SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
Date of Report
(Date of earliest
event reported): April 24, 1995
Giddings & Lewis, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 0-17873 39-1643189
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
142 Doty Street, Fond du Lac, Wisconsin 54935
(Address of principal executive offices, including zip code)
(414) 921-9400
(Registrant's telephone number)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 24, 1995, Giddings & Lewis, Inc. ("Giddings & Lewis")
acquired through a wholly owned subsidiary ("Purchaser") all of the issued
and outstanding shares of capital stock ("Fadal Stock") of Fadal
Engineering Company, Inc., a California corporation ("Fadal"), and the
land and building in Chatsworth, California used by Fadal in the operation
of its business (the "Property"), which was leased by Fadal from a related
partnership. Giddings & Lewis' acquisition of the Fadal Stock and the
Property as well as the consummation of the transactions related thereto
are sometimes collectively referred to herein as the "Acquisition." The
total cash consideration paid by Giddings & Lewis at the closing of the
Acquisition was $180,193,000, which amount includes $1,550,000 of direct
acquisition costs.
The Acquisition was consummated in accordance with the terms of (i)
a Stock Purchase Agreement, dated as of April 24, 1995 (the "Stock
Purchase Agreement"), by and among Giddings & Lewis, Purchaser, Fadal,
David E. de Caussin and Myrtle Rosalie de Caussin, trustees of the David
and Myrtle de Caussin Family Trust - 1988 (the "DM Trust"), and Larry F.
de Caussin and Elsie Margaret de Caussin, trustees of the Larry and Elsie
de Caussin Family Trust - 1988 (the "LE Trust") (the LE Trust and the DM
Trust are collectively referred to herein as the "Shareholders"); and (ii)
an Agreement of Purchase and Sale, dated as of April 24, 1995 (the
"Property Agreement"), by and between Giddings & Lewis, Purchaser and
20701 Plummer Street, Ltd., a California limited partnership ("PS Ltd.").
20701 Plummer Street, Inc., a California corporation owned by the
Shareholders, is the sole general partner of PS Ltd.
In connection with the Acquisition, Giddings & Lewis through
Purchaser (a) acquired the Fadal Stock from the Shareholders for (i)
$152,893,000 in cash at the closing of the Acquisition, subject to a
potential post-closing adjustment based on the Fadal stockholders' equity
as of April 24, 1995 and (ii) the incremental tax liability to the
Shareholders and Fadal resulting from the Purchaser's and Shareholders'
election under Section 338(h)(10) of the Internal Revenue Code to step up
the basis in Fadal's assets, $2,000,000 of which was paid to the
Shareholders at the closing of the Acquisition as an estimate of such
liability; (b) entered into confidential information agreements with ten
employees of Fadal pursuant to which Purchaser paid each of the ten
employees $1,500,000 in cash; and (c) acquired the Property as well as PS
Ltd.'s interest in the lease of the Property to Fadal for a purchase price
of $8,750,000. The purchase price paid by Giddings & Lewis in the
Acquisition was determined on the basis of arm's length negotiations
between the parties.
Following the Acquisition, Fadal was merged with and into
Purchaser, a Wisconsin corporation, which changed its name to Fadal
Engineering Company, Inc. Such merger and name change were consummated
immediately following the Acquisition on April 24, 1995.
Purchaser also entered into eight year, worldwide noncompetition
agreements with David E. de Caussin and Larry F. De Caussin, the
beneficial owners of the Fadal Stock prior to the Acquisition. In
addition, ten employees of Fadal, including David and Larry de Caussin,
entered into employment agreements. The employment agreements have two-
year terms, except for David and Larry de Caussin's agreements which have
terms expiring December 31, 1995, that are automatically renewed month to
month thereafter unless prior notice of termination is given. The
employment agreements also contain confidentiality covenants.
To provide financing for the Acquisition, Giddings & Lewis (a)
entered into an unsecured $100 million revolving credit facility, dated as
of April 24, 1995 (the "1995 Credit Agreement"), with Citibank, N.A., and
(b) amended its unsecured $175 million revolving credit facility, dated as
of December 21, 1992, as amended (the "1992 Credit Agreement"), with
Citibank, N.A. and certain other financial institutions. The 1995 Credit
Agreement matures in April 1996, subject to extension. In connection with
the closing of the Acquisition, Giddings & Lewis borrowed $62,193,000 under
the 1995 Credit Agreement and $118,000,000 under the 1992 Credit Agreement
to finance the Acquisition and to pay costs associated with the Acquisition.
The Stock Purchase Agreement, the Property Agreement, the 1995
Credit Agreement and the 1992 Credit Agreement are filed as exhibits to
this Current Report on Form 8-K and are incorporated herein by reference.
The brief summaries of the material provisions of such agreements set
forth above are qualified in their entirety by reference to each
respective agreement filed as an exhibit hereto.
Fadal is principally involved in the design, manufacture and sale
of computer numerically controlled vertical machining centers. Giddings &
Lewis has no present plans to make significant changes to Fadal's
business.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired - Fadal Engineering
Company, Inc.
Report of Independent Auditors
Audited Financial Statements
Balance Sheets of December 31, 1994 and 1993
Statements of Income for the years ended December 31,
1994 and 1993
Statements of Stockholders' Equity for the years ended
December 31, 1994 and 1993
Statements of Cash Flows for the years ended December 31,
1994 and 1993
Notes to Financial Statements
<PAGE>
Report of Independent Auditors
The Stockholders
Fadal Engineering Co., Inc.
We have audited the accompanying balance sheets of Fadal Engineering Co.,
Inc. as of December 31, 1994 and 1993, and the related statements of
income, stockholders' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements 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 financial position of Fadal Engineering Co.
Inc. at December 31, 1994 and 1993, and the results of its operations and
its cash flows for the years then ended in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
March 3, 1995, except
for Note 11, as to
which the date is
April 24, 1995
<PAGE>
Fadal Engineering Co., Inc.
Balance Sheets
December 31
1994 1993
Assets
Current assets:
Cash $ 8,012,038 $ 2,087,548
Accounts receivable, less allowance
for doubtful accounts of $390,761
and $292,418 in 1994 and 1993,
respectively 33,296,877 21,275,341
Note receivable from stockholders'
partnership, current portion
(Note 4) 1,785,710 1,785,710
Other receivables 164,785 138,437
Inventories (Note 1) 21,186,925 18,376,017
Prepaid expenses 595,190 535,387
---------- ----------
Total current assets 65,041,525 44,198,440
Equipment and leasehold improvements,
net (Notes 1 and 2) 5,568,520 4,628,948
Note receivable from stockholders'
partnership, non-current portion
(Note 4) 4,285,728 6,071,438
Note receivable from stockholders (Note
4) - 275,817
Accounts receivable, non-current
portion - 28,255
Other assets 142,290 137,195
----------- ----------
Total assets $75,038,063 $55,340,093
=========== ===========
<PAGE>
December 31
1994 1993
Liabilities and stockholders' equity
Current liabilities:
Note payable to bank (Note 3) $12,000,000 $8,772,000
Bank term loan, current portion
(Note 3) 1,785,710 1,785,710
Accounts payable 9,021,575 4,339,382
Accrued expenses 945,013 869,967
Income tax payable 104,000 -
Notes payable to stockholders (Note
4) 8,613,031 6,781,256
Note payable to estate of former
stockholder (Note 4) 2,144,197 2,265,217
Note payable to former
stockholder's estate, current
portion (Note 5) 900,000 900,000
---------- ----------
Total current liabilities 35,513,526 25,713,532
Deferred income - 232,159
Bank term loan, long-term portion
(Note 3) 4,285,728 6,071,438
Note payable to former stockholder's
estate, long-term portion (Note 5) 6,300,000 7,200,000
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, no par value:
authorized shares - 135,000 issued
and outstanding shares - 18,480 20,533 20,533
Additional paid-in capital 1,200 1,200
Retained earnings 28,917,076 16,101,231
----------- -----------
Total stockholders' equity 28,938,809 16,122,964
----------- -----------
Total liabilities and stockholders'
equity $75,038,063 $55,340,093
=========== ===========
See accompanying notes.
<PAGE>
Fadal Engineering Co., Inc.
Statements of Income
Years ended December 31
1994 1993
Net sales $137,827,754 $86,784,717
Costs and expenses:
Cost of sales (Note 4) 98,575,812 68,965,502
Selling, general and
administrative expenses 22,757,958 11,557,057
Depreciation and amortization 2,148,826 1,588,265
----------- ----------
Total operating expenses 123,482,596 82,110,824
----------- -----------
Operating income 14,345,158 4,673,893
Other (income) expense:
Interest income (Note 4) (495,725) (586,551)
Interest expense (Note 3, 4
and 5) 1,775,500 1,790,399
Earthquake repairs 541,173 -
Other miscellaneous (income)
expense (475,638) (347,860)
--------- ---------
Total other (income) expense 1,345,310 855,988
--------- ---------
Income before provision for state
income taxes 12,999,848 3,817,905
Provision for state income taxes
(Note 7) 184,003 91,418
---------- ----------
Net income $12,815,845 $3,726,487
=========== ===========
See accompanying notes.
<PAGE>
<TABLE>
Fadal Engineering Co., Inc.
Statements of Stockholders' Equity
<CAPTION>
Additional Total
Common Stock Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1992 18,480 $20,533 $1,200 $12,374,744 $12,396,477
Net income - - - 3,726,487 3,726,487
----------- ---------- --------- ---------- -----------
Balance at December 31,
1993 18,480 20,533 1,200 16,101,231 16,122,964
Net income - - - 12,815,845 12,815,845
----------- --------- -------- ---------- -----------
Balance at December 31,
1994 18,480 $20,533 $1,200 $28,917,076 $28,938,809
=========== ========= ======== ========== ==========
</TABLE>
See accompanying notes.
<PAGE>
Fadal Engineering Co., Inc.
Statements of Cash Flows
Years ended December 31
1994 1993
Increase (decrease) in cash
Operating activities
Cash received from customers $125,765,347 $82,716,197
Cash paid to suppliers and
employees (119,857,805) (81,004,989)
Interest received 496,692 588,585
Interest paid (1,841,778) (1,810,459)
Income taxes paid (76,703) (72,719)
Workers' compensation dividends
received 169,557 186,487
Net (loans to) repayments from
employees (27,005) 708
Rental income received 26,442 86,760
----------- ----------
Net cash provided by operating
activities 4,654,747 690,570
Investing activities
Capital expenditures (3,188,340) (3,877,936)
Proceeds from disposition of assets 419,328 183,869
----------- ----------
Net cash used in investing
activities (2,769,012) (3,694,067)
Financing activities
Proceeds from draws on lines of
credit 47,872,000 30,586,000
Repayments under lines of credit (44,644,000) (23,264,000)
Principal payments under bank term
loan (1,785,710) (1,785,710)
Net borrowings from stockholders 1,831,775 889,127
Net repayments on notes receivable
from stockholders' partnership 1,785,710 165,632
Principal payments on notes payable
to estate of former stockholder (121,020) (375,000)
Principal payments on note payable
to former stockholder's estate (900,000) (1,900,000)
Cash received on settlement of life
insurance policies - 700,000
----------- -----------
Net cash provided by financing
activities 4,038,755 5,016,049
----------- -----------
Net increase in cash 5,924,490 2,012,552
Cash at beginning of year 2,087,548 74,996
----------- -----------
Cash at end of year $8,012,038 $2,087,548
=========== ===========
Reconciliation of net income to net
cash provided by operating
activities:
Net income $12,815,845 $3,726,487
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,148,826 1,588,265
Gain on asset dispositions (275,728) (72,810)
Provision for doubtful accounts 150,000 -
Changes in assets and liabilities:
Increase in accounts
receivable (12,143,281) (4,061,249)
(Increase) decrease in other
receivables (26,348) 5,242
Increase in inventories (2,810,908) (2,556,315)
(Increase) decrease in prepaid
expenses and other assets (64,898) 16,333
Increase in accounts payable 4,682,193 1,878,771
Increase in income taxes
payable and accrued
expenses 179,046 165,846
---------- -----------
Total adjustments (8,161,098) (3,035,917)
----------- -----------
Net cash provided by operating
activities $4,654,747 $ 690,570
=========== ===========
See accompanying notes.
<PAGE>
Fadal Engineering Co., Inc.
Notes to Financial Statements
December 31, 1994
1. Summary of Significant Accounting Policies
Description of Business
Fadal Engineering Co., Inc. (the Company) designs, manufactures, and sells
computer numerically controlled metalworking machining centers for use in
industrial machine shops.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method)
or market and consist of the following at:
December 31
1994 1993
Raw materials $13,321,470 $11,352,245
Work-in-process 6,120,364 5,856,731
Finished goods 1,745,091 1,167,041
----------- -----------
$21,186,925 $18,376,017
=========== ===========
Depreciation and Amortization
Depreciation of machinery, office equipment, software, and automotive
equipment are provided on the double declining balance method over the
estimated useful lives of three to seven years. Leasehold improvements are
amortized on the straight-line method over the terms of the underlying
leases or, if shorter, the estimated useful lives of the improvements.
Research and Development Costs
Research and development costs of $95,484 and $320,214 for 1994 and 1993,
respectively, were expensed as they were incurred.
Credit Risk
The Company sells vertical machining centers to both foreign and domestic
retail and wholesale customers and distributors. Sales to foreign
customers and distributors accounted for 10.6% of net sales for 1994. The
Company performs periodic credit evaluations of its customers' financial
condition and generally does not require collateral. Receivables are
generally due within 30 days, however, some customers are granted extended
terms. Credit losses have consistently been within management's
expectations.
Major Customer
The Company had net sales to one customer representing 14% of total
Company net sales during the year ended 1994 (13% in 1993). Accounts
receivable from this customer at December 31, 1994 were $6,296,349
($3,345,563 at 1993).
2. Equipment and Leasehold Improvements
Equipment and leasehold improvements consist of the following:
December 31
1994 1993
Machinery and equipment $8,294,513 $6,083,658
Automotive equipment 293,493 303,230
Office equipment 1,460,139 1,113,467
Software 329,040 310,263
Leasehold improvements 1,843,525 2,046,953
---------- -----------
12,220,710 9,857,571
Less accumulated depreciation (6,652,190) (5,228,623)
---------- -----------
$5,568,520 $4,628,948
========== ===========
3. Notes Payable to Bank
For working capital purposes, the Company has a revolving credit facility
with a bank under which the Company may borrow up to $10,000,000. As of
December 31, 1994, the facility provided for a temporary increase to a
maximum amount of borrowings of $20,000,000 through January 31, 1995 and
$15,000,000 thereafter through February 28, 1995. Advances under the
revolving credit facility can be made based on certain percentages of
eligible accounts receivable and inventory (as defined in the credit
agreement). The agreement expires in August 1995. Interest is charged at
the bank's prime rate of interest (8.5% at December 31, 1994). Interest
expense relating to this credit facility for the years ended December 31,
1994 and 1993 amounted to $238,698 and $50,837, respectively.
In August 1992, in connection with the purchase of commercial land and
building by a partnership owned by the stockholders (see Note 4), the
Company borrowed $10,000,000 under a term loan facility. The outstanding
balance on this loan was $6,071,438 and $7,857,148 at December 31, 1994
and 1993, respectively. This loan is payable in quarterly principal
installments of $357,142 through August 1999. Interest is charged at
either the bank's prime rate (8.5% at December 31, 1994) plus 1/2%, or
other offshore rate (LIBOR of 5% plus 2.5% on $5,000,000 of outstanding
balance at December 31, 1994) and is payable monthly. Under the terms of
the loan agreement the Company is obligated to make one additional
principal payment each year based on excess cash flow for the prior year
(as defined), up to a maximum of $357,142. Amounts due after December 31,
1994 are as follows (assuming the maximum additional principal payment):
1995 $1,785,710
1996 1,785,710
1997 1,785,710
1998 714,308
----------
$6,071,438
==========
Interest expense relating to the term loan was $467,331 and $549,850 for
1994 and 1993, respectively.
The credit facility and term loan are secured under a blanket security
agreement covering substantially all assets of the Company. These
agreements place various restrictions on the Company and provide specific
financial ratios that must be maintained.
The above term loan facility is personally guaranteed by the stockholders
up to $1,071,438 at December 31, 1994 ($2,857,148 at December 31, 1993).
4. Related Party Transactions
In connection with the purchase of commercial land and building by a
partnership owned by the stockholders in August 1992, the Company, which
leases the facility (see Note 6), agreed to lend the partnership up to
$10,000,000. The balance outstanding at December 31, 1994 and 1993 was
$6,071,438 and $7,857,148, respectively. Repayment terms for the loan are
identical to the term loan facility (see Note 3). The note is secured by a
deed of trust on the commercial land and building. The partnership has
borrowed the maximum amount allowed by the agreement.
At December 31, 1993, the Company held a note receivable from stockholders
in the amount of $275,817 related to the sale of land and a building to
the stockholders in December 1984. This note was repaid in June 1994.
Additionally, at December 31, 1993, the unrecognized portion of the gain
on the sale of the land and building totaled $232,159, which was recorded
in income in 1994.
Interest income relating to these notes was $467,331 and $534,194 for the
years ended December 31, 1994 and 1993, respectively.
Notes payable to stockholders and note payable to estate of former
stockholder consist of unsecured loans totaling $8,613,031 and $2,144,197,
respectively, which are due on demand and bear interest at 6% per annum.
Interest expense on these loans was $341,099 and $374,948 for the years
ended December 31, 1994 and 1993, respectively.
5. Stock Redemption
The Company's stockholder agreement requires that upon the death of any
stockholder, the Company has the obligation to purchase from the estate of
the stockholder, at a predetermined price, all shares owned by the
stockholder and his spouse.
In connection with the death of a stockholder in November, 1992, the
Company has acquired all of the common stock previously owned by the
deceased stockholder for a total price of $10,000,000. The outstanding
balance on this note at December 31, 1994 was $7,200,000. This note is
payable in annual installments of $900,000 through November 15, 2002.
Interest at 9% per annum is payable not less frequently than annually with
each principal installment. Interest expense for the year ended December
31, 1994 was $718,791 ($814,764 for 1993).
6. Commitments and Contingencies
Operating Leases
The Company leases office and warehouse facilities from related parties
under an operating lease that has initial and noncancelable terms in
excess of one year. Rent expense for the year ended December 31, 1994
totaled $1,768,980, of which $1,463,816 was to related parties ($2,011,930
for the year ended December 31, 1993, of which $1,489,650 was to related
parties).
Future minimum operating lease payments to related parties are as follows:
Year ending:
1995 $1,440,000
1996 1,440,000
1997 960,000
----------
Total minimum lease payments $3,840,000
==========
Developmental Contract
The Company has entered into a contract for the development of a product
to be included as an integral part of a lathe being developed by the
Company. The contract provides that the Company will be given a license
to use and sell the product.
Under the terms of the contract the Company is obligated to pay a total of
$450,000. As of December 31, 1994, the unpaid portion of the contract
amounted to $210,000, which is payable upon approval of the product by the
Company, which is expected to occur during 1995.
Contingencies
Various claims and actions, considered normal to the Company's business
have been asserted or are pending against the Company. In the opinion of
management, all such claims and actions should not have a material adverse
effect upon the Company's financial position, results of operations or
cash flows.
7. Provision for State Taxes Based on Income
The Company's tax provision is calculated in accordance with Statement of
Financial Accounting Standard No. 109 "Accounting for Income Taxes."
The Company elected S Corporation status effective January 1, 1987. Under
this election, the Company is not liable for Federal taxes on income and
is liable for 1.5% of California taxable income. Accordingly, the earnings
of the Company will be reported on the stockholders' federal and state
income tax returns.
8. Retirement Plan
Effective October 1990 the Company implemented a contributory 401(k)
retirement savings plan (the 401(k) Plan) covering all of the Company's
employees eighteen years of age and older. The 401(k) Plan is a defined
contribution salary deferral plan to which participants may contribute not
less than 1% nor more than 15% of their compensation. The Company
contributes an amount equal to 50% of each participant's elective
contribution up to the first 6% of compensation. The Company's expense for
1994 and 1993 was $168,810 and $163,755, respectively.
9. Earthquake Repairs
The Company suffered damage and work stoppage as a result of the major
earthquake which occurred on January 17, 1994, including losses for roof
repair and damages to leasehold improvements. The Company maintains
standard insurance policies with standard deductible provisions that
require an initial level of loss prior to receiving insurance proceeds.
The Company incurred $541,173 in damages which were below the deductible
amount. Substantially all costs related to the earthquake were paid in
1994 and are included as non-operating costs for financial statement
purposes.
10. Fair Values of Financial Instruments
The carrying amounts of the Company's note receivable from stockholders'
partnership, note payable to bank, bank term loan, notes payable to
stockholders and note payable to estate of former stockholder approximate
their fair values at December 31, 1994 and 1993. The fair value of the
note payable to former stockholder's estate was $6,797,000 at December 31,
1994 ($8,455,000 at December 31, 1993), as determined using discounted
cash flow analyses based on the Company's current incremental borrowing
rates for similar types of borrowing arrangements.
11. Subsequent Event
Effective April 24, 1995 the Company was sold to Giddings & Lewis, Inc.
(b) Pro Forma Financial Information.
GIDDINGS & LEWIS, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma financial information relates to
the April 24, 1995 acquisition (such acquisition including certain related
transactions are collectively referred to herein as the "Acquisition") by
a wholly owned subsidiary of Giddings & Lewis, Inc. ("Giddings & Lewis")
of (a) all of the issued and outstanding shares of capital stock of Fadal
Engineering Company, Inc. ("Fadal") and (b) the land and building used by
Fadal and leased from a related partnership. The transaction will be
accounted for as a purchase business combination. The pro forma amounts
have been prepared based on certain purchase accounting and other pro
forma adjustments (as described in the accompanying notes) to the December
31, 1994 historical financial statements of both companies.
The unaudited pro forma condensed consolidated statement of income
for the year ended December 31, 1994 reflects the 1994 historical results
of operations of both companies with pro forma acquisition adjustments as
if the Acquisition had occurred on January 1, 1994. The unaudited pro
forma condensed consolidated balance sheet at December 31, 1994 reflects
the historical financial position of both companies at December 31, 1994,
with pro forma acquisition adjustments as if the Acquisition had occurred
on December 31, 1994. The pro forma adjustments are described in the
accompanying notes and give effect to events that are (a) directly
attributable to the Acquisition, (b) factually supportable, and (c) in the
case of certain income statement adjustments, expected to have a
continuing impact.
The unaudited pro forma condensed consolidated financial statements
should be read in connection with Giddings & Lewis' Annual Report on Form
10-K for the year ended December 31, 1994 along with December 31, 1994
financial statements of Fadal and related notes appearing elsewhere in
this Current Report on Form 8-K.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what Giddings
& Lewis' and Fadal's financial position or results of operations as of the
dates presented would have been had the Acquisition in fact occurred on
such date or at the beginning of the period indicated or to project
Giddings & Lewis' and Fadal's financial position or results of operations
for any future date or period.
<TABLE>
<CAPTION>
PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
December 31, 1994
Giddings Pro Forma
ASSETS & Lewis Fadal Adjustments Pro Forma
(Note 2)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents . $ 24,072 $ 8,012 $(8,012)(a) $ 24,072
Accounts receivable . . . . 343,881 33,297 - 377,178
Inventories . . . . . . . . 74,823 21,187 - 96,010
Note receivable . . . . . . - 1,827 (1,827)(a) -
Other current assets . . . . 20,378 719 235(a,b) 21,332
------- -------- -------- ---------
Total current assets . . . . . 463,154 65,042 (9,604) 518,592
Non-current assets
Net property, plant and
equipment . . . . . . . 107,164 5,568 6,900(b) 119,632
Note receivable . . . . . . - 4,286 (4,286)(a) -
Costs in excess of net
acquired tangible assets 84,997 - 120,783(b) 205,780
Other assets . . . . . . . . 31,911 142 1,211(a,b) 33,264
-------- --------- -------- --------
Total non-current assets . . . 224,072 9,996 124,608 358,676
-------- --------- -------- --------
Total assets . . . . . . . . . $687,226 $ 75,038 $115,004 $877,268
======== ======== ======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable . . . . . . $76,562 $ 9,021 $ - $ 85,583
Accrued expenses . . . . . . 78,912 1,049 (221)(a) 79,740
Notes payable - revolving
credit . . . . . . . . . . . . - - 180,193(c) 180,193
Notes payable - other . . . - 25,443 (25,443)(a) -
------- -------- -------- -------
Total current liabilities . . . 155,474 35,513 154,529 345,516
Non-current liabilities:
Notes payable . . . . . . . - 10,586 (10,586)(a) -
Other . . . . . . . . . . . 46,454 - - 46,454
--------- ------- -------- -------
Total non-current liabilities . 46,454 10,586 (10,586) 46,454
--------- -------- ------- --------
Total liabilities . . . . . . . 201,928 46,099 143,943 391,970
Total shareholders' equity . . 485,298 28,939 (28,939)(a,b) 485,298
--------- --------- --------- --------
Total liabilities and
shareholders' equity . . . . $687,226 $ 75,038 $115,004 $877,268
========= ========= ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
(Unaudited)
Year Ended December 31, 1994
Giddings Pro Forma
& Lewis Fadal Adjustments Pro Forma
(Note 2)
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . $619,471 $137,828 $ - $757,299
Cost of sales . . . . . . . . . 491,397 98,576 (1,610)(d,e) 588,363
Selling, general and
administrative expenses . . 58,977 22,758 (16,184)(f) 65,551
Depreciation and
amortization . . . . . . . . 15,399 2,149 5,297(g,h,i) 22,845
Other income . . . . . . . . . (22,128) - - (22,128)
--------- -------- -------- ----------
Operating income . . . . . . . 75,826 14,345 12,497 102,668
Net interest
income/(expense) . . . . . . 1,025 (1,280) (11,584)(j,k,l) (11,839)
Other income (expense) . . . . 755 (65) (170)(e) 520
-------- --------- ---------- --------
Income before provision
for income taxes . . . . . . 77,606 13,000 743 91,349
Provision for income taxes . . 29,726 184 5,519(m) 35,429
--------- --------- ---------- ---------
Net income . . . . . . . . . . $47,880 $12,816 ($4,776) $55,920
======== ======== ========== ==========
Net income per common
share . . . . . . . . . . . $1.40 $1.63(n)
======= ========
Average number of common
shares outstanding . . . . . 34,284 34,284
======== =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements
<PAGE>
GIDDINGS & LEWIS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share data)
1. Basis of Presentation
The accompanying unaudited pro forma condensed consolidated
financial statements have been prepared using the historical financial
statements of Giddings & Lewis and Fadal, with pro forma adjustments as if
the Acquisition had occurred on January 1, 1994 for purposes of the income
statement and December 31, 1994 for purposes of the balance sheet.
2. Pro Form Adjustments
The pro forma adjustments are summarized as follows:
Balance Sheet:
(a) To eliminate related party and other assets and liabilities
not acquired/assumed in the Acquisition, as follows:
Cash . . . . . . . . . . . . $8,012
Note receivable:
Current . . . . . . . . . . 1,827
Non-current . . . . . . . . 4,286
Other current assets . . . . 15
Other assets . . . . . . . . 89
Accrued expenses . . . . . . (221)
Notes payable-current . . . . (25,443)
Notes payable-non-current . . (10,586)
--------
$(22,021)
========
(b) To adjust the acquired assets and assumed liabilities to their
estimated fair value:
Total cash consideration . . . . . . . . . . $180,193
=========
Purchase price allocation
Book value of acquired net assets of
Fadal at December 31, 1994 . . . . . . $50,960
Adjustments to acquired net assets:
Estimated fair value of land and
buildings acquired from related
partnership . . . . . . . . . . . . . 6,900
Organization costs . . . . . . . . . . 1,300
Loan origination fee . . . . . . . . . 250
Costs in excess of net acquired tangible
assets . . . . . . . . . . . . . . . 120,783
--------
$180,193
========
(c) To record the debt incurred by Giddings & Lewis to finance the
Acquisition (via draws on its new and amended U.S. revolving credit
facilities).
Income Statement:
(d) Reduction in lease costs due to the real estate and building
purchase - $1,440.
(e) Reclassification between cost of sales and other expense -
$170.
(f) Reduction in compensation expense paid to key Fadal executives
in 1994 to conform with the terms of employment agreements entered into
with such individuals as part of the Acquisition - $16,184.
(g) Amortization of costs in excess of net acquired tangible
assets. Giddings & Lewis is in the process of valuing intangible assets
acquired. For purposes of this pro forma condensed consolidated statement
of income, Giddings & Lewis estimates the average life of these
intangibles will approximate 24 years - $4,950.
(h) Depreciation expense on the building purchase - $87.
(i) Amortization of organization costs during a period of 5 years
- $260.
(j) Eliminate interest expense on the debt retained by the sellers
- $1,280.
(k) Amortization of loan origination fees - $250.
(l) Additional interest expense on the acquisition debt of
$180,193. Interest rate used was 7.0% - $12,614.
(m) To reflect corporate and state income taxes at the estimated
combined effective statutory rate (41.5%) as if Fadal had been a C
corporation during 1994, and the tax effect of pro forma adjustments using
a 41.5% tax rate.
Per Share Computation:
(n) The computation of earnings per share is based upon the pro
forma net income divided by the historical weighted average number of
Giddings & Lewis common shares outstanding during 1994.
<PAGE>
(c) Exhibits. The exhibits listed in the accompanying Exhibit
Index are filed as part of this Current Report on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GIDDINGS & LEWIS, INC.
Date: May 8, 1995 By: /s/ Richard C. Kleinfeldt
Richard C. Kleinfeldt
Vice President-Finance, Secretary
and Chief Financial Officer
<PAGE>
GIDDINGS & LEWIS, INC.
EXHIBIT INDEX TO FORM 8-K
Report Dated April 24, 1995
Exhibit
(2.1) Stock Purchase Agreement by and among Giddings
& Lewis, Inc., Bike Corp., Fadal Engineering
Company, Inc., David E. de Caussin and Myrtle
Rosalie de Caussin, trustees of the David and
Myrtle de Caussin Family Trust - 1988, and
Larry F. de Caussin and Elsie Margaret de
Caussin, trustees of the Larry and Elsie de
Caussin Family Trust - 1988, dated as of April
24, 1995*
(2.2) Agreement of Purchase and Sale by and between
Giddings & Lewis, Inc., Bike Corp. and 20701
Plummer Street, Ltd., dated as of April 24,
1995*
(4.1) Credit Agreement among Giddings & Lewis, Inc.,
Giddings & Lewis GmbH, Giddings & Lewis AG, the
Institutions from time to time party thereto as
Lenders, the Institutions from time to time
party thereto as Issuing Banks, Citicorp North
America, Inc., as Agent, and Citicorp
Investment Bank Limited, as London Agent, dated
as of December 21, 1992. [Incorporated by
reference to Exhibit 4.2 to Giddings & Lewis,
Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1992]
(4.2) Amendment to Credit Agreement among Giddings &
Lewis, Inc., Giddings & Lewis GmbH, Giddings &
Lewis Ltd., the Institutions from time to time
party thereto as Lenders, the Institutions from
time to time party thereto as Issuing Banks,
Citicorp North America, Inc., as Retiring
Agent, and Citibank N.A., as Agent, Citicorp
Investment Bank Limited, as Retiring London
Agent, and Citibank International plc, as an
Agent, dated as of December 21, 1994.
[Incorporated by reference to Exhibit 4.3 to
Giddings & Lewis, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1994]
(4.3) Amendment No. 2 and Consent to Credit Agreement
among Giddings & Lewis, Inc., Giddings & Lewis
GmbH, Giddings & Lewis Ltd. and the
Institutions from time to time party thereto as
Agent and Lenders, dated as of April 24, 1995.
(4.4) Credit Agreement among Giddings & Lewis, Inc.,
the Institutions from time to time party hereto
as Lenders and Citibank, N.A., as Agent, dated
as of April 24, 1995.*
(23) Consent of Ernst & Young LLP
* The schedules/exhibits to this document are not being filed herewith.
The Registrant agrees to furnish supplementally a copy of any such
schedule/exhibit to the Securities and Exchange Commission upon request.
STOCK PURCHASE AGREEMENT
by and among
FADAL ENGINEERING COMPANY INC.,
DAVID E. DE CAUSSIN AND MYRTLE ROSALIE DE CAUSSIN,
TRUSTEES OF THE
DAVID AND MYRTLE DE CAUSSIN FAMILY TRUST - 1988,
LARRY F. DE CAUSSIN AND ELSIE MARGARET DE CAUSSIN,
TRUSTEES OF THE
LARRY AND ELSIE DE CAUSSIN FAMILY TRUST - 1988,
GIDDINGS & LEWIS, INC.
and
BIKE CORP.
