UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 22, 1996
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Walter Industries Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-20537 13-3429953
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(Name or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1500 North Dale Mabry, Tampa, Florida 33607
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 813-871-4811
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(Former name or former address if changed since last report.)
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Item 5. Other Events
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On January 22, 1996, Walter Industries, Inc. (the "Company") completed a
$550 million bank financing led by NationsBank National Association
(South). Proceeds from the financing, together with a drawing of $75
million under the Mid-State Trust V Variable Funding Loan Agreement, were
used to redeem $490 million of 12.19% Senior Notes Due 2000 and to replace
an existing $150 million bank credit facility, both issued in
connection with the Company's emergence from Chapter 11 reorganization in
March 1995. The financing consists of a $365 million revolving credit
facility, a six-year $125 million term loan and a $60 million seven-year
term loan.
Item (C) Exhibits
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10) Credit Agreement, dated as of January 22, 1996
99) Press release, dated January 23, 1996
SIGNATURES
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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.
WALTER INDUSTRIES, INC.
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(Registrant)
Date: February 16, 1996 /s/ W. H. Weldon
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W. H. Weldon
Executive Vice President and
Chief Financial Officer
Exhibit 10
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$550,000,000
CREDIT AGREEMENT
by and among
WALTER INDUSTRIES, INC.
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH),
as Administrative Agent, Documentation
Agent and Syndication Agent
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
January 22, 1996
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<PAGE>
TABLE OF CONTENTS
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ARTICLE I
Definitions and Terms 2 . . . . . . . . . . 2
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Rules of Interpretation . . . . . . . . . . . . . . . . . . 33
1.3. Accounting Principles . . . . . . . . . . . . . . . . . . . 34
ARTICLE II
The Term Loans . . . . . . . . . . . . . 36
2.1. Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.2. Term Loan Advance . . . . . . . . . . . . . . . . . . . . . 36
2.3. Payment of Principal . . . . . . . . . . . . . . . . . . . . 37
2.4. Payment of Interest . . . . . . . . . . . . . . . . . . . . 38
2.5. Manner of Payment . . . . . . . . . . . . . . . . . . . . . 39
2.6. Optional Prepayments . . . . . . . . . . . . . . . . . . . . 39
2.7. Mandatory Prepayments. . . . . . . . . . . . . . . . . . . 40
2.8. Term Notes . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.9. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 41
2.10. Interest Periods . . . . . . . . . . . . . . . . . . . . . . 41
2.12. Non-Conforming Payments . . . . . . . . . . . . . . . . . . 42
2.13. Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE III
The Revolving Credit Facility . . . . . . . . . 44
3.1. Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 44
3.2. Payment of Interest . . . . . . . . . . . . . . . . . . . . 46
3.3. Payment of Principal . . . . . . . . . . . . . . . . . . . . 47
3.4. Non-Conforming Payments . . . . . . . . . . . . . . . . . . 47
3.5. Revolving Notes . . . . . . . . . . . . . . . . . . . . . . 47
3.6. Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . 48
3.7. Reductions . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.8. Conversions and Elections of Subsequent Interest Periods . . 48
3.9. Increase and Decrease in Amounts . . . . . . . . . . . . . . 49
3.10. Unused Fee . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.11. Deficiency Advances . . . . . . . . . . . . . . . . . . . . 49
3.12. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 50
3.13. Swing Line . . . . . . . . . . . . . . . . . . . . . . . . . 50
<PAGE>
ARTICLE IV
Letters of Credit . . . . . . . . . . . . 52
4.1. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 52
4.2. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . 53
4.3. Letter of Credit Facility Fees . . . . . . . . . . . . . . . 56
4.4. Administrative and Other Fees . . . . . . . . . . . . . . . 56
ARTICLE V
Security . . . . . . . . . . . . . . 57
5.1. Security . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.2. Further Assurances . . . . . . . . . . . . . . . . . . . . . 57
5.3. Information Regarding Collateral . . . . . . . . . . . . . . 57
5.4. Additional Intercompany Notes . . . . . . . . . . . . . . . 57
ARTICLE VI
Yield Protection and Illegality . . . . . . . . . 59
6.1. Additional Costs . . . . . . . . . . . . . . . . . . . . . . 59
6.2. Suspension of Loans . . . . . . . . . . . . . . . . . . . . 60
6.3. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.4. Compensation . . . . . . . . . . . . . . . . . . . . . . . . 61
6.5. Alternate Loan and Lender . . . . . . . . . . . . . . . . . 62
6.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit . . 64
7.1. Conditions of Term Loans and Initial Advance . . . . . . . . 64
7.2. Conditions of Revolving Loans and Letters of Credit . . . . 67
ARTICLE VIII
Representations and Warranties . . . . . . . . . 69
8.1. Organization and Authority . . . . . . . . . . . . . . . . . 69
8.2. Loan Documents . . . . . . . . . . . . . . . . . . . . . . . 69
8.3. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.4. Subsidiaries and Stockholders . . . . . . . . . . . . . . . 70
8.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . 70
<PAGE>
8.6. Financial Condition . . . . . . . . . . . . . . . . . . . . 71
8.7. Title to Properties . . . . . . . . . . . . . . . . . . . . 71
8.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.9. Other Agreements . . . . . . . . . . . . . . . . . . . . . . 72
8.10. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.11. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . 72
8.12. Investment Company . . . . . . . . . . . . . . . . . . . . . 72
8.13. Patents, Etc. . . . . . . . . . . . . . . . . . . . . . . . 73
8.14. No Untrue Statement . . . . . . . . . . . . . . . . . . . . 73
8.15. No Consents, Etc. . . . . . . . . . . . . . . . . . . . . . 73
8.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 73
8.17. No Default . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.18. Hazardous Materials . . . . . . . . . . . . . . . . . . . . 75
8.19. Employment Matters . . . . . . . . . . . . . . . . . . . . . 75
8.20. RICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.21. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.22. Material Contracts . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE IX
Affirmative Covenants . . . . . . . . . . . 77
9.1. Financial Reports, Etc. . . . . . . . . . . . . . . . . . 77
9.2. Maintain Properties . . . . . . . . . . . . . . . . . . . . 79
9.3. Existence, Qualification, Etc. . . . . . . . . . . . . . . . 79
9.4. Regulations and Taxes . . . . . . . . . . . . . . . . . . . 79
9.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 80
9.6. True Books . . . . . . . . . . . . . . . . . . . . . . . . . 80
9.7. Right of Inspection . . . . . . . . . . . . . . . . . . . . 80
9.8. Observe all Laws . . . . . . . . . . . . . . . . . . . . . . 80
9.9. Governmental Licenses . . . . . . . . . . . . . . . . . . . 80
9.10. Covenants Extending to Other Persons . . . . . . . . . . . . 80
9.11. Officer's Knowledge of Default . . . . . . . . . . . . . . . 81
9.12. Suits or Other Proceedings . . . . . . . . . . . . . . . . . 81
9.13. Notice of Discharge of Hazardous Material or Environmental
Complaint . . . . . . . . . . . . . . . . . . . . . . . . . 81
9.14. Environmental Compliance . . . . . . . . . . . . . . . . . . 81
9.15. Indemnification . . . . . . . . . . . . . . . . . . . . . . 82
9.16. Further Assurances . . . . . . . . . . . . . . . . . . . . . 82
9.17. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 82
9.18. Continued Operations . . . . . . . . . . . . . . . . . . . . 83
9.19. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 83
9.20. Mortgage Warehousing Facility . . . . . . . . . . . . . . . 85
9.21. Performance of Specified Documents and Material Contracts . 85
9.22. Transactions with Affiliates . . . . . . . . . . . . . . . . 85
9.23. Covenant to Give Security . . . . . . . . . . . . . . . . . 86
<PAGE>
9.24. Mid-State Rate Hedging Obligation . . . . . . . . . . . . . 87
9.25. Permitted Receivables Securitization . . . . . . . . . . . . 87
ARTICLE X
Negative Covenants . . . . . . . . . . . . 88
10.1. Financial Covenants . . . . . . . . . . . . . . . . . . . . 88
10.2. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . 89
10.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.4. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 91
10.5. Transfer of Assets . . . . . . . . . . . . . . . . . . . . 93
10.6. Investments . . . . . . . . . . . . . . . . . . . . . . . . 94
10.7. Merger or Consolidation . . . . . . . . . . . . . . . . . . 95
10.8. Restricted Payments . . . . . . . . . . . . . . . . . . . . 96
10.9. Compliance with ERISA . . . . . . . . . . . . . . . . . . . 96
10.10. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 97
10.11. Dissolution, etc. . . . . . . . . . . . . . . . . . . . . . 97
10.12. Lease Payments . . . . . . . . . . . . . . . . . . . . . . 97
10.13. Negative Pledge Clauses . . . . . . . . . . . . . . . . . . 97
10.14. Prepayments, Etc. of Indebtedness . . . . . . . . . . . . . 98
10.15. Creation of New Subsidiaries . . . . . . . . . . . . . . . 98
10.16. Change the Nature of Business . . . . . . . . . . . . . . . 99
10.17. Charter Amendments . . . . . . . . . . . . . . . . . . . . 99
10.18. [reserved] . . . . . . . . . . . . . . . . . . . . . . . . 99
10.19. Amendment, Etc. of Specified Documents and Material
Contracts . . . . . . . . . . . . . . . . . . . . . . . . 99
10.20. Partnerships . . . . . . . . . . . . . . . . . . . . . . . 99
10.21. Mid-State Rights in Mortgage Accounts . . . . . . . . . . . 99
10.22. Sale of Mid-State . . . . . . . . . . . . . . . . . . . . . 99
10.23. Sales of Mortgage Accounts to Mid-State . . . . . . . . . 100
ARTICLE XI
Events of Default and Acceleration . . . . . . . 101
11.1. Events of Default . . . . . . . . . . . . . . . . . . . . 101
11.2. Agent to Act . . . . . . . . . . . . . . . . . . . . . . . 104
11.3. Cumulative Rights . . . . . . . . . . . . . . . . . . . . . 104
11.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.5. Allocation of Proceeds . . . . . . . . . . . . . . . . . . 104
<PAGE>
ARTICLE XII
The Agent . . . . . . . . . . . . . . 106
12.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . 106
12.2. Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . 106
12.3. Limitation on Liability . . . . . . . . . . . . . . . . . . 106
12.4. Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . 107
12.6. No Representations . . . . . . . . . . . . . . . . . . . . 107
12.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . 107
12.8. Lender . . . . . . . . . . . . . . . . . . . . . . . . . . 108
12.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . 108
12.10. Sharing of Payments, etc . . . . . . . . . . . . . . . . . 108
12.11. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE XIII
Miscellaneous . . . . . . . . . . . . . 110
13.1. Assignments and Participations . . . . . . . . . . . . . . 110
13.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 112
13.3. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 113
13.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . 113
13.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 114
13.6. Amendments . . . . . . . . . . . . . . . . . . . . . . . . 114
13.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 116
13.8. Termination . . . . . . . . . . . . . . . . . . . . . . . . 116
13.9. Indemnification; Limitation of Liability . . . . . . . . . 116
13.10. Severability . . . . . . . . . . . . . . . . . . . . . . . 117
13.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 117
13.12. Agreement Controls . . . . . . . . . . . . . . . . . . . . 117
13.13. Usury Savings Clause . . . . . . . . . . . . . . . . . . . 117
13.14. Governing Law; Waiver of Jury Trial . . . . . . . . . . . . 118
EXHIBIT A Applicable Commitment Percentages . . . . . . . . . . . . . A-1
EXHIBIT B-1 Form of Assignment and Acceptance . . . . . . . . . . . .B-1-1
EXHIBIT C Notice of Appointment (or Revocation) of
Authorized Representative . . . . . . . . . . . . . . . . . C-1
EXHIBIT D-1 Form of Borrowing Notice. . . . . . . . . . . . . . . . . D-1-1
EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans . . . . . . . .D-2-1
EXHIBIT E Form of Interest Rate Selection Notice. . . . . . . . . . . E-1
EXHIBIT F Form of Intercompany Note . . . . . . . . . . . . . . . . . F-1
EXHIBIT G Form of Intercompany Note Pledge Agreement. . . . . . . . . G-1
EXHIBIT H-1 Form of Revolving Note . . . . . . . . . . . . . . . . . H-1-1
<PAGE>
EXHIBIT H-2 Form of Term Note A . . . . . . . . . . . . . . . . . . . H-2-1
EXHIBIT H-3 Form of Term Note B . . . . . . . . . . . . . . . . . . . H-3-1
EXHIBIT I Form(s) of Opinion(s) of Counsel to Credit Parties . . . . I-1
EXHIBIT J Compliance Certificate . . . . . . . . . . . . . . . . . . J-1
EXHIBIT K Form of Facility Guaranty for Subsidiaries . . . . . . . . K-1
Schedule 1.1A Existing Letters of Credit
Schedule 1.1B Employee Stock Purchase Plan
Schedule 5.3 Information Regarding Collateral
Schedule 8.4 Subsidiaries and Intercompany Advances
Schedule 8.5 Investments in Other Persons
Schedule 8.6 Indebtedness
Schedule 8.7 Liens
Schedule 8.8 Tax Matters
Schedule 8.10 Disclosed Litigation
Schedule 8.16A Employee Benefit Plans Funding Matters
Schedule 8.16B Employee Benefit Plans
Schedule 8.18A Environmental Matters
Schedule 8.18B Environmental Listings on NPL and CERCLIS
Schedule 8.19 Collective Bargaining Agreements
Schedule 8.21 Leases
Schedule 8.22 Material Contracts
Schedule 9.5 Insurance
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 22, 1996 (the "Agreement"),
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is made by and among WALTER INDUSTRIES, INC., a Delaware corporation having
its principal place of business in Tampa, Hillsborough County, Florida (the
"Borrower"), NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking
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association organized and existing under the laws of the United States, in
its capacity as a Lender ("NationsBank"), and each other financial
-----------
institution executing and delivering a signature page hereto and each other
financial institution which may hereafter execute and deliver an instrument
of assignment with respect to this Agreement pursuant to Section 13.1
------------
(hereinafter such financial institutions may be referred to individually as
a "Lender" or collectively as the "Lenders"), and NATIONSBANK, NATIONAL
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ASSOCIATION (SOUTH), a national banking association organized and existing
under the laws of the United States, in its capacity as administrative
agent, documentation agent and syndication agent for the Lenders (in such
capacity, and together with any successor agent appointed in accordance
with the terms of Section 12.9, the "Administrative Agent" or the "Agent");
------------ -------------------- -----
W I T N E S S E T H:
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WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower two term loan facilities, one in the original aggregate
principal amount of $125,000,000 and the other in the original aggregate
principal amount of $60,000,000, the proceeds of which term loans are to be
used, together with other funds available to the Borrower, to redeem in
full the Senior Notes (as hereinafter defined), and a revolving credit
facility of up to $365,000,000, the proceeds of which are to be used, (i)
together with the term loans proceeds and certain proceeds from the
Mortgage Warehousing Facility (as hereinafter defined) , to effect the
redemption in full of the Senior Notes, (ii) to repay in full and satisfy
the Borrower's obligations and liabilities under the Prior Credit
Facilities (as hereinafter defined) other than certain obligations with
respect to Existing Letters of Credit (as hereinafter defined), and (iii)
for other general working capital requirements, which revolving credit
facility shall include a letter of credit facility of up to $40,000,000
for the issuance of standby and commercial letters of credit and a
$15,000,000 swing line facility; and
WHEREAS, the Lenders are willing to make such term loans, revolving
credit and letter of credit facilities available to the Borrower upon the
terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree
as follows:
<PAGE>
ARTICLE I
Definitions and Terms
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1.1 Definitions. For the purposes of this Agreement, in addition to
-----------
the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling equity
-----------
interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon exercise
of an option or warrant for, or conversion of securities into, such
equity interest, or (ii) assets of another Person which constitute all
or substantially all of the assets of such Person or of a line or
lines of business conducted by such Person; provided that the term
"Acquisition" shall not include Investments by Mid-State in one or
-----------
more special purpose Subsidiaries in connection with the issuance by
such Subsidiaries of securities described in Section 10.4(d)(iii).
--------------------
"Advance" means any of (i) the borrowing under the Term Loan
-------
Facility or (ii) a borrowing under the Revolving Credit Facility
consisting, in any case, of a Base Rate Loan or a Eurodollar Rate
Loan.
"Affiliate" means any Person (i) which directly or indirectly
---------
through one or more intermediaries controls, or is controlled by, or
is under common control with the Borrower; or (ii) which beneficially
owns or holds 5% or more of any class of the outstanding voting stock
(or in the case of a Person which is not a corporation, 5% or more of
the equity interest) of the Borrower; or 5% or more of any class of
the outstanding voting stock (or in the case of a Person which is not
a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Borrower. The term "control" means
-------
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting stock, by contract or otherwise.
"Applicable Commitment Percentage" means, as to each Lender at
--------------------------------
any time (i) with respect to the Revolving Credit Facility and the
Participations, a fraction, the numerator of which shall be such
Lender's Revolving Credit Commitment and the denominator of which
shall be the Total Revolving Credit Commitment, and (ii) with respect
to each of the Term Loan A Facility or Term Loan B Facility, as the
case may be, a fraction, the numerator of which shall be such Lender's
Term Loan A Commitment or Term Loan B Commitment, as applicable, and
the denominator of which shall be the Total Term Loan A Commitment or
the Total Term Loan B Commitment, as applicable, which Applicable
Commitment Percentage in each case for each Lender as of the Closing
Date is as set forth in Exhibit A; provided that each Applicable
--------- --------
Commitment Percentage of each Lender shall be increased or decreased
to reflect any assignments to or by such Lender effected in accordance
with Section 13.1.
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2
<PAGE>
"Applicable Margin" means, with respect to Eurodollar Rate Loans
-----------------
and Eurodollar Rate Segments, for Revolving Loans and for each of the
Term Loans as indicated below, that percent per annum set forth below,
which shall be based upon the Consolidated Leverage Ratio for the
Four-Quarter Period most recently ended as specified below:
Applicable Margin for
Eurodollar Rate Loans
---------------------
Revolving
Consolidated Term Loans and
TIER Leverage Ratio Loan B Term Loan A
- ---- -------------- ------ -----------
1 Greater than 3.50 to 1.0 2.25% 1.75%
2 Greater than 3.0 to 1.0
and less than or equal to
3.50 to 1.0 2.00% 1.50%
3 Greater than 2.50 to 1.0
and less than or equal to
3.0 to 1.0 2.00% 1.25%
4 Greater than 2.0 to 1.0
and less than or equal to
2.50 to 1.0 2.00% 1.00%
5 Less than or equal to
2.0 to 1.0 2.00% .75%
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in
------------------
the Applicable Margin following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Agent pursuant to Section 9.1(a)(ii) and Section
------------------ -------
9.1(b)(ii), subject to review and approval of such computations by the
----------
Agent, and shall be effective commencing on the date following the
date such certificate is received (or, if earlier, the date such
certificate was required to be delivered), and in each case, until the
date following the date on which a new certificate is delivered or is
required to be delivered, whichever shall first occur; provided
--------
however, if the Borrower shall fail to deliver any such certificate
within the time period required by Section 9.1, then the Applicable
-----------
Margin with respect to Revolving Loans and Segments under Term Loan A
shall be 1.75% and the Applicable Margin with respect to Segments
under Term Loan B shall be 2.25% until the appropriate certificate is
so
3
<PAGE>
delivered. From the Closing Date to the first Determination Date, the
Applicable Margin shall be 1.25% for Revolving Loans and Segments
under Term Loan A and 2.00% for Segments under Term Loan B.
"Applicable Margin (L/C)" means, as of any date, the Applicable
-----------------------
Margin then in effect with respect to Eurodollar Rate Loans under the
Revolving Credit Facility, minus .375%
"Applicable Unused Fee" means that percent per annum set forth
---------------------
below, which shall be based upon the Consolidated Leverage Ratio for
the Four-Quarter Period most recently ended as specified below:
Consolidated Applicable
TIER Leverage Ratio Unused Fee
----- -------------- ----------
1 Greater than 3.50 to 1.0 .50%
2 Greater than 3.0 to 1.0
and less than or equal to
3.50 to 1.0 .375%
3 Greater than 2.50 to 1.0
and less than or equal to
3.0 to 1.0 .375%
4 Greater than 2.0 to 1.0
and less than or equal to
2.50 to 1.0 .25%
5 Less than or equal to
2.0 to 1.0 .25%
The Applicable Unused Fee shall be established at the end of each
fiscal quarter of the Borrower (the "Determination Date"). Any change
------------------
in the Applicable Unused Fee following each Determination Date shall
be determined based upon the computations set forth in the certificate
furnished to the Agent pursuant to Section 9.1(a)(ii) and Section
------------------ -------
9.1(b)(ii), subject to review and approval of such computations by the
----------
Agent and shall be effective commencing on the date following the date
such certificate is received (or, if earlier, the date such
certificate was required to be delivered) until the date a new
certificate is delivered or is required to be delivered, whichever
shall first occur, and continuing until the date following the next
date on which such certificate is delivered or required to be
delivered; provided however, if the Borrower shall fail to deliver any
--------
such certificate within the time period required by Section 9.1, then
-----------
the Applicable Unused Fee shall be .50% until the appropriate
certificate is so delivered. From the Closing Date to the first
Determination Date, the
4
<PAGE>
Applicable Unused Fee shall be .375%.
"Applications and Agreements for Letters of Credit" means,
-------------------------------------------------
collectively, the Applications and Agreements for Letters of Credit,
or similar documentation, executed by the Borrower, or by the Borrower
and a Restricted Subsidiary, as applicable, from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Assignment and Acceptance" shall mean (i) with respect to the
-------------------------
Revolving Credit Facility and the Participations, an Assignment and
Acceptance in the form of Exhibit B-1 (with blanks appropriately
-----------
filled in), (ii) with respect to the Term Loan A Facility, an
Assignment and Acceptance in the form of Exhibit B-2 (with blanks
-----------
appropriately filled in), and (iii) with respect to the Term Loan B
Facility, an Assignment and Acceptance in the form of Exhibit B-3
-----------
(with blanks appropriately filled in) in each case delivered to the
Agent in connection with an assignment of a Lender's interest under
this Agreement pursuant to Section 13.1.
------------
"Authorized Representative" means any of the President, any Vice
-------------------------
President or any Assistant Treasurer of the Borrower or, with respect
to financial matters, the chief financial officer of the Borrower, or
any other Person expressly designated by the Board of Directors of the
Borrower (or the appropriate committee thereof) as an Authorized
Representative of the Borrower, as set forth from time to time in a
certificate in the form of Exhibit C.
---------
"Base Rate" means the per annum rate of interest equal to the
---------
greater of (i) the Prime Rate or (ii) the Federal Funds Effective Rate
plus one-half of one percent ( 1/2%). Any change in the Base Rate
resulting from a change in the Prime Rate or the Federal Funds
Effective Rate shall become effective as of 12:01 A.M. of the Business
Day on which each such change occurs. The Base Rate is a reference
rate used by the Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
"Base Rate Loan" means a Revolving Loan or a Segment of any Term
--------------
Loan for which the rate of interest is determined by reference to the
Base Rate.
"Base Rate Segment" means a Segment bearing interest or to bear
-----------------
interest at the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan which is a
------------------------
Revolving Loan or Swing Line Loan made either to (i) satisfy
Reimbursement Obligations arising from a drawing under a Letter of
Credit or (ii) pay NationsBank in respect of Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve
-----
System (or any successor body).
5
<PAGE>
"Borrower's Account" means a demand deposit account number
------------------
3750658039 or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the
Agent.
"Borrowing Notice" means the notice delivered by an Authorized
----------------
Representative in connection with an Advance under the Revolving
Credit Facility or a Swing Line Loan, in the forms of Exhibits D-1 and
D-2, respectively.
"Business Day" means, (i) with respect to any Base Rate Loan, any
------------
day which is not a Saturday, Sunday or a day on which banks in the
States of New York and North Carolina are authorized or obligated by
law, executive order or governmental decree to be closed and, (ii)
with respect to any Eurodollar Rate Loan, any day which is a Business
Day, as described above, and on which the relevant international
financial markets are open for the transaction of business
contemplated by this Agreement in London, England, New York, New York
and Charlotte, North Carolina.
"Capital Leases" means all leases which have been or should be
--------------
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Cardem" means Cardem Insurance Co., Ltd., a Bermuda corporation
------
and a wholly owned Subsidiary of the Borrower.
"Cash Equivalents" means any of the following types of property,
----------------
to the extent owned by the Borrower or any of its Subsidiaries free
and clear of all Liens (other than Liens created under the Security
Instruments) and having a maturity of not greater than 180 days from
the date of acquisition thereof:
(a) readily marketable direct obligations of the Government
of the United States or any agency or instrumentality thereof or
obligations unconditionally guaranteed by the full faith and
credit of the Government of the United States;
(b) insured certificates of deposit or bankers' acceptances
of, or time deposits with any Lender or with any commercial bank
that (i) is a member of the Federal Reserve System, (ii) issues
(or the parent of which issues) commercial paper rated as
described in clause (c) below, (iii) is organized under the laws
of the United States or any state thereof and (iv) has combined
capital and surplus of at least $500,000,000; or
(c) commercial paper in an aggregate amount of no more than
$10,000,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any state of the United
States and rated at least "Prime-1" (or the then equivalent
grade) by Moody's or "A-1" (or the then equivalent grade) by S&P,
or carrying an equivalent rating by a nationally recognized
rating agency acceptable to the Agent if
6
<PAGE>
both Moody's and S&P cease publishing ratings of investments.
"Cash Income Taxes" means, with respect to the Borrower and its
-----------------
Restricted Subsidiaries for any period, the aggregate amount of all
payments in respect of income taxes made in cash by the Borrower and
its Restricted Subsidiaries to any applicable Government Authority
during such period, after giving effect, to the extent available, to
the application of net operating losses available to the Borrower and
its Restricted Subsidiaries (and excluding Cash Income Taxes paid on
behalf of Unrestricted Subsidiaries).
"CERCLA" means the Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
-------
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"Change in Working Capital" means, for any period, the amount
-------------------------
(whether positive or negative) by which Consolidated Working Capital
for such period changes from the Consolidated Working Capital for the
immediately preceding period.
"Change of Control" means, at any time:
-----------------
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) either (A) becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, of Voting Stock of the Borrower (or
securities convertible into or exchangeable for such Voting
Stock) representing 33-1/3% or more of the combined voting power
of all Voting Stock of the Borrower (on a fully diluted basis) or
(B) otherwise acquires the ability, directly or indirectly, to
elect a majority of the board of directors of the Borrower;
(ii) during any period of up to 24 consecutive months,
commencing on the Closing Date, individuals who at the beginning
of such 24-month period were directors of the Borrower shall
cease for any reason (other than the death, disability or
retirement of an officer of the Borrower that is serving as a
director at such time so long as another officer of the Borrower
replaces such Person as a director) to constitute a majority of
the board of directors of the Borrower (excluding the exercise by
the Equity Investors of rights in existence as of the date hereof
under the Stockholders Agreement to designate or replace
individual members of the board of directors of the Borrower);
(iii) any Person or two or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation
thereof, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence on the
management or policies of the
7
<PAGE>
Borrower; or
(iv) with respect to any pledge or other security agreement
covering all or any portion of the shares of capital stock of the
Borrower that are owned beneficially and of record by any of the
Equity Investors or their nominees, any secured party or pledgee
thereunder shall become the holder of record of more than fifty
percent (50%) of the shares owned by any such Equity Investor or
shall receive dividends or other cash or cash equivalent
distributions (including, without limitation, stock repurchases)
in respect thereof, or shall proceed to exercise voting or other
consensual rights in respect thereof (whether by proxy, voting or
other similar arrangement or otherwise), or shall otherwise
commence to realize upon such shares.
"Closing Date" means the date as of which this Agreement is
------------
executed by the Borrower, the Lenders, the Agent and the Managing
Agents and on which the conditions set forth in Section 7.1 have been
-----------
satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and
----
any regulations promulgated and rulings issued thereunder.
"Collateral" means, collectively, all property of the Borrower,
----------
any Subsidiary or any other Person in which the Agent or any Lender is
granted a Lien as security for all or any portion of the Obligations
under any Security Instrument.
"Consistent Basis" in reference to the application of GAAP means
----------------
the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the
preparation of the audited financial statements of the Borrower
referred to in Section 8.6(a).
--------------
"Consolidated Capital Expenditures" means, with respect to the
---------------------------------
Borrower and its Restricted Subsidiaries on a consolidated basis, for
any period the sum of (without duplication) (i) all expenditures
---
(whether paid in cash or accrued as liabilities) by the Borrower or
any Restricted Subsidiary during such period for items that would be
classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Borrower and its Restricted
Subsidiaries, including without limitation all transactional costs
incurred in connection with such expenditures provided the same have
been capitalized, excluding, however, (A) the amount of any
Consolidated Capital Expenditures paid for with proceeds of casualty
insurance as evidenced in writing and submitted to the Agent together
with any compliance certificate delivered pursuant to Section 9.1(a)
--------------
or (b) and (B) non-cash capitalized depreciation arising in connection
---
with mining operations, and (ii) with respect to any Capital Lease
entered into by the Borrower or its Restricted Subsidiaries during
such period, the present value of the lease payments due under such
Capital Lease over the term of such Capital Lease applying a discount
rate equal to the interest rate provided in such lease (or in the
absence of a stated interest rate, that rate used in the preparation
of the financial
8
<PAGE>
statements described in Section 9.1(a)), all the foregoing in
--------------
accordance with GAAP applied on a Consistent Basis.
"Consolidated Current Assets" means all assets of the Borrower
---------------------------
and its Restricted Subsidiaries which are expected to be realized in
cash, sold in the ordinary course of business, or consumed within one
year or which would be classified as a current asset, but excluding
cash and Cash Equivalents, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Current Liabilities" means all liabilities of the
--------------------------------
Borrower and its Restricted Subsidiaries which by their terms are
payable within one year (including all Indebtedness payable on demand
or maturing not more than one year from the date of computation and
the current portion of Consolidated Indebtedness having a maturity
date in excess of one year), but excluding, without duplication, bank
overdrafts to the extent such overdrafts do not exceed cash and Cash
Equivalents, all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated EBITDA" means, with respect to the Borrower and its
-------------------
Restricted Subsidiaries for any Four-Quarter Period ending on the date
of computation thereof, the sum of, without duplication, (i)
---
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
taxes on income, (iv) noncash liabilities otherwise deducted in
calculating net income resulting from FASB No. 106 Changes, (v)
extraordinary and unusual losses deducted in calculating net income
less extraordinary and unusual gains added in calculating net income,
(vi) amortization, (vii) depreciation and depletion, and (viii) non-
cash liabilities otherwise deducted in calculating net income
resulting from FASB No. 121 Changes, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis; provided,
--------
that for each Four-Quarter Period that includes any period ending on
or prior to May 31, 1995, all nonrecurring charges related to the
consummation of the Plan of Reorganization that are deductible from
net income (or addable to net loss) of the Borrower and its Restricted
Subsidiaries shall be excluded for purposes of calculating
Consolidated EBITDA for such period.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
----------------------------------------
the Borrower and its Restricted Subsidiaries for any Four-Quarter
Period ending on the date of computation thereof, the ratio of
(i) Consolidated EBITDA for such period less (without duplication)
Consolidated Capital Expenditures for such period, to (ii)
Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to the Borrower
--------------------------
and its Restricted Subsidiaries for any Four-Quarter Period ending on
the date of computation thereof, the sum of, without duplication, (i)
---
Consolidated Interest Expense (provided that with respect to any Four-
Quarter Period which includes any period during which the Senior Notes
and the Prior Credit Facilities were outstanding, Consolidated
Interest Expense shall for purposes of this
9
<PAGE>
definition only be determined by (x) excluding interest paid, accrued
or amortized in respect of the Senior Notes and the Prior Credit
Facilities and (y) substituting therefor actual interest expense on
the Revolving Credit Facility and the Term Loan Facilities from the
Closing Date and annualizing such amount for the period of
computation, (ii) the aggregate amount of Required Principal Payments
made or required to be made during such period, and (iii) all
dividends paid during such period (regardless of when declared) on any
shares of capital stock of the Borrower then outstanding, all
determined on a consolidated basis in accordance with GAAP applied on
a Consistent Basis.
"Consolidated Indebtedness" means, with respect to any Person,
-------------------------
all Indebtedness for Money Borrowed of such Person and its
Subsidiaries, all determined on a consolidated basis, including in the
case of the Borrower and its Restricted Subsidiaries amounts
outstanding under Permitted Receivables Securitizations but excluding
as Indebtedness, any Indebtedness which is secured by Liens on life
insurance policies permitted by Section 10.4(n).
"Consolidated Interest Coverage Ratio" means, with respect to the
------------------------------------
Borrower and its Restricted Subsidiaries for any Four-Quarter Period
ending on the date of computation thereof, the ratio of Consolidated
EBITDA to Consolidated Interest Expense (provided that with respect to
any Four-Quarter Period which includes any period during which the
Senior Notes and the Prior Credit Facilities were outstanding,
Consolidated Interest Expense shall for purposes of this definition
only be determined by (x) excluding interest paid, accrued or
amortized in respect of the Senior Notes and the Prior Credit
Facilities and (y) substituting therefor actual interest expense on
the Revolving Credit Facility and the Term Loan Facilities from the
Closing Date and annualizing such amount for the period of
computation.
"Consolidated Interest Expense" means, with respect to any period
-----------------------------
of computation thereof, the interest expense (net of interest income)
of the Borrower and its Restricted Subsidiaries, including without
limitation (i) the current amortized portion of debt discounts to the
extent included in interest expense, (ii) the current amortized
portion of all fees (including fees payable in respect of any Swap
Agreement) payable in connection with the incurrence of Indebtedness
to the extent included in interest expense, (iii) the portion of any
payments made in connection with Capital Leases allocable to interest
expense, and (iv) all fees, charges, discounts and other costs
incurred in connection with any Permitted Receivables Securitization,
all determined on a consolidated basis in accordance with GAAP applied
on a Consistent Basis.
"Consolidated Lease Payments" means the gross amount of all lease
---------------------------
or rental payments in respect of the lease, rental or hire of real or
personal property, whether or not characterized as rent and including
payments under sale and leaseback transactions, of the Borrower and
its Restricted Subsidiaries, excluding (i) payments in respect of
Capital Leases constituting Indebtedness and (ii) royalty payments
under leases of mineral rights which are being expensed, all
determined on a consolidated basis in accordance with GAAP applied on
a Consistent Basis.
10
<PAGE>
"Consolidated Leverage Ratio" means, as of the date of
---------------------------
computation thereof, the ratio of (i) Consolidated Indebtedness of the
Borrower and its Restricted Subsidiaries (determined as at such date)
to (ii) Consolidated EBITDA (for the Four-Quarter Period ending on (or
most recently ended prior to) such date).
"Consolidated Net Income" means, for any period of computation
-----------------------
thereof, the gross revenues from operations of the Borrower and its
Restricted Subsidiaries (including payments received by the Borrower
and its Restricted Subsidiaries of (i) interest income, and (ii)
dividends and distributions made in the ordinary course of their
businesses by Persons in which investment is permitted pursuant to
this Agreement and not related to an extraordinary event), less all
operating and non-operating expenses of the Borrower and its
Restricted Subsidiaries including taxes on income, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis. Consolidated Net Income will not include, in any event, non
cash income recognized from Unrestricted Subsidiaries.
"Consolidated Working Capital" means, as of any date on which the
----------------------------
amount thereof is to be determined, the excess of Consolidated Current
Assets over Consolidated Current Liabilities.
"Contingent Obligation" of any Person means all contingent
---------------------
liabilities required (or which, upon the creation or incurring
thereof, would be required) to be included in the financial statements
(including footnotes) of such Person in accordance with GAAP applied
on a Consistent Basis, including Statement No. 5 of the Financial
Accounting Standards Board, all Rate Hedging Obligations and any
obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including obligations of such Person however incurred:
(1) to purchase such Indebtedness or other obligation or
any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other
balance sheet condition or any income statement condition of the
primary obligor;
(3) to grant or convey any lien, security interest, pledge,
charge or other encumbrance on any property or assets of such
Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner or holder of such Indebtedness or obligation of the ability
of the primary obligor to make payment of such Indebtedness
11
<PAGE>
or other obligation; or
(5) otherwise to assure the owner of the Indebtedness or
such obligation of the primary obligor against loss in respect
thereof.
"Cost of Acquisition" means, with respect to any Acquisition, as
-------------------
at the date of entering into any agreement therefor, the sum of the
---
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Borrower or any
Subsidiary to be transferred in connection therewith, (ii) the amount
of any cash and fair market value of other property (excluding
property described in clause (i) and the unpaid principal amount of
any debt instrument) given as consideration, (iii) the amount
(determined by using the face amount or the amount payable at
maturity, whichever is greater) of any Indebtedness incurred, assumed
or acquired by the Borrower or any Subsidiary in connection with such
Acquisition, (iv) all additional purchase price amounts in the form of
earnouts and other contingent obligations that should be recorded on
the financial statements of the Borrower and its Subsidiaries in
accordance with GAAP, (v) all amounts paid or payable in respect of
covenants not to compete, consulting agreements that should be
recorded on financial statements of the Borrower and its Subsidiaries
in accordance with GAAP, and other affiliated contracts in connection
with such Acquisition which would constitute additional consideration
by the Borrower or any Subsidiary, (vi) the aggregate fair market
value of all other consideration given by the Borrower or any
Subsidiary in connection with such Acquisition, and (vii) out of
pocket transaction costs for the services and expenses of attorneys,
accountants and other consultants incurred in effecting such
transaction, and other similar transaction costs so incurred. For
purposes of determining the Cost of Acquisition for any transaction,
(A) the capital stock of the Borrower shall be valued (I) in the case
of capital stock that is then designated as a national market system
security by the National Association of Securities Dealers, Inc.
("NASDAQ") or is listed on a national securities exchange, the average
of the last reported bid and ask quotations or the last prices
reported thereon, and (II) with respect to shares that are not freely
tradeable, as determined by a committee composed of the disinterested
members of the Board of Directors of the Borrower and, if requested by
the Agent, determined to be a reasonable valuation by the independent
public accountants referred to in Section 9.1(a), (B) the capital
--------------
stock of any Subsidiary shall be valued as determined by a committee
composed of the disinterested members of the Board of Directors of the
Borrower and, if requested by the Agent, determined to be a reasonable
valuation by the independent public accountants referred to in Section
-------
9.1(a), and (C) with respect to any Acquisition accomplished pursuant
------
to the exercise of options or warrants or the conversion of
securities, the Cost of Acquisition shall include both the cost of
acquiring such option, warrant or convertible security as well as the
cost of exercise or conversion.
"Credit Parties" means, collectively, the Borrower and the
--------------
Guarantors.
"Cumulative Excess Cash Flow" means 50% of Excess Cash Flow
---------------------------
calculated on a cumulative basis, whether positive or negative less as
----
of any date of computation thereof the
12
<PAGE>
sum of (i) the aggregate amount of all Restricted Payments theretofore
paid from Cumulative Excess Cash Flow pursuant to Section 10.8(b) in
---------------
respect of the capital stock of the Borrower, (ii) the aggregate
amount of all outstanding investments theretofore made under Section
-------
10.6(l)(y) and (iii) the aggregate amount of all payments theretofore
----------
made of Indebtedness expressly permitted under Section 10.14(a)(iv),
--------------------
all determined cumulatively on a Fiscal Year basis beginning with the
Fiscal Year ending May 31, 1997.
"Default" means any event or condition which, with the giving or
-------
receipt of notice or lapse of time or both, would constitute an Event
of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
------------
Loan and Eurodollar Rate Segment, until the end of the Interest Period
applicable thereto, a rate of two percent (2%) above the Eurodollar
Rate applicable to such Loan or Segment, and thereafter at a rate of
interest per annum which shall be two percent (2%) above the Base
Rate, (ii) with respect to Base Rate Loans and Base Rate Segments, at
a rate of interest per annum which shall be two percent (2%) above the
Base Rate and (iii) in any case, the maximum rate permitted by
applicable law, if lower.
"Deficiency Advance" has the meaning specified in Section 3.11.
------------------ ------------
"Depositor Account Transfer Agreement" means the agreement dated
------------------------------------
as of March 3, 1995 between Jim Walter Homes and Mid-State entered
into in connection with the Mortgage Warehousing Facility, as amended,
modified or supplemented.
"Disclosed Litigation" has the meaning provided for such term in
--------------------
Section 8.10.
------------
"Disclosure Date" means the later of December 17, 1995 and the
---------------
mailing by the Borrower of notice of redemption of the Senior Notes.
"Documentary Letter of Credit" means a Letter of Credit issued
----------------------------
under the Letter of Credit Facility for the benefit of a supplier of
inventory to the Borrower or any Restricted Subsidiary to effect
payment for such inventory, the conditions to drawing under which
include the presentation to the Issuing Bank of negotiable bills of
lading, invoices and related documents sufficient, in the judgment of
the Issuing Bank, to create a valid and perfected Lien in such
inventory and presented documents in favor of the Issuing Bank.
"Dollars" and the symbol "$" means dollars constituting legal
------- -
tender for the payment of public and private debts in the United
States of America.
"Employee Benefit Plan" means any employee benefit plan within
---------------------
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of the Borrower or any of its ERISA Affiliates or is assumed
by the Borrower or any of its ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees
of the
13
<PAGE>
Borrower or any current or former ERISA Affiliate [and, with respect
to employee benefit plans of any former ERISA Affiliate, the Borrower
or any Restricted Subsidiary has or retains any obligations or
liability, absolute or contingent, for funding or other performance
obligations imposed by ERISA or other applicable law].
"Environmental Action" means any action, suit, demand, demand
--------------------
letter, claim, notice of noncompliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental
Law or any Hazardous Material.
"Environmental Laws" means, collectively, CERCLA, the Superfund
------------------
Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the
Clean Air Act, as amended, the Clean Water Act, as amended, any other
"Superfund" or "Superlien" law or any other federal, or applicable
state or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to, or imposing liability or standards
of conduct concerning, any Hazardous Material.
"Equity Investors" means Lehman Brothers, Inc., Kohlberg Kravis
----------------
Roberts & Co., KKR Associates, KKR Partners II, L.P., JWC Associates,
L.P., JWC Associates II, L.P., Channel One Associates, L.P. and their
respective Affiliates.
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person
---------------
or trade or business which is a member of a group which is under
common control with the Borrower, who together with the Borrower, is
treated as a single employer within the meaning of Section 414(b) and
(c) of the Code.
"Eurodollar Rate Loan" means a Loan or Segment for which the rate
--------------------
of interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
---------------
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
---------------------------------
Rate 1- Eurodollar Reserve Percentage Margin
"Eurodollar Rate Segment" means a Segment bearing interest or to
-----------------------
bear interest at the Eurodollar Rate.
"Eurodollar Reserve Percentage" means, for any day, that
-----------------------------
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D or any successor
14
<PAGE>
regulation, as the maximum reserve requirement (including any basic,
supplemental, emergency, special, or marginal reserves) applicable
with respect to Eurocurrency liabilities as that term is defined in
Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of
Eurodollar Rate Loans is determined), whether or not the Agent or any
Lender has any Eurocurrency liabilities subject to such requirements,
without benefits of credits or proration, exceptions or offsets that
may be available from time to time to the Agent or any Lender. The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the occurrences set forth as such
----------------
in Section 11.1.
------------
"Excess Cash Flow" means, with respect to the Borrower and its
----------------
Restricted Subsidiaries for any period, (a) Consolidated EBITDA less
(b) the sum of (i) any Change in Working Capital for such period, (ii)
all Consolidated Capital Expenditures made during such period, (iii)
all Cash Income Taxes paid during such period, (iv) the aggregate
amount of all Required Principal Payments made during such period, and
(v) Consolidated Interest Expense for such period.
I
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended through the date hereof, and the regulations promulgated and
the rulings issued thereunder.
"Existing Letters of Credit" means, collectively, the irrevocable
--------------------------
letters of credit issued for the benefit of the Borrower or one of its
Restricted Subsidiaries under the Prior Credit Facilities prior to the
Closing Date and remaining outstanding as of and after the Closing
Date, all as more particularly described on Schedule 1.1A.
-------------
"Facility Guaranty" means each Guaranty and Suretyship Agreement
-----------------
between one or more Guarantors and the Agent for the benefit of the
Lenders, delivered as of the Closing Date and otherwise pursuant to
Section 9.19, as the same may be amended, modified or supplemented.
------------
"Facility Termination Date" means the date on which both the
-------------------------
Revolving Credit Termination Date and the Term Loan Termination Date
shall have occurred, no Letters of Credit shall remain outstanding and
the Borrower shall have fully paid and satisfied all Obligations.
"FASB No. 106 Changes" means adjustments to income (or loss) less
--------------------
actual cash payments resulting from "retirement benefits other than
pensions" (as defined in the Statement of Financial Accounting
Standards No. 106).
"FASB No. 121 Changes" means adjustments charged to income (or
--------------------
loss) resulting from impairment of long-lived assets (as defined in
the Statement of Financial Accounting
15
<PAGE>
Standards No. 121).
"Federal Funds Effective Rate" means, for any day, the rate per
----------------------------
annum (rounded upward to the nearest 1/100th 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 Business Day next succeeding such day, provided that (a)
--------
if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business
Day, and (b) if no such rate is so published on such next preceding
Business Day, the Federal Funds Rate for such day shall be the average
rate quoted to the Agent on such day on such transaction as determined
by the Agent.
"Fiscal Year" means the twelve month fiscal period of the
-----------
Borrower and its Subsidiaries commencing on June 1 of each calendar
year and ending on May 31 of the next following calendar year.
"Foreign Benefit Law" means any applicable statute, law,
-------------------
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan or similar type plan.
"Four-Quarter Period" means a period of four full consecutive
-------------------
fiscal quarters (such fiscal quarters to end on the last day of each
February, May, August and November of each year) of the Borrower and
its Subsidiaries, taken together as one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
---- ----------------------------------------
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
Accountants or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
"Governmental Authority" shall mean any Federal, state,
----------------------
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guaranties" means all obligations of the Borrower or any
----------
Subsidiary directly or indirectly guaranteeing, or in effect
guaranteeing (including any arrangement described clauses (1) through
(5) of the definition of "Contingent Obligation"), any Indebtedness or
other obligation of any other Person.
16
<PAGE>
"Guarantors" means, at any date, the Restricted Subsidiaries
----------
(other than inactive Subsidiaries).
"Hazardous Material" means and includes any hazardous, toxic or
------------------
dangerous waste, substance or material, the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
"Holdback Reserve" means, with respect to any Person for any
----------------
sale, lease, transfer or other disposition of any property or assets,
an amount equal to any amount required to be reserved (and properly
reserved for) by such Person in accordance with GAAP against any
contingent liabilities that (a) are associated with the property and
assets of such Person being sold, leased, transferred or otherwise
disposed of in such transaction in accordance with the terms of the
Loan Documents (including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental
matters and liabilities resulting from indemnification obligations for
other similar contingent liabilities) and (b) are required to be
retained or indemnified by such Person under the documentation
evidencing the terms and conditions of such transaction; provided that
--------
the amount of each Holdback Reserve shall be (i) reduced on each
Business Day that the Borrower shall give notice to the Agent that the
contingent liabilities giving rise to such Holdback Reserve have been
paid, satisfied or extinguished in an amount specified in such notice,
by such amount, and (ii) permanently reduced to zero on the earlier to
occur of (X) the date that is 24 months after the date on which the
Borrower or any of its Subsidiaries received Net Cash Proceeds from
the transaction for which the Holdback Reserve was established and (Y)
the date on which the contingent liabilities for which such Holdback
Reserve was established are no longer required to be reserved against
in accordance with GAAP.
"Indebtedness" means with respect to any Person, without
------------
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property, all indebtedness secured
by any Lien on the property of such Person whether or not such
indebtedness is assumed, all liability of such Person by way of
endorsements (other than for collection or deposit in the ordinary
course of business), all Guaranties, that portion of obligations with
respect to Capital Leases and other items which in accordance with
GAAP is required to be classified as a liability on a balance sheet;
but excluding all accounts payable in the ordinary course of business
so long as payment therefor is due within one year; provided that in
no event shall the term Indebtedness include surplus and retained
earnings, lease obligations (other than pursuant to Capital Leases),
reserves for deferred income taxes and other taxes not due and
payable, and investment credits, other deferred credits or reserves,
or deferred compensation obligations.
