<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _______________________
Commission file number 0-20274
-------
THE RIVAL COMPANY
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-0794462
- --------------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 E. 101st Terrace, Kansas City, MO 64131
- ---------------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
(816) 943-4100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(l) Yes X No
----- -----
(2) Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
As of April 26, 1996, the registrant had 9,726,047 shares
of common stock, par value $.01 per share, outstanding.
<PAGE>
THE RIVAL COMPANY
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PART I. - FINANCIAL INFORMATION
Page
ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of March 31,
1996, March 31, 1995 and June 30, 1995. 3
Condensed Consolidated Statements of Earnings for the three
months and nine months ended March 31, 1996 and 1995. 4
Condensed Consolidated Statements of Cash Flows for the
nine months ended March 31, 1996 and 1995. 5
(2) Notes to Condensed Consolidated Financial Statements. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 8
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 9
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1996 and 1995 and June 30, 1995
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
03/31/96 03/31/95 06/30/95
-------- -------- --------
<S> <C> <C> <C>
ASSETS
Currents assets:
Cash $ 320 $ 214 $ 193
Accounts receivable 55,809 34,586 43,492
Inventories 88,229 52,144 81,104
Deferred income taxes 860 985 860
Prepaid expenses 1,479 928 835
-------- -------- --------
Total current assets 146,697 88,857 126,484
Property, plant and equipment, net 36,242 21,733 27,072
Goodwill 46,968 37,849 48,186
Other assets 6,499 2,943 2,626
-------- -------- --------
$236,406 $151,382 $204,368
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 56,200 $ 4,000 $ 37,627
Current portion of long-term debt 4,000 4,000 4,000
Trade accounts payable 17,376 9,364 14,972
Income taxes payable 1,821 1,032 577
Other payables and accrued expenses 8,735 5,752 9,015
-------- -------- --------
Total current liabilities 88,132 24,148 66,191
Long-term debt, less current portion 38,000 42,000 42,000
Deferred income taxes 3,438 2,237 2,372
Other 262 -- --
Stockholders' equity:
Common stock 97 93 97
Paid-in capital 45,396 40,196 45,366
Retained earnings 61,709 47,901 49,047
Treasury stock, at cost (310) (4,764) (310)
Foreign currency translation
adjustments (318) (429) (395)
-------- -------- --------
Total stockholders' equity 106,574 82,997 93,805
-------- -------- --------
$236,406 $151,382 $204,368
======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three months and nine months ended March 31, 1996 and March 31, 1995
(amounts in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ ------------------
03/31/96 03/31/95 03/31/96 03/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $61,916 $39,624 $233,263 $179,109
Cost of sales 45,258 28,592 167,879 128,304
------- ------- -------- --------
Gross profit 16,658 11,032 65,384 50,805
Selling expenses 9,039 4,978 27,612 19,847
General and administrative expenses 2,780 1,906 8,313 6,612
Amortization of goodwill 407 317 1,219 951
------- ------- -------- --------
Operating income 4,432 3,831 28,240 23,395
Interest expense 1,656 821 4,816 2,942
Other expense, net 59 59 203 158
------- ------- -------- --------
Earnings before income taxes 2,717 2,951 23,221 20,295
Income tax expense 1,145 1,201 9,100 7,845
------- ------- -------- --------
Net earnings $ 1,572 $ 1,750 $ 14,121 $ 12,450
======= ======= ======== ========
Weighted average common and
common equivalent shares
outstanding 9,959 9,330 9,940 9,441
======= ======= ======== ========
Net earnings per common share $ 0.16 $ 0.19 $ 1.42 $ 1.32
======= ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended March 31, 1996 and March 31, 1995
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
-------------------
03/31/96 03/31/95
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 14,121 $ 12,450
Adjustments to reconcile net earnings to
net cash used by operating activities:
Depreciation and amortization 5,899 5,009
Other (43) --
Changes in assets and liabilities, net
of acquisitions:
Accounts receivable (6,106) 171
Inventories 569 (1,868)
Prepaid expenses 337 124
Accounts payable and accruals (1,478) (3,004)
Income taxes payable 1,244 626
-------- --------
Net cash provided by
operating activities 14,543 13,508
-------- --------
Cash flows from investing activities:
Capital expenditures (3,995) (3,395)
Acquisition of business (23,532) --
Other (13) 119
-------- --------
Net cash used by investing activities (27,540) (3,276)
-------- --------
Cash flows from financing activities:
Net borrowings (repayments) under
working capital loans 18,573 (600)
Payment of long term debt (4,000) (4,000)
Repurchase of common stock -- (4,454)
Dividends paid (1,459) (1,103)
Other 10 20
-------- --------
Net cash provided (used) by
financing activities 13,124 (10,137)
-------- --------
Net increase in cash 127 95
Cash at beginning of period 193 119
-------- --------
Cash at end of period $ 320 $ 214
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
Notes to Condensed Consolidated Financial Statements
Nine Months Ended March 31, 1996 and March 31, 1995
Note 1
- ------
In the opinion of Management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the financial position of the
Company as of March 31, 1996 and 1995 and the results of its operations and its
cash flows for the periods ended March 31, 1996 and 1995. The June 30, 1995,
condensed consolidated balance sheet has been derived from the audited
consolidated financial statements as of that date. These financial statements
have been prepared in accordance with the instructions to Form 10-Q. To the
extent that information and footnotes required by generally accepted accounting
principles for complete financial statements are contained in or consistent with
the audited consolidated financial statements incorporated by reference in the
Company's Form 10-K for the year ended June 30, 1995, such information and
footnotes have not been duplicated herein.
