of principal, premium or interest is
made upon the Note.
(c) In any of the proceedings referred to in subsection (b)
above, any payment or distribution of any kind or character, whether in cash,
property, stock or obligations, which may be payable or deliverable in respect
of the Note, or the indebtedness represented thereby, shall be paid or
delivered directly to the holders of Senior Debt or their authorized
representative designated to Sybron in writing, for application in payment
thereof, unless and until the Senior Debt shall have been paid in full in
cash, and Chemie does hereby authorize holders of Senior Debt to prove and
enforce claims comprising the Note, vote claims comprising the Note to accept
or reject any plan for liquidation, reorganization, composition or extension
and accept and receipt for any payment or distribution to such extent and
apply such payment or distribution to the then unpaid Senior Debt and do all
things and to execute all such documents as may be necessary to effectuate the
foregoing; provided, however, that notwithstanding the foregoing, should any
payment or distribution in any such proceeding be received by Chemie before
all Senior Debt is paid in full in cash, such payment or distribution shall be
received in trust and promptly delivered in the form received (duly endorsed,
if appropriate) to the holders of Senior Debt or their representative for
application to the payment of Senior Debt then remaining unpaid.
<PAGE>
(d) "Senior Debt," as used herein, shall mean the principal
of, premium on, and unpaid interest (including any interest accrued after
commencement of any proceeding referred to in subsection (b) above at the rate
provided in any document or instrument creating or evidencing any indebtedness
referred to in this definition) on (i) all amounts payable under or in respect
of the Credit Agreement dated as of July 31, 1998 among Sybron, the Lenders
party thereto, the Issuer referred to therein, the Swingline Bank referred to
therein, DLJ Capital Funding, Inc., as Syndication Agent, Morgan Guaranty
Trust Company of New York, as Documentation Agent, and Mellon Bank, N.A., as
administrative agent, or the Notes referred to therein, whether outstanding on
the date hereof or hereafter created or arising and including all fees and
other amounts related to such obligations and (ii) any modifications,
deferrals, renewals, extensions or increase in the amount of any such
obligations or any obligations issued in exchange, replacement, refunding or
refinancing of or for Senior Debt.
Subject to the prior payment in full of all Senior Debt as
aforesaid, Chemie shall be subrogated pro rata to the rights of the holders of
Senior Debt to receive payments or distributions of any kind or character,
whether in cash, property, stock or obligations, which may be payable or
deliverable to the holders of Senior Debt, until the principal of, and
interest on, the Note shall be paid in full and no such payments or
distributions to the holders of Senior Debt shall, as between Sybron, its
creditors other than the holders of Senior Debt, and Chemie be deemed to be a
payment by Sybron to Chemie of or on account of the Note.
No right of any holder of Senior Debt to enforce the
subordination of the indebtedness evidenced by the Note shall be impaired by
any act or failure to act by Sybron or by the failure of Sybron to comply with
the Note or this Subordination Agreement.
2
<PAGE>
Without limiting the effect of the immediately preceding
paragraph, no holder of Senior Debt need obtain the consent of, or give notice
to, Chemie prior to taking any of the following actions, upon or without any
terms or conditions and in whole or in part, none of which shall impair or
release any of the rights of any such holder of Senior Debt under this
Subordination Agreement:
(i) change the manner, place or terms of payment, and/or
change or extend the time of payment of, renew or alter, any Senior Debt or
any other liability of Sybron to such holder of Senior Debt, any security
therefor, or any liability incurred directly or indirectly in respect thereof,
and the provisions of this Subordination Agreement shall apply to the Senior
Debt of Sybron as so changed, extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, any Senior
Debt or any other liability of Sybron to such holder of Senior Debt or any
other liabilities incurred directly or indirectly in respect thereof or hereof
and/or any offset there against;
(iii) exercise or refrain from exercising any rights and/or
remedies against Sybron or others or otherwise act or refrain from acting or,
for any reason, fail to file, record or otherwise perfect any security
interest in or lien on any property of Sybron or any other person;
(iv) settle or compromise any Senior Debt or any other
liability of Sybron to such holder of Senior Debt or any security therefor, or
any liability incurred directly or indirectly in respect thereof or hereof,
and may subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of Sybron to creditors of Sybron other than
such holder of Senior Debt; and
(v) apply any sums by whomsoever paid and howsoever realized
to any liability or liabilities of Sybron to such holder of Senior Debt
regardless of what liability or liabilities of Sybron to such holder of Senior
Debt remain unpaid.
Section 2. Reliance by Senior Debtholders. Chemie agrees that
the subordination effected hereby is for the benefit of the holders of Senior
Debt from time to time, and that each holder of Senior Debt, whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained herein. The subordination effected hereby shall be
enforceable by each holder of Senior Debt from time to time which holders are
third party beneficiaries of this Subordination Agreement.