"Indebtedness for Money Borrowed" means with respect to any
-------------------------------
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money
17
<PAGE>
(including conditional sales or similar title retention agreements),
other than trade payables incurred in the ordinary course of business.
"Interbank Offered Rate" means, with respect to any Eurodollar
----------------------
Rate Loan or Eurodollar Rate Segment for the Interest Period
applicable thereto, the average (rounded upward to the nearest one-
sixteenth (1/16) of one percent) per annum rate of interest determined
by the office of the Agent (each such determination to be conclusive
and binding) as of two Business Days prior to the first day of such
Interest Period, as the effective rate at which deposits in
immediately available funds in Dollars are being, have been, or would
be offered or quoted by the Agent to major banks in the applicable
interbank market for Eurodollar deposits at any time during the
Business Day which is the second Business Day immediately preceding
the first day of such Interest Period, for a term comparable to such
Interest Period and in the amount of the Eurodollar Rate Loan or
Eurodollar Rate Segment. If no such offers or quotes are generally
available for such amount, then the Agent shall be entitled to
determine the Eurodollar Rate by estimating in its reasonable judgment
the per annum rate (as described above) that would be applicable if
such quote or offers were generally available.
"Intercompany Advance" means a loan or advance made by an
--------------------
Intercompany Note Holder to a Restricted Subsidiary of the Borrower,
which is evidenced by an Intercompany Note in which the Agent has a
valid, duly perfected, first priority Lien under the Intercompany Note
Pledge Agreement, and the repayment of which is subordinated to the
rights of the Agent and the Lenders under the Loan Documents in
accordance with the provisions set forth in the Intercompany Notes.
"Intercompany Notes" means, collectively, the promissory notes in
------------------
the form attached as Exhibit F (with appropriate insertions)
---------
outstanding from time to time evidencing the Intercompany Advances.
"Intercompany Note Holder" means, at any date, the Borrower and
------------------------
any Restricted Subsidiary of the Borrower who has extended any
Intercompany Advance that remains outstanding at such date.
"Intercompany Notes Pledge Agreements" means, collectively, (i)
------------------------------------
the Intercompany Notes Pledge Agreement of even date herewith between
the Borrower and the Agent, and (ii) each Intercompany Note Pledge
Agreement between each Intercompany Note Holder other than the
Borrower and the Agent, substantially in the form of Exhibit G,
---------
pursuant to which the Agent is granted a Lien in the Intercompany
Notes held by such Intercompany Note Holder, in each case as the same
may be modified, amended or supplemented.
"Interest Period" means, for each Eurodollar Rate Loan or
---------------
Eurodollar Rate Segment, a period commencing on the date such
Eurodollar Rate Loan or Eurodollar Rate Segment is made or converted
and ending, at the Borrower's option, on the date one, two, three or
six
18
<PAGE>
months thereafter as notified to the Agent by the Authorized
Representative three (3) Business Days prior to the beginning of such
Interest Period; provided, that,
--------
(i) if the Authorized Representative fails to notify the
Agent of the length of an Interest Period three (3) Business Days
prior to the first day of such Interest Period, the Loan or Segment
for which such Interest Period was to be determined shall be deemed to
be a Base Rate Loan or Base Rate Segment as of the first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan or
Eurodollar Rate Segment would end on a day which is not a Business
Day, such Interest Period shall be extended to the next Business Day
(unless such extension would cause the applicable Interest Period to
end in the succeeding calendar month, in which case such Interest
Period shall end on the next preceding Business Day);
(iii) any Interest Period which begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iv) no Interest Period shall extend past the Stated
Revolving Credit Termination Date for Revolving Credit Loans or past
the Term Loan Termination Date for any Segment; and
(v) there shall not be more than eight (8) Interest Periods
in effect on any day.
"Interest Rate Selection Notice" means the written notice
------------------------------
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or Eurodollar Rate Segment or the conversion of any Eurodollar Rate
Loan or Eurodollar Rate Segment into a Base Rate Loan or Base Rate
Segment or the conversion of any Base Rate Loan or Base Rate Segment
into a Eurodollar Rate Loan or Eurodollar Rate Segment, in the form of
Exhibit E.
---------
"Investment" means, with respect to any Person, any loan or
----------
advance (including any Intercompany Advance) to such Person, any
purchase or other acquisition of any shares of capital stock of or
other ownership or profit interest in such Person, any warrants,
rights, options, obligations or other securities of such Person, any
capital contribution to such Person or any other investment in such
Person, including, without limitation, any Guaranty in respect of
Indebtedness or other obligations of such Person.
"Issuing Bank" means (i) NationsBank as issuer of Existing
------------
Letters of Credit and Letters of Credit under Article IV, and (i)
----------
Citicorp USA, Inc. only with respect to Existing
19
<PAGE>
Letters of Credit heretofore issued by Citicorp USA, Inc.
"Jim Walter Homes" means Jim Walter Homes, Inc., a Florida
----------------
corporation and a Subsidiary of the Borrower.
"LC Account Agreement" means the LC Account Agreement dated as of
--------------------
the date hereof between the Borrower and the Agent, as amended,
modified or supplemented from time to time.
"Lending Office" means, as to each Lender, the Lending Office of
--------------
such Lender designated on the signature pages hereof or in an
Assignment and Acceptance or such other office of such Lender (or of
an affiliate of such Lender) as such Lender may from time to time
specify to the Authorized Representative and the Agent as the office
by which its Loans are to be made and maintained.
"Letters of Credit" means, collectively, (i) the Standby Letters
-----------------
of Credit and (ii) the Documentary Letters of Credit, and shall
include the Existing Letters of Credit.
"Letter of Credit Commitment" means, with respect to each Lender,
---------------------------
the obligation of such Lender to acquire Participations in respect of
Letters of Credit and Reimbursement Obligations up to an aggregate
amount at any one time outstanding equal to such Lender's Applicable
Commitment Percentage of the Total Letter of Credit Commitment as the
same may be increased or decreased from time to time pursuant to this
Agreement.
"Letter of Credit Facility" means the facility described in
-------------------------
Article IV hereof providing for the issuance by the Issuing Bank upon
----------
application of the Borrower for the account of the Borrower or the
Borrower and a Restricted Subsidiary of Letters of Credit in an
aggregate stated amount at any time outstanding not exceeding the
Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of
-----------------------------
determination, the aggregate amount remaining undrawn under all
Letters of Credit (including for this purpose Existing Letters of
Credit) plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
----
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and any
Subsidiary shall be deemed to be the owner of any property which it
has acquired or holds subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for
security purposes.
20
<PAGE>
"Loan" or "Loans" means any of the Revolving Loans or the Term Loans
---- -----
made under the Revolving Credit Facility or the Term Loan Facility,
respectively.
"Loan Documents" means this Agreement, the Notes, the Security
--------------
Instruments, the Facility Guaranties, the LC Account Agreement, the
Unrestricted Subsidiary Subordination Agreement, the Applications and
Agreements for Letter of Credit, and all other instruments and
documents heretofore or hereafter executed or delivered to or in favor
of any Lender or the Agent in connection with the Loans made and
transactions contemplated under this Agreement, as the same may be
amended, supplemented or replaced from the time to time.
"Material Adverse Change" means any change in the business,
-----------------------
condition (financial or otherwise), operations, performance,
properties or prospects of, or actions, suits, proceedings or
investigations affecting the Borrower or any of its Subsidiaries which
has or could reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a)
-----------------------
the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its
Subsidiaries, taken as a whole, (b) the rights and remedies of the
Agent or any Lender under any Loan Document or the validity or
enforceability thereof, or (c) the ability of the Borrower or any
Subsidiary to pay any amounts owing under or in respect of the Loan
Documents when the same shall be due and payable or of the Borrower or
any Subsidiary to perform its other obligations under any Loan
Document to which it is or is to be a party.
"Material Contract" means, with respect to the Borrower and its
-----------------
Subsidiaries, each contract to which the Borrower or any Subsidiary is
a party involving aggregate consideration payable to or by such Person
of $20,000,000 or more or otherwise material to the business,
condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries, taken as
a whole; provided, however, that, notwithstanding the foregoing,
leases of real property, the Specified Documents, and the
documentation evidencing Indebtedness described in Section 10.4(a),
---------------
the Mortgage-Backed Securities and the Mortgage Warehousing Facility
shall not constitute Material Contracts.
"Mid-State" means Mid-State Homes, Inc., a Florida corporation
---------
and a wholly owned Subsidiary of the Borrower.
"Mid-State Holdings" means Mid-State Holding Corporation, a
------------------
Delaware corporation and a wholly-owned Subsidiary of the Borrower.
"Moody's" means Moody's Investors Service, Inc.
-------
"Mortgage Accounts" means certain building and installment
-----------------
contracts and related mortgages and instruments originated by Jim
Walter Homes.
21
<PAGE>
"Mortgage-Backed Securities" means, collectively, (i) the Class
--------------------------
A3 and Class A4 Mortgage-Backed Notes issued by Mid-State Trust II, a
Delaware business trust established by Mid-State, having an aggregate
principal amount outstanding as of October 1, 1995 of approximately
$540,500,000, (i) the Asset Backed Notes issued by Mid-State Trust
III, a Delaware business trust established by Mid-State, having an
aggregate principal amount outstanding as of October 1, 1995 of
approximately $160,672,446, and (iii) the Asset Backed Notes issued by
Mid-State Trust IV, a Delaware business trust established by Mid-
State, having an aggregate principal amount outstanding as of October
1, 1995 of approximately $930,229,750.
"Mortgage Warehousing Facility" means, collectively, (i) the
-----------------------------
mortgage warehousing facility established on or about March 3, 1995 by
Mid-State with Enterprise Funding Corporation in an aggregate amount
of up to $500,000,000 (subject to certain availability criteria set
forth therein), pursuant to which Mid-State obtains limited recourse
financing secured by Mortgage Accounts, and (ii) any other mortgage
warehousing facility entered into by Mid-State having substantially
the same terms as the facility described in clause (i) of this
definition.
"MSH Trusts" means, collectively, each of the Mid-State Trust II,
----------
Mid-State Trust III and Mid-State Trust IV entities referred to in the
definition of "Mortgage-Backed Securities" and Mid-State Trust V, and
any other special purpose entity in which Mid-State shall own the sole
equity or residual beneficial interest created and operated solely for
the purpose of issuing asset-backed securities permitted by Section
-------
10.4(d)(iii).
------------
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"NCMI" means NationsBanc Capital Markets, Inc. and its
----
successors.
"Net Cash Advances to Unrestricted Subsidiaries" means, as of any
----------------------------------------------
date of determination thereof, (A) the aggregate outstanding principal
amount of loans and advances made after the Closing Date by the
Borrower or any Restricted Subsidiary to any of the Unrestricted
Subsidiaries less (B) the aggregate outstanding principal amount of
----
Subordinated Payables arising after the Closing Date.
"Net Cash Proceeds" means, with respect to any sale, lease,
-----------------
transfer or other disposition of any property or assets, the aggregate
amount of cash received from time to time (whether as initial
consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only:
22
<PAGE>
(a) reasonable and customary brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees and
other similar fees and commissions;
(b) the amount of taxes payable in connection with or as a
result of such transaction; provided, however, that, in the case
of taxes that are deductible under this clause (b) but for the
fact that they would not be paid at the time of receipt of such
cash, such Person may deduct an amount equal to the necessary Tax
Reserve, if any, for such transaction;
(c) the amount of the required Holdback Reserve, if any, for
such transaction: and
(d) the amount of any Indebtedness secured by a Lien on such
property or assets that, by the terms of such transaction, is
required to be repaid upon such disposition, in each case to the
extent, but only to the extent, that the amounts so deducted are,
at the time of receipt of such cash, actually paid to a Person
that is not an Affiliate of such Person or any Credit Party and
that are properly attributable to such transaction or to the
property and assets that are the subject thereof.
"Net Issuance Proceeds" means, with respect to any Permitted
---------------------
Receivables Securitization or the issuance of any permitted
Consolidated Indebtedness, cash payments received therefrom as and
when received, net of all legal, accounting, printing, rating agency,
banking, underwriting, title and recording fees and expenses,
commissions, discounts and other issuance expenses incurred in
connection therewith and all taxes required to be paid or accrued as a
consequence of such transaction.
"Notes" means, collectively, the Term Notes and the Revolving
-----
Notes.
"Obligations" means the obligations, liabilities and Indebtedness
-----------
of the Borrower with respect to (i) the principal and interest on the
Loans as evidenced by the Notes, (ii) the Reimbursement Obligations
and otherwise in respect of the Letters of Credit, (iii) all
liabilities of Borrower to any Lender which arise under a Swap
Agreement, and (iii) the payment and performance of all other obliga-
tions, liabilities and Indebtedness of the Borrower to the Lenders,
the Agent or NCMI hereunder, under any one or more of the other Loan
Documents or with respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of
------------
Credit Outstandings, Swing Line Outstandings, Term Loan Outstandings
and Revolving Credit Outstandings on such date.
"Participation" means, (i) with respect to any Lender with a
-------------
Revolving Credit Commitment (other than the Issuing Bank) and a Letter
of Credit, the extension of credit represented by the participation of
such Lender hereunder in the liability of the Issuing Bank
23
<PAGE>
in respect of a Letter of Credit issued by the Issuing Bank in
accordance with the terms hereof and (ii) with respect to any Lender
(other than NationsBank) and a Swing Line Loan, the extension of
credit represented by the participation of such Lender hereunder in
the liability of NationsBank in respect of a Swing Line Loan made by
NationsBank in accordance with the terms hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any
----
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
------------
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or any of its ERISA Affiliates or is assumed by the Borrower or any of
its ERISA Affiliates in connection with any Acquisition or (ii) has at
any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate and, with respect to employee
pension benefit plans of any former ERISA Affiliate, the Borrower or
any Restricted Subsidiary has or retains any obligations or liability,
absolute or contingent, for funding or other performance obligations
imposed by ERISA or other applicable law.
"Permitted Receivables Securitization" means limited recourse
------------------------------------
sales and assignments of accounts receivable of the Borrower or its
Restricted Subsidiaries to one or more special purpose entities, in
connection with the issuance of obligations by such special purpose
entities secured by such accounts, the proceeds of the issuance of
which obligations shall be made available to the Borrower or its
Restricted Subsidiaries at such rates of advance, and the obligations
issued by such special purpose entities shall be in such amount or
amounts, bear such rate or rates of interest, and be subject to such
other terms and conditions, all as shall be acceptable to the Agent
and the Required Lenders.
"Person" means an individual, partnership, corporation, trust,
------
unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof.
"Plan of Reorganization" means the Amended Joint Plan of
----------------------
Reorganization dated as of December 9, 1994, as modified on March 1,
1995, filed by the Borrower and certain of its Subsidiaries in the
United States Bankruptcy Court for the Middle District of Florida,
Tampa Division.
"Pledged Stock" has the meaning given to such term in the Stock
-------------
Pledge Agreements.
"Prime Rate" means the rate of interest per annum announced
----------
publicly by the Agent as its prime rate from time to time. The Prime
Rate is not necessarily the best or the lowest rate of interest
offered by the Agent.
"Principal Office" means the office of the Agent at NationsBank,
----------------
National Association
24
<PAGE>
(South), Independence Center, 15th Floor, NC1 001-15-04, Charlotte,
North Carolina 28255, Attention: Agency Services, or such other
office and address as the Agent may from time to time designate.
"Prior Credit Agreement" means the Credit Agreement dated as of
----------------------
February 27, 1995 among the Borrower, certain of its Subsidiaries,
Citicorp USA, Inc., as facilities manager, co-administrative agent and
provider of a swing line, the lenders party thereto, and certain other
persons, pursuant to which $150,000,000 revolving credit, swing line
and letter of credit facilities were made available to the Borrower
and certain of its Subsidiaries.
"Prior Credit Facilities" means the credit facilities made
-----------------------
available under the Prior Credit Agreement.
"Prior Credit Facility Liens" means all Liens on property of the
---------------------------
Borrower or any of its Subsidiaries created under the Prior Credit
Facility Loan Documents.
"Prior Credit Facility Loan Documents" shall mean the "Loan
------------------------------------ ----
Documents" as defined in the Prior Credit Agreement.
---------
"Prior Credit Facilities Manager" means Citicorp, USA, Inc., as
-------------------------------
Facilities Manager under the Prior Credit Agreement.
"Ratable Reduction of Credit Facilities" means the application of
--------------------------------------
amounts to reduce pro rata each of (i) the Total Revolving Credit
Commitment, (ii) the Term Loan Outstandings in respect of Term Loan A,
and (iii) the Term Loan Outstandings in respect of Term Loan B.
"Ratable Reduction of Term Loan Facilities" means the application
-----------------------------------------
of amounts to reduce pro rata each of the Term Loan Outstandings in
respect of Term Loan A and the Term Loan Outstandings in respect of
Term Loan B.
"Rate Hedging Obligations" means any and all obligations of the
------------------------
Borrower or any Subsidiary, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts,
warrants, commodity options or future contracts or similar
transactions, and those commonly known as interest rate "swap"
agreements; and (ii) any and all cancellations, buybacks, reversals,
terminations or assignments of any of the foregoing.
25
<PAGE>
"Regulation D" means Regulation D of the Board as the same may be
------------
amended or supplemented from time to time.
"Registration Rights Agreements" means, collectively, (a) the
------------------------------
Registration Rights Agreement dated on or about February 27, 1995
among the Borrower and certain holders of the Senior Notes and (b) the
Registration Rights Agreement dated on or about February 27, 1995
among the Borrower and certain holders of the common stock of the
Borrower, in either case as such agreement may be amended,
supplemented or otherwise modified hereafter from time to time in
accordance with the terms hereof and thereof.
"Regulatory Change" means any change effective after the Closing
-----------------
Date in United States federal or state laws or regulations (including
Regulation D and capital adequacy regulations) or foreign laws or
regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy,
including those relating to "highly leveraged transactions," whether
or not having the force of law, and whether or not failure to comply
therewith would be unlawful and whether or not published or proposed
prior to the date hereof.
"Reimbursement Obligation" shall mean at any time, the obligation
------------------------
of the Borrower with respect to any Letter of Credit to reimburse the
Issuing Bank and the Lenders to the extent of their respective
Participations (including by the receipt by the Issuing Bank of
proceeds of Loans pursuant to Section 4.2) for amounts theretofore
-----------
paid by the Issuing Bank pursuant to a drawing under such Letter of
Credit.
"Required Lenders" means, as of any date, Lenders on such date
----------------
having Credit Exposures (as defined below) aggregating in excess of
50% of the aggregate Credit Exposures of all the Lenders on such date.
For purposes of the preceding sentence, the amount of the "Credit
------
Exposure" of each Lender shall be equal to the aggregate principal
--------
amount of the Revolving Loans owing to such Lender plus the aggregate
unutilized amounts of such Lender's Revolving Credit Commitment
(without regard to any Swing Line Outstandings) plus the amount of
such Lender's Applicable Commitment Percentage of Letter of Credit
Outstandings plus the amount of such Lender's Applicable Commitment
Percentage of the Term Loan Outstandings; provided that, (i) if any
Lender with a Revolving Credit Commitment shall have failed to pay to
the Issuing Bank its Applicable Commitment Percentage of any drawing
under any Letter of Credit resulting in an outstanding Reimbursement
Obligation, such Lender's Credit Exposure attributable to Letters of
Credit and Reimbursement Obligations shall be deemed to be held by the
Issuing Bank for purposes of this definition and (ii) if any Lender
with a Revolving Credit Commitment shall have failed to pay to
NationsBank its Applicable Commitment Percentage of any Swing Line
Loan, such
26
<PAGE>
Lender's Credit Exposure equal to its Applicable Commitment Percentage
of all Swing Line Outstandings shall be deemed to be held by
NationsBank for purposes of this definition.
"Required Principal Payments" means, for any period, any
---------------------------
regularly scheduled principal payment or any required prepayment or
redemption of Consolidated Indebtedness of the Borrower and its
Restricted Subsidiaries during such period, but excluding any such
payments to the extent refinanced through the incurrence of additional
Indebtedness under Section 10.4(m).
---------------
"Reserve Amount" means, at any date, the aggregate amount of
--------------
Holdback Reserves and Tax Reserves at such date.
"Reserve Reduction Amount" means the amount of each reduction in
------------------------
any Holdback Reserve or any Tax Reserve in accordance with the
respective provisos in the definitions of "Holdback Reserve" and "Tax
---------------- ---
Reserve".
-------
"Restricted Payment" means (a) any dividend or other
------------------
distribution, direct or indirect, on account of any shares of any
class of stock of Borrower or any of its Subsidiaries (other than
those payable or distributable solely to the Borrower) now or
hereafter outstanding, except a dividend payable solely in shares of a
class of stock to the holders of that class; (b) any redemption,
conversion, exchange, retirement or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class
of stock of Borrower or any of its Subsidiaries (other than those
payable or distributable solely to the Borrower) now or hereafter
outstanding; and (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of Borrower or any of its
Subsidiaries now or hereafter outstanding; provided, however,
"Restricted Payments" shall not include (i) amounts contributed (and
accounted for as compensation expense) by the Credit Parties for the
purchase in the open market for the account of participating employees
of capital stock of the Borrower pursuant to an employee stock
purchase plan more particularly described on Schedule 1.1B, and (ii)
-------------
capital stock of the Borrower purchased in the open market for the
benefit of directors of the Borrower in payment of directors' fees
that the directors elected to have deferred and invested in capital
stock of the Borrower in lieu of cash.
"Restricted Subsidiaries" means all Subsidiaries of the Borrower
-----------------------
other than Mid-State Holdings, Mid-State, Cardem and the MSH Trusts.
"Revolving Credit Commitment" means, with respect to each Lender,
---------------------------
the obligation of such Lender to make Revolving Loans to the Borrower
and to purchase Participations up to an aggregate principal amount at
any one time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in
-------------------------
Article III hereof providing
27
<PAGE>
for Loans to the Borrower by the Lenders and Swing Line Loans to the
Borrower by NationsBank in the aggregate principal amount of the Total
Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
-----------------------------
determination, the aggregate principal amount of all Revolving Loans
then outstanding.
"Revolving Credit Termination Date" means (i) the Stated
---------------------------------
Revolving Credit Termination Date or (ii) such earlier date of
termination of Lenders' obligations pursuant to Section 11.1 upon the
------------
occurrence of an Event of Default, or (iii) such date as the Borrower
may voluntarily and permanently terminate the Revolving Credit
Facility by payment in full of all Revolving Credit Outstandings,
Swing Line Outstandings and Letter of Credit Outstandings and
cancellation of all Letters of Credit.
"Revolving Loan" means any borrowing pursuant to an Advance under
--------------
the Revolving Credit Facility in accordance with Article III.
-----------
"Revolving Notes" means, collectively, the promissory notes of
---------------
the Borrower evidencing Revolving Loans executed and delivered to the
Lenders as provided in Section 3.4 substantially in the form of
-----------
Exhibit H-1, with appropriate insertions as to amounts, dates and
-----------
names of Lenders.
"S&P" means Standard & Poor's Ratings Group, a division of
---
McGraw-Hill, Inc.
"Security Instruments" means, collectively, the Intercompany
--------------------
Notes Pledge Agreements, the Stock Pledge Agreements, and all other
agreements, instruments and other documents, whether now existing or
hereafter in effect, pursuant to which the Borrower or any Subsidiary
shall grant or convey to the Agent or the Lenders a Lien in property
as security for all or any portion of the Obligations, as any of them
may be amended, modified or supplemented.
"Segment" means a portion of a Term Loan (or all thereof) with
-------
respect to which a particular interest rate is (or is proposed to be)
applicable.
"Senior Notes" means the 12.19% senior fixed-rate notes of the
------------
Borrower due 2000 in the aggregate outstanding principal amount
immediately prior to the Closing Date of $490,000,000 issued pursuant
to the terms of the Senior Notes Documents.
"Senior Notes Documents" means the Senior Notes Indenture, the
----------------------
instruments evidencing the Senior Notes, the pledge agreements related
thereto and all other agreements, instruments and other documents
pursuant to which the Senior Notes have been issued, in each case as
such agreement, instrument or document may have been amended,
supplemented or otherwise modified.
28
<PAGE>
"Senior Notes Indenture" means the Indenture dated on or about
----------------------
March 17, 1995 among the Borrower and the Senior Notes Trustee, as
such agreement, instrument or document may have been amended,
supplemented or otherwise modified.
"Senior Notes Trustee" means United States Trust Company of New
--------------------
York, as Trustee under the Senior Notes Indenture.
"Single Employer Plan" means any employee pension benefit plan
--------------------
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
-------
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly basis)
is in excess of the total amount of its liabilities, including
Contingent Obligations;
(ii) it is then able and expects to be able to pay its
debts as they mature; and
(iii) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
"Specified Documents" means the Plan of Reorganization, the
-------------------
Registration Rights Agreements, the Stockholders Agreement and the
Veil Piercing Settlement Agreement.
"Standby Letters of Credit" means, collectively, the standby
-------------------------
letters of credit issued by the Issuing Bank under the Letter of
Credit Facility for the account of the Borrower in favor of a Person
advancing credit or securing an obligation on behalf of the Borrower
or a Restricted Subsidiary.
"Stated Revolving Credit Termination Date" means January 22,
----------------------------------------
2002.
"Stock Pledge Agreement" means, collectively (or individually as
----------------------
the context may indicate), (i) each of the Stock Pledge Agreements
dated as of the date hereof between the Borrower and the Agent or
between any Restricted Subsidiary and the Agent for the benefit of the
Agent and the Lenders, and (ii) any additional Stock Pledge Agreement
delivered to the Agent pursuant to Section 9.19, as hereafter amended,
------------
modified or supplemented.
"Stockholders Agreement" means the Stockholders Agreement dated
----------------------
on or about February 27, 1995 among the Borrower, the Equity Investors
and the other holders of the common stock of the Borrower from time to
time, as such agreement may be amended,
29
<PAGE>
supplemented or otherwise modified hereafter from time to time in
accordance with the terms hereof and thereof.
"Subordinated Payables" means amounts payable by the Borrower or
---------------------
any Restricted Subsidiary to either of the Unrestricted Subsidiaries
representing advances to the Borrower or its Restricted Subsidiaries,
the repayment of which is subordinated to the payment of the
Obligations pursuant to the Unrestricted Subsidiary Subordination
Agreement.
"Subsidiary" means any corporation or other entity in which more
----------
than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by the Borrower
and/or by one or more of the Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the
--------------
Borrower and any Lender with respect to Indebtedness evidenced by any
or all of the Notes, on terms mutually acceptable to Borrower and such
Lender, which agreements create Rate Hedging Obligations.
"Swing Line" means the revolving line of credit established by
----------
NationsBank in favor of the Borrower pursuant to Section 3.13.
------------
"Swing Line Loans" means loans made by NationsBank to the
----------------
Borrower pursuant to Section 3.13.
------------
"Swing Line Outstandings" means, as of any date of determination,
-----------------------
the aggregate principal amount of all Swing Line Loans then
outstanding, not to exceed $15,000,000.
"Tax Reserve" means, with respect to any Person for any sale,
-----------
lease, transfer or other disposition of any property or assets, an
amount equal to the amount properly reserved by such Person in
accordance with GAAP as such Person's reasonable estimate of taxes to
be paid by such Person solely as a result of such sale, lease,
transfer or disposition (computed on the basis of statutory rates in
effect at the time of such sale, lease, transfer or disposition after
giving effect to deductions, credit carryforwards, carrybacks and
similar items of such Person or such other amount as such Person
estimates in good faith and with the concurrence of the Agent) other
than any taxes for which such Person or any of its Subsidiaries is
indemnified; provided that the amount of each Tax Reserve shall be (i)
--------
reduced on each Business Day that the Borrower shall give notice to
the Agent that the tax liabilities giving rise to such Tax Reserve
have been paid, satisfied or extinguished in an amount specified in
such notice, by such amount, and (ii) permanently reduced to zero on
the date on which the tax return covering the transaction giving rise
to the Tax Reserve is required to be filed.
"Term Loan" means Term Loan A or Term Loan B, as the case may be.
---------
"Term Loan A" means the loan made pursuant to the Term Loan A
-----------
Facility in accordance with Section 2.1(a)(i).
-----------------
30
<PAGE>
"Term Loan "B" means the loan made pursuant to the Term Loan B
------------
Facility in accordance with Section 2.1(a)(ii).
------------------
"Term Loan A Commitment" means, with respect to each Lender, the
----------------------
obligation of such Lender to make the Term Loan A to the Borrower in a
principal amount equal to such Lender's Applicable Commitment
Percentage of the Total Term Loan A Commitment as set forth on
Exhibit A.
----------
"Term Loan B Commitment" means, with respect to each Lender, the
----------------------
obligation of such Lender to make the Term Loan B to the Borrower in a
principal amount equal to such Lender's Applicable Commitment
Percentage of the Total Term Loan B Commitment as set forth on
Exhibit A.
----------
"Term Loan Commitments" means, with respect to each Lender, the
---------------------
Term Loan A Commitment and the Term Loan B Commitment of such Lender.
"Term Loan A Facility" means the facility described in Article II
-------------------- ----------
providing for the Term Loan to the Borrower by the Lenders in the
original principal amount of $125,000,000.
"Term Loan B Facility" means the facility described in Article II
-------------------- ----------
providing for the Term Loan to the Borrower by the Lenders in the
original principal amount of $60,000,000.
"Term Loan Facilities" means the Term Loan A Facility and the
--------------------
Term Loan B Facility.
"Term Loan A Maturity Date" means January 22, 2002.
-------------------------
"Term Loan B Maturity Date" means January 22, 2003.
-------------------------
"Term Loan Outstandings" means, as of any date of determination,
----------------------
the aggregate principal amount of the Term Loans then outstanding and
all interest accrued thereon.
"Term Loan Termination Date" means, with respect to each Term
--------------------------
Loan, (i) the Term Loan A Maturity Date or Term Loan B Maturity Date
applicable to such Term Loan, or (ii) such earlier date of termination
of Lenders' obligations pursuant to Section 11.1 upon the occurrence
------------
of an Event of Default, or (iii) such date as the Borrower may
voluntarily and permanently terminate the applicable Term Loan
Facility by payment in full of all Obligations incurred in connection
with such Term Loan.
"Term Notes A" means, collectively, the promissory notes of the
------------
Borrower evidencing Term Loan A executed and delivered to the Lenders
as provided in Section 2.8 substantially in the form of Exhibit H-2,
----------- -----------
with appropriate insertions as to amounts, dates and names of Lenders.
31
<PAGE>
"Term Notes B" means, collectively, the promissory notes of the
------------
Borrower evidencing Term Loan B executed and delivered to the Lenders
as provided in Section 2.8 substantially in the form of Exhibit H-3,
----------- -----------
with appropriate insertions as to amounts, dates and names of Lenders.
"Term Notes" means, collectively, the Term Notes A and the Term
----------
Notes B.
"Termination Event" means: (i) a "Reportable Event" described in
-----------------
Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4068(f) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the
Code or Section 302 of ERISA; or (viii) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan
under Section 4241 or Section 4245 of ERISA, respectively; or (ix) any
event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by the PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA.
"Total Letter of Credit Commitment" means an amount not to exceed
---------------------------------
$40,000,000.
"Total Revolving Credit Commitment" means a principal amount
---------------------------------
equal to $365,000,000, as reduced from time to time in accordance with
Section 3.7.
-----------
"Total Term Loan A Commitment" means a principal amount equal to
----------------------------
$125,000,000.
"Total Term Loan B Commitment" means a principal amount equal to
----------------------------
$60,000,000.
"Total Term Loan Commitment" means the sum of the Total Term Loan
--------------------------
A Commitment and the Total Term Loan B Commitment.
"Unrestricted Subsidiaries" means Cardem, Mid-State Holdings,
-------------------------
Mid-State and MSH Trusts.
"Unrestricted Subsidiary Subordination Agreement" means the
-----------------------------------------------
Subordination Agreement of even date herewith among the Unrestricted
Subsidiaries and the Agent, as the same may be amended, modified or
supplemented.
32
<PAGE>
"Veil Piercing Settlement Agreement" means the Second Amended and
----------------------------------
Restated Veil Piercing Settlement Agreement dated as of November 22,
1994 by and among certain asbestos victim defendants named in
Adversary Proceeding 90-0003 and Adversary Proceeding 90-0004, certain
representatives of such defendants, The Celotex Corporation, Jim
Walter Corporation and its subsidiaries (other than The Celotex
Corporation), the Plan Proponents referred to therein and certain
Settling Equityholders referred to therein, as such agreement may be
amended, supplemented or otherwise modified hereafter from time to
time in accordance with the terms hereof and thereof.
"Voting Stock" means shares of capital stock issued by a
------------
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
1.2. Rules of Interpretation.
-----------------------
(a) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code
of another jurisdiction is controlling, in which case such terms shall
have the meaning given in the Uniform Commercial Code of the
applicable jurisdiction.
(b) The headings, subheadings and table of contents used herein
or in any other Loan Document are solely for convenience of reference
and shall not constitute a part of any such document or affect the
meaning, construction or effect of any provision thereof.
(c) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits
and schedules are references to articles, sections, paragraphs,
clauses, annexes, appendices, exhibits and schedules in or to this
Agreement.
(d) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of
such defined term, and all references to the masculine gender shall
include reference to the feminine or neuter gender, and vice versa, as
----------
the context may require.
(e) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of
like import shall, unless the context clearly indicates to the
contrary, refer to the whole of the applicable document and not to any
particular article, section, subsection, paragraph or clause thereof.
(f) References to "including" means including without limiting
the generality of any description preceding such term, and for
purposes hereof the rule of ejusdem generis shall not
---------------
33
<PAGE>
be applicable to limit a general statement, followed by or referable
to an enumeration of specific matters, to matters similar to those
specifically mentioned.
(g) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(h) Each of the parties to the Loan Documents and their counsel
have reviewed and revised, or requested (or had the opportunity to
request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of
the Loan Documents and all exhibits, schedules and appendices thereto.
(i) All reference to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted
therein and in the Loan Documents.
1.3. Accounting Principles.
---------------------
(a) Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters
and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation where appropriate applied on a
Consistent Basis), and all accounting or financial terms shall have
the meanings ascribed to such terms by GAAP.
(b) If there shall occur any change in GAAP after the Closing
Date, the Borrower shall give written notice thereof to the Agent and
the Lenders promptly, and in any event within fifteen (15) days after
the effective date of any such change in GAAP, which notice shall be
effective upon receipt and shall (i) describe in detail the nature of
such required change and its impact on (X) the financial statements
required to be delivered pursuant to Section 9.1 hereof, and (Y) the
-----------
effect on calculation of any financial covenants contained herein or
determination of compliance with any other terms or conditions hereof
insofar as they relate to financial or accounting matters, and (ii) be
accompanied by a covenant compliance certificate in the form of
Exhibit J signed by an Authorized Representative and showing the
---------
computations therein provided, after giving effect to the required
change in GAAP, for the same fiscal period of the Borrower and its
Subsidiaries for which a compliance certificate required under Section
-------
9.1(a)(ii) or 9.1(b)(ii), as the case may be, has most recently
------------------------
theretofore been delivered.
(c) In the event that, in the judgment of the Agent, the change
in GAAP shall materially affect the calculation of any financial
covenant or other determination of compliance with any term or
condition contained herein insofar as it relates to financial or
accounting matters so as to distort the intended economic effect of
any such covenant, term
34
<PAGE>
or condition, then the provisions of GAAP without giving effect to such change
shall continue to be utilized for all purposes of such covenants, terms and
provisions unless the Required Lenders shall otherwise consent.
35
<PAGE>
ARTICLE II
The Term Loans
--------------
2.1. Term Loan. (a) Subject to the terms and conditions of this
---------
Agreement, each Lender with a Term Loan A Commitment or a Term Loan B
Commitment, as the case may be, severally agrees to make (i) an Advance of
the Term Loan A to the Borrower on the Closing Date in an amount equal to
its Applicable Commitment Percentage of the Total Term Loan A Commitment
and (ii) an Advance of the Term Loan B to the Borrower on the Closing Date
in an amount equal to its Applicable Commitment Percentage of the Total
Term Loan B Commitment. The principal amount of each Segment of the Term
Loans outstanding hereunder from time to time shall bear interest, at the
Borrower's election, at an interest rate per annum equal to the Base Rate
or the Eurodollar Rate; provided, however, that (x) no Eurodollar Rate
--------
Segment shall have an Interest Period that extends beyond the Term Loan A
Maturity Date or the Term Loan B Maturity Date, as the case may be, (y)
each Eurodollar Rate Segment of each Term Loan shall be in the minimum
amount of $5,000,000 and if greater, in an integral multiple of $1,000,000,
and (z) each Eurodollar Rate Segment may, subject to the provisions of
Sections 2.4, 2.6 and 2.7 and Article XI, be repaid only on the last day of
- ------------ --- --- ----------
the Interest Period with respect thereto. No amount of any Term Loan
repaid or prepaid by the Borrower may be reborrowed hereunder, and no
subsequent Advances of Term Loan amounts shall be made by any Lender after
the initial such Advance.
(b) Interest and fees relating to the Term Loans shall be
computed on the basis of a year of 360 days and calculated for the actual
number of days elapsed.
2.2. Term Loan Advance. Not later than 10:00 A.M. on the Closing
-----------------
Date, each Lender with a Term Loan A Commitment and a Term Loan B
Commitment, as the case may be, shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Term Loan Advances
to be made by it on such day available by wire transfer to the Agent in the
amount of its Term Loan A Commitment and Term Loan B Commitment. Such wire
transfer shall be directed to the Agent at the Principal Office and shall
be in the form of immediately available, freely transferable Dollars. The
amount so received by the Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Borrower by delivery of the
proceeds thereof to the Borrower's Account or otherwise as shall be
directed by the Authorized Representative and reasonably acceptable to the
Agent.
36
<PAGE>
2.3. Payment of Principal. (a) The principal amount of Term Loan A
--------------------
shall be repaid in twenty four (24) consecutive quarterly installments on
the dates and in the amounts (subject to the provisions of Section 2.6 and
---------------
2.7) set forth below:
- ---
Date Amount
---- ------
April 30, 1996 $3,750,000
July 31, 1996 $3,750,000
October 31, 1996 $3,750,000
January 31, 1997 $3,750,000
April 30, 1997 $3,750,000
July 31, 1997 $3,750,000
October 31, 1997 $3,750,000
January 31, 1998 $3,750,000
April 30, 1998 $5,000,000
July 31, 1998 $5,000,000
October 31, 1998 $5,000,000
January 31, 1999 $5,000,000
April 30, 1999 $6,250,000
July 31, 1999 $6,250,000
October 31, 1999 $6,250,000
January 31, 2000 $6,250,000
April 30, 2000 $6,250,000
July 31, 2000 $6,250,000
October 31, 2000 $6,250,000
January 31, 2001 $6,250,000
April 30, 2001 $6,250,000
July 31, 2001 $6,250,000
October 31, 2001 $6,250,000
Term Loan A Maturity Date All remaining
principal outstanding
37
<PAGE>
(b) The principal amount of Term Loan B shall be repaid in twenty
eight (28) consecutive quarterly installments on the dates and in the
amounts (subject to Sections 2.6 and 2.7) set forth below:
--------------------
Date Amount
---- ------
April 30, 1996 $250,000
July 31, 1996 $250,000
October 31, 1996 $250,000
January 31, 1997 $250,000
April 30, 1997 $250,000
July 31, 1997 $250,000
October 31, 1997 $250,000
January 31, 1998 $250,000
April 30, 1998 $250,000
July 31, 1998 $250,000
October 31, 1998 $250,000
January 31, 1999 $250,000
April 30, 1999 $250,000
July 31, 1999 $250,000
October 31, 1999 $250,000
January 31, 2000 $250,000
April 30, 2000 $250,000
July 31, 2000 $250,000
October 31, 2000 $250,000
January 31, 2001 $250,000
April 30, 2001 $250,000
July 31, 2001 $250,000
October 31, 2001 $250,000
January 31, 2002 $250,000
April 30, 2002 $11,000,000
July 31, 2002 $11,000,000
October 31, 2002 $11,000,000
Term Loan B Maturity Date All remaining
principal outstanding
(c) Notwithstanding the foregoing, the entire amount of Term Loan
Outstandings shall be due and payable in full on the Term Loan Termination
Date.
2.4. Payment of Interest. The Borrower shall pay interest on the
-------------------
outstanding and unpaid principal amount of each Segment of each Term Loan
commencing on the date of determination of the interest rate applicable to
such Segment until such Segment shall be due at the applicable Base Rate or
Eurodollar Rate, as the case may be, as designated by the Borrower in the
applicable Interest
38
<PAGE>
Rate Selection Notice or as otherwise provided hereunder. Interest shall
be computed on the basis of a year of 360 days and calculated for actual
days elapsed. Interest on each Segment of each Term Loan shall be paid on
the earlier of (a) in the case of any Base Rate Segment, quarterly in
arrears on the last Business Day of each April, July, October and January,
commencing on April 30, 1996, until the applicable Term Loan A Maturity
Date or Term Loan B Maturity Date, or if earlier the Term Loan Termination
Date, on which date the entire principal amount of and all accrued interest
on the Term Loans shall be paid in full, (b) in the case of any Eurodollar
Rate Segment, on the last day of the applicable Interest Period for such
Segment and if such Interest Period extends for more than three (3) months,
at intervals of three (3) months after the first day of such Interest
Period, and (c) upon payment in full of such Term Loan; provided, however,
-------- -------
that if any amount due under this Agreement shall not be paid when due (at
maturity, by acceleration or otherwise), all amounts outstanding hereunder
shall bear interest thereafter at the Default Rate.
2.5. Manner of Payment. (a) Each payment of principal (including
-----------------
any prepayment) and payment of interest and fees, and any other amount
required to be paid to the Lenders with respect to the Term Loans, shall be
made to the Agent at the Principal Office for the account of each Lender in
Dollars in immediately available funds on or before 3:00 P.M. on the date
such payment is due. The Agent may, upon the request of the Borrower, but
shall not be obligated to, debit the amount of such payment from any one or
more ordinary deposit accounts of the Borrower with the Agent. The
Borrower shall give the Agent telefacsimile notice of any intended payment
of principal or interest prior to 12:00 Noon on the date of such payment.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower that is not made both in Dollars in immediately available funds
and prior to 3:00 P.M. on the date such payment is to be made to be a non-
conforming payment. Any such non-conforming payment shall not be deemed to
be received by the Agent until the later of (i) the time such funds become
available funds and (ii) the next Business Day. Any non-conforming payment
may constitute or become a Default or Event of Default. Interest shall
continue to accrue on any principal as to which a non-conforming payment is
made until the later of (i) the date such funds become available funds or
(ii) the next Business Day at the Default Rate, from the date such amount
was due and payable.
(c) In the event that any payment hereunder or under the Term Notes
becomes due and payable on a day other than a Business Day, then such due
date shall be extended to the next succeeding Business Day unless provided
otherwise under the definition of "Interest Period"; provided, however,
--------
that interest shall continue to accrue during the period of any such
extension; and provided further, however, that in no event shall any such
--------
due date be extended beyond the Term Loan Termination Date.
2.6. Optional Prepayments. The Borrower may prepay the Term Loans,
--------------------
in accordance with a Ratable Reduction of Term Loan Facilities, in whole or
in part from time to time on any Business Day, without penalty or premium,
upon not less than three (3) Business Days' prior written notice (effective
upon receipt) to the Agent, which notice shall be irrevocable. Any
prepayment, whether a Base Rate Segment or a Eurodollar Rate Segment, shall
be made at a prepayment price equal to
39
<PAGE>
(i) the amount of principal to be prepaid, plus (ii) all accrued and unpaid
interest on the amount so prepaid, to the date of prepayment. All
prepayments under this Section 2.6 shall be made in the minimum principal
-----------
amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof (or in the entire remaining principal balance of the Term Loans),
and all such prepayments of principal shall be applied to installments of
principal in inverse order of their maturities. No such prepayment shall
result in the payment of any Eurodollar Rate Segment other than on the last
day of the Interest Period of such Segment unless such prepayment is
accompanied by amounts due, if any, under Section 6.4. No payment under
-----------
this Section 2.6 shall reduce or excuse any payment required under Section
----------- -------
2.7.
- ---
2.7. Mandatory Prepayments. (a) In addition to the required payments
---------------------
of principal of the Term Loans set forth in Section 2.3 and any optional
-----------
payments of principal of the Loans effected under Section 2.6 or Section
----------- -------
3.7(a), the Borrower shall make the following required prepayments of the
- ------
Term Loan Facilities and the Revolving Credit Facility, each such payment
to be made to the Agent for the benefit of the Lenders within the time
period specified below:
(i) the Borrower shall make prepayments of the Term Loan
Facilities and the Revolving Credit Facility by application to the
Ratable Reduction of Credit Facilities of an amount equal to one
hundred percent (100%) of the Net Cash Proceeds (including each
Reserve Reduction Amount other than those resulting from the payment
in cash or other property by the Borrower or any Restricted Subsidiary
to pay or satisfy a liability giving rise to any related Holdback
Reserve or Tax Reserve) or Net Issuance Proceeds, as the case may be,
of (X) all sales, transfers or other dispositions of property or
assets of the Borrower or any Restricted Subsidiary in accordance with
the provisions of Section 10.5(c) and 10.5(e)(ii) in which the
-------------------------------
aggregate consideration received in such transactions (on a cumulative
basis from the Closing Date) exceeds $20,000,000 and (without limiting
the obligation to make prepayments as provided herein) the cumulative
amount of such Net Cash Proceeds from such dispositions since the most
recent preceding prepayment under this Section 2.7(a)(i), if any,
-----------------
shall equal or exceed $1,000,000, (Y) each Permitted Receivables
Securitization, or (Z) each issuance of Consolidated Indebtedness
permitted to be issued hereunder (other than Indebtedness described in
Section 10.4), each such prepayment to be made within ten (10)
------------
Business Days of receipt of such proceeds and upon not less than five
(5) Business Days' written notice to the Agent, which notice shall
include a certificate of an Authorized Representative setting forth in
reasonable detail the calculations utilized in computing the amount of
such prepayment; and
(ii) the Borrower shall make an annual prepayment of the Term
Loans by application to the Ratable Reduction of Term Loan Facilities
of an amount equal to fifty percent (50%) of Excess Cash Flow as at
the end of each Fiscal Year of Borrower ending on or after May 31,
1997, each such prepayment to be made on the date financial statements
of the Borrower and its Subsidiaries for such Fiscal Year are required
to be delivered (or if earlier, the date such financial statements are
delivered) pursuant to Section 9.1, which payment shall be accompanied
-----------
by a certificate of an Authorized Representative (which may be
incorporated
40
<PAGE>
within the certificate regarding compliance with certain covenants
otherwise required to be delivered under Section 9.1) setting forth in
-----------
reasonable detail the calculations utilized in computing Excess Cash
Flow and the amount of such prepayment.
(b) Each mandatory prepayment of Term Loans pursuant to this Section
-------
2.7 shall be applied within each Term Loan to reduce remaining installments
- ---
of principal otherwise payable hereunder pro rata, except that such
prepayments of Term Loan A arising under Section 2.7(a)(ii) shall be
------------------
applied, first, to installments of principal becoming due and payable
within the 12 month period following the date of receipt of such prepayment
in the order of maturity of such installments, and then, the balance after
prepayment in full of such installments, shall be applied to reduce the
remaining installments of principal of Term Loan A pro rata. Each pro rata
application of prepayments to installments of any Term Loan shall give
effect to prior optional or mandatory prepayments.
(c) The Agent shall give each Lender, within one (1) Business Day,
telefacsimile notice of each notice of each prepayment described in this
Section 2.7. Any prepayment of a Eurodollar Rate Segment pursuant to this
- -----------
Section 2.7 other than on the last day of an Interest Period shall be
- -----------
accompanied by the additional payment, if any, required by Section 6.4.
-----------
2.8. Term Notes. The portion of each of the Term Loan A and Term
----------
Loan B made by each Lender shall be evidenced by the Term Note A and Term
Note B, respectively, payable to the order of such Lender in the respective
amounts of its Term Loan A Commitment and Term Loan B Commitment, which
Term Notes shall be dated the Closing Date or a later date pursuant to an
Assignment and Acceptance and shall be duly completed, executed and
delivered by the Borrower.
2.9. Use of Proceeds. The proceeds of the Term Loans hereunder shall
---------------
be used by the Borrower exclusively to fund, together with other funds
supplied by or available to the Borrower, the redemption in full of the
Senior Notes.