Note 2
- ------
The results of operations for the nine months ended March 31, are not indicative
of the results to be expected for the full year due to the seasonal nature of
the Company's operations.
Note 3 Inventories
- ------------------
The following is a summary of inventories at March 31, 1996 and 1995 and June
30, 1995 (in thousands):
<TABLE>
<CAPTION>
Mar. 31, 1996 Mar. 31, 1995 June 30, 1995
------------- ------------- -------------
<S> <C> <C> <C>
Raw Materials $ 33,946 $ 16,666 $ 33,221
Work in progress 3,334 744 1,741
Finished goods 55,906 39,046 49,924
--------- --------- ---------
93,186 56,456 84,886
Less LIFO allowance (4,957) (4,312) (3,782)
--------- --------- ---------
$ 88,229 $ 52,144 $ 81,104
========= ========= =========
</TABLE>
Note 4 Acquisition of Fasco Consumer Products, Inc.
- ---------------------------------------------------
On January 2, 1996, the Company acquired 100% of the common stock of Fasco
Consumer Products, Inc. ("Fasco"), from H.S. Investments, Inc., a subsidiary of
BTR Dunlop, Inc. Fasco is a manufacturer of heating, ventilating and other
convenience products that are distributed through wholesale and retail markets
with annual sales of approximately $40 million.
The acquisition was accounted for as a purchase and, accordingly, the purchase
price was allocated to the assets acquired based upon their respective fair
values. The total purchase price of Fasco and the allocation of that purchase
price to assets acquired and liabilities assumed is summarized as follows (in
thousands):
Current assets $14,900
Property, plant and equipment 9,300
Non-compete agreement 4,000
-------
Fair value of assets acquired 28,200
Accounts payable and accrued
liabilities assumed (4,700)
Purchase price $23,500
=======
6
<PAGE>
The non-compete agreement is being amortized over its eight year term.
The operating results of Fasco have been included in the consolidated results of
the Company since the date of acquisition. The table below presents certain
combined statement of earnings data on a pro forma basis as if the acquisition
had occurred on the first day of each period presented. The pro forma
information has been developed based upon certain assumptions relative to the
integration of the companies' operations and may not reflect the operating
results which would have occurred if Rival and Fasco had operated as a single
entity for the entire periods presented. Amounts are in thousands except per
share amounts.
<TABLE>
<CAPTION>
Pro Forma Nine Months ended
03/31/96 03/31/95
----------------------------
<S> <C> <C>
Net sales $ 253,258 $ 214,925
Net earnings 13,322 14,126
Net earnings per common share $ 1.34 $ 1.50
Weighted average common and common
equivalent shares outstanding 9,940 9,441
</TABLE>
Note 5 Subsequent Events
- -------------------------
Acquisition of Bionaire, Inc.
- -----------------------------
On April 2, 1996 the Company, through its indirect wholly-owned Canadian
Subsidiary, RC Acquisition Inc., (the "Offeror"), paid for and took up the
shares of Bionaire, Inc. ("Bionaire") which had been validly deposited under a
tender offer which was commenced on March 4, 1996. A total of 14,284,911 common
shares, representing 95% of the issued and outstanding common shares of Bionaire
were tendered. On April 2, 1996, the Offeror also deposited sufficient funds
with the stock transfer agent, Montreal Trust Company to acquire the balance of
the issued and outstanding shares of Bionaire and circulated a Compulsory
Acquisition Notice Pursuant to the Provisions of Section 206 of The Canada
Business Corporations Act to the remaining shareholders.
Bionaire, which is headquartered in Lachine, Quebec develops, manufactures and
markets products designed to improve the environment and air quality in homes
and offices, including air purifiers, humidifiers and related accessories such
as replacement filters. Bionaire has annual sales of approximately $57 million.
Approximately 60% of its products are sold in the U.S., 25% are sold in Canada
and the balance is sold elsewhere, primarily in Europe. The Company intends to
continue to use the assets of Bionaire for the manufacture and distribution of
air cleaners, humidifiers and related accessories.
The Company paid CDN $2.25 per share for the Common Stock of Bionaire (U.S.
$24,993,000 in the aggregate). The acquisition will be accounted for as a
purchase, and accordingly, the purchase price will be allocated to Bionaire's
assets and liabilities based upon their respective fair values. The operating
results of Bionaire will be included in the consolidated results of the Company
beginning on the date of acquisition (April 2, 1996).