3
<PAGE>
Section 3. Further Assurances. Chemie agrees to execute and
deliver any and all papers and documents which may be reasonably necessary to
carry out the terms of this Subordination Agreement.
Section 4. Entire Agreement. This Subordination Agreement
contains the entire agreement among the parties with respect to the subject
matter hereof.
Section 5. Assignment. Chemie agrees that it shall not assign
or otherwise transfer the Note or any rights thereunder without the consent of
the holders of the Senior Debt.
Section 6. Binding Effect. This Subordination Agreement shall
be binding upon Chemie and inure to the benefit of the holder from time to time
of the Senior Debt and their respective successors and assigns. No amendment
of this Subordination Agreement or waiver of any of its provisions shall be
effective without the written consent of each holder of Senior Debt if such
amendment adversely affects any rights of the holders of Senior Debt.
Section 7. Governing Law. The execution, interpretation and
performance of this Subordination Agreement shall be governed by the laws of
the State of New York. Chemie hereby consents to the jurisdiction of any
state or federal court located within the State of New York, waive personal
service of process and assent that service of process may be made by
registered mail to Chemie's address set forth in the Note.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Subordination Agreement as of the date first above written.
SYBRON CHEMIE NEDERLAND B.V.
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Supervisory Director
5
<PAGE>
SUBORDINATION AGREEMENT
AGREEMENT made as of the 31st day of July, 1998 by Sybron
Chemical Industries Nederland BV, a Dutch corporation (together with and on
behalf of its successors and assigns of the Note referred to below,
"Nederland") in favor of the holders from time to time of the Senior Debt
referred to below.
Nederland hereby agrees as follows:
Section 1. Subordination. The indebtedness evidenced by the
$4,000,000 Demand Note dated December 18, 1997 (the "Note") made by Sybron
Chemical Holdings Inc., a Delaware corporation ("Sybron"), and held by
Nederland shall be subordinated and junior to the extent set forth in the
following subsections (a) to (c), inclusive, to all Senior Debt (as defined in
subsection (d) hereof) of Sybron:
(a) So long as any Senior Debt is outstanding, (i) no payment
on account of principal of or any other amount (other than interest) payable
in respect of the Note shall be made or accepted, including by right of
set-off, and no purchase of the Note directly or indirectly by Sybron shall
be made and (ii) if an Event of Default with respect to any Senior Debt (as
defined therein or in the instrument or agreement under which the Senior Debt
is outstanding) shall have occurred and be continuing, no payment on account
of interest on the Note shall be made or accepted, including by right of
set-off.
(b) In the event of any insolvency, bankruptcy, liquidation
(whether voluntary or involuntary), reorganization or other similar
proceedings, or any receivership proceedings in connection therewith, relative
to Sybron or its property, and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of Sybron, whether voluntary or
involuntary, or any assignment for the benefit of creditors or other
marshalling of assets or liabilities of Sybron, whether or not involving
insolvency or bankruptcy proceedings, then all Senior Debt shall first be paid
in full in cash or provision for such payment satisfactory to the holders of
the majority in principal amount of the Senior Debt shall be made, before any
payment on account of principal, premium or interest is made upon the Note.
(c) In any of the proceedings referred to in subsection (b)
above, any payment or distribution of any kind or character, whether in cash,
property, stock or obligations, which may be payable or deliverable in respect
of the Note, or the indebtedness represented thereby, shall be paid or
delivered directly to the holders of Senior Debt or their authorized
representative designated to Sybron in writing, for application in payment
thereof, unless and until the Senior Debt shall have been paid in full in
cash, and Nederland does hereby authorize holders of Senior Debt to prove and
enforce claims comprising the Note, vote claims comprising the Note to accept
or reject any plan for liquidation, reorganization, composition or extension
and accept and receipt for any payment or distribution to such extent and
apply such payment or distribution to the then unpaid Senior Debt and do all
things and to execute all such documents as may be necessary to effectuate the
foregoing; provided, however, that notwithstanding the foregoing, should any
payment or distribution in any such proceeding be received by Nederland before
all Senior Debt is paid in full in cash, such payment or distribution shall be
received in trust and promptly delivered in the form received (duly endorsed,
if appropriate) to the holders of Senior Debt or their representative for
application to the payment of Senior Debt then remaining unpaid.