2.10. Interest Periods. Each Term Loan shall be, at the option of the
----------------
Borrower specified in an Interest Rate Selection Notice, comprised of
either Eurodollar Rate Segments or Base Rate Segments. Eurodollar Rate
Segments and Base Rate Segments may be outstanding at the same time,
provided, however, there shall not be outstanding at any one time
- -------- -------
Eurodollar Rate Loans (including Revolving Loans) and Eurodollar Rate
Segments having more than eight (8) different Interest Periods. If the
Agent does not receive an Interest Rate Selection Notice giving notice of
election of the duration of an Interest Period or of conversion of any
Segment to or continuation of a Segment as a Eurodollar Rate Segment by the
time prescribed by Section 2.11, the Borrower shall be deemed to have
------------
elected to convert such Segment to (or continue such Segment as) a Base
Rate Segment until the Borrower notifies the Agent in accordance with
Section 2.11.
- ------------
2.11. Conversions and Elections of Subsequent Interest Periods.
--------------------------------------------------------
Provided that no Default or Event of Default shall have occurred and be
continuing and subject to the limitations set forth below and in Article
-------
VI, the Borrower may:
- --
41
<PAGE>
(a) upon delivery (effective upon receipt) of a properly
completed Interest Rate Selection Notice to the Agent on or before
10:30 A.M. on any Business Day, convert any Eurodollar Rate Segment to
a Base Rate Segment on the last day of the Interest Period for such
Eurodollar Rate Segment; and
(b) upon delivery (effective upon receipt) of a properly
completed Interest Rate Selection Notice to the Agent on or before
10:30 A.M. three (3) Business Days' prior to the date of such
conversion:
(i) elect a subsequent Interest Period for any
Eurodollar Rate Segment to begin on the last day of the then
current Interest Period for such Eurodollar Rate Segment; and
(ii) convert any Base Rate Segment to a Eurodollar Rate
Segment on any Business Day.
In addition, provided that the Borrower shall have given the Agent
notice of its request to obtain Eurodollar Rate Loans and Segments at the
Closing Date, by delivery (effective upon receipt) no later than 10:00 A.M.
two Business Days prior to the Closing Date of (i) an Interest Rate
Selection Notice therefor, together with (ii) the Borrower's written
acknowledgment that the provisions of Article VI hereof shall apply to any
----------
failure of the Borrower to borrow on the Closing Date any or all of the
amounts specified in such Interest Rate Selection Notice, then upon the
making of Loans as of the Closing Date such Loans may be effected as
Eurodollar Rate Loans or Eurodollar Rate Segments, as the case may be, in
accordance with such Interest Rate Selection Notice.
Each conversion pursuant to this Section 2.11 shall be subject to the
------------
limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1, 2.10 and Article VI. The
------------------ ----------
Agent shall give written notice to each Lender of such notice of conversion
prior to 3:00 P.M. on the day such notice of election or conversion is
received. All such continuations or conversions of Term Loan A or Term
Loan B shall be effected pro rata based on the Applicable Commitment
Percentages of the Lenders with respect to such Term Loan.
2.12. Non-Conforming Payments. (a) Each payment of principal
-----------------------
(including any prepayment) and payment of interest and fees, and any other
amount required to be paid to the Lenders with respect to the Term Loans,
shall be made to the Agent at the Principal Office, for the account of each
Lender, in Dollars and in immediately available funds before 3:00 P.M. on
the date such payment is due. The Agent may, but shall not be obligated
to, debit the amount of any such payment which is not made by such time to
any ordinary deposit account, if any, of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 3:00 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the
later of (i) the time such funds become available funds and (ii) the next
Business Day. Any non-
42
<PAGE>
conforming payment may constitute or become a Default or Event of Default.
Interest shall continue to accrue on any principal as to which a non-
conforming payment is made until the later of (x) the date such funds
become available funds or (y) the next Business Day at the respective rates
of interest per annum specified in the proviso to Section 2.4 regarding
-----------
late payments of interest, from the date such amount was due and payable.
2.13. Pro Rata Payments. Except as otherwise provided herein,
-----------------
(a) each payment on account of the principal of and interest on each of
Term Loan A and Term Loan B shall be made to the Agent for the account of
the Lenders pro rata based on their Applicable Commitment Percentages of
such Term Loan, (b) all payments to be made by the Borrower for the account
of each of the Lenders on account of principal, interest and fees, shall be
made without diminution, set-off, recoupment or counterclaim, and (c) the
Agent will promptly distribute to the Lenders in immediately available
funds payments received in fully collected, immediately available funds
from the Borrower.
43
<PAGE>
ARTICLE III
The Revolving Credit Facility
-----------------------------
3.1. Revolving Loans.
---------------
(a) Commitment. Subject to the terms and conditions of this
----------
Agreement, each Lender severally agrees to make Advances to the Borrower
under the Revolving Credit Facility from time to time from the Closing Date
until the Revolving Credit Termination Date on a pro rata basis as to the
total borrowing requested by the Borrower on any day determined by such
Lender's Applicable Commitment Percentage up to but not exceeding the
Revolving Credit Commitment of such Lender, provided, however, that the
--------
Lenders will not be required and shall have no obligation to make any such
Advance (i) so long as a Default or an Event of Default has occurred and is
continuing or (ii) if the Agent has accelerated the maturity of any of the
Notes as a result of an Event of Default; provided further, however, that
--------
immediately after giving effect to each such Advance, the principal amount
of Revolving Credit Outstandings plus the sum of Letter of Credit
Outstandings, Swing Line Outstandings and Reserve Amount shall not exceed
the Total Revolving Credit Commitment. Within such limits, the Borrower
may borrow, repay and reborrow under the Revolving Credit Facility on a
Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Revolving Credit Termination Date;
provided, however, that (y) no Revolving Loan that is a Eurodollar Rate
- --------
Loan shall be made which has an Interest Period that extends beyond the
Stated Revolving Credit Termination Date and (z) each Revolving Loan that
is a Eurodollar Rate Loan may, subject to the provisions of Section 3.7, be
-----------
repaid only on the last day of the Interest Period with respect thereto
unless such payment is accompanied by the additional payment, if any,
required by Section 6.4.
-----------
(b) Amounts. Except as otherwise permitted by the Lenders from
-------
time to time, the aggregate unpaid principal amount of the Revolving Credit
Outstandings plus the sum of Letter of Credit Outstandings, Swing Line
Outstandings and Reserve Amount shall not exceed at any time the Total
Revolving Credit Commitment, and, in the event there shall be outstanding
any such excess, the Borrower shall immediately make such payments and
prepayments as shall be necessary to comply with this restriction. Each
Revolving Loan hereunder, other than Base Rate Refunding Loans, and each
conversion under Section 3.8, shall be in an amount of at least $5,000,000,
-----------
and, if greater than $5,000,000, an integral multiple of $1,000,000.
(c) Advances. (i) An Authorized Representative shall give the
--------
Agent (1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt,
of each Revolving Loan that is a Eurodollar Rate Loan (whether representing
an additional borrowing hereunder or the conversion of a borrowing
hereunder from Base Rate Loans to Eurodollar Rate Loans) prior to 10:30
A.M. and (2) irrevocable written notice by telefacsimile transmission of a
Borrowing Notice or Interest Rate Selection Notice (as applicable) with
appropriate insertions, effective upon receipt, of each Revolving Loan
(other than Base Rate Refunding Loans
44
<PAGE>
to the extent the same are effected without notice pursuant to Section
-------
3.1(c)(iv)) that is a Base Rate Loan (whether representing an additional
- ----------
borrowing hereunder or the conversion of borrowing hereunder from
Eurodollar Rate Loans to Base Rate Loans) prior to 10:30 A.M. on the day of
such proposed Revolving Loan. Each such notice shall specify the amount of
the borrowing, the type of Revolving Loan (Base Rate or Eurodollar Rate),
the date of borrowing and, if a Eurodollar Rate Loan, the Interest Period
to be used in the computation of interest. Notice of receipt of such
Borrowing Notice or Interest Rate Selection Notice, as the case may be,
together with the amount of each Lender's portion of an Advance requested
thereunder, shall be provided by the Agent to each Lender by telefacsimile
transmission with reasonable promptness, but (provided the Agent shall have
received such notice by 10:30 A.M.) not later than 1:00 P.M. on the same
day as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this Section 3.1, each Lender shall, pursuant to the terms and
-----------
subject to the conditions of this Agreement, make the amount of the Advance
or Advances to be made by it on such day available by wire transfer to the
Agent in the amount of its pro rata share, determined according to such
Lender's Applicable Commitment Percentage of the Revolving Loan or
Revolving Loans to be made on such day. Such wire transfer shall be
directed to the Agent at the Principal Office and shall be in the form of
Dollars constituting immediately available funds. The amount so received
by the Agent shall, subject to the terms and conditions of this Agreement,
be made available to the Borrower by delivery of the proceeds thereof to
the Borrower's Account or otherwise as shall be directed in the applicable
Borrowing Notice by the Authorized Representative and reasonably acceptable
to the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to convert the Revolving
Loans in accordance with Section 3.8. Eurodollar Rate Loans and Base Rate
-----------
Loans may be outstanding at the same time, provided, however, there shall
-------- -------
not be outstanding at any one time Eurodollar Rate Loans and Eurodollar
Rate Segments having more than eight (8) different Interest Periods. If
the Agent does not receive a Borrowing Notice or an Interest Rate Selection
Notice giving notice of election of the duration of an Interest Period or
of conversion of any Loan to or continuation of a Revolving Loan as a
Eurodollar Rate Loan by the time prescribed by Section 3.1(c) or 3.8, the
---------------------
Borrower shall be deemed to have elected to convert such Loan to (or
continue such Loan as) a Base Rate Loan until the Borrower notifies the
Agent in accordance with Section 3.8.
-----------
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Stated Revolving Credit Termination Date, and the Borrower shall not
immediately fully reimburse the Issuing Bank in respect of such drawing,
(A) provided that the conditions to making a Revolving Loan as herein
provided shall then be satisfied, the Reimbursement Obligation arising from
such drawing shall be paid to the Issuing Bank by the Agent without the
requirement of notice to or from the Borrower from immediately available
funds which shall be advanced as a Base Rate Refunding Loan by each Lender
under the Revolving Credit Facility in an amount equal to such Lender's
Applicable Commitment Percentage of such Reimbursement Obligation, and (B)
if the conditions to making a Revolving Loan as herein provided
45
<PAGE>
shall not then be satisfied, each of the Lenders shall fund by payment to
the Agent (for the benefit of the Issuing Bank) in immediately available
funds the purchase from the Issuing Bank of their respective Participations
in the related Reimbursement Obligation based on their respective
Applicable Commitment Percentages of the Total Letter of Credit Commitment.
If a drawing is presented under any Letter of Credit in accordance with the
terms thereof and the Borrower shall not immediately reimburse the Issuing
Bank in respect thereof, then notice of such drawing or payment shall be
provided promptly by the Issuing Bank to the Agent and the Agent shall
provide notice to each Lender by telephone or telefacsimile transmission.
If notice to the Lenders of a drawing under any Letter of Credit is given
by the Agent at or before 12:00 noon on any Business Day, each Lender
shall, pursuant to the conditions specified in this Section 3.1(c)(iv),
------------------
either make a Base Rate Refunding Loan or fund the purchase of its
Participation in the amount of such Lender's Applicable Commitment
Percentage of such drawing or payment and shall pay such amount to the
Agent for the account of the Issuing Bank at the Principal Office in
Dollars and in immediately available funds before 2:30 P.M. on the same
Business Day. If notice to the Lenders of a drawing under a Letter of
Credit is given by the Agent after 12:00 noon on any Business Day, each
Lender shall, pursuant to the conditions specified in this Section
-------
3.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of
- ----------
its Participation in the amount of such Lender's Applicable Commitment
Percentage of such drawing or payment and shall pay such amount to the
Agent for the account of the Issuing Bank at the Principal Office in
Dollars and in immediately available funds before 12:00 noon on the next
following Business Day. Any such Base Rate Refunding Loan shall be
advanced as, and shall continue as, a Base Rate Loan unless and until the
Borrower converts such Base Rate Loan in accordance with the terms of
Section 3.8.
- -----------
(v) Notwithstanding the foregoing provisions of this Section 3.1, in
-----------
addition, provided that the Borrower shall have given the Agent notice of
its request to obtain Eurodollar Rate Loans under the Revolving Credit
Facility at the Closing Date, by delivery (effective upon receipt) no later
than 10:00 A.M. two Business Days prior to the Closing Date of (i) a
Borrowing Notice, together with (ii) the Borrower's written acknowledgment
that the provisions of Article VI hereof shall apply to any failure of the
----------
Borrower to borrow on the Closing Date any or all of the amounts specified
in such Borrowing Notice, then each Lender shall, subject to the conditions
hereof, make or cause to be made available on or before 10:00 A.M. on the
Closing Date its Applicable Commitment Percentage of the Revolving Credit
Loans requested in such Borrowing Notice.
3.2. Payment of Interest. (a) The Borrower shall pay interest to
-------------------
the Agent for the account of each Lender on the outstanding and unpaid
principal amount of each Revolving Loan made by such Lender for the period
commencing on the date of such Revolving Loan until such Revolving Loan
shall be due at the then applicable Base Rate for Base Rate Loans or
applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by the
Authorized Representative pursuant to Section 3.1; provided, however, that
----------- --------
if any amount shall not be paid when due (at maturity, by acceleration or
otherwise), all amounts outstanding hereunder shall bear interest
thereafter at the Default Rate.
(b) Interest on each Revolving Loan shall be computed on the
basis of a year of 360 days and calculated in each case for the actual
number of days elapsed. Interest on each
46
<PAGE>
Revolving Loan shall be paid (i) quarterly in arrears on the last Business
Day of each April, July, October and January, commencing April 30, 1996 for
each Base Rate Loan, (ii) on the last day of the applicable Interest Period
for each Eurodollar Rate Loan and, if such Interest Period extends for more
than three (3) months, at intervals of three (3) months after the first day
of such Interest Period, and (iii) upon payment in full of the principal
amount of such Revolving Loan and termination of this Agreement.
3.3. Payment of Principal. The principal amount of each Revolving
--------------------
Loan shall be due and payable to the Agent for the benefit of each Lender
in full on the Revolving Credit Termination Date, or earlier as
specifically provided herein. The principal amount of any Base Rate Loan
under the Revolving Credit Facility may be prepaid in whole or in part at
any time. The principal amount of any Eurodollar Rate Loan under the
Revolving Credit Facility may be prepaid only at the end of the applicable
Interest Period unless the Borrower shall pay to the Agent for the account
of the Lenders the additional amount, if any, required under Section 6.4.
-----------
All prepayments of Revolving Loans made by the Borrower shall be in the
amount of $5,000,000 or such greater amount which is an integral multiple
of $1,000,000, or the amount equal to all Revolving Credit Outstandings, or
such other amount as necessary to comply with Section 3.1(b) or Section
-------------- -------
3.8.
- ---
3.4. Non-Conforming Payments. (a) Each payment of principal
-----------------------
(including any prepayment) and payment of interest and fees, and any other
amount required to be paid to the Lenders with respect to the Revolving
Loans, shall be made to the Agent at the Principal Office, for the account
of each Lender, in Dollars and in immediately available funds before 3:00
P.M. on the date such payment is due. The Agent may, but shall not be
obligated to, debit the amount of any such payment which is not made by
such time to any ordinary deposit account, if any, of the Borrower with the
Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 3:00 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the
later of (i) the time such funds become available funds and (ii) the next
Business Day. Any non-conforming payment may constitute or become a
Default or Event of Default. Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until the later of
(x) the date such funds become available funds or (y) the next Business Day
at the Default Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the
Revolving Notes becomes due and payable on a day other than a Business Day,
then such due date shall be extended to the next succeeding Business Day
unless provided otherwise under clause (ii) of the definition of "Interest
Period"; provided that interest shall continue to accrue during the period
--------
of any such extension and provided further, that in no event shall any such
--------
due date be extended beyond the Revolving Credit Termination Date.
3.5. Revolving Notes. Revolving Loans made by each Lender shall be
---------------
evidenced by the
47
<PAGE>
Revolving Note payable to the order of such Lender in the amount of its
Revolving Credit Commitment, which Revolving Note shall be dated the
Closing Date or a later date pursuant to an Assignment and Acceptance and
shall be duly completed, executed and delivered by the Borrower.
3.6. Pro Rata Payments. Except as otherwise provided herein,
-----------------
(a) each payment on account of the principal of and interest on the
Revolving Loans and the fees described in Section 3.10 shall be made to the
------------
Agent for the account of the Lenders pro rata based on their Applicable
Commitment Percentages, (b) all payments to be made by the Borrower for the
account of each of the Lenders on account of principal, interest and fees,
shall be made without diminution, setoff, recoupment or counterclaim, and
(c) the Agent will promptly distribute to the Lenders in immediately
available funds payments received in fully collected, immediately available
funds from the Borrower.
3.7. Reductions. (a) The Borrower shall, by notice from an
----------
Authorized Representative, have the right from time to time but not more
frequently than once each calendar month, upon not less than three (3)
Business Days' written notice to the Agent, effective upon receipt, to
reduce the Total Revolving Credit Commitment. The Agent shall give each
Lender, within one (1) Business Day of receipt of such notice,
telefacsimile notice, or telephonic notice (confirmed in writing), of such
reduction. Each such reduction shall be in the aggregate amount of
$5,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and
shall permanently reduce the Total Revolving Credit Commitment.
(b) Simultaneously with each mandatory prepayment of the Term Loans
required under Section 2.7(a)(i), the Total Revolving Credit Commitment
-----------------
shall be reduced by an amount equal to the pro rata portion of Net Cash
Proceeds or Net Issuance Proceeds giving rise to such prepayment in
accordance with the Ratable Reduction of Credit Facilities.
(c) Each reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of the Revolving Loans to the extent that the
principal amount of Revolving Credit Outstandings plus the sum of Letter of
Credit Outstandings, Swing Line Outstandings and Reserve Amount exceeds the
Total Revolving Credit Commitment after giving effect to such reduction,
together with accrued and unpaid interest on the amounts prepaid. No such
reduction shall result in the payment of any Eurodollar Rate Loan other
than on the last day of the Interest Period of such Eurodollar Rate Loan
unless such prepayment is accompanied by amounts due, if any, under Section
-------
6.4.
- ---
3.8. Conversions and Elections of Subsequent Interest Periods.
--------------------------------------------------------
Provided that no Default or Event of Default shall have occurred and be
continuing and subject to the limitations set forth below and in Article
-------
VI, the Borrower may:
- --
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30
A.M. on any Business Day, convert all or a part of Eurodollar Rate Loans
under the Revolving Credit Facility to Base Rate Loans on the last day of
the Interest Period for such Eurodollar Rate Loans; and
48
<PAGE>
(b) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30
A.M. three (3) Business Days' prior to the date of such election or
conversion:
(i) elect a subsequent Interest Period for all or a portion
of Eurodollar Rate Loans under the Revolving Credit Facility to
begin on the last day of the then current Interest Period for
such Eurodollar Rate Loans; and
(ii) convert Base Rate Loans under the Revolving Credit
Facility to Eurodollar Rate Loans on any Business Day.
Each election and conversion pursuant to this Section 3.8 shall be
-----------
subject to the limitations on Eurodollar Rate Loans set forth in the
definition of "Interest Period" herein and in Sections 3.1, 3.3 and Article
----------------- -------
VI. The Agent shall give written notice to each Lender of such notice of
- --
election or conversion prior to 3:00 P.M. on the day such notice of
election or conversion is received. All such continuations or conversions
of Loans shall be effected pro rata based on the Applicable Commitment
Percentages of the Lenders.
3.9. Increase and Decrease in Amounts. The amount of the Total
--------------------------------
Revolving Credit Commitment which shall be available to the Borrower as
Advances shall be reduced by the aggregate amount of Revolving Credit
Outstandings, Letter of Credit Outstandings, Swing Line Outstandings and
the Reserve Amount.
3.10. Unused Fee. For the period beginning on the Closing Date and
----------
ending on the Revolving Credit Termination Date, the Borrower agrees to pay
to the Agent, for the pro rata benefit of the Lenders based on their
Applicable Commitment Percentages, an unused fee equal to the Applicable
Unused Fee multiplied by the average daily amount by which the Total
Revolving Credit Commitment exceeds the sum of (i) Revolving Credit
Outstandings (without giving effect to Swing Line Outstandings in the case
of Lenders other than NationsBank) plus (ii) Letter of Credit Outstandings.
Such fees shall be due in arrears on the last Business Day of each April,
July, October and January, commencing April 30, 1996, to and on the
Revolving Credit Termination Date. Notwithstanding the foregoing, so long
as any Lender fails to make available any portion of its Revolving Credit
Commitment when requested, such Lender shall not be entitled to receive
payment of its pro rata share of such fee until such Lender shall make
available such portion. Such fee shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed.
3.11. Deficiency Advances. No Lender shall be responsible for any
-------------------
default of any other Lender in respect to such other Lender's obligation to
make any Loan or fund its purchase of any Participation hereunder nor shall
the Revolving Credit Commitment of any Lender hereunder be increased as a
result of such default of any other Lender. Without limiting the
generality of the foregoing, in the event any Lender shall fail to advance
funds to the Borrower under the Revolving Credit Facility as herein
provided, the Agent may in its discretion, but shall not be obligated to,
advance under the Revolving Note in its favor as a Lender all or any
portion of such amount or
49
<PAGE>
amounts (each, a "Deficiency Advance") and shall thereafter be entitled to
payments of principal of and interest on such Deficiency Advance in the
same manner and at the same interest rate or rates to which such other
Lender would have been entitled had it made such advance under its
Revolving Note; provided that, upon payment to the Agent from such other
Lender of the entire outstanding amount of each such Deficiency Advance,
together with accrued and unpaid interest thereon, from the most recent
date or dates interest was paid to the Agent by the Borrower on each
Revolving Loan comprising the Deficiency Advance at the interest rate per
annum for overnight borrowing by the Agent from the Federal Reserve Bank,
then such payment shall be credited against the applicable Revolving Note
of the Agent in full payment of such Deficiency Advance and the Borrower
shall be deemed to have borrowed the amount of such Deficiency Advance from
such other Lender as of the most recent date or dates, as the case may be,
upon which any payments of interest were made by the Borrower thereon.
3.12. Use of Proceeds. The proceeds of the Loans made pursuant to the
---------------
Revolving Credit Facility hereunder shall be used by the Borrower, (i)
together with proceeds of the Term Loans and certain funds to made
available from the Mortgage Warehousing Facility, to redeem in full the
Senior Notes, (ii) to repay in full and satisfy Borrower's obligations and
liabilities under the Prior Credit Facilities (other than certain
obligations in respect of Existing Letters of Credit), and (iii) for
general corporate purposes and working capital needs.
3.13. Swing Line. (a) Notwithstanding any other provision of this
----------
Agreement to the contrary, in order to administer the Revolving Credit
Facility in an efficient manner and to minimize the transfer of funds
between the Agent and the Lenders, NationsBank shall make available Swing
Line Loans to the Borrower prior to the Revolving Credit Termination Date.
NationsBank shall not make any Swing Line Loan pursuant hereto (i) if to
the actual knowledge of NationsBank the Borrower is not in compliance with
all the conditions to the making of Revolving Loans set forth in this
Agreement, (ii) if after giving effect to such Swing Line Loan, the Swing
Line Outstandings exceed $15,000,000, or (iii) if after giving effect to
such Swing Line Loan, the sum of the principal amount of Swing Line
Outstandings, Revolving Credit Outstandings, Letter of Credit Outstandings
and Reserve Amount exceeds the Total Revolving Credit Commitment. Swing
Line Loans shall be limited to Base Rate Loans. The Company may borrow,
repay and reborrow under this Section 3.13. Unless notified to the
------------
contrary by NationsBank, borrowings under the Swing Line shall be made in
the minimum amount of $500,000 or, if greater, in amounts which are
integral multiples of $100,000, or in the amount necessary to effect a Base
Rate Refunding Loan, upon written request by telefacsimile transmission,
effective upon receipt, by an Authorized Representative of the Borrower
made to NationsBank not later than 3:00 P.M. on the Business Day of the
requested borrowing. Each such Borrowing Notice shall specify the amount
of the borrowing and the date of borrowing, and shall be in the form of
Exhibit D-2, with appropriate insertions. Unless notified to the contrary
- -----------
by NationsBank, each repayment of a Swing Line Loan shall be in an amount
which is an integral multiple of $100,000 or the aggregate amount of all
Swing Line Outstandings. If the Borrower instructs NationsBank to debit
any demand deposit account of the Borrower in the amount of any payment
with respect to a Swing Line Loan, or NationsBank otherwise receives
repayment, after 3:00 P.M. on a Business Day, such payment shall be deemed
received on the next Business Day.
50
<PAGE>
(b) Swing Line Loans shall bear interest at the Base Rate, the
interest payable on Swing Line Loans is solely for the account of
NationsBank, and all accrued and unpaid interest on Swing Line Loans shall
be payable on the dates and in the manner provided in Sections 3.2(b) and
-------------------
3.4 with respect to interest on Base Rate Loans. The Swing Line
- ---
Outstandings shall be evidenced by the Note delivered to NationsBank
pursuant to Section 3.5.
-----------
(c) Upon the making of a Swing Line Loan, each Lender with a Revolving
Credit Commitment shall be deemed to have purchased from NationsBank a
Participation therein in an amount equal to that Lender's Applicable
Commitment Percentage of such Swing Line Loan. Upon demand made by
NationsBank, each Lender shall, according to its Applicable Commitment
Percentage of such Swing Line Loan, promptly provide to NationsBank its
purchase price therefor in an amount equal to its Participation therein.
Any Advance made by a Lender pursuant to demand of NationsBank of the
purchase price of its Participation shall be deemed (i) provided that the
conditions to making Revolving Loans shall be satisfied, a Base Rate
Refunding Loan under Section 3.1 until the Borrower converts such Base Rate
-----------
Loan in accordance with the terms of Section 3.8, and (ii) in all other
-----------
cases, the funding by each Lender of the purchase price of its
Participation in such Swing Line Loan. The obligation of each Lender to so
provide its purchase price to NationsBank shall be absolute and
unconditional and shall not be affected by the occurrence of a Default or
an Event of Default or any other occurrence or event.
The Borrower, at its option and subject to the terms hereof, may
request an Advance pursuant to Section 3.1 in an amount sufficient to repay
-----------
Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to NationsBank the amount necessary to repay such
Swing Line Outstandings (which NationsBank shall then apply to such
repayment) and credit any balance of the Advance in immediately available
funds in the manner directed by the Borrower pursuant to Section
-------
3.1(c)(ii). The proceeds of such Advances shall be paid to NationsBank for
- ----------
application to the Swing Line Outstandings and the Lenders shall then be
deemed to have made Loans in the amount of such Advances. The Swing Line
shall continue in effect until the Revolving Credit Termination Date, at
which time all Swing Line Outstandings and accrued interest thereon shall
be due and payable in full.
51
<PAGE>
ARTICLE IV
Letters of Credit
-----------------
4.1. Letters of Credit. The Issuing Bank agrees, subject to the
-----------------
terms and conditions of this Agreement, upon request of the Borrower to
issue from time to time from the Closing Date to the date 60 days prior to
the Stated Revolving Credit Termination Date, for the account of the
Borrower or the Borrower and a Restricted Subsidiary Letters of Credit upon
delivery to the Issuing Bank of an Application and Agreement for Letter of
Credit relating thereto in form and content acceptable to the Issuing Bank;
provided, that (i) the Letter of Credit Outstandings shall not exceed the
- --------
Total Letter of Credit Commitment and (ii) no Letter of Credit shall be
issued if, after giving effect thereto, Letter of Credit Outstandings plus
the sum of the principal amount of Revolving Credit Outstandings, Swing
Line Outstandings and Reserve Amount shall exceed the Total Revolving
Credit Commitment. No Documentary Letter of Credit shall have an expiry
date later than the earlier of (1) 180 days after the date of issuance
thereof and (2) 60 days before the Stated Revolving Credit Termination
Date. No Standby Letter of Credit shall have an expiry date (including all
rights of the Borrower, any Restricted Subsidiary, or the beneficiary named
in such Standby Letter of Credit to require renewal) later than one year
after the date of issuance thereof, but any such Standby Letter of Credit
may by its terms be renewable annually upon notice (a "Notice of Renewal")
-----------------
given to the Issuing Bank and the Agent at least three Business Days prior
to any date for notice of renewal set forth in such Standby Letter of
Credit and upon fulfillment of the applicable conditions set forth in
Article VII unless the Issuing Bank has notified the Borrower (with a copy
- -----------
to the Agent) at least 30 Business Days prior to the date of automatic
renewal of its election not to renew such Standby Letter of Credit (a
"Notice of Termination"); provided that the terms of each Standby Letter of
---------------------
Credit that is automatically renewable annually (x) shall require the
Issuing Bank to give the beneficiary named in such Standby Letter of Credit
notice of any Notice of Termination, (y) shall permit such beneficiary,
upon receipt of such notice, to draw under such Standby Letter of Credit
prior to the date such Standby Letter of Credit otherwise would have been
automatically renewed and (z) shall not permit the expiry date (after
giving effect to any renewal) of such Standby Letter of Credit in any event
to be extended to a date later than 60 days before the first anniversary of
the Stated Revolving Credit Termination Date; and provided further that the
Borrower shall deposit or cause to be deposited Collateral (as defined in
the LC Account Agreement) with the Agent pursuant to the LC Account
Agreement at least five Business Days prior to the Stated Revolving Credit
Termination Date an amount equal to 105% of the sum of (I) the aggregate
available amount for drawing under all Standby Letters of Credit that have
an expiry date (after giving effect to any renewal) that extends beyond the
Stated Revolving Credit Termination Date and (II) the aggregate amount of
all fees and expenses owing on or in respect of such Standby Letters of
Credit. If either a Notice of Renewal is not given by the Borrower or a
Notice of Termination is given by the Issuing Bank pursuant to the
immediately preceding sentence with respect to any Standby Letter of
Credit, such Standby Letter of Credit shall expire on the date on which it
otherwise would have been automatically renewed; provided, however, that if
a Notice of Renewal is not received by the Issuing Bank, such Issuing Bank
may, in its discretion, unless otherwise instructed by the Agent or the
Borrower, deem that a Notice of Renewal
52
<PAGE>
had been timely delivered and, in such case, a Notice of Renewal shall be
deemed to have been so delivered for all purposes under this Agreement.
Citicorp USA, Inc. shall act as Issuing Bank only with respect to Existing
Letters of Credit as in effect as of the Closing Date, but excluding any
annual renewals or reissuances thereof, whether or not permitted by the
terms of the Existing Letters of Credit as in effect on the Closing Date.
4.2. Reimbursement.
-------------
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts
required to pay all drafts drawn or purporting to be drawn under the
Letters of Credit and all reasonable expenses incurred by the Issuing Bank
in connection with the Letters of Credit, and in any event and without
demand to place in possession of the Issuing Bank (which shall include
Advances under the Revolving Credit Facility if permitted by Section 3.1
-----------
and Swing Line Loans if permitted by Section 3.13) sufficient funds to pay
------------
all debts and liabilities arising under any Letter of Credit. The Issuing
Bank agrees to give the Borrower prompt notice of any request for a draw
under a Letter of Credit. The Issuing Bank may charge any account the
Borrower may have with it for any and all amounts the Issuing Bank pays
under a Letter of Credit, plus charges and reasonable expenses as from time
to time agreed to by the Issuing Bank and the Borrower; provided that to
the extent permitted by Section 3.1(c)(iv) and Section 3.13, amounts shall
------------------ ------------
be paid pursuant to Advances under the Revolving Credit Facility or, if the
Borrower shall elect, by Swing Line Loans. The Borrower agrees to pay the
Issuing Bank interest on any Reimbursement Obligations not paid when due
hereunder at the Base Rate plus two percent (2.0%), or the maximum rate
permitted by applicable law, if lower, such rate to be calculated on the
basis of a year of 360 days for actual days elapsed.
(b) In accordance with the provisions of Section 3.1(c), the
--------------
Issuing Bank shall notify the Agent of any drawing under any Letter of
Credit promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender with a Revolving Credit Commitment (a "Revolving
Lender") (other than the Issuing Bank) shall automatically acquire on the
date of issuance thereof, a Participation in the liability of the Issuing
Bank in respect of each Letter of Credit in an amount equal to such
Lender's Applicable Commitment Percentage of such liability, and to the
extent that the Borrower is obligated to pay the Issuing Bank under Section
-------
4.2(a), each Revolving Lender (other than the Issuing Bank) thereby shall
- ------
absolutely, unconditionally and irrevocably assume, and shall be
unconditionally obligated to pay to the Issuing Bank as hereinafter
described, its Applicable Commitment Percentage of the liability of the
Issuing Bank under such Letter of Credit.
(i) Each Revolving Lender (including the Issuing Bank in
its capacity as a Lender) shall, subject to the terms and conditions
of Article III, pay to the Agent for the account of the Issuing Bank
-----------
at the Principal Office in Dollars and in immediately available funds,
an amount equal to its Applicable Commitment Percentage of any drawing
under a Letter of Credit, such funds to be provided in the manner
described in Section 3.1(c)(iv).
------------------
53
<PAGE>
(ii) Simultaneously with the making of each payment by a
Revolving Lender to the Issuing Bank pursuant to Section
-------
3.1(c)(iv)(B), such Lender shall, automatically and without any
-------------
further action on the part of the Issuing Bank or such Lender, acquire
a Participation in an amount equal to such payment (excluding the
portion thereof constituting interest accrued prior to the date the
Lender made its payment) in the related Reimbursement Obligation of
the Borrower. The Reimbursement Obligations of the Borrower shall be
immediately due and payable whether by Advances made in accordance
with Section 3.1(c)(iv), Swing Line Loans made in accordance with
-------------------
Section 3.13, or otherwise.
------------
(iii) Each Revolving Lender's obligation to make payment to
the Agent for the account of the Issuing Bank pursuant to Section
-------
3.1(c)(iv) and this Section 4.2(c), and the right of the Issuing Bank
---------- --------------
to receive the same, shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and shall be made without any
offset, abatement, withholding or reduction whatsoever. If any
Revolving Lender is obligated to pay but does not pay amounts to the
Agent for the account of the Issuing Bank in full upon such request as
required by Section 3.1(c)(iv) or this Section 4.2(c), such Revolving
------------------ --------------
Lender shall, on demand, pay to the Agent for the account of the
Issuing Bank interest on the unpaid amount for each day during the
period commencing on the date of notice given to such Revolving Lender
pursuant to Section 3.1(c) until such Revolving Lender pays such
--------------
amount to the Agent for the account of the Issuing Bank in full at the
interest rate per annum for overnight borrowing by the Agent from the
Federal Reserve Bank.
(iv) In the event the Revolving Lenders have purchased
Participations in any Reimbursement Obligation as set forth in clause
(ii) above, then at any time payment (in fully collected, immediately
available funds) of such Reimbursement Obligation, in whole or in
part, is received by Issuing Bank from the Borrower, Issuing Bank
shall promptly pay to each Revolving Lender an amount equal to its
Applicable Commitment Percentage of such payment from the Borrower.
(d) Not later than ten (10) days prior to the end of each fiscal
quarter, the Issuing Bank shall deliver to the Agent a notice describing
the aggregate undrawn amount of all Letters of Credit at the end of such
quarter. Upon the request of any Revolving Lender from time to time, the
Issuing Bank shall deliver to the Agent, and the Agent shall deliver to
such Revolving Lender, any other information reasonably requested by such
Lender with respect to each Letter of Credit outstanding.
(e) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Article VII, be
-----------
subject to the conditions that such Letter of Credit be in such form and
contain such terms as shall be reasonably satisfactory to the Issuing Bank
consistent with the then current practices and procedures of the Issuing
Bank with respect to similar letters of credit, and the Borrower or if
applicable the Borrower and a Restricted Subsidiary, shall have executed
and delivered such other instruments and agreements relating to such
Letters of Credit as the Issuing Bank shall have reasonably requested
consistent with such practices and procedures
54
<PAGE>
and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject
to the Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(f) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of
Credit, any drafts or other documents otherwise in order which may be
signed or issued by an administrator, executor, trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors, liquidator,
receiver, attorney in fact or other legal representative of a party who is
authorized under such Letter of Credit to draw or issue any drafts or other
documents.
(g) Without limiting the generality of the provisions of Section
-------
13.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing
- ----
Bank, each other Revolving Lender and the Agent from and against any and
all claims and damages, losses, liabilities, reasonable costs and expenses
which the Issuing Bank, such other Revolving Lender or the Agent may incur
(or which may be claimed against the Issuing Bank, such other Revolving
Lender or the Agent) by any Person by reason of or in connection with the
issuance or transfer of or payment or failure to pay under any Letter of
Credit; provided that the Borrower shall not be required to indemnify the
Issuing Bank, any other Revolving Lender or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to
the extent, (i) caused by the willful misconduct or gross negligence of the
party to be indemnified or (ii) caused by the failure of the Issuing Bank
to pay under any Letter of Credit after the presentation to it of a request
for payment strictly complying with the terms and conditions of such Letter
of Credit, unless such payment is prohibited by any law, regulation, court
order or decree. The indemnification and hold harmless provisions of this
Section 4.2(g) shall survive the occurrence of the Facility Termination
- --------------
Date.
(h) Without limiting Borrower's rights as set forth in Section
-------
4.2(g), the obligation of the Borrower to immediately reimburse the Issuing
- ------
Bank for drawings made under Letters of Credit and the Issuing Bank's right
to receive such payment shall be absolute, unconditional and irrevocable,
and that such obligations of the Borrower shall be performed strictly in
accordance with the terms of this Agreement and such Letters of Credit and
the related Applications and Agreement for any Letter of Credit, under all
circumstances whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the obligation supported by the Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "Related
LC Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other
than the defense of payment in accordance with the terms of this
Agreement) or other rights which the Borrower
55
<PAGE>
may have at any time against any beneficiary or any transferee of a
Letter of Credit (or any persons or entities for whom any such
beneficiary or any such transferee may be acting), the Agent, the
Revolving Lenders or any other Person, whether in connection with the
Loan Documents, the Related LC Documents or any unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit
(or any persons or entities for whom such beneficiary or any such
transferee may be acting), the Agent, the Lenders or any other Person;
(v) any draft, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by the Agent,
with or without notice to or approval by the Borrower in respect of
any of Borrower's Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
4.3. Letter of Credit Facility Fees. (a) The Borrower shall pay to
------------------------------
the Agent, for the pro rata benefit of the Revolving Lenders based on their
Applicable Commitment Percentages, a fee on the aggregate amount available
to be drawn on each outstanding (i) Standby Letter of Credit at a per annum
rate equal to the Applicable Margin (L/C) and (ii) Documentary Letter of
Credit at a per annum rate equal to .50%. Such fees shall be due with
respect to each Letter of Credit quarterly in arrears on the last Business
day of each April, July, October and January, the first such payment to be
made on the first such date occurring after the date of issuance of a
Letter of Credit. The fees described in this Section 4.3 shall be
-----------
calculated on the basis of a year of 360 days for the actual number of days
elapsed.
4.4. Administrative and Other Fees. The Borrower shall pay to the
-----------------------------
Issuing Bank such administrative fee and other fees, if any, in connection
with the Letters of Credit in such amounts and at such times as the Issuing
Bank and the Borrower shall agree from time to time.
56
<PAGE>
ARTICLE V
Security
--------
5.1. Security. As security for the full and timely payment and
--------
performance of all Obligations, the Credit Parties shall on or before the
Closing Date do or cause to be done all things necessary in the opinion of
the Agent and its counsel to grant to the Agent for the benefit of the
Lenders a duly perfected first priority security interest in all Collateral
subject to no prior Lien or other encumbrance or restriction on transfer
(other than restrictions on transfer imposed by applicable securities
laws).
5.2. Further Assurances. At the request of the Agent, the Borrower
------------------
will or will cause its Subsidiaries, as the case may be to execute, by its
duly authorized officers, alone or with the Agent, any certificate,
instrument, statement or document, or to procure any such certificate,
instrument, statement or document, or to take such other action (and pay
all connected costs) which the Agent reasonably deems necessary from time
to time to create, continue or preserve the liens and security interests in
Collateral (and the perfection and priority thereof) of the Agent
contemplated hereby and by the other Loan Documents.
5.3. Information Regarding Collateral. The Borrower represents,
--------------------------------
warrants and covenants that (i) the chief executive office of the Borrower
and each other Person providing Collateral pursuant to a Security
Instrument (each, a "Grantor") at the Closing Date is located at the
address or addresses specified on Schedule 5.3, and (ii) Schedule 5.3
------------ ------------
contains a true and complete list of (a) each location of the chief
executive office of each Grantor at any time since January 1, 1990, and (b)
the amount of each Intercompany Advance as of December 31, 1995 and, with
respect to each such Intercompany Advance, the name of the obligor and the
obligee, and the date and amount of the Intercompany Note evidencing such
Intercompany Advance. Borrower shall not change, and shall not permit any
other Grantor to change, its name or the location of its chief executive
office except upon giving not less than thirty (30) days' prior written
notice to the Agent and taking or causing to be taken all such action at
Borrower's or such other Grantor's expense as may be reasonably requested
by the Agent to perfect or maintain the perfection of the Lien of the Agent
in Collateral.
5.4. Additional Intercompany Notes. Pursuant to Section 7.1, on the
----------------------------- -----------
Closing Date each Intercompany Note Holder shall deliver to the Agent all
Intercompany Notes of which it is the obligee then in existence, together
with a duly executed endorsement in blank affixed thereto, and an
Intercompany Note Pledge Agreement granting to the Agent for the benefit of
the Lenders a Lien in such Intercompany Notes. In the event that following
the Closing Date there shall come into existence additional Intercompany
Notes, whether representing additional Intercompany Advances or amendments,
extensions, renewals or restatements of previously outstanding
Intercompany Advances, the Borrower shall, or shall cause the appropriate
Intercompany Note Holder to furnish to the Agent, as soon as practicable
but in any event no later than thirty (30) days following the making of
such Intercompany Notes the following documents:
(i) the additional Intercompany Notes, with duly executed
endorsement in blank
57
<PAGE>
affixed thereto;
(ii) if the Intercompany Note Holder shall then be a party to an
Intercompany Note Pledge Agreement, a supplement to the appropriate
schedule to such Intercompany Note Pledge Agreement executed by such
Intercompany Note Holder and reflecting the addition of such
additional Intercompany Note (but the failure to provide such schedule
supplement shall not impair the validity or priority of the Lien
arising under the Intercompany Note Pledge Agreement); and
(iii) if the Intercompany Note Holder shall not then be a party
to an Intercompany Note Pledge Agreement, the documents, opinions of
counsel and other items required to be delivered under Section 9.19 .
-------------
58
<PAGE>
ARTICLE VI
Yield Protection and Illegality
-------------------------------
6.1. Additional Costs. (a) The Borrower shall promptly pay to the
----------------
Agent for the account of a Lender from time to time, without duplication,
such amounts as such Lender may reasonably determine to be necessary to
compensate it for any costs incurred by such Lender which it determines are
attributable to its making or maintaining any Loan or its obligation to
make any Loans, or the issuance or maintenance by the Issuing Bank of or
any other Lender's Participation in any Letter of Credit issued or Swing
Line Loan extended hereunder, or any reduction in any amount receivable by
such Lender under this Agreement or the Notes in respect of any of such
Loans or the Letters of Credit, including reductions in the rate of return
on a Lender's capital (such increases in costs and reductions in amounts
receivable and returns being herein called "Additional Costs"), resulting
from any Regulatory Change which: (i) changes the basis of taxation of any
amounts payable to such Lender under this Agreement or the Notes in respect
of any of such Loans or the Letters of Credit (other than taxes imposed on
or measured by the income, revenues, assets or net worth); or (ii) imposes
or modifies any reserve, special deposit, or similar requirements relating
to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Lender (other than any such reserve, deposit or
requirement reflected in the Prime Rate, Federal Funds Effective Rate or
the Interbank Offered Rate, in each case computed in accordance with the
respective definitions of such terms set forth in Section 1.1); or
-----------
(iii) has or would have the effect of reducing the rate of return on
capital of any such Lender or any Person controlling such Lender to a level
below that which the Lender or such Person could have achieved but for such
Regulatory Change (taking into consideration such Lender's or such Person's
policies with respect to capital adequacy); or (iv) imposes any other
condition adversely affecting the Agent or any Lender under this Agreement,
the Notes or the issuance or maintenance of, or any Lender's Participation
in, the Letters of Credit or Swing Line Loans (or any of such extensions of
credit or liabilities). Each Lender will notify the Authorized
Representative and the Agent of any event occurring after the Closing Date
which would entitle it to compensation pursuant to this Section 6.1(a) as
--------------
promptly as practicable after it obtains knowledge thereof and determines
to request such compensation.
(b) Without limiting the effect of the foregoing provisions of
this Section 6.1, in the event that, by reason of any Regulatory Change,
-----------
any Lender either (i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits or
other liabilities of the Lender which includes deposits by reference to
which the interest rate on Eurodollar Rate Loans or Eurodollar Rate
Segments is determined as provided in this Agreement or a category of
extensions of credit or other assets of any Lender which includes
Eurodollar Rate Loans or Eurodollar Rate Segments or (ii) becomes subject
to restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if the Lender so elects by notice to the other
Lenders, the obligation hereunder of such Lender to make, and to convert
Base Rate Loans or Base Rate Segments into, Eurodollar Rate Loans or
Eurodollar Rate Segments that are the subject of such restrictions shall be
suspended until the date such Regulatory Change ceases to be in effect and
the Borrower shall, on the last day(s) of the then current Interest
Period(s) for outstanding Eurodollar
59
<PAGE>
Rate Loans or Eurodollar Rate Segments convert such Eurodollar Rate Loans
or Eurodollar Rate Segments into Base Rate Loans or Base Rate Segments;
provided, however, that the suspension of such obligation and the
- -------- -------
conversion of any Eurodollar Rate Loans or Eurodollar Rate Segments into
Base Rate Loans or Base Rate Segments shall apply only to any Lender who is
affected by such restrictions and who has provided such notice to the other
Lenders, and the obligation of the other Lenders to make, and to convert
Base Rate Loans or Base Rate Segments into, Eurodollar Rate Loans or
Eurodollar Rate Segments shall not be affected by such restrictions. In
the event that the obligation of some, but not all, of the Lenders to make,
or to convert Base Rate Loans or Base Rate Segments into, Eurodollar Rate
Loans or Eurodollar Rate Segments is suspended, then any request by the
Borrower during the pendency of such suspension for a Eurodollar Rate Loan
or Eurodollar Rate Segment shall be deemed a request for such Eurodollar
Rate Loan or Eurodollar Rate Segment from the Lender(s) not subject to such
suspension and for a Base Rate Loan or Base Rate Segments from the
Lender(s) who are subject to such suspension, in each case in the
respective amounts based on the Lenders' respective Applicable Commitment
Percentages.
(c) Determinations by any Lender for purposes of this Section
-------
6.1 of the effect of any Regulatory Change on its costs of making or
- ---
maintaining, or being committed to make Loans, or by NationsBank as issuer
of any Letter of Credit of the effect of any Regulatory Change on its costs
in connection with the issuance or maintenance of, or any other Lender's
Participation in, any Letter of Credit issued or Swing Line Loan extended
hereunder, or the effect of any Regulatory Change on amounts receivable by
any Lender in respect of Loans or Letters of Credit, and of the additional
amounts required to compensate the Lender in respect of any Additional
Costs, shall be made taking into account such Lender's policies, or the
policies of the parent corporation of such Lender, as to the allocation of
capital, costs and other items and shall be conclusive absent manifest
error. The Lender requesting such compensation shall furnish to the
Authorized Representative and the Agent within one hundred eighty (180)
days of the incurrence of any Additional Costs for which compensation is
sought an explanation of the Regulatory Change and calculations, in
reasonable detail, setting forth such Lender's determination of any such
Additional Costs.
