<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Commission
Ended August 31, 1996 File Number 0-288
ROBBINS & MYERS, INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
OHIO 31-0424220
- --------------------------- ---------------------------
(State of incorporation) (I.R.S. employer
identification number)
1400 Kettering Tower, Dayton, Ohio 45423
- ----------------------------------------- ------------------
Registrant's telephone number, including area code:
(937) 222-2610
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------------- --------------------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
--------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirement for at least the past 90 days. Yes [x] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
1
<PAGE> 2
At the close of business on October 22, 1996:
Number of Common Shares, without
par value, outstanding....................... 10,726,032
Aggregate market value of Common
Shares, without par value, held
by non-affiliates of the Company............. $161,639,753
DOCUMENT INCORPORATED BY REFERENCE
Robbins & Myers, Inc., Proxy Statement, dated November 13, 1996, for
its Annual Meeting of Shareholders on December 11, 1996, definitive copies of
the foregoing have been filed with the Commission. Only such portions of the
Proxy Statement as are specifically incorporated by reference under Part III of
this Report shall be deemed filed as part of this Report.
2
<PAGE> 3
ITEM 1. BUSINESS.
- ------- ---------
BACKGROUND
Robbins & Myers, Inc., an Ohio corporation (the "Company"), designs,
manufactures and markets on a global basis high-performance, specialized fluids
management products for the process industries. The Company's four product lines
are glass-lined reactor and storage vessels (38% of fiscal 1996 sales),
progressing cavity products (30%), mixing and turbine agitation equipment (22%),
and related products, such as engineered systems, fluoropolymer products, and
valves (10%). These percentages for fiscal 1996 were substantially the same as
in fiscal 1995.
The Company has achieved leading market shares in each of its main
product lines: the Company believes that it is first worldwide in glass-lined
storage and reactor vessels, first in North America in progressing cavity
products, and second worldwide in mixing and turbine agitation equipment. The
Company also believes that its principal brand names - Pfaudler(R), Moyno(R)
and Chemineer(R) - are well-known in the marketplace and are associated with
quality products and extensive customer support, including product application
engineering, state-of-the-art customer test facilities and strong aftermarket
service and support.
Since February 1992, the Company has completed eight acquisitions as
part of a strategy to leverage its fluid management expertise, its leadership in
progressing cavity technology, and its operating capabilities into a portfolio
of highly-engineered, fluids management products and services. The most
significant of these acquisitions occurred in June 1994 when the Company
acquired its Pfaudler(R), Chemineer(R) and Edlon(R) business units. These
acquisitions more than tripled the sales of the Company and provided leading
worldwide positions in two core product lines.
The Company markets it products to the process industries - industries
in which the pumping, mixing, treatment, chemical processing, measurement and
containment of fluids and particulates are important elements in their
production processes. The principal sectors of the process industries served by
the Company are specialty chemicals, pharmaceuticals, oil and gas recovery,
wastewater treatment, food and beverage and pulp and paper.
The Company seeks to balance its mix of products and services and
maintain overall stability in its operating results principally through
increased levels of higher margin aftermarket sales, increased international
presence with manufacturing facilities in ten countries and end market
diversification. In fiscal 1996, aftermarket sales to the Company's customers,
as well as customers of its competitors, accounted for approximately 35% of
total sales and international sales accounted for approximately 41% of total
sales.
The Company seeks to continue to grow by (i) capitalizing on the
inherent growth of its end markets, particularly high-growth markets such as oil
and gas recovery, pharmaceuticals, and food additives and supplements, which
collectively account for over 40% of the Company's sales; (ii) exploiting
acquisition opportunities for industry consolidation within existing markets,
specifically the highly fragmented positive displacement pump and industrial
mixer industries; (iii) expanding geographically, both internally and through
acquisitions, into high-growth emerging markets such as Asia-Pacific Rim and
South America; and (iv) establishing new product lines through acquisitions of
related fluids management businesses such as valves, filters and grinders.
3
<PAGE> 4
The Company operates in one industry segment--fluids management.
Information concerning the Company's net sales, operating income and
identifiable assets by geographic area and export sales for the years ended
August 31, 1996, 1995 and 1994 is set forth in the "Information by Geographic
Area" note to the Consolidated Financial Statements included at Item 8 and is
incorporated herein by reference.
ACQUISITIONS
The Company has achieved substantial sales growth over the past several
years. The sales growth from 1992 through 1996 primarily was driven by eight
acquisitions completed since February 1992 at an aggregate purchase price of
approximately $160.0 million:
<TABLE>
<CAPTION>
Fiscal Prchase
Year Principal Price
Acquired Business Products (millions)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1992 Prochem Mixing Equipment, Inc. Large industrial mixers $ 8.0
1993 JWI Mixer Line Portable industrial mixers 2.2
1994 Chemineer, Inc. Large industrial mixers 78.4
1994 Pfaudler, Inc. Glass-lined vessels 50.3
1994 Edlon, Inc. Fluoropolymer coatings 5.5
1995 Pharaoh Corporation Glass-lined vessel parts and 2.1
aftermarket services
1995 Cannon Process Equipment Co., Ltd Glass-lined vessels 5.4
1995 Universal Glasteel Equipment Reconditioned glass-lined 7.0
reactor and storage vessels
</TABLE>
MARKETS SERVED
The Company markets its fluids management products and services to the
process industries - industries in which the pumping, mixing, treatment,
chemical processing, measurement and containment of fluids and particulates are
important elements in their manufacturing or production processes. The principal
sectors of the process industries served by the Company are oil and gas
recovery, pharmaceuticals, specialty chemicals, food and beverage, pulp and
paper and wastewater treatment.
The companies included in these sectors of the process industries tend
to be large, often with global operations. Capital expenditures for equipment in
each sector are driven by a variety of factors, such as market growth rates, new
product introduction, globalization and cost control. Economic cycles tend to
differ among sectors, and the Company believes that general economic downturns
have less of an impact on capital expenditures in the pharmaceuticals, oil and
gas recovery and food and beverage industries.
4
<PAGE> 5
Oil and Gas Recovery. The Company's sales to the oil and gas recovery
market include (i) progressing cavity down-hole pumps used in lifting oil to the
surface and dewatering of gas wells; (ii) progressing cavity power sections used
to drive the drilling element in directional drilling operations; and (iii)
aftermarket products and services such as replacement power sections, relining
of down-hole pump stators and replacement of rotors. The Company believes its
growth prospects primarily are driven by the trend in the industry to adopt the
latest oil and gas technologies, including 3-D seismic analysis which, in
conjunction with directional drilling methods and versatile down-hole pumps,
facilitates recovery of oil and gas from difficult to reach formations. In
addition, changing geopolitics have resulted in more countries opening their
borders to privatization in the exploration and development of their oil and gas
properties. In response to increased demand within the oil and gas recovery
market and to maintain its technological advantages, the Company currently is
developing a facility in Houston, Texas dedicated to the production of down-hole
pumps and power drilling sections. Production activities at this facility are
scheduled to begin in fiscal 1997.
Pharmaceuticals. The Company's products perform critical functions in
the production of pharmaceuticals by providing temperature, agitation and
pressure-controlled environments for complex chemical reactions which require
exact formulations, repeatability and high levels of purity. In addition, the
Company's products are reconditioned on a regular basis because of the severe
operating conditions to which the Company's products are exposed and the need to
maintain a pure processing environment. The Company believes that it will
benefit from the long-term trend of high levels of capital expenditure within
the pharmaceuticals industry. This trend is driven by the significant industry
growth rates from globalization of manufacturing facilities to service emerging
markets and development of innovative drugs which often require new process
facilities or retrofit of existing facilities.
Specialty Chemicals. Substantially all of the Company's products sold
to the chemical industry consist of specialized equipment and aftermarket
products and services for use in the batch processing of specialty chemicals
rather than for use in the continuous processing of commodity chemicals. Unlike
commodity chemicals, such as basic petrochemicals and inorganic commodities,
specialty chemicals are downstream products, such as intermediate products,
directed to the pharmaceuticals industry, which are more highly processed and
refined. The Company believes that, because producers of specialty chemicals are
value-added, strategic suppliers to their customers, pricing pressure and
volatility are less severe than in other segments of the chemical industry.
Other Markets. The Company's industrial mixer and pump products also
serve the food and beverage, pulp and paper and wastewater treatment industries.
Long-term growth in these markets should approximate the growth in general
economic activity, with certain segments such as food additives and supplements
and international markets growing faster than the overall domestic market.
PRODUCTS
Glass-Lines Storage and Reactor Vessels. The Company's Pfaudler unit
manufactures and sells glass-lined reactor and storage vessels and related
equipment for use in the pharmaceuticals and specialty chemicals industries.
Reactor vessels perform critical functions in the production process by
providing a temperature, agitation and pressure controlled environment for often
complex chemical reactions.
5
<PAGE> 6
The Pfaudler unit fabricates steel vessels and bonds glass to the
interior of vessels to form a fused composite, referred to as Glasteel(R), which
provides a vessel in which materials can be processed or stored in an inert,
nonsticking, corrosion-resistant, pressure-controlled environment. Reactor
vessels range in capacities from one to 15,000 gallons, are generally
custom-ordered and designed and can be equipped with various accessories, such
as agitators, instrumentation and baffles. Storage vessels have capacities of up
to 25,000 gallons.
Aftermarket products and services consist of reconditioning and
reglassing reactor vessels, replacement of vessel parts and accessories and
field service.
PRODUCTS PRIMARY MARKETS SERVED
- -------------------------------------------------------------------------------
Glasteel(R) Reactor and Storage Vessels Pharmaceuticals
Glasteel(R) pH Measurement Systems Specialty Chemicals
Cryo-Lock(R) Mixing Systems
Pfaudler(R) Mixer Drives
Pfaudler(R) Conical Dryers and Blenders
Pfaudler vessels are marketed worldwide under the tradename Glasteel(R)
to end-users. The industry is dominated by two major suppliers. Pfaudler
believes that it is currently the largest supplier of vessels, with DeDietrich,
a French manufacturer, being the next largest supplier.
Progressing Cavity Products. Progressing cavity technology is used in
down-hole pumps and power sections for the oil and gas recovery industry, as
well as in other process industries, such as specialty chemicals, food and
beverage, pulp and paper and wastewater treatment. A progressing cavity pump
consists of a high-strength, single helix steel rod (called the rotor) which
rotates in a double-helix, elastomer-lined steel tube (called the stator). The
rotor generates positive displacement in the stator to deliver uniform fluid
flow at rates proportional to the rotational speed of the rotor.
For the oil and gas recovery industry, the Company manufactures and
sells down-hole pumps and power sections used to drive the drilling element in
the drilling of wells. The ability of progressing cavity technology to be used
in severe pumping applications and also as a hydraulic motor has enabled the
Company to become a leader in the development of pumping and directional
drilling products. Moyno(R) down-hole pumps are used primarily to pump heavy
crude oil to the surface and for dewatering gas wells. Moyno(R) down-hole power
sections utilize progressing cavity technology to drive the drilling element in
oil and gas drilling.
For other process industries, the Company markets a wide range of
progressing cavity pumps under the brand names Moyno(R) and R&M(R). Progressing
cavity pumps are versatile as they can be positioned at any angle and can
deliver flow in either direction, without modification or accessories. These
pumps are able to handle fluids ranging from high pressure water and
shear-sensitive materials to heavy, viscous, abrasive, solid-laden slurries and
sludges.
Aftermarket products and services consist of replacement power
sections, relining of the elastomer component of down-hole pump stators and
replacement of rotors.
6
<PAGE> 7
PRODUCTS PRIMARY MARKETS SERVED
- ----------------------------------------------------------------------------
Moyno(R) Down-Hole Pumps Oil and Gas Recovery
Moyno(R) Power Sections for Down-Hole Motors Food and Beverage
R&M(R) Positive Displacement Pumps Pulp and Paper
Moyno(R) Progressing Cavity Pumps Wastewater Treatment
Speciality Chemicals
While the Company believes it is the world leader in the manufacture of
progressing cavity pumps, the market is highly competitive and includes many
different types of similar equipment and a significant number of competitors,
none of which is dominant. The Company is recognized for its high levels of
product quality and attention to customer requirements.
Mixing and Turbine Agitation Equipment. The Company's industrial mixers
and turbine agitation equipment are used in a variety of applications, ranging
from simple storage tank agitation to critical applications in polymerization
and fermentation processes. Industrial mixers are sold under the Chemineer(R),
Valchem(R), Prochem(R) and Kenics(R) brand names.
Chemineer(R) products include a line of high-quality turbine agitators.
These gear-driven agitators are available in various sizes, a wide selection of
mounting methods, and drive ranges from one to 1,000 horsepower. The
Chemineer(R) line also includes top-entry turbine agitators with drive ranges
from one-half to five horsepower, designed for less demanding applications, and
a line of portable gear-driven and direct drive mixers, which can be clamp
mounted to tanks to handle batch mixing needs. The principal markets for
Chemineer(R) products are the specialty chemicals, pharmaceuticals, food and
beverage and wastewater treatment industries.
Prochem(R) industrial mixers are principally belt-driven, side-entry
mixers used primarily in the pulp and paper, mining and mineral processing
industries. Kenics(R) mixers are continuous mixing and processing devices, with
no moving parts, which are used in specialized static mixing and heat transfer
applications.
Aftermarket products and services consist of replacement parts, such as
impellers and gear boxes, as well as field service.
PRODUCTS PRIMARY MARKETS SERVED
- -------------------------------------------------------------------------------
Chemineer(R) Top-and Side Entry Mixers Specialty Chemicals
Chemineer(R) Portable Mixers Wastewater Treatment
Valchem(R) Portable Mixers Food and Beverage
Kenics(R) Static Mixers & Heat Exchangers Pharmaceuticals
Prochem(R) Top- and Side-Entry Mixers Pulp and Paper
Prochem(R) Specialty Mixers
The mixer and agitation equipment industry is highly competitive. Three
companies account for a significant portion of domestic sales, but compete with
the numerous smaller
7
<PAGE> 8
companies. The Company believes that Lightnin, a unit of General Signal
Corporation, has the largest share of the global market, with the Company being
number two in market share. The Company believes that its application
engineering know-how, diverse products, product quality and customer support
allow it to compete effectively in the market place.
Related Products. The Company also manufactures and markets to the
process industries several products which complement its principal products.
These related products include engineered systems, fluoropolymer products and
valves.
The Company's engineered systems group designs and sells fluid
heating/cooling systems used with reactor vessels to control fluid temperature
in the manufacture and processing of pharmaceuticals and speciality chemicals.
The engineered systems group also designs and sells fluid separators, known as
wiped film evaporators. The Company maintains a computer-controlled pilot plant
test facility for use by engineers from the Company and its customers to
determine and evaluate operating parameters in the production and processing of
pharmaceuticals, speciality chemicals and other products.
The Company's Edlon(R) unit manufactures and markets fluoropolymer roll
covers and liners for process equipment, isostatically molded liners for pipe
and flowmeters and vessel and piping accessories. Edlon's(R) products are used
principally in the specialty chemicals industry to provide corrosion-resistant
environments and in the paper industry for release applications.
PRODUCTS PRIMARY MARKETS SERVED
- -----------------------------------------------------------------------------
Pfaudler(R)Engineered Systems Pharmaceuticals
Pfaudler(R)Wiped Film Evaporators Specialty Chemicals
Edlon(R)Custom Linings & Coatings Electronics
Edlon(R)Roll Covering Products Pulp and Paper
Edlon(R)Fluoropolymer Products Wastewater Treatment
RKL(R)Pinch Valves
RKL(R)Pressure Sensors
SALES AND MARKETING
The marketing and sales function in each of the Company's businesses
generally involves outside sales efforts supported by numerous internal sales
personnel, application engineers and, in many cases, the joint utilization of
the Company's test and development facilities by Company and customer engineers.
Distributors and manufacturers' representatives are supported by
Company-maintained regional offices and educational and training programs. The
specialized nature of the Company's products requires multiple methods of
distribution, depending upon product line and end-use application.
Pfaudler(R) glass-lined reactor and storage vessels and accessories are
sold directly to end-users by a Company-employed direct sales force of
approximately 30 persons, approximately 20 of whom are based outside the United
States, and manufacturers' representatives. Pfaudler(R) is particularly focused
on continuing to develop preferred supplier relationships with major
pharmaceuticals companies as they continue to expand their production operations
in emerging markets.
8
<PAGE> 9
Chemineer(R) industrial mixers and agitation equipment are sold
directly through regional sales offices and through a network of approximately
125 domestic and 30 international manufacturers' representatives. The Company
maintains regional sales offices for such equipment in Dayton, Ohio, Houston,
Texas, Toronto, Canada, Singapore, Taiwan and China.
Moyno(R) progressing cavity pumps (other than for oil and gas recovery
applications) are sold worldwide through approximately 55 domestic and 30
international distributors and 40 domestic and 15 international manufacturers'
representatives. The Company maintains 11 regional sales offices for this
equipment.
Sales efforts for Moyno(R) down-hole pumps are directed by Company
product managers who work closely with the Company's principal domestic
distributor, which maintains approximately 90 outlets capable of handling pump
sales. Outside the U.S., down-hole pumps are directly sold by the Company.
Additional distributor relationships are currently being established for these
products in South America, the former Soviet Union, and the Pacific Rim.
Moyno(R) power sections for use in down-hole drilling are sold by a direct sales
force to motor manufacturers and oilfield service companies.
GENERAL
At August 31, 1996, the Company's order backlog was $110.0 million
compared to $107.4 million at the beginning of the year. Within the next twelve
months, the Company expects to ship over 99% of the current backlog. Sales of
the Company's products are not subject to material seasonal fluctuations.
Basic manufacturing raw materials are purchased from various domestic
and foreign vendors. The supply of raw materials and components has been
adequate and available without significant delivery delays. No events are known
or anticipated that would change the sources and availability of raw materials.
The Company owns a number of patents relating to the design and
manufacture of its products. While the Company considers these patents important
to its operations, it believes that the successful manufacture and sale of its
products depend more upon technological know-how and manufacturing skills. The
Company is committed to maintaining high quality manufacturing standards and has
completed ISO certification at several facilities.
During 1996, the Company spent approximately $2.6 million on research
and development activities compared to $2.4 million and $1.4 million in 1995 and
1994, respectively.
Compliance with federal, state and local laws regulating the discharge
of materials into the environment is not anticipated to have any material effect
upon the capital expenditures, earnings or competitive position of the Company.
At August 31, 1996, the Company had approximately 2,460 employees.
Approximately 910 employees were covered by collective bargaining agreements at
various locations. In February 1996, the Company entered into a new three-year
contract covering approximately 250 employees represented by the International
Union of United Automobile, Aerospace and Agricultural Implement Workers of
American (UAW) at the Company's Springfield, Ohio facility. The Company
considers labor relations at each of its locations to be good.
9
<PAGE> 10
ITEM 2. PROPERTIES
FACILITIES
The Company's executive offices are located in Dayton, Ohio. The
executives offices are leased and occupy approximately 15,000 square feet. Set
forth below is certain information relating to the Company's principal operating
facilities.
<TABLE>
<CAPTION>
SQUARE PRODUCT MANUFACTURED OR
LOCATION FOOTAGE OTHER USE OF FACILITY
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
NORTH AND SOUTH AMERICA:
Rochester, New York 500,000 Glass-lined vessels
Springfield, Ohio 272,800 Progressing cavity pumps and pinch valves
Dayton, Ohio 160,000 (1) Turbine agitators and mixers
Houston, Texas 110,000 (2) Down-hole pumps and power sections
Mexico City, Mexico 110,000 Glass-lined vessels
Taubate, Brazil 100,000 Glass-lined vessels
Fairfield, California 60,000 Down-hole pumps and power sections
Avondale, Pennsylvania 50,000 Fluoropolymer products
North Andover, Massachusetts 30,000 (1) Static mixers and heat exchangers
Sao Jose Dos Campos, Brazil 30,000 Air handlers
Rochester, New York 10,000 (1) Parts and field service for glass-lined vessels
EUROPE:
Schwetzingen, Germany 400,000 Glass-lined vessels
Leven, Scotland 240,000 Glass-lined vessels, and fluoropolymer products
Bilston, England 50,000 Parts and reglassing for glass-lined vessels
Derby, England 20,000 (1) Turbine agitators and mixers
Petit-Rechain, Belgium 15,000 Progressing cavity products
Kearsley, England 14,000 Parts and field service for glass-lined vessels
Bolton, England 14,000 Gaskets for glass-lined vessels
Southampton, England 10,000 (1) Assembly operation for progressing cavity pumps
ASIA:
Gujurat, India 350,000 (3) Glass-lined vessels
Suzhou, China 150,000 (4) Glass-lined vessels
Singapore 5,000 (1) Assembly operation for progressing cavity pumps
<FN>
(1) Leased facility.
(2) New facility scheduled to commence operations in January 1997.
(3) Facility of a 40%-owned affiliate.
(4) Facility of a 60%-owned subsidiary.
At August 31, 1996, utilization of plants was approximately 95%.
10
</TABLE>
<PAGE> 11
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
The Company is presently not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
None.
11
<PAGE> 12
EXECUTIVE OFFICERS OF THE REGISTRANT
Maynard H. Murch IV, age 52, has been Chairman of the Board of the
Company since July, 1979 and a director of the Company since 1977. Mr. Murch is
also President and Chief Executive Officer of Maynard H. Murch Co., Inc.
(investments), which is managing general partner of M.H.M. & Co., Ltd.
(investments). Mr. Murch is also Vice President (since June, 1976) of
Parker/Hunter Incorporated (dealer in securities), a successor firm to Murch and
Co., Inc., a securities firm which Mr. Murch had been associated with since
1968.
Daniel W. Duval, age 60, has been President and Chief Executive Officer
of the Company and a director of the Company since December 3, 1986. Prior to
joining the Company, he was President and Chief Operating Officer of
Midland-Ross Corporation (a manufacturer of electrical, electronic and aerospace
products and thermal systems) having held various positions with that company
since 1960.
Gerald L. Connelly, age 54, is Executive Vice President and Chief
Operating Officer of the Company, having been elected to that position on May 1,
1996. He is also President of the Process Industries Group and President of
Pfaudler, Inc. He was President of the Process Industries Group of Eagle
Industries, Inc. from 1993 until joining the Company. Previously, he served as
President of Pulsafeeder, Inc. (metering pumps) for ten years.
George M. Walker, age 59, is Vice President and Chief Financial Officer
of the Company, having been elected to that position in 1972. From 1968 to 1972,
he held various positions with the Company in the areas of finance and
accounting, including the position of Controller. Prior to 1968, he was employed
by the accounting firm of Ernst & Young LLP for eight years.
Howard O. Royer, age 58, is Treasurer of the Company, having been
elected to that position on June 28, 1995. He had previously been employed by
the Company from 1975 to 1985, serving as Treasurer at the time of his
departure. Prior to rejoining the Company, he was employed by Nissan Motor
Manufacturing Corp., USA, most recently holding the position of Vice President,
Finance and Information Systems.
Kevin J. Brown, age 38, is Corporate Controller of the Company, having
been elected to that position on December 12, 1995 after joining the Company on
October 10, 1995. Prior to joining the Company, he was employed by the
accounting firm of Ernst & Young LLP for fifteen years.
Joseph M. Rigot, age 53, is Secretary and General Counsel of the
Company, having been elected to that position in 1990. He has been a partner
with the law firm of Thompson Hine & Flory L.L.P. Dayton, Ohio, for more than
five years.
The term of office of all executive officers of the Company is until
the next Annual Meeting of Directors (December 11, 1996) or until their
respective successors are elected.
12
<PAGE> 13
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
- ------- -----------------------------------------------------
STOCKHOLDER MATTERS
- -------------------
(A) The Company's common shares are traded on the NASDAQ/National
Market System under the symbol ROBN. The prices presented in the following table
are the high and low sales prices for the common shares for the periods
presented as reported in the National Market System.
<TABLE>
<CAPTION>
Dividends
High Low Paid
---------------------------------------------
Fiscal 1996
- -----------
<S> <C> <C> <C>
1st Quarter $17.500 $13.625 $.03750
2nd Quarter 16.500 13.625 .04375
3rd Quarter 23.500 14.750 .04375
4th Quarter 26.500 21.000 .04375
Fiscal 1995
- -----------
1st Quarter $10.250 $8.375 $.03750
2nd Quarter 11.375 8.250 .03750
3rd Quarter 14.250 10.375 .03750
4th Quarter 14.375 12.500 .03750
(B) As of October 22, 1996, the Company had 650 shareholders of record.
Based on requests from brokers and other nominees, the Company estimates there
are an additional 980 shareholders.
(C) Dividends paid on common shares are presented in the table in Item
5(a). The Company's credit agreements include certain covenants which restrict
the Company's payment of dividends. At August 31, 1996, $7,381,000 of retained
earnings was available for the payment of future dividends. With the new debt
agreement signed November 26, 1996, retained earnings available for the payment
of future dividends was reduced to approximately $3,905,000.
13
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
FIVE YEAR FINANCIAL HIGHLIGHTS
<S> <C> <C> <C> <C> <C>
Robbins & Myers, Inc. and Subsidiaries
(in thousands except per share, shareholder and employee data) 1996 1995 (1) 1994 (1) 1993 1992
Operating Results
Net sales $350,964 $302,952 $121,647 $85,057 $75,588
Gross profit 119,030 101,304 44,981 32,761 30,080
Operating expenses 80,272 74,234 28,733 22,171 19,365
Operating income 39,455 26,320 12,102 8,400 8,512
Income before special items 20,338 11,825 6,355 6,178 7,873
Special items, net of tax (2) (813) 1,332 0 (8,018) 0
----------- ----------- ----------- ---------- ---------
Net income (loss) $19,525 $13,157 $6,355 $(1,840) $7,873
=========== =========== =========== ========== =========
Depreciation and amortization $13,877 $12,401 $4,594 $2,798 $2,442
Capital expenditures 16,453 10,133 6,798 2,579 4,749
Cash flow from operating activities 32,060 33,017 14,601 7,533 6,487
Ending backlog 109,921 107,423 73,944 20,248 12,210
Financial Condition
Total assets $300,340 $270,407 $258,130 $84,636 $74,318
Total debt 73,533 67,901 83,790 971 939
Shareholders' equity 91,437 69,939 57,039 52,342 56,310
Total capitalization 164,970 137,840 140,829 53,313 57,249
Performance Statistics
Percent of net sales
Gross profit 33.9% 33.4% 37.0% 38.5% 39.8%
Operating expenses 22.9 24.5 23.6 26.1 25.6
Operating income 11.2 8.7 9.9 9.9 11.3
Income before special items 5.8 3.9 5.2 7.3 10.4
Net income 5.6 4.3 5.2 (2.2) 10.4
Debt as a % of total capitalization 44.6 49.3 59.5 1.8 1.6
Return on shareholders' equity (3) 25.2 18.6 11.6 11.4 14.9
Price/earnings ratio at August 31 12.5:1 11.3:1 15.5:1 NA 10.3:1
Per Share Data (4)
Income (loss) per share, fully diluted:
Before special items $1.83 $1.09 $0.61 $0.59 $0.75
Special items, net of tax (2) (0.07) 0.12 0.00 (0.76) 0.00
----------- ----------- ----------- ---------- ---------
Net income (loss) per share $1.76 $1.21 $0.61 ($0.17) $0.75
=========== =========== =========== ========== =========
Shareholders' equity (book value) $8.63 $6.72 $5.55 $5.14 $5.53
Dividends declared 0.1688 0.1500 0.1438 0.1188 0.0938
Market price of common stock
High $26 1/2 $14 3/8 $10 3/8 $10 3/4 $10 3/4
Low 13 5/8 8 1/4 7 3/4 6 1/2 7 1/4
Close 22 13 23/32 9 3/8 9 3/8 7 3/4
Other Data
Weighted average common shares outstanding, fully diluted (4) 11,107 10,874 10,504 10,514 10,498
Number of shareholders (5) 1,632 1,520 1,098 1,295 1,370
Number of employees 2,459 2,337 2,226 615 622
<FN>
Notes to Five-Year Financial Highlights
(1) 1995 reflects the acquisition of Pharaoh and Cannon and 1994 reflects the
acquisition of Pfaudler, Chemineer and Edlon as discussed in the Business
Acquisitions note.
(2) Special items are: 1996 and 1995 extinguishment of debt and 1993 cumulative effects of accounting changes.
(3) Calculated using Income Before Special Items.
(4) Prior year information adjusted to reflect 2 for 1 stock split effective July 31, 1996.
(5) As of October 22, 1996, the Company had 650 shareholders of record. Based on requests from brokers and other nominees,
the Company estimates there are an additional 980 shareholders.
</TABLE>
14
<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------- -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
- -----------------------------------
OVERVIEW
Since June 1994, the Company has completed six acquisitions that have
significantly changed its business and financial profile. As a result of the
acquisitions, the Company accomplished critical elements of its strategy to
expand its capabilities to serve the fluids management needs of its customers on
a global basis. The results of the most significant of the acquired companies,
Pfaudler, Chemineer and Edlon, are included in the Company's results for all of
fiscal 1996 and 1995 and two months of fiscal 1994, which significantly impact
comparisons between fiscal 1995 and fiscal 1994.
Sales to non-U.S. customers ranged from 40.0% to 45.0% of total Company
sales for fiscal 1996, 1995 and 1994. Profitability of the non-U.S. business
units of the Company was less than the U.S. business units. Operating income
(loss) as a percent of net sales for the non-U.S. business units increased to
10.1% for fiscal 1996 from 7.7% for fiscal 1995 and from (2.8)% for fiscal 1994.
The improvements were primarily the result of ongoing cost reduction programs.
Changes in exchange rates for fiscal 1996, 1995 and 1994 did not
significantly impact sales and income levels of the Company. The Company's
significant non-U.S. operations have their local currency as their functional
currency and primarily buy and sell using the same currency. For significant
transactions that are in another currency, the Company hedges the risk of future
currency fluctuations through foreign currency forward contracts with major
financial institutions.
The Company seeks to balance its mix of products and services and
maintain overall stability in its operating results principally through
increased levels of aftermarket sales, increased non-U.S. sales and end market
diversification. Aftermarket sales accounted for 35.0% of total Company sales
for fiscal 1996 and 38.0% for fiscal 1995. Sales into the specialty chemicals,
pharmaceuticals, oil and gas recovery, wastewater treatment and pulp and paper
markets are each at least 5.0% of total Company sales.
15
<PAGE> 16
Results Of Operations
The following table presents the components of the Company's statement of income
as a percent of net sales for fiscal 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Year Ended August 31,
1996 1995 1994
------------ ---------- ----------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 66.1 66.6 63.0
------------ ---------- ----------
Gross profit 33.9 33.4 37.0
Operating expenses 22.9 24.5 23.6
Other (income) expense (0.2) 0.2 3.5
------------ ---------- ----------
Operating income 11.2 8.7 9.9
Interest expense 2.0 2.4 1.2
------------ ---------- ----------
Income before income taxes and
special items 9.2 6.3 8.7
Income taxes 3.4 2.4 3.5
------------ ---------- ----------
Income before special items 5.8 3.9 5.2
Special items, net of tax (0.2) 0.4 0.0
------------ ---------- ----------
Net income 5.6% 4.3% 5.2%
============ ========== ==========
</TABLE>
FISCAL 1996 COMPARED TO FISCAL 1995--Net sales of $351.0 million for
fiscal 1996 were 15.8% higher than for fiscal 1995 due primarily to strong
market demand for the Company's mixing, glass-lined vessels and oilfield
products. Net income of $19.5 million was 48.4% higher than for fiscal 1995.
Earnings per share of $1.76, fully diluted, were 45.5% higher than for fiscal
1995. Company backlog was $110.0 million at August 31, 1996, $2.6 million higher
than at August 31, 1995.
The gross profit percent increased from 33.4% for fiscal 1995 to 33.9%
for fiscal 1996 due to higher sales volume and cost reduction programs
implemented by the Company.
Operating expenses as a percent of net sales decreased from 24.5% for
fiscal 1995 to 22.9% for fiscal 1996 due to higher sales volume, the fixed
nature of certain of these expenses and cost reduction programs implemented
during the year.
Profitability for fiscal 1996 was also increased from fiscal 1995 due
to continued improvements in the Company's non-U.S. businesses. These
improvements were due to cost reduction programs, including the consolidation of
Prochem production into the Chemineer facility.
Other (income) expense for fiscal 1995 included a one-time write-off of
the Company's investment in Hazleton Environmental of $1.6 million, or 0.5% of
net sales. The Company has no further ongoing exposure to future losses related
to this investment. This category also includes income from joint ventures of
$2.0 million, or 0.6% of net sales for fiscal 1996, and $1.6 million, or 0.5% of
net sales for fiscal 1995. One of the joint ventures, Universal Glasteel
Equipment, commenced operations on March 1, 1995.
16
<PAGE> 17
Activities related to restructuring charges provided for fiscal 1994,
principally in connection with the acquisitions, were substantially completed
during fiscal 1996. Actual payments were consistent with original estimates in
total and by component.
Interest expense decreased to $7.1 million for fiscal 1996 from $7.3
million for fiscal 1995 due to slightly lower average borrowings and interest
rates for fiscal 1996.
The effective income tax rate was 37.0% for fiscal 1996 compared to
37.9% for fiscal 1995. The effective income tax rate for fiscal 1995 reflects
the nondeductibility of a portion of the write-off of the investment in Hazleton
Environmental. Deferred income tax assets of $7.3 million at August 31, 1996
primarily relate to U.S. operations. Future pretax income at fiscal 1996 levels
would be sufficient to realize these assets.
The Company realized an extraordinary loss for fiscal 1996 of $0.8
million from the early extinguishment of $25.0 million of subordinated debt with
a book value of $23.6 million. The Company realized an extraordinary gain for
fiscal 1995 of $1.3 million related to the early extinguishment of $25.0 million
of subordinated debt with a book value of $22.3 million.
FISCAL 1995 COMPARED TO FISCAL 1994--Net sales of $303.0 million for
fiscal 1995 were 150.4% higher than for fiscal 1994 due to the full year effect
of the acquired companies. Net income of $13.2 million was 107.0% higher than
for fiscal 1994. Earnings per share of $1.21, fully diluted, were 98.4% higher
than for fiscal 1994. The Company's businesses existing before the acquisitions
also experienced growth with net sales reaching $102.5 million, an increase of
11.0% over fiscal 1994, due mostly to strong market demand for the Company's
oilfield products.
The gross profit percent decreased from 37.0% for fiscal 1994 to 33.4%
for fiscal 1995 as the acquired companies had lower gross profit percents than
the existing businesses.
Operating expenses as a percent of net sales increased from 23.6% for
fiscal 1994 to 24.5% for fiscal 1995 as the acquired companies had higher
operating expenses as a percent of sales than the existing businesses.
Profitability for fiscal 1995 was further impacted from fiscal 1994 as
the Company's non-U.S. businesses were less profitable than its U.S.
businesses. For fiscal 1995, the European businesses were affected primarily by
the German operation which accounted for 52% of European sales but was only
nominally profitable. A program for changing the way the Company conducts
business in Germany and the related cost structure was commenced during that
year. The lower rate of profitability for the other non-U.S. businesses was due
in part to their being start-up operations.
Other (income) expense for fiscal 1995 included a one-time write-off of
the Company's investment in Hazleton Environmental of $1.6 million, or 0.5% of
net sales. Other (income) expense for fiscal 1994 included a restructure charge
of $2.6 million, or 2.1% of net sales, related to the consolidation of Prochem
production into the Chemineer facility.
Interest expense increased to $7.3 million in fiscal 1995 from $1.5
million for fiscal 1994 due to borrowings to purchase the acquired companies on
June 30, 1994.
The effective income tax rate was 37.9% for fiscal 1995 compared to
40.3% for fiscal 1994. The lower rate for fiscal 1995 reflects lower income tax
rates for certain of the non-U.S. operations which contributed a greater percent
of pretax income for fiscal 1995.
17
<PAGE> 18
In May 1995, the Company repurchased $25.0 million of subordinated debt
issued as a part of the consideration for the acquired companies. The
transaction generated an extraordinary gain of $1.3 million, or 0.4% of net
sales.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates capital expenditures of $24.0 million for
fiscal 1997. Included in this amount is approximately $5.0 million which will be
spent for a new Moyno Oilfield facility and related equipment in Houston, Texas.
The Company expects cash flow from operating activities to be adequate for
operating needs, including scheduled debt service, capital expenditures plans
and shareholder dividend requirements for fiscal 1997. There are no significant
restrictions on the Company's ability to transfer funds from its non-U.S.
subsidiaries to the Company.
Cash flow from operating activities was $32.1 million for fiscal 1996.
This cash flow, supplemented by a $3.1 million reduction in available cash, was
used for capital expenditures of $16.5 million, to retire 3.8 million
outstanding stock appreciation rights for $18.8 million and to pay dividends of
$1.8 million.
Cash flow from operating activities was $33.0 million for fiscal 1995.
This cash flow, supplemented by a $5.9 million reduction in available cash, was
used primarily for capital expenditures of $10.1 million, acquisitions of $12.9
million, net debt payments of $15.0 million and dividends of $1.5 million.
The Company had $15.0 million available under its current bank credit
facility at August 31, 1996. The Company repaid $63.0 million of its bank
indebtedness in September 1996 with the net proceeds from the sale of $65.0
million of 6.5% Convertible Subordinated Notes due 2003 ("Notes"). After such
repayment, $44.0 million was available under its current bank credit facility.
If the Notes had been outstanding for all of fiscal 1996, the Company's fully
diluted earnings per share would have been reduced from $1.76 to $1.66.
The Company has entered into negotiations with respect to a replacement
bank credit facility. The new agreement would provide for $150.0 million of
borrowings with certain terms more favorable than the current agreement. The
primary purpose of the facility is to finance the Company's acquisition growth
program.
On November 26, 1996, an agreement was entered into on the new $150.0
million bank credit agreement. The terms of the new facility are generally
more favorable than the prior facility.
18
<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
Robbins & Myers, Inc. and Subsidiaries
($ in thousands)
August 31,
1996 1995
------------ -------------
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $7,121 $10,210
Accounts receivable, less allowances 51,158 49,415
Inventories 48,417 43,176
Other current assets 2,184 2,492
Deferred taxes 5,180 4,539
------------ -------------
Total Current Assets 114,060 109,832
Goodwill 95,101 73,497
Other Intangible Assets 13,068 13,573
Deferred Taxes 2,101 4,522
Other Assets 3,896 4,378
Net Property, Plant and Equipment 72,114 64,605
------------ -------------
$300,340 $270,407
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $25,478 $22,442
Accrued expenses 49,614 49,190
Current portion long-term debt 1,348 6,067
------------ -------------
Total Current Liabilities 76,440 77,699
Long-Term Debt - Less Current Portion 72,185 61,834
Other Long-Term Liabilities 60,278 60,935
Shareholders' Equity
Common stock-without par value:
Authorized shares-25,000,000
Issued shares-10,868,002 (10,676,698 in 1995) 26,617 22,654
Treasury shares-270,610 (271,610 in 1995) (2,481) (1,972)
Retained earnings 66,996 49,254
Equity adjustment for foreign currency translation 655 777
Equity adjustment to recognize minimum pension liability (350) (774)
------------ ------------
91,437 69,939
------------ ------------
$300,340 $270,407
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
19
<PAGE> 20
CONSOLIDATED INCOME STATEMENT
Robbins & Myers, Inc. and Subsidiaries
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Years ended August 31,
1996 1995 1994
------------- ------------- --------------
<S> <C> <C> <C>
Net sales $350,964 $302,952 $121,647
Cost of sales 231,934 201,648 76,666
------------- ------------- --------------
Gross profit 119,030 101,304 44,981
Operating expenses 80,272 74,234 28,733
Other (income) expense (697) 750 4,146
------------- ------------- --------------
Operating income 39,455 26,320 12,102
Interest expense 7,076 7,287 1,457
------------- ------------- --------------
Income before income taxes and
extraordinary items 32,379 19,033 10,645
Income taxes 12,041 7,208 4,290
------------- ------------- --------------
Income before extraordinary items 20,338 11,825 6,355
Extraordinary items, net of income taxes:
(Loss) gain on extinguishment of debt (813) 1,332 0
------------- ------------- --------------
Net income $19,525 $13,157 $6,355
============= ============= ==============
Income per share:
Primary:
Before extraordinary items $1.84 $1.09 $0.61
Extraordinary items, net of taxes (0.07) 0.13 0.00
------------- ------------- --------------
Total $1.77 $1.22 $0.61
============= ============= ==============
Fully diluted:
Before extraordinary items $1.83 $1.09 $0.61
Extraordinary items, net of taxes (0.07) 0.12 0.00
------------- ------------- --------------
Total $1.76 $1.21 $0.61
============= ============= ==============
</TABLE>
See Notes to Consolidated Financial Statements
20
<PAGE> 21
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Robbins & Myers, Inc. and Subsidiaries
($ in thousands, except per share data)
Foreign Minimum
Common Treasury Retained Currency Pension
Shares Shares Earnings Translation Liability Total
---------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 1, 1993 $21,298 ($1,810) $32,776 $292 ($214) $52,342
Net income 6,355 6,355
Cash dividends declared, $0.14 per share (1,475) (1,475)
Stock options exercised, 110,400 shares 298 298
Proceeds from sale of 24,976 shares
to employee benefit plans 61 176 237
Performance stock awards 31 31
Cost of 52,004 shares purchased (481) (481)
Change in foreign currency translation (81) (81)
Change in minimum pension liability (187) (187)
---------- ----------- ----------- ------------ ------------ -----------
Balance at August 31, 1994 21,688 (2,115) 37,656 211 (401) 57,039
Net income 13,157 13,157
Cash dividends declared, $0.15 per share (1,559) (1,559)
Stock options exercised, 92,200 shares 290 290
Proceeds from sale of 26,110 shares
to employee benefit plans 73 195 268
Performance stock awards 603 603
Cost of 3,710 shares purchased (52) (52)
Change in foreign currency translation 566 566
Change in minimum pension liability (373) (373)
---------- ----------- ----------- ------------ ------------ -----------
Balance at August 31, 1995 22,654 (1,972) 49,254 777 (774) 69,939
Net income 19,525 19,525
Cash dividends declared, $0.17 per share (1,783) (1,783)
Stock options exercised, 113,066 shares 410 410
Proceeds from sale of 40,344 shares
to employee benefit plans 295 370 665
Performance stock awards 1,050 1,050
Retirement of SAR's for common stock 1,700 1,700
Cost of 39,344 shares purchased (879) (879)
Tax benefits of stock options exercised 508 508
Change in foreign currency translation (122) (122)
Change in minimum pension liability 424 424
---------- ----------- ----------- ------------ ------------ -----------
Balance at August 31, 1996 $26,617 ($2,481) $66,996 $655 ($350) $91,437
========== =========== =========== ============ ============ ===========
</TABLE>
See Notes to Consolidated Financial Statements
21
<PAGE> 22
STATEMENT OF CONSOLIDATED CASH FLOWS
Robbins & Myers, Inc. and Subsidiaries
($ in thousands)
<TABLE>
<CAPTION>
Years Ended August 31,
1996 1995 1994
----------- ----------- -----------
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $19,525 $13,157 $6,355
Adjustment required to reconcile net income to net cash
and cash equivalents provided by operating activities:
Depreciation 9,382 8,549 3,761
Amortization 4,495 3,852 833
Deferred taxes (220) (800) (523)
Equity income from unconsolidated investments (400) (944) (80)
Loss (gain) on extinguishment of debt 1,355 (2,183) 0
Performance stock awards 1,050 603 0
Changes in operating assets and liabilities - excluding the effects of the
purchase of Pharaoh and Cannon and Pfaudler, Chemineer, and Edlon
Accounts receivable, less allowances (1,804) (7,204) 89
Inventories (5,302) (1,571) 2,435
Other current assets 308 2,236 (1,436)
Other assets 868 659 1,729
Accounts payable 3,036 5,273 (128)
Accrued expenses 424 9,605 549
Other long-term liabilities (657) 1,785 1,017
----------- ----------- -----------
Net cash and cash equivalents provided by operating activities 32,060 33,017 14,601
INVESTING ACTIVITIES:
Capital expenditures, net of nominal disposal (16,453) (10,133) (6,798)
Purchase of marketable securities 0 0 (29,796)
Proceeds from sale of marketable securities 0 0 52,860
Purchase of Pfaudler, Chemineer and Edlon 0 0 (96,725)
Purchase of Pharaoh and Cannon 0 (12,898) 0
Other 0 0 (700)
----------- ----------- -----------
Net cash and cash equivalents used for investing activities (16,453) (23,031) (81,159)
FINANCING ACTIVITIES:
Proceeds from debt borrowings 92,565 67,375 113,805
Payments of long-term debt (90,781) (82,205) (31,200)
Retirement of SAR's and other acquisition costs (19,401) 0 0
Proceeds from sale of common stock 1,583 534 580
Purchase of common stock (879) 0 (495)
Dividends paid (1,783) (1,559) (1,475)
----------- ----------- -----------
Net cash and cash equivalents (used) provided by financing activities (18,696) (15,855) 81,215
----------- ----------- -----------
(Decrease) increase in cash and cash equivalents (3,089) (5,869) 14,657
Cash and cash equivalents at beginning of year 10,210 16,079 1,422
----------- ----------- -----------
Cash and cash equivalents at end of year $7,121 $10,210 $16,079
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
22
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Robbins & Myers, Inc. and Subsidiaries
SUMMARY OF ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include accounts of the Company and its
wholly-owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated upon consolidation. All of the Company's
operations are conducted in the fluids management industry.
Use Of Estimates
The preparation of financial statements in conformity with general accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimated.
Accounts Receivable
Accounts receivable are stated net of allowances for doubtful accounts totaling
$1,195,000 and $1,260,000 at August 31, 1996 and 1995, respectively. Accounts
receivable relate primarily to customers located in North America and Western
Europe and are concentrated in the chemical, pharmaceutical and oil and gas
industries. To reduce credit risk, the Company performs credit investigations
prior to accepting an order and, when necessary, requires letters of credit to
insure payment.
Inventories
Domestic inventories are stated at the lower of cost or market determined by the
last-in, first-out (LIFO) method. At August 31, 1996 and 1995, the difference
between estimated current replacement cost and the stated LIFO value was
approximately $5,947,000 and $7,436,000 respectively.
Non-U.S. inventories are reported on the first-in, first-out (FIFO) method
and amounted to $25,052,000 and $23,226,000 at August 31, 1996 and 1995,
respectively.
At August 31, inventories consisted of the following:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
(In thousands)
<S> <C> <C>
Finished products $12,424 $13,743
Work in process 18,249 15,149
Raw materials 17,744 14,284
-------------- --------------
$48,417 $43,176
============== ==============
</TABLE>
Goodwill And Other Intangible Assets
Goodwill is the excess of the purchase price paid over the value of net assets
of businesses acquired. Amortization expense is calculated on a straight-line
basis over forty years. The carrying value of goodwill is reviewed quarterly if
the facts and circumstances suggest that it may be permanently impaired. If the
review indicates that goodwill will not be recoverable, as determined by the
undiscounted cash flow method, the asset will be reduced to its estimated
recoverable value.
23
<PAGE> 24
At August 31, other intangible assets consisted of the following:
<TABLE>
<CAPTION>
1996 1995
--------------- --------------
(In thousands)
<S> <C> <C>
Patents $939 $1,019
Non-compete agreements 4,546 5,401
Financing costs 152 396
Acquisition costs 3,937 3,515
Pension intangible 3,494 3,242
--------------- --------------
$13,068 $13,573
=============== ==============
</TABLE>
Accumulated amortization of goodwill and other intangible assets totaled
$7,503,000 and $3,904,000 at August 31, 1996 and 1995, respectively.
Amortization is calculated on the straight-line basis using the following lives:
Patents 14 to 17 years
Non-compete agreements 3 to 5 years
Financing costs 5 years
Acquisition costs 40 years
Property, Plant And Equipment
Property, plant and equipment are stated at cost. Depreciation expense is
recorded over the estimated useful life of the asset on the straight-line method
using the following lives:
Land improvements 20 years
Buildings 40 years
Machinery & equipment 3 to 15 years
The Company's normal policy is to charge repairs and improvements made to
capital assets to expense as incurred. In limited circumstances, major building
repairs are capitalized and amortized over the estimated life of the new asset
and any remaining value of the old asset is written off. Repairs to machinery
and equipment must result in an addition to the useful life of the asset before
the costs are capitalized.
At August 31, property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
1996 1995
---------------- --------------
(In thousands)
<S> <C> <C>
Land and improvements $10,699 $9,732
Buildings 24,095 20,182
Machinery & equipment 77,867 69,255
---------------- --------------
112,661 99,169
Less accumulated depreciation 40,547 34,564
---------------- --------------
$72,114 $64,605
================ ==============
</TABLE>
24
<PAGE> 25
Equity Investments
The Company owns 40% of Gujarat Machinery Manufacturers, Ltd. (GMM). GMM is
located in India and manufactures and markets glass-lined reactor and storage
vessels, parts and services, primarily for the Indian market. In addition, the
Company owns 50% of Universal Glasteel Equipment (UGE) located in Robbinsville,
New Jersey. UGE is a supplier of used and reconditioned glass-lined storage and
reactor vessels. The Company uses the equity method of accounting for these
investments, the net investments at August 31, 1996 and 1995 of $2,836,000 and
$2,980,000, respectively, are included in other assets in the Consolidated
Balance Sheet.
Foreign Currency Accounting
Gains and losses resulting from the settlement of a transaction in a currency
different from that used to record the transaction are charged or credited to
operations when incurred. Adjustments resulting from the translation of foreign
financial statements into U.S. dollars are recognized as a separate component of
shareholders' equity for all foreign units except those located in Brazil and
Mexico. The U.S. dollar is the functional currency for the Brazilian and Mexican
units. As a result, translation gains and losses for these operations are
reflected in net income.
Product Warranty
Provision for product warranty is recognized as a liability at the time of sale
based on the historical relationship of warranty expense to sales. Actual
payments of warranty claims are charged against the liability as incurred. The
liability is reviewed quarterly and adjusted as necessary.
Research And Development
Research and development expenditures are expensed as incurred and amounted to
approximately $2,602,000, $2,403,000 and $1,363,000 for the years ended August
31, 1996, 1995 and 1994, respectively.
Income Taxes
Income taxes are provided for all items included in the Consolidated Income
Statement regardless of the period when such items are reported for income tax
purposes. Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
The Company's policy is to provide U.S. income taxes on current non-U.S. income
which the Company remits to the U.S. The Company does not provide U.S. income
taxes on the remaining undistributed non-U.S. income, as it is the Company's
intention to maintain its investments in these operations.
Income Per Share
All income per share amounts are based on the weighted average number of shares
outstanding during the year plus the dilutive effect of common stock
equivalents. The stock appreciation rights granted in connection with the prior
year acquisitions of Pfaudler, Chemineer and Edlon have been excluded from the
calculation of income per share. See the Common Stock note for additional
information.
Statement Of Consolidated Cash Flows
Cash and cash equivalents consist of working cash balances and temporary
investments having an original maturity of 90 days or less.
In 1996 the Company recorded the following non-cash investing and financing
transactions: $2,000,000 increase in goodwill and decrease in deferred taxes
related to purchase entry adjustments, $1,700,000 increase in goodwill and
common stock related to the retirement of
25
<PAGE> 26
certain of the stock appreciation rights with the issuance of stock (see Common
Stock and Business Acquisitions notes) and $1,625,000 increase in goodwill and
long-term debt related to earn-out provisions of the Pharaoh acquisition (see
Business Acquisitions note).
Fair Value Of Financial Instruments
The following methods and assumptions were used by the Company in estimating the
fair value of financial instruments:
Current portion long-term debt - The amounts reported approximate the
market value of similar instruments.
Equity investments and current portion long-term debt - The amounts
reported are consistent with the terms, interest rates and maturities
currently available to the Company for similar debt instruments.
Interest swap agreements - The amounts reported are consistent with
values at which they could be settled, based upon dealer estimates.
Foreign exchange contracts - The amounts reported are estimated using
quoted market prices for similar instruments.
BUSINESS ACQUISITIONS
On March 1, 1995, the Company acquired Cannon and Pharaoh for cash and
subordinated notes totaling $12,898,000. Cannon, located in Bilston, England,
sells new and reconditioned glass-lined reactor vessels. Pharaoh, located in
Rochester, New York, is a supplier of replacement parts and services for
glass-lined process equipment. At the same time, the Company entered into a
partnership with a major supplier of used process equipment to supply used and
reconditioned glass-lined vessels worldwide. During 1996, a contingent earn-out
payment of $1,625,000 was earned and recorded as an increase to long-term debt
and goodwill. At August 31, 1996, there remains approximately $3,000,000 that
may be due under the earn-out provisions of the purchase contract.
On June 30, 1994, the Company completed the acquisition of the Pfaudler,
Chemineer and Edlon business units for approximately $117,045,000. The funds
used for the acquisition were provided by a combination of cash on hand, bank
debt of $52,000,000 and subordinated notes of $43,576,000, net of discount,
issued to the seller. In addition to the cash and subordinated notes, the
seller also received certain stock appreciation rights ("SAR's") as further
described in the Common Stock note. In 1996, these SAR's were exercised for a
total of $20,588,000, primarily paid in cash with proceeds from the Company's
long-term revolving credit agreement. These transactions resulted in goodwill
of $71,225,000 in 1994 and an additional $22,588,000 in 1996 upon the exercise
of the SAR's and purchase accounting adjustments. Pfaudler is the foremost
worldwide manufacturer of glass-lined chemical reactor and storage vessels.
Chemineer is a leading producer of industrial mixing and agitation equipment
and Edlon designs and fabricates engineered Teflon(R) products and coatings.
This acquisition was accounted for under the purchase method and, accordingly,
the purchase price was allocated to the assets acquired and liabilities assumed
based on their fair values on the dates of the respective transactions.
The operating results of the acquired businesses have been included in
consolidated operating results since the dates of each acquisition. The
following unaudited pro-forma summary presents the results of operations of the
Company combined with the results of Pfaudler, Chemineer and Edlon as if the
acquisition of the business units had occurred by the beginning of 1994. In
preparing the pro-forma data, certain adjustments have been made to historical
operating results,
26
<PAGE> 27
including increased interest expense resulting from the new debt structure,
amortization of intangible assets and the related income tax effects. The
pro-forma data excludes business restructure provisions recorded at Pfaudler of
$8,100,000 in 1994. This summary does not necessarily reflect the results of
operations as they would have been had the acquisitions occurred by the
beginning of 1994, nor is it necessarily indicative of future operating results.
<TABLE>
<CAPTION>
1994
------------------
(In thousands, except per share data)
<S> <C> <C>
Net sales $261,090
Income before extraordinary items 4,388
Income per share before extraordinary items:
Primary and fully diluted $.42
</TABLE>
ACCRUED EXPENSES
At August 31, accrued expenses consisted of the following:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
(In thousands)
<S> <C> <C>
Customer advances $12,426 $9,531
Salaries, wages, payroll taxes and withholdings 9,799 9,158
Federal income taxes 5,190 4,197
Warranty costs 3,642 3,040
Pension benefits 2,670 2,373
Business restructure costs 1,624 3,712
Medical and workers' compensation benefits 1,211 3,351
All other items 13,052 13,828
----------- -----------
$49,614 $49,190
=========== ===========
</TABLE>
LONG-TERM DEBT AND SUBSEQUENT EVENT
Effective September 23, 1996, the Company completed the sale of $65,000,000 of 6
1/2% Convertible Subordinated Notes Due 2003 ("Notes"). The net proceeds of
approximately $63,000,000 (after underwriters' discount and expenses) from this
sale were used to repay term and revolving credit loans under the Company's
senior debt agreements bearing interest at 8.0%. The Notes are not common stock
equivalents and will not impact primary income per share. However, on a fully
diluted basis, pro-forma net income per share for 1996 would have been $1.66,
assuming the Notes were outstanding for the entire year, compared to the $1.76
reported.
The Notes are due on September 1, 2003, and bear interest at 6 1/2%, payable
semi-annually on March 1, and September 1, commencing on March 1, 1997. The
notes are convertible into common stock at a rate of $27.25 per share. Holders
may convert at any time until maturity and the Company may call for conversion
at any time after September 1, 1999, at a redemption price ranging from 103.25%
in 1999 to 100% in 2001. The Notes are subordinated to all other current
indebtedness of the Company.
27
<PAGE> 28
Assuming the Notes had been issued at August 31, 1996, long-term debt would be
as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Senior debt $ 3,250
Senior subordinated debt:
Face amount, less discount of $156 5,283
6 1/2% Convertible Subordinated Notes 65,000
--------------
Total debt 73,533
Less current portion 1,348
--------------
$72,185
==============
</TABLE>
At August 31, 1996, the Company had senior debt outstanding under an agreement
with two Ohio banks. The agreement consists of a term loan and a revolving
credit arrangement. Any amounts outstanding under the term loan portion of the
agreement are payable in quarterly installments through 2001, beginning in
September 1997. During 1996, the Company amended the agreement and increased the
amount the Company can borrow to $100,000,000. After the proceeds from the Notes
were used to repay senior debt, $44,000,000 was available for additional
borrowings. The agreement does not require compensating balances; however, a
nominal commitment fee is paid on the unused portion. The interest rate is
variable based upon Prime or a formula tied to LIBOR rates. At August 31, 1996,
the interest rate for the amounts indicated above was 6.97%. The agreement is
secured by all domestic assets except land and buildings and includes certain
restrictive covenants which include, among other things, minimum requirements
for tangible net worth, working capital, additional debt, debt service coverage
and payment of cash dividends. At August 31, 1996, $7,381,000 of retained
earnings is available for future dividends.
During the fourth quarter of 1996, $25,000,000 of senior subordinated debt with
a book value of $23,300,000 was retired and the Company recorded an
extraordinary loss of $1,355,000 ($813,000 after taxes or $.07 per share).
During the third quarter of 1995, the Company recorded an extraordinary gain of
$2,183,000 ($1,332,000 after taxes or $.13 per share) in connection with the
early retirement of another $25,000,000 of senior subordinated debt with a book
value of $22,300,000.
The Company has additional subordinated debt with a face amount of $5,447,000
which has been discounted at normal market rates yielding a discount of $156,000
at August 31, 1996. The debt is payable in annual installments on February 28 of
each year through 1999.
Aggregate principal payments of long-term debt, assuming the Notes had been
issued at August 31, 1996, for the five years subsequent to August 31, 1996, are
as follows:
28
<PAGE> 29
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1997 $ 1,348
1998 4,884
1999 2,301
2000 0
2001 0
Thereafter 65,000
--------------
Total $73,533
==============
</TABLE>
Interest paid on all outstanding debt amounted to $7,083,000 in 1996, $6,753,000
in 1995 and $1,457,000 in 1994.
RETIREMENT PLANS
The Company sponsors three defined contribution plans covering most salaried
employees and certain U.S. hourly employees. Contributions are made to the plans
based on a percentage of eligible amounts contributed by participating
employees.
The Company also has several defined benefit plans covering all U.S. employees
and certain non-U.S. employees. Plans covering salaried employees provide
benefits based on years of service and employees' compensation. Plans covering
hourly employees generally provide benefits of stated amounts for each year of
service. The Company's funding policy is consistent with the funding
requirements of applicable federal regulations. At August 31, 1996 and 1995
pension assets were invested in short and long-term interest bearing obligations
and equity securities, including 238,000 shares of the Company's common stock.
Retirement plan costs for the above plans include the following components:
<TABLE>
<CAPTION>
1996 1995 1994
------------------ ------------- ---------------
Defined benefit plans: (In thousands)
<S> <C> <C> <C>
Service cost - benefits earned during
the period $2,292 $2,134 $1,128
Interest cost on projected benefit
obligation 3,692 3,460 2,875
Actual return on assets (6,560) (5,242) (1,167)
Net amortization and deferral 3,198 2,167 (1,865)
------------------ ------------- ---------------
Total 2,622 2,519 971
Defined contribution plans 1,180 477 327
------------------ ------------- ---------------
$3,802 $2,996 $ 1,298
================== ============= ===============
</TABLE>
The increase in 1995 costs over the previous year is due primarily to the
inclusion in 1995 of a full year's expense for Pfaudler, Chemineer and Edlon
compared with two months in 1994.
29
<PAGE> 30
The funded status of U.S. defined benefit plans at August 31, 1996 and 1995 was
as follows:
<TABLE>
<CAPTION>
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
1996 1996
------------------------ --------------------
Actuarial present value of: (In thousands)
<S> <C> <C>
Vested benefit obligation $15,157 $34,320
Accumulated benefit obligation 15,787 37,433
Projected benefit obligation 19,383 37,433
Plan assets at fair market value 18,299 29,882
------------------------ --------------------
Plan assets less than projected
benefit obligation (1,084) (7,551)
Unrecognized net loss (gain) 700 (348)
Unrecognized prior service cost 1,064 3,514
Unrecognized net (asset) obligation year end (370) 333
Adjustment to recognize minimum liability 0 (3,845)
------------------------ --------------------
Net pension asset (liability) recognized in the
Consolidated Balance Sheet $310 ($7,897)
======================== ====================
<CAPTION>
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
1995 1995
------------------------ --------------------
Actuarial present value of: (In thousands)
Vested benefit obligation $15,207 $31,109
Accumulated benefit obligation 15,849 33,824
Projected benefit obligation 19,177 33,830
Plan assets at fair market value 16,456 25,589
------------------------ --------------------
Plan assets less than projected
benefit obligation (2,721) (8,241)
Unrecognized net loss 2,273 65
Unrecognized prior service cost 1,169 2,826
Unrecognized net (asset) obligation year end (432) 416
Adjustment to recognize minimum liability 0 (4,016)
------------------------ --------------------
Net pension asset (liability) recognized in the
Consolidated Balance Sheet $ 289 ($8,950)
======================== ====================
</TABLE>
30
<PAGE> 31
The projected benefit obligation was determined using a discount rate of 7% and
weighted average pay increases of 6 3/4% in 1996 and 1995. The assumed long-term
rate of return on plan assets is 9 1/2% in 1996 and 1995 and 10% in 1994.
The following tables describe the amount recognized in the consolidated
financial statements relating to Pfaudler's unfunded German pension plan as of
the actuarial valuation dates at August 31, 1996 and August 31, 1995.
Net pension cost for this plan includes the following components:
<TABLE>
<CAPTION>
1996 1995
------------- -------------
(In thousands)
<S> <C> <C>
Service cost $558 $550
Interest cost 2,269 2,231
------------- -------------
Net pension cost $2,827 $2,781
============= =============
</TABLE>
The status of this plan at the actuarial valuation dates of August 31, 1996 and
1995 was as follows:
<TABLE>
<CAPTION>
1996 1995
----------------- -------------
(In thousands)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $28,610 $28,231
Accumulated benefit obligation 29,021 28,636
Projected benefit obligation 32,062 31,746
Plan assets at fair market value* 0 0
----------------- --------------
Plan assets less than projected benefit
obligation (32,062) (31,746)
Unrecognized net actuarial gain (1,496) ( 966)
----------------- --------------
Pension liability recognized in the
Consolidated Balance Sheet ($33,558) ($32,712)
================= ==============
<FN>
*Funding of pension obligations is not permitted in Germany
</TABLE>
The projected benefit obligation for this plan was determined using a discount
rate of 7 1/4% and weighted average pay increases of 4%. Pension payments are
paid from funds generated by operations and were $1,698,000 in 1996 and
$1,602,000 in 1995.
The Company also sponsors several other non-U.S. defined benefit plans primarily
in the U.K., which are immaterial in the aggregate.
31
<PAGE> 32
OTHER POSTRETIREMENT BENEFITS
In addition to pension benefits, the Company provides health care and life
insurance benefits for certain of its retired U.S. employees. The Company's
policy is to fund the cost of these benefits as claims are paid. The Company's
accumulated postretirement benefit obligation includes the following components
at August 31:
<TABLE>
<CAPTION>
1996 1995
------------- --------------
(In thousands)
<S> <C> <C> <C>
Retirees $14,173 $13,988
Active employees 3,918 3,680
Unrecognized net loss 200 0
Unrecognized prior service cost (1,286) 0
------------- --------------
$17,005 $17,668
============= ==============
Net periodic postretirement benefit cost includes the following components:
1996 1995 1994
------------- ----------- --------------
(In thousands)
Interest cost $1,228 $1,237 $1,100
Service cost 138 93 87
Net amortization 463 10 0
------------- ----------- --------------
$1,829 $1,340 $1,187
============= =========== ==============
</TABLE>
The rate of increase in per capita health care costs is assumed to be 7% in
1997, decreasing to 6% in 1998 and thereafter. The rate of increase in health
care costs has a significant effect on the amounts reported. Each one percentage
point change in the rate of increase would change the accumulated postretirement
benefit obligation at August 31, 1996, by approximately $470,000 and increase
net periodic postretirement benefit cost by approximately $35,000.
The discount rate used in determining the accumulated postretirement benefit
obligation was 7% in 1996 and 1995.
OTHER LONG-TERM LIABILITIES
The following items are included in other long-term liabilities at August 31:
<TABLE>
<CAPTION>
1996 1995
------------ --------------
(In thousands)
<S> <C> <C>
German pension liability 32,328 $31,478
Other postretirement benefits 15,005 15,276
U.S. pension liability 5,988 7,347
Casualty insurance reserves 4,358 5,612
All other items 2,599 1,222
------------ --------------
$60,278 $60,935
============ ==============
</TABLE>
32
<PAGE> 33
INCOME TAXES
Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the
Company's deferred tax position are as follows:
<TABLE>
<CAPTION>
1996 1995
---------------- -------------
(In thousands)
Deferred tax benefits:
<S> <C> <C>
Postretirement benefit obligations $6,802 $6,863
Capital loss carryforward 1,231 1,231
Non-U.S. tax loss carryforward and
restructuring charges 3,810 2,822
Warranty reserve 1,916 1,216
Pension benefits 1,282 1,627
Other items - net 3,925 3,532
---------------- ------------
18,966 17,291
Less valuation allowance 4,031 2,853
---------------- ------------
14,935 14,438
Deferred tax liabilities:
Tax depreciation in excess of book depreciation 3,519 2,725
Goodwill and purchased asset basis differences 3,146 2,480
Other items - net 989 172
---------------- ------------
7,654 5,377
---------------- ------------
Net deferred tax benefit $7,281 $9,061
================ =============
</TABLE>
Included in the 1996 valuation allowance for deferred tax benefits is $2,900,000
relating to non- U.S. tax loss carryforwards ($1,622,000 in 1995).
The provision for U.S., non-U.S. and U.S. state income taxes charged to
operations is as follows:
33
<PAGE> 34
<TABLE>
<CAPTION>
1996 1995 1994
-------------- ------------ ------------
Current: (In thousands)
<S> <C> <C> <C>
U.S. federal $8,222 $5,021 $4,100
Non-U.S. 2,092 2,007 337
U.S. state 1,362 980 598
-------------- ------------ ------------
11,676 8,008 5,035
Deferred:
U.S. federal (644) 366 (40)
Non-U.S. 1,101 (1,218) (700)
U.S. state (92) 52 (5)
-------------- ------------ ------------
365 (800) (745)
-------------- ------------ ------------
$12,041 $7,208 $4,290
============== ============ ============
</TABLE>
A summary of the differences between the effective income tax rate attributable
to operations and the statutory rate is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------------ ------------- ---------------
<S> <C> <C> <C>
U.S. statutory rate 35.0% 35.0% 35.0%
U.S. state income taxes, net of
U.S. federal tax benefit 3.5 3.5 3.7
Other items - net (1.5) (.6) 1.6
------------------ ------------- ---------------
37.0% 37.9% 40.3%
================== ============= ===============
</TABLE>
Income taxes paid in 1996, 1995 and 1994 were $9,743,000, $3,007,000 and
$3,299,000, respectively. The Company also has a Belgian tax loss carryforward
of approximately $3,300,000, a Canadian tax loss carryforward of approximately
$3,000,000 and a German tax loss carryforward of approximately $3,450,000 for
corporation tax purposes and $7,560,000 for trade tax purposes. For financial
reporting purposes, a valuation allowance was deducted for a portion of the
deferred tax benefit related to the German and Canadian tax loss carryforwards.