__________________________
dated as of April 24, 1995
__________________________
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. SALE AND PURCHASE OF COMMON SHARES . . . . . . . . . . 1
1.1 Sale and Purchase of Common Shares . . . . . . . 1
1.2 Unadjusted Purchase Price . . . . . . . . . . . . 1
1.3 Adjustments to Purchase Price . . . . . . . . . . 2
SECTION 2. CLOSING AND DELIVERIES . . . . . . . . . . . . . . . . 5
2.1 Closing . . . . . . . . . . . . . . . . . . . . . 5
2.2 Deliveries by Shareholders . . . . . . . . . . . 5
2.3 Deliveries by Purchaser . . . . . . . . . . . . . 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND
COMPANY . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Organization, Power and Authority . . . . . . . . 7
3.2 Validity of Agreement . . . . . . . . . . . . . . 7
3.3 No Breach . . . . . . . . . . . . . . . . . . . . 7
3.4 Capitalization . . . . . . . . . . . . . . . . . 8
3.5 Options or Other Rights . . . . . . . . . . . . . 8
3.6 Subsidiaries and Investments . . . . . . . . . . 8
3.7 Consents . . . . . . . . . . . . . . . . . . . . 8
3.8 Financial Statements . . . . . . . . . . . . . . 9
3.9 No Material Adverse Changes . . . . . . . . . . . 9
3.10 Agreements, Etc. . . . . . . . . . . . . . . . . 10
3.11 Identification of Depositories and
Authority . . . . . . . . . . . . . . . . . . . . 11
3.12 Labor Matters . . . . . . . . . . . . . . . . . . 11
3.13 Licenses and Permits . . . . . . . . . . . . . . 11
3.14 Intellectual Property . . . . . . . . . . . . . . 12
3.15 Litigation and Orders . . . . . . . . . . . . . . 12
3.16 Tax Matters . . . . . . . . . . . . . . . . . . . 12
3.17 Environmental . . . . . . . . . . . . . . . . . . 15
3.18 Insurance . . . . . . . . . . . . . . . . . . . . 16
3.19 Accounts Receivable . . . . . . . . . . . . . . . 17
3.20 Real Property and Leases; Equipment . . . . . . . 17
3.21 Inventories . . . . . . . . . . . . . . . . . . . 18
3.22 Undisclosed Liabilities . . . . . . . . . . . . . 18
3.23 Customers and Suppliers . . . . . . . . . . . . . 18
3.24 Compliance With Laws . . . . . . . . . . . . . . 18
3.25 No Brokers', Finders' or Insider Fees . . . . . . 19
3.26 Interests in Clients, Customers, Etc. . . . . . . 19
3.27 Product Warranty and Product Liability . . . . . 19
3.28 Employee Benefit Plans; ERISA . . . . . . . . . . 19
3.29 Disclosure . . . . . . . . . . . . . . . . . . . 23
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER . . . . . . . . . . . . . . . . . . . . . . 24
4.1 Investment Intent . . . . . . . . . . . . . . . . 24
4.2 Validity of Agreement. . . . . . . . . . . . . . 24
4.3 No Breach . . . . . . . . . . . . . . . . . . . . 24
4.4 Financing . . . . . . . . . . . . . . . . . . . . 24
4.5 Subsidiary Status . . . . . . . . . . . . . . . . 24
4.6 Parent Status . . . . . . . . . . . . . . . . . . 24
4.7 No Brokers', Finders', or Insider Fees . . . . . 24
4.8 Consents . . . . . . . . . . . . . . . . . . . . 25
4.9 Disclosure . . . . . . . . . . . . . . . . . . . 25
SECTION 5. CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . 25
5.1 Special Pre-Closing Transactions . . . . . . . . 25
5.2 Closing Date Publicity . . . . . . . . . . . . . 25
5.3 Satisfaction of Non-Operating Liabilities . . . . 25
SECTION 6. POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . 25
6.1 General . . . . . . . . . . . . . . . . . . . . . 25
6.2 Litigation Support . . . . . . . . . . . . . . . 26
6.3 Transition . . . . . . . . . . . . . . . . . . . 26
6.4 Tax Matters . . . . . . . . . . . . . . . . . . . 26
SECTION 7. [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . 29
SECTION 8. [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . 29
SECTION 9. INDEMNIFICATION AND SURVIVAL . . . . . . . . . . . . . 29
9.1 General Indemnity . . . . . . . . . . . . . . . . 29
9.2 Indemnification Procedure . . . . . . . . . . . . 29
9.3 Limitations on Indemnification
Obligations . . . . . . . . . . . . . . . . . . . 30
9.4 Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . 31
SECTION 10. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Exclusive Remedies . . . . . . . . . . . . . . . 31
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 31
11.1 Waivers and Amendments . . . . . . . . . . . . . 31
11.2 Notices . . . . . . . . . . . . . . . . . . . . . 31
11.3 Fees and Expenses . . . . . . . . . . . . . . . . 32
11.4 Successors and Assigns . . . . . . . . . . . . . 32
11.5 Choice of Law . . . . . . . . . . . . . . . . . . 33
11.6 Severability . . . . . . . . . . . . . . . . . . 33
11.7 Entire Agreement . . . . . . . . . . . . . . . . 33
11.8 Construction . . . . . . . . . . . . . . . . . . 33
11.9 Incorporation of Exhibits and
Schedules . . . . . . . . . . . . . . . . . . . . 33
11.10 Headings and Recitals . . . . . . . . . . . 33
11.11 Counterparts . . . . . . . . . . . . . . . . 33
11.12 Forum Selection and Consent to
Jurisdiction . . . . . . . . . . . . . . . 33
11.13 Certain Definitions . . . . . . . . . . . . 34
<PAGE>
EXHIBITS
Exhibit A Form of Employment Agreement
Exhibit B-1 Form of Non-Competition Agreement
Exhibit B-2 Form of Non-Competition Agreement
Exhibit C-1 Form of Legal Opinion of Counsel to Company and
Shareholders
Exhibit C-2 Form of Legal Opinion of Counsel to Company and
Shareholders
Exhibit D Form of Agreement of Purchase and Sale
Exhibit E-1 Form of Legal Opinion of Counsel to Parent and Purchaser
(California)
Exhibit E-2 Form of Legal Opinion of Counsel to Parent and Purchaser
(Wisconsin)
Exhibit F Form of Confidential Information Agreement
SCHEDULES
Schedule 1.2 Allocation of Purchase Price
Schedule 2.2 Directors and Officers to Resign Prior to Closing
Schedule 3.1 Foreign Qualification
Schedule 3.3 Conflicts: Shareholders and Company
Schedule 3.4 Share Ownership
Schedule 3.7 Consents and Approvals
Schedule 3.8 Financial Statements
Schedule 3.9 No Material Adverse Changes; Permitted Liens
Schedule 3.10 Agreements, Etc.
Schedule 3.11 Depositories
Schedule 3.12 Labor
Schedule 3.13 Licenses and Permits
Schedule 3.14 Intellectual Property
Schedule 3.15 Litigation and Orders
Schedule 3.16 Tax Matters
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.20 Real Property, Leases and Equipment
Schedule 3.21 Useable and Saleable Inventories
Schedule 3.22 Undisclosed Liabilities
Schedule 3.23 Customers and Suppliers
Schedule 3.24 Compliance with Laws
Schedule 3.25 Broker's Fees
Schedule 3.26 Interests in Clients, Customers, Etc.
Schedule 3.27 Product Warranty and Liability Claims
Schedule 3.28 Employee Benefit Plans
Schedule 5.1 Special Pre-Closing Transactions
Schedule 6.4 338 Election
Schedule 9.4 Survival Periods
Schedule 11.13 Knowledge Persons
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of April 24, 1995
("Agreement"), is made by and among Giddings, & Lewis, Inc., a Wisconsin
corporation ("Parent"), Bike Corp., a Wisconsin corporation ("Purchaser"),
Fadal Engineering Company Inc., a California corporation ("Company"),
David E. de Caussin and Myrtle Rosalie de Caussin, trustees, of the David
and Myrtle de Caussin Family Trust - 1988 ("DM Trust"), and Larry F. de
Caussin and Elsie Margaret de Caussin, trustees, of the Larry and Elsie
de Caussin Family Trust - 1988 ("LE Trust," and collectively with the
DM Trust, "Shareholders").
R E C I T A L S:
A. Shareholders are the beneficial and record owners of all the
issued and outstanding shares of common stock, no par value ("Common
Shares"), of the Company, which constitute the entire equity interest of
the Company.
B. Shareholders desire to sell to Purchaser, and Purchaser
desires to purchase from Shareholders, all of the Common Shares upon the
terms and subject to the conditions set forth in this Agreement.
C. Purchaser is a wholly owned subsidiary of Parent and Parent is
making certain representations, warranties and covenants in this Agreement
as a material inducement to the Company and Shareholders to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and subject
to the terms and conditions herein set forth, the parties hereto hereby
agree as follows:
SECTION 1. SALE AND PURCHASE OF COMMON SHARES.
1.1 Sale and Purchase of Common Shares. At the Closing (as
hereinafter defined) (a) Shareholders shall sell, assign, transfer and
convey all of the Common Shares to Purchaser, (b) each of the Shareholders
shall deliver to Purchaser one or more stock certificates representing the
Common Shares owned by that Shareholder, with duly executed stock powers
attached in proper form for transfer, (c) Purchaser shall purchase all of
the Common Shares and (d) Parent shall cause Purchaser to pay and deliver
to Shareholders the Purchase Price (as hereinafter defined) pursuant to a
pay proceeds letter ("Pay Proceeds Letter"), which shall be executed by
Shareholders and delivered to Purchaser not later than one business day
prior to the Closing Date.
1.2 Unadjusted Purchase Price. In full consideration for the
Common Shares, at the Closing Parent shall cause Purchaser to pay to
Shareholders an aggregate amount in cash equal to One Hundred and Fifty
Million Dollars ($150,000,000) ("Unadjusted Purchase Price"), subject to
adjustment as provided in Section 1.3 ("Purchase Price"), by wire transfer
of immediately available funds to the accounts designated in the Pay
Proceeds Letter and which shall be allocated as set forth on Schedule 1.2.
1.3 Adjustments to Purchase Price.
(a) Not later than one business day prior to the Closing
Date (as hereinafter defined), the Company will deliver or cause the
Company's designated representative to deliver to Purchaser the Company's
estimate of its Total Stockholders' Equity (as hereinafter defined) as of
the Closing Date ("Estimated Total Stockholders' Equity Amount"),
certified by the Company's Chief Financial Officer. If the amount that
results from subtracting $48,575,000 ("Interim Total Stockholders' Equity
Amount") from the Estimated Total Stockholders' Equity Amount is a
negative amount, the Unadjusted Purchase Amount payable by Purchaser
pursuant to Section 1.2 will be reduced by the absolute value of such
negative amount. If the amount that results from subtracting the Interim
Total Stockholders' Equity Amount from the Estimated Total Stockholders'
Equity Amount is a positive amount, the Unadjusted Purchase Amount payable
by Purchaser pursuant to Section 1.2 will be increased by one-half of the
amount of such difference.
(b) As soon as practicable, and in no event more than
60 calendar days after the Closing Date, Shareholders will deliver or
cause Shareholders' designated representative to deliver to Purchaser a
reviewed Balance Sheet of the Company as of the Closing Date ("Closing
Date Balance Sheet") accompanied by a final computation of the Total
Stockholders' Equity as of the Closing Date ("Final Total Stockholders'
Equity Amount"). The Closing Date Balance Sheet will be prepared using
the same accounting principles, policies and practices used in preparing
the Balance Sheet (as hereinafter defined). Subject to Section 1.3(c), if
the Final Total Stockholders' Equity Amount is greater than the Estimated
Total Stockholders' Equity Amount, Parent and Purchaser will pay
immediately to Shareholders one-half the amount by which the Final Total
Stockholders' Equity Amount exceeds the Estimated Total Stockholders'
Equity Amount; if the Final Total Stockholders' Equity Amount is less than
the Estimated Total Stockholders' Equity Amount, Shareholders will pay
immediately to Purchaser one-half the amount by which the Final Total
Stockholders' Equity Amount is less than the Estimated Total Stockholders'
Equity Amount up to the Interim Total Stockholders' Equity Amount, and to
the extent the Final Total Stockholders' Equity Amount is less than the
Interim Total Stockholders' Equity Amount, the Shareholders will also pay
immediately to Purchaser the full amount by which the Final Total
Stockholders' Equity Amount is less than the Interim Total Stockholders'
Equity Amount. Any payment required to be made under this Section 1.3(b)
will bear interest, compounded every 30 days, at the Market Interest Rate
(as hereinafter defined) from the Closing Date to the date of payment.
Without limiting the generality or effect of any other provision hereof,
the Company and Purchaser will, and Purchaser will cause the Company to,
(A) provide Shareholders and their representatives access during normal
business hours to the facilities, personnel and accounting and other
records of the Company to the extent reasonably necessary to permit
Shareholders to prepare the Closing Date Balance Sheet as herein provided
and (B) take such actions as may be reasonably requested by Shareholders
to close, or to assist Shareholders in closing, as of the Closing Date,
the books and accounting records relating to the Company and otherwise
reasonably cooperate with Shareholders and its representatives in the
preparation of the Closing Date Balance Sheet.
(c) If, within 45 calendar days after the date of
Shareholders' delivery of their computation of the Final Total
Stockholders' Equity Amount, Purchaser determines in good faith that the
Final Total Stockholders' Equity Amount is inaccurate, Purchaser will give
notice to Shareholders, within such 45 calendar day period, (i) setting
forth Purchaser's determination of the correct Final Total Stockholders'
Equity Amount and (ii) specifying in reasonable detail Purchaser's basis
for its disagreement with Shareholders' computation. If Purchaser and
Shareholders are unable to resolve any disagreement between them within
10 calendar days after the giving of notice of such disagreement, the
items in dispute will be referred for determination to the Los Angeles
office of Coopers & Lybrand LLP ("Accountants") as promptly as practicable
(which firm of accountants has not provided services to Parent, Purchaser
or their Affiliates in the past 5 years and will not provide services at
anytime prior to completion of their services pursuant to this Section
1.3). The Accountants will make a determination as to each of the items
in dispute, which determination will be (A) in writing, (B) furnished to
the parties hereto as promptly as practicable after the items in dispute
have been referred to the Accountants, (C) made in accordance with this
Agreement, including without limitation the second sentence of
Section 1.3(b), and (D) conclusive and binding upon each of the parties
hereto. In connection with their determination of the disputed items, the
Accountants will be granted reasonable access to the books and records of
the parties hereto and each of the parties will cooperate in good faith
with the Accountants. The fees and expenses of the Accountants will be
borne equally by Shareholders and Purchaser. Within three business days
after the date on which the Accountants furnish to the parties hereto such
firm's written determination of the items in dispute, the appropriate
party will make payment to the other in accordance with this Section 1.3.
Notwithstanding the procedures contemplated by this Section 1.3(c),
undisputed amounts will be promptly paid to the appropriate party.
(d) For purposes of this Agreement, (i) "Total
Stockholders' Equity" means (A) the line item amount shown on the Closing
Date Balance Sheet for "Total Stockholders' Equity," determined in
accordance with the second sentence of Section 1.3(b) (1) without regards
to the Section 338(h)(10) Election (as hereinafter defined) and
(2) eliminating amounts properly classified as (q) "Cash," (r) "Interest
Receivable," (s) "Note Receivable - Officer/Shareholder - Current
Portion," (t) "Cash Surrender Value - Officers' Life Insurance," (u) "Note
Receivable - Officer/Shareholder - Long Term," (v) "Other Receivables" to
the extent of $15,000, and (w) all liabilities that would be properly
reflected on the Closing Date Balance Sheet other than "Accounts Payable,"
"Accrued Expenses," "Customer Deposits," "Contracts Payable" and "Taxes
Other Than Income Tax" (collectively, the items in quotation marks in this
clause (w) constitute "Normal Operating Liabilities") and (ii) "Market
Interest Rate" means a rate of interest per annum equal to the lower of
(A) 2.0% over the interest rate publicly announced by Citibank, N.A. as
its "reference" or "base" rate of interest as in effect on the Closing
Date or, if higher, the last business day immediately preceding the
payment date and (B) the maximum rate of interest allowable under the Laws
(as hereinafter defined) of the State of California.
(e) In addition to all other payments that Shareholders
are entitled to receive under this Agreement, Shareholders shall be paid
an additional amount equal to the incremental tax liability ("Incremental
Tax") to the Shareholders and the Company resulting from the Section
338(h)(10) election made pursuant to Section 6.4(a) hereof and as such
term is defined in Section 11.13 hereof. Purchaser shall pay to
Shareholders at Closing, as part of the Purchase Price, $2,000,000, which
is an estimate of the Incremental Tax (the "Estimate"). Such Estimate
shall be credited towards Purchaser's payment of the Incremental Tax or if
upon calculation of the Incremental Tax it is determined that the
Incremental Tax is less than the amount of the Estimate, then the
Shareholders shall immediately pay any such excess to the Purchaser by
means of wire transfer of immediately available funds to a bank account to
be designated in writing by Purchaser. The Incremental Tax shall
initially be calculated by Shareholders. Such calculation and sufficient
supporting information to permit Purchaser to verify the calculation of
the Incremental Tax shall be provided to Purchaser no later than June 15,
1996 (the "Incremental Tax Notice"). Purchaser shall notify Shareholders
of any disagreement with respect to the calculation of the Incremental Tax
within thirty (30) days of receipt of the Incremental Tax Notice; in the
event Purchaser shall not notify Shareholders of any disagreement within
said thirty (30) day period, Purchaser shall be deemed to have agreed to
Shareholders' computation of the Incremental Tax and shall immediately pay
to Shareholders the Incremental Tax so determined, less the Estimate
previously paid, within five (5) days of such determination, but in no
case sooner than March 15, 1996. If Purchaser and Shareholders are unable
to resolve any disagreement within ten (10) days of Purchaser notifying
Shareholders of the disagreement, the Incremental Tax shall be calculated
by the Accountants taking into account comments of each of Purchaser and
Shareholders. The final determination of the Incremental Tax as resolved
by the Accountants shall occur no later than sixty (60) days after the
date of the Incremental Tax Notice, and Purchaser shall pay to
Shareholders the Incremental Tax, less the Estimate previously paid, no
later than five (5) days after such final determination, but in no case
sooner than March 15, 1996. The payment of the Incremental Tax, less the
Estimate previously paid, shall be made by means of a wire transfer of
immediately available funds to a bank account to be designated in writing
by Shareholders.
The intent of Purchaser and Shareholders with respect to this
Section 1.3(e) is that the proceeds resulting to Shareholders from the
receipt of the Purchase Price net of all federal and California income
taxes applicable thereto equal the proceeds which would have resulted to
Shareholders from the receipt of the Purchase Price net of all federal and
California income taxes applicable thereto had no Section 338(h)(10)
election been made. The provisions of this Section 1.3(e) and the
definition of the term "Incremental Tax" as set forth in Section 11.13
have been prepared based upon the aforesaid stated intent of Purchaser and
Shareholders and this stated intent shall in all events control the
calculation of the Incremental Tax.
SECTION 2. CLOSING AND DELIVERIES.
2.1 Closing. The closing of the transactions contemplated
hereby ("Closing") shall take place at the offices of Jones, Day, Reavis &
Pogue, 555 West Fifth Street, Suite 4600, Los Angeles, California 90013 at
9:00 a.m., Los Angeles time, on April 24, 1995 ("Closing Date").
2.2 Deliveries by Shareholders. At the Closing, Shareholders
shall deliver or cause to be delivered to Purchaser the following items:
(a) one or more certificates representing the Common
Shares, all duly endorsed by Shareholders or accompanied by duly executed
stock powers in proper form for transfer, in either case with signatures
guaranteed in a manner reasonably satisfactory to Purchaser, representing
all of the then outstanding shares of capital stock of the Company and
with all requisite documentary and transfer taxes paid;
(b) the stock books, stock ledgers, minute books and
corporate seals of the Company and all other business books and business
records relating to the business or operation of the Company which are not
maintained at the Company;
(c) the Articles of Incorporation of the Company
("Articles of Incorporation"), certified by the Secretary of State of the
State of California;
(d) a certificate of the Secretary of State of the State
of California as to the good standing of the Company in California;
(e) a franchise tax certificate showing that the Company
has paid its franchise taxes in the State of California;
(f) a certificate of the Secretary of the Company
certifying as to the resolutions authorizing this Agreement, the
transactions contemplated hereby and the Bylaws of the Company ("Bylaws");
(g) the statement contemplated by Section 3.16(i);
(h) the Employment Agreements, in the form attached as
Exhibit A, executed by the persons identified in Exhibit A;
(i) the Non-Competition Agreement ("Non-Competition
Agreement"), in the form attached as Exhibit B-1 and B-2, executed by each
of David de Caussin and Larry de Caussin;
(j) the resignation of each director and officer of the
Company designated on Schedule 2.2, effective as of the Closing;
(k) the legal opinions of counsel to the Company and
counsel to Shareholders, in the form attached as Exhibit C-1 and Exhibit
C-2;
(l) an incumbency certificate for each officer of the
Company executing any documents delivered in connection with the
transactions contemplated hereby;
(m) evidence reasonably satisfactory to Purchaser of
satisfaction in full of the liabilities contemplated to be satisfied under
Section 5.3;
(n) the Agreement of Purchase and Sale ("Property
Agreement"), in the form attached as Exhibit D, executed by Plummer
Street, Ltd., a California limited partnership; and
(o) such other certificates, opinions, documents or
instruments as may reasonably be requested by Purchaser, consistent with
the terms of and transactions contemplated by this Agreement.
2.3 Deliveries by Purchaser. At the Closing, Parent shall
cause Purchaser to and Purchaser shall deliver or cause to be delivered
the following items:
(a) an amount, in cash, equal to the Purchase Price in
the manner provided in Section 1.2;
(b) a certificate of the Secretary of Parent and
Purchaser certifying as to the resolutions authorizing this Agreement and
the transactions contemplated hereby;
(c) the legal opinions of counsel to Parent and
Purchaser, in the form attached as Exhibit E-1 and Exhibit E-2;
(d) a confidential information agreement ("Confidential
Information Agreement") in the form of Exhibit F with respect to each of
the individuals identified on Exhibit F, executed by Purchaser;
(e) the Property Agreement;
(f) the Employment Agreements;
(g) the Non-Competition Agreements; and
(h) such other certificates, opinions, documents or
instruments as may reasonably be requested by Shareholders, consistent
with the terms of and the transactions contemplated by this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND COMPANY.
Each of the Shareholders and the Company jointly and severally
hereby represent and warrant to Purchaser that:
3.1 Organization, Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California and has the corporate power and
authority to own, operate and lease its properties and to carry on its
business as presently being conducted. Given the nature of the Company's
business and location of its properties, the Company is not, and is not
required to be, qualified to do business in any other state, other than
California, except as set forth on Schedule 3.1.
3.2 Validity of Agreement. This Agreement constitutes the
legal, valid and binding obligations of the Company and Shareholders,
enforceable against the Company and Shareholders in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or
principles governing the availability of equitable remedies. The Company
has the corporate power and authority to enter into this Agreement and to
undertake and perform fully the transactions contemplated hereby. All
necessary action has been taken by and on behalf of the Company with
respect to the authorization, execution, delivery and performance of this
Agreement. Each of the Shareholders has full capacity, authority and
right to execute and deliver this Agreement and to transfer and deliver to
Purchaser the Common Shares owned by such Shareholder, free and clear of
any mortgage, lien, pledge, encumbrance, security interest, claim, charge,
defect in title or other restriction (other than those arising solely by
virtue of the failure to register or qualify under applicable state and
federal securities laws and regulations) of any nature whatsoever,
("Lien") or option, warrant, call, convertible or exchangeable security,
right of conversion or exchange, subscription, unsatisfied preemptive
right, other agreement or right of similar nature, whether oral or written
("Option").
3.3 No Breach. Except as set forth on Schedule 3.3, neither
the execution and delivery of this Agreement by Shareholders and the
Company nor the performance of their obligations hereunder will (a)
violate, conflict with or result in a breach of any law, statute, code,
ordinance, regulation or other requirement ("Law") of any government or
political subdivision, whether federal, state or local, or court or
arbitrator ("Governmental Authority") or order, judgment, injunction,
award, decree, ruling, charge or writ of any Governmental Authority
("Order") or the Articles of Incorporation or Bylaws of the Company,
(b) except for any of the following that would not have a material adverse
effect on the business, financial condition, assets, liabilities, results
of operation or prospects of the Company or the transactions contemplated
hereby (a "Material Adverse Effect"), violate, conflict with or result in
a breach or termination of, or otherwise give any contracting party
additional rights or compensation under, or the right to terminate or
accelerate, or constitute (with notice or lapse of time, or both) a
default under the terms of, any note, deed, lease, instrument, security
agreement, mortgage, commitment, contract, agreement, license or other
instrument or oral understanding to which the Company or any Shareholder
is a party or by which any of the assets or properties of the Company or
any Shareholder are bound, or (c) result in the creation or imposition of
any Lien with respect to, or otherwise have an adverse effect upon, the
Shares or any of the properties or assets of the Company or any
Shareholder.
3.4 Capitalization. The authorized capital stock of the
Company consists of 135,000 Common Shares, of which only 18,480 Common
Shares are issued and outstanding, all of which were duly issued and are
fully paid and nonassessable. The Common Shares are the only authorized
class of capital stock of the Company. Each of the Shareholders (a) is
the record and beneficial owner of all of the Common Shares set forth
opposite such Shareholder's name on Schedule 3.4, (b) has full power,
right and authority, and any approval required by Law (other than under
the HSR Act), to make and enter into this Agreement to which such
Shareholder is a party and to sell, assign, transfer and deliver the
Common Shares to Purchaser, and (c) other than restrictions existing on
the date hereof which arise under the Amended and Restated Shareholders
Agreement identified on Schedule 3.3 ("Shareholders Agreement"), which
restrictions shall not exist on the Closing Date, has good and marketable
title to the Common Shares set forth opposite such Shareholder's name on
Schedule 3.4 free and clear of any Lien or Option. Upon the consummation
of the transactions contemplated by this Agreement in accordance with the
terms hereof, Purchaser shall acquire good and marketable title to the
Common Shares, free and clear of any Lien or Option.
3.5 Options or Other Rights. Other than Options existing on
the date hereof which arise under the Shareholders Agreement, which
Options shall not exist on the Closing Date, there are no authorized or
outstanding Options providing for or relating to the issuance, transfer or
voting of any Common Shares or any unissued securities of the Company.
3.6 Subsidiaries and Investments. The Company has no
Subsidiaries (as hereinafter defined) and has no equity interest, directly
or indirectly, in any Person in excess of 5% of the total equity ownership
of such Person ("Investments").
3.7 Consents. On or prior to the Closing, the Company shall
have received all approvals (as set forth on Schedule 3.7) from all
Governmental Authorities, except for those which if not obtained would not
have a Material Adverse Effect, including compliance with the filing
requirements of and waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder ("HSR Act"), and all consents and approvals of
third parties as may be required in connection with the execution,
delivery and performance by the Company or Shareholders of this Agreement
or the consummation of the transactions contemplated thereby or hereby,
except for those which if not obtained would not have a Material Adverse
Effect. Except as set forth on Schedule 3.7, and except for such of the
following which if not obtained would not have a Material Adverse Effect,
no consent, approval or authorization of any individual, sole
proprietorship, partnership, corporation, unincorporated society or
association, trust or other entity or Governmental Authority ("Person") is
required in connection with the execution, delivery and performance by the
Company or Shareholders of this Agreement or the consummation of the
transactions contemplated hereby.
3.8 Financial Statements.
(a) The Company has delivered to Purchaser correct and
complete copies of (i) the audited balance sheets of the Company as of
December 31, 1994, 1993 and 1992 (the 1994 audited balance sheet is
referred to herein as the "Balance Sheet"), and the related audited
statements of operations and cash flows for the years then ended, together
with the notes thereto and the reports thereon of the Company's
independent auditors, and the other financial information included
therewith (collectively, "Audited Financial Statements"), and (ii) the
reviewed balance sheet of the Company as of January 31, 1995 and the
related reviewed statements of operations and cash flows for the one-month
period then ended ("Interim Financial Statements," and collectively with
the Audited Financial Statements, "Financial Statements"), which are
attached as Schedule 3.8.
(b) Except as set forth on Schedule 3.8, the Financial
Statements (i) are accurate and complete in all material respects and are
consistent with the books and records of the Company (which are accurate
and complete in all material respects), (ii) have been prepared in
accordance with generally accepted accounting principles, consistently
applied throughout the periods indicated (except as otherwise stated
therein) and (iii) fairly present the financial position, results of
operations and cash flows of the Company at the respective dates thereof
and for the periods therein indicated, in each case in accordance with
generally accepted accounting principals consistently applied during the
periods involved (except as otherwise stated therein).
3.9 No Material Adverse Changes. Except as set forth on
Schedule 3.9 or Schedule 5.1, since December 31, 1994 there has not been
with respect to the Company any (a) material adverse change in the assets,
liabilities, business, operations, condition (financial or otherwise) or
prospects of the Company; (b) transaction except in the ordinary course of
business consistent with past custom and practice, including with respect
to quantity and frequency ("Ordinary Course of Business"); (c) capital
expenditures or commitments for capital expenditures exceeding $1,000,000
in addition to those set forth on Schedules 3.9 and 3.10) in the
aggregate; (d) unfulfilled commitment as of the date of this Agreement
requiring expenditures by the Company exceeding $100,000 (excluding
commitments expressly described elsewhere in this Agreement, the Schedules
or the Exhibits hereto, payroll or other compensation payments and fringe
benefits, related Taxes and Tax obligations and commitments incurred in
the Ordinary Course of Business); (e) termination or amendment of, or a
failure in any material respect to perform obligations or the occurrence
of any default under, any material contract, lease, agreement or license;
(f) failure to maintain in full force and effect substantially the same
level and types of insurance coverage as in effect on December 31, 1994,
or destruction, damage to, or loss of any asset of the Company (whether or
not covered by insurance) that materially and adversely affects the
assets, liabilities, business, operations, condition (financial or
otherwise) or prospects of the Company; (g) material change in accounting
principles, methods or practices, investment practices, claims, payment
and processing practices or policies other than in connection with the
AS400 conversion; (h) declaration, setting aside, or payment of a dividend
or other distribution in respect of its capital stock, or any direct or
indirect redemption, purchase or other acquisition of any shares of its
capital stock; (i) material revaluation of any assets or material write
down of the value of any inventory; (j) sale, assignment, disposition,
transfer or lapse of any material tangible or intangible asset, including
any rights to any Intellectual Property (as hereinafter defined), except
in the Ordinary Course of Business; (k) Lien placed or incurred with
respect to any tangible or intangible asset, other than liens identified
on Schedule 3.9 or liens identified in the Financial Statements
("Permitted Liens"); (l) increase or commitment to the increase of the
salary or other compensation payable or to become payable to any of its
officers, directors or employees, except in the Ordinary Course of
Business and applicable policies and procedures of the Company; (m)
cancellation of any debt or waiver or release of any material right or
claim, except for cancellations, waivers and releases in the Ordinary
Course of Business (i) which do not exceed $100,000 in the aggregate, or
(ii) with respect to machinery, equipment and inventory in the Ordinary
Course of Business; (n) issuance or sale of any equity security or of any
security convertible into or exchangeable for equity securities; (o)
amendment to its Articles of Incorporation or Bylaws; or (p) agreement or
understanding to take any of the actions described in this Section 3.9.
3.10 Agreements, Etc. Except as set forth on Schedule 3.10 or
as identified in another Schedule to this Agreement, the Company is not a
party to or bound by (a) any agreement, contract or commitment, whether
written or oral, relating to the employment of any Person, or any bonus,
deferred compensation, pension, profit sharing, stock option, employee
stock purchase, retirement insurance, health, welfare or other employee
benefit plan, (b) any loan or advance to, or Investment in, any other
Person or any agreement, contract or commitment, whether written or oral,
relating to the making of any such loan, advance or Investment, (c) any
indemnity, or any guarantee or other contingent liability, whether written
or oral, in respect of any indebtedness or obligation of any other Person
(other than the endorsement of negotiable instruments for collection in
the Ordinary Course of Business), (d) any agreement, contract or
commitment, whether written or oral, limiting the freedom of the Company
to engage in any line of business or to compete with any other Person,
(e) agreements, contracts or commitments, pursuant to which the obligation
of any party thereto is in excess of $100,000 except for sales of
inventory or purchases of raw material or outside services in the Ordinary
Course of Business or (f) to the best knowledge of the Company, any other
material agreement, contract, lease, arrangement, commitment, warranty or
instrument, whether written or oral, express or implied. All of such
agreements, arrangements, commitments, contracts and instruments set forth
on Schedule 3.10 and marked with a double asterisk (**) are in full force
and effect and enforceable in accordance with its terms, there exists no
material default or breach thereunder or event or circumstance which would
constitute (with notice or lapse of time or both) a material default or
breach by any party thereto, and the Company has not received any notice
claiming that the Company has committed any such default or breach or
indicating the desire or intention of any party thereto to amend, modify,
rescind or terminate the same. To the best knowledge of the Company, all
of such agreements, arrangements, commitments, contracts and instruments
set forth on Schedule 3.10 (or required to be set forth on Schedule 3.10)
other than those marked with a double asterisk are in full force and
effect and enforceable in accordance with its terms, there exists no
material default or breach thereunder or event or circumstance which would
constitute (with notice or lapse of time or both) a material default or
breach by any party thereto, and the Company has not received any notice
claiming that the Company has committed any such default or breach or
indicating the desire or intention of any party thereto to amend, modify,
rescind or terminate the same.
3.11 Identification of Depositories and Authority. Schedule
3.11 lists the names and addresses of all banks, trust companies, savings
and loan associations and other financial institutions in which the
Company has accounts, deposits or safe deposit boxes and the signatories
thereunder.
3.12 Labor Matters. Except as set forth on Schedule 3.12:
(a) the Company has paid in full to, or accrued on behalf of, all
employees of the Company all wages, salaries, commissions, bonuses and
other direct compensation for all services performed by them and all
amounts required to be reimbursed to such employees; (b) to the best
knowledge of the Company, the Company is in material compliance with all
federal, state, local and foreign laws and regulations respecting
employment and employment practices, terms and conditions of employment
and wages and hours; (c) there is no unfair labor practice complaint
against the Company pending of which the Company has received notice
before the National Labor Relations Board or any comparable state, local
or foreign agency; (d) there is no labor strike, dispute, slowdown or
stoppage actually pending of which the Company has received notice or, to
the best knowledge of the Company, threatened against or involving the
Company; (e) to the best knowledge of the Company, there are no efforts
being made on the part of any labor union or other labor organization or
employee bargaining group with respect to representation or organization
of the Company's employees; and (f) to the best knowledge of the Company,
no grievance which would have a Material Adverse Effect nor any
arbitration proceeding arising out of or under collective bargaining
agreements is pending and no claim therefor has been asserted. There are
no collective bargaining agreements or other employee representation
agreements which exist or are currently being negotiated by the Company.
3.13 Licenses and Permits. Schedule 3.13 sets forth a
complete and accurate list and description of all material licenses,
permits (other than building permits) and other authorizations of any
Governmental Authority held by the Company ("Governmental Permits") and
used by it in the conduct of its business. Complete and correct copies of
all such Governmental Permits as currently in effect have been, or at
least twenty (20) days prior to the Closing will be, made available to
Purchaser. To the best knowledge of the Company, all such Governmental
Permits are currently in full force and effect. The Company is in
material compliance with the terms of such licenses, permits and
authorizations and there is no pending or, to the best knowledge of the
Company, threatened termination, expiration or revocation thereof. Except
for the licenses, permits, and authorizations set forth and described on
Schedule 3.13, to the best knowledge of the Company, neither the Company's
conduct of its business nor its ownership or use of any of its properties
or assets is dependent on any license, permit or other authorization,
whether written or oral.
3.14 Intellectual Property. Schedule 3.14 sets forth an
accurate and complete list of all letters patents, patents, patent
applications, patent licenses, material software licenses, material
know-how licenses, material trade names, material brand names, material
trademarks, material copyrights, material service marks, trademark
registrations and applications, service mark registrations and
applications and copyright registrations and applications and all other
material intangible property rights owned or used by the Company in the
operation of its business (collectively, "Intellectual Property"). Except
as set forth on Schedule 3.14 to the best knowledge of the Company, the
Company, without payment of any license fee, royalty or similar charge,
owns the entire right, title and interest in and to the Intellectual
Property and the trade secrets, know-how and technology used in the
operation of its business, and the Company has the exclusive right to use
and license the same without infringement or violation of the rights of
others. To the best knowledge of the Company, there are no pending or
threatened proceedings or litigation or other adverse claims (or basis
therefor) affecting or challenging the Intellectual Property or the trade
secrets, know-how or technology used in the operation of the Company's
business. To the best knowledge of the Company, no Person is infringing
the Intellectual Property or the trade secrets, know-how or technology
used in the operation of the Company's business.
3.15 Litigation and Orders. Except as set forth on
Schedule 3.15 or any other Schedule to this Agreement, there is no, nor
has there been in the last five years, any material claim, litigation,
action, suit, proceeding, investigation or inquiry, administrative or
judicial, at law or in equity, before or by any Governmental Authority
pending of which the Company has been notified or, to the best knowledge
of the Company, threatened against or affecting the Company or any of its
properties or assets, including, without limitation, any seeking to enjoin
or prevent the consummation of the transactions contemplated hereby, or
otherwise claiming this Agreement or the transactions contemplated hereby
or the consummation thereof are improper. To the best knowledge of the
Company, there is no basis upon which any such material claim, litigation,
action, suit, proceeding, investigation or inquiry could reasonably be
brought or initiated. Except as set forth on Schedule 3.15, the Company
and its properties and assets are not subject to any Order.