Notes Payable and Long-Term Debt
- --------------------------------
On April 19, 1996, the Company sold $50 million in unsecured notes in a private
placement. The notes bear interest at a rate of 7.21%, and have a final maturity
in 2008. In conjunction with the sale of these notes, the Company entered into
an interest rate swap transaction with Bank of America, N.A. in the nominal
amount of $25 million. The effect of the swap transaction was to convert the
interest payment stream on $25 million of the notes to a variable rate which is
approximately 0.45% above the prevailing six month LIBOR rate.
7
<PAGE>
On April 15, 1996, the Company entered into a $75 million unsecured revolving
credit facility with a group of banks. This credit facility expires on June 30,
1999 and replaces a similar credit facility with the same banks. On April 17,
1996, the Company through an indirect wholly-owned subsidiary, entered into a
revolving credit facility with a Canadian bank for the Canadian Dollar
equivalent of U.S. $10 million. The proceeds of this credit facility were used
to retire secured indebtedness of Bionaire, Inc. which was assumed in the
acquisition and will be used to fund seasonal working capital requirements of
the Company's Canadian operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales were $61.9 million in the quarter ended March 31, 1996 compared to
$39.6 million in the prior year. Patton Electric, which was acquired in April
1995 and Fasco Consumer Products, which was acquired in January 1996, together
contributed $16.3 million of the increase in sales. Sales of the Company's
other products increased 15%, with especially strong growth in kitchen heating
appliances such as toasters and slow cookers. For the nine months ended March
31, 1996, sales were $233.3 million compared to $179.1 million in the prior
year. Patton and Fasco contributed $36.9 million of the increase and sales of
the Company's other products grew by nearly 10%.
Sales by product category were as follows (in millions):
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
03/31/96 03/31/95 03/31/96 03/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Kitchen heating appliances $ 19.8 $ 15.5 $ 98.6 $ 82.4
Kitchen motor-driven appliances 6.2 6.6 29.4 32.9
Other electric appliances 23.9 7.3 79.2 40.4
Water products 12.0 10.2 26.1 23.4
-------- -------- -------- --------
$ 61.9 $ 39.6 $ 233.3 $ 179.1
======== ======== ======== ========
</TABLE>
Gross profit was $16.7 million (26.9% of sales) for the quarter ended March 31,
1996 compared to $11.0 million (27.8% of sales) in the prior year. For the
first nine months of the current fiscal year, gross profit was $65.4 million
(28.0% of sales) compared to $50.8 million (28.4% of sales) in the prior year.
The decline in gross margin percentage was primarily the result of sales mix.
Selling expenses were $9.0 million (14.6% of sales) for the quarter ended March
31, 1996 compared to $5.0 million (12.6% of sales) in the prior year. For the
nine months ended March 31, 1996 such expenses were $27.6 million (11.8% of
sales) compared to $19.8 million (11.1% of sales) in the prior year. The
increase in selling expenses as a percentage of sales is the result of increased
advertising expenditures and selling expenses related to Fasco which are higher
than the Company's other business units.
General and administrative expenses were $2.8 million for the March 1996 quarter
compared to $1.9 million in the prior year. For the nine months ended March 31,
1996, general and administrative expenses were $8.3 million compared to $6.6
million in the prior year. The higher expenses reflect increases in product
engineering as well as management and clerical personnel required to support
recent growth.
Interest expense was $4.8 million for the nine months ended March 31, 1996
compared to $2.9 million in the prior year as a result of higher borrowings
required to finance the April 1995 acquisition of Patton Electric, and the
January 1996 acquisition of Fasco Consumer Products.
8
<PAGE>
Net earnings for the quarter ended March 31, 1996 were $1.6 million ($0.16 per
share) compared to $1.8 million ($0.19 per share) for the same period in the
prior year. For the nine months ended March 31, 1996, net earnings were $14.1
million ($1.42 per share) compared to $12.5 million ($1.32 per share) in the
prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company has in place $42 million of 6.42% unsecured term notes having a
final maturity of January 2003 with required payments of $4 million per year in
fiscal 1997 and 1998. In April 1996, the Company issued an additional $50
million in unsecured term notes with no scheduled principal payments until the
year 2004 and a final maturity in 2008. Additionally, as a result of an
agreement finalized on April 15, 1996, the Company has a $75 million, unsecured
revolving credit facility which expires in June 1999 and bears interest at a
floating rate of LIBOR plus .75%. The Company historically requires a
significant amount of cash each fall to fund its build-up in inventories and
accounts receivable during its peak selling season. These cash requirements are
funded through borrowings on the working capital line. Upon completion in April
1996 of the financing transactions as well as the acquisition of Bionaire both
of which are more fully described in Note 5, the Company had approximately $40
million available under its revolving credit facilities.
The Company plans to make capital expenditures of approximately $5.0 million to
$6.0 million during fiscal 1996. Management believes that cash generated from
operations and its bank credit facility will be sufficient to meet its cash
requirements for the foreseeable future.