The Canadian carryforward, if unused, will expire in future years beginning in
1998. The Belgium and German carryforwards have no expiration period.
At August 31, 1996, the Company has a capital loss carryforward of $3,077,000
for income tax purposes that expires in the years ending August 31, 1997 through
August 31, 1999. The carryforward was primarily generated from the disposal of
the Motion Control Group in 1991. For financial reporting purposes, a valuation
allowance was deducted for the full amount of the deferred tax benefit related
to this carryforward.
COMMON STOCK
The Company's stock option plans provide for the granting of options to
directors, officers and other key employees. Under the plans, the option price
per share may not be less than the fair market value as of the date of grant and
the options become exercisable on a vesting schedule determined by the
Compensation Committee of the Board of Directors. Most currently outstanding
grants become exercisable over a three or four year period. Proceeds from the
sale of
34
<PAGE> 35
stock issued under option arrangements are credited to common stock. The Company
makes no charges or credits against earnings with respect to options.
At August 31, 1996 and 1995, 1,829,434 and 882,500 shares, respectively, were
reserved for future grants.
<TABLE>
<CAPTION>
1996 1995
------------- ---------------
<S> <C> <C>
Options granted 93,000 153,500
Options expired 7,334 86,600
Options exercised: option price $1.94-$13.50 113,066 92,200
Options outstanding: option price $2.57-$22.38 779,700 807,100
Options which became exercisable:
option price $7.75-$13.50 144,432 103,160
Options exercisable: option price $2.57- $13.50 532,566 501,200
</TABLE>
The Company also sponsors a long-term incentive stock plan for senior
executives. Under the program, participants earn performance shares based on a
three year measurement of how favorably the total return on Company shares
compares to the total shareholder return of the Russell 2000 Company Group. No
performance shares are earned unless the total return on Company shares is at
least equal to the median return for companies included in the Russell 2000.
Performance shares earned under the program are issued to the participants at
the end of the three year measurement period and are subject to forfeit if the
participant leaves the employment of the Company within the next two years.
At August 31, 1996, 146,000 units had been awarded under the program. The
Company has computed the total value of shares earned under the program and is
recognizing the cost ratably over a five year period. The amounts charged to
expense for this program were $1,000,000 and $562,000 for the years ended August
31, 1996 and 1995, respectively.
During 1996, the 4,000,000 SAR's issued in connection with the acquisition of
Pfaudler, Chemineer and Edlon were retired for $18,888,000 in cash and 37,000
shares of common stock valued at $1,700,000.
At the June 26, 1996 Board of Directors' meeting, the Board approved a 2-for-1
stock split for shareholders of record on July 12, 1996, effected in the form of
a share distribution on July 31, 1996. All share and per share information has
been adjusted to reflect the effect of this stock split for all periods
presented.
35
<PAGE> 36
LEASES
Future minimum payments, by year and in the aggregate, under non-cancellable
operating leases with initial or remaining terms of one year or more consisted
of the following at August 31, 1996:
<TABLE>
<CAPTION>
(In thousands)
<C> <C>
1997 $1,732
1998 1,335
1999 1,230
2000 807
2001 627
2001 201
---------------------
Thereafter $5,932
=====================
</TABLE>
Rental expense for all operating leases in 1996 was approximately $2,380,000
($2,352,000 in 1995 and $904,000 in 1994).
OTHER DEDUCTIONS
The following items are included in "Other items-net":
<TABLE>
<CAPTION>
1996 1995 1994
---------------- -------------- -------------
(In thousands)
<S> <C> <C> <C>
Income from equity investments ($1,488) ($944) ($80)
Royalty income (573) (712) (46)
Write-off of investment in
Hazleton Environmental 0 1,612 0
Provision for business restructure 0 0 2,551
All other items 1,364 794 1,721
---------------- -------------- -------------
($697) $750 $4,146
================ ============== =============
</TABLE>
ACCOUNTING FOR STOCK BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement No.
123, "Accounting for Stock-Based Compensation." The Statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans. Companies may elect to account for such plans under the fair
value method or continue the previous accounting and disclose pro-forma net
income and income per share as if the fair value method was applied. The
statement is to be applied on a prospective basis beginning in the Company's
fiscal year 1997.
The Company has not as yet determined the potential financial statement impact
of the Standard, nor has it decided how it will initially adopt the Standard.
36
<PAGE> 37
INFORMATION BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
Years Ended August 31,
1996 1995 1994
----------------- -------------- ---------------
Net Sales (In thousands)
<S> <C> <C> <C>
U.S. domestic $206,439 $165,135 $73,380
U.S. export 34,726 31,218 18,926
----------------- -------------- ---------------
Total U.S. 241,165 196,353 92,306
Europe 92,558 80,844 16,824
Other non-U.S. 17,241 25,755 (3) 12,517
----------------- -------------- ---------------
$350,964 $302,952 $121,647
================= ============== ===============
Operating Income
U.S. $41,383 $29,519 $17,718
Europe 7,274 4,818 877
Other non-U.S. 3,784 3,377 (1,696)(2)
----------------- -------------- ---------------
52,441 37,714 16,899
Amortization of intangible assets (3,504) (2,707) (121)
Corporate expenses (9,482) (8,687) (1) (4,676)
----------------- -------------- ---------------
$39,455 $26,320 $12,102
================= ============== ===============
Income Before Income Taxes
U.S. $21,321 $10,838 $11,464
Europe 7,274 4,818 877
Other non-U.S. 3,784 3,377 (1,696)
----------------- -------------- ---------------
Total $32,379 $19,033 $10,645
================= ============== ===============
Assets
U.S. $233,477 $193,852 $185,706
Europe 54,187 56,063 50,694
Other non-U.S. 12,676 20,492 (3) 21,730
----------------- -------------- ---------------
$300,340 $270,407 $258,130
================= ============== ===============
<FN>
(1) Includes $1,612,000 write-off of investment in Hazleton Environmental.
(2) Includes provision for business restructure of $1,929,000.
(3) Includes $8,044,000 in sales and $10,498,000 in assets of Prochem which were transferred to the
U.S. for 1996 due to the consolidation of Prochem production into the Chemineer facility.
</TABLE>
37
<PAGE> 38
QUARTERLY DATA
Robbins & Myers, Inc
<TABLE>
<CAPTION>
1996 Quarters
1st 2nd 3rd 4th Total
----------- ----------- ----------- ----------- ------------
(In thousands except per share data)
<S> <C> <C> <C> <C> <C>
Net sales $81,212 $84,179 $89,881 $95,692 $350,964
Gross profit 27,103 27,766 30,068 34,093 119,030
Operating expense 19,136 19,545 19,499 22,092 80,272
Income before income taxes 6,664 6,712 9,103 9,900 32,379
Income before extraordinary item 4,098 4,329 5,735 6,176 20,338
Net income 4,098 4,329 5,735 5,363(1) 19,525(1)
Income per share, before extraordinary
item:
Primary $0.37 $0.40 $0.52 $0.55 $1.84
Fully diluted 0.37 0.39 0.52 0.55 1.83
Pro-forma fully diluted for
convertible notes 0.36 0.38 0.48 0.51 1.73
Net income per share:
Primary $0.37 $0.40 $0.52 $0.48(1) $1.77(1)
Fully diluted 0.37 0.39 0.52 0.48(1) 1.76(1)
Pro-forma fully diluted for
convertible notes 0.36 0.38 0.48 0.44 1.66
Weighted average common shares:
Primary 10,948 10,930 11,026 11,151 11,046
Fully diluted 10,972 10,956 11,092 11,151 11,107
Pro-forma fully diluted for
convertible notes 13,357 13,341 13,477 13,536 13,492
</TABLE>
38
<PAGE> 39
QUARTERLY DATA
Robbins & Myers, Inc.
<TABLE>
<CAPTION>
1995 Quarters
1st 2nd 3rd 4th Total
----------- ----------- ----------- ----------- ------------
(In thousands except per share data)
<S> <C> <C> <C> <C> <C>
Net sales $68,628 $70,873 $79,973 $83,478 $302,952
Gross profit 23,042 24,145 26,180 27,937 101,304
Operating expense 16,987 17,351 19,037 20,859 74,234
Income before income taxes 4,332 5,044 4,317(2) 5,340 19,033(2)
Income before extraordinary item 2,915 3,087 2,256(2) 3,567 11,825(2)
Net income 2,915 3,087 3,588(2)(3) 3,567 13,157(2)(3)
Income per share, before extraordinary
item:
Primary $0.28 $0.29 $0.21(2) $0.33 $1.09(2)
Fully diluted 0.28 0.29 0.21(2) 0.33 1.09(2)
Net income per share:
Primary $0.28 $0.29 $0.34(2)(3) $0.33 $1.22(2)(3)
Fully diluted 0.28 0.29 0.34(2)(3) 0.33 1.21(2)(3)
Weighted average common shares:
Primary 10,548 10,572 10,710 10,876 10,786
Fully diluted 10,552 10,612 10,732 10,906 10,874
<FN>
(1) Fourth quarter includes an after-tax loss of $ 813,000 ($.07 per share) for early extinguishment of debt.
(2) Third quarter includes a pre-tax write-off of $1,612,000 for investment in Hazleton Environmental.
(3) Third quarter includes an after tax gain of $1,332,000 ($.13 per share) for early extinguishment of debt.
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ------- ------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
- -----------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The information required by this Item 10 is incorporated herein by
reference to the Company's Proxy Statement for its Annual Meeting of
Shareholders on December 11, 1996, except for certain information concerning the
executive officers of the Company which is set forth in Part I of this Report.
39
<PAGE> 40
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
The information required by this Item 11 is set forth in the Company's
Proxy Statement for its Annual Meeting of Shareholders on December 11, 1996 and
is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- -------- ---------------------------------------------------
MANAGEMENT
- ----------
The information required by this Item 12 is incorporated herein by
reference to the Company's Proxy Statement for its Annual Meeting of
Shareholders on December 11, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The information required by this Item 13 is incorporated herein by
reference to the Company's Proxy Statement for its Annual Meeting of
Shareholders on December 11, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- -------- -------------------------------------------------------
FORM 8-K
- --------
(a) (1) FINANCIAL STATEMENTS
The following consolidated financial statements of Robbins & Myers,
Inc. and its subsidiaries are at Item 8 hereof.
Consolidated Balance Sheet - August 31, 1996 and 1995.
Consolidated Income Statement -
Years ended August 31, 1996, 1995, and 1994.
Consolidated Statement of Shareholders' Equity -
Years ended August 31, 1996, 1995, and 1994.
Statementof Consolidated Cash Flows -
Years ended August 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements.
(a) (2) FINANCIAL STATEMENT SCHEDULE
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
financial statements or notes thereto.
Separate financial statements of the Company have been omitted since it
is primarily an operating Company and long-term debt held by subsidiaries of the
Company is less than five percent of consolidated total assets.
40
<PAGE> 41
(a) (3) EXHIBITS. See INDEX to EXHIBITS.
(b) REPORTS ON FORM 8-K. During the quarter ended August 31,
1996, the Company did not file any reports on Form 8-K.
41
<PAGE> 42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Robbins & Myers, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on this 27nd
day of November, 1996.
ROBBINS & MYERS, INC.
BY /s/ Daniel W. Duval
----------------------------------
Daniel W. Duval
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of Robbins
& Myers, Inc. and in the capacities and on the date indicated:
NAME TITLE DATE
- ------------------------------------------------------------------------------
/S/ Daniel W. Duval Director, President and November 27, 1996
- -------------------- Chief-Executive Officer
Daniel W. Duval
/S/ George M. Walker Vice President - CFO November 27, 1996
- --------------------- (Principal-Financial
George M. Walker Officer)
/S/ Kevin J. Brown Corporate Controller November 27, 1996
- --------------------- (Principal-Accounting
Kevin J. Brown Officer)
*Maynard H. Murch,IV Chairman Of Board November 27, 1996
*Robert J. Kegerreis Director November 27, 1996
*Thomas P. Loftis Director November 27, 1996
*William D. Manning, Jr. Director November 27, 1996
*Jerome F. Tatar Director November 27, 1996
*John N. Taylor, Jr. Director November 27, 1996
*The undersigned, by signing his name hereto, executes this Report on
Form 10-K for the year ended August 31, 1996 pursuant to powers of attorney
executed by the above-named persons and filed with the Securities and Exchange
Commission.
/S/ Daniel W. Duval
----------------------------
Daniel W. Duval
Their Attorney-in-fact
42
<PAGE> 43
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Robbins & Myers, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Robbins & Myers,
Inc. and Subsidiaries as of August 31, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended August 31, 1996. Our audits also included
the financial statement schedule listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Robbins & Myers,
Inc. and Subsidiaries at August 31, 1996 and 1995, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended August 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
presents fairly, in all material respects, the information set forth therein.
Dayton, Ohio
October 1, 1996 /s/ Ernst & Young LLP
43
<PAGE> 44
<TABLE>
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
(1) (2)
DESCRIPTION Balance at Beginning Charged to Costs Charged to Other Deductions - Balance at End
of Period and Expenses Accounts-Describe Describe of Period
Year Ended August 31, 1996:
Allowances and reserves deducted from assets:
<S> <C> <C> <C> <C> <C>
Uncollectable accounts receivable $1,260 $275 0 $340 (1) $1,195
Inventory obsolescence 5,639 1,282 0 1,244 (2) 5,677
Restructuring reserve for property, plant &
equipment held for sale 1,307 0 0 1,307 (6) 0
Other reserves:
Warranty claims 3,040 3,166 0 2,564 (3) 3,642
Restructuring liabilities 3,712 0 0 2,088 (5), (6) 1,624
Casualty insurance reserves 5,612 2,718 3,972 (7) 4,358
Year Ended August 31, 1995
Allowances and reserves deducted from assets:
Uncollectable accounts receivable $952 $535 0 $227 (1) $1,260
Inventory obsolescence 3,948 1,259 982 (4) 550 (2) 5,639
Restructuring reserve for property, plant &
equipment held for sale 1,250 0 57 (5) 0 1,307
Other reserves:
Warranty claims 2,139 2,522 461 (5) 2,082 (3) 3,040
Restructuring liabilities 5,541 0 300 (4) 2,129 (5), (6) 3,712
Casualty insurance reserves 3,900 2,767 1,803 (4) 2,858 (7) 5,612
Year Ended August 31, 1994
Allowances and reserves deducted from assets:
Uncollectable accounts receivable $425 $230 $464 (4) $167 (1) $952
Inventory obsolescence 775 574 2,956 (4) 357 (2) 3,948
Restructuring reserve for property, plant &
equipment held for sale 0 1,000 250 (4) 0 1,250
Other reserves:
Warranty claims 267 1,088 1,357 (4) 573 (3) 2,139
Restructuring liabilities 950 1,551 4,925 (4) 1,885 (6) 5,541
Casualty insurance reserves 915 1,609 2,586 (4) 1,210 (4) 3,900
<FN>
Note (1) Represents accounts receivable written off against the reserve.
Note (2) Inventory items scrapped and written off against the reserve.
Note (3) Warranty cost incurred applied against the reserve.
Note (4) Amount due to acquisition of Chemineer, Edlon, Pfaudler.
Note (5) Transferred from restructure reserve.
Note (6) Spending against restructing reserve.
Note (7) Spending against casualty reserves.
</TABLE>
44
<PAGE> 45
INDEX TO EXHIBITS
(3) ARTICLES OF INCORPORATION AND BY-LAWS:
3.1 Amended Articles of Incorporation of Robbins
& Myers, Inc. were filed as Exhibit 3.1 to
the Company's Report on Form 10-Q for the
quarter ended February 28, 1995...
3.2 Code of Regulations of Robbins & Myers, Inc.
was filed as Exhibit 3.2 to the Company's
Report on Form 10-Q for the quarter ended
February 28, 1995... *
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
HOLDERS, INCLUDING INDENTURES:
4.1 Indenture relating to $65,000,000 Convertible
Subordinated Notes due 2003, with
Star Bank, N.A., as Trustee, dated September 1, 1996,
was filed as Exhibit 4.3 to the Company's Registration
Statement on Form S-3 (No. 333-10619)... *
4.2 $150,000,000 Credit Agreement dated November 26, 1996
among Robbins & Myers, Inc., Bank One, Dayton, NA
as Administrative Agent, NationsBank, N.A.
As Documentation and Syndication Agent, and
the Lenders named therein +
4.3 Pledge and Security Agreement between Robbins & Myers, Inc.
and Bank One, Dayton, N.A., as Administrative Agent,
dated November 26, 1996... +
(10) MATERIAL CONTRACTS:
10.1 Robbins & Myers, Inc. Pension Plan (As
Amended and Restated Effective as of
October 1, 1989) was filed as Exhibit 10.3
to the Company's Annual Report on Form 10-K
for year ended August 31, 1990... *
10.2 First Amendment to Supplement One to the
Robbins & Myers, Inc. Pension Plan dated
October 22, 1990 was filed as Exhibit 10.4 to
the Company's Annual Report on Form 10-K for
the year ended August 31, 1990... *
10.3 Amendments to the Robbins & Myers, Inc. Pension Plan
dated March 5, 1991, December 16, 1992, and two
additional amendments both dated September 30, 1993
were filed as Exhibit 10.4 to the Company's Annual
Report on Form 10-K for
the year ended August 31, 1993... *
10.3.1 Fifth Amendment and Sixth Amendment dated September 24, 1994,
Seventh Amendment dated December 23, 1994, Eighth Amendment
effective September 30, 1994, and Ninth Amendment dated
June 12, 1996 to the Robbins & Myers, Inc. Pension Plan... +
45
<PAGE> 46
10.4 Salary Continuation Agreement between
Robbins & Myers, Inc. and Daniel W. Duval
dated May 8, 1987 was filed as Exhibit 10.5 to
the Company's Annual Report on Form 10-K for
the year ended August 31, 1993... *
10.5 Robbins & Myers, Inc. Employee Savings
Plan... +
10.6 Robbins & Myers, Inc. 1984 Stock Option
Plan was filed as Exhibit 10.8 to the Company's Report
on Form 10-K for the year ended August 31, 1992... *
10.7 Robbins & Myers, Inc. Supplemental Pension
Program adopted May 29, 1987 was filed as
Exhibit 10.9 to the Company's Report on
Form 10-K for the year ended August 31, 1993... *
10.8 Form of Indemnification Agreement between Robbins &
Myers, Inc., and each director of the Company was
filed as Exhibit 10.11 to the Company's Report on
Form 10-K for the year ended August 31, 1993... *
10.9 Robbins & Myers, Inc. 1994 Directors Stock
Compensation Plan was filed as Exhibit 10.13
to the Company's Report on Form 10-K for the
year ended August 31, 1994... *
10.10 Robbins & Myers, Inc. 1994 Long-Term Incentive
Stock Plan as amended. +
10.11 Robbins & Myers, Inc. 1995 Stock Option Plan for
Non-Employee Directors was filed as Exhibit 4.1
to the Company's Registration Statement on
Form S-8 (No. 333-00293)... *
10.12 Robbins & Myers, Inc. Senior Executive Annual Cash
Bonus Plan +
(11) STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS:
11.1 Computation of Per Share Earnings... +
46
<PAGE> 47
(21) SUBSIDIARIES OF THE REGISTRANT:
Robbins & Myers, Inc. has the following subsidiaries all of
which (i) do business under the name under which they are
organized and (ii) are included in the consolidated financial
statements of the Company. The names of such subsidiaries are
set forth below.
Jurisdiction in Percentage of
Name of Subsidiary which Incorporated Ownership
- --------------------------------------------------------------------------------
Chemineer, Asia, Ptd. Ltd. Singapore 51
Chemineer, Inc. Delaware 100
Chemineer Limited England 100
Edlon, Inc. Delaware 100
Glasteel Parts and Services, Inc. Delaware 100
Pfaudler Equipamentos
Industrias Ltda. Brazil 100
Pfaudler, Inc. Delaware 100
Pfaudler S.A. de C.V. Mexico 100
Pfaudler-Werke GMBH Germany 100
Robbins & Myers Canada, Ltd. Dominion of Canada 100
Robbins & Myers International
Sales Company, Inc. Ohio 100
Robbins & Myers, Limited England 100
Robbins & Myers NRO Ltd. Dominion of Canada 100
Robbins & Myers U.K. Limited England 100
Suzhou Pfaudler Co., Ltd. China 60
(23) CONSENTS OF EXPERTS AND COUNSEL
23.1 Consent of Ernst & Young LLP +
(24) POWER OF ATTORNEY
24.1 Powers of Attorney of any person who
signed this Report on Form 10-K on
47
<PAGE> 48
behalf of another pursuant to a
Power of attorney... +
(27) 27.1 Financial Data Schedule(submitted for SEC's
information) +
"+" Indicates Exhibit is being filed with this Report.
"*" Indicates that Exhibit is incorporated by reference in this Report from a
previous filing with the Commission.
48
<PAGE> 1
Exhibit 4.2
EXECUTION COPY
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF NOVEMBER 26, 1996
AMONG
ROBBINS & MYERS, INC.,
THE LENDERS NAMED HEREIN,
BANK ONE, DAYTON, N.A.,
AS ADMINISTRATIVE AGENT
AND
NATIONSBANK, N.A.,
AS DOCUMENTATION AND SYNDICATION AGENT
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
ARTICLE I DEFINITIONS.......................................................................................... 1
SECTION 1.01. Defined Terms........................................................................... 1
SECTION 1.02. Terms Generally......................................................................... 25
SECTION 1.03. Types of Borrowings..................................................................... 25
ARTICLE II THE CREDITS......................................................................................... 25
SECTION 2.01. Commitment to Make Loans................................................................ 25
SECTION 2.02. Loans................................................................................... 26
SECTION 2.03. Notice of Borrowings.................................................................... 28
SECTION 2.04. Notes; Repayment of Loans............................................................... 29
SECTION 2.05. Fees.................................................................................... 30
SECTION 2.06. Interest on Loans....................................................................... 31
SECTION 2.07. Default Interest........................................................................ 32
SECTION 2.08. Alternate Rate of Interest.............................................................. 33
SECTION 2.09. Termination and Reduction of Commitments; Extension of
Commitments............................................................................. 33
SECTION 2.10. Conversion and Continuation Options..................................................... 35
SECTION 2.11. Mandatory Repayments and Prepayments.................................................... 36
SECTION 2.12. Optional Prepayments.................................................................... 37
SECTION 2.13. Reserve Requirements; Change in Circumstances........................................... 37
SECTION 2.14. Change in Legality...................................................................... 39
SECTION 2.15. Indemnity............................................................................... 40
SECTION 2.16. Pro Rata Treatment...................................................................... 40
SECTION 2.17. Sharing of Setoffs...................................................................... 41
SECTION 2.18. Payments................................................................................ 41
SECTION 2.19. Taxes................................................................................... 41
SECTION 2.20. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate........................................................................ 44
SECTION 2.21. Swingline Loans......................................................................... 45
SECTION 2.22. Letters of Credit....................................................................... 47
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................................................... 50
SECTION 3.01. Organization; Powers.................................................................... 50
SECTION 3.02. Authorization........................................................................... 51
SECTION 3.03. Enforceability.......................................................................... 51
SECTION 3.04. Consents and Governmental Approvals..................................................... 51
SECTION 3.05. Financial Statements; Undisclosed Liabilities........................................... 51
SECTION 3.06. No Material Adverse Change.............................................................. 52
SECTION 3.07. Title to Properties; Possession Under Leases............................................ 52
SECTION 3.08. Subsidiaries............................................................................ 52
SECTION 3.09. Litigation; Compliance with Laws........................................................ 52
SECTION 3.10. Agreements.............................................................................. 53
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.11. Federal Reserve Regulations............................................................. 53
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act..................................................................................... 54
SECTION 3.13. Use of Proceeds......................................................................... 54
SECTION 3.14. Tax Returns............................................................................. 54
SECTION 3.15. No Material Misstatements............................................................... 54
SECTION 3.16. Employee Benefit Plans.................................................................. 54
SECTION 3.17. Environmental and Safety Matters........................................................ 55
SECTION 3.18. Security Interests...................................................................... 55
SECTION 3.19. Solvency................................................................................ 56
SECTION 3.20. Transactions with Affiliates and Shareholders........................................... 56
SECTION 3.21. Insurance............................................................................... 57
SECTION 3.22. Labor Matters........................................................................... 57
ARTICLE IV CONDITIONS OF LENDING............................................................................... 58
SECTION 4.01. First Borrowing......................................................................... 58
SECTION 4.02. All Credit Events....................................................................... 62
ARTICLE V AFFIRMATIVE COVENANTS................................................................................ 63
SECTION 5.01. Existence; Businesses and Properties.................................................... 63
SECTION 5.02. Insurance............................................................................... 63
SECTION 5.03. Obligations and Taxes................................................................... 64
SECTION 5.04. Financial Statements, Reports, etc...................................................... 64
SECTION 5.05. Other Information....................................................................... 66
SECTION 5.06. ERISA................................................................................... 67
SECTION 5.07. Maintaining Records; Access to Properties and Inspections............................... 68
SECTION 5.08. Use of Proceeds......................................................................... 68
SECTION 5.09. Interest Rate Protection Agreements..................................................... 68
SECTION 5.10. Fiscal Year............................................................................. 68
SECTION 5.11. Compliance with Environmental Laws; Preparation of
Environmental Reports................................................................... 68
SECTION 5.12. Subsidiaries............................................................................ 69
SECTION 5.13. Further Assurances...................................................................... 69
SECTION 5.14. Certain Post-Closing Covenants.......................................................... 70
ARTICLE VI NEGATIVE COVENANTS.................................................................................. 70
SECTION 6.01. Indebtedness............................................................................ 70
SECTION 6.02. Negative Pledge......................................................................... 72
SECTION 6.03. Sale and Lease-Back Transactions........................................................ 74
SECTION 6.04. Investments, Loans and Advances......................................................... 74
SECTION 6.05. Mergers, Consolidations, Dispositions and Acquisitions.................................. 76
SECTION 6.06. Dividends, Distributions and Other Restricted Payments.................................. 78
SECTION 6.07. Impairment of Security Interests........................................................ 79
SECTION 6.08. Limitation on Restrictions on Subsidiary Dividends, etc................................. 79
SECTION 6.09. No Other Negative Pledges............................................................... 79
SECTION 6.10. Transactions with Affiliates and Shareholders........................................... 79
SECTION 6.11. Business of Borrower and Subsidiaries................................................... 80
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 6.12. Certain Amendments...................................................................... 80
SECTION 6.13. Capital Expenditures.................................................................... 80
SECTION 6.14. Financial Covenants..................................................................... 80
ARTICLE VII
EVENTS OF DEFAULT............................................................................................... 81
ARTICLE VIII THE AGENTS AND ISSUING BANK....................................................................... 85
SECTION 8.01. Appointment and Authorization........................................................... 85
SECTION 8.02. Liability of Agents..................................................................... 85
SECTION 8.03. Action by Agents........................................................................ 86
SECTION 8.04. Successor Agents........................................................................ 86
SECTION 8.05. Agent and Affiliate..................................................................... 86
SECTION 8.06. Indemnification......................................................................... 87
SECTION 8.07. Credit Decision......................................................................... 87
ARTICLE IX MISCELLANEOUS....................................................................................... 87
SECTION 9.01. Notices................................................................................. 87
SECTION 9.02. Survival of Agreement................................................................... 88
SECTION 9.03. Binding Effect.......................................................................... 89
SECTION 9.04. Successors and Assigns.................................................................. 89
SECTION 9.05. Expenses; Indemnity..................................................................... 92
SECTION 9.06. Right of Setoff......................................................................... 94
SECTION 9.07. Applicable Law.......................................................................... 94
SECTION 9.08. Waivers; Amendment...................................................................... 94
SECTION 9.09. Interest Rate Limitation................................................................ 95
SECTION 9.10. Entire Agreement........................................................................ 96
SECTION 9.11. Severability............................................................................ 96
SECTION 9.12. Counterparts............................................................................ 96
SECTION 9.13. Headings................................................................................ 96
SECTION 9.14. Remedies................................................................................ 96
SECTION 9.15. Jurisdiction; Consent to Service of Process............................................. 97
<CAPTION>
Schedules
<S> <C>
Schedule 1.01 Restricted Subsidiaries
Schedule 2.01(a) Tranche A Revolving Credit Commitment
Schedule 2.01(b) Tranche B Revolving Credit Commitment
Schedule 3.05(b) Liabilities
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation; Compliance with Laws
Schedule 3.10 Material Contracts
Schedule 3.16 Employee Benefit Plans
Schedule 3.17 Environmental Matters
Schedule 3.18 Filings
Schedule 3.20 Transactions with Affiliates and Shareholders
Schedule 3.22 Labor Matters
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Schedule 5.14 Post Closing Matters
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
Schedule 6.04 Investments
<CAPTION>
Exhibits
- --------
<S> <C>
Exhibit A-1 Form of Tranche A Revolving Credit Note
Exhibit A-2 Form of Tranche B Revolving Credit Note
Exhibit A-3 Form of Swingline Note
Exhibit B Form of Guarantee Agreement
Exhibit C Form of Pledge Agreement
Exhibit D Form of Intercompany Note
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Opinion of Counsel
Exhibit G Form of Compliance Certificate
Exhibit H Form of Perfection Certificate
Exhibit I Form of Supplemental Agreement
Exhibit J Form of Notice of Borrowing/Conversion
Exhibit K Form of Indemnity, Subrogation and Contribution Agreement
Exhibit L Form of Subordinated Note
</TABLE>
iv
<PAGE> 6
CREDIT AGREEMENT dated as of November 26, 1996, among ROBBINS & MYERS,
INC., an Ohio corporation, the Lenders (as defined in this Agreement), BANK ONE,
DAYTON, N.A., as Administrative Agent and Issuing Bank, and NATIONSBANK, N.A.,
as Documentation and Syndication Agent.
The Borrower (such term, and all other capitalized terms in this
paragraph, being used as defined in this Agreement below) has requested the
Lenders to extend credit to the Borrower in the aggregate principal amount of up
to $150,000,000, in the form of (a) Tranche A Revolving Loans made by the
Lenders at any time and from time to time during the Tranche A Revolving Credit
Availability Period in an aggregate principal amount at any one time outstanding
of up to $100,000,000, which shall include Swingline Loans under which the
Borrower may make short-term borrowings of up to $10,000,000 and Letters of
Credit to be issued by the Issuing Bank at any time and from time to time during
the Letter of Credit Availability Period in an aggregate amount at any time
outstanding not in excess of $25,000,000, and (b) Tranche B Revolving Loans made
by the Lenders at any time and from time to time during the Tranche B Revolving
Credit Availability Period in an aggregate principal amount at any one time
outstanding of up to $50,000,000; PROVIDED, THAT, the sum at any time of
outstanding Revolving Loans, Swingline Exposure and Letter of Credit Exposure
shall not exceed $150,000,000. The proceeds of all Borrowings are to be used,
and the Letters of Credit are to be used, as provided in Section 3.13. The
Lenders are willing to extend the described credit to the Borrower upon the
terms and subject to the conditions set forth in this Agreement. Accordingly,
the Borrower, the Lenders, the Agents, the Swingline Lender and the Issuing Bank
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any ABR Revolving Loan or any Swingline Loan.
"ABR REVOLVING LOAN" shall mean any Revolving Loan and any Swingline
Loan bearing interest at a rate determined by reference to the Alternate Base
Rate in accordance with the provisions of Article II.
The term "ADDITIONAL AMOUNTS" shall have the meaning assigned to that
term in Section 2.19(a).
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for that Interest Period and (b) Statutory Reserves.
<PAGE> 7
"ADMINISTRATIVE AGENT" shall mean Bank One, Dayton, N.A., in its
capacity as administrative agent for the Lenders under this Agreement, and its
successors in that capacity.
"ADMINISTRATIVE QUESTIONNAIRE" shall mean, with respect to each Lender,
the administrative questionnaire in the form submitted to that Lender by the
Administrative Agent and returned to the Administrative Agent duly completed by
the applicable Lender.
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"AGENTS" shall mean the Administrative Agent and the Syndication Agent.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Federal Funds Effective Rate in effect on such day plus 0.50% and (b)
the Prime Rate in effect on such day. If the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of this Agreement, the
Alternate Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise to that
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of the applicable change in the Prime Rate or the Federal Funds
Effective Rate, respectively, without notice to the Borrower.
"APPLICABLE ABR MARGIN" shall mean, with respect to any Revolving Loan
or Swingline Loan outstanding on any day:
(i) 0.0%, if such day falls within a Level I Pricing Period;
(ii) 0.0%, if such day falls within a Level II Pricing Period;
(iii) 0.0%, if such day falls within a Level III Pricing Period;
(iv) 0.0%, if such day falls within a Level IV Pricing Period;
(v) .125%, if such day falls within a Level V Pricing Period; and
(vi) .25%, if such day falls within a Level VI Pricing Period.
"APPLICABLE LAWS" shall have the meaning assigned to such term in
Section 3.09(b).
2
<PAGE> 8
"APPLICABLE LIBOR MARGIN" shall mean, with respect to any Revolving
Loan outstanding on any day:
(i) 0.40%, if such day falls within a Level I Pricing Period;
(ii) 0.50%, if such day falls within a Level II Pricing Period;
(iii) 0.625%, if such day falls within a Level III Pricing Period;
(iv) 0.75%, if such day falls within a Level IV Pricing Period;
(v) 1.00%, if such day falls within a Level V Pricing Period; and
(vi) 1.25%, if such day falls within a Level VI Pricing Period.
"APPLICABLE TRANCHE A PERCENTAGE" of any Tranche A Lender shall mean a
fraction (expressed as a percentage) the numerator of which is such Tranche A
Lender's Tranche A Revolving Credit Commitment and the denominator of which is
the aggregate of all Tranche A Revolving Credit Commitments.
"APPLICABLE TRANCHE B PERCENTAGE" of any Tranche B Lender shall mean a
fraction (expressed as a percentage) the numerator of which is such Tranche B
Lender's Tranche B Revolving Credit Commitment and the denominator of which is
the aggregate of all Tranche B Revolving Credit Commitments.
"ACQUIRED ENTITY" shall have the meaning set forth in Section 6.04(g).
"ASSET SALE" shall mean any sale, lease, transfer, assignment,
condemnation, taking or other disposition or series of related sales, leases,
transfers, assignments or dispositions (including dispositions in the nature of
casualties, to the extent covered by insurance) of any businesses, business
units, assets (including licenses, trademarks and other intangibles and the
Capital Stock of any Subsidiary) or other properties of the Borrower or any
Subsidiary (each referred to for the purposes of this definition as a
"disposition") by the Borrower or any of its Subsidiaries (including any
disposition by means of a merger, consolidation or similar transaction) other
than (i) a disposition by a Subsidiary to the Borrower, (ii) a disposition by
the Borrower or a Subsidiary to a Wholly Owned Subsidiary that is a Qualified
Acquisition Subsidiary and (iii) a disposition permitted by Sections 6.05(a),
(b), (c), (e) and (g).
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit E or such other form as shall be approved by the
Administrative Agent.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States.
3
<PAGE> 9
"BORROWER" shall mean Robbins & Myers, Inc., an Ohio corporation, and
its successors.
"BORROWING" shall mean a group of Loans of a single Class and Type made
by the Lenders on a single date and as to which a single Interest Period is in
effect.
"BREAKAGE EVENT" shall have the meaning assigned to that term in
Section 2.15.
"BUSINESS DAY" shall mean any day (other than a Saturday, Sunday or a
day which is a legal holiday in the States of North Carolina, Ohio or New York)
on which banks are open for business in Charlotte, North Carolina, Dayton, Ohio
and New York City; PROVIDED, THAT, when used in connection with a LIBOR Loan,
the term "BUSINESS DAY" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any period, the sum of all
expenditures (whether paid in cash or other consideration or accrued as a
liability) which would, in accordance with GAAP, be included on a consolidated
statement of cash flows of the Borrower and its Consolidated Subsidiaries for
such period as additions to property, plant and equipment, Capital Lease
Obligations or similar items; PROVIDED, THAT, the foregoing shall exclude all
such expenditures to the extent made with insurance proceeds or condemnation
awards as permitted pursuant to Section 6.05(e).
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITAL STOCK" of any person shall mean any and all shares,
partnership, limited liability company and other interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) the equity of such person.
"CASH EQUIVALENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within 180 days from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 180 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Corporation or from Moody's Investors Service, Inc.
respectively;
4
<PAGE> 10
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any Lender or any commercial bank organized under the laws of the
United States of America or any State thereof, which has a combined
capital and surplus and undivided profits of not less than
$300,000,000;
(d) money market funds substantially all of whose assets are
comprised of securities of the types described in (a) through (c)
above;
(e) cash deposits in any deposit account or in any cash
collateral account with any Lender; and
(f) other investment instruments approved in writing by the
Agents and offered by financial institutions which have a combined
capital and surplus and undivided profits of not less than
$300,000,000.
"CASH TAX EXPENSE" shall mean, for any period for any person, the
amount of expense for Federal, state, local and other income taxes of such
person and its Consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP (assuming such person was deemed to be the common parent of
an affiliated group (within the meaning of Section 1504 of the Code) of which
only such person and its subsidiaries were members), for such period, but
excluding deferred income tax expense.
"CHANGE OF CONTROL" means and shall be deemed to have occurred on (a)
the date upon which a transaction or event or any series of transactions or
events occurs that is required to be reported on Schedule 13D pursuant to
Section 13(d) of the Exchange Act and the regulations promulgated thereunder,
whereby a person or group, as used for purposes of Section 13(d) of the Exchange
Act (other than M.H.M. & Co., Ltd., an Ohio limited partnership ("M.H.M.")), has
or will become the Beneficial Owner of 30% or more of the outstanding Voting
Shares or the date upon which the Borrower first learns that a person or group
(other than M.H.M.) has or will become the Beneficial Owner of 30% or more of
the outstanding Voting Shares; (b) the date of a change in the composition of
the Board of Directors of the Borrower (the "Board of Directors") such that
individuals who were members of the Board of Directors on the date two years
prior to such change (or who were subsequently elected to fill a vacancy in the
Board of Directors by the affirmative vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such two
year period) no longer constitute a majority of the Board of Directors; (c) the
date either the Board of Directors or shareholders approve a merger or
consolidation of the Borrower with any other person, other than a merger or
consolidation which would result in the Voting Shares outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into Voting Shares of the surviving entity) at least 80% of the
total voting power represented by the Voting Shares of such surviving entity
outstanding immediately after such merger or consolidation; (d) the date either
the Board of Directors or shareholders of the Borrower approve a plan of
liquidation of the Borrower or an agreement for the sale, lease, transfer or
other disposition by the Borrower of all or substantially all the Borrower's
assets, or (e) the date that members of the Murch family,
5
<PAGE> 11
individually or collectively, no longer are the Beneficial Owners of a majority
of the Voting Stock of M.H.M. For purposes of this definition, "Beneficial
Owner" means the person or group has the power, directly or indirectly, to vote
or direct the vote of, and the power to dispose, or direct the disposition of,
Voting Shares; "Voting Shares" means the Capital Stock of the Borrower entitled
to vote generally in the election of directors of the Borrower; and "Voting
Stock" means the Capital Stock of M.H.M. entitled to vote generally on the
management and affairs of M.H.M.
"CHARGES" shall have the meaning assigned to that term in Section 9.09.
"CLASS" shall have the meaning assigned to that term in Section 1.03.
"CLOSING DATE" shall mean the date of the first Borrowing hereunder in
accordance with Sections 4.01 and 4.02.
"CODE" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"COLLATERAL" shall mean all the collateral pledged or purported to be
pledged pursuant to any of the Collateral Documents, including all Intercompany
Notes and the Capital Stock of all Restricted Subsidiaries.
"COLLATERAL DOCUMENTS" shall mean the Pledge Agreement and all other
documents and instruments executed and delivered pursuant to the terms hereof or
thereof in order to secure any Obligations or perfect any Lien granted for the
benefit of the Lenders pursuant thereto.
"COMMITMENT" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and, in the case of the Swingline Lender, its
Swingline Commitment and, in the case of the Issuing Bank, the Letter of Credit
Commitment.
"COMMITMENT FEE" shall have the meaning assigned to that term in
Section 2.05(a).
"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"CONFIDENTIAL INFORMATION MEMORANDUM" shall mean the confidential
information memorandum of the Borrower dated October, 1996.
"CONSOLIDATED EBIT" shall mean, for any period for any person,
Consolidated Net Income of such person for such period, PLUS, to the extent
deducted in computing such Consolidated Net Income for such period, (a) the sum
of (i) Consolidated Interest Expense for such period, and (ii) Cash Tax Expense
for such period, MINUS, to the extent added in computing such Consolidated Net
Income for such period, (b) the sum of (i) any interest income and (ii) any
non-cash income or non-cash gains during such period that requires
6
<PAGE> 12
footnote disclosure on financial statements, reports or other filings pursuant
to or in accordance with GAAP or applicable SEC regulations, all as determined
on a consolidated basis with respect to such person and its Consolidated
Subsidiaries in accordance with GAAP.
"CONSOLIDATED EBITDA" shall mean, for any period for any person,
Consolidated Net Income of such person for such period, PLUS, to the extent
deducted in computing such Consolidated Net Income for such period, (a) the sum
of (i) Consolidated Interest Expense for such period, (ii) Cash Tax Expense for
such period, and (iii) depreciation, depletion, amortization of intangibles and
other non-cash charges or non-cash losses, MINUS, to the extent added in
computing such Consolidated Net Income for such period, (b) the sum of (i) any
interest income, and (ii) any non-cash income or non-cash gains during such
period that requires footnote disclosure on financial statements, reports or
other filings pursuant to or in accordance with GAAP or applicable SEC
regulations, all as determined on a consolidated basis with respect to such
person and its Consolidated Subsidiaries in accordance with GAAP.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean, for the Borrower
as of any date, the ratio of (a) Consolidated EBIT for the Reference Period with
respect to such date, to (b) Consolidated Interest Expense for such Reference
Period; PROVIDED, THAT, if, since the beginning of the applicable Reference
Period, (A) the Borrower or any Consolidated Subsidiary has issued or incurred
any Indebtedness that remains outstanding as of the end of such Reference Period
in connection with any Permitted Acquisition or pursuant to Sections 6.01(d),
6.01(g) or 6.01(j), Consolidated Interest Expense for such Reference Period
shall be calculated after giving effect on a pro forma basis to (I) such
Indebtedness as if such Indebtedness had been issued or incurred on the first
day of such Reference Period and (II) the discharge of any other Indebtedness
repaid, repurchased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such
Reference Period, (B) the Borrower or any Consolidated Subsidiary shall have
made any Asset Sale with a net book value in excess of $1,000,000, the
Consolidated EBIT for the applicable Reference Period shall be reduced by an
amount equal to the Consolidated EBIT (if positive) directly attributable to the
assets which are the subject of such Asset Sale for such Reference Period, or
increased by an amount equal to the Consolidated EBIT (if negative), directly
attributable thereto for such Reference Period and Consolidated Interest Expense
for such Reference Period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Borrower or any Consolidated Subsidiary repaid or otherwise discharged with
respect to the Borrower and its continuing Consolidated Subsidiaries in
connection with such Asset Sale for such Reference Period (or, if the Capital
Stock of any Consolidated Subsidiary is sold, the Consolidated Interest Expense
for such Reference Period directly attributable to the Indebtedness of such
Consolidated Subsidiary to the extent the Borrower and its continuing
Consolidated Subsidiaries are no longer liable for such Indebtedness after such
sale), and (C) the Borrower or any Consolidated Subsidiary shall have made a
Permitted Acquisition, Consolidated EBIT for the applicable Reference Period
shall be calculated after giving pro forma effect thereto as if such Permitted
Acquisition occurred on the first day of such Reference Period. For purposes of
this definition, whenever pro forma effect is to be given to an acquisition of
assets, (i) the amount of income or earnings relating thereto and the amount of
Consolidated
7
<PAGE> 13
Interest Expense associated with any Indebtedness issued or incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible Financial Officer of the Borrower and (ii) if any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the date of the beginning of the applicable Reference Period had been
the applicable rate for the entire period. Whenever pro forma effect is to be
given to any event or for any Reference Period, the pro forma calculations made
shall be cumulative of all events for which pro forma effect is to be given that
have occurred within or that relate to the applicable Reference Period.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period for any
person, the sum (without duplication) of (a) the gross amount of interest
expense, both expensed and capitalized, of such person and its Consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP, for
such period, exclusive of any non-cash interest expense related to original
issue discount notes and pay-in-kind notes, and (b) all amounts paid (net of any
amounts received) by such person and its Consolidated Subsidiaries pursuant to
Interest Rate Protection Agreements for such period.
"CONSOLIDATED LEVERAGE RATIO" shall mean, for the Borrower as of any
date, the ratio of (a) Total Debt on such date to (b) Consolidated EBITDA for
the Reference Period applicable to such date; PROVIDED, THAT, if, since the
beginning of the applicable Reference Period, (A) the Borrower or any
Consolidated Subsidiary has issued or incurred any Indebtedness that remains
outstanding as of the end of such Reference Period in connection with any
Permitted Acquisition or pursuant to Sections 6.01(d), 6.01(g) or 6.01(j),
Consolidated Interest Expense for such Reference Period shall be calculated
after giving effect on a pro forma basis to (I) such Indebtedness as if such
Indebtedness had been issued or incurred on the first day of such Reference
Period and (II) the discharge of any other Indebtedness repaid, repurchased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such Reference Period, (B) the
Borrower or any Consolidated Subsidiary shall have made any Asset Sale with a
net book value in excess of $1,000,000, the Consolidated EBITDA for such
Reference Period shall be reduced by the amount equal to Consolidated EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Sale for such Reference Period, or increased by an amount equal to the
Consolidated EBITDA (if negative), directly attributable thereto for such
Reference Period, and Consolidated Interest Expense for such Reference Period
shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Borrower or any Consolidated
Subsidiary repaid or otherwise discharged with respect to the Borrower and its
continuing Consolidated Subsidiaries in connection with such Asset Sale for such
Reference Period (or, if the Capital Stock of any Consolidated Subsidiary is
sold, the Consolidated Interest Expense for such Reference Period directly
attributable to the Indebtedness of such Consolidated Subsidiary to the extent
the Borrower and its continuing Consolidated Subsidiaries are no longer liable
for such Indebtedness after such sale), and (C) the Borrower or any Consolidated
Subsidiary shall have made a Permitted Acquisition, Consolidated EBITDA for such
Reference Period shall be calculated after giving pro forma effect thereto as if
such Permitted Acquisition occurred on the first day of such Reference Period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, (i) the amount of income or earnings relating thereto and
the
8
<PAGE> 14
amount of Consolidated Interest Expense associated with any Indebtedness issued
or incurred in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible Financial Officer of the Borrower and
(ii) if any Indebtedness bears a floating rate of interest and is being given
pro forma effect, the interest on such Indebtedness shall be calculated as if
the rate in effect on the date of the beginning of the applicable Reference
Period had been the applicable rate for the entire period. Whenever pro forma
effect is to be given to any event or for any Reference Period, the pro forma
calculations made shall be cumulative of all events for which pro forma effect
is to be given that have occurred within or that relate to the applicable
Reference Period.
"CONSOLIDATED NET INCOME" shall mean, for any period for any person,
net income or loss of such person and its Consolidated Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP; PROVIDED,
THAT, there shall be excluded from such calculation of net income or loss (a)
the income of any person in which any other person (other than such person or
any of its subsidiaries or any director holding qualifying shares in accordance
with applicable law) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to such person or any of its
Wholly Owned Subsidiaries by such other person during such periods, (b) the
income (or loss) of any other person accrued prior to the date it becomes a
subsidiary of such person or is merged into or consolidated with such person or
any of its subsidiaries or the date that such other person's assets are acquired
by such person or any of its subsidiaries, (c) the income of any subsidiary of
such person to the extent that the declaration or payment of dividends or
similar distributions by such subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that subsidiary, except that, with respect to the Borrower and its Consolidated
Subsidiaries, the income of the German Subsidiary shall not be subject to
exclusion from the Borrower's Consolidated Net Income pursuant to this clause
(c) solely because of negative retained earnings existing as of the Closing Date
that prevent, under German law, the payment of dividends by the German
Subsidiary; (d) any after-tax gains attributable to sales of assets out of the
ordinary course of business and (e) (to the extent not included in clauses (a)
through (d) above) any non-cash extraordinary gains.
"CONSOLIDATED NET WORTH" shall mean, as of any date of determination,
the total of all amounts which would in accordance with GAAP be included on a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of such date as stockholder's equity, LESS any amounts attributable to
Disqualified Stock.
"CONSOLIDATED PRICING RATIO" shall mean, for the Borrower as of any
date, the ratio of (a) Total Debt on such date, less the aggregate principal
amount of Letters of Credit outstanding on such date, to (b) Consolidated EBITDA
for the Reference Period applicable to such date; PROVIDED, THAT, if, since the
beginning of the applicable Reference Period, (A) the Borrower or any
Consolidated Subsidiary has issued or incurred any Indebtedness that remains
outstanding as of the end of such Reference Period in connection with any
Permitted Acquisition or pursuant to Sections 6.01(d), 6.01(g) or 6.01(j),
Consolidated Interest Expense for such Reference Period shall be calculated
after giving effect on a pro forma basis to (I) such Indebtedness as if such
Indebtedness had been issued or incurred on the first day of
9
<PAGE> 15
such Reference Period and (II) the discharge of any other Indebtedness repaid,
repurchased or otherwise discharged with the proceeds of such new Indebtedness
as if such discharge had occurred on the first day of such Reference Period, (B)
the Borrower or any Consolidated Subsidiary shall have made any Asset Sale with
a net book value in excess of $1,000,000, the Consolidated EBITDA for such
Reference Period shall be reduced by the amount equal to Consolidated EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Sale for such Reference Period, or increased by an amount equal to the
Consolidated EBITDA (if negative), directly attributable thereto for such
Reference Period, and Consolidated Interest Expense for such Reference Period
shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Borrower or any Consolidated
Subsidiary repaid or otherwise discharged with respect to the Borrower and its
continuing Consolidated Subsidiaries in connection with such Asset Sale for such
Reference Period (or, if the Capital Stock of any Consolidated Subsidiary is
sold, the Consolidated Interest Expense for such Reference Period directly
attributable to the Indebtedness of such Consolidated Subsidiary to the extent
the Borrower and its continuing Consolidated Subsidiaries are no longer liable
for such Indebtedness after such sale), and (C) the Borrower or any Consolidated
Subsidiary shall have made a Permitted Acquisition, Consolidated EBITDA for such
Reference Period shall be calculated after giving pro forma effect thereto as if
such Permitted Acquisition occurred on the first day of such Reference Period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, (i) the amount of income or earnings relating thereto and
the amount of Consolidated Interest Expense associated with any Indebtedness
issued or incurred in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible Financial Officer of the Borrower and
(ii) if any Indebtedness bears a floating rate of interest and is being given
pro forma effect, the interest on such Indebtedness shall be calculated as if
the rate in effect on the date of the beginning of the applicable Reference
Period had been the applicable rate for the entire period. Whenever pro forma
effect is to be given to any event or for any Reference Period, the pro forma
calculations made shall be cumulative of all events for which pro forma effect
is to be given that have occurred within or that relate to the applicable
Reference Period.
"CONSOLIDATED SUBSIDIARIES" shall mean, for any person, all
subsidiaries of such person that should be consolidated with such person for
financial reporting purposes in accordance with GAAP.
"CONTROL" shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and "Controlling" and "Controlled" shall have meanings correlative thereto.
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"DISQUALIFIED STOCK" of any person shall mean (a) any Capital Stock of
such person or any subsidiary of such person which by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable or subject to any mandatory
10
<PAGE> 16
repurchase requirement, pursuant to a sinking fund obligation or otherwise, (ii)
is convertible into or exchangeable or exercisable for Indebtedness or
Disqualified Stock or (iii) is redeemable or subject to any repurchase
requirement exercisable at the option of the holder thereof, in whole or in
part, in each case on or prior to the first anniversary of the Tranche A
Revolving Credit Maturity Date (or, if earlier, the first anniversary of the
date on which all the Obligations have been indefeasibly paid in full in cash
and the Commitments have been terminated) and (b) any Preferred Stock of a
subsidiary of such person.
"DISSENTING LENDER" shall have the meaning assigned to such term in
Section 2.09(f).
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"DOMESTIC SUBSIDIARY" shall mean any Subsidiary incorporated or
organized under the laws of the United States of America, any state thereof or
the District of Columbia; PROVIDED, that, for purposes of this Agreement,
Robbins & Myers International Sales Company, Inc., a U.S. Virgin Islands
Corporation, shall not be considered a Domestic Subsidiary.
"EASTERN STANDARD TIME" shall mean Eastern Standard Time or, if
applicable, Daylight Savings Time in the eastern time zone in which Dayton, Ohio
is located.
"EFFECTIVE DATE" shall mean the first date on which this Agreement
shall become effective pursuant to Section 9.03.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"EURODOLLAR BORROWING" shall mean a Tranche A Eurodollar Borrowing or a
Tranche B Eurodollar Borrowing.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCLUDED TAXES" shall have the meaning assigned to such term in
Section 2.19(a).
"EXISTING DEBT" shall mean the outstanding indebtedness of the Borrower
existing immediately prior to the first Borrowing hereunder, other than
indebtedness evidenced and created by the Subordinated Notes and other
Indebtedness that is listed on Schedule 6.01.
"FACILITIES" shall mean the Tranche A Revolving Credit Facility and the
Tranche B Revolving Credit Facility provided or participated in by the Lenders
to the Borrower pursuant to this Agreement and the other Loan Documents.
"FAIR MARKET VALUE" shall mean with respect to any Permitted
Acquisition, the value that would be obtained in an arm's-length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer.
11
<PAGE> 17
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it. Each change in the Federal Funds Effective Rate shall be
effective on the date thereof, without notice to the Borrower.
"FEE LETTER" shall have the meaning assigned to such term in Section
2.05(c).
"FEES" shall mean the Commitment Fees, the Letter of Credit Fees, the
Fronting Fees and the other fees payable pursuant to the Fee Letter.
"FINANCIAL OFFICER" of any corporation shall mean the chief financial
officer, principal accounting officer or similar officer of such corporation.
"FISCAL YEAR" shall mean, when used with respect to any year, the
Fiscal Year of the Borrower ending on August 31 of such year.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary which is not a Domestic
Subsidiary (including, without limitation, Robbins & Myers International Sales
Company, Inc.).
"FRONTING FEE" shall have the meaning assigned to that term in Section
2.05(b)(ii).
"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
"GERMAN SUBSIDIARY" shall mean Pfaudler-Werke GMBH, a German limited
liability company.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign governmental department, commission, board, bureau, authority, agency,
court, instrumentality or judicial or regulatory body or entity.
"GUARANTEE" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; PROVIDED, THAT, the term Guarantee shall not
include endorsements for collection or deposit, in either case in the ordinary
course of business.
12
<PAGE> 18
"GUARANTEE AGREEMENT" shall mean the Guarantee Agreement among the
Domestic Subsidiaries and the Administrative Agent in the form attached hereto
as Exhibit B, as amended from time to time.
"GUARANTOR" shall mean any guarantor under the Guarantee Agreement.
"HAZARDOUS MATERIALS" shall have the meaning assigned to such term in
Section 3.17.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind made with or to such person, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments (other than
obligations under surety bonds incurred in the ordinary course of business), (c)
all obligations of such person upon which interest charges are customarily paid,
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such person,
(e) all obligations of such person issued or assumed as the deferred purchase
price of property or services, (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
person, whether or not the obligations secured thereby have been assumed, (g)
all Guarantees by such person of Indebtedness of others, (h) all Capital Lease
Obligations of such person, (i) all obligations of such person in respect of
Interest Rate Protection Agreements, (j) all obligations of such person,
contingent or otherwise, as an account party in respect of letters of credit and
bankers' acceptances and (k) all obligations of such person to contribute money
or other property to any other person. The Indebtedness of any person shall
include, without duplication, the Indebtedness of any partnership in which such
person is a general partner and of any trust or other entity formed or utilized
in connection with a securitization of assets of such person. Notwithstanding
the foregoing, the Indebtedness of any person shall exclude all trade accounts
payable, customer advance payments, and accrued expenses determined in
accordance with GAAP and all of which arise or are incurred in the ordinary
course of business.
"INDEMNIFIED PARTY" shall have the meaning assigned to such term in
Section 9.05(b).
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit K hereto, among the Borrower, the Domestic Subsidiaries and the
Administrative Agent, as amended from time to time.
"INDIAN AFFILIATE" shall mean Gujarat Machinery Manufacturing Co., an
Indian corporation.
"INTERCOMPANY INDEBTEDNESS" shall mean Indebtedness of the Borrower or
any Subsidiary to (a) any Wholly Owned Subsidiary that is a Domestic Subsidiary
or (b) the Borrower.
"INTERCOMPANY NOTES" shall mean the promissory notes issued as
contemplated by Sections 6.01(c) and 6.04(b), in the form attached hereto as
Exhibit D.
13
<PAGE> 19
"INTEREST PAYMENT DATE" shall mean, with respect to any Loan, all of
the following to the extent applicable: (a) the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part, (b) if such Loan is
part of any Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day that would have been an Interest Payment Date had
successive Interest Periods of three months' duration been applicable to such
Borrowing, (c) if such Loan is part of any Eurodollar Borrowing, the date of any
repayment or prepayment of the Borrowing of which such Loan is a part, (d) if
such Loan is a part of any ABR Borrowing, the date of any prepayment of the
Borrowing required pursuant to the terms of Section 2.11 and (e) any conversion
of any Eurodollar Borrowing to any ABR Borrowing.
"INTEREST PERIOD" shall mean (a) as to any Tranche A Eurodollar
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, subject
to the availability thereof, as determined by the Administrative Agent, (b) as
to any Tranche B Eurodollar Borrowing, the period commencing on the date of such
Borrowing or on the last day of the immediately preceding Interest Period
applicable to such Borrowing, as the case may be, and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2 or 3 months thereafter, as the Borrower
may elect, subject to the availability thereof, as determined by the
Administrative Agent, and (c) as to any ABR Borrowing (including any ABR
Borrowing comprised of Swingline Loans), the period commencing on the date of
such Borrowing or on the last day of the immediately preceding Interest Period
applicable to such Borrowing, as the case may be, and ending on the earliest of
(i) the next succeeding March 31, June 30, September 30 or December 31, (ii) the
Tranche A Revolving Credit Maturity Date or the Tranche B Revolving Credit
Maturity Date, as applicable, and (iii) the date such Borrowing is prepaid in
accordance with Section 2.11; PROVIDED, THAT, if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless, in the case of a Eurodollar Borrowing
only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest Period to,
but excluding, the last day of such Interest Period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean any interest rate swap,
collar, cap or other arrangement requiring payments contingent upon interest
rates.
"ISSUING BANK" shall mean Bank One, Dayton, N.A., in its capacity as
the issuer of Letters of Credit, and its successors in such capacity.
"LENDER" shall mean each financial institution listed on the signature
pages hereof, each assignee which becomes a Lender pursuant to Section 9.04(b),
and their respective successors (including the Swingline Lender).
14
<PAGE> 20
"LETTERS OF CREDIT" shall mean any and all letters of credit issued
pursuant to Section 2.22 and all letters of credit issued by Bank One, Dayton,
N.A., under documents and instruments creating certain Existing Debt being
satisfied at Closing, which letters of credit, upon the satisfaction of all
conditions precedent to borrowing as set forth in Article IV hereof, shall
remain issued and outstanding and shall be deemed to have been issued pursuant
to the terms of this Agreement.
"LETTER OF CREDIT AVAILABILITY PERIOD" shall mean the period from and
including the Closing Date to but excluding the earlier of (a) the date five
Business Days prior to the Tranche A Revolving Credit Maturity Date and (b) the
termination of the Tranche A Revolving Credit Commitments of the Lenders in
accordance with the terms hereof.
"LETTER OF CREDIT COMMITMENT" shall mean the commitment of the Issuing
Bank to issue Letters of Credit pursuant to Section 2.22.
"LETTER OF CREDIT DISBURSEMENT" shall mean a payment or disbursement
made by the Issuing Bank pursuant to a Letter of Credit.
"LETTER OF CREDIT EXPOSURE" shall mean at any time an amount equal to
the sum of (a) the aggregate undrawn amount of all outstanding Letters of
Credit, PLUS (b) the aggregate amount of all Letter of Credit Disbursements not
yet reimbursed by the Borrower as provided in Section 2.22. The Letter of Credit
Exposure of any Tranche A Lender at any time shall mean its Applicable Tranche A
Percentage of the aggregate Letter of Credit Exposure at such time.
"LETTER OF CREDIT FEE" shall have the meaning assigned to that term in
Section 2.05(b)(i).
"LEVEL I PRICING PERIOD" shall mean, subject to Section 2.06(c), any
period on or after the Closing Date during which the Consolidated Pricing Ratio
is less than or equal to 1.50:1.00 and no Event of Default has occurred and is
continuing.
"LEVEL II PRICING PERIOD" shall mean, subject to Section 2.06(c), any
period on or after the Closing Date during which the Consolidated Pricing Ratio
is greater than 1.50:1.00 but less than or equal to 2.00:1.00 and no Event of
Default has occurred and is continuing.
"LEVEL III PRICING PERIOD" shall mean, subject to Section 2.06(c), any
period on or after the Closing Date during which the Consolidated Pricing Ratio
is greater than 2.00:1.00 but less than or equal to 2.50:1.00 and no Event of
Default has occurred and is continuing.
"LEVEL IV PRICING PERIOD" shall mean, subject to Section 2.06(c), any
period on or after the Closing Date during which the Consolidated Pricing Ratio
is greater than 2.50:1.00 but less than or equal to 3.00:1.00 and no Event of
Default has occurred and is continuing.
"LEVEL V PRICING PERIOD" shall mean, subject to Section 2.06(c), any
period on or after the Closing Date during which the Consolidated Pricing Ratio
is greater than 3.00:1.00 but less than or equal to 3.50:1.00 and no Event of
Default has occurred and is continuing.
15
<PAGE> 21
"LEVEL VI PRICING PERIOD" shall mean any period on or after the Closing
Date which is not a Level I Pricing Period, Level II Pricing Period, Level III
Pricing Period, Level IV Pricing Period or Level V Pricing Period.
"LIBO RATE" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate (rounded upwards, if necessary, to the next 1/16
of 1%) per annum designated as the British Bankers' Association settlement rate,
which appears on the display on page 3750 (under the caption "USD") of the
Telerate Services, Incorporated screen (the "Telerate Screen") (or on such other
display as may replace such page on the Telerate Screen) as of 11:00 a.m.
(London time) two Business Days prior to the commencement of such Interest
Period, for a period of time comparable to such Interest Period; PROVIDED, THAT,
if no offered quotations appear on the Telerate Screen or if quotations are not
given on the Telerate Screen for the selected period, then the LIBO Rate shall
be the rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the commencement of such Interest Period, for a term comparable to such
Interest Period; and PROVIDED, FURTHER, that if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"LIBOR LOAN" shall mean any Revolving Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"LIEN" shall mean, with respect to any asset, any mortgage, deed of
trust, lien, pledge, easement, restriction, restrictive covenant, lease,
sublease, option, charge, security interest or encumbrance of any kind in
respect of such asset. For purposes hereof, the Borrower or any Subsidiary shall
be deemed to own subject to a lien any asset which it has acquired or holds
subject to the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Letters of
Credit, the Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement, the Intercompany Notes, the Collateral Documents, any Interest Rate
Protection Agreements entered into by the Borrower with any Lender or Affiliate
thereof as permitted hereunder and any Supplemental Agreements.
"LOANS" shall mean any or all of the Revolving Loans and the Swingline
Loans.
"MARGIN STOCK" shall have the meaning assigned to such term under
Regulation U.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in the
business, assets, liabilities, financial condition, prospects or results of
operations of Borrower and the Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect on
the material existing agreements and relationships, business, financial
condition or results of operations of the Borrower and the Subsidiaries, taken
as a whole, (b) a material impairment of the ability
16
<PAGE> 22
of the Borrower or any of the Subsidiaries to perform its material obligations
under any Loan Document to which it is or will be a party or (c) a material
impairment of the rights of or benefits available to the Lenders under any Loan
Document. In determining whether any individual event would result in a Material
Adverse Effect, notwithstanding that such event does not itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events would result
in a Material Adverse Effect.
"MATERIAL CONTRACTS" shall have the meaning assigned to such term in
Section 3.10(a).
"MAXIMUM RATE" shall have the meaning assigned to such term in Section
9.09.
"MEXICAN SUBSIDIARY" shall mean Pfaudler S.A. de C.V., a Mexican
corporation.
"MULTIEMPLOYER PLAN" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NCMI" shall mean NationsBanc Capital Markets, Inc.
"NET CASH PROCEEDS" shall mean, with respect to any Prepayment Event,
an amount equal to (a) the gross cash proceeds (including insurance proceeds and
condemnation awards in the case of any casualty) actually paid to or actually
received by or on behalf of the Borrower or any Subsidiary from or in respect of
such event (including cash received as proceeds from any noncash consideration
received in respect of any such event), LESS (b) the sum of (i) any expenses
reasonably incurred by the Borrower and the Subsidiaries in respect of such
Prepayment Event, including, in the case of a sale or issuance of Capital Stock,
underwriters' fees, discounts or commissions and, in the case of a disposition
of assets or properties, commissions, (ii) in the case of a disposition of
assets or properties, amounts required to be applied to repay Indebtedness
(other than Loans) associated with the assets or properties subject to such
Prepayment Event and (iii) in the case of a disposition of assets or properties,
taxes paid or payable by the Borrower and the Subsidiaries (as determined
reasonably and in good faith by a Financial Officer of the Borrower) in respect
of such Prepayment Event.
"NEW LENDING OFFICE" shall have the meaning assigned to such term in
Section 2.19(f).
"NON-U.S. LENDER" shall have the meaning assigned to such term in
Section 2.19(g).
"NOTES" shall mean the Revolving Credit Notes and the Swingline Note.
"OBLIGATIONS" shall mean (a) the Borrower's obligations in respect of
the due and punctual payment of principal of and interest (including interest
accruing after the filing of a petition initiating any proceeding referred to in
paragraph (g) or (h) of Article VII of this Agreement) on the Loans and all
amounts drawn under the Letters of Credit, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise, (b) all
Fees, expenses, indemnities and expense reimbursement obligations of the
17
<PAGE> 23
Borrower under this Agreement, the Fee Letter, or any other Loan Document and
(c) all other obligations, monetary or otherwise, of the Borrower or any of the
Subsidiaries under any Loan Document (including any Interest Rate Protection
Agreement entered into by the Borrower after the Closing Date with any Lender or
Affiliate of a Lender as permitted under this Agreement) to which it is a party,
in each case, whether now owing or hereafter existing.