3.16 Tax Matters.
(a) Except as set forth on Schedule 3.16, the Company
has timely filed all Tax Returns (as hereinafter defined) required to be
filed by it, to the best knowledge of the Company, each such Tax Return
has been prepared in material compliance with all applicable laws and
regulations, and all such Tax Returns are true and accurate in all
material aspects. All Taxes (as hereinafter defined) due and payable by
the Company have been paid. The Company has delivered to Purchaser
complete copies of all federal income tax Returns, filed with respect to
the Company for taxable periods ended on or after December 31, 1989, and
all examination reports and statements of deficiencies assessed against or
agreed to by the Company with respect to such taxable periods.
(b) Except as set forth on Schedule 3.16:
(i) with respect to each taxable period of the
Company, either such taxable period has been audited by the relevant
taxing authority or the time for assessing or collecting income Tax with
respect to each such taxable period has closed and such taxable period is
not subject to review by any relevant taxing authority;
(ii) no deficiency or proposed adjustment which
has not been settled or otherwise resolved for any amount of Tax has been
proposed, asserted or assessed by any taxing authority against the
Company;
(iii) the Company has not consented to
extend the time in which any Tax may be assessed or collected by any
taxing authority with respect to any taxable period for which the statute
of limitations is open;
(iv) the Company has not requested or been
granted an extension of the time for filing any Tax Return to a date later
than the Closing Date;
(v) there is no action, suit, taxing authority
proceeding or audit now in progress or pending with respect to which the
Company has been notified or, to the best knowledge of the Company,
threatened against or with respect to the Company with respect to any Tax;
(vi) since 1986, the Company has not been a
member of an affiliated group as defined in Section 1504 of the Code (or
any analogous combined, consolidated or unitary group defined under state,
local or foreign income Tax law) of which the Company is or has been a
member ("Affiliated Group") or filed or been included in a combined,
consolidated or unitary income Tax Return;
(vii) the Company is not a party to or
bound by any Tax allocation or Tax sharing agreement and has no current or
potential contractual obligation to indemnify any other Person with
respect to Taxes;
(viii) the Company does not reasonably
expect any taxing authority to claim or assess any additional Taxes for
any period ending on or prior to the Closing Date and is not aware of any
facts which would constitute grounds for the assessment of any Taxes for
any period prior to the Closing Date;
(ix) the Company does not own any interest in
real property in any jurisdiction in which a Tax (other than a net income
or franchise tax) will be imposed on a transfer of any interest in real
property as a result of the transactions contemplated by this Agreement;
(x) no claim has ever been made by a taxing
authority in a jurisdiction where the Company does not pay Tax or file Tax
Returns that the Company is or may be subject to Taxes assessed by such
jurisdiction;
(xi) the Company has withheld and paid, or in
the case of Taxes not currently due has made provisions to pay, all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, creditor, independent contractor or other third
party;
(xii) the Company has no permanent
establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country; and
(xiii) to the best knowledge of the Company,
the Company has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662 for Tax Returns
due after December 31, 1989 and within the meaning of Code Section 6661
for Tax Returns due before January 1, 1990.
(c) To the best knowledge of the Company, Schedule 3.16
contains a list of states, territories and jurisdictions (whether foreign
or domestic) in which the Company is required to file Tax Returns relating
to the operations of the Company.
(d) Since January 1, 1987, the Company has had in effect
a valid election under Section 1362 of the Code and any corresponding
state tax provision to be an S corporation and no such election has been
terminated.
(e) Except as set forth on Schedule 3.16, the Company is
not a party to any "safe harbor lease" within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982, nor has the Company entered
into any compensatory agreements with respect to the performance of
services for which payment thereunder would result in a nondeductible
expense to the Company pursuant to Section 280G of the Code.
(f) The Company has not agreed, nor is it required, to
make any adjustment under Section 481(a) of the Code by reason of a change
in accounting method or otherwise.
(g) The Company has not participated in or cooperated
with an international boycott within the meaning of Section 999 of the
Code.
(h) Except as set forth on Schedule 3.16, the Company
has not entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, nor has the Company
entered into an interest rate swap, currency swap or other similar
transaction.
(i) The Common Shares of the Company do not constitute
"United States real property interests" within the meaning of
section 987(c) of the Code. At the Closing, the Company will provide
Purchaser with a statement to that effect meeting the requirements of
Treasury Regulations Sections 1.1445-2(c)(3) and 1.897.2(h).
3.17 Environmental.
(a) Except as set forth on Schedule 3.17, to the best
knowledge of the Company, the Company's current and former operations,
properties and assets (i) are and have been in compliance in all material
respects with all Environmental Laws (as hereinafter defined), and (ii)
are not the subject of any federal, state, local or foreign investigation
evaluating whether any remedial or other response action is needed to
respond to a release or threatened release of any Hazardous Substance (as
hereinafter defined). For purposes of this Agreement, (i) "Environmental
Law(s)" shall mean any statute, ordinance, code, law, rule, regulation,
order, or other requirement, standard or procedure enacted, adopted, or
applied by any Governmental Authority, relating to pollution, protection
of worker health and safety or protection of public health, safety or
welfare or the environment, including, without limit, those relating to
emissions, discharges, releases or threatened releases of Hazardous
Substances (as hereafter defined) into the environment, or otherwise
relating to the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Substances, and (ii) "Hazardous Substance" shall mean any pollutant,
contaminant, industrial, toxic, hazardous or noxious substance or waste
which is regulated by any Governmental Authority, including, without
limit, any petroleum or petroleum compounds (refined or crude), flammable
substances, explosives, radioactive materials, asbestos or asbestos-
containing materials, polychlorinated biphenyls ("PCBs"), or any other
materials or pollutants which pose a hazard or potential hazard to the
Property or to persons in or about the Property, or cause the Property to
be in violation of any Environmental Law, whether existing as of the date
hereof, previously enforced, or subsequently enacted.
(b) Except as set forth on Schedule 3.17:
(i) To the best knowledge of the Company, the
Company has not generated, stored, transported, recycled, treated,
disposed of or otherwise handled any Hazardous Substances for itself or
for any other Person in violation of Environmental Law, nor, to the best
knowledge of the Company, has any other Person at any time stored,
transported, recycled, treated, disposed of or otherwise handled any
Hazardous Substances on any property owned or leased by the Company at any
time in violation of Environmental Law;
(ii) to the best knowledge of the Company,
there are no former or current locations where any Hazardous Substances
from the operation of the business have been stored, treated, recycled or
disposed of in violation of Environmental Law;
(iii) to the best knowledge of the Company,
there are no Hazardous Substances located on, within or under any land,
buildings or other improvements owned or leased by the Company at any time
in violation of Environmental Law including, without limitation, any
surface and subsurface waters on or under any real property owned or
leased by the Company at any time;
(iv) to the best knowledge of the Company,
there has not been and there is no ongoing or threatened release, and
there has been no past release, of Hazardous Substances into the
environment from the operation of the Company in violation of
Environmental Law or from any facility in violation of Environmental Law
at which any Hazardous Substances generated by the Company have been
stored, treated, recycled or disposed of;
(v) to the best knowledge of the Company,
there are no PCBs nor any asbestos or asbestos-containing material located
on or within any land, building or other improvement owned or leased by
the Company;
(vi) to the best knowledge of the Company, the
Company is not under any current obligation imposed by any Governmental
Authority to make any expenditure to achieve or maintain compliance with
any Environmental Law other than under Environmental Laws applicable
generally to persons engaged in businesses similar to the Company's
business;
(vii) the Company has no knowledge of any
information indicating that any Person, including any employee, may have
impaired health, or that the environment may have been damaged, as the
result of the operation of the business or the release or threat of
release of Hazardous Substances from or on any land, building or other
improvement owned or leased by the Company;
(viii) the Company has not received notice
of any claim or investigation based on Environmental Law, including but
not limited to CERCLA;
(ix) to the best knowledge of the Company, no
underground storage tanks are or have ever been located on any properties
owned or leased by the Company; and
(x) the Company has not received notice under
the citizen suit provision of any Environmental Law in connection with any
properties owned or operated by the Company, or their activities thereon.
3.18 Insurance. Schedule 3.18 sets forth a true and complete
list and brief description (including applicable premiums and deductibles)
of all policies of, and binders evidencing, life, fire, workmen's
compensation, product liability, general liability and other forms of
insurance, including title insurance, owned or maintained by the Company
(other than key man insurance). To the best knowledge of the Company,
such policies (which are, to the best knowledge of the Company, sufficient
for compliance with law and contractual obligations) are in full force and
effect, are not maintained by Affiliates of the Company other than the
20701 Plummer Street L.P. and, to the best knowledge of the Company, the
Company is not in default under any of them and has not received a notice
of cancellation with respect to any insurance policies.
3.19 Accounts Receivable. All trade and other accounts
receivable of the Company are valid and bona fide obligations due to the
Company and are, to the best knowledge of the Company, collectible in the
Ordinary Course of Business, net of any allowance for doubtful accounts
reflected on the Company's Financial Statements.
3.20 Real Property and Leases; Equipment.
(a) The Company owns no real property. Schedule 3.20
constitutes a complete and correct list of all real properties leased or
subleased by the Company. The Company has delivered or caused to be
delivered true, complete and correct copies of all documents evidencing
the lease or sublease of the leased properties reflected on Schedule 3.20.
Each such lease and sublease is valid and in full force and effect and
enforceable in accordance with its terms and has not been further
supplemented, amended or modified. Except as set forth on Schedule 3.20,
there exists no material event of default, or event, occurrence, condition
or act, which constitutes or would constitute (with notice or lapse of
time or both) a material default in any respect under any such leases or
subleases. The Company has not received any notice of any event of
default or any event, occurrence, condition or act which constitutes or
would constitute (with notice or lapse of time or both) a default in any
respect under any lease or subleases. Except as set forth on Schedule
3.20, to the best knowledge of the Company, the building fixtures and
improvements thereon, and the present use thereof, comply, in all material
respects with all restrictive covenants, deeds and other restrictions and
all zoning laws, ordinances and regulations of Governmental Authorities
having jurisdiction thereof, including provisions relating to permissible
nonconforming uses, if any, and such premises are not presently affected,
nor to the best knowledge of the Company threatened, by any condemnation
or eminent domain proceeding nor do they constitute a nuisance to or
interfere with the rights of any Person.
(b) Except as set forth on Schedule 3.20, all equipment
and tangible personal property used by the Company are either owned, free
and clear of all Liens other than Permitted Liens, or are (i) used under
capital leases reflected on the Financial Statements or (ii) used under
operating leases. Such Liens, individually and in the aggregate, are not
substantial in amount, do no detract from the value of, or impair the use
of, in the businesses of the Company, the properties subject thereto, and
have arisen only in the Ordinary Course of Business and consistent with
past practice. Schedule 3.20 sets forth a complete and accurate
description of all capital leases and operating leases pursuant to which
the Company leases property. All such leases are valid and in full force
and effect and enforceable in accordance with their terms and have not
been further supplemented, amended or modified. The Company has not
received any notice of, and there exists no event of material default, or
event, occurrence, condition or act, which constitutes or would constitute
(with notice or lapse of time or both) a material default in any respect
under any such lease. All of the equipment and tangible personal property
owned or leased by the Company is in good operating condition (other than
equipment which is in the process of construction) and repair, subject to
normal wear and tear, and to the best knowledge of the Company, none of
such assets are in need of maintenance or repairs except for ordinary,
routine maintenance. The real property and assets owned or leased by the
Company on the date hereof include all properties and assets necessary to
permit the Company to conduct its respective business and operations in
all material respects in the manner in which it has been conducted since
December 31, 1994.
3.21 Inventories. Except as set forth on Schedule 3.21, to
the best knowledge of the Company, the inventories of the Company are of a
quality and quantity useable and saleable in the Ordinary Course of
Business, subject to appropriate and adequate allowances reflected in the
Financial Statements for obsolete, excess, slow-moving and other irregular
items.
3.22 Undisclosed Liabilities. Except (a) as set forth on
Schedule 3.22 or any other Schedule to this Agreement, (b) as set forth in
the Financial Statements, (c) such of the following as do not exceed
$250,000 individually or $1,000,000 in the aggregate or (d) such as may
have arisen in the Ordinary Course of Business after December 31, 1994
(which are not otherwise prohibited by, in violation of or which will
result in a breach of the representations, warranties and covenants of the
Company and Shareholders contained in this Agreement), there are no debts,
liabilities or obligations, including, to the best knowledge of the
Company, contingent or otherwise, of the Company.
3.23 Customers and Suppliers. Schedule 3.23 sets forth (i)
the Company's 20 largest (in terms of revenue) customers (including
distributors) for the years ended December 31, 1992, 1993 and 1994, and
(ii) the Company's 12 largest suppliers for the fiscal year ended December
31, 1994 and, with respect to such suppliers, amounts paid to such
suppliers by the Company for the fiscal years ended December 31, 1992,
1993 and 1994 ("Material Customers and Suppliers"). Except as set forth
on Schedule 3.23, (a) all Material Customers and Suppliers continue to be
customers or licensees or suppliers or licensors of the Company and none
of such Material Customers and Suppliers has reduced materially its
business with the Company from the levels achieved during the year ended
December 31, 1994, and the Company has no reason to believe that any such
reduction will occur; (b) the Company is not involved in any claim,
dispute or controversy with any of its Material Customers and Suppliers
other than claims, disputes or controversies arising in the Ordinary
Course of Business which are not material in amount; and (c) the Company
is not involved in any claim, dispute or controversy with any of its other
customers or licensees or any of its suppliers or licensors which,
individually or in the aggregate, could reasonably be anticipated to have
a material adverse effect upon the Company's assets, liabilities,
business, operations, condition (financial or otherwise) or prospects.
3.24 Compliance With Laws. Except as set forth on Schedule
3.24 or any other Schedule to this Agreement, to the best knowledge of the
Company, the Company has complied with, and is not in violation of or in
default under, any Law or Order applicable to the Company or to any of its
businesses, assets, properties or employees the violation of which could
reasonably be expected to have a material adverse effect upon the
Company's assets, liabilities, business, operations, condition (financial
or otherwise) or prospects.
3.25 No Brokers', Finders' or Insider Fees. Except as set
forth on Schedule 3.25, no Person has, or immediately following the
consummation of the transactions contemplated hereby will have, as a
result of any act or omission of the Company or Shareholders, any right,
interest, or valid claim against the Company or Purchaser for any
commission, fee or other compensation as a finder or broker in connection
with the transactions contemplated by this Agreement, nor are there any
fees or any payments or promises of payment, however characterized, other
than as contemplated by this Agreement, which have been paid or which are
or may become payable in connection with the transactions contemplated
hereby to the Company, Shareholders or any director, officer or employee
of the Company, or any Affiliate of any of the foregoing which is not
satisfied on or prior to Closing.
3.26 Interests in Clients, Customers, Etc. Except as set
forth on Schedule 3.26, none of the Shareholders have any direct or
indirect contract, equity or similar interest (a) in, or is a director,
officer or employee of, any Person which is a client, customer, supplier,
lessor, lessee, debtor, creditor or competitor or potential competitor of
the Company, (b) in any property, asset or right which is owned or used by
the Company in the conduct of its respective business, or (c) in any
contractual relationship with the Company other than the employment of
Shareholders as employees of the Company or as provided in this Agreement.
3.27 Product Warranty and Product Liability. Except as set
forth on Schedule 3.27, there are (i) to the best knowledge of the
Company, no product warranty claims (other than claims arising in the
Ordinary Course of Business) pending of which the Company has received
notice, or threatened against the Company, (ii) product liability claims
pending of which the Company has received notice or, to the best knowledge
of the Company, threatened against the Company and, (iii) to the best
knowledge of the Company, no state of facts or the occurrence of any event
forming the basis for any such product warranty, product liability or
other tort claim. The Company has provided Purchaser with a complete and
accurate list of all warranty information provided to its customers.
Schedule 3.27 sets forth a complete and accurate summary of (i) material
product warranty claims outside the Ordinary Course of Business and (ii)
product liability claims made against the Company within the past five
years.
3.28 Employee Benefit Plans; ERISA.
(a) Identification of Plans/Definitions. Schedule 3.28
includes a complete listing or description of all "employee benefit
plans," as defined in Section 3(3) of ERISA (as hereinafter defined), and
all other deferred compensation, severance, bonus, incentive, stock
option, salary continuation, excess benefit, employee insurance or similar
compensation or welfare benefit plans, contracts, programs, funds, or
arrangements of any kind (whether written or oral, qualified or
nonqualified, funded or unfunded, foreign or domestic, currently effective
or terminated) and any trust, escrow, or similar agreement related
thereto, whether or not funded, in respect of any present or former
employees, directors, officers, shareholders, consultants, or independent
contractors of the Company or any predecessor or a Controlled Group
Member, or to which the Company or any predecessor or a Controlled Group
Member has at any time during the past five years made or is required to
make payments, transfers, or contributions (the above hereinafter
individually or collectively referred to as "Employee Plan" or "Employee
Plans", respectively). For purposes of Section 3.28: (i) "Controlled
Group Member" means each trade or business (whether or not incorporated)
which together with the Company would be treated as a "single employer"
within the meaning of Code Section 414(b), (c), (m), or (o) or Section
4001 of ERISA, and includes all "leased employees" attributable to that
single employer under Code Section 414(n) or (o), (ii) "ERISA" means the
Employee Retirement Income Security Act of 1974, as amended, and
(iii) "WARN" means the Worker Adjustment and Retraining Notification Act,
29 U.S.C. Section 2101-2109 (1989).
(b) Delivery of Relevant Documents. Company has
delivered or made available to Purchaser (i) all current and prior plan
documents with amendments for each Employee Plan or, in the case of an
unwritten Employee Plan, a written description thereof, (ii) all actions
taken by the board of directors for the Company adopting the Employee
Plans and any amendments thereto, (iii) all determination letters from the
Internal Revenue Service ("IRS") with respect to any of the Employee
Plans, (iv) all current and prior summary plan descriptions, description
of material modifications, annual reports, and summary annual reports, (v)
all current and prior trust agreements, insurance contracts, and other
documents relating to the funding or payment of benefits under any
Employee Plan, and (vi) any other documents, forms or other instruments
relating to any Employee Plan reasonably requested in writing by
Purchaser.
(c) Operational Compliance. Except as provided on
Schedule 3.28, to the best knowledge of the Company, each Employee Plan
has been maintained, operated, and administered in compliance with its
terms and any related documents or agreements and in compliance with all
Laws.
(d) Qualified for Tax-Exempt Status. To the best
knowledge of the Company, each Employee Plan intended to qualify under
Code Section 401(a) is so qualified (or in the case of the Company's
401(k) is in the process of being so qualified), and has heretofore been
determined by the IRS to be so qualified (or in the case of the Company's
401(k) is in the process of being so qualified), and, to the best
knowledge of the Company, each trust maintained in connection with each
such plan is tax-exempt under Code Section 501(a), and has heretofore been
determined by the IRS to be exempt (or in the case of the Company's 401(k)
is in the process of being so determined), and nothing has occurred since
the date of any such determination that could reasonably be expected to
give the IRS grounds to revoke such determination.
(e) All Contributions Deductible. To the best knowledge
of the Company, all contributions, transfers, and payments made by or on
behalf of the Company in respect of any Employee Plan, other than
transfers incident to an incentive stock option plan within the meaning of
Code Section 422A, have been or are fully deductible under the Code.
(f) [Omitted]
(g) No Risk of Assessments or Claims. Except as set
forth on Schedule 3.28, to the best knowledge of the Company, there is no
pending or threatened assessment, complaint, claim (other than a routine
claim for benefits), proceeding, audit, or investigation of any kind in or
before any Governmental Authority with respect to any Employee Plan, nor
is there any basis for one.
(h) No Prohibited Transactions. No "prohibited
transaction" within the meaning of ERISA Sections 406 or 407 or Code
Section 4975 to which a statutory, class or individual exemption does not
apply, nor any breach of a duty imposed by Title I of ERISA, has occurred
with respect to any Employee Plan, nor is any request pending at, or
contemplated to be filed with, the Department of Labor for an exemption
from, or an advisory opinion with respect to, any such matter.
(i) Insurance Premiums Paid/Insurer Solvency. To the
best knowledge of the Company, any insurance premium with respect to any
Employee Plan and any premium imposed on the Company or Controlled Group
Member under ERISA Section 4007 that is required or payable through the
Closing Date will have been paid, accrued, and booked on or before the
Closing Date, and, with respect to any insurance policy related to any
Employee Plan, there is no currently determinable liability of the Company
in the nature of a retroactive rate adjustment, loss sharing arrangement,
or other actual or contingent liability, nor would there be any such
liability if such insurance policy was terminated on the Closing Date. To
the best knowledge of the Company, no insurance company issuing any such
policy is in receivership, conservatorship, liquidation or similar
proceeding and, to the best knowledge of the Company, no such proceedings
with respect to any insurer are imminent.
(j) No Payments Due. All benefits, expenses, and other
amounts due and payable under any Employee Plan, and all contributions,
transfers, or payments required to be made to any Employee Plan, have been
timely paid or made, accrued, and booked.
(k) No Liability under Prior Plans or Foreign Plans.
With respect to any "pension plans," within the meaning of Section 3(2) of
ERISA, maintained or contributed to, currently or in the past, by the
Company or any Controlled Group Member, or to which the Company or a
Controlled Group Member has or has had an obligation to contribute,
neither the Company nor Shareholders have any liability for or in
connection with the funding, termination or reorganization of, or the
withdrawal of the Company or a Controlled Group Member from, any such
pension plan and no Employee Plan is established and maintained outside
the United States.
(l) Compliance with COBRA. With respect to each group
health plan that is benefiting any current or former employee of the
Company or a Controlled Group member, the Company and each Controlled
Group Member has complied with the continuation coverage requirements of
Code Section 4980B and Part 6 of Title I of ERISA.
(m) No Retiree Liability. No Employee Plan provides
benefits, including, without limitation, death or medical benefits, beyond
termination of service or retirement other than (i) coverage mandated by
law, (ii) death or retirement benefits under any Employee Plan qualified
under Code Section 401(a), or (iii) deferred compensation benefits to the
extent reflected on the books of the Company.
(n) Bonding of Plan Officials. Each "fiduciary" and
"plan official" as defined in ERISA Section 412 of each Employee Plan is
bonded to the extent required by ERISA Section 412.
(o) No Leased Employees. There are no leased employees
within the meaning of Code Section 414(n) or (o), or the regulations
thereunder, who perform services for the Company or a Controlled Group
Member.
(p) No Indemnification Agreements. Neither a Controlled
Group Member, the Company, the Shareholder nor any Employee Plan has
agreed to guarantee or indemnify the performance of any Person with
respect to any Employee Plan.
(q) No Golden Parachutes. Any Employee Plan that
provides for "parachute payments" within the meaning of Code Section 280G
provides that "excess parachute payments" will not be paid thereunder.
(r) No Future Undisclosed Obligations. Shareholders and
the Company have taken no action directly or indirectly to obligate the
Company to institute any plan, program, arrangement or agreement for the
benefit of employees or former employees of the Company other than the
Employee Plans, nor have the Shareholders or the Company taken any action
directly or indirectly to obligate the Company to amend any Employee Plan,
other than amendments required by law or which are solely technical in
nature.
(s) No Severance Plan. Except as set forth on
Schedule 3.28, there is no Employee Plan under which any employee of the
Company is entitled to claim or receive severance pay or benefits.
(t) Compliance with WARN. Within 90 calendar days prior
to the date hereof, the Company has not had a layoff of any of its
employees or taken any other action which constitutes a plant closing or
mass layoff under WARN. The Company has complied in all respects with the
applicable provisions of WARN.
(u) No Termination of Overfunded Plan. Since
December 31, 1988, no Employee Plan has been terminated with assets in
excess of the amount required in order to satisfy all liabilities to plan
participants and beneficiaries.
(v) Medicare Secondary Payor Compliance. Each Employee
Plan that is subject to Section 1862(b)(1) of the Social Security Act has
been operated in compliance with the secondary payor requirements of
Section 1862(b)(1) of such Act.
(w) No Welfare Plan Funding Vehicle. No Employee Plan
is or at any time was funded through a "welfare benefit fund" as defined
in Section 419(e) of the Code, and no benefits under any Employee Plan are
or at any time have been provided through a voluntary employees'
beneficiary association (within the meaning of Section 501(c)(9) of the
Code or a supplemental unemployment benefit plan (within the meaning of
Section 501(c)(17) of the Code).
(x) No Payment or Obligation Triggered by Transaction.
The execution and performance of this Agreement will not (i) constitute a
stated triggering event under any Employee Plan that will result in any
payment (whether of severance pay or otherwise) becoming due from
Shareholders or Company to any officer, employee, or former employee (or
dependents of such employee), or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due to any employee,
officer or director of Company.
(y) No Defined Benefit/Title IV Liability. Neither the
Company nor a Controlled Group Member has, or has had within the past six
years, an obligation to contribute to a (i) "defined benefit plan" as
defined in Section 3(35) of ERISA, (ii) a pension plan subject to the
funding standards of Section 302 of ERISA or Section 412 of the Code,
(iii) a "multiemployer plan" as defined in Section 3(37) of ERISA or
Section 414(f) of the Code, or a "multiple employer plan" within the
meaning of Section 210(a) of ERISA or Section 413(c) of the Code.
3.29 Disclosure. To the best knowledge of the Company,
neither the Company nor Shareholders have withheld from Purchaser any
material facts relating to the assets, liabilities, business, operations,
condition (financial or otherwise) or prospects of the Company that would
be required to be disclosed as an exception to the representations and
warranties set forth herein. To the best knowledge of the Company, no
representation, warranty or statement made on behalf of the Company or
Shareholders (i) in this Agreement, or (ii) in the Exhibits or Schedules
hereto contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained therein, in
light of circumstances in which they were or are made, not false or
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser jointly and severally hereby
represent and warrant to Shareholders and the Company that:
4.1 Investment Intent. The Common Shares are being purchased
for Purchaser's own account for investment and not with the view to, or
for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act.
4.2 Validity of Agreement. This Agreement constitutes the
legal, valid and binding obligation of Parent and Purchaser, enforceable
against Parent and Purchaser in accordance with its terms. Parent and
Purchaser have the corporate power and authority to enter into this
Agreement and to undertake and perform fully the transactions contemplated
hereby. All necessary corporate action has been taken by and on behalf of
Parent and Purchaser with respect to the authorization, execution,
delivery and performance of this Agreement.
4.3 No Breach. Neither the execution and delivery of this
Agreement by Parent and Purchaser nor the performance of their obligations
hereunder will (a) violate, conflict with or result in a breach of any Law
of any Governmental Authority or Order or the Articles of Incorporation or
Bylaws of Parent or Purchaser, (b) violate, conflict with or result in a
breach or termination of, or otherwise give any contracting party
additional rights or compensation under, or the right to terminate or
accelerate, or constitute (with notice or lapse of time, or both) a
default under the terms of, any note, deed, lease, instrument, security
agreement, mortgage, commitment, contract, agreement, license or other
instrument or oral understanding to which Parent or Purchaser is a party
or by which any of the assets or properties of Parent or Purchaser are
bound, or (c) result in the creation or imposition of any Lien with
respect to, or otherwise have an adverse effect upon, any of the
properties or assets of Parent or Purchaser.
4.4 Financing. Purchaser has adequate financing in place to
consummate the purchase of the Common Shares.
4.5 Subsidiary Status. Purchaser is a wholly owned
subsidiary of Parent.
4.6 Parent Status. Parent has outstanding securities which
are registered under Section 12 of the Securities Exchange Act of 1934.
4.7 No Brokers', Finders', or Insider Fees. No Person has
or, immediately following the consummation of the transactions
contemplated hereby, will have, as a result of any act or omission of
Purchaser, any right, interest or valid claim against the Company or
Shareholders for any commission, fee or other compensation as a finder or
broker in connection with the transactions contemplated by this Agreement.
4.8 Consents. On or prior to the Closing, Parent and
Purchaser shall have received all approvals from all Governmental
Authorities, except for those which if not obtained would not have a
Material Adverse Effect (as applicable to Parent and Purchaser), including
compliance with the filing requirements of and waiting period under the
HSR Act and all consents and approvals of third parties as may be required
in connection with the execution, delivery and performance by Parent and
Purchaser of this Agreement or the consummation of the transactions
contemplated thereby or hereby, except for those which if not obtained
would not have a Material Adverse Effect. Except for such of the
following which if not obtained would not have a Material Adverse Effect,
no consent, approval or authorization of any Person is required in
connection with the execution, delivery and performance by Parent and
Purchaser of this Agreement or the consummation of the transactions
contemplated hereby.
4.9 Disclosure. To the best knowledge of Parent and
Purchaser, neither Parent nor Purchaser have withheld from the Company or
the Shareholders any material facts relating to the assets, liabilities,
business, operations, condition (financial or otherwise) or prospects of
Parent or Purchaser that would be required to be disclosed as an exception
to the representations and warranties set forth herein. To the best
knowledge of Parent and Purchaser, no representations, warranty or
statement made on behalf of Parent or Purchaser (i) in this Agreement, or
(ii) in the Exhibits or Schedules hereto contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained therein, in light of circumstances in which they were
or are made, not false or misleading.
SECTION 5. CERTAIN COVENANTS.
5.1 Special Pre-Closing Transactions. Effective immediately
prior to Closing, the Company and the Shareholders shall have consummated
the Special pre-Closing Transactions described in Schedule 5.1.
5.2 Closing Date Publicity. Parent, Purchaser, the Company
and Shareholders will cooperate with each other with respect to any
Closing Date public disclosures and cooperate with respect to any Closing
Date disclosures to the Company's distributors, suppliers and customers.
5.3 Satisfaction of Non-Operating Liabilities. Shareholders
at or prior to the Closing shall cause the Company to satisfy in full
(such that the Company will have no liability) any liabilities that would
be properly reflected on the Closing Date Balance Sheet other than the
Normal Operating Liabilities.
SECTION 6. POST-CLOSING COVENANTS.
6.1 General. If at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties shall take such further action (including
the execution and delivery of such further instruments and documents) as
any other party may reasonably request.
6.2 Litigation Support. In the event and for so long as any
party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand of
third parties after the Closing in connection with (i) any transaction
contemplated by this Agreement or (ii) any fact, situation, circumstances,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing
involving the Company, each of the other parties shall cooperate in the
defense or contest, make available their personnel, and provide such
testimony and access to their books and records as shall be necessary in
connection with the defense or contest, all at the sole cost and expense
of the contesting or defending party (unless the contesting or defending
party is entitled to indemnification therefor under Section 9).
6.3 Transition. Shareholders shall not take any action that
is designed or intended to have the effect of discouraging any actual or
potential lessor, licensor, customer, supplier, or other business
associate of the Company from maintaining the same business relationships
with the Company after the Closing as it maintained with the Company prior
to the Closing.
6.4 Tax Matters.
(a) Section 338(h)(10) Election.
(i) Each Shareholder and Purchaser will make
an election under Code Section 338(h)(10) (and any corresponding
provisions of state, local, or foreign law) (collectively, a "Section
338(h)(10) Election") with respect to the purchase and sale of the Common
Shares. Prior to Closing, Purchaser and Shareholders shall agree on the
form and content (including all required Purchase Price allocations) of
the Section 338(h)(10) Election, which shall be reflected on Schedule 6.4.
Purchaser will be responsible for preparing and timely filing any forms
used to make a Section 338(h)(10) Election with Shareholders having the
right to review such forms and consent to the manner in which such forms
are prepared, such consent not to be unreasonably withheld. Such forms
shall be filed promptly following the final determination of the Purchase
Price, assumed liabilities and other relevant items pursuant to Section
6.4(a)(iv) hereof. Each Shareholder shall sign promptly all federal and
state forms used to make a Section 338(h)(10) Election requiring their
signature, which forms shall be filed by Purchaser on behalf of each
Shareholder as described in the preceding sentence.
(ii) Shareholders shall pay any federal, state,
local or foreign income tax and franchise tax attributable to the making
of a Section 338(h)(10) Election and shall, subject to the provisions of
Section 1.3(e), indemnify Purchaser and the Company against any such
federal, state, local or foreign income tax and franchise tax.
(iii) Promptly after the Closing Date, each
Shareholder shall provide to Purchaser any information (including Tax
elections made by or on behalf of the Company) reasonably requested by
Purchaser in connection with its filing of a Section 338(h)(10) Election.
(iv) The Purchase Price, assumed liabilities
and other relevant items shall be allocated among the Company's assets as
determined by Purchaser and the Company prior to Closing. Purchaser and
Shareholders shall file any Tax Returns and any other governmental filings
on a basis consistent with such allocation of fair market value.
(b) Tax Periods Ending on or Before the Closing Date.
The Purchaser shall prepare or cause to be prepared and file or cause to
be filed all Tax Returns for the Company for all periods ending on or
prior to the Closing Date or for which the date of measurement for such
Tax occurs on or prior to the Closing Date which are filed after the
Closing Date, except for the Company's income Tax Returns for such periods
which Shareholders shall prepare and cause to be filed. The Purchaser
shall permit Shareholders to review, comment on and approve (which
approval shall not be unreasonably withheld) each such Tax Return
described in the preceding sentence prior to filing. Shareholders shall
reimburse Purchaser for income and franchise Taxes of the Company with
respect to such periods within fifteen (15) days prior to any payment by
Purchaser or the Company of such Taxes.
(c) Tax Periods Beginning Before and Ending After the
Closing Date. Purchaser shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Company for Tax periods which
begin before the Closing Date and end after the Closing Date ("Straddle
Tax Returns"). Purchaser shall permit Shareholders to review, comment on
and approve (which such approval shall not be unreasonably withheld) each
of the Straddle Tax Returns prior to filing.
(d) Cooperation on Tax Matters.
(i) Purchaser, the Company and Shareholders
shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns pursuant to this
Section 6.4 and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include promptly providing the other party
a copy of any correspondence or notice from any tax authority with respect
to Taxes for which such other party may have an interest or
responsibility, signing any Tax Return, amended Tax Returns, claims or
other documents necessary to settle any Tax controversy or refund claim
for any tax period ending on or prior to the Closing Date, the retention
and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such Tax Return
preparation and filing, audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The
Company and Shareholders agree to retain all books and records with
respect to Tax matters pertinent to the Company relating to any taxable
period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Purchaser or
Shareholders, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any
taxing authority; provided that for taxable periods which include any date
in 1994 or 1995, Shareholders shall retain all Tax Returns and related
work papers for at least ten years after the date such Tax Returns are
filed.
(ii) Purchaser shall have the right to
participate in any Tax proceeding related to a pre-Closing Tax year of the
Company which may have the effect of increasing Purchaser's or the
Company's Tax liability for any Tax period ending after the Closing, and
Shareholders shall not settle or compromise any such proceeding without
Purchaser's prior written consent; provided, however, Purchaser hereby
agrees to consent if Shareholders fully indemnify Purchaser for any
increase in Purchaser's or the Company's Tax. Purchaser shall promptly
notify and furnish copies to Shareholders of any notice received after the
Closing involving any Tax matter relating to any period prior to the
Closing.
(iii) Shareholders shall have the right to
participate in any Tax proceeding related to a post-Closing Tax year of
the Company which may have the effect of increasing Shareholders' Tax
liability for any Tax period ending on or before the Closing, and
Purchaser shall not settle or compromise any such proceeding without
Shareholders' prior written consent; provided, however, Shareholders
hereby agree to consent if Purchaser fully indemnifies Shareholders for
any increase in Shareholders' Tax.
(iv) Purchaser and Shareholders further agree,
upon request, to use their best efforts to obtain any certificate or other
document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby).