PART II - OTHER INFORMATION
---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits.
10(k) Note Purchase Agreement for $50,000,000 Senior Unsecured
Notes dated as of April 15, 1996 between the Company and The
Purchasers listed therein.
10(l) Credit Agreement for a $75,000,000 Revolving Credit Facility
dated as of April 15, 1996 between the Company, the banks
listed therein and, NationsBank of Texas, N.A. as agent.
11 Schedule regarding computation of per share earnings.
(b) Reports on Form 8-K.
On April 12, 1996, the Company filed a Report on Form 8-K with respect
to the acquisition of the stock of Bionaire, Inc. The items reported
on the Form 8-K were Item 2, Acquisition or Disposition of Assets and
Item 7, Financial Statements and Exhibits.
9
<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.
THE RIVAL COMPANY
Dated: May 3, 1996 By: _______________________
Thomas K. Manning
President and CEO
(Duly Authorized Officer)
Dated: May 3, 1996 By: ________________________
William L. Yager
Senior Vice-President of
Finance and Administration,
Chief Financial Officer
10
<PAGE>
________________________________________________________________________________
THE RIVAL COMPANY
_______________________
NOTE PURCHASE AGREEMENT
_______________________
DATED AS OF APRIL 15, 1996
$50,000,000 7.21% SENIOR UNSECURED NOTES DUE 2008
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 1. Notes; Payments................................... 1
1.1 Issuance.......................................... 1
1.2 Payments; Prepayments............................. 1
1.3 Registration...................................... 2
1.4 Transfer or Exchange.............................. 2
1.5 Replacement....................................... 3
1.6 Payments.......................................... 3
Section 2. Sale and Purchase of Notes........................ 3
2.1 Agreement......................................... 3
2.2 Purchasers' Representations....................... 3
Section 3. Closing........................................... 5
Section 4. Conditions Precedent.............................. 5
4.1 Opinions.......................................... 5
4.2 Certificates...................................... 6
4.3 Approvals......................................... 6
4.4 Fees.............................................. 6
4.5 Operative Documents............................... 7
4.6 Legal Investment.................................. 7
4.7 Proceedings and Documents......................... 7
4.8 Bank Financing.................................... 7
4.9 Other Materials................................... 7
4.10 Private Placement Number.......................... 7
Section 5. Representations and Warranties.................... 7
5.1 Corporate Existence............................... 7
5.2 Corporate Authority............................... 8
5.3 No Default........................................ 8
5.4 Validity of Agreements............................ 8
5.5 Litigation........................................ 8
5.6 Compliance with Laws; Consents.................... 9
5.7 Defaults Under Other Documents.................... 9
5.8 Judgments......................................... 9
5.9 Disclosure........................................ 9
5.10 Securities Laws................................... 9
5.11 Margin Stock...................................... 10
5.12 Regulations of Federal Reserve System............. 10
5.13 Title to Property; Leases......................... 10
5.14 Debt.............................................. 10
5.15 Pari Passu Ranking................................ 10
5.16 Transaction Regulations........................... 10
</TABLE>
i
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TABLE OF CONTENTS
(cont.)
PAGE
5.17 Taxes............................................. 11
5.18 Zoning............................................ 11
5.19 OSHA.............................................. 11
5.20 Environmental Matters............................. 11
5.21 ERISA............................................. 12
5.22 Material Contracts................................ 13
5.23 Employment Liabilities............................ 13
5.24 Intellectual Property............................. 13
5.25 Company Status.................................... 13
5.26 Product Liability................................. 14
5.27 Insurance......................................... 14
Section 6. General Affirmative Covenants..................... 14
6.1 Financial Data.................................... 14
6.2 Inspection of Properties and Books................ 15
6.3 Payments.......................................... 15
6.4 Notices........................................... 16
6.5 Corporate Matters................................. 16
6.6 Accounting........................................ 17
6.7 Maintenance of Property........................... 17
6.8 Corporate Existence............................... 17
6.9 Intellectual Property............................. 17
6.10 Taxes............................................. 17
6.11 Governmental Regulations.......................... 17
6.12 Use of Proceeds................................... 18
6.13 Expenses.......................................... 18
6.14 Bank Financing Amendments......................... 18
6.15 Payment of Claims................................. 18
Section 7. General Negative Covenants........................ 19
7.1 ERISA............................................. 19
7.2 Merger and Consolidation.......................... 19
7.3 Sales or Other Dispositions of Assets............. 20
7.4 Additional Stock.................................. 20
7.5 Other Agreements.................................. 21
7.6 Negative Pledge................................... 21
7.7 Additional Subsidiaries........................... 21
7.8 Affiliate Transactions............................ 21
7.9 Business Practices................................ 22
7.10 Restricted Payments............................... 22
7.11 Subsidiary Guarantee.............................. 22
ii
<PAGE>
TABLE OF CONTENTS
(cont.)