"OFFICER'S CERTIFICATE" shall mean, as to any corporation, a
certificate executed on its behalf by the Chairman of the Board of Directors (if
an officer) or its President or one of its Vice Presidents and its Treasurer, or
Controller, or one of its Assistant Treasurers or Assistant Controllers, and, as
to any partnership, a certificate executed on behalf of such partnership by its
general partner in a manner which would qualify such certificate as an Officer's
Certificate of such general partner hereunder.
"OTHER TAXES" shall have the meaning assigned to that term in Section
2.19(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"PERFECTION CERTIFICATE" shall mean a certificate from the Borrower and
the Subsidiaries substantially in the form of Exhibit H hereto.
"PERMITTED ACQUISITION" shall have the meaning assigned to that term in
Section 6.04(g).
"PERMITTED INDEBTEDNESS" shall mean Indebtedness permitted pursuant to
Section 6.01.
A "PERSON" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership,
government (or any agency or political subdivision thereof) or other entity.
"PLAN" shall mean at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"PLEDGE AGREEMENT" shall mean the Pledge and Security Agreement among
the Borrower, the Domestic Subsidiaries and the Administrative Agent in the form
attached hereto as Exhibit C, as amended from time to time.
"PREFERRED STOCK", as applied to the Capital Stock of any corporation,
shall mean Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
18
<PAGE> 24
"PREPAYMENT EVENT" shall mean (a) the issuance or sale by the Borrower
or any of its Subsidiaries of any Capital Stock of the Borrower or any of its
Subsidiaries (other than (i) the conversion of any of the Subordinated Notes to
Capital Stock of the Borrower pursuant to the terms thereof, (ii) any such
issuance or sale solely to the Borrower or any of the Wholly Owned Subsidiaries,
and (iii) any issuance of Capital Stock pursuant to employee or director stock
plans of the Borrower or pursuant to the Borrower's Investor Stock Purchase
Plan), (b) the contribution of capital to the equity of the Borrower or any of
its Subsidiaries, whether or not Capital Stock is issued on account thereof
(except as expressly permitted by the terms of Sections 6.04(a)(ii) and
6.04(j)), or (c) any other Asset Sale. The foregoing definition shall not be
deemed to imply that any such action or event is permitted under this Agreement.
"PRIME RATE" shall mean the rate of interest per annum adopted from
time to time by the Administrative Agent as its prime rate as announced and in
effect at its principal office in Dayton, Ohio. Each change in the Prime Rate
shall be effective on the date such change is adopted, without notice to the
Borrower. The Prime Rate is a reference rate used by the Administrative 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.
"PURCHASE MONEY INDEBTEDNESS" shall mean Indebtedness of the Borrower
or any Subsidiary in respect of which a Lien described in Section 6.02(i) is
incurred.
"QUALIFIED ACQUISITION SUBSIDIARY" shall mean (i) any Domestic
Subsidiary, (ii) any Foreign Subsidiary that is a Restricted Subsidiary as long
as the Agents shall have received an opinion of counsel in form, content and as
to counsel reasonably satisfactory to the Agents stating that the Administrative
Agent, on behalf of the Lenders, has a valid, perfected and first priority
security interest, pursuant to the Pledge Agreement, in the applicable
percentage of the Capital Stock of that Subsidiary as required by the Pledge
Agreement, (iii) the UK Subsidiary, as long as the Agents shall have received an
opinion of counsel in form, content and as to counsel reasonably satisfactory to
the Agents stating that the Administrative Agent, on behalf of the Lenders, has
a valid, perfected and first priority security interest, pursuant to the Pledge
Agreement, in the applicable percentage of the Capital Stock of the parent or
parents of the UK Subsidiary (whether directly or indirectly), as required or
contemplated by the Pledge Agreement, and (iv) the Mexican Subsidiary, as long
as the Agents shall have received an opinion of counsel in form, content and as
to counsel reasonably satisfactory to the Agents stating that the Administrative
Agent, on behalf of the Lenders, has a valid, perfected and first priority
security interest, pursuant to the Pledge Agreement, in the applicable
percentage of the Capital Stock of the parent or parents of the Mexican
Subsidiary (whether directly or indirectly), as required or contemplated by the
Pledge Agreement.
"REFERENCE PERIOD" with respect to any date shall mean the period of
four consecutive fiscal quarters of the Borrower immediately preceding such date
or, if such date is the last day of a fiscal quarter, ending on such date.
"REGISTER" shall have the meaning assigned to such term in Section
9.04(d).
19
<PAGE> 25
"REGULATION G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the PBGC has waived either
the 30-day notice period or the penalty for failure to give notice.
"REQUIRED FINANCIAL STATEMENTS" shall mean, with respect to any period,
the financial statements of the Borrower for such period required under Section
5.04.
"REQUIRED LENDERS" shall mean, at any time, Lenders holding Loans
(excluding Swingline Loans), Letter of Credit Exposure, and Swingline Exposure
and having Revolving Credit Commitments representing in the aggregate at least a
majority of the sum at such time of (a) the aggregate principal amount of the
Loans outstanding (excluding Swingline Loans), (b) the aggregate amount of
Letter of Credit Exposure, (c) the aggregate amount of Swingline Exposure and
(d) the aggregate amount of unused Revolving Credit Commitments.
"RESPONSIBLE OFFICER" of any person shall mean and include the
president, chief executive officer, chief operating officer, any financial
officer, any vice president, the general counsel or any other senior officer of
such person (or, in the case of a partnership, of a general partner thereof).
"RESTRICTED SUBSIDIARY" shall mean (i) all Domestic Subsidiaries of the
Borrower, none of the Capital Stock of which is owned by Unrestricted
Subsidiaries and (ii) all Foreign Subsidiaries of the Borrower, all of the
Capital Stock of which is owned directly by the Borrower or a Wholly Owned
Domestic Subsidiary, or any subsidiary described in clauses (i) or (ii) that is
formed or acquired after the date hereof; PROVIDED, THAT, nothing in this
definition shall be deemed to permit any such formation or acquisition of a
subsidiary. Each of such Domestic and Foreign Subsidiaries existing as of the
Closing Date are listed on Schedule 1.01.
"REVOLVING CREDIT BORROWING" shall mean a Borrowing comprised of
Revolving Loans.
"REVOLVING CREDIT COMMITMENT" of a Lender shall mean its Tranche A
Revolving Credit Commitment and its Tranche B Revolving Credit Commitment, or
either of them.
"REVOLVING CREDIT NOTES" shall mean the Tranche A Revolving Credit
Notes and the Tranche B Revolving Credit Notes.
20
<PAGE> 26
"REVOLVING LOANS" shall mean the Tranche A Revolving Loans or the
Tranche B Revolving Loans.
"SEC" shall mean the Securities and Exchange Commission, and any
successor thereto.
"SECURED PARTIES" shall mean (a) the Lenders and the Issuing Bank, (b)
the Administrative Agent and the Syndication Agent, in their capacities as such
under each Loan Document, (c) each Agent or Lender with which the Borrower
enters into an Interest Rate Protection Agreement pursuant to Section 5.09, in
its capacity as a party to such agreement, (d) the beneficiaries of each
indemnification obligation undertaken by the Borrower or any of the Subsidiaries
under any Loan Document and (e) the successors and assigns of the foregoing.
"SHAREHOLDER" shall mean, as of any date, any person or "group" (within
the meaning of Rule 13d-3 under the Exchange Act) (a) which beneficially owns as
of such date Capital Stock of the Borrower (or of any person Controlling the
Borrower) representing 5% or more of the aggregate ordinary voting power of all
the outstanding Capital Stock of the Borrower (or of such person Controlling the
Borrower) and (b) of which the Borrower has knowledge.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"SOLVENT" shall have the meaning assigned to such term in Section
3.19(a).
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other domestic banking authority (and with
respect to any Non-U.S. Lender, any foreign banking authority) to which the
Administrative Agent or any Lender (including any branch, Affiliate or other
fronting office making or holding a Loan) is subject for Eurocurrency
Liabilities (as defined in Regulation D of the Board). Such reserve percentages
shall include those imposed pursuant to such Regulation D. LIBOR Loans shall be
deemed to constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
which may be available from time to time to any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"SUBORDINATED NOTES" shall mean (i) the $65,000,000 6.5% Convertible
Subordinated Notes due September 1, 2003, and all documents and instruments
pursuant to which they were issued or related in any way thereto, (ii) the
promissory notes issued or to be issued by Glasteel Parts and Services, Inc., a
Subsidiary of the Borrower, to Pharaoh Corp. (and the associated subordinated
guarantees of the Borrower with respect to each such note) pursuant to the Asset
Purchase Agreement dated as of February 28, 1995 between the Borrower and
Pharaoh Corp., and all documents and instruments pursuant to which they were
issued or related in any way thereto and (iii) the two Promissory Notes dated
February 28, 1995 in the
21
<PAGE> 27
original principal amount of $1,917,857 each from Pfaudler, Inc. (a Subsidiary
of the Borrower) to Ron Gale and Jan Gale, respectively, and the associated
Subordinated Guaranty of the Borrower with respect to each such note of even
date therewith, and all documents and instruments pursuant to which they were
issued or related in any way thereto.
The term "SUBSIDIARY" shall mean, with respect to any person (referred
to in this definition as the "parent"), any corporation, partnership,
association or other business entity (a) of which Capital Stock representing
more than 50% of the aggregate ordinary voting power or more than 50% of the
ownership interests is, at the time any determination is being made, owned,
Controlled or held, or (b) which is, at the time any determination is made,
otherwise Controlled, by (i) the parent, (ii) one or more subsidiaries of the
parent or (iii) the parent and one or more subsidiaries of the parent.
"SUBSIDIARY" shall mean the subsidiaries of the Borrower existing as of
the Closing Date and listed on Schedule 3.08 and other subsidiaries of the
Borrower that are permitted to be created or acquired hereafter pursuant to the
express terms of this Agreement.
"SUPPLEMENTAL AGREEMENT" shall mean an agreement between a Subsidiary
and the Administrative Agent in the form attached hereto as Exhibit I, as
amended from time to time.
"SWINGLINE BORROWING" shall mean a Borrowing comprised of Swingline
Loans.
"SWINGLINE COMMITMENT" shall mean the commitment of the Swingline
Lender to make loans pursuant to Section 2.01(d) and Section 2.21, as the same
may be reduced from time to time pursuant to Section 2.09.
"SWINGLINE EXPOSURE" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Tranche A Lender at any time shall equal its Applicable Tranche A
Percentage of the aggregate Swingline Exposure at such time.
"SWINGLINE LENDER" shall mean Bank One, Dayton, N.A., and its
successors in such capacity.
"SWINGLINE LOANS" shall mean any loan made by the Swingline Lender
pursuant to Section 2.01(d) and 2.21.
"SWINGLINE NOTE" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit A-3 hereto, evidencing Swingline Loans.
"SYNDICATION AGENT" shall mean NationsBank, N.A., in its capacity as
syndication agent and documentation agent for the Lenders hereunder, and its
successors in such capacity.
"TAXES" shall have the meaning assigned to such term in Section
2.19(a).
22
<PAGE> 28
"TOTAL DEBT" shall mean, as of any date, the aggregate amount of (a)
all Revolving Loans, Letters of Credit and Swingline Loans outstanding as of
such date and (b) all other Indebtedness (other than (i) Interest Rate
Protection Agreements permitted by Section 6.01(h), (ii) the obligations of the
German Subsidiary with respect to its unfunded German pension plan and (iii)
post retirement obligations of the Borrower and the Domestic Subsidiaries) of
the Borrower and its Consolidated Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP, which by its terms or by the terms
of any instrument or agreement relating thereto matures more than one year from
the date of the initial creation thereof (including any current installment
thereof due within one year of the date of determination); PROVIDED, THAT, Total
Debt shall include any Indebtedness which does not otherwise come within the
foregoing definition but which is directly or indirectly renewable or extendible
at the option of the debtor to a date one year or more (including an option of
the debtor under a revolving credit or similar agreement obligating the lender
or lenders to extend credit over a period of one year or more) from the date of
the initial creation thereof.
"TRANCHE A EURODOLLAR BORROWING" shall mean a Borrowing comprised of
Tranche A Revolving Loans bearing interest at a rate based on the Adjusted LIBO
Rate.
"TRANCHE A LENDER" shall mean any Lender making Tranche A Revolving
Loans.
"TRANCHE A REVOLVING CREDIT AVAILABILITY PERIOD" shall mean the period
from and including the Closing Date to but excluding the termination of the
Tranche A Revolving Credit Commitments of the Lenders in accordance with the
terms hereof.
"TRANCHE A REVOLVING CREDIT COMMITMENT" shall mean, with respect to
each Tranche A Lender, the commitment of such Tranche A Lender to make Tranche A
Revolving Loans hereunder as set forth on Schedule 2.01(a), or in the Assignment
and Acceptance pursuant to which such Tranche A Lender assumed its Tranche A
Revolving Credit Commitment, as applicable, as the same may be (a) reduced from
time to time pursuant to Section 2.09 and (b) reduced or increased from time to
time pursuant to assignments by or to such Tranche A Lender pursuant to Section
9.04.
"TRANCHE A REVOLVING CREDIT FACILITY" shall mean the Tranche A
Revolving Loans, the Swingline Loans and the Letters of Credit provided or
participated in by the Tranche A Lenders to the Borrower pursuant to this
Agreement and the other Loan Documents.
"TRANCHE A REVOLVING CREDIT MATURITY DATE" shall mean November 26,
2001.
"TRANCHE A REVOLVING CREDIT NOTE" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-1 hereto, evidencing Tranche A
Revolving Loans.
"TRANCHE A REVOLVING LOANS" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to Section 2.01(a). Each Tranche A Revolving
Loan shall be a LIBOR Loan or an ABR Loan.
23
<PAGE> 29
"TRANCHE B EURODOLLAR BORROWING" shall mean a Borrowing comprised of
Tranche B Revolving Loans bearing interest at a rate based on the Adjusted LIBO
Rate.
"TRANCHE B LENDER" shall mean any Lender making Tranche B Revolving
Loans.
"TRANCHE B REVOLVING CREDIT AVAILABILITY PERIOD" shall mean the period
from and including the Closing Date to but excluding the termination of the
Tranche B Revolving Credit Commitments of the Lenders in accordance with the
terms hereof.
"TRANCHE B REVOLVING CREDIT COMMITMENT" shall mean, with respect to
each Tranche B Lender, the commitment of such Tranche B Lender to make Tranche B
Revolving Loans hereunder as set forth on Schedule 2.01(b), or in the Assignment
and Acceptance pursuant to which such Tranche B Lender assumed its Tranche B
Revolving Credit Commitment, as applicable, as the same may be (a) reduced from
time to time pursuant to Section 2.09 and (b) reduced or increased from time to
time pursuant to assignments by or to such Tranche B Lender pursuant to Section
9.04.
"TRANCHE B REVOLVING CREDIT FACILITY" shall mean the Tranche B
Revolving Loans participated in by the Tranche B Lenders to the Borrower
pursuant to this Agreement and the other Loan Documents.
"TRANCHE B REVOLVING CREDIT MATURITY DATE" shall mean November 25,
1997; PROVIDED, THAT, if the Borrower requests and obtains a 364 day extension
of the Tranche B Revolving Credit Facility pursuant to Section 2.09(f), the
Tranche B Revolving Credit Maturity Date shall mean the date that is 364 days
from the prior Tranche B Revolving Credit Maturity Date.
"TRANCHE B REVOLVING CREDIT NOTE" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-2 hereto, evidencing Tranche B
Revolving Loans.
"TRANCHE B REVOLVING LOANS" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to Section 2.01(b). Each Tranche B Revolving
Loan shall be a LIBOR Loan or an ABR Loan.
"TRANSFEREE" shall have the meaning assigned to such term in Section
2.19(a).
"TYPE" shall have the meaning assigned to such term in Section 1.03.
"UK SUBSIDIARY" shall mean Robbins & Myers U.K. Limited, an English
corporation.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary other than a
Restricted Subsidiary.
"VOTING STOCK" shall have the meaning assigned to such term in the
definition of "Change of Control".
24
<PAGE> 30
"WHOLLY OWNED SUBSIDIARY" shall mean, at any time, any Subsidiary, all
of the Capital Stock of which is at such time directly or indirectly owned by
the Borrower.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Unless otherwise
expressly provided herein, all terms of an accounting or financial nature used
herein shall be interpreted in accordance with GAAP, as in effect from time to
time; PROVIDED, THAT, for purposes of (a) making any calculation contemplated by
the provisions of Article II and (b) determining compliance with any covenant
set forth in Article VI, such terms shall be construed in accordance with GAAP
as in effect on the date of this Agreement applied on a basis consistent with
the application used in preparing the audited financial statements of the
Borrower referred to in Section 3.05.
SECTION 1.03. TYPES OF BORROWINGS. The term "Borrowing" refers to the
portion of the aggregate principal amount of Loans of any Class outstanding
hereunder which bears interest of a specific Type and for a specific Interest
Period pursuant to a notice of Borrowing pursuant to Section 2.03. Each Lender's
ratable share of each Borrowing is referred to herein as a separate "Loan".
Borrowings and Loans hereunder are distinguished by "Class" and "Type". The
"Class" of a Loan or of a Commitment to make such a Loan or of a Borrowing
comprising such Loans refers to whether such Loan is a Tranche A Revolving Loan,
a Tranche B Revolving Loan or a Swingline Loan. The "Type" of a Loan refers to
whether such Loan is an ABR Loan or a LIBOR Loan. Borrowings and Loans may (but
need not) be identified both by Class and Type (E.G., a "LIBOR Tranche A
Revolving Loan" is a Loan which is both a Tranche A Revolving Loan and a LIBOR
Loan).
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENT TO MAKE LOANS. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
each Tranche A Lender agrees, severally and not jointly, to make Tranche A
Revolving Loans to the Borrower, at any time and from time to time during the
Tranche A Revolving Credit Availability Period, in an aggregate principal amount
at any one time outstanding not to exceed the excess, if any, of such Lender's
Tranche A Revolving Credit Commitment set forth opposite its name on Schedule
2.01(a) (as the same may be reduced from time to time pursuant to Section 2.09
or changed from time to time pursuant to an assignment in accordance with
Section 9.04) over the sum of its Applicable Tranche A Percentage of outstanding
and unpaid Tranche A Revolving Loans at such time, PLUS its Letter of Credit
Exposure at such time PLUS its Swingline Exposure at such time.
25
<PAGE> 31
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Tranche B Lender agrees,
severally and not jointly, to make Tranche B Revolving Loans to the Borrower, at
any time and from time to time during the Tranche B Revolving Credit
Availability Period, in an aggregate principal amount at any one time
outstanding not to exceed the excess, if any, of such Lender's Tranche B
Revolving Credit Commitment set forth opposite its name on Schedule 2.01(b) (as
the same may be reduced from time to time pursuant to Section 2.09 or changed
from time to time pursuant to an assignment in accordance with Section 9.04),
over its Applicable Tranche B Percentage of outstanding and unpaid Tranche B
Revolving Loans at such time.
(c) The Borrower may borrow, pay or prepay and reborrow Tranche A
Revolving Loans during the Tranche A Revolving Credit Availability Period and
Tranche B Revolving Loans during the Tranche B Revolving Credit Availability
Period, within the limits set forth in Section 2.01(a) and (b) and upon the
other terms and subject to the other conditions and limitations set forth
herein.
(d) Subject to the terms and conditions and relying on the
representations and warranties herein set forth, the Swingline Lender agrees to
make loans to the Borrower, from time to time during the Tranche A Revolving
Credit Availability Period, in an aggregate principal amount at any one time
outstanding not to exceed the lesser of (i) $10,000,000 and (ii) the excess, if
any, of the aggregate amount of all Lenders' Tranche A Revolving Credit
Commitments, as the same may be reduced from time to time pursuant to Section
2.09 or changed from time to time pursuant to an assignment in accordance with
Section 9.04, over the sum of (A) the then outstanding and unpaid Tranche A
Revolving Credit Loans, (B) the then outstanding aggregate Letter of Credit
Exposure and (C) the then outstanding aggregate Swingline Exposure. Each
Swingline Loan shall be in a principal amount that is an integral multiple of
$100,000.
SECTION 2.02. LOANS. (a) Each Loan (other than Swingline Loans) shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their respective Tranche A Revolving Credit Commitments and
Tranche B Revolving Credit Commitments, as the case may be, based on their
Applicable Tranche A Percentage and Applicable Tranche B Percentage,
respectively; PROVIDED, THAT, the failure of any Lender to make any Loan shall
not in itself relieve any other Lender of its obligation to lend hereunder (it
being understood, however, that no Lender shall be responsible for the failure
of any other Lender to make any Loan required to be made by such other Lender).
The Loans comprising any Borrowing (other than a Borrowing comprised of
Swingline Loans) shall be in an aggregate principal amount which is (i) an
integral multiple of $100,000 and not less than $500,000 in the case of LIBOR
Loans and (ii) an integral multiple of $100,000 in the case of ABR Loans.
(b) A particular Borrowing (other than a Borrowing comprised of
Swingline Loans) shall consist solely of ABR Loans or LIBOR Loans as the
Borrower may request pursuant to Section 2.03; PROVIDED, THAT, if an Event of
Default or Default shall have occurred and be continuing (i) the Borrower shall
not be entitled to request any LIBOR Loans and (ii) no Loans of any Type shall
be made unless such Event of Default or Default shall have been waived in
accordance with Section 9.08(b); PROVIDED, THAT, the
26
<PAGE> 32
Administrative Agent shall not be deemed liable to the Lenders for disbursing
Loan proceeds received from a Lender if the Administrative Agent had no
knowledge of the existence of a Default or Event of Default. Each Lender may at
its option fulfill its Commitment with respect to any LIBOR Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
PROVIDED, THAT, any exercise of such option shall not affect the obligation of
the Borrower to repay such Loan in accordance with the terms of this Agreement
and the applicable Note. Borrowings of more than one Type and LIBOR Loans
bearing interest for more than one specific Interest Period may be outstanding
at the same time; PROVIDED, THAT, the Borrower shall not be entitled to request
any Borrowing or any continuation or conversion thereof which, if made, would
result in an aggregate of more than ten separate LIBOR Loans of any Lender being
outstanding hereunder at any one time. For purposes of the foregoing, Loans
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Loans.
(c) All Swingline Loans shall be ABR Loans. No Swingline Loan shall be
a LIBOR Loan.
(d) Subject to Section 2.02(h) and Section 2.16, each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds to the Administrative Agent in Dayton,
Ohio, not later than 4:00 p.m., Eastern Standard Time, and the Administrative
Agent shall by 6:00 p.m., Eastern Standard Time, credit or wire transfer the
amounts so received to an account in the name of the Borrower maintained with
the Administrative Agent or, if a Borrowing shall not occur on such date because
any condition precedent herein specified shall not have been met, return the
amounts so received to the respective Lenders.
(e) If the Administrative Agent has not received from the Borrower the
payment required by Section 2.22(g) by 2:00 p.m., Eastern Standard Time, on the
date of notice from the Issuing Bank that payment of a draft presented under any
Letter of Credit has been or will be made, as provided in Section 2.22(g), the
Administrative Agent will promptly notify the Issuing Bank and each Lender of
the Letter of Credit Disbursement and, in the case of each Lender, its pro rata
portion of such Letter of Credit Disbursement. Not later than 10:00 a.m.,
Eastern Standard Time, on the next Business Day, each Lender shall make
available its pro rata share (based on such Lender's Applicable Tranche A
Percentage) of such Letter of Credit Disbursement, in Federal or other funds
immediately available in Dayton, Ohio, to the Administrative Agent at its
address set forth in Section 9.01, and the Administrative Agent will promptly
make such funds available to the Issuing Bank. The Administrative Agent will
promptly remit to each Lender that shall have made such funds available its pro
rata portion (based on such Lender's Applicable Tranche A Percentage) of any
amounts subsequently received by the Administrative Agent from the Borrower in
respect of such Letter of Credit Disbursement.
(f) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing, or prior to the time of any required
payment by any Lender in respect of a Letter of Credit Disbursement, that such
Lender will not make available to the Administrative Agent such Lender's portion
of such Borrowing or payment, the Administrative Agent may assume that such
Lender has made such portion available to
27
<PAGE> 33
the Administrative Agent on the date of such Borrowing or payment in accordance
with Section 2.02(a), and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower or the Issuing Bank, as the case may
be, on such date a corresponding amount. If and to the extent that such Lender
shall not have made such portion available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower or the
Issuing Bank (or, if the Administrative Agent and the Issuing Bank are the same
person, from the date of such payment in respect of a Letter of Credit
Disbursement), as applicable, until the date such amount is repaid to the
Administrative Agent at, (i) in the case of the Borrower, the interest rate
applicable thereto pursuant to Section 2.06 or 2.22(g), as applicable, and (ii)
in the case of such Lender, the Federal Funds Effective Rate. If such Lender
shall repay to the Administrative Agent such corresponding amount in respect of
a Borrowing, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement.
(g) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Eurodollar Borrowing if the Interest Period
requested with respect thereto would end after the Tranche A Revolving Credit
Maturity Date or the Tranche B Revolving Credit Maturity Date, as applicable.
Any Revolving Credit Borrowing which cannot be refinanced as a Eurodollar
Borrowing by reason of the preceding sentence shall be automatically converted
at the end of the Interest Period in effect for such Borrowing into an ABR
Borrowing.
(h) The Borrower may refinance all or any part of any Revolving Credit
Borrowing with a Revolving Credit Borrowing of the same or a different Type,
upon the terms and subject to the conditions and limitations set forth in this
Agreement. Any Revolving Credit Borrowing or part thereof so refinanced shall be
deemed for all purposes to be simultaneously repaid or prepaid in accordance
with Section 2.04 or 2.12, as applicable, with the proceeds of a new Revolving
Credit Borrowing and the proceeds of such new Revolving Credit Borrowing (to the
extent they do not exceed the principal amount of the Borrowing being
refinanced) shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to the Borrower pursuant to Section 2.02(d).
SECTION 2.03. NOTICE OF BORROWINGS. In order to request a Borrowing
(other than a Swingline Loan), the Borrower shall give the Administrative Agent
written or telecopy notice (or telephone notice promptly confirmed in writing or
by telecopy) (a) in the case of a Eurodollar Borrowing, not later than 12:00
noon, Eastern Standard Time, two Business Days before a proposed Borrowing and
(b) in the case of an ABR Borrowing, not later than 12:00 noon, Eastern Standard
Time, on the Business Day of a proposed Borrowing. Any such notice of Borrowing
shall be irrevocable, shall be substantially in the form of Exhibit J hereto,
and shall in each case refer to this Agreement and specify (i) whether the
Borrowing then being requested is to be a Eurodollar Borrowing or an ABR
Borrowing; (ii) the date of such Borrowing (which shall be a Business Day) and
the amount thereof; and (iii) if such Borrowing is to be a Eurodollar Borrowing,
the Interest Period with respect thereto. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar
28
<PAGE> 34
Borrowing is specified in any such notice, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. If the Borrower shall
not have given notice in accordance with this Section 2.03 of its election to
refinance a Revolving Credit Borrowing prior to the end of the Interest Period
in effect for such Borrowing, then the Borrower shall (unless such Borrowing is
repaid at the end of such Interest Period) be deemed to have given notice of an
election to refinance such Borrowing with an ABR Borrowing. The Administrative
Agent shall, by 2:00 p.m. Eastern Standard Time, on the day it receives a notice
hereunder from the Borrower, advise the applicable Lenders of any notice given
pursuant to this Section 2.03 and of each Lender's portion of the requested
Borrowing.
SECTION 2.04. NOTES; REPAYMENT OF LOANS. (a) The Tranche A Revolving
Loans made by each Lender shall be evidenced by a Tranche A Revolving Credit
Note, duly executed and delivered on behalf of the Borrower, dated the Closing
Date, substantially in the form attached hereto as Exhibit A-1, with the blanks
appropriately filled, payable to the order of such Lender in a principal amount
equal to such Lender's Tranche A Revolving Credit Commitment. The outstanding
principal balance of each Tranche A Revolving Loan, as evidenced by each
applicable Tranche A Revolving Credit Note, shall be payable on the last day of
the Interest Period applicable to such Tranche A Revolving Loan and on the
Tranche A Revolving Credit Maturity Date, and shall bear interest from the date
of the first Borrowing hereunder on the outstanding principal balance thereof as
set forth in Section 2.06. Each Lender shall, and is hereby authorized by the
Borrower to, endorse on the schedule attached to each Tranche A Revolving Credit
Note delivered to such Lender (or on a continuation of such schedule attached to
such Tranche A Revolving Credit Note and made a part thereof), or otherwise to
record in such Lender's internal records, an appropriate notation evidencing the
date and amount of each applicable Loan from such Lender, each payment and
prepayment of principal of any such Loan, each payment of interest on any such
Loan and the other information provided for on such schedule; PROVIDED, THAT,
the failure of any Lender to make such a notation or any error therein shall not
affect the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms of this Agreement and the applicable Tranche A
Revolving Credit Notes.
(b) The Tranche B Revolving Loans made by each Lender shall be
evidenced by a Tranche B Revolving Credit Note, duly executed and delivered on
behalf of the Borrower, dated the Closing Date, substantially in the form
attached hereto as Exhibit A-2, with the blanks appropriately filled, payable to
the order of such Lender in a principal amount equal to such Lender's Tranche B
Revolving Credit Commitment. The outstanding principal balance of each Tranche B
Revolving Loan, as evidenced by the applicable Tranche B Revolving Credit Note,
shall be payable on the last day of the Interest Period applicable to such
Tranche B Revolving Loan and on the Tranche B Revolving Credit Maturity Date,
and shall bear interest from the date of the first Borrowing hereunder on the
outstanding principal balance thereof as set forth in Section 2.06. Each Lender
shall, and is hereby authorized by the Borrower to, endorse on the schedule
attached to each Tranche B Revolving Credit Note delivered to such Lender (or on
a continuation of such schedule attached to such Tranche B Revolving Credit Note
and made a part thereof), or otherwise to record in such Lender's internal
records, an appropriate notation evidencing the date and amount of each
applicable Tranche B Revolving Loan from such Lender, each payment and
prepayment of principal of
29
<PAGE> 35
any such Loan, each payment of interest on any such Loan and the other
information provided for on such schedule; PROVIDED, THAT, the failure of any
Lender to make such a notation or any error therein shall not affect the
obligation of the Borrower to repay the Tranche B Revolving Loans made by such
Lender in accordance with the terms of this Agreement and the applicable Tranche
B Revolving Credit Notes.
(c) The Swingline Loans made by the Swingline Lender shall be evidenced
by a Swingline Note, duly executed and delivered on behalf of the Borrower,
substantially in the form attached hereto as Exhibit A-3, with the blanks
appropriately filled, payable to the order of the Swingline Lender in a
principal amount equal to the Swingline Commitment. The outstanding principal
balance of each Swingline Loan, as evidenced by the applicable Swingline Note,
shall be payable on the last day of the Interest Period applicable to such
Swingline Loan and on the Tranche A Revolving Credit Maturity Date. The
Swingline Note shall bear interest from the date of the first Borrowing
hereunder on the outstanding principal balance thereof as set forth in Section
2.06. The Swingline Lender shall, and is hereby authorized by the Borrower to,
endorse on the schedule attached to the Swingline Note (or on a continuation of
such schedule attached to the Swingline Note and made a part thereof), or
otherwise to record in the Swingline Lender's internal records, an appropriate
notation evidencing the date and amount of each applicable Swingline Loan from
the Swingline Lender, each payment and prepayment of principal of any Swingline
Loan, each payment of interest on any such Loan and the other information
provided for on such schedule; PROVIDED, THAT, the failure of the Swingline
Lender to make such a notation or any error therein shall not affect the
obligation of the Borrower to repay the Swingline Loans made by the Swingline
Lender in accordance with the terms of this Agreement and the Swingline Note.
SECTION 2.05. FEES. (a) The Borrower shall pay to the Administrative
Agent for the account of each Lender, on the last day of March, June, September
and December in each year and on the date on which the Revolving Credit
Commitment of such Lender shall expire or be terminated as provided herein, a
commitment fee (a "Commitment Fee") on the average daily unused amount of (x)
the Tranche A Revolving Credit Commitment (for purposes of this calculation
only, outstanding Swingline Borrowings in which the Swingline Lender has not
required the other Lenders to participate pursuant to Section 2.21(c), shall not
be considered as usage of their respective Tranche A Revolving Credit
Commitments, except that such Swingline Borrowings shall count as usage of the
Swingline Lender's Tranche A Revolving Credit Commitment) (as the same may be
reduced from time to time pursuant to Section 2.09) and (y) the Tranche B
Revolving Credit Commitment (as the same may be reduced from time to time
pursuant to Section 2.09), of such Lender (as applicable) during the preceding
quarter (or shorter period commencing with the Closing Date or ending with the
date on which the Tranche A Revolving Credit Commitment or Tranche B Revolving
Credit Commitment of such Lender, as the case may be, shall be terminated),
equal to (i) with respect to Tranche A Revolving Credit Commitments (A) during
any Level I Pricing Period, 0.125% per annum; (B) during any Level II Pricing
Period, 0.150% per annum; (C) during any Level III Pricing Period, 0.200% per
annum; (D) during any Level IV Pricing Period, 0.250% per annum; (E) during any
Level V Pricing Period, 0.300% per annum; and (F) during any Level VI Pricing
Period, 0.375% per annum; and (ii) with respect to Tranche B Revolving Credit
Commitments, (A) during any Level I Pricing Period, 0.080% per annum; (B) during
any Level II Pricing Period, 0.100% per annum; (C) during any Level III
30
<PAGE> 36
Pricing Period, 0.125% per annum; (D) during any Level IV Pricing Period, 0.150%
per annum; (E) during any Level V Pricing Period, 0.200% per annum; and (F)
during any Level VI Pricing Period, 0.250% per annum. All Commitment Fees shall
be computed on the basis of the actual number of days elapsed in a year of 360
days. The Commitment Fees due to each Lender shall commence to accrue on the
Closing Date and cease to accrue on the date on which the Revolving Credit
Commitment of such Lender shall be terminated as provided herein.
(b) The Borrower shall pay to the Administrative Agent (i) for the
account of each Tranche A Lender, on the last day of March, June, September and
December of each year and on the date on which the Tranche A Revolving Credit
Commitment of such Lender shall expire or be terminated as provided herein, a
letter of credit fee (a "LETTER OF CREDIT FEE") equal to (A) such Lender's
Applicable Tranche A Percentage of the aggregate Letter of Credit Exposure
(excluding the portion thereof attributable to unreimbursed Letter of Credit
Disbursements) existing as of the first day of the quarter then ended (or
shorter period commencing with the Closing Date or ending with the date on which
all Letters of Credit have been canceled or have expired and the Tranche A
Revolving Credit Commitments of all Tranche A Lenders shall have been
terminated) plus the face amount of each Letter of Credit issued during such
quarter (or shorter period commencing with the Closing Date or ending with the
date on which all Letters of Credit have been canceled or have expired and the
Tranche A Revolving Credit Commitments of all Tranche A Lenders shall have been
terminated) multiplied by (B) a per annum rate equal to the Applicable LIBOR
Margin in effect from time to time during such period, and (ii) for the account
of the Issuing Bank, on the last day of March, June, September and December of
each year, a fronting fee (a "FRONTING FEE") of 0.125% per annum on the sum of
(A) the aggregate Letter of Credit Exposure (excluding the portion thereof
attributable to unreimbursed Letter of Credit Disbursements) existing as of the
first day of the quarter then ended (or shorter period commencing with the date
hereof or ending with the Tranche A Revolving Credit Maturity Date) and (B) the
face amount of each Letter of Credit issued during such quarter and, with
respect to each Letter of Credit, any other customary fees of the Issuing Bank
agreed upon by the Borrower and Issuing Bank in connection with the issuance,
amendment or transfer of any Letter of Credit or any Letter of Credit
Disbursement. All Letter of Credit Fees and Fronting Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days.
(c) The Borrower agrees to pay to the Agents, for their own accounts,
the fees set forth in the Fee Letter dated October 2, 1996 among NCMI, the
Agents and the Borrower and in the applicable provisions of the Commitment
Letter dated October 2, 1996 among such parties (together, the "FEE LETTER") in
the amounts and on the dates provided in the Fee Letter. Such fees shall be in
addition to reimbursement of the Agents' reasonable out-of-pocket expenses.
(d) All Fees shall be paid on the dates due, in immediately available
funds. Once paid, none of the Fees shall be refundable under any circumstances
(absent manifest error).
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, each Revolving Loan and each Swingline Loan comprising an ABR
Borrowing shall bear
31
<PAGE> 37
interest for each day from the date such Loan is made until it becomes due
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be when determined by reference to the Prime Rate
and over a year of 360 days at all other times) at a rate per annum equal to the
Alternate Base Rate, plus the Applicable ABR Margin in effect from time to time
for such Class of Loan. So long as any ABR Borrowing is outstanding, the
Administrative Agent shall promptly notify the Borrower of any change in the
Prime Rate.
(b) Subject to the provisions of Section 2.07, each Revolving Loan
comprising a Eurodollar Borrowing shall bear interest for each day from the date
such Loan is made until it becomes due (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing, plus
the Applicable LIBOR Margin in effect from time to time for such Class of Loan.
(c) Each Level I Pricing Period, Level II Pricing Period, Level III
Pricing Period, Level IV Pricing Period, Level V Pricing Period or Level VI
Pricing Period (each a "Pricing Period") shall commence on (and include) the
date that is the first day of the third month following the end of each Fiscal
Quarter of the Borrower and shall terminate on the day before the beginning of
the next Pricing Period. Notwithstanding the foregoing, in the event the
Borrower has failed to deliver any Required Financial Statements when due in
accordance with Section 5.04, a Level VI Pricing Period shall be deemed to be in
effect beginning as of the first day of the third month following the end of the
Fiscal Quarter for which any Required Financial Statement was not timely
delivered and such Level VI Pricing Period shall remain effective until a Fiscal
Quarter in which Borrower has delivered the Required Financial Statements when
due in accordance with Section 5.04, and then the applicable Pricing Period as
determined pursuant hereto with reference to the Required Financial Statements
shall become effective on the date determined above.
(d) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan, except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent in good faith, and such determination shall be
conclusive absent manifest error.
SECTION 2.07. DEFAULT INTEREST. If and for so long as any Event of
Default shall have occurred and be continuing, interest shall accrue, to the
extent permitted by applicable law, on the outstanding amount of all Obligations
during the period from (and including) the date of such Event of Default to (but
not including) the date of actual payment (after as well as before judgment) at
(a) in the case of principal of or interest on any Loan, the rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) applicable to such Loan during
such period pursuant to Section 2.06, plus 2.00% or (b) in the case of any other
amount, a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when determined by
reference to the Prime Rate and over a year of 360 days at all other times)
equal to the rate applicable to ABR Loans during such period
32
<PAGE> 38
pursuant to Section 2.06, plus 2.00%. The Borrower shall pay all such accrued
but unpaid interest from time to time upon demand.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
reasonably determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the applicable
interbank market, or that the rates at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to the Lenders of making
or maintaining LIBOR Loans during such Interest Period, or that reasonable means
do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent
shall, as soon as practicable thereafter, give written or telecopy notice of
such determination to the Borrower and the Lenders. In the event of any such
determination, any request by the Borrower for a Eurodollar Borrowing pursuant
to Section 2.03 or 2.10 shall, until the Administrative Agent shall have advised
the Borrower and the Lenders that the circumstances giving rise to such notice
no longer exist, be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS; EXTENSION OF
COMMITMENTS. (a) The Tranche A Revolving Credit Commitments and the Swingline
Commitment shall be automatically terminated at 5:00 p.m., Eastern Standard
Time, on (i) November 27, 1996, if the first Borrowing hereunder in accordance
with Article IV has not occurred by such date, and (ii) otherwise, the Tranche A
Revolving Credit Maturity Date.
(b) The Tranche B Revolving Credit Commitments shall be automatically
terminated at 5:00 p.m., Eastern Standard Time, on (i) November 27, 1996, if the
first Borrowing of any Class hereunder in accordance with Article IV has not
occurred by such date, and (ii) otherwise, the Tranche B Revolving Credit
Maturity Date.
(c) Upon at least five Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or in part permanently reduce, the Revolving Credit
Commitments; PROVIDED, THAT, (i) each partial reduction of the Revolving Credit
Commitments shall be in a minimum aggregate principal amount which is an
integral multiple of $500,000 and not less than $1,000,000, and (ii) the
aggregate of Tranche A Revolving Credit Commitment shall not be reduced to an
amount that is less than the aggregate Letter of Credit Exposure at that time.
(d) On the date of each mandatory payment or prepayment of Loans (or
provision of cash collateral in respect of Letters of Credit) in accordance with
Sections 2.11(c) or (d), the Revolving Credit Commitments shall be permanently
reduced by an aggregate amount equal to the amount of such required payment or
prepayment (or provision of cash collateral).
(e) Each reduction in the Revolving Credit Commitments shall be made
ratably among the Lenders in accordance with their respective Revolving Credit
Commitments and
33
<PAGE> 39
each such reduction shall proportionately reduce the Swingline Commitment. The
Borrower shall pay to the Administrative Agent for the account of the Lenders,
on the date of each termination or reduction of the Revolving Credit
Commitments, the Commitment Fees on the amount of the Revolving Credit
Commitments so terminated or reduced accrued to the date of such termination or
reduction.
(f) The Borrower shall have the option to request an extension of the
Tranche B Revolving Credit Maturity Date by 364 days on an annual basis;
provided, that, in no event shall the Tranche B Revolving Credit Maturity Date
be extended beyond the Tranche A Revolving Credit Maturity Date. In the event
the Borrower desires to extend the maturity of the Tranche B Revolving Credit
Facility, the Borrower shall give written notice of such request to the
Administrative Agent not less than 90 days before the then scheduled termination
of the Tranche B Revolving Credit Facility. The Administrative Agent shall give
the Lenders prompt written notice of the receipt of any such request. In the
event the Administrative Agent obtains the written consent of at least 66.67% of
the Tranche B Revolving Credit Commitments, but not the unanimous consent of all
Tranche B Lenders, within 30 days after the date of the Borrower's request for
such extension (any Lender failing to give consent being referred to herein as a
"DISSENTING LENDER"), the Administrative Agent shall so notify the Borrower and
the Borrower shall have the right to replace any Dissenting Lender by causing
such Lender to transfer and assign all its interests, rights and obligations
under this Agreement to another financial institution pursuant to Section 2.20;
PROVIDED, THAT, any transfer or assignment must occur prior to 30 days before
the scheduled termination of the Tranche B Revolving Credit Facility and the
transferee must be willing to consent to the requested extension. Any request to
extend the Tranche B Revolving Credit Facility (in whole or in part as provided
below) shall be granted if, and only if, (i) no Default or Event of Default
exists (either at the time of Borrower's request for extension, or any time
subsequent thereto and prior to the then scheduled termination of the Tranche B
Revolving Credit Facility) and (ii) the Administrative Agent shall have received
the written consent of Lenders holding at least 66.67% of the Tranche B
Revolving Credit Commitments within 30 days of the Borrower's written request;
otherwise, the Tranche B Revolving Credit Maturity Date shall not be extended.
If the conditions to an extension of the Tranche B Revolving Credit Maturity
Date as set forth in clauses (i) and (ii) above are met, then (I) the Tranche B
Revolving Credit Maturity Date shall be extended as to all Tranche B Revolving
Credit Commitments of Tranche B Lenders that consented to such extension and all
Lenders that acquired Tranche B Revolving Credit Commitments of Dissenting
Lenders pursuant to the procedures set forth in this Section 2.09(f), and (II)
the Tranche B Revolving Credit Commitments shall be permanently reduced by an
amount equal to all Tranche B Revolving Credit Commitments of the Dissenting
Lenders not assigned to other financial institutions pursuant to this Section
2.09(f). It is understood and agreed that no consenting Lender shall be required
to increase its Tranche B Revolving Credit Commitment under any circumstances.
Notwithstanding the foregoing, it is further understood and agreed that at no
time shall the Tranche B Lenders be obligated to extend the Tranche B Revolving
Credit Maturity Date, unless at least an aggregate total of $33,335,000 in total
aggregate Tranche B Revolving Credit Commitments are to be extended pursuant
hereto. Each Lender shall respond in writing to the Administrative Agent within
30 days of Borrower's written request for an extension.
34
<PAGE> 40
SECTION 2.10. CONVERSION AND CONTINUATION OPTIONS. Except with respect
to Borrowings comprised of Swingline Loans, as to which this Section 2.10 shall
not apply, the Borrower shall have the right at any time upon prior irrevocable
notice to the Administrative Agent (a) not later than 12:00 noon, Eastern
Standard Time, on the day of conversion, to convert any Eurodollar Borrowing
into an ABR Borrowing, (b) not later than 12:00 noon, Eastern Standard Time, two
Business Days prior to conversion or continuation, to convert any ABR Borrowing
into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a
Eurodollar Borrowing for an additional Interest Period and (c) not later than
12:00 noon, Eastern Standard Time, two Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Borrowing to another
permissible Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) the aggregate principal amount of such Borrowing
converted into or continued as (A) a Eurodollar Borrowing, shall be an
integral multiple of $100,000 and not less than $500,000 or (B) an ABR
Borrowing, shall be the lesser of (I) the remaining outstanding
principal amount of such Borrowing and (II) an integral multiple of
$100,000;
(iii) each conversion or continuation shall be effected by
each Lender by applying the proceeds of the new Loan of such Lender
resulting from such conversion or continuation to the Loan (or portion
thereof) of such Lender being converted or continued;
(iv) accrued interest on a LIBOR Loan (or portion thereof)
being converted or continued shall be paid by the Borrower at the time
of conversion;
(v) if any Eurodollar Borrowing is converted or continued at a
time other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.15;
(vi) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing; and
(vii) any portion of a Eurodollar Borrowing which cannot be
converted into or continued as a Eurodollar Borrowing by reason of
clause (vi) above shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Borrowing.
Each notice pursuant to this Section 2.10 shall be irrevocable, shall
be in substantially the form of Exhibit J hereto and shall in each case refer to
this Agreement and specify (I) the principal amount, the Class, the Type and, in
the case of a Eurodollar Borrowing, the Interest Period of the Borrowing that
the Borrower requests be converted or continued,
35
<PAGE> 41
(II) whether such Borrowing is to be converted to or continued as a Eurodollar
Borrowing or an ABR Borrowing, (III) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and (IV) if such
Borrowing is to be converted to or continued as a Eurodollar Borrowing, the
Interest Period with respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a Eurodollar
Borrowing, the Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Administrative Agent shall advise the other Lenders of
any notice given pursuant to this Section 2.10 and of each Lender's portion of
any converted or continued Borrowing. If the Borrower shall not have given
notice in accordance with this Section 2.10 to continue any Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing.
SECTION 2.11. MANDATORY REPAYMENTS AND PREPAYMENTS.
(a) On the Tranche A Maturity Date, all Tranche A Revolving Credit
Borrowings and all Swingline Borrowings shall be due and payable to the extent
not previously paid and all Letter of Credit Exposure (if any) shall be
terminated or cash collateralized in a manner satisfactory to the Agents.
(b) On the Tranche B Maturity Date, all Tranche B Revolving Credit
Borrowings shall be due and payable to the extent not previously paid.
(c) In the event and on each occasion that a Prepayment Event occurs,
the Borrower shall give to the Administrative Agent written or telecopy notice
of such event, the amount of Net Cash Proceeds expected to be received therefrom
and the expected schedule for receiving such proceeds. On the date of receipt by
the Borrower or any Subsidiary of Net Cash Proceeds from such Prepayment Event,
the Borrower shall prepay Loans in an aggregate principal amount equal to the
lesser of (x) 100% of such Net Cash Proceeds received and (y) the amount of Net
Cash Proceeds required to reduce the Commitments (as contemplated by Section
2.09(d)) to, but not below, $100,000,000; PROVIDED, THAT in the case of an Asset
Sale, (i) no such prepayment shall be required unless the aggregate amount of
Net Cash Proceeds received from such Asset Sale and all other Asset Sales
occurring during the same Fiscal Year of the Borrower equals or exceeds
$1,000,000 and (ii) any such receipt of Net Cash Proceeds that would otherwise
result in prepayment of a lesser amount under this subparagraph (c) shall
cumulate until the aggregate amount of such Net Cash Proceeds received and not
yet applied equals or exceeds $1,000,000, at which time such prepayment shall be
made.
(d) In the event and on each occasion that the sum of (i) the aggregate
outstanding principal amount of Tranche A Revolving Credit Loans, (ii) the
aggregate Letter of Credit Exposure, and (iii) the aggregate Swingline Exposure
(collectively, the "TRANCHE A EXPOSURE") exceeds the aggregate amount of the
Tranche A Revolving Credit Commitments at such time, the Borrower shall
immediately prepay Tranche A Revolving Loans such that the aggregate Tranche A
Exposure is equal to or less than the aggregate Tranche A
36
<PAGE> 42
Revolving Credit Commitments. Similarly, in the event and on each occasion that
the aggregate outstanding principal amount of Tranche B Revolving Loans exceeds
the aggregate amount of the Tranche B Revolving Credit Commitments at that time,
the Borrower shall immediately prepay Tranche B Revolving Loans such that the
aggregate outstanding Tranche B Revolving Loans are equal to or less than the
aggregate Tranche B Revolving Credit Commitments.
(e) All mandatory prepayments under Section 2.11(c) or (d) shall be
applied (to the extent applicable) (i) FIRST, to reduce the outstanding
principal amount of the Tranche A Revolving Credit Loans (ii) SECOND, to reduce
the Tranche B Revolving Loans and (iii) to the extent that the remaining amount
of such prepayment is greater than the aggregate principal amount of outstanding
Loans, to provide cash collateral in respect of the Letters of Credit (and
thereupon such cash shall be deemed to reduce the Letter of Credit Exposure for
purposes of this Section 2.11(e)). Subject to the foregoing provisions, any
mandatory prepayment of Loans of any Class pursuant to Section 2.11(c) or (d)
shall be applied to prepay all ABR Loans of such Class before any LIBOR Loans of
such Class are prepaid.
(f) Each payment of Borrowings pursuant to this Section 2.11 (except
partial prepayments of ABR Borrowings) shall be accompanied by accrued interest
on the principal amount paid to but excluding the date of payment. All payments
under this Section 2.11 shall be subject to Section 2.15, but otherwise shall be
without premium or penalty.
SECTION 2.12. OPTIONAL PREPAYMENTS. (a) Subject to Section 2.12(b), the
Borrower shall have the right at any time and from time to time to prepay any
LIBOR Loans, in whole or in part, upon giving prior written or telecopy notice
(or telephone notice promptly confirmed by written or telecopy notice) to the
Administrative Agent, at least three Business Days prior to the date of
prepayment; PROVIDED, THAT each partial prepayment of LIBOR Loans shall be in an
amount which is an integral multiple of $500,000 and not less than $1,000,000
and a partial prepayment of a Eurodollar Borrowing under this Section 2.12(a)
shall not be made that would result in the remaining aggregate outstanding
principal amount thereof being less than $500,000. Each notice of prepayment
shall specify the prepayment date, the Class, the Type, the Interest Period of
the Borrowing to be prepaid and the principal amount thereof to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay such Borrowing by
the amount stated therein on the date stated therein.
(b) All prepayments under this Section 2.12 shall be subject to Section
2.15 but otherwise shall be without premium or penalty. All prepayments under
this Section 2.12 shall be accompanied by accrued interest on the principal
amount being prepaid to, but excluding, the date of payment.
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the Issuing
Bank of the principal of or interest on any LIBOR Loan made by such Lender or
any Fees or other amounts payable hereunder (other
37
<PAGE> 43
than changes in respect of taxes imposed on the overall net income of such
Lender or the Issuing Bank by the jurisdiction in which such Lender or the
Issuing Bank has its principal office or by any state of the United States or by
any political subdivision or taxing authority therein), or shall impose, modify
or deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by any Lender
or the Issuing Bank (except any such reserve requirement that is reflected in
the Adjusted LIBO Rate) or shall impose on such Lender or the Issuing Bank or
the applicable interbank market any other condition affecting this Agreement or
LIBOR Loans made by such Lender or any Letter of Credit or participation
therein, and the result of any of the foregoing shall be to increase the cost to
such Lender or the Issuing Bank of making or maintaining any LIBOR Loan or
increase the cost to any Lender of issuing or maintaining any Letter of Credit
or purchasing or maintaining a participation therein or to reduce the amount of
any sum received or receivable by such Lender (or Affiliate or parent thereof
which fairly allocates any such increase to the Lender) or the Issuing Bank
hereunder (whether of principal, interest or otherwise) by an amount deemed by
such Lender or the Issuing Bank to be material, then the Borrower will pay to
such Lender or the Issuing Bank, as the case may be, upon demand such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the
case may be, for such additional costs actually incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline or in the interpretation or
administration thereof by any Governmental Authority (including the National
Association of Insurance Commissioners) charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office of
such Lender) or the Issuing Bank or any Lender's or the Issuing Bank's holding
company with any request or directive regarding capital adequacy (whether or not
having the force of law) of any Governmental Authority has or would have the
effect of reducing the rate of return on such Lender's or the Issuing Bank's
capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made or
participations in Letters of Credit purchased by such Lender pursuant hereto or
the Letters of Credit issued by the Issuing Bank pursuant hereto to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such applicability, adoption,
change or compliance (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy) by an amount deemed by such Lender or
the Issuing Bank to be material, then, from time to time the Borrower shall pay
to such Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or the Issuing Bank or such Lender's
or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
circumstances requiring the payment of compensation, the calculations with
respect thereto, and the amount or amounts necessary to compensate such Lender
or the Issuing Bank or its holding company, as applicable, as specified in
paragraph (a) or (b) above shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such
38
<PAGE> 44
Lender or the Issuing Bank the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation. The
protection of this Section 2.13 shall be available to each Lender and the
Issuing Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed. In the event any
Lender or the Issuing Bank ever receives a refund from any applicable
Governmental Authority of any amount paid by the Borrower on account of the
provisions of this Section 2.13, the applicable Lender or Issuing Bank, as the
case may be, shall repay those refunded amounts to the Borrower.
SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision of this Agreement, if after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any LIBOR Loan or to give effect to its
obligations as contemplated hereby with respect to any LIBOR Loan, then, by
written notice to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that LIBOR Loans will not thereafter (for the
duration of such unlawfulness) be made by such Lender hereunder (or be
continued for additional Interest Periods and ABR Loans will not
thereafter (for such duration) be converted into LIBOR Loans),
whereupon any request for a Eurodollar Borrowing (or to convert an ABR
Borrowing to a Eurodollar Borrowing or to continue a Eurodollar
Borrowing for an additional Interest Period) shall, as to such Lender
only, be deemed a request for an ABR Loan (or a request to continue an
ABR Loan as such for an additional Interest Period or to convert a
LIBOR Loan into an ABR Loan, as the case may be), unless such
declaration shall be subsequently withdrawn; and
(ii) require that all outstanding LIBOR Loans made by it be
converted to ABR Loans, in which event all such LIBOR Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the LIBOR Loans that would have been made by such Lender or the converted
LIBOR Loans of such Lender shall instead be applied to repay the ABR Loans made
by such Lender in lieu of, or resulting from the conversion of, such LIBOR
Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower by any
Lender shall be effective as to each LIBOR Loan made by such Lender, if lawful,
on the last day of
39
<PAGE> 45
the Interest Period currently applicable to such LIBOR Loan and in all other
cases such notice shall be effective on the date of receipt by the Borrower.
SECTION 2.15. INDEMNITY. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by the Agents or such Lender
in the performance of its obligations hereunder, which results in (i) such
Lender receiving or being deemed to receive any amount on account of the
principal of any LIBOR Loan prior to the end of the Interest Period in effect
therefor, (ii) the conversion of any LIBOR Loan to a Loan of another Type, or
the conversion of the Interest Period with respect to any LIBOR Loan, in each
case other than on the last day of the Interest Period in effect therefor, (iii)
any LIBOR Loan to be made by such Lender (including any LIBOR Loan to be made
pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "BREAKAGE EVENT") or
(b) any default by the Borrower in the making of any payment or prepayment
required to be made hereunder. In the case of any Breakage Event, such loss
shall include an amount equal to the excess, as reasonably determined by such
Lender, of (i) its cost of obtaining funds for the LIBOR Loan that is the
subject of such Breakage Event for the period from the date of such Breakage
Event to the last day of the Interest Period in effect (or that would have been
in effect) for such Loan over (ii) the amount of interest likely to be realized
by such Lender in redeploying the funds released or not utilized by reason of
such Breakage Event for such period. A certificate of any Lender setting forth
any amount or amounts which such Lender is entitled to receive pursuant to this
Section 2.15 shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay each Lender the amount shown as due on
any such certificate delivered by it within 10 days after its receipt of the
same.
SECTION 2.16. PRO RATA TREATMENT. Except as required under Section 2.14
and as provided in this Section 2.16 with respect to Swingline Loans, each
Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Revolving Credit Commitments and each refinancing of any
Borrowing with, conversion of any Borrowing to, or continuation of any Borrowing
as, a Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the sum of (a) the
respective principal amounts of their applicable outstanding Loans and (b) in
the case of the Tranche A Revolving Credit Commitments, the respective amounts
of their Letter of Credit Exposure). For purposes of determining the available
Tranche A Revolving Credit Commitments of the Lenders at any time, each
outstanding Swingline Loan shall be deemed to have utilized the Tranche A
Revolving Credit Commitments of the Lenders (including those Lenders which shall
not have made Swingline Loans) pro rata in accordance with such respective
Tranche A Revolving Credit Commitments. Each Lender agrees that in computing
such Lender's portion of any Borrowing to be made hereunder, the Administrative
Agent may, in its discretion, round each Lender's percentage of such Borrowing
to the next higher or lower whole dollar amount.
40
<PAGE> 46
SECTION 2.17. SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a result
of which the unpaid principal portion of its Loans of any Class shall be
proportionately less than the unpaid principal portion of the Loans of such
Class of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, a participation in such Loans of such other
Lender, so that the aggregate unpaid principal amount of the Loans and
participations in Loans of any Class held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Loans of such Class
then outstanding as the principal amount of its Loans of such Class prior to
such exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Loans of such Class outstanding prior to such exercise
of banker's lien, setoff or counterclaim or other event; PROVIDED, HOWEVER,
that, if any such purchase or purchases or adjustments shall be made pursuant to
this Section 2.17 and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustment restored
without interest. For purposes of this Section 2.17, the Tranche A Revolving
Loans of any Tranche A Lender shall include such Tranche A Lender's Letter of
Credit Exposure. The Borrower expressly consents to the foregoing arrangements
and agrees that any Lender holding a participation in a Loan deemed to have been
so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason thereof as fully as if such Lender had made a Loan directly to
the Borrower in the amount of such interest.
SECTION 2.18. PAYMENTS. (a) Unless expressly provided otherwise herein,
the Borrower shall make each payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document without setoff, defense or counterclaim not later than 12:00 noon,
Eastern Standard Time, on the date when due in dollars to the Administrative
Agent at its offices in Dayton, Ohio, in immediately available funds. Any such
payment received after such time on any date shall be deemed made on the next
Business Day.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.19. TAXES. (a) Any and all payments by or on behalf of the
Borrower or any Subsidiary hereunder and under any other Loan Document shall be
made, in accordance with Section 2.18, free and clear of and without deduction
for any and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING (i) income
taxes or branch profit taxes imposed on the net income
41
<PAGE> 47
of any Agent, any Lender or the Issuing Bank (or any transferee or assignee
thereof, including a participation holder (any such entity a "TRANSFEREE")) and
(ii) franchise taxes imposed on the net income of any Agent, any Lender or the
Issuing Bank (or Transferee), in each case by the jurisdiction under the laws of
which any Agent, such Lender or the Issuing Bank (or Transferee) is organized or
any political subdivision thereof or the jurisdiction in which such Lender or
Transferee has its applicable lending office (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities, collectively
or individually, being called "TAXES" and all such excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being called
"EXCLUDED TAXES"). Subject to the provisions of Section 2.19(f) if the Borrower
or any Subsidiary shall be required to deduct any Taxes from or in respect of
any sum payable hereunder or under any other Loan Document to any Lender or the
Issuing Bank (or any Transferee) or either Agent, (A) the sum payable shall be
increased by the amount (an "ADDITIONAL AMOUNT") necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.19 but excluding Excluded Taxes) such Lender or the
Issuing Bank (or Transferee) or Agent, as the case may be, shall receive an
amount equal to the sum it would have received had no such deductions been made,
(B) the Borrower or such Subsidiary shall make such deductions and (C) the
Borrower or such Subsidiary shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law, any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies (including mortgage recording taxes and similar fees) that arise
from any payment made hereunder or under any other Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("OTHER TAXES").
(c) The Borrower will indemnify each Lender (or Transferee), each Agent
and the Issuing Bank (or Transferee) for the full amount of Taxes and Other
Taxes paid by such Lender (or Transferee) or Agent or the Issuing Bank, as the
case may be, and any liability (excluding Excluded Taxes, but including
penalties, interest and expenses (including reasonable attorneys' fees and
expenses)) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability and the
method of computation thereof prepared by the Administrative Agent, the
Syndication Agent, a Lender or the Issuing Bank (or Transferee) or any Agent on
its behalf, absent manifest error, shall be final, conclusive and binding for
all purposes. Such indemnification shall be made within 30 days after the date
any Agent, any Lender or the Issuing Bank (or Transferee), as the case may be,
makes written demand therefor and provides the Borrower with the certificate
described above.
(d) If any Lender (or Transferee) or Agent shall become aware that it
is entitled to claim a refund in respect of Taxes or Other Taxes as to which it
has been indemnified by the Borrower, or with respect to which the Borrower has
paid additional amounts, pursuant to this Section 2.19, it shall promptly notify
the Borrower of the availability of such refund claim and shall, within 30 days
after receipt of a request by the Borrower, make a claim to
42
<PAGE> 48
such Governmental Authority for such refund at the Borrower's expense. If any
Lender (or Transferee) or Agent receives a refund (including pursuant to a claim
for refund made pursuant to the preceding sentence) in respect of any Taxes or
Other Taxes as to which it has been indemnified by the Borrower, or with respect
to which the Borrower has paid additional amounts, pursuant to this Section
2.19, it shall within 30 days from the date of such receipt, so long as no Event
of Default has occurred and is continuing, pay over such refund to the Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section 2.19 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of such Lender
(or Transferee) or Agent and without interest (other than interest paid by the
relevant Governmental Authority with respect to such refund); PROVIDED, HOWEVER,
that the Borrower, upon the request of such Lender (or Transferee) or Agent,
agrees to repay the amount paid over to the Borrower (plus penalties, interest
or other charges) to such Lender (or Transferee) or Agent in the event such
Lender (or Transferee) or Agent is required to repay such refund to such
Governmental Authority.
(e) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower or any Subsidiary to the relevant Governmental
Authority, the Borrower or such Subsidiary will deliver to the Administrative
Agent, at its address referred to in Section 9.01, the original or a certified
copy of a receipt issued by such Governmental Authority evidencing payment
thereof.
(f) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "NON-U.S. LENDER") shall deliver to the Borrower and the
Administrative Agent two copies of (i) either United States Internal Revenue
Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not
a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or
reduced rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement and the other Loan Documents and (ii) an Internal Revenue Service
Form W-8 or W-9 entitling such Non-U.S. Lender to receive a complete exemption
from United States backup withholding tax. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of a Transferee that is a participation holder, on or before the
date such participation holder becomes a Transferee hereunder) and on or before
the date, if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "NEW LENDING OFFICE"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. If a
Non-U.S. Lender who has delivered the forms referred to above on the date it
becomes a party to this Agreement (or, in the case of a Transferee, on the date
that it becomes a Transferee hereunder) determines that it is unable
subsequently to submit to the Borrower any such
43
<PAGE> 49
form, or that it is required to withdraw or cancel any such form, such Non-U.S.
Lender shall promptly notify the Borrower of such fact. Notwithstanding any
other provision of this Section 2.19(g), a Non-U.S. Lender shall not be required
to deliver any form pursuant to this Section 2.19(g) that such Non-U.S. Lender
is not legally able to deliver.
(g) The Borrower shall not be required to indemnify any Non-U.S.
Lender, or to pay any additional amounts to any Non-U.S. Lender, in respect of
United States Federal withholding tax pursuant to paragraph (a) or (c) above to
the extent that (i) the obligation to pay such additional amounts would not have
arisen but for a failure by such Non-U.S. Lender to comply with Section 2.19(f)
or (ii) the obligation to withhold amounts with respect to United States Federal
withholding tax existed on the date such Non-U.S. Lender become a party to this
Agreement (or, in the case of a Transferee that is a participation holder, on
the date such participation holder became a Transferee hereunder) or, with
respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; PROVIDED, HOWEVER,
that this clause (ii) shall not apply (A) to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of the
Borrower and (B) to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee) acting through a New Lending Office,
would be entitled to receive (without regard to this clause (ii)) do not exceed
the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Transferee, or Lender (or
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation or (ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Lender to comply with the
provisions of paragraph (f) above.
(h) Nothing contained in this Section 2.19 shall require any Lender or
the Issuing Bank (or Transferee) or any Agent to make available any of its tax
returns (or any other information that it deems to be confidential or
proprietary).
(i) The provisions of this Section 2.19 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of any Agent or any Lender.
SECTION 2.20. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES;
DUTY TO MITIGATE. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.13, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.14, (iii) the Borrower
is required to pay any additional amount to any Lender or the Issuing Bank or
any Governmental Authority on account of any Lender or the Issuing Bank pursuant
to Section 2.19, or (iv) any Lender elects not to consent to an extension of the
Tranche B Revolving Credit Facility upon the Borrower's request for such an
extension as provided in Section 2.09(f), the Borrower may, at its sole expense
and effort (including with respect to the processing and recordation fee
referred to in Section 9.04(b)), upon notice to such Lender, Dissenting Lender
or the Issuing Bank and the Agents, as the case may be, require such Lender,
Dissenting Lender or the
44
<PAGE> 50
Issuing Bank, as applicable, to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
of its interests, rights and obligations under this Agreement to an assignee
reasonably acceptable to the Agents that shall assume such assigned obligations
(which assignee may be another Lender, if a Lender accepts such assignment),
PROVIDED, THAT (A) such assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental Authority having
jurisdiction, (B) the Borrower shall have received the prior written consent of
the Agents (and, if a Tranche A Revolving Credit Commitment is being assigned,
of the Issuing Bank and the Swingline Lender), which consent shall not
unreasonably be withheld, (C) no Event of Default shall have occurred and be
continuing and (D) the Borrower or such assignee shall have paid to the affected
Lender or the Issuing Bank in immediately available funds an amount equal to the
sum of 100% of the principal of and interest accrued to the date of such payment
on the outstanding Loans or Letter of Credit Disbursements of such Lender or the
Issuing Bank, respectively, plus all Fees and other amounts accrued for the
account of such Lender or the Issuing Bank hereunder (including any amounts
under Section 2.13 and Section 2.15); PROVIDED, FURTHER, that if prior to any
such assignment the circumstances or event that resulted in such Lender's notice
or certificate under Section 2.13 or 2.14 or demand for additional amounts under
Section 2.19, as the case may be, shall cease to exist or become inapplicable
for any reason or if such Lender shall waive its rights in respect of such
circumstances or event under Section 2.13, 2.14 or 2.19, as the case may be,
then such Lender shall not thereafter be required to make any such assignment
hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.13, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.14 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.19, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (A) to file any
certificate or document reasonably requested in writing by the Borrower or (B)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.13 or enable it to
withdraw its notice pursuant to Section 2.14 or would reduce amounts payable
pursuant to Section 2.19, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender or the
Issuing Bank in connection with any such filing or assignment, delegation and
transfer.