(v) Without the prior written consent (which
shall not be unreasonably withheld) of Purchaser, neither Shareholders nor
the Company shall make or change any election, change an annual accounting
period, file any amended Tax Return, enter into any closing agreement,
settle any Tax claim or assessment relating to the Company, surrender any
right to claim a refund of Taxes, or take any other similar action, or
omit to take any action relating to the filing of any Tax Return or the
payment of any Tax, if such action or omission for Tax periods ending on
or prior to the Closing Date would have the effect of increasing the Tax
liability or decreasing any Tax asset of the Company, Purchaser or any
Affiliate of Purchaser, with respect to any Tax period beginning after the
Closing Date. Shareholders shall notify Purchaser of any consent to any
extension or waiver of the limitation period applicable to any Tax claim
or assessment relating to the Company within 15 days of making such
consent or waiver.
(e) Tax Sharing Agreements. All tax-sharing agreements
or similar agreements with respect to or involving the Company shall be
terminated as of the Closing Date and, after the Closing Date, the Company
shall not be bound thereby nor shall it have any liability thereunder.
SECTION 7. [INTENTIONALLY OMITTED]
SECTION 8. [INTENTIONALLY OMITTED]
SECTION 9. INDEMNIFICATION AND SURVIVAL.
9.1 General Indemnity.
(a) Subject to the provisions of this Section 9, from
and after the Closing, Shareholders jointly and severally hereby agree to
indemnify and hold harmless Purchaser, Purchaser's Affiliates, the
Company, and its and their officers, directors, employees, agents and
representatives and the successors and assigns of each of them, from,
against and in respect of any and all Losses (as hereinafter defined)
resulting from, relating to or arising out of (i) any breach of any
representation, warranty, covenant or agreement of Shareholders or the
Company contained herein and (ii) any and all claims, penalties, or
assessments that are asserted by (A) either the IRS or the Department of
Labor with respect to the failure by the Company to timely file any annual
returns required by the Code or ERISA with respect to periods required to
be filed prior to Closing and (B) the FTB or IRS with respect to any Tax
resulting from the disallowance of any deduction for compensation paid by
the Company for periods up to and including the Closing Date.
(b) Subject to the provisions of this Section 9, from
and after the Closing, Parent and Purchaser jointly and severally hereby
agree to indemnify and hold harmless Shareholders, Shareholders'
Affiliates (other than the Company or its Affiliates) and its and their
officers, directors, employees, agents and representatives and the
successors and assigns of each of them, from, against and in respect of
any and all Losses resulting from, relating to or arising out of (i) any
breach of any representation, warranty, covenant or agreement of Parent or
Purchaser contained herein and (ii) other obligations, actions or
omissions by Parent, Purchaser or their Affiliates (other than Losses with
respect to which the Shareholders are required to indemnify an Indemnified
Party pursuant to Section 9.1(a)).
(c) The party or parties being indemnified are referred
to herein as the "Indemnified Party" and the indemnifying party is
referred to herein as the "Indemnifying Party". "Loss" shall mean any and
all liabilities, damages, deficiencies, costs, claims, judgments, amounts
paid in settlement, interests, penalties, assessments, out-of-pocket
expenses (including reasonable attorneys' and auditors' fees and
disbursements).
9.2 Indemnification Procedure.
(a) The Indemnified Party shall use commercially
reasonable efforts to minimize any Losses in respect of which indemnity
may be sought hereunder; provided, however, that this sentence shall not
be construed to release the Indemnifying Party from liability for the
breach of any representation, warranty, covenant or agreement contained in
this Agreement or to waive the rights of an Indemnified Party to
indemnification for the breach of any representation, warranty, covenant
or agreement contained in this Agreement. The Indemnified Party shall
give prompt written notice ("Indemnification Notice") to the Indemnifying
Party after discovery by the Indemnified Party of any matters giving rise
to a claim for indemnification or reimbursement under this Agreement;
provided, however, that if no prejudice results from a failure to deliver
prompt notice of a claim, no penalty shall be exacted therefor and the
Indemnified Party shall continue to be entitled to indemnification.
(b) In the event that the Indemnifying Party advises the
Indemnified Party that the Indemnifying Party will contest a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of
any Indemnification Notice to notify, in writing, the Indemnified Party of
its election to defend, settle or compromise, at its sole cost and
expense, any action or claim (or discontinues its defense at any time
after it commences such defense), then the Indemnified Party may, at its
option, defend, settle or otherwise compromise or pay such action or
claim. In any event, unless and until the Indemnifying Party elects in
writing to assume and does so assume the defense of any such claim or
action, the Indemnified Party's costs and expenses arising out of the
defense, settlement or compromise of any such action or claim shall be
Losses subject to indemnification hereunder.
(c) The Indemnified Party shall cooperate fully with the
Indemnifying Party in connection with any negotiation or defense of any
such action or claim by the Indemnifying Party and shall furnish to the
Indemnifying Party all information reasonably available to the
Indemnifying Party which relates to such action or claim. The
Indemnifying Party, if the defending party, shall keep the Indemnified
Party fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. If the Indemnifying Party
elects to defend any such action or claim, then the Indemnified Party
shall be entitled to participate in such defense with counsel of its
choice at its sole cost and expense. If the Indemnifying Party does not
assume the defense, the Indemnified Party shall use reasonable efforts to
keep the Indemnifying Party apprised at all times as to the status of the
defense. Payment of indemnification amounts hereunder shall be made to
the Person specified by the Indemnified Party. Anything in this Section 9
to the contrary notwithstanding, no Person shall, without each of the
parties' prior written consent, settle or compromise any claim or consent
to entry of any judgment in respect thereof which imposes any future
obligation on any other party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to
the other parties, a release from all liability in respect of such claim
(it being agreed that if the Indemnified Party rejects a settlement that
fully satisfies the requirements hereof, the Indemnifying Party shall not
be obligated to indemnify the Indemnified Party in respect of such claim
in excess of the amount of such rejected settlement).
9.3 Limitations on Indemnification Obligations. The
indemnification obligations of Shareholders under this Agreement
(excluding indemnification obligations for Losses resulting from, relating
to or arising out of the breach of the representations and warranties set
forth in Section 3.4 or Section 9.1(a)(ii), as to which no minimum or
maximum limitations shall apply) shall not apply to any Loss being
indemnified thereunder (i) until the aggregate of all Losses of the
Indemnified Parties shall exceed $1,650,000, and then only to the extent
of such excess or (ii) to the extent the aggregate of all Losses for which
the Shareholders have made payment to or for the benefit of Parent,
Purchaser or their Affiliates or related Indemnified Parties, exceeds
$75,000,000.
9.4 Survival of Representations and Warranties. All of the
representations and warranties of Shareholders, the Company and Purchaser
contained in Sections 3 and 4 above shall survive for the periods set
forth on Schedule 9.4.
SECTION 10. REMEDIES.
10.1 Exclusive Remedies. The provisions of Section 9 of this
Agreement set forth the exclusive remedies of the parties for any and all
breaches of this Agreement.
SECTION 11. MISCELLANEOUS.
11.1 Waivers and Amendments. This Agreement may be amended or
modified only by an instrument in writing duly executed by the parties to
this Agreement.
11.2 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given
on the date of service if personally served or if mailed, on the third day
after it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set
forth below:
If to Parent or Purchaser:
Bike Corp.
142 Doty Street
Fond du Lac, Wisconsin 54936
Attention: Douglas E. Barnett
With a copy to:
Jones, Day, Reavis & Pogue
555 West Fifth Street, Suite 4600
Los Angeles, California 90013
Attention: Erich Spangenberg
If to the Company:
Fadal Engineering Company Inc.
20701 Plummer Street
Chatsworth, California 91311
Attention: David E. de Caussin and
Larry F. de Caussin
With a copy to:
Maron & Sandler
844 Moraga Drive
Los Angeles, CA 90049
Attention: Stanley Maron
Buchalter, Nemer, Fields & Younger
601 S. Figueroa Street, Suite 2400
Los Angeles, CA 90017-5704
Attention: David S. Kyman
If to Shareholders:
David E. de Caussin
19227 Mayall Street
Northridge, CA 91324
Larry F. de Caussin
22335 N. Summit Ridge
Chatsworth, CA 91311
With a copy to:
Maron & Sandler
844 Moraga Drive
Los Angeles, CA 90049
Attention: Stanley Maron
Buchalter, Nemer, Fields & Younger
601 S. Figueroa Street, Suite 2400
Los Angeles, CA 90017-5704
Attention: David S. Kyman
11.3 Fees and Expenses. Each party shall bear their own costs
and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated thereby.
11.4 Successors and Assigns. No party hereto shall assign any
rights or delegate any duties hereunder without the prior written consent
of the other parties hereto. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties.
11.5 Choice of Law. This Agreement shall be governed by and
construed and interpreted in accordance with laws of the State of
California regardless of the laws that might otherwise govern under
principles of conflict of laws applicable thereto.
11.6 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
11.7 Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, to the extent
they have related in any way to the subject matter hereof.
Notwithstanding the foregoing, the Confidentiality Agreement executed on
October 31, 1994 shall survive through the Closing.
11.8 Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement. Any reference
to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean including
without limitation.
11.9 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
11.10 Headings and Recitals. The section headings and
recitals contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this
Agreement.
11.11 Counterparts. This Agreement may be executed
concurrently in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11.12 Forum Selection and Consent to Jurisdiction. Any
legal action arising out of or relating to this Agreement or the
transactions described herein shall only be brought and litigated in the
courts of the State of California in Los Angeles County or in the United
States District Court for the Central District of California. Each of
Parent, Purchaser and Shareholders irrevocably submits to the exclusive
jurisdiction of (a) the courts of the State of California in Los Angeles
County, and (b) the United States District Court for the Central District
of California, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby.
Parent and Purchaser hereby irrevocably designate, appoint and empower CT
Corporation System, 818 West Seventh Street, Los Angeles, California
90017, and Shareholders hereby irrevocably designate, appoint and empower
Stanley Maron, Maron & Sandler, 844 Moraga Drive, Los Angeles, California
90049, in each case as its true and lawful agent and attorney-in-fact in
its name, place and stead to receive and accept on its behalf service of
process in any action, suit or proceeding in California with respect to
any matters as to which it has submitted to jurisdiction as set forth in
the immediately preceding sentence.
11.13 Certain Definitions. For purposes of this
Agreement:
"Affiliate" shall mean any Person which directly or indirectly
controls, is controlled by, or is under common control with such Person.
A Person shall be deemed to control another Person if such Person owns 10%
or more of any class of stock of the "controlled" Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the controlled Person, whether through
ownership of stock or partnership interests, by contract, or otherwise.
"Dollars" shall mean United States Dollars.
"Best Knowledge of the Company" shall mean (i) the actual
knowledge of any of the Persons identified on Schedule 11.13 ("Knowledge
Persons"), (ii) information made available to any such Knowledge Persons
as a result of making inquiry of Knowledge Persons and the Company's
advisors with respect to matters on which they have been specifically
engaged in connection with the subject matter and specific content of the
representation and warranty and (iii) the information that would have been
made available to any such Person had he made such inquiry.
"Incremental Tax" means the sum of: (i) the increase in
federal and California income taxes resulting from the recognized income
and gain on all assets of the Company taxed as ordinary income rather than
as capital gain for federal income tax purposes resulting from the
Section 338(h)(10) election, if any; multiplied by the "Gross Up Factor"
which is 1 divided by (1 minus the combined marginal income tax rate of
the Shareholders for federal and California income taxes taking into
account the deduction, if any, the Shareholders would receive against
their federal income taxes for California income taxes paid after taking
into account all factors, including, but not limited to, the alternative
minimum tax and any adjustments in computing the alternative minimum tax);
(ii) the amount of the income tax payable by the Company to the State of
California pursuant to California Revenue and Tax Code Section 23802(b)(1)
as a result of the Section 338(h)(10) election taking into account the
increased amount paid to the Shareholders pursuant to subsections (i) and
(iii) hereof and the increase caused by this subsection (ii), and
(a) assuming no compensation or other tax deductible payments are made
with respect to the Purchase Price and the Incremental Tax and, (b) taking
into account the federal tax savings of the Shareholders, if any,
attributable to the deductibility for federal income tax purposes of such
California tax against the income of the Company which flows through to
the Shareholders; multiplied by the "Gross Up Factor" as defined above;
(iii) the increase in California income taxes payable by the Shareholders
attributable to the amount determined in subsection (ii) multiplied by the
"California Gross Up Factor" which is 1 divided by (1 minus the marginal
income tax rate of the Shareholders for California income taxes); and
(iv) the difference between (A) the total amount of federal and California
income tax paid by the Company and/or the Shareholders as a result of the
Section 338(h)(10) election other than those items already taken into
account pursuant to (i), (ii) and (iii) immediately above, and (B) the
total amount of federal and California income tax which the Shareholders
would have incurred if the Shareholders had sold the Common Stock pursuant
to this Agreement for the Purchase Price and no Section 338(h)(10)
election had been made; multiplied by the "Gross Up Factor" as defined
above.
"Special Pre-Closing Transactions" shall mean the transactions
described in reasonable detail on Schedule 5.1 which Shareholders will
cause the Company to effect at or prior to the Closing.
"Subsidiaries" shall mean any Person of which at least a
majority of the outstanding shares or other equity interests having
ordinary voting power for the election of directors or comparable managers
of such Person, whether or not at the time the shares of any other class
or classes or other equity interests of such Person shall have or might
have voting power by reason of the happening of any contingency, are at
the time owned, directly or indirectly, by the Company, by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
"Tax" shall mean any federal, state, local or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, real property gains, registration, value added,
excise, natural resources, severance, stamp, occupation, premium, windfall
profit, customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or
other withholding, or other tax, of any kind whatsoever, including any
interest, penalties or additions to tax or additional amounts in respect
of the foregoing; the foregoing shall include any transferee or secondary
liability for a Tax and any liability assumed by agreement or arising as a
result of being (or ceasing to be) a member of any Affiliated Group (or
being included (or required to be included) in any Tax Return relating
thereto).
"Tax Return" shall mean any return, declaration, report, claim
for refunds, information return or other document (including any related
or supporting schedule, statement or information) filed or required to be
filed in connection with the determination, assessment or collection of
any Tax of any party or the administration of any laws, regulations or
administrative requirements relating to any Tax.
* * *
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day and year first above written.
BIKE CORP.
By: /s/ Douglas E. Barnett
Name: Douglas E. Barnett
Title: President
FADAL ENGINEERING COMPANY INC.
By: /s/ David E. de Caussin
Name: David E. de Caussin
Title: President
GIDDINGS & LEWIS, INC.
By: /s/ Joseph R. Coppola
Name: Joseph R. Coppola
Title: Chairman
DAVID AND MYRTLE DE CAUSSIN FAMILY
TRUST - 1988
/s/ David E. de Caussin
David E. de Caussin, Trustee
/s/ Myrtle Rosalie de Caussin
Myrtle Rosalie de Caussin, Trustee
LARRY AND ELSIE DE CAUSSIN FAMILY
TRUST - 1988
/s/ Larry F. de Caussin
Larry F. de Caussin, Trustee
/s/ Elsie Margaret de Caussin
Elsie Margaret de Caussin, Trustee
AGREEMENT OF PURCHASE AND SALE
This Agreement of purchase and Sale ("Agreement"), dated for
reference purposes only as of April 24, 1995, is entered into by and
between 20701 Plummer Street, Ltd., a California limited partnership
("Seller"), Bike Corp., a Wisconsin corporation, qualified to do business
in California as V.M.C. Bike Corp. ("Bike") Giddings & Lewis, Inc., a
Wisconsin corporation ("G&L") (Bike and G&L are hereinafter jointly,
severally and collectively referred to as "Buyer"), and is based on the
following facts and circumstances:
A. Concurrent with the execution and delivery of this Agreement,
Bike, as purchaser, G&L, as parent of Bike, Fadal Engineering Company,
Inc., a California corporation ("Fadal"), and the shareholders of all the
currently issued and outstanding shares of common stock, no par value
("Common Shares") of Fadal ("Shareholders") are executing and delivering
that certain Stock Purchase Agreement dated as of April 24, 1995 ("Stock
Purchase Agreement").
B. Pursuant to the Stock Purchase Agreement, the Shareholders agree
to sell to Bike and Bike agrees to purchase from the Shareholders all of
the Common Shares of Fadal, as more particularly set forth in the Stock
Purchase Agreement.
C. As more particularly set forth herein, Buyer desires to purchase
the Property (as hereafter defined) and Seller desires to sell the
Property to Buyer contingent upon and concurrent with the Closing (as
defined in the Stock Purchase Agreement) of the transaction contemplated
under the Stock Purchase Agreement ("Stock Closing").
Buyer and Seller hereby agree as follows:
1. Purchase and Sale. Pursuant to the terms and conditions
set forth in this Agreement, Seller does hereby agree to sell and Buyer
does hereby agree to purchase Seller's right, title and interest, if any,
to the following: (a) the land located in the State of California
("State"), County of Los Angeles ("County"), commonly known as 20701
Plummer Street, Chatsworth, and more particularly described on Exhibit 1
attached hereto ("Land"), (b) the permanent improvements located on the
Land ("Improvements") [the Land and the Improvements are collectively
referred to as the "Real Property"], (c) that certain lease dated August
6, 1992 ("Lease") by and between Seller, as lessor, and Fadal, as lessee,
with respect to the Real Property. The Real Property and the Lease are
hereafter collectively referred to as the "Property."
2. Purchase Price. The purchase price to be paid by Buyer to
Seller for the Property shall be the sum of Eight Million Seven Hundred
and Fifty Thousand Dollars ($8,750,000.00), all cash ("Purchase Price").
On or before the Closing Date (as hereafter defined), Buyer shall pay to
Seller the Purchase Price, plus any other fees or charges required of
Buyer pursuant to this Agreement, less any credits due to Buyer hereunder,
in cash, by wire transfer, cashier's check or bank certified check.
3. Closing.
3.1 The term "Closing" is hereby defined to mean the date when
Seller and Buyer have each performed their respective obligations under
this Agreement.
3.2 The Closing shall be contingent upon and occur concurrent
with the Stock Closing ("Closing Date"). Buyer and Seller hereby
acknowledge and agree that time is of the essence under this Agreement,
including, but not limited to, with respect to the Closing on or before
the Closing Date. Buyer and Seller shall use their respective reasonable
efforts to take all action and do all things necessary, proper or
advisable in order to consummate and make effective the transaction
contemplated by this Agreement.
4. Seller's Delivery.
4.1 On or before the Closing Date, Seller shall deliver or
cause to be delivered to Buyer the following:
4.1.1 Buyer hereby elects to take title in the name of
Bike; Seller shall deliver a grant deed conveying the Real Property to
Bike in the form attached hereto as Exhibit "2".
4.1.2 A fully executed Assignment and Assumption of
Lessor's Interest in Lease in the form attached hereto as Exhibit "3"
("Assignment of Lease");
4.1.3 A certification of nonforeign status executed by
Seller in the form set forth in Exhibit "4" attached hereto;
4.1.4 A California Real Estate Withholding Exemption
Certificate in the form attached hereto as Exhibit "5"; and
4.1.5 A pro-forma ("Pro-Forma") commitment for the
issuance by the Title Company of an ALTA extended owner's form of title
insurance policy, with a liability equal to the Purchase Price, with
endorsements CLTA 116.1, 116.4 and 103.7, excluding items 5, 6, 10 and 11
shown in schedule B of the PTR (as hereinafter defined) ("Title Policy").
5. Buyer's Delivery.
5.1 On or before the Closing Date, Buyer shall deliver to
Seller:
5.1.1 The Purchase Price, plus such additional funds as
are required to pay charges payable by Buyer hereunder, less any credit to
which Buyer is entitled under the terms hereof; and
5.1.2 A fully executed Assignment of Lease.
6. Title Report and Survey. Buyer hereby acknowledges
receipt, review and approval of that certain (i) Preliminary Report order
No. 9509109-62 ("PTR") with respect to the Real Property, issued by
Chicago Title Company ("Title Company"), dated March 21, 1995, and all the
underlying documents referred to therein, (ii) ALTA Survey of the Property
dated March 21, 1995, prepared by Book & Clark's National Surveyors
Network ("ALTA Survey"), and (iii) the supplement to the PTR based on the
ALTA Survey. Buyer agrees to accept title to the Property subject to all
the matters and items disclosed by or referred to in the PTR and the ALTA
Survey, except Items 5, 6, 10 and 11 of Schedule B of the PTR, which items
Seller agrees to remove or cause not to be shown in the Title Policy by on
or before the Closing.
7. Charges.
7.1 Buyer shall be responsible for the costs of preparing and
recording the grant deed. Seller shall be responsible for any documentary
transfer taxes.
7.2 Seller shall pay the cost of the Title Policy to the extent
of the cost of a CLTA owner's policy of title insurance, and Buyer shall
pay any additional premium attributable to the Title Policy. Buyer shall
be responsible for paying the cost of any endorsements to the Title
Policy.
7.3 All expenses and charges incurred with the discharge of
delinquent real property taxes, liens or encumbrances, if any, shall be
charged to Seller.
8. Prorations.
8.1 Buyer and Seller shall prorate all real estate taxes, bonds
or assessments (general and special), and rent under the Lease as of 12:01
a.m. on the date of the Closing.
8.2 All expenses of the Property which are not paid by Fadal
under the Lease shall be prorated between Buyer and Seller as of 12:01 am.
on the date of Closing. Buyer and Seller shall not prorate any security
deposit under the Lease since none was provided under the Lease. Utility
services shall be transferred to the name of the Buyer effective as of the
Closing and Seller shall be relieved of any future liability for such
charges incurred after the Closing. In the event Seller has made any
utility deposits, Seller shall be entitled to a refund of such deposits
directly from the utility companies and any future deposits shall be paid
directly to the utility companies by Buyer; provided, however, that Buyer
may elect, in its sole discretion, to require Seller to assign the rights
to utility deposits to Buyer in exchange for a credit to Seller for the
amount of such deposits.
8.3 In the event that there are any unknown amounts or items to
be prorated as of the Closing, then Seller and Buyer will prorate the same
promptly after the Closing.
9. Possession. Seller shall deliver and Buyer shall accept
possession of the property at the Closing, subject to the Lease.
10. Property Information. Buyer hereby acknowledges that,
except as otherwise specifically provided in this Agreement, neither
Seller, nor any brokers, agents, representatives, employees or attorneys
of Seller have made any representations or warranties, direct or implied,
verbal or written with respect to the Property Information (as hereafter
defined), including, but not limited to the accuracy, completeness or
reliability of the Property Information. Buyer hereby expressly releases
Seller, Seller's brokers, agents, representatives, employees and attorneys
from any and all past, present and future Claims (as hereafter defined)
arising from, in connection with or caused by the Property Information,
including, but not limited to, Buyer's reliance upon any of the Property
Information, statements, representations, information, determinations or
assertions contained therein, or the inaccuracy, incompleteness or
unreliability of any of the Property Information; provided, however, the
foregoing release shall not release any of the rights or remedies of the
parties to the Stock Purchase Agreement or affect any of the rights of the
parties thereunder. "Property Information" shall mean all materials,
documents, agreements, lists, reports, studies, maps, surveys or any other
information that Seller has provided Buyer, including, but not limited to,
those identified on Exhibit "6" hereof ("Partial Property Information
List") or that Buyer has obtained or will obtain regarding the Property
from any source. Buyer hereby (i) acknowledges receipt, review and
approval of the Property Information identified on the Partial Property
Information List, (ii) acknowledges that the Partial Property Information
List is not an exhaustive list of the Property Information, and merely
sets forth some of the Property Information, and (iii) agrees that Seller
shall have no liability or responsibility for any errors, omissions or
inaccuracies in the Partial Property Information List.
11. Representations and Warranties.
11.1 Seller hereby represents and warrants to Buyer as follows:
11.1.1 Seller is a limited partnership, duly formed,
validly existing and in good standing under the laws of the State of
California.
11.1.2 Seller has the full right, power and authority to
enter into this Agreement and the instruments referenced herein, and to
consummate the transactions contemplated hereby.
11.1.3 The persons executing this Agreement and any
other documents executed and delivered on behalf of Seller have the full
right, power and authority to do so and have been duly authorized to do so
by Seller, and no other persons are required to execute this Agreement on
behalf of Seller.
11.1.4 This Agreement and all the documents executed by
Seller which are to be delivered to Buyer at the Closing are and will be
duly authorized, executed, and delivered by Seller.
11.2 Bike hereby represents and warrants to Seller as follows:
11.2.1 Bike is a corporation duly formed, validly
existing and in good standing under the laws of the State of Wisconsin,
and duly qualified to do business in the State of California.
11.2.2 Bike has the full right, power and authority to
enter into this Agreement and the instruments referenced herein, and to
consummate the transactions contemplated hereby.
11.2.3 The persons executing this Agreement and any
other documents executed and delivered on behalf of Bike have the full
right, power and authority to do so and have been duly authorized to do so
by Bike, and no other persons are required to execute this Agreement on
behalf of Bike.
11.2.4 This Agreement and all the documents executed by
Bike which are to be delivered to Seller at the Closing are and will be
duly authorized, executed, and delivered by Bike.
11.3 G&L hereby represents and warrants to Seller as follows:
11.3.1 G&L is a corporation duly formed, validly
existing and in good standing under the laws of the State of Wisconsin,
and duly qualified to do business in the State of California.
11.3.2 G&L has the full right, power and authority to
enter into this Agreement and the instruments referenced herein, and to
consummate the transactions contemplated hereby.
11.3.3 The persons executing this Agreement and any
other documents executed and delivered on behalf of G&L have the full
right, power and authority to do so and have been duly authorized to do so
by G&L, and no other persons are required to execute this Agreement on
behalf of G&L.
11.3.4 This Agreement and all the documents executed by
G&L which are to be delivered to Seller at the Closing are and will be
duly authorized, executed, and delivered by G&L.
11.4 Buyer's representations and warranties shall survive the
Closing.
12. Acknowledgements by Buyer.
12.1 Buyer acknowledges that Buyer is acquiring the Property in
an "AS IS, WHERE IS" condition, with all faults, whether known or unknown.
Buyer further expressly acknowledges that, except as may otherwise be
specifically set forth in this Agreement or the Stock Purchase Agreement,
neither Seller, nor any agents, representatives, employees or attorneys of
Seller have made any representations or warranties of any kind, nature or
description, direct or implied, verbal or written, with respect to the
Property or the Property Information. Buyer hereby waives the benefit of
any statute, law or decision that would in any way detract, reduce or
diminish from giving full force and effect to the provisions of this
Paragraph; provided, however, nothing in this paragraph 12 shall affect or
diminish the representations and warranties of the parties under the Stock
Purchase Agreement.
12.2 Buyer acknowledges that, except as may otherwise be
specifically set forth in this Agreement or the Stock purchase Agreement,
Buyer is relying upon Buyer's own independent investigation of the
Property and the Property Information in entering into this Agreement and
purchasing the Property. Buyer acknowledges that, prior to Buyer's
execution and delivery of this Agreement, Buyer has to the extent
permitted by Seller investigated and inspected each and every aspect of
the Property and the Property Information, and all factors relevant
thereto, including, without limitation, the physical condition of the
Property; the Improvements located on the Property; the composition,
condition and buildability of the Property's soil; size and dimension of
the Property and Improvements on the Property; accuracy and adequacy of
the legal description of the Property; all Applicable Laws; the Property's
compliance with all Applicable Laws; the Property's fitness for any
particular purpose, use or enjoyment; the feasibility of development of
the Property; availability and adequacy of all utilities, including, but
not limited to, water, electricity, sewer, gas, and telephone; all
documents, encumbrances and matters affecting the title of the Property;
all taxes, assessments, bonds and other liens and encumbrances affecting
the Property; and the Lease.
13. Release and Indemnity.
13.1 As a further consideration for all of Seller's obligations
hereunder, and as an express material inducement to Seller, without which
and but for Seller would not enter into this Agreement, Buyer, its
successors and assigns hereby expressly and unconditionally release,
discharge and acquit Seller, Seller's partners, shareholders, directors,
officers, brokers, agents, representatives, employees and attorneys
(collectively, "Seller Parties"), from and against any and all past,
present or future Claims (as hereafter defined) directly or indirectly
arising out of, in connection with or related to the past, present or
future condition of the Property or the Property Information, or arising
on, before or after the Closing. Seller expressly disclaims any
responsibility for the past or present use, management, control, handling,
manufacture, creation, generation, storage, disposal, discharge, removal,
treatment, containment, remediation or existence of any Hazardous
Substance in, on, under or about the Property. The release set forth in
this paragraph 13 shall not release any of the rights or remedies of the
parties to the Stock Purchase Agreement or affect any of the rights or
remedies of the parties thereunder; provided, however, Buyer hereby agrees
that the pursuit of Buyer's rights and remedies, if any, under the Stock
Purchase Agreement shall constitute Buyer's sole and exclusive remedy.
13.2 Buyer hereby acknowledges that it may hereafter discover
facts different from or in addition to those now known or believed to be
true regarding the Property and/or Property Information and it agrees that
the releases set forth in this Agreement shall remain in full force and
effect, notwithstanding the existence of any such different or additional
facts. Buyer knowingly and voluntarily waives any and all rights,
benefits and privileges to the fullest extent permissible under all
Applicable Laws which do or would negatively affect validity or
enforceability of all or part of the releases set forth in this Agreement.
Buyer specifically waives the provisions of California Civil Code section
1542, which provides:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him, must have materially affected his
settlement with the debtor."
13.3 Indemnity.
13.3.1 Subject to the provisions of the Stock Purchase
Agreement relating to indemnification, Buyer, its successors and assigns
(collectively, "Indemnifying Party") agree to indemnify, defend, reimburse
and hold harmless the Seller Parties from and against any and all Claims
accruing on or after the Closing, whether such Claims arise directly or
indirectly out of, in connection with or related to the Property or the
Property Information on or after the Closing.
13.3.2 The Seller Parties shall use commercially
reasonable efforts to minimize any Claims in respect of which indemnity
may be sought hereunder; provided, however, that this sentence shall not
be construed to release the Indemnifying Party from liability for the
breach of representation, warranty, covenant or agreement contained in
this Agreement or to waive the rights of Seller Parties to indemnification
for the breach of any representation, warranty, covenant or agreement
contained in this Agreement. The Seller Parties shall give prompt written
notice ("Indemnification Notice") to the Indemnifying Party after
discovery by the Seller Parties of any matters giving rise to a claim for
indemnification or reimbursement under this Agreement; provided, however,
that if no prejudice results form a failure to deliver prompt notice of a
claim, no penalty shall be exacted therefor and the Seller Parties shall
continue to be entitled to indemnification.
13.3.3 In the event that the Indemnifying Party advises
the Seller Parties that the Indemnifying Party will contest a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of
any Indemnification Notice to notify, in writing the Seller Parties of its
election to defend, settle or compromise, at its sole cost and expense,
any action or claim (or discontinues its defense at any time after it
commences such defense), then the Seller Parties may, at its option,
defend, settle or otherwise compromise or pay such action or claim. In
any event, unless and until the Indemnifying Party elects in writing to
assume and does so assume the defense of any such claim or action, the
Seller Parties' costs and expenses arising out of the defense, settlement
or compromise of any such action or claim shall be a Claim subject to
indemnification hereunder.
13.3.4 The Seller Parties shall cooperate fully with the
Indemnifying Party in connection with any negotiation or defense of any
such action or claim by the Indemnifying Party and shall furnish to the
Indemnifying Party all information reasonably available to the Seller
Parties which relates to such action or claim. The Indemnifying Party, if
the defending party, shall keep the Seller Parties fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. If the Indemnifying Party elects to defend any such
action or claim, then the Seller Parties shall be entitled to participate
in such defense with counsel of its choice at its sole cost and expense.
If the Indemnifying Party does not assume the defense, the Seller Parties
shall use reasonable efforts to keep the Indemnifying Party apprised at
all times as to the status of the defense. Payment of indemnification
amounts hereunder shall be made to the person specified by the Seller
Parties. Anything in this paragraph to the contrary notwithstanding, no
person shall, without each of the parties' prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect
thereof which imposes any future obligation on any other party or which
does not include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the other parties, a release from all
liability in respect of such claim (it being agreed that if the Seller
Parties reject a settlement that fully satisfies the requirements hereof,
the Indemnifying Party shall not be obligated to indemnify the Seller
Parties in respect of such claim in excess of the amount of such rejected
settlement).
13.4 The provisions of this Paragraph shall survive the Closing.
13.5 The obligations of Buyer, its successors or assigns under
this Paragraph shall not be affected by any investigation by or on behalf
of Buyer, or by any information which Buyer may have or would obtain with
respect thereto, including, but not limited to, the Property Information,
and shall specifically include any Environmental Damages, the violation of
any Environmental Requirements, the presence of any Hazardous Substances
to the extent disclosed by or referred to in the Property Information, or
to the extent that Buyer or any employee, contractor or agent of Buyer has
knowledge of such condition.
14. Buyer's Entry to Property. Provided that Buyer is not and
has not been in breach or default hereunder or under the Stock Purchase
Agreement, Buyer may enter the Property upon the terms and conditions
therefor set forth in the Stock Purchase Agreement. Buyer shall
indemnify, defend (with counsel reasonably approved by Seller), protect
and hold harmless Seller of and from any and all Claims arising out of or
relating to Buyer's entry onto the Property. Buyer's obligations under
this paragraph shall survive the termination of this Agreement or the
Closing.
15. Waiver. The waiver by either party of the performance of
any covenant, condition or promise, shall not invalidate this Agreement,
nor shall it be considered a waiver of any other covenant, condition or
promise. The waiver by either party of the time for performing any act
shall not constitute a waiver of time for performing any other act or an
identical act required to be performed at a later time.
16. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and assigns. The
obligations of Bike and G&L hereunder shall be joint and several.
17. Assignment. The rights and obligations of Buyer under this
Agreement may not be assigned by Buyer.
18. Amendments. All amendments and supplements to this
Agreement must be in writing and executed by each party hereto.
19. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. However, this
Agreement shall not be binding on any party until all parties have
executed this document, either all on one document or in counterparts.
20. Time of the Essence. Time is of the essence of this
Agreement.
21. Entire Agreement. It is understood and acknowledged that
there are no oral agreements between the parties hereto affecting this
Agreement and that this Agreement supersedes and cancels any and all
previous negotiations, arrangements, brochures, advertisements, set-ups,
agreements and understandings, if any, between the parties hereto or
displayed by Seller to Buyer with respect to the subject matter thereof,
and none thereof shall be used to interpret or construe this Agreement.
This Agreement, its exhibits, the Stock Purchase Agreement and its
exhibits contain all of the terms, covenants, conditions, warranties and
agreements of the parties relating in any manner to the sale of the
Property, shall be considered to be the only agreement between the parties
hereto and their representatives and agents. All negotiations and oral
agreements acceptable to both parties have been merged into and are
included herein. Except as set forth in the Stock Purchase Agreement,
there are no other representations or warranties between the parties, and
all reliance with respect to representations is based totally upon the
representations and agreements contained in this Agreement, if any.