PAGE
Section 8. Financial Covenants............................. 22
8.1 Minimum Adjusted Net Worth...................... 22
8.2 Funded Debt..................................... 22
8.3 Current Debt.................................... 22
8.4 Fixed Charge Coverage........................... 22
8.5 Restricted Subsidiary Indebtedness.............. 23
Section 9. Events of Default............................... 23
9.1 Payments........................................ 23
9.2 Other Obligations............................... 23
9.3 Other Debt...................................... 23
9.4 Undischarged Final Judgments.................... 24
9.5 False Representations........................... 24
9.6 Negative and Financial Covenants................ 24
9.7 Affirmative Covenants........................... 24
9.8 Involuntary Bankruptcy Proceedings.............. 24
9.9 Voluntary Petitions............................. 24
9.10 Assignments for Benefit of Creditors............ 25
9.11 ERISA Violation................................. 25
Section 10. Remedies........................................ 25
10.1 Acceleration.................................... 25
10.2 Other Remedies.................................. 25
10.3 Remedies in General............................. 25
Section 11. Definitions..................................... 26
11.1 Adjusted Consolidated Net Worth................. 26
11.2 Affiliate....................................... 26
11.3 Agreement....................................... 26
11.4 Bank Financing.................................. 26
11.5 Bankruptcy Code................................. 26
11.6 Business Day.................................... 27
11.7 Capital Lease................................... 27
11.8 Capital Lease Obligation........................ 27
11.9 CERCLA.......................................... 27
11.10 Closing......................................... 27
11.11 Closing Date.................................... 27
11.12 Code............................................ 27
11.13 Company......................................... 27
11.14 Consolidated Income Available for Fixed Charges. 27
11.15 Consolidated Net Income......................... 27
11.16 Current Debt.................................... 28
iii
<PAGE>
TABLE OF CONTENTS
(cont.)
PAGE
11.17 Debt.......................................... 28
11.18 Environmental Laws............................ 28
11.19 ERISA......................................... 28
11.20 Event of Default.............................. 28
11.21 Financial Statements.......................... 28
11.22 Fiscal Quarter................................ 28
11.23 Fiscal Year................................... 29
11.24 Fixed Charges................................. 29
11.25 Funded Debt................................... 29
11.26 GAAP.......................................... 29
11.27 Guarantee..................................... 29
11.28 Hazardous Materials........................... 30
11.29 Intellectual Property......................... 30
11.30 Interest Expense.............................. 30
11.31 Investment.................................... 30
11.32 Liens......................................... 30
11.33 Make-Whole Premium............................ 30
11.34 Margin Security............................... 31
11.35 Margin Stock.................................. 31
11.36 Material Adverse Change or Effect............. 31
11.37 Multiemployer Plan............................ 31
11.38 NAIC Annual Statement......................... 31
11.39 Noteholders................................... 31
11.40 Notes......................................... 31
11.41 Obligations................................... 31
11.42 Operating Lease............................... 32
11.43 Operating Lease Rentals....................... 32
11.44 Operative Documents........................... 32
11.45 Permitted Investments......................... 32
11.46 Permitted Liens............................... 32
11.47 Person........................................ 34
11.48 Plan.......................................... 34
11.49 Potential Event of Default.................... 34
11.50 Private Placement Memorandum.................. 34
11.51 Purchasers.................................... 34
11.52 QPAM.......................................... 34
11.53 QPAM Exemption................................ 34
11.54 Rating Agencies............................... 34
11.55 Related Person................................ 34
11.56 Release....................................... 34
11.57 Restricted Investments........................ 34
11.58 Restricted Payments........................... 34
iv
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TABLE OF CONTENTS
(cont.)
PAGE
11.59 Restricted Subsidiary............................ 35
11.60 SEC.............................................. 35
11.61 Source........................................... 35
11.62 Subsidiary....................................... 35
11.63 Successor Corporation............................ 35
11.64 Taxes............................................ 35
11.65 '34 Act.......................................... 35
11.66 '33 Act.......................................... 35
11.67 Total Capitalization............................. 35
11.68 Weighted Average Life to Maturity................ 35
Section 12. Miscellaneous.................................... 36
12.1 Entire Agreement................................. 36
12.2 Amendments; Changes and Modifications............ 36
12.3 Applicable Law: Submission to Jurisdiction....... 36
12.4 Notices.......................................... 36
12.5 Captions......................................... 37
12.6 Counterparts..................................... 37
12.7 Assignment....................................... 37
12.8 Survival of Representations and Warranties....... 37
12.9 Consents: Noteholder Action...................... 37
12.10 Reproduction of Documents........................ 38
12.11 No Third Party Beneficiaries..................... 38
Schedule I -- Purchasers
Schedule II -- Other Financial Data
Schedule III -- Disclosure Schedule
Exhibit 1.1 -- Form of Note
Exhibit 4.1(a) -- Company Outside Counsel Opinion
v
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NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT is made as of April 15, 1996 among THE RIVAL
COMPANY (the "Company") and the purchasers set forth in Schedule I (the
"Purchasers"). In consideration of the agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree:
Section 1. Notes; Payments.