SECTION 2.21. SWINGLINE LOANS.
(a) SWINGLINE LOANS. The Borrower shall notify the Administrative Agent
by telecopy, or by telephone (confirmed by telecopy), not later than 12:00
(noon), Eastern Standard Time, on the day of a proposed Swingline Loan. Such
notice shall be delivered on a Business Day, shall be irrevocable and shall
refer to this Agreement and shall specify the requested date (which shall be a
Business Day) and amount of such Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender of any notice received from
45
<PAGE> 51
the Borrower pursuant to this paragraph (a). The Swingline Lender shall make
each Swingline Loan available to the Borrower by means of a credit to the
general deposit account of the Borrower with the Swingline Lender by 6:00 p.m.
on the date such Swingline Loan is so requested.
(b) PREPAYMENT. The Borrower shall have the right at any time and from
time to time to prepay any Swingline Loan, in whole or in part, upon giving
written or telecopy notice (or telephone notice promptly confirmed by written,
or telecopy notice) to the Swingline Lender and to the Administrative Agent
before 12:00 noon, Eastern Standard Time, on the date of prepayment at the
Swingline Lender's address for notices specified in Section 9.01.
(c) PARTICIPATIONS. The Swingline Lender may by written notice given to
the Administrative Agent not later than 1:00 p.m., Eastern Standard Time, on any
Business Day require the Tranche A Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Tranche A Lenders
will participate. The Administrative Agent will, by 2:00 p.m., Eastern Standard
Time, on the date of receipt of such notice, give notice to each Tranche A
Lender, specifying in such notice such Lender's Applicable Tranche A Percentage
of such Swingline Loan or Loans. In furtherance of the foregoing, each Tranche A
Lender hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the Administrative Agent by 4:00 p.m., Eastern
Standard Time, on the date such notice is received from the Swingline Lender,
for the account of the Swingline Lender, such Tranche A Lender's Applicable
Tranche A Percentage of such Swingline Loan or Loans. Each Lender acknowledges
and agrees that its obligation to acquire participations in Swingline Loans
pursuant to this paragraph is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Lender shall comply with its obligation under this paragraph by
wire transfer of immediately available funds, in the same manner as provided in
Section 2.02(d) with respect to Loans made by such Lender (and Section 2.02(c)
shall apply, MUTATIS MUTANDIS, to the payment obligations of the Lenders) and
the Administrative Agent shall promptly pay to the Swingline Lender the amounts
so received by it from the Lenders. The Administrative Agent shall notify the
Borrower of any participations in any Swingline Loan acquired pursuant to this
paragraph and thereafter payments in respect of such Swingline Loan shall be
made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower (or other party liable for obligations of the Borrower) of any
default in the payment thereof.
46
<PAGE> 52
SECTION 2.22. LETTERS OF CREDIT. (a) The Borrower may request the
issuance of Letters of Credit, in form and substance reasonably acceptable to
the Administrative Agent and the Issuing Bank, for the account of the Borrower
or any Subsidiary, at any time and from time to time during the Letter of Credit
Availability Period; PROVIDED, THAT, any Letter of Credit shall be issued only
if, and each request by the Borrower for the issuance of any Letter of Credit
shall be deemed a representation and warranty of the Borrower that, immediately
following the issuance of such Letter of Credit, (i) the aggregate Letter of
Credit Exposure hereunder shall not exceed $25,000,000 and (ii) the sum of the
aggregate Letter of Credit Exposure, the aggregate Swingline Exposure and the
aggregate principal amount of outstanding Tranche A Revolving Loans shall not
exceed the aggregate amount of the Tranche A Revolving Credit Commitments at
such time. For purposes hereof, the "issuance" of a Letter of Credit includes
the amendment, renewal or extension of a Letter of Credit.
(b) Each Letter of Credit shall expire no later than the earlier of
(i)(A) in the case of standby Letters of Credit, three years after the date of
issuance of such Letter of Credit, subject to extension (including pursuant to
an automatic renewal provision in customary form), and (B) in the case of trade
Letters of Credit, 270 days after the date of issuance of such Letter of Credit
and (ii) the fifth Business Day prior to the Tranche A Revolving Credit Maturity
Date. Each Letter of Credit shall provide for payments of drawings in dollars.
(c) Each issuance of any Letter of Credit shall be made on at least two
Business Days' prior irrevocable written or telecopy notice (such notice to be
delivered by 12:00 noon, Eastern Standard Time) from the Borrower (or such
shorter notice as shall be acceptable to the Issuing Bank) to the Administrative
Agent and the Issuing Bank specifying whether such Letter of Credit is a standby
Letter of Credit or a trade Letter of Credit, the date of issuance, the date on
which such Letter of Credit is to expire, the amount of such Letter of Credit,
the name and address of the beneficiary of such Letter of Credit, and such other
information as may be necessary or desirable to complete such Letter of Credit.
The Issuing Bank will give the Administrative Agent prompt notice of the
issuance and amount of such Letter of Credit and the expiration date of such
Letter of Credit (and the Administrative Agent shall give prompt notice thereof
to the Syndication Agent and each Lender). During the Letter of Credit
Availability Period, the Issuing Bank also will give the Administrative Agent
(i) daily notice of the amount available to be drawn under each outstanding
Letter of Credit and (ii) a quarterly summary indicating, on a daily basis
during such quarter, the issuance of any Letter of Credit and the amount
thereof, the expiration of any Letter of Credit and the amount thereof and the
payment on any draft presented under any Letter of Credit. Each Letter of Credit
issued hereunder will be subject to the Uniform Customs and Practices for
Documentary Credits, as in effect from time to time.
(d) By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank, the Agents or the Lenders in respect
thereof, the Issuing Bank hereby grants to each Tranche A Lender, and each
Tranche A Lender hereby acquires from the Issuing Bank, a participation in such
Letter of Credit equal to such Tranche A Lender's Applicable Tranche A
Percentage of the aggregate amount available to be drawn under such Letter of
Credit, effective upon the issuance of such Letter of Credit. In consideration
and in furtherance of the foregoing, each Tranche A Lender hereby absolutely and
47
<PAGE> 53
unconditionally agrees to pay to the Administrative Agent, on behalf of the
Issuing Bank, in accordance with Section 2.02(d), such Tranche A Lender's
Applicable Tranche A Percentage of each Letter of Credit Disbursement made by
the Issuing Bank and not reimbursed by the Borrower when due in accordance with
Section 2.22(g).
(e) Each Tranche A Lender acknowledges and agrees that its obligation
to acquire participations pursuant to Section 2.22(d) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
(f) The Borrower shall pay to the Administrative Agent, for the account
of the Tranche A Lenders and the Issuing Bank, as applicable, a nonrefundable
Letter of Credit Fee and Fronting Fee in accordance with Section 2.05(b). In
addition to the foregoing fees and commissions, the Borrower shall pay or
reimburse the Issuing Bank for such normal and customary costs and expenses,
including, without limitation, administrative, issuance, amendment, payment and
negotiation charges, as are incurred or charged by the Issuing Bank in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit (including any Letter of Credit issued for the account of a Subsidiary).
(g) The Borrower hereby agrees to reimburse the Issuing Bank for any
payment disbursement made by the Issuing Bank under any Letter of Credit
(including any Letter of Credit issued for the account of a Subsidiary), by
making payment in immediately available funds, to the Administrative Agent on
the same Business Day after receipt of notice of such payment or disbursement,
in an amount equal to the amount of such payment or disbursement, plus interest
on the amount so paid or disbursed by the Issuing Bank at a rate per annum equal
to the rate applicable to ABR Loans pursuant to Section 2.06; PROVIDED, THAT, if
such amount is not reimbursed prior to 2:00 p.m., Eastern Standard Time, on the
same Business Day after receipt by the Borrower of the notice of such payment or
disbursement, interest shall thereafter accrue on such unreimbursed amount at a
rate per annum equal to the rate applicable to ABR Loans during such period
pursuant to Section 2.06, plus 2.00%. The Administrative Agent shall promptly
pay any such amounts received by it to the Issuing Bank.
(h) The Borrower's obligation to reimburse Letter of Credit
Disbursements as provided in Section 2.22(g) shall be absolute, unconditional
and irrevocable and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any other Loan Document or any term or provision therein;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower, any Subsidiary or any other person may at any
time have against the beneficiary under any Letter of Credit, the
Issuing Bank, the Agents, any Lender or any other person, whether in
connection with this Agreement, any other Loan Document or any other
related or unrelated agreement or transaction;
48
<PAGE> 54
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or failing to comply with the Uniform Customs and Practices for
Documentary Credits, as in effect from time to time, or any statement
therein being untrue or inaccurate in any respect;
(iv) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document which does not comply
with the terms of such Letter of Credit;
(v) any amendment, waiver or consent in respect of this
Agreement or any other Loan Document; and
(vi) any other act or omission or delay of any kind or any
other circumstance or event whatsoever, whether or not similar to any
of the foregoing and whether or not foreseeable, that might, but for
the provisions of this Section 2.22(h), constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
(i) Without limiting the generality of the provisions of the foregoing
paragraph (h), it is expressly understood and agreed that the absolute and
unconditional obligation of the Borrower hereunder to reimburse Letter of Credit
Disbursements will not be excused by the gross negligence or willful misconduct
of the Issuing Bank. However, the preceding sentence and the provisions of
Section 2.22(h) shall not be construed to excuse the Issuing Bank from liability
to the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's bad faith, gross negligence or willful misconduct in
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. It is understood that the Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (i) the Issuing Bank's exclusive reliance in good faith on the documents
presented to it under such Letter of Credit as to any and all matters set forth
therein, including reliance on the amount of any draft presented under such
Letter of Credit, if such document on its face appears to be in order, and
whether or not any other statement or any other document presented pursuant to
such Letter of Credit proves to be forged or invalid or any statement therein
proves to be inaccurate or untrue in any respect whatsoever and (ii) any
noncompliance in any immaterial respect of the documents presented under such
Letter of Credit with the terms thereof shall, in each case, be deemed not to
constitute bad faith, gross negligence or willful misconduct of the Issuing
Bank.
(j) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic
notification, confirmed by telex or telecopy, to the Administrative Agent and
the Borrower of such demand for payment and whether the Issuing Bank has made or
will make a Letter of Credit Disbursement thereunder; PROVIDED, THAT, the
failure to give such notice shall not relieve the Borrower of its obligation
49
<PAGE> 55
to reimburse any such Letter of Credit Disbursement in accordance with this
Section 2.22. The Administrative Agent shall promptly give each Lender notice
thereof.
(k) In the event that the Borrower is required pursuant to the terms of
this Agreement or any other Loan Document to provide cash collateral in respect
of the Letter of Credit Exposure, the Borrower shall deposit in an account with
the Administrative Agent, for the benefit of each Tranche A Lender, an amount in
cash equal to the Letter of Credit Exposure (or such lesser amount as shall be
required hereunder or thereunder). Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Obligations to Tranche A Lenders. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits in
Cash Equivalents, which investments shall be made as directed by the Borrower
(unless such investments shall be contrary to applicable law or regulation or a
Default or Event of Default shall have occurred and be continuing, in which case
the Administrative Agent shall determine in its discretion whether to make
investments and, if so, shall determine in its discretion the Cash Equivalents
to be selected), such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall automatically be applied by the Administrative Agent to reimburse
the Issuing Bank for Letter of Credit Disbursements and, if the maturity of the
Loans has been accelerated, to satisfy the Obligations to Tranche A Lenders. If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived. If the Borrower is required to
provide an amount of cash collateral hereunder pursuant to Section 2.11(g), such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrower upon demand; PROVIDED, THAT, after giving effect to such return, (i)
the sum of the aggregate Letter of Credit Exposure, plus the aggregate
outstanding Swingline Exposure, plus the aggregate outstanding principal amount
of Tranche A Revolving Loans would not exceed the aggregate Tranche A Revolving
Credit Commitments and (ii) no Default or Event of Default shall have occurred
and be continuing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Borrower and the
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has all requisite power
and authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify would not result in a Material Adverse Effect, and (d) has
the requisite power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement or
instrument contemplated thereby to which
50
<PAGE> 56
it is or will be a party and, in the case of the Borrower, to obtain extensions
of credit hereunder.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance by
each of the Borrower and the Subsidiaries of each of the Loan Documents to which
it is or will be a party (including the exercise of remedies thereunder) and, in
the case of the Borrower, the extensions of credit hereunder (a) have been duly
authorized by all requisite corporate or partnership and, if required,
stockholder action and (b) will not (i) violate (A) any provision of law,
statute, rule or regulation, (B) any provision of the certificate of
incorporation, partnership agreement, operating agreement or other constitutive
documents or by-laws of the Borrower and the Subsidiaries, (C) any order of any
Governmental Authority or (D) any provision of any Material Contract or other
indenture, agreement or instrument to which the Borrower or any of the
Subsidiaries is a party or by which any of them or any of their property is or
may be bound, (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default or give rise to
increased, additional, accelerated or guaranteed rights of any person under any
Material Contract or other indenture, agreement or instrument or (iii) except
for the Liens of the Collateral Documents, result in the creation or imposition
of any Lien upon or with respect to any property or assets now owned or
hereafter acquired by the Borrower or any of the Subsidiaries.
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by the Borrower or any of the Subsidiaries will
constitute, a legal, valid and binding obligation of such party enforceable
against such party in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent
conveyance, voidable preference or similar laws and the application of equitable
principles generally.
SECTION 3.04. CONSENTS AND GOVERNMENTAL APPROVALS. No action, consent
or approval of, registration or filing with or any other action by (a) any
Governmental Authority, (b) any creditor or shareholder of the Borrower or any
creditor, shareholder, partner or member of the Subsidiaries, (c) any
counterparty to a Material Contract or (d) except where failure to take or
obtain such action, consent or approval of, registration or filing with or such
other action could not reasonably be expected to have a Material Adverse Effect,
any other person, is or will be required in connection with the Facilities or
the performance by the Borrower or any of the Subsidiaries of the Loan Documents
to which it is or will be a party, in each case except such as have been made or
obtained and are in full force and effect.
SECTION 3.05. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income and cash flows as of and for the 1996 Fiscal Year,
audited by and accompanied by the unqualified opinion of Ernst & Young LLP,
independent public accountants and (ii) its unaudited consolidating balance
sheet and statements of income and cash flows for the 1996 Fiscal Year. Such
financial statements present fairly the financial condition and results of
operations and cash flows of the Borrower and its Consolidated Subsidiaries as
of such dates and for such periods. Such balance sheet and the notes thereto
disclose all material
51
<PAGE> 57
liabilities, direct, contingent or otherwise, of the Borrower and its
Consolidated Subsidiaries as of the dates thereof for which disclosure is
required in accordance with GAAP. Such financial statements were prepared in
accordance with GAAP applied on a consistent basis, except as otherwise noted
therein.
(b) As of the Closing Date, the Borrower and the Subsidiaries do not
have any material liability, contingent or otherwise, required by GAAP to be set
forth on a consolidated balance sheet of the Borrower, except (i) as set forth
in the financial statements referred to in Section 3.05(a), (ii) for items set
forth in Schedule 3.05(b) and (iii) for liabilities and obligations incurred in
the ordinary course of business consistent with past practice.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. Since August 31, 1996, and as
of the Closing Date, there has not been any Material Adverse Change in the
business of the Borrower.
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each of
the Borrower and the Subsidiaries has good and marketable title to, or valid
leasehold interests or licenses in, all its properties and assets (including
without limitation, real property and intellectual property interests), except
for defects in title that do not materially interfere with its ability to
conduct its business as currently conducted or to utilize such properties and
assets for their intended purposes. All such properties and assets are free and
clear of Liens, other than Liens permitted by Section 6.02.
(b) Each of the Borrower and the Subsidiaries has complied in all
material respects with all obligations under all material leases to which it is
a party and all such leases are in full force and effect. Each of the Borrower
and the Subsidiaries enjoys peaceful and undisturbed possession under all such
material leases.
SECTION 3.08. SUBSIDIARIES. Schedule 3.08 sets forth a list of all of
the Subsidiaries, the respective jurisdictions of organization thereof and the
percentage ownership interest, direct or indirect, of the Borrower therein. All
of the Subsidiaries are Consolidated Subsidiaries.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) As of the Closing
Date, except as set forth in Schedule 3.09 or as fully covered by third party
insurance, there are no pending or, to the knowledge of the Borrower, threatened
litigation, arbitrations or other proceedings against the Borrower or any
Subsidiary involving a claim for more than $200,000. Except as noted on Schedule
3.09, there are no lawsuits, claims, arbitrations or other proceedings which, if
adversely determined, whether individually or in the aggregate, would have a
Material Adverse Effect. As of the Closing Date, to the knowledge of the
Borrower, except as set forth in Schedule 3.09, neither the Borrower nor any
Subsidiary is a party or subject to or in default under any material judgment,
order, injunction or decree of any Governmental Authority or arbitration
tribunal. Except as set forth in Schedule 3.09, there are no actions, suits,
investigations or proceedings at law or in equity or by or before any arbitrator
or Governmental Authority now pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower, any of the Subsidiaries or any
52
<PAGE> 58
business, property or rights of the Borrower or any of the Subsidiaries (i)
which involve any Loan Document or (ii) as to which there is a reasonable
possibility of an adverse determination and which, if adversely determined,
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in Schedule 3.09, the Borrower and the
Subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority ("APPLICABLE LAWS")
including those relating to the environment, taxes and occupational health and
safety, except for instances of noncompliance that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 3.09 and as of the Closing Date, neither the Borrower nor any
Subsidiary has received any written communication during the past three years
from a Governmental Authority that alleges that the Borrower or a Subsidiary is
not in compliance in any material respect with any Applicable Laws. Except as
set forth in Schedule 3.09 and as of the Closing Date, to the knowledge of the
Borrower, there is no pending or threatened investigation of the Borrower or a
Subsidiary by any Governmental Authority.
SECTION 3.10. AGREEMENTS. (a) Each indenture or other agreement or
instrument evidencing Indebtedness and each other material agreement, contract,
lease, license, commitment or other instrument (within the meaning of 17 C.F.R.
ss.229.601(b)(10)(1996)) to which the Borrower or any of the Subsidiaries is a
party or by which it or any of its properties or assets are or may be bound as
of the Closing Date is listed on Schedule 3.10 hereto (collectively with the
Subordinated Notes and any agreements listed on Schedule 3.20, the "MATERIAL
CONTRACTS").
(b) Except as set forth in Schedule 3.10, all the Material Contracts
are valid, binding and in full force and effect in all material respects. Except
as set forth in Schedule 3.10, the Borrower and the Subsidiaries have performed
all material obligations required to be performed by them to date under the
Material Contracts and they are not in breach or default in any material respect
thereunder and, to the knowledge of the Borrower, no other party to any of the
Material Contracts is in breach or default in any material respect thereunder.
Neither the Borrower, nor any of the Subsidiaries, nor, to the knowledge of the
Borrower, any other party to any Material Contract has given notice of
termination of, or taken any action inconsistent with the continuation of, any
Material Contract. None of such other parties has any presently exercisable
right to terminate any Material Contract nor will any such other party have any
right to terminate any Material Contract on account of the execution, delivery
or performance of the Loan Documents.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) Neither the Borrower nor
any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan and no Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the regulations of the Board, including
Regulation G, U and X.
53
<PAGE> 59
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither the Borrower nor any of the Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935 or (c) subject to
regulation as a "public utility" or a "public service corporation" or the
equivalent under any Federal or state law.
SECTION 3.13. USE OF PROCEEDS. The proceeds of all Loans will be used
solely (a) to refinance Existing Debt of the Borrower, (b) to provide for the
ongoing working capital requirements of the Borrower and the Subsidiaries and
for general corporate purposes (including working capital, Capital Expenditures
in the ordinary course of business and Permitted Acquisitions) and (c) to pay
related fees and expenses. The Letters of Credit will be issued solely to
support various financial and other performance obligations of the Borrower and
the Subsidiaries incurred in the ordinary course of business.
SECTION 3.14. TAX RETURNS. Each of the Borrower and the Subsidiaries
has filed or caused to be filed all Federal, state and local tax returns
required to have been filed by it and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments received by
it, except taxes that are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves in accordance
with GAAP have been set aside on its financial statements.
SECTION 3.15. NO MATERIAL MISSTATEMENTS. The Confidential Information
Memorandum and the exhibits and schedules (except for forecasts and projections)
furnished by or on behalf of the Borrower to the Lenders in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto, when taken as a whole and evaluated in the context presented, do not
contain any material misstatement of fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which such information was provided. Any such exhibit or
schedule which constitutes a forecast or a projection was prepared in good
faith, was based on assumptions that the Borrower believes to be reasonable and
was based on the best information reasonably available to the Borrower. The
Borrower has no reason to believe that any such forecasts or projections are
misleading in any material respect in light of the circumstances existing at the
time of preparation thereof.
SECTION 3.16. EMPLOYEE BENEFIT PLANS. (a) Except as set forth in
Schedule 3.16, each of the Borrower and the Commonly Controlled Entities is in
compliance in all material respects with the applicable provisions of ERISA and
the regulations and published interpretations thereunder. Neither a Reportable
Event nor an "accumulated funding deficiency" (within the meaning of Section 412
of the Code or Section 302 of ERISA) has occurred within the last five years
with respect to any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and the Code. No termination of a Single
Employer Plan has occurred and no Lien in favor of the PBGC or a Plan has arisen
during the five years prior to the Effective Date.
(b) Except as set forth in Schedule 3.16, the present value of all
accrued benefits under each Single Employer Plan in which the Borrower or any
Commonly Controlled Entity
54
<PAGE> 60
is a participant (based on those assumptions used to fund the Plans) did not, as
of the last annual valuation date, exceed the value of the assets of such Plan
allocable to such accrued benefits.
(c) Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the last
valuation date.
(d) No such Multiemployer Plan is in "reorganization" or "insolvent,"
within the meaning of such terms as used in ERISA.
(e) Except as set forth in Schedule 3.16, neither the Borrower nor any
Commonly Controlled Entity has any liability for post retirement benefits to be
provided to its current and former employees.
(f) No prohibited transaction under ERISA or the Code has occurred with
respect to any Multiemployer Plan or Single Employer Plan which could have a
Material Adverse Effect.
SECTION 3.17. ENVIRONMENTAL AND SAFETY MATTERS. As of the Closing Date,
except as set forth in Schedule 3.17, each of the Borrower and the Subsidiaries
has complied in all material respects with all applicable Federal, state, local
and other statutes, ordinances, orders, judgments, rulings and regulations
relating to protection of the environment or to employee health or safety. As of
the Closing Date, except as set forth in Schedule 3.17, neither the Borrower nor
any Subsidiary has received notice of any material failure so to comply. The
facilities of the Borrower and the Subsidiaries do not manage or contain any
hazardous wastes, hazardous substances, hazardous materials, toxic substances,
toxic pollutants or similarly denominated substances, as those terms or similar
terms are used in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the
Clean Water Act or any other applicable law relating to protection of the
environment, human health or to employee health and safety (collectively,
"HAZARDOUS MATERIALS"), in violation in any material respect of any such law or
any regulations promulgated pursuant thereto. Except as set forth in Schedule
3.17, to the knowledge of the Borrowers, there are no events, conditions or
circumstances involving environmental pollution, regulation or control or
employee health or safety that are reasonably likely to result in any material
liabilities being incurred by the Borrower or any Subsidiary.
SECTION 3.18. SECURITY INTERESTS. (a) The Administrative Agent for the
benefit of the Secured Parties will at all times have the Liens provided for in
the Collateral Documents and, subject to the filing by the Administrative Agent
of continuation statements to the extent required by the Uniform Commercial Code
and the continuing possession by the Administrative Agent of the certificates
representing the securities pledged pursuant to the Pledge Agreement, the
Collateral Documents will at all times constitute a valid and
55
<PAGE> 61
continuing lien of record and first priority perfected security interest in all
the Collateral referred to therein. No filings or recordings are required in
order to perfect the security interests created under the Collateral Documents,
except for filings or recordings listed on Schedule 3.18. All such listed
filings and recordings will have been made on or prior to the Closing Date.
(b) All of the shares of common stock of each Subsidiary have been duly
and validly authorized and issued, are fully paid and nonassessable, and were
not issued in violation of the preemptive rights of any stockholder. The
Borrower owns, directly or indirectly, good and valid title to 100% (or such
other percentage as the Borrower does own, directly or indirectly, as noted on
Schedule 3.08) of the Capital Stock of each Subsidiary, free and clear of all
Liens, other than the Liens of the Collateral Documents, of every kind, whether
absolute, matured, contingent or otherwise. There are no existing options,
warrants, calls or commitments relating to, or any securities or rights
convertible into, exercisable for or exchangeable for, any Capital Stock of the
Subsidiaries.
SECTION 3.19. SOLVENCY. (a) After the making of each Loan made on the
Closing Date and the uses of proceeds therefrom, each of the Borrower and the
Subsidiaries will be Solvent on the Closing Date. "SOLVENT" means, with respect
to any person, that (i) the fair value of the assets of such person, at a fair
valuation, will exceed the debts and liabilities, subordinated, contingent or
otherwise, of such person; (ii) the present fair saleable value of the property
of such person will be greater than the amount that will be required to pay the
liabilities of such person on its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) such person will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) such person will not have an unreasonably small
amount of capital with which to conduct the businesses in which it is engaged as
such businesses are now conducted and are proposed to be conducted. With respect
to any contingent liabilities, such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an actual or
matured liability.
(b) The Borrower does not intend to, or to permit any of the
Subsidiaries to, and does not believe that the Borrower or any of the
Subsidiaries will, incur debts beyond its ability to pay such debts as they
mature taking into account the timing of and amounts of cash to be received by
the Borrower or any such Subsidiary and the timing of and amounts of cash to be
payable on or in respect of indebtedness of the Borrower or any such Subsidiary.
SECTION 3.20. TRANSACTIONS WITH AFFILIATES AND SHAREHOLDERS. Except as
set forth in Schedule 3.20 and except for agreements and arrangements among the
Borrower and Wholly Owned Subsidiaries or among Wholly Owned Subsidiaries,
neither the Borrower nor any of the Subsidiaries is a party to, and none of the
properties and assets of the Borrower or any of the Subsidiaries is subject to
or bound by, any agreement or arrangement with, (a) any Affiliate of the
Borrower or any of the Subsidiaries, except in each case those agreements or
arrangements that are entered into on terms not less favorable to the Borrower
or any Subsidiary as a comparable transaction on an arm's-length basis with an
unrelated
56
<PAGE> 62
third party or as may be expressly permitted by Section 6.10, or (b) any
Shareholder. Except as set forth in Schedule 3.20 and except for transactions
among the Borrower and Wholly Owned Subsidiaries or among Wholly Owned
Subsidiaries, neither the Borrower nor any of the Subsidiaries is engaged in any
transaction with (i) any Affiliate of the Borrower or of any Subsidiary, except
in each case those agreements or arrangements that are entered into on terms not
less favorable to the Borrower or any Subsidiary as a comparable transaction on
an arm's-length basis with an unrelated third party or as may be expressly
permitted by Section 6.10, or (ii) any Shareholder.
SECTION 3.21. INSURANCE. The Borrower and the Subsidiaries maintain
policies of fire and casualty, liability, business interruption and other forms
of insurance in such amounts, with such deductibles and against such risks and
losses, all of which are in accordance with normal industry practices. All such
policies are in full force and effect, all premiums due and payable thereon have
been paid (other than retroactive or retrospective premium adjustments that are
not yet, but may be, required to be paid with respect to any period under
comprehensive general liability and workmen's compensation insurance policies),
and no notice of cancellation or termination has been received with respect to
any such policy which has not been replaced on substantially similar terms prior
to the date of such cancellation. The activities and operations of the Borrower
and the Subsidiaries have been conducted in a manner so as to conform in all
material respects to all applicable provisions of such insurance policies.
SECTION 3.22. LABOR MATTERS. (i) As of the Closing Date, except as set
forth in Schedule 3.22, there is no labor strike, dispute, work stoppage or
lockout pending or, to the knowledge of the Borrower, threatened against the
Borrower or a Subsidiary, (ii) to the knowledge of the Borrower, as of the
Closing Date, no union organizational campaign is in progress with respect to
the employees of the Borrower or a Subsidiary; (iii) as of the Closing Date,
there is no unfair labor practice charge or complaint against the Borrower or a
Subsidiary pending or, to the knowledge of the Borrower, threatened before the
National Labor Relations Board; (iv) there are no pending or threatened union
grievances against the Borrower or a Subsidiary as to which there is a
reasonable possibility of adverse determination and that, if so determined,
would have a Material Adverse Effect; (v) there are no pending, or, to the
knowledge of the Borrower, threatened, charges against the Borrower, a
Subsidiary or any current or former employee of the Borrower before the Equal
Employment Opportunity Commission or any state or local agency responsible for
the prevention of unlawful employment practices which individually or in the
aggregate are reasonably likely to have a Material Adverse Effect; and (vi) as
of the Closing Date, none of the Borrower and the Subsidiaries has received
written notice during the past three years of the intent of any Governmental
Authority responsible for the enforcement of labor or employment laws to conduct
an investigation of the Borrower or a Subsidiary and, to the knowledge of the
Borrower, no such investigation is in progress.
(b) No employee or agent of the Borrower or any Subsidiary that has not
signed a confidentiality and non-compete agreement is privy to any information
that, if disseminated to an unrelated third party, could have a Material Adverse
Effect.
57
<PAGE> 63
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. FIRST BORROWING. The obligations of the Lenders to make
Loans hereunder, and the obligation of the Issuing Bank to issue Letters of
Credit hereunder, are subject to the satisfaction of the conditions that on the
Closing Date:
(a) The Agents shall have received counterparts hereof signed
by each of the parties (or, in the case of any Lender as to which an
executed counterpart shall not have been received, telecopy or other
written confirmation from such party in form satisfactory to the Agents
of the execution of a counterpart hereof by such Lender).
(b) The Administrative Agent shall have received for the
account of each Lender a duly executed Note or Notes, dated the Closing
Date, complying with the provisions of Section 2.04.
(c) The Administrative Agent on behalf of the Secured Parties
shall have a security interest in the Collateral of the type and
priority described in the Collateral Documents, perfected to the extent
contemplated by Section 3.18 and the Administrative Agent shall have
received:
(i) counterparts of the Pledge Agreement, duly
executed by the Borrower and all Domestic Subsidiaries of the
Borrower, and a duly completed and executed Perfection
Certificate from the Borrower and all Domestic Subsidiaries of
the Borrower;
(ii) certificates representing 100% of all
outstanding Capital Stock of each Domestic Subsidiary (or such
other percentage as is owned by the Borrower or applicable
Domestic Subsidiary as noted on Schedule 3.08), accompanied by
stock powers endorsed in blank and Intercompany Notes, duly
executed by each Domestic Subsidiary, accompanied by
assignments executed in blank;
(iii) except for those Foreign Subsidiaries listed on
Schedule 5.14(c), certificates representing 65% of all
outstanding Capital Stock of each Foreign Subsidiary that is a
Restricted Subsidiary, accompanied by stock powers endorsed in
blank, and, except for those Foreign Subsidiaries listed on
Schedule 5.14(b), Intercompany Notes, duly executed by each
and every Wholly Owned Subsidiary that is a Foreign Subsidiary
(whether owned directly or indirectly), and each and every
non-Wholly Owned Subsidiary that is a Foreign Subsidiary that
is borrowing from a Domestic Subsidiary or the Borrower as of
the Closing Date, accompanied by assignments executed in
blank;
58
<PAGE> 64
(iv) an acknowledgement copy, or other evidence
satisfactory to the Agents, of the proper filing, registration
or recordation of each document (including each Uniform
Commercial Code financing statement) required by law or
reasonably requested by the Agents to be filed, registered or
recorded in each jurisdiction and to each Governmental
Authority in which or to which the filing, registration or
recordation is so required or requested in order to create in
favor of the Administrative Agent for the benefit of the
Secured Parties a valid, legal and perfected security interest
in or Lien on the Collateral that is the subject of the Pledge
Agreement;
(v) certified copies of Requests for Information or
Copies (form UCC-11), or equivalent reports from Prentice-Hall
Financial Services or other independent search service
satisfactory to the Agents, listing (A) any judgment naming
the Borrower or any Subsidiary, as judgment debtor, (B) any
tax lien that names the Borrower or any Subsidiary as a
delinquent taxpayer in any of the jurisdictions referred to in
clause (iv) above and (C) any Uniform Commercial Code
financing statement that names the Borrower or any Subsidiary
as debtor filed in any jurisdiction in which a Lien could be
perfected against assets of the Borrower or any Subsidiary;
(vi) appropriate duly executed termination statements
(Form UCC-3) signed by all persons disclosed as secured
parties in the jurisdictions referred to in clauses (iv) and
(v)(C) above (other than holders of Liens permitted under
Section 6.02) in form for filing under the Uniform Commercial
Code in the applicable jurisdictions; and
(vii) any other evidence reasonably required by the
Agents to evidence that the Administrative Agent (on behalf of
the Lenders) holds a perfected, first priority Lien in all
Collateral for the Facilities, subject to no other Liens,
except for Liens permitted under Section 6.02. Such evidence
shall include, but is not limited to, evidence of registration
of the Lenders' security interest on the register or books of
certain Foreign Subsidiaries and any other action as may be
required under applicable local law to perfect the Lenders'
security interest in the Capital Stock of the Foreign
Subsidiaries (other than with respect to those Foreign
Subsidiaries listed on Schedule 5.14(c).
(d) The Agents shall have received (i) an opinion of Thompson
Hine & Flory LLP, counsel to the Borrower and the Subsidiaries,
substantially in the form of Exhibit F hereto dated the Closing Date
and addressed to the Agents and the Lenders, and (ii) opinions of Doser
Amereller Noack, German counsel to the Borrower and the German
Subsidiary, and Simmons & Simmons, English counsel to the Borrower and
the UK Subsidiary, each in form and substance acceptable to the Agents,
dated the Closing Date and addressed to the Agents and the Lenders.
(e) The Agents shall have received counterparts of the
Guarantee Agreement duly executed by the Guarantors and the
Administrative Agent dated as of
59
<PAGE> 65
the Closing Date and the Indemnity, Subrogation and Contribution
Agreement duly executed by the Borrower, the Guarantors and the
Administrative Agent dated as of the Closing Date.
(f) The Agents shall have received:
(i) an Officer's Certificate, dated the Closing Date
and signed by a Responsible Officer of each of the Borrower
and the Subsidiaries confirming compliance with the conditions
precedent set forth in subparagraphs (h), (i), (j), (k) and
(l) of this Section 4.01 and in subparagraphs (b), (c) and (d)
of Section 4.02;
(ii) a copy of the long form certificate of
incorporation or other constitutive documents, including all
amendments thereto, of each of the Borrower, the Domestic
Subsidiaries and all Foreign Subsidiaries not listed on
Schedule 5.14(a), certified as of a recent date by the
Secretary of State (or comparable authority whether domestic
or foreign (where available)) of the jurisdiction of its
organization, and a certificate as to the good standing of
each such party as of a recent date, from such Secretary of
State (or other domestic or foreign authority (where
available));
(iii) a certificate of the Secretary or Assistant
Secretary of each of the Borrower, the Domestic Subsidiaries
and all Foreign Subsidiaries not listed on Schedule 5.14(b),
dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws or
comparable governing instruments of such party as in effect on
the Closing Date and at all times since a date prior to the
date of the resolutions described in clause (B) below, (B)
that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors or
comparable governing body of such party (or, in the case of
any partnership, of the general partner of such party)
authorizing the execution, delivery and performance of the
Loan Documents to which such party is or will be a party, and,
in the case of the Borrower, the extensions of credit
hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C)
that the certificate of incorporation or other constitutive
documents of such party have not been amended since the date
of the last amendment thereto shown on the certificate of good
standing furnished pursuant to clause (ii) above, and (D) as
to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in
connection herewith on behalf of such party; and
(iv) such other documents, opinions, certificates and
agreements in connection with the Facilities, in form and
substance satisfactory to the Agents, as it shall reasonably
request.
(g) The Borrower shall have paid all Fees and other amounts
due and payable to the Agents or any Lender on or prior to the Closing
Date, including
60
<PAGE> 66
reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower under the Fee Letter or any Loan
Document.
(h) The Agents shall have received evidence that the Existing
Debt has been repaid in full and all credit facilities, security
interests and other agreements related thereto have been terminated and
discharged in a manner satisfactory to the Agents, NCMI and the
Lenders, and that the Borrower and the Subsidiaries shall have no
Indebtedness or other liabilities other than Permitted Indebtedness and
liabilities disclosed on Schedule 3.05(b).
(i) No Material Adverse Change shall have occurred since
August 31, 1996.
(j) The Lenders shall have received evidence satisfactory to
each of them that the Borrower and the Subsidiaries have obtained all
governmental (whether domestic or foreign), shareholder and third party
consents and approvals and expiration of all applicable waiting or
appeal periods necessary or, in the opinion of the Lenders, appropriate
in connection with the Facilities and the pledge of the Collateral for
the Facilities without any action being taken that could restrain,
prevent or impose any material adverse condition on the Borrower, the
Subsidiaries (or any of them) or the transactions contemplated hereby
or that could seek or threaten any of the foregoing, and no law or
regulation or condition shall be applicable which in the judgment of
the Lenders could have such effect.
(k) There shall not exist any action, suit, investigation or
proceeding pending or threatened in any court or before any arbitrator
or Governmental Authority that purports to adversely affect the
Facilities or that could have a Material Adverse Effect.
(l) None of the Borrower and the Subsidiaries shall be in
violation of any law, rule or regulation, or in default with respect to
any judgment, writ, injunction or decree of any Governmental Authority,
where such violation or default could reasonably be expected to result
in a Material Adverse Effect.
(m) The Agents and the Lenders shall have received information
satisfactory to them regarding litigation, tax, tax sharing
arrangements, management arrangements, accounting, labor, insurance,
pension liabilities (actual or contingent), employee benefits
(including post-retirement benefits), real estate leases, Material
Contracts, debt agreements, intercompany agreements, property
ownership, transaction with affiliates and contingent liabilities of
the Borrower and the Subsidiaries.
(n) The Agents and the Lenders shall have received, and in
each case approved the consolidated financial statements of the
Borrower for the most recent three Fiscal Years, including balance
sheets and statements of operation and cash flows, audited by
independent public accountants of recognized national standing and
prepared in conformity with GAAP.
61
<PAGE> 67
(o) The Agents and the Lenders shall have completed, and shall
be satisfied with the results of, their respective due diligence
investigations of the business, assets, operations, properties,
condition (financial and otherwise), liabilities (actual and
contingent) and prospects of the Borrower and the Subsidiaries.
(p) The Agents and the Lenders shall be satisfied in all
respects with all agreements and transactions between any of the
Borrower and the Subsidiaries, on the one hand, and any of their
Affiliates and Shareholders, on the other hand, and with all other
material agreements of any of the Borrower and the Subsidiaries.
(q) The Agents and the Lenders shall be satisfied with the
corporate and legal structure and capitalization of the Borrower and
the Subsidiaries.
SECTION 4.02. ALL CREDIT EVENTS. The obligations of the Lenders to make
Loans hereunder, and the obligation of the Issuing Bank to issue Letters of
Credit hereunder, are subject to the satisfaction of the conditions that on the
date of each Borrowing and on the date of issuance of each Letter of Credit:
(a) The Agents shall have received a notice of such Borrowing
as required by Section 2.03 or Section 2.10, or a notice requesting the
issuance of such Letter of Credit as required by Section 2.22(c), or a
notice requesting a Swingline Borrowing as required by Section 2.21(a),
as applicable.
(b) The representations and warranties set forth in Article
III and the representations and warranties of the Borrower and the
Subsidiaries set forth in the other Loan Documents shall be true and
correct in all material respects on and as of the date of such
Borrowing or the date of the issuance of such Letter of Credit with the
same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date
(in which case such representations and warranties shall be true and
correct in all material respects on and as of such earlier date).
(c) At the time of and immediately after such Borrowing or the
issuance of such Letter of Credit, the aggregate outstanding principal
amount of the Loans of each Class, the Swingline Exposure and the
Letter of Credit Exposure shall not exceed the limitations set forth in
Sections 2.01.
(d) At the time of and immediately after such Borrowing or the
issuance of such Letter of Credit, no Default or Event of Default shall
have occurred and be continuing.
Each Borrowing hereunder and each issuance of a Letter of Credit hereunder shall
be deemed to constitute a representation and warranty by the Borrower on the
date of such Borrowing or issuance of such Letter of Credit as to the matters
specified in paragraphs (b), (c) and (d) of this Section 4.02. For purposes of
this Section 4.02, a "Borrowing" does not include a conversion or continuation
of a previously outstanding Borrowing pursuant to Section 2.10.
62
<PAGE> 68
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the Loans, together with interest, Fees and all other Obligations have been
paid in full, all Letters of Credit have been canceled or have expired, and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing:
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) The Borrower
will, and will cause each of the Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence, except as otherwise expressly permitted under Sections 6.05(a) and
(b).
(b) The Borrower will, and will cause each of the Subsidiaries to, do
or cause to be done all things necessary to obtain, preserve, renew, extend and
keep in full force and effect the rights, leases, privileges, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks, trade names and all
other intellectual property material to the conduct of its business; maintain
and operate such business in substantially the manner in which it is presently
conducted and operated; comply in all material respects with all applicable
laws, rules, regulations (including any zoning, building, ordinance, code or
approval or any building permits or any restrictions of record or agreements
affecting real property and excluding environmental laws, which are subject to
the provisions of Section 5.11) and judgments, writs, injunctions, decrees and
orders of any Governmental Authority, whether now in effect or hereafter
enacted; and at all times maintain and preserve all property material to the
conduct of such business and keep such property in good repair, working order
and condition (subject to ordinary wear and tear) and from time to time make, or
cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
SECTION 5.02. INSURANCE. (a) The Borrower will, and will cause each of
the Subsidiaries to, keep its insurable properties fully insured at all times by
financially sound and reputable insurers; such insurance to include fire and
other risks insured against by extended coverage, public and product liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by it and business interruption insurance, and maintain
such other insurance as may be required by law and as is customary in the
industry. The Borrower shall deliver to the Administrative Agent on the Closing
Date a report from the Borrower's independent insurance consultant demonstrating
that the insurance required by this Section 5.02 is in effect.
(b) The Borrower will, and will cause each of the Subsidiaries to, on
the request of the Agents, deliver original or certified copies of all insurance
policies to the Agents.
63
<PAGE> 69
(c) In connection with the covenants set forth in this Section 5.02, it
is understood and agreed that:
(i) none of the Agents, the Lenders, the Issuing Bank or their
respective agents or employees shall be liable for any loss or damage
insured by the insurance policies required to be maintained under this
Section 5.02, it being understood that (A) the Borrower and the
Subsidiaries shall look solely to their insurance companies or any
other parties other than the aforesaid parties for the recovery of such
loss or damage and (B) such insurance companies shall have no rights of
subrogation against the Agents, the Lenders, the Issuing Bank or their
agents or employees;
(ii) upon the occurrence of an Event of Default, the Borrower
will permit an insurance consultant retained by the Agents, at the
expense of the Borrower, to review the insurance policies maintained by
the Borrower and the Subsidiaries; and
(iii) the designation of any form, type or amount of insurance
coverage by the Agents or the Lenders under this Section 5.02 shall in
no event be deemed a representation, warranty or advice by the Agents
or the Lenders that such insurance is adequate for the purposes of the
business of the Borrower and the Subsidiaries or the protection of
their properties.
SECTION 5.03. OBLIGATIONS AND TAXES. The Borrower will, and will cause
each of the Subsidiaries to, pay all of its Indebtedness and other obligations
promptly and in accordance with their terms and pay and discharge promptly when
due all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property, before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might give rise to a Lien
upon such properties or any part thereof; PROVIDED, THAT, such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings diligently pursued and the
Borrower shall have set aside on its books adequate reserves in accordance with
GAAP with respect thereto and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien.
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. The Borrower will
furnish to the Agents and each Lender:
(a) as soon as available, and in any event within 105 days
after the end of each Fiscal Year (i) its consolidated and
consolidating balance sheet and related consolidated and consolidating
statements of operations and cash flows, showing the consolidated and
consolidating financial position of the Borrower and its Consolidated
Subsidiaries as of the close of such Fiscal Year and the consolidated
and consolidating results of their operations and cash flows during
such year, in each case setting forth in comparative form the figures
for the preceding Fiscal Year, with all of the consolidated statements
having been audited by a nationally recognized independent public
accounting firm and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect
that such financial
64
<PAGE> 70
statements fairly present the consolidated financial position and
consolidated results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries in accordance with GAAP consistently
applied and (ii) copies of its Annual Report on Form 10-K prepared in
compliance with the requirements therefor and filed with the SEC;
(b) as soon as available, and in any event within 45 days
after the end of each of the first three fiscal quarters of each Fiscal
Year (i) its consolidated balance sheet and related consolidated
statements of operations and cash flows, showing the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as
of the close of such fiscal quarter, the consolidated results of their
operations and cash flows during such fiscal quarter and the then
elapsed portion of such Fiscal Year and the consolidated cash flows for
the then elapsed portion of such Fiscal Year, all certified by one of
its Financial Officers as fairly presenting the consolidated financial
position and consolidated results of operations and cash flows of the
Borrower and its Consolidated Subsidiaries in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and
(ii) copies of its Quarterly Report on form 10-Q prepared in compliance
with the requirements therefore and filed with the SEC;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, an Officer's Certificate of the
Borrower certifying that no Default or Event of Default has occurred
or, if such a Default or Event of Default has occurred, specifying the
nature and extent thereof and any corrective action taken or proposed
to be taken with respect thereto;
(d) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial Officer
of the Borrower, substantially in the form of Exhibit G hereto, (i)
setting forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the covenants
contained in Sections 6.13 and 6.14, (ii) setting forth computations in
reasonable detail satisfactory to the Administrative Agent
demonstrating the Consolidated Pricing Ratio and (iii) stating whether,
since the date of the most recent Required Financial Statements
previously delivered, there has been any material change in the
generally accepted accounting principles applied in the preparation of
the Borrower's financial statements and, if so, describing such change;
(e) promptly upon their becoming publicly available, copies of
all (i) financial statements, reports, notices and proxy statements
sent or made available by the Borrower to all of its security holders
in compliance with the Exchange Act or any comparable Federal or state
laws relating to the disclosure by any person of information to its
security holders, (ii) all regular and periodic reports and all
registration statements and prospectuses filed by the Borrower with any
securities exchange or with the SEC, and (iii) all press releases and
other statements made available by the Borrower or its Subsidiaries
concerning material developments in the business of the Borrower or any
of the Subsidiaries, as the case may be;
65
<PAGE> 71
(f) promptly upon completion, but in any event not later than
45 days after the commencement of each Fiscal Year, a copy of
projections by the Borrower of its consolidated balance sheet and
related consolidated statements of operations and cash flows for such
Fiscal Year (including all material assumptions to such projections)
and a budget for such Fiscal Year, all in form customarily prepared by
the Borrower's management, such projected financial statements to be
accompanied by a certificate of a Financial Officer to the effect that
such projected financial statements have been prepared in good faith,
based on assumptions that the Borrower believes to be reasonable and
based on the best information available to the Borrower and that such
Financial Officer has no reason to believe they are misleading in any
material respect in light of the circumstances existing at the time of
preparation thereof. Further, in connection with any request to extend
the Tranche B Revolving Credit Maturity Date pursuant to Section
2.09(f), the Borrower shall provide the Agents and the Lenders with
preliminary projections and budgets prepared by the Borrower's
management for the coming Fiscal Year;
(g) at least 10 but not more than 30 days prior to any
Permitted Acquisition, financial projections covering the period from
the date of such Permitted Acquisition through the Tranche A Revolving
Credit Maturity Date giving effect to such Permitted Acquisition and
demonstrating compliance by the Borrower on a pro forma basis with the
covenants in Article VI from and after the date of, and after giving
effect to such Permitted Acquisition through the Tranche A Revolving
Credit Maturity Date (such projections to be certified by a Financial
Officer of the Borrower as having been prepared in good faith on the
basis of assumptions believed by the Borrower to be reasonable);
(h) as soon as available, and in any event within 15 days of
receipt, any final management letter issued or provided by the auditors
of the Borrower or any Subsidiary; and
(i) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Borrower or any Subsidiary, or compliance with the terms of any
Loan Document, as either Agent or any Lender may reasonably request.
SECTION 5.05. OTHER INFORMATION. (a) The Borrower will furnish to the
Agents prompt written notice of the following:
(i) any Default or Event of Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(ii) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against or affecting the Borrower or any of the
Subsidiaries (A) which, if adversely determined, could individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect or (B) which involves a claim or series of related claims
against the Borrower or any Subsidiary in
66
<PAGE> 72
excess of $500,000; PROVIDED, THAT, the Borrower is not required to
give written notice of claims fully covered by third party insurance;
(iii) all matters materially affecting the value,
enforceability or collectibility of any material portion of its assets,
including changes to significant contracts, schedules of equipment,
changes of significant equipment or real property, the reclamation or
repossession of, or the return to the Borrower or any of the
Subsidiaries of, a material amount of goods and material claims or
disputes asserted by any customer or other obligor, which matters could
have a Material Adverse Effect;
(iv) any material adverse change in the relationship between
any of the Borrower and the Subsidiaries, on the one hand, and any of
its respective suppliers, licensors or customers, on the other hand,
which could reasonably be expected to have a Material Adverse Effect;
(v) all proposed amendments to any material agreement relating
to Indebtedness to which the Borrower or any Subsidiary is a party; and
(vi) any development that individually or in the aggregate has
resulted in, or could reasonably be expected to have, a Material
Adverse Effect.
(b) Immediately upon receipt by the Borrower, the Borrower shall
provide the Agents and the Lenders with copies of all notices (including notices
of default), statements and financial information received from any other
creditor or lessor with respect to any item of Indebtedness which, if not paid,
could give rise to an Event of Default or the repossession of material property
from the Borrower or any of the Subsidiaries.
(c) Any notification required by this Section 5.05 shall be accompanied
by a certificate of a Financial Officer of the Borrower setting forth the
details of the specified events and the action which the Borrower proposes to
take with respect thereto.
SECTION 5.06. ERISA. (a) The Borrower will, and will cause each of the
Subsidiaries to, comply in all material respects with the applicable provisions
of ERISA and the Code.
(b) The Borrower will promptly give notice to the Agents and each
Lender of the following events, as soon as possible and in any event within 30
days after the Borrower knows or has reason to know thereof: (i) the occurrence
or expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, any filing by the Borrower
with the PBGC of a notice of intent to terminate a Plan, any receipt by the
Borrower of notice from the PBGC of the intention of the PBGC to terminate a
Plan or appoint a trustee to administer a Plan, any Lien in favor of the PBGC or
a Plan, or any withdrawal from, or the termination, reorganization or insolvency
(within the meaning of such terms as used in ERISA) of, any Multiemployer Plan;
or (ii) the institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal
67
<PAGE> 73
from, or the termination, reorganization or insolvency (within the meaning of
such terms as used in ERISA) of, any Single Employer Plan or Multiemployer Plan.
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. The Borrower will, and will cause each of the Subsidiaries to, keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of the Subsidiaries to, permit any representatives designated by
either Agent or any Lender to visit and inspect the financial records and the
properties of the Borrower or any Subsidiary at reasonable times and as often as
reasonably requested, and to make extracts from and copies of such financial
records, and permit any representatives designated by either Agent or any Lender
to discuss the affairs, finances and condition of the Borrower or any Subsidiary
with the officers thereof and independent accountants therefor (with
representatives of the Borrower present unless an Event of Default or Default
has occurred and is continuing).
SECTION 5.08. USE OF PROCEEDS. The Borrower will use the proceeds of
the Loans and request the issuance of Letters of Credit only for the purposes
set forth in Section 3.13.
SECTION 5.09. INTEREST RATE PROTECTION AGREEMENTS. After the Closing
Date in the event the Borrower elects to enter into and thereafter maintain in
full force and effect Interest Rate Protection Agreements, then such Interest
Rate Protection Agreements shall be at rates and on terms reasonably
satisfactory to the Agents and the Borrower; PROVIDED, THAT, it is understood
and agreed that any Interest Rate Protection Agreement entered into with any
person other than a Lender must be unsecured. The Borrower will promptly deliver
evidence of the execution and delivery of such Interest Rate Protection
Agreements to the Administrative Agent.
SECTION 5.10. FISCAL YEAR. The Borrower will cause its Fiscal Year to
end on August 31 in each year. The Borrower will cause each Subsidiary to cause
their respective Fiscal Years to end on the date in each year that is the date
of such Subsidiaries' Fiscal Year end in effect as of the Closing Date.
SECTION 5.11. COMPLIANCE WITH ENVIRONMENTAL LAWS; PREPARATION OF
ENVIRONMENTAL REPORTS. (a) The Borrower will, and will cause each Subsidiary to,
comply, and use its best efforts to cause all lessees and other persons
occupying the properties owned or leased by the Borrower and the Subsidiaries to
comply, in all material respects with all environmental laws and environmental
permits applicable to its operations and properties except to the extent that
the failure to comply therewith could not reasonably be expected to result in
liability in excess of $500,000; obtain and renew all material environmental
permits necessary for its operations and properties; and conduct any remedial
action required under, and in accordance with, environmental laws, except to the
extent that: (i) the cost of such remedial action could not reasonably be
expected to exceed $500,000; or (ii) the necessity of any such remedial action
is being contested in good faith by appropriate proceedings timely instituted
and diligently pursued and in the manner provided by applicable law.
68
<PAGE> 74
(b) If a Default or Event of Default caused by reason of a breach of
Section 3.17 or 5.11(a) shall have occurred and be continuing, or if the laws of
the United States or any state in which the Borrower or any of the Subsidiaries
leases or owns property provide that a Lien upon the property of the Borrower or
any of the Subsidiaries may be obtained for the removal of Hazardous Materials
which have been released, at the request of the Required Lenders through the
Administrative Agent, the Borrower will provide to the Lenders within 45 days
after such request, at the expense of the Borrower, an environmental site
assessment report for the properties which are the subject of such Default or
Event of Default prepared by an environmental consulting firm reasonably
acceptable to the Agents and indicating the presence or absence of Hazardous
Materials and the estimated cost of any compliance or remedial action in
connection with such properties. To the extent any such Hazardous Materials are
located therein or thereunder that either (i) subjects a property to Lien or
(ii) requires removal to safeguard the health of any person, the Borrower shall,
and shall cause each of the Subsidiaries to, remove, or cause to be removed,
such Lien and such Hazardous Materials at the Borrower's expense.
SECTION 5.12. SUBSIDIARIES. The Borrower shall cause each and every
Domestic Subsidiary that is (i) existing as of the Closing Date, to execute and
deliver a Guarantee Agreement, Indemnity, Subrogation and Contribution
Agreement, Intercompany Note, Pledge Agreement and other Collateral Documents as
may be required by the Agents, and (ii) organized or acquired subsequent to the
date hereof, to execute and deliver an Intercompany Note and a Supplemental
Agreement immediately upon and contemporaneously with their organization or
acquisition. The Borrower will cause each and every Foreign Subsidiary that is
existing as of the Closing Date, or organized or is acquired subsequent thereto,
to (x) execute and deliver an Intercompany Note in accordance with the terms of
Section 5.14; PROVIDED, THAT, Foreign Subsidiaries that are not Wholly Owned
Subsidiaries shall not be required to execute an Intercompany Note unless and
until the applicable Foreign Subsidiary incurs Intercompany Indebtedness to the
Borrower or a Wholly Owned Subsidiary that is a Domestic Subsidiary, at which
time and as a condition to that borrowing, such Foreign Subsidiary shall execute
and deliver an Intercompany Note, and (y) in the event any Foreign Subsidiary
borrows funds (as permitted hereunder) in excess of $250,000 from the Borrower
or any Domestic Subsidiary, contemporaneously with such borrowing, deliver an
opinion of counsel reasonably required by the Agents regarding the
enforceability thereof and the Lender's security interest therein. Nothing in
this Section 5.12 shall be deemed to imply that any such acquisition or
organization of a Subsidiary is permitted under this Agreement.
SECTION 5.13. FURTHER ASSURANCES. Within 10 days after a request by
either of the Agents or the Required Lenders, the Borrower will, and will cause
each Subsidiary to, execute any and all further documents, financing statements,
agreements and instruments, and take all further action (including filing
Uniform Commercial Code and other financing statements that may be required
under applicable law, or that the Required Lenders or the Agents may reasonably
request), in order to effectuate the transactions contemplated by the Loan
Documents and in order to grant, maintain, preserve, protect and perfect the
validity and first priority of the security interests created or intended to be
created by the Collateral Documents. Such security interests and Liens will be
created under the Collateral Documents and other security agreements,
instruments and documents in form and substance satisfactory to the Agents, and
the Borrower shall deliver or cause to be delivered to the
69
<PAGE> 75
Lenders all such instruments and documents (including legal opinions and lien
searches) as the Agents shall reasonably request to evidence compliance with
this Section 5.13. The Borrower agrees to provide such evidence as the Agents
shall reasonably request as to the perfection and priority status of each such
security interest and Lien.
SECTION 5.14. CERTAIN POST-CLOSING COVENANTS. Within 30 days from the
Closing Date the Borrower agrees to (a) with respect to the Foreign Subsidiaries
listed on Schedule 5.14(a), deliver the certificates and documents (translated
into English) that are listed and described in Section 4.01(f)(ii), (b) with
respect to the Foreign Subsidiaries that are listed on Schedule 5.14(b), deliver
the documents and instruments listed and described by Section 4.01(f)(iii) and
(c) with respect to the Foreign Subsidiaries that are listed on Schedule
5.14(c), deliver certificates of Capital Stock, stock powers and other documents
and instruments described in Section 4.01(c)(iii) and/or such other evidence as
may be required pursuant to Section 4.01(c)(vii) to evidence that the
Administrative Agent (on behalf of the Lenders) holds a perfected, first
priority Lien on the Capital Stock of such Foreign Subsidiaries. With respect to
those Foreign Subsidiaries that are Wholly Owned Subsidiaries and listed on
Schedule 5.14(b), the Borrower agrees to cause such Foreign Subsidiaries to
execute and deliver to the Borrower, and then to the Administrative Agent
pursuant to the Pledge Agreement, all within 30 days from the Closing Date,
Intercompany Notes executed on behalf of such Foreign Subsidiaries. With respect
to those Foreign Subsidiaries that are Restricted Subsidiaries and listed on
Schedule 5.14(c), the Borrower agrees to deliver a letter from its counsel in
each applicable jurisdiction setting forth the steps and procedures required to
perfect a Lien on the Capital Stock of that Foreign Subsidiary pursuant to the
laws of such jurisdiction. It is understood and agreed that, with respect to any
Foreign Subsidiary listed on Schedule 5.14(a) (b) or (c), until the covenants
and requirements set forth in this Section 5.14 with respect to such Foreign
Subsidiary have been satisfied in full, in the reasonable opinion of the Agents,
such Foreign Subsidiary shall not be deemed to be a "Foreign Subsidiary" for
purposes of activities permitted pursuant to Article 6 of this Agreement (other
than Sections 6.01(k) and 6.01(l)).
ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the Loans, together with interest, Fees and all other Obligations have been
paid in full, all Letters of Credit have been canceled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing:
SECTION 6.01. INDEBTEDNESS. The Borrower will not, and will not cause
or permit any of the Subsidiaries to, incur, create, issue, assume, guarantee or
permit to exist any Indebtedness or Disqualified Stock, except:
(a) Indebtedness or Disqualified Stock existing on the Closing
Date that is set forth in Schedule 6.01 (but not any extension,
renewal, increase or refinancing
70
<PAGE> 76
thereof, other than the refinancing of Indebtedness permitted under
Section 6.01(d) (i) if such refinancing is within the terms and limits
of Section 6.01(d)(i));
(b) Indebtedness created and evidenced by the Loan Documents;
(c) Intercompany Indebtedness existing on the Closing Date
that is set forth on Schedule 6.01, or arising thereafter; PROVIDED,
THAT (i) in the case of Intercompany Indebtedness existing on the
Closing Date, all such Indebtedness is listed on Schedule 6.01, (ii) in
the case of Intercompany Indebtedness arising after the Closing Date,
all such Indebtedness is evidenced by Intercompany Notes pledged to the
Agents and the Lenders pursuant to the Pledge Agreement and is
permitted pursuant to Section 6.04(b); PROVIDED, THAT, the aggregate
Intercompany Indebtedness of Foreign Subsidiaries to the Borrower or
any Domestic Subsidiary shall not exceed $20,000,000 at any time and,
contemporaneously with any loan or advance to a Foreign Subsidiary, if
required by the terms of Section 5.12, the Borrower shall deliver or
cause to be delivered to the Administrative Agent an opinion of counsel
to such Foreign Subsidiary, in form and substance reasonably
satisfactory to the Administrative Agent, stating that the applicable
Intercompany Note is the valid, binding and enforceable obligation of
such Foreign Subsidiary and (iii) Intercompany Indebtedness that is
created between Domestic Subsidiaries that are Wholly Owned
Subsidiaries is not required to be evidenced by Intercompany Notes;
PROVIDED, THAT, such Indebtedness (i) is incurred in good faith, in the
ordinary course of business, and for a legitimate company purpose, (ii)
is unsecured and (iii) is, by its terms, not assignable, transferrable,
sellable, or otherwise pledgeable to any third party;
(d) (i) Indebtedness for borrowed money of Foreign
Subsidiaries to unrelated third parties (including guarantees with
respect thereto by the Borrower or any other Subsidiaries, as long as
those guarantees are unsecured (except for Liens on the assets (other
than Capital Stock) of the applicable Foreign Subsidiary)) that does
not exceed $15,000,000 in an aggregate amount outstanding at any time,
(which Indebtedness includes the Indebtedness described in item 4 of
Schedule 6.01) and (ii) in the event the Borrower acquires a majority
(or more) of the total outstanding Capital Stock of the Indian
Affiliate as permitted by Section 6.04(g), then the Indebtedness for
borrowed money of the Indian Affiliate existing as of the Closing Date
that does not exceed $6,000,000;
(e) Indebtedness of the Borrower or any Wholly Owned
Subsidiary that is a Domestic Subsidiary to Foreign Subsidiaries;
PROVIDED, THAT such Indebtedness is unsecured and is created and
outstanding under an agreement or instrument pursuant to which such
Indebtedness is subordinated to the Obligations secured under the
Collateral Documents at least to the extent provided in the instrument
attached hereto as Exhibit L;
(f) Indebtedness owed to any person providing worker's
compensation, health, disability or other employee benefits, property,
casualty or liability insurance to the Borrower or any Subsidiary, so
long as such Indebtedness shall not be in excess of the amount of the
unpaid cost or estimated or negotiated amounts of, and shall be
71
<PAGE> 77
incurred only to defer the cost or estimated or negotiated amounts of,
such insurance for the applicable insurance period for which such
Indebtedness is incurred and such Indebtedness shall be outstanding
only during such period (which period shall not extend beyond the date
that is two years after the date on which such Indebtedness is
incurred);
(g) Indebtedness (including Capital Lease Obligations and
Purchase Money Indebtedness) issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable arising
in the ordinary course of business and paid in accordance with
customary trade terms) in a principal amount at any time outstanding
not in excess of $5,000,000 and incurred to finance Capital
Expenditures permitted by Section 6.13;
(h) Interest Rate Protection Agreements entered into in
accordance with Section 5.09;
(i) Indebtedness for advances permitted by Sections 6.04(d);
(j) Indebtedness issued to a seller or assumed as the deferred
purchase price of a person (or to which the acquired person is
subject), business or asset in connection with a Permitted Acquisition
pursuant to Section 6.04(g); PROVIDED, THAT (i) such Indebtedness is
not secured by a Lien on any assets other than assets acquired in such
Permitted Acquisition, (ii) any Indebtedness issued or assumed pursuant
to this Section 6.01(j) may not be refinanced in any manner except with
Revolving Loans and (iii) the aggregate principal amount of all such
Indebtedness outstanding at any time shall not exceed $10,000,000;
(k) Indebtedness from one Wholly Owned Foreign Subsidiary to
another Wholly Owned Foreign Subsidiary; PROVIDED, THAT, such
Indebtedness (i) is incurred in good faith, in the ordinary course of
business, and for a legitimate company purpose, (ii) is unsecured and
(iii) is, by its terms, not assignable, transferrable, sellable, or
otherwise pledgeable to any third party;
(l) Indebtedness of Foreign Subsidiaries pursuant to foreign
currency hedge contracts entered into in the ordinary course of
business; and
(m) Indebtedness of Glasteel Parts and Services, Inc. that
exists solely as a result of their general partnership interest in
Universal Glasteel Equipment, an Ohio general partnership ("UGE")
resulting from Indebtedness for borrowed money incurred by UGE for the
purpose of making a loan to Galeglass, Inc. (or an Affiliate thereof)
in an amount not to exceed $2,000,000.
SECTION 6.02. NEGATIVE PLEDGE. The Borrower will not, and will not
cause or permit any of the Subsidiaries to, create, incur, assume or permit to
exist any Lien on any property or assets (including Capital Stock or other
securities of any Subsidiary or other person) now owned or hereafter acquired by
it or on any income or revenues or rights in respect of any thereof, except:
72
<PAGE> 78
(a) Liens existing on the Closing Date and that are set forth
in Schedule 6.02, provided that such Liens secure only those
obligations which they secure on the Closing Date;
(b) Liens in favor of the Administrative Agent on behalf of
the Secured Parties created by the Collateral Documents;
(c) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanic's, materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due or which are being
contested in compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way and
restrictions on use of real property existing as of the Closing Date or
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of the Subsidiaries;
(h) unperfected Liens arising by operation of law under
Article 2 of the Uniform Commercial Code in favor of unpaid sellers or
prepaying buyers of goods relating to amounts that are not past due in
accordance with their respective terms of sale;
(i) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case
of improvements, constructed) by the Borrower or any Subsidiary;
PROVIDED, THAT (i) such security interests secure Indebtedness
permitted by Section 6.01(g), (ii) such security interests are
incurred, and the Indebtedness secured thereby is created, within 90
days after such acquisition (or completion of construction), (iii) the
Indebtedness secured thereby does not exceed 100% of the lesser of the
cost or the fair market value of such real property, improvements or
equipment at the time of such acquisition (or completion of
construction) and (iv) such security interests do not apply to any
other property or assets of the Borrower or any Subsidiary;
73
<PAGE> 79
(j) leases or subleases which are entered into in the ordinary
course of the business and which do not interfere in any material
respect with the ordinary conduct of the business of the Borrower or
its Subsidiaries;
(k) Liens existing on any asset (other than Capital Stock)
acquired in a Permitted Acquisition or on the assets (other than
Capital Stock) of any person acquired in a Permitted Acquisition;
PROVIDED, THAT, (i) the Indebtedness secured by any such Lien is
permitted under Section 6.01(j), (ii) any such Lien is created at the
time of completion of the Permitted Acquisition, (iii) the Indebtedness
secured thereby does not exceed 100% of the lesser of the cost or the
fair market value of the asset acquired at the time of the Permitted
Acquisition and (iv) such Liens are confined solely to the asset
acquired (or assets of the person acquired) and do not apply to any
other asset of the Borrower or any Subsidiary; and
(l) Liens on assets (other than Capital Stock) of Foreign
Subsidiaries securing Indebtedness or guarantees permitted under
Section 6.01(d).