22. Interpretation. The necessary grammatical changes required
to make the provisions hereof apply either to corporations, limited
liability companies, partnerships or individuals, men or women, as the
case may require, shall in all cases be assumed as though in each case
fully expressed. The captions herein are for convenience only and shall
not be deemed to limit, construe, affect or alter the meaning hereof. If
any term, provision or condition contained in this Agreement shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term, provision or condition to persons or
circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other
term, provision and condition of this Agreement shall be valid and
enforceable to the fullest extent possible permitted by law. The language
in this Agreement shall be construed in accordance with the laws of the
State for interpretation of contracts and according to its normal and
usual meaning, and not strictly for or against either Buyer or Seller,
regardless of the party who drafted this Agreement.
23. Exhibits. All exhibits referenced herein are incorporated
herein by such reference.
24. Real Estate Broker's Commissions. Seller and Buyer each
represent and warrant to the other that (i) neither has had any dealings
with any person, firm, broker or finder in connection with the negotiation
of this Agreement and/or the consummation of the purchase and sale
contemplated hereby; and (ii) no broker or other person, firm or entity is
entitled to any commission or finder's fee in connection with this
transaction. Seller and Buyer do each hereby indemnify and hold the other
harmless from and against any costs, expenses or liability for
compensation, commission or charges which may be claimed by any broker;
finder or other similar party by reason of any dealings or actions of the
indemnifying party.
25. Attorneys' Fees. If either party commences litigation
against the other under this Agreement, for damages for the breach hereof
or otherwise for enforcement of any remedy hereunder, the parties hereto
agree to and hereby do waive any right to a trial by jury and, in the
event of any such commencement of litigation, the prevailing party shall
be entitled to recover from the other party such costs and reasonable
attorneys' fees as may have been incurred, including any and all costs
incurred in enforcing, perfecting and executing such judgment.
26. Choice of Law. This Agreement and the rights and remedies
of the parties thereunder shall be governed by the laws of the State. Any
legal action arising out of or relating to this Agreement or the
transactions described herein shall only be brought and litigated in the
courts of the State of California in Los Angeles County or in the United
States District Court for the Central District of California. Buyer and
Seller irrevocably submit to the exclusive jurisdiction of (a) the courts
of the State of California in Los Angeles County, and (b) the United
States District Court for the Central District of California, for the
purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby.
27. Notices. All notices, requests, demands or other
communications hereunder shall be in writing and shall be addressed as
follows:
TO SELLER: c/o DAVID E. DeCAUSSIN
19227 Mayall Street
Northridge, California 91324
WITH A COPY TO: BUCHALTER, NEMER, FIELDS & YOUNGER
601 South Figueroa Street
Suite 2200
Los Angeles, California 90017
Attn: Bryan Mashin, Esq.
Phone Number: (213) 891-5045
FAX Number: (213) 896-0400
AND A COPY TO: Maron & Sandier
844 Moraga Drive
Los Angeles, California 90049
Attn: Stanley Maron
Phone Number: (310) 440-3600
FAX Number: (310) 440-3690
TO BUYER: V.M.C. Bike Corp.
142 Doty Street
Fond du Lac, Wisconsin 54936
Attention: Todd Dillman
Phone Number: (414) 929-7143
FAX Number: (414) 929-4334
WITH A COPY TO: Jones, Day, Reavis & Pogue
555 West Fifth Street, Suite 4600
Los Angeles, California 90013
Attention: Eric Spangenberg
Phone Number: (213) 243-2908
FAX Number: (213) 243-2539
or such other addresses as either party from time to time may specify in
writing to the other in accordance with this notice provision. All
notices hereunder shall be effective (a) upon confirmation of
telefacsimile transmission to the other party, (b) upon delivery or
attempted delivery after having been deposited in United States Mail,
certified, postage prepaid, or sent by Federal Express or other reliable
overnight courier service that provides written evidence of delivery, or
(c) upon delivery, if delivered by personal service.
The parties have executed this Agreement on the dates set forth
immediately below their respective signatures.
"Seller" "Buyer"
20701 Plummer Street, Ltd., a Bike Corp., a Wisconsin
California limited partnership corporation, qualified to do
business in California as V.M.C.
Bike Corp.
By: 20701 Plummer Street, Inc.,
a California corporation By: /s/ Douglas E. Barnett
Name Printed: Douglas E. Barnett
By: /s/ David E. de Caussin Title:President
Name Printed: David E. de Caussin
Title: President
Giddings & Lewis, Inc., a Wisconsin
corporation
By: /s/ Joseph R. Coppola
Name Printed: Joseph R. Coppola
Title: Chairman
<PAGE>
GLOSSARY OF SOME OF THE DEFINED TERMS
-- "Applicable Laws," shall mean any and all past, present and
future statutes, regulations, rules, ordinances, codes, licenses, permits,
orders, approvals, plans, authorizations, concessions, franchises, and
similar items, of all Governmental Bodies (as herein defined), including,
but not limited to Environment Requirements (as herein defined), and the
Americans with Disabilities Act.
-- "Claims," shall mean any and all claims, demands, debts,
obligations, lawsuits, causes of action, costs, expenses, attorneys' fees,
judgments, damages (including, but not limited to, Environmental Damages),
losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs and expenses of investigation and defense of
any claim, whether or not ultimately defeated, and of any good faith
settlement of judgment, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, known or
unknown, including without limitation reasonable attorneys' fees and
disbursements and consultants' fees, in any way related to, arising from
or in connection with the Property or the Property Information, including,
but not limited to, Environmental Damages arising from the presence of
Hazardous Substances, in, on, upon, about or beneath the Property,
Hazardous Substances migrating to or from the Property, or arising, in any
manner whatsoever, out of the violation of any Environmental Requirements
pertaining to the Property and the activities thereon.
-- "Environmental Damages," shall mean any and all Claims
arising from, caused by or resulting from the existence of Hazardous
Substances in, upon, about or beneath the Property, migrating or
threatening to migrate to or from the Property, the existence of a
violation of Environmental Requirements pertaining to the Property,
including, without limitation, the following:
(1) Damages for injury to persons, property or natural
resources occurring upon or off of the Property, foreseeable or
unforeseeable, including, without limitation, lost profits,
consequential damages, the cost of demolition and rebuilding of
any improvements on real property, interest and penalties
including but not limited to claims brought by or on behalf of
employees and tenants of Buyer;
(2) Fees incurred for the services of attorneys,
consultants, contractors, experts, laboratories and all other
costs incurred in connection with the investigation or
remediation of such Hazardous Substances or violation of
Environmental Requirements including, but not limited, to the
preparation of any feasibility studies or reports or the
performance of any cleanup, remediation, removal, response,
abatement, containment, closure, restoration or monitoring work
required by any federal, state or local governmental agency or
political subdivision, or reasonably necessary to make full
economic use of the Property or any other property or otherwise
expended in connection with such conditions, and including
without limitation any attorneys' fees, costs and expenses
incurred in enforcing this Agreement or collecting any sums due
hereunder;
(3) Liability to any third person or governmental agency
to indemnity such person or agency for costs expended in
connection with the items referenced in subparagraph (2) herein;
and
(4) Damages for the loss of business, restriction on the
use of or adverse impact on the use of the Property.
-- "Environmental Requirements," shall mean Applicable Laws
relating to, governing or applying to the protection of human health or
the environment, including, without limitation:
(1) All requirements, including, but not limited to, those
pertaining to reporting, licensing, permitting, investigation,
or remediation of emissions, discharges, releases, or threatened
releases of Hazardous Substances, chemical substances,
pollutants, contaminants, or hazardous or toxic substances,
materials or wastes whether solid, liquid, or gaseous in nature,
into the air, surface water, groundwater, or land, or relating
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous
Substances, chemical substances, pollutants, contaminants, or
hazardous or toxic substances, materials, or wastes, whether
solid, liquid, or gaseous in nature; and
(2) All requirements pertaining to the protection of the
health and safety of employees, tenants, or the public.
-- "Hazardous Substance," shall mean any substance:
(1) The presence of which requires investigation or
remediation under any federal, state or local statute,
regulation, ordinance, order, action, policy or common law; or
(2) Which is or becomes defined as a "hazardous waste,"
"hazardous substance," pollutant or contaminant under any
federal, state or local statute, regulation, rule or ordinance
or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act (42. U.S.C. section 9601, et seq.) and/or the Resource
Conservation and Recovery Act (42 U.S.C. section 6901 et seq.);
or
(3) Which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is or becomes regulated by any governmental
authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or
any political subdivision thereof; or
(4) The presence of which on the Property causes or
threatens to cause a nuisance upon the Property or to adjacent
properties or poses or threatens to pose a hazard to the health
or safety of persons on or about the Property; or
(5) Which contains, without limitation, gasoline, diesel
fuel, other petroleum hydrocarbons, polychlorinated biphenyls
(PCBs), asbestos, urea formaldehyde foam insulation, or radon
gas.
-- "Governmental Bodies," shall mean any and all past, present
or future governmental agencies, authorities, departments, commissions,
boards, bureaus, or instrumentalities of the United States, states and
political subdivisions thereof.
<PAGE>
LIST OF EXHIBITS
Exhibit No. Description Referred To In
1 Legal description of Land Paragraph 1.1
2 Grant Deed Paragraph 4.1.1
3 Assignment of Lease Paragraph 4.1.2
4 FIRPTA AFFIDAVIT Paragraph 4.1.3
5 California Affidavit Paragraph 4.1.4
6 Partial Property Information List Paragraph 11.1
AMENDMENT NO. 2
AND CONSENT
to
CREDIT AGREEMENT
Dated as of December 21, 1992
THIS AMENDMENT NO. 2 AND CONSENT ("Amendment") is entered into
as of April 24, 1995 by and among Giddings & Lewis, Inc., a Wisconsin
corporation, Giddings & Lewis, Ltd., a corporation formed under the laws
of the United Kingdom, Giddings & Lewis GmbH, a corporation formed under
the laws of the Republic of Germany, and the institutions identified on
the signature pages hereof as Agent and Lenders which are signatories
hereto. Capitalized terms used herein but not defined herein shall have
the meanings provided in the Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the U.S. Borrower, Multicurrency Borrowers, and the
Lenders are parties to that certain Credit Agreement dated as of December
21, 1992, as heretofore amended (together with the Exhibits and Schedules
thereto, the "Credit Agreement"), pursuant to which the Lenders have
agreed to provide certain financial accommodations to the U.S. Borrower
and Multicurrency Borrowers;
WHEREAS, the U.S. Borrower intends to make one or more
Investments in a newly formed wholly-owned Subsidiary, Bike Corp., a
Wisconsin corporation, ("Bike") for the purpose of enabling Bike to
acquire all of the issued and outstanding Capital Stock of Fadal
Engineering Company, Inc., a California corporation ("Fadal") as more
particularly described in that certain Stock Purchase Agreement dated as
of April 24, 1995 to which the Borrower and Bike are parties (the
"Purchase Agreement") for a cash purchase price of $150,000,000, subject
to post-closing adjustment as more particularly described in the Purchase
Agreement;
WHEREAS, the U.S. Borrower further intends to cause the merger
of Fadal with and into Bike, with Bike being the surviving corporation and
changing its name to Fadal Engineering, Inc. ("Merger"), upon consummation
of the acquisition under the Purchase Agreement;
WHEREAS, in view of the foregoing, the U.S. Borrower has
requested certain consents be provided in accordance with the terms of the
Credit Agreement and certain amendments to the Credit Agreement are
required to accommodate the transactions contemplated by the Purchase
Agreement and in connection with the formation of Bike and the Merger;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendment to Credit Agreement. Effective as of the date
first written above upon satisfaction of the conditions precedent set
forth in Section 3 below, the Credit Agreement is hereby amended as
follows:
1.1 Section 1.01 is amended to (i) delete the definitions of
"Funded Debt to Capitalization Ratio" and "Restricted Subsidiaries" in
their entirety and substitute the following therefor:
"Funded Debt to Capitalization Ratio" means, as of any date of
determination, the ratio of (i) the sum of (A) the Borrower's
consolidated long-term Funded Debt for borrowed money, including the
current portion of such long-term Funded Debt, plus (B) to the extent
not otherwise included in clause (A) above, the aggregate outstanding
principal balance of Advances, Multicurrency Advances, and B Advances
plus (C) the aggregate face amount of all letters of credit issued
for the account of the U.S. Borrower or any of its Subsidiaries plus
(D) the aggregate outstanding principal balance of "Advances" and "B
Advances" under the 1995 Credit Agreement to (ii) the sum of (X) the
amounts determined pursuant to clauses (i) (A), (i)(B), and (i)(D) of
this definition, plus (Y) the U.S. Borrower's consolidated
stockholders equity.
"Restricted Subsidiaries" means the Multicurrency Borrowers, Cross &
Trecker Corporation, a Michigan corporation, Bike Corp., a Wisconsin
corporation, Fadal Engineering Company, Inc., a California
corporation, and from and after the Merger becoming effective, Fadal
Engineering, Inc., as the surviving entity in the Merger; each of
which is a "Restricted Subsidiary".
(ii) add the following provision at the end of the definition of "Debt":
"Debt" of the U.S. Borrower and its Subsidiaries shall not include
the face amount of letters of credit issued for the account of the
U.S. Borrower or any of its Subsidiaries.
(iii) delete the definition of "Senior Debt" in its entirety, and
(iv) add the following definitions:
"Merger" means the merger of Fadal Engineering Company, Inc., a
California corporation, with and into Bike Corp., a Wisconsin
corporation and wholly-owned Subsidiary of the U.S. Borrower, with
Bike Corp. being the surviving entity and changing its corporate name
to Fadal Engineering, Inc.
"1995 Credit Agreement" means that certain Credit Agreement dated as
of April 24, 1995, by and among Giddings & Lewis, Inc., the financial
institutions from time to time a party thereto as "Lenders" and
"Issuing Banks", and Citibank, N.A., as agent, as the same may be
amended, restated, supplemented, and extended from time to time.
1.2 Section 6.01(h) is amended to insert the phrase "any
Restricted Subsidiary" after the phrase "either Multicurrency Borrower,"
in each place it appears in such subsection and to insert the phrase
"either Multicurrency Borrower, any Restricted Subsidiary" after the term
"U.S. Borrower" when first appearing in the phrase "or the U.S. Borrower
or any of the Significant Subsidiaries of the U.S. Borrower" which appears
in the final clause of such subsection.
2. Consents. The Lenders signatory hereto and comprising at
least the Majority Lenders hereby consent to:
2.1 the U.S. Borrower's Investments in Bike to enable Bike to
acquire all of the issued and outstanding Capital Stock of Fadal pursuant
to the terms of the Purchase Agreement, and
2.2 following the consummation of the acquisition described in
Section 2.1, the merger of Fadal with and into Bike, with Bike being the
surviving corporation.
3. Conditions to Effectiveness. The amendments and consents
set forth in in Sections 1 and 2 hereof shall become effective as of the
date first written above provided that (i) Agent shall have received, on
or before April 21, 1995, executed counterparts of this Amendment signed
on behalf of the U.S. Borrower, the Multicurrency Borrowers, and Lenders
constituting at least the Majority Lenders and (ii) the acquisition
contemplated by the Purchase Agreement is consummated on or before April
28, 1995.
4. Representations, Warranties and Covenants.
4.1 The U.S. Borrower hereby represents and warrants that this
Amendment and the Credit Agreement, as amended hereby, constitute the
legal, valid and binding obligations of the U.S. Borrower and
Multicurrency Borrowers and are enforceable against the U.S. Borrower and
Multicurrency Borrowers in accordance with their terms.
4.2 The U.S. Borrower hereby represents and warrants that,
before and after giving effect to this Amendment (including, without
limitation, the consents set forth in Section 2 above), the consummation
of the acquisition described in the Purchase Agreement, and the making of
loans and other extensions of credit contemplated by the 1995 Credit
Agreement, no Event of Default has occurred and is continuing.
4.3 The U.S. Borrower hereby reaffirms all agreements,
covenants, representations and warranties made in the Credit Agreement, to
the extent the same are not amended hereby, and made in the other Loan
Documents to which it is a party; and agrees that all such agreements,
covenants, representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
5. Reference to and Effect on the Credit Agreement.
5.1 Upon the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import shall mean and be a reference to the Credit
Agreement as amended hereby.
5.2 Except as specifically amended above, the Credit Agreement
shall remain in full force and effect, and is hereby ratified and
confirmed.
5.3 The execution, delivery, and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Agent or Lenders, nor
constitute a waiver of any provision of any of the Loan Documents.
6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
7. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by one or more
of the parties hereto on any number of separate counterparts, each of
which shall be deemed an original and all of which, taken together, shall
be deemed to constitute one and the same instrument. Delivery of an
executed counterpart of this Amendment by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, this Amendment has been duly executed as of
the day and year first above written.
GIDDINGS & LEWIS, INC.
By/s/ Douglas E. Barnett
Name: Douglas E. Barnett
Title: Treasurer
GIDDINGS & LEWIS GmbH
By/s/ Douglas E. Barnett
Name: Douglas E. Barnett
Title: Treasurer
GIDDINGS & LEWIS, LTD.
By/s/ Douglas E. Barnett
Name: Douglas E. Barnett
Title: Treasurer
CITIBANK, N.A., as Agent and Lender
By/s/ Gerald Gallucci
Name: Gerald Gallucci
Title: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By/s/ Robert A. Flosbach
Name: Robert A. Flosbach
Title: Vice President
THE BANK OF NOVA SCOTIA
By/s/ A. S. Norsworthy
Name: A. S. Norsworthy
Title: Assistant Agent
NORWEST BANK WISCONSIN, NATIONAL
ASSOCIATION
By/s/ Daniel G. Fragrer
Name: Daniel G. Fragrer
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT GRAND
CAYMAN BRANCH
By/s/ Paul Karlin
Name: Paul Karlin
Title: A.C.
By/s/ Joachim G. Fochs
Name: Joachim G. Fochs
Title: Executive Vice President
FIRST BANK NATIONAL ASSOCIATION
By/s/ Terese A. Radford
Name: Terese A. Radford
Title: Commercial Banking Officer
THE NORTHERN TRUST COMPANY
By/s/ Julie J. Wigdale
Name: Julie J. Wigdale
Title: Vice President
$100,000,000
CREDIT AGREEMENT
Dated as of April 24, 1995
Among
GIDDINGS & LEWIS, INC.
AS BORROWER,
and
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
and
CITIBANK, N.A.
AS AGENT
<PAGE>
Schedules
Schedule I -- List of Notice Addresses and
Applicable Lending Offices
Schedule 5.02(e)(i) -- Permitted Existing Investments
Exhibits
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Promissory Note
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Notice of Conversion/Continuation
Exhibit E - Form of Notice of Reduction of Commitments
Exhibit F - Pro Forma
Exhibit G - List of Closing Documents
Exhibit H - Form of Officer's Certificate to
Accompany Reports
<PAGE>
CREDIT AGREEMENT
Dated as of April 24, 1995
Giddings & Lewis, Inc., a Wisconsin corporation (the
"Borrower"), the institutions from time to time party hereto as Lenders,
the institutions from time to time party hereto as Issuing Banks, and
Citibank, N.A., a national banking association ("Citibank"), as agent for
the Lenders and Issuing Banks hereunder (the "Agent"), agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Advance" means an advance by a Lender to the Borrower pursuant
to Section 2.01 and refers to a Base Rate Advance or a Eurodollar
Rate Advance (each of which shall be a "Type" of Advance).
"Affected Lender" has the meaning specified in Section 8.04(c).
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
"Agreement" means this Credit Agreement dated as of April 24,
1995, by and among the Borrower, the Lenders, the Issuing Banks, and
the Agent, as the same may be amended, supplemented, restated or
modified from time to time.
"Applicable Eurocurrency Rate Margin" means, as of any date, in
respect of the then applicable Performance Level, a per annum rate as
set forth below:
Applicable Eurocurrency Rate Margin
(per annum rate)
Applicable
Performance Level Eurocurrency Rate Margin
Performance Level I 0.2600%
Performance Level II 0.3300%
Performance Level III 0.3200%
provided that if (a) "Commitments" (as defined in the 1992 Credit
Agreement) are then in effect, in respect of any calendar month, the
sum of (i) the average aggregate principal amount of "Advances" (as
defined in the 1992 Credit Agreement) outstanding during such
calendar month, (ii) the average aggregate principal amount of "B
Advances" (as defined in the 1992 Credit Agreement) outstanding
during such calendar month, and (iii) the average aggregate face
amount of all outstanding "Letters of Credit" (as defined in the 1992
Credit Agreement) during such calendar month, shall exceed an amount
equal to fifty percent (50%) of the average aggregate "Commitments"
(as defined in the 1992 Credit Agreement) during such calendar month
or (b) "Commitments" (as defined in the 1992 Credit Agreement) are no
longer in effect, in respect of any calendar month, the sum of (i)
the average aggregate principal amount of Advances outstanding during
such calendar month and (ii) the average aggregate face amount of all
outstanding Letters of Credit during such calendar month, shall
exceed an amount equal to fifty percent (50%) of the average
aggregate Commitments during such calendar month, then the Applicable
Eurocurrency Rate Margin during the month immediately succeeding such
calendar month shall be the per annum rate as set forth below
opposite the Performance Level which is applicable during such
immediately succeeding calendar month:
Applicable Eurocurrency Rate Margin
(per annum rate)
During the Calendar Month
Immediately Succeeding the Calendar Month
of Excess Utilization
Applicable
Performance Level Eurocurrency Rate Margin
Performance Level I 0.3100%
Performance Level II 0.3800%
Performance Level III 0.3700%
"Applicable Lending Office" means, with respect to each Lender,
(i) such Lender's Domestic Lending Office in the case of a Base Rate
Advance and (ii) such Lender's Eurocurrency Lending Office(s)
designated on Schedule I or in an Assignment and Acceptance or other
written notice to the Agent in the case of a Eurodollar Rate Advance.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by
the Agent, in substantially the form of Exhibit A hereto.
"Base Rate" means, for any period, a fluctuating interest rate
per annum (computed on the basis of a year of 360 days for the actual
number of days elapsed) as shall be in effect from time to time which
rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
or
(b) the sum (adjusted to the nearest 1/4 of one percent
or, if there is no nearest 1/4 of one percent, to the next
higher 1/4 of one percent) of (i) 1/2 of one percent per annum,
plus (ii) the rate obtained by dividing (A) the latest three-
week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of
major United States money market banks, such three-week moving
average (adjusted to the basis of a year of 365 or 366 days, as
the case may be) being determined weekly on each Monday (or, if
any such day is not a Business Day, on the next succeeding
Business Day) for the three-week period ending on the previous
Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such
rates received by Citibank from three New York certificate of
deposit dealers of recognized standing, by (B) a percentage
equal to 100% minus the average of the daily percentages
specified during such three-week period by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal
reserve requirement) for Citibank with respect to liabilities
consisting of or including (among other liabilities) three-month
U.S. dollar nonpersonal time deposits in the United States, plus
(iii) the average during such three-week period of the annual
assessment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal
Deposit Insurance Corporation (or any successor) for insuring
U.S. dollar deposits of Citibank in the United States; or
(c) the sum of (i) 1/2 of one percent per annum, plus (ii)
the Federal Funds Rate in effect from time to time during such
period.
"Base Rate Advance" means an Advance which bears interest as
provided in Section 2.08(a).
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect
of which the Borrower or any ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"Borrower Common Stock" means the common stock, par value $0.10
per share, of the Borrower.
"Borrowing" means a borrowing consisting of Advances of the same
Type made on the same day by the Lenders; provided, however, that a
Continuation or Conversion made pursuant to Section 2.11 shall not
constitute a Borrowing.
"Business Day" means a day, in the applicable local time, which
is not a Saturday or Sunday or a legal holiday and on which banks are
not required or authorized to close (i) in New York, New York or
Chicago, Illinois and (ii) if the applicable Business Day relates to
any Letter of Credit transactions for a particular Issuing Bank, in
the place where its office for issuance or administration of the
pertinent Letter of Credit is located.
"Capital Expenditures" means, for any period, the aggregate of
all expenditures (whether payable in cash or other property or
accrued as a liability (but without duplication)) during such period
that, in conformity with generally accepted accounting principles,
are required to be included in or reflected by the Borrower's or any
of its Subsidiaries' fixed asset accounts as reflected in any of
their respective balance sheets; provided, however, (i) Capital
Expenditures shall include, whether or not such a designation would
be in conformity with generally accepted accounting principles, (A)
that portion of Capital Leases which is capitalized on the
consolidated balance sheet of the Borrower and its Subsidiaries and
(B) expenditures for equipment which is purchased or manufactured by
the Borrower or such Subsidiary within six (6) months after the sale
or other disposition of existing equipment and which is used to
perform functions similar to those performed by such existing
equipment in the business of the Borrower or one of its Subsidiaries,
to the extent the gross purchase price or the gross costs of
manufacturing, as applicable, of the new equipment exceeds the book
value of the equipment disposed of; and (ii) Capital Expenditures
shall exclude, whether or not such a designation would be in
conformity with generally accepted accounting principles,
expenditures made in connection with the replacement or restoration
of property, to the extent reimbursed or financed from insurance or
condemnation proceeds.
"Capital Lease", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as
lessee which, in conformity with generally accepted accounting
principles, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock", as applied to any Person, means any capital
stock of such Person, regardless of class or designation, and all
warrants, options, purchase rights, conversion and exchange rights,
voting rights, calls and claims of any character with respect
thereto.
"Cash Equivalents" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States government
and backed by the full faith and credit of the United States
government; and (ii) domestic and Eurodollar certificates of deposit
and time deposits, bankers' acceptances and floating rate
certificates of deposit issued by any commercial bank organized under
the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully
protected against currency fluctuations), which, at the time of
acquisition, are rated "A-1" or better by Standard & Poor's
Corporation or "P-1" or better by Moody's Investors Services, Inc.;
provided, that (x) the maturities of such Cash Equivalents shall not
exceed one year and (y) such Cash Equivalents shall be maintained in
investment and other accounts at Citibank.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section Section
9601 et seq., any amendments thereto, any successor statutes, and any
regulations or guidance promulgated thereunder.
"Citibank" means Citibank, N.A., a national banking association.
"Closing Date" means April 24, 1995.
"Commercial Letter of Credit" means any documentary letter of
credit issued by an Issuing Bank pursuant to Section 2.04 for the
account of the Borrower, or for the account of any of the Borrower's
Subsidiaries if the Borrower is jointly and severally liable for
reimbursement of draws under such letter of credit, which is drawable
upon presentation of documents evidencing the sale or shipment of
goods purchased by the Borrower or such Subsidiary in the ordinary
course of its business.
"Commitment" means, with respect to any Lender, the obligation
of such Lender to make Advances to the Borrower and to participate in
Letters of Credit pursuant to the terms and conditions of this
Agreement, and which shall not exceed the principal U.S. dollar
amount set forth opposite such Lender's name under the heading
"Commitment" on the signature pages hereof or the signature page of
the Assignment and Acceptance by which it became a Lender, as
modified from time to time pursuant to the terms of this Agreement or
to give effect to any applicable Assignment and Acceptance; and
"Commitments" means the aggregate principal U.S. dollar amount of the
Commitments of all Lenders as in effect from time to time.
"Compliance Certificate" has the meaning specified in Section
5.01(e)(v).
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, asbestos, polychorlinated
biphenyls (PCBs), or any constituent of any such substance or waste,
and includes, but is not limited to, these terms as defined in
federal, state or local laws or regulations.
"Continue", "Continuation" and "Continued" each refers to a
continuation of Advances of one Type as Advances of that Type
pursuant to Section 2.11.
"Convert", "Conversion" and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type
pursuant to Section 2.10 or 2.11.
"Corporate Documents" means, with respect to any corporation,
(i) the articles/certificate of incorporation (or the equivalent
organizational documents) of such corporation, (ii) the by-laws (or
the equivalent governing documents) of such corporation, and (iii)
any document setting forth the designation, amount and/or relative
rights, limitations and preferences of any class or series of such
corporation's Capital Stock.
"Cure Loans" has the meaning specified in Section
2.15(b)(iv)(C).
"Debt", as applied to any Person, means, at any time, (a) all
indebtedness, obligations or other liabilities of such Person (i) for
borrowed money or evidenced by bonds, debentures, notes, acceptances
or other similar instruments, and any accrued interest, fees and
charges related thereto, (ii) to pay the deferred purchase price of
property or services and (iii) in respect of Capital Leases; (b) all
preferred stock subject (upon the occurrence of any contingency or
otherwise) to mandatory redemption; (c) all obligations under direct
or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) and (b) above (in each
instance, without duplication); and (d) liabilities in respect of
unfunded vested benefits under plans covered by Title IV of ERISA.
"Debt" shall not include the face amount of letters of credit
(including, without limitation, Letters of Credit) issued for the
account of the Borrower or any of its Subsidiaries.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule I attached hereto and hereby made a
part hereof or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender
may from time to time specify to the Borrower and the Agent.
"Eligible Assignee" means (i) any Lender (or any Affiliate of
such Lender); (ii) a commercial bank organized under the laws of the
United States, or any State thereof, and having total assets in
excess of $2,500,000,000; (iii) the central bank of any country which
is a member of the OECD; and (iv) a finance company, insurance
company or other financial institution or fund (whether a
corporation, partnership or other entity) which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary
course of its business, and having total assets in excess of
$300,000,000; provided, however, none of the Persons described in
clauses (i) through (iv) above shall be an Eligible Assignee if, as
of the effective date of any proposed assignment of a Lender's
interests hereunder to such Person, such Person would require
compensation from the Borrower under Sections 2.13 or 2.16 to recover
increased costs theretofore incurred by such Person which are not
being generally incurred by the Lenders not a party to such
assignment.
"Environmental, Health or Safety Requirements of Law" means all
Requirements of Law derived from or relating to federal, state and
local laws or regulations relating to or addressing the environment,
health or safety, including, but not limited to, CERCLA, OSHA and
RCRA, and any state equivalent thereof.
"Environmental Lien" means a lien in favor of any Governmental
Authority for any (i) liabilities under any Environmental, Health or
Safety Requirement of Law, or (ii) damages arising from, or costs
incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of
the same controlled group of corporations (within the meaning of
Section 414(b) of the Internal Revenue Code) as the Borrower, (ii) a
partnership or other trade or business (whether or not incorporated)
which is under common control (within the meaning of Section 414(c)
of the Internal Revenue Code) with the Borrower, and (iii) a member
of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as the Borrower, any corporation
described in clause (i) above or any partnership or trade or business
described in clause (ii) above.
"Eurocurrency Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurocurrency Lending
Office" opposite its name on Schedule I hereto or in the Assignment
and Acceptance pursuant to which it became a Lender (or, if no such
office is specified, its Domestic Lending Office), or such other
office of such Lender as such Lender may from time to time specify to
the Borrower and the Agent.
"Eurocurrency Liabilities" has the meaning assigned to that term
in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an
interest rate per annum equal to the rate per annum at which deposits
in U.S. dollars are offered by the principal office of Citibank in
London, England to prime banks in the London interbank market at
11:00 A.M. (London time) two (2) Business Days before the first day
of such Interest Period in an amount substantially equal to
Citibank's Eurodollar Rate Advance comprising part of such Borrowing
and for a period equal to such Interest Period.
"Eurodollar Rate Advance" means an Advance which bears interest
as provided in Section 2.08(b).
"Eurodollar Rate Reserve Percentage" of any Lender for the
Interest Period for any Eurodollar Rate Advance means the reserve
percentage applicable during such Interest Period (or, if more than
one such percentage shall be so applicable, the daily average of such
percentages for those days in such Interest Period during which any
such percentage shall be so applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Lender with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Extension Request" has the meaning specified in Section 8.10.
"Facility Fee" has the meaning specified in Section 2.05.
"Fair Market Value" means, with respect to any asset, the value
of the consideration obtainable in a sale of such asset in the open
market, assuming a sale by a willing seller to a willing purchaser
dealing at arm's length and arranged in an orderly manner over a
reasonable period of time, each having reasonable knowledge of the
nature and characteristics of such asset, neither being under any
compulsion to act, determined (a) in good faith by the Board of
Directors of the Borrower or (b) in an appraisal of such asset,
provided that such appraisal was performed relatively
contemporaneously with such sale by an independent third party
appraiser and the basic assumptions underlying such appraisal have
not materially changed since the date thereof.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to 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 for such day (or, if such day is not a Business
Day, for the next preceding 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 such day on such
transactions received by the Agent from three (3) federal funds
brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any Governmental Authority succeeding to
its functions.
"Fixed Charge Coverage Ratio" means, with respect to any period,
the ratio of (i) the amount of the Borrower's consolidated earnings
before interest expense, tax expense, depreciation and amortization
for such period and extraordinary gains on sales and other
dispositions of assets during such period, minus Capital Expenditures
made during such period to (ii) the amount of Borrower's consolidated
interest expense (net of interest income) for such period, whether
paid or accrued during such period, including, without limitation,
the interest component of all Capital Leases, all commissions, fees
and discounts with respect to letters of credit and other Debt, plus
scheduled amortization of the principal portion of all Debt of the
Borrower and its Subsidiaries during such period, plus the aggregate
amount of cash dividends paid during such period with respect to the
Borrower's Capital Stock, plus the aggregate amount of redemptions of
the Borrower's Capital Stock for cash during such period.
"Funded Debt" means Debt other than that described in clause (d)
of the definition thereof.
"Funded Debt to Capitalization Ratio" means
(i) as of any date of determination prior to the "Effective Date" of
the initial Assignment and Acceptance executed and delivered by
Citibank, the ratio of (a) the sum of (1) the Borrower's consolidated
long-term Funded Debt for borrowed money, including the current
portion of such long-term Funded Debt, plus (2) to the extent not
otherwise included in clause (1) above, the aggregate outstanding
principal balance of Advances plus (3) to the extent not otherwise
included in clause (1) above, the aggregate outstanding principal
balance of "Advances", "B Advances" and "Multicurrency Advances"
under the 1992 Credit Agreement, plus (4) the aggregate face amount
of all letters of credit issued for the account of the Borrower or
any of its Subsidiaries to (b) the sum of (X) the amounts determined
pursuant to clauses (i)(a)(1), (i)(a)(2), (i)(a)(3) and (i)(a)(4) of
this definition, plus (Y) the Borrower's consolidated stockholders
equity and
(ii) as of any date of determination from and after the "Effective
Date" of the initial Assignment and Acceptance executed and delivered
by Citibank, the ratio of (a) the sum of (1) the Borrower's
consolidated long-term Funded Debt for borrowed money, including the
current portion of such long-term Funded Debt, plus (2) to the extent
not otherwise included in clause (1) above, the aggregate outstanding
principal balance of Advances plus (3) to the extent not otherwise
included in clause (1) above, the aggregate outstanding principal
balance of "Advances", "B Advances" and "Multicurrency Advances"
under the 1992 Credit Agreement, plus (4) the aggregate face amount
of all letters of credit issued for the account of the Borrower or
any of its Subsidiaries to (b) the sum of (X) the amounts determined
pursuant to clauses (ii)(a)(1), (ii)(a)(2) and (ii)(a)(3) of this
definition, plus (Y) the Borrower's consolidated stockholders equity.
"Governmental Authority" means any nation or government, any
federal, state, local or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Interest Coverage Ratio" means, with respect to any period, the
ratio of (i) the amount of the Borrower's consolidated earnings
before interest expense and tax expense for such period and
extraordinary gains on sales and other dispositions of assets during
such period, to (ii) the amount of the Borrower's consolidated
interest expense (net of interest income) for such period, whether
paid or accrued during such period, including, without limitation,
the interest component of Capital Leases and all commissions, fees
and other discounts with respect to letters of credit and other Debt,
but excluding all such expenses not paid in cash during such period.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the
date of such Eurodollar Rate Advance or the date of the Conversion of
any Base Rate Advance into an Eurodollar Rate Advance and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing
on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower
pursuant to the provisions below. The duration of each such Interest
Period shall be one, two, three, or six months, in each case as the
Borrower may, upon notice received by the Agent not later than 11:00
A.M. (New York City time) on the second (2nd) Business Day prior to
the first day of such Interest Period for Eurodollar Rate Advances,
select; provided, however, that:
(i) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing
shall be of the same duration; and
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day
of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided that if such extension would
cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day.