6.2. Suspension of Loans. Anything herein to the contrary
-------------------
notwithstanding, if, on or prior to the determination of any interest rate
for any Eurodollar Rate Loan or Eurodollar Rate Segment for any Interest
Period, the Agent determines (which determination made on a reasonable
basis shall be conclusive absent manifest error) that:
(a) quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in Section 1.1 are
-----------
not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest for such
Eurodollar Rate Loan or Eurodollar Rate Segment as provided in this
Agreement; or
(b) the relevant rates of interest referred to in the definition
of "Interbank Offered Rate" in Section 1.1 upon the basis of which the
-----------
Eurodollar Rate for such Interest Period is to be determined do not
adequately reflect the cost to the Lenders of making or maintaining
such Eurodollar Rate Loan or Eurodollar Rate Segment for such Interest
Period;
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<PAGE>
then the Agent shall give the Authorized Representative prompt notice
thereof, and so long as such condition remains in effect, the Lenders shall
be under no obligation to make Eurodollar Rate Loans or Eurodollar Rate
Segments that are subject to such condition, or to convert Base Rate Loans
or Base Rate Segments into Eurodollar Rate Loans or Eurodollar Rate
Segments, and the Borrower shall on the last day(s) of the then current
Interest Period(s) for outstanding Eurodollar Rate Loans, as applicable,
convert such Eurodollar Rate Loans or Eurodollar Rate Segments into another
Eurodollar Rate Loan or Eurodollar Rate Segment if such Eurodollar Rate
Loan or Eurodollar Rate Segment is not subject to the same or similar
condition, or Base Rate Loans or Base Rate Segments, if available
hereunder. The Agent shall give the Authorized Representative notice
describing in reasonable detail any event or condition described in this
Section 6.2 promptly following the determination by the Agent that the
- -----------
availability of Eurodollar Rate Loans or Eurodollar Rate Segments is, or is
to be, suspended as a result thereof.
6.3. Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Lender to honor
its obligation to make or maintain Eurodollar Rate Loans or Eurodollar Rate
Segments hereunder, then such Lender shall promptly notify the Borrower
thereof (with a copy to the Agent) and such Lender's obligation to make or
continue Eurodollar Rate Loans or Eurodollar Rate Segments, or to convert
Base Rate Loans or Base Rate Segments into Eurodollar Rate Loans or
Eurodollar Rate Segments, shall be suspended until such time as such Lender
may again make and maintain Eurodollar Rate Loans or Eurodollar Rate
Segments, and such Lender's outstanding Eurodollar Rate Loans or Eurodollar
Rate Segments shall be converted into Base Rate Loans or Base Rate Segments
in accordance with Sections 2.11 and 3.8 or earlier if required by
---------------------
applicable law. The conversion of any Eurodollar Rate Loans or Eurodollar
Rate Segments into Base Rate Loans or Base Rate Segments shall apply only
to any Lender who is affected by such restrictions and who has provided the
notice described above, and the obligation of the other Lenders to make,
and to convert Base Rate Loans or Base Rate Segments into, Eurodollar Rate
Loans or Eurodollar Rate Segments shall not be affected by such
restrictions. In the event that the obligation of some, but not all, of
the Lenders to make, or to convert Base Rate Loans or Base Rate Segments
into, Eurodollar Rate Loans or Eurodollar Rate Segments is so suspended,
then any request by the Borrower during the pendency of such suspension for
a Eurodollar Rate Loan or Eurodollar Rate Segment shall be deemed a request
for such Eurodollar Rate Loan or Eurodollar Rate Segment from the Lender(s)
not subject to such suspension and for a Base Rate Loan or Base Rate
Segment from the Lender(s) who are subject to such suspension, in each case
in the respective amounts based on the Lenders' respective Applicable
Commitment Percentages.
6.4. Compensation. The Borrower shall promptly pay to each Lender,
------------
upon the request of such Lender, such amount or amounts as shall be
sufficient (in the reasonable determination of Lender) to compensate it for
any loss, cost or expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Rate
Loan on a date other than the last day of the Interest Period for such
Eurodollar Rate Loan or Eurodollar Rate Segment, including without
limitation any conversion required pursuant to Sections 6.1, 6.2 or
--------------------
6.3; or
---
61
<PAGE>
(b) any failure by the Borrower to borrow or convert a
Eurodollar Rate Loan or Eurodollar Rate Segment on the date for such
borrowing or conversion specified in the relevant Borrowing Notice or
Interest Rate Selection Notice under Articles II or III hereof;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on
the principal amount so paid, prepaid or converted or not borrowed for the
period from the date of such payment, prepayment or conversion or failure
to borrow or convert to the last day of the then current Interest Period
for such Loan (or, in the case of a failure to borrow or convert, the
Interest Period for such Loan which would have commenced on the date
scheduled for such borrowing or conversion) at the applicable rate of
interest for such Eurodollar Rate Loan or Eurodollar Rate Segment provided
for herein over (ii) the Interbank Offered Rate (as reasonably determined
by the Agent) for Dollar deposits of amounts comparable to such principal
amount and maturities comparable to such period. A determination of a
Lender as to the amounts payable pursuant to this Section 6.4 shall be
-----------
conclusive, provided that such determinations are made on a reasonable
basis. The Lender requesting compensation under this Section 6.4 shall
-----------
promptly furnish to the Authorized Representative and the Agent
calculations in reasonable detail setting forth such Lender's determination
of the amount of such compensation.
6.5. Alternate Loan and Lender. In the event any Lender suspends the
-------------------------
making of any Eurodollar Rate Loan or Eurodollar Rate Segment pursuant to
this Article VI (herein a "Restricted Lender"), the Restricted Lender's
----------
Applicable Commitment Percentage of any Eurodollar Rate Loan or Eurodollar
Rate Segment shall bear interest at the Base Rate or the Eurodollar Rate
for which the suspension does not apply, as selected by Borrower, until the
Restricted Lender once again makes available the applicable Eurodollar Rate
Loan or Eurodollar Rate Segment. Notwithstanding the provisions of
Sections 2.4 and 3.2(b), interest shall be payable to the Restricted Lender
- -----------------------
at the time and manner as paid to those Lenders making available Eurodollar
Rate Loans or Eurodollar Rate Segments.
6.6. Taxes. (a) All payments by the Borrower of principal of, and
-----
interest on, the Loans and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future
excise, stamp or other taxes, fees, duties, levies, imposts, charges,
deductions, withholdings or other charges of any nature whatsoever imposed
by any taxing authority, but excluding (i) franchise taxes, (ii) any taxes
(other than withholding taxes) that would not be imposed but for a
connection between a Lender or the Agent and the jurisdiction imposing such
taxes (other than a connection arising solely by virtue of the activities
of such Lender or the Agent pursuant to or in respect of this Agreement or
any other Loan Document), (iii) any taxes imposed on or measured by any
Lender's assets, net income, receipts or branch profits, and (iv) any taxes
arising after the Closing Date solely as a result of or attributable to a
Lender changing its designated lending office after the date such Lender
becomes a party hereto (such non-excluded items being collectively called
"Taxes"). In the event that any withholding or deduction from any payment
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower will
62
<PAGE>
(x) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(y) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to
such authority; and
(z) pay to the Agent for the account of each Lender such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount
such Lender would have received had no such withholding or deduction
been required.
(b) Prior to the date that any Lender or participant organized under
the laws of a jurisdiction outside the United States becomes a party
hereto, such Person shall deliver to the Borrower and the Agent such
certificates, documents or other evidence, as required by the Code or
Treasury Regulations issued pursuant thereto, properly completed, currently
effective and duly executed by such Lender or participant establishing that
payments to it hereunder and under the Notes are (i) not subject to United
States Federal backup withholding tax and (ii) not subject to United States
Federal withholding tax under the Code because such payment is either
effectively connected with the conduct by such Lender or participant of a
trade or business in the United States or totally exempt from United States
Federal withholding tax by reason of the application of the provisions of a
treaty to which the United States is a party or such Lender is otherwise
exempt.
(c) If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, for the
account of the respective Lender, the required receipts or other required
documentary evidence, the Borrower shall indemnify the Lenders for any
incremental Taxes, interest or penalties that may become payable by any
Lender as a result of any such failure. For purposes of this Section 6.6,
-----------
a distribution hereunder by the Agent or any Lender to or for the account
of any Lender shall be deemed a payment by or on behalf of the Borrower.
63
<PAGE>
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
--------------------------------------------------------
7.1. Conditions of Term Loans and Initial Advance. The obligations
--------------------------------------------
of the Lenders to make the Term Loans and the initial Advance under the
Revolving Credit Facility, and of the Issuing Bank to issue any Letter of
Credit, and of NationsBank to make any Swing Line Loan, are subject to the
conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form
and substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the
Notes, the initial Facility Guaranties, the Security Instruments,
the LC Account Agreement, the other Loan Documents, together with
all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions contemplated
thereby of counsel to the Credit Parties dated the Closing Date,
addressed to the Agent and the Lenders and satisfactory to Smith
Helms Mulliss & Moore, L.L.P., special counsel to the Agent,
substantially in the form(s) of Exhibit I;
---------
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Credit Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution, delivery and performance thereof;
(iv) specimen signatures of officers of each Credit
Party executing the Loan Documents on behalf of such Credit
Party, certified by the secretary or assistant secretary of such
Credit Party;
(v) the charter documents of each Credit Party
certified as of a recent date by the Secretary of State of its
state of organization;
(vi) the bylaws of each Credit Party certified as of
the Closing Date as true and correct by its secretary or
assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation
of each Credit Party as to the due existence and good standing of
each Credit Party;
(viii) appropriate certificates of qualification to do
business, good standing
64
<PAGE>
and, where appropriate, authority to conduct business under
assumed name, issued in respect of each Credit Party as of a
recent date by the Secretary of State or comparable official of
each jurisdiction in which the failure to be qualified to do
business or authorized so to conduct business could have a
Material Adverse Effect;
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated
the Closing Date demonstrating compliance with the financial
covenants contained in Sections 10.1, 10.4(g), 10.4(k), 10.4(l),
-----------------------------------------
10.6(g), 10.6(k), 10.8(b) and 10.12 (to the extent applicable) as
-----------------------------------
of the end of the most recent fiscal quarter preceding the
Closing Date, or the Closing Date, as applicable, substantially
in the form of Exhibit J;
---------
(xi) evidence of all insurance required by the Loan
Documents;
(xii) an initial Borrowing Notice, if any, and, if
elected by the Borrower, Interest Rate Selection Notice;
(xiii) evidence of the filing of Uniform Commercial Code
financing statements reflecting the filing in all places required
by applicable law to perfect the Liens of the Agent under the
Security Instruments as a first priority Lien as to items of
Collateral in which a security interest may be perfected by the
filing of financing statements, and such other documents and/or
evidence of other actions as may be necessary under applicable
law to perfect the Liens of the Agent under the Security
Instruments as a first priority Lien in and to such other
Collateral as the Agent may require, including without
limitation:
(1) the delivery by the Borrower and each Subsidiary of all
stock certificates evidencing Pledged Stock, accompanied in
each case by duly executed stock powers (or other
appropriate transfer documents) in blank affixed thereto;
and
(2) the delivery by each Intercompany Note Holder of all
Intercompany Notes in existence as of the Closing Date, to
which is affixed the duly executed endorsement thereof in
blank;
(xiv) evidence satisfactory to the Agent that all fees
payable by the Borrower on the Closing Date to the Agent, NCMI
and for the benefit of the Lenders have been paid in full or made
available to the Lenders;
(xv) Uniform Commercial Code search results in respect of
the Borrower and its Subsidiaries showing only those Liens as are
acceptable to the Lenders;
(xvi) Evidence satisfactory to the Agent that a Mortgage
Warehousing Facility
65
<PAGE>
for Mid-State will remain in effect following the Closing Date,
which Mortgage Warehousing Facility provides not less than
$500,000,000 in limited recourse financing, and from which
facility proceeds of not less than $75,000,000 are made available
at the Closing Date and applied to the redemption in full of the
Senior Notes (including the payment of interest thereon)
described in the following clause (xvii) and to pay other costs
associated with this Agreement;
(xvii) Evidence satisfactory to the Agent, which may be
comprised of or include the written advice and undertaking of the
Senior Notes Trustee and the Borrower's notice of redemption, of
(1) the aggregate amount of obligations and liabilities required
to be paid as of the Closing Date to redeem in full the Senior
Notes and discharge the Borrower's obligations under the Senior
Notes Documents, and (2) the redemption in full of the Senior
Notes, discharge of the Borrower's obligations under the Senior
Notes Documents (other than liabilities in the nature of
continuing indemnities expressly provided for in the Senior Notes
Documents), and the release of any Liens arising under the Senior
Notes Documents substantially simultaneously with the funding of
the Term Loans and the initial Advance under the Revolving Credit
Facility;
(xviii) Evidence satisfactory to the Agent, which may be
comprised of or include the written advice and undertaking of the
Prior Credit Facilities Manager, of (1) the aggregate amount of
obligations and liabilities required to be paid as of the Closing
Date to pay and satisfy in full the Prior Credit Facilities and
discharge the Borrower's and Subsidiaries' obligations under the
Prior Credit Facility Loan Documents (other than the
reimbursement and related indemnification obligations in respect
of Existing Letters of Credit), and (2) the payment and
satisfaction in full of the Prior Credit Facilities, the
discharge of the Borrower's and Subsidiaries' obligations under
the Prior Credit Facility Loan Documents (other than liabilities
in the nature of continuing indemnities expressly provided for in
the Prior Credit Facility Loan Documents and the reimbursement
and related indemnification obligations in respect of Existing
Letters of Credit), and the release of any Liens arising under
the Prior Credit Facility Loan Documents substantially
simultaneously with the funding of the Term Loans and the initial
Advance under the Revolving Credit Facility;
(xix) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or
prior to the Closing Date in connection with the consummation of
the transactions contemplated hereby; and
(xx) evidence satisfactory to the Agent that no default or
event of default exist under the Prior Credit Agreement as at the
Closing Date; and
(b) In the good faith judgment of the Agent and the Lenders:
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<PAGE>
(i) there shall not have occurred or become known to
the Agent or the Lenders any event, condition, situation or
status since the Disclosure Date, other than the information
theretofore furnished to the Agent and the Lenders, that has had
or could reasonably be expected to result in a Material Adverse
Effect;
(ii) there shall not be pending or threatened any
action, suit, investigation, litigation or other arbitral,
administrative or judicial proceeding, other than the Disclosed
Litigation, an adverse result in which could reasonably be likely
to result in a Material Adverse Effect, and there shall not have
occurred any adverse change in status of or results in any
Disclosed Litigation which could reasonably be expected to have a
Materially Adverse Effect; and
(iii) the Borrower and its Subsidiaries shall have
received all approvals, consents and waivers, and shall have made
or given all necessary filings and notices as shall be required
to consummate the transactions contemplated hereby without the
occurrence of any default under, conflict with or violation of
(A) any applicable law, rule, regulation, order or decree of any
Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Borrower or
any Subsidiary is a party or by which any of them or their
properties is bound.
7.2. Conditions of Revolving Loans and Letters of Credit. The
---------------------------------------------------
obligations of the Lenders to make any Revolving Loans, of the Issuing Bank
to issue or renew Letters of Credit, and of NationsBank to make Swing Line
Loans, hereunder on or subsequent to the Closing Date are subject to the
satisfaction of the following conditions:
(a) the Agent or, in the case of Swing Line Loans, NationsBank
shall have received a Borrowing Notice if required by Article III;
-----------
(b)(i) the representations and warranties of the Borrower and
the Subsidiaries set forth in Article VIII and in each of the other
-------------
Loan Documents shall be true and correct in all material respects on
and as of the date of and both immediately before and after giving
effect to such Advance, Letter of Credit issuance or renewal or Swing
Line Loan, with the same effect as though such representations and
warranties had been made on and as of such date, except to the extent
that such representations and warranties expressly relate to an
earlier date and except that the financial statements referred to in
Section 8.6(a) shall be deemed to be those financial statements most
--------------
recently delivered to the Agent and the Lenders pursuant to
Section 9.1 from the date financial statements are delivered to the
-----------
Agent and the Lenders in accordance with such Section, and (ii) no
statement furnished pursuant to Article IX shall disclose, either
----------
individually or in the aggregate and cumulatively from the Closing
Date, a Material Adverse Change;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit
67
<PAGE>
in form and content acceptable to the Issuing Bank together with such
other instruments and documents as it shall request;
(d) immediately before and after giving effect to each Advance,
Swing Line Loan or the issuance or renewal of a Letter of Credit, no
Default or Event of Default specified in Article XI shall have
----------
occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance of
all outstanding Revolving Loans for each Lender shall not
exceed such Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in
Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X)
such Lender's Letter of Credit Commitment or (Y) the Total
Letter of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line Outstandings shall
not exceed $15,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a Letter of Credit
(or renewal thereof), the sum of the principal amount of
Letter of Credit Outstandings, Revolving Credit
Outstandings, Swing Line Outstandings and Reserve Amount
shall not exceed the Total Revolving Credit Commitment.
68
<PAGE>
ARTICLE VIII
Representations and Warranties
------------------------------
The Borrower represents and warrants with respect to itself and to its
Restricted Subsidiaries, and where indicated its Unrestricted Subsidiaries
(which representations and warranties shall survive the delivery of the
documents mentioned herein and the making of Loans), that:
8.1. Organization and Authority.
--------------------------
(a) The Borrower and each Subsidiary (other than the MSH Trusts)
is a corporation duly organized and validly existing under the laws of
the jurisdiction of its formation, and each of the MSH Trusts is a
validly organized business trust existing under the laws of the State
of Delaware;
(b) The Borrower and each Subsidiary (x) has the requisite power
and authority to own its properties and assets and to carry on its
business as now being conducted and as contemplated in the Loan
Documents, and (y) is qualified to do business in every jurisdiction
in which failure so to qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute, deliver
and perform this Agreement and the Notes, and to borrow hereunder, and
to execute, deliver and perform each of the other Loan Documents to
which it is a party;
(d) Each Subsidiary has the power and authority to execute,
deliver and perform the Facility Guaranty, Intercompany Note Pledge
Agreement, Unrestricted Subsidiary Subordination Agreement and each of
the other Loan Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which the Borrower or any Subsidiary is a party will be the legal,
valid and binding obligation or agreement, as the case may be, of the
Borrower or such Subsidiary, enforceable against the Borrower or such
Subsidiary in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other
similar law affecting the enforceability of creditors' rights
generally and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity);
8.2. Loan Documents. The execution, delivery and performance by the
--------------
Borrower and each Subsidiary of each of the Loan Documents to which it is a
party:
(a) have been duly authorized by all requisite corporate action
(including any required shareholder approval) of the Borrower and each
Subsidiary required for the lawful execution, delivery and performance
thereof;
69
<PAGE>
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority
binding on the Borrower or any Subsidiary or its properties, or
(iii) the charter documents or bylaws of the Borrower or any
Subsidiary;
(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which Borrower or any Subsidiary is a party, or by which
the properties or assets of Borrower or any Subsidiary are bound; and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of Borrower or any
Subsidiary except any Liens in favor of the Agent and the Lenders
created by the Security Instruments;
8.3. Solvency. The Borrower and each Subsidiary is Solvent after
--------
giving effect to the transactions contemplated by the Loan Document;
8.4. Subsidiaries and Stockholders. The Borrower has no Subsidiaries
-----------------------------
other than those Persons listed as Subsidiaries in Schedule 8.4 and
------------
additional Subsidiaries created or acquired after the Closing Date in
compliance with Section 9.19; Schedule 8.4 states as of the date hereof the
------------ ------------
organizational form of each entity, the authorized and issued
capitalization of each Subsidiary listed thereon, the number of shares or
other equity interests of each class of capital stock or interest issued
and outstanding of each such Subsidiary and the number and/or percentage of
outstanding shares or other equity interest (including options, warrants
and other rights to acquire any interest) of each such class of capital
stock or other equity interest owned by Borrower or by any such Subsidiary;
the outstanding shares or other equity interests of each such Subsidiary
have been duly authorized and validly issued and are fully paid and non-
assessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in
Schedule 8.4, free and clear of any Lien;
- ------------
8.5. Investments. Set forth on Schedule 8.5 is a complete and
----------- ------------
accurate list of all Investments (other than Investments described on
Schedule 8.4, Cash Equivalents, and loans and advances to employees
- ------------
otherwise permitted under Section 10.6(k)) held by the Borrower or any of
---------------
its Restricted Subsidiaries, showing as of the date of delivery of such
Schedule or of the most recent amendment or supplement thereto delivered
pursuant to Section 9.1(g) the amount, obligor or issuer, obligee and
--------------
maturity, if any, thereof. Neither the Borrower nor any of its Restricted
Subsidiaries owns any interest in any Person other than as listed in
Schedules 8.4 and 8.5, Cash Equivalents and advances to employees otherwise
- ---------------------
permitted under Section 10.6(k);
---------------
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<PAGE>
8.6. Financial Condition.
-------------------
(a) The Borrower has heretofore furnished to each Lender an
audited consolidated balance sheet of the Borrower and its
Subsidiaries (and related consolidating balance sheets of the Borrower
and its Restricted Subsidiaries) as at May 31, 1995 and the notes
thereto, and the related consolidated statements of operations,
retained earnings and cash flows for the Fiscal Year then ended (and
related consolidating statements of the Borrower and its Restricted
Subsidiaries) as examined and certified by Price Waterhouse, and
unaudited consolidated interim financial statements of the Borrower
and its Subsidiaries consisting of a consolidated balance sheet and
related consolidated statements of operations, retained earnings and
cash flows, in each case with related notes, for and as of the end of
the three month period ending August 31, 1995 (and related interim
consolidating balance sheets and statements of operations, retained
earnings and cash flows of the Borrower and its Restricted
Subsidiaries as at and for the same interim period). Except as set
forth therein, such financial statements (including the notes thereto)
present fairly the financial condition of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and three month period
and results of their operations and the changes in its stockholders'
equity for the Fiscal Year and interim period then ended, all in
conformity with GAAP applied on a Consistent Basis, subject however,
in the case of unaudited interim statements to year end audit
adjustments;
(b) since August 31, 1995 there has been no adverse change in
the condition, financial or otherwise, of the Borrower or any of its
Subsidiaries or in the businesses, properties, performance, prospects
or operations of the Borrower or its Subsidiaries, nor have such
businesses or properties, been adversely affected as a result of any
fire, explosion, earthquake, accident, strike, lockout, combination of
workers, drought, storm, hail, flood, embargo or act of God or a
public enemy, in any case which act, event, condition or occurrence
has had or could reasonably be expected to have a Material Adverse
Effect; and
(c) except as set forth in the financial statements referred to
in Section 8.6(a) or in Schedule 8.6 or permitted by Section 10.4,
-------------- ------------ ------------
neither Borrower nor any Restricted Subsidiary has incurred, other
than in the ordinary course of business, any material Indebtedness,
Contingent Obligation or other commitment or liability which remains
outstanding or unsatisfied;
8.7. Title to Properties. The Borrower and each of its Restricted
-------------------
Subsidiaries has good and marketable title to all its real and personal
properties, subject to no transfer restrictions or Liens of any kind,
except for (i) Liens arising under the Senior Notes Documents and the Prior
Credit Facility Loan Documents, which Liens will be released in their
entirety upon repayment of the Prior Credit Facilities and redemption of
the Senior Notes substantially simultaneously with the initial funding of
the Loans, (ii) the transfer restrictions and Liens described in Schedule
--------
8.7, and (iii) Liens permitted by Section 10.3;
- --- ------------
8.8. Taxes. The Borrower and each of its Subsidiaries has filed or
-----
caused to be filed all
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federal, state and local tax returns which are required to be filed by it
and, except for taxes and assessments described in Schedule 8.8 being
------------
contested in good faith by appropriate proceedings diligently conducted and
against which reserves, to the extent required by the Borrower's
independent certified public accountants, have been established and
reflected in the financial statements described in Section 8.6(a), have
--------------
paid or caused to be paid all taxes as shown on said returns or on any
assessment received by it, to the extent that such taxes have become due;
8.9. Other Agreements. Neither the Borrower nor any Subsidiary is
----------------
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions,
which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any
agreement or instrument to which the Borrower or any Subsidiary is a
party, which default has, or if not remedied within any applicable
grace period could reasonably be likely to have, a Material Adverse
Effect;
8.10. Litigation. Except for those matters set forth on Schedule 8.10
---------- -------------
(the "Disclosed Litigation"), each of which matters were disclosed to the
Agent prior to the Disclosure Date, there is no action, suit or proceeding
at law or in equity or by or before any governmental instrumentality or
agency or arbitral body pending, or, to the knowledge of the Borrower,
threatened by or against the Borrower or any Subsidiary or affecting the
Borrower or any Subsidiary or any properties or rights of the Borrower or
any Subsidiary, and since the Disclosure Date there has occurred no change
in the status or financial effect of any Disclosed Litigation, in either
case which could reasonably be likely to have a Material Adverse Effect;
8.11. Margin Stock. The proceeds of the borrowings made hereunder
------------
will be used by the Borrower only for the purposes expressly authorized
herein. None of such proceeds will be used, directly or indirectly, for
the purpose of purchasing or carrying any equity securities registered
pursuant to Section 12 of the Exchange Act or any margin stock or for the
purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry such equity securities or margin stock, or
for any other purpose which might constitute any of the Loans under this
Agreement a "purpose credit" within the meaning of said Regulation U,
Regulation G or Regulation X (12 C.F.R. Part 224) of the Board. Neither
the Borrower nor any agent acting in its behalf has taken or will take any
action which might cause this Agreement or any of the documents or
instruments delivered pursuant hereto to violate any regulation of the
Board or to violate the Exchange Act, or the Securities Act of 1933, as
amended, or any state securities laws, in each case as in effect on the
date hereof;
8.12. Investment Company. Neither the Borrower nor any Subsidiary is
------------------
an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (15 U.S.C.
72
<PAGE>
Sec. 80a-1, et seq.). The application of the proceeds of the Loans and
repayment thereof by the Borrower and the performance by the Borrower and
the Guarantors of the transactions contemplated by the Loan Documents will
not violate any provision of said Act, or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder, in each case
as in effect on the date hereof;
8.13. Patents, Etc. The Borrower and each Restricted Subsidiary owns
------------
or has the right to use, under valid license agreements or otherwise, all
material patents, licenses, franchises, trademarks, trademark rights, trade
names, trade name rights, trade secrets and copyrights necessary to or used
in the conduct of its businesses as now conducted and as contemplated by
the Loan Documents, without known conflict with any patent, license,
franchise, trademark, trade secret, trade name, copyright, other
proprietary right of any other Person;
8.14. No Untrue Statement. Neither (a) this Agreement nor any other
-------------------
Loan Document or certificate or document executed and delivered by or on
behalf of the Borrower or any Subsidiary in accordance with or pursuant to
any Loan Document nor (b) any information or any other statement,
representation, or warranty provided to the Agent in connection with the
negotiation or preparation of the Loan Documents contains any
misrepresentation or untrue statement of material fact or omits to state a
material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement
contained therein not misleading;
8.15. No Consents, Etc. Neither the respective businesses or
----------------
properties of the Borrower or any Subsidiary, nor any relationship between
the Borrower or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan
Documents and the transactions contemplated thereby, is such as to require
a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person on the
part of the Borrower or any Subsidiary as a condition to the execution,
delivery and performance of, or consummation of the transactions
contemplated by the Loan Documents, which, if not obtained or effected,
would be reasonably likely to have a Material Adverse Effect or to
materially impair or impose burdensome conditions on the performance of any
of the Loan Documents, or if so, such consent, approval, authorization,
filing, registration or qualification has been duly obtained or effected,
as the case may be;
8.16. Employee Benefit Plans.
----------------------
(a) The Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit
Laws with respect to all Employee Benefit Plans except for any
required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to
be exempt under Section 501(a) of the Code. No material liability has
been incurred by the
73
<PAGE>
Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged
in a nonexempt prohibited transaction described in Section 4975 of the
Code or Section 406 of ERISA affecting any of the Employee Benefit
Plans or the trusts created thereunder which could subject any such
Employee Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any accumulated funding deficiency with
respect to any Employee Benefit Plan, whether or not waived, or any
other liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due
and unpaid, (iii) failed to make a required contribution or payment to
a Multiemployer Plan, or (iv) failed to make a required installment or
other required payment under Section 412 of the Code, Section 302 of
ERISA or the terms of such Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably expected
to occur with respect to any Pension Plan or Multiemployer Plan, and
neither the Borrower nor any ERISA Affiliate has incurred any unpaid
withdrawal liability with respect to any Multiemployer Plan;
(d) Except as described on Schedule 8.16A, the present value of
--------------
all vested accrued benefits under each Employee Benefit Plan which is
subject to Title IV of ERISA, did not, as of the most recent valuation
date for each such plan, exceed the then current value of the assets
of such Employee Benefit Plan allocable to such benefits, and since
such valuation date there has occurred no material adverse change in
the funding of any such Employee Benefit Plan;
(e) To the best of the Borrower's knowledge, each Employee
Benefit Plan subject to Title IV of ERISA, maintained by the Borrower
or any ERISA Affiliate, has been administered in accordance with its
terms in all material respects and is in compliance in all material
respects with all applicable requirements of ERISA and other
applicable laws, regulations and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of the Borrower after due inquiry, is
threatened concerning or involving any Employee Benefit Plan;
(h) Set forth on Schedule 8.16B is a complete and accurate list
--------------
as of the Closing Date of all Pension Plans and Multiemployer Plans.
74
<PAGE>
8.17. No Default. As of the date hereof, there does not exist any
----------
Default or Event of Default hereunder;
8.18. Hazardous Materials. (a) Except as set forth on Schedule 8.18A,
------------------- --------------
the operations and properties of the Borrower and each of its Subsidiaries
comply in all material respects with all applicable Environmental Laws, and
no circumstances exist that could reasonably be expected to (i) form the
basis of an Environmental Action against the Borrower or any of its
Subsidiaries or any of their properties that could have a Material Adverse
Effect or (ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any applicable
Environmental Law that could have a Material Adverse Effect; and
(b) Except as set forth on Schedule 8.18B hereto, none of the
--------------
properties owned or operated by the Borrower or any of its Subsidiaries is
listed or proposed for listing on the national priorities list established
under CERCLA or on the CERCLIS, or on any analogous state or local list; no
underground storage tanks (as defined in 42 U.S.C. Sec. 6991) are located on
any property owned or operated by the Borrower or any of its Subsidiaries,
except in compliance with all applicable Environmental Laws; and Hazardous
Materials have not been released or disposed of on, generated, used,
treated, handled or stored at, or transported to or from, any property
currently or formerly owned or operated by the Borrower or any of its
Subsidiaries in violation of any applicable Environmental Laws or in a
manner that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. The Borrower and each
Subsidiary is in compliance with all applicable Environmental Laws in all
material respects. Except as set forth on Schedule 8.18A, neither the
--------------
Borrower nor any Subsidiary has been notified of any action, suit,
proceeding or investigation which calls into question compliance by the
Borrower or any Subsidiary with any Environmental Laws or which seeks to
suspend, revoke or terminate any license, permit or approval necessary for
the generation, handling, storage, treatment or disposal of any Hazardous
Material, and none of such actions, suits, proceedings or investigations
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect;
8.19. Employment Matters. (a) Except as set forth on Schedule 8.19,
------------------ -------------
none of the employees of the Borrower or any Subsidiary is subject to any
collective bargaining agreement and there are no strikes, work stoppages,
election or decertification petitions or proceedings, unfair labor charges,
equal opportunity proceedings, or other material labor/employee related
controversies or proceedings pending or, to the best knowledge of the
Borrower, threatened against the Borrower or any Subsidiary or between the
Borrower or any Subsidiary and any of its employees, other than employee
grievances arising in the ordinary course of business which could not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not
have a Material Adverse Effect, the Borrower and each Subsidiary is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation
those pertaining to wages, hours, occupational safety and taxation and
there is neither pending or threatened any litigation, administrative
proceeding nor, to the knowledge of the Borrower, any
75
<PAGE>
investigation, in respect of such matters which, if decided adversely,
could reasonably be likely, individually or in the aggregate, to have a
Material Adverse Effect.
8.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or
----
has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws.
8.21. Leases. Set forth on Schedule 8.21 is a complete and accurate
------ -------------
list as of the Closing Date of all leases of real property under which the
Borrower or any of its Restricted Subsidiaries is the lessee (other than
mineral leases constituting leases of real property), showing as of such
date the street address, county or other relevant jurisdiction, state,
lessor, lessee, expiration date and annual rental cost thereof. Each lease
referred to in the immediately preceding sentence is, to the best of the
Borrower's knowledge, the legal, valid and binding obligation of the lessor
thereof, enforceable in accordance with its terms.
8.22. Material Contracts. Set forth on Schedule 8.22 is a complete
------------------ -------------
and accurate list of all Material Contracts of the Borrower and each of its
Restricted Subsidiaries, showing as of the date of delivery of such
Schedule the parties thereto, and the subject matter and the term thereof.
Each Material Contract has been duly authorized, executed and delivered by
all parties thereto, has not been amended or otherwise modified in any
material respect, is in full force and effect, and is binding upon and
enforceable against all parties thereto in accordance with its terms.
There exists no default under any Material Contract by any party thereto.
76
<PAGE>
ARTICLE IX
Affirmative Covenants
---------------------
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will
cause each Subsidiary to:
9.1. Financial Reports, Etc. (a) As soon as practical and in any
----------------------
event within 90 days after the end of each Fiscal Year of the Borrower,
deliver or cause to be delivered to the Agent and each Lender (i) a
consolidated balance sheet of the Borrower and its Subsidiaries and a
consolidating balance sheet of the Borrower and its Restricted Subsidiaries
as at the end of such Fiscal Year, and the notes thereto, and the related
consolidated statements of operations, retained earnings and cash flows of
the Borrower and its Subsidiaries, and the respective notes thereto, and
consolidating statement of operations of the Borrower and its Restricted
Subsidiaries, and any notes thereto, for such Fiscal Year, setting forth
(other than for consolidating statements) comparative financial statements
for the preceding Fiscal Year, all prepared in accordance with GAAP applied
on a Consistent Basis and containing, with respect to the consolidated
financial statements, opinions of Price Waterhouse, or other such
independent certified public accountants selected by the Borrower and
approved by the Agent, which are unqualified as to the scope of the audit
performed and as to the "going concern" status of the Borrower and its
Subsidiaries and without any exception not acceptable to the Lenders, and
(ii) a certificate of an Authorized Representative (A) demonstrating
compliance with Sections 10.1, 10.4(g), 10.4(j), 10.4(k), 10.4(l), 10.6(g),
-----------------------------------------------------------
10.6(k), 10.6(l), 10.8(b) and 10.12 and (B) showing the net cash investment
- -----------------------------------
by the Borrower and Restricted Subsidiaries in the Unrestricted
Subsidiaries, which certificate shall be in the form of Exhibit J;
---------
(b) (i) as soon as practical and in any event within 45 days
after the end of each fiscal quarter (except the last fiscal quarter of the
Fiscal Year), deliver to the Agent and each Lender (A) a consolidated
balance sheet of the Borrower and its Subsidiaries and the related
consolidated statements of operations, retained earnings and cash flows for
such fiscal quarter and for the period from the beginning of the then
current Fiscal Year through the end of such reporting period, and
accompanied by a certificate of an Authorized Representative to the effect
that such financial statements present fairly the financial position of the
Borrower and its Subsidiaries as of the end of such fiscal period and the
results of their operations and the changes in their financial position for
such fiscal period, in conformity with the standards set forth in Section
-------
8.6(a) with respect to interim financial statements, and (B) a management
- ------
discussion and analysis of operating results of the Borrower and its
Subsidiaries for such fiscal quarter and for the period from the beginning
of the then current Fiscal Year, in form and detail reasonably acceptable
to the Agent, and (ii) as soon as practical and in any event within 60 days
after the end of each fiscal quarter (except the last fiscal quarter of the
Fiscal Year), deliver to the Agent and each Lender (A) a consolidating
balance sheet of the Borrower and its Restricted Subsidiaries and the
related consolidating statement of operations for such fiscal quarter and
for the period from the beginning of the then current Fiscal Year through
the end of such reporting period, and accompanied by a certificate of an
Authorized Representative to the effect that such consolidating financial
statements present fairly the financial position of the
77
<PAGE>
Borrower and its Restricted Subsidiaries as of the end of such fiscal
period and the results of their operations and the changes in their
financial position for such fiscal period, in conformity with the standards
set forth in Section 8.6(a) with respect to interim financial statements,
--------------
and (B) a certificate of an Authorized Representative containing
computations for such quarter comparable to that required pursuant to
Section 9.1(a)(ii);
- ------------------
(c) together with each delivery of the financial statements required
by Section 9.1(a)(i), deliver to the Agent and each Lender a letter from
-----------------
the Borrower's accountants specified in Section 9.1(a)(i) stating that in
-----------------
performing the audit necessary to render an opinion on the financial
statements delivered under Section 9.1(a)(i), they obtained no knowledge of
-----------------
any Default or Event of Default by the Borrower in the fulfillment of the
terms and provisions of this Agreement insofar as they relate to financial
matters (which at the date of such statement remains uncured); or if the
accountants have obtained knowledge of such Default or Event of Default, a
statement specifying the nature and period of existence thereof;
(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all
regular or special reports or effective registration statements which
Borrower or any Subsidiary shall file with the Securities and Exchange
Commission (or any successor thereto) or any securities exchange, (ii) any
proxy statement distributed by the Borrower or any Subsidiary to its
shareholders, bondholders or the financial community in general, and
(iii) any management letter or other report submitted to the Borrower or
any Subsidiary by independent accountants in connection with any annual,
interim or special audit of the Borrower or any Subsidiary;
(e) together with each delivery of the financial statements required
by Sections 9.1(a)(i)and 9.1(b)(i), deliver to the Agent and each Lender
-------------------------------
each of the following items as to the Borrower and its Restricted
Subsidiaries in respect of the period covered by the financial statements
accompanying such item and, in the case of items accompanying quarterly
financial statements, in respect of the period from the beginning of the
then current Fiscal Year through the end of such quarterly period, each to
be certified as true and correct by the Authorized Representative: (i) a
schedule of Consolidated Capital Expenditures, (ii) a schedule of Changes
in Consolidated Working Capital, and (iii) a statement of the aggregate
amount of each of Holdback Reserves and Tax Reserves as at the end of such
period;
(f) As soon as available and in any event no later than 15 days
before the end of each Fiscal Year, a consolidated forecast for the
Borrower and its Subsidiaries, a supplemental consolidated forecast for the
Borrower and its Restricted Subsidiaries, in each case prepared by
management of the Borrower, substantially similar in form and detail to the
forecasts and budgets prepared prior to the Closing Date and furnished to
the Agent, of balance sheets, operations and retained earnings statements
and cash flow statements (to include separate forecasts for Consolidated
Capital Expenditures and Consolidated EBITDA), and a reasonably detailed
explanation of any underlying assumptions with respect thereto, on a
quarterly basis for the Fiscal Year following such Fiscal Year then ended
and on an annual basis for the next succeeding four Fiscal Years and a
business plan for
78
<PAGE>
each Subsidiary for such period; provided, however, that, if at any time
during such Fiscal Year, management of the Borrower determines that their
interim forecasts prepared at the end of either fiscal quarter ending
August 31 or November 30 reflect that the most recently delivered forecasts
no longer accurately reflect the projected financial results of the
Borrower and its Restricted Subsidiaries for the Fiscal Year during which
such interim forecasts have been prepared, as promptly as practicable after
such determination and in any event within 60 days of the end of the fiscal
quarter for which such determination was made, revised consolidated
forecasts of the financial statements for which such determination was made
relating to the Fiscal Year during which such interim forecasts have been
prepared; and
(g) promptly, from time to time, deliver or cause to be delivered to
the Agent and each Lender such other information regarding Borrower's and
any Subsidiary's operations, business affairs and financial condition as
the Agent or such Lender may reasonably request;
The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders
(or any affiliate of any Lender) or to the Agent, to any Governmental
Authority having jurisdiction over the Agent or any of the Lenders pursuant
to any written request therefor or in the ordinary course of examination of
loan files, or to any other Person who shall acquire or consider the
assignment of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement [(subject, in the case of delivery
of information to Persons considering the acquisition of a participation
interest, to the agreement of such Person to comply with customary
confidentiality undertakings with respect to such information then employed
by the Agent in such circumstances)];
9.2.Maintain Properties. Maintain all properties necessary to its
-------------------
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens
all trademarks, trade names, patents, copyrights, trade secrets, know-how,
and other intellectual property and proprietary information (or adequate
licenses thereto), in each case as are reasonably necessary to conduct its
business as currently conducted or as contemplated hereby, all in
accordance with customary and prudent business practices;
9.3. Existence, Qualification, Etc. Except as otherwise expressly
-----------------------------
permitted under Section 10.7, do or cause to be done all things necessary
------------
to preserve and keep in full force and effect its existence and all
material rights and franchises, and maintain its license or qualification
to do business as a foreign corporation and good standing in each
jurisdiction in which its ownership or lease of property or the nature of
its business makes such license or qualification necessary, except where
the failure to so qualify would not have a Material Adverse Effect;
9.4. Regulations and Taxes. Comply in all material respects with or
---------------------
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent
and any other obligation which, if unpaid, would become a Lien against any
of its properties except liabilities being contested in good faith by
appropriate proceedings diligently conducted and against which adequate
reserves acceptable to the Borrower's independent certified
79
<PAGE>
public accountants have been established unless and until any Lien
resulting therefrom attaches to its property and assets and becomes
enforceable against its creditors;
9.5. Insurance. (a) Keep all of its insurable properties adequately
---------
insured at all times with responsible insurance carriers against loss or
damage by fire and other hazards to the extent and in the manner
substantially similar to that in effect as of the Closing Date, (b)
maintain general public liability insurance at all times with responsible
insurance carriers against liability on account of damage to persons and
property, and (c) maintain insurance under all applicable workers'
compensation laws (or in the alternative, maintain required reserves if
self-insured for workers' compensation purposes), such policies of
insurance to have such limits, deductibles, exclusions, co-insurance and
other provisions providing no less coverages than that specified in
Schedule 9.5 and to be in form reasonably satisfactory to the Agent. Each
- ------------
of the policies of insurance described in this Section 9.5 shall provide
-----------
that the insurer shall give the Agent not less than thirty (30) days' prior
written notice before any such policy shall be terminated, lapse or be
altered in any manner;
9.6. True Books. Keep true books of record and account in which
----------
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by
GAAP with respect to doubtful accounts and all taxes, assessments, charges,
levies and claims and with respect to its business in general, and include
such reserves in interim as well as year-end financial statements;
9.7. Right of Inspection. Permit any Person designated by any Lender
-------------------
or the Agent to visit and inspect any of the properties, corporate books
and financial reports of the Borrower or any Subsidiary and to discuss its
affairs, finances and accounts with its principal officers and independent
certified public accountants, all at reasonable times, at reasonable
intervals and with reasonable prior notice;
9.8. Observe all Laws. Conform to and duly observe in all material
----------------
respects all laws, rules and regulations and all other valid requirements
of any Governmental Authority with respect to the conduct of its business,
except where the failure to do so could not reasonably be expected to have
a Material Adverse Effect; provided that this Section excludes matters
pertaining to compliance with Environmental Laws and with laws, rules and
regulations pertaining to Employee Benefit Plans, which matters are
addressed in Sections 9.13, 9.14, 9.17 and 10.9;
----------------------------------
9.9. Governmental Licenses. Obtain and maintain all licenses,
---------------------
permits, certifications and approvals of all applicable Governmental
Authorities as are required for the conduct of its business as currently
conducted and as contemplated by the Loan Documents, except where the
failure to do so could not reasonably be expected to have a Material
Adverse Effect; provided that this Section excludes matters pertaining to
compliance with Environmental Laws and with laws, rules and regulations
pertaining to Employee Benefit Plans, which matters are addressed in
Sections 9.13, 9.14, 9.17 and 10.9;
- ----------------------------------
9.10. Covenants Extending to Other Persons. Cause each of its
------------------------------------
Subsidiaries to do with
80
<PAGE>
respect to itself, its business and its assets, each of the things required
of the Borrower in Sections 9.2 through 9.9, 9.18 and 9.21 inclusive;
------------ --- ---- ----
9.11. Officer's Knowledge of Default. Upon the chief financial
------------------------------
officer, Vice President-Controller or Vice President-Treasurer (or other
officer of different title exercising the same function) of the Borrower
obtaining knowledge of any Default or Event of Default hereunder or under
any other obligation of the Borrower or any Subsidiary to any Lender, or
any event, development or occurrence which could reasonably be expected to
have a Material Adverse Effect, cause any such officer to promptly notify
the Agent of the nature thereof, the period of existence thereof, and what
action the Borrower or such Subsidiary proposes to take with respect
thereto;
9.12. Suits or Other Proceedings. Upon any officer of the Borrower
--------------------------
obtaining knowledge (i) of any litigation or other proceedings being
instituted against the Borrower or any Subsidiary, or any attachment, levy,
execution or other process being instituted against any assets of the
Borrower or any Subsidiary, which individually or in the aggregate could
reasonably be likely to have a Material Adverse Effect, or (ii) of any
Material Adverse Change in Disclosed Litigation, promptly deliver to the
Agent written notice thereof stating the nature and status of such
litigation, dispute, proceeding, levy, execution or other process;
9.13. Notice of Discharge of Hazardous Material or Environmental
----------------------------------------------------------
Complaint. Promptly provide to the Agent true, accurate and complete
- ---------
copies of any and all notices, complaints, orders, directives, claims, or
citations received by the Borrower or any Subsidiary relating to any (a)
violation or alleged violation by the Borrower or any Subsidiary of any
applicable Environmental Law; (b) release or threatened release by the
Borrower or any Subsidiary, or at any facility or property owned or leased
or operated by the Borrower or any Subsidiary, of any Hazardous Material,
except where occurring legally; or (c) liability or alleged liability of
the Borrower or any Subsidiary for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, in any case
which could reasonably be expected to have a Material Adverse Effect;
9.14. Environmental Compliance. If the Borrower or any Subsidiary
------------------------
shall receive any letter, notice, complaint, order, directive, claim or
citation from any Governmental Authority or in connection with any pending
or threatened litigation alleging that the Borrower or and Subsidiary has
violated any Environmental Law or is liable for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials,
the Borrower shall, in any case relating to any claim, liability, act,
event or occurrence which could reasonably be expected to have a Material
Adverse Effect, within the time period permitted by the applicable
Environmental Law or the Governmental Authority responsible for enforcing
such Environmental Law, remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation or release or satisfy such
liability, unless and only during the period that the applicability of the
Environmental Law, the fact of such violation or liability or what is
required to remove or remedy such violation is being contested by the
Borrower or the applicable Subsidiary by appropriate proceedings diligently
conducted, all reserves with respect thereto as may be required under
Generally Accepted Accounting Principles, if any, have been made, and no
Lien shall have attached to property of the Borrower or the applicable
Subsidiary which shall
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have become enforceable against creditors of such Person;
9.15. Indemnification. Without limiting the generality of Section
--------------- -------
13.9, the Borrower hereby agrees to indemnify and hold the Agent, the
- ----
Lenders and NCMI, and their respective officers, directors, employees and
agents, harmless from and against any and all claims, losses, penalties,
liabilities, damages and expenses (including assessment and cleanup costs
and reasonable attorneys' fees and disbursements) arising directly or
indirectly from, out of or by reason of (a) the violation of any
Environmental Law by the Borrower or any Subsidiary or with respect to any
property owned, operated or leased by the Borrower or any Subsidiary or (b)
the handling, storage, treatment, emission or disposal of any Hazardous
Materials by or on behalf of the Borrower or any Subsidiary or on or with
respect to property owned or leased or operated by the Borrower or any
Subsidiary. The provisions of this Section 9.15 shall survive the Facility
------------
Termination Date;
9.16. Further Assurances. At the Borrower's cost and expense, upon
------------------
request of the Agent, duly execute and deliver or cause to be duly executed
and delivered, to the Agent such further instruments, documents,
certificates, financing and continuation statements, and do and cause to be
done such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the
provisions and purposes of this Agreement, the Security Instruments and the
other Loan Documents;