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. The Borrower will not,
and will not cause or permit any of the Subsidiaries to, enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred; PROVIDED, THAT, the Borrower
may enter into such a transaction if, and only if, a legitimate tax purpose
exists for such transaction and the aggregate fair market value of the assets
that are the subject of such transaction or transactions does not exceed
$5,000,000 at any one time.
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. The Borrower will not,
and will not cause or permit any of the Subsidiaries to, purchase, hold or
acquire any Capital Stock, evidences of indebtedness or other securities of,
make or permit to exist any loans, extensions of credit or advances to, make
guarantees in favor of, or make or permit to exist any other investment, capital
contribution or other interest in, any other person, except:
(a) (i) equity investments existing on the Closing Date by the
Borrower in the Subsidiaries and listed on Schedule 6.04, (ii)
contributions of equity made after the Closing Date to Wholly Owned
Subsidiaries of the Borrower that do not exceed $1,000,000 in the
aggregate during any Fiscal Year, as long as such contributions are not
made for the purpose of funding an acquisition not otherwise permitted
hereunder, and (iii) treasury stock held by the Borrower and its
Subsidiaries on the Closing Date and listed on Schedule 6.04 or
acquired by the Borrower or a Subsidiary as permitted pursuant to
Section 6.06(a);
(b) loans and advances made after the Closing Date by the
Borrower or any Wholly Owned Subsidiary that is a Domestic Subsidiary
to any Subsidiary or the Borrower; PROVIDED, THAT, any such loan or
advance (i) is evidenced by an Intercompany Note pledged and delivered
to the Administrative Agent on behalf of the Secured Parties pursuant
to the Pledge Agreement (other than as excepted in
74
<PAGE> 80
clause (iii) of Section 6.01(c)), and (ii) is otherwise permitted
pursuant to Section 6.01(c);
(c) trade accounts receivable (and related notes and
instruments) arising in the ordinary course of business consistent with
past practices;
(d) (i) advances to employees for home-swing loans and moving
and travel expenses in the ordinary course of business consistent with
past practices, and guarantees by the Borrower in connection with
home-swing loans of third parties to employees, that, in the aggregate,
do not exceed $1,000,000 at any one time outstanding and (ii) loans to
executive officers of the Borrower to assist in the payment of taxes
resulting from an election made under Section 83(b) of the Code which
shall not exceed $500,000 in the aggregate at any one time outstanding;
(e) Cash Equivalents;
(f) securities held by the Borrower or any of the Subsidiaries
prior to the Closing Date and listed in Schedule 6.04;
(g) one or more non-hostile acquisitions by the Borrower or
any Qualified Acquisition Subsidiary of assets or Capital Stock (other
than Margin Stock) of any other person (such assets, in the case of an
asset acquisition, or person, in the case of the acquisition of Capital
Stock, is referred to herein as the "ACQUIRED ENTITY") so long as (i)
in the case of an acquisition of assets, such assets are to be used,
and in the case of an acquisition of Capital Stock, the person so
acquired is engaged, in a business generally considered to be a part of
the fluids management industry, (ii) the Borrower shall have provided
the Lenders with the financial projections required by Section 5.04(g)
and such other information as the Lenders shall reasonably request,
(iii) on the date of such acquisition and immediately after giving
effect thereto, the representations and warranties set forth in Article
III shall be true and correct in all material respects with the same
effect as though made on and as of such date and no Default or Event of
Default shall exist, (iv) the Consolidated Leverage Ratio shall not
exceed 3.75 to 1.00 calculated on a pro forma basis, (v) the
Consolidated Fixed Charge Coverage Ratio shall not be less than 2.00 to
1.00 calculated on a pro forma basis, (vi) in the case of an
acquisition of Capital Stock of a person, then simultaneously with any
such acquisition, the Administrative Agent for the benefit of the
Secured Parties shall be granted (A) in the case of a person organized
under the laws of the United States, any State thereof or the District
of Columbia, a first priority security interest in all of such Capital
Stock acquired by the Borrower or any Qualified Acquisition Subsidiary
as part of such acquisition, and (B) in the case of a person organized
under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia, that will be acquired
directly by the Borrower or a Domestic Subsidiary, a first priority
security interest in 65% of all of the Capital Stock of the person so
acquired, and in all cases the Borrower shall, and shall cause any
applicable Subsidiary to, execute any documents (including a
Supplemental Agreement, Intercompany Note, financing statements and
other Collateral Documents) and take all action (including filing
financing statements and
75
<PAGE> 81
obtaining and providing consents, and legal opinions) that may be
required under applicable law, or that the Agents may request, in order
to grant, preserve, protect and perfect such security interest, (vii)
in the case of an acquisition of Capital Stock of a person, the
Borrower acquires directly or indirectly 100% of the Capital Stock of
such person; PROVIDED, THAT, with respect to the Indian Affiliate, the
Borrower may acquire less than all but at least a majority interest in
the Indian Subsidiary for a total aggregate consideration not to exceed
$10,000,000, and (viii) the aggregate Fair Market Value of
consideration, whether payable upon consummation thereof or in the form
of earn-outs, non-competes or other deferred payment arrangements, for
all such acquisitions made during any Fiscal Year, including cash,
securities, other property and the assumption of Indebtedness (if
permitted), shall not exceed the difference between (A) the greater of
(x) $25,000,000 or (y) 20% of the Borrower's Consolidated Net Worth as
of the end of the preceding Fiscal Year, and (B) the amount of any
Indebtedness incurred as permitted pursuant to Section 6.01(j) that
remains outstanding at the time of determination (any acquisition
satisfying each of the criteria set forth in the preceding clauses (i)
through (viii) being referred to herein as a "PERMITTED ACQUISITION");
(h) loans and advances made after the Closing Date by (i) any
Foreign Subsidiaries to the Borrower or any Wholly Owned Subsidiary
that is a Domestic Subsidiary that are permitted pursuant to Section
6.01(e) and (ii) any Wholly Owned Foreign Subsidiary to another Wholly
Owned Foreign Subsidiary that are permitted pursuant to Section
6.01(k);
(i) loans to any Affiliate of the Borrower or its
Subsidiaries; PROVIDED, THAT, (i) such loans do not exceed an aggregate
amount equal to $1,000,000 at any one time outstanding, and (ii) all
such loans are evidenced by Intercompany Notes pledged to the Agents
and the Lenders pursuant to the Pledge Agreement; and
(j) a contribution of assets to the Borrower or any Wholly
Owned Subsidiary that is a Domestic Subsidiary to the extent permitted
by Section 6.05(g).
SECTION 6.05. MERGERS, CONSOLIDATIONS, DISPOSITIONS AND ACQUISITIONS.
The Borrower will not, and will not cause or permit any of the Subsidiaries to,
(i) merge into or consolidate with any other person, (ii) permit any other
person to merge into or consolidate with it, (iii) sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired)
(iv) issue, sell, transfer, lease or otherwise dispose of any Capital Stock of
any Subsidiary to, or permit any Subsidiary to accept any capital contribution
from, any person, or (v) purchase, lease or acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
person, except that:
(a) any Foreign Subsidiary may be merged, liquidated or
consolidated with or into another Foreign Subsidiary if, immediately
after giving effect to such transaction, no condition or event shall
exist which constitutes a Default or Event of Default;
76
<PAGE> 82
(b) any Subsidiary may be merged, liquidated or consolidated
with or into the Borrower or any Domestic Subsidiary that is a Wholly
Owned Subsidiary if, immediately after giving effect to such
transaction, no condition or event shall exist which constitutes a
Default or Event of Default and the Borrower or such Domestic
Subsidiary, as applicable, is the surviving entity;
(c) the Borrower and any of the Subsidiaries may sell
inventory in the ordinary course of business for fair value and on an
arm's-length basis (and as may be permitted pursuant to Section 6.10)
and may purchase inventory in the ordinary course of business;
(d) the Borrower and any of the Subsidiaries may sell damaged,
worn out or obsolete tangible assets or scrap in the ordinary course of
business and in a commercially reasonable manner, so long as the Net
Cash Proceeds of any such disposition are applied as required by
Section 2.11(e);
(e) the foregoing shall not be deemed violated by any casualty
or condemnation affecting assets of the Borrower or any Subsidiary, so
long as (i) the Borrower or its applicable Subsidiary reinvests the Net
Cash Proceeds of any such casualty of condemnation within 270 days of
the date of such casualty or condemnation (or if the Required Lenders
agree to a longer period, such longer period) in assets of a like kind
and character to those that were destroyed or taken or (ii) if the
Borrower or its applicable Subsidiary does not reinvest the Net Cash
Proceeds of any such casualty or condemnation as provided in the
preceding clause (i) within the period provided in clause (i), the Net
Cash Proceeds thereof are immediately applied as required by Section
2.11(e);
(f) the Borrower and any of the Subsidiaries may sell, lease,
transfer, assign or dispose of assets to any other person to the extent
that the aggregate Net Cash Proceeds from such sale, lease, transfer,
assignment or other disposition to such person do not exceed $500,000,
so long as (I) the fair market value of all property disposed of
pursuant to this clause (f) does not exceed $2,000,000 in the aggregate
in any Fiscal Year and (II) the Net Cash Proceeds of any such
disposition are applied as required by Section 2.11(e);
(g) any of the Subsidiaries may transfer assets consisting of
plant, property and equipment (in accordance with GAAP) to the Borrower
or any Wholly Owned Subsidiary which is a Domestic Subsidiary;
(h) the Borrower or a Qualified Acquisition Subsidiary may
make Permitted Acquisitions to the extent permitted by Section 6.04(g);
(i) the Borrower may make equity contributions to Wholly Owned
Subsidiaries to the extent permitted by Section 6.04(a)(ii);
(j) the Borrower and the Subsidiaries may make Capital
Expenditures to the extent permitted by Section 6.13;
77
<PAGE> 83
(k) the Borrower and any applicable Subsidiary may acquire the
Capital Stock of the Borrower or the Subsidiaries to the extent
permitted by Section 6.06(a); and
(l) a non-Wholly owned Foreign Subsidiary may issue Capital
Stock to third parties as long as (i) the proceeds thereof are used for
working capital purposes of such Subsidiary or to finance the
acquisition of capital assets in the ordinary course of business; and
(ii) the issuer remains a majority-owned Subsidiary of the Borrower
after the issuance of such Capital Stock.
SECTION 6.06. DIVIDENDS, DISTRIBUTIONS AND OTHER RESTRICTED PAYMENTS.
(a) The Borrower will not, and will not cause or permit any of the Subsidiaries
to, (i) declare or pay, directly or indirectly, any dividend or make any other
distribution (by reduction of capital or otherwise and including any tax sharing
or indemnification payments), whether in cash, property, securities or a
combination thereof, with respect to any Capital Stock of the Borrower or any of
the Subsidiaries, (ii) except as expressly permitted pursuant to Section 6.06(b)
below and except for Capital Stock reacquired by the Borrower in connection with
the exercise of stock options granted pursuant to employee or director stock
option plans of the Borrower or in connection with withholding taxes due under
any stock plan in which employees or directors participate, directly or
indirectly redeem, purchase, retire or otherwise acquire for value, any Capital
Stock of the Borrower or any of the Subsidiaries, whether such acquisition is
made at the option of the Borrower or such Subsidiary or at the option of the
holder of such Capital Stock and whether or not such acquisition is required
under the terms and conditions applicable to such Capital Stock or set aside any
amount for any such purpose, (iii) release, cancel, compromise or forgive in
whole or in part any Indebtedness evidenced by the Intercompany Notes or (iv)
directly or indirectly redeem, purchase, prepay, retire, defease or otherwise
acquire for value any Indebtedness (other than Obligations), whether such
acquisition is made at the option of the Borrower or such Subsidiary or at the
option of the holder of such Indebtedness and whether or not such acquisition is
required under the terms and conditions applicable to such Indebtedness, or set
aside any amount for any such purpose, except for repayments of principal of any
such Indebtedness in accordance with the scheduled amortization thereof;
PROVIDED, THAT (x) any Subsidiary may declare and pay dividends or make other
distributions to the Borrower or any Wholly Owned Subsidiary and (y) as long as
no Event of Default then exists, the Borrower may pay cash dividends to the
holders of its Capital Stock and repurchase or redeem Capital Stock of the
Borrower in each Fiscal Year of the Borrower that do not exceed the greater of
(x) twenty percent (20%) of the Borrower's Consolidated Net Income for the
preceding Fiscal Year or (y) $2,500,000.
(b) In connection with a Permitted Acquisition in which Capital Stock
of the Borrower is to be issued as all or part of the consideration therefor,
the Borrower or a Restricted Subsidiary may repurchase a number of shares of the
Capital Stock of Borrower which is not greater than the number of shares of
Borrower's Capital Stock issued or to be issued in connection with the Permitted
Acquisition so long as: (i) all of such Capital Stock is repurchased during the
fiscal quarter of Borrower in which the Permitted Acquisition occurs, and (ii)
the aggregate consideration paid for the Capital Stock so repurchased, together
with all other consideration paid in such Permitted Acquisition (other than
consideration consisting
78
<PAGE> 84
of a number of shares of Borrower's Capital Stock not greater than the number of
shares so repurchased) does not exceed the amount permitted by Section 6.04(g);
PROVIDED, THAT, any such repurchase of Capital Stock of the Borrower in
connection with a Permitted Acquisition that is not completed must otherwise be
permitted under Section 6.06(a).
SECTION 6.07. IMPAIRMENT OF SECURITY INTERESTS. The Borrower will not,
and will not permit any of the Subsidiaries to, take or omit to take any action,
which action or omission might or would have the result of materially impairing
the security interests in favor of the Administrative Agent on behalf of the
Secured Parties with respect to the Collateral, and the Borrower will not, and
will not permit any of the Subsidiaries to, grant to any person (other than the
Administrative Agent on behalf of the Secured Parties pursuant to the Loan
Documents) any interest whatsoever in the Collateral.
SECTION 6.08. LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS, ETC.
The Borrower will not, and will not cause or permit any of the Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction or any restriction in its
articles of incorporation (except restrictions imposed by state law), By-laws or
comparable governing instruments on the ability of any Subsidiary to (a) pay
dividends or make any other distributions on or in respect of its Capital Stock,
or pay any indebtedness owed to the Borrower or any Subsidiary, (b) make loans
or advances to the Borrower or any Subsidiary or (c) except in agreements
entered into in connection with a transaction permitted by Section 6.02(i),
transfer any of its properties or assets to the Borrower or any Subsidiary,
except for such encumbrances or restrictions existing under or by reason of (i)
customary non-assignment provisions in any lease governing a leasehold interest
or in any other contract governing a contract right which in the ordinary course
of business is not assignable or (ii) this Agreement and the Collateral
Documents.
SECTION 6.09. NO OTHER NEGATIVE PLEDGES. The Borrower will not, and
will not cause or permit any of the Subsidiaries to, directly or indirectly,
enter into any agreement prohibiting the creation or assumption of any Lien upon
the properties or assets of the Borrower or any Subsidiary, whether now owned or
hereafter acquired, or requiring an obligation to be secured if some other
obligation is secured, except for this Agreement and except in agreements
entered into in connection with a transaction permitted by Section 6.02(i).
SECTION 6.10. TRANSACTIONS WITH AFFILIATES AND SHAREHOLDERS. The
Borrower will not, and will not cause or permit any of the Subsidiaries to, sell
or transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise enter into or maintain any other transactions with,
any Affiliate of the Borrower or any of the Shareholders, except that so long as
no Default or Event of Default shall have occurred and be continuing, the
Borrower or any Subsidiary may enter into any of the foregoing transactions in
the ordinary course of business at prices and on terms and conditions that are
(i) set forth in writing and (ii) as favorable to the Borrower or such
Subsidiary as would be obtainable at the time in a comparable transaction on an
arm's-length basis from an unrelated third party. The provisions of this Section
6.10 shall not prohibit (A) any payment expressly permitted under Section 6.04
or 6.06, (B) any transaction entered into and maintained among
79
<PAGE> 85
the Borrower and any Restricted Subsidiaries or among Restricted Subsidiaries
and (C) payment of compensation to employees and directors in the ordinary
course of business. Notwithstanding the foregoing, (x) the Borrower and the
Subsidiaries may engage in transactions on a non-arm's-length basis in
connection with "beachhead" pricing in new markets as long as such transactions
are permitted by the rules and regulations regarding international transfer
pricing set forth in the Internal Revenue Code, and (y) except as required by
other provisions of this Agreement, permitted transactions between Subsidiaries
are not required to be in writing.
SECTION 6.11. BUSINESS OF BORROWER AND SUBSIDIARIES. (a) The Borrower
will not, and will not cause or permit any of the Subsidiaries to, engage at any
time in any business or business activity other than the businesses conducted by
it on the Closing Date, other businesses generally considered to be a part of
the fluids management industries and business activities reasonably incidental
thereto.
(b) The Borrower will not own, form or acquire any subsidiaries other
than (i) Subsidiaries existing on the Closing Date as set forth on Schedule 3.08
and (ii) subsidiaries expressly permitted to be owned, formed, or acquired by
the terms of this Agreement.
SECTION 6.12. CERTAIN AMENDMENTS. The Borrower will not, and will not
cause or permit any of the Subsidiaries to, enter into any amendment,
modification or waiver of (a) the Certificate of Incorporation or By-laws or
comparable governing instruments of the Borrower or any of the Subsidiaries as
in effect on the Closing Date, other than amendments, modifications and waivers
which are not, individually or in the aggregate, adverse in any material respect
to the rights or interests of the Lenders, or (b) the Subordinated Notes.
SECTION 6.13. CAPITAL EXPENDITURES. The Borrower will not permit the
aggregate amount of Capital Expenditures made by the Borrower and its
Subsidiaries taken as a whole in any Fiscal Year to exceed the sum of (i)
$30,000,000, plus (ii) the amount, if any, by which Capital Expenditures for the
previous Fiscal Year (other than any Fiscal Year prior to the 1997 Fiscal Year),
are less than $30,000,000.
SECTION 6.14. FINANCIAL COVENANTS.
(a) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Borrower
will not permit the Consolidated Fixed Charge Coverage Ratio for any
Reference Period to be less than 2.00 to 1.00 at any time during the
term of this Agreement.
(b) CONSOLIDATED LEVERAGE RATIO. The Borrower will not permit
the Consolidated Leverage Ratio for any Reference Period to exceed 3.75
to 1.00 at any time during the term of this Agreement.
(c) MINIMUM CONSOLIDATED NET WORTH. The Borrower will not
permit its Consolidated Net Worth as of the last day of any fiscal
quarter of the Borrower to be less than the Minimum Compliance Level at
any time during the term of this Agreement. The "Minimum Compliance
Level" shall be $77,721,000 as of
80
<PAGE> 86
August 31, 1996 and shall be increased as of the last day of each
fiscal quarter of the Borrower ending after the Closing Date by an
amount equal to the sum of (a) 50% of Consolidated Net Income (if
positive) for such fiscal quarter and (b) 100% of the Net Cash Proceeds
of the issuance of any Capital Stock of the Borrower or any Subsidiary;
PROVIDED, THAT, nothing in this paragraph shall be construed to permit
the issuance of any such Capital Stock. It is understood that the first
increase in the Minimum Compliance Level pursuant to the foregoing
provisions shall be determined as of the Borrower's fiscal quarter
ending November 30, 1996. The foregoing increases in the Minimum
Compliance Level shall be fully cumulative and no reduction in the
Minimum Compliance Level shall be made to reflect negative Consolidated
Net Income for any period.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events (each
an "EVENT OF DEFAULT" and collectively the "EVENTS OF DEFAULT"):
(a) default shall be made in the payment of any principal of
any Loan or any reimbursement obligation in respect of a Letter of
Credit when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on
any Loan or any Fee or any other amount (other than an amount referred
to in paragraph (a) above) due under any Loan Document, when and as the
same shall become due and payable, and such default shall continue
unremedied for a period of three Business Days;
(c) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a), 5.05, 5.08, 5.09, 5.10, 5.12,
5.13 or 5.14 or in Article VI;
(d) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained herein and in any other Loan Document (other than
those specified in paragraph (a), (b) or (c) above) and such default
shall continue unremedied for a period of 30 days after such default
becomes known to a Responsible Officer of the Borrower or such
Subsidiary;
(e) any representation or warranty made or deemed made in any
Loan Document or the extensions of credit hereunder, or any
representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document,
81
<PAGE> 87
shall prove to have been false or misleading in any material respect
when so made, deemed made or furnished;
(f) the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $500,000, when and as
the same shall become due and payable, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any Indebtedness in
excess of $4,000,000 if the effect of any failure referred to in this
clause (ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf to cause, with or
without the giving of notice or the lapse of time or both, such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower or any
Subsidiary, or of a substantial part of its property or assets, under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Subsidiary, or for a substantial part of its
property or assets, or (iii) the winding-up or liquidation of the
Borrower or any Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended,
or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in paragraph (g) above, (iii)
apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such party
or for a substantial part of its property or assets, (iv) file an
answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the
foregoing;
(i) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $500,000 shall be rendered against
the Borrower or any Subsidiary or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during
which execution shall not be effectively stayed, or any judgment
creditor shall levy upon assets or properties of the Borrower or any
Subsidiary to enforce any such judgment;
(j) (i) any person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or
82
<PAGE> 88
not waived, shall exist with respect to any Plan, or any Lien shall
arise on the assets of the Borrower or any Commonly Controlled Entity
in favor of the PBGC or a Plan, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee
appointed (or a trustee shall be appointed) to administer, or to
terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the termination,
reorganization or insolvency of (within the meaning of such terms as
used in ERISA), a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and, in each
case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could
reasonably be expected to result in liability of the Borrower and the
Subsidiaries in an aggregate amount exceeding $2,500,000 or require
payments by the Borrower and the Subsidiaries exceeding $1,000,000 in
any year;
(k) any Lien purported to be created by any Collateral
Document shall cease to be, or shall for any reason be asserted by the
Borrower or any Subsidiary not to be, a valid, perfected, first
priority Lien on the securities, properties or assets covered thereby,
except as priority may be affected by Liens permitted under Section
6.02 and except for releases of Collateral in accordance with all
applicable provisions of this Agreement and the Collateral Documents;
(l) any Loan Document or any material provision of any Loan
Document shall be declared by any Governmental Authority to be invalid
or unenforceable in whole or in part, or shall be asserted by the
Borrower or any Subsidiary not to be, in full force and effect and
enforceable in accordance with its terms;
(m) any adverse change in the material agreements or
relationships of the Borrower and the Subsidiaries shall occur and such
event or condition, together with all other such events or conditions,
if any, could, in light of all the then existing circumstances,
reasonably be expected to result in net losses, claims or actions
(after tax) to which the Borrower or its Subsidiaries are or may become
subject (with or without the passage of time) in an amount equal to or
greater than the greater of (i) $10,000,000 or (ii) 7% of the
Borrower's Consolidated Net Worth;
(n) any material intellectual property or any material license
relating thereto shall be invalid or unenforceable in whole or in part
or shall for any reason not be in full force and effect and enforceable
by the Borrower and the Subsidiaries or shall infringe the rights of
any other person or any other adverse change in the material
intellectual property rights of the Borrower and the Subsidiaries shall
occur and such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material
Adverse Effect;
83
<PAGE> 89
(o) either (i) the Borrower or any Subsidiary shall be liable,
whether directly, indirectly through required indemnification of any
person or otherwise, for the costs of investigation and/or remediation
of any Hazardous Material originating from or affecting property or
properties, whether or not owned, leased or operated by the Borrower or
any Subsidiary, which liability, together with all other such
liabilities, could reasonably be expected to exceed $10,000,000 or
require payments exceeding $3,000,000 in any year or (ii) any Federal,
state, regional, local or other environmental regulatory agency or
authority shall commence an investigation or take any other action that
could reasonably be expected to be determined adversely to the Borrower
or any Subsidiary and, on the basis of such a determination, to have a
Material Adverse Effect; or
(p) there shall occur (i) any Change of Control (as defined in
this Agreement) or (ii) any change of control as contemplated by any of
the Subordinated Notes;
then, and in every such event, and at any time thereafter during the continuance
of such event, the Administrative Agent may, and at the request of the Required
Lenders shall, take one or more of the following actions, at the same or
different times: (i) by notice to the Borrower terminate the Commitments and
they shall immediately terminate; (ii) by notice to the Borrower declare the
Loans then outstanding to be forthwith due and payable (in whole or, in the sole
discretion of the Required Lenders, from time to time in part, provided that any
such partial acceleration shall be made pro rata based on the outstanding
principal amount of Loans of each Class), whereupon the principal of the Loans
so declared to be due and payable, together with accrued interest thereon and
any unpaid accrued Fees and all other liabilities of the Borrower accrued
hereunder or under any other Loan Document, shall thereupon become immediately
due and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrower, anything
contained herein or in any other Loan Document to the contrary notwithstanding;
(iii) require cash collateral as contemplated by Section 2.22(k) in an amount
not exceeding the Letter of Credit Exposure; (iv) exercise any remedies
available under the Guarantee Agreement, the Collateral Documents or otherwise;
or (v) any combination of the foregoing; PROVIDED, THAT, in the case of (A) any
of the Events of Default with respect to the Borrower described in paragraph (g)
or (h) above or (B) the Event of Default specified in paragraph (p) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder or under any other
Loan Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
84
<PAGE> 90
ARTICLE VIII
THE AGENTS AND ISSUING BANK
SECTION 8.01. APPOINTMENT AND AUTHORIZATION. (a) Each of the Lenders,
and each subsequent holder of any Note by its acceptance thereof, hereby
irrevocably appoints and authorizes each of the Agents and the Issuing Bank to
take such actions as agent on behalf of such Lender or holder and to exercise
such powers as are specifically delegated to such Agent or the Issuing Bank, as
the case may be, by the terms and provisions hereof and of the other Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
(b) The Administrative Agent is hereby expressly authorized by the
Lenders, without hereby limiting any implied authority, and hereby agrees (in
the case of clause (ii) below, at the direction of the Required Lenders), (i) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (ii) to
give notice on behalf of each of the Lenders to the Borrower of any Event of
Default specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; (iii) to give notice
to the Lenders of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (iv) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrower pursuant to
this Agreement as received by the Administrative Agent.
SECTION 8.02. LIABILITY OF AGENTS. Neither the Agents, the Issuing
Bank, nor any of their respective directors, officers, employees or agents,
shall be liable as such for any action taken or omitted to be taken by any of
them, except for such party's own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrower or
any Subsidiary of any of the terms, conditions, covenants or agreements
contained in any Loan Document. Neither the Agents nor the Issuing Bank shall be
responsible to the Lenders or the holders of the Notes for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement, the
Notes or any other Loan Documents or other instruments or agreements. Each of
the Administrative Agent and the Issuing Bank may deem and treat the payee of
any Note as the owner thereof for all purposes hereof until it shall have
received from the payee of such Note notice, given as provided herein, of the
transfer thereof in compliance with Section 9.04. Each of the Agents and the
Issuing Bank shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required Lenders
and, except as otherwise specifically provided herein, such instructions and any
action or inaction pursuant thereto shall be binding on all the Lenders and each
subsequent holder of any Note. The Agents, the Issuing Bank and the Required
Lenders shall, in the absence of knowledge to the contrary, be entitled to rely
on any instrument or document believed by it in good faith to be genuine and
correct and to have been signed or sent by the proper person or persons. Neither
the Agents, the Issuing Bank nor any of their respective directors, officers,
employees or agents,
85
<PAGE> 91
shall have any responsibility to the Borrower on account of the failure of or
delay in performance or breach by any Lender of any of its obligations hereunder
or to any Lender on account of the failure of or delay in performance or breach
by any other Lender or the Borrower or any Subsidiary of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. The Agents and the Issuing Bank may execute any and all duties
hereunder by or through agents or employees, shall be entitled to consult with
legal counsel, independent public accountants and other experts selected by it
with respect to all matters arising hereunder and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts.
SECTION 8.03. ACTION BY AGENTS. The Lenders hereby acknowledge that
neither the Agents nor the Issuing Bank shall be under any duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement unless it shall be requested in writing to do so by the Required
Lenders. The obligations of the Agents and the Issuing Bank under the Loan
Documents are only those expressly set forth herein and therein. Without
limiting the generality of the foregoing, no Agent shall be required to take any
action with respect to any Default or Event of Default, except as expressly
required pursuant to Article VII.
SECTION 8.04. SUCCESSOR AGENTS. Subject to the appointment and
acceptance of a successor Agent, the Agents and the Issuing Bank (except, in the
case of the Issuing Bank, in respect of Letters of Credit issued by it) may
resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
subject to approval by the Borrower (which shall not be unreasonably withheld).
If no successor shall have been so appointed by the Required Lenders, and shall
have accepted such appointment within 30 days after the retiring Agent or
Issuing Bank, as the case may be, gives notice of its resignation, then the
retiring Agent or Issuing Bank, as the case may be, on behalf of the Lenders,
shall appoint a successor Agent or Issuing Bank, as applicable, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as an Agent or Issuing Bank, as the case may be, hereunder by a
successor bank, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent or Issuing Bank and
the retiring Agent or Issuing Bank shall be discharged from its duties and
obligations hereunder. After the resignation of an Agent or the Issuing Bank, as
the case may be, hereunder, the provisions of this Article and Section 9.05
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as an Agent or Issuing Bank.
SECTION 8.05. AGENT AND AFFILIATE. With respect to the Loans made by it
hereunder, the Letters of Credit issued by it hereunder and the Notes issued to
it, the Agents and the Issuing Bank, each in its individual capacity and not as
an Agent or the Issuing Bank, as the case may be, shall have the same rights and
powers as any other Lender and may exercise the same as though it were not an
Agent or the Issuing Bank. The Agents and the Issuing Bank (and its Affiliates)
may accept deposits from, lend money to and generally
86
<PAGE> 92
engage in any kind of business and transactions with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent or the Issuing
Bank (or such Affiliate thereof).
SECTION 8.06. INDEMNIFICATION. Each Lender agrees (a) to reimburse each
of the Agents and the Issuing Bank, on demand, in the amount of its pro rata
share (as determined under Section 2.16) of any expenses incurred for the
benefit of the Lenders by such Agent or the Issuing Bank, as the case may be,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which shall not have been reimbursed
by the Borrower and (b) to indemnify and hold harmless each of the Agents, the
Issuing Bank and any of their respective directors, officers, employees or
agents, on demand, in the amount of such pro rata share, from and against any
and all liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against it in its
capacity as an Agent or the Issuing Bank, as the case may be, or any of them in
any way relating to or arising out of this Agreement or any other Loan Document
or any action taken or omitted by it or any of them under this Agreement or any
other such Loan Document, to the extent the same shall not have been reimbursed
by the Borrower; PROVIDED, THAT, no Lender shall be liable to any Agent or the
Issuing Bank for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or willful misconduct of such Agent, the Issuing Bank
or any of their respective directors, officers, employees or agents.
SECTION 8.07. CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agents, the Issuing Bank or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Agents, the Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy as follows:
(a) if to the Borrower, to it at 1400 Kettering Tower, Dayton,
Ohio 45423, Attention of Mr. Howard O. Royer (Telecopy No. (937)
225-3354), with a copy to Thompson Hine & Flory LLP, 2000 Courthouse
Plaza, N.E., P.O. Box 8801, Dayton, Ohio 45401-8801, Attention of David
A. Neuhardt, Esq. (Telecopy No: (937) 443-6635);
87
<PAGE> 93
(b) if to the Administrative Agent or the Issuing Bank, to it
at Kettering Tower, 40 North Main Street, 3rd Floor, Dayton, Ohio
45423, Attention of Mr. Paul A. Harris (Telecopy No. (513) 449-4885),
with a copy to Banc One Corporation, Legal Department, 100 East Broad
Street, Columbus, Ohio 43215, Attention of David Raybuck, Esq.
(Telecopy No. (614) 248-4189);
(c) if to the Syndication Agent, to it at (i) NationsBank
Corporate Center, 100 North Tryon Street, Charlotte, North Carolina
28255, Attention of Mr. Michael D. McKay (Telecopy No: (704) 388-0960),
and (ii) NationsBank Corporate Center, 100 North Tryon Street,
Charlotte, North Carolina 28255, Attention of Mr. Daniel Montgomery
(Telecopy No: (704) 388-9441), with a copy to Fennebresque, Clark,
Swindell & Hay, at NationsBank Corporate Center, 100 North Tryon
Street, Suite 2900, Charlotte, North Carolina 28202-4011, Attention of
Marvin L. Rogers, Esq. (Telecopy No. (704) 347-3838); and
(d) if to a Lender, to it at its address (or telecopy number)
set forth in Schedule 2.01(a) or (b), as applicable, or in the
Assignment and Acceptance pursuant to which such Lender shall have
become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date three Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01. In all events, notice shall be deemed effective immediately upon
refusal of delivery thereof irrespective of the method of such delivery.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders, the Agents and the Issuing Bank and shall
survive the making by the Lenders of the Loans, the execution and delivery to
the Lenders of the Notes evidencing such Loans, and the issuance of the Letters
of Credit, regardless of any investigation made by the Lenders, the Agents or
the Issuing Bank or on their behalf, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan, any Fee, any
Letter of Credit Disbursement or any other amount payable under this Agreement
or any other Loan Document is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not been terminated. The
provisions of Section 2.13, 2.15, 2.19 and 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document or any investigation made
by or on behalf of the Agent, the Issuing Bank or any Lender.
88
<PAGE> 94
SECTION 9.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower, the Agents and the Issuing
Bank and when the Administrative Agent shall have received copies hereof which,
when taken together, bear the signatures of each Lender.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) All covenants, promises and
agreements by or on behalf of the Borrower, the Agents, the Issuing Bank or the
Lenders that are contained in this Agreement shall be binding upon and inure to
the benefit of their respective permitted successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitments, the Loans at the time owing to it, the Notes held by
it and the participations in Letters of Credit held by it) to other financial
institutions; PROVIDED, THAT, the Borrower (unless an Event of Default shall
have occurred and be continuing), the Agents and, in the case of an assignment
of a Tranche A Revolving Credit Commitment, the Issuing Bank must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld). No Lender shall assign to any financial institution
other than an existing Lender, a Commitment in an amount less than $10,000,000;
PROVIDED, THAT, a Lender may assign Commitments to a financial institution in
amounts less than $10,000,000 as long as (i) no Commitments are assigned in
amounts less than $5,000,000, (ii) any Lender desiring to assign Commitments in
amounts less that $10,000,000 shall first notify the Borrower and the Agents at
which time the Borrower shall have 30 days to identify a financial institution
of its choice willing to assume the Commitments to be assigned by such Lender
(which financial institution shall be reasonably acceptable to the Agents) and
(iii) after such assignment is made, no Lender shall hold less than $5,000,000
in total Commitments. The parties to each such assignment (including, but not
limited to, an assignment by a Lender to another Lender) shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
the Note or Notes subject to such assignment and a processing and recordation
fee of $3,500 and the assignee, if it shall not be a Lender or an Affiliate
thereof, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to Section 9.04(e), from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof
(unless the Administrative Agent shall otherwise agree), (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.15,
2.19 and 9.05, as well as to any Fees accrued for its account to the effective
date of the Assignment and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it
89
<PAGE> 95
is the legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim arising in respect of any action by the assigning
Lender; (ii) except as set forth in clause (i) above, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto, or the financial
condition of the Borrower or any Subsidiary or the performance or observance by
the Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
copies of the most recent Required Financial Statements and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently, and without reliance upon the Agents, the Issuing Bank, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Agents and the Issuing Bank to exercise
such powers under this Agreement as are delegated to such party by the terms
hereof, together with such powers as are reasonably incidental hereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) The Administrative Agent shall maintain at one of its offices in
Dayton, Ohio (or such other reasonable location as the Administrative Agent may
select with prompt notice to the Lenders), a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"REGISTER"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrower, the Agents 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, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or Notes
subject to such assignment, an Administrative Questionnaire completed in respect
of the assignee (unless the assignee shall already be a Lender hereunder or
shall be an Affiliate of a Lender), the processing and recordation fee referred
to in Section 9.04(b) and, if required, the written consent of the Borrower, the
Agents and the Issuing Bank to such assignment, the Administrative Agent shall
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Issuing
Bank, the Syndication Agent, the Lenders and the Borrower. Within five Business
90
<PAGE> 96
Days after receipt of notice, the Borrower, at its own expense, shall execute
and deliver to the Administrative Agent, in exchange for the surrendered Note or
Notes, a new Note or Notes payable to the order of such assignee in a principal
amount equal to the applicable portion thereof (and the corresponding
Commitment, if any) assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained any portion of such Note or Notes (and
such Commitment, if any), a new Note or Notes payable to the order of such
assigning Lender in a principal amount equal to the applicable portion of such
Note or Notes (and such Commitment, if any) retained by it. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note; such new Note or Notes shall be dated the date
of the surrendered Notes which they replace and shall otherwise be in
substantially the form of Exhibits A-1, A-2 and A-3 hereto, as applicable.
Canceled Notes shall be returned to the Borrower.
(f) Each Lender may, without the consent of the Borrower, the Agents or
the Issuing Bank, sell participations in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment,
the Loans owing to it, the Notes held by it and the participations in Letters of
Credit held by it) to one or more participants; PROVIDED, THAT, (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) the sum
of (A) the principal amount of the outstanding Loans subject to such
participation and (B) the unused amount of the Commitments of the Lender subject
to such participation shall be not less than the lesser of (I) $5,000,000 and
(II) the entire remaining amount of the outstanding Loans and unused Commitments
of such Lender, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iv) the participating
banks or other entities shall be entitled to the benefit of the cost protection
and indemnity provisions contained in Sections 2.13, 2.15 and 2.19 to the same
extent as if they were Lenders (except that no participant shall be entitled to
claim any amount greater than its pro rata share of the amount that could have
been claimed by the Lender from which it acquired its participation) and (v) the
Borrower, the Agents, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with the Lender from which the participant acquired its
interest in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans or increasing or extending the Commitments).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or any of the Subsidiaries
furnished to such Lender by or on behalf of the Borrower or any of the
Subsidiaries; PROVIDED, THAT, prior to any such disclosure of non-public
information, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
such information.
91
<PAGE> 97
(h) Assignments and participations pursuant to this Section 9.04 need
not be pro rata among the Facilities.
(i) Any Lender may at any time assign all or any portion of its rights
under this Agreement and the Notes issued to it to a Federal Reserve Bank to
secure extensions of credit by such Federal Reserve Bank to such Lender;
PROVIDED, THAT, no such assignment shall release a Lender from any of its
obligations hereunder or substitute any such Federal Reserve Bank for such
Lender as a party hereto.
(j) The Borrower shall not assign or delegate any of its rights or
duties hereunder or any interest herein (whether voluntarily, by operation of
law or otherwise). Any purported assignment or delegation in violation of the
foregoing shall be void.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by any Agent, NCMI or the Issuing
Bank in connection with the preparation, execution and administration of this
Agreement and the other Loan Documents, the syndication or closing of the
Facilities, the administration of the Facilities or any amendment, modification
or waiver of the provisions hereof or thereof and the Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by any Agent, NCMI, the Issuing Bank
or any Lender in connection with the enforcement or protection of the rights of
the Agents, the Issuing Bank and the Lenders under this Agreement and the other
Loan Documents or in connection with the Loans made, the Notes issued hereunder
or the Letters of Credit issued hereunder, including the reasonable fees,
charges and disbursements of (i) Fennebresque, Clark, Swindell & Hay, counsel
for the Syndication Agent, and the allocated cost of in-house counsel to the
Administrative Agent, (ii) any third party consultants retained with the
Borrower's consent, which consent will not be unreasonably withheld, to assist
the Agents in analyzing any environmental, insurance, solvency-related and other
due diligence issues and (iii) in connection with any such enforcement or
protection (including any workout or restructuring or any negotiations relating
thereto), any other counsel for any Agent, the Issuing Bank or any Lender
(including the allocated internal fees and expenses of any in-house staff
counsel).
(b) The Borrower agrees to indemnify each of the Agents, NCMI, the
Issuing Bank, the Affiliates of any Agent, the Lenders, and their respective
directors, officers, employees, agents and Controlling persons (each, an
"INDEMNIFIED PARTY") from and against any and all losses, claims (whether valid
or not), damages and liabilities, joint or several, to which such Indemnified
Party may become subject, related to or arising out of (i) the Facilities, (ii)
the execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder and the other transactions contemplated hereby and thereby, (iii) the
use of the Letters of Credit or the proceeds of the Loans or (iv) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnified Party is a party thereto. The Borrower further
agrees to reimburse each Indemnified Party for all expenses (including
reasonable attorneys' fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense of any pending or threatened
claim or any action or proceeding arising therefrom. Notwithstanding the
foregoing, the obligation to indemnify any
92
<PAGE> 98
Indemnified Party under this Section 9.05(b) shall not apply in respect of any
loss, claim, damage or liability to the extent that a court of competent
jurisdiction shall have determined by final and nonappealable judgment that such
loss, claim, damage or liability resulted from such Indemnified Party's gross
negligence or willful misconduct.
(c) The Borrower agrees to indemnify each of the Agents, NCMI, the
Issuing Bank, the Lenders and the other Indemnified Parties from and against any
and all losses, claims (whether valid or not), damages and liabilities, joint or
several, to which such Indemnified Party may become subject, related to or
arising out of (i) any Federal, state, local or other statute, ordinance, order,
judgment, ruling or regulation relating to environmental pollution, regulation
or control affecting the Borrower, any Subsidiary or its properties or assets,
(ii) any Hazardous Materials managed by the Borrower or any Subsidiary, (iii)
any event, condition or circumstance involving environmental protection,
pollution, regulation or control affecting the Borrower or any Subsidiary or its
properties or assets or (iv) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnified Party is a
party thereto. The Borrower further agrees to reimburse each Indemnified Party
for all expenses (including reasonable consultants' and attorneys' fees and
expenses) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom. Notwithstanding the foregoing, the obligation to
indemnify any Indemnified Party under this Section 9.05(c) shall not apply in
respect of any loss, claim, damage or liability to the extent that a court of
competent jurisdiction shall have determined by final and nonappealable judgment
that such loss, claim, damage or liability resulted from such Indemnified
Party's gross negligence or willful misconduct.
(d) In the event that the foregoing indemnity is unavailable or
insufficient to hold an Indemnified Party harmless, then the Borrower will
contribute to amounts paid or payable by such Indemnified Party in respect of
such Indemnified Party's losses, claims, damages or liabilities in such
proportions as appropriately reflect the relative benefits received by and fault
of the Borrower and such Indemnified Party in connection with the matters as to
which such losses, claims, damages or liabilities relate and other equitable
considerations.
(e) If any action, proceeding or investigation is commenced, as to
which any Indemnified Party proposes to demand such indemnification, it shall
notify the Borrower with reasonable promptness; PROVIDED, THAT, any failure by
such Indemnified Party to notify the Borrower shall not relieve the Borrower
from its obligations hereunder except to the extent the Borrower is prejudiced
thereby. The Borrower shall be entitled to assume the defense of any such
action, proceeding or investigation, including the employment of counsel and the
payment of all fees and expenses. Each Indemnified Party shall have the right to
employ separate counsel in connection with any such action, proceeding or
investigation and to participate in the defense thereof, but the fees and
expenses of such counsel shall be paid by such Indemnified Party, unless (i) the
Borrower has failed to assume the defense and employ counsel as provided herein,
(ii) the Borrower has agreed in writing to pay such fees and expenses of
separate counsel or (iii) an action, proceeding or investigation has been
commenced against such Indemnified Party and the Borrower and representation of
both the Borrower and such Indemnified Party by the same counsel would be
inappropriate because of actual or potential conflicts of interest between the
parties (in the case of any Agent or
93
<PAGE> 99
Lender, the existence of any such actual or potential conflict of interest to be
determined by such party, taking into account, among other things, any relevant
regulatory concerns). In the case of any circumstance described in clause (i),
(ii), or (iii) of the immediately preceding sentence, the Borrower shall be
responsible for the reasonable fees and expenses of such separate counsel;
PROVIDED, THAT, the Borrower shall not in any event be required to pay the fees
and expenses of more than one separate counsel (plus appropriate local counsel
under the direction of such separate counsel) for all Indemnified Parties,
unless representation of all Indemnified Parties by the same counsel would be
inappropriate due to actual or potential conflicting interests between such
Indemnified Parties, in which case, the Borrower shall be required to pay the
fees and expenses of such additional counsel as are necessary to prevent such
conflicting interests. The Borrower shall be liable only for settlement of any
claim against an Indemnified Party made with the Borrower's written consent.
(f) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of any Agent or Lender. All amounts due under this Section
9.05 shall be payable on written demand therefor.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final
except deposits for the payment of payroll taxes) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any of and all the obligations of the Borrower
now or hereafter existing under this Agreement and the other Loan Documents held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement or such other Loan Document and although such
obligations may be unmatured. The rights of each Lender under this Section 9.06
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF OHIO, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of any Agent,
the Issuing Bank or any Lender in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Agents, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower or any other Secured Party
therefrom
94
<PAGE> 100
shall in any event be effective unless the same shall be permitted by Section
9.08(b), and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice 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.
(b) None of this Agreement, the other Loan Documents and any provision
hereof or thereof may be waived, amended or modified (and no consent to the
departure by the Borrower or any other Secured Party therefrom may be
effective), except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders; PROVIDED, THAT, no such agreement
shall (i) decrease the principal amount of or extend the maturity of or date for
the payment of any interest on any Loan or any date for reimbursement of a
Letter of Credit Disbursement, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan or a Letter of Credit
Disbursement, without the prior written consent of each Lender affected thereby,
(ii) change or extend the Commitments or decrease the Fees of any Lender without
the prior written consent of such Lender, (iii) increase the aggregate
Commitments of the Lenders without the prior written consent of each Lender,
(iv) amend or modify the provisions of Section 2.16 or 9.04(j), the provisions
of this Section, the definition of the term "Required Lenders," release at one
time or serially in the aggregate all or substantially all the Guarantors or all
or substantially all the Collateral, without the prior written consent of each
Lender; (v) change the amount of, or allocation between the Tranche A Revolving
Credit Facility and the Tranche B Revolving Credit Facility or any provision
relating to any prepayment of the Loans under either of the Facilities without
the consent of Lenders holding more than 50% of the outstanding Loans (and
outstanding Letter of Credit Exposure, if applicable) under each of the
respective Facilities, (vi) waive the conditions to funding any Loan or issuance
of a Letter of Credit without the consent of Lenders holding more than 50% of
the outstanding Loans, Letter of Credit Exposure and unused Commitments under
the applicable Facility, and (vii) waive, amend or modify in a manner that, by
its terms, adversely affects a Lender's participation in a Facility differently
from those of the Lenders participating in the other Facility, shall require the
consent of such adversely affected Lenders holding more than 50% of the
outstanding Loans, Letter of Credit Exposure (if applicable) and unused
Commitments under such Facility; PROVIDED, FURTHER, that no such agreement shall
amend, modify or otherwise affect the rights or duties of any Agent, the
Swingline Lender (in its capacity as such) or the Issuing Bank hereunder or
under any other Loan Document without the prior written consent of such Agent,
the Swingline Lender or the Issuing Bank, as applicable. Each Lender and each
holder of a Note shall be bound by any waiver, amendment or modification
authorized by this Section 9.08 regardless of whether its Note shall have been
marked to make reference thereto, and any consent by any Lender or holder of a
Note pursuant to this Section 9.08 shall bind any person subsequently acquiring
a Note from it, whether or not such Note shall have been so marked.
SECTION 9.09. INTEREST RATE LIMITATION. Notwithstanding anything herein
or in the Notes to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively the "CHARGES"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender, shall exceed the maximum
rate permitted by applicable law (the "MAXIMUM RATE") which may be contracted
95
<PAGE> 101
for, charged, taken, received or reserved by such Lender in accordance with
applicable law, the rate of interest payable under the affected Note held by
such Lender, together with all Charges payable to such Lender, shall be limited
to the Maximum Rate.
SECTION 9.10. ENTIRE AGREEMENT. (a) This Agreement, the other Loan
Documents and the Fee Letter constitute the entire contract among the parties
relative to the subject matter hereof and thereof. Any previous agreement among
the parties with respect to the subject matter hereof and thereof is superseded
by this Agreement, the other Loan Documents and the Fee Letter. Nothing in this
Agreement, the other Loan Documents or the Fee Letter, expressed or implied, is
intended to confer upon any party (other than the parties hereto and the other
Secured Parties) any rights, remedies, obligations or liabilities under or by
reason of this Agreement, the other Loan Documents or the Fee Letter.
(b) THIS WRITTEN AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS, THE
FEE LETTER AND THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 9.11. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts and each such counterpart shall be deemed
to be an original, admissible into evidence, but all such counterparts shall
together constitute but one and the same Agreement, and shall become effective
as provided in Section 9.03. Delivery of an executed counterpart of this
Agreement by facsimile shall be equally as effective as delivery of a manually
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by facsimile shall also deliver a manually
executed counterpart of this Agreement, but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.
SECTION 9.13. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14. REMEDIES. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the Borrower,
then the Administrative Agent may, on behalf of the Lenders, proceed to protect
and enforce the Lenders' rights either by suit in equity and/or by action at
law, including, but not limited to,
96
<PAGE> 102
an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Agreement. Without limitation of the foregoing, the Borrower agrees that failure
to comply with any of the covenants contained herein will cause irreparable harm
and that specific performance shall be available in the event of any breach
thereof. The Agent acting pursuant to this Section 9.14, shall be indemnified
against all liability, loss or damage, together with all reasonable costs and
expenses related thereto (including reasonable legal and accounting fees and
expenses) in accordance with Section 9.05.
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any Ohio State court or Federal
court of the United States of America sitting in Dayton, Ohio, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or the other Loan Documents, or for recognition or enforcement
of any judgment, and hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such Ohio State court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Agent, the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding relating
to this Agreement or the other Loan Documents against the Borrower or its
properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
Ohio State court or Federal court of the United States of America sitting in
Dayton, Ohio. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
97
<PAGE> 103
IN WITNESS WHEREOF, the Borrower, the Agents, the Issuing Bank and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
ROBBINS & MYERS, INC.,
as Borrower
by_____________________________
Name:
Title:
BANK ONE, DAYTON, N.A., as Administrative
Agent, as Issuing Bank and as a Lender
by_____________________________
Name:
Title:
NATIONSBANK, N.A.,
as Syndication Agent and as a Lender
by_____________________________
Name:
Title:
ABN AMRO BANK N.V.,
as a Lender
by_____________________________
Name:
Title:
NATIONAL CITY BANK OF COLUMBUS,
as a Lender
by_____________________________
Name:
Title:
<PAGE> 104
THE BANK OF NOVA SCOTIA,
as a Lender
by_____________________________
Name:
Title:
<PAGE> 1
Exhibit 4.3
EXHIBIT C
- --------------------------------------------------------------------------------
PLEDGE AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 26, 1996
AMONG
THE PLEDGORS NAMED HEREIN
AND
BANK ONE, DAYTON, N.A.,
AS ADMINISTRATIVE AGENT
- --------------------------------------------------------------------------------
<PAGE> 2
EXECUTION COPY
- --------------------------------------------------------------------------------
PLEDGE AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 26, 1996
AMONG
THE PLEDGORS NAMED HEREIN
AND
BANK ONE, DAYTON, N.A.,
AS ADMINISTRATIVE AGENT
- --------------------------------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
ARTICLE I DEFINITIONS.......................................................................................... 1
SECTION 1.01. Terms Defined in the Credit Agreement................................................... 1
SECTION 1.02. Definition of Certain Terms Used Herein................................................. 1
SECTION 1.03. UCC Definitions......................................................................... 3
SECTION 1.04. Rules of Interpretation................................................................. 3
ARTICLE II PLEDGE.............................................................................................. 3
SECTION 2.01. Grant and Pledge........................................................................ 3
SECTION 2.02. Delivery of the Collateral; Intercompany Obligations.................................... 3
SECTION 2.03. Registration in Nominee Name; Denominations............................................. 4
SECTION 2.04. Voting Rights; Dividends and Interest; Etc.............................................. 4
SECTION 2.05. Security Interests Absolute............................................................. 6
SECTION 2.06. Release of Collateral................................................................... 7
SECTION 2.07. Continuing Liability of the Pledgor..................................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................................................... 8
SECTION 3.01. Credit Agreement........................................................................ 8
SECTION 3.02. Pledged Securities...................................................................... 8
SECTION 3.03. Validity, Perfection and Priority of Security Interests................................. 8
SECTION 3.04. Place of Business; Location of Collateral............................................... 9
SECTION 3.05. Effectiveness........................................................................... 9
ARTICLE IV COVENANTS........................................................................................... 9
SECTION 4.01. Perfection of Security Interests........................................................ 9
SECTION 4.02. Further Actions......................................................................... 10
SECTION 4.03. Change of Name, Identity or Structure................................................... 11
SECTION 4.04. Place of Business and Collateral........................................................ 11
SECTION 4.05. Maintenance of Records.................................................................. 11
SECTION 4.06. Compliance with Laws, Etc............................................................... 11
SECTION 4.07. Payment of Taxes, Etc................................................................... 11
SECTION 4.08. Limitation on Liens on Collateral....................................................... 11
SECTION 4.09. Limitations on Dispositions of Collateral............................................... 12
SECTION 4.10. Notices................................................................................. 12
SECTION 4.11. Change of Law........................................................................... 12
SECTION 4.12. Additional Interests.................................................................... 12
SECTION 4.13. Certain Liabilities..................................................................... 12
SECTION 4.14. Reimbursement Obligation................................................................ 12
SECTION 4.15. Further Approvals....................................................................... 13
ARTICLE V REMEDIES; RIGHTS UPON DEFAULT........................................................................ 13
SECTION 5.01. UCC Rights.............................................................................. 13
SECTION 5.02. Sale of Collateral...................................................................... 13
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 5.03. Additional Rights of the Administrative Agent........................................... 15
SECTION 5.04. Securities Act, Etc..................................................................... 16
SECTION 5.05. Remedies Not Exclusive.................................................................. 17
SECTION 5.06. Waiver and Estoppel..................................................................... 18
SECTION 5.07. Power of Attorney....................................................................... 18
ARTICLE VI MISCELLANEOUS....................................................................................... 20
SECTION 6.01. Notices................................................................................. 20
SECTION 6.02. Survival of Agreement................................................................... 20
SECTION 6.03. Counterparts; Effectiveness............................................................. 20
SECTION 6.04. Waivers; Amendment...................................................................... 21
SECTION 6.05. Supplemental Agreement.................................................................. 21
SECTION 6.06. Assignments............................................................................. 21
SECTION 6.07. Savings Clause.......................................................................... 21
SECTION 6.08. GOVERNING LAW........................................................................... 22
SECTION 6.09. Entire Agreement........................................................................ 22
SECTION 6.10. Headings................................................................................ 22
SECTION 6.11. Administrative Agent's Fees and Expenses; Indemnification............................... 22
SECTION 6.12. Submission to Jurisdiction.............................................................. 23
SECTION 6.13. Waiver of Jury Trial.................................................................... 23
SCHEDULES
Schedule 1 Chief Executive Office and Principal Place of Business; Locations of
Records of Receivables and General Intangibles
Schedule 2 Pledged Securities
Schedule 3 Intentionally Omitted
Schedule 4 Required Filings and Recordings
</TABLE>
- ii -
<PAGE> 5
PLEDGE AND SECURITY AGREEMENT dated as of November 26, 1996, among (i)
Robbins & Myers, Inc., an Ohio corporation (the "BORROWER"), (ii) the Domestic
Subsidiaries listed on the signature pages hereof and such other Domestic
Subsidiaries as shall become parties hereto in accordance with Section 6.05
hereof (such listed Domestic Subsidiaries, together with the Borrower, being
referred to herein individually as a "PLEDGOR" or collectively as the
"PLEDGORS") and (iii) Bank One, Dayton, N.A., as Administrative Agent for the
Lenders (as defined herein).
Reference is made to the Credit Agreement dated as of November 26, 1996
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, the financial institutions party thereto as
lenders (the "LENDERS"), Bank One, Dayton, N.A., as Administrative Agent (in
such capacity, the "ADMINISTRATIVE AGENT") and as Issuing Bank (in such
capacity, the "ISSUING BANK") and NationsBank, N.A., as Documentation and
Syndication Agent.
The Lenders have agreed to extend credit to the Borrower, and the
Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions set
forth in, the Credit Agreement. The obligations of the Lenders to extend credit
and of the Issuing Bank to issue Letters of Credit under the Credit Agreement
are conditioned on, among other things, the execution and delivery by the
Pledgors of a Pledge Agreement in the form hereof to secure all Secured
Obligations (defined below) of such Pledgor. As consideration therefor and in
order to induce the Lenders to make Loans and the Issuing Bank to issue Letters
of Credit, the Pledgors are willing to execute and deliver this Agreement.
Accordingly, the Pledgors and the Administrative Agent hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. TERMS DEFINED IN THE CREDIT AGREEMENT. Terms used herein
and not otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
SECTION 1.02. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein,
the following terms shall have the following meanings:
"COLLATERAL" shall have the meaning assigned to such term in Section
2.01.
"GENERAL INTANGIBLES" of any Pledgor shall mean (a) all Capital Stock
of any Subsidiary now owned or hereafter acquired by such Pledgor; PROVIDED,
THAT, no shares of Capital Stock of any issuer organized in a jurisdiction
outside of the United States of America shall be included hereunder to the
extent that the aggregate amount of shares of Capital Stock of such issuer
pledged hereunder would exceed 65% of such issuer's issued and outstanding
Capital Stock for so long as the pledge of any greater percentage would have
adverse tax consequences for the Borrower and (b) all dividends, liquidating
dividends,
<PAGE> 6
distributions, options, rights to subscribe, cash, instruments and other
property and proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Capital Stock
referenced in clause (a) above (and all contract rights to receive any of the
foregoing) and (c) all rights of such Pledgor (including all choses in action
and causes of action) under all agreements that in any way relate to the Capital
Stock.
"PLEDGED DEBT" of any Pledgor shall mean (a) the Intercompany Notes
payable to such Pledgor and (b) all payments of principal or interest, cash,
instruments or other property from time to time received, receivable or
otherwise distributed, in respect of, in exchange for or upon the conversion of
the Intercompany Notes referred to in clause (a) above.
"PLEDGED SECURITIES" of any Pledgor shall mean the Pledged Debt and the
Pledged Shares of such Pledgor.
"PLEDGED SHARES" of any Pledgor shall mean (a) the shares of Capital
Stock listed and described with respect to such Pledgor in SCHEDULE 2 hereto,
and the certificates representing such Capital Stock, (b) all additional shares
of Capital Stock of any issuer of the Pledged Shares from time to time acquired
by any Pledgor in any manner and all shares of Capital Stock of any Domestic
Subsidiary, any Foreign Subsidiary that is a Restricted Subsidiary, and other
person hereafter acquired by any Pledgor (which shares shall be considered to be
Pledged Shares under this Agreement), together in each case with the
certificates representing such additional shares, and (c) all dividends,
liquidating dividends, stock dividends, distributions, stock rights, options,
rights to subscribe, cash, instruments and other property and proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such listed shares referenced in clause (a) above or
such additional shares referenced in clause (b) above; PROVIDED, THAT, no shares
of Capital Stock of any issuer organized in a jurisdiction outside of the United
States of America shall be included hereunder to the extent that the aggregate
amount of shares of Capital Stock of such issuer pledged hereunder would exceed
65% of such issuer's issued and outstanding Capital Stock for so long as the
pledge of any greater percentage would have adverse tax consequences for the
Borrower.
"PROCEEDS" of any Pledgor shall mean all proceeds (as defined in the
UCC), including (a) whatever is received upon any collection, exchange, sale or
other disposition of any of the Collateral of such Pledgor and any property into
which any of the Collateral of such Pledgor is converted, whether cash or
non-cash, and (b) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral of such Pledgor.
"SECURED OBLIGATIONS" of any Pledgor shall mean (a) in the case of the
Borrower, all Obligations, (b) in the case of a Pledgor that is a Subsidiary,
all amounts now and hereafter payable by that Subsidiary as a Guarantor under
the Guarantee Agreement and (c) in the case of any Pledgor, all reasonable
expenses (including reasonable counsel fees and expenses) incurred in enforcing
any rights of the Administrative Agent and the other Secured Parties against
such Pledgor under this Agreement.
2
<PAGE> 7
"UCC" shall mean at any time the Uniform Commercial Code as the same
may from time to time be in effect in the State of Ohio; PROVIDED, THAT, if, by
reason of mandatory provisions of law, the validity or perfection of any
security interest granted herein is governed by the Uniform Commercial Code as
in effect in a jurisdiction other than Ohio, then, as to the validity or
perfection of such security interest, "UCC" shall mean the Uniform Commercial
Code in effect in such other jurisdiction.
SECTION 1.03. UCC DEFINITIONS. The uncapitalized terms "contract
right", "instrument", "general intangible", "money" and "proceeds", as used in
Section 1.02 or elsewhere in this Agreement shall have the meanings ascribed
thereto in the UCC.
SECTION 1.04. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
PLEDGE
SECTION 2.01. GRANT AND PLEDGE. As security for the punctual payment or
performance, as the case may be, of the Secured Obligations of such Pledgor,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, in accordance
with the terms hereof, each Pledgor hereby bargains, sells, conveys, assigns,
sets over, mortgages, pledges, hypothecates and transfers to the Administrative
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties and hereby grants to the Administrative Agent, its successors and
assigns, for the benefit of the Secured Parties, a security interest in, all of
such Pledgor's right, title and interest in, to and under the following whether
now existing or hereafter acquired (all of which are herein sometimes
collectively referred to as the "COLLATERAL"):
(i) all Pledged Securities of such Pledgor;
(ii) all General Intangibles of such Pledgor; and
(iii) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing, whether existing on the date
hereof or hereafter arising.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Administrative Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; SUBJECT, HOWEVER, to the terms,
covenants and conditions hereinafter set forth.
SECTION 2.02. DELIVERY OF THE COLLATERAL; INTERCOMPANY OBLIGATIONS. (a)
Each Pledgor shall deliver original certificates and other instruments
evidencing all Pledged Securities of such Pledgor listed on SCHEDULE 2 hereto to
the Administrative Agent contemporaneously with its execution hereof, duly
endorsed in a manner satisfactory to the
3
<PAGE> 8
Administrative Agent. Upon delivery to the Administrative Agent, (i) the Pledged
Securities shall be accompanied by stock powers duly executed in blank or other
instruments of transfer satisfactory to the Administrative Agent and by such
other instruments and documents as the Administrative Agent may reasonably
request and (ii) all other property comprising part of the Collateral shall be
accompanied by proper instruments of assignment duly executed by each applicable
Pledgor and such other instruments or documents as the Administrative Agent may
reasonably request. Each delivery of Pledged Securities shall be accompanied by
a schedule describing the securities theretofore and then being pledged
hereunder, which schedule shall be attached hereto as SCHEDULE 2 and made a part
hereof. Each schedule so delivered as to any Pledgor shall supersede any prior
schedules so delivered as to such Pledgor.
(b) Each Pledgor agrees to promptly deliver or cause to be delivered to
the Administrative Agent from time to time after the execution hereof any and
all other Pledged Securities held by such Pledgor, and any and all other
certificates or other instruments or documents representing the Collateral.
(c) Each Pledgor will cause any obligations in respect of borrowed
money or similar advances owed to such Pledgor from any Subsidiary to be
evidenced by a duly executed Intercompany Note which is pledged and delivered to
the Administrative Agent pursuant to the terms hereof. Nothing herein shall be
construed as implying that any loan, advance or other investment by any Pledgor
is permitted under the Credit Agreement.
SECTION 2.03. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The
Administrative Agent shall have the right (in its sole and absolute discretion)
to hold the Pledged Securities in its own name as pledgee, the name of its
nominee or the name of the applicable Pledgor, endorsed or assigned in blank or
in favor of the Administrative Agent, PROVIDED, THAT it is understood that the
Administrative Agent shall not have the right to cause a reissuance of the
Pledged Securities in its own name or the name of its nominee until after the
occurrence of an Event of Default. Each Pledgor will promptly give to the
Administrative Agent copies of any notices or other communications received by
it with respect to Pledged Securities registered in its name. The Administrative
Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations (representing in the aggregate the same number of Pledged
Securities) for any purpose consistent with this Agreement.
SECTION 2.04. VOTING RIGHTS; DIVIDENDS AND INTEREST; ETC. (a) Unless
and until an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have notified any Pledgor that its rights under this
Section 2.04 are being suspended:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers accruing to an owner
of Pledged Securities or any part thereof for any purpose consistent
with the terms of this Agreement, the Credit Agreement and the other
Loan Documents; PROVIDED, THAT, such action would not materially and
adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of the Administrative Agent or
any of the Secured Parties under this Agreement or
4
<PAGE> 9
the Credit Agreement or any other Loan Document or the ability of the
Administrative Agent or any of the Secured Parties to exercise the
same.
(ii) The Administrative Agent shall execute and deliver to any
applicable Pledgor, or cause to be executed and delivered to such
Pledgor, all such proxies, powers of attorney and other instruments as
such Pledgor may reasonably request for the purpose of enabling it to
exercise the voting and/or consensual rights and powers which it is
entitled to exercise pursuant to subparagraph (i) above.
(iii) Each Pledgor shall be entitled to receive and retain any
and all dividends, interest and principal paid in cash on the Pledged
Securities pledged by it to the extent and only to the extent that such
cash dividends, interest and principal are permitted by, and otherwise
paid in accordance with, the terms and conditions of the Credit
Agreement, the other Loan Documents and applicable laws. Other than (A)
pursuant to the first sentence of this paragraph (a)(iii) or (B)
pursuant to a distribution or transfer of any of the assets of a
Subsidiary to any Pledgor in a transaction permitted under the Credit
Agreement, all noncash dividends, interest and principal, and all
dividends, interest and principal paid or payable in cash or otherwise
in connection with a partial or total liquidation or dissolution,
return of capital, capital surplus or paid-in surplus, and all other
distributions made on or in respect of Pledged Securities of such
Pledgor, whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the
outstanding Capital Stock of the issuer of any Pledged Securities or
received in exchange for Pledged Securities or any part thereof, or in
redemption thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer may be a
party or otherwise, shall be and become part of the Collateral, and, if
received by such Pledgor, shall not be commingled by such Pledgor with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Administrative
Agent and shall be forthwith delivered to the Administrative Agent in
the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, after the Administrative Agent shall have notified any Pledgor of the
suspension of its rights under paragraph (a)(iii) above, then all rights of such
Pledgor to dividends, interest and principal payments which such Pledgor is
authorized to receive pursuant to paragraph (a)(iii) above shall cease, and all
such rights shall thereupon become vested in the Administrative Agent, which
shall have the sole and exclusive right and authority to receive and retain such
dividend, interest and principal payments. All dividends, interest and principal
which are received by any Pledgor contrary to the provisions of this Section
2.04 shall be received in trust for the benefit of the Administrative Agent,
shall be segregated from other property or funds of such Pledgor and shall be
forthwith delivered to the Administrative Agent in the same form as so received
(with any necessary endorsement). Any and all money and other property paid over
to or received by the Administrative Agent pursuant to the provisions of
5
<PAGE> 10
this paragraph (b) shall be retained by the Administrative Agent in an account
to be established by the Administrative Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of Section
5.02(c).