"Investment" means, with respect to any Person, (i) any purchase
or other acquisition by that Person of securities, or of a beneficial
interest in securities, issued by any other Person, (ii) any purchase
by that Person of all or substantially all of the assets of a
business conducted by another Person, and (iii) any loan, advance
(other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable, advances
to employees and similar items made or incurred in the ordinary
course of business) or capital contribution by that Person to any
other Person, including all Debt to such Person arising from a sale
of property by such Person other than in the ordinary course of
business. The amount of any Investment shall be the original cost of
such Investment, plus the cost of all additions thereto minus the
amount of any return of capital or principal to the extent such
return is in cash with respect to such Investment without any
adjustments for increases or decreases in value or write-ups, write-
downs or write-offs with respect to such Investment.
"Issuing Bank" means any Person designated as an "Issuing Bank"
on the signature pages hereof or the signature page of any Assignment
and Acceptance and each other Person approved by the Agent and the
Borrower who has agreed to become an Issuing Bank for the purpose of
issuing Letters of Credit pursuant to Section 2.04.
"Lenders" means the Lenders listed on the signature pages hereof
and each Eligible Assignee that becomes a party hereto pursuant to
Section 8.07.
"Letter of Credit" means any Commercial Letter of Credit or
Standby Letter of Credit.
"Letter of Credit Fee" has the meaning specified in Section
2.05(c).
"Letter of Credit Obligations" means, at any particular time,
the sum, in U.S. dollars, of (i) all outstanding Reimbursement
Obligations calculated with respect to the Lenders, plus (ii) the
then aggregate undrawn face amount of all outstanding Letters of
Credit, plus (iii) the then aggregate face amount of all Letters of
Credit requested by the Borrower but not yet issued (unless the
request for an unissued Letter of Credit has been denied pursuant to
Section 2.04(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect
to a Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several
documents, taken together) as the Issuing Bank from which the Letter
of Credit is requested may employ in the ordinary course of business
for its own account, with such modifications thereto as may be agreed
upon by the Issuing Bank and the Borrower (and, with respect to any
Letter of Credit issued for the account of any Subsidiary of the
Borrower, such Subsidiary) and as are not materially adverse (in the
judgment of the Issuing Bank) to the interests of the Lenders;
provided, however, in the event of any conflict between the terms of
any Letter of Credit Reimbursement Agreement and this Agreement, the
terms of this Agreement shall control.
"Loan Documents" means this Agreement, the Notes, and all other
instruments, agreements and written contractual obligations between
the Borrower and any of the Agent, any Lender or Issuing Bank
pursuant to or in connection with the transactions evidenced by this
Agreement.
"Majority Lenders" means Lenders as of a given time whose Pro
Rata Shares, in the aggregate, are greater than sixty-six and two-
thirds percent (66-2/3%); provided, however, that if any of the
Lenders shall have failed to fund its Pro Rata Share of any Advance
requested under this Agreement which such Lender is obligated to fund
under the terms of this Agreement and any such failure has not been
cured, then for so long as such failure continues, "Majority Lenders"
means the Lenders (excluding all Lenders whose failure to fund their
respective Pro Rata Shares of such Advances have not been cured)
whose Pro Rata Shares are greater than sixty-six and two-thirds
percent (66-2/3%) of the aggregate Pro Rata Shares of such Lenders;
provided, further, however, that if the Commitments have been
terminated pursuant to the terms of this Agreement, "Majority
Lenders" means Lenders (without regard to such Lenders' performance
of their respective obligations hereunder) whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding
principal balance of all Advances are greater than sixty-six and two-
thirds percent (66-2/3%).
"Material Adverse Effect" means a material adverse effect upon
(i) the financial condition, operations, assets or prospects of the
Borrower (giving effect to the Borrower's investments and interests
in its Subsidiaries, calculated on an equity basis), or the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of the
Borrower, its Subsidiaries and Affiliates to perform their
obligations under the Loan Documents, or (iii) the ability of the
Lenders, the Issuing Banks, the Agent, or any Affiliate of the Agent,
any Lender or any Issuing Bank to enforce the Loan Documents against
the Borrower, its Subsidiaries and/or Affiliates.
"Maturity Date" means April 22, 1996 or such later date as shall
be determined under Section 8.10.
"Merger" means the merger of Fadal Engineering Company, Inc., a
California corporation, with and into Bike Corp., a Wisconsin
corporation and wholly-owned Subsidiary of the Borrower, with Bike
Corp. being the surviving entity and changing its corporate name to
Fadal Engineering Company, Inc.
"Multiemployer Plan" means any "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is, or within the immediately
preceding six (6) years was, contributed to by either the Borrower or
any ERISA Affiliate.
"Net Cash Proceeds of Sale" means proceeds received by the
Borrower or any of its Subsidiaries in cash from the sale, assignment
or other disposition (exclusive of (A) sale/leaseback transactions
and (B) sales, assignments or other dispositions in the ordinary
course of business or for which equivalent replacement assets are
acquired) of all or substantially all of the assets comprising the
operations of the Borrower and/or its Subsidiaries located in Fond du
Lac, Wisconsin, Janesville, Wisconsin and/or Fraser, Michigan, net,
in any such case, of (X) the reasonable estimate of cost of sale,
assignment or other disposition, (Y) an estimate of any income,
franchise, transfer or other tax liability arising from such
transaction(s) and (Z) amounts applied to the repayment of Debt
(other than the Obligations) secured by a lien permitted by Section
5.02 on the asset disposed of, whether such net proceeds arise from
an individual sale, assignment or other disposition or from a group
of related sales, assignments or other dispositions.
"Net Cash Proceeds of Securities" means proceeds received by the
Borrower or any of its Subsidiaries in cash from the issuance of Debt
(exclusive of Advances under this Agreement and purchase money Debt
otherwise permitted under the terms of this Agreement) or Capital
Stock (other than from issuance of Capital Stock pursuant to any
employee or director stock option program, benefit plan or
compensation program of the Borrower or any of its Subsidiaries),
net, in any such case, of the transaction costs related to such
issuance.
"1992 Credit Agreement" means that certain Credit Agreement
dated as of December 21, 1992, as amended, among the Borrower,
certain Subsidiaries of the Borrower a party thereto, Citibank, and
certain other institutions a party thereto as a lender or issuing
bank.
"Non Pro Rata Loan" has the meaning specified in Section
2.15(b)(iv).
"Note" means a promissory note of the Borrower payable to the
order of any Lender, in substantially the form attached as Exhibit B
hereto, evidencing the aggregate indebtedness of the Borrower to such
Lender resulting from the Advances made by such Lender.
"Notice of Borrowing" means a written notice by the Borrower to
the Agent, substantially in the form of Exhibit C hereto, delivered
not later than 11:00 A.M. (New York City time) on the (i) second
Business Day prior to the proposed funding date set forth therein,
for Advances which are Eurodollar Rate Advances, and (ii) funding
date set forth therein, for Base Rate Advances. Each Notice of
Borrowing shall specify the requested (i) date of such Borrowing,
(ii) Type(s) of Advances comprising such Borrowing, (iii) aggregate
amount of such Borrowing, and (iv) in the case of a Borrowing
comprised of Eurodollar Rate Advances, the Interest Period for each
such Advance.
"Notice of Conversion/Continuation" means a notice substantially
in the form of Exhibit D hereto with respect to a proposed Conversion
of an Advance or Continuation of an Advance pursuant to Section 2.11.
"Notice of Reduction of Commitments" means a notice
substantially in the form of Exhibit E hereto with respect to a
reduction of the Commitments pursuant to Section 2.06.
"Obligation" means all Advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Agent,
any Lender, any Issuing Bank, any Affiliate of the Agent, any Lender
or any Issuing Bank, of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument,
arising under this Agreement, the Notes, the Letters of Credit, or
the other Loan Documents, and whether or not for the payment of
money, whether arising by reason of extension of credit, opening or
amendment of a Letter of Credit or payment of any draft drawn
thereunder, loan, guaranty, indemnification, or in any other manner,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees
and disbursements and any other sum chargeable to the Borrower under
this Agreement or any other Loan Document.
"OECD" means the Organization for Economic Cooperation and
Development.
"Officer's Certificate" means, as to a corporation, a
certificate executed on behalf of such corporation by (i) the
chairman or vice-chairman of its board of directors (if an officer of
such corporation) or (ii) its president, any of its vice-presidents,
its chief financial officer, or its treasurer.
"OSHA" means the Occupational Safety and Health Act of 1970, any
amendments thereto, any successor statutes, and any regulations or
guidance promulgated thereunder.
"Performance Level" means any of Performance Level I,
Performance Level II, or Performance Level III.
"Performance Level I" means that level of financial performance
of the Borrower, measured as of the end of a fiscal quarter of the
Borrower, at which all of the following tests have been met:
(i) the Interest Coverage Ratio for the then most recently ended
four (4) fiscal quarter period of the Borrower is greater than
or equal to 5.25 to 1;
(ii) the Funded Debt to Capitalization Ratio for the then most
recently ended four (4) fiscal quarter period of the Borrower is
less than or equal to 0.35 to 1; and
(iii) no Event of Default has occurred and is continuing or
unwaived at the end of the initial fiscal quarter in which the
tests in clauses (i) and (ii) have been met.
"Performance Level II" means that level of financial performance
of the Borrower, measured as of the end of a fiscal quarter of the
Borrower, at which all of the following tests have been met:
(i) the Interest Coverage Ratio for the then most recently ended
four (4) fiscal quarter period of the Borrower is greater than
or equal to 4.8 to 1;
(ii) the Funded Debt to Capitalization Ratio for the then most
recently ended four (4) fiscal quarter period of the Borrower is
less than or equal to 0.38 to 1;
(iii) no Event of Default has occurred and is continuing
unwaived at the end of the initial fiscal quarter in which the
tests in clauses (i), and (ii) have been met; and
(iv) the conditions of Performance Level I are not satisfied as
of such date.
"Performance Level III" means that level of financial
performance of the Borrower, measured as of the end of a fiscal
quarter of the Borrower, at which neither of Performance Level I or
Performance Level II shall have been achieved.
"Permits" means any permit, approval, authorization, license,
variance, or permission required from a Governmental Authority under
an applicable Requirement of Law.
"Permitted Distribution" means with respect to each of the
Borrower's fiscal quarters, forty percent (40%) of the Borrower's
consolidated net earnings after taxes for such fiscal quarter.
"Permitted Existing Investments" means those Investments
identified as such on Schedule 5.02(e)(i).
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" means any employee benefit plan defined in Section 3(3)
of ERISA in respect of which the Borrower or any ERISA Affiliate is,
or within the immediately preceding six (6) years was, an "employer"
as defined in Section 3(5) of ERISA.
"Pro Forma" means the unaudited pro forma opening balance sheet
of the Borrower and its Subsidiaries attached hereto as Exhibit F,
dated the Closing Date, and giving effect to the acquisition by Bike
Corp. of all of the Capital Stock of Fadal Engineering Company, Inc.
and the extensions of credit contemplated hereby.
"Pro Rata Share" means, with respect to any Lender, the
percentage that such Lender's Commitment represents of the aggregate
Commitments of all Lenders.
"Purchase Agreement" means that certain Stock Purchase Agreement
dated as of April 24, 1995, among the Borrower, Bike Corp., Fadal
Engineering Company, Inc. and the shareholders of Fadal Engineering
Company, Inc., a copy of which has previously been delivered to the
Agent.
"RCRA" means the Resource Conservation and Recovery Act of 1976,
42 U.S.C. Section Section 6901 et seq., any amendments thereto, any
successor statutes, and any regulations or guidance promulgated
thereunder.
"Reference Banks" means Citibank and Commerzbank
Aktiengesellschaft (either being a "Reference Bank").
"Register" has the meaning specified in Section 8.07(c).
"Regulation A" means Regulation A of the Federal Reserve Board
as in effect from time to time.
"Regulation G" means Regulation G of the Federal Reserve Board
as in effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board
as in effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board
as in effect from time to time.
"Reimbursement Date" has the meaning specified in Section
2.04(d).
"Reimbursement Obligation" means, as to the Lenders, the
aggregate non-contingent reimbursement or repayment obligations as of
a Reimbursement Date of the Borrower (together with the joint and
several non-contingent reimbursement or repayment obligations of the
Subsidiary of the Borrower for whose account the Letter of Credit is
issued, if applicable) with respect to amounts drawn under Letters of
Credit; and, as to an Issuing Bank, the aggregate non-contingent
reimbursement or repayment obligations as of a Reimbursement Date of
the Borrower (together with the joint and several non-contingent
reimbursement or repayment obligations of the Subsidiary of the
Borrower for whose account the Letter of Credit is issued, if
applicable) with respect to amounts drawn under Letters of Credit
issued by such Issuing Bank calculated as of the Reimbursement Date.
"Requirements of Law" means, as to any Person, the charter or
by-laws or other organizational or governing documents of such
Person, and any law, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject including,
without limitation, the Securities Act, the Securities Exchange Act,
Regulation G, U and X, ERISA, the Fair Labor Standards Act, Americans
with Disabilities Act of 1990 and any certificate of occupancy,
zoning ordinance, building, environmental or land use requirement or
Permit or environmental, labor, employment, occupational safety or
health law, rule or regulation.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment or into or out of
any property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or property.
"Restricted Subsidiaries" means Cross & Trecker Corporation, a
Michigan corporation, Giddings & Lewis Ltd., a corporation formed
under the laws of the United Kingdom, Giddings & Lewis GmbH, a
corporation formed under the laws of the Republic of Germany, Bike
Corp., a Wisconsin corporation, Fadal Engineering Company, Inc., a
California corporation, and from and after the Merger becoming
effective, Fadal Engineering Company, Inc., as the surviving entity
in the Merger; each of which is a "Restricted Subsidiary".
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Significant Subsidiary" means "significant subsidiary" as such
term is defined in Rule 1-02(v) of Regulation S-X promulgated by the
Securities and Exchange Commission as in effect on the Closing Date.
"Standby Letter of Credit" means any letter of credit issued by
an Issuing Bank pursuant to Section 2.04 for the account of the
Borrower or for the account of any of the Borrower's Subsidiaries
with respect to downpayment guarantees on contracts entered into in
the ordinary course of business by the Borrower, or any of its
Subsidiaries if the Borrower is jointly and severally liable for
reimbursement of draws under such letter of credit.
"Subsidiary" of a Person means any corporation or other entity
of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or
indirectly owned or controlled by such Person, one or more of the
other subsidiaries of such Person or any combination thereof; for
purposes of this Agreement, Fadal Engineering Company, Inc. shall be
deemed to be a Subsidiary of the Borrower.
"Termination Date" means the Maturity Date or the earlier date
of termination in whole of the Commitments pursuant to Section 2.06,
2.12(b), or 6.01; provided in each case that if such day shall not be
a Business Day, the Termination Date shall occur on the immediately
preceding Business Day.
"Total Unfunded Commitments" means, as of the date of
determination thereof, the amount equal to the amount of the
Commitments then in effect minus the aggregate principal balance of
the Advances then outstanding, minus the Letter of Credit Obligations
as of such date.
"U.S. dollar" means the lawful money of the United States of
America.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles consistent with those applied in
the preparation of the financial statements referred to in Section
4.01(e).
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) Each Lender severally agrees,
on the terms and conditions hereinafter set forth, to make Advances to the
Borrower from time to time on any Business Day during the period from the
date hereof until the Termination Date in an aggregate amount not to
exceed at any time outstanding such Lender's Pro Rata Share of the
Commitments then in effect minus the Letter of Credit Obligations. Each
Borrowing of Advances shall be in an aggregate amount not less than
$1,000,000 or in integral multiples of $1,000,000 in excess thereof and
shall consist of Advances of the same Type made on the same day by the
Lenders ratably according to their Pro Rata Share of the Commitments.
(b) Within the limits of each Lender's Commitment and the foregoing
restrictions in this Section 2.01, the Borrower may borrow, prepay
pursuant to Section 2.12(a) and reborrow under this Section 2.01.
SECTION 2.02. [Intentionally Omitted.]
SECTION 2.03. Making the Advances. (a) Each Borrowing shall
be made on a Notice of Borrowing to the Agent or telephonic notice
confirmed promptly thereafter in a Notice of Borrowing (which notice the
Agent shall promptly transmit by telegram, telex, telecopy, telephone or
similar transmission to each Lender). Each Lender shall make available
for the account of its Applicable Lending Office to the Agent at Citibank
in New York, New York, before 11:00 A.M. (New York City time) on the date
of such Borrowing of Advances, in same day funds, such Lender's ratable
portion of such Borrowing. After the Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in Article III,
the Agent will make such funds with respect to Advances available to the
Borrower at Citibank in New York, New York.
(b) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower when given. In the case of any Borrowing of Advances
which the related Notice of Borrowing specifies are to be comprised of
Eurodollar Rate Advances, the Borrower shall indemnify each Lender against
any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of
Borrowing for such Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Lender to fund the Eurodollar Rate Advances to be
made by such Lender as part of such Borrowing when such Eurodollar Rate
Advance, as a result of such failure, is not made on such date.
(c) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Borrowing,
the Agent may assume that such Lender has made such portion available to
the Agent on the date of such Borrowing in accordance with subsection (a)
of this Section 2.03 and the Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If
and to the extent that such Lender shall not have so made such ratable
portion available to the Agent and the Agent shall have advanced such
portion to the Borrower, such Lender and the Borrower, severally agree to
repay to the Agent, forthwith on demand, such corresponding amount
together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at
the time to Advances comprising such Borrowing and (ii) in the case of
such Lender, the Federal Funds Rate. If such Lender shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute
such Lender's Advance as part of such Borrowing for purposes of this
Agreement.
(d) The failure of any Lender to make the Advance to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of
any Borrowing.
SECTION 2.04. Letters of Credit. Subject to the terms and
conditions set forth in this Agreement, each Issuing Bank hereby severally
agrees to issue for the account of the Borrower, or for the account of any
of the Borrower's Subsidiaries if the Borrower is jointly and severally
liable for reimbursement of draws under such Letter of Credit, one or more
Letters of Credit, subject to the following provisions:
(a) Types and Amounts. An Issuing Bank shall not have any
obligation to issue, amend or extend, and shall not issue, amend or
extend, any Letter of Credit:
(i) at any time the aggregate Letter of Credit Obligations
with respect to such Issuing Bank, after giving effect to the
issuance, amendment or extension of the Letter of Credit requested
hereunder, shall exceed any limit imposed by law or regulation upon
such Issuing Bank;
(ii) at any time the Issuing Bank receives written notice from
the Agent at or before 11:00 A.M. (New York City time) on the date of
the proposed issuance, amendment or extension of such Letter of
Credit that (A) immediately after giving effect to the issuance,
amendment or extension of the Letter of Credit, (I) the sum of the
Letter of Credit Obligations plus the "Letter of Credit Obligations"
(as defined in the 1992 Credit Agreement) at such time would exceed
$50,000,000, or (II) if such Letter of Credit is a Commercial Letter
of Credit, the Letter of Credit Obligations with respect to
Commercial Letters of Credit would exceed $1,000,000, or (III) the
sum, at such time, of the Advances plus the Letter of Credit
Obligations would exceed the Commitments at such time, or (B) one or
more of the conditions precedent contained in Sections 3.01 and 3.02
would not on such date be satisfied, unless such conditions are
thereafter satisfied and written notice of such satisfaction is given
to the Issuing Bank by the Agent (and an Issuing Bank shall not
otherwise be required to determine that, or take notice whether, the
conditions set forth in Sections 3.01 and 3.02 have been satisfied);
(iii) which has an expiration date later than the earlier of
(A) the date one (1) year after the date of issuance (without regard
to any automatic renewal provisions thereof), or (B) the Business Day
next preceding the Maturity Date; or
(iv) which is in a currency other than U.S. dollars.
(b) Conditions. In addition to being subject to the
satisfaction of the conditions precedent contained in Sections 3.01 and
3.02, the obligation of an Issuing Bank to issue, amend or extend any
Letter of Credit is subject to the satisfaction in full of the following
conditions:
(i) if the Issuing Bank so requests, the Borrower, or in the
case of Letters of Credit issued for the account of any Subsidiary of
the Borrower, the Borrower and such Subsidiary shall have executed
and delivered to such Issuing Bank and the Agent a Letter of Credit
Reimbursement Agreement and such other documents and materials as may
be required pursuant to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall be
satisfactory to the Issuing Bank in its sole discretion.
(c) Issuance and Extension of Letters of Credit. (i) The
Borrower shall give an Issuing Bank and the Agent written notice that (A)
it has selected such Issuing Bank to issue a Letter of Credit and (B) if
applicable, it wishes to extend the expiry date of or otherwise amend a
Letter of Credit issued by such Issuing Bank, which notice shall be
delivered not later than 11:00 A.M. (New York City time) on the second
(2nd) Business Day preceding the requested date for issuance, extension or
amendment thereof under this Agreement, or such shorter notice period as
may be acceptable to such Issuing Bank and the Agent. Such notice shall
be irrevocable unless and until such request is denied by the applicable
Issuing Bank and shall specify (1) with respect to Letters of Credit to be
issued,
(a) that such Letter of Credit is solely for the account of the
Borrower or the Subsidiary of the Borrower which is jointly and
severally applying for such Letter of Credit,
(b) the stated amount of the Letter of Credit requested,
(c) the date (which shall be a Business Day) of issuance of such
Letter of Credit,
(d) the date on which such Letter of Credit is to expire (which
shall be a Business Day and no later than the Business Day
immediately preceding the Maturity Date),
(e) the Person for whose benefit such Letter of Credit is to be
issued,
(f) other relevant terms of such Letter of Credit, and
(g) the amount by which the Commitments at such time exceeds the
sum, at such time, of outstanding Advances plus the Letter of Credit
Obligations; and
(2) with respect to Letters of Credit to be amended or extended, as
applicable,
(a) the letter of credit reference number or other identifying
information with respect to such Letter of Credit,
(b) the date (which shall be a Business Day) of amendment or
extension of such Letter of Credit,
(c) the new expiry date of such Letter of Credit (which shall be
a Business Day no later than the Business Day immediately preceding
the Maturity Date),
(d) the relevant terms of the Letter of Credit to be amended,
and
(e) the amount, if any, by which the Commitments at such time
exceeds the sum, at such time, of outstanding Advances plus the
Letter of Credit Obligations.
(ii) The Issuing Bank shall give the Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of the
issuance, amendment or extension of a Letter of Credit (which notice the
Agent shall promptly transmit by telegram, telex, telecopy, telephone or
similar transmission to each Lender).
(d) Reimbursement Obligations; Duties of Issuing Banks. (i)
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(A) the Borrower shall pay, or cause its Subsidiary for whose
account a Letter of Credit is issued to pay, the Issuing Bank the
Reimbursement Obligation for drawings under such Letter of Credit no
later that the date (the "Reimbursement Date") which is the earlier
of (1) the time specified in the applicable Letter of Credit
Reimbursement Agreement and (2) one (1) Business Day after the
Borrower receives written notice from the Issuing Bank that payment
has been made under such Letter of Credit by the Issuing Bank; and
(B) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the rate applicable to Base Rate
Advances in accordance with Section 2.08(a) from the date of the
relevant drawing under such Letter of Credit until the Reimbursement
Date and thereafter at the rate applicable to Base Rate Advances in
accordance with Section 2.08(e).
(ii) The Issuing Bank shall give the Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of all
drawings under a Letter of Credit and the payment (or the failure to pay
when due) by the Borrower or its applicable Subsidiary on account of a
Reimbursement Obligation (which notice the Agent shall promptly transmit
by telegram, telex, telecopy, telephone or similar transmission to each
Lender).
(iii) No action taken or omitted in good faith by an Issuing
Bank under or in connection with any Letter of Credit shall result in any
liability on the part of such Issuing Bank to any Lender, the Borrower or
any of its Subsidiaries or, so long as it is not issued in violation of
Section 2.04(a), relieve any Lender of its obligations hereunder to the
Issuing Bank. Solely as between the Issuing Bank and the Lenders, in
determining whether to pay under any Letter of Credit, the respective
Issuing Bank shall have no obligation to the Lenders other than to confirm
that the documents required to be delivered under a respective Letter of
Credit appear on their face to comply with the requirements of such Letter
of Credit.
(e) Participations. (i) Immediately upon issuance by an
Issuing Bank of any Letter of Credit in accordance with this Section 2.04
and immediately upon conversion of a letter of credit of an Issuing Bank
to a Letter of Credit pursuant to Section 2.04(j), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received from
that Issuing Bank, without recourse or warranty, an undivided interest and
participation in such Letter of Credit to the extent of such Lender's Pro
Rata Share, including, without limitation, all obligations of the Borrower
with respect thereto (other than amounts owing to the Issuing Bank under
Section 2.04(g)) and any security therefor.
(ii) If any Issuing Bank makes any payment under any Letter of
Credit and the Borrower or the Subsidiary of the Borrower for whose
account the Letter of Credit was issued does not pay the related
Reimbursement Obligation to the Issuing Bank on the Reimbursement Date,
the Issuing Bank shall promptly notify the Agent, which shall promptly
notify each Lender, and each Lender shall promptly and unconditionally pay
to the Agent for the account of such Issuing Bank, in immediately
available funds, the amount of such Lender's Pro Rata Share of such
payment (net of that portion of such payment, if any, made by such Lender
in its capacity as Issuing Bank), and the Agent shall promptly pay to the
Issuing Bank such amounts received by it, and any other amounts received
by the Agent for the Issuing Bank's account pursuant to this Section
2.04(e). If a Lender does not make its Pro Rata Share of the amount of
such payment available to the Agent, such Lender agrees to pay to the
Agent for the account of the Issuing Bank, forthwith on demand, such
amount together with interest thereon at the rate applicable to Base Rate
Advances in accordance with Section 2.08(a). The failure of any Lender to
make available to the Agent for the account of an Issuing Bank its Pro
Rata Share of any such payment shall neither relieve any other Lender of
its obligation hereunder to make available to the Agent for the account of
such Issuing Bank such other Lender's Pro Rata Share of any payment on the
date such payment is to be made nor increase the obligation of any other
Lender to make such payment to the Agent.
(iii) Whenever an Issuing Bank receives a payment on account of
a Reimbursement Obligation, including any interest thereon, as to which
the Agent has previously received payments from any Lender for the account
of such Issuing Bank and remitted the same to such Issuing Bank pursuant
to this Section 2.04(e), such Issuing Bank shall promptly pay to the Agent
and the Agent shall promptly pay to such Lender an amount equal to the
portion thereof previously received from such Lender. Each such payment
shall be made by such Issuing Bank or the Agent, as the case may be, on
the Business Day on which such Person receives the funds paid to such
Person pursuant to the preceding sentence, if received prior to 11:00 A.M.
(New York City time) on such Business Day, otherwise on the next
succeeding Business Day.
(iv) Upon the request of any Lender, an Issuing Bank shall
furnish such Lender copies of any Letter of Credit or Letter of Credit
Reimbursement Agreement to which such Issuing Bank is a party and such
other documentation as reasonably may be requested by such Lender.
(v) The obligations of any Lender to make payments to the Agent
for the account of any Issuing Bank with respect to a Letter of Credit
shall be irrevocable, shall not be subject to any qualification or
exception whatsoever except willful misconduct or gross negligence of such
Issuing Bank, and shall be honored in accordance with this Article II
(irrespective of the satisfaction of the conditions described in Section
3.02) under all circumstances, including, without limitation, any of the
following circumstances:
(A) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right
which the Borrower or Subsidiary of the Borrower which is an account
party, may have at any time against a beneficiary named in a Letter
of Credit or any transferee of a beneficiary named in a Letter of
Credit (or any Person for whom any such transferee may be acting),
the Agent, the Issuing Bank, any Lender, or any other Person, whether
in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the account party and
beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document presented
under the Letter of Credit having been determined to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(E) any failure by the Issuing Bank to make any reports
required pursuant to Section 2.04(h) or the inaccuracy of any such
report; or
(F) the occurrence of any Event of Default.
(f) Payment of Reimbursement Obligations. (i) The Borrower
unconditionally agrees to pay, or cause its Subsidiary for whose account a
Letter of Credit is issued to pay, to each Issuing Bank the amount of all
Reimbursement Obligations, interest and other amounts payable to such
Issuing Bank under or in connection with the Letters of Credit issued for
the account of such Person when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right which the
Borrower may have at any time against any Issuing Bank or any other Person
and of any of the circumstances described in clauses (A) through (F) of
Section 2.04(e)(v).
(ii) In the event any payment by the Borrower or such
Subsidiary received by an Issuing Bank with respect to a Letter of Credit
and distributed by the Agent to the Lenders on account of the
participations is thereafter set aside, avoided or recovered from such
Issuing Bank in connection with any receivership, liquidation or
bankruptcy proceeding, each Lender which received such distribution shall,
upon demand by such Issuing Bank, contribute such Lender's Pro Rata Share
of the amount set aside, avoided or recovered together with interest at
the rate required to be paid by such Issuing Bank upon the amount required
to be repaid by it.
(g) Issuing Bank Charges. The Borrower shall pay, or cause its
Subsidiary for whose account a Letter of Credit is issued to pay, to each
Issuing Bank, solely for its own account, the standard charges assessed by
such Issuing Bank in connection with the issuance, administration,
amendment and payment or cancellation of Letters of Credit issued for the
account of such Person and such compensation in respect of such Letters of
Credit for the Borrower's or such Subsidiary's account, as applicable, as
may be agreed upon by the Borrower and such Issuing Bank from time to
time.
(h) Issuing Bank Reporting Requirements. Each Issuing Bank
shall, no later than the tenth (10th) Business Day following the last day
of each calendar month, provide to the Agent and the Borrower separate
schedules for Commercial Letters of Credit and Standby Letters of Credit,
in form and substance satisfactory to the Agent, setting forth the
aggregate Letter of Credit Obligations outstanding to it at the end of
each month and any information requested by the Agent or the Borrower
relating to the date of issuance, account party, amount, expiration date
and reference number of each Letter of Credit issued by it.
(i) Indemnification; Exoneration. (i) In addition to all
other amounts payable to an Issuing Bank, the Borrower hereby agrees to
defend, indemnify, and save the Agent, each Issuing Bank and each Lender
harmless from and against any and all claims, demands, liabilities,
penalties, damages, losses (other than loss of profits), costs, charges
and expenses (including reasonable attorneys' fees but excluding taxes)
which the Agent, such Issuing Bank or such Lender may incur or be subject
to as a consequence, direct or indirect, of (A) the issuance of any Letter
of Credit other than as a result of gross negligence or willful misconduct
of the Issuing Bank, as determined by a court of competent jurisdiction,
or (B) the failure of the Issuing Bank issuing a Letter of Credit to honor
a drawing under such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority.
(ii) As between the Borrower and any of its Subsidiaries for
whose account a Letter of Credit is issued on the one hand and the Agent,
the Lenders and the Issuing Banks on the other hand, the Borrower assumes
all risks of the acts and omissions of, or misuse of Letters of Credit by,
the respective beneficiaries of the Letters of Credit. In furtherance and
not in limitation of the foregoing, subject to the provisions of the
Letter of Credit Reimbursement Agreements, the Issuing Banks and the
Lenders shall not be responsible for: (A) the form, validity, legality,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by the account party in connection with the application for and
the issuance of the Letters of Credit, even if it should in fact prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (B) the validity, legality or sufficiency or any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole
or in part, which may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of a Letter of Credit to comply duly with
the conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or
not they be in cipher; (E) errors in interpretation of technical terms;
(F) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; and (H)
any consequences arising from causes beyond the control of the Agent, the
Issuing Banks or the Lenders.
(j) [Intentionally Omitted.]
(k) Obligations Several. The obligations of each Issuing Bank
and each Lender under this Section 2.04 are several and not joint, and no
Issuing Bank or Lender shall be responsible for the obligation to issue
Letters of Credit or participation obligation hereunder, respectively, of
any other Issuing Bank or Lender.
SECTION 2.05. Fees. (a) Facility Fee. The Borrower agrees to
pay to the Agent for the account of each Lender a fee ("Facility Fee") at
the respective rate per annum set forth below on such Lender's Pro Rata
Share of the aggregate average daily Commitments of all Lenders (whether
used or unused) from the Closing Date until the Termination Date. The
Facility Fee shall be payable monthly, in arrears, on the first day of
each calendar month, commencing on May 1, 1995, and on the Termination
Date. The Facility Fee in respect of any period shall be determined on
the basis of the Performance Level which is applicable during such period,
in accordance with the table set forth below. The rate per annum at which
such Facility Fee is calculated shall change when and as the existing
Performance Level changes.
Performance Level Facility Fee
(Rate per annum)
Performance Level I 0.0900%
Performance Level II 0.1200%
Performance Level III 0.1800%
(b) [Intentionally Omitted.]
(c) Letter of Credit Fee. In addition to any charges paid
pursuant to Section 2.04, the Borrower shall pay to the Agent, for the
account of the Lenders based on their respective Pro Rata Shares, a fee
(the "Letter of Credit Fee") accruing at a per annum rate equal to the
Applicable Eurocurrency Rate Margin then in effect times the undrawn face
amount of each outstanding Letter of Credit. The Letter of Credit Fee
shall be calculated for each calendar quarter such Letter of Credit is
outstanding and be payable, in advance, (i) on the date such Letter of
Credit is issued for the remainder of the calendar quarter in which such
Letter of Credit is issued and (ii) on the seventh day of each successive
calendar quarter thereafter for such calendar quarter or portion of a
calendar quarter during which such Letter of Credit is outstanding;
provided, however, in the event a Letter of Credit is issued on a day
other than the first day of a calendar quarter, the Letter of Credit Fee
for the initial quarterly period shall be calculated based on the actual
number of days during such initial calendar quarter such Letter of Credit
is outstanding. Notwithstanding the foregoing, upon the occurrence of an
Event of Default and for so long thereafter as such Event of Default shall
be continuing or unwaived, the rate at which such Letter of Credit Fees
shall accrue and be payable shall be equal to three percent (3.0%) per
annum.
(d) [Intentionally Omitted.]
(e) [Intentionally Omitted.]
SECTION 2.06. Reduction of the Commitments. The Borrower shall
have the right, upon delivering to the Agent a Notice of Reduction of
Commitments at least three (3) Business Days' prior to the date of
reduction specified therein, to terminate in whole or reduce ratably in
part the unused portion of the Commitments; provided that each partial
reduction shall be in the aggregate amount of $1,000,000 or an integral
multiple of $1,000,000 in excess thereof, whereupon the Commitment of each
Lender then in effect shall be permanently reduced proportionately in
accordance with its Pro Rata Share.