<PAGE>
(d) "Senior Debt," as used herein, shall mean the principal
of, premium on, and unpaid interest (including any interest accrued after
commencement of any proceeding referred to in subsection (b) above at the rate
provided in any document or instrument creating or evidencing any indebtedness
referred to in this definition) on (i) all amounts payable under or in respect
of the Credit Agreement dated as of July 31, 1998 among Sybron, the Lenders
party thereto, the Issuer referred to therein, the Swingline Bank referred to
therein, DLJ Capital Funding, Inc., as Syndication Agent, Morgan Guaranty
Trust Company of New York, as Documentation Agent, and Mellon Bank, N.A., as
administrative agent, or the Notes referred to therein, whether outstanding on
the date hereof or hereafter created or arising and including all fees and
other amounts related to such obligations and (ii) any modifications,
deferrals, renewals, extensions or increase in the amount of any such
obligations or any obligations issued in exchange, replacement, refunding or
refinancing of or for Senior Debt.
Subject to the prior payment in full of all Senior Debt as
aforesaid, Nederland shall be subrogated pro rata to the rights of the holders
of Senior Debt to receive payments or distributions of any kind or character,
whether in cash, property, stock or obligations, which may be payable or
deliverable to the holders of Senior Debt, until the principal of, and
interest on, the Note shall be paid in full and no such payments or
distributions to the holders of Senior Debt shall, as between Sybron, its
creditors other than the holders of Senior Debt, and Nederland be deemed to be
a payment by Sybron to Nederland of or on account of the Note.
No right of any holder of Senior Debt to enforce the
subordination of the indebtedness evidenced by the Note shall be impaired by
any act or failure to act by Sybron or by the failure of Sybron to comply with
the Note or this Subordination Agreement.
2
<PAGE>
Without limiting the effect of the immediately preceding
paragraph, no holder of Senior Debt need obtain the consent of, or give notice
to, Nederland prior to taking any of the following actions, upon or without
any terms or conditions and in whole or in part, none of which shall impair or
release any of the rights of any such holder of Senior Debt under this
Subordination Agreement:
(i) change the manner, place or terms of payment, and/or
change or extend the time of payment of, renew or alter, any Senior Debt or
any other liability of Sybron to such holder of Senior Debt, any security
therefor, or any liability incurred directly or indirectly in respect thereof,
and the provisions of this Subordination Agreement shall apply to the Senior
Debt of Sybron as so changed, extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, any Senior
Debt or any other liability of Sybron to such holder of Senior Debt or any
other liabilities incurred directly or indirectly in respect thereof or hereof
and/or any offset there against;
(iii) exercise or refrain from exercising any rights and/or
remedies against Sybron or others or otherwise act or refrain from acting or,
for any reason, fail to file, record or otherwise perfect any security
interest in or lien on any property of Sybron or any other person;
(iv) settle or compromise any Senior Debt or any other
liability of Sybron to such holder of Senior Debt or any security therefor, or
any liability incurred directly or indirectly in respect thereof or hereof,
and may subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of Sybron to creditors of Sybron other than
such holder of Senior Debt; and
(v) apply any sums by whomsoever paid and howsoever realized
to any liability or liabilities of Sybron to such holder of Senior Debt
regardless of what liability or liabilities of Sybron to such holder of Senior
Debt remain unpaid.
Section 2. Reliance by Senior Debtholders. Nederland agrees
that the subordination effected hereby is for the benefit of the holders of
Senior Debt from time to time, and that each holder of Senior Debt, whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained herein. The subordination effected hereby shall be
enforceable by each holder of Senior Debt from time to time which holders are
third party beneficiaries of this Subordination Agreement.
3
<PAGE>
Section 3. Further Assurances. Nederland agrees to execute and
deliver any and all papers and documents which may be reasonably necessary to
carry out the terms of this Subordination Agreement.
Section 4. Entire Agreement. This Subordination Agreement
contains the entire agreement among the parties with respect to the subject
matter hereof.
Section 5. Assignment. Nederland agrees that it shall not
assign or otherwise transfer the Note or any rights thereunder without the
consent of the holders of the Senior Debt.
Section 6. Binding Effect. This Subordination Agreement shall
be binding upon Nederland and inure to the benefit of the holder from time to
time of the Senior Debt and their respective successors and assigns. No
amendment of this Subordination Agreement or waiver of any of its provisions
shall be effective without the written consent of each holder of Senior Debt if
such amendment adversely affects any rights of the holders of Senior Debt.
Section 7. Governing Law. The execution, interpretation and
performance of this Subordination Agreement shall be governed by the laws of
the State of New York. Nederland hereby consents to the jurisdiction of any
state or federal court located within the State of New York, waive personal
service of process and assent that service of process may be made by
registered mail to Nederland's address set forth in the Note.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Subordination Agreement as of the date first above written.