(c) Upon the occurrence and during the continuance of an Event of
Default, after the Administrative Agent shall have notified any Pledgor of the
suspension of its rights under paragraph (a)(i) above, then all rights of such
Pledgor to exercise the voting and consensual rights and powers which such
Pledgor is entitled to exercise pursuant to paragraph (a)(i) of this Section
2.04, and the obligations of the Administrative Agent under paragraph (a)(ii) of
this Section 2.04, shall cease, and all such rights shall thereupon become
vested in the Administrative Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers.
(d) Any notice given by the Administrative Agent to any Pledgor
suspending its rights under paragraph (a) above (i) may be given by telephone if
promptly confirmed in writing and (ii) may suspend the rights of such Pledgor
under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such
rights (as specified by the Administrative Agent in its sole and absolute
discretion) and without waiving or otherwise affecting the Administrative
Agent's rights to give additional notices from time to time suspending other
rights so long as an Event of Default has occurred and is continuing.
SECTION 2.05. SECURITY INTERESTS ABSOLUTE. All rights of the
Administrative Agent and the Secured Parties hereunder, and all obligations of
each Pledgor hereunder, shall be absolute and unconditional and, without
limiting the generality of the foregoing and to the fullest extend permitted
under applicable law, shall not be released, discharged or otherwise affected
by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any Secured Obligation, any Note, or any other
document evidencing or securing such Secured Obligation, by operation
of law or otherwise;
(b) any modification or amendment or supplement to the Credit
Agreement, any Note, or any other document evidencing or securing any
Secured Obligation;
(c) any release, non-perfection or invalidity of any direct or
indirect security for any Secured Obligation;
(d) any change in the existence, structure or ownership of the
Borrower, such Pledgor or any other Pledgor, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Borrower, such Pledgor or any other Pledgor or its assets or any
resulting disallowance, release or discharge of all or any portion of
the Secured Obligations;
(e) the existence of any claim, set-off or other right which
the Pledgor may have at any time against the Borrower, such Pledgor,
any other Pledgor, the
6
<PAGE> 11
Administrative Agent, any Secured Party or any other corporation or
person, whether in connection herewith or any unrelated transactions;
(f) any invalidity or unenforceability for any reason of any
Secured Obligation relating to or against the Borrower, such Pledgor or
any other Pledgor, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower, such Pledgor or any
other Pledgor of the Secured Obligations;
(g) any failure by the Administrative Agent or any Secured
Party (i) to file or enforce a claim against the Borrower or any other
Pledgor or its estate (in a bankruptcy or other proceeding), (ii) to
give notice of the existence, creation or incurrence by the Borrower or
any other Pledgor of any new or additional indebtedness or obligation
under or with respect to the Secured Obligations, (iii) to commence any
action against the Borrower or any other Pledgor, (iv) to disclose to
such Pledgor any facts which the Administrative Agent or any Secured
Party may now or hereafter know with regard to the Borrower or any
other Pledgor or (v) to proceed with due diligence in the collection,
protection or realization upon any collateral securing the Secured
Obligations; or
(h) any other act or omission to act or delay of any kind by
the Borrower, any other Pledgor, the Administrative Agent, any other
Secured Party or any other person or any other circumstance whatsoever
which might, but for the provisions of this clause, constitute a legal
or equitable discharge of such Pledgor's obligations hereunder.
SECTION 2.06. RELEASE OF COLLATERAL. Upon (a) the indefeasible payment
in full in cash of all of the Secured Obligations, (b) the termination of the
Commitments, (c) the cancellation or expiration of all Letters of Credit and the
reimbursement in full of all Letter of Credit Disbursements and (d) the
satisfaction by each Pledgor of all terms and conditions hereof, of the Credit
Agreement, the Notes, the Collateral Documents and of all other documents or
agreements governing the Secured Obligations applicable to such Pledgor, the
Administrative Agent will (as soon as reasonably practicable after receipt of
notice from such Pledgor requesting the same, but at the expense of such
Pledgor) execute and send to such Pledgor, (a) for each filing made under
Section 4.01 or 4.02 to perfect the security interests granted to the
Administrative Agent and the Secured Parties hereunder, a termination statement
prepared by such Pledgor to the effect that the Administrative Agent and the
other Secured Parties no longer claim a security interest under such filing and
(b) all documents and instruments previously pledged to the Administrative Agent
hereunder.
SECTION 2.07. CONTINUING LIABILITY OF THE PLEDGOR. Anything herein to
the contrary notwithstanding, each Pledgor shall remain liable to observe and
perform all the terms and conditions to be observed and performed by it under
any contract, agreement, warranty or other obligation with respect to the
Collateral, and shall do nothing to impair the security interests herein
granted. Neither the Administrative Agent nor any Secured Party shall have any
obligation or liability under any such contract, agreement, warranty or
obligation by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any Secured Party of any payment relating to any
Collateral, nor shall the
7
<PAGE> 12
Administrative Agent or any Secured Party be required to perform or fulfill any
of the obligations of any Pledgor with respect to any of the Collateral, to make
any inquiry as to the nature or sufficiency of any payment received by it or the
sufficiency of the performance of any party's obligations with respect to any
Collateral. Furthermore, neither the Administrative Agent nor any Secured Party
shall be required to file any claim or demand to collect any amount due or to
enforce the performance of any party's obligations with respect to the
Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Pledgor represents, warrants and covenants to and with the
Administrative Agent and each of the Secured Parties that:
SECTION 3.01. CREDIT AGREEMENT. All representations and warranties
contained in the Credit Agreement that relate to such Pledgor are true and
correct. Such Pledgor agrees to comply with each of the covenants contained in
the Credit Agreement that imposes or purports to impose restrictions or
obligations on such Pledgor. Such Pledgor acknowledges that any default in the
due observance or performance by such Pledgor of any covenant, condition or
agreement contained herein may constitute an Event of Default as provided in
Article VII of the Credit Agreement. There are no conditions precedent to the
effectiveness of this Agreement that have not been satisfied or waived.
SECTION 3.02. PLEDGED SECURITIES. All Pledged Securities have been duly
authorized and validly issued by the issuers thereof and are fully paid and
nonassessable. Each Pledgor owns good and valid title to all the outstanding
Pledged Securities listed on SCHEDULE 2 hereto with respect to such Pledgor,
free and clear of all Liens, other than the Liens of the Collateral Documents,
of every kind, whether absolute, matured, contingent or otherwise. None of the
Pledged Securities is subject to options to purchase, rights of first refusal or
similar rights of any person. No Pledgor is nor will become a party to or
otherwise bound by any agreement, shareholders agreement, partnership agreement,
operating agreement, charter or by-law provision or contractual restriction
other than this Agreement, which restricts, prohibits, impairs or delays in any
manner the rights of any present or future holder of any of the Pledged
Securities with respect thereto, the pledge of Collateral hereunder or the sale
or disposition of Collateral pursuant hereto after the occurrence of an Event of
Default or the exercise by the Administrative Agent of its rights and remedies
hereunder. The Pledged Securities constitute and will at all times constitute
100% of the Capital Stock of each Subsidiary of the Pledgor (except for smaller
percentages set forth on Schedule 3.08 of the Credit Agreement or as may be
otherwise expressly permitted by the Credit Agreement); PROVIDED, THAT, with
respect to any Foreign Subsidiary that is a Restricted Subsidiary, the Pledged
Securities shall constitute 65% of the Capital Stock of such Foreign Subsidiary
to the extent, and for so long as, the pledge of any greater percentage would
have adverse tax consequences for such Pledgor. Each Pledgor (i) has the power
and authority to pledge the Collateral pledged by it hereunder in the manner
hereby done or contemplated and (ii) will defend its title or interest thereto
or therein against any
8
<PAGE> 13
and all Liens (other than the Lien of this Agreement), however arising, of all
persons whomsoever. No consent or approval of any Governmental Authority or any
securities exchange was or is necessary to the validity of the pledges effected
hereby.
SECTION 3.03. VALIDITY, PERFECTION AND PRIORITY OF SECURITY INTERESTS.
(a) By complying with Section 4.01 and by delivering all certificates or
instruments, if any, representing or evidencing the Collateral to the
Administrative Agent, each Pledgor will have created a valid and duly perfected
security interest in favor of the Administrative Agent for the benefit of the
Secured Parties as security for the due and punctual payment and performance of
all Secured Obligations of such Pledgor in all Collateral and identifiable
Proceeds of such Collateral, as to which a security interest may be perfected by
(i) filing UCC financing statements and (ii) possession, which security interest
would be prior to the claims of the trustee in bankruptcy under Section 544(a)
of Title 11 of the United States Bankruptcy Code. Continuing compliance by each
Pledgor with the provisions of Section 4.02 will also (i) create and duly
perfect valid security interests in all Collateral acquired by any Pledgor or
otherwise coming into existence after the date hereof and in all identifiable
Proceeds of such Collateral as security for the due and punctual payment of all
Secured Obligations of each Pledgor and (ii) cause such security interests in
all Collateral and in all Proceeds which are (A) identifiable cash Proceeds of
Collateral covered by financing statements required to be filed hereunder and
(B) identifiable Proceeds in which a security interest may be perfected by such
filing under the UCC, to be duly perfected under the UCC, in each case prior to
the claims of a trustee in bankruptcy under the United States Bankruptcy Code.
(b) The security interests of the Administrative Agent and the other
Secured Parties in the Collateral rank first in priority. Other than financing
statements or other similar documents perfecting the security interests of the
Administrative Agent, no financing statements or similar documents covering all
or any part of the Collateral are on file or of record in any government office
in any jurisdiction in which such filing or recording would be effective to
perfect a security interest in such Collateral, nor is any of the Collateral in
the possession of any person (other than such Pledgor) asserting any claim
thereto or security interest therein.
SECTION 3.04. PLACE OF BUSINESS; LOCATION OF COLLATERAL. SCHEDULE 1
correctly sets forth (a) each Pledgor's chief executive office and principal
place of business and (b) the offices of each Pledgor where records concerning
the General Intangibles are kept.
SECTION 3.05. EFFECTIVENESS. The pledge and grant effected hereby is
effective to vest in the Administrative Agent, on behalf of the Secured Parties,
the rights of the Administrative Agent in the Collateral as set forth herein.
9
<PAGE> 14
ARTICLE IV
COVENANTS
Each Pledgor covenants and agrees with the Administrative Agent that
until all the Secured Obligations have been indefeasibly paid in full in cash,
the Commitments have been terminated, all Letters of Credit have been cancelled
or have expired and all Letter of Credit Disbursements have been reimbursed in
full and all terms and conditions hereof, the Credit Agreement, the Loan
Documents and all other documents or agreements governing the Secured
Obligations have been satisfied, each Pledgor will comply with the following:
SECTION 4.01. PERFECTION OF SECURITY INTERESTS. Such Pledgor will, at
its own expense, cause all filings and recordings and other actions specified on
SCHEDULE 4 with respect to such Pledgor to have been completed and filed on or
prior to the Closing Date.
SECTION 4.02. FURTHER ACTIONS. (a) At all times after the Closing Date,
such Pledgor will, at its own expense, comply with the following:
(i) as to all General Intangibles and Pledged Securities of
such Pledgor, it will cause UCC financing statements and continuation
statements to be filed and to be on file in all applicable
jurisdictions as required to perfect the security interests granted to
the Administrative Agent and the Secured Parties hereunder, to the
extent that applicable law permits perfection of a security interest by
filing under the UCC;
(ii) as to all Proceeds of such Pledgor, it will cause all UCC
financing statements and continuation statements filed in accordance
with clause (i) above to include a statement or a checked box
indicating that Proceeds of all items of Collateral described therein
are covered; and
(iii) as to any Capital Stock hereafter acquired by such
Pledgor, such Pledgor will immediately pledge and deliver the
corresponding certificates as contemplated by the Agreement (i.e., 100%
of all Capital Stock of an issuer organized under the laws of the
United States and 65% of the Capital Stock of an issuer organized in a
jurisdiction outside the United States for so long as the pledge of any
greater percentage would have adverse tax consequences to the
Borrower), or other instruments, if applicable, to the Administrative
Agent for the benefit of the Secured Parties as part of the Pledged
Securities duly endorsed in a manner satisfactory to the Administrative
Agent or accompanied by instruments of transfer satisfactory to the
Administrative Agent.
(b) Such Pledgor will, from time to time and at its own expense,
execute, deliver, file or record such financing statements pursuant to the UCC
and such other statements, assignments, instruments, documents, agreements or
other papers and take any other action that may be necessary or desirable, or
that the Administrative Agent may reasonably request, in order to create,
preserve, perfect, confirm or validate the security interests, to enable the
Administrative Agent and the Secured Parties to obtain the full benefits of this
Agreement or
10
<PAGE> 15
to enable the Administrative Agent to exercise and enforce any of its rights,
powers and remedies hereunder, including, without limitation, its right to take
possession of the Collateral.
(c) To the fullest extent permitted by law, such Pledgor authorizes the
Administrative Agent (i) to sign and file financing and continuation statements
and amendments thereto with respect to the Collateral without its signature
thereon and (ii) to the extent permissible by applicable law, file this
Agreement in any UCC filing jurisdiction as a financing statement with respect
to the Collateral. In furtherance of the foregoing, such Pledgor hereby
irrevocably constitutes and appoints the Administrative Agent, with full power
of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor, or in its own name, from time to time in the Administrative
Agent's reasonable discretion, to execute, deliver, file or record financing
statements pursuant to the UCC as may be necessary or desirable in order to
create, preserve, perfect, confirm or validate the security interests.
SECTION 4.03. CHANGE OF NAME, IDENTITY OR STRUCTURE. Such Pledgor will
not change its name, identity or corporate structure in any manner and will not
conduct its business under any trade, assumed or fictitious name unless
expressly permitted by the Credit Agreement and unless it shall have given the
Administrative Agent at least 30 days' prior written notice thereof and shall
have taken all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary or reasonably requested by the Administrative Agent to amend
any financing statement or continuation statement relating to the security
interests granted hereby in order to preserve such security interests and to
effectuate or maintain the priority thereof against all persons.
SECTION 4.04. PLACE OF BUSINESS AND COLLATERAL. Such Pledgor will not
change the location of its chief executive office unless, prior to such change,
it notifies the Administrative Agent of such change, makes all UCC filings
required by Section 4.02 and takes all other action necessary or that the
Administrative Agent may reasonably request to preserve, perfect, confirm and
protect the security interests granted hereby.
SECTION 4.05. MAINTENANCE OF RECORDS. Pledgor will keep and maintain at
its own cost and expense complete books and records relating to the Collateral
of such Pledgor which are reasonably satisfactory to the Administrative Agent,
including a record of all payments received and all credits granted with respect
to the Collateral of such Pledgor and all of its other dealings with such
Collateral. Such Pledgor will provide the Administrative Agent with reasonable
access to or copies of such records promptly upon Administrative Agent's request
therefor.
SECTION 4.06. COMPLIANCE WITH LAWS, ETC. Such Pledgor will comply, in
all material respects, with all acts, rules, regulations, orders, decrees and
directions of any Governmental Authority applicable to the Collateral or any
part thereof or to the operation of such Pledgor's business; PROVIDED, THAT,
such Pledgor may contest any act, regulation, order, decree or direction in any
reasonable manner which shall not in the reasonable judgment of
11
<PAGE> 16
the Administrative Agent adversely affect the Administrative Agent's rights or
the first priority of its security interest in the Collateral.
SECTION 4.07. PAYMENT OF TAXES, ETC. Such Pledgor will pay promptly
when due all taxes, assessments and other governmental charges or levies imposed
upon the Collateral of such Pledgor or in respect of its income or profits
therefrom, and all claims of any kind; PROVIDED, THAT, no such tax, assessment,
charge or claim need be paid or reimbursed if the validity thereof is being
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such reserves or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor and be adequate
in the good faith judgment of such Pledgor.
SECTION 4.08. LIMITATION ON LIENS ON COLLATERAL. Such Pledgor will not
create, permit or suffer to exist, but will defend the Collateral of such
Pledgor and such Pledgor's rights with respect thereto against and take such
other action as is necessary to remove, any security interest, encumbrance,
claim or other Lien in respect of the Collateral of such Pledgor other than the
security interests created hereunder.
SECTION 4.09. LIMITATIONS ON DISPOSITIONS OF COLLATERAL. Such Pledgor
will not directly or indirectly (through the sale of stock, merger or otherwise)
sell, transfer, lease or otherwise dispose of any of the Collateral of such
Pledgor, or attempt, offer or contract to do so, except in each case as
expressly permitted under the Credit Agreement. The inclusion of Proceeds of the
Collateral under the security interest granted hereby shall not be deemed a
consent by the Administrative Agent to any sale or disposition of any
Collateral.
SECTION 4.10. NOTICES. Such Pledgor will advise the Administrative
Agent promptly and in reasonable detail, (a) of any security interest,
encumbrance or claim made or other Lien asserted against any of the Collateral
of such Pledgor, (b) of any material change in the composition of the Collateral
of such Pledgor, and (c) of the occurrence of any other event which would have a
material effect on the aggregate value of the Collateral of such Pledgor, or on
the security interests granted to the Administrative Agent in this Agreement.
SECTION 4.11. CHANGE OF LAW. Such Pledgor shall:
(a) promptly notify the Administrative Agent in writing of any
change in law known to it which (i) adversely affects or will adversely
affect the validity, perfection or priority of the security interests
granted hereby, (ii) requires or will require a change in the
procedures to be followed in order to maintain and protect such
validity, perfection and priority or (iii) could result in the
Administrative Agent not having a perfected security interest in any of
the Collateral of such Pledgor;
(b) furnish the Administrative Agent with an opinion of
outside legal counsel reasonably satisfactory to the Administrative
Agent setting forth the procedures to be followed in order (i) to avoid
(or to minimize if avoidance is impossible) such adverse effect, (ii)
to maintain and protect such
12
<PAGE> 17
validity, perfection and priority or (iii) to assure that the
Administrative Agent has perfected security interests in all of the
Collateral of such Pledgor; and
(c) follow the procedures set forth in such opinion of
counsel.
SECTION 4.12. ADDITIONAL INTERESTS. No later than 30 days prior to
acquiring any Capital Stock of any Subsidiary, such Pledgor shall provide notice
to the Administrative Agent of such acquisition and complete any filings
required under Section 4.02 with respect to such acquisition.
SECTION 4.13. CERTAIN LIABILITIES. By taking a security interest in the
Collateral pursuant to this Agreement, the Administrative Agent and the other
Secured Parties do not assume, accept or become liable with respect to any
debts, liabilities or obligations of any issuer of any Collateral.
SECTION 4.14. REIMBURSEMENT OBLIGATION. Should any Pledgor fail to
comply with the provisions of this Agreement or any other agreement relating to
the Collateral of such Pledgor such that the value of any Collateral or the
validity, perfection, rank or value of any security interest granted to the
Administrative Agent hereunder or thereunder is thereby diminished or
potentially diminished in any material respect or put at risk in any material
respect (as reasonably determined by the Administrative Agent), the
Administrative Agent on behalf of such Pledgor may, but shall not be required
to, effect such compliance on behalf of such Pledgor, and such Pledgor shall
reimburse the Administrative Agent for the costs thereof on demand, and interest
shall accrue on any such unpaid reimbursement obligation from the date the
relevant costs are incurred until reimbursement thereof in full at the default
rate provided in Section 2.07 of the Credit Agreement.
SECTION 4.15. FURTHER APPROVALS. In connection with the exercise by the
Administrative Agent on behalf of the Secured Parties of its rights hereunder,
it may be necessary to obtain the prior consent or approval of Governmental
Authorities and other persons to a transfer or assignment of Collateral. Each
Pledgor hereby agrees, during the continuance of an Event of Default, to
execute, deliver and file, and hereby appoints (to the extent permitted under
applicable law) the Administrative Agent on behalf of the Secured Parties as its
attorney, during the continuance of an Event of Default, to execute, deliver and
file on each Pledgor's behalf and in each Pledgor's name, all applications,
certificates, filings, instruments and other documents (including any
application for an assignment or transfer of control or ownership) that may be
necessary or appropriate, in the Administrative Agent's opinion, to obtain such
consents, waivers or approvals. Each Pledgor further agrees to use its best
efforts to obtain the foregoing consents, waivers and approvals, including
receipt of consents, waivers and approvals under applicable agreements, prior to
a Default or Event of Default. Each Pledgor acknowledges that there is no
adequate remedy at law for failure by it to comply with the provisions of this
Section 4.16 and that such failure would not be adequately compensable in
damages, and therefore agrees that this Section 4.16 may be specifically
enforced.
13
<PAGE> 18
ARTICLE V
REMEDIES; RIGHTS UPON DEFAULT
SECTION 5.01. UCC RIGHTS. If any Event of Default shall have occurred,
the Administrative Agent may, in addition to all other rights and remedies
granted to it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, exercise all rights
and remedies of a secured party under the UCC and all other rights available to
the Administrative Agent at law or in equity.
SECTION 5.02. SALE OF COLLATERAL. (a) Each Pledgor expressly agrees
that if an Event of Default shall occur and be continuing, the Administrative
Agent, without demand of performance or other demand or notice of any kind
(except the notice specified below of the time and place of any public or
private sale) to such Pledgor or any other person (all of which demands and/or
notices are hereby waived by such Pledgor), may forthwith collect, receive,
appropriate and realize upon the Collateral and/or forthwith sell, lease,
assign, give an option or options to purchase or otherwise dispose of and
deliver the Collateral (or contract to do so) or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at any
office of the Administrative Agent or elsewhere in such manner as is
commercially reasonable and as the Administrative Agent may deem best, for cash
or on credit or for future delivery without assumption of any credit risk. The
Administrative Agent or any Secured Party shall have the right upon any such
public sale and, to the extent permitted by law, upon any such private sale, to
purchase the whole or any part of the Collateral so sold. Each Pledgor further
agrees, at the Administrative Agent's request, to assemble the Collateral, and
to make it available to the Administrative Agent at places which the
Administrative Agent may reasonably select. To the extent permitted by
applicable law, each purchaser or purchasers at any such sale shall hold any
Collateral purchased absolutely free from any claim or right of any Pledgor and,
to the extent permitted by applicable law, each such Pledgor waives all claims,
damages and demands against the Administrative Agent arising out of the
foreclosure, repossession, retention or sale of the Collateral except to the
extent that a court of competent jurisdiction shall have determined by final
nonappealable judgment that any action taken by the Administrative Agent or any
Secured Party with respect to such foreclosure, repossession, retention or sale
constitutes gross negligence or willful misconduct.
(b) Unless the Collateral threatens to decline speedily in value or is
of a type customarily sold in a recognized market, the Administrative Agent
shall give such Pledgor ten (10) days' written notice of its intention to make
any such public or private sale or sale at a broker's board or on a securities
exchange. Such notice shall (i) in the case of a public sale, state the time and
place fixed for such sale, (ii) in the case of a sale at a broker's board or on
a securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or any portion thereof being sold,
will first be offered for sale and (iii) in the case of a private sale, state
the day after which such sale may be consummated. The Administrative Agent shall
not be required or obligated to make any such sale pursuant to any such notice.
The Administrative Agent may adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which
14
<PAGE> 19
the same may be so adjourned. In the case of any sale of all or any part of the
Collateral for credit or for future delivery, the Collateral so sold may be
retained by the Administrative Agent until the selling price is paid by the
purchaser thereof, but the Administrative Agent shall not incur any liability in
case of failure of such purchaser to pay for the Collateral so sold and, in the
case of such failure, such Collateral may again be sold upon like notice. At any
public sale made pursuant to this Section any Secured Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Pledgor (all rights being also
hereby waived and released to the extent permitted by law), the Collateral or
any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to it from any Pledgor as a credit against
the purchase price, and the Administrative Agent may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to any Pledgor therefor to the fullest extent permitted under
applicable law. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Administrative Agent shall be free to carry out such sale pursuant to such
agreement, and, to the fullest extent permitted under applicable law, no Pledgor
shall be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Administrative Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Secured Obligations paid in full.
(c) The proceeds of any sale of Collateral pursuant to this Section
5.02 shall be applied by the Administrative Agent as follows:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Administrative Agent (in its capacity as such hereunder
or under any other Loan Document) in connection with such sale or
otherwise in connection with this Agreement or any of the Secured
Obligations, including all reasonable court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all
advances made by the Administrative Agent hereunder or under any other
Loan Document on behalf of any Pledgor and any other reasonable costs
or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Secured Obligations (the
amounts so applied to be distributed among the Secured Parties pro rata
in accordance with the amounts of the Secured Obligations owed to them
on the date of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Administrative Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Administrative Agent or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
15
<PAGE> 20
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Administrative Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 5.03. ADDITIONAL RIGHTS OF THE ADMINISTRATIVE AGENT. Upon the
occurrence and during the continuance of an Event of Default:
(a) The Administrative Agent shall have the right and power to
institute and maintain such suits and proceedings as it may deem appropriate to
protect and enforce the rights vested in it by this Agreement and may proceed by
suit or suits at law or in equity to enforce such rights and to foreclose upon
and sell the Collateral or any part thereof pursuant to the judgment or decree
of a court of competent jurisdiction.
(b) The Administrative Agent shall, to the extent permitted by law and
without regard to the solvency or insolvency at the time of any person then
liable for the payment of any of the Secured Obligations or the then value of
the Collateral, and without requiring any bond from any party to such
proceedings, be entitled to the appointment of a special receiver or receivers
(who may be the Administrative Agent or any other Secured Party) for the
Collateral or any part thereof and for the rents, issues, tolls, profits,
royalties, revenues and other income therefrom, which receiver shall have such
powers as the court making such appointment shall confer, and to the entry of an
order directing that the rents, issues, tolls, profits, royalties, revenues and
other income of the property constituting the whole or any part of the
Collateral be segregated, sequestered and impounded for the benefit of the
Administrative Agent and the other Secured Parties, and each Pledgor irrevocably
consents to the appointment of such receiver or receivers and to the entry of
such order.
SECTION 5.04. SECURITIES ACT, ETC. (a) In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other present or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "FEDERAL SECURITIES LAWS"), with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Administrative Agent if the Administrative
Agent were to attempt to dispose of all or any part of the Pledged Securities,
and might also limit the extent to which or the manner in which any subsequent
transferee of any such Pledged Securities could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the
Administrative Agent and the other Secured Parties in any attempt to dispose of
all or part of the Pledged Securities under applicable blue sky or other state
securities laws or similar laws analogous in purpose or effect. Each Pledgor
recognizes that in light of the foregoing restrictions and limitations the
Administrative Agent may, with respect to any sale of Pledged Securities, limit
the purchasers to those who will agree, among other things, to acquire Pledged
Securities for their own account, for investment, and not with a view to the
distribution or resale thereof.
Accordingly, each Pledgor expressly agrees that the Administrative
Agent is authorized, in connection with any sale of the Pledged Securities, if
it deems it advisable so
16
<PAGE> 21
to do, (i) to restrict the prospective bidders on or purchasers of any of the
Pledged Securities to a limited number of sophisticated investors who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
Pledged Securities, (ii) to cause to be placed on certificates for any or all of
the Pledged Securities or on any other securities pledged hereunder a legend to
the effect that such security has not been registered under the Federal
Securities Laws and may not be disposed of in violation of the provision of the
Federal Securities Laws and (iii) to impose such other limitations or conditions
in connection with any such sale as the Administrative Agent deems necessary or
advisable in order to comply with the Federal Securities Laws or any other law.
Each Pledgor covenants and agrees that it will execute and deliver such
documents and take such other action as the Administrative Agent deems necessary
or advisable in order to comply with the Federal Securities Laws or any other
law. Each Pledgor acknowledges and agrees that such limitations may result in
prices and other terms less favorable to the seller than if such limitations
were not imposed, and, notwithstanding such limitations, agrees that any such
sale shall be deemed to have been made in a commercially reasonable manner, it
being the agreement of each Pledgor, the Administrative Agent and the other
Secured Parties that the provisions of this Section 5.04 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Administrative Agent sells the Pledged Securities. The Administrative Agent
shall be under no obligation to delay a sale of any Pledged Securities for a
period of time necessary to permit the issuer of any securities contained
therein to register such securities under the Federal Securities Laws, or under
applicable state securities laws, even if the issuer would agree to do so.
(b) If the Administrative Agent shall determine to exercise its right
to sell all or any of the Pledged Securities and if in the opinion of counsel
for the Administrative Agent it is necessary, or if in the opinion of the
Administrative Agent it is advisable, to have the securities included in the
Pledged Securities or the portion thereof to be sold registered under the
provisions of the Federal Securities Laws, each Pledgor agrees, at its own
expense, (i) to execute and deliver, and to use its best efforts to cause its
directors and officers to execute and deliver, all such instruments and
documents, and to do or cause to be done all other such acts and things, as may
be necessary or, in the opinion of the Administrative Agent, advisable to
register such securities under the provisions of the Federal Securities Laws and
to cause the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished, and to make or cause to be made all amendments and supplements
thereto and to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Federal Securities Laws and the rules and regulations of the
Securities and Exchange Commission thereunder, (ii) to prepare, and to make
available to its security holders as soon as practicable, an earnings statement
(which need not be audited) covering the period of at least 12 months beginning
with the first month after the effective date of any such registration
statement, which earning statement will satisfy the provisions of Section 11(a)
of the Federal Securities Laws, (iii) to use its best efforts to qualify such
securities under state blue sky or securities laws and to obtain the approval of
any governmental authorities for the sale of such securities as requested by the
Administrative Agent and (iv) at the request of the Administrative Agent, to
indemnify and hold harmless the Administrative Agent, any other Secured Party
and any underwriters (and any person controlling any of the
17
<PAGE> 22
foregoing) from and against any loss, liability, claim, damage and expense (and
reasonable counsel fees incurred in connection therewith) under the Federal
Securities Laws or otherwise insofar as such loss, liability, claim, damage or
expense arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in such registration statement or
prospectus or in any preliminary prospectus or any amendment or supplement
thereto, or arises out of or is based upon any omission or alleged omission to
state therein a material fact required to be stated or necessary to make the
statements therein not misleading, such indemnification to remain operative
regardless of any investigation made by or on behalf of the Administrative
Agent, any other Secured Party or any underwriters (or any person controlling
any of the foregoing); PROVIDED, THAT, such Pledgor shall not be liable in any
case to the extent that any such loss, liability, claim, damage or expense
arises out of or is based on an untrue statement or alleged untrue statement or
an omission or an alleged omission made in reliance upon and in conformity with
written information furnished to such person by the Administrative Agent or any
underwriter expressly for use in such registration statement or prospectus.
SECTION 5.05. REMEDIES NOT EXCLUSIVE. (a) No remedy conferred upon or
reserved to the Administrative Agent in this Agreement is intended to be
exclusive of any other remedy or remedies, but every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law, in equity or by statute.
(b) If the Administrative Agent shall have proceeded to enforce any
right, remedy or power under this Agreement and the proceeding for the
enforcement thereof shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Administrative Agent, each Pledgor
and the Administrative Agent shall, subject to any determination in such
proceeding, severally and respectively be restored to their former positions and
rights under this Agreement, and thereafter all rights, remedies and powers of
the Administrative Agent shall continue as though no such proceedings had been
taken.
(c) All rights of action under this Agreement may be enforced by the
Administrative Agent without the possession of any instrument evidencing any
Secured Obligation or the production thereof at any trial or other proceeding
relative thereto, and any suit or proceeding instituted by the Administrative
Agent shall be brought in its name and any judgment shall be held as part of the
Collateral.
SECTION 5.06. WAIVER AND ESTOPPEL. (a) Each Pledgor, to the extent it
may lawfully do so, agrees that it will not at any time in any manner whatsoever
claim or take the benefit or advantage of any appraisement, valuation, stay,
extension, moratorium, turnover or redemption law, or any law now or hereafter
in force permitting it to direct the order in which the Collateral shall be sold
which may delay, prevent or otherwise affect the performance or enforcement of
this Agreement and each Pledgor hereby waives the benefits or advantage of all
such laws, and covenants that it will not hinder, delay or impede the execution
of any power granted to the Administrative Agent in this Agreement but will
permit the execution of every such power as though no such law were in force;
PROVIDED, THAT, nothing contained in this Section 5.06 shall be construed as a
waiver of any rights of any Pledgor under any applicable Federal bankruptcy law.
18
<PAGE> 23
(b) Each Pledgor, to the extent it may lawfully do so, on behalf of
itself and all who may claim through or under it, including any and all
subsequent creditors, vendees, assignees and lienors, waives and releases all
rights to demand or to have any marshalling of the Collateral upon any sale,
whether made under any power of sale granted herein or pursuant to judicial
proceedings or upon any foreclosure or any enforcement of this Agreement and
consents and agrees that all of the Collateral may at any such sale be offered
and sold as an entirety.
(c) Each Pledgor, to the extent it may lawfully do so, waives
presentment, demand, protest and any notice of any kind (except notices
explicitly required hereunder or under the Credit Agreement) in connection with
this Agreement and any action taken by the Administrative Agent with respect to
the Collateral.
SECTION 5.07. POWER OF ATTORNEY. Each Pledgor hereby irrevocably
constitutes and appoints the Administrative Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in its own name, from time to time in the Administrative Agent's
discretion for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives the Administrative Agent the power and right, on behalf of such Pledgor,
without notice to or assent by such Pledgor to do the following:
(a) upon the occurrence and during the continuance of any
Event of Default, to pay or discharge taxes, liens, security interests
or other encumbrances levied or placed on or threatened against the
Collateral; and
(b) upon the occurrence and during the continuance of any
Event of Default and otherwise to the extent provided in this
Agreement, (i) to direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due and to come
due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (ii) to receive payment of and
receipt for any and all moneys, claims and other amounts due and to
become due at any time in respect of or arising out of any Collateral;
(iii) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of
any Collateral; (iv) to defend any suit, action or proceeding brought
against such Pledgor with respect to any Collateral; (v) to settle,
compromise and adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases as
the Administrative Agent may deem appropriate; and (vi) generally to
sell, transfer, pledge, make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes,
and to do, at the option of the Administrative Agent and such Pledgor's
expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Administrative Agent's security
interest therein, in order
19
<PAGE> 24
to effect the intent of this Agreement, all as fully and effectively as
such Pledgor might do.
Each Pledgor hereby ratifies all that such attorneys shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
Except as provided by law or the UCC or its equivalent, nothing herein
contained shall be construed as requiring or obligating the Administrative Agent
to make any commitment or to make any inquiry as to the nature or sufficiency of
any payment received by the Administrative Agent, or to present or file any
claim or notice, or to take any action with respect to the Collateral or any
part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and the Administrative Agent shall not be liable
hereunder for any action taken by the Administrative Agent or omitted to be
taken with respect to the Collateral or any part thereof (other than any action
or inaction that a court of competent jurisdiction shall have determined by
final and nonappealable judgment to constitute gross negligence or willful
misconduct). It is understood and agreed that the appointment of the
Administrative Agent as the agent of each Pledgor for the purposes set forth
above in this Section 5.07 is coupled with an interest and is irrevocable. The
provisions of this Section 5.07 shall in no event relieve such Pledgor of any of
its obligations hereunder with respect to the Collateral or any part thereof or
impose any obligation on the Administrative Agent to proceed in any particular
manner with respect to the Collateral or any part thereof, or in any way limit
the exercise by the Administrative Agent of any other or further right which it
may have on the date of this Agreement or hereafter, whether hereunder or by law
or otherwise.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. NOTICES. Unless otherwise specified herein, all notices,
requests or other communications to any party hereunder shall be in writing,
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy and shall be given to such party at its
address or telecopy number set forth, in the case of the Administrative Agent,
in Section 9.01 of the Credit Agreement and, in the case of each Pledgor, on the
signature pages hereof or at any other address or telecopy number which such
party shall have specified for the purpose of communications hereunder by notice
to the other parties hereunder. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by telecopy or on the date three Business Days
after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 6.01 or in accordance with the latest unrevoked direction from such
party given in accordance with this Section 6.01.
20
<PAGE> 25
SECTION 6.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by each Pledgor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Administrative Agent and the other Secured Parties and shall survive the making
by the Lenders of the Loans, the issuance by the Issuing Bank of Letters of
Credit and the execution and delivery to the Lenders of the Notes evidencing
such Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect until the Secured
Obligations have been indefeasibly paid in full in cash, the Commitments have
been terminated, all Letters of Credit have been cancelled or have expired, all
Letter of Credit Disbursements have been reimbursed in full and all terms and
conditions hereof, the Credit Agreement, the Loan Documents and all other
documents or agreements governing the Secured Obligations have been satisfied.
SECTION 6.03. COUNTERPARTS; EFFECTIVENESS. (a) This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
instrument.
(b) This Agreement shall become effective as to each Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Administrative Agent and a counterpart hereof shall have been executed on
behalf of the Administrative Agent, and thereafter shall be binding upon such
Pledgor and the Administrative Agent and their respective successors and
assigns, subject to the terms of Section 6.06 hereof, and shall inure to the
benefit of such Pledgor, the Administrative Agent and the other Secured Parties
and their respective successors and assigns, subject to the terms of Section
6.06 hereof.
SECTION 6.04. WAIVERS; AMENDMENT. (a) To the fullest extent permitted
under applicable law, no failure or delay of the Administrative Agent in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent hereunder
and of the Administrative Agent and the Lenders under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provisions of this Agreement or any other Loan
Document or consent to any departure by any Pledgor therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on any Pledgor in any case
shall entitle such Pledgor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Pledgor with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
21
<PAGE> 26
SECTION 6.05. SUPPLEMENTAL AGREEMENT. Upon execution and delivery by
the Administrative Agent and a Subsidiary of a Supplemental Agreement
substantially in the form of Exhibit I to the Credit Agreement, such Subsidiary
shall become a Pledgor hereunder with the same force and effect as if originally
named as a Pledgor herein. The execution and delivery of any such instrument
shall not require the consent of any other Pledgor hereunder. The rights and
obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this Agreement.
SECTION 6.06. ASSIGNMENTS. Upon the assignment by any Lender of all or
any portion of its rights and obligations under the Credit Agreement (including
all or any portion of its Commitment and the Loans owing to it) to any other
person, such other person shall thereupon become vested with all the benefits in
respect thereof granted to such transferor or assignor herein or otherwise. No
Pledgor shall be permitted to assign, transfer or delegate any of its rights or
obligations under this Agreement (and any such purported assignment, transfer or
delegation without such consent shall be void).
SECTION 6.07. SAVINGS CLAUSE. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, no party hereto shall be required to comply with
such provision for so long as such provision is held to be invalid, illegal or
unenforceable, and the validity, legality and enforceability of the remaining
provisions contained herein, and of such invalid, illegal or unenforceable
provision with respect to any other party, shall not in any way be affected or
impaired. The parties shall endeavor in good-faith negotiations to replace any
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 6.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF OHIO.
SECTION 6.09. ENTIRE AGREEMENT. This Agreement, the other Loan
Documents and the Fee Letter constitute the entire contract between the parties
relative to the subject matter hereof. Any previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement, the
other Loan Documents and the Fee Letter. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party other than the parties hereto and
the Secured Parties, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
SECTION 6.10. HEADINGS. Article and Section headings used herein are
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 6.11. ADMINISTRATIVE AGENT'S FEES AND EXPENSES;
INDEMNIFICATION. (a) Each Pledgor agrees to pay upon demand to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts or agents,
which the Administrative Agent may incur in connection with (i) the
22
<PAGE> 27
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from or other realization upon any of the Collateral of such
Pledgor, (iii) the exercise, enforcement or protection of any of the rights of
the Administrative Agent hereunder or (iv) the failure of such Pledgor to
perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Pledgor agrees, to the fullest extent permitted under
applicable law, to indemnify the Administrative Agent and the other Indemnified
Parties against, and hold each of them harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees and expenses, incurred by or asserted against any of them arising out of,
in any way connected with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or not any Indemnified
Party is a party thereto; PROVIDED, THAT, such indemnity shall not, as to any
Indemnified Party, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnified Party.
(c) Any such amounts payable as provided hereunder shall be additional
obligations secured hereby. The provisions of this Section shall remain
operative and in full force and effect regardless of the termination of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent or any Lender. All amounts due
under this Section shall be payable on written demand therefor.
SECTION 6.12. SUBMISSION TO JURISDICTION. (a) Each Pledgor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any Ohio State court or Federal court of the United
States of America sitting in Dayton, Ohio and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Ohio State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent or any Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against such Pledgor or its properties in the courts of
any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
Ohio State court or Federal court of the United States of America sitting in
Dayton, Ohio. Each of the parties hereto hereby
23
<PAGE> 28
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 6.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
24
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first written above.
BANK ONE, DAYTON, N.A.,
as Administrative Agent
By:____________________________
Name:
Title:
ROBBINS & MYERS, INC.
By:____________________________
Name:
Title:
Address:
Telecopy:
PFAUDLER, INC.
By:____________________________
Name:
Title:
Address:
Telecopy:
CHEMINEER, INC.
By:____________________________
Name:
Title:
Address:
Telecopy:
<PAGE> 30
EDLON, INC.
By:____________________________
Name:
Title:
Address:
Telecopy:
GLASTEEL PARTS AND SERVICES, INC.
By:____________________________
Name:
Title:
Address:
Telecopy:
E.C. MOTORS, INC.
By:____________________________
Name:
Title:
Address:
Telecopy:
R&M ENVIRONMENTAL STRATEGIES, INC.
By:____________________________
Name:
Title:
Address:
Telecopy:
<PAGE> 31
Schedule 1
----------
CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS
------------------------------------------------------
<TABLE>
<CAPTION>
Name Mailing Address County State
- ---- --------------- ------ -----
<S> <C> <C> <C>
</TABLE>
LOCATIONS OF RECORDS OF RECEIVABLES AND GENERAL INTANGIBLES
-----------------------------------------------------------
<TABLE>
<CAPTION>
Name Mailing Address County State
- ---- --------------- ------ -----
<S> <C> <C> <C>
</TABLE>
<PAGE> 32
Schedule 2
----------
PLEDGED SECURITIES
------------------
Part I: List of Pledged Shares:
-----------------------
<TABLE>
<CAPTION>
Class Stock Par Number
Pledgor Stock Issuer Of Stock Certificate Nos. Value of Shares
------- ------------ -------- ---------------- ----- ---------
<S> <C> <C> <C> <C> <C>
</TABLE>
Part II: List of Pledged Debt:
---------------------
<TABLE>
<CAPTION>
Pledgor Debt Issuer Date of Issuance Outstanding Balance
------- ----------- ---------------- -------------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 33
Schedule 3
----------
TRADE NAMES, DIVISION NAMES, ETC.
---------------------------------
<TABLE>
<CAPTION>
Pledgor Trade Names, Division Names, Etc.
------- ---------------------------------
<S> <C>
</TABLE>
<PAGE> 34
Schedule 4
----------
REQUIRED FILINGS AND RECORDINGS
-------------------------------
<TABLE>
<CAPTION>
Pledgor UCC Filings & Locations Other Filings
------- ----------------------- -------------
<S> <C> <C>
</TABLE>
<PAGE> 1
Exhibit 10.3.1
FIFTH AMENDMENT
TO
ROBBINS & MYERS, INC.
PENSION PLAN
(as Amended and Restated Effective as of 10/1/89)
WHEREAS, Robbins & Myers, Inc. (the "Company") maintains Robbins &
Myers, Inc. Pension Plan (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable;
NOW, THEREFORE, the Corporate Benefits Committee, acting pursuant to
the authority granted to it by Section 11.1 of the Plan, hereby amends the Plan,
effective October 1, 1994 by substituting the following for subparagraph
6.7(a)(2):
(2) LUMP SUM OPTION. A lump sum option is also available under the
Plan. The lump sum Actuarial Equivalent value shall be
determined on the basis of the benefit that the Member would
have been entitled to on the first day of the month following
the later of his Normal Retirement Age or the date on which
his Vesting Service terminates. Notwithstanding the foregoing,
effective for Vesting Service accrued on or after October 1,
1994, the value of the supplemental benefit ($3.50 times years
of Vesting Service) will not be taken into account when
calculating the amount of the Member's distribution under the
lump sum option.
A Member's election of the lump sum option shall include a
waiver of an immediately payable Qualified Joint and Survivor
Annuity under section 6.6, together with spousal consent if
the Member is married. Such waiver shall not be necessary if
the lump sum payment is made pursuant to the provisions of
section 6.8.
Subject to the waiver described above, the lump sum option
described in this paragraph (2) shall be available effective
as of October 1, 1989 to all Members other than those who are
in pay status, including retirees and terminated vested
Members.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, a duly appointed member of the
Corporate Benefits Committee, has caused this Fifth Amendment to be executed on
its behalf, this 24th day of September, 1994.
By /s/
------------------------------
A Member of the Corporate
Benefits Committee
-2-
<PAGE> 3
SIXTH AMENDMENT
TO
ROBBINS & MYERS, INC.
PENSION PLAN
(as Amended and Restated Effective as of 10/1/89)
WHEREAS, Robbins & Myers, Inc. (the "Company") maintains Robbins &
Myers, Inc. Pension Plan (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable;
NOW, THEREFORE, the Corporate Benefits Committee, acting pursuant to
the authority granted to it by Section 11.1 of the Plan, hereby amends the Plan,
effective October 1, 1994:
(1) By substituting the following for paragraph 2.1(b):
(b) "ACTUARIAL EQUIVALENT" means a benefit having the same
value as the benefit which it replaces. Except as otherwise
provided elsewhere in the Plan, such benefit shall be computed
based on such tables as are attached as an exhibit to the
Plan, and otherwise computed on the bases of the 1971 Group
Annuity Mortality Table, weighted 80 percent male and 20
percent female, and on a 7 percent interest assumption.
Notwithstanding the above, for purposes of determining single
sum cash settlements, the interest rate used shall be the
immediate and deferred rate which would be used (as of the
first day of the Plan Year in which the distribution occurs)
by the Pension Benefit Guaranty Corporation ("PBGC") for
purposes of determining the present value of a lump sum
distribution upon the termination of a defined benefits plan;
provided, however, that if, using that rate, a lump sum
benefit is determined to be at least $25,000, the benefit will
be recalculated using an interest rate of 120 percent of the
PBGC rate described above.
(2) By substituting the following for subparagraph
6.5(b)(1):
(1) IF MEMBER SURVIVES TO BENEFIT COMMENCEMENT DATE.
The reduced amount of the monthly retirement
benefits payable to a terminated Member at
retirement (and accordingly under section 6.6, if
-3-
<PAGE> 4
applicable), if he does not die prior to the Benefit
Commencement Date, shall be equal to an amount
determined by applying to the monthly retirement
benefit otherwise payable to the Member a "Reduction
Percentage" for the number of complete months during
which the coverage is in effect. The Reduction
Percentage shall be .0083 percent per month
(one-tenth of 1 percent per year) for Members under
age 45, .0333 percent per month (four-tenths of 1
percent per year) for Members ages 45 through 54, and
.0667 percent per month (eight-tenths of 1 percent
per year) for Members ages 55 through 64. On and
after October 1, 1994, the reduction described above
shall apply only with respect to individuals who are
Former Participants.
IN WITNESS WHEREOF, the undersigned, a duly appointed member of the
Corporate Benefits Committee, has caused this Sixth Amendment to be executed on
its behalf, this _____ day of September, 1994.
By
------------------------------
A Member of the Corporate
Benefits Committee
-4-
<PAGE> 5
SEVENTH AMENDMENT TO
ROBBINS & MYERS, INC.
PENSION PLAN
WHEREAS, Robbins & Myers, Inc. (the "Company") maintains the Robbins &
Myers, Inc. Pension Plan (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable;
NOW, THEREFORE, the Corporate Benefits Committee, acting pursuant to
the authority granted to it by Section 11.1 of the Plan, hereby amend the Plan
is the follow particulars:
(1) By adding Addendum A, as attached hereto, immediately
following the last Article thereof, effective for all distributions
made after December 31, 1992.
(2) By adding Addendum B immediately following Addendum A as
attached hereto, effective for all Plan Years beginning after December
31, 1993.
IN WITNESS WHEREOF, the undersigned, a duly appointed member of the
Corporate Benefits Committee, has caused this Seventh Amendment to be executed
on its behalf, this 23rd day of December, 1994.
/s/
----------------------------------
A Member of the Corporate Benefits
Committee
-5-
<PAGE> 6
ADDENDUM A
IRS MODEL DIRECT ROLLOVER REVISIONS
A.1 ROLLOVER REQUIREMENTS
This Addendum applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Addendum, a distributee may elect, at
the time and in the manner prescribed by the plan administrator, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
A.2 DEFINITIONS
(a) Eligible rollover distribution: An eligible rollover distribution is
any cash distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or
the joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
Employer securities).
(b) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
(c) Distributee: A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
-6-
<PAGE> 7
(d) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
-7-
<PAGE> 8
ADDENDUM B
IRS MODEL SECTION 401(a)17 LIMITATION
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in this plan
to the limitation under section 401(a)(17) of the Code shall mean the OBRA '93
annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account in
determining an employee's benefit accruing in the current plan year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
B-1
<PAGE> 9
EIGHTH AMENDMENT TO
ROBBINS & MYERS, INC.
PENSION PLAN
WHEREAS, Robbins & Myers, Inc. (the "Company") maintains the Robbins &
Myers, Inc. Pension Plan (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable;
NOW, THEREFORE, the Corporate Benefits Committee, acting pursuant to
the authority granted to it by Section 11.1 of the Plan, hereby amend the Plan,
effective October 1, 1993, by adding the following subsection 6.13 to the Plan:
6.13 EXTENDED WEAR AWAY. Notwithstanding the foregoing, with respect to
each Participant whose Compensation exceeded $150,000 during the Plan Year ended
September 30, 1993, the amount of a Participant's Accrued Benefit will not be
less than the greater of the amount of the Participant's Accrued Benefit, if
any, determined as at September 30, 1989 under the terms of the Plan as then in
effect, or the amount of the Participant's Accrued Benefit, if any, determined
as at September 30, 1993 under the terms of the Plan as then in effect plus such
additional amount, if any, as is accrued after September 30, 1993 pursuant to
the foregoing provisions of this subsection.
IN WITNESS WHEREOF, the undersigned, a duly appointed member of the
Corporate Benefits Committee, has caused this Eighth Amendment to be executed on
its behalf, effective as of September 30, 1994.
/s/
----------------------------------
A Member of the Corporate Benefits
Committee
B-2
<PAGE> 10
NINTH AMENDMENT TO
ROBBINS & MYERS, INC.
PENSION PLAN
WHEREAS, Robbins & Myers, Inc. (the "Company") maintains the Robbins &
Myers, Inc. Pension Plan (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable;
NOW, THEREFORE, the Corporate Benefits Committee, acting pursuant to
the authority granted to it by Section 11.1 of the Plan, hereby amend the Plan
effective October 1, 1989, in the follow particulars:
(1) by adding the following two sentences to the end
paragraph 2.1(j) of the Plan:
If the Participant is a "5-percent owner" (as defined in section
414(q)(3) of the Code) or is one of the 10 Highly Compensated Employees
earning the most Compensation without regard to the $200,000 limit,
such limitation shall be calculated by aggregating the Compensation of
the Participant and of the Participant's spouse and his lineal
descendents who have not attained age 19 by the close of the Plan Year,
if they are Participants in the Plan. Compensation in excess of the
limit under section 401(a)(17) shall not be taken into account under
the Plan for any purpose.
(2) by adding the following two sentences to the end of
paragraph 6.5(b)(1) of the Plan:
There shall be no Reduction Percentage in effect for any month prior to
the date the Committee provides notice to the Member of his and his
spouse's rights to waive the preretirement surviving spouse annuity.
(3) by adding a new subsection 6.7(c) to the Plan:
(c) NORMAL FORM. The qualified joint and survivor
annuity described above shall be at least as valuable as any
optional form of benefit payable under the Plan.
(4) by inserting the word "any" at the end of the
first line of subsection 6.8.
(5) by substituting the following for paragraphs 6.10(a) of
the Plan:
6.10 MAXIMUM ANNUAL BENEFITS. Notwithstanding any other
provisions of this Plan to the contrary, the annual
B-3
<PAGE> 11
benefit provided under this Plan (together with that provided by all
other defined benefit plans of the Affiliates) for any Member for a
limitation year, which shall be the calendar year, shall in no event
exceed the lesser of (a) or (b) below:
(a) An amount equal to the lesser of (1) or (2) below:
(1) $90,000, or the smaller Actuarial Equivalent of the
benefit payable at the Member's Social Security
Retirement Age if payments begin before that age, or
the larger Actuarial Equivalent of the benefit
payable at that age if payments begin after that age;
or
(2) an amount equal to 100 percent of the annual
average of the highest three consecutive calendar
years of Compensation paid to him by the Employer
during his active participation in this Plan;
multiplied by the Member's Credited Service (or
his Vesting Service if subsection (a)(2) above is
applicable), determined as of the time benefits
commence, not to exceed ten years. In no case
will the preceding limit reduce the accrued
benefit of a Member determined on September 30,
1983 or on September 30, 1987, provided such
benefit complied with the maximum benefit
limitation then in effect.
If the Plan satisfied the applicable requirements of section 415 of the
Code as in effect for all limitation years beginning before January 1,
1987, an amount shall be subtracted from the numerator of the defined
contribution plan fraction (not exceeding such numerator) as prescribed
by the Secretary of the Treasury so that the sum of the defined benefit
plan fraction and the defined contribution plan fraction computed under
section 415(e)(1) of the Code, as revised by the Tax Reform Act of
1986, does not exceed 1.0 for such limitation year. In the event the
special limitation contained in this subparagraph is exceeded, the
benefits otherwise payable to the Member under this qualified defined
benefit Plan shall be reduced to the extent necessary to meet such
limitation. If the annual benefit begins before a Member's Social
Security Retirement Age, but on or after age 62, the actuarial
adjustment for such benefit referred to in paragraph (1) above shall be
determined by reducing the dollar limitation by five-ninths of 1
percent for each of the first 36 months by which the Benefit
Commencement Date precedes the Social Security Retirement Age, and by
five-twelfths of 1 percent for each of the next 24 months, if any, by
which the Benefit Commencement Date precedes the Social Security
Retirement Age. For benefits commencing prior to age 62, an additional
adjustment shall be made to the benefit which could otherwise have been
payable commencing at age 62; such adjustment shall be based on an
interest rate of 7 percent
B-4
<PAGE> 12
or such other rate described in section 2.1(b). If the annual benefit
begins after a Member's Social Security Retirement Age, the actuarial
adjustment for such benefit referred to in paragraph (1) above shall be
based on an interest rate of 5 percent. If a Member's annual benefit
does not exceed $10,000 and if he did not participate in any defined
contribution plan maintained by an Affiliate, the limitations described
in (1) and (2) above will not apply; provided, however, if such Member
has fewer than ten years of Vesting Service, instead of $10,000, the
exemption shall be $1,000 multiplied by his years of Vesting Service,
determined as of the time benefits commence. The amount in (1) above,
and the amount in (2) above for a Member who has terminated his
employment with all Affiliates, shall be automatically adjusted
annually for increases in the cost of living as follows: as of January
1 of each calendar year, the dollar limitation as determined by the
Commissioner of Internal Revenue for that calendar year will become
effective as the maximum permissible dollar amount for that calendar
year. The maximum permissible dollar amount for a calendar year applies
to limitation years ending with or within that calendar year. The
requirement of ten years of Vesting Service shall apply with respect to
each change in benefit structure under the Plan, as required by section
415(b)(5) of the Code and the regulations thereunder.
(6) by adding a new subsection 6.14 to the Plan:
6.14 SPECIAL DISTRIBUTION RULES. All distributions required
under this Plan shall be determined and made in accordance with
Treasury Regulations under Code section 401(a)(9), including the
minimum distribution incidental benefit requirement of Treasury
Regulation section 1.401(a)(9)-2 and the provisions of section
401(a)(11) of the Code relating to incidental death benefit payments.
If the Participant dies after distribution of his or her interest has
commenced, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of distribution
being used prior to the Participant's death. If a Participant dies
before distribution of his or her interest has commenced, distribution
shall be made in accordance with the provisions of subsection
401(a)(9)(B) of the Code.
(7) by adding a new subsection 12.5 to the Plan:
12.5 AMENDMENT OF VESTING SCHEDULE. If the Plan is amended to
provide a different vesting schedule, each person adversely affected:
(a) who is a Participant during the election period
below; and
(b) who has completed at least three years of Service
before that period ends;
B-5
<PAGE> 13
may elect to have the amendment disregarded in determining his vested
amount. The election must be in writing and delivered to the Corporate
Benefits Committee within the election period. Upon delivery, the
election will be irrevocable. The election period begins on the date
such amendment is adopted and ends 60 days after the latest of the
date:
(c) the amendment is adopted;
(d) the amendment becomes effective; or
(e) the Corporate Benefits Committee delivers a written
notice of the amendment to the Participant.
No amendment to the Plan's vesting schedule may decrease the vested
amount which any Participant has earned as of the date of the
amendment.
(8) by substituting the following for paragraph
14.2(a) of the Plan:
(a) "AGGREGATION GROUP" means the Plan and all other plans
maintained by the Employer and nonparticipating
Affiliates which cover a Key Employee and any other
plan which enables a plan covering a Key Employee to
meet the requirements of Code section 401(a)(4) or 410
including any plan that terminated within the five-year
period ending on the relevant determination date. In
addition, at the election of the Committee, the
Aggregation Group may be expanded to include any other
qualified plan maintained by an Employer or
nonparticipating Affiliate if such expanded Aggregation
Group meets the requirements of Code sections 401(a)(4)
and 410.
(9) by substituting the following for subsection 14.3
of the Plan:
14.3 VESTING REQUIREMENTS. If the Plan is determined to be
top-heavy with respect to a Plan Year under the provisions of section
14.1, then a Member's interest in his accrued benefit shall vest in
accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Service Vesting Percentage
---------------- ------------------
<S> <C>
Less than 3 0%
3 or more 100%
</TABLE>
The vesting provisions described in this section shall not apply to a
Member who does not have an Hour of Service after the Plan becomes
top-heavy. If in a subsequent Plan Year the Plan is no longer
top-heavy, the vesting provisions that
B-6
<PAGE> 14
were in effect prior to the time the Plan became top-heavy
shall be reinstated.
B-7
<PAGE> 15
IN WITNESS WHEREOF, the undersigned, a duly appointed member of the
Corporate Benefits Committee, has caused this Ninth Amendment to be executed on
its behalf, this 12th day of June, 1996.
/s/
----------------------------------
A Member of the Corporate Benefits
Committee
B-8
<PAGE> 1
Exhibit 10.5
ROBBINS & MYERS, INC.
---------------------
EMPLOYEE SAVINGS PLAN
(Revised and Restated Effective January 1, 1996)
B-9
<PAGE> 2
ROBBINS & MYERS, INC.
---------------------
EMPLOYEE SAVINGS PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I - NAME, PURPOSE AND HISTORY OF PLAN................................................... 1
ARTICLE II - DEFINITIONS AND CONSTRUCTION....................................................... 1
Section 2.01. Definitions............................................................ 1
Section 2.02. Construction........................................................... 5
ARTICLE III - PARTICIPATION..................................................................... 6
Section 3.01. Eligibility to Participate............................................. 6
Section 3.02. Election to Participate................................................ 7
ARTICLE IV - CONTRIBUTIONS...................................................................... 7
Section 4.01. Amount of Participant's Contributions.................................. 7
Section 4.02. Limitations on Basic Contributions..................................... 7
Section 4.03. Suspension of Contributions............................................ 8
Section 4.04. Payment of Basic Contributions to Trustee.............................. 9
Section 4.05. Employer Matching Contributions........................................ 9
Section 4.06. Limitations on Contributions For
Nondiscrimination Testing Purposes..................................... 10
Section 4.07. Maximum Annual Additions............................................... 14
ARTICLE V - TRUST AGREEMENT; INVESTMENT FUNDS
AND PARTICIPANT INVESTMENT ELECTIONS.......................................... 17
Section 5.01. Trust Agreement........................................................ 17
Section 5.02. Investment Funds....................................................... 17
Section 5.03. Allocation and Reallocation of
Contributions Among Investment Funds................................... 18
Section 5.04. Fees and Expenses...................................................... 18
Section 5.05. Exclusive Benefit and Funding Policy................................... 18
Section 5.06. Special Rules Relating to Certain
Participants Subject to Section 16(b).................................. 18
ARTICLE VI - PARTICIPANT ACCOUNTS............................................................... 19
Section 6.01. Establishment of Accounts.............................................. 19
Section 6.02. Adjustment of Participants' Accounts................................... 19
ARTICLE VII - VESTING; DISTRIBUTION OF ACCOUNTS................................................. 20
Section 7.01. Vesting................................................................ 20
Section 7.02. Distribution Upon Termination of
Employment............................................................. 20
Section 7.03. Designation of Beneficiary............................................. 21
Section 7.04. Manner and Timing of Distributions..................................... 21
Section 7.05. Years of Service....................................................... 23
Section 7.06. One Year Break in Service.............................................. 23
ARTICLE VIII - WITHDRAWALS AND LOANS............................................................ 24
Section 8.01. Withdrawal of Supplemental Contributions............................... 24
Section 8.02. Withdrawal of After-Tax Contributions.................................. 24
</TABLE>
-i-
B-i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 8.03. Withdrawals After Age 59-1/2........................................... 24
Section 8.04. Hardship Withdrawals................................................... 24
Section 8.05. Source of Funds for Withdrawals........................................ 25
Section 8.06. Loans to Participants.................................................. 26
ARTICLE IX - ADMINISTRATION..................................................................... 27
Section 9.01. Designation of Fiduciaries............................................. 27
Section 9.02. Board.................................................................. 27
Section 9.03. Corporate Benefits Committee............................................27
Section 9.04. Action of Committee ................................................... 29
Section 9.05. Trustee................................................................ 30
Section 9.06. Employer Records....................................................... 30
Section 9.07. Indemnification........................................................ 30
Section 9.08. Discrimination Prohibited.............................................. 30
Section 9.09. Representation in Proceedings.......................................... 30
Section 9.10. Time of Delivery....................................................... 31
ARTICLE X - MISCELLANEOUS....................................................................... 31
Section 10.01. Rights to Trust Assets................................................. 32
Section 10.02. Non-Recommendation of Investment....................................... 32
Section 10.03. Non-Alienation......................................................... 32
Section 10.04. Facility of Payment.................................................... 32
Section 10.05. Unclaimed Benefits..................................................... 32
ARTICLE XI - TOP-HEAVY PLAN PROVISIONS.......................................................... 33
Section 11.01. Effect of Top-Heavy Status............................................. 33
Section 11.02. Additional Definitions................................................. 33
Section 11.03. Minimum Benefits....................................................... 34
Section 11.04. Maximum Benefit Limits................................................. 35
ARTICLE XII - AMENDMENT......................................................................... 35
Section 12.01. General Amendment...................................................... 35
Section 12.02. Amendment of Vesting Schedule.......................................... 35
ARTICLE XIII - SUSPENSION, DISCONTINUANCE OR TERMINATION........................................ 36
Section 13.01. Termination or Partial Termination of the
Plan................................................................... 36
Section 13.02. Termination of the Trust............................................... 36
Section 13.03. Discontinuance of Employer Contributions............................... 36
ARTICLE XIV - GENERAL........................................................................... 37
Section 14.01. Severability........................................................... 37
Section 14.02. Merger of Plans........................................................ 37
Section 14.03. Plan Not a Contract of Employment...................................... 37
Section 14.04. Successors; Reorganizations............................................ 37
Section 14.05. Expenses............................................................... 38
Section 14.06. Controlling Law........................................................ 38
Section 14.07. Construction........................................................... 38
Section 14.08. Headings............................................................... 38
Section 14.09. Counterparts........................................................... 38
Section 14.10. Treasury Qualification................................................. 38
Section 14.11. Denial of Guaranty..................................................... 39
SUPPLEMENT A - IRS MODEL DIRECT ROLLOVER REVISIONS.............................................. 40
SUPPLEMENT B - IRS MODEL SECTION 401(a)17 LIMITATION............................................ 41
</TABLE>
-ii-
B-ii
<PAGE> 4
<TABLE>
<S> <C>
SUPPLEMENT C - PERIOD OF LIMITED ACTIVITY ...................................................... 42
</TABLE>
-iii-
B-iii
<PAGE> 5
CERTIFICATE
-----------
I, ___________________ of Robbins & Myers, Inc. and a member of its
Corporate Benefits Committee, hereby certify that the attached document is a
full, true and complete copy of the Robbins & Myers Employee Savings Plan, as
adopted by the Corporate Benefits Committee of Robbins & Myers, Inc., on
________________, 1995, to be effective as of January 1, 1996.
Dated this _____ day of _________, 1995.
_____________________________
-iv-
B-iv
<PAGE> 6
ROBBINS & MYERS. INC.
---------------------
EMPLOYEE SAVINGS PLAN
ARTICLE I
NAME, PURPOSE AND HISTORY OF PLAN
---------------------------------
Robbins & Myers, Inc., an Ohio corporation (the "Company"), has
previously established the Robbins & Myers, Inc. Employee Savings Plan for
Salaried Employees of Chemineer, Edlon, and Pfaudler and the Robbins & Myers,
Inc. Employee Savings Plan (the "Plans"). The Company now restates those plans
in the form of the Robbins & Myers, Inc. Employee Savings Plan ("Plan"),
effective January 1, 1996 (the "Effective Date"). Its purpose is to stimulate
employee savings for financial security on a tax-advantaged basis.
The Plan has been amended and restated to bring it into compliance with
the requirements of the Internal Revenue Code of 1986. The Company intends that
this Plan and the related Trust qualify under all applicable provisions of the
Internal Revenue Code of 1986, as amended ("Code"), and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and each of the terms of this
Plan and the Trust Agreement shall be so interpreted. This Plan is intended to
be a profit sharing plan with a qualified cash or deferred arrangement meeting
the requirement of Code sections 401(a) and 401(k).
The provisions of the Plan may be modified or supplemented by
Supplements to the Plan. Any such Supplement shall form a part of the Plan as of
its effective date and be attached hereto.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
----------------------------
SECTION 2.01. DEFINITIONS. For purposes of the Plan, unless the content
clearly or necessarily indicates otherwise, the following words and phrases
shall have the meaning set forth in the definitions below:
(a) "Account" shall mean the separate Account or Accounts to be
maintained under the Plan for each Participant as provided in Section 6.02.
(b) "Acquired Business" shall mean one or more plants, units or other
facilities acquired by the Company or any other Employer after the Effective
Date as a going concern.
(c) "Affiliate" shall mean each corporation or unincorporated trade or
business which is a member of either a controlled group of
B-1
<PAGE> 7
corporations, a group of trades or businesses under common control, or an
affiliated service group within the meaning of Code sections 414(b), (c) or (m),
which includes the Company, or any other entity required to be aggregated with
the Company pursuant to regulations under Code section 414(o).
(d) "After-Tax Contributions" shall mean contributions by the
Participant pursuant to the Participant's authorization to make regular payroll
deductions from his Compensation pursuant to Section 4.01(b). The term shall be
deemed to include amounts contributed as "Qualified Deposits" under the terms of
the Plan in effect prior to January 1, 1985.
(e) "Basic Contributions" shall mean contributions made pursuant to
Section 4.01(a) or (b) and shall include both Pre-Tax Contributions and
After-Tax Contributions.