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1.1 Issuance. The Company will authorize the issuance and sale of $50,000,000
in aggregate principal amount of its senior unsecured notes (the "Notes") due as
provided in Section 1.2(a). The Notes shall bear interest at the rate of 7.21%
per annum payable semiannually as provided in Section 1.2(a). The Notes shall
be in the form of Exhibit 1.1. Interest on the Notes shall be computed on the
basis of a 360-day year of twelve 30-day months. Interest on any overdue
principal (including any overdue prepayment of principal); on the Make-Whole
Premium, if any; to the extent permitted by applicable law, on any unpaid and
overdue interest; and on other Obligations shall be paid at the rate per annum
2% above the otherwise applicable rate.
1.2 Payments; Prepayments.
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(a) Required Payments. On April 15, 2004 and on each April 15 thereafter
to and including April 15, 2007, the Company shall prepay $10,000,000
principal amount (or such lesser principal amount as shall then be
outstanding) of the Notes at par. The Company shall make its final payment
of principal of the Notes on April 15, 2008. The Company shall make
semiannual payments, in arrears, of all accrued interest on April 15 and
October 15 of each year commencing on October 15, 1996. All payments and
prepayments of principal, interest and Make-Whole Premium, if any, shall be
made in immediately available funds on the date specified therefor (or, if
such day is not a Business Day, on the succeeding Business Day), before
12:00 noon, New York time, and to the account of each Noteholder,
respectively, as set forth in Schedule I, or such other account as each
Noteholder may designate in writing from time to time. The Company shall
give each Noteholder contemporaneous notice of each payment made to such
Noteholder, such notice to be made to the address indicated on Schedule I,
or such other address as each Noteholder may designate in writing from time
to time. All such payments shall be made, without setoff or counterclaim
and without reduction for, and free from, any and all present or future
taxes, levies, imposts, duties, fees, charges, deductions, withholdings,
restrictions or conditions of any nature imposed by any government or any
political subdivision or taxing authority thereof (but excluding any taxes
measured by the overall net income of any Noteholder).
(b) Optional Prepayments. On any interest payment date, the Company may
prepay, in full or in part, the Notes; provided, that such prepayment is
accompanied by payment of all accrued interest to the date of prepayment
and a Make-Whole Premium, if any, determined as of the date of the
prepayment; and provided further, that in no
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event shall such prepayment be less than the principal being prepaid plus
all accrued interest to the date of prepayment. Prepayments with respect
to fewer than all holders are not permitted. Partial prepayments shall be
made pro rata to all holders of Notes. The Company shall give notice to
each Noteholder at least 30 days, but not more than 60 days, prior to the
intended prepayment date. Such notice shall specify the prepayment date,
and, as to each Note being prepaid, the outstanding principal amount
thereof, the accrued interest thereon (through the scheduled prepayment
date) and an estimate of the applicable Make-Whole Premium due in respect
of such prepayment. Such notice shall contain such data and detailed
calculations as are necessary to confirm the computation of the estimated
Make-Whole Premium set forth therein. The amount of the Make-Whole Premium
actually paid shall be adjusted from the foregoing estimate based on the
most recent information available as of the day prior to the date of
prepayment as required by Section 11.33. On the day prior to the date of
prepayment, the Company shall give to each Noteholder notice of the actual
amount of Make-Whole Premium. Such notice shall contain such data and
detailed calculations as are necessary to confirm the computation of the
actual Make-Whole Premium contained therein. Any partial prepayment under
this Agreement applied to the Notes shall reduce in inverse order of
maturity all remaining scheduled payments of principal, pro rata to all
holders of Notes to which such prepayment applied.
(c) Note Purchases. The Company will not, and will not permit any
Subsidiary or Affiliate to, acquire, directly or indirectly by purchase or
prepayment or otherwise, any of the outstanding Notes, except in accordance
with the terms of this Agreement and the Notes.
1.3 Registration. The Company shall maintain at its principal office a
register with respect to ownership and transfers of the Notes. The Company may
in good faith rely on the register for the purpose of making payments on the
Notes and for all other purposes related to actions taken and notices given in
respect of the Notes. For purposes of this Agreement, the Person in whose name
a Note is registered shall be deemed the "holder" of the Note and a Noteholder
hereunder.
1.4 Transfer or Exchange. Upon written request of the holder of any Note and
the surrender of such Note for transfer or exchange, the Company shall, without
charge: (a) issue a new Note or Notes in respect thereof, in such denominations
as may be requested by the holder to equal the unpaid principal balance of the
Note surrendered, and made payable to the holder, its nominee(s) or the
transferee, as requested by the holder, provided that the holder may not request
a new Note in a denomination less than $500,000 or, if the outstanding principal
of such Note is less than $500,000, in a denomination less than the outstanding
principal amount of such Note; and (b) register such new Note(s) in the name of
the party to whom it is made payable. Any transferee shall by its acceptance of
a Note be deemed to make for the benefit of the Company the representations set
forth in Sections 2.2 (a) and (b) hereof and, furthermore, a representation that
the transfer alone will not require the Notes or any portion thereof to be
registered under the '33 Act. New Notes shall be of like tenor to the Notes
surrendered therefor and shall be dated the date to which interest was last
paid, or if no interest has been paid, the date of the issuance of the Notes
surrendered, so that there is no loss of interest with respect thereto. Upon
the request of any Noteholder, the Company shall, without charge, provide such
data as may be reasonably necessary to enable such Noteholder, upon a transfer
of any Note, to comply with Rule 144A (or similar safe harbor
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provision) of the SEC. Such data shall be provided within 15 days after request
by the Noteholder.