SECTION 2.07. Repayment. The Borrower shall repay the
principal amount of each Advance made to it to each Lender in accordance
with the Notes payable to the order of such Lender. To the extent the
sum, at any time, of the outstanding Advances plus the Letter of Credit
Obligations, exceeds the aggregate Commitments then in effect, the
Borrower shall, without notice or demand of any kind, immediately make a
payment to the Agent for the benefit of the Lenders in such amount as is
required to eliminate such excess for application first on the outstanding
Advances, if any, until paid in full, and, second, as cash collateral for
the Letter of Credit Obligations, if Letters of Credit are then
outstanding until the amount of cash collateral equals the then
outstanding face amount of such Letters of Credit.
SECTION 2.08. Interest. The Borrower shall pay interest on the
unpaid principal amount of each Advance made to it to each Lender from the
date of such Advance until such principal amount shall be paid in full, at
the following rates per annum:
(a) Base Rate Advances. If a Base Rate Advance, a rate per
annum equal at all times to the Base Rate in effect from time to
time, payable monthly, in arrears, on the last day of each calendar
month and on the date such Base Rate Advance shall be Converted to an
Eurodollar Rate Advance or paid in full.
(b) Eurodollar Rate Advances. If a Eurodollar Rate Advance, a
rate per annum equal at all times during the Interest Period for such
Eurodollar Rate Advance to the sum of (i) the Eurodollar Rate for
such Interest Period plus (ii) the Applicable Eurocurrency Rate
Margin in effect from time to time during such Interest Period,
payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three (3) months, on
each date during such Interest Period which occurs every three (3)
months from the first day of such Interest Period.
(c) [Intentionally Omitted.]
(d) [Intentionally Omitted.]
(e) Default Rate. Notwithstanding the rates of interest
specified in Sections 2.08(a) and 2.08(b) or elsewhere in this
Agreement, effective immediately upon the occurrence of an Event of
Default and for so long thereafter as such Event of Default shall be
continuing or unwaived, the principal balance of all Base Rate
Advances shall bear interest at a rate per annum equal to two percent
(2.0%) above the Base Rate, and the principal balance of all
Eurodollar Rate Advances shall bear interest at a rate per annum
equal to three percent (3.0%) above the Eurodollar Rate.
SECTION 2.09. Additional Interest on Eurodollar Advances. The
Borrower shall pay to the Agent for the account of each Lender, so long as
such Lender shall be required under regulations of the Board of Governors
of the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
interest on the unpaid principal amount of each Eurodollar Rate Advance of
such Lender in addition to the interest described in Section 2.08, from
the date of such Eurodollar Rate Advance until such principal amount is
paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting (i) the Eurodollar Rate for the Interest
Period for such Eurodollar Rate Advance from (ii) the rate obtained by
dividing such Eurodollar Rate by a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage of such Lender for such Interest
Period, payable on each date on which interest is payable on such
Eurodollar Rate Advance. Such additional interest shall be determined by
such Lender and notified to the Borrower through the Agent.
SECTION 2.10. Interest Rate Determination. (a) The Agent
shall give prompt notice to the Borrower and the Lenders of the applicable
interest rate furnished by Citibank for the purpose of determining the
applicable interest rate under Section 2.08(b).
(b) [Intentionally Omitted.]
(c) If, with respect to any Eurodollar Rate Advances, the
Majority Lenders notify the Agent that the Eurodollar Rate for any
Interest Period for such Eurodollar Rate Advances will not adequately
reflect the cost to such Majority Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances for such Interest
Period, the Agent shall forthwith so notify the Borrower and the Lenders,
whereupon
(i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into
a Base Rate Advance, and
(ii) the obligation of the Lenders to make, Continue Advances
as, or Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.
(d) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section
1.01, the Agent will forthwith so notify the Borrower and the Lenders and
such Eurodollar Rate Advances will automatically, on the last day of the
then existing Interest Period therefor, Convert into Base Rate Advances.
(e) On the date on which the aggregate unpaid principal amount
of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, such
Eurodollar Rate Advances shall automatically Convert into Base Rate
Advances, and on and after such date the right of the Borrower to Convert
such Base Rate Advances into Eurodollar Rate Advances shall terminate;
unless, such Eurodollar Rate Advance shall have the same Interest Period
as Eurodollar Rate Advances comprising another Borrowing or other
Borrowings, and the aggregate unpaid principal amount of all such
Eurodollar Rate Advances shall equal or exceed $1,000,000, in which case,
the Borrower shall have the right to Continue all such Eurodollar Rate
Advances having such common Interest Period.
SECTION 2.11. Voluntary Conversion or Continuation of Advances.
The Borrower may on any Business Day, upon delivery of a Notice of
Conversion/Continuation to the Agent not later than 11:00 A.M. (New York
City time) on the second (2nd) Business Day prior to the date of the
proposed Conversion or Continuation of Advances, subject to the provisions
of this Section 2.11 and Sections 2.14 and 2.15, (i) Convert all Advances
of one Type comprising the same Borrowing into Advances of another Type;
provided, however, that any Conversion of any Advances which are
Eurodollar Rate Advances into Base Rate Advances shall be made on, and
only on, the last day of an Interest Period for such Eurodollar Rate
Advances and (ii) Continue Eurodollar Rate Advances on the last day of an
Interest Period for such Eurodollar Rate Advances. Each such Notice of
Conversion/Continuation shall, within the restrictions specified above,
specify (i) the date of such Conversion or Continuation, (ii) the Advances
to be Converted, (iii) if such Conversion is into Eurodollar Rate
Advances, the duration of the Interest Period for each such Advance, and
(iv) the Eurodollar Rate Advances to be Continued and the duration of the
Interest Period therefor.
SECTION 2.12. Prepayments. (a) Voluntary Prepayments. The
Borrower may, upon at least three (3) Business Days' prior written notice
to the Agent stating the proposed date and aggregate principal amount of
the prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amounts of the Advances comprising part of the same
Borrowing in whole or ratably in part, together with accrued interest to
the date of such prepayment on the principal amount prepaid; provided,
however, that (i) each partial prepayment shall be in an aggregate
principal amount not less than $1,000,000 or an integral multiple of
$1,000,000 in excess thereof and (ii) in the event of any such prepayment
of an Eurodollar Rate Advance, the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 8.04(b).
(b) Mandatory Prepayments. (i) On the date on which any
refund is made to the Borrower of a mandatory prepayment under Section
2.12(b) of the 1992 Credit Agreement as set forth therein, the Borrower
shall make or cause to be made a mandatory prepayment of the Obligations
in an amount equal to 100% of the amount refunded to the Borrower under
the 1992 Credit Agreement and (ii) within seven (7) Business Days after
the Borrower's or any of its Subsidiaries' receipt of any Net Cash
Proceeds of Securities, the Borrower shall make or cause to be made a
mandatory prepayment of the Obligations in an amount equal to 100% of such
Net Cash Proceeds of Securities. The amount of any such mandatory
prepayment described in clause (i) or clause (ii) shall be remitted to the
Agent for application, retention as cash collateral, or refund to the
Borrower as set forth below. The Agent shall:
(A) first apply such amount to the outstanding Advances,
together with accrued interest to the date of such prepayment on the
amount prepaid, and the Commitments shall thereupon be permanently
reduced by the amount of such prepayment applied to the outstanding
Advances and the Commitment of each Lender shall be reduced
proportionately in accordance with its Pro Rata Share, until repaid
in full and, if the Commitments, other than with respect to Letters
of Credit, are thereby permanently reduced to zero, second, retain
an amount equal to the then undrawn face amount of the outstanding
Letters of Credit, as cash collateral for outstanding Letters of
Credit to be held by the Agent until the expiration of each such
Letter of Credit or the related Reimbursement Obligations with
respect to such Letters of Credit have been paid in full, and third,
refund any remaining balance of the Net Cash Proceeds of Sale or Net
Cash Proceeds of Securities, as applicable, giving rise to such
mandatory prepayment to the Borrower;
provided, however, in the event the Commitments are not permanently
reduced to zero as provided in "first" of clause (A) above, after
application to the outstanding Advances together with accrued interest as
aforesaid until paid in full, the Agent shall (before retention or refund
under "second" and "third" of clause (A) above):
(B) then, retain an amount equal to the then undrawn face
amount of the outstanding Letters of Credit as cash collateral for
outstanding Letters of Credit to be held by the Agent until the
expiration of each such Letter of Credit or the related Reimbursement
Obligations with respect to such Letters of Credit have been paid in
full, and
(C) last, refund any remaining balance of such Net Cash
Proceeds of Sale or Net Cash Proceeds of Securities, as applicable,
to the Borrower.
SECTION 2.13. Increased Costs. (a) If, due to either (i) the
introduction of or any change (other than any change by way of imposition
or increase of reserve requirements, in the case of Eurodollar Rate
Advances, included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in
the cost to any Lender or Issuing Bank of (A) agreeing to make or making,
funding or maintaining Eurodollar Rate Advances by any Lender, or (B)
agreeing to issue or issuing or maintaining Letters of Credit by an
Issuing Bank, then the Borrower shall from time to time, upon demand by
such Lender or Issuing Bank (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender or Issuing Bank additional
amounts sufficient to compensate such Lender or Issuing Bank for such
increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower and the Agent by such Lender or Issuing Bank,
shall be conclusive and binding for all purposes, absent manifest error.
(b) If any Lender or Issuing Bank determines that compliance
with any law or regulation or any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to
be maintained by such Lender or Issuing Bank or any corporation
controlling such Lender or Issuing Bank and that the amount of such
capital is increased by or based upon (i) the existence of such Lender's
commitment to lend hereunder and other commitments of this type or (ii)
the existence of such Issuing Bank's obligation to issue Letters of Credit
hereunder, then, upon demand by such Lender or Issuing Bank (with a copy
of such demand to the Agent), the Borrower shall immediately pay to the
Agent for the account of such Lender or Issuing Bank, from time to time as
specified by such Lender or Issuing Bank, additional amounts sufficient to
compensate such Lender or Issuing Bank or such corporation in the light of
such circumstances, to the extent that such Lender or Issuing Bank
reasonably determines such increase in capital to be allocable to the
existence of such Lender's commitment to lend hereunder or such Issuing
Bank's obligation to issue Letters of Credit hereunder. A certificate as
to such amounts submitted to the Borrower and the Agent by such Lender or
Issuing Bank shall be conclusive and binding for all purposes, absent
manifest error.
(c) Each demand for compensation pursuant to Section 2.13(a) or
Section 2.13(b) shall be made no later than ninety (90) days after the
date upon which the Lender or Issuing Bank making such demand determines
that such compensation is payable hereunder or under the Notes.
SECTION 2.14. Illegality. Notwithstanding any other provision
of this Agreement, if any Lender shall notify the Agent that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other Governmental
Authority asserts that it is unlawful, for any Lender or its Eurocurrency
Lending Office to perform its obligations hereunder to make Eurodollar
Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder,
(i) the obligation of the Lenders to make Eurodollar Rate Advances, or to
Convert Base Rate Advances into Eurodollar Rate Advances or to Continue
Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such
suspension no longer exist, (ii) the Borrower shall forthwith prepay in
full all Eurodollar Rate Advances of all Lenders then outstanding to them,
respectively, together with interest accrued thereon, provided, however,
that if the Borrower within five (5) Business Days after notice from the
Agent, Converts all Eurodollar Rate Advances of all Lenders then
outstanding to it into Base Rate Advances in accordance with Section 2.11,
the aforesaid prepayment requirement shall not apply.
SECTION 2.15. Payments and Computations. (a) Manner and Time
of Payment. All payments of principal of and interest on the Advances and
Reimbursement Obligations and other Obligations (including, without
limitation, fees and expenses) which are payable to the Agent, the Lenders
or any Issuing Bank shall be made without condition or reservation of
right, in immediately available funds consisting of U.S. dollars. Such
payments payable to Lenders shall be delivered to the Agent not later than
11:00 A.M. (New York City time) on the date due, to Account No. 38869385
at Citibank in New York, New York or to such other account of the Agent as
it may hereafter designate in writing, for the account of the Agent or the
Lenders, as the case may be. Such payments with respect to Reimbursement
Obligations payable to an Issuing Bank shall be delivered to the pertinent
Issuing Bank not later than 11:00 A.M. (New York City time) on the
Reimbursement Date for the account of the pertinent Issuing Bank. All
funds received by the Agent, including, without limitation, funds in
respect of any Advances to be made on that date, not later than 11:00 A.M.
(New York City or London time, as applicable) on any given Business Day
shall be credited against payment to be made that day and funds received
by the Agent after that time shall be deemed to have been paid on the next
succeeding Business Day. Payments actually received by the Agent for the
account of the Lenders or the Issuing Banks, or any of them, shall be paid
to them by the Agent promptly after receipt thereof and shall be deemed to
be payments by the Borrower to the Lenders or the Issuing Banks, as
applicable, regardless of the actual receipt of such payments by such
Persons from the Agent.
(b) Apportionment of Payments. (i) [Intentionally Omitted.]
(ii) The Agent, in its sole discretion subject only to the
terms of this Section 2.15(b)(ii), may pay from the proceeds of Advances
made to the Borrower hereunder, whether made following a request by the
Borrower pursuant to Section 2.03 or a deemed request as provided in this
Section 2.15(b)(ii), all amounts payable by the Borrower hereunder,
including, without limitation, amounts payable with respect to payments of
principal, interest, Reimbursement Obligations and fees and all
reimbursements for expenses pursuant to Section 8.04. The Borrower hereby
irrevocably authorizes the Lenders to make Advances, which Advances shall
be Base Rate Advances, in each case, upon notice from the Agent as
described in the following sentence for the purpose of paying principal,
interest, Reimbursement Obligations and fees due from the Borrower,
reimbursing expenses pursuant to Section 8.04 and paying any and all other
amounts due and payable by the Borrower hereunder or under the Notes, and
agrees that all such Advances so made shall be deemed to have been
requested by it pursuant to Section 2.03 as of the date of the
aforementioned notice. The Agent shall request Advances on behalf of the
Borrower as described in the preceding sentence by notifying the Lenders
by telex, telecopy, telegram or other similar form of transmission (which
notice the Agent shall thereafter promptly transmit to the Borrower), of
the amount and date of the proposed Borrowing and that such Borrowing is
being requested on the Borrower's behalf pursuant to this Section
2.15(b)(ii). On the date of the proposed Borrowing, the Lenders shall
make the requested Advances in accordance with the procedures and subject
to the conditions specified in Section 2.03.
(iii) Subject to Sections 2.12(b) and 2.15(b)(iv), the Agent
shall promptly distribute to each Lender at its Domestic Lending Office,
or at such other address as a Lender may request in writing, such funds as
it may be entitled to receive, subject to the provisions of Article VII;
provided that the Agent shall under no circumstances be bound to inquire
into or determine the validity, scope or priority of any interest and may
suspend all payments or seek appropriate relief (including, without
limitation, instructions from the Majority Lenders or an action in the
nature of interpleader) in the event of any doubt or dispute as to any
apportionment or distribution contemplated hereby.
(iv) In the event that any Lender fails to fund its Pro Rata
Share of the Advances requested by the Borrower which such Lender is
obligated to fund under the terms of this Agreement (the funded portion of
such Advance being hereinafter referred to as a "Non Pro Rata Loan"),
until the earlier of such Lender's cure of such failure and the
termination of the Commitments, the proceeds of all amounts thereafter
repaid to the Agent by the Borrower and otherwise required to be applied
to such Lender's share of other Obligations pursuant to the terms of this
Agreement shall be advanced to the Borrower by the Agent on behalf of such
Lender to cure, in full or in part, such failure by such Lender, but shall
nevertheless be deemed to have been paid to such Lender in satisfaction of
such other Obligations. Notwithstanding anything in this Agreement to the
contrary:
(A) the foregoing provisions of this Section 2.15(b)(iv)
shall apply only with respect to the proceeds of payments of
Obligations and shall not affect the Conversion of Advances or
Continuation of Base Rate Advances or Eurodollar Rate Advances
pursuant to Section 2.11;
(B) a Lender shall be deemed to have cured its failure to
fund its Pro Rata Share of any Advance at such time as an amount
equal to such Lender's Pro Rata Share of such Advance is fully
funded to the Borrower, whether made by such Lender itself or by
operation of the terms of this Section 2.15(b)(iv), and whether
or not the Non Pro Rata Loan with respect thereto has been
repaid, Converted or Continued;
(C) amounts advanced to the Borrower to cure, in full or
in part, any such Lender's failure to fund its Pro Rata Share of
any Advance ("Cure Loans") shall bear interest at the Base Rate
in effect from time to time, and for all other purposes of this
Agreement shall be treated as if they were Base Rate Advances;
and
(D) regardless of whether or not an Event of Default has
occurred or is continuing and unwaived, and notwithstanding the
instructions of the Borrower as to its desired application, all
repayments of principal which, in accordance with the other
terms of this Section 2.15, would be applied to the outstanding
Base Rate Advances shall be applied first, ratably to all Base
Rate Advances constituting Non Pro Rata Loans, second, ratably
to Base Rate Advances other than those constituting Non Pro Rata
Loans or Cure Loans and, third, ratably to Base Rate Advances
constituting Cure Loans.
(c) All computations of interest based on the Base Rate and the
Eurodollar Rate, and of Facility Fees and Letter of Credit Fees shall be
made by the Agent, and all computations of interest pursuant to Section
2.09 shall be made by a Lender, on the basis of a year of 360 days, in
each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest,
Facility Fees and Letter of Credit Fees are payable. Each determination
by the Agent (or, in the case of Section 2.09, by a Lender) of an interest
rate or fees hereunder shall be conclusive and binding for all purposes,
absent manifest error. All fees shall be fully earned and non-refundable
when paid.
(d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the immediately succeeding Business Day, and such extension of
time shall in such cases be included in the computation of interest or
Facility Fees due on such Business Day, as the case may be; provided,
however, if such extension would cause payment of interest on or principal
of Eurodollar Rate Advances to be made in the immediately succeeding
calendar month, such payment shall be made on the immediately preceding
Business Day.
(e) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on
such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each Lender shall repay to the
Agent forthwith on demand such amount distributed to such Lender together
with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount
to the Agent at the Federal Funds Rate.
SECTION 2.16. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section
2.15, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each
Lender, each Issuing Bank and the Agent, taxes imposed on or measured by
net income or overall gross receipts, and capital and franchise taxes
imposed on it, by (i) the United States, (ii) the jurisdiction under the
laws of which such Lender, such Issuing Bank or the Agent (as the case may
be) is organized or any political subdivision thereof and (iii) the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). Subject to the provisions of Section 2.16(h), if
the Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any Note to any Lender, any
Issuing Bank or the Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.16)
such Lender, such Issuing Bank or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions, and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present and
future stamp and documentary taxes and any other excise and property
taxes, charges and similar levies which arise from any payment made
hereunder or under the Notes or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or the Notes
(hereinafter referred to as "Other Taxes").
(c) Except to the extent the Borrower makes payments pursuant
to Sections 2.16(a) or 2.16(b), and subject to the provisions of Section
2.16(h), the Borrower will indemnify each Lender, each Issuing Bank and
the Agent against, and reimburse each on demand for, the full amount of
Taxes and Other Taxes (including, without limitation, any Taxes and Other
Taxes imposed by any jurisdiction on amounts payable under this Section
2.16) incurred or paid by such Lender, such Issuing Bank or the Agent (as
the case may be) or any of their respective Affiliates and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Each Lender and each Issuing Bank agrees, within a
reasonable time after receiving a written request from the Borrower, to
provide the Borrower and the Agent with such certificates as are
reasonably required, and take such other actions as are reasonably
necessary to claim such exemptions as such Lender or Issuing Bank may be
entitled to claim in respect of all or a portion of any Taxes which are
otherwise required to be paid or deducted or withheld pursuant to this
Section 2.16 in respect of any payments under this Agreement or under the
Notes.
(d) Within ninety (90) days after the close of each fiscal year
of the Borrower, the Borrower will furnish to the Agent, at its address
referred to in Section 8.02, the original or a certified copy of a receipt
evidencing payment of any Taxes during such fiscal year.
(e) (i) Each Lender that is not created or organized under the
laws of the United States or a political subdivision thereof shall deliver
to the Borrower and the Agent on the Closing Date or the date on which
such Lender becomes a Lender pursuant to Section 8.07 hereof (A) a true
and accurate certificate executed in duplicate by a duly authorized
officer of such Lender to the effect that such Lender is eligible to
receive payments hereunder and under the Notes or other documents without
deduction or withholding of United States federal income tax (I) under the
provisions of an applicable tax treaty concluded by the United States (in
which case the certificate shall be accompanied by two (2) duly completed
copies of IRS Form 1001 (or any successor or substitute form or forms)) or
(II) under Sections 1442(c)(1) and 1442(a) of the Internal Revenue Code
(in which case the certificate shall be accompanied by two (2) duly
completed copies of IRS Form 4224 (or any successor or substitute form or
forms)) and (B) a duly completed IRS Form W-8 or W-9 to establish an
exemption from the United States backup withholding tax.
(ii) Each Lender further agrees to deliver to the Borrower
and the Agent from time to time a true and accurate certificate executed
in duplicate by a duly authorized officer of such Lender before or
promptly upon the occurrence of any event requiring a change in the most
recent certificate previously delivered by it to the Borrower and the
Agent pursuant to this Section 2.16(e). Each certificate required to be
delivered pursuant to this Section 2.16(e)(ii) shall certify as to one of
the following:
(A) that such Lender can continue to receive payments hereunder
and under the Notes and other Loan Documents without deduction or
withholding of United States federal income tax;
(B) that such Lender cannot continue to receive payments
hereunder and under the Notes and other Loan Documents without
deduction or withholding of United States federal income tax as
specified therein but does not require additional payments pursuant
to Section 2.16(a) because it is entitled to recover the full amount
of any such deduction or withholding from a source other than the
Borrower; or
(C) that such Lender is no longer capable of receiving payments
hereunder and under the Notes and other Loan Documents without
deduction or withholding of United States federal income tax as
specified therein and that it is not capable of recovering the full
amount of the same from a source other than the Borrower.
Each Lender agrees to deliver to the Borrower and the Agent further duly
completed copies of the above-mentioned IRS forms on or before the earlier
of (x) the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to obtaining an
exemption from withholding from United States federal income tax and (y)
fifteen (15) days after the occurrence of any event requiring a change in
the most recent form previously delivered by such Lender to the Borrower
and Agent, unless any change in treaty, law, regulation, or official
interpretation thereof which would render such form inapplicable or which
would prevent the Lender from duly completing and delivering such form has
occurred prior to the date on which any such delivery would otherwise be
required and the Lender promptly advises the Borrower that it is not
capable of receiving payments hereunder and under the Notes without any
deduction or withholding of United States federal income tax.
(f) Any Lender claiming any additional amounts payable pursuant
to this Section 2.16 shall use its best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a
change would avoid the need for, or reduce the amount of, any such
additional amounts which may thereafter accrue and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.
(g) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.16 shall survive the payment in full of
principal and interest hereunder and under the Notes.
(h) Notwithstanding the provisions of Sections 2.16(a) and
2.16(c), the Borrower shall not be required to pay any additional amounts
thereunder to a Lender if (i) the obligation to pay such additional
amounts would not have arisen but for a failure by the Lender to comply
with the requirements described in Section 2.16(e) or (ii) the Lender
shall not have furnished the Borrower with such forms or shall not have
taken such other action as reasonably may be available to it under
applicable tax laws and any applicable tax treaty to obtain an exemption
from, or reduction (to the lowest applicable rate) of withholding of such
United States federal income tax provided, however, the Borrower's
obligation to pay such additional amounts shall be reinstated upon receipt
of such forms or evidence that action with respect to obtaining such
exemption or reduction has been taken.
SECTION 2.17. Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of the Obligations owing
to it (other than pursuant to Section 2.09, 2.13 or 2.16) in excess of its
ratable share of payments on account of the Obligations obtained by all
the Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Obligations owing to them as shall be necessary
to cause such purchasing Lender to share the excess payment ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such
purchases from each Lender shall be rescinded and each such Lender shall
repay to the purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant
to this Section 2.17 may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect to
such participation as fully as if such Lender were the direct creditor of
the Borrower in the amount of such participation.
SECTION 2.18. Cash Collateral Account. (a) Amounts referred
to in this Agreement to be held by the Agent as cash collateral shall be
deposited in an interest-bearing account (the "Cash Collateral Account")
maintained with Citibank in New York, New York and established and
administered pursuant to this Section 2.18. If requested by the Borrower
and subject to the right of the Agent to withdraw funds from the Cash
Collateral Account as provided below, the Agent shall, so long as no Event
of Default shall have occurred and be continuing or unwaived, from time to
time invest funds on deposit in the Cash Collateral Account and accrued
interest thereon, reinvest proceeds of any such investments which may
mature or be sold, and invest interest or other income received from such
investments, in each case in such Cash Equivalents as the Borrower may
select. Such funds, interest, proceeds or income which are not so invested
or reinvested shall, except as otherwise provided in this Section 2.18, be
deposited and held for the benefit of the Agent, the Lenders and Issuing
Banks in the Cash Collateral Account. None of the Agent, any Lender or any
Issuing Bank shall be liable to the Borrower for, or with respect to, any
decline in value of amounts on deposit in the Cash Collateral Account
which shall have been invested pursuant to this Section 2.18. Cash
Equivalents from time to time purchased and held pursuant to this Section
2.18 shall constitute cash collateral and shall, for purposes of this
Agreement, be deemed to be part of the funds held in the Cash Collateral
Account in amounts equal to their respective outstanding principal
amounts.
(b) The Agent may, at any time after the occurrence and during
the continuance of an Event of Default, sell or cause to be sold any Cash
Equivalents being held by Agent as cash collateral at any broker's board
or at public or private sale, in one or more sales or lots, at such price
as the Agent may deem best, without assumption of any credit risk, and the
purchaser of any or all such Cash Equivalents so sold shall thereafter own
the same, absolutely free from any claim, encumbrance or right of any kind
whatsoever. The Agent, any of the Lenders and any of the Issuing Banks
may, in its own name or in the name of a designee or nominee, buy such
Cash Equivalents at any public sale and, if permitted by applicable law,
buy such Cash Equivalents at any private sale. The Agent shall apply the
proceeds of any such sale, net of any expenses incurred in connection
therewith, and any other funds deposited in the Cash Collateral Account to
the payment of the Obligations in accordance with the terms of this
Agreement. The Borrower agrees that (i) any sale of Cash Equivalents
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to such Cash Equivalents shall
be deemed to be commercially reasonable and (ii) any requirements of
reasonable notice shall be met if such notice is received by the Borrower
at its notice address in Section 8.02 at least five (5) Business Days
before the date of the sale or disposition. Any other requirement of
notice, demand or advertisement for sale is waived to the extent permitted
by law. The Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(c) Neither the Borrower nor any Person or entity claiming on
behalf of or through the Borrower shall have any right to withdraw any of
the funds held in the Cash Collateral Account, except to the extent such
cash collateral is no longer required to be held by the Agent under the
applicable provisions of this Agreement.
(d) The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Cash Collateral Account and shall be
deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords its own like
property, it being understood that the Agent shall not have any
responsibility for taking any necessary steps to preserve rights against
any parties with respect to any such funds but may do so at its option.
All expenses incurred in connection therewith shall be for the sole
account of the Borrower and shall constitute Obligations hereunder.
SECTION 2.19. Availability of Credit Facilities; Repayment of
Obligations. Notwithstanding anything in this Agreement to the contrary,
(a) Borrower shall be entitled to request Advances and Letters of Credit
only at such time or times as the amount of the "Total Unfunded
Commitments" (as defined in the 1992 Credit Agreement) equals zero (0) and
(b) except to the extent Borrower is required to make payments under the
terms of the 1992 Credit Agreement, Borrower shall repay all Obligations
under this Agreement (other than indemnities not yet due) prior to its
making any payment under the 1992 Credit Agreement.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Borrowing and
Letters of Credit. The obligation of each Lender on the Closing Date to
make an Advance on the occasion of the initial Borrowing, and the
agreement of each Issuing Bank on the Closing Date to issue Letters of
Credit, is subject to the satisfaction of all of the following conditions
precedent:
(a) Documents. The Agent shall have received, on or before the
Closing Date, this Agreement, the Notes payable to the order of the
respective Lenders, the Pro Forma and all other agreements, documents and
instruments described in the List of Closing Documents attached hereto as
Exhibit G and made a part hereof, each duly executed where appropriate,
dated the Closing Date, in form and substance satisfactory to the Agent
and (except for the Notes) in sufficient copies for the Agent and each
Lender; without limiting the foregoing, the Borrower hereby directs its
counsel, Mayer Brown & Platt to prepare and deliver to the Agent, the
Lenders, the Issuing Banks and Sidley & Austin the opinion referred to on
Exhibit G.
(b) No Change in Condition. No change in the business, assets,
management, operations, financial condition or prospects of the Borrower
or any of its Subsidiaries shall have occurred since December 31, 1994
which change, in the judgment of the Agent, will have or is reasonably
likely to have, a Material Adverse Effect.
(c) No Default. No Event of Default shall have occurred and be
continuing.
(d) Fees and Expenses Paid. The Borrower shall have paid to
the Agent, for the respective accounts of the Lenders and the Agent, as
applicable, all fees due and payable on or before the Closing Date with
respect to the provision of extensions of credit under this Agreement, and
all expenses due and payable on or before the Closing Date with respect to
the provision of extensions of credit under this Agreement.
(e) Acquisition of Fadal. The Borrower, through Bike Corp., a
wholly-owned Subsidiary of the Borrower, shall have acquired all of the
issued and outstanding Capital Stock of Fadal Engineering Company, Inc., a
California corporation, in compliance, in all material respects, with all
Requirements of Law pursuant to the terms of the Purchase Agreement and
Fadal Engineering Company, Inc. shall have repaid in full all outstanding
secured Debt (other than purchase money Debt) owing by it prior to the
consummation of such acquisition and obtained the release of all Liens
securing the same.
SECTION 3.02. Conditions Precedent to Each Borrowing and Letter
of Credit. The obligation of each Lender to make an Advance on the
occasion of each Borrowing (including the initial Borrowing) and the
agreement of each Issuing Bank to issue any Letter of Credit (including
the issuance of any Letter of Credit on the Closing Date) shall be subject
to the further conditions precedent that on each such date (a) the
following statements shall be true (and each of the giving of the
applicable Notice of Borrowing, the acceptance by the Borrower of the
proceeds of such Borrowing, the giving of applicable notice requesting the
issuance of any Letter of Credit and the issuance of such Letter of Credit
shall constitute a representation and warranty by the Borrower that on the
date of such Borrowing and/or the issuance of such Letter of Credit such
statements are true):
(i) The representations and warranties contained in Section
4.01 are correct on and as of the date of such Borrowing or the
issuance of such requested Letter of Credit, before and after giving
effect to such Borrowing and to the application of the proceeds
therefrom or the issuance of such requested Letter of Credit, as
though made on and as of such date;
(ii) No event has occurred and is continuing, or would result
from such Borrowing, the application of the proceeds therefrom or the
issuance of such Letter of Credit, which constitutes an Event of
Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both;
(iii) No law, regulation, order, judgment or decree of any
Governmental Authority shall, and the Agent shall not have received
from any Lender or Issuing Bank notice that, in the judgment of such
Lender or Issuing Bank, litigation is pending or threatened which is
likely to, enjoin, prohibit or restrain, or impose or result in the
imposition of any material adverse condition upon, (i) such Lender's
making of the requested Advance or participation in the requested
Letter of Credit or (ii) such Issuing Bank's issuance of the
requested Letter of Credit; provided, however, only such Lenders and
Issuing Banks delivering such notice to the Agent of such material
adverse condition shall be relieved of their respective obligations
to make the requested Advance or participate in or issue the
requested Letter of Credit pursuant to this Section 3.02; and
(iv) No event has occurred since the date of this Agreement
which has or is reasonably likely to have a Material Adverse Effect;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.03. [Intentionally Omitted.]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) The Borrower and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization.
(b) The execution, delivery and performance of this Agreement,
the Notes, and each of the other Loan Documents are within the
corporate powers of the Borrower, have been duly authorized by all
necessary corporate action of the Borrower, and do not contravene (i)
the Borrower's articles of incorporation or by-laws or (ii) any law
or any contractual restriction binding on or affecting the Borrower
which has or is reasonably likely to have a Material Adverse Effect.
(c) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or regulatory
body is required for the due execution, delivery and performance by
the Borrower of this Agreement, the Notes, or the other Loan
Documents.
(d) This Agreement is, and each of the Notes and the other Loan
Documents when delivered hereunder will be, the legal, valid and
binding obligations of the Borrower, enforceable against it in
accordance with their respective terms.
(e) The consolidated balance sheet of the Borrower and its
Subsidiaries (exclusive of Fadal Engineering Company, Inc.) as at
December 31, 1994, and the related consolidated statements of income
and retained earnings of the Borrower and its Subsidiaries (exclusive
of Fadal Engineering Company, Inc.) for the fiscal quarter then ended
(copies of which have been furnished to each Lender), as of the
Closing Date, fairly present the financial condition of the Borrower
and its Subsidiaries (exclusive of Fadal Engineering Company, Inc.)
as at such date and the results of the operations of the Borrower and
its Subsidiaries (exclusive of Fadal Engineering Company, Inc.) for
the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since
December 31, 1994, no event has occurred which has or is reasonably
likely to have a Material Adverse Effect.
(f) There is no pending or, to the knowledge of the Borrower,
threatened action or proceeding affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator,
which has or is reasonably likely to have a Material Adverse Effect.
(g) Neither the Borrower, nor any of its Subsidiaries is
engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of
Regulations U or G issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
(h) Neither the Borrower nor any of its Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, or the Investment
Company Act of 1940, or any other Requirements of Law which limits
the ability of the Borrower or any of its Subsidiaries to incur
indebtedness or their respective ability to consummate the
transactions contemplated hereby, by the other Loan Documents or by
the Purchase Agreement, as applicable.
(i) Neither the Borrower nor any of its Subsidiaries has
received notice or has actual knowledge that (i) it is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any contractual obligation
applicable to it, or (ii) any condition exists which, with the giving
of notice or the lapse of time or both, would constitute a default,
in each case, except where such default or defaults, if any, will not
have or is not reasonably likely to have a Material Adverse Effect.
(j) The Borrower and its Subsidiaries are in compliance with
all Requirements of Law applicable to them or their respective
businesses, in each case where failure to so comply individually or
in the aggregate will have or is reasonably likely to have a Material
Adverse Effect.
(k) The operations of the Borrower and its Subsidiaries are in
compliance in all material respects with all applicable
Environmental, Health or Safety Requirements of Law.
(l) The Borrower and its Subsidiaries have insurance policies
and programs in effect in amounts sufficient to cover the replacement
value of the respective property and assets of the Borrower and its
Subsidiaries.
(m) No liens, security interests or other charges or
encumbrances exist as of the Closing Date upon or with respect to any
of the properties of the Borrower or any of its Subsidiaries other
than the liens permitted pursuant to the terms of the 1992 Credit
Agreement.
(n) No "Event of Default" (as defined in the 1992 Credit
Agreement) has occurred or is continuing unwaived.
(o) The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act has expired without any request for further
information or order prohibiting the acquisition by Bike Corp. of the
Capital Stock of Fadal Engineering Company, Inc. All conditions
precedent to, and all consents necessary to permit, the acquisition
by Bike Corp. of the Capital Stock of Fadal Engineering Company, Inc.
pursuant to the terms of the Purchase Agreement have been satisfied
or delivered (or waived with the prior written consent of the Agent)
and no material breach of any term or provision of the Purchase
Agreement has occurred and no action has been taken by any competent
authority which restrains, prevents or imposes material adverse
conditions upon, or seeks to restrain, prevent or impose material
adverse conditions upon, the aforesaid acquisition or the funding of
any Advances and issuance of any Letters of Credit hereunder.