9.17. Employee Benefit Plans.
----------------------
(a) With reasonable promptness, and in any event within thirty (30)
days thereof, give notice to the Agent of (a) any material increase in
the benefits of any Employee Benefit Plan, (b) each funding waiver
request filed with respect to any Employee Benefit Plan and all
communications received or sent by the Borrower or any ERISA Affiliate
with respect to such request and (c) the failure of the Borrower or
any ERISA Affiliate to make a required installment or payment under
Section 302 of ERISA or Section 412 of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of becoming
aware of the occurrence or forthcoming occurrence of any
(a) Termination Event or (b) nonexempt "prohibited transaction," as
such term is defined in Section 406 of ERISA or Section 4975 of the
Code, in connection with any Pension Plan or any trust created
thereunder, deliver to the Agent a notice specifying the nature
thereof, what action the Borrower or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen (15)
days for purposes of clauses (a), (b) and (c), deliver to the Agent
copies of (a) any unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit
Plan under Section 401(a) of the Code, (b) all notices received by the
Borrower or any ERISA
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Affiliate of the PBGC's intent to terminate any Pension Plan or to
have a trustee appointed to administer any Pension Plan, (c) if the
Agent shall request, each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by the Borrower or any ERISA
Affiliate with the Internal Revenue Service with respect to each
Pension Plan and (d) all notices received by the Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition
and amount, if any, of withdrawal liability pursuant to Section 4202
of ERISA. The Borrower will notify the Agent in writing within five
(5) Business Days of the Borrower or any ERISA Affiliate obtaining
knowledge or reason to know that the Borrower or any ERISA Affiliate
has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA;
9.18. Continued Operations. Continue at all times to conduct its
--------------------
business and engage principally in the same line or lines of business
substantially as heretofore conducted;
9.19. New Subsidiaries. Within thirty (30) days following the
----------------
acquisition or creation of any Subsidiary other than an MSH Trust, or the
date upon which any previously inactive Subsidiary ceases to be inactive,
cause to be delivered to the Agent for the benefit of the Lenders each of
the following:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of Exhibit K;
---------
(b) an Intercompany Notes Pledge Agreement of such Subsidiary
substantially in the form of Exhibit G, together with such Uniform
---------
Commercial Code financing statements on Form UCC-1 or otherwise duly
executed by such Subsidiary as "Debtor" and naming the Agent for the
benefit of the Lenders as "Secured Party", in form, substance and
number sufficient in the reasonable opinion of the Agent and its
special counsel to be filed in all Uniform Commercial Code filing
offices in all jurisdictions in which filing is necessary or advisable
to perfect in favor of the Agent for the benefit of the Lenders the
Lien on Collateral conferred under such Security Instrument to the
extent such Lien may be perfected by Uniform Commercial Code filing;
(c)(A) the Pledged Stock of such Subsidiary, together with duly
executed stock powers or powers of assignment in blank affixed
thereto, and (B) if such Collateral shall be owned by a Subsidiary who
has not then executed and delivered to the Agent a Stock Pledge
Agreement granting a Lien to the Agent in such Collateral, a Stock
Pledge Agreement substantially similar in form and content to that
executed and delivered by the Borrower as of the Closing Date, with
appropriate revisions as to the identity of the pledgor and securing
the obligations of such pledgor under its Facility Guaranty;
(d) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized
Representative (provided that the failure to deliver such supplement
shall not
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impair the rights conferred under the Security Instruments in after
acquired Collateral);
(e) an opinion of counsel to the Subsidiary dated as of the date
of delivery of the Facility Guaranty and other Loan Documents provided
for in this Section 9.19 and addressed to the Agent and the Lenders,
------------
in form and substance reasonably acceptable to the Agent (which
opinion may include assumptions and qualifications of similar effect
to those contained in the opinions of counsel delivered pursuant to
Section 7.1(a)), to the effect that:
--------------
(A) such Subsidiary is duly organized, validly existing and
in good standing in the jurisdiction of its formation, has the
requisite power and authority to own its properties and conduct
its business as then owned and then conducted and proposed to be
conducted, and is duly qualified to transact business and is in
good standing as a foreign corporation or partnership in each
other jurisdiction in which the character of the properties owned
or leased, or the business carried on by it, requires such
qualification and the failure to be so qualified could reasonably
be likely to result in a Material Adverse Effect;
(B) the execution, delivery and performance of the Facility
Guaranty and other Loan Documents described in this Section 9.19
------------
to which such Subsidiary is a signatory have been duly authorized
by all requisite corporate or partnership action (including any
required shareholder or partner approval), each of such
agreements has been duly executed and delivered and constitutes
the valid and binding agreement of such Subsidiary, enforceable
against such Subsidiary in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability
of creditors' rights generally and to the effect of general
principles of equity (whether considered in a proceeding at law
or in equity); and
(C) to the extent required by applicable law, the Uniform
Commercial Code financing statements on Form UCC-1 delivered to
the Agent by the Subsidiary in connection with the delivery of
the Security Instruments of such Subsidiary have been duly
executed by the Subsidiary and are in form, substance and number
sufficient for filing in all Uniform Commercial Code filing
offices in all jurisdictions in which filing is necessary to
perfect in favor of the Agent for the benefit of the Lenders the
Lien on Collateral conferred under such Security Instruments to
the extent such Lien may be perfected by Uniform Commercial Code
filing, and to the extent that possession of the Pledged Stock or
Intercompany Notes owned by such Subsidiary is required to
perfect the Lien of the Agent therein, the Agent has a duly
perfected Lien in such Collateral as in existence as of the date
of such opinion;
(f) current copies of the charter documents and bylaws of such
Subsidiary, minutes of duly called and conducted meetings (or duly
effected consent actions) of the Board of Directors or appropriate
committees thereof (and, if required by such charter documents,
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bylaws or by applicable law, of the shareholders) of such Subsidiary
authorizing the actions and the execution and delivery of documents
described in this Section 9.19;
------------
9.20. Mortgage Warehousing Facility. Cause Mid-State to maintain a
-----------------------------
mortgage warehousing program in an aggregate amount of at least
$500,000,000 (the availability of which may be subject to substantially the
same criteria as those included in the documentation evidencing the
Mortgage Warehousing Facility on the Closing Date) and otherwise on
substantially the same terms as the terms of the Mortgage Warehousing
Facility;
9.21. Performance of Specified Documents and Material Contracts. (a)
---------------------------------------------------------
Perform and observe all of the terms and provisions of each Specified
Document and each Material Contract to be performed or observed by it,
maintain each such Specified Document and each such Material Contract in
full force and effect and enforce each such Specified Document and each
such Material Contract in accordance with its terms, in each case except to
the extent as, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect or to impair the
rights or interest of the Agent or any Lender in any material manner, and
take all such action to such end as may be reasonably requested from time
to time by the Agent, and (b) promptly upon request of the Agent, make to
each other party to each such Specified Document and each such Material
Contract such demands and requests for information and reports or for
action as any Borrower or any of its Subsidiaries is entitled to make under
such Specified Document or such Material Contract;
9.22. Transactions with Affiliates. Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, directly or indirectly, all transactions otherwise
permitted under the Loan Documents with any of their Affiliates on terms
that are fair and reasonable and no less favorable to such Borrower or such
Subsidiary than it would obtain in a comparable arm's-length transaction
with a Person that is not an Affiliate, other than:
(i) the consummation by the Borrower and its Subsidiaries of
the transactions effected by the Loan Documents;
(ii) any employment arrangement entered into by such Borrower
or any of its Subsidiaries in the ordinary course of business and
consistent with the past practices of such Borrower or such
Subsidiary, as the case may be;
(iii) transactions between or among such Borrower and its
wholly owned Subsidiaries or between or among wholly owned
Subsidiaries of such Borrower, in each case to the extent
otherwise permitted under the terms of the Loan Documents; and
(iv) the declaration and payment of dividends and the making
of distributions to all holders of any class of capital stock of
such Borrower or any of its Subsidiaries to the extent otherwise
permitted under Section 10.8;
------------
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provided that, notwithstanding the foregoing provisions of this
Section 9.22, neither the Borrower nor any of its Subsidiaries shall
------------
conduct any transaction or series of related transactions (other than
transactions or series of transactions between or among the Borrower
and its wholly owned Subsidiaries or between or among wholly owned
Subsidiaries of the Borrower otherwise permitted under clause (iii) of
this Section 9.22), directly or indirectly, with any of its Affiliates
------------
(1) having an aggregate value or resulting in aggregate consideration
of more than $1,000,000 unless the Borrower or such Subsidiary has
obtained the approval of the majority of the Board of Directors of the
Borrower (including a majority of the disinterested directors of such
Board of Directors) for such transaction or transactions and (2)
having an aggregate value or resulting in aggregate consideration of
more than $25,000,000 (other than any such transaction or series of
transactions relating to the rendering of services, including, without
limitation, underwriting, financial advisory and other similar
services) unless the Borrower or such Subsidiary has delivered to the
Agent, on behalf of the Lenders, an opinion of an independent
investment banking firm or appraisal firm of national standing stating
that such transaction or series of transactions are fair to the
Borrower or such Subsidiary, as the case may be, from a financial
point of view;
9.23. Covenant to Give Security. Upon the reasonable request of the
-------------------------
Agent following the occurrence and during the continuance of a Default
under any of Sections 11.1(a), 11.1(b), 11.1(g) or 11.1(h) or an Event of
---------------------------------------------
Default, and at the expense of the Borrower:
(i) within ten days after such request, furnish to the Agent
a description of the real and personal properties of the Borrower
and each of its Restricted Subsidiaries in detail satisfactory to
the Agent;
(ii) within 15 days after such request, duly execute and
deliver to the Agent mortgages, pledges, assignments and other
security agreements, as specified by and in form and substance
reasonably satisfactory to the Agent, securing payment of all
the Obligations and constituting Liens on all such properties;
(iii) within 30 days after such request, take whatever action
(including, without limitation, the recording of mortgages, the
filing of Uniform Commercial Code financing statements, the
giving of notices and the endorsement of notices on title
documents) may be necessary or advisable in the opinion of the
Agent to vest in the Agent (or in any representative of the Agent
designated by it) valid and subsisting Liens on the properties
purported to be subject to the mortgages, pledges, assignments
and other security agreements delivered pursuant to this Section
-------
9.23, enforceable against all third parties in accordance with
----
their terms;
(iv) within 60 days after such request, deliver to the Agent
a signed copy of a favorable opinion of counsel for the Borrower,
addressed to the Agent and reasonably acceptable to the Agent, as
to the matters contained in clauses (ii) and (iii) of this
Section 9.23, as to such mortgages, pledges, assignments and
------------
other security
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agreements being legal, valid and binding obligations of the
Borrower and its Subsidiaries, as the case may be, intended to be
party thereto, enforceable in accordance with their terms, and as
to such other matters as the Agent may reasonably request; and
(v) at any time and from time to time, promptly execute and
deliver any and all further instruments and documents and take
all such other actions as the Agent may deem desirable in
obtaining the full benefits of, or in preserving the Liens of,
such mortgages, pledges, assignments or other security
agreements;
9.24. Mid-State Rate Hedging Obligation. Cause Mid-State to maintain
---------------------------------
until the Facility Termination Date, one or more Rate Hedging Obligations
reasonably acceptable to the Agent in an aggregate notional amount
approximately equal to the amount of advances to Mid-State under the
Mortgage Warehousing Facility in respect of mortgages transferred by Mid-
State under the Mortgage Warehousing Facility that have a stated interest
rate of less than 10% per anum;
9.25. Permitted Receivables Securitization. In the event that the
------------------------------------
Borrower shall enter into any Permitted Receivables Securitization, the
Borrower shall maintain such Permitted Receivables Securitization (or a
replacement Permitted Receivables Securitization on terms no less favorable
to the Lenders than the facility so replaced), including without limitation
availability of advances thereunder, on the terms and conditions approved
by the Agent and the Required Lenders.
9.26. Pari Passu. Cause the Obligations and the obligations of the
----------
Guarantors under the Facility Guaranty to rank at all times at least pari
----
passu in right of payment with, and senior in right of security to, all
- -----
other present and future unsubordinated Indebtedness and other obligations
of the Borrower or such Guarantor, as the case may be, except that
Indebtedness secured as permitted by Section 10.4 hereof may rank senior in
------------
right of security with respect to the collateral therefor.
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ARTICLE X
Negative Covenants
------------------
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Subsidiary or Restricted Subsidiary, as the case may be, to:
10.1. Financial Covenants.
-------------------
(a) Fixed Charge Coverage. Cause, suffer or permit the
---------------------
Consolidated Fixed Charge Coverage Ratio as at the end of each Four-
Quarter Period during the respective periods set forth below to be
less than the amount set forth opposite each such period:
Ratio Must
Period Equal or Exceed
------ ---------------
From the Closing Date
to and including May 31, 1996 1.00 to 1.00
From June 1, 1996 to
and including May 31, 1997 1.15 to 1.00
From June 1, 1997 and thereafter 1.25 to 1.00
(b) Interest Coverage. Cause, suffer or permit the Consolidated
-----------------
Interest Coverage Ratio during any Four-Quarter Period to be less than
2.50 to 1.00;
(c) Leverage. Cause, suffer or permit the Consolidated Leverage
--------
Ratio as at the end of each Four-Quarter Period during the respective
periods set forth below to be greater than the amount set forth
opposite each such period:
Ratio Must
Period Not Exceed
------ ----------
From the Closing Date
to and including May 31, 1996 3.75 to 1.00
From June 1, 1996 to
and including May 31, 1997 3.00 to 1.00
From June 1, 1997 and thereafter 2.50 to 1.00
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<PAGE>
10.2. Acquisitions. Enter into any agreement, contract, binding
------------
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose
assets are to be) acquired does not oppose such Acquisition and the line or
lines of business of the Person to be acquired are substantially the same
as one or more line or lines of business conducted by the Borrower and its
Subsidiaries, (ii) no Default or Event of Default shall exist and be
continuing immediately prior to and immediately after giving effect to such
Acquisition and if the Cost of Acquisition is in excess of $10,000,000, the
Borrower shall have furnished to the Agent (A) pro forma historical
financial statements as of the end of the most recently completed Fiscal
Year of the Borrower and most recent interim fiscal quarter, if applicable
giving effect to such Acquisition and (B) a certificate in the form of
Exhibit J prepared on a historical pro forma basis giving effect to such
- ---------
Acquisition, which certificate shall demonstrate that no Default or Event
of Default would exist immediately after giving effect thereto, (iii) the
Person acquired shall be a wholly owned Restricted Subsidiary, or be merged
into the Borrower or a wholly owned Restricted Subsidiary, immediately upon
consummation of the Acquisition (or if assets are being acquired, the
acquiror shall be the Borrower or a wholly owned Restricted Subsidiary),
and (iv) after giving effect to such Acquisition, the aggregate Costs of
Acquisition incurred since the Closing Date, together with the aggregate
amount of all other loans, advances and Investments described in Section
-------
10.6(l) do not exceed the amount permitted under such Section 10.6(l);
- ------- ---------------
10.3. Liens. Incur, create or permit to exist any Lien, charge or
-----
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary,
including the Borrower's interest in capital stock of each Subsidiary,
other than
(a) Liens created under the Security Instruments in favor of the
Agent and the Lenders;
(b) Liens existing as of the date hereof and as set forth in
Schedule 8.7;
------------
(c) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted, which, except as expressly so specified on Schedule 8.7,
------------
are inferior in respect of the Collateral to the Liens conferred under
the Security Instruments, and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance
with GAAP and which Liens are not yet enforceable against other
creditors;
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted, which, except as expressly so specified on
Schedule 8.7, are inferior in respect of the
------------
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Collateral to the Liens conferred under the Security Instruments, and
with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP and which
Liens are not yet enforceable against other creditors;
(e) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(f) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges
or encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower
or any Subsidiary and which do not materially detract from the value
of the property to which they attach or materially impair the use
thereof to the Borrower or any Subsidiary;
(g) any interest or title of a lessor or sublessor and any
restriction or encumbrance to which the interest or title of such
lessor or sublessor may be subject that is incurred in the ordinary
course of business and, either individually or when aggregated with
all other Liens described in clauses (a) through (f) in effect on any
date of determination, could not be reasonably expected to have a
Material Adverse Effect;
(h) Liens on certain property and assets of Jim Walter Homes and
Mid-State (i) pursuant to the terms of the documentation evidencing
the Mortgage-Backed Securities and the Mortgage Warehousing Facility
or (ii) securing Indebtedness incurred under Section 10.4(d)(iii)
--------------------
(including for purposes of this clause (ii) Liens on Mid-State's
residual beneficial interest in Mid-State Trust III constituting one
of the MSH Trusts provided that such Lien is created in a transaction
permitted under Section 10.22(ii));
-----------------
(i) purchase money Liens upon or in real property or equipment
acquired or held by the Borrower or any of its Subsidiaries in the
ordinary course of business to secure the purchase price of such real
property or equipment or to secure Indebtedness permitted by Section
-------
10.4(g) incurred solely for the purpose of financing the acquisition,
-------
construction or improvement of such real property or equipment to be
subject to such Liens, or Liens existing on any such real property or
equipment at the time of its acquisition (other than any such Liens
created in contemplation of such acquisition that do not secure the
purchase price of such real property or equipment); provided, however,
that no such Lien shall extend to or cover any property other than the
real property or equipment being acquired, constructed or improved;
and provided further that any Indebtedness secured by such Liens shall
otherwise be permitted under the terms of the Loan Documents;
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(j) Liens arising in connection with Capital Leases permitted
under Section 10.4(k); provided that no such Lien shall extend to or
---------------
cover any Collateral or any property or assets other than the assets
subject to such Capital Leases; and
(k) the replacement, extension or renewal of any Lien permitted
under clauses (b), (h), (i) and (j) of this Section 10.3 solely upon
------------
or in the same property and assets theretofore subject thereto;
provided that any Indebtedness secured by such Liens shall otherwise
be permitted under the terms of the Loan Documents; and
(l) Liens on life insurance policies securing Indebtedness
permitted under Section 10.4(n);
---------------
10.4. Indebtedness. Incur, create, assume or permit to exist any
------------
Indebtedness of the Borrower or its Subsidiaries, howsoever evidenced,
except:
(a) Indebtedness existing as of the Closing Date and as set
forth in Schedule 8.6;
------------
(b) Indebtedness owing to the Agent or any Lender in connection
with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) in the case of Mid-State and each MSH Trust, where
applicable,
(i) non-recourse Indebtedness evidenced by the
Mortgage-Backed Securities,
(ii) limited recourse Indebtedness created under the
Mortgage Warehousing Facility, and
(iii) limited recourse Indebtedness resulting from the
issuance of additional securities by one or more special
purpose entities owned by Mid-State or in which Mid-State
shall have the sole residual or beneficial interest, secured
or otherwise supported by Mortgage Accounts, which
securities shall not restrict the actions or businesses of
any Borrower or any of its Subsidiaries (other than Mid-
State) in any manner and shall not include terms requiring
any guarantee or other credit support from or recourse to
the Borrower or any of its Restricted Subsidiaries that are
less favorable to the Borrower and its Restricted
Subsidiaries than those contained in the Mortgage-Backed
Securities; and
(e) in the case of Jim Walter Homes, (A) Indebtedness resulting
from the contingent
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obligations of Jim Walter Homes (1) to repurchase Mortgage Accounts
pursuant to Section 3(b) of the Depositor Account Transfer Agreement,
(2) to repurchase Foreclosure Accounts (as defined in the Depositor
Account Transfer Agreement) pursuant to the terms of Section 4 of the
Depositor Account Transfer Agreement and (3) to indemnify certain
Indemnitees referred to in the Depositor Account Transfer Agreement
for expenses incurred thereby on the terms set forth in Section 6 of
the Depositor Account Transfer Agreement; provided that the amount of
Indebtedness incurred under subclauses (e)(A)(1) and (e)(A)(3) shall
not exceed $10,000,000 at any time, and (B) Indebtedness owed to Mid-
State resulting from the receipt of proceeds from the issuance and
sale of the Mortgage-Backed Securities or additional securities
otherwise permitted under subclauses (d)(i) and (d)(iii) of this
Section 10.4;
------------
(f) Intercompany Advances;
(g) purchase money Indebtedness secured by Liens described in
Section 10.3(i) not to exceed an aggregate outstanding amount at any
---------------
time of $40,000,000;
(h) Subordinated Payables;
(i) Indebtedness arising in connection with Permitted
Receivables Securitizations not to exceed $75,000,000 at any time;
(j) Indebtedness arising from Rate Hedging Obligations (provided
that such Indebtedness is incurred to limit risks of currency or
interest rate fluctuations to which the Borrower and its Subsidiaries
are otherwise subject by virtue of the operations of their businesses,
and not for speculative purposes):
(i) of Unrestricted Subsidiaries, including the Rate Hedging
Obligation of Mid-State required to be maintained pursuant to
Section 9.24; and
------------
(ii) of the Borrower and its Restricted Subsidiaries in aggregate
notional amount not to exceed $365,000,000 at any time;
(k) Capital Leases in aggregate principal amount not at any time
exceeding $20,000,000 in the aggregate;
(l) additional unsecured Indebtedness for Money Borrowed of the
Borrower not otherwise covered by clauses (a) through (k) above,
provided that the aggregate outstanding principal amount of all such
other Indebtedness permitted under this clause (l) shall in no event
exceed $15,000,000 at any time;
(m) Indebtedness extending the maturity of, or refunding or
refinancing, in whole or in part, any Indebtedness incurred under
clauses (a), (f), (g), (k) and (l) this Section 10.4,
------------
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provided, however, that the terms of any such extension, refunding or
refinancing Indebtedness (and of any agreement entered into and of any
instrument issued in connection therewith) are no less favorable to
the Agent and the Lenders than the terms of the Indebtedness so
extended, refunded or refinanced and are otherwise expressly permitted
under the terms of the Loan Documents, and provided further, however,
that (1) the aggregate principal amount of such extended, refunding or
refinancing Indebtedness shall not be increased above the outstanding
principal amount thereof immediately prior to such extension,
refunding or refinancing, (2) the direct and contingent obligors
therefor shall not be changed as a result of or in connection with
such extension, refunding or refinancing and (3) immediately before
and immediately after giving effect to any such extension, refunding
or refinancing, no Default shall have occurred and be continuing; and
(n) loans to a Credit Party against and secured by the cash
surrender value of life insurance policies owned by such Credit Party,
provided that the aggregate principal amount of such loan does not
exceed the cash surrender value of the policy constituting security
therefor;
10.5. Transfer of Assets. Sell, lease, transfer or otherwise dispose
------------------
of any assets of Borrower or any Restricted Subsidiary except:
(a) dispositions of inventory, cash and Cash Equivalents in the
ordinary course of business for fair value;
(b) sales of Mortgage Accounts by Jim Walter Homes to Mid-
State, which sales shall be at no less than book value and otherwise
on terms no less favorable to Jim Walter Homes than those contained as
of the Closing Date in the Mortgage Warehousing Facility;
(c) sales for the fair market value thereof (which shall be
determined in the good faith judgment of the Borrower) of assets other
than the capital stock of any Subsidiary of the Borrower (or any
security exchangeable, exercisable or convertible into such capital
stock) with the exception of J.W. Window Components, Inc., Southern
Precision Corporation, Vestal Manufacturing Company, Walter Land
Company, J.W. Walter, Inc., Hamer Properties, Inc., Land Holdings
Corporation, J.W.I. Holdings Corporation, or Hamer Holdings, Inc.,
provided that (i) not less than 75% of the aggregate purchase price
therefor is paid in cash, (ii) to the extent required hereunder, the
proceeds of such sale are applied in accordance with the terms hereof
to the Ratable Reduction of Credit Facilities, and (iii) immediately
prior to and after giving effect to any such sale, no Default or Event
of Default shall exist and be continuing hereunder;
(d) dispositions for fair market value (which shall be
determined in the good faith judgment of the Borrower) of equipment
which, in the aggregate during any Fiscal Year, has an aggregate fair
market value not in excess of $2,000,000 and 100% of the Net Cash
Proceeds of which are used to acquire replacement equipment having at
least equivalent
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value;
(e) cash sales for fair market value (which shall be determined
in the good faith judgment of the Borrower) of property, other than
the capital stock of any Subsidiary of the Borrower (or any security
exchangeable, exercisable or convertible into such capital stock) with
the exception of J.W. Window Components, Inc., Southern Precision
Corporation, Vestal Manufacturing Company, Walter Land Company, J.W.
Walter, Inc., Hamer Properties, Inc., Land Holdings Corporation,
J.W.I. Holdings Corporation, or Hamer Holdings, Inc., that is (i)
substantially worn, damaged, obsolete or (ii), in the judgment of the
Borrower, no longer best used or useful in its business or that of any
Subsidiary, provided that the aggregate fair market value of such
property sold in any Fiscal Year shall not exceed $2,000,000;
(f) sales of accounts receivable of Restricted Subsidiaries in
connection with Permitted Receivables Securitizations;
(g) transfers or utilization of assets necessary to give effect
to merger or consolidation transactions permitted by Section 10.7 and
------------
loans, advances and investments permitted by Section 10.6; and
------------
(h) sales of land by United Land Corporation, Walter Land
Company, J.W. Walter, Inc. or Hamer Properties, Inc., the net proceeds
of which are included in the computation of Consolidated Net Income;
10.6. Investments. Purchase, own, invest in or otherwise acquire,
-----------
directly or indirectly, any Investments, except that Borrower and its
Subsidiaries may maintain Investments or invest in the following:
(a) securities of any Person acquired in an Acquisition
permitted hereunder;
(b) investments in Cash Equivalents;
(c) investments existing as of the date hereof and as set forth
in Schedules 8.4 and 8.5;
---------------------
(d) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss; and
(e) Intercompany Advances;
(f) Subordinated Payables;
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(g) Net Cash Advances to Unrestricted Subsidiaries in an amount
not to exceed $30,000,000 at any time after the Closing Date, on the
condition that all of the proceeds of such Net Cash Advances are used
solely to satisfy certain tax obligations and other administrative and
operating expenses of the Unrestricted Subsidiaries incurred in the
ordinary course of business, provided that immediately before and
after giving effect thereto no Default or Event of Default shall have
occurred and be continuing;
(h) investments in Rate Hedging Obligations permitted to be
maintained under Section 10.4(j);
---------------
(i) investments of Mid-State in special purpose entities created
for the purpose of issuing asset-backed securities permitted under
Section 10.4(d)(iii);
--------------------
(j) investments of the Borrower or Restricted Subsidiaries in
special purpose entities created in connection with Permitted
Receivables Securitizations;
(k) loans and advances to employees in the ordinary course of
the business of the Borrower and its Subsidiaries as presently
conducted in an aggregate principal amount not to exceed $1,000,000 at
any time outstanding;
(l) additional investments (including Acquisitions but excluding
intercompany advances among the Borrower and Restricted Subsidiaries)
in an aggregate amount not to exceed at any time the positive amount,
if any, equal to the sum of (x) $20,000,000 plus (y) to the extent
positive Cumulative Excess Cash Flow; provided that (i) no Default or
Event of Default shall exist and be continuing immediately before or
immediately after giving effect to such Investment and (ii) to the
extent such Investment shall constitute an Acquisition, the provisions
of Sections 10.2 and 9.19 shall be complied with; and
----------------------
(m) investments by Cardem and each of the MSH Trusts in the
ordinary course of business and in conformity with their respective
investment policies in effect from time to time;
10.7. Merger or Consolidation. (a) Consolidate with or merge into
-----------------------
any other Person, or (b) permit any other Person to merge into it, or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise
dispose of all or substantially all of its assets; provided, however, (i)
-------- -------
any Restricted Subsidiary of the Borrower may merge or transfer all or
substantially all of its assets into or consolidate with the Borrower or
any wholly owned Restricted Subsidiary of the Borrower, and (ii) any other
Person may merge into or consolidate with the Borrower so long as the
Borrower is the survivor or any wholly owned Restricted Subsidiary and any
Subsidiary may merge into or consolidate with any other Person in order to
consummate an Acquisition permitted by Section 10.2; provided further that
------------ ----------------
any resulting or surviving entity shall execute such agreements and other
documents, including a Facility Guaranty and Intercompany Note Pledge
Agreement, and take such other action as the Agent may require to evidence
its express assumption of the obligations and
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liabilities of its predecessor entities under the Loan Documents;
10.8. Restricted Payments. Make any Restricted Payment or apply or
-------------------
set apart any of their assets therefor or agree to do any of the foregoing;
provided, however, the Borrower may make the following Restricted Payments
- --------
if prior to and immediately after giving effect thereto no Default or Event
of Default shall exist and be continuing:
(a) the purchase, redemption or other acquisition of capital
stock of the Borrower acquired solely with the Net Issuance Proceeds
of the issuance of other shares of capital stock of the Borrower
having equal or inferior voting rights to the shares so acquired;
(b) commencing June 1, 1996, in any period of twelve consecutive
months (on a non-cumulative basis, with the effect that amounts not
paid in any twelve month period may not be carried over for payment in
a subsequent period), Restricted Payments in an aggregate amount not
to exceed the applicable amount set forth below based on the
Consolidated Leverage Ratio as at the end of the Four-Quarter Period
most recently then ended:
Consolidated Restricted Payment
Leverage Ratio Not to Exceed
-------------- -------------
Greater than 2.50
to 1.00 $ 5,500,000
Less than or
equal to 2.50 to 1.00 $11,000,000
Less than or
equal to 2.00 to 1.00 $11,000,000 plus,
to the extent positive,
Cumulative Excess
Cash Flow;
provided that not less than ten days prior to any Restricted Payment
described in clauses (a) or (b), the Borrower shall deliver to the Agent a
certificate of an Authorized Representative describing such Restricted
Payment in reasonable detail and including, in the case of a Restricted
Payment described in clause (b), computations on a pro forma basis
demonstrating that no Default or Event of Default shall occur as a result
of such Restricted Payment;
10.9. Compliance with ERISA. With respect to any Pension Plan,
---------------------
Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability
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<PAGE>
on the part of the Borrower or any ERISA Affiliate to the PBGC; or
(b) fail to comply with ERISA and other applicable laws with
respect to the funding of liabilities arising under any Pension Plan;
or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived to the extent not permitted under
ERISA or other applicable law; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to
Section 502(I) of ERISA or a tax pursuant to Section 4975 of the Code
may be imposed; or
(f) fail, or permit the Borrower or any ERISA Affiliate to fail,
to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Laws and all other applicable
laws and the regulations and interpretations thereof;
10.10. Fiscal Year. Change its Fiscal Year;
-----------
10.11. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily
----------------
or involuntarily) or commence or suffer any proceedings seeking any such
winding up, liquidation or dissolution, except in connection with a merger
or consolidation permitted pursuant to Section 10.7;
------------
10.12. Lease Payments. Incur or cause, suffer or permit to be
--------------
incurred in any Four-Quarter Period (on a noncumulative basis, with the
effect that amounts not incurred in any Four-Quarter Period may not be
carried forward to a subsequent period) aggregate Consolidated Lease
Payments in excess of $30,000,000.
10.13. Negative Pledge Clauses. Enter into or suffer to exist any
-----------------------
agreement with any Person other than the Agent and the Lenders pursuant to
this Agreement or any other Loan Documents which prohibits or limits the
ability of any 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, other than:
(a) such provisions as are contained as of the Closing Date in
Indebtedness described as of the Closing Date on Schedule 8.6;
------------
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<PAGE>
(b) such provisions as are contained in Indebtedness of any
Subsidiary as of the date it becomes a Subsidiary of the Borrower in
any transaction otherwise permitted hereunder;
(c) such provisions as may be contained in any Indebtedness
permitted hereunder to be issued under Section 10.4(m) to refinance or
---------------
replace other Indebtedness, provided that the terms of such provisions
shall be no less favorable to the Agent and the Lenders as were
contained in the Indebtedness being refinanced or replaced; and
(d) such provisions as are or may be imposed on the MSH Trusts or
on other special purpose entities created in connection with the
issuance of asset-backed securities permitted by Section 10.4(d)(iii)
--------------------
or in connection with any Permitted Receivables Securitization;
10.14. Prepayments, Etc. of Indebtedness. (a) Prepay, redeem,
---------------------------------
purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any
subordination terms of, any Indebtedness other than:
(i) the prepayment of the Loans and the cash
collateralization of the Letters of Credit in accordance with the
terms of this Agreement;
(ii) regularly scheduled or required repayments or
redemptions of Indebtedness described on Schedule 8.6 as of the
------------
Closing Date;
(iii) the satisfaction of any Indebtedness incurred under
Sections 10.4(g) and 10.4(k) that is secured by a Lien on the
----------------------------
property or assets of the Borrower or the Subsidiary of a
Borrower that incurred such Indebtedness, which property or
assets are otherwise permitted to be disposed of under Section
-------
10.5;
----
(iv) prepayments, redemptions or defeasance of Indebtedness
under Section 10.4(l) solely from Cumulative Excess Cash Flow,
---------------
provided that prior to and immediately after giving effect to
such payment there shall not exist a Default or Event of Default;
and
(v) so long as no Default shall have occurred and be
continuing or would result therefrom, repayments of Intercompany
Advances, advances by the Borrower to Mid-State, and Subordinated
Payables;
(b) amend, modify or change in any manner any term or condition
of (i) the Mortgage-Backed Securities or any Indebtedness described on
Schedule 8.6 as of the Closing Date, or (ii) the Mortgage Warehousing
------------
Facility, or (iii) any material lease, so that the terms and
conditions thereof are less favorable to the Agent and the Lenders
than the terms of such facilities or agreements on the Closing Date.
10.15. Creation of New Subsidiaries. Create or acquire any new
----------------------------
Subsidiary after the Closing
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<PAGE>
Date other than wholly-owned Restricted Subsidiaries created or acquired in
accordance with Section 9.19;
------------
10.16. Change the Nature of Business. Make any material change in the
-----------------------------
nature of its business as carried on at the date of this Agreement;
10.17. Charter Amendments. Amend (i) its certificate of incorporation
------------------
or (ii) its bylaws, except, in the case of the bylaws of the Borrower or
any Subsidiary where such amendment could not reasonably be expected to
have a Material Adverse Effect or to impair the rights or interests of the
Agent or any Lenders in any material manner; provided that copies of any
amendment to the bylaws of the Borrower or such Subsidiary shall be
provided promptly to the Agent;
10.18. [reserved]
10.19. Amendment, Etc. of Specified Documents and Material Contracts.
-------------------------------------------------------------
Cancel or terminate any Specified Document, any Material Contract or any
material lease, or consent to or accept any cancellation or termination
thereof, amend, modify or change in any manner any term or condition of any
Specified Document, any Material Contract or any material lease, or give
any consent, waiver or approval thereunder, waive any default under or any
breach of any term or condition of any Specified Document, any Material
Contract or any material lease, agree in any manner to any other amendment,
modification or change of any term or condition of any Specified Document,
any Material Contract or any material lease, or take any other action in
connection with any Specified Document, any Material Contract or any
material lease, that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or to impair the
rights or interests of the Agent or any Lender in any material manner;
10.20. Partnerships. Become a general partner in any general or
------------
limited partnership;
10.21. Mid-State Rights in Mortgage Accounts. Except as permitted in
-------------------------------------
Section 10.22(ii), cause, suffer or permit Mid-State to grant any Lien on
- -----------------
(i) the residual value of Mortgage Accounts transferred to any special
purpose entity in connection with the Mortgage-Backed Securities, the
Mortgage Warehousing Facility or the issuance of additional securities
secured or supported by Mortgage Accounts, or (ii) its rights as servicer
of Mortgage Accounts in any such transaction;
10.22. Sale of Mid-State. Sell, transfer or otherwise dispose of all
-----------------
or any material portion of the assets of Mid-State, other than (i) the
transfer by Mid-State of Mortgage Accounts to one or more special purpose
entities in connection with the issuance of securities secured or supported
by such Mortgage Accounts and otherwise permitted hereunder and (ii) the
transfer by Mid-State of its residual beneficial interest in Mid State
Trust III and the creation of a Lien thereon constituting one of the MSH
Trusts to a new special purpose entity created in connection with the
issuance of asset-backed securities permitted under Section 10.4(d)(iii),
provided that the portion of the proceeds received by Mid-State in
connection with such issuance and allocable to the transfer of such
residual beneficial interest (which portion shall be established by the
Borrower to the satisfaction of the Agent)
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<PAGE>
shall immediately be advanced to the Borrower or a Restricted Subsidiary
upon receipt thereof as a Subordinated Payable.
10.23. Sales of Mortgage Accounts to Mid-State. Sell Mortgage
---------------------------------------
Accounts to Mid-State on terms other than those substantially similar to
the terms of sale provided in connection with the Mortgage-Backed
Securities and the Mortgage Warehousing Facility.
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ARTICLE XI
Events of Default and Acceleration
----------------------------------
11.1. Events of Default. If any one or more of the following events
-----------------
(herein called "Events of Default") shall occur for any reason whatsoever
(and whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any Governmental Authority) and shall be continuing, that is
to say:
(a) if default shall be made in the due and punctual payment of
the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of Article II or Article III or Article IV,
---------- ----------- ----------
at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment of
any amount of interest on any Loan, Reimbursement Obligation or other
Obligation or of any fees or other amounts payable to any of the
Lenders, any Managing Agent or the Agent on the date on which the same
shall be due and payable; or
(c) if default shall be made in the performance or observance of
any covenant set forth in Section 2.9, 9.7, 9.11, 9.19, 9.20, 9.24 or
----------- --- ---- ---- ---- ----
Article X; or
---------
(d) if a default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision
contained in this Agreement or the Notes (other than as described in
clauses (a), (b) or (c) above) and such default shall continue for 20
or more days after the earlier of receipt of notice of such default by
the Authorized Representative from the Agent or any of the chief
financial officer, Vice President-Controller or Vice President-
Treasurer (or other officer of different title exercising the same
function) becomes aware of such default, or if a default shall be made
in the performance or observance of, or shall occur under, any
covenant, agreement or provision contained in any of the other Loan
Documents (beyond any applicable grace period, if any, contained
therein) or in any instrument or document evidencing or creating any
obligation, guaranty, or Lien in favor of the Agent or any of the
Lenders or delivered to the Agent or any of the Lenders in connection
with or pursuant to this Agreement or any of the Obligations, or if
any Loan Document ceases to be in full force and effect (other than by
reason of any action by the Agent), or if without the written consent
of the Lenders, this Agreement or any other Loan Document shall be
disaffirmed or shall terminate, be terminable or be terminated or
become void or unenforceable for any reason whatsoever (other than in
accordance with its terms in the absence of default or by reason of
any action by the Lenders or the Agent); or
(e) if a default shall occur, which is not waived, (i) in the
payment of any principal, interest, premium or other amount with
respect to any Indebtedness or Rate Hedging
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Obligation (other than the Loans and other Obligations) of the
Borrower or any Subsidiary in an amount not less than $5,000,000 as to
any single issue of Indebtedness or $10,000,000 in the aggregate
outstanding, or (ii) in the performance, observance or fulfillment of
any term or covenant contained in or the occurrence of any other event
specified in any agreement or instrument under or pursuant to which
any such Indebtedness may have been issued, created, assumed,
guaranteed or secured by the Borrower or any Subsidiary, and such
default shall continue for more than the period of grace, if any,
therein specified, or such default or occurrence shall permit the
holder of any such Indebtedness (or any agent or trustee acting on
behalf of one or more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower or any Subsidiary pursuant to or in connection
with any Loan Document, or otherwise, shall be false or misleading in
any material respect when given; or
(g) if the Borrower or any Subsidiary shall be unable to pay its
debts generally as they become due; file a petition to take advantage
of any insolvency statute; make an assignment for the benefit of its
creditors; commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any
substantial part of its property; file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
thirty (30) days, or approve a petition filed against the Borrower or
any Subsidiary seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state, which petition is not dismissed within thirty (30) days; or if,
under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody or
control of the Borrower or any Subsidiary or of the whole or any
substantial part of its properties, which control is not relinquished
within thirty (30) days; or if there is commenced against the Borrower
or any Subsidiary any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of
thirty (30) days; or if the Borrower or any Subsidiary takes any
action to indicate its consent to or approval of any such proceeding
or petition; or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is equal to or in excess of $10,000,000 is rendered against
the Borrower or any Subsidiary, and either (A) enforcement
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<PAGE>
proceedings shall have been commenced by any creditor upon any such
judgment or order and remain unstayed or (B) there shall be any period
of 20 consecutive days during which a stay of enforcement of any such
judgment or order shall not be in effect, or (ii) one or more
nonmonetary judgments or order shall be rendered against the Borrower
or any of its Subsidiaries that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect, and there shall be any period of 20 consecutive days during
which a stay of enforcement of any such judgment or order shall not be
in effect; or
(j) if there shall occur a Change of Control; or
(k) if there shall occur in the judgment of the Required Lenders
a Material Adverse Change since August 31, 1995; or
(l) if there shall occur and not be waived an Event of Default
as defined in any of the other Loan Documents; or
(m) if Mid-State shall cease to be the "servicer" or Jim Walter
Homes shall cease to be the "subservicer" on any mortgages securing
any of the financings contemplated under Section 10.4(d);
---------------
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived, either or
both of the following actions may be taken:
(i) the Agent, with the consent of the Required Lenders,
may, and at the direction of the Required Lenders shall, declare
any obligation of the Lenders and the Issuing Bank to make
further Revolving Loans and Swing Line Loans or to issue
additional Letters of Credit terminated, whereupon the obligation
of each Lender to make further Revolving Loans, of NationsBank to
make further Swing Line Loans, and of the Issuing Bank to issue
additional Letters of Credit, hereunder shall terminate
immediately, and
(ii) the Agent shall at the direction of the Required
Lenders, at their option, declare by notice to the Borrower any
or all of the Obligations to be immediately due and payable, and
the same, including all interest accrued thereon and all other
obligations of the Borrower to the Agent and the Lenders, shall
forthwith become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all of
which are hereby expressly waived, anything contained herein or
in any instrument evidencing the Obligations to the contrary
notwithstanding;
provided, however, that notwithstanding the above, if there shall occur an
- --------
Event of Default under clause (g) or (h) above, then the obligation of the
Lenders to make Revolving Loans, of NationsBank to make Swing Line Loans,
and of the Issuing Bank to issue Letters of Credit hereunder shall
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automatically terminate and any and all of the Obligations shall be
immediately due and payable without the necessity of any action by the
Agent or the Required Lenders or notice to the Agent or the Lenders;
the Borrower shall, upon demand of the Agent or the Required
Lenders, deposit cash with the Agent in an amount equal to the
amount of any Letter of Credit Outstandings, as collateral
security for the repayment of any future drawings or payments
under such Letters of Credit, and such amounts shall be held by
the Agent pursuant to the terms of the LC Account Agreement; and
the Agent and each of the Lenders shall have all of the
rights and remedies available under the Loan Documents or under
any applicable law.
11.2. Agent to Act. In case any one or more Events of Default shall
------------
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant, agreement or other provision
contained herein or in any other Loan Document, or to enforce the payment
of the Obligations or any other legal or equitable right or remedy.
11.3. Cumulative Rights. No right or remedy herein conferred upon
-----------------
the Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such
right or remedy shall be cumulative and shall be in addition to every other
such right or remedy contained herein and therein or now or hereafter
existing at law or in equity or by statute, or otherwise.
11.4. No Waiver. No course of dealing between the Borrower and any
---------
Lender or the Agent or any failure or delay on the part of any Lender or
the Agent in exercising any rights or remedies under any Loan Document or
otherwise available to it shall operate as a waiver of any rights or
remedies and no single or partial exercise of any rights or remedies shall
operate as a waiver or preclude the exercise of any other rights or
remedies hereunder or of the same right or remedy on a future occasion.
11.5. Allocation of Proceeds. If an Event of Default has occurred
----------------------
and not been waived, and the maturity of the Notes has been accelerated
pursuant to Article XI hereof, all payments received by the Agent
----------
hereunder, in respect of any principal of or interest on the Obligations or
any other amounts payable by the Borrower hereunder, shall be applied by
the Agent in the following order:
(a) amounts due to the Lenders pursuant to Sections 3.10, 4.3,
-------------------
4.4 and 13.5;
------------
(b) amounts due to the Agent pursuant to Section 12.11;
-------------
(c) payments of interest on Loans, Swing Line Loans and
Reimbursement
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Obligations, to be applied for the ratable benefit of the Lenders
based on their respective Applicable Commitment Percentages (with
amounts payable in respect of Swing Line Outstandings being included
in such calculation and paid to NationsBank);
(d) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of
the Lenders in accordance with their respective Applicable Commitment
Percentages (with amounts payable in respect of Swing Line
Outstandings being included in such calculation and paid to
NationsBank);
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 11.1(B);
---------------
(f) amounts due to the Lenders pursuant to Sections 4.2(g), 9.15
---------------------
and 13.9;
----
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the
Lenders;
(h) amounts due to any of the Lenders in respect of Obligations
consisting of liabilities under any Swap Agreement with any of the
Lenders on a pro rata basis according to the amounts owed; and
(i) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
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ARTICLE XII
The Agent
---------
12.1. Appointment. Each Lender hereby irrevocably designates and
-----------
appoints NationsBank as the Agent for the Lenders under this Agreement, and
each of the Lenders hereby irrevocably authorizes NationsBank as the Agent
for such Lender, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers as
are expressly delegated to the Agent by the terms of this Agreement and
such other Loan Documents, together with such other powers as are
reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any of the Lenders, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into
this Agreement or any other Loan Document or otherwise exist against the
Agent.
12.2. Attorneys-in-fact. The Agent may execute any of its duties
-----------------
under the Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence, gross
negligence or willful misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
12.3. Limitation on Liability. Neither the Agent nor any of its
-----------------------
officers, directors, employees, agents or attorneys-in-fact shall be liable
to the Lenders for any action lawfully taken or omitted to be taken by it
or them under or in connection with the Loan Documents except for its or
their own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates shall be responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made by
the Borrower, any of its Subsidiaries or any officer or representative
thereof contained in any Loan Document, or in any certificate, report,
statement or other document referred to or provided for in or received by
the Agent under or in connection with any Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any
Loan Document, or for any failure of the any Credit Party to perform its
obligations under any Loan Document, or for any recitals, statements,
representations or warranties made, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any
collateral. The Agent shall not be under any obligation to any of the
Lenders to ascertain or to inquire as to the observance or performance of
any of the terms, covenants or conditions of any Loan Document on the part
of any Credit Party or to inspect the properties, books or records of the
Borrower or its Subsidiaries.
12.4. Reliance. The Agent shall be entitled to rely, and shall be
--------
fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telefacsimile
or telex message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Agent. The Agent
may deem and treat the payee of any Note as the owner thereof for all
purposes unless an Assignment shall have been filed
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<PAGE>
with and accepted by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under the Loan Documents unless it
shall first receive advice or concurrence of the Lenders or the Required
Lenders as provided in this Agreement or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under the Loan Documents in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and
all present and future holders of the Notes.
12.5. Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender, the
Authorized Representative or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is
a "notice of default". In the event that the Agent receives such a notice,
the Agent shall promptly give notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that, unless
and until the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable in
the best interests of the Lenders.
12.6. No Representations. Each Lender expressly acknowledges that
------------------
neither the Agent, any Managing Agent, NCMI nor any of their affiliates has
made any representations or warranties to it and that no act by the Agent
hereafter taken, including any review of the affairs of the Borrower and
its Subsidiaries, shall be deemed to constitute any representation or
warranty by the Agent, any Managing Agent or NCMI to any Lender. Each
Lender represents to the Agent that it has, independently and without
reliance upon the Agent, any Managing Agent, NCMI or any other Lender, and
based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of each Credit Party and made
its own decision to enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Agent, any
Managing Agent, NCMI or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under the Loan Documents and to make such investigation as it deems
necessary to inform itself as to the status and affairs, financial or
otherwise, of each Credit Party. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of any Credit Party which may come into the
possession of the Agent or any of its affiliates.
12.7. Indemnification. Each of the Lenders agree to indemnify the
---------------
Agent in its capacity as such (to the extent required to be but not
reimbursed by any Credit Party and without limiting any obligations of any
Credit Party), ratably according to the respective principal amount of the
Notes held by them (or, if no Notes are outstanding, ratably in accordance
with their respective Applicable
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<PAGE>
Commitment Percentages as then in effect) from and against any and all
liabilities, obligations, losses (excluding any losses suffered by the
Agent as a result of Borrower's failure to pay any fee owing to the Agent),
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time
(including without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of any Loan Document or any other document
contemplated by or referred to therein or the transactions contemplated
thereby or any action taken or omitted by the Agent under or in connection
with any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the Facility Termination Date.
12.8. Lender. The Agent, each Managing Agent and their affiliates
------
may make loans to, accept deposits from and generally engage in any kind of
business with any Credit Party as though it were not the Agent or Managing
Agent hereunder. With respect to its Loans made or renewed by it and any
Note issued to it, the Agent and each Managing Agent shall have the same
rights and powers under this Agreement as any Lender and may exercise the
same as though it were not the Agent or Managing Agent, as the case may be,
and the terms "Lender" and "Lenders" shall, unless the context otherwise
indicates, include the Agent and each Managing Agent in its individual
capacity.