1.5 Replacement. In the case of the loss, theft, or destruction of any Note,
the holder thereof shall be entitled, without charge, to a replacement Note by
delivering to the Company the affidavit of a responsible officer or
representative of the holder, testifying that the Note has been lost, stolen or
destroyed, as applicable, and an unsecured indemnity agreement with respect to
the lost, stolen or destroyed Note. In the case of the mutilation of any Note,
the holder thereof shall be entitled, without charge, to a replacement Note by
delivering to the Company such mutilated Note along with a written request for
replacement. Replacement Notes shall be issued in the amount of the unpaid
principal balance of the original Notes, shall be of like tenor to the original
Notes and shall be dated the date to which interest was last paid, or if no
interest has been paid, the date of the issuance of the Notes surrendered, so
that there is no loss of interest with respect thereto.
1.6 Payments. All payments due under the Notes or on any of the other
Obligations shall be made without tender of the Notes in immediately available
funds by federal wire transfer in lawful money of the United States before 12:00
noon, New York time, on the due date therefor to the account of the respective
holder as set forth on the attached Schedule I or at such other account as the
holder may designate in writing from time to time.
Section 2. Sale and Purchase of Notes.
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2.1 Agreement. The Company agrees to issue and sell to each Purchaser, and
each Purchaser agrees to purchase from the Company, Notes in the principal
amount set forth in Schedule I with respect to such Purchaser. The purchase
price for the Notes shall be 100% of the principal amount thereof.
2.2 Purchasers' Representations. Each Purchaser hereby represents and
warrants, as to itself, that:
(a) Purchase for Investment. The Purchaser is purchasing the Notes for
its own account or for one or more separate accounts maintained by it, in
each case for investment and not with a view to distributing or selling any
of the Notes; provided, that disposition of the Notes shall at all times be
within the control of the Purchaser.
(b) Source of Funds. As to such Purchaser, at least one of the following
statements is an accurate representation as to each source of funds (a
"Source") to be used to pay the purchase price of the Notes to be purchased
by such Purchaser hereunder:
(i) if such Purchaser is an insurance company, the Source is such
Purchaser's general account, and, in reliance upon the Company's
representations set forth in Section 5.21, the amount of the reserves
and liabilities for the general account contracts (as defined by the
annual statement for life insurance companies approved by the National
Association of Insurance Commissioners (the "NAIC Annual Statement"))
held by or on behalf of any Plan together with the amount of the
reserves and liabilities for the general account
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contracts held by or on behalf of any other Plans maintained by the
same employer (or affiliate thereof, as such term is defined in
section V of DOL Prohibited Transaction Exemption 95-60 (60 FR 35925,
July 12, 1995)) or by the same employee organization (as defined in
ERISA) in the general account do not exceed 10% of the total reserves
and liabilities of the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual Statement
filed with the state of domicile of the insurance company; for
purposes of the percentage limitation in this clause (i), the amount
of reserves and liabilities for the general account contracts held by
or on behalf of a Plan shall be determined before reduction for
credits on account of any reinsurance ceded on a coinsurance basis; or
(ii) if such Purchaser is an insurance company, the Source does not
include assets allocated to any separate account maintained by such
Purchaser in which any employee benefit plan (or its related trust)
has any interest, other than a separate account that is maintained
solely in connection with its fixed contractual obligations under
which the amounts payable, or credited, to such plan and to any
participant or beneficiary of such plan (including any annuitant) are
not affected in any manner by the investment performance of the
separate account; or
(iii) the Source is either (1) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption
("PTE") 90-1 (issued January 29, 1990), or (2) a bank collective
investment fund, within the meaning of the PTE 91-38 (issued July 12,
1991) and, except as such Purchaser has disclosed to the Company in
writing pursuant to this clause (iii), no employee benefit plan or
group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated
to such pooled separate account or collective investment fund; or
(iv) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and
(1) the identity of such QPAM and
(2) the names of all employee benefit plans whose assets are
included in such investment fund
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have been disclosed to the Company in writing pursuant to this clause
(iv); or
(v) the Source is a governmental plan; or
(vi) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant
to this clause (vi); or
(vii) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in the preceding Sections 2.2(a) and 2.2(b), the terms "separate
account," "employee benefit plan" and "governmental plan" shall have the
respective meanings assigned to them in Section 3 of ERISA.
(c) Fees. The Purchaser has not dealt with any broker or finder besides
NationsBanc Capital Markets, Inc. in respect of the transaction
contemplated hereby.