(f) "Beneficiary" shall mean the person or persons designated on Timely
Notice by a Participant to receive benefits in the event of the Participant's
death, as provided in Section 7.03.
(g) "Board" shall mean the Board of Directors of the Company.
(h) "Committee" shall mean the Corporate Benefits Committee described
in Section 9.01 hereof, which committee shall be the plan administrator for
purposes of ERISA.
(i) "Compensation" shall mean an Employee's total salary or wages from
an Employer before deductions, including annual base pay bonuses, commissions
and overtime and Pre-Tax Contributions hereunder and any other salary reduction
amount under Code section 401(k), but excluding deferred compensation,
contributions by an Employer to this or any other benefit plan, and any other
form of remuneration which is not "compensation" within the meaning of Code
section 415, all as determined in accordance with such rules, regulations or
standards as may be prescribed by the Committee. The maximum annual compensation
that may be taken into account hereunder for any Participant shall be $150,000
or such greater amount as may be permitted pursuant to Code section 401(a)(17).
In determining the compensation of a Participant for purposes of this
limitation, the rules of Code section 414(q)(6) shall apply, except that, in
applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year.
(j) "Effective Date" means January 1, 1996.
(k) "Employee" shall mean any person who is in the employ of an
Employer during periods in which he meets the following conditions:
-2-
B-2
<PAGE> 8
(i) he is employed by an Employer on its United States
payroll;
(ii) he is not in a unit of employees covered by a collective
bargaining agreement, unless such collective bargaining agreement
specifically provides for the application of the Plan to the employees
in such unit; and
(iii) his employment is not in a group which has been excluded
by the Corporate Benefits Committee from participation in the Plan.
The term shall not include persons employed by an Employer at an Acquired
Business unless and until the Corporate Benefits Committee designates the
persons so employed as Employees hereunder.
In addition, any leased employee (within the meaning of Code section
414(n)(2)) of the Employer performing services shall be treated as an Employee
of the Employer. However, contributions or benefits provided by the leasing
organization for any leased employee which are attributable to services
performed for the Employer shall be treated as provided by the Employer. The
preceding sentences shall not apply to any leased employee of the Employer if
(a) leased employees do not constitute more than 20 percent of the Employer's
nonhighly compensated workforce (as defined by reference to Code section 414(q))
and (b) the leased employee is covered by a money purchase pension plan
maintained by the leasing organization which provides (i) a nonintegrated
employer contribution rate for each participant of at least 10 percent of
compensation (ii) full and immediate vesting and (iii) immediate participation
for all employees of the leasing organization (except for those individuals
whose compensation is less than $1,000 in each Plan Year during the 4-year
period ending with the Plan Year). Notwithstanding any other provisions of the
Plan, for purposes of determining the number or identity of highly compensated
employees (within the meaning of Code section 414(q)), the employees of the
Employer shall include all individuals defined as Employees in this Section
2.01(m).
Notwithstanding the preceding paragraph, a leased employee shall be
deemed to be in a class of employees not eligible to participate in this Plan
unless such participation is required as a condition of the Plan's qualification
under Code section 401(a).
(l) "Employer" shall mean the Company, Chemineer, Inc., Edlon, Inc.,
Pfaudler, Inc. and each other Affiliate which, with the approval of the
Corporate Benefits Committee, adopts this Plan.
(m) "Employer Contributions" shall mean amounts contributed under the
Plan by Employers as provided in Article IV. The term shall also be deemed to
include forfeitures applied to reduce the amount of an Employer's contributions
otherwise due hereunder.
-3-
B-3
<PAGE> 9
(n) "Employment Commencement Date" shall mean the date on which an
Employee first performs an Hour of Service.
(o) "Highly Compensated Employee" shall mean an individual described in
Code section 414(q) and Section 4.06 of this Plan.
(p) "Hour of Service" shall mean:
(i) Each hour for which the Employee is paid or entitled to
payment, for the performance of duties for the Company or an Affiliate,
during the applicable computation period. These hours shall be credited
to the Employee for the computation period in which the duties were
performed;
(ii) each hour for which the Employee is paid or entitled to
payment by the Company or an Affiliate, either directly or indirectly,
on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty, and leave of absence, but excluding
payments under a plan maintained solely for the purpose of complying
with workmen's compensation, unemployment compensation, or disability
insurance laws and also excluding payments for medical or medically
related expenses. No more than 501 Hours of Service shall be credited
under this paragraph (ii) for any single computation period whether or
not such period occurs in a single computation period); and
(iii) Each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the Company or an
Affiliate:
The same hours of service shall not be credited under clause (i) or clause (ii),
as the case may be, and under clause (iii). Further, no more than 501 Hours of
Service shall be credited for payment of back pay to the extent it is agreed to
or awarded for a period of time during which an Employee did not or would not
have performed duties. These Hours shall be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
Hours of Service shall be computed and credited in accordance with paragraphs
(b) and (c) of Section 2530.200b-2 of the Department of Labor Regulations.
(q) "Investment Fund" means an unsegregated fund established at the
direction of the Committee pursuant to Section 5.02, and invested in securities,
insurance contracts, mutual fund shares or other property of such type and
characteristics as the Committee shall determine.
(r) "Normal Retirement Age" shall mean the date on which the
Participant attains age 65.
-4-
B-4
<PAGE> 10
(s) "Participant" shall mean an Employee who has satisfied the
requirements of Section 3.01 and has made Basic Contributions under the Plan.
The term shall also include any other person whose interests derived from
participation in a prior plan are transferred or rolled over into the Plan. A
person who has become a Participant hereunder shall continue to be a Participant
until his entire Account has been distributed or forfeited pursuant to the Plan.
(t) "Part-Time Employee" shall mean an Employee who is regularly
scheduled to perform less than 20 Hours of Service per week or whose work
schedule, because of its seasonal or temporary nature, is expected to result in
completion of fewer than 1,000 Hours of Service per year.
(u) "Plan" shall mean the Robbins & Myers, Inc. Employee Savings Plan
for Salaried Employees of Chemineer, Edlon and Pfaudler.
(v) "Plan Year" shall mean the calendar year.
(w) "Pre-Tax Contributions" shall mean amounts contributed by the
Participant's Employer pursuant to the Participant's authorization and direction
under Section 4.01(a) to make such contribution on the Participant's behalf in
lieu of payment of an equal amount directly to the Participant.
(x) "After-Tax Contributions" shall mean amounts contributed as such
under the terms of the Plan as it was in effect prior to the Effective Date.
(y) "Supplemental Contributions" shall mean amounts contributed as
"Special Deposits" under the terms of the plan as it was in effect prior to the
Effective Date.
(z) "Timely Notice" shall mean a notice in writing on a form prescribed
by the Committee and filed at such places and at such reasonable times as shall
be required by the rules of the Committee.
(aa) "Trust" shall mean the trust fund established pursuant to the
provisions of this Plan, as it may be amended from time to time.
(bb) "Trustee" shall mean the Trustee under the Trust.
(cc) "Valuation Date" shall mean each business day.
SECTION 2.02. CONSTRUCTION.
(a) Where appearing in this Plan, the masculine shall include the
feminine and the plural shall include the singular, unless the context clearly
indicates otherwise. The words "hereof", "herein",
-5-
B-5
<PAGE> 11
"hereunder", and other similar compounds of the word "here" shall mean and refer
to the entire Plan and not to any particular section or subsection. Titles of
articles and sections are for reference purposes only.
(b) The Plan is intended to be a qualified profit sharing plan meeting
the requirements of Code section 401(a) and to contain a "qualified cash or
deferred arrangement" meeting the requirements of Code section 401(k), and shall
be interpreted so as to comply with the applicable requirements thereof, where
such requirements are not clearly contrary to the express terms hereof. In all
other respects, the Plan shall be construed and its validity determined
according to the laws of the State of Ohio to the extent such laws are not
preempted by applicable requirements of federal law. In case any provision of
this Plan shall be held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if said illegal or invalid provisions had
never been included herein.
ARTICLE III
PARTICIPATION
-------------
SECTION 3.01. ELIGIBILITY TO PARTICIPATE.
(a) Each Participant in the prior Plans on December 31, 1995 shall
continue as a Participant subject to the terms of the Plan on January 1, 1996 if
he is then an Employee. Each Employee who would have become a Participant under
one of the Prior plans on January 1, 1996 shall become a Participant under this
Plan on January 1, 1996 if he is then an Employee. On or after January 1, 1996,
an Employee, other than a Part-Time Employee, shall be eligible to participate
herein as of the first January 1, April 1, July 1 or October 1 which is at least
90 days after his Employment Commencement Date.
(b) A Part-Time Employee, shall be eligible to participate herein as of
the last day of his "qualifying period". For purposes of this subsection, the
"qualifying period" of a Part-Time Employee shall mean the first
12-consecutive-month period commencing on his Employment Commencement Date or
any anniversary thereof, during which he completes at least 1,000 Hours of
Service.
(c) A former Participant whose employment has terminated and who is
subsequently reemployed as an Employee shall reenter the Plan as a Participant
on the date of his reemployment. If a reemployed Employee was not formerly a
Participant in the Plan, he shall be considered a new Employee and required to
meet the requirements of Section 3.01 to be eligible to participate in the Plan.
-6-
B-6
<PAGE> 12
SECTION 3.02. ELECTION TO PARTICIPATE. An Employee may elect to
participate in the Plan by filing his election with his Employer on a Timely
Notice to make Basic Contributions on the Participant's behalf, as provided in
Section 4.01. Such election shall be effective with the January 1, April 1, July
1 or October 1 which next follows the later of (i) the filing of the election or
(ii) the date as of which he shall have become eligible to participate herein as
determined under Section 3.01. Such election shall remain in effect so long as
the Participant remains an Employee as defined herein, subject to Sections 4.03
and 8.04 relating to the suspension of contributions.
ARTICLE IV
CONTRIBUTIONS
-------------
SECTION 4.01. AMOUNT OF PARTICIPANT'S CONTRIBUTIONS.
(a) BASIC CONTRIBUTIONS. Subject to the limitations described in
Sections 4.02, 4.06 and 4.07, a Participant may elect to make Pre-Tax Basic
Contributions in any whole percentage from 1 to 12 percent of the Participant's
Compensation. Basic Contributions shall be made by the Participant's Employer in
lieu of payment of an equal amount directly to the Participant as current
compensation, pursuant to authorization by the Participant on a form provided by
the Committee. A Participant's Basic Contributions for a Plan Year may not
exceed the limitation of Code section 402(g). No After-Tax Contributions will be
made under the Plan on or after the Effective Date.
(b) SUPPLEMENTAL CONTRIBUTIONS. The Plan does not permit Supplemental
Contributions.
(c) CHANGE IN RATE OF CONTRIBUTIONS. The designated rates of a
Participant's Basic Contributions may be changed as of the first day of any
month following the Company's receipt of Timely Notice, but shall remain in
effect for successive periods of time unless changed.
SECTION 4.02. LIMITATIONS ON BASIC CONTRIBUTIONS.
(a) No Participant shall be permitted to have Basic Contributions made
under the Plan and any other plan maintained by the Employer during any taxable
year in excess of the dollar limitation contained in Code section 402(g) as in
effect at the beginning of such taxable year.
(b) Excess Elective Deferrals under this Plan, plus any income and
minus any losses allocable thereto, may be distributed to the Participant no
later than March 15 of the following year.
(c) DEFINITIONS.
-7-
B-7
<PAGE> 13
(i) "EXCESS ELECTIVE DEFERRALS" shall mean those Basic
Contributions that are includable in a Participant's gross income under
Code section 402(g) to the extent such Participant's Elective Deferrals
for a taxable year exceed the dollar limitation under such Code
section. Excess Elective Deferrals shall be treated as Annual Additions
under the Plan.
(ii) "ELECTIVE DEFERRALS" with respect to any taxable year,
shall mean, the sum of all employer contributions (including those of
another employer who is not an Employer who has adopted this Plan) made
on behalf of a Participant pursuant to an election to defer under any
qualified cash or deferred arrangement as described in Code section
401(k), any simplified employee pension cash or deferred arrangement as
described in Code section 402(h)(l)(B), any eligible deferred
compensation plan under Code section 457, any plan as described under
Section 501(c) (18), and any employer contributions made on the behalf
of a Participant for the purchase of an annuity contract under Code
section 403(b) pursuant to a salary reduction agreement.
(d) DETERMINATION OF INCOME OR LOSS. Excess Elective Deferrals shall be
adjusted for any income or loss up to the date of distribution using the method
described in this subsection or any other method permitted under Treasury
Regulation Section l.402(g)-1(e)(5). The income or loss allocable to Excess
Elective Deferrals is the sum of: (i) income or loss allocable to the
Participant's Basic Contributions for the taxable year multiplied by a fraction,
the numerator of which is such Participant's Excess Elective Deferrals for the
year and the denominator of which is the Participant's Account balance
attributable to Basic Contributions without regard to any income or loss
occurring during such taxable year; and (ii) ten percent (10%) of the amount
determined under (i) multiplied by the number of whole calendar months between
the end of the Participant's taxable year and the date of distribution, counting
the month of distribution if distribution occurs after the 15th of such month.
SECTION 4.03. SUSPENSION OF CONTRIBUTIONS.
(a) A Participant's Basic Contributions shall be suspended if any of
the following occurs:
(i) the Participant elects, in the form of a Timely Notice, to
suspend all of his Basic Contributions being made pursuant to Section
4.01;
(ii) the Participant receives a hardship withdrawal under
Section 8.04; or
(iii) the Participant fails to qualify as an Employee. (A
Participant on an authorized leave of absence without pay fails to
qualify as an Employee for purposes of this Section.)
-8-
B-8
<PAGE> 14
Suspensions shall be effective as soon as practicable following such occurrence.
Participants will not be permitted to make up suspended contributions. A
Participant's Basic Contributions shall be suspended for the period described in
Section 8.04(d) following his receipt of a hardship withdrawal.
(b) A Participant whose contributions have been suspended for reasons
other than a Hardship Withdrawal pursuant to Section 8.04 of this Plan may
resume making contributions as of the next January 1, April 1, July 1 or October
1 following his provision of Timely Notice provided that he is then an Employee
as defined herein.
SECTION 4.04. PAYMENT OF BASIC CONTRIBUTIONS TO TRUSTEE. Each Employer
shall periodically (but not less frequently than monthly), remit to the Trustee
(or to the Company, if the Company has remitted to the Trustee) the amounts
withheld from the Compensation of its Employees as Basic Contributions under the
Plan. Such amounts shall be credited to the Accounts of Participants on a
monthly basis.
SECTION 4.05. EMPLOYER MATCHING CONTRIBUTIONS.
(a) Each Employer shall make contributions for each of its eligible
Employees in an amount equal to forty percent (40%) of the Employee's Basic
Contributions up to six percent (6%) of his Compensation that he elects to make
as Basic Contributions and each Employer may contribute, from its current or
accumulated profits (as determined in accordance with generally accepted
accounting principles), on behalf of each Participant (excluding any Participant
who resigned or was dismissed during that year and who is not employed by the
Employers on the last day of that year) an amount, if any, equal to such
percentage (which shall be the same for all Participants) of the Participant's
Basic Contributions for that Plan Year as the Employer shall decide and as shall
be approved by the Corporate Benefits Committee. Amounts forfeited from the
Accounts of Employees of the Employer pursuant to Section 7.01 shall be applied
to reduce the amount of the Employer's Matching Contributions otherwise payable
hereunder.
(b) Employer Matching Contributions under this subsection shall be made
in "qualifying employer securities" (as defined in Section 407(d)(4) of ERISA)
issued by the Company ("Company Stock"), on or before the due date of the
Company's tax return for the year.
(c) Employer Matching Contributions hereunder are conditioned upon
their deductibility under Code section 404. Notwithstanding any provision herein
to the contrary, to the extent a deduction is disallowed, contributions may be
returned to the Employer within one year after such disallowance.
(d) Employer Matching Contributions shall be forfeited to the extent
they are based on Excess Elective Deferrals under Section
-9-
B-9
<PAGE> 15
4.02(c), Basic Contributions that are Excess Contributions or After-Tax
Contributions that are Excess Aggregate Contributions distributed under Section
4.06(h). Any forfeitures that occur will be used to reduce Employer Matching
Contributions for the next Plan Year.
SECTION 4.06. LIMITATIONS ON CONTRIBUTIONS FOR
NONDISCRIMINATION TESTING PURPOSES.
(a) Employer Matching Contributions and Basic Contributions allocated
to the Accounts of Highly-Compensated Employees shall not in any Plan Year
exceed the limits specified in this Section 4.06. The Committee may make the
adjustments authorized in this Section 4.06 to ensure that the limits of
Subsections (b) (the "Actual Deferral Percentage test") and (c) (the "Average
Contribution Percentage test") are not exceeded, regardless of whether such
adjustments affect some Participants more than others. This Section shall be
administered and interpreted in accordance with Code sections 401(k) and 401(m).
(b) The Actual Deferral Percentage of the Highly-Compensated Employees
shall not exceed, in any Plan Year, the greater of:
(i) The Actual Deferral Percentage of all other Participants
for such Plan Year multiplied by 1.25; or
(ii) The lesser of the (A) Actual Deferral Percentage. of all
other Participants for such Plan Year multiplied by two (2) and (B) the
Actual Deferral Percentage of all other Participants for such Plan Year
plus two (2) percentage points, or such lesser amount as the Secretary
of the Treasury shall prescribe to prevent the multiple use of this
alternative limitation with respect to any Highly-Compensated Employee.
(c) The Average Contribution Percentage of the Highly Compensated
Employee shall not exceed, in any Plan Year, the greater of:
(i) The Average Contribution Percentage of all other
Participants for such Plan Year multiplied by 1.25; or
(ii) The lesser of (A) the Average Contribution Percentage of
all other Participants for such Plan Year multiplied by two (2) and (B)
the Average Contribution Percentage of all other Participants for such
Plan Year plus two (2) percentage points, or such lesser amounts as the
Secretary of the Treasury shall prescribe to prevent the multiple use
of this alternative limitation with respect to any Highly-Compensated
Employee.
(d) The following terms shall have the meanings specified herein for
purposes of this Section 4.06.
-10-
B-10
<PAGE> 16
(i) ACTUAL DEFERRAL PERCENTAGE. The average, for a specified
group of Participants for a Plan Year, of the ratios (calculated
separately for each Participant in such group) of (1) the amount of
Employer contributions actually paid over to the Trust on behalf of
such Participant for the Plan Year to (2) the Participant's
compensation for such Plan Year, as determined under Treasury
Regulation Section 1.401(k)-1(g)(2). For this purpose, Employer
contributions on behalf of any Participant shall include Basic
Contributions, including amounts in excess of the dollar limitation
contained in Section 4.02(g) of the Code described in Section 4.02, but
excluding Basic Contributions that are taken into account in the
Average Contribution Percentage test (provided that the Actual Deferral
Percentage test is satisfied both with and without exclusion of these
Basic Contributions). For purposes of computing Actual Deferral
Percentages, an Employee who would be a Participant but for the failure
to make Basic Contributions shall be treated as a Participant on whose
behalf no Basic Contributions are made.
(ii) AVERAGE CONTRIBUTION PERCENTAGE. The average for a
designated group of Employees of the ratios (calculated separately for
each Employee in the group) of (1) the sum of (A) the Employer Matching
Contributions paid and credited to the Account of such Employee for a
Plan Year, and (B) any Basic Contributions which are to be taken into
account for purposes of the Average Contribution Percentage Test, to
(2) such Employee's compensation for such Plan Year, as determined
under Treasury Regulation Section 1.401(k)-1(g)(2). Participant Basic
Contributions may be used in the Average Contribution Percentage test
provided that the Actual Deferral Percentage test is met before the
Basic Contributions are used in the Average Contribution Percentage
test and continues to be met following the exclusion of those
contributions that are used to meet the Average Contribution Percentage
test.
(iii) HIGHLY-COMPENSATED EMPLOYEE. The term Highly Compensated
Employee shall mean Highly Compensated Active Employees and Highly
Compensated Former Employees.
A Highly Compensated Active Employee includes any Employee who
performs service for the Employer during the determination year and
who, during the look-back year: (i) received compensation from the
Employer in excess of $75,000 (as adjusted pursuant to Code section
415(d)); (ii) received compensation from the Employer in excess of
$50,000 (as adjusted pursuant to Code section 415(d)) and was a member
of the top paid group for such year; or (iii) was an officer of the
Employer and received compensation during such year that is greater
than 50 percent of the dollar limitation in effect under Code section
415(b)(1)(A). The term Highly Compensated Employee also includes: (i)
Employees who are both described in the preceding sentence if the term
"determination year" is
-11-
B-11
<PAGE> 17
substituted for the term "look-back year" and the Employee is one of
the 100 employees who received the most compensation from the Employer
during the determination year; and (ii) employees who are five percent
owners at any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of
(iii) above during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a Highly
Compensated Employee.
For purposes of this Section, the determination year shall be
the Plan Year. The look-back year shall be the twelve-month period
immediately preceding the determination year.
A Highly Compensated Former Employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a Highly Compensated Active Employee for
either the separation year or any determination year ending on or after
the Employee's 55th birthday.
If an Employee is, during a determination year or look-back
year, a family member of either a five percent owner who is an active
or former Employee or a Highly Compensated Employee who is one of the
ten (10) most Highly Compensated Employees ranked on the basis of
compensation paid by the Employer during such year, then the family
member and the five percent owner or top-ten Highly Compensated
Employee shall be aggregated. In such case, the family member and five
percent owner or top-ten Highly Compensated Employee shall be treated
as a single employee receiving compensation and plan contributions or
benefits equal to the sum of such compensation and contributions or
benefits of the family member and five percent owner or top-ten Highly
Compensated Employee. For purposes of this Section, family member
includes the spouse, lineal ascendants and descendants of the Employee
or former Employee and the spouses of such lineal ascendants and
descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in
the top-paid group, the top ten Employees, the number of Employees
treated as officers and the compensation that is considered, will be
made in accordance with Code section 414(q) and the regulations
thereunder.
(e) For purposes of determining compliance with the Actual Deferral
Percentage Test and the Average Contribution Percentage test, Basic
Contributions and Employer Matching Contributions must
-12-
B-12
<PAGE> 18
be made before the last day of the twelve-month period immediately following the
Plan Year to which the contributions relate.
(f) The Committee shall maintain records sufficient to demonstrate
satisfaction of the Actual Deferral Percentage test and the Average Contribution
Percentage test and the amount of Basic Contributions and Employer Matching
Contributions used in such test.
(g) For purposes of determining the Actual Deferral Percentage or
Average Contribution Percentage of a Participant who is a five percent owner or
one of the ten most highly paid Highly Compensated Employees, the Basic
Contributions, Employer Matching Contributions, and Compensation of such
Participant shall include the Basic Contributions, Employer Matching
Contributions, and Compensation for the Plan Year of family members (as defined
in Code section 414(q)(6)). Family members, with respect to Highly Compensated
Employees, shall be disregarded as separate employees in determining the Actual
Deferral Percentages and Average Contribution Percentages of Participants who
are Highly Compensated Employees and Participants who are not Highly Compensated
Employees.
(h) TREATMENT OF EXCESS CONTRIBUTIONS. If Employer Matching
Contributions or Basic Contributions exceed any of the limits specified in
Subsections 4.06(b) and (c) for a Plan Year, then the Plan Administrator shall
correct such excess in accordance with the provisions of this Subsection (h).
(i) Notwithstanding any other provision of this Plan, unless
Employer Matching Contributions are treated as Qualified Matching
Contributions as provided under Subsection (iv) below, excess
contributions and excess aggregate contributions (as defined in
subsections (ii) and (iii) below) attributable to Basic Contributions,
plus any income and minus any loss allocable thereto, such income or
loss determined and allocated in accordance with Treasury Regulation
Section l.401(k)-l(f)(4)(ii), shall be distributed no later than the
last day of each Plan Year to Participants to whose accounts such
excess contributions and excess aggregate contributions were allocated
for the preceding Plan Year. Employer Matching Contributions based on
such Basic Contributions distributed as excess contributions and excess
aggregate contributions shall be forfeited as provided under Section
4.05(d). Excess contributions and excess aggregate contributions shall
be allocated to Participants who are subject to the family member
aggregation rules of Code section 414(q) (6) in the manner prescribed
by the regulations. If such excess contributions and excess aggregate
contributions are distributed more than 2-1/2 months after the last day
of the Plan Year in which such excess amounts arose, a ten percent
(10%) excise tax will be imposed on the Employer maintaining the Plan
with respect to those amounts. Excess contributions and excess
aggregate
-13-
B-13
<PAGE> 19
contributions shall be treated as Annual Additions under the
plan.
(ii) "Excess contributions" shall mean, with respect to any
Plan Year, the excess of:
(A) The aggregate amount of Employer contributions
actually taken into account in computing the Actual Deferral
Percentage of Highly Compensated Employees for such Plan Year,
over
(B) The maximum amount of such contributions
permitted by the Actual Deferral Percentage test (determined
by reducing contributions made on behalf of Highly Compensated
Employees in order of the Actual Deferral Percentages,
beginning with the highest of such percentages).
(iii) "Excess aggregate contributions" shall mean, with
respect to any Plan Year, the excess of:
(A) The aggregate amount of Employer contributions
taken into account in computing the numerator of the Average
Contribution Percentage actually made on behalf of Highly
Compensated Employees for such Plan year, over
(B) The maximum amount of Employer contributions
permitted by the Average Contribution Percentage test
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
(iv) The Plan Administrator may, in its sole discretion, elect
to treat any portion of the Employer Matching Contributions as
Qualified Matching Contributions to be taken into account for the
Actual Deferral Percentage test to the extent necessary to satisfy the
requirements of this Section 4.06. To the extent Employer Matching
Contributions are treated as Qualified Matching Contributions and taken
into account for the Actual Deferral Percentage test, they may not be
taken into account for the Average Contribution Percentage test. To the
extent Employer Matching Contributions are treated as Qualified
Matching Contributions they shall be allocated to Participants'
Accounts within the Plan Year to which they relate and shall be paid to
the Trust no later than 12 months after the end of the Plan Year to
which they relate.
SECTION 4.07. MAXIMUM ANNUAL ADDITIONS.
(a) The Annual Addition to the Accounts of any Participant for a
Limitation Year, when added to the Annual Additions to his accounts under all
other defined contribution plans (if any)
-14-
B-14
<PAGE> 20
maintained by the Employer, may not exceed the Maximum Permissible Amount. In
addition, in the case of a Participant who also participates in a defined
benefit plan maintained by the Employer, the Annual Addition for a Limitation
Year will, if necessary, be further limited so that the sum of the Defined
Contribution Plan Fraction and the Defined Benefit Plan Fraction for such
Limitation Year does not exceed 1.0.
(b) DEFINITIONS. For purposes of this Article, the following
definitions and rules of interpretation shall apply:
(i) ANNUAL ADDITIONS. The sum of the following amounts
credited to a Participant's Account for the Limitation Year:
(A) Employer Contributions;
(B) Employee Contributions; and
(C) Forfeitures.
Annual additions shall also include (i) any amounts
allocated to an individual medical account, as defined in Code
section 415(l)(2) which is part of a pension or annuity plan
maintained by an Employer and (ii) amounts derived from
contributions for post-retirement medical benefits allocated
to the separate account of a key employee (as defined in Code
section 419A(d)) under a welfare benefit plan (as defined in
Code section 419(e)) maintained by an Employer.
(ii) COMPENSATION. A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received
for personal service actually rendered in the course of employment with
the Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and
bonuses), and excluding the following:
(A) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross
income for the taxable year in which contributed, or Employer
contributions under a simplified employee pension to the
extent such contributions are deductible by the Employee, or
any distributions from a plan of deferred compensation;
(B) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of
forfeiture;
-15-
B-15
<PAGE> 21
(C) Amounts realized from the sale, exchange, or
other disposition of stock acquired under a qualified stock
option; and
(D) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or
not under a compensation reduction agreement) towards the
purchase of an annuity described in Code section 403(b)
(whether or not the amounts are actually excludable from the
gross income of the Employee).
For purposes of applying the limitations of this Article, Compensation
for a Limitation Year is the Compensation actually paid or includable
in gross income during such year.
(iii) DEFINED BENEFIT FRACTION. A fraction, the numerator of
which is the projected annual benefit of the Participant under all
defined benefit plans (whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser of (i) the product
of 1.25 multiplied by the dollar limitation in effect under Code
section 415(b)(1)(A) for such Plan Year, or (ii) the product of 1.4
multiplied by the amount which may be taken into account under Code
section 415(b)(l)(B)with respect to such Participant under the Plan for
such Plan Year.
(iv) DEFINED CONTRIBUTION FRACTION. A fraction, the numerator
of which is the sum of the Annual Additions to the Participant's
accounts under defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation
Years, and the denominator of which is the sum of the lesser of the
following amounts determined for such limitation Year and all prior
Limitation Years of service with the Employer: (i) the product of 1.25
multiplied by the dollar limitation in effect under Code section
415(c)(l)(A) for such Plan Year (determined without regard to Code
section 415(c)(6)), or (ii) the product under Code section 415(c)(1)(B)
(or Code section 415(c) (7), if applicable) with respect to the
Participant under the Plan for such Plan Year.
(v) MAXIMUM PERMISSIBLE AMOUNT. The lesser of thirty thousand
dollars ($30,000) (or, if larger, one-fourth of the dollar limitation
in effect under Code section 415(b)(l)(A)) or twenty-five percent (25%)
of the Participant's Compensation for the Limitation Year.
(vi) LIMITATION YEAR. The Plan Year.
(c) In the event that rules set forth in Subsections (a) or (b) would
otherwise be violated after making all possible adjustments under the terms of
any defined benefit plans, then such Employee's benefits under this Plan shall
be reduced by forfeiting
-16-
B-16
<PAGE> 22
a pro rata portion of the Employer Matching Contribution made with respect
thereto and, in the event such return is not sufficient to eliminate the
violation, by returning the Participant's Basic Contributions together with the
earnings thereon and by forfeiting a pro rata portion of Employer Matching
Contributions made with respect thereto. Such forfeited Employer Matching
Contributions shall be held in a suspense account and used to reduce Employer
Matching Contributions to all Participants in the next Limitation Year.
ARTICLE V
TRUST AGREEMENT; INVESTMENT FUNDS
AND PARTICIPANT INVESTMENT ELECTIONS
------------------------------------
SECTION 5.01. TRUST AGREEMENT. The Company shall enter into a trust
agreement with a corporate trustee selected by the Corporate Benefits Committee
to act as Trustee. The Trustee shall receive all Basic Contributions and all
Employer Matching Contributions and shall hold, manage, administer and invest
the same, reinvest any income, and make distributions in accordance with the
provisions of the Plan and the trust agreement. The trust agreement shall be in
such form and contain such provisions as the Board may deem necessary and
appropriate to effectuate the purposes of the Plan and to qualify the Plan and
the Trust under the Code.
SECTION 5.02. INVESTMENT FUNDS. The Committee shall establish two or
more Investment Funds and shall advise the Trustee in writing of the types of
investments to be made for each Investment Fund. The Committee may direct that
any such Investment Fund will be invested in one or more insurance contracts or
mutual funds selected by the Committee or may appoint one or more investment
managers to direct the investment of any Investment Fund. The Committee may at
any time add, delete or change the investment medium or investment manager of
any Investment Fund, provided that if such change substantially changes the
characteristics of any Investment Fund, Participants utilizing such Fund shall
be notified and given an opportunity to reallocate their Account balances.
Notwithstanding the foregoing, the Committee shall at all times on and after
September 1, 1995 cause to be maintained an Investment Fund, known as the
Robbins & Myers, Inc. Company Stock Fund," the assets of which shall be invested
in shares of a class of voting common stock issued by the Company, which are
regularly traded on an established securities market and are required to be, and
are, registered under the provisions of Section 12 of the Securities Exchange
Act of 1934, as amended. Notwithstanding the asset character of an Investment
Fund, the Trustee, in its sole discretion, may invest any amount held under the
Fund in cash or cash equivalents pending investment of, or any distribution or
withdrawal from, that fund pursuant to the terms of the Trust Agreement or the
Plan. The Plan shall be administered in compliance with the provisions of
Section 404 (c) of ERISA.
-17-
B-17
<PAGE> 23
SECTION 5.03. ALLOCATION AND REALLOCATION OF CONTRIBUTIONS
AMONG INVESTMENT FUNDS.
(a) ALLOCATION. On Timely Notice a Participant shall elect to allocate
all of his Basic Contributions and Employer Matching Contributions among the
Investment Funds established pursuant to Section 5.02 in whole multiples of 1
percent of such Contributions. An election under this subsection may be changed
as of any business day but shall remain in effect for successive periods of time
unless changed on Timely Notice. In the event that a Participant fails to direct
the investment of contributions subject to his direction or fails to replace any
directions which may have been suspended or revoked, then such contributions
shall be invested in an Investment Fund designated by the Committee which
invests primarily in securities or other property providing a fixed or
guaranteed rate of return.
(b) INVESTMENT FUND TRANSFERS. A Participant may on Timely Notice elect
to transfer his interests in any one or more Investment Funds to other
Investment Funds. Except to the extent that the conditions governing any
Investment Fund (such as a fund investing in guaranteed investment contracts
issued by an insurance company) may limit or prohibit such transfers, such
transfers may be made on any business day. Such election shall be in such form
as the Committee shall determine.
SECTION 5.04. FEES AND EXPENSES. Brokerage fees and other direct costs
of investment shall be paid by the Trustee out of that fund of the Trust to
which such cost is attributable. All other costs and expenses of the Plan
including without limitation the Trustee's fees and transfer taxes shall be paid
by the Company.
SECTION 5.05. EXCLUSIVE BENEFIT AND FUNDING POLICY.
(a) All contributions hereunder shall be paid to the Trust and all
property and funds of the Trust allocable to the Plan, including income from
investments and from all other sources, shall be managed solely in the interest
of Participants and their Beneficiaries and for the exclusive purpose of:
(i) providing benefits to Participants and their
Beneficiaries; and
(ii) defraying the reasonable expenses of administering the
Plan.
(b) To the extent not specifically set forth in the Plan or Trust, the
Trustee shall establish the funding policy for the Plan and shall consult with
the Committee with respect thereto.
SECTION 5.06. SPECIAL RULES RELATING TO CERTAIN PARTICIPANTS SUBJECT TO
SECTION 16(B). Notwithstanding any other provision of the Plan, the Plan shall
at all times be administered in a manner
-18-
B-18
<PAGE> 24
that will minimize or eliminate a Participant's liability to the Company under
Section 16(b) of the Securities Exchange Act of 1934, and the rules, regulations
and interpretations thereunder.
ARTICLE VI
PARTICIPANT ACCOUNTS
--------------------
SECTION 6.01. ESTABLISHMENT OF ACCOUNTS. A separate Account shall be
established and maintained in the name of each Participant. To the extent
necessary or appropriate to provide for the proper administration of the Plan,
such Account shall include separate balances for interests derived from Pre-tax
and After-Tax Contributions, Supplemental Contributions and Employer Matching
Contributions and such other separate balances as the Committee shall determine.
As soon as practicable following the end of each Plan Year, the Company shall
provide to each Participant a statement of his Account balances, which may, but
need not, be provided more frequently.
SECTION 6.02. ADJUSTMENT OF PARTICIPANTS' ACCOUNTS. On, or as soon as
administratively practicable after, each Valuation Date, the Company shall cause
Participants' Accounts to be adjusted, as of that Valuation Date, as follows:
(a) FIRST, by adjusting the balances of the Participant's interests
invested under each of the Investment Funds as of the last preceding Valuation
Date, upward or downward, pro rata, according to the interests so that the
aggregate interests of Participants invested under that Investment Fund will
equal the then "Adjusted Net Worth" (as defined below) of that Investment Fund;
(b) NEXT, by executing the Investment Fund transfer elections made by
each Participant pursuant to the provisions of Section 5.03 that are to be
executed as of that date;
(c) NEXT, by charging to the proper Accounts of each Participant the
amount of any distributions made to or on account of that Participant pursuant
to the provisions of Articles VII and VIII since the last preceding Valuation
Date and with any cost directly related to any such distribution or loan that
have not been charged previously;
(d) FINALLY, by crediting the proper Accounts of each Participant with
the amount of any contributions made on his behalf or by him pursuant to the
provisions of Article IV that are to be credited as of that date.
The "Adjusted Net Worth" of any Investment Fund as of any Accounting Date means
the then fair market value of the assets held in the Investment Fund, as
determined by the Trustee.
-19-
B-19
<PAGE> 25
ARTICLE VII
VESTING; DISTRIBUTION OF ACCOUNTS
---------------------------------
SECTION 7.01. VESTING. A Participant's right to the balances credited
to his Basic Contributions Account and his Supplemental and After-Tax
Contributions Accounts, if any, shall at all times be fully vested and
nonforfeitable. A Participant's right to the balance of his Employer Matching
Contributions is subject to the following table:
<TABLE>
<CAPTION>
Number of Completed Forfeitable
Years of Service Percentage
- ---------------- ----------
<S> <C>
Less than 1 year 100 percent
at least 1 year but less than 2 years 80 percent
at least 2 years but less than 3 years 60 percent
at least 3 years but less than 4 years 40 percent
at least 4 years but less than 5 years 20 percent
5 years or more 0 percent;
</TABLE>
The portion of a Participant's Employer Matching Contributions Account that is
not distributable to him by reason of the provisions of this subsection shall be
forfeited and shall be applied, commencing with the Plan Year next following the
Plan Year during which the Participant first incurs a One Year Break in Service
(as defined in subsection 7.06) to reduce the amount of any Employer Matching
Contributions that would otherwise be made pursuant to subsection 4.05, until
exhausted. Notwithstanding the foregoing provisions of this Section, the
Forfeitable Percentage of an Employee of an Employer who participated in the
Robbins & Myers, Inc. Savings Plan for Salaried Employees of Chemineer, Edlon
and Pfaudler prior to January 1, 1996 shall be determined under the provisions
of Section 12.02 of the Plan.
SECTION 7.02. DISTRIBUTION UPON TERMINATION OF EMPLOYMENT. When a
Participant's employment with the Company and any Affiliates is terminated for
any reason (except an intercompany transfer between the Company or any Affiliate
and another Affiliate), including death, disability or retirement, the entire
vested balance in such Participant's Account shall be paid at the time and in
the manner specified in Section 7.04. If the termination occurs by reason of the
death of the Participant, or if the Participant dies before the distribution is
completed, distribution shall be made to the Participant's Beneficiary. If a
Participant terminates employment with the Company and Affiliates but does not
take a distribution under this subsection, his entire Account shall be invested
in the Investment Fund selected by the Committee for that purpose and shall
continue to share in the earnings, gains and losses of such Investment Fund
until distribution has been completed.
-20-
B-20
<PAGE> 26
SECTION 7.03. DESIGNATION OF BENEFICIARY. A Participant may designate
any person, trust and/or other entity as Beneficiary. Any such designation shall
be in writing and filed with the Committee on the form and in the manner
prescribed by the Committee, and may be revoked or changed at any time by
the-Participant. Notwithstanding the foregoing, in the event that the
Participant has a spouse at the time of his death, such spouse shall be the
Participant's Beneficiary unless (i) such spouse has consented in writing to the
Participant's designation of a different Beneficiary, (ii) such consent
acknowledges the effect of such election and is witnessed by a plan
representative appointed by the Committee or by a notary public, and (iii) the
Participant is survived by a Beneficiary designated as such as described above.
Any such consent shall be irrevocable, but shall be effective only with respect
to the specific Beneficiary designation unless the consent expressly permits
designations by the Participant without any requirement of further consent. In
the event that the Participant is not married at the time of death and either no
valid designation of Beneficiary is on file with the Committee at the date of
death or no designated Beneficiary survives, the Participant's estate shall be
the Beneficiary.
SECTION 7.04. MANNER AND TIMING OF DISTRIBUTIONS.
(a) All amounts becoming payable under Section 7.02 shall be paid in
the form of a lump sum cash distribution, provided, however that at the election
of the Participant, distribution of whole shares of Company Stock shall be made
in kind.
(b) Distributions under this Section shall be made as soon as
practicable after the Valuation Date which is coincident with or next follows
the Participant's election to receive his Account.
(c) Notwithstanding the foregoing, if the value of the Participant's
interests exceeds $3,500, no distribution shall be made prior to the
Participant's Normal Retirement Age unless the prior written consent of the
Participant and the Participant's spouse, if any (or if either the Participant
or the spouse has died, the survivor) to the distribution has been obtained by
the Plan Administrator within the period beginning no more than 90 days and
ending no less than 30 days before the date payments are to be made or
commenced. The Plan Administrator shall notify the Participant and the
Participant's spouse of the right to defer any distribution until the
Participant's Normal Retirement Age. Such notification shall include a general
description of the material features of, and an explanation of the relative
values of, the optional forms of benefit under the Plan in a manner that would
satisfy the notice requirements of Code section 417(a)(3), and shall be provided
no less than 30 days and no more than 90 days prior to the date that benefit
payments are to be made or commenced. If the Participant or Beneficiary fails to
consent, distribution shall be made as soon as practicable after the Participant
attains Normal Retirement Age; provided that
-21-
B-21
<PAGE> 27
distribution shall in all events be completed not later than five (5) years
after the date of the Participant's death. In the event that distribution is
deferred, the Participant's entire Account shall be invested in the Investment
Funds selected by the Participant under Section 5.03.
(d) Notwithstanding any election to the contrary, payment of benefits
to a Participant shall commence no later than the April 1 next following the
close of the calendar year in which he attains age 70-1/2, whether or not the
Participant has retired.
(e) All distributions required under this Section 7.04 shall be
determined and made in accordance with the provisions of Code section 401(a)(9)
and the regulations issued thereunder, including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the Treasury
Regulations.
(f) Pre-Tax Contributions, Employer Matching Contributions, and income
allocable to each, shall not be distributed to Participants or Beneficiaries
earlier than upon separation from service, death, or disability, or upon the
occurrence of one of the following events:
(i) The termination of the Plan without establishment of a
successor defined contribution plan as such term is defined in Section
1.401(k)-l(d)(3) of the Treasury regulations.
(ii) The disposition by the Company of substantially all of
the assets (within the meaning of Section 401(k)-l(d) (4)(iv)(A) of the
Treasury regulations) used in the trade or business of the Company if
the Company continues to maintain this Plan after the disposition, but
only with respect to Employees who continue employment with the
corporation acquiring such assets.
(iii) The disposition by the Company to an unrelated entity of
the Company's interest in a subsidiary (within the meaning of Section
409(d)(3) of the Code) if the Company continues to maintain this Plan,
but only with respect to Employees who continue employment with such
subsidiary.
(iv) The attainment of age 59-1/2 or, in the case of Pre-Tax
Contributions only, the hardship of the Participant, as described in
Section 8.04.
(g) Notwithstanding the foregoing provisions of this subsection, a
Participant in the Robbins & Myers, Inc. Employee Savings Plan on December 31,
1995 shall have the right to receive a distribution of his account balance as of
December 31, 1995 under subsection 7.02 in 5 substantially equal annual or more
frequent installments if his Distribution Eligibility Date occurs on account of
his retirement on:
-22-
B-22
<PAGE> 28
(i) a normal retirement date elected by him which must
occur on or after the date on which he attains age 65 years;
(ii) an early retirement date elected by him which must occur
on or after the later of the date on which he both attains age 55 years
and completes at least 10 Years of Service (as defined in subsection
7.06) or the date on which he is first eligible to retire on an early
retirement date under the terms of any defined benefit plan (as defined
in section 414(j) of the Code) that is maintained by an Employer and in
which he is a participant, but prior to the date on which he attains
age 65 years.
SECTION 7.05. YEARS OF SERVICE. The term "Years of Service" means, with
respect to any employee of Participant, the number of years, including
fractional portions thereof, elapsed since the first date for which he was paid,
or entitled to payment, for the performance of duties for the Employers or
Affiliates, subject to the following:
(a) an employee's or Participant's number of Years of Service for the
period ended on December 31, 1995, shall be equal to his number of "Years of
Service", if any, determined in accordance with the provisions of the Plan as in
effect on that date;
(b) for purposes of determining the nonforfeitable portion of the
balance of a Participant's Employer Matching Contributions Account accrued prior
to the date he incurs a One Year Break in Service, his number of Years of
Service accrued after 5 consecutive One Year Breaks in Service shall be
disregarded.
(c) if a Participant's employment with the Employers and Affiliates is
terminated and he incurs a One Year Break in Service, he shall not be credited
with service for the period elapsed between the date his employment is
terminated and the date, if any, of his reemployment by the Employers or
Affiliates;
(d) if an employee or Participant does not have a nonforfeitable right
under the Plan to any portion of an Employer Matching Contributions Account
balance, and the number of his consecutive One Year Breaks in Service equals or
exceeds 5, then, his number of Years of Service, if any, accrued prior to such
break shall be disregarded and he shall be considered as a new employee.
SECTION 7.06. ONE YEAR BREAK IN SERVICE. The term "One Year Break in
Service" means, with respect to any employee or Participant, the
12-consecutive-month period commencing on his Distribution Eligibility Date if
he is not paid or entitled to payment for the performance of duties for the
Employers, or the Company Affiliates during that period.
-23-
B-23
<PAGE> 29
ARTICLE VIII
WITHDRAWALS AND LOANS
---------------------
SECTION 8.01. WITHDRAWAL OF SUPPLEMENTAL CONTRIBUTIONS. Participant may
elect to withdraw, as of any Valuation Date, all or part of any balances
credited to such Participant's Account attributable to Supplemental
Contributions, provided that, in no event shall any Participant have a right
under this Section to withdraw amounts in excess of the amounts actually
contributed as Supplemental Contributions. The minimum withdrawal under this
Section (together with any contemporaneous withdrawal under Section 8.02) shall
be $500.00.
SECTION 8.02. WITHDRAWAL OF AFTER-TAX CONTRIBUTIONS. A Participant may
elect to withdraw, as of any Valuation Date, all or part of any balances
credited to such Participant's Account, attributable to After-Tax Contributions;
provided that Supplemental Contributions, if any, have been previously withdrawn
or are withdrawn at the same time; and provided further that in no event shall
any Participant have a right to withdraw amounts in excess of the amounts
actually contributed as After-Tax Contributions. The minimum withdrawal under
this Section (together with any contemporaneous withdrawal under Section 8.01)
shall be $500.00.
SECTION 8.03. WITHDRAWALS AFTER AGE 59-1/2. A Participant who has
attained age 59-1/2 may elect to withdraw, as of any Valuation Date, all or part
of the balances credited to such Participant's Account.
SECTION 8.04. HARDSHIP WITHDRAWALS.
(a) Prior to the termination of the Participant's employment, upon a
demonstration by the Participant of an immediate and heavy financial need that
cannot be met from other resources that are reasonably available to the
Participant, a Participant shall be permitted, on Timely Notice, to make a
withdrawal of an amount not exceeding the lesser of (i) the amount needed to
satisfy such need, or (ii) 100% of all balances in the Participant's Account
which are derived from the Participant's Pre-Tax Contributions. Notwithstanding
the foregoing, (i) amounts derived from Employer Matching Contributions may not
be withdrawn pursuant to this Section, and (ii) distributions made pursuant to
this Section may not include any earnings credited on or after January 1, 1989
to the balance in the Participant's Account derived from Pre-Tax Contributions.
(b) For purposes of this Section, "an immediate and heavy financial
need" shall be deemed to exist if the distribution is on account of:
(i) Unreimbursed medical expenses described in Code section
213(d) incurred by the Participant, the Participant's
-24-
B-24
<PAGE> 30
spouse, or any dependent of the Participant (as defined in
Code section 152);
(ii) Costs directly related to the purchase of the principal
residence for the Participant (excluding mortgage payments);
(iii) Payment of tuition and related fees for the next
semester or quarter of post-secondary education for the Participant,
his or her spouse, children or dependents;
(iv) The need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage on the
Participant's principal residence; or
(v) Other events provided for in rulings, notices or other
documents published by the Commissioner of Internal Revenue. The amount
of an immediate and heavy financial need may include amounts necessary
to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution.
(c) In order to demonstrate that a need cannot be met from other
resources, the Participant shall be required to provide such documents or
information as the Committee may require and to certify that the need cannot be
relieved (i) through reimbursement from insurance, (ii) by reasonable
liquidation of assets, (iii) by cessation of Pre-Tax or After-Tax Contributions
under the Plan, or (iv) by other withdrawals under or loans from this or any
other plan or a loan from a commercial lender, on reasonable terms.
(d) Withdrawals under this Section shall be permitted only if the
Participant has first withdrawn all amounts available to him under this or any
other Employer plan and borrowed all amounts available to him under any other
Employer plan. All of the Participant's Contributions to this Plan and
contributions to all other plans maintained by the Employer (except
contributions to welfare benefit plans and mandatory employee contributions to
defined benefit plans) shall be suspended for a period of 12 months following
such withdrawal, and the amount which the Participant may contribute as Pre-Tax
Contributions for the Plan Year following such withdrawal shall not exceed the
amount described in Code section 402(g), reduced by the amount of the
Participant's actual Pre-Tax Contributions for the Plan Year in which the
withdrawal occurred.
(e) Distributions pursuant to this Section shall be made as soon as
administratively feasible after the withdrawal is approved. The minimum
withdrawal under this subsection is $500.00.
SECTION 8.05. SOURCE OF FUNDS FOR WITHDRAWALS. A Participant may
specify which of his Accounts should be charged for any withdrawal under this
Article. Distribution will be made out of
-25-
B-25
<PAGE> 31
the Participant's interests in each of the Investment Funds in accordance with
the proportion of the Participant's Account then invested in such Fund.
Notwithstanding the foregoing provisions of this Article, any withdrawal by a
Participant of an amount held under any group investment contract held by the
Trustee shall be subject to any restrictions on withdrawals contained in that
contract.
SECTION 8.06. LOANS TO PARTICIPANTS. On written application of a
Participant, the Corporate Benefits Committee may, if it determines that the
Participant is creditworthy, direct the Trustee to make a loan to him from the
Trust Fund for any purpose set forth in the written loan policies of the
Corporate Benefits Committee. The amount of any loan shall not exceed an amount
equal to the lesser of:
(a) $50,000, reduced by the excess, if any, of:
(i) the highest outstanding balance of loans from the Plan during
the 1-year period ending on the day before the date the loan is made,
over
(ii) the outstanding balance of loans from the Plan on
the date on which the loan is made; or
(b) 50 percent of the amount of the Participant's nonforfeitable
Account balances determined as of the last preceding Accounting Date.
Each such loan shall be evidenced by a written note containing such terms as may
be determined by the Corporate Benefits Committee in a uniform and
nondiscriminatory manner in accordance with written loan procedures adopted by
it. Such terms shall provide that:
(i) interest will be paid on the amount of the loan at a
commercial lender's then prevailing rate for loans of a
similar type;
(ii) except in the case of a loan used to acquire a dwelling
unit which, within a reasonable time (determined as of the date the
loan is made) will be utilized as a principal residence of the
Participant, the loan will be repaid within 5 years;
(iii) repayment of the loan will be made in substantially
equal quarterly or more frequent installments over the period of the
loan.
The Corporate Benefits Committee shall establish a Loan Account in the name of
each Participant to whom a loan is granted, which Loan Account shall be
periodically adjusted as provided in Article VI. If, on a Participant's
distribution (under Section 7.02), any loan or portion of a loan made to him,
together with the accrued
-26-
B-26
<PAGE> 32
interest thereon, remains unpaid, an amount equal to such loan or portion
thereof, together with the accrued interest thereon, shall be charged to the
Participant's Accounts after all other adjustments required under the Plan have
been made, but before any payment or distribution is made to any person pursuant
to the provisions of Article VII.
ARTICLE IX
ADMINISTRATION
--------------
SECTION 9.01. DESIGNATION OF FIDUCIARIES. The persons designated in
Sections 9.02, 9.03, and 9.05, and the persons they designate to carry out or
help to carry out their duties or responsibilities are fiduciaries under the
Plan and Trust. Each fiduciary has only those duties or responsibilities
specifically assigned to him under the Plan or Trust or delegated to him by
another fiduciary. Each fiduciary may assume that any direction, information or
action of another fiduciary is proper and need not inquire into the propriety of
any such action, direction or information. Except as provided by law, no
fiduciary will be responsible for the malfeasance, misfeasance or nonfeasance of
any other fiduciary. Any fiduciary may participate in the Plan, provided he
otherwise is eligible to do so. Except as permitted by law, no Employee or
director shall receive any compensation from the Plan or Trust for his services
as a fiduciary.
SECTION 9.02. BOARD. The Board will appoint the members of the
Corporate Benefits Committee, act on any matter referred by the Corporate
Benefits Committee under subsection 9.03(c) and receive and review reports
submitted periodically by the Corporate Benefits Committee concerning
administration of the Plan and Trust.
SECTION 9.03. CORPORATE BENEFITS COMMITTEE.
(a) DESIGNATION. The Board will name the members of the Corporate
Benefits Committee and will fix the number of its members.
(b) PURPOSE. The Corporate Benefits Committee will control and
administer the Plan.
(c) POWERS. The Corporate Benefits Committee has all powers necessary
to carry out its purposes, including the following:
(i) administer the Plan in accordance with its terms and
conditions;
(ii) establish the rules, regulations and procedures it finds
necessary or appropriate to discharge its duties;
-27-
B-27
<PAGE> 33
(iii) adopt or amend the Plan and any trusts or insurance
contracts used to fund the Plan;
(iv) interpret the Plan, including supplying any omissions in
accordance with the intent of the Plan;
(v) decide all questions concerning eligibility of any
Employee to become a Participant;
(vi) compute the amount of benefits and determine to whom such
benefits will be paid;
(vii) authorize or deny the payment of Plan benefits;
(viii) delegate its powers and duties to others as it sees
fit, including:
(A) the preparation and filing of all reports with
governmental agencies;
(B) the preparation and distribution of booklets,
announcements, reports and descriptions of the Plan to
Employees, as required by law;
(C) the maintenance of all records relating the Plan
and Trust;
(D) the establishment and administration of a
uniform claims procedure; and
(E) the performance of all other duties necessary to
administer the Plan;
(ix) employ those accountants, actuaries, agents, consultants,
physicians and attorneys (who may be counsel to the Company) it finds
necessary, and to receive and evaluate their reports;
(x) review bonding and insurance requirements;
(xi) designate an agent for service of legal process upon the
Plan;
(xii) review and implement long-term planning in developing
modifications of the Plan;
(xiii) establish and enforce the rules, regulations,
procedures, investment policies and investment programs it considers
desirable;
(xiv) receive and evaluate monthly, quarterly and annual
reports of Trustees, investment managers and investment
advisers;
-28-
B-28
<PAGE> 34
(xv) review the performance of the Trustees, investment
managers and/or investment advisers at least quarterly;
(xvi) allocate the amount of assets to be managed by each
Trustee, investment manager and investment adviser;
(xvii) accept or reject rollover amounts;
(xviii) establish any accounts called for by the Plan or
Trust;
(xix) report at least annually to the Company on the
investment performance of the Trust Fund;
(xx) appoint, remove or replace other fiduciaries including
the Trustee (or insurance company which holds Plan assets), investment
managers or investment advisers;
(xxi) approve the amount of Employer Contributions to be
made to the Plan or approve discontinuance of Employer
Contributions to the Trust Fund;
(xxii) discontinue or terminate the Plan and any trusts
or insurance contracts used to fund the Plan; and
(xxiii) perform any other act or acts necessary to the
performance of its powers and duties;
(d) RESIGNATION, REMOVAL AND DESIGNATION OF SUCCESSOR. The Company may
remove any member of the Corporate Benefits Committee at any time. Any member of
the Corporate Benefits Committee may resign at any time by delivering his
written resignation to the Company and the Corporate Benefits Committee. New
members will be named by the Company. Any new member will have the same rights,
powers, privileges, immunities and duties as the other members of the Corporate
Benefits Committee. The Corporate Benefits Committee must promptly notify the
Trustee of any change in its membership.
SECTION 9.04. ACTION OF COMMITTEE. Any act authorized, permitted or
required to be taken by the Corporate Benefits Committee may be taken by a
majority of its members, either by vote at a meeting or in writing without a
meeting. All members must be notified of the proposed action and must have an
opportunity to vote. A majority of the members of the Corporate Benefits
Committee constitutes a quorum. All notices, advices, directions,
certifications, approvals and instructions required or authorized to be given by
the Corporate Benefits Committee must be in writing and signed (a) by a majority
of the members of the Corporate Benefits Committee, (b) by the member or members
of the Corporate Benefits Committee designated as having authority to execute
documents on its behalf or (c) by a person authorized to act for the Corporate
Benefits Committee under subsection 9.03(c)(ix).
-29-
B-29
<PAGE> 35
SECTION 9.05. TRUSTEE.
(a) DESIGNATION. The Corporate Benefits Committee will
appoint the Trustee.
(b) POWERS AND DUTIES. The Trustee has the duties and powers
set forth in the agreement executed by the Company and the Trustee.
SECTION 9.06. EMPLOYER RECORDS. The Corporate Benefits Committee may
inspect the Employer's books and records to determine any fact in connection
with acts to be performed by it under the Plan, or it may rely on the Employer's
statement. If the Corporate Benefits Committee wants any statement, certified,
it may rely on a certification of the Company, Employer or Affiliate, as
appropriate.
SECTION 9.07. INDEMNIFICATION. All fiduciaries designated in Section
9.01 other than a bank or trust company or any insurance company acting as a
Trustee and anyone else delegated any power, authority or responsibility under
this Article, have all rights of indemnification provided by law or agreement or
under the Company's Articles of Incorporation, regulations or by-laws. In
addition, the Employer will satisfy any liability actually and reasonably
incurred by all fiduciaries, other than a bank or trust company or an insurance
company acting as Trustee, including expenses, attorneys' fees, judgments, fines
and amounts paid in settlement, in connection with any threatened, pending, or
completed action, suit or proceeding related to their exercise or failure to
exercise any of the powers, authority, responsibilities or discretion provided
under the Plan and the Trust, or reasonably believed by them to be provided
thereunder, any action taken by them in connection with those matters if they
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interest of the Plan, and with respect to any criminal action or
proceeding, if they had no reasonable cause to believe that their conduct was
unlawful.
SECTION 9.08. DISCRIMINATION PROHIBITED. In exercising any
discretionary or absolute authority under the Plan, the Corporate Benefits
Committee will act in a consistent and nondiscriminatory manner, treating all
persons in similar circumstances in a similar manner. The Corporate Benefits
Committee may take no action which would discriminate in favor of Members,
Beneficiaries or Employees who are officers, shareholders or highly-compensated
employees, or which would result in benefiting one employee or group of
employees at the expense of others similarly situated.
SECTION 9.09. REPRESENTATION IN PROCEEDINGS. In any court proceeding
arising under the Plan, the Corporate Benefits Committee will be the
representative of the Members, Beneficiaries and all other claiming any interest
under the Plan.
-30-
B-30
<PAGE> 36
SECTION 9.10. TIME OF DELIVERY. Any information, forms of election,
rejection or other materials required to be filed or delivered by a Member or
Beneficiary to the Company, the Employer or any fiduciary will be deemed filed
or delivered when received. Any consents, approvals, information, requests for
information or other materials required to be filed or delivered to a Member or
Beneficiary by the Company, the Employer for any fiduciary will be deemed filed
or delivered on the earlier of the date of personal delivery or the date
deposited in first class mail. Any information or other materials required to be
filed or delivered to the Company, the Employer or any fiduciary by the Company,
the Employer or any fiduciary will be deemed filed or delivered when actually
received.
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.01. RIGHTS TO TRUST ASSETS.
(a) No Participant or any other person shall have any right to, or
interest in, any part of the Trust assets upon termination of employment or
otherwise, except as provided from time to time under this Plan, and then only
to the extent of the amounts due and payable to such person out of the assets of
the Trust. All payments as provided for in this Plan shall be made solely out of
the assets of the Trust and neither the Employers, the Trustee, nor any member
of the Committee shall be liable therefor in any manner.
(b) The effectiveness of this Plan is expressly subject to the
condition that the Company shall initially receive a favorable determination
letter from the Internal Revenue Service that the Plan meets the requirements
for qualification under Section 401(a) of the Code and all Employer
contributions hereunder are conditioned on the continued qualification of the
Plan under such Code section and the deductibility of such contributions under
Code section 404. In the event that the Internal Revenue Service initially fails
to issue a favorable determination letter, the Company may, at its option,
terminate the Plan, in which case all amounts in the Trust attributable to
Employer contributions shall be refunded to the Employers and all amounts
attributable to Participant contributions shall be distributed to Participants.
In the event that the Committee determines that a contribution has been made as
the result of a good faith mistake of fact, then the Committee may direct that
any non-deductible Employer contribution or any other contribution made as the
result of a mistake of fact shall be refunded to the Employer or Participant in
accordance with applicable provisions of ERISA.
(c) Except as provided in subsection (b) of this Section, the Employers
shall have no beneficial interest of any nature whatsoever in any Employer
Matching Contributions after the same
-31-
B-31
<PAGE> 37
have been received by the Trustee, or in the assets, income or profits of the
Trust or any part thereof.
SECTION 10.02. NON-RECOMMENDATION OF INVESTMENT. The decision as to the
choice of Investment Funds hereunder must be made solely by each Participant,
and no officer or employee of any Employer or the Trustee is authorized to make
any recommendation to any Participant concerning the allocation or reallocation
of Contributions among the Investment Funds.
SECTION 10.03. NON-ALIENATION. Except as otherwise provided herein, no
right or interest of any Participant or Beneficiary in the Plan and the Trust
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, attachment, garnishment, execution,
levy, bankruptcy, or any other disposition of any kind, either voluntary or
involuntary, prior to actual receipt of payment by the person entitled to such
right or interest under the provisions hereof, and such disposition or attempted
disposition shall be void. Notwithstanding the foregoing, a qualified domestic
relations order relating to child support, alimony payments or marital property
rights shall be recognized and given effect if such order contains sufficient
information to permit the Committee to determine that it meets the requirements
of Code section 414(p). If a qualified domestic relations order so directs,
distribution of benefits to the alternate payee may be made at a time not
permitted for distributions to the Participant.
SECTION 10.04. FACILITY OF PAYMENT. If the Committee shall determine
that a Participant or Beneficiary entitled to a distribution hereunder is
incapable of caring for his own affairs, because of illness or otherwise, it may
direct that any distribution from such Participant's Account may be made, in
such shares as it shall determine, to the spouse, child, parent or other blood
relative of such Participant or his Beneficiary, or any of them, or to such
other persons or persons as the Committee may determine. The Committee shall be
under no obligation to see to the proper application of the distributions so
made to such person or persons and any such distribution shall be a complete
discharge of any liability under the Plan to such Participant or Beneficiary, to
the extent of such distribution.
SECTION 10.05. UNCLAIMED BENEFITS. In the event that the Committee is
unable to locate any person who is entitled to benefits hereunder despite
reasonable and diligent efforts to do so, then such person's benefits shall be
automatically forfeited as of the last day of the Plan Year next following the
year in which such benefits became payable; provided, however, in the event that
such person subsequently makes a claim for such forfeited benefits prior to the
termination of the Plan, such benefits shall be reinstated by means of a special
Employer contribution equal to the amount of the forfeiture or by direct payment
by the Company to such person as determined by the Committee.
-32-
B-32
<PAGE> 38
ARTICLE XI
TOP-HEAVY PLAN PROVISIONS
-------------------------
SECTION 11.01. EFFECT OF TOP-HEAVY STATUS. The Plan shall be
a "Top-Heavy Plan" for any Plan Year if either of the following
conditions applies:
(a) The Top-Heavy Ratio for the Plan exceeds sixty percent (60%) and
the Plan is not part of any Required Aggregation Group or Permissive Aggregation
Group having a Top-Heavy Ratio of sixty percent (60%) or less.
(b) The Plan is part of a Required Aggregation Group Having a Top-Heavy
Ratio which exceeds sixty percent (60%) and is not part of a Permissive
Aggregation Group having a Top-Heavy Ratio of sixty percent (60%) or less.
If the Plan is a Top-Heavy Plan in any Plan Year, the provisions of Article
11.03 through 11.05 shall supersede any conflicting provisions of the Plan.
SECTION 11.02. ADDITIONAL DEFINITIONS. Solely for purposes
of this Article, the following terms shall have the meanings set
forth below:
(a) "Key Employee" means any employee or former employee (and the
beneficiary of such employee) whose status as an officer or owner of the
Employer makes him a "key employee" as determined in accordance with Code
section 416(i)(1) and the regulations thereunder.
(b) "Determination Date" means the last day of the preceding Plan Year.
(c) "Top-Heavy Ratio" means a fraction, the numerator of which is the
sum of account balances under any defined contribution plans maintained by the
Employer for all Key Employees and the present value of accrued benefits under
any defined benefit plans maintained by the Employer for all Key Employees, and
the denominator of which is the sum of the account balances under such defined
contribution plans for all employees and the present value of accrued benefits
under such defined benefit plans for all employees disregarding in either case
accrued benefits attributable to employees who have not been employed within the
five year period preceding the Determination Date. Both the numerator and
denominator of the Top-Heavy Ratio shall be adjusted for any distribution of an
account balance on an accrued benefit made in the five (5) year period ending on
the Determination Date and any contribution due but unpaid as of the
Determination Date. For purposes of calculating the Top-Heavy Ratio, (i) the
value of account balances and the present value of accrued benefits shall be
-33-
B-33
<PAGE> 39
determined as of the most recent Valuation Date that falls within or ends with
the twelve (12) month period ending on the Determination Date, and (ii) the
account balances and present values of accrued benefits of any employees who are
not Key Employees but who were Key Employees in a prior year shall be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to which
distributions, rollovers and transfers are taken into account will be made in
accordance with Code section 416 and the regulations thereunder. When
aggregating plans, the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the same
calendar year. The present value of accrued benefits shall be determined
pursuant to Code section 416(g) using a five (5) percent interest assumption and
the 11P-1984 Mortality Table. Solely for the purpose of determining if the Plan,
or any other plan included in an aggregation group of which this Plan is a part,
is top-heavy, the accrued benefit of an Employee other than a Key Employee shall
be determined under (i) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Affiliates, or (ii) if there is no
such method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rate of Code section
411(b)(1)(C).
(d) "Permissive Aggregation Group" means the Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when considered as
a group with the Required Aggregation Group, would continue to satisfy the
requirements of Code section 401(a)(4) and 410.
(e) "Required Aggregation Group" means (i) each qualified plan of the
Employer in which at least one Key Employee participates, and (ii) any other
qualified plan of the Employer which enables a plan described in (i) to meet the
requirements of Code sections 401(a)(4) and 410.
(f) "Valuation Date" means (i) in the case of a defined contribution
plan, the Determination Date, and (ii) in the case of a defined benefit plan,
the date as of which funding calculations are generally made within the twelve
(12) month period ending on the Determination Date.
(g) "Employer" means the employer or employers whose employees are
covered by this Plan and any other employer which must be aggregated with any
such employer under Code sections 414(b), (c), (m) or (o).
SECTION 11.03. MINIMUM BENEFITS. For any year in which the Plan is a
Top-Heavy Plan, the employer contributions on behalf of each Employee who is not
Key Employee shall at least be equal to three percent (3%) of such Employee's
compensation (as defined in Code section 415) for such Plan Year or the
percentage of compensation allocated on behalf of the Key Employee for which
such allocation was highest, whichever is less, reduced however by the
-34-
B-34
<PAGE> 40
amounts allocated to such Employee under any other defined contribution plans.