12.9. Resignation. If the Agent shall resign as Agent under this
-----------
Agreement, then the Required Lenders may appoint, with the consent, so long
as there shall not have occurred and be continuing a Default or Event of
Default, of the Borrower, which consent shall not be unreasonably withheld,
a successor Agent for the Lenders, which successor Agent shall be a
commercial bank organized under the laws of the United States or any state
thereof, having a combined surplus and capital of not less than
$500,000,000, whereupon such successor Agent shall succeed to the rights,
powers and duties of the former Agent and the obligations of the former
Agent shall be terminated and canceled, without any other or further act or
deed on the part of such former Agent or any of the parties to this
Agreement; provided, however, that the former Agent's resignation shall not
--------
become effective until such successor Agent has been appointed and has
succeeded of record to all right, title and interest in any collateral held
by the Agent; provided, further, that if the Required Lenders and, if
-------- -------
applicable, the Borrower cannot agree as to a successor Agent within ninety
(90) days after such resignation, the Agent shall appoint a successor Agent
which satisfies the criteria set forth above in this Section 12.9 for a
------------
successor Agent and the parties hereto agree to execute whatever documents
are necessary to effect such action under this Agreement or any other
Document executed pursuant to this Agreement; provided, however that in
--------
such event all provisions of the Loan Documents, shall remain in full force
and effect. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article XII shall inure to its benefit as to any actions
-----------
taken or omitted to be taken by it while it was Agent under this Agreement.
12.10. Sharing of Payments, etc. Each Lender agrees that if it shall,
------------------------
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than
pursuant to Article VI) which results in its receiving more than its pro
----------
rata
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<PAGE>
share of the aggregate payments with respect to all of the Obligations
(other than any payment expressly provided hereunder to be distributed on
other than a pro rata basis and payments pursuant to Article VI), then (a)
----------
such Lender shall be deemed to have simultaneously purchased from the other
Lenders a share in their Obligations so that the amount of the Obligations
held by each of the Lenders shall be pro rata and (b) such other
adjustments shall be made from time to time as shall be equitable to insure
that the Lenders share such payments ratably; provided, however, that for
--------
purposes of this Section 12.10 the term "pro rata" shall be determined with
-------------
respect to both the Revolving Credit Commitment and Term Loan Commitment of
each Lender and to the Total Revolving Credit Commitments and Total Term
Loan Commitment after subtraction in each case of amounts, if any, by which
any such Lender has not funded its share of the outstanding Loans and
Obligations. If all or any portion of any such excess payment is
thereafter recovered from the Lender which received the same, the purchase
provided in this Section 12.10 shall be rescinded to the extent of such
-------------
recovery, without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that each Lender so purchasing a portion
of the other Lenders' Obligations may exercise all rights of payment
(including, without limitation, all rights of set-off, banker's lien or
counterclaim) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
12.11. Fees. The Borrower agrees to pay to the Agent, for its
----
individual account, an annual Agent's fee as heretofore and from time to
time hereafter agreed to by the Borrower and Agent in writing.
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ARTICLE XIII
Miscellaneous
-------------
13.1. Assignments and Participations. (a) At any time after the
------------------------------
Closing Date each Lender may, with the prior consent of the Agent and (so
long as no Default or Event of Default has occurred and is continuing) the
Borrower, which consents shall not be unreasonably withheld, assign to one
or more banks or financial institutions all or a portion of its rights and
obligations under the Loan Documents (including, without limitation, all or
a portion of any Note payable to its order); provided, that (i) each such
--------
assignment with respect to the Revolving Credit Facility shall be of a
constant and not a varying percentage of all of the assigning Lender's
rights and obligations under the Revolving Credit Facility, Letter of
Credit Facility and Swing Line Facility, (ii) for each assignment involving
the issuance and transfer of a Note, the assigning Lender shall execute the
applicable Assignment and Acceptance and the Borrower hereby agrees to
execute a replacement Note or Notes to give effect to the assignment, (iii)
in any case the amount of Revolving Credit Commitment and Letter of Credit
Commitment, or the amount of Term Loan A Commitment or Term Loan B
Commitment, as applicable, which shall be assigned is a minimum of
$5,000,000 and, if greater, an amount which is an integral multiple of
$1,000,000, (iv) such assignee shall have an office located in the United
States, and (v) no consent of the Borrower or the Agent shall be required
in connection with any assignment by a Lender to another Lender or to an
affiliate of any Lender. Upon such execution, delivery, approval and
acceptance, from and after the effective date specified in each Assignment
and Acceptance, (x) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder or under any such Note
have been assigned or negotiated to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and a
holder of such Note and (y) the assignor thereunder shall, to the extent
that rights and obligations hereunder or under such Note have been assigned
or negotiated by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement. Any
Lender who makes an assignment shall pay to the Agent a one-time
administrative fee of $3,500 which fee shall not be reimbursed by the
Borrower.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) the assignment
made under such Assignment and Acceptance is made under such Assignment and
Acceptance without recourse; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of any Credit Party or the performance or
observance by any Credit Party of its obligations under any Loan Document
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements delivered pursuant to Section
-------
8.6(a) or Section 9.1, as the case may be, and such other Loan Documents
- ------ -----------
and other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance
upon the Agent, NCMI or such assigning Lender or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
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<PAGE>
continue to make its own credit decisions in taking or not taking action
under any Loan Document; (v) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender and a holder of
such Notes.
(c) The Agent shall maintain at one of its offices in Charlotte,
North Carolina a copy of each Lender Assignment and Acceptance delivered to
it in accordance with the terms of Section 13.1(a) above and a register for
---------------
the recordation of the identity of the principal amount, type and Interest
Period of each Loan outstanding hereunder, the names, addresses and the
Revolving Credit Commitments, the Term Loan A Commitments and the Term Loan
B Commitments of the Lenders pursuant to the terms hereof from time to time
(the "Register"). The Agent will make reasonable efforts to maintain the
--------
accuracy of the Register and to promptly update the Register from time to
time, as necessary. The entries in the Register shall be conclusive in the
absence of manifest error and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and each Lender,
at any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to Borrower.
(e) Nothing herein shall prohibit any Lender from pledging or
assigning, without notice to or consent of the Borrower and without the
payment of the administrative fee referred to in Section 13.1(a), any Note
---------------
to any Federal Reserve Bank in accordance with applicable law.
(f) Each Lender may sell participations at its expense to one or more
banks or other entities as to all or a portion of its rights and
obligations under this Agreement; provided, that (i) such Lender's
--------
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder
of any Note issued to it for the purpose of this Agreement, (iv) such
participations shall be in a minimum amount of $5,000,000 and, if greater,
an amount which is an integral multiple of $1,000,000, and shall include an
allocable portion of such Lender's Participation, (v) Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and with regard to any and all payments to be made under this
Agreement; provided, that the participation agreement between a Lender and
--------
its participants may provide that such Lender will obtain the approval of
such participant prior to such Lender's agreeing to any amendment or waiver
of any provisions of any Loan Document which would (A) extend the maturity
of any Note, (B) reduce the interest rates hereunder or (C) increase the
Revolving Credit Commitment, either of the Term Loan Commitments or the
Letter of Credit Commitment of the Lender granting the participation, and
(vi) the sale of any such participations which require Borrower to file a
registration statement with the United States
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<PAGE>
Securities and Exchange Commission or under the securities regulations or
laws of any state shall not be permitted.
(g) The Borrower may not assign, nor shall it permit any other Credit
Party to assign, any rights, powers, duties or obligations under this
Agreement or the other Loan Documents without the prior written consent of
all the Lenders.
13.2. Notices. Any notice shall be conclusively deemed to have been
-------
received by any party hereto and be effective (i) on the day on which
delivered (including hand delivery by commercial courier service) to such
party (against receipt therefor), (ii) on the date of receipt at such
address, telefacsimile number or telex number as may from time to time be
specified by such party in written notice to the other parties hereto or
otherwise received), in the case of notice by telegram, telefacsimile or
telex, respectively (where the receipt of such message is verified by
return), or (iii) on the fifth Business Day after the day on which mailed,
if sent prepaid by certified or registered mail, return receipt requested,
in each case delivered, transmitted or mailed, as the case may be, to the
address, telex number or telefacsimile number, as appropriate, set forth
below or such other address or number as such party shall specify by notice
hereunder:
(a) if to the Borrower:
Walter Industries, Inc.
1500 N. Dale Mabry Highway
Tampa, Florida 33607
Attn: Chief Financial Officer
Telephone: (813) 871-4811
Telefacsimile: (813) 871-4430
with a copy to:
Walter Industries, Inc.
1500 N. Dale Mabry Highway
Tampa, Florida 33607
Attn: Chief Financial Officer
Telephone: (813) 871-4811
Telefacsimile: (813) 871-4430
Attn: Corporate Secretary
Telephone: (813) 871-4811
Telefacsimile: (813) 871-4430
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<PAGE>
(b) if to the Agent:
NationsBank, National Association (South)
Independence Center, 15th Floor
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank, National Association (South)
400 North Ashley Drive
Tampa, Florida 33603
Attention: Corporate Finance Department
Telephone: (813) 224-5242
Telefacsimile: (813) 224-5948
(c) if to the Lenders:
At the addresses set forth on the signature pages hereof and
on the signature page of each Assignment and Acceptance;
(d) if to any Guarantor, at the address set forth on the
signature page of the Facility Guaranty of such Guarantor.
13.3. Setoff. The Borrower agrees that the Agent and each Lender
------
shall have a lien for all the Obligations of the Borrower upon all deposits
or deposit accounts, of any kind, or any interest in any deposits or
deposit accounts thereof, now or hereafter pledged, mortgaged, transferred
or assigned to the Agent or such Lender or otherwise in the possession or
control of the Agent or such Lender (other than for safekeeping) for any
purpose for the account or benefit of the Borrower and including any
balance of any deposit account or of any credit of the Borrower with the
Agent or such Lender, whether now existing or hereafter established, hereby
authorizing the Agent and each Lender at any time or times with or without
prior notice to apply such balances or any part thereof to such of the
Obligations of the Borrower to the Lenders then past due and in such
amounts as they may elect, and whether or not the collateral or the
responsibility of other Persons primarily, secondarily or otherwise liable
may be deemed adequate. For the purposes of this paragraph, all
remittances and property shall be deemed to be in the possession of the
Agent or such Lender as soon as the same may be put in transit to it by
mail or carrier or by other bailee.
13.4. Survival. All covenants, agreements, representations and
--------
warranties made herein shall
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<PAGE>
survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit and the execution and delivery to the Lenders of this
Agreement and the Notes and shall continue in full force and effect so long
as any of Obligations remain outstanding or any Lender has any commitment
hereunder or the Borrower has continuing obligations hereunder unless
otherwise provided herein. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party and all covenants,
provisions and agreements by or on behalf of the Borrower which are
contained in the Loan Documents shall inure to the benefit of the
successors and permitted assigns of the Lenders or any of them.
13.5. Expenses. The Borrower agrees (a) to pay or reimburse the
--------
Agent for all its reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, any of the Loan Documents
(including due diligence expenses and travel expenses relating to closing),
and the consummation of the transactions contemplated thereby, including
the reasonable fees and disbursements of counsel to the Agent, (b) to pay
or reimburse the Agent and the Lenders for all their costs and expenses
incurred in connection with the enforcement or preservation of any rights
under the Loan Documents, including the reasonable fees and disbursements
of their counsel and any payments in indemnification or otherwise payable
by the Lenders to the Agent pursuant to the Loan Documents, and (c) to pay,
indemnify and hold the Agent and the Lenders harmless from any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any failure to pay or delay in paying, documentary, stamp,
excise and other similar taxes, if any, which may be payable or determined
to be payable in connection with the execution and delivery of any of the
Loan Documents, or consummation of any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any Loan
Document.
13.6. Amendments. No amendment, modification or waiver of any
----------
provision of any Loan Document and no consent by the Lenders to any
departure therefrom by any Credit Party shall be effective unless such
amendment, modification or waiver shall be in writing and signed by the
Agent, shall have been approved by the Required Lenders through their
written consent, and the same shall then be effective only for the period
and on the conditions and for the specific instances and purposes specified
in such writing; provided, however, that, no such amendment, modification
--------
or waiver
(i) which changes, extends or waives any provision of
Section 2.13, Section 3.6, Section 12.9 or this Section 13.6, the
--------------------------------------- ------------
amount of or the due date of any principal (including any
scheduled installment thereof), any fees or any interest (or the
rate thereof) payable on any Obligation, which changes the
definition of "Required Lenders", which permits an assignment by
any Credit Party of its Obligations under any Loan Document,
which reduces the required consent of Lenders provided hereunder,
which increases, decreases (other than pursuant to the express
terms hereof) or extends (other than pursuant to the express
terms hereof) the Revolving Credit Commitment, either of the Term
Loan Commitments or Letter of Credit Commitment of any Lender, or
which waives any condition to the making of any Loan, shall be
effective unless in writing and signed by each of the Lenders
directly
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affected thereby;
(ii) which waives or excuses any mandatory prepayment of the
Revolving Credit Facility or either of the Term Loan Facilities
pursuant to Section 2.7 or 3.7(b), shall be effective unless with
---------------------
the written consent of each of the following: (i) the Lenders
holding Revolving Loans representing a majority of the Revolving
Credit Outstandings; (ii) the Lenders holding Term Loan A Loans
representing a majority of the Term Loan Outstandings under Term
Loan A; and (iii) the Lenders holding Term Loan B Loans
representing a majority of the Term Loan Outstandings under Term
Loan B;
(iii) which amends, modifies or waives Section 2.6, 2.7, or
--------------------
3.7, or the definitions of "Ratable Reduction of Credit
---
Facilities" or "Ratable Reduction of Term Loan Facilities", or
any required application, allocation or priority of application
to facilities, in each case in a manner which would cause the
holders of the Revolving Loans, Term Loans A or Term Loans B
(each, an "Affected Class") to be treated in a manner less
favorable as to ratable distribution of payments provided for
therein as in effect immediately before giving effect to any such
modification, amendment or waiver, unless with the prior written
consent of the Lenders holding a majority of the Revolving Credit
Outstandings or applicable Term Loan Outstandings held by such
members of such Affected Class;
(iv) which releases all or substantially all of the
Collateral or all or substantially all of the obligations under
the Facility Guaranties shall be effective unless with the
written consent of each of the Lenders; or
(v) which affects the rights, privileges or obligations of
NationsBank as provider of Swing Line Loans, shall be effective
unless signed in writing by NationsBank;
(vi) which affects the rights, privileges or obligations of
the Issuing Bank as issuer of Letters of Credit, shall be
effective unless signed in writing by the Issuing Bank; or
(vii) which affects the rights, privileges, immunities or
indemnities of the Agent shall be effective unless in writing and
signed by the Agent.
Notwithstanding any provision of the other Loan Documents to the contrary,
as between the Agent and the Lenders, execution by the Agent shall not be
deemed conclusive evidence that the Agent has obtained the written consent
of the Required Lenders. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances, except as otherwise expressly provided
herein. No delay or omission on any Lender's or the Agent's part in
exercising any right, remedy or option shall operate as a waiver of such or
any
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other right, remedy or option or of any Default or Event of Default.
13.7. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed
an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such fully-executed
counterpart.
13.8. Termination. The termination of this Agreement shall not
-----------
affect any rights of the Borrower, the Lenders, the Agent or NCMI or any
obligation of the Borrower, the Lenders or the Agent, arising prior to the
effective date of such termination, and the provisions hereof shall
continue to be fully operative until all transactions entered into or
rights created or obligations incurred prior to such termination have been
fully disposed of, concluded or liquidated and the Obligations arising
prior to or after such termination have been irrevocably paid in full. The
rights granted to the Agent for the benefit of the Lenders under the Loan
Documents shall continue in full force and effect, notwithstanding the
termination of this Agreement, until all of the Obligations have been paid
in full after the termination hereof (other than Obligations in the nature
of continuing indemnities or expense reimbursement obligations not yet due
and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and
each Lender with respect thereto. All representations, warranties,
covenants, waivers and agreements contained herein shall survive
termination hereof until payment in full of the Obligations unless
otherwise provided herein. Notwithstanding the foregoing, if after receipt
of any payment of all or any part of the Obligations, the Agent or any
Lender is for any reason compelled to surrender such payment to any Person
because such payment is determined to be void or voidable as a preference,
impermissible setoff, a diversion of trust funds or for any other reason,
this Agreement shall continue in full force and the Borrower shall be
liable to, and shall indemnify and hold such Lender harmless for, the
amount of such payment surrendered until such Lender shall have been
finally and irrevocably paid in full. The provisions of the foregoing
sentence shall be and remain effective notwithstanding any contrary action
which may have been taken by the Agent or the Lenders in reliance upon such
payment, and any such contrary action so taken shall be without prejudice
to the Lenders' rights under this Agreement and shall be deemed to have
been conditioned upon such payment having become final and irrevocable.
13.9. Indemnification; Limitation of Liability. In consideration of
----------------------------------------
the execution and delivery of this Agreement by the Agent and each Lender
and the extension of credit under the Loans, the Borrower hereby
indemnifies, exonerates and holds the Agent, NCMI and each Lender and each
of their respective affiliates, officers, directors, employees, agents and
advisors (collectively, the "Indemnified Parties") free and harmless from
and against any and all claims, actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to
the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the
"Indemnified Liabilities") that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or by reason of, or in connection with (i) any acquisition or proposed
acquisition by the Borrower or any of its Subsidiaries or Affiliates of all
or
116
<PAGE>
a portion of the capital stock or substantially all of the assets of any
other Person, (ii) the execution, delivery, enforcement, performance or
administration of this Agreement and the other Loan Documents, or any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan (including any Swing Line Loan)
or Letter of Credit, or (iii) any case or proceeding involving the Borrower
or any Subsidiary or Affiliates pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law whether or not such action is
brought against the Agent, NCMI or any Lender, the shareholders or
creditors of any of such Persons or an Indemnified Party or an Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated herein are consummated, except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct, and if and to
the extent that the foregoing undertaking may be unenforceable for any
reason, the Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The Borrower agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract or
tort or otherwise) to it, any of its Subsidiaries, any Guarantor, or any
security holders or creditors thereof arising out of, related to or in
connection with the transactions contemplated herein, except to the extent
that such liability is found in a final non-appealable judgment by a court
of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct; provided, however, in no event
shall any Indemnified Party be liable for consequential, indirect or
special, as opposed to direct, damages.
13.10. Severability. If any provision of this Agreement or the other
------------
Loan Documents shall be determined to be illegal or invalid as to one or
more of the parties hereto, then such provision shall remain in effect with
respect to all parties, if any, as to whom such provision is neither
illegal nor invalid, and in any event all other provisions hereof shall
remain effective and binding on the parties hereto.
13.11. Entire Agreement. This Agreement, together with the other Loan
----------------
Documents, constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all previous proposals,
negotiations, representations, commitments and other communications between
or among the parties, both oral and written, with respect thereto.
13.12. Agreement Controls. In the event that any term of any of the
------------------
Loan Documents other than this Agreement conflicts with any express term of
this Agreement, the terms and provisions of this Agreement shall control to
the extent of such conflict.
13.13. Usury Savings Clause. Notwithstanding any other provision
--------------------
herein, the aggregate interest rate charged under any of the Notes,
including all charges or fees in connection therewith deemed in the nature
of interest under applicable law shall not exceed the Highest Lawful Rate
(as such term is defined below). If the rate of interest (determined
without regard to the preceding sentence) under this Agreement at any time
exceeds the Highest Lawful Rate (as defined below), the outstanding amount
of the Loans made hereunder shall bear interest at the Highest Lawful Rate
until the total amount of interest due hereunder equals the amount of
interest which would have been due
117
<PAGE>
hereunder if the stated rates of interest set forth in this Agreement had
at all times been in effect. In addition, if when the Loans made hereunder
are repaid in full the total interest due hereunder (taking into account
the increase provided for above) is less than the total amount of interest
which would have been due hereunder if the stated rates of interest set
forth in this Agreement had at all times been in effect, then to the extent
permitted by law, the Borrower shall pay to the Agent an amount equal to
the difference between the amount of interest paid and the amount of
interest which would have been paid if the Highest Lawful Rate had at all
times been in effect. Notwithstanding the foregoing, it is the intention
of the Lenders and the Borrower to conform strictly to any applicable usury
laws. Accordingly, if any Lender contracts for, charges, or receives any
consideration which constitutes interest in excess of the Highest Lawful
Rate, then any such excess shall be cancelled automatically and, if
previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the
Borrower. As used in this paragraph, the term "Highest Lawful Rate" means
the maximum lawful interest rate, if any, that at any time or from time to
time may be contracted for, charged, or received under the laws applicable
to such Lender which are presently in effect or, to the extent allowed by
law, under such applicable laws which may hereafter be in effect and which
allow a higher maximum nonusurious interest rate than applicable laws now
allow.
13.14. Governing Law; Waiver of Jury Trial.
-----------------------------------
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF FLORIDA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
(a) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
HILLSBOROUGH, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE
BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(b) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR
118
<PAGE>
PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE
ADDRESS OF THE BORROWER PROVIDED IN SECTION 13.2, OR BY ANY OTHER METHOD
------------
OF SERVICE PROVIDED
FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA.
(c) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF SHALL
--------------- ---
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED
BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY
ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE
UNDER APPLICABLE LAW.
(d) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE
LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY
SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
119
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the
day and year first above written.
WALTER INDUSTRIES, INC.
WITNESS:
_____________________ By:
-------------------------------------
Name: William H. Weldon
_____________________ Title: Executive Vice President
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as
Agent for the Lenders
By:
------------------------------------------
Name: Joseph J. Troy
Title: Vice President
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH)
By:
------------------------------------------
Name: Joseph J. Troy
Title: Vice President
Lending Office:
NationsBank, National Association (South)
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association (South)
Tampa, Florida
ABA# 063100277
Account No.: 136621-2163
Reference: Walter Industries, Inc.
Attention: Corporate Credit Support
<PAGE>
THE BANK OF NOVA SCOTIA
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
The Bank of Nova Scotia
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: Frank Sandler
Telephone: (404) 877-1505
Telefacsimile: (404) 888-8998
Wire Transfer Instructions:
The Bank of Nova Scotia
ABA# 026002532
Account No.: 0606634
Reference: Walter Industries, Inc.
Attention: Jefrey Jones
<PAGE>
CIBC INC.
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Canadian Imperial Bank of Commerce
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Kathryn S. McGovern
Telephone: (770) 319-4821
Telefacsimile: (770) 319-4950
Wire Transfer Instructions:
Morgan Guaranty Bank
New York, New York
ABA# 021-00-238
Account No.: 630-00-480
Reference: Walter Industries
Attention: Credit Operations, Atlanta
<PAGE>
CITIBANK, N.A.
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Citibank N.A.
399 Park Avenue, 10th Floor
New York, New York 10043
Attention: _____________________
Telephone: (___) ___-____
Telefacsimile: (___) ___-____
Wire Transfer Instructions:
Citibank, N.A.
ABA# 021000089
Account No.: 3885-8061
Reference: Walter Industries
Attention: Marva Swaby
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
The Industrial Bank of Japan, Limited
245 Park Avenue
New York, New York 10167
Attention: Mikihide Katsumata
Telephone: (212) 309-6452
Telefacsimile: (212) 682-2870
Wire Transfer Instructions:
The Industrial Bank of Japan, Limited
ABA# 026008345
Account No.: _____________________
Reference: Walter Industries, Inc.
Attention: A. Kawai, Credit Administration
<PAGE>
LEHMAN COMMERCIAL PAPER, INC.
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Lehman Commercial Paper, Inc.
3 World Financial Center, 10th Floor
New York, New York 10285-0900
Attention: Michele Swanson
Telephone: (212) 526-0330
Telefacsimile: (212) 528-0819
Wire Transfer Instructions:
Bankers Trust Company
New York, New York
ABA# 021-001-033
Account No.: 01-442-898
Reference: LCPI
Attention: Charles Abraham
<PAGE>
LTCB TRUST COMPANY
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
LTCB Trust Company
165 Broadway
New York, New York
Attention: _____________________
Telephone: (___) ___-____
Telefacsimile: (___) ___-____
Wire Transfer Instructions:
Bankers Trust Company
ABA# 021001033
Account No.: 04-203-606
Name of Account: LTCB Trust Company, New York
Reference: Walter Industries
Attention: _______________________
<PAGE>
VANKAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
VanKampen American Capital Prime Rate
Income Trust
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attention: Jeffrey Maillet
Telephone: (708) 684-6438
Telefacsimile: (708) 684-6740
Wire Transfer Instructions:
State Street Bank & Trust
Boston, Massachusetts
ABA# 011000028
Account No.: 99001265
Reference: VKAC PRIT (Walter Industries)
Attention: _______________________
<PAGE>
COMERICA BANK
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Comerica Bank
500 Woodward Avenue
Detroit, Michigan 48226-3280
Attention: Bradley A. Terryn
Telephone: (313) 222-6231
Telefacsimile: (313) 222-3330
Wire Transfer Instructions:
Comerica Bank
ABA# 072000096
Account No.: _____________________
Reference: Walter Industries
Attention: Commercial Loan Department
<PAGE>
ABN AMRO BANK, N.V.
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
ABN AMRO Bank, N.V.
One Ravinia Drive
Suite 1200
Atlanta, Georgia 30346
Attention: Michel van Cranenburgh
Telephone: (404) 396-0066
Telefacsimile: (404) ___-____
Wire Transfer Instructions:
Federal Reserve Bank
New York, New York
Favor of: ABN AMRO New York
ABA# 0260-09580
Account No.: 651-0-010197-41
Reference: Walter Industries, Inc.
Attention: _______________________
<PAGE>
ARAB BANKING CORPORATION (B.S.C.)
By:
-----------------------------------------------
Name: Louise Bilbro
Title:
-------------------------------------------
Lending Office:
Arab Banking Corporation
245 Park Avenue, 31st Floor
New York, New York 10167
Attention: Louise Bilbro
Telephone: (212) 850-0666
Telefacsimile: (212) 599-8386
Wire Transfer Instructions:
Arab Banking Corporation
ABA# 021-000-021
Account No.: 001-1-534882
Reference: Walter Industries, Inc.
Attention: Loan Administration
<PAGE>
FIRST UNION NATIONAL BANK OF FLORIDA
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
First Union National Bank of Florida
100 S. Ashley Drive, Suite 1000
Tampa, Florida 33607
Attention: _____________________
Telephone: (407) 649-5959
Telefacsimile: (407) 649-5757
Wire Transfer Instructions:
First Union National Bank of Florida
ABA# 063-0000-21
Account No.: _____________________
Reference: Walter Industries
Attention: Gilbert H. Reese
<PAGE>
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Senior Debt Portfolio
c/o Boston Management and Research
24 Federal Street, 6th Floor
Boston, Massachusetts 02110
Attention: Payson F. Swaffield
Telephone: (617) 654-8484
Telefacsimile: (___) ___-____
Wire Transfer Instructions:
Investors Bank and Trust Co.
ABA# 011-001-438
Account No.: 79650-9107
Reference: Walter Industries
Attention: Senior Debt Portfolio
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK BRANCH
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
The Fuji Bank, Limited, New York Branch
2 World Trade Center, 79th Floor
New York, New York 10048
Attention: Mark Hanslin
Telephone: (212) 898-2073
Telefacsimile: (212) 912-0516
Wire Transfer Instructions:
Fuji Bank, Ltd., NYB
ABA# 026 009 700
Account No.: 51501103
Reference: Walter Industries
Attention: U.S. Corporate
<PAGE>
CAISSE NATIONALE DE CREDIT AGRICOLE
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Caisse Nationale de Credit Agricole
600 Travis
Suite 2340
Houston, Texas 77002
Attention: Ken Coulter
Telephone: (713) 223-7005
Telefacsimile: (713) 223-7000
Wire Transfer Instructions:
Morgan Guaranty Trust Company
New York, New York
ABA# 021 000 238
Account No.: 630 00 205
Reference: Walter Industries
Attention: _______________________
<PAGE>
CREDITANSTALT-BANKVEREIN
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Creditanstalt-Bankverein
Two Ravinia Drive, Suite 1680
Atlanta, Georgia 30346
Attention: Scott Kray
Telephone: (770) 390-1850
Telefacsimile: (770) 390-1851
Wire Transfer Instructions:
Chemical Bank
New York, New York
ABA# 021000128
Account No.: 544-7-73095
Account Name: Creditanstalt, New York
Reference: Walter Industries
Attention: _______________________
<PAGE>
CREDIT SUISSE
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
By:
-----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Credit Suisse
191 Peachtree Street, N.E.
Suite 3500
Atlanta, Georgia 30303-1757
Attention: Michel A. Odermatt
Telephone: (404) 577-6100
Telefacsimile: (404) 577-9029
Wire Transfer Instructions:
Credit Suisse
ABA# 026009179
Account No.: 90 49 96 02 Loan Suspense
Reference: Walter Industries
Attention: Ms. E. Chedda
<PAGE>
THE SUMITOMO BANK, LIMITED, ATLANTA AGENCY
By:
-----------------------------------------------
Name: Thomas G. Savini
Title: Vice President
Lending Office:
The Sumitomo Bank, Limited, Atlanta Agency
133 Peachtree Street
Atlanta, Georgia 30303
Attention: Thomas G. Savini
Telephone: (404) 526-8514
Telefacsimile: (404) 521-1187
Wire Transfer Instructions:
Morgan Guaranty Trust Co., NY
F/A The Sumitomo Bank NY
ABA# 021000238
Account No.: 631-28-256
Further Credit to:
The Sumitomo Bank, Ltd.,
Atlanta Agency
A/C 819008
Reference: Walter Industries
Attention: _______________________
<PAGE>
EXHIBIT A
Applicable Commitment Percentages
I. Revolving Credit Facility
-------------------------
Lender Revolving Applicable
- ------
Credit Commitment
Commitment Percentage
---------- ----------
NationsBank, National
Association (South) $53,632,653.04 14.69387755%
The Industrial Bank
of Japan $33,520,408.16 9.18367347%
The Bank of Nova Scotia $29,795,918.37 8.16326531%
CIBC, Inc. $29,795,918.37 8.16326531%
Citibank, N.A. $29,795,918.37 8.16326531%
Lehman Commercial Paper,
Inc. $29,795,918.37 8.16326531%
LTCB Trust Company $29,795,918.37 8.16326531%
ABN AMRO Bank, N.V. $18,622,448.98 5.10204082%
Comerica Bank $18,622,448.98 5.10204082%
Credit Suisse $18,622,448.98 5.10204082%
First Union National
Bank of Florida $18,622,448.98 5.10204082%
Arab Banking Corporation $11,173,469.39 3.06122449%
Caisse Nationale de
Credit Agricole $11,173,469.39 3.06122449%
The Sumitomo Bank,
Limited, Atlanta, Agency $11,173,469.39 3.06122449%
The Fuji Bank,
Limited, New York Branch $11,173,469.39 3.06122449%
Creditanstalt-Bankverein $9,683,673.47 2.65306122%
A-1
<PAGE>
II. Term Loan A Facility
--------------------
Applicable
Lender Term Loan A Commitment
- ------
Commitment Percentage
---------- ----------
NationsBank, National
Association (South) $18,367,346.96 14.69387755%
The Industrial Bank
of Japan $11,479,591.84 9.18367347%
The Bank of Nova Scotia $10,204,081.63 8.16326531%
CIBC, Inc. $10,204,081.63 8.16326531%
Citibank, N.A. $10,204,081.63 8.16326531%
Lehman Commercial Paper,
Inc. $10,204,081.63 8.16326531%
LTCB Trust Company $10,204,081.63 8.16326531%
ABN AMRO Bank, N.V. $6,377,551.02 5.10204082%
Comerica Bank $6,377,551.02 5.10204082%
Credit Suisse $6,377,551.02 5.10204082%
First Union National
Bank of Florida $6,377,551.02 5.10204082%
Arab Banking Corporation $3,826,530.61 3.06122449%
Caisse Nationale de
Credit Agricole $3,826,530.61 3.06122449%
The Sumitomo Bank,
Limited, Atlanta, Agency $3,826,530.61 3.06122449%
The Fuji Bank,
Limited, New York Branch $3,826,530.61 3.06122449%
Creditanstalt-Bankverein $3,316,326.53 2.65306122%
A-2
<PAGE>
III. Term Loan B Facility
--------------------
Lender Term Applicable
- ------
Loan B Commitment
Commitment Percentage
---------- ----------
NationsBank, National
Association (South) $30,000,000 50.00000000%
VanKampen American Capital
Prime Rate Income Trust $22,500,000 33.33333333%
CHL High Yield Loan
Portfolio $7,500,000 16.66666667%
A-3
<PAGE>
EXHIBIT B-1
Form of Assignment and Acceptance
DATED ,
--------------- ----
Reference is made to the Credit Agreement dated as of January 22, 1996
(the "Agreement") among Walter Industries, Inc., a Delaware corporation
(the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association (South), as Agent for the Lenders
("Agent"). Unless otherwise defined herein, terms defined in the Agreement
are used herein with the same meanings.
(the "Assignor") and
------------------------ ----------------------
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE,
a _______%1 interest in and to all of the Assignor's rights and
obligations under the Agreement in respect of the Revolving Credit
Facility, Term Loan A and Participations as of the Effective Date (as
defined below), including, without limitation, such percentage interest in
the Loans owing to the Assignor on the Effective Date, and evidenced by the
Revolving Note and each of the Term Notes held by the Assignor.
2. The Assignor (i) represents and warrants that, as of the date
hereof, (A) the aggregate outstanding principal amounts of Term Loan A
owing to it (without giving effect to assignments thereof which have not
yet become effective) of $________ under a Term Note A dated __________,
____ in the principal amount of $_________ and (B) the aggregate principal
amount of Revolving Loans owing to it (without giving effect to the
assignments thereof which have not yet become effective) is $__________
under a Revolving Note dated ____________, ____ in the principal amount of
$_________ and (C) the aggregate principal amount of the Participations
purchased by it (without giving effect to the assignments thereof which
have not yet become effective) is $_________; (ii) represents and warrants
that it is the legal and beneficial owner of the interest being assigned by
it hereunder and that such interest is free and clear of any adverse claim;
(iii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Agreement or any of the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Agreement or any of the Loan Documents or any other instrument
or document furnished pursuant thereto; (iv) makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Borrower, any Subsidiary or any other Guarantor or the
performance or observance by the Borrower or any Guarantor of any of its
obligations under any of the Loan Documents or any other instrument or
document furnished pursuant thereto and (v) attaches hereto the Revolving
Note and the Term Note A referred to in paragraph 1 above and requests that
the Agent exchange such
- --------------------
1 Specify percentage in no more than 4 decimal points.
B-1-1
<PAGE>
Notes for replacement Notes as follows: a Revolving Note dated
_____________, ____ in the principal amount of $________________ and a Term
Note A dated __________, ____ in the principal amount of $__________, each
payable to the order of the Assignor, and a Revolving Note dated
_____________, ____ in the principal amount of $________________ and a Term
Note A dated __________, ____ in the principal amount of $__________, each
payable to the order of the Assignee.
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements referred to in
Section 9.1 thereof and such other documents and information as it has
- -----------
deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, NCMI or the Assignor, or
any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Agreement; (iii) appoints and
authorizes the Agent to take such actions on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto; (iv) will perform all of the obligations which by the terms of the
Agreement are required to be performed by the Lender; and (v) specifies as
its address for notices the office set forth beneath its name on the
signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance, it will be delivered to the
Agent together with the transfer fee payable under Sectioon 13.1(a) of the
Agreement in connection therewith for acceptance and recording in the
Register by the Agent pursuant to Section 13.1(c) of the Agreement.
5. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the Loan Documents and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Agreement and the
other Loan Documents.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Agreement and Notes in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest, commitment fees and letter of credit fees
with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Agreement and the
Notes for periods prior to the Effective Date directly between themselves.
B-1-2
<PAGE>
7. This Assignment and Acceptance shall be governed by and construed
in accordance with, the laws of the State of Florida.
[NAME OF ASSIGNOR]
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Notice Address:
------------------------------
------------------------------
After the Effective Date:
Outstanding Revolving Loans:$______
Outstanding LC
Participations: $___________
Outstanding Swing Line
Participations: $___________
[NAME OF ASSIGNEE]
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Notice Address/Lending Office
____________________
____________________
____________________
Wire transfer Instructions:
____________________
____________________
____________________
After the Effective Date
Outstanding Revolving Loans:$______
Outstanding LC
Participations: $___________
Outstanding Swing Line
Participations: $___________
B-1-3
<PAGE>
Accepted this ____ day of _______, ______
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as
Agent
By:
-----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Consented to:
WALTER INDUSTRIES, INC.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
B-1-4
<PAGE>
EXHIBIT B-2
Form of Assignment and Acceptance
DATED ___________________, ____
Reference is made to the Credit Agreement dated as of January 22, 1996
(the "Agreement") among Walter Industries, Inc., a Delaware corporation
(the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association (South), as Agent for the Lenders
("Agent"). Unless otherwise defined herein, terms defined in the Agreement
are used herein with the same meanings.
(the "Assignor") and
------------------------ -------------------------
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE,
a _______%1 interest in and to all of the Assignor's rights and
obligations under the Agreement in respect of the Term Loan A Facility as
of the Effective Date (as defined below), including, without limitation,
such percentage interest in the Loans owing to the Assignor on the
Effective Date and evidenced by the Term Note A.
2. The Assignor (i) represents and warrants that, as of the date
hereof, the aggregate outstanding principal amount of the Term Loan A owing
to it (without giving effect to assignments thereof which have not yet
become effective) is $________ under a Term Note A dated __________, ____
in the principal amount of $_________; (ii) represents and warrants that it
is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim;
(iii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Agreement or any of the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Agreement or any of the Loan Documents or any other instrument
or document furnished pursuant thereto; (iv) makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Borrower, any Subsidiary or any other Guarantor or the
performance or observance by the Borrower or any Guarantor of any of its
obligations under any of the Loan Documents or any other instrument or
document furnished pursuant thereto and (v) attaches hereto the Term Note A
referred to in paragraph 1 above and requests that the Agent exchange such
Note for replacement Notes as follows: a Term Note A dated _____________,
____ in the principal amount of $______________, payable to the order of
the Assignor, and a Term Note A dated _____________, ____ in the principal
amount of $______________, payable to the order of the Assignee.
- --------------------
1 Specify percentage in no more than 4 decimal points.
B-2-1
<PAGE>
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements referred to in
Section 9.1 thereof and such other documents and information as it has
- -----------
deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, NCMI or the Assignor, or
any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Agreement; (iii) appoints and
authorizes the Agent to take such actions on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto; (iv) will perform all of the obligations which by the terms of the
Agreement are required to be performed by the Lender; and (v) specifies as
its address for notices the office set forth beneath its name on the
signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance, it will be delivered to the
Agent together with the transfer fee payable under Section 13.1(a) of the
Agreement in connection therewith for acceptance and recording in the
Register by the Agent pursuant to Section 13.1(c) of the Agreement.
5. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the Loan Documents and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Agreement and the
other Loan Documents.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Agreement and Notes in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest, commitment fees and letter of credit fees
with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Agreement and the
Notes for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by and construed
in accordance with, the laws of the State of Florida.
B-2-2
<PAGE>
[NAME OF ASSIGNOR]
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Notice Address:
------------------------------
------------------------------
------------------------------
After the Effective Date:
Outstanding Term Loan A: $_________
[NAME OF ASSIGNEE]
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Notice Address/Lending Office
____________________
____________________
____________________
Wire transfer Instructions:
____________________
____________________
____________________
After the Effective Date
Outstanding Term Loan A: $_________
Accepted this ____ day of _______, ___
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as
Agent
By:
-----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Consented to:
WALTER INDUSTRIES, INC.
By:
----------------------------
Name:
----------------------
Title:
----------------------
B-2-3
<PAGE>
EXHIBIT B-3
Form of Assignment and Acceptance
DATED ___________________, ____
Reference is made to the Credit Agreement dated as of January 22, 1996
(the "Agreement") among Walter Industries, Inc., a Delaware corporation
(the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association (South), as Agent for the Lenders
("Agent"). Unless otherwise defined herein, terms defined in the Agreement
are used herein with the same meanings.
(the "Assignor") and
------------------------ -------------------------
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE,
a _______% 1 interest in and to all of the Assignor's rights and
obligations under the Agreement in respect of the Term Loan B Facility as
of the Effective Date (as defined below), including, without limitation,
such percentage interest in the Loans owing to the Assignor on the
Effective Date and evidenced by the Term Note B.
2. The Assignor (i) represents and warrants that, as of the date
hereof, the aggregate outstanding principal amount of the Term Loan B owing
to it (without giving effect to assignments thereof which have not yet
become effective) is $________ under a Term Note B dated __________, ____
in the principal amount of $_________; (ii) represents and warrants that it
is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim;
(iii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Agreement or any of the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Agreement or any of the Loan Documents or any other instrument
or document furnished pursuant thereto; (iv) makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Borrower, any Subsidiary or any other Guarantor or the
performance or observance by the Borrower or any Guarantor of any of its
obligations under any of the Loan Documents or any other instrument or
document furnished pursuant thereto and (v) attaches hereto the Term Note B
referred to in paragraph 1 above and requests that the Agent exchange such
Note for replacement Notes as follows: a Term Note B dated _____________,
____ in the principal amount of $______________, payable to the order of
the Assignor, and a Term Note B dated _____________, ____ in the principal
amount of $______________, payable to the order of the Assignee.
- --------------------
1 Specify percentage in no more than 4 decimal points.
B-3-1
<PAGE>
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements referred to in
Section 9.1 thereof and such other documents and information as it has
- -----------
deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, NCMI or the Assignor, or
any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Agreement; (iii) appoints and
authorizes the Agent to take such actions on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto; (iv) will perform all of the obligations which by the terms of the
Agreement are required to be performed by the Lender; and (v) specifies as
its address for notices the office set forth beneath its name on the
signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance, it will be delivered to the
Agent together with the transfer fee payable under Section 13.1(a) of the
Agreement in connection therewith for acceptance and recording in the
Register by the Agent pursuant to Section 13.1(c) of the Agreement.
5. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the Loan Documents and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Agreement and the
other Loan Documents.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Agreement and Notes in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest, commitment fees and letter of credit fees
with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Agreement and the
Notes for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by and construed
in accordance with, the laws of the State of Florida.
B-3-2
<PAGE>
[NAME OF ASSIGNOR]
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Notice Address:
------------------------------
------------------------------
------------------------------
After the Effective Date:
Outstanding Term Loan B: $_________
[NAME OF ASSIGNEE]
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Notice Address/Lending Office
____________________
____________________
____________________
Wire transfer Instructions:
____________________
____________________
____________________
After the Effective Date
Outstanding Term Loan B: $_________
Accepted this ____ day of _______, ___
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as
Agent
By:
-----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Consented to:
WALTER INDUSTRIES, INC.
By:
----------------------------
Name:
---------------------
Title:
----------------------
B-3-3
<PAGE>
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized
Representative
Reference is hereby made to the Credit Agreement dated as of __ January
22, 1996 (the "Agreement") among Walter Industries, Inc., a Delaware
corporation (the "Borrower"), the Lenders (as defined in the Agreement),
and NationsBank, National Association (South), as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower hereby nominates, constitutes and appoints each
individual named below as an Authorized Representative under the Loan
Documents, and hereby represents and warrants that (i) set forth opposite
each such individual's name is a true and correct statement of such
individual's office (to which such individual has been duly elected or
appointed), a genuine specimen signature of such individual and an address
for the giving of notice, and (ii) each such individual has been duly
authorized by the Borrower to act as Authorized Representative under the
Loan Documents:
Name and Address Office Specimen Signature
_________________ ___________________ ___________________
_________________
_________________
_________________ ___________________ ____________________
_________________
_________________
Borrower hereby revokes (effective upon receipt hereof by the Agent) the
prior appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, ____.
WALTER INDUSTRIES. INC.
By:
----------------------------
Name:
--------------------------
Title:
-----------------------
C-1
<PAGE>
EXHIBIT D-1
Form of Borrowing Notice
To: NationsBank, National Association (South),
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of January
22, 1996 (the "Agreement") among Walter Industries, Inc. (the "Borrower"),
the Lenders (as defined in the Agreement), and NationsBank, National
Association (South), as Agent for the Lenders ("Agent"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent that Loans of the type and amount set forth below be made on
the date indicated:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
--------- ------ ------ ------------
Revolving Loan
- --------------
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
_______________________
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $5,000,000 or if greater an integral multiple of $1,000,000,
unless a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
The Borrower hereby requests that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrower as follows:
[insert transmittal instructions] .
- -----------------------------------------
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
D-1-1
<PAGE>
2. All the representations and warranties set forth in Article VIII
------------
of the Agreement and in the Loan Documents (other than those expressly
stated to refer to a particular date) are true and correct as of the date
hereof except that the reference to the financial statements in Section
-------
8.6(a) of the Agreement are to those financial statements most recently
- ------
delivered to you pursuant to Section 9.1 of the Agreement (it being
-----------
understood that any financial statements delivered pursuant to Section
-------
9.1(b) have not been certified by independent public accountants) and
- ------
attached hereto are any changes to the Schedules referred to in connection
with such representations and warranties; and
3. All conditions contained in the Agreement to the making of any
Loan requested hereby have been met or satisfied in full .
WALTER INDUSTRIES, INC.
BY: ___________________________________
Authorized Representative
DATE: _________________________________
D-1-2
<PAGE>
EXHIBIT D-2
Form of Borrowing Notice--Swing Line Loans
To: NationsBank, National Association (South),
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704)386-9923
Reference is hereby made to the Credit Agreement dated as of January
22, 1996 (the "Agreement") among Walter Industries, Inc. (the "Borrower"),
the Lenders (as defined in the Agreement), and NationsBank, National
Association (South), as Agent for the Lenders ("Agent"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to NationsBank that a Swing Line Loan of the amount set forth below be made
on the date indicated:
Amount(1)
Date of Loan
--------- ------------
_________ __________, ____
_______________________
(1) Must be $500,000 or if greater an integral multiple of $100,000,
unless a Base Rate Refunding Loan.
The Borrower hereby requests that the proceeds of Swing Line Loans
described in this Borrowing Notice be made available to the Borrower as
follows: [insert transmittal instructions] .
------------------------------------
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article VIII
------------
of the Agreement and in the Loan Documents (other than those expressly
stated to refer to a particular date) are true and correct as of the date
hereof except that the reference to the financial statements in Section
-------
8.6(a) of the Agreement are to those financial statements most recently
- ------
delivered to you pursuant to Section 9.1 of the Agreement (it being
-----------
understood that any financial statements delivered pursuant to Section
-------
9.1(b) have not been certified by independent public accountants) and
- ------
attached hereto are any changes to the Schedules referred to in connection
with such representations and warranties; and
D-2-1
<PAGE>
3. All conditions contained in the Agreement to the making of any
Loan requested hereby have been met or satisfied in full .
WALTER INDUSTRIES, INC.
BY: ___________________________________
Authorized Representative
DATE: _________________________________
D-2-2
<PAGE>
EXHIBIT E
Form of Interest Rate Selection Notice
To: NationsBank, National Association (South),
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of January
22, 1996 (the "Agreement") among Walter Industries, Inc. (the "Borrower"),
the Lenders (as defined in the Agreement), and NationsBank, National
Association (South), as Agent for the Lenders ("Agent"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent of the following selection of a type of Loan or Segment and
Interest Period:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
--------- ------ ------ ------------
Revolving Loan
- --------------
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
Term Loan A Segment
- -------------------
Base Rate Segment ______ _________ ____________
Eurodollar Rate
Segment ______ _________ ____________
Term Loan B Segment
- -------------------
Base Rate Segment ______ _________ ____________
Eurodollar Rate
Segment ______ _________ ____________
_______________________
(1) For any Eurodollar Rate Loan or Segment, one, two, three or six
months.
(2) Must be $5,000,000 or if greater an integral multiple of $1,000,000,
unless a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan or
Eurodollar Rate Segment;
E-1
<PAGE>
WALTER INDUSTRIES, INC.