SYBRON CHEMICAL INDUSTIRES NEDERLAND BV
By: /s/ Richard M. Klein
-----------------------------------
Name: Richard M. Klein
Title: Managing Director
5
<PAGE>
EXHIBIT 20.1
PRESS RELEASE RE: PURCHASE OF RUCO COMPANIES
Birmingham, NJ, July 31, 1998 -- Sybron Chemicals Inc. (AMEX:SYC), today
announced it has acquired the stock of Ruco Polymer Corporation and Ruco
Polymer Company of Georgia LLC for cash in a transaction valued at
approximately $110 million, including the refinancing of approximately $15
million of indebtedness.
Ruco, with annual sales of approximately $80 million, is headquartered in
Hicksville, NY. It is a leading developer, manufacturer and marketer of
polymer intermediates used primarily in powder and high solids coatings, as
well as in fiber-reinforced plastics. Ruco's polyester powders, polyester
polyols and urethane latexes are manufactured either in Hicksville or their
new Columbus, GA plant. Tony Forgione, currently President of the Ruco
Companies, will continue in that role for the combined businesses, which
become wholly-owned subsidiaries of Sybron Chemicals.
Commenting on this acquisition, Dr. Richard M. Klein, President and CEO
of Sybron Chemicals, said, "This transaction fulfills our objective, stated
over the past few years, of adding a third leg onto our company's portfolio.
Ruco meets our criteria of being a specialty company with leading technology,
participating in markets with high growth characteristics, and capable of
being grown even faster through global penetration and add-on acquisitions. We
understand well the driving forces behind this business and feel that with our
greater global infrastructure we can add substantial value in moving Ruco
ahead more quickly and more profitably. Mainly due to the high amortization of
goodwill, the acquisition will be dilutive to earnings in the first year. We
anticipate that the internal growth of the business will make the acquisition
accretive thereafter.
At the same time, we will also continue growing our global Textile
Chemical Specialties and Environmental Products and Services businesses
through internal development, geographic expansion and niche acquisitions."
Sybron is financing the acquisitions through a bank facility arranged by
Donaldson, Lufkin & Jenrette Securities Corporation, who served as the
company's financial advisor on this transaction.
Sybron Chemicals Inc. is an international specialty chemical company that
develops, produces and markets specialty chemicals in two main market
segments: Textile preparation, dyeing, printing and finishing and
Environmental (primarily related to water and waste treatment). Products
include Tanatex(R) dyehouse chemicals and Jersey State(TM), Auralux(TM) and
other finishing chemicals for the textile and carpet industries; Ocean Wash(R)
products for the garment processing industry; Ionac(R) ion exchange resins for
use in water treatment and special applications; specialty resins for use in
reprographic and laser printer toners, Bi-Chem(R) biologically active seed
cultures for industrial, municipal and laser printer toners, Bi-Chem(R)
biologically active seed cultures for industrial, municipal and sanitary waste
treatment and groundspill clean-up.
<PAGE>
For more information on Sybron Chemicals Inc., please visit us on the
World Wide Web at http://www.sybronchemicals.com.
-2-
<PAGE>
EXHIBIT 20.2
PRESS RELEASE RE: SYBRON CHEMICALS INC.
ADOPTS STOCKHOLDER RIGHTS PLAN
BIRMINGHAM, NJ, August 7, 1998--Sybron Chemicals Inc. (AMEX: SYC),
announced today that its Board of Directors has adopted a Stockholder Rights
Plan designed to protect stockholders and their equity investment from
potential acquirers who would use coercive or unfair tactics to gain control
of the Company. The Plan would not preclude any fair acquisition proposal.
Under the Rights Plan, which is similar to those adopted by many other
companies, Rights will be distributed as a dividend at the rate of one Right
for each share of Common Stock of the Company held by shareholders of record
as of the close of business on August 27, 1998. The Rights will expire on
August 27, 2008.
Sybron Chemicals Inc. is an international specialty chemical company that
develops, produces and markets specialty chemicals in three main market
segments: Textile preparation, dyeing, printing, finishing and garment
processing; Environmental (primarily related to water and waste treatment);
and Specialty Polymer Intermediates for coatings. Products include Tanatex(R)
dyehouse chemicals and Jersey State(TM), Auralux(TM) and other finishing
chemicals for the textile and carpet industries; Ocean Wash(R) products for
the garment processing industry; Ionac(R) ion exchange resins for use in water
treatment and special applications; specialty resins for use in reprographic
and laser printer toners; Bi-Chem(R) biologically active seed cultures for
industrial, municipal and sanitary waste treatment and groundspill clean-up;
and Ruco(R) Polymer intermediates for powder and high solids coatings and
urethane latexes.
For more information on Sybron Chemicals Inc., please visit us
on the World Wide Web at http://www.sybronchemicals.com and
www.rucopolymer.com.
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