If such Employee is also covered under a defined benefit plan of the Affiliates,
such Employee will only be entitled to the defined benefit minimum.
SECTION 11.04. MAXIMUM BENEFIT LIMITS. If the Employer maintains a
defined benefit plan and a defined contribution plan which both cover one or
more of the same Key Employees, and if such Plans are Top-Heavy, then the
limitation stated in a separate provision of this Plan with respect to the Code
section 415(e) maximum benefit limitations shall be deemed to refer to a 1.0
adjustment on the dollar limitation rather than a 1.25 adjustment. This
provision shall not apply if the Top-Heavy Ratio is less than ninety percent
(90%) and if the minimum benefit requirements of Section 11.03 are met when
three percent (3%) is changed to four percent (4%).
ARTICLE XII
AMENDMENT
---------
SECTION 12.01. GENERAL AMENDMENT. The Corporate Benefits Committee may
amend the Plan at any time, by action of a majority of its members at a meeting
or by unanimous written consent in lieu of meeting. The Employer, the Corporate
Benefits Committee and all Members, Beneficiaries and other persons will be
bound by those amendments. However, no amendment may increase the duties or
liabilities of the Trustee, the Company or the Employer without its written
consent, and no amendment may authorize or permit any part of the Trust Fund to
be used for or diverted to any purpose other than the exclusive benefit of
Members or their Beneficiaries, and for defraying the reasonable expenses of
administering the Plan and Trust. The Corporate Benefits Committee specifically
reserves the right to make any amendment designed to comply, or to eliminate any
uncertainty of compliance, with the Code, ERISA, any other laws relating to
qualified employees' trusts or any regulations or rulings issued under those
laws, even though accrued benefits are eliminated or reduced retroactively.
SECTION 12.02. AMENDMENT OF VESTING SCHEDULE. If the Plan is
amended to provide a different vesting schedule, each person
adversely affected:
(a) who is a Participant during the election period below; and
(b) who has completed a Period of Service of at least three years
before that period ends;
may elect to have the amendment disregarded in determining his vested amount.
The election must be in writing and delivered to the Corporate Benefits
Committee within the election period. Upon
-35-
B-35
<PAGE> 41
delivery, the election will be irrevocable. The election period begins on the
date the amendment is adopted and ends 60 days after the latest of the date:
(c) the amendment is adopted;
(d) the amendment becomes effective; or
(e) the Corporate Benefits Committee delivers a written notice of the
amendment to the Participant.
No amendment to the Plan's vesting schedule may decrease the vested amount which
any Member has earned as of the date of the amendment.
ARTICLE XIII
SUSPENSION, DISCONTINUANCE OR TERMINATION
-----------------------------------------
SECTION 13.01. TERMINATION OR PARTIAL TERMINATION OF THE PLAN. The
Corporate Benefits Committee may terminate or partially terminate the Plan at
any time by action of a majority of its members at a meeting or by unanimous
written consent in lieu of meeting. If the Plan is terminated or partially
terminated without termination of the Trust, the Trust will be continued until
terminated by the Corporate Benefits Committee or until all Trust assets have
been distributed.
SECTION 13.02. TERMINATION OF THE TRUST. If the Plan is terminated or
partially terminated, the Trust may be terminated by the Corporate Benefits
Committee in the manner described above. The Trust Fund and each account under
the Trust Fund will be valued as provided in the Trust document. The Corporate
Benefits Committee will determine the methods and means of distribution and will
certify that information to the Trustee. After receiving that certification and
after making necessary adjustments to reflect additional earnings, losses and
liquidation expenses, the Trustee will distribute the Trust assets promptly. If
one but not all Employers terminates or partially terminates the Plan, that
Employer will determine whether or not the Trust will continue for its Members.
If those interests are terminated, the Corporate Benefits Committee will direct
their liquidation under this Section.
SECTION 13.03. DISCONTINUANCE OF EMPLOYER CONTRIBUTIONS. The Employer
expects to continue the Plan and to make Employer Contributions indefinitely.
However, the Employer does not assume a contractual obligation to continue the
Plan and reserves the right to reduce, suspend or discontinue Employer
Contributions. Any suspension or discontinuance of Employer Contributions will
not constitute a discontinuance of the Plan. If Employer Contributions are
discontinued or suspended the Trust will be continued until
-36-
B-36
<PAGE> 42
terminated by the Company or until all trust Assets have been distributed.
ARTICLE XIV
GENERAL
-------
SECTION 14.01. SEVERABILITY. Each provision of the Plan is independent
of each other provision. If any provision of the Plan proves to be, or is
finally held by any court or tribunal, board or authority of competent
jurisdiction to be illegal, unenforceable or in conflict with the Code, ERISA or
any other law relating to qualified employees' trusts, that provision will be
disregarded and will be void. Such invalidation will not impair the Plan or any
of its other provisions.
SECTION 14.02. MERGER OF PLANS. No merger or consolidation of the Plan
with, or transfer in whole or in part of the assets and liabilities of the Trust
Fund to, any other plan of deferred compensation or trust fund maintained or
established for the benefit of all or some Members may occur unless:
(a) each Member would receive (if the other plan then terminated) a
benefit immediately after the merger, consolidation or transfer which is equal
to or great than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer (if the Plan had then terminated);
(b) resolutions adopted by the Company, the Corporate Benefits
Committee, and the Employer, and by any new or successor employer of the
affected Members, authorize the transfer of assets and, in the case of the new
or successor employer of the affected Members, its resolutions specifically
assume liabilities for those Members' benefits; and
(c) the other plan and trust are qualified under Code sections 401(a)
and 501(a).
SECTION 14.03. PLAN NOT A CONTRACT OF EMPLOYMENT. Neither the creation
of the Plan nor any amendment to it nor the creation of the Trust Fund nor the
payment of benefits gives any legal or equitable right to any person against the
Company, the Employer or any Affiliate, their officers or employees, or against
the Trustee except as provided in the Plan. All liabilities under the Plan will
be satisfied, if at all, only out of the Trust Fund. Participation in the Plan
does not give any Member any right to continued employment.
SECTION 14.04. SUCCESSORS; REORGANIZATIONS. In the case of the merger,
consolidation, sale of assets, liquidation or other reorganization of the
Employer under circumstances in which a successor person, firm or company (a)
continues all or a
-37-
B-37
<PAGE> 43
substantial part of the Employer's business and (b) employs a substantial number
of the Employer's employees, the successor will be substituted for the Employer
under the Plan if it files a written election with the Trustee and the Corporate
Benefits Committee to carry on the provisions of the Plan.
SECTION 14.05. EXPENSES. The Employer will pay all the expenses of
administering the Plan, including the Trustee's compensation and expenses, any
broker's fees incurred by the Trust, the expenses of the Corporate Benefits
Committee, and any other expenses incurred at the direction of the Corporate
Benefits Committee. Any of those expenses not paid by the Employer will be paid
out of the Trust Fund. The Company will allocate the expenses among Employers.
SECTION 14.06. CONTROLLING LAW. The Plan will be construed and enforced
according to the laws of the State of Ohio and the United States.
SECTION 14.07. CONSTRUCTION. If the Plan contains contradictory clauses
or if there appears to be a conflict between its provisions, the following rules
of construction will apply:
(a) The interpretation that favors the Plan as a tax-free retirement
plan and the deduction of Employer Contributions for federal income tax purposes
will prevail over any interpretation that might render the Plan taxable or
prevent that deduction.
(b) Subject to subsection (a), the rules established by the Supreme
Court of the State of Ohio for the construction of like instruments will apply.
SECTION 14.08. HEADINGS. The headings and subheadings in the Plan are
inserted for convenience of reference only and are not to be considered in the
construction of its provisions.
SECTION 14.09. COUNTERPARTS. The Plan may be executed in any number of
counterparts, each of which is an original. All counterparts constitute one and
the same instrument, sufficiently evidenced by any one counterpart.
SECTION 14.10. TREASURY QUALIFICATION. The Plan is designed to comply
with Code section 401(a) and will terminate automatically if (a) the Internal
Revenue Service issues a written determination that the Plan as initially
adopted is not qualified and the Corporate Benefits Committee elects not to
amend or further amend the Plan, or (b) the Internal Revenue Service fails to
issue, within one year following a request that the Internal Revenue Service
issue, a written determination of qualification. Upon termination of the Plan
under this Section, the Trust will terminate and all amounts contributed by the
Employer and Participants (adjusted for net earnings and losses) will be
returned to them.
-38-
B-38
<PAGE> 44
SECTION 14.11. DENIAL OF GUARANTY. There is no guarantee that the Trust
Fund will not incur losses or depreciate in value. Also, there is no guarantee
that any benefit or amount which may become due to any Member, Participant or
Beneficiary, or to any creditor of the Trust will be paid, nor does the Employer
or the Corporate Benefits Committee guarantee or assume any obligation to
enforce payment by any insurance company of any benefit or amount which may
become due under any insurance contract. Each Member or Beneficiary and any
creditor of the Trust may look only to the Trust Fund for payment. After a
Member's Distributable Credit has been fully distributed to him or to his
Beneficiary, or to the persons designated in Section 5.05, his interest in the
Trust Fund is extinguished. Neither the Company nor the Employer is liable in
any manner to any Member, Beneficiary or other person for any act or omission of
the Corporate Benefits Committee or Trustee.
-39-
B-39
<PAGE> 45
SUPPLEMENT A
IRS MODEL DIRECT ROLLOVER REVISIONS
(Effective January 1, 1996)
A.1 Rollover Requirements
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Supplement, a distributee may elect,
at the time and in the manner prescribed by the plan administrator, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
A.2 Definitions
(a) Eligible rollover distribution: An eligible rollover
distribution is any cash distribution of all or any portion of
the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not
includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
Employer securities).
(b) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
(c) Distributee: A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
-40-
B-40
<PAGE> 46
SUPPLEMENT B
IRS MODEL SECTION 401(a)17 LIMITATION
(Effective January 1, 1996)
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, the annual
compensation of each employee taken into account under the plan shall not exceed
the OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit
is $150,000, as adjusted by the Commissioner for increases in the cost of living
in accordance with section 401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which compensation is determined (determination
period) beginning in such calendar year. If a determination period consists of
fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied
by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in this plan
to the limitation under section 401(a)(17) of the Code shall mean the OBRA '93
annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account in
determining an employee's benefit accruing in the current plan year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
-41-
B-41
<PAGE> 47
SUPPLEMENT C
PERIOD OF LIMITED ACTIVITY
(Effective January 1, 1996)
This Supplement applies to Participants who were Participants in the
Robbins & Myers, Inc. Employee Savings Plan on December 31, 1995. During the
period beginning January 1, 1996 and ending as soon as practicable following the
transition to Vanguard administration, such Participants shall not be permitted
to take loans or any in-service withdrawals under the Plan.
-42-
B-42
<PAGE> 48
ROBBINS & MYERS, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
--------------------------------------
In consideration of their continued employment, ROBBINS &
MYERS, INC. (the "Company") agrees to provide each Executive a supplemental
retirement benefit under the terms described below.
The Company expressly intends that this program constitute an
unfunded, nonqualified program of deferred compensation for specified key
management employees as described in the Employee Retirement Income Security Act
of 1974, as amended.
SECTION 1. DEFINITIONS.
Unless defined below, each term used in this plan will have the meaning given to
it in the Robbins & Myers, Inc. Pension Plan in effect on the date of reference.
(a) BENEFICIARY means the person, persons or entity which the
Executive designates to receive death benefits under this Agreement in
the form and manner approved by the Committee. A designation of a
Beneficiary may be revoked or amended at any time in a similar manner.
If there is no effective designation, an Executive's Beneficiary will
be the person entitled to receive his death benefits under the
Qualified Plan or, if there is no such person, his estate.
(b) BOARD OF DIRECTORS means the Company's board of
directors.
(c) COMMITTEE means the compensation committee of the
Board of Directors.
(d) EXECUTIVE means each "Eligible Employee" (as defined
in the Qualified Plan) who is a key management employee of the
-43-
B-43
<PAGE> 49
Company or an affiliate and who has been designated by the President
and Chief Executive Officer of the Company as a participant in the
Plan.
(e) PLAN means the Robbins & Myers, Inc. Executive
Supplemental Retirement Plan.
(f) QUALIFIED PLAN means the Robbins & Myers, Inc. Pension
Plan, sometimes referred to below as the "Pension Plan," a
tax-qualified employee defined benefit pension plan sponsored by the
Company, of which the Executive is or has been a member.
(g) SUPPLEMENTAL PENSION means the payments under this
Agreement.
SECTION 2. SUPPLEMENTAL PENSION.
(a) NORMAL RETIREMENT. If the Executive severs from
Service on or after his Normal Retirement Date, the Company will pay to
him a monthly benefit for his life only equal to the benefit calculated
under the Qualified Plan in which the Executive is actively accruing
benefits on the date he severs from Service with the Company (or would
be accruing benefits but for section 415 of the Internal Revenue Code
of 1986, as amended ("Code")) as provided in Section 4.1(a) of the
Pension Plan (as modified in Exhibit A) without regard to:
(i) the limitation imposed on compensation under the
Qualified Plan by sections 401(a)(17) or 416(d) of the
Internal Revenue Code of 1986, as amended (the "Code"); or
(ii) the limitation imposed on benefits under the
Qualified Plan by section 415 of the Code
-44-
B-44
<PAGE> 50
reduced by the sum of benefits payable under the Qualified Plan. Once
earned, a benefit may not be changed without prior consent of the
Executive and the Board of Directors.
(b) EARLY RETIREMENT. If the Executive severs from Service on
or after his Early Retirement Date, the Company will pay him a monthly
benefit for his life only calculated under Section 2(a) and reduced as
provided in the Qualified Plan if benefits begin before the Executive's
Normal Retirement Date; provided, however, that if the Compensation
Committee of the Board of Directors of the Company so determines in its
sole and absolute discretion, with respect to an Executive who severs
from Service on or after his 62nd birthday with at least 8 years of
Vesting Service, the benefit payable under this Plan shall be
calculated in the manner described in paragraph (a) above.
(c) DISABILITY. If the Executive becomes Disabled before
severing from Service, he will receive a monthly calculated under
Section 2(a) as if he had continued to receive compensation at the rate
paid on his date of disability and continued to earn Credited Service
from his date of disability until the date benefits begin or the
earlier of the date the Committee consents to the payment of benefits
or his Normal Retirement Date.
(d) DEATH. If the Executive dies before severing from Service,
his Beneficiary will receive in a single lump sum payment the actuarial
equivalent of the benefit which would have been payable to the
Executive if he had reached his Normal Retirement Date on the day
before his death, reduced by
-45-
B-45
<PAGE> 51
the value of any death benefit payable under the Qualified Plan.
(e) TERMINATION FOR OTHER REASONS. If the Executive severs
from Service for any other reason before his Early Retirement Date and
before he has earned a nonforfeitable right to 100% of his benefits
under the Qualified Plan, he will irrevocably forfeit all benefits
under this program. If the Executive severs from Service for any reason
other than those described in paragraphs (a) through (d), after he has
earned a nonforfeitable right to 100% of his benefits under the
Qualified Plan, he will receive the benefit described in paragraph (a),
commencing on his Normal Retirement Date. The benefit payable under
this supplemental retirement plan
will be calculated as a lump sum (using the applicable assumptions from the
Pension Plan) as if that benefit and the retirement benefit payable under the
Qualified Plan begin at the same time. If the Executive elects another form of
payment under the Pension Plan, the benefit under this Plan shall be converted
to that form using the appropriate assumptions set forth in the Pension Plan.
Benefits from the Qualified Plan will be calculated under the terms of the
Qualified Plan in effect as of the date of calculation, ignoring any division of
benefits under the Qualified Plan pursuant to a Qualified Domestic Relations
Order (as defined in the Qualified Plan).
SECTION 3. RISK OF FORFEITURE. If the Executive, without the
express prior written consent of the Company, directly or
indirectly, individually or as an agent, officer, director,
employee, consultant, shareholder, or partner engages in any
-46-
B-46
<PAGE> 52
business or enterprise which is in competition with the Company during the time
of the Executive's employment with the Company or any of its affiliates or at
any time thereafter, all benefits accrued under this supplemental retirement
plan will be forfeited permanently and payment of benefits, if begun, will stop.
As used in this Section, (i) the words "Competition with the Company"
include competition with any subsidiary or affiliate of the Company, or their
successors or assigns, or the business of any of them, and (ii) a business or
enterprise will be in Competition with the Company if it is engaged, in any
state in the United States in which the Company's products are then marketed or
in any foreign country in which the Company's products are then marketed, in
manufacturing, designing, engineering, assembling or distributing pumps, oil
field power sections, industrial mixers and agitators, glass-lined reactor and
storage vessels, and valves. However, this section will not prevent the
Executive from (i) being employed by or serving as an officer of or consultant
to any subsidiary or division of a business or enterprise in Competition with
the Company if that subsidiary or division is not itself in Competition with the
Company; or (ii) purchasing or holding for investment less than 2% of the shares
of any corporation regularly traded either on a national securities exchange or
in the over-the-counter market.
The Executive also will forfeit any benefits accrued under this
supplemental retirement plan and payment of benefits, if begun, will stop if the
Executive, without the express prior written consent of the Company, discloses,
misappropriates, or makes available to anyone outside the Company at any time,
either
-47-
B-47
<PAGE> 53
during the Executive's employment with the Company or any of its affiliates or
subsequent to termination of employment, any trade secrets or confidential
information belonging to the Company or any of its affiliates. As used in this
Section, "confidential information" includes, but is not limited to, business
systems, methods, policies, procedures, manuals, promotional materials, price
lists, pricing policies, order forms, contracts, agreements, invoices, receipts,
messages, memoranda, circulars, bulletins, sales records for any assigned
territory, sale and delivery schedules, customer lists, customer files, customer
credit terms and information, any records regarding the solicitation of orders,
past, present or prospective orders or customers for the products and product
knowledge belonging to the Company or any of its affiliates (that is, the manner
in which products are made, purchased, prepared and used) to the extent that any
of these items are used by the Company or any of its affiliates in this business
and which become known to the Executive by reason of his or her employment or
otherwise.
SECTION 4. ADMINISTRATION. The Committee is responsible for the general
interpretation and administration of this Agreement and the carrying out of its
provisions, and has all rights and powers required in that connection.
SECTION 5. TITLE TO FUNDS. The Executive's rights under this Agreement
are not funded or secured by any fund, trust or other property. Benefits will be
paid by the Company to the Executive or to his Beneficiary when due, out of its
general assets, which are subject to the rights of the general creditors of the
Company.
SECTION 6. GENERAL PROVISIONS.
-48-
B-48
<PAGE> 54
(a) NON-ALIENATION OF BENEFITS. No benefit payable under this
Agreement and no right or privilege under this Agreement may be
anticipated, alienated, sold, transferred, signed, pledged, garnished,
encumbered or charged by the Executive, and any attempt to do so will
be void.
(b) AMENDMENT; TERMINATION. No modification or amendment of
any provision of this Agreement will be effective unless made in
writing and signed by both parties. When an Executive severs from
Service, he will cease to earn additional benefits under this program,
except as provided in paragraph 2(c). If the Executive is reemployed
after severing from Service (whether or not he incurs a
Break-in-Service as defined in the Qualified Plan), he may earn
benefits attributable to his subsequent period of employment only if
the Committee again extends this program to him.
(c) NON-DUPLICATION. No Executive may receive a benefit
under this Plan if he receives a benefit under the Robbins &
Myers, Inc. Executive Supplemental Pension Program.
(d) SUCCESSOR; BINDING AGREEMENT. This Agreement and the
obligations hereunder are binding on the Company and its successors and
assigns. In the case of a merger, consolidation, sale of all or
substantially all of its assets, liquidation or other reorganization of
the Company under circumstances in which a successor person, firm or
company (a) continues all or a substantial part of the Company's
business and (b) employs a substantial number of the Company's
employees, the successor will be substituted for the Company under this
Agreement. The Company will require any successor
-49-
B-49
<PAGE> 55
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the
Company, by agreement in form and substance reasonably satisfactory to
Executive, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
(e) ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, will be settled by
arbitration in Dayton, Ohio, in accordance with the Rules of the
American Arbitration Association, and judgment upon the award rendered
by the Arbitrator(s) may be entered in any court having jurisdiction
thereof.
(f) APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of Ohio and the
United States of America.
(g) PROGRAM NOT A CONTRACT OF EMPLOYMENT. Neither the adopting
of this supplemental pension program nor the payment of any benefit
gives any legal or equitable right to any person against the Company,
any affiliate of the Company or their officers or employees except as
provided in this document. Participation in the program does not give
any Executive any right to continued employment.
IN WITNESS WHEREOF, Robbins & Myers, Inc. has executed this document
this ___ day of ______________, 1996.
ROBBINS & MYERS, INC.
-50-
B-50
<PAGE> 56
By: ________________________
Title:______________________
-51-
B-51
<PAGE> 57
AGREEMENT OF EXECUTIVE
The undersigned hereby agrees to be designated as an Executive
participating in the foregoing Robbins & Myers, Inc. Executive Supplemental
Retirement Plan and to be bound by the terms and provision of said Program.
_________________________________
Executive
Date: ___________________________
-52-
B-52
<PAGE> 58
EXHIBIT A
For purposes of calculating an Executive's benefit under Section 4.1(a)
of the Pension Plan, the following rules apply:
(a) The amount of an Executive's Credited Service shall be
determined by multiplying the Executive's Credited Service, as
determined under the terms of the Pension Plan, by the percentage set
forth in the following table:
<TABLE>
<S> <C>
Daniel Duval 150%
Gerald L. Connelly 130%
George M. Walker 130%
Hugh E. Becker 130%
</TABLE>
In no event shall the total Credited Service of an Executive exceed 35
years after application of the above table.
(b) The amount of an Executive's Final Average Earnings shall
be calculated taking into account any elective deferred compensation
for the applicable period.
-53-
B-53
<PAGE> 1
Exhibit 10.10
ROBBINS & MYERS, INC.
---------------------
1994 LONG-TERM INCENTIVE STOCK PLAN, AS AMENDED
-----------------------------------------------
(PLAN DOCUMENT AS AMENDED THROUGH 11/6/96)
<PAGE> 2
1994 LONG-TERM INCENTIVE STOCK PLAN, AS AMENDED
-----------------------------------------------
SECTION 1. PURPOSE
- -------------------
The purpose of this 1994 Long-Term Incentive Stock Plan, As
Amended (the "Plan") is to promote the long-term success of Robbins & Myers,
Inc. (the "Company") by providing financial incentives to key employees of the
Company and its subsidiaries who are in positions to make significant
contributions toward such success. The Plan is designed to attract individuals
of outstanding ability to employment with the Company and its subsidiaries and
to encourage key employees to acquire a proprietary interest in the Company
through stock ownership, to continue employment with the Company and its
subsidiaries, and to render superior performance during such employment. To
accomplish the purposes of the Plan, the Board of Directors of the Company
establishes the Plan and authorizes the Committee referred to in Section 4 to
administer the Plan in such manner and on such conditions as it deems
appropriate, subject to the provisions of the Plan.
The Plan was originally adopted by the Board of Directors on
October 6, 1993. Effective September 1, 1996, the Plan is hereby amended and
restated as set forth below.
SECTION 2. DEFINITIONS
- -----------------------
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" means and shall be deemed to have
occurred on (i) the date upon which the Company is provided a copy of a Schedule
13D, filed pursuant to Section 13(d) of the Securities Exchange Act of 1934
indicating that a group or person, as defined in Rule 13d-3 under said Act, has
become the beneficial owner of 20% or more of the outstanding Voting Shares or
the date upon which the Company first learns that a person or group has become
the beneficial owner of 20% or more of the outstanding Voting Shares if a
Schedule 13D is not filed; (ii) the date of a change in the composition of the
Board such that individuals who were members of the Board on the date two years
prior to such change (or who were subsequently elected to fill a vacancy in the
Board, or were subsequently nominated for election by the Company's
shareholders, by the affirmative vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such two year
period) no longer constitute a majority of the Board; (iii) the date the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the Voting Shares of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Shares of the surviving entity) at least 80% of the total voting
power represented by the Voting Shares of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or (iv) the date
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
<PAGE> 3
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the committee referred to in Section 4.
(e) "Company" means Robbins & Myers, Inc., an Ohio
corporation, and when used with reference to employment of a Participant,
Company includes any Subsidiary of the Company.
(f) "Employee" means any key employee of the Company or any of
its Subsidiaries.
(g) "Fair Market Value" means the last sale price of a Share
on the date when the value of a Share is to be determined, as reported in the
NASDAQ National Market System (or any exchange or other system on which the
Shares may then be listed); or, if no sale is reported for such date, then it
shall be the mean of representative bid and asked price for such Shares in such
system at the close of business on such date; or if the Shares are no longer
listed in such system (or on an exchange), the determination of such value shall
be made by the Committee in accordance with applicable provisions of the Code
and related regulations promulgated under the Code.
(h) "Gross Misconduct" means engaging in any act or acts
involving conduct which violates Company policy or is illegal and which results,
directly or indirectly, in personal gain to the individual involved at the
expense of the Company or a Subsidiary.
(i) "Incentive Award" means an Option, Restricted Share Award
or Performance Award granted under the Plan.
(j) "Incentive Stock Option" means an Option that is an
Incentive Stock Option, as defined in Section 422A of the Code.
(k) "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option.
(l) "Option" means a right to purchase Shares at a specified
price; "Optionee" means the holder of an Option.
(m) "Participant" means an Employee selected to receive an
Incentive Award.
(n) "Performance Award" means a right to receive Restricted
Shares, Shares, cash, or a combination thereof, contingent upon the attainment
of performance objectives determined in the discretion of the Committee as more
fully set forth at Section 8 hereof.
-2-
<PAGE> 4
(o) "Restricted Share Award" means a right to receive Shares
that is nontransferable and subject to substantial risk of forfeiture until
specific conditions are met; "Restricted Shares" means Shares which are the
subject of a Restricted Share Award; and "Restricted Period" shall have the
meaning ascribed to it at Section 7(a).
(p) "Shares" means the Common Shares of the Company.
(q) "Subsidiary" means any company more than 50% of the voting
stock of which is owned or controlled, directly or indirectly, by the Company.
(r) "Voting Shares" means any securities of the Company which
vote generally in the election of directors of the Company.
SECTION 3. SHARES SUBJECT TO THE PLAN
- --------------------------------------
(a) MAXIMUM NUMBER-AGGREGATE. The maximum number of Shares
that may be subject to Incentive Awards granted pursuant to the Plan shall be
one million (1,000,000), subject to adjustment in accordance with Section 3(c).
The Shares which may be issued pursuant to Incentive Awards may be authorized
and unissued Shares or Shares held in the Company's treasury. In the event of a
lapse, expiration, termination, or cancellation of any Incentive Award granted
under the Plan without the issuance of Shares or the payment of cash, or if
Shares are issued under a Restricted Share Award and are reacquired by the
Company as a result of rights reserved upon the issuance thereof, the Shares
subject to or reserved for such Incentive Award shall no longer be charged
against the 1,000,000 Share maximum and may again be used for new Incentive
Awards.
(b) MAXIMUM NUMBER-PER EMPLOYEE. The maximum Incentive
Awards that may be granted to each Employee in each fiscal year of the Company
commencing on or after September 1, 1996, is as follows:
(i) With respect to Options, no more than 100,000
may be granted;
(ii) With respect to Restricted Shares (not issued
in connection with Performance Awards), no more than $500,000
of such Shares may be granted; and
(iii) With respect to Performance Awards, no more
than $1,000,000 of Performance Shares may be granted (based on
the Fair Market Value of Shares on the date the award is
granted, not the date the award is earned or paid).
(c) RECAPITALIZATION ADJUSTMENT. In the event of any change
affecting the Shares by reason of any share dividend or split, recapitalization,
merger,
-3-
<PAGE> 5
consolidation, spin-off, combination or exchange of Shares or other corporate
change, or any distribution to a holder of Shares other than ordinary cash
dividends, the Committee shall make such adjustment, if any, as it may deem
appropriate to avoid dilution in the number and kind of shares authorized for
issuance under the Plan, in the number and kind of shares covered by Incentive
Awards and, in the case of Options, in the option price.
SECTION 4. ADMINISTRATION
- --------------------------
(a) COMMITTEE. The Plan shall be administered by a Committee
of the Board, comprised of three or more directors, who shall from time to time
be appointed by, and serve at the pleasure of, the Board. Each director serving
on the Committee shall be a "non-employee director" within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934 and an "outside
director" within the meaning of Code Section 162(m).
(b) AUTHORITY. The Committee shall have and exercise all the
power and authority granted to it under the Plan. Subject to the provisions of
the Plan, the Committee shall have authority in its sole discretion from time to
time (i) to designate from Employees the persons to whom Incentive Awards are
granted; (ii) to prescribe such limitations, restrictions and conditions upon
any such awards as the Committee shall deem appropriate, including establishing
and administering Performance Goals, as defined in Section 8(a), and certifying
whether the Performance Goals have been attained; (iii) to interpret the Plan
and to adopt, amend and rescind rules and regulations relating to the Plan; and
(iv) to make all other determinations and take all other actions necessary or
advisable for the implementation and administration of the Plan.
(c) COMMITTEE ACTIONS. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members present at a
meeting at which a quorum is present, or acts reduced to or approved in writing
by all members of the Committee, shall be acts of the Committee. All such
actions shall be final, conclusive, and binding. No member of the Committee
shall be liable for any action taken or decision made in good faith relating to
the Plan or any Incentive Award thereunder.
(d) INTERPRETATION AND CONSTRUCTION. Any provision of this
Plan to the contrary notwithstanding, (i) certain designated Incentive Awards
under this Plan are intended to qualify as performance-based compensation within
the means of Code Section 162(m)(4)(C) and (ii) any provision of the Plan that
would prevent a designated Incentive Award from so qualifying shall be
administered, interpreted and construed to carry out such intention and any
provision that cannot be so administered, interpreted and construed shall to
that extent be disregarded.
SECTION 5. ELIGIBILITY AND INCENTIVE AWARDS
- --------------------------------------------
(a) ELIGIBLE EMPLOYEES. The Committee may grant
Incentive Awards to officers and other key Employees.
-4-
<PAGE> 6
(b) INCENTIVE AWARDS. Incentive Awards may be granted in any
one or more combinations of (i) Incentive Stock Options, (ii) Nonqualified Stock
Options, (iii) Restricted Share Awards and (iv) Performance Awards. All
Incentive Awards shall be subject to such other terms and conditions as may be
established by the Committee. Determinations by the Committee under the Plan,
including without limitation, designation of Participants, the form, amount and
timing of Incentive Awards, the terms and provisions of Incentive Awards, and
the written agreements evidencing Incentive Awards, need not be uniform and may
be made selectively among Employees who receive, or are eligible to receive,
Incentive Awards hereunder, whether or not such Employees are similarly
situated.
(c) EMPLOYMENT. The Plan and the Incentive Awards granted
hereunder shall not confer upon any Employee the right to continued employment
with the Company or affect in any way the right of the Company to terminate the
employment of an Employee at any time and for any reason.
SECTION 6. OPTIONS
- -------------------
The Committee may grant Incentive Stock Options and
Nonqualified Stock Options and such Options shall be subject to the following
terms and conditions and such other terms and conditions as the Committee may
prescribe:
(a) OPTION PRICE. The option price per Share with respect to
each Option shall be determined by the Committee but shall not be less than the
Fair Market Value of a Share on the date the Option is granted.
(b) PERIOD OF OPTION. The period of each Option shall be fixed
by the Committee but in no case may an option be exercised more than ten years
after the date of its grant.
(c) EXERCISE OF OPTION. Subject to the provisions of Section
6(d) relating to continuous employment, an Option may be exercised with respect
to all Shares covered thereby or may be exercised with respect to a specified
number of Shares over a specified period or periods as determined by the
Committee. Any Shares not purchased during a specified period may be purchased
thereafter at any time prior to the expiration of the Option unless the
Committee determines otherwise. The Committee may at any time remove or alter
any restriction on exercise of an Option which was imposed by the Committee.
(d) TERMINATION OF EMPLOYMENT. No Option may be exercised
under the Plan unless the Optionee has been continuously employed by the Company
from the date of grant of the Option to the date of exercise except that an
Option may, subject to the ten year limitation at Section 6(b), be exercised (i)
within 30 days after the Optionee ceases to be employed by the Company if the
cause of cessation of employment was other than retirement, disability, death or
termination of employment by the Company
-5-
<PAGE> 7
for Gross Misconduct; (ii) within one year of cessation of employment in the
case of early retirement except that the Committee may, in its discretion, in
the case of early retirement, extend the period of exercise to a date not more
than three years after cessation of employment; and (iii) within three years of
cessation of employment in the case of normal retirement, death or disability.
After termination of employment Options may be exercised only to the extent they
could have been exercised on the date of the Optionee's termination of
employment. Whether authorized leave of absence or absence for military or
governmental service shall constitute a termination of employment shall be
determined by the Committee.
(e) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may be
permitted by the Code, the Fair Market Value of Shares (determined at the time
of grant of Options) as to which Incentive Stock Options held by an Optionee
first become exercisable in any calendar year shall not exceed $100,000. In
addition, no Incentive Stock Option shall be granted to an Employee who
possesses, directly or indirectly (within the meaning of Code Section 424(d)),
at the time of grant more than 10% of the combined voting power of all classes
of stock of the Company unless the option price is at least 110% of the Fair
Market Value of the Shares subject to the Option on the date such Option is
granted and such Incentive Stock Option is not exercisable after the expiration
of five years from the date of grant.
(f) NOTICE OF EXERCISE AND PAYMENT. An Option granted under
the Plan may be exercised by the Optionee giving written notice of exercise to
the Committee. The Option price for the Shares purchased shall be paid in full
at the time such notice is given. An Option shall be deemed exercised on the
date the Committee receives written notice of exercise, together with full
payment for the Shares purchased. The Option price shall be paid to the Company
either in cash, by delivery to the Company of Shares already-owned by the
Optionee or any combination of cash and such Shares. The Committee may,
however, at any time and in its discretion, adopt guidelines limiting or
restricting the use of already-owned Shares to pay all or any portion of the
Option price. In the event already-owned Shares are used to pay all or a
portion of the Option price, the amount credited to payment of the Option price
shall be the Fair Market Value of the already-owned Shares on the date the
Option is exercised.
(g) FRACTIONAL SHARES. No fractional shares shall be
issued pursuant to the exercise of an Option, nor shall any cash
payment be made in lieu of fractional shares.
SECTION 7. RESTRICTED SHARE AWARDS
- -----------------------------------
The Committee may issue Shares to an Employee which Shares
shall be subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe in connection with the grant of a
Restricted Share Award:
-6-
<PAGE> 8
(a) GENERAL. With respect to each grant of Restricted Shares,
the Committee, in its sole discretion, shall determine the period during which
the restrictions set forth at Subsection 7(b) shall apply to the Restricted
Shares (the "Restricted Period").
(b) RESTRICTIONS. At the time of grant of Restricted Shares to
an Employee, a certificate representing the number of Shares granted shall be
registered in his name but shall be held by the Company for the account of the
Employee. The Employee shall have the entire beneficial ownership interest in,
and all rights and privileges of a shareholder as to, such Restricted Shares,
including the right to receive dividends and the right to vote such Restricted
Shares, subject to the following restrictions: (i) subject to Section 7(c), the
Employee shall not be entitled to delivery of the Share certificate until the
expiration of the Restricted Period; (ii) none of the Restricted Shares may be
sold, transferred, assigned, pledged, or otherwise encumbered or disposed of
during the Restricted Period; and (iii) all of the Restricted Shares shall be
forfeited and all rights of the Employee to such Restricted Shares shall
terminate without further obligation on the part of the Company unless the
Employee remains in the continuous employment of the Company for the entire
Restricted Period in relation to which such Restricted Shares were granted,
except as provided by Section 7(c). Any Shares received with respect to
Restricted Shares as a result of a recapitalization adjustment pursuant to
Section 3(b) shall be subject to the same restrictions as such Restricted
Shares.
(c) TERMINATION OF EMPLOYMENT.
--------------------------
(i) RETIREMENT. If an Employee ceases to be
employed by the Company prior to the end of a Restricted
Period by reason of normal retirement under a retirement plan
of the Company or the Employee otherwise retires with the
consent of the Company, the number of Restricted Shares
granted to such Employee for such Restricted Period shall be
reduced in proportion to the Restricted Period (determined on
a quarterly basis) remaining after the Employee ceases to be
an Employee and all restrictions on such reduced number of
Shares shall lapse. A certificate for such Shares shall be
delivered to the Employee in accordance with the provisions of
Section 7(d) hereof. The Committee may, if it deems
appropriate, direct that the Employee receive a greater number
of Shares free of all restrictions but not exceeding the
number of Restricted Shares then subject to the restrictions
of Section 7(b).
(ii) DEATH. If an Employee ceases to be employed by
the Company prior to the end of a Restricted Period by reason
of death, the Restricted Shares granted to such Employee shall
immediately vest in his beneficiary or estate and all
restrictions applicable to such Shares shall lapse. A
certificate for such Shares shall be delivered to the
Employee's beneficiary or estate in accordance with the
provisions of Subsection 7(d).
-7-
<PAGE> 9
(iii) ALL OTHER TERMINATIONS. If an Employee ceases
to be an Employee prior to the end of a Restricted Period for
any reason other than retirement or death, the Employee shall
immediately forfeit all Restricted Shares then subject to the
restrictions of Section 7(b) in accordance with the provisions
thereof, except that the Committee may, if it finds that the
circumstances in the particular case so warrant, allow an
Employee whose employment has so terminated to retain any or
all of the Restricted Shares then subject to the restrictions
of Section 7(b) and all restrictions applicable to such
retained shares shall lapse. A certificate for such retained
shares shall be delivered to the Employee in accordance with
the provisions of Section 7(d).
(d) PAYMENT OF RESTRICTED SHARES. At the end of the Restricted
Period or at such earlier time as provided for in Subsection 7(c), all
restrictions applicable to the Restricted Shares shall lapse and a Share
certificate for a number of Shares equal to the number of Restricted Shares,
free of all restrictions, shall be delivered to the Employee or his beneficiary
or estate, as the case may be. The Company shall not be required to deliver any
fractional Share but will pay, in lieu thereof, the Fair Market Value (measured
as of the date the restrictions lapse) of such fractional Share to the Employee
or his beneficiary or estate, as the case may be.
SECTION 8. PERFORMANCE AWARDS
- -----------------------------
The Committee may grant to Employees Performance Awards which
shall be subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe in connection with the grant of a
Performance Award:
(a) AWARD PERIOD AND PERFORMANCE GOALS. The Committee shall
determine and include in a Performance Award the period of time during which a
Performance Award may be earned ("Award Period"). The Committee shall also
establish performance objectives ("Performance Goals") to be met by the Company,
Subsidiary or division during the Award Period as a condition to payment of the
Performance Award. The Performance Goals may include minimum and optimum
objectives or a single set of objectives.
With respect to Performance Awards that are intended to
qualify as "performance based" within the meaning of Code Section 162(m)(4)(C),
the Committee shall (i) select the Employees for such Incentive Awards, (ii)
establish in writing the applicable performance goals no later than 90 days
after the commencement of the period of service to which the performance goals
relates (or such earlier or later date as may be the applicable deadline for
compensation payable hereunder to qualify as "performance based" within the
meaning of Code Section 162(m)(4)(C)), and (iii) designate the Performance
Awards that are to qualify as "performance based" within the meaning of Code
Section 162(m)(4)(C).
-8-
<PAGE> 10
The Committee shall establish in writing the Performance Goals
for each Award Period commencing on or after September 1, 1996, which shall be
based on any of the following performance criteria, either alone or in any
combination, on either a consolidated or business unit or divisional level, and
which shall include or exclude discontinued operations and acquisition expenses
(e.g., pooling of interests), as the Committee may determine: level of sales,
earnings per share, income before income taxes and cumulative effect of
accounting changes, income before cumulative effect of accounting changes, net
income, return on assets, return on equity, return on capital employed, total
stockholder return, market valuation, cash flow and completion of acquisitions.
The foregoing criteria shall have any reasonable definitions that the Committee
may specify, which may include or exclude any or all of the following items, as
the Committee may specify: extraordinary, unusual or non-recurring items;
effects of accounting changes; effects of currency fluctuations; effects of
financing activities (e.g., effect on earnings per share of issuing convertible
debt securities); expenses for restructuring or productivity initiatives;
non-operating items; acquisition expenses (e.g., pooling of interests); and
effects of divestitures. Any such performance criterion or combination of such
criteria may apply to the participant's award opportunity in its entirety or to
any designated portion or portions of the award opportunity, as the Committee
may specify.
(b) NO DISCRETION. With respect to Performance Awards that are
intended to qualify as "performance based" within the meaning of Code Section
162(m)(4)(C), the Committee has no discretion to increase the amount of the
award due upon attainment of the applicable performance goals. No provision of
this Plan shall preclude the Committee from exercising negative discretion with
respect to any award hereinafter (I.E., to reduce or eliminate the award
payable) within the meaning of Treasury Regulation Section
1.162-27(e)(2)(iii)(A).
(c) PERFORMANCE AWARD EARNED. The Performance Awards shall be
expressed in terms of Shares and referred to as "Performance Shares". With
respect to each Performance Award, the Committee shall fix the number of
allocable Performance Shares. The level of Performance Goals attained will
determine the percentage of Performance Shares earned for an Award Period. After
completion of the Award Period, the Committee shall certify in writing the
extent to which the Performance Goals and other material terms applicable to
such award are attained. Unless and until the Committee so certifies, the
Performance Award shall not be paid.
(d) PERFORMANCE AWARD PAYMENT. The Committee, in its
discretion, may elect to make payment of the Performance Awards in Restricted
Shares, Shares, cash or any combination of the foregoing. If the Performance
Award is paid in Shares or Restricted Shares, the Company shall issue one Share
or Restricted Share for each Performance Share earned. If the Performance Award
is paid in cash, the cash payable shall be equal to the Fair Market Value of the
Performance Shares earned as of the last day of the Award Period.
-9-
<PAGE> 11
(e) REQUIREMENT OF EMPLOYMENT. A grantee of a Performance
Award must remain in the employment of the Company until the completion of the
Award Period in order to be entitled to payment under the Performance Award;
provided that the Committee may, in its sole discretion, provide for a partial
or full payment of the Performance Award that would have been payable if the
grantee had continued employment for the entire Award Period, which shall be
paid at the same time as would have been paid if no termination of employment
occurred, but only if and to the extent the exercise of such discretion does not
prevent any designated Incentive Award from qualifying as "performance based"
within the meaning of Code Section 162(m)(4)(C).
(f) DIVIDENDS. The Committee may, in its discretion, at the
time of the granting of a Performance Award, provide that any dividends declared
on Shares during the Award Period, and which would have been paid with respect
to Performance Shares had they been owned by a grantee, be (i) paid to the
grantee, or (ii) accumulated for the benefit of the grantee and used to increase
the number of Performance Shares of the grantee.
(g) DELAYED PAYMENT. To the extent that the Committee, in its
sole discretion, determines that the payment of any Performance Award is not
deductible by the Company based on Code Section 162(m), the Company shall delay
the payment of such Performance Award. The unpaid portion of a Performance Award
that is subject to this Section 8(g) shall be paid (in whole or in part), at the
discretion of the Committee, when such payment is deductible in accordance with
Code Section 162(m). This provision shall apply to all Performance Awards
granted with respect to an Award Period commencing on or after September 1,
1993.
The delayed payment of a Performance Award payable in Shares
or Restricted Shares shall be equal to the number of Performance Shares earned
but unpaid. The delayed payment of a Performance Award payable in cash shall be
equal to the Fair Market Value of the earned but unpaid Performance Shares as of
the appropriate payment date selected by the Committee.
SECTION 9. NON-ASSIGNABILITY OF INCENTIVE AWARDS
- -------------------------------------------------
(a) Except as provided in Section 9(b) with respect to
Nonqualified Stock Options, no Incentive Award granted under the Plan shall be
assigned, transferred, pledged, or otherwise encumbered by an Employee,
otherwise than by will, by designation of a beneficiary after death, or by the
laws of descent and distribution, or be made subject to execution, attachment or
similar process. Except as provided in Section 9(b) with respect to Nonqualified
Stock Options, each Incentive Award shall be exercisable during the Employee's
lifetime only by the Employee or, if permissible under applicable law, by the
Employee's guardian or legal representative.
(b) No Nonqualified Stock Option nor any right thereunder may
be assigned or transferred by the optionee except by will or the laws of descent
and
-10-
<PAGE> 12
distribution or pursuant to a qualified domestic relations order (as defined in
the Code or the Employee Retirement Income Security Act of 1974), provided,
however, the Committee may by written action permit any holder of a Nonqualified
Stock Option, either before or after the time of grant, to transfer a
Nonqualified Stock Option during his lifetime to one or more members of his
family, to one or more trusts for the benefit of one or more members of his
family, or to a partnership or partnerships of members of his family, provided
that no consideration is paid for the transfer and that such transfer would not
result in the loss of any exemption under Rule 16b-3 for any option granted
under any plan of the Company. The transferee of a Nonqualified Stock Option
shall be subject to all restrictions, terms and conditions applicable to the
Nonqualified Stock Option prior to its transfer. The Committee may impose on any
transferable Nonqualified Stock Option and on the shares to be issued upon the
exercise of a Nonqualified Stock Option such limitations and conditions as the
Committee deems appropriate.
SECTION 10. CHANGE OF CONTROL
- ------------------------------
(a) GENERAL. In order to maintain all of the Employee's rights
in the event of a Change of Control of the Company, the Committee, in its sole
discretion, may, as to any Incentive Award, either at the time that an Incentive
Award is made or any time thereafter, take any one or more of the following
actions:
(i) provide for the acceleration of any time periods
relating to the exercise or realization of any such award, so
that such award may be exercised or realized in full on or
before a date fixed by the Committee,
(ii) provide for the purchase of any such award by
the Company, upon an Employee's request, for an amount of cash
equal to the amount that could have been attained upon the
exercise of such award or realization of such Employee's
rights had such award been currently exercisable or payable,
(iii) make such adjustment to any such award then
outstanding as the Committee deems appropriate to
reflect a Change of Control, or
(iv) cause any such award then outstanding to be
assumed, or new rights substituted therefor, by the acquiring
or surviving corporation, if any, in connection with a Change
of Control.
(b) OPTIONS. All outstanding Options which are not
yet exercisable shall become immediately exercisable in full in
the event of a Change of Control of the Company.
SECTION 11. TAXES
- ------------------
-11-
<PAGE> 13
(a) WITHHOLDING FOR TAXES. The Company shall be entitled, if
necessary or desirable, to withhold the amount of any tax attributable to any
amounts payable under any Incentive Award and the Company may defer making
payment of any Incentive Award if any such tax, charge, or assessment may be
pending until indemnified to its satisfaction.
(b) USE OF SHARES FOR TAX WITHHOLDING PAYMENTS. With the
approval of the Committee, Shares may be used in lieu of cash to pay all or any
part of the federal, state or local withholding tax payments (whether mandatory
or permissive) to be made by the Employee in connection with an Incentive Award
(up to a maximum amount determined by the Employee's marginal tax rate), as
follows:
(i) NONQUALIFIED STOCK OPTIONS. (a) The holder of a
Nonqualified Stock Option may elect to have the Company retain
from the Shares to be issued upon exercise of such an option
Shares having a Fair Market Value equal to the withholding tax
to be paid; or (b) the holder of a Nonqualified Stock Option
may deliver to the Company already-owned Shares having a Fair
Market Value equal to the withholding tax to be paid and in
such case, the election to use already-owned Shares for such
purpose and the exercise of the Nonqualified Stock Option may
occur at any time.
(ii) RESTRICTED SHARE AWARDS. If withholding taxes
are required to be paid at the time Restricted Shares are
delivered to an Employee or at the expiration of the
Restricted Period, then the Employee may pay such taxes by
delivering to the Company already-owned Shares having a Fair
Market Value equal to the amount of the withholding tax being
paid by the use of already-owned Shares.
(iii) PERFORMANCE SHARES. If withholding taxes are
required to be paid at the time Shares are delivered to an
Employee as a Performance Award, then the Employee may pay
such taxes by delivering to the Company already-owned Shares
having a Fair Market Value equal to the amount of the
withholding tax being paid by the use of already-owned Shares.
SECTION 12. COMPLIANCE WITH LAWS AND EXCHANGE REQUIREMENTS
- -----------------------------------------------------------
No Option shall be granted and no Shares shall be issued in
connection with any Incentive Award unless the grant of the Option and the
issuance and delivery of Shares or cash pursuant to the Incentive Award shall
comply with all relevant provisions of state and federal law, including, without
limitation, the Securities Act of 1933, the Securities Exchange Act of 1934, the
rules and regulations promulgated thereunder, and the requirements of any market
system or stock exchange upon which the Shares may then be listed.
-12-
<PAGE> 14
SECTION 13. AMENDMENT AND TERMINATION OF PLAN
- ----------------------------------------------
(a) AMENDMENT. The Board may from time to time amend the Plan,
or any provision thereof, in such respects as the Board may deem advisable
except that it may not amend the Plan without shareholder approval so as to:
(i) increase the maximum number of Shares that may be
issued under the Plan except in accordance with Section
3(b);
(ii) materially increase the benefits accruing to
officers or directors of the Company under the Plan;
(iii) materially modify the requirements as to
eligibility of officers or directors of the Company for
participation in the Plan; or
(iv) prevent future grant of Incentive Awards to qualify as
"performance based" within the meaning of Code Section 162(m)(4)(C).
(b) TERMINATION. The Board may at any time terminate
the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any amendment or the
termination of the Plan shall not adversely affect any Incentive Award
previously granted nor disqualify an Incentive Award from being treated as
"performance based" within the meaning of Code Section 162(m)(4)(C). Incentive
Awards outstanding at the time that the Plan is amended or terminated shall
remain in full force and effect as if the Plan had not been amended or
terminated.
SECTION 14. NOTICES
- --------------------
Each notice relating to the Plan shall be in writing and
delivered in person or by certified or registered mail to the proper address.
Each notice to the Committee shall be addressed as follows: Robbins & Myers,
Inc., 1400 Kettering Tower, Dayton, Ohio 45423, Attention: Compensation
Committee. Each notice to a Participant shall be addressed to the Participant at
the address of the Participant maintained by the Company on its books and
records. Anyone to whom a notice may be given under this Plan may designate a
new address by written notice to the other party to that effect.
SECTION 15. BENEFITS OF PLAN
- -----------------------------
This Plan shall inure to the benefit of and be binding upon
each successor of the Company. All rights and obligations imposed upon a
Participant and all rights granted to the Company under this Plan shall be
binding upon the Participant's heirs, legal representatives and successors.
-13-
<PAGE> 15
SECTION 16. PRONOUNS AND PLURALS
- ---------------------------------
All pronouns shall be deemed to refer to the masculine,
feminine, singular or plural, as the identity of the person or persons may
require.
SECTION 17. SHAREHOLDER APPROVAL AND TERM OF PLAN
- --------------------------------------------------
(a) The Plan and amendments shall become effective upon its
adoption by the Board. No payment of cash or Shares in connection with an
Incentive Award shall be made, and no Option shall be exercised, prior to the
approval of the Plan by the affirmative vote of the holders of a majority of the
outstanding Shares entitled to notice and to vote at an annual meeting of the
shareholders of the Company. Unless the Plan shall be so approved by the
shareholders of the Company at the next annual meeting after its adoption by the
Board, the Plan shall terminate and all Incentive Awards granted under the Plan
shall be cancelled.
(b) With respect to Incentive Awards granted on or after
September 1, 1996, no payment of cash or Shares shall be made and no Option
shall be exercised prior to the reapproval of the Plan by the affirmative vote
at an annual meeting of the outstanding Shares entitled to notice and to vote at
an annual meeting of the shareholders of the Company in 1996.
(c) Unless sooner terminated under Section 13, the Plan shall
be in effect for a period of five years and automatically terminate on the fifth
anniversary of its approval by the Shareholders.
-14-
<PAGE> 1
Exhibit 10.12
ROBBINS & MYERS, INC.
SENIOR EXECUTIVE ANNUAL CASH BONUS PLAN
---------------------------------------
1. Purpose
-------
This document sets forth the annual incentive plan applicable to those
employees of Robbins & Myers, Inc. (the "Company") and its subsidiaries who are
executive officers of the Company and whose annual incentive compensation for
any taxable year of the Company commencing on or after September 1, 1996 the
Committee (as hereafter defined) anticipates would not be deductible by the
Company due to Section 162 of the Internal Revenue Code of 1986, as amended
("Covered Employees"), including members of the Board of Directors who are such
employees. This plan is hereafter referred to as the "Plan" or "Annual Incentive
Plan."
The Plan is designed to reward, through additional cash compensation,
Covered Employees for their significant contribution toward improved
profitability and growth of the Company.
2. Eligibility
-----------
All Covered Employees shall be eligible to be selected to participate
in this Annual Incentive Plan. The Committee shall select the Covered Employees
who shall participate in this Plan in any year no later than 90 days after the
commencement of the fiscal year of the Company (or no later than such earlier or
later date as may be the applicable deadline for the compensation payable to
such Covered Employee for such year hereunder to qualify as "performance based"
under Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the
"Code")).
A Covered Employee participating in this Plan shall not participate in
an Annual Incentive Plan established by the Company for all key employees.
3. Administration
--------------
The Plan shall be administered by the Compensation Committee of the
Board of Directors (the "Board"), or by another committee appointed by the Board
(the "Committee"). The Committee shall be comprised exclusively of Directors who
are not employees and who are "outside directors" within the meaning of Section
162(m)(4)(C) of the Code. The Committee shall have authority, subject to the
provisions herein, to select employees to participate herein; establish and
administer the performance goals and the award opportunities applicable to each
participant and certify whether the goals have been attained; construe and
interpret the Plan and any agreement or instrument entered into under the Plan;
establish, amend, and waive rules and regulations for the Plan's
administration; and make all other determinations which may be necessary or
advisable for the administration of the Plan. Any determination by
<PAGE> 2
Committee pursuant to the Plan shall be final, binding and conclusive on all
employees and participants and anyone claiming under or through any of them.
4. Establishment Of Performance Goals And Award Opportunities
----------------------------------------------------------
No later than 90 days after the commencement of each year commencing on
or after September 1, 1996 (or than such earlier or later date as may be the
applicable deadline for compensation payable hereunder for such year to qualify
as "performance-based" under Section 162(m)(4)(C) of the Code), the Committee
shall establish in writing the method for computing the amount of compensation
which will be payable under the Plan to each participant in the Plan for such
year if the performance goals established by the Committee for such year are
attained in whole or in part and if the participant's employment by the Company
or a subsidiary continues without interruption during that year. Such method
shall be stated in terms of an objective formula or standard that precludes
discretion to increase the amount of the award that would otherwise be due upon
attainment of the goals. No provision of this Plan shall preclude the Committee
from exercising negative discretion with respect to any award hereunder, within
the meaning of Treasury Regulation Section 1.162-27(e)(2)(iii)(A).
No later than 90 days after the commencement of each year commencing on
or after September 1, 1996 (or than such earlier or later date as may be the
applicable deadline for compensation payable hereunder for such year to qualify
as "performance-based" under Section 162(m)(4)(C) of the Code), the Committee
shall establish in writing the performance goals for such year, which shall be
based on any of the following performance criteria, either alone or in any
combination, on either a consolidated or business unit or divisional level, and
which shall include or exclude discontinued operations and acquisition expenses
(e.g., pooling of interests), as the Committee may determine: level of sales,
earnings per share, income before income taxes and cumulative effect of
accounting changes, income before cumulative effect of accounting changes, net
income, earnings before interest and taxes, return on assets, return on equity,
return on capital employed, total stockholder return, market valuation, cash
flow, and completion of acquisitions. The foregoing criteria shall have any
reasonable definitions that the Committee may specify, which may include or
exclude any or all of the following items, as the Committee may specify:
extraordinary, unusual or non-recurring items; effects of accounting changes;
effects of currency fluctuations; effects of financing activities (e.g., effect
on earnings per share of issuing convertible debt securities); expenses for
restructuring or productivity initiatives; non-operating items; acquisition
expenses (e.g., pooling of interests); and effects of divestitures. Any such
performance criterion or combination of such criteria may apply to the
participant's award opportunity in its entirety or to any designated portion or
portions of the award opportunity, as the Committee may specify.
-2-
<PAGE> 3
5. Maximum Award
-------------
The maximum amount of compensation that may be paid under the Plan to
any participant for any year is the lesser of 150% of base salary or $750,000.
6. Attainment Of Performance Goals Required
----------------------------------------
Awards shall be paid under this Plan for any year solely on account of
the attainment of the performance goals established by the Committee with
respect to such year. Awards shall also be contingent on continued employment by
the Company or a subsidiary of the Company during such year. The only exceptions
to this rule apply in the event of termination of employment by reason of death
or disability (as determined by the Committee), or in the event of a Change of
Control of the Company (as such term is defined in the Company's 1994 Long-Term
Incentive Stock Plan), during such year, in which case the following provisions
shall apply. In the event of termination of employment by reason of death or
disability during the Plan year, an award shall be payable under this Plan to
the participant or the participant's estate for such year, which shall be paid
at the same time as the award the participant would have received for such year
had no termination of employment occurred, and which shall be equal to the
amount of such award multiplied by a fraction the numerator of which is the
number of full or partial calendar months elapsed in such year prior to
termination of employment and the denominator of which is the number twelve. In
the event of a Change of Control during a Plan year and prior to termination of
employment, an incentive award shall be paid under the Plan at the time of such
Change of Control to each participant, with the amount of such award being equal
to the participant's projected award under the Plan (as determined by the
Committee) for the year in which the Change of Control occurs, multiplied by a
fraction of the numerator of which is the number of full or partial calendar
months elapsed in such year prior to the Change of Control and the denominator
of which is the number twelve. An additional exception shall apply in the event
of termination of employment by reason of being eligible for retirement pursuant
to Robbins & Myers Retirement Plan for Salaried Employees during a Plan year,
but only if and to the extent it will not prevent any award payable hereunder
(other than an award payable in the event of death, disability, Change of
Control or retirement) from qualifying as "performance-based compensation"
under Section 162(m)(4)(C) of the Code. Subject to the preceding sentence, in
the event of termination of employment by reason of retirement during a Plan
year an award shall be payable under this Plan to the participant for such
year, which shall be paid at the same time as the award the participant would
have received for such year had no termination of employment occurred, and
which shall be equal to the amount of such award multiplied by a fraction the
numerator of which is the number of full or partial calendar months elapsed in
such year prior to termination of employment and the denominator of which is
the number twelve. A participant whose employment terminates prior to the end
of a Plan year for any reason not excepted above shall not be entitled to any
award under the Plan for that year.
-3-
<PAGE> 4
7. Shareholder Approval And Committee Certification Contingencies;
---------------------------------------------------------------
Payment Of Awards
-----------------
Payment of any awards under this Plan shall be contingent upon the
affirmative vote of the shareholders of at least a majority of the votes cast
(including abstentions) at the annual meeting of shareholders held in 1996.
Unless and until such shareholder approval is obtained, no award shall be paid
pursuant to this Plan. Subject to the provisions of Paragraph 6 above relating
to death, disability, Change of Control and retirement, payment of any award
under this Plan shall also be contingent upon the Compensation Committee's
certifying in writing that the performance goals and any other material terms
applicable to such award were in fact satisfied, in accordance with applicable
Treasury regulations under Code Section 162(m). Unless and until the Committee
so certifies, such award shall not be paid. Unless the Committee provides
otherwise, (a) earned awards shall be paid promptly following such
certification, and (b) such payment shall be made in cash (subject to any
payroll tax withholding the Company may determine applies).
To the extent necessary for purposes of Code Section 162(m), this Plan
shall be resubmitted to shareholders for their reapproval with respect to awards
payable for the taxable year of the Company commencing on and after September 1,
2001.
8. Amendment, Termination And Term Of Plan
---------------------------------------
The Board of Directors may amend, modify or terminate this Plan at any
time, provided that no such amendment, modification or termination shall
adversely affect the incentive opportunity of any participant with respect to
the portion of the year elapsed prior to the date of such amendment,
modification or termination, without such participant's written consent. The
Plan will remain in effect until terminated by the Board.
9. Interpretation And Construction
-------------------------------
Any provision of this Plan to the contrary notwithstanding, (a) awards
under this Plan are intended to qualify as performance-based compensation under
Code Section 162(m)(4)(C) and (b) any provision of the Plan that would prevent
an award under the Plan from so qualifying shall be administered, interpreted
and construed to carry out such intention and any provision that cannot be so
administered, interpreted and construed shall to that extent be disregarded. No
provision of the Plan, nor the selection of any eligible employee to
participate in the Plan, shall constitute an employment agreement or affect the
duration of any participant's employment, which shall remain "employment at
will" unless an employment agreement between the Company and the participant
provides otherwise. Both the participant and the Company shall remain free to
terminate employment as any time to the same extent as if the Plan had not been
adopted.
-4-
<PAGE> 5
10. GOVERNING LAW
-------------
The terms of this Plan shall be governed by the laws of the State of
Ohio, without reference to the conflicts of laws principles of that State.
-5-
<PAGE> 1
ROBBINS & MYERS, INC. EXHIBIT 11.1
- - STATEMENT RE: COMPUTATON OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
(Amounts in thousands, except per share data) Year Ended August 31,
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
PRIMARY
Average shares outstanding 10,474 10,336 10,214
Net efffect of dilutive stock options -
based on the treasury stock method
using average market price 572 450 296
-------- -------- --------
TOTAL 11,046 10,786 10,510
======== ======== ========
Income Before Extraordinary Gain and Cumulative
Effect of Accounting Changes $ 20,338 $ 11,825 $ 6,355
Extraordinary (Loss) Gain from Early Extinguishment of
Debt, Net of Income Taxes (813) 1,332 --
-------- -------- --------
NET INCOME (LOSS) $ 19,525 $ 13,157 $ 6,355
======== ======== ========
PER SHARE AMOUNTS:
Income Before Extraordinary Gain and Cumulative
Effect of Accounting Changes $ 1.84 $ 1.09 $ 0.61
Extraordinary Gain from Early Extinguishment of
Debt, Net of Income Taxes (0.07) 0.13 --
-------- -------- --------
NET INCOME (LOSS) $ 1.77 $ 1.22 $ 0.61
======== ======== ========
FULLY DILUTED
Average shares outstanding 10,474 10,336 10,214
Net effect of dilutive stock options -
based on the treasury stock method
using the year-end market price, if
higher than average market price 633 538 308
-------- -------- --------
TOTAL 11,107 10,874 10,522
======== ======== ========
Income Before Extraordinary Gain and Cumulative
Effect of Accounting Changes $ 20,338 $ 11,825 $ 6,355
Extraordinary Gain from Early Extinguishment of
Debt, Net of Income Taxes (813) 1,332 --
-------- -------- --------
NET INCOME (LOSS) $ 19,525 $ 13,157 $ 6,355
======== ======== ========
PER SHARE AMOUNTS:
Income Before Extraordinary Gain and Cumulative
Effect of Accounting Changes $ 1.83 $ 1.09 $ 0.61
Extraordinary Gain from Early Extinguishment of
Debt, Net of Income Taxes (0.07) 0.12 --
-------- -------- --------
NET INCOME (LOSS) $ 1.76 $ 1.21 $ 0.61
======== ======== ========
<FN>
Note: Share and per share amounts restated for 2 for 1 stock split effective
July 31,1996.
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8's) pertaining to the 1979 Stock Option Plan (No. 2-66181,
Post-Effective Amendment No. 3, dated December 1, 1982), the 1984 Stock Option
Plan (No. 2-98841, Post-Effective Amendment No. 1, dated November 23, 1988), the
Employee Savings Plan (No. 33-32103, dated December 7, 1989 and No. 33-49466,
dated July 9, 1992), Stock Option Plan for Non-Employee Directors (No. 33-
43625, dated November 1, 1991), 1994 Directors' Stock Compensation Plan (No.
33-84032, dated September 13, 1994), the Robbins & Myers, Inc. Savings Plan
for Salaried Employees of Chemineer, Edlon, and Pfaudler (No. 33-61893, dated
August 17, 1995), the Robbins & Myers, Inc. Savings Plan for Union Employees
(No. 333-00289, dated January 19, 1996), the Robbins & Myers, Inc. 1994
Long-term Incentive Stock Plan (No. 333-00291, Dated January 19, 1996) and the
Robbins & Myers, Inc. 1995 Stock Option Plan for Non-employee Directors (No.
333-00293, dated January 19, 1996) of our report dated October 1, 1996, with
respect to the consolidated financial statements and schedule of Robbins &
Myers, Inc. and Subsidiaries, included in this Annual Report (Form 10-K) for
the year ended August 31, 1996.
/s/ Ernst & Young LLP
November 22, 1996 Ernst & Young LLP
<PAGE> 1
Exhibit 24.1
ROBBINS & MYERS, INC.
---------------------
LIMITED POWER OF ATTORNEY
-------------------------
WHEREAS, Robbins & Myers, Inc. (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1996:
NOW, THEREFORE, each of the undersigned in his capacity as a
director of the Company hereby appoints Daniel W. Duval his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
to execute in his name, place and stead, the Company's Annual Report on Form
10-K for the year ended August 31, 1996, (including any amendment to such
report) and any and all other instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission.
Said attorney shall have full power and authority to do and perform in the name
and on behalf of the undersigned, in the aforesaid capacity, every act
whatsoever necessary or desirable to be done, as fully to all intents and
purposes as the undersigned might or could do in person. The undersigned hereby
ratifies and approves the act of said attorney.
IN WITNESS WHEREOF, the undersigned has executed this
instrument this 27 day of November, 1996.
/s/ Maynard H. Murch, IV
-----------------------------
Maynard H. Murch, IV
/s/ Robert J. Kegerreis
----------------------------
Robert J. Kegerreis
/s/ Thomas P. Loftis
-----------------------------
Thomas P. Loftis
/s/ William D. Manning, Jr.
------------------------------
William D. Manning, Jr.
/s/ Jerome F. Tatar
-------------------------------
Jerome F. Tatar
/s/ John N. Taylor, Jr.
--------------------------------
John N. Taylor, Jr.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> AUG-31-1996
<CASH> 7,121
<SECURITIES> 0
<RECEIVABLES> 52,353
<ALLOWANCES> 1,195
<INVENTORY> 48,417
<CURRENT-ASSETS> 114,060
<PP&E> 112,661
<DEPRECIATION> 40,547
<TOTAL-ASSETS> 300,340
<CURRENT-LIABILITIES> 76,440
<BONDS> 72,185
<COMMON> 24,136
0
0
<OTHER-SE> 67,301
<TOTAL-LIABILITY-AND-EQUITY> 340,340
<SALES> 350,964
<TOTAL-REVENUES> 350,964
<CGS> 231,934
<TOTAL-COSTS> 231,934
<OTHER-EXPENSES> 79,299
<LOSS-PROVISION> 276
<INTEREST-EXPENSE> 7,076
<INCOME-PRETAX> 32,379
<INCOME-TAX> 12,041
<INCOME-CONTINUING> 20,338
<DISCONTINUED> 0
<EXTRAORDINARY> (813)
<CHANGES> 0
<NET-INCOME> 19,525
<EPS-PRIMARY> 1.77
<EPS-DILUTED> 1.76
</TABLE>