BY: ___________________________
Authorized Representative
DATE: _________________________
E-2
<PAGE>
EXIHIBIT F
Certificate No. 1
INTERCOMPANY NOTE
Dated: January 22, 1996
FOR VALUE RECEIVED, the undersigned, , a
Delaware corporation (the "Payor"), hereby promises to pay to the order of
, a Delaware corporation (the "Payee"), UPON DEMAND,
at 1500 North Dale Mabry Highway, Tampa, Florida 33607, in lawful money of
the United States of America and in immediately available funds, the
aggregate amount of all loans and advances by the Payee to the Payor
remaining outstanding at such time, such loans and advances constituting
Intercompany Advances in accordance with Section 10.4(f) of the Credit
Agreement dated as of January 22, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; the terms
defined therein and not otherwise defined herein being used herein as
therein defined) among the Payor, as Borrower, NationsBank, National
Association (South) in its capacity as a Lender ("NationsBank") and each
other financial institution executing and delivering a signature page to
the Credit Agreement and each other financial institution which may
hereafter execute and deliver an instrument of assignment with respect to
the Credit Agreement (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"),
and NationsBank in its capacity as administrative agent, documentation
agent and syndication agent for the Lenders (the "Agent"), provided that
any and all amounts advanced by the Payor to the Payee at any time when
amounts are outstanding hereunder shall be applied to the prepayment of
such outstanding amounts, including any interest which constitutes part of
such outstanding amounts.
Interest shall be payable under this Intercompany Note on any and all
principal amounts from time to time outstanding hereunder from and
including the date of the initial advance by the Payee and the Payor until
such principal amounts are paid in full, at a rate per annum equal to the
lesser of (a) eleven and one-half percent per annum and (b) the sum of (i)
four percent per annum and (ii) the yield on 180-day United States Treasury
Bills obtained at the most recent official auction, as reported in The Wall
Street Journal on the Business Day immediately preceding any date of
determination. Accrued interest shall be payable upon demand, or if no
demand is made therefor, quarterly on the last day of each calendar
quarter.
This Intercompany Note may, at the option of the Payor, be prepaid at
any time in whole or in part, without penalty or premium.
The Payee agrees that the accounts of the Payor shall be prima facie
evidence of the amounts
F-1
<PAGE>
advanced by the Payee to the Payor and the amounts repaid by the Payor to
the Payee. All advances made by the Payee to the Payor hereunder, and all
payments made on account of principal hereof, shall be recorded by the
Payor and, prior to any transfer hereof, endorsed on the grid attached
hereto that is part of this Intercompany Note; provided that the failure to
record any such advance or payment shall not affect the obligations of the
Payor and the Payee with respect thereto.
The indebtedness evidenced by this Intercompany Note (the
"Subordinated Indebtedness") is and shall be subordinate and subject in
right of payment, to the extent and in the manner hereinafter set forth, to
the prior payment in full of all obligations of the Payor now or hereafter
existing under or in respect of:
(a) the Loan Documents, whether for principal, interest (including,
without limitation, interest accruing after the filing of a petition
initiating any Proceeding (as defined below), whether or not such
interest accrues after the filing of such petition for purposes of
Chapter 11 of Title 11 of the United States Code or is an allowed
claim in such Proceeding), fees, commissions, expenses or otherwise;
and
(b) any and all amendments, modifications, extensions, refinancings,
renewals and refundings of the obligations referred to in clause (a)
of this paragraph that are made in accordance with the applicable
terms thereof (all such obligations under clauses (a) and (b) of this
paragraph being, collectively, the "Senior Indebtedness").
For the purposes of the provisions hereof, the Senior Indebtedness shall
not be deemed to have been paid in full until the Facility Termination
Date; provided, however, that on such date neither the Agent nor any other
Lender shall have made any claim against the Payee or any other Credit
Party under any provision of any of the Loan Documents that has not been
cash collateralized by an amount sufficient in the reasonable judgment of
the Agent, to secure such claim.
So long as the Senior Indebtedness shall not have been paid in full,
the Payee shall not (a) ask, demand, sue for, take or receive from the
Payor (except, so long as no Default or Event of Default shall have
occurred and be continuing, in the ordinary course of business of the Payor
and the Payee, directly or indirectly, in cash or other property or by
setoff or in any manner (including, without limitation, from or by way of
Collateral), payment of all or any of the Subordinated Indebtedness or (b)
commence, or join with any creditor other than the Agent or any Lender in
commencing, or directly or indirectly cause the Payor to commence, or
assist the Payor in commencing, any Proceeding.
Upon the occurrence and during the continuance of a Default or an
Event of Default, no payment or distribution of any assets of the Payor of
any kind or character (including, without limitation, any payment that may
be payable by reason of any other Indebtedness of the Payor being
subordinated to payment of the Subordinated Indebtedness) shall be made by
or on behalf of the Payor for or on account of any Subordinated
Indebtedness, and the Payee shall not ask, demand, sue
F-2
<PAGE>
for, take or receive from the Payor, directly or indirectly, in cash or
other property or by setoff or in any other manner (including, without
limitation, from or by way of Collateral), payment of all or any of the
Subordinated Indebtedness, unless and until such Default or Event of
Default shall have been cured or waived in writing or such Senior
Indebtedness shall have been paid in full, after which the Payor may resume
making any and all required payments in respect of the Subordinated
Indebtedness (including any missed payments).
In the event of any dissolution, winding up, liquidation, arrangement,
reorganization, adjustment, protection, relief or composition of the Payor
or its debts, whether voluntary or involuntary, in any bankruptcy,
insolvency, arrangement, reorganization, receivership, relief or other
similar case or proceeding under any federal or state bankruptcy or similar
law or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Payor or otherwise (each,
a "Proceeding"), the Agent, for its benefit and for the ratable benefit of
the Lenders, shall be entitled to receive payment in full of all of the
Senior Indebtedness before the Payee is entitled to receive any payment or
distribution of any kind or character on account of all or any of the
Subordinated Indebtedness, and, to that end, any payment or distribution of
any kind (whether in cash, property or securities) that otherwise would be
payable or deliverable upon or with respect to the Subordinated
Indebtedness in any such Proceeding (including, without limitation, any
payment that may be payable by reason of any other Indebtedness of the
Payor being subordinated to payment of the Subordinated Indebtedness) shall
be paid or delivered directly to the Agent, for its benefit and for the
ratable benefit of the Lenders for application (in the case of cash) to, or
as collateral (in the case of noncash property or securities) for, the
payment or prepayment of the Senior Indebtedness until all of the Senior
Indebtedness shall have been paid in full.
In the event that any Subordinated Indebtedness is declared due and
payable before its stated maturity, if any, the Agent, for its benefit and
for the ratable benefit of the Lenders, shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
of the Senior Indebtedness before the Payee is entitled to receive any
payment (including, without limitation, any payment that may be payable by
reason of the payment of any other Indebtedness of the Payor being
subordinated to the payment of the Subordinated Indebtedness) by the Payor
on account of the Subordinated Indebtedness.
Until such time as the Senior Indebtedness has been paid in full, if
any Proceeding is commenced by or against the Payor,
(a) the Agent is hereby irrevocably authorized and empowered (in its
own name or in the name of the Payee or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution referred to above and give acquittance therefor, and to
file claims and proofs of claim and take such other action (including,
without limitation, voting the Subordinated Indebtedness or enforcing
any security interest or other lien securing payment of the
Subordinated Indebtedness) as it may deem necessary or advisable for
the exercise or enforcement of any of the rights or interest of the
Agent and the Lenders hereunder; and
F-3
<PAGE>
(b) the Payee shall duly and promptly take such action as the Agent
may request (i) to collect the Subordinated Indebtedness for the
account of the Agent, for its benefit and for the ratable benefit of
the Lenders, and to file appropriate claims or proofs of claim in
respect of the Subordinated Indebtedness, (ii) to execute and deliver
to the Agent such powers of attorney, assignments or other instruments
as the Agent may request in order to enable to Agent to enforce any
and all claims with respect to, and any security interests and other
liens securing payment of, the Subordinated Indebtedness, and (iii) to
collect and receive any and all payments or distributions that may be
payable or deliverable upon or with respect to the Subordinated
Indebtedness.
All payments or distributions upon or with respect to the Subordinated
Indebtedness that are received by the Payee contrary to the provisions of
this Agreement shall be received in trust for the benefit of the Agent, for
its benefit and for the ratable benefit of the Lenders, shall be segregated
from other property or funds held by the Payee and shall be forthwith paid
over or delivered directly to the Agent, for its benefit and for the
ratable benefit of the Lenders, in the same form as so received (with any
necessary endorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of noncash property or securities) for, the payment
or prepayment of the Senior Indebtedness in accordance with the terms of
the Loan Documents.
The Agent is hereby authorized to demand specific performance of these
provisions, whether or not the Payor shall have complied with any of the
provisions hereof applicable to it, at any time when the Payee shall have
failed to comply with any of these provisions. The Payee hereby
irrevocably waives any defense based on the adequacy of a remedy at law,
which might be asserted as a bar to such remedy of specific performance.
The Payee will not:
(a) (i) Cancel or otherwise discharge any of the Subordinated
Indebtedness (except upon payment in full of the Senior Indebtedness);
(ii) convert or exchange any of the Subordinated Indebtedness into or
for any other Indebtedness or equity interest; or (iii) subordinate
any of the Subordinated Indebtedness to any Indebtedness of the Payor
other than the Senior Indebtedness;
(b) Sell, assign, pledge, encumber or otherwise dispose of any of the
Subordinated Indebtedness other than the pledge of the instruments
evidencing the Subordinated Indebtedness to the Agent, on behalf of
the Lenders, under the applicable Security Instruments; or
(c) Permit the terms of any of the Subordinated Indebtedness to be
changed in such a manner as to have an adverse effect upon the rights
or interests of the Secured Parties hereunder.
No payment or distribution to the Agent or any Lender pursuant to the
provisions hereof shall
F-4
<PAGE>
entitle the Payee to exercise any rights of subrogation in respect thereof
until the Facility Termination Date.
The holders of the Senior Indebtedness may, at any time and from time
to time, without any consent of or notice to the Payee or any other holder
of the Subordinated Indebtedness and without impairing or releasing the
obligations of the Payee hereunder:
(a) change the manner, place or terms of payment, or change or extend
the time of payment of, or renew payment or change or extend the time
or payment of, or renew or alter, the Senior Indebtedness (including
any change in the rate of interest thereon), or amend in any manner
any agreement under which any of the Senior Indebtedness is
outstanding;
(b) sell, exchange, release, not perfect and otherwise deal with any
property at any time pledged, assigned or mortgaged to secure the
Senior Indebtedness;
(c) release anyone liable in any manner under or in respect of the
Senior Indebtedness;
(d) exercise or refrain from exercising any rights against the Payor,
any other Credit Party or any other Person; and
(e) apply to the Senior Indebtedness any sums from time to time
received.
The foregoing provisions regarding subordination are and are intended
solely for the purpose of defining the relative rights of the holders of
the Senior Indebtedness on the one hand and the holders of the Subordinated
Indebtedness on the other hand. Such provisions are for the benefit of the
holders of the Senior Indebtedness and shall inure to the benefit of, and
shall be enforceable by, the Agent, on behalf of itself and the Lenders,
directly against the holders of the Subordinated Indebtedness, and no
holder of the Senior Indebtedness shall be prejudiced in its right to
enforce subordination of any of the Subordinated Indebtedness by any act or
failure to act by the Payor or anyone in custody of its property or assets.
Nothing contained in the foregoing provisions is intended to or shall
impair, as between the Payor and the holders of the Subordinated
Indebtedness, the obligations of the Payor to such holders.
The Payor agrees to pay on demand all costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by
the Agent or any Lender in enforcing the provisions hereof.
The Payor hereby waives presentment for payment, demands, notice of
dishonor and protest of this Intercompany Note and further agrees that none
of the terms or provisions hereof may be waived, altered, modified or
amended, except as the Payee may consent in a writing duly signed for and
on its behalf.
No amendment, waiver or modification of this Intercompany Note
(including, without
F-5
<PAGE>
limitation, the subordination provisions hereof), and no consent to any
departure here from, shall adversely affect the Agent or any other Lender
in any manner unless the same shall be in writing and signed by the Agent
and/or such Lender, and then such waiver, modification or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
No failure or delay on the part of the Payee in exercising any of its
rights,powers or privileges hereunder shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or
further exercise of any right, power or privilege. The remedies provided
herein are cumulative and are not exclusive of any remedies provided by
law.
This Intercompany Note shall be governed by and construed in
accordance with the laws of the State of Florida.
By
-----------------------------
Title:
F-6
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
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Amount of
Amount of Principal Paid Unpaid Principal Notation
Date Advance or Prepaid Balance Made By
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ENDORSEMENT
PAY TO THE ORDER OF
---------------------------------
Dated:
-----------------
By
--------------------
Title:
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F-7
<PAGE>
EXHIBIT G
Form of Intercompany Note Pledge Agreement
THIS INTERCOMPANY NOTE PLEDGE AGREEMENT (the "Agreement") is made and
entered into as of this 22nd day of January, 1996 by and between WALTER
INDUSTRIES, INC., a Delaware corporation (the "Pledgor"), and NATIONSBANK,
NATIONAL ASSOCIATION (SOUTH), a national banking association, as
Administrative Agent, Documentation Agent and Syndication Agent (the
"Agent") for each of the lenders (the "Lenders" and collectively with the
Agent, the "Secured Parties") now or hereafter party to the Credit
Agreement (as defined below). All capitalized terms used but not otherwise
defined herein shall have the respective meanings assigned thereto in
either or both of the Credit Agreement.
W I T N E S S E T H:
--------------------
WHEREAS, the Agent and the Lenders have agreed to provide to the
Pledgor a revolving credit facility with letter of credit and swing line
subfacilities and two term loan facilities pursuant to the terms of that
certain Credit Agreement of even date herewith among the Pledgor, the Agent
and the Lenders (as from time to time amended, modified or supplemented,
the "Credit Agreement"); and
WHEREAS, as collateral security for the payment and performance of its
Obligations under the Credit Agreement and the other Loan Documents, the
Pledgor is willing to pledge and grant to the Secured Parties a security
interest in all of the Intercompany Notes held by it from time to time
evidencing loans and advances made by Pledgor to its Subsidiaries, whether
now in existence or hereafter issued (the "Pledged Notes"), including
without limitation the Pledged Notes more particularly described on
Schedule I hereto; and
- ----------
WHEREAS, the Secured Parties are unwilling to enter into the Loan
Documents unless the Pledgor enters into this Agreement;
NOW, THEREFORE, in order to induce the Lenders, the Agent and the Co-
Agents to enter into the Loan Documents and in consideration of the
premises and the mutual covenants contained herein, the parties hereto
agree as follows:
1. Pledge of Intercompany Notes; Other Collateral.
----------------------------------------------
(a) As collateral security for the payment and performance of all
Obligations now or hereafter existing, absolute or contingent, the Pledgor
hereby pledges and collaterally assigns to the Agent for the benefit of the
Secured Parties, and grants to the Agent for the benefit of the Secured
Parties pursuant to the Florida Uniform Commercial Code (the "UCC") a first
priority security interest in, the Pledged Notes and all of the following:
G-1
<PAGE>
(i) all cash, securities, dividends, rights, and other
property at any time and from time to time declared or distributed in
respect of or in exchange for any or all of the Pledged Notes, other
than cash dividends permitted to be retained by the Pledgor hereunder;
(ii) all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such property
and all cash, securities, interest, dividends, rights, and other
property at any time and from time to time declared or distributed in
respect of or in exchange for any or all of the Pledged Notes; and
(iii) all proceeds of any of the foregoing.
All such Pledged Notes, certificates, instruments, cash, securities,
interest, dividends, rights and other property referred to in this Section
1, other than payments of principal and interest under and in accordance
with the terms of such Pledged Notes that are permitted to be retained by
the Pledgor hereunder and under the other Loan Documents, are herein
collectively referred to as the "Collateral." All of the Pledged Notes
described on Schedule I in effect from time to time are currently owned by
----------
the Pledgor. The Pledged Notes, with duly executed endorsement in blank by
Pledgor, have been delivered to the Agent.
(b) The Pledgor agrees to deliver all the Collateral to the Agent at
such location as the Agent shall from time to time designate by written
notice pursuant to Section 18 hereof for its custody at all times until
----------
termination of this Agreement, together with such instruments of assignment
and transfer as requested by the Agent.
(c) All advances, charges, costs and expenses, including reasonable
attorneys' fees, incurred or paid by the Agent or any Lender in exercising
any right, power or remedy conferred by this Agreement, or in the
enforcement thereof, shall become a part of the Obligations secured
hereunder and shall be paid to the Agent for the benefit of the Secured
Parties by the Pledgor immediately upon demand therefor, with interest
thereon until paid in full at the Default Rate for Base Rate Loans.
2. Status of Pledged Notes. The Pledgor hereby represents and
-----------------------
warrants to the Agent for the benefit of the Secured Parties that (i) the
Pledged Notes evidence, and constitute the only instruments evidencing, all
Intercompany Advances outstanding from the Pledgor to any of its Restricted
Subsidiaries, (ii) the Pledgor is the recorded and beneficial owner of the
Pledged Notes, such ownership being free and clear of all Liens, charges,
equities, encumbrances and restrictions on pledge or transfer (other than
the pledge hereunder and applicable restrictions pursuant to federal and
state securities laws), (iii) the Pledgor has full corporate power, legal
right and lawful authority to execute this Agreement and to pledge, assign
and transfer the Pledged Notes in the manner and form hereof, and (iv) the
pledge, assignment and delivery of the Pledged Notes to the Agent for the
benefit of the Secured Parties pursuant to this Agreement creates, together
with the delivery of the Pledged Notes, which delivery has heretofore been
accomplished, a valid and perfected first priority security
G-2
<PAGE>
interest in the Pledged Notes in favor of the Agent for the benefit of the
Secured Parties, securing the payment of the Obligations. Except as
otherwise expressly permitted herein or in the Credit Agreement, none of
the Pledged Notes (nor any interest therein or thereto) shall be sold,
transferred or assigned, nor any Lien created therein other than pursuant
to the Loan Documents, without the Agent's prior written consent, which may
be withheld for any reason.
3. Preservation and Protection of Collateral.
-----------------------------------------
(a) The Agent shall be under no duty or liability with respect to the
collection, protection or preservation of the Collateral, or otherwise,
beyond the use of reasonable care in the custody and preservation thereof
while in its possession.
(b) The Pledgor agrees to pay when due all taxes, charges, Liens and
assessments against the Collateral, unless being contested in good faith by
appropriate proceedings diligently conducted and against which adequate
reserves have been established in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis and provided further
that all enforcement proceedings in the nature of levy or foreclosure are
effectively stayed. Upon the failure of the Pledgor to so pay or contest
such taxes, charges, Liens or assessments, the Agent at its option may pay
or contest any of them (the Agent having the sole right to determine the
legality or validity and the amount necessary to discharge such taxes,
charges, Liens or assessments).
4. Default. UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF ANY
-------
EVENT OF DEFAULT IN THE CREDIT AGREEMENT, or should the Pledgor fail
otherwise to comply with the terms hereof (any of the foregoing an "Event
of Default"), the Agent is given full power and authority, then or at any
time thereafter, to sell, assign and deliver or collect the whole or any
part of the Collateral, or any substitute therefor or any addition thereto,
in one or more sales, with or without any previous demands or demand of
performance or, to the extent permitted by law, notice or advertisement, in
such order as the Agent may elect; and any such sale may be made either at
public or private sale at the Agent's place of business or elsewhere,
either for cash or upon credit or for future delivery, at such price as the
Agent may reasonably deem fair; and the Agent may be the purchaser of any
or all Collateral so sold and hold the same thereafter in its own right
free from any claim of the Pledgor or right of redemption. Demands of
performance, advertisements and presence of property and sale and notice of
sale are hereby waived to the extent permissible by law. Any sale
hereunder may be conducted by an auctioneer or any officer or agent of the
Agent. Pledgor recognizes that the Agent may be unable to effect a public
sale of the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act"), and applicable
state law, and may be otherwise delayed or adversely affected in effecting
any sale by reason of present or future restrictions thereon imposed by
governmental authorities, and that as a consequence of such prohibitions
and restrictions the Agent may be compelled (i) to resort to one or more
private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire the stock for their own account, for
investment and not with a view to the distribution or resale thereof, or
(ii) to seek regulatory approval of any proposed sale or sales, or (iii) to
limit the amount of Collateral sold to any Person or group. Pledgor agrees
and acknowledges
G-3
<PAGE>
that private sales so made may be at prices and upon terms less favorable
to Pledgor than if such Collateral was sold either at public sales or at
private sales not subject to other regulatory restrictions, and that the
Agent has no obligation to delay the sale of any of the Collateral for the
period of time necessary to permit the issuer of such Collateral to
register or otherwise qualify them, even if such issuer would agree to
register or otherwise qualify such Collateral for public sale under the
Securities Act or applicable state law. The Pledgor further agrees, to the
extent permitted by applicable law, that the use of private sales made
under the foregoing circumstances to dispose of the Collateral shall be
deemed to be dispositions in a commercially reasonable manner. Pledgor
hereby acknowledges that a ready market may not exist for the Pledged Notes
if they are not traded on a national securities exchange or quoted on an
automated quotation system and agrees and acknowledges that in such event
the Pledged Notes may be sold for an amount less than a pro rata share of
the fair market value of the issuer's assets minus its liabilities. In
addition to the foregoing, the Secured Parties may exercise such other
rights and remedies as may be available under the Loan Documents, at law
(including without limitation the UCC) or in equity.
5. Proceeds of Sale. The proceeds of the sale of any of the
----------------
Collateral and all sums received or collected from or on account of such
Collateral from and after the occurrence of any Event of Default shall be
applied to the payment of expenses incurred or paid by the Agent in
connection with any holding, sale, transfer or delivery of the Collateral,
to the payment of any other costs, charges, reasonable attorneys' fees or
expenses mentioned herein, and to the payment of the Obligations or any
part thereof, all in such order and manner as is provided in the Credit
Agreement and otherwise as the Agent may determine and as permitted by
applicable law. The Agent shall, upon satisfaction in full of all such
Obligations, pay any balance to the Pledgor or otherwise as may be required
by applicable law.
6. Presentments, Etc. The Agent shall not be under any duty or
-----------------
obligation whatsoever to make or give any presentments, demands for
performances, notices of nonperformance, protests, notice of protest or
notice of dishonor in connection with any obligations or evidences of
indebtedness held thereby as collateral, or in connection with any obliga-
tions or evidences of indebtedness which constitute in whole or in part the
Obligations secured hereunder.
7. Attorney-in-Fact. The Pledgor hereby appoints the Agent as the
----------------
Pledgor's attorney-in-fact for the purposes of carrying out the provisions
of this Agreement and taking any action and executing any instrument which
the Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is coupled with an interest and is irrevocable
prior to the Facility Termination Date; provided, that the Agent shall have
--------
and may exercise rights under this power of attorney only upon the
occurrence and during the continuance of an Event of Default. Without
limiting the generality of the foregoing, upon the occurrence and during
the continuance of an Event of Default, the Agent shall have the right and
power to enforce the Pledged Notes in accordance with their terms, in its
own name or in the name of the Pledgor, and to receive, endorse and collect
all checks and other orders for the payment of money made payable to the
Pledgor representing any interest payment, principal payment or other
distribution payable or distributable in respect to the Collateral or any
part thereof and to give full discharge for the same.
G-4
<PAGE>
8. Absolute Rights and Obligations. All rights of the Secured
-------------------------------
Parties, and all obligations of the Pledgor hereunder, shall be absolute
and unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or
instrument relating to any of the Obligations;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or
instrument relating to any of the Obligations;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Obligations or of this Agreement.
9. Waiver by Pledgor. The Pledgor waives (to the extent permitted
-----------------
by applicable law) any right to require any Secured Party or any other
obligee of the Obligations to (a) proceed against any Person or entity, (b)
proceed against or exhaust any collateral, or (c) pursue any other remedy
in its power; and waives (to the extent permitted by applicable law) any
defense arising by reason of any disability or other defense of any other
Person, or by reason of the cessation from any cause whatsoever of the
liability of any other Person or entity. The Agent may at any time deliver
(without representation, recourse or warranty) the Collateral or any part
thereof to the Pledgor and the receipt thereof by the Pledgor shall be a
complete and full acquittance for the Collateral so delivered, and the
Secured Parties shall thereafter be discharged from any liability or
responsibility therefor.
10. Payments and Enforcement Rights.
--------------------------------
(a) All payments of principal, interest, fees and other amounts with
respect to the Pledged Notes shall be subject to the pledge hereunder,
except for those payments of principal and interest which, to the extent
permitted to be made under the Credit Agreement and the terms (including
the subordination provisions) of the Pledged Notes, are permitted to be
retained by the Pledgor so long as no Event of Default shall have occurred
and be continuing, and any such payments may be retained by Pledgor free
from any Lien hereunder. Upon the occurrence and during the continuance of
any Event of Default, all such payments and other amounts received in
respect of the Pledged Notes shall be promptly delivered to the Agent
(together, if the Agent shall request, with stock powers or instruments of
assignment duly executed in blank affixed to any capital stock or other
negotiable document or instrument so distributed) to be held, released or
disposed of by it hereunder or, at the option of the Agent, to be applied
to the Obligations hereby secured as they become due.
(b) So long as no Event of Default shall have occurred and be
continuing, the Pledgor
G-5
<PAGE>
shall be entitled to exercise all rights of enforcement, and other rights
and powers pertaining to the Collateral for all purposes not inconsistent
with the terms hereof.
(c) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of the Pledgor to receive
and retain payments in respect of the Collateral shall cease and shall
thereupon be vested in the Agent for the benefit of the Secured Parties.
(d) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of the Pledgor to exercise
rights of enforcement or other rights and powers in respect of the Pledged
Notes which it is authorized to exercise pursuant to subsection (b) above
shall cease and the Agent may thereupon (but shall not be obligated to), at
its request, cause such Collateral to be registered in the name of the
Agent or its nominee or agent for the benefit of the Secured Parties and/or
exercise such enforcement and other rights and powers as appertain to
ownership of such Collateral, pursuant to the power of attorney conferred
under Section 7 hereof, and the Pledgor hereby agrees to provide such
---------
further powers of attorney as the Agent may request; provided, however,
-------- -------
that the Agent in its discretion may from time to time refrain from
exercising, and shall not be obligated to exercise, any such enforcement or
other power or right.
11. Power of Sale. Until all Obligations (other than those in the
-------------
nature of continuing indemnities or liability for fees and expenses which
have not yet become due and payable) shall have been fully and irrevocably
paid and satisfied, the obligation of the Lenders to make Loans and issue
Letters of Credit shall have terminated and no Letters of Credit shall
remain outstanding, the power of sale and other rights, powers and remedies
granted to the Agent for the benefit of the Secured Parties hereunder shall
continue to exist and may be exercised by the Agent at any time and from
time to time irrespective of the fact that any such Obligations or any part
thereof may have become barred by any statute of limitations or that the
liability of the Pledgor may have ceased.
12. Other Rights. The rights, powers and remedies given to the Agent
------------
for the benefit of the Secured Parties by this Agreement shall be in
addition to all rights, powers and remedies given to any Secured Party by
virtue of any statute or rule of law. Any forbearance or failure or delay
by the Agent in exercising any right, power or remedy hereunder shall not
be deemed to be a waiver of such right, power or remedy, and any single or
partial exercise of any right, power or remedy hereunder shall not preclude
the further exercise thereof; and every right, power and remedy of the
Secured Parties shall continue in full force and effect until such right,
power or remedy is specifically waived by the Required Lenders by an
instrument in writing.
13. Further Assurances. The Pledgor agrees at its own expense to do
------------------
such further acts and things, and to execute and deliver such additional
conveyances, assignments, financing statements, agreements and instruments,
as the Agent may at any time reasonably request in connection with the
administration or enforcement of this Agreement or related to the
Collateral or any part thereof or in order better to assure and confirm
unto the Agent its rights, powers and remedies for the benefit of the
Secured Parties hereunder. The Pledgor hereby consents and agrees that the
issuers of or obligors in respect of the Collateral shall be entitled to
accept the provisions
G-6
<PAGE>
hereof as conclusive evidence of the right of the Agent, on behalf of the
Secured Parties, to exercise its rights hereunder with respect to the
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by the Pledgor or any other Person to any of
such issuers or obligors.
14. Binding Agreement; Assignment. This Agreement, and the terms,
-----------------------------
covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and to their respective successors and
assigns, except that the Pledgor shall not be permitted to assign this
Agreement or any interest herein or in the Collateral, or any part thereof,
or otherwise pledge, encumber or grant any option with respect to the
Collateral, or any part thereof, or any cash or property held by the Agent
as Collateral under this Agreement. All references herein to the Agent
shall include any successor thereof, each Lender and any other obligees
from time to time of the Obligations.
15. Severability. In case any Lien, security interest or other right
------------
of any Secured Party or any provision hereof shall be held to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability
shall not affect any other Lien, security interest or other right granted
hereby or provision hereof.
16. Counterparts. This Agreement may be executed in any number of
------------
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
17. Termination. This Agreement and all obligations of the Pledgor
-----------
hereunder shall terminate without delivery of any instrument or performance
of any act by any party on the date when all of the Obligations (other than
those in the nature of continuing indemnities or liability for fees and
expenses which have not become due and payable) have been fully and
irrevocably paid and satisfied in full, the Lenders are under further
obligation to make Loans or issue Letters of Credit and no Letters of
Credit are outstanding. Upon such termination of this Agreement, the Agent
shall, at the sole expense of the Pledgor, deliver to the Pledgor the
Pledged Notes (and any other property received as a dividend or
distribution or otherwise in respect of the Pledged Notes), together with
any cash then constituting the Collateral, not then sold or otherwise
disposed of in accordance with the provisions hereof and take such further
actions as may be necessary to effect the same.
18. Notices. Any notice required or permitted hereunder shall be
-------
given and shall be effective as provided in Section 12.02 of the Credit
Agreement.
19. Governing Law; Waivers.
----------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
G-7
<PAGE>
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF HILLSBOROUGH, STATE OF FLORIDA, UNITED STATES OF AMERICA, AND, BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED
IN SECTION 12.02 OF THE CREDIT AGREEMENT OR BY ANY OTHER METHOD OF
-------------
SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE
OF FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
--------------- ---
PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF
SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE,
MAY BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY
AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
G-8
<PAGE>
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
[Signature page follows.]
G-9
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first written above.
WALTER INDUSTRIES, INC.
WITNESS:
By:
------------------------------------------
_____________________ Name:
----------------------------------------
_____________________ Title:
---------------------------------------
G-10
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as
Agent for the Lenders
WITNESS:
By:
------------------------------------------
______________________ Name:
----------------------------------------
Title:
______________________ ---------------------------------------
G-11
<PAGE>
<TABLE><CAPTION>
SCHEDULE I
----------
Name of Obligor Name of Obligee Date Face Amount Certificate No.
--------------- --------------- ---- ----------- ---------------
<S> <C> <C> <C> <C>
Sloss Industries Corporation Walter Industries, Inc. $24,000,000.00 1
Vestal Manufacturing Company Walter Industries, Inc. $ 9,600,000.00 1
JW Window Components, Inc. Walter Industries, Inc. $43,300,000.00 1
Southern Precision Corporation Walter Industries, Inc. $19,200,000.00 1
JW Aluminum Company Walter Industries, Inc. $19,100,000.00 1
Walter Land Company Walter Industries, Inc. $ 9,600,000.00 1
Jim Walter Resources, Inc. Walter Industries, Inc. $119,700,514.90 1
JW Window Components, Inc. Walter Industries, Inc. 1
Jim Walter Homes, Inc. Walter Industries, Inc. 1
Best Insurors, Inc. Walter Industries, Inc. 1
JW Aluminum Company Walter Industries, Inc. 2
Vestal Manufacturing Company Walter Industries, Inc. 1
United States Pipe and Foundry Company Walter Industries, Inc. 1
United Land Corporation Walter Industries, Inc. 1
Southern Precision Corporation Walter Industries, Inc. 1
Jim Walter Resources, Inc. Walter Industries, Inc. 2
Sloss Industries Corporation Walter Industries, Inc. 1
Jefferson Warrior Railroad Company, Inc. Walter Industries, Inc. 1
Hamer Properties, Inc. Walter Industries, Inc. 1
J.W. Walter, Inc. Walter Industries, Inc. 1
Walter Land Company Walter Industries, Inc. 2
Jim Walter Computer Services, Inc. Walter Industries, Inc. 1
Jim Walter Homes of Louisiana, Inc. Walter Industries, Inc. 1
Jim Walter Window Components, Inc. Walter Industries, Inc. 1
Homes Holding Corporation Walter Industries, Inc. 1
Walter Home Improvement, Inc. Walter Industries, Inc. 1
Dixie Building Supplies, Inc. Walter Industries, Inc. 1
Railroad Holdings Corporation Walter Industries, Inc. 1
Hamer Holdings Corporation Walter Industries, Inc. 1
J.W.I. Holdings Corporation Walter Industries, Inc. 1
Land Holdings Corporation Walter Industries, Inc. 1
Computer Holdings Corporation Walter Industries, Inc. 1
Coast to Coast Advertising, Inc. Walter Industries, Inc. 1
</TABLE>
<PAGE>
EXHIBIT H-1
Form of Revolving Note
Promissory Note
(Revolving Loan)
$______________ _________, ______________
______ __, ____
FOR VALUE RECEIVED, WALTER INDUSTRIES, INC., a Delaware corporation
having its principal place of business located in Tampa, Florida (the
"Borrower"), hereby promises to pay to the order of
_______________________________________________, its successors and
registered assigns (the "Lender"), in its individual capacity, at the
office of NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as agent for the
Lenders (the "Agent"), located at One Independence Center, 101 North Tryon
Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other
place or places as the Agent may designate in writing) at the times set
forth in the Credit Agreement dated as of January 22, 1996 among the
Borrower, the financial institutions party thereto as lenders
(collectively, the "Lenders"), the Agent and certain financial institutions
as managing agents (the "Agreement" -- all capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the
Agreement), in lawful money of the United States of America, in immediately
available funds, the principal amount of ___________ DOLLARS ($__________)
or, if less than such principal amount, the aggregate unpaid principal
amount of all Revolving Loans made by the Lender to the Borrower pursuant
to the Agreement on the Revolving Credit Termination Date or such earlier
date as may be required pursuant to the terms of the Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates provided in
Article III of the Agreement. All or any portion of the principal amount
- -----------
of Loans may be prepaid or required to be prepaid as provided in the
Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on
demand at the rates per annum set forth in the proviso to Section 3.2 (a)
---------------
of the Agreement. Further, in the event of such acceleration, this
Revolving Note shall become immediately due and payable, without presenta-
tion, demand, protest or notice of any kind, all of which are hereby waived
by the Borrower.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable
attorneys' fees, and interest due hereunder thereon at the rates set forth
above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Revolving Note is one of the Revolving Notes in the principal
amount of $365,000,000 referred to in the Agreement and is issued pursuant
to and entitled to the benefits and security of the Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions upon which the Revolving Loans evidenced hereby were or are made
and are to be repaid. This Revolving Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.
This Note and the Loans evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained
by or on behalf of the Borrower as provided in Section 13.1(c) of the
Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law the benefits of all provisions of
law for stay or delay of execution or sale of property or other
satisfaction of judgment against any of them on account of liability hereon
until judgment be obtained and execution issues against any other of them
and returned satisfied or until it can be shown that the maker or any other
party hereto had no property available for the satisfaction of the debt
evidenced by this instrument, or until any other proceedings can be had
against any of them, also their right, if any, to require the holder hereof
to hold as security for this Revolving Note any collateral deposited by any
of said Persons as security. Protest, notice of protest, notice of
dishonor, diligence or any other formality are hereby waived by all parties
bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
made, executed and delivered by its duly authorized representative as of
the date and year first above written, all pursuant to authority duly
granted.
WALTER INDUSTRIES, INC.
WITNESS:
______________________ By: _______________________________
______________________ Name: _____________________________
Title: ____________________________
<PAGE>
EXHIBIT H-2
Form of Term Note A
Promissory Note
(Term Loan A)
$________________ ________, ________
______ __, ____
FOR VALUE RECEIVED, WALTER INDUSTRIES, INC., a Delaware corporation
having its principal place of business located in Tampa, Florida (the
"Borrower"), hereby promises to pay to the order of
___________________________________ , its successors and registered assigns
(the "Lender"), in its individual capacity, at the office of NATIONSBANK,
NATIONAL ASSOCIATION (SOUTH), as agent for the Lenders (the "Agent"),
located at One Independence Center, 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the
Agent may designate in writing) at the times set forth in the Credit
Agreement dated as of January 22, 1996 among the Borrower, the financial
institutions party thereto as lenders (collectively, the "Lenders"), the
Agent and certain financial institutions as managing agents (the
"Agreement" -- all capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement), in lawful money
of the United States of America, in immediately available funds, the
principal amount of _____________________ DOLLARS ($______________), such
amount of principal to be payable on the respective dates and in the
respective amounts provided for in Sections 2.3(a) and 2.13 of the
Agreement or such earlier date as may be required pursuant to the terms of
the Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at
the rates provided in Article II of the Agreement. All or any portion of
the principal amount of Loans may be prepaid or required to be prepaid as
provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount hereof
and accrued but unpaid interest thereon shall bear interest which shall be
payable on demand at the rates per annum set forth in the proviso to
Section 2.4 of the Agreement. Further, in the event of such acceleration,
- -----------
this Term Note A shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are
hereby waived by the Borrower.
In the event this Term Note A is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest due hereunder, all costs of collection, including
reasonable attorneys' fees, and interest thereon at the rates set forth
above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Term Note A is one of the Term Notes A in the aggregate principal
amount of $125,000,000 referred to in the Agreement and is issued pursuant
to and entitled to the benefits and security of the Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions upon which the Term Loan A evidenced hereby was made and is to
be repaid. This Term Note A is subject to certain restrictions on transfer
or assignment as provided in the Agreement.
This Note and the Loans evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained
by or on behalf of the Borrower as provided in Section 13.1(c) of the
Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law the benefits of all provisions of
law for stay or delay of execution or sale of property or other
satisfaction of judgment against any of them on account of liability hereon
until judgment be obtained and execution issues against any other of them
and returned satisfied or until it can be shown that the maker or any other
party hereto had no property available for the satisfaction of the debt
evidenced by this instrument, or until any other proceedings can be had
against any of them, also their right, if any, to require the holder hereof
to hold as security for this Term Note A any collateral deposited by any of
said Persons as security. Protest, notice of protest, notice of dishonor,
diligence or any other formality are hereby waived by all parties bound
hereon.
IN WITNESS WHEREOF, the Borrower has caused this Term Note A to be
made, executed and delivered by its duly authorized representative as of
the date and year first above written, all pursuant to authority duly
granted.
WALTER INDUSTRIES, INC.
WITNESS:
______________________ By: _________________________________
______________________ Name: _______________________________
Title: ______________________________
<PAGE>
EXHIBIT H-3
Form of Term Note B
Promissory Note
(Term Loan B)
$________________ ________, ________
______ __, ____
FOR VALUE RECEIVED, WALTER INDUSTRIES, INC., a Delaware corporation
having its principal place of business located in Tampa, Florida (the
"Borrower"), hereby promises to pay to the order of
___________________________________, its successors and registered assigns
(the "Lender"), in its individual capacity, at the office of NATIONSBANK,
NATIONAL ASSOCIATION (SOUTH), as agent for the Lenders (the "Agent"),
located at One Independence Center, 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the
Agent may designate in writing) at the times set forth in the Credit
Agreement dated as of January 22, 1996 among the Borrower, the financial
institutions party thereto as lenders (collectively, the "Lenders"), the
Agent and certain financial institutions as managing agents (the
"Agreement" -- all capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement), in lawful money
of the United States of America, in immediately available funds, the
principal amount of _____________________ DOLLARS ($______________), such
amount of principal to be payable on the respective dates and in the
respective amounts provided for in Sections 2.3(b) and 2.13 of the
Agreement or such earlier date as may be required pursuant to the terms of
the Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at
the rates provided in Article II of the Agreement. All or any portion of
the principal amount of Loans may be prepaid or required to be prepaid as
provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount hereof
and accrued but unpaid interest thereon shall bear interest which shall be
payable on demand at the rates per annum set forth in the proviso to
Section 2.4 of the Agreement. Further, in the event of such acceleration,
- -----------
this Term Note B shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are
hereby waived by the Borrower.
In the event this Term Note B is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest due hereunder, all costs of collection, including
reasonable attorneys' fees, and interest thereon at the rates set forth
above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Term Note B is one of the Term Notes B in the aggregate principal
amount of $60,000,000 referred to in the Agreement and is issued pursuant
to and entitled to the benefits and security of the Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions upon which the Term Loan B evidenced hereby was made and is to
be repaid. This Term Note B is subject to certain restrictions on transfer
or assignment as provided in the Agreement.
This Note and the Loans evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained
by or on behalf of the Borrower as provided in Section 13.1(c) of the
Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law the benefits of all provisions of
law for stay or delay of execution or sale of property or other
satisfaction of judgment against any of them on account of liability hereon
until judgment be obtained and execution issues against any other of them
and returned satisfied or until it can be shown that the maker or any other
party hereto had no property available for the satisfaction of the debt
evidenced by this instrument, or until any other proceedings can be had
against any of them, also their right, if any, to require the holder hereof
to hold as security for this Term Note A any collateral deposited by any of
said Persons as security. Protest, notice of protest, notice of dishonor,
diligence or any other formality are hereby waived by all parties bound
hereon.
IN WITNESS WHEREOF, the Borrower has caused this Term Note B to be
made, executed and delivered by its duly authorized representative as of
the date and year first above written, all pursuant to authority duly
granted.
WALTER INDUSTRIES, INC.
WITNESS:
______________________ By: _________________________________
______________________ Name: _______________________________
Title: ______________________________
<PAGE>
EXHIBIT I
Form(s) of Opinion(s) of Counsel to Credit Parties
<PAGE>
[OPINION OF SHACKLEFORD, FARRIOR, STALLINGS & EVANS]
January 22, 1996
To the Lenders party to the Credit Agreement
referred to below and NationsBank, National
Association (South) as Administrative Agent,
Documentation Agent and Syndication Agent
(the "Agent")
Walter Industries, Inc.
-----------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 7.1(a)(ii) of the
Credit Agreement dated as of January 22, 1996 among Walter Industries,
Inc., a Delaware corporation (the "Borrower"), and each of you. Unless
otherwise defined herein, terms defined in the Credit Agreement are used
herein as therein defined.
We are special counsel for the Borrower and its Subsidiaries listed on
Exhibit A attached hereto (the Borrower and its Subsidiaries are
- ---------
collectively referred to as the "Obligated Entities"; the Obligated
Entities shown on Exhibit A attached hereto as organized under the laws of
---------
Delaware are collectively referred to as the "Delaware Entities" and the
Obligated Entities shown on Exhibit A attached hereto as organized under
---------
the laws of Florida are collectively referred to as the "Florida Entities")
in connection with the preparation, execution and delivery of the Credit
Agreement and in connection with the preparation, execution and delivery of
the other Loan Documents.
In that connection, we have examined:
(a) counterparts of each of the Loan Documents, executed by each of
the parties thereto;
(b) the charter and bylaws of the Borrower, each of the other
Delaware Entities and each of the Florida Entities, in each case as amended
through the date hereof;
(c) all resolutions adopted by, and certain other records of
proceedings of, the Board of Directors of the Borrower, each of the other
Delaware Entities and each of the Florida Entities;
[(d) executed copies of financing statements (the "Financing
Statements") to be filed under the Uniform Commercial Code of the State of
Florida (the "Code") naming a Loan Party as debtor and the Facilities
Manager as secured party, which Financing Statements are to be filed; and]
<PAGE>
(e) all other documents furnished by the Obligated Entities pursuant
to Section 7.1 of the Credit Agreement.
We have also examined the originals, or copies certified to our
satisfaction, of the documents listed in the certificate of William H.
Weldon, Senior Vice President of the Borrower and a Vice President of each
of the Subsidiaries, dated the date hereof (the "Opinion Certificate"),
certifying that the documents listed therein are all of the indentures,
loan or credit agreements, guarantees, mortgages, security agreements,
bonds, notes and other agreements or instruments, and all of the orders,
writs, judgments, injunctions, decrees, determinations and awards, that
restrict or impair or purport to restrict or impair the performance of the
obligations of each of the Obligated Entities under any of the Loan
Documents or the right of each of the Obligated Entities, to borrow money,
to guarantee the obligations of other Persons, to create Liens on its
properties or to consummate the transactions contemplated by the Loan
Documents. In rendering our opinion expressed in paragraphs 3(a)(ii), (b)
and (c), we have limited our investigation to the documents described in
the Opinion Certificate.
In addition, we have examined the originals, or copies certified to
our satisfaction, of such other corporate records of each of the Obligated
Entities, certificates of public officials and of the officers of each of
the Obligated Entities and agreements, instruments and other documents as
we have deemed necessary as a basis for the opinions expressed below. As
to questions of fact material to such opinions, we have, when relevant
facts were not independently known or established by us, relied upon
certificates of each of the Obligated Entities, as appropriate, or of its
officers or of public officials.
In our examination of the documents referred to above, we have assumed
(i) the due execution and delivery, pursuant to due authorization, of each
of the documents referred to above by all parties thereto other than any of
the Obligated Entities except, with respect to authorization, (a) the
Alabama Entities as defined in the opinion of Bradley, Arant, Rose & White
addressed to you of even date herewith, as to which matter we refer you to
such opinion, (b) Jim Walter Window Components, Inc., a Wisconsin
corporation, and (c) Cardem Insurance Co., Ltd., as to which matter we
refer you to ____________________________________, (ii) the authenticity of
all such documents submitted to us as originals and (iii) the conformity to
originals of all such documents submitted to us as copies.
[In rendering our opinion expressed in paragraphs 1(b), 2(b) and 7
below, we have relied upon the opinion of the Borrower's Vice President -
Legal of even date herewith (the "General Counsel Opinion").
This opinion is limited to the laws of the State of Florida, the
General Corporation Law of the State of Delaware and the federal laws of
the United States.
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. (a) Each of the Florida Entities is a corporation duly organized,
validly existing and
<PAGE>
in good standing under the laws of the State of Florida and each of the
Delaware Entities is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (b) except as
otherwise disclosed [in the General Counsel Opinion,] each Obligated Entity
is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which it owns or leases property or in which the conduct of
its business requires it to so qualify or be licensed, except whether the
failure to so qualify or be licensed, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect, and (d) each of the Delaware Entities and the Florida Entities has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to
be conducted.
2. (a) All of the outstanding shares of capital stock of the
Borrower has been validly issued and is fully paid and nonassessable and
(b) all of the outstanding shares of capital stock of each Restricted
Subsidiary has been validly issued, are fully paid and nonassessable, and
are owned by the Borrower and one or more of its wholly owned Subsidiaries
(as more particularly described on Exhibit B attached hereto) free and
---------
clear of all Liens except those credited under the Loan Documents.
3. The execution, delivery and performance by the Borrower, each
other Delaware Entity and each Florida Entity of each Loan Document to
which it is or is to be a party, and the consummation of the transactions
contemplated by the Loan Documents, are within such Obligated Entity's
corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene such Obligated Entity's charter or bylaws,
and the execution, delivery and performance by each Loan Party of each Loan
Document to which it is or is to be a party, and the consummation of the
transactions contemplated by the Loan Documents do not (a) violate (i) any
Florida, Delaware or federal law (including, without limitation, the
Exchange Act and the Racketeer Influenced and Corrupt Organizations Chapter
of the Organized Crime Control Act of 1970), statute, rule or regulation
(including, without limitation, Regulation X of the Board of Governors of
the Federal Reserve System) or (ii) any order, writ, judgment, injunction,
decree, determination or award, (b) conflict with or result in the breach
of, or constitute a default under, any contract, loan agreement, indenture,
mortgage, deed of trust, or other instrument binding on or affecting such
Obligated Entity, or any of its Subsidiaries or any of their properties, or
(c) except for Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties of any Obligated Entity or any of its Subsidiaries.
4. No authorization, approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body or any other
third party is required for (a) the due execution, delivery, recordation,
filing or performance by any Obligated Entity of any Loan Document to which
it is or is to be a party or for the consummation of any aspect of the
transactions contemplated by the Loan Documents, (b) the grant by any
Obligated Entity of the Liens granted by it pursuant to the Collateral
Documents, (c) the perfection or maintenance of the Liens created under the
Security Instruments (including the priority nature thereof) or (d) the
exercise by the Agent or any Lender of its rights under the Loan Documents.