(p) The Pro Forma prepared as of the Closing Date, a copy of
which has been furnished to the Agent on such date, fairly presents
on a pro forma basis the financial condition of the Borrower and its
Subsidiaries as of the Closing Date, and reflects on a pro forma
basis those liabilities reflected in the notes thereto and resulting
from consummation of the transactions contemplated by the Purchase
Agreement and this Agreement and the payment and accrual of all
transaction costs payable on the Closing Date with respect to any of
the foregoing. The projections expressed in the Pro Forma were
prepared in good faith based upon reasonable assumptions made based
on the information available to the Borrower at the time so
furnished, it being understood that such projections are subject to
significant uncertainties and contingencies, many of which are beyond
the Borrower's control, and that no assurance can be given that the
projections will be realized.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Obligation
(other than indemnities not yet due) shall remain unpaid or any Lender
shall have any Commitment hereunder, the Borrower will, unless the
Majority Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon
its property except to the extent contested in good faith.
(b) Minimum Interest Coverage Ratio. Maintain an Interest
Coverage Ratio as of the end of each of its fiscal quarters which is
equal to or greater than 3.00 to 1.
(c) Minimum Fixed Charge Coverage Ratio. Maintain a Fixed
Charge Coverage Ratio as of the end of each of its fiscal quarters
which is equal to or greater than 1.75 to 1.
(d) Maximum Funded Debt to Capitalization Ratio. Maintain a
Funded Debt to Capitalization Ratio as of the end of each of its
fiscal quarters which is less than or equal to 0.49 to 1.
(e) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within forty-
five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Borrower, consolidated
financial statements of the Borrower and its Subsidiaries as of
the end of such quarter, and promptly after its filing with the
Securities and Exchange Commission, a copy of the quarterly
report (Form 10-Q) for such quarter of the Borrower and its
Subsidiaries (it being understood that if the Form 10-Q is filed
within such forty-five (45) day period, such Form 10-Q may be
delivered in place of such financial statements);
(ii) as soon as available and in any event within ninety
(90) days after the end of each fiscal year of the Borrower, a
copy of the annual report (Form 10-K) for such year for the
Borrower and its Subsidiaries, containing consolidated and
consolidating (if available) financial statements of the
Borrower and its Subsidiaries for such year certified in a
manner acceptable to the Majority Lenders by Ernst & Young, or
other independent public accountants acceptable to the Majority
Lenders;
(iii) as soon as possible and in any event not later than
the earlier of (X) fifteen (15) days after approval of the
following by the Borrower's board of directors and (Y) sixty
(60) days after the commencement of each fiscal year of the
Borrower for each of the Borrower's fiscal years ending December
31, 1995 and thereafter (a) an annual business plan for such
fiscal year, substantially in the form of the 1992 Business Plan
heretofore delivered to the Agent, accompanied by a report
comparing all projections included in such plan with the
projections included in the business plan delivered to the Agent
for the preceding fiscal year with respect to any changes
therein; and (b) a consolidated plan and financial forecast,
prepared in accordance with the Borrower's normal accounting
procedures applied on a consistent basis, for each succeeding
fiscal year of the Borrower and its Subsidiaries until the
Termination Date, including, without limitation, (A) a
forecasted consolidated balance sheet and a consolidated
statement of changes in financial position of the Borrower for
such fiscal year, (B) forecasted consolidated balance sheets,
statements of earnings and retained earnings, and changes in
financial position of the Borrower for and as of the end of each
fiscal quarter of such fiscal year, (C) the amount of forecasted
Capital Expenditures for such fiscal year, and (D) forecasted
compliance with the provisions of subsections (b), (c) and (d)
of Section 5.01.
(iv) as soon as practicable and in any event within thirty
(30) days after the end of each calendar month in each fiscal
year, a report detailing the operations of the Borrower and its
Subsidiaries which report shall include the following
information: (a) a management commentary with respect to the
Borrower's and its Subsidiaries' financial performance during
such calendar month, together with an explanation of any
material changes in the consolidated and consolidating
statements of income, stockholders' equity and cash flow of the
Borrower and its Subsidiaries for such calendar month from such
statements for the corresponding calendar month of the previous
fiscal year and, if such month is the last month of a fiscal
quarter, the corresponding figures from the consolidated plan
and financial forecast for the current fiscal year delivered
pursuant to Section 5.01(e)(iii); (b) a schedule of in-process
contract booking and backlog information for each of the
Borrower and its Subsidiaries for the period from the beginning
of the then current fiscal year to the end of such calendar
month; and (c) a schedule listing all of the Borrower's and its
Subsidiaries' respective valuation allowances and reserves
greater than or equal to, in each case, $500,000;
notwithstanding the foregoing, after the first date, if any, on
which Performance Level I is achieved and provided Performance
Level I is maintained thereafter, the Borrower shall no longer
be required to deliver such report;
(v) together with each delivery of any financial statement
pursuant to Section 5.01(e)(i) or (ii), (i) an Officer's
Certificate of the Borrower substantially in the form of Exhibit
H attached hereto and made a part hereof, stating that the
executive officer signatory thereto has reviewed the terms of
the Loan Documents, and has made, or caused to be made under his
supervision, a review in reasonable detail of the transactions
and consolidated and consolidating financial condition of the
Borrower and its Subsidiaries during the accounting period
covered by such financial statements, that such review has not
disclosed the existence during or at the end of such accounting
period, and that such officer does not have knowledge of the
existence as at the date of such Officer's Certificate, of any
condition or event which constitutes an Event of Default or, if
any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the
Borrower or any Subsidiary has taken, is taking and proposes to
take with respect thereto, and, if applicable, that Performance
Level I or Performance Level II has been achieved and such
applicable Performance Level has continued to be maintained as
of such date; and (ii) a certificate (the "Compliance
Certificate"), signed by the Borrower's chief financial officer,
setting forth calculations (with such specificity as the Agent
may reasonably request) for the period then ended which
demonstrate compliance, when applicable, with the provisions of
subsections (b), (c) and (d) of Section 5.01.
(vi) as soon as possible and in any event within five (5)
days after an officer of the Borrower has knowledge of the
occurrence of an Event of Default or an event which, with the
giving of notice or lapse of time, or both, would constitute an
Event of Default, a statement of the chief financial officer of
the Borrower setting forth details of such Event of Default or
event and the action which the Borrower has taken and proposes
to take with respect thereto;
(vii) promptly after the sending or filing thereof, copies
of all reports which the Borrower sends to any of its security
holders, and copies of all reports and registration statements
(other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) which the Borrower or any
Subsidiary of the Borrower files with the Securities and
Exchange Commission or any national securities exchange;
(viii) promptly after the filing thereof, copies of (A)
each annual report (form 5500 series), including Schedule B
thereto, which the Borrower or any Subsidiary of the Borrower
files with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor with
respect to each Benefit Plan and (B) notices of reportable
events (within the meaning of Section 4043 of ERISA) which the
Borrower or any Subsidiary of the Borrower files with the
Pension Benefit Guaranty Corporation with respect to any Benefit
Plan; and
(ix) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of
its Subsidiaries as any Lender through the Agent may from time
to time reasonably request.
(f) Inspection of Property; Books and Records; Discussions.
Unless Performance Level I has been achieved and is being maintained,
permit, and cause each of its Subsidiaries to permit, any authorized
representative(s) designated by the Agent to visit and inspect any of
the properties of the Borrower or any of its Subsidiaries, to
examine, audit, check and make copies of their respective financial
and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses
or the transactions contemplated hereby (including, without
limitation, in connection with environmental compliance, hazard or
liability and excluding any correspondence or other records which may
have the benefit of or be subject to any legal privilege against
disclosure in any judicial, administrative or other legal
proceeding), and to discuss their affairs, finances and accounts with
their officers and independent certified public accountants, all upon
reasonable notice and at such reasonable times during normal business
hours, as often as may be reasonably requested. Each such visitation
and inspection by or on behalf of the Agent shall be at the
Borrower's expense. The Borrower shall keep and maintain, and cause
its Subsidiaries to keep and maintain, in all material respects,
proper books of record and account in which entries in conformity
with generally accepted accounting principles, consistently applied,
shall be made of all dealings and transactions in relation to their
respective businesses and activities.
(g) Corporate Existence, Etc. At all times maintain, and shall
cause each of its Subsidiaries to at all times maintain, its
corporate existence and preserve and keep, or cause to be preserved
and kept, in full force and effect its rights and franchises material
to its businesses, except where the loss or termination of such
rights and franchises does not or is not likely to have a Material
Adverse Effect.
(h) Corporate Powers; Conduct of Business. Qualify and remain
qualified, and cause each of its Subsidiaries to qualify and remain
qualified, to do business in each jurisdiction in which the nature of
its business requires it to be so qualified, except for those
jurisdictions where failure to so qualify does not or is not likely
to have a Material Adverse Effect.
(i) Bike Acquisition of Fadal Engineering Company, Inc. Cause
Bike Corp. to acquire all of the Capital Stock of Fadal Engineering
Company, Inc. pursuant to the Purchase Agreement in compliance with
all material Requirements of Law.
SECTION 5.02. Negative Covenants. So long as any Obligation
(other than indemnities not yet due) shall remain unpaid or any Lender
shall have any Commitment hereunder, the Borrower will not, without the
written consent of the Majority Lenders:
(a) Liens, Etc. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any lien, security
interest or other charge or encumbrance, or any other type of
preferential arrangement, upon or with respect to any of its
properties, whether now owned or hereafter acquired, or assign, or
permit any of its Subsidiaries to assign, any right to receive
income, in each case to secure or provide for the payment of any Debt
of any Person, other than:
(i) liens described in Section 4.01(m) and any liens
granted in connection with any refinancing or replacement of the
Debt secured thereby provided that the amount of Debt secured by
such liens is not increased above the amount of such Debt as of
the Closing Date;
(ii) purchase money liens or purchase money security
interests upon or in any property acquired or held by the
Borrower or any Subsidiary in the ordinary course of business to
secure the purchase price of such property or to secure
indebtedness incurred solely for the purpose of financing the
acquisition of such property;
(iii) liens arising in the ordinary course of the
Borrower's or such Subsidiary's business with respect to the
payment of taxes, assessments or governmental charges in all
cases which are not past due (other than liens in favor of the
Pension Benefit Guaranty Corporation and Environmental Liens);
liens of suppliers, mechanics, carriers, materialmen,
warehousemen, landlords or workmen; liens of attachment or
judgment; liens in connection with worker's compensation,
unemployment insurance or social security; and contracts,
leases, surety, appeal and performance bonds; provided that (A)
all such liens do not in the aggregate materially detract from
the value of the Borrower's or such Subsidiary's assets or
property or materially impair the use thereof in the operation
of their respective businesses, (B) all liens of attachment or
judgment and liens securing bonds to stay judgments or in
connection with appeals do not secure at any time an aggregate
amount exceeding $10,000,000, and (C) all liens securing surety
and performance bonds shall be permitted only to the extent the
Debt under such bonds is permitted under subsection (b) of
Section 5.02;
(iv) liens arising with respect to zoning restrictions,
easements, licenses, leases, reservations, provisions,
covenants, conditions, waivers, rights-of-way, subleases,
utility easements, building restrictions, restrictions on the
use of real property or minor irregularities of title (and with
respect to leasehold interests, mortgages, obligations, liens
and other encumbrances incurred, created, assumed or permitted
to exist and arising by, through or under or asserted by a
landlord or owner of the leased real property, with or without
consent of the lessee); provided that all such liens do not in
the aggregate materially impair the use of any real property
material to the operation of the business of the Borrower or
such Subsidiary or materially impair the value of such real
property for the purpose of such business;
(v) liens, with respect to goods sold or transferred on
sale on approval, sale-and-return, consignment or similar basis
by the Borrower or any of its Subsidiaries, in favor of a
consignee or a financer of the consignee of such goods, provided
that such goods have an aggregate book value of less than
$10,000,000; or
(vi) as required by the terms of this Agreement.
(b) Debt. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Debt if, immediately
after giving effect to such Debt and the receipt and application of
any proceeds thereof, Debt would exceed $300,000,000.
(c) Dividends, Etc. Declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of Capital Stock
of the Borrower (or permit any of its Subsidiaries to do so with
respect to their Capital Stock), or purchase, redeem or otherwise
acquire for value (or permit any of its Subsidiaries to do so) any
shares of any class of Capital Stock of the Borrower or any warrants,
rights or options to acquire any such shares, now or hereafter
outstanding, except that the Borrower and Subsidiaries of the
Borrower, as applicable, may:
(i) declare dividends or make distributions to the
Borrower on the Capital Stock of any of its wholly-owned
Subsidiaries or to any of the Borrower's wholly-owned
Subsidiaries from any other wholly-owned Subsidiary of the
Borrower or any other Subsidiary of the Borrower existing on the
Closing Date;
(ii) declare dividends or other distributions payable to
holders of Capital Stock of the Borrower solely in shares of
Capital Stock of the Borrower; and
(iii) declare dividends payable to holders of Capital
Stock of the Borrower or redemptions of Capital Stock of the
Borrower; provided that (A) for or with respect to each fiscal
quarter of the Borrower, the aggregate amount of such dividends
and redemptions shall be in an amount not greater than the
Permitted Distribution and (B) in the event the aggregate amount
of such dividends and redemptions distributed in or with respect
to any fiscal quarter is less than the Permitted Distribution
for such fiscal quarter, the portion of such Permitted
Distribution not distributed as dividends on and/or redemptions
of Capital Stock of the Borrower may be so distributed in any
succeeding quarter;
provided, however, the payment of dividends and distributions
described in clauses (i), (ii), and (iii) above shall not be
permitted after the occurrence of an Event of Default and for so long
as such Event of Default shall be continuing or unwaived, or if an
Event of Default would result therefrom.
(d) Restriction on Fundamental Changes. Engage or permit any
of its Subsidiaries to engage in any business, except (i) the
businesses engaged in by the Borrower and its Subsidiaries on the
Closing Date and (ii) any business or activities which are
substantially similar, related or incidental thereto; enter into or
permit any Restricted Subsidiary to enter into any merger or
consolidation (other than the Merger), or liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or
a series of transactions, all or substantially all of either (A) the
Borrower's or any such Restricted Subsidiary's business or property
or (B) the Capital Stock of any Restricted Subsidiary.
(e) Investments. Directly or indirectly make or own, or permit
any of its Subsidiaries to directly or indirectly make or own, any
Investments except:
(i) Permitted Existing Investments and Investments in Cash
Equivalents;
(ii) advances to employees with respect to ordinary course
business-related travel and entertainment expenses in accordance
with the Borrower's policies as of the Closing Date;
(iii) loans to employees for any lawful purpose in
accordance with the Borrower's policies as of the Closing Date,
provided that each loan permitted under this clause (iii) shall
be evidenced by a promissory note and that the aggregate
principal amount of all such loans at any one time outstanding
shall not exceed $5,000,000;
(iv) Investments received in connection with the
bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes
with, customers and suppliers arising in the ordinary course of
business;
(v) Investments in connection with the acquisition by the
Borrower of substantially all of the assets or Capital Stock of
another business entity, provided that such acquisition shall
have occurred with the approval of such acquired business's
board of directors and such acquisition is not otherwise
"hostile" in nature;
(vi) contributions to and payments of benefits under any
Plan; and
(vii) Subject to the restrictions in Section 5.02(d),
Investments in any Subsidiary of the Borrower, whether existing
on the Closing Date or thereafter formed.
(f) Sales of Assets. Sell, assign, transfer, lease, convey or
otherwise dispose of any assets, or permit any Subsidiary to sell,
assign, transfer, lease, convey or otherwise dispose of any assets,
whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
(i) the sale of assets for consideration not less than the
Fair Market Value of such assets;
(ii) the sale of inventory in the ordinary course of
business; and
(iii) the disposition of equipment if (A) such equipment
is obsolete or no longer useful in the ordinary course of the
Borrower's or such Subsidiary's business, provided that the
proceeds therefrom are either (I) used to finance the purchase
or manufacture by the seller thereof of replacement equipment or
(II) delivered to the Agent for application to the repayment of
the Obligations.
(g) Changes in Accounting Practices. Change, nor permit any
Subsidiary to change, any fundamental revenue recognition accounting
practices in effect as of the Closing Date.
(h) Corporate Documents. Amend, modify or otherwise change,
nor permit any Restricted Subsidiary to amend, modify or change any
of the terms or provisions of any of their respective Corporate
Documents or documents with respect to Funded Debt, except:
(i) amendments to effect a change of name of the Borrower
or such Restricted Subsidiary, provided that the Borrower shall
have provided the Agent with prior written notice of any such
name change;
(ii) amendments to the respective Corporate Documents (or
their equivalent) of the Borrower or the Restricted Subsidiary
which would not, in the reasonable judgment of the Agent,
materially and adversely affect the interests, rights and
remedies of any of the Agent, any Lender or any Issuing Bank,
provided that the Borrower promptly provides notice to the Agent
of all amendments to the Corporate Documents of such Persons.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any of the Obligations when
the same becomes due and payable; or
(b) Any representation or warranty made by the Borrower herein
or in any of the other Loan Documents or by the Borrower (or any of
the officers of such Person) in connection with this Agreement or the
other Loan Documents shall prove to have been incorrect in any
material respect when made; or
(c) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in subsections (b), (c), (d) and
(e)(vi) of Section 5.01 or Section 5.02; or
(d) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in this Agreement on its part to be
performed or observed, other than those specified in clauses (a),
(b), or (c) of this Section 6.01, or any default or event of default
shall occur under any of the other Loan Documents if such failure or
such default or event of default shall remain unremedied for thirty
(30) days after the occurrence thereof; or
(e) Any Person or group of Persons (within the meaning of
Sections 13 and 14 of the Securities Exchange Act) shall have the
beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act) of thirty
percent (30.0%) or more of the outstanding voting securities of the
Borrower; and individuals who constitute the Board of Directors of
the Borrower on the Closing Date (the "Incumbent Board") cease to
constitute at least a majority thereof, provided that any Person
becoming a director subsequent to the Closing Date whose election, or
nomination for election by the Borrower's shareholders, was approved
by a vote of at least three-fourths (3/4) of the directors comprising
the Incumbent Board (either by a specific vote or by approval of the
proxy statement of the Borrower in which such Person is named as a
nominee for director, without objection to such nomination) shall be,
for the purpose of this Section 6.01(e), considered as though such
Person were a member of the Borrower's Incumbent Board; or
(f) An event shall occur or condition exist which results in a
Material Adverse Effect; or
(g) The Borrower or any of its Subsidiaries shall fail to pay
any principal of or premium or interest on any of their Debt (other
than the Obligations) which is outstanding in an aggregate principal
amount of at least $5,000,000, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to
any such Debt and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or
(h) The Borrower, any Restricted Subsidiary, or any of the
Significant Subsidiaries of the Borrower shall generally not pay its
debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, any Restricted Subsidiary, or
any of the Significant Subsidiaries of the Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for
any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of
thirty (30) days after the commencement thereof, or any of the
actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for
any substantial part of its property) shall occur; or the Borrower,
any Restricted Subsidiary, or any of the Significant Subsidiaries of
the Borrower shall take any corporate action to authorize any of the
actions set forth above in this subsection (h); or
(i) Any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower or any of its
Subsidiaries and either (1) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (2) there
shall be any period of ten (10) consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(j) An "Event of Default" under the 1992 Credit Agreement shall
occur and continue unwaived
then, and in any such event, the Agent (i) shall at the request, or may
with the consent, of the Majority Lenders, by notice to the Borrower,
declare that the Commitments are terminated, whereupon the Commitments and
the obligation of each Lender to make Advances hereunder and of each
Lender or Issuing Bank to issue or participate in any Letter of Credit not
then issued shall terminate, and/or (ii) shall at the request, or may with
the consent, of the Majority Lenders, by notice to the Borrower, declare
the unpaid principal amount of and any and all interest on the Obligations
to be forthwith due and payable, whereupon the unpaid principal amount of
and any and all such interest on the Obligations shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that if an Event of Default described in
Section 6.01(h) shall occur with respect to the Borrower, any Restricted
Subsidiary, or any Significant Subsidiary of the Borrower, (A) the
obligation of each Lender to make Advances hereunder and of each Lender or
Issuing Bank to issue or participate in any Letter of Credit not then
issued shall automatically be terminated and (B) the unpaid principal
amount of and any and all interest on the Obligations shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the
Borrower.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender and each
Issuing Bank hereby appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement as
are delegated to the Agent by the terms hereof, together with such powers
as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement (including, without limitation, enforcement
or collection of the Debt resulting from the Advances), the Agent shall
not be required to exercise any discretion or take any action, but the
Agent shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be
binding upon all Lenders, all Issuing Banks and all holders of Notes;
provided, however, that the Agent shall not be required to take any action
which exposes it to personal liability or which is contrary to this
Agreement or applicable law. The Agent agrees to give to each Lender and
Issuing Bank prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent, any
Affiliate of the Agent nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement or the
other Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the
foregoing, the Agent: (i) may treat the Lender which made any Advance as
the holder of the Debt resulting therefrom until the Agent receives and
accepts an Assignment and Acceptance entered into by such Lender, as
assignor, and an Eligible Assignee, as assignee, as provided in Section
8.07; (ii) may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it
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; (iii) makes no warranty or representation to any
Lender or Issuing Bank and shall not be responsible to any Lender or
Issuing Bank for any statements, warranties or representations (whether
written or oral) made in or in connection with this Agreement or the other
Loan Documents; (iv) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of
the Borrower or to inspect the property (including the books and records)
of the Borrower; (v) shall not be responsible to any Lender or Issuing
Bank for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement or the other Loan
Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 7.03. Agent and Affiliates. With respect to its
Commitment, if any, any Advances made by it, any Note issued to it and its
participation with respect to Obligations arising under any Letter of
Credit, the Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were
not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include the Agent in its individual capacity with
respect thereto. The Agent and their respective Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of
the Borrower or any such Subsidiary, all as if the Agent were not the
"Agent", and without any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender and Issuing
Bank acknowledges that it has, independently and without reliance upon the
Agent or any other Lender or Issuing Bank and based on the financial
statements referred to in Section 4.01 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender and Issuing Bank also
acknowledges that it will, independently and without reliance upon the
Agent or any other Lender or Issuing Bank 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
or any Letter of Credit.
SECTION 7.05. Indemnification. The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Borrower), in proportion to
each Lender's Pro Rata Share (or, in the event that the Commitments have
been terminated pursuant to the terms of this Agreement, each Lender's
ratable portion of the aggregate outstanding principal balance of all
Advances and Letter of Credit Obligations), from and against any and all
liabilities, 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 the Agent in any
way relating to or arising out of this Agreement or the other Loan
Documents or any action taken or omitted by the Agent under this Agreement
or the other Loan Documents, provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
the Agent's gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender agrees to reimburse the Agent promptly upon
demand for its ratable share based on its Pro Rata Share (or, in the event
that the Commitments have been terminated pursuant to the terms of this
Agreement, each Lender's ratable portion of the aggregate outstanding
principal balance of all Advances and Letter of Credit Obligations) of any
out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations,
legal proceedings or otherwise) of, or legal advice in respect of rights
or responsibilities under, this Agreement and the other Loan Documents, to
the extent that the Agent are not reimbursed for such expenses by the
Borrower.
SECTION 7.06. Successor Agents. The Agent may resign at any
time by giving written notice thereof to the Lenders, Issuing Banks and
Borrower. Upon any such resignation, the Majority Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been
so appointed by the Majority Lenders or shall have accepted such
appointment, within thirty (30) days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the
Lenders and Issuing Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America
or of any State thereof and having a combined capital and surplus of at
least $50,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of
the retiring Agent and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Agent's
resignation as such hereunder, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Majority Lenders, and then such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. Notwithstanding the foregoing, no
amendment, modification, waiver, termination or consent shall, unless in
writing and signed by each Lender affected thereby, do any of the
following: (a) waive any of the conditions specified in Section 3.01 or
3.02 (except with respect to a condition based upon another provision of
this Agreement, the waiver of which requires only the concurrence of the
Majority Lenders), (b) increase the amount of the Commitment of such
Lender or subject such Lender to any additional obligations, (c) reduce
the principal of, or interest on, the Notes, the Reimbursement Obligations
or any fees or other amounts payable to such Lender (other than by the
payment or prepayment thereof), (d) postpone any date fixed for any
payment of principal of, or interest on, the Notes, the Reimbursement
Obligations or any fees or other amounts payable hereunder to such Lender,
(e) change the Pro Rata Share or percentage of the Commitments or
percentage of the aggregate unpaid principal amount of the Notes, or the
number of Lenders, which shall be required for the Lenders or any of them
to take any action hereunder or (f) amend Section 2.17 or this Section
8.01. Notwithstanding the foregoing, no amendment, waiver or consent
shall, unless in writing and signed by the Agent, in addition to the
Lenders required above to take such action, affect the rights or duties of
the Agent under this Agreement or any Note.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telecopier, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered,
(i) if to the Borrower, at the address of the Borrower at 142
Doty Street, Fond du Lac, Wisconsin 54935, Attention: Douglas
Barnett, Telecopier No.: (414) 929-4455;
(ii) if to any Lender, at its Domestic Lending Office specified
opposite its name on Schedule I hereto or the Assignment and
Acceptance pursuant to which it became a Lender;
(iii) if to the Agent, c/o Citicorp North America, Inc., 200
South Wacker Drive, Chicago, Illinois 60606, Attention: Richard
Michel, Telecopier No.: (312) 993-1050, Telephone No.: (312) 993-
3130;
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other parties. All such notices and
communications shall, when mailed, telecopied, telegraphed, telexed or
cabled, be effective when deposited in the mails, telecopied, delivered to
the telegraph company, confirmed by telex answerback or delivered to the
cable company, respectively, except that notices and communications to the
Agent pursuant to Article II or VII shall not be effective until received
by the Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender, Issuing Bank, or the Agent to exercise, and no delay in
exercising, any right hereunder or under any Note or Letter of Credit
Reimbursement Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes. (a) The Borrower
agrees to pay on demand all costs and expenses in connection with the
preparation, execution, delivery, administration, modification and
amendment of this Agreement, the Notes and the other documents to be
delivered hereunder or in connection herewith, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for
the Agent with respect thereto and with respect to advising the Agent as
to its rights and responsibilities under this Agreement and the other Loan
Documents. The Borrower further agrees to pay on demand all costs and
expenses, if any (including, without limitation, reasonable counsel fees
and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes
and the other documents to be delivered hereunder or in connection
herewith, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section
8.04(a).
(b) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such
Eurodollar Rate Advance, as a result of a payment or Conversion pursuant
to Sections 2.10(d) or 2.14, acceleration of the maturity of the Notes
pursuant to Section 6.01 or for any other reason, or by an Eligible
Assignee to a Lender other than on the last day of the Interest Period for
such Eurodollar Rate Advance upon an assignment of rights and obligations
under this Agreement pursuant to Section 8.07 as a result of a demand by
the Borrower pursuant to Section 8.04(c), the Borrower shall, upon demand
by such Lender (with a copy of such demand to the Agent), pay to the Agent
for the account of such Lender all amounts required to compensate such
Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment or Conversion, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Eurodollar Rate Advance.
(c) In the event a Lender ("Affected Lender") shall have:
(i) failed to fund its Pro Rata Share of any Advance requested
by the Borrower which such Lender is obligated to fund under the
terms of this Agreement and which such failure has not been cured,
(ii) requested compensation from the Borrower under Sections
2.13 or 2.16 to recover increased costs incurred by such Lender which
are not being incurred generally by the other Lenders, or
(iii) delivered a notice pursuant to Section 2.14 claiming that
such Lender is unable to extend Eurodollar Rate Advances to the
Borrower for reasons not generally applicable to the other Lenders,
then, in any such case, the Borrower or the Agent may make written demand
on such Affected Lender (with a copy to the Borrower in the case of a
demand by the Agent and with a copy to the Agent in the case of a demand
by the Borrower) for the Affected Lender to assign, and such Affected
Lender shall assign pursuant to one or more duly executed Assignment and
Acceptances five (5) Business Days after the date of such demand, to one
or more Eligible Assignees which the Borrower or the Agent, as the case
may be, shall have engaged for such purpose, all of such Affected Lender's
rights and obligations under this Agreement (including, without
limitation, its Commitment, all Advances owing to it, all of its
participation interests in existing Letters of Credit, and its obligation
to participate in additional Letters of Credit hereunder) in accordance
with this Section 8.04(c). Upon the replacement of any Affected Lender
pursuant to this Section 8.04(c), each Letter of Credit issued by such
Affected Lender or one of its Affiliates shall cease to be a Letter of
Credit under this Agreement and shall no longer be subject to the
participation provisions of Section 2.04(e), all of which participations
shall be deemed to have terminated and been repurchased by such Affected
Lender or such Affiliate of such Affected Lender.
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 6.01 to
authorize the Agent to declare the Obligations due and payable pursuant to
the provisions of Section 6.01, each Lender, each Issuing Bank and any
Affiliate of any Lender or Issuing Bank 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) at any time held and other indebtedness at any time
owing by such Lender, Issuing Bank or any of their Affiliates to or for
the credit or the account of the Borrower against any and all of the
Obligations of the Borrower now or hereafter existing under this Agreement
and the Note held by such Lender, Issuing Bank or any of their Affiliates,
whether or not such Lender or Issuing Bank shall have made any demand
under this Agreement or such Note and although such Obligations may be
unmatured. Each Lender and Issuing Bank agrees promptly to notify the
Borrower after any such set-off and application made by such Lender,
Issuing Bank or any of their Affiliates, provided that the failure to give
such notice shall not affect the validity of such set-off and application.
The rights of each Lender, Issuing Bank and any of their Affiliates under
this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Lender, Issuing
Bank or any of their Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the Lenders,
the Issuing Banks, and the Agent and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Agent, each Lender and each
Issuing Bank as of the Closing Date and their respective successors and
assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent
of each of the Lenders as of the date of such proposed assignment.
SECTION 8.07. Assignments and Participations. (a) Each Lender
may assign to one or more banks or other entities all or a portion of its
rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it,
the Note or Notes held by it and its rights and obligations with respect
to Letters of Credit); provided, however, that (i) each such assignment
shall be of a constant, and not a varying, percentage of all rights and
obligations under this Agreement, (ii) in the case of an assignment of
less than all of the assigning Lender's rights and obligations under this
Agreement, the amount of the Commitment retained by the assigning Lender
(determined as of the date of the Assignment and Acceptance with respect
to such assignment) shall in no event be less than $5,000,000, (iii) each
such assignment shall be to an Eligible Assignee, and (iv) the parties to
each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment and a
processing and recordation fee of $5,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in
each Assignment and Acceptance, (x) the assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and 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).
(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, 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 or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Loan Documents, or any other instrument
or document furnished pursuant hereto or thereto; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the performance
or observance by the Borrower of any of its obligations under this
Agreement, the other Loan Documents, or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee confirms that it
has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.01 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; (iv)
such assignee will, independently and without reliance upon the Agent,
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
and the other Loan Documents; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to the Agent
by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of
the Advances owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee representing that it is an Eligible
Assignee, together with any Note or Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is
in substantially the form of Exhibit A hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. Within
five (5) Business Days after its receipt of such notice, the Borrower, at
its own expense, shall execute and deliver to the Agent in exchange for
the surrendered Note or Notes a new Note to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment hereunder, a new Note to the order of the assigning Lender in
an amount equal to the Commitment retained by it hereunder. Such new Note
or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A hereto.
(e) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of
its Commitment, and the Advances owing to it, the Notes held by it and its
undivided interest in Letters of Credit); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation,
its Commitment hereunder) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any such
Note for all purposes of this Agreement, (iv) the Borrower, the Agent, and
the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and (v) such participant's rights to agree or to restrict such
Lender's ability to agree to the modification, waiver, or release of any
of the terms of the Loan Documents, to consent to any action or failure to
act by any party to any of the Loan Documents or any of their respective
Affiliates, or to exercise or refrain from exercising any powers or right
which any Lender may have under or in respect of the Loan Documents shall
be limited to the right to consent to (A) an increase in the Commitment of
the Lender from whom such participant purchased a participation, (B)
reduction of the principal of, or rate or amount of interest on the
Advances subject to such participation (other than by payment or
prepayment thereof), (C) postponement of any date fixed for any payment of
principal of, or interest on, the Advances subject to such participation
and (D) release of any guarantor of the Obligations.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 8.07, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided that, prior to any such
disclosure, the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any
confidential information relating to the Borrower received by it from such
Lender.
(g) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without
limitation, the Advances owing to it and the Notes held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 8.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and
the same agreement.
SECTION 8.10. Extensions of the Commitments. During the period
from the date that is 90 days prior to the Maturity Date then in effect to
the date that is 60 days prior to the Maturity Date then in effect, the
Borrower may, by written notice (an "Extension Request") given to the
Agent, request that the Maturity Date then in effect be extended. Each
such Extension Request shall contemplate an extension of the Maturity Date
then in effect to a date that is not later than 364 days after the date of
issuance of the Extension Confirmation Notice. The Agent shall promptly
advise each Lender of its receipt of any Extension Request. Each Lender
may, in its sole discretion, consent to a requested extension by giving
written notice thereof to the Agent and the Borrower by not later than the
Business Day (the "Extension Confirmation Date") immediately preceding the
date that is 31 days after the date of the Extension Request. Failure on
the part of any Lender to respond to an Extension Request by the
applicable Extension Confirmation Date shall be deemed to be a denial of
such request by such Lender. If all of the Lenders as of the date of any
given Extension Request shall consent in writing to the requested
extension, such request shall be granted. The Agent shall promptly (and in
any event by no later than the close of business on the applicable
Extension Confirmation Date) notify the Borrower in writing as to whether
the requested extension has been granted (such written notice being an
"Extension Confirmation Notice"), and shall promptly thereafter provide a
copy of such Extension Confirmation Notice to each Lender. Each Extension
Confirmation Notice shall specify therein the new Maturity Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
GIDDINGS & LEWIS, INC.
By/s/ Douglas E. Barnett
Title: Treasurer
AGENT CITIBANK, N.A., as Agent
By/s/ Barbara A. Cohen
Vice President
LENDERS & ISSUING BANKS
Commitment LENDER AND CITIBANK, N.A.
$100,000,000 ISSUING BANK
By/s/ Barbara A. Cohen
Title: Vice President
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 33-64936, Form S-8 No. 33-31950, Form S-8 No.
33-31951, Form S-8 No. 33-40542, Form S-8 No. 33-44325, and Form S-8 No.
33-44518) pertaining to the Giddings & Lewis, Inc. 1993 Stock and
Incentive Plan, the Giddings & Lewis, Inc. 1989 Restricted Stock Plan, the
Giddings & Lewis, Inc. 1989 Stock Option Plan, the Giddings & Lewis, Inc.
Savings Plan, The Cross & Trecker Retirement Savings Plan, and The
Kearney & Trecker Retirement Savings Plan of our report dated March 3,
1995 (except for Note 11, as to which the date is April 24, 1995), with
respect to the financial statements of Fadal Engineering Co., Inc. for the
year ended December 31, 1994 included in the Form 8-K for Giddings &
Lewis, Inc. dated May 8, 1995.
Ernst & Young LLP
Woodland Hills, California
May 8, 1995