Notwithstanding clause (d) above, we express no opinion regarding
authorizations, approvals or other actions by, notices to or filings with
any Governmental Authority or other third party that may be required in
connection with the enforcement of remedies provided by the Security
Instruments. All applicable waiting periods in connection with
<PAGE>
any aspect of the transactions contemplated by the Loan Documents have
expired without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions upon the
rights of the Obligated Entities or their Subsidiaries freely to transfer
or otherwise dispose of, or to create any Lien on, any properties or assets
now owned or hereafter acquired by any of them.
5. Each Loan Document has been duly executed and delivered by each
Obligated Entity intended to be a party thereto and constitutes the legal,
valid and binding obligation, agreement or conveyance, as the case may be,
enforceable against such Obligated Entity in accordance with its respective
terms.
6. There is no action, suit, investigation, litigation or proceeding
affecting any Obligated Entity or any of its Subsidiaries or any of their
respective properties pending or, to the best of our knowledge, threatened
in any court or before any arbitrator or by or before any Governmental
Authority that could reasonably be expected to (a) have a Material Adverse
Effect [(other than the matters disclosed in the General Counsel Opinion)],
(b) adversely affect the legality, validity or enforceability of any aspect
of the Credit Agreement, any Note, or any other Loan Document or the
consummation of the transactions contemplated by the Loan Documents, and
there has been no adverse change in the status, and no materially adverse
change in the financial effect on the Borrower or any of its Subsidiaries,
of the Disclosed Litigation from that described on Schedule 8.10 to the
Credit Agreement.
7. Each of the Stock Pledge Agreement and the Intercompany Note
Pledge Agreement to which any Obligated Entity is a party (the "Pledge
Agreements") is effective to create a valid and subsisting security
interest in the Collateral therein described (or, as to Collateral in which
each such Obligated Entity party thereto does not have an interest as of
the date hereof, to create such a security interest upon the acquisition by
such Obligated Entity of an interest in such property). Under the Pledge
Agreements, upon delivery by each of the Obligated Entities of the
certificates evidencing Pledged Stock owned by them, and of the
Intercompany Notes of which each of them is the holder, the Agent (for
itself and on behalf of the Lenders) will hold a perfected security
interest in such Collateral and no filing of a financing statement or other
instrument of any kind is required in order to perfect, or preserve the
perfection of, such security interest in such Collateral.
8. All taxes and governmental fees and charges, the payment of which
are required by the States of Florida or Delaware in connection with the
execution, delivery and recording of the Loan Documents, and the execution
and delivery of any financing statements have been paid.
9. Neither the Agent nor any Lender is required to qualify to do
business in the State of Florida or to comply with the requirements of any
foreign lender statute solely in order to carry out the transactions
contemplated by the Loan Documents, nor will the Agent or any other Lender
be subject to taxation in the State of Florida, in each case solely as the
result of the performance of such transactions, provided that we express no
opinion with regard to such matters as they relate to the enforcement of
remedies provided by the Security Instruments if and when the Agent or any
Lender becomes an owner of the Collateral.
<PAGE>
10. No Obligated Entity or any of its Subsidiaries is an "investment
company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
The opinions set forth above are subject to the following
qualifications:
(a) Our opinions as to enforceability in paragraph 5 above is subject
to the effect of general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether considered in a proceeding in equity or at
law).
This opinion is rendered to the Agent and the other Lenders as of the
date hereof in connection with the Credit Agreement and may not be relied
upon by any person other than the Agent, the Lenders, and the assignees and
participants of the Agent or any Lender, or by any of them in any other
context, and may not be furnished to any other person or entity without our
prior written consent, provided that each person entitled to rely hereon
may provide this opinion (i) to bank examiners and other regulatory
authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of any Person,
(iii) pursuant to order or legal process of any court or government agency,
(iv) in connection with any legal action to which such Person is a party
arising out of the transactions contemplated by the Loan Documents or (v)
in connection with the assignment of or sale of participations in Loans
and/or Participations.
Very truly yours,
<PAGE>
EXHIBIT A
Subsidiaries
------------
[list all direct and indirect Subsidiaries, including Unrestricted
Subsidiaries, with reference to jurisdiction of organization]
<PAGE>
EXHIBIT B
Ownership of Stock
------------------
<PAGE>
[OPINION OF GENERAL COUNSEL TO THE BORROWER]
January 22, 1996
To: The Lenders party to the Credit Agreement referred to below and
to NationsBank, National Association (South) as Administrative
Agent, Documentation Agent and Syndication Agent (the "Agent")
Walter Industries, Inc.
-----------------------
Ladies and Gentlemen:
The undersigned is Vice President-Legal of Walter Industries, Inc., a
Delaware corporation (the "Borrower") and in such capacity oversees the
legal services provided to the Borrower and each of its wholly-owned
subsidiaries set forth on Exhibit A attached hereto (together with the
---------
Borrower, the "Obligated Entities"). In my capacity as Vice President -
Legal of the Borrower, I have been requested to provide the following
opinion to you in connection with the opinion that Shackleford, Farrior,
Stallings & Evans, P.A. is to provide (the "SFS&E Opinion") pursuant to
Section 7.1(a)(ii) of the Credit Agreement dated as of January 22, 1996
(the "Credit Agreement") among the Borrower and you. Unless otherwise
defined herein, terms defined in the Credit Agreement are used herein as
therein defined.
In connection with rendering this opinion, I have examined:
(a) counterparts of each of the Loan Documents, executed by each of
the parties thereto;
(b) the charter and bylaws of each of the Obligated Entities in each
case as amended through the date hereof; and
(c) certain resolutions adopted by, and certain other records of
proceedings of, the Board of Directors of each of the Obligated Entities.
In addition, I have also examined the originals, or copies certified
to my satisfaction, of such other corporate records of each of the
Obligated Entities, certificates of public officials and of the officers of
each of the Obligated Entities and agreements, instruments and other
documents as I have deemed necessary as a basis for the opinions expressed
below. As to questions of fact material to such opinions, I have, when
relevant facts were not independently known or established by me, relied
upon certificates of each of the Obligated Entities, as appropriate, or of
its officers or of public officials.
<PAGE>
This opinion is limited to the laws of the State of Florida, the
General Corporation Law of the State of Delaware and the federal laws of
the United States.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. Except as disclosed on Exhibit B attached hereto, each Obligated
---------
Entity is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed, except
where the failure to so qualify or be licensed, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
2. All of the outstanding shares of capital stock of each Obligated
Entity (other than the Borrower with respect to which I express no opinion)
have been validly issued, are fully paid and nonassessable, and are owned
by the Borrower and one or more of its wholly-owned Subsidiaries, as more
particularly described on Exhibit B attached to the SFS&E Opinion, free and
---------
clear of all Liens, except those created under the Loan Documents.
3. The execution, delivery and performance by each Obligated Entity
of each Loan Document to which it is or is to be a party and the
consummation of the transactions contemplated by the Loan Documents, are
within such Obligated Entity's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene such Obligated
Entity's charter or bylaws.
4. There is no action, suit, investigation, litigation or proceeding
affecting any Obligated Entity or any of its Subsidiaries or any of their
respective properties pending or, to the best of our knowledge, threatened
in any court or before any arbitrator or by or before any Governmental
Authority that could reasonably be expected to (a) have a Material Adverse
Effect (other than the Disclosed Litigation and those environmental and
related matters set forth in attached Schedules and
--------------------------------------
), or (b) adversely affect the legality, validity or enforceability of
- -----
any aspect of the Credit Agreement, any Note, or any other Loan Document or
the consummation of the transactions contemplated by the Loan Documents,
and there has been no adverse change in the status, and no materially
adverse change in the financial effect on the Borrower or any of its
Subsidiaries, of the Disclosed Litigation from that described on Schedule
8.10 to the Credit Agreement.
This opinion is rendered to Shackleford, Farrior, Stallings & Evans,
P.A., the Agent and the Lenders as of the date hereof in connection with
the Credit Agreement and may not be relied upon by any person other than
Shackleford, Farrior, Stallings & Evans, P.A. in connection with its
opinion furnished pursuant to Section 7.1(a)(ii) of the Credit Agreement,
and the Agent, the Lenders and the assignees or participants of the Agent
or any Lender, or by any of them in any other context, and may not be
furnished to any other Person without my prior written consent, provided
that each Person entitled to rely hereon may provide this opinion (i) to
bank examiners and other regulatory authorities should they so request or
in connection with their normal examination, (ii) to the independent
auditors and attorneys of any Person, (iii) pursuant to order or legal
process of any court or government
<PAGE>
agency, (iv) in connection with any legal action to which such Person is a
party arising out of the transactions contemplated by the Loan Documents or
(v) in connection with the assignment of or sale of participations in Loans
and/or Participations.
I am aware that Shackleford, Farrior, Stallings & Evans, P.A. will
rely upon this opinion in rendering its opinion furnished pursuant to
Sections 7.1(a)(ii) and (xxii) of the Credit Agreement.
Very truly yours,
<PAGE>
EXHIBIT A
[List all Subsidiaries]
<PAGE>
EXHIBIT B
Qualification Matters
---------------------
<PAGE>
[OPINION OF BRADLEY, ARANT, ROSE & WHITE]
January 22, 1996
To: The Lenders party to the Credit Agreement referred to below and
to NationsBank, National Association (South) as Administrative
Agent, Documentation Agent and Syndication Agent (the "Agent")
Walter Industries, Inc.
-----------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 7.1(a)(ii) of the
Credit Agreement dated as of January 22, 1996 (the "Credit Agreement"),
among Walter Industries, Inc., a Delaware corporation (the "Borrower"), and
each of you. Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined.
We have acted as special counsel in the State of Alabama for the
Borrower and the Subsidiaries listed on Exhibit A attached hereto (the
---------
"Covered Subsidiaries" and, together with the Borrower, collectively the
"Obligors"; Jim Walter Resources, Inc. and Jefferson Warrier Railroad
Company, Inc. are collectively referred to as the "Alabama Entities") in
connection with the execution and delivery of the Credit Agreement and the
other Loan Documents.
In that connection, we have examined:
(a) copies of the Credit Agreement and each of the following
documents (the "Alabama Loan Documents") to be executed by the Covered
Subsidiaries; the Facility Guaranty, Stock Pledge Agreement (and related
assignments) and Intercompany Note Pledge Agreement (and related
endorsements);
(b) the charter and bylaws of each of the Alabama Entities, as
amended through the date hereof;
(c) resolution adopted by the Board of Directors and sole shareholder
of each of the Alabama Entities pertaining to the Credit Agreement and the
transactions contemplated thereby; [and
(d) copies of financing statements (the "Financing Statements") to be
filed under the Uniform Commercial Code as enacted and in effect in the
State of Alabama naming each Alabama Entity as debtor and the Agent as
secured party, which Financing Statements are to be filed in the filing
offices listed in Schedule I hereto.]
<PAGE>
In addition, we have examined the originals, or copies certified to
our satisfaction, of such other corporate records of each of the Obligors,
certificates of public officials and of the officers of each of the
Obligors and agreements, instruments and other documents as we have deemed
necessary as a basis for the opinions expressed below. As to questions of
fact material to such opinions, we have relied upon certificates of each of
the Obligors, as appropriate, or of its officers or of public officials.
In our examination of the documents referred to above, we have assumed
(i) the due execution and delivery, pursuant to due authorization, of each
of the documents referred to above by all parties thereto other than the
Alabama Entities, (ii) the authenticity of all such documents submitted to
us as originals and (iii) the conformity to originals of all such documents
submitted to us as copies.
In rendering our opinion we have assumed that the Loan Documents were
negotiated and will be executed and delivered by the parties thereto in
Florida and North Carolina, that all Loans and other disbursements under
the Credit Agreement will be made and repaid in [North Carolina] and that
the Notes will be held by the Lenders outside of the State of Alabama.
This opinion is limited to the laws of the State of Alabama.
Based upon the foregoing and upon such investigation as we have deemed
necessary, and subject to the exceptions and qualifications herein set
forth, we are of the following opinion:
1. Each of the Alabama Entities (a) is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Alabama and (b) has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. Each of the Covered
Subsidiaries other than the Alabama Entities is qualified to do business as
a foreign corporation and is in good standing under the law of the State of
Alabama.
2. All of the outstanding shares of capital stock of each of the
Alabama Entities have been validly issued, are fully paid and
nonassessable, and are owned of record by the Borrower or one or more of
its wholly owned Subsidiaries as more particularly described on Exhibit B
---------
attached hereto.
3. The execution, delivery and performance by each of the Alabama
Entities of each Alabama Loan Document to which it is or is to be a party
and the consummation of the transactions contemplated thereby are within
such Alabama Entity's corporate powers, have been duly authorized by all
necessary corporate action, and do not (a) contravene such Alabama Entity's
charter or bylaws or (b) violate any law, statute, rule or regulation.
4. No authorization, approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body of the State
of Alabama is required for (a) the due execution, delivery, recordation,
filing or performance by any Covered Subsidiary of any Alabama Loan
Document to which it is or is to be a party or the consummation of any
aspect of the transactions contemplated thereby, (b) the grant by any
Covered Subsidiary of the Liens granted by
<PAGE>
them pursuant to the Alabama Loan Documents, (c) the perfection of the
Liens created under the Alabama Loan Documents (including the priority
thereof) executed by any Covered Subsidiary or (d) the exercise by the
Agent or any Lender of its rights under the Alabama Loan Documents or the
remedies in respect of the Collateral pursuant to the Alabama Loan
Documents, except [ ].
5. Although the Alabama Loan Documents executed by the Covered
Subsidiaries contain choice of law provisions that state that they shall be
governed by and construed in accordance with the laws of the State of
Florida (except to the extent that the validity or perfection of the
security interest thereunder, or remedies thereunder, in respect of any
particular Collateral are governed by the laws of another jurisdiction), in
the event that the laws of the State of Alabama were applied to govern such
Alabama Loan Documents, the Alabama Loan Documents would be the legal,
valid and binding obligations of the Covered Subsidiaries, enforceable
against the Covered Subsidiaries in accordance with their respective terms.
6. Each of the Stock Pledge Agreement and the Intercompany Note
Pledge Agreement to which either of the Alabama Entities is a party (the
"Pledge Agreements") is effective to create a valid and subsisting security
interest in the Collateral therein described (or, as to Collateral in which
such Alabama Entity party thereto does not have an interest as of the date
hereof, to create such a security interest upon the acquisition by such
Alabama Entity of an interest in such property). Under the Pledge
Agreements, upon delivery to the Agent by the Alabama Entities of the
certificates evidencing Pledged Stock owned by either of them, and of the
Intercompany Notes of which either of them is the holder, the Agent (for
itself and on behalf of the Lenders) will hold a perfected security
interest in such Collateral, and no filing of a financing statement or
other instrument of any kind under the laws of Alabama is required in order
to perfect, or preserve the perfection of, such security interest in such
Collateral.
7. No documentary stamp, intangibles, excise or other tax, duty, fee
or impost is required by the State of Alabama to be paid in connection with
the execution and delivery of, or enforcement by the Agent and the Lenders
of rights under the Alabama Loan Documents.
8. Neither the Agent nor any Lender is required to qualify to do
business in the State of Alabama, or to comply with the requirements of any
foreign lender statute solely in order to carry out the transactions
contemplated by the Loan Documents or to avail themselves of the remedies
provided thereby, nor will the Agent, or any Lender be subject to taxation
in the State of Alabama solely as the result of the performance of such
transactions.
9. The choice of Florida law to govern the Loan Documents in which
such choice of law is stipulated is a valid and effective choice of law
under the laws of the State of Alabama and, under the State of Alabama's
principles of conflicts of laws, a federal court sitting in its diversity
capacity in the State of Alabama or any of the State of Alabama's state
courts will apply Florida law in an action or proceeding arising out of the
Florida Loan Document to the extent that the parties thereto have agreed to
its application therein, except to the extent that any provision of such
Loan Document violates the fundamental public policy of the State of
Alabama and except that the State of Alabama's or federal procedural or
remedial law will apply. Without limiting the generality of the foregoing,
any
<PAGE>
such court would apply the usury law of the State of Florida to the Loan
Documents in which the law of the State of Florida is stipulated to govern.
The opinions set forth above are subject to the following
qualifications:
(a) Our opinions in paragraphs 1 and 3 above are subject to the
comments made in this subparagraph. [The Articles of Incorporation of Jim
Walter Resources provide that its purposes include the transaction of any
lawful business for which a corporation may be incorporated under the
Alabama Business Corporation Act. Such a "general purpose clause" is
authorized by the Alabama Business Corporation Act. However, the Alabama
Constitution provides that no corporation shall engage in any business
other than that expressly authorized in its articles. There has been no
judicial determination of whether such a general purpose clause is
sufficient under this constitutional provision to authorize a corporation
to engage in any lawful business, and in the absence of such a
determination, we could not express an unqualified opinion that a general
purpose clause is sufficient. For that reason we customarily include a
more specific statement of the purposes for which the corporation is
organized. Nevertheless, we are inclined to believe that if properly
presented our courts would hold a general purpose clause is sufficient
under the Constitution to authorize a corporation to engage in any lawful
business.]
(b) Our opinion in paragraph 5 above is subject to the effect of
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law).
(c) Our opinion in paragraph 5 above is also subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally (including, without
limitation, all laws relating to fraudulent transfers or conveyances).
(d) Our opinion in paragraph 5 above is also subject to the effect of
any applicable laws or judicial decisions of the State of Alabama which may
limit the enforceability of certain rights and remedies provided by the
Pledge Agreements but which do not in our opinion render inadequate the
rights and remedies for the realization of the practical benefits and
security intended to be provided by the Pledge Agreements.
(e) Our opinion set forth in paragraphs 4 and 6 above are subject to
the further qualifications that we express no opinion as to the rights of
the Alabama Entities in or title to any Collateral.
This opinion is rendered to the Agent and the Lenders as of the date
hereof in connection with the Credit Agreement and may not be relied upon
by any person other than the Agent, the Lenders, and any participant or
assignee of the Agent or any Lender, or by any of them in any other
context, and may not be furnished to any other person or entity without our
prior written consent, provided that this opinion may be provided (i) to
bank examiners and other regulatory authorities should they so request or
in connection with their normal examination, (ii) to the independent
auditors and attorneys of any Person entitled to rely hereon, (iii)
pursuant to order or legal process of any court or government agency, (iv)
in connection with any legal action to which any Person entitled to rely
hereon is a party arising out of the transactions contemplated by the Loan
Documents or (v) in
<PAGE>
connection with the assignment of or sale of participations in Loans and/or
Participations.
Very truly yours,
<PAGE>
EXHIBIT A
Covered Subsidiaries
--------------------
<PAGE>
EXHIBIT B
Ownership of Stock
------------------
<PAGE>
EXHIBIT J
CERTIFICATE OF COMPLIANCE
NationsBank, National Association (South),
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
NationsBank, National Association (South),
as Agent
400 North Ashley Drive
Tampa, Florida 33603
Attention: Corporate Banking Department
Telefacsimile: (813) 224-5948
Reference is hereby made to the Credit Agreement dated as of January
22, 1996 (the "Agreement") among Walter Industries, Inc., a Delaware
corporation (the "Borrower"), the Lenders (as defined in the Agreement),
and NationsBank, National Association (South), as Agent for the Lenders
("Agent"). Capitalized terms used but not otherwise defined herein shall
have the respective meanings therefor set forth in the Agreement. The
undersigned, a duly authorized and acting Authorized Representative, hereby
certifies to you as of November 30, 1995 (the "Determination Date") as
follows:
I. COMPLIANCE WITH CERTAIN FINANCIAL COVENANTS
-------------------------------------------
Computations showing compliance with Sections 10.1, 10.4(g), (j), (k),
(l), 10.6(g), (k), (l), 10.8(b), and 10.12 are set forth on Schedule I
----------
hereto and incorporated herein by this reference.
II. NO DEFAULT OR EVENT OF DEFAULT - Not Applicable -
------------------------------
A. Since (the date of the last similar certification), (a)
-----------
the Borrower has not defaulted in the keeping, observance, performance or
fulfillment of its obligations pursuant to any of the Loan Documents; and
(b) no Default or Event of Default specified in Article XI of the Agreement
----------
has occurred and is continuing.
B. If a Default or Event of Default has occurred since (the
----------
date of the last similar certification), the Borrower proposes to take the
following action with respect to such Default or Event of Default:
----------
- ----------------------------------------------------------------------------
- ---------------
(Note if no Default or Event of Default has occurred,
insert "Not Applicable").
III. NET CASH ADVANCES BY BORROWER AND RESTRICTED SUBSIDIARIES TO
------------------------------------------------------------
UNRESTRICTED SUBSIDIARIES
- -------------- ------------
As of the Determination Date, the Net Cash Advances after the Closing
Date by the Borrower and Restricted Subsidiaries to the Unrestricted
Subsidiaries was $ Not applicable.
---------------
IV. CERTIFICATE OF FAIRNESS OF FINANCIAL STATEMENTS
-----------------------------------------------
Pursuant to Section 9.1(b) of the Credit Agreement, the undersigned
hereby
<PAGE>
certifies that the unaudited consolidated financial statements present
fairly the financial position of Walter Industries, Inc., and its
Subsidiaries, at November 30, 1995 and 1994 and the results of their
operations and their cash flows for the six month periods ended November
30, 1995 and 1994, in conformity with generally accepted accounting
principles applied on a consistent basis, subject however, to year-end
audit adjustments.
V. ADDITIONAL REQUIRED SCHEDULES
-----------------------------
Pursuant to Section 9.1(e) of the Credit Agreement, the additional
required schedules of Consolidated Capital Expenditures and Changes in
Consolidated Working Capital and a statement of the aggregate amount of
each of Holdback Reserves and Tax Reserves are set forth in Schedule II
-----------
hereto and incorporated by this reference, each certified as true and
correct by the below Authorized Representative.
VI. APPLICABLE MARGIN
-----------------
Effective as of the end of each fiscal quarter of the Borrower (each,
a "Determination Date"), the Applicable Margin for Revolving Loans and each
of the Term Loans are set forth on Schedule III hereto and incorporated
------------
herein by this reference.
IN WITNESS WHEREOF, I have executed this Certificate this day of
---- ------
, .
- --------
By:
--------------------------
Authorized Representative
Name: W. H. Weldon
------------------------
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
WALTER INDUSTRIES, INC.
FINANCIAL COVENANTS
NOVEMBER 30, 1995
SCHEDULE I
<TABLE><CAPTION>
Page 1 of 4
10.1 (a) Fixed Charge Coverage ($ in thousands) Fiscal LTM
Year Six months ended November 30, November 30,
1995 ----------------------------- 1995
----------- 1994 1995 --------------
------------ -------------
<S> <C> <C> <C> <C>
Consolidated net income (loss) $ $ $ $
Plus: Consolidated Net Interest Expense (actual)
Taxes on income
FASB 106 non-cash liability
Net extraordinary and unusual losses/(gains)
Amortization of excess of purchase price
Depreciation and depletion
FASB 121 Changes
Non-recurring Plan of Reorganization charges
---------------------------------------------------
= Consolidated EBITDA
Less: Consolidated Capital Expenditures
--------- ------------- --------- --------
= Numerator
--------- --------- --------- --------
Pro forma Consolidated Interest Expense (attached)
Plus: Required Principal Payments
Dividends Paid
---------------------------------------------------
= Denominator
---------- -------- --------------------------
= Consolidated Fixed Charge Coverage
Covenant
---------
Variance
=========
Compliance Status Yes No
------------ ------------
10.1 (b) Interest Coverage ($ in thousands) Fiscal LTM
Year Six months ended November 30, November 30,
1995 ----------------------------- 1995
------------ 1994 1995 --------------
------------ -------------
Consolidated EBITDA (from 10.1 [a]) $ $ $ $
Divided by:
Pro forma Consolidated Interest Expense
---------
= Consolidated Interest Coverage Ratio
Covenant
---------
Variance
=========
Compliance Status Yes No
-------- ---------------
</TABLE>
<PAGE>
<TABLE><CAPTION>
WALTER INDUSTRIES, INC.
FINANCIAL COVENANTS
NOVEMBER 30, 1995
SCHEDULE I
Page 2 of 4
<S> <C> <C>
10.1 (c) Leverage Ratio ($ in thousands)
(Measured Quarterly) November 30,
1995
-------------
Consolidated Indebtedness (Pro Forma Basis):
Revolver Outstanding $
Plus: Term Loan A Outstandings
Term Loan B Outstandings
Permitted Receivables Securitization Outstandings
Capital Leases and Other
---------
= Consolidated Indebtedness (Numerator)
Divided by: Consolidated EBITDA (Denominator)
(4 Consecutive quarters)
---------
= Consolidated Leverage Ratio
Covenant
---------
Variance
=========
Compliance Status Yes No
------- --------
10.4 (g) Purchase money Indebtedness secured by
Liens described by 10.3 (i)
Actual
Covenant
------------
Variance
============
Compliance Status Yes No
------- -------
10.4 (j) Indebtedness arising from Rate Hedging
Obligations for Borrower and Restricted
Subsidiaries (Notional Amount)
Actual
Covenant
------------
Variance
============
Compliance Status Yes No
-------- -------
10.4 (k) Capital Leases in aggregate principal amount
Actual
Covenant
------------
Variance
============
Compliance Status Yes No
------- -------
</TABLE>
<PAGE>
<TABLE><CAPTION>
WALTER INDUSTRIES, INC.
FINANCIAL COVENANTS
NOVEMBER 30, 1995
SCHEDULE I
Page 3 of 4
<S> <C> <C>
10.4 (1) Additional unsecured Indebtedness not
otherwise defined in 10.4(a) - (k) November 30,
1995
-------------
Actual $
Covenant
-----------
Variance
===========
Compliance Yes No
------------- ---------
10.6 (g) Net Cash Advances to Unrestricted Subsidiaries
Net Cash Advances to Unrestricted Subsidiaries:
Aggregate outstanding principal amount of loans &
advances made after the Closing Date by Borrower
or any Restricted Subsidiaries to the Not applicable
Unrestricted Subsidiaries
Less: Aggregate outstanding principal amount of Subordinated
Payables arising after the Closing Date
Covenant
Variance
Compliance Status Yes No
-------- ---------
10.6 (k) Loans and advances to employees in ordinary
course of business of the Borrower and its
subsidiaries
Actual $
Covenant
----------
Variance
==========
Compliance Status Yes No
--------- ---------
10.6 (l) Additional Investments (including acquisitions
but excluding intercompany advances between
the Borrower and Restricted Subsidiaries)
Actual $
Covenant: ($20,000,000 + Cumulative Excess Cash Flow)
-----------
Variance $
===========
Compliance Status Yes No
-------- ---------
</TABLE>
<PAGE>
<TABLE><CAPTION>
WALTER INDUSTRIES, INC.
FINANCIAL COVENANTS
NOVEMBER 30, 1995
SCHEDULE I
Page 4 of 4
<S> <C> <C> <C> <C>
10.8 (b) Restricted Payments
Commencing on June 1, 1996:
Total Restricted Payments
Covenant (based on Consolidated Not applicable
Leverage Ratio)
Variance
Compliance Status Yes No
------- -------
10.12 Lease Payments ($ in thousands) Fiscal LTM
Year Six months ended November 30, November 30,
1995 ----------------------------- 1995
----------- 1994 1995 --------------
------------ -------------
Actual $ $ $ $
Covenant
---------
Variance $
=========
Compliance Status Yes No
-------- --------
</TABLE>
<PAGE>
<TABLE><CAPTION>
WALTER INDUSTRIES, INC.
FINANCIAL COVENANTS
NOVEMBER 30, 1995
SCHEDULE II
9.1 (e)(i) Schedule of Consolidated Capital For the Quarter Ended
------------------------------------------------------
Expenditures (Measured from Year-end) Aug. 31, Nov. 30, Feb. 29, May 31,
($ in thousands) 1995 1995 1996 1996 Total
------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Consolidated Capital Expenditures $ $ $ $ $
<CAPTION>
9.1 (e)(ii) Schedule of changes in Consolidated May 31, November 30,
Working Capital 1995 1995 Change
-------- -------- --------
<S> <C> <C> <C>
Consolidated Current Assets
Accounts Receivable - Trade $ $ $
Accounts Receivable - Other
Inventories
Prepaid Expenses
Other Current Assets
--------- --------- ---------
Current Assets
---------------------------------------
Consolidated Current Liabilities
Short-Term Notes Payable
Current Maturities of Long-term Debt
Accounts Payable
Accrued Expenses
Taxes Payable
Other Current Liabilities
--------- --------- ---------
Current Liabilities
--------- --------- ---------
Consolidated Working Capital $ $ $
========= ========= =========
Nov.30
1995
------
9.1 (e)(iii) Statement of Aggregate Amount of Holdback Reserves $
======
Nov. 30,
1995
------
9.1(e)(iii) Statement of Aggregate Amount of Tax Reserves $
======
</TABLE>
<PAGE>
<TABLE><CAPTION>
WALTER INDUSTRIES, INC.
Calculation of Applicable Margin
At NOVEMBER 30, 1995
SCHEDULE III
<S> <C> <C>
Applicable Margin for
Eurodollar Rate Loans
Consolidated -------------------------
Leverage Ratio Term Revolver and
(10.1 [c]) Loan B Term Loan A
------------- -------------------------
> 3.50:1.00 2.25% 1.75%
> 3.00:1.00 2.00% 1.50%
> 2.50:1.00 2.00% 1.25%
> 2.00:1.00 2.00% 1.00%
> 2.00:1.00 2.00% 0.75%
Actual 2.75:1.00 2.00% 1.25%
---------------------------------------
Rate Change
Status No No rate change
--------------------------------------------
</TABLE>
<PAGE>
EXHIBIT K
Form of Facility Guaranty for Subsidiaries
THIS GUARANTY AND SURETYSHIP AGREEMENT (the "Guaranty Agreement" or
the "Guaranty"), dated as of __________ __, ____, is made by each of the
undersigned (each a "Guarantor" and collectively the "Guarantors") to
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association,
as Administrative Agent, Documentation Agent and Syndication Agent (the
"Agent") for each of the lenders now or hereafter party to the Credit
Agreement (as defined below) (each a "Lender" and collectively the
"Lenders").
W I T N E S S E T H:
-------------------
WHEREAS, the Agent and the Lenders have agreed to provide to Walter
Industries, Inc., a Delaware corporation (the "Borrower") two term loan
facilities, a revolving credit facility and letter of credit and swing line
subfacilities pursuant to the terms of that certain Credit Agreement dated
as of January 22, 1996 among the Borrower, the Agent and the Lenders (as
from time to time amended, modified or supplemented, the "Credit
Agreement"); and
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the
Borrower; and
WHEREAS, as a condition to entering into the Credit Agreement and
continuing to make any loans or advances or to issue letters of credit
thereunder, each Guarantor is required to guarantee to the Agent and the
Lenders payment of the Borrower's Liabilities (as hereinafter defined) in
accordance with the terms of this Agreement; and
WHEREAS, each Guarantor will materially benefit from the loans and
advances to be made, and the letters of credit to be issued, under the
Credit Agreement, and each Guarantor is willing to enter into this Guaranty
to provide an inducement for the Lenders and the Agent to continue to make
loans and advances, and to issue letters of credit, under the Credit
Agreement.
<PAGE>
NOW, THEREFORE, in order to induce the Lenders and the Agent to make
loans and advances to the Borrower, and to issue letters of credit for the
account of the Borrower, under the Credit Agreement, each Guarantor agrees
as follows:
10. Definitions. All capitalized terms not otherwise defined herein
-----------
shall have the meanings ascribed to such terms in the Credit Agreement.
11. Guaranty. Each Guarantor hereby jointly and severally,
--------
unconditionally, absolutely, continually and irrevocably guarantees to the
Agent and the Lenders the payment and performance in full of the Borrower's
Liabilities (as defined below). For all purposes of this Guaranty
Agreement, "Borrower's Liabilities" means: (a) the Borrower's prompt
payment in full, when due or declared due and at all such times, of all
Obligations and all other amounts pursuant to the terms of the Credit
Agreement, the Notes, and all other Loan Documents executed in connection
with the Credit Agreement heretofore, now or at any time or times hereafter
owing, arising, due or payable from the Borrower to the Lenders, including
without limitation principal, interest, premium or fee (including, but not
limited to, loan fees and attorneys' fees and expenses); and (b) the
Borrower's prompt, full and faithful performance, observance and discharge
of each and every agreement, undertaking, covenant and provision to be
performed, observed or discharged by the Borrower under the Credit
Agreement and all other Loan Documents executed in connection therewith.
Each Guarantor's obligations to the Agent and the Lenders under this
Guaranty Agreement are hereinafter collectively referred to as the
"Guarantors' Obligations"; provided, however, that the liability of each
-------- -------
Guarantor with respect to the Guarantors' Obligations shall not exceed at
any time the Maximum Amount (as hereinafter defined). The "Maximum Amount"
means the greater of (X) the aggregate amount of all Advances to such
Guarantor made directly or indirectly with the proceeds of Loans and not
theretofore repaid by such Guarantor or (Y) 95% of (i) the fair salable
value of the assets of such Guarantor as of the date hereof minus (ii) the
total liabilities of such Guarantor (including contingent liabilities, but
excluding liabilities of such Guarantor under this Guaranty and any other
Loan Documents executed by such Guarantor) as of the date hereof; provided
--------
further, however, that if the calculation of the Maximum Amount in the
- ------- -------
manner provided above as of the date payment is required of such Guarantor
pursuant to this Guaranty would result in a greater positive number, then
the Maximum Amount shall be deemed to be such greater positive number.
<PAGE>
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable for the Borrower's Liabilities.
12. Payment. If the Borrower shall default in payment or performance
-------
of any Borrower's Liabilities, whether principal, interest, premium, fee
(including, but not limited to, loan fees and attorneys' fees and
expenses), or otherwise, when and as the same shall become due, whether
according to the terms of the Credit Agreement, by acceleration, or
otherwise, or upon the occurrence of any other Event of Default under the
Credit Agreement that has not been cured or waived, then each Guarantor,
upon demand thereof by the Agent or its successors or assigns, will AS OF
THE DATE OF THE AGENT'S DEMAND fully pay to the Agent, for the benefit of
the Lenders, subject to any restriction set forth in Section 2 hereof, an
---------
amount equal to all Guarantor's Obligations then due and owing.
13. Unconditional Obligations. This is a guaranty of payment and not
-------------------------
of collection. The Guarantors' Obligations under this Guaranty Agreement
shall be joint and several, absolute and unconditional irrespective of the
validity, legality or enforceability of the Credit Agreement, the Notes or
any other Loan Document or any other guaranty of the Borrower's
Liabilities, and shall not be affected by any action taken under the Credit
Agreement, the Notes or any other Loan Document, any other guaranty of the
Borrower's Liabilities, or any other agreement between the Agent or the
Lenders and the Borrower or any other Person, in the exercise of any right
or power therein conferred, or by any failure or omission to enforce any
right conferred thereby, or by any waiver of any covenant or condition
therein provided, or by any acceleration of the maturity of any of the
Borrower's Liabilities, or by the release or other disposal of any security
for any of the Borrower's Liabilities, or by the dissolution of the
Borrower or the combination or consolidation of the Borrower into or with
another entity or any transfer or disposition of any assets of the Borrower
or by any extension or renewal of the Credit Agreement, any of the Notes or
any other Loan Document, in whole or in part, or by any modification,
alteration, amendment or addition of or to the Credit Agreement, any of the
Notes or any other Loan Document, any other guaranty of the Borrower's
Liabilities, or any other agreement between the Agent or the Lenders and
the Borrower or any other Person, or by any other circumstance whatsoever
(with or without notice to or knowledge of any Guarantor) which may or
might in any manner or to any extent vary the risks of any Guarantor, or
might otherwise constitute a legal or equitable discharge of a surety or
guarantor; it being the purpose
<PAGE>
and intent of the parties hereto that this Guaranty Agreement and the
Guarantors' Obligations hereunder shall be absolute and unconditional under
any and all circumstances and shall not be discharged except by payment as
herein provided.
14. Currency and Funds of Payment. Each Guarantor hereby guarantees
-----------------------------
that the Guarantors' Obligations will be paid in lawful currency of the
United States of America and in immediately available funds, regardless of
any law, regulation or decree now or hereafter in effect that might in any
manner affect the Borrower's Liabilities, or the rights of the Agent or any
Lender with respect thereto as against the Borrower, or cause or permit to
be invoked any alteration in the time, amount or manner of payment by the
Borrower of any or all of the Borrower's Liabilities.
15. Events of Default. In the event that (a) there shall occur an
-----------------
Event of Default under the Credit Agreement; (b) any default shall occur in
the payment of amounts due hereunder; or (c) any other default shall occur
hereunder which remains uncured or unwaived for a period of thirty (30)
days (each of the foregoing an "Event of Default" hereunder); then
notwithstanding any collateral available to the Agent or the Lenders from
the Borrower or any Guarantor or any other guarantor of the Borrower's
Liabilities, or any other party, at the Agent's election and without notice
thereof or demand therefor, so long as such Event of Default shall be
continuing, the Guarantors' Obligations shall immediately become due and
payable.
16. Suits. Each Guarantor from time to time shall pay to the Agent
-----
for the benefit of the Lenders, on demand, at the Agent's place of business
set forth in the Credit Agreement or such other address as the Agent shall
give notice of to the Guarantor, the Guarantors' Obligations as they become
or are declared due, and in the event such payment is not made forthwith,
the Agent or the Lenders or any of them may proceed to suit against any one
or more or all of the Guarantors. At the Agent's election, one or more and
successive or concurrent suits may be brought hereon by the Agent against
any one or more or all of the Guarantors, whether or not suit has been
commenced against the Borrower, any other guarantor of the Borrower's
Liabilities, or any other Person and whether or not the Agent or any Lender
has taken or failed to take any other action to collect all or any portion
of the Borrower's Liabilities.
17. Set-Off and Waiver. Each Guarantor waives any right to assert
------------------
against the Agent
<PAGE>
and the Lenders as a defense, counterclaim, set-off or cross claim, any
defense (legal or equitable) or other claim which such Guarantor may now or
at any time hereafter have against the Borrower, the Agent or the Lenders,
without waiving any additional defenses, set-offs, counterclaims or other
claims otherwise available to such Guarantor. If at any time hereafter the
Agent or any Lender employs counsel for advice or other representation to
enforce the Guarantors' Obligations that arise out of an Event of Default,
then, in any of the foregoing events, all of the reasonable attorneys' fees
arising from such services and all expenses, costs and charges in any way
or respect arising in connection therewith or relating thereto shall be
jointly and severally paid by the Guarantors to the Agent, for the benefit
of the Lenders, on demand.
18. Waiver; Subrogation.
-------------------
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement;
(ii) the Lenders' heretofore, now or from time to time hereafter loaning
monies or giving or extending credit to or for the benefit of the Borrower,
whether pursuant to the Credit Agreement, the Notes or the other Loan
Documents, or any amendments, modifications, or supplements thereto, or
replacements or extensions thereof; (iii) the Agent, the Lenders or the
Borrower heretofore, now or at any time hereafter, obtaining, amending,
substituting for, releasing, waiving or modifying the Credit Agreement, the
Notes or any other Loan Documents; (iv) presentment, demand, notices of
default, non-payment, partial payment and protest; (v) the Agent or the
Lenders heretofore, now or at any time hereafter granting to the Borrower
(or any other party liable to the Lenders on account of the Borrower's
Liabilities) any indulgence or extensions of time of payment of the
Borrower's Liabilities; and (vi) the Agent or the Lenders heretofore, now
or at any time hereafter accepting from the Borrower or any other person,
any partial payment or payments on account of the Borrower's Liabilities or
any collateral securing the payment thereof or the Agent settling,
subordinating, compromising, discharging or releasing the same in whole or
in part. Each Guarantor agrees that the Agent and each Lender may
heretofore, now or at any time hereafter do any or all of the foregoing in
such manner, upon such terms and at such times as the Agent and each
Lender, in its sole and absolute discretion, deems advisable, without in
any way or respect impairing, affecting, reducing or releasing such
Guarantor from the Guarantors' Obligations, and each Guarantor hereby
consents to each and all of the foregoing events or occurrences.
<PAGE>
(b) Each Guarantor hereby agrees that payment or performance by such
Guarantor of the Guarantors' Obligations under this Guaranty Agreement may
be enforced by the Agent on behalf of the Lenders upon demand by the Agent
to such Guarantor without the Agent being required, each Guarantor
expressly waiving any right it may have to require the Agent, to
(i) prosecute collection or seek to enforce or resort to any remedies
against the Borrower or any other Guarantor or any other guarantor of the
Borrower's Liabilities, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND
AGREED TO BY EACH GUARANTOR THAT DEMAND UNDER THIS GUARANTY AGREEMENT MAY
BE MADE BY THE AGENT, AND THE PROVISIONS HEREOF ENFORCED BY THE AGENT,
EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS
CONTINUING UNDER THE CREDIT AGREEMENT, or (ii) seek to enforce or resort to
any remedies with respect to any security interests, Liens or encumbrances
granted to the Agent by the Borrower or any other Person on account of the
Borrower's Liabilities or any guaranty thereof. Neither the Agent nor any
Lender shall have any obligation to protect, secure or insure any of the
foregoing security interests, Liens or encumbrances on the properties or
interests in properties subject thereto. The Guarantors' Obligations shall
in no way be impaired, affected, reduced, or released by reason of the
Agent's or any Lender's failure or delay to do or take any of the acts,
actions or things described in this Guaranty Agreement including, without
limiting the generality of the foregoing, those acts, actions and things
described in this Section 9.
---------
(c) Each Guarantor further agrees with respect to this Guaranty
Agreement that such Guarantor shall have no right of subrogation,
reimbursement or indemnity, nor any right of recourse to security for the
Borrower's Liabilities until such time as all of the Obligations of the
Borrower are fully, finally and irrevocably paid and satisfied.
19. Effectiveness; Enforceability. This Guaranty Agreement shall be
-----------------------------
effective as of the date of the initial Advance under the Credit Agreement,
and shall continue in full force and effect until the Borrower's
Obligations (other than obligations in the nature of continuing indemnities
and liability for expenses which are not yet due and payable, which shall
survive as an obligation guarantied by the Guarantors hereunder
notwithstanding any termination hereof) are fully, finally and irrevocably
paid and satisfied, the Lenders shall be under no further obligation to
advance funds or issue Letters of Credit and there shall be no Letters of
Credit outstanding. The Agent shall give each Guarantor
<PAGE>
written notice of such termination at each Guarantor's address set forth
below such Guarantor's execution hereof on the signature pages of this
Guaranty or such other address for the Guarantor as such Guarantor shall
give notice to the Agent in the manner provided for the giving of notices
under the Credit Agreement (the "Guarantor's Address"). This Guaranty
Agreement shall be binding upon and inure to the benefit of each Guarantor,
the Agent and the Lenders and their respective successors and assigns.
Notwithstanding the foregoing, no Guarantor may, without the prior written
consent of the Agent, assign any rights, powers, duties or obligations
hereunder. Any claim or claims that the Agent and the Lenders may at any
time hereafter have against any Guarantor under this Guaranty Agreement may
be asserted by the Agent or any Lender by written notice directed to any
one or more or all of the Guarantors at the applicable Guarantor's Address.
20. Representations and Warranties. Each Guarantor warrants and
------------------------------
represents to the Agent for the benefit of the Lenders that it is duly
authorized to execute, deliver and perform this Guaranty Agreement, that
this Guaranty Agreement is legal, valid, binding and enforceable against
such Guarantor in accordance with its terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles; and that such Guarantor's execution, delivery
and performance of this Guaranty Agreement do not violate or constitute a
breach of any of its charter or governance documents or any agreement to
which such Guarantor is a party, or any law, order, rule, regulation,
decree or award of any applicable Governmental Authority or arbitral body.
21. Expenses. Each Guarantor agrees to be liable for the payment of
--------
all reasonable fees and expenses, including attorney's fees, incurred by
the Agent or any Lender in connection with the enforcement of this Guaranty
Agreement.
22. Reinstatement. Each Guarantor agrees that this Guaranty
-------------
Agreement shall continue to be effective or be reinstated, as the case may
be, at any time payment received by the Agent under the Credit Agreement or
any other Loan Document or this Guaranty Agreement is rescinded or must be
restored for any reason.
23. Counterparts. This Guaranty 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
<PAGE>
appears thereon, and all of which shall constitute one and the same
instrument.
24. Reliance. Each Guarantor represents and warrants to the Agent,
--------
for the benefit of the Agent and the Lenders, that: (a) such Guarantor has
adequate means to obtain from Borrower, on a continuing basis, information
concerning Borrower and Borrower's financial condition and affairs and has
full and complete access to Borrower's books and records; (b) such
Guarantor is not relying on the Agent, any Co-Agent or any Lender, its or
their employees, agents or other representatives, to provide such
information, now or in the future; (c) such Guarantor is executing this
Guaranty Agreement freely and deliberately, and understands the obligations
and financial risk undertaken by providing this Guaranty; (d) such
Guarantor has relied solely on the Guarantor's own independent
investigation, appraisal and analysis of Borrower and Borrower's financial
condition and affairs in deciding to provide this Guaranty and is fully
aware of the same; and (e) such Guarantor has not depended or relied on the
Agent, any Co-Agent or any Lender, its or their employees, agents or
representatives, for any information whatsoever concerning Borrower or
Borrower's financial condition and affairs or other matters material to
such Guarantor's decision to provide this Guaranty or for any counselling,
guidance, or special consideration or any promise therefor with respect to
such decision. Each Guarantor agrees that neither the Agent, any Co-Agent
nor any Lender has any duty or responsibility whatsoever, now or in the
future, to provide to any Guarantor any information concerning Borrower or
Borrower's financial condition and affairs, other than as expressly
provided herein, and that, if such Guarantor receives any such information
from the Agent, any Co-Agent or any Lender, its or their employees, agents
or other representatives, such Guarantor will independently verify the
information and will not rely on the Agent, any Co-Agent or any Lender, its
or their employees, agents or other representatives, with respect to such
information.
25. Governing Law.
-------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY
<PAGE>
AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF HILLSBOROUGH, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE GUARANTOR'S ADDRESS (AS HEREIN
DEFINED) FOR EACH GUARANTOR AND AT THE ADDRESS OF SUCH OTHER PARTY
PROVIDED IN SECTION 12.02 OF THE CREDIT AGREEMENT OR BY ANY OTHER
-------------
METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN
THE STATE OF FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
--------------- ---
PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF
SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS
<PAGE>
WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE,
OR OTHERWISE, MAY BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY
AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Guaranty
Agreement on the day and year first written above.
GUARANTORS:
---------------------------------------------
WITNESS: By:
-----------------------------------------
Name:
---------------------------------------
______________________ Title:
---------------------------------
______________________ Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Telefacsimile: / -
---------------------------------------------
WITNESS: By:
-----------------------------------------
Name:
---------------------------------------
______________________ Title:
---------------------------------
______________________ Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Telefacsimile: / -
<PAGE>
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as
Agent for the Lenders
By:
------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exhibit 99
CONTACT: David L. Townsend
Walter Industries, Inc.
(813) 871-4448
FOR IMMEDIATE RELEASE
---------------------
WALTER INDUSTRIES COMPLETES $550 MILLION FINANCING; REDEEMS HIGH COST
SENIOR NOTES
Tampa, FL, January 23, 1996--Walter Industries (Nasdaq: WLTR)
announced it has completed a planned $550 million bank financing and
redeemed $490 million of Senior Notes Due 2000.
In a move to substantially lower interest costs, the company replaced
the 12.19% Senior Notes and a $150 million working capital facility with
bank credit facilities currently carrying a blended interest rate of
approximately 7%.
G. Robert Durham, Walter Industries' chairman and chief executive
officer, said "With elimination of the high cost senior debt, we have
accomplished a primary objective of our management and board since the
company's emergence from Chapter 11 last March. The new facilities will
significantly enhance future bottom line results." Annual interest savings
will exceed $20 million, or $.25 per share, Durham said.
The financing, led by NationsBank, consisted of a $365 million
revolving credit facility, a six-year $125 million term loan and a seven-
year $60 milllion term loan.
# # # # # #
Note to Editor: Walter Industries, Inc., based in Tampa, Florida, is a
- ---------------
diversified, multi-subsidiary corporation with major interests in two
business areas: homebuilding and financing and industrial operations.
Walter Industries and its subsidiaries employ more than 7,800 at
manufacturing facilities and sales offices throughout the United States,
generating sales and revenues in excess of $1.4 billion annually.