Section 3. Closing. The sale and purchase of the Notes contemplated by Section
2 shall be consummated at a closing (the "Closing") to occur at 10:00 a.m.
(Hartford time) on April 19, 1996. The Closing shall take place at the offices
of Hebb & Gitlin in Hartford, Connecticut. At the Closing, the Company shall
deliver to each Purchaser the Notes to be purchased by such Purchaser. Such
Notes shall be delivered to each Purchaser in the form of a single note (or such
greater number of Notes as the Purchaser may request) to be purchased by the
Purchaser, shall be dated the Closing Date, and shall be made payable to and
registered in the name of that Purchaser or its nominee(s) as required by the
Purchaser. Upon tender of delivery of the Notes, and satisfaction of the
conditions precedent set forth in Section 4, each Purchaser shall pay to the
Company, in immediately available funds, the purchase price for the Notes sold
to such Purchaser. Failure of the Company to tender delivery of the Notes or
failure of the respective person or persons to satisfy any condition precedent
in Section 4 shall, at the option of the Purchasers or any of them, relieve the
Purchasers of all further obligations hereunder or operate as a waiver of the
Purchasers' rights hereunder. In such event, the Purchasers shall also have all
other rights and remedies available at law or in equity.
Section 4. Conditions Precedent. The obligations of the Purchasers to purchase
the Notes are subject to satisfaction of the following conditions precedent:
4.1 Opinions.
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(a) Counsel to the Company. Each Purchaser shall have received from
Hillix, Brewer, Hoffhaus, Whittaker & Wright, counsel to the Company, a
favorable opinion addressed to the Purchasers, covering all matters
reasonably requested by the Purchasers or their counsel, including, without
limitation, the due and valid authorization, execution and delivery of the
Company's Operative Documents, that such Operative Documents constitute the
legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, and certain other matters set forth
in Section 5. Such opinion shall be satisfactory in form and substance to
the Purchasers and their counsel, and shall be substantially in the form of
Exhibit 4.1
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(a).
(b) Special Counsel to the Purchasers. Each Purchaser shall have received
from Hebb & Gitlin, special counsel to the Purchasers, a favorable opinion
addressed to the Purchasers, covering all matters requested by the
Purchasers. Such opinion shall be satisfactory in form and substance to
the Purchasers.
4.2 Certificates.
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(a) Corporate Certificates. Each of the Purchasers shall have received:
(i) a certificate dated the Closing Date of the Secretary of the
Company as to a copy of the resolutions of the Board of Directors of
the Company authorizing the execution, delivery and performance of its
Operative Documents, a copy of its certificate of incorporation and
by-laws, the absence of any amendment thereto, the incumbency and
signatures of the officers of the Company signing, and the
satisfaction of all requisite corporate approvals for the consummation
of the transactions contemplated by this Agreement;
(ii) a certificate dated within 30 days of the Closing Date from the
Secretary of State of the State of Delaware as to the certificate of
incorporation of the Company and its good standing under the laws of
such state;
(iii) a certificate dated within 30 days of the Closing Date from the
Secretary of State of Missouri, as to the good standing and
qualification to do business in such state of the Company; and
(iv) certificates dated within 30 days of the Closing Date from the
Secretaries of State or similar officer of the states or provinces of
incorporation of each of the Restricted Subsidiaries (except Waverly
Products Company Limited, Patton Electric Company Hong Kong, Ltd.,
Bionaire International B.V., Bionaire France s.a.r.l. and Bionaire
Worldwide Management Inc.) as to the certificate of incorporation of
such Restricted Subsidiary and its good standing under the laws of
such state or province.
(b) Closing Certificate. Each of the Purchasers shall have received a
certificate from the chief financial officer or treasurer of the Company
certifying that as of the Closing Date, and after giving effect to the
issuance and the application of proceeds of the Notes, all representations
and warranties of the Company contained in its Operative Documents are true
and correct, and that no Event of Default or Potential Event of Default
exists under this Agreement. Such certificate shall also certify that
since June 30, 1995 there has been no Material Adverse Change.
4.3 Approvals. Any and all requisite consents, approvals, authorizations and
orders of, or qualifications with, any courts, regulatory authorities, or other
governmental bodies that are required for the consummation of the transactions
contemplated by this Agreement shall have been obtained.
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4.4 Fees. The Company shall have paid the statements rendered at Closing for
all fees and expenses of Hebb & Gitlin, special counsel to the Purchasers, in
respect of negotiating and preparing this Agreement and the documents
contemplated hereby, rendering the opinion set forth in Section 4.1(b), and in
respect of otherwise advising the Purchasers as to the transactions contemplated
by this Agreement.
4.5 Operative Documents. The Operative Documents shall have been duly
authorized, executed and delivered and shall be in full force and effect. Each
Purchaser's obligation to purchase its Note(s) is further subject to the
condition that contemporaneously with such Purchaser's purchase, the Company
shall issue and sell, and each other Purchaser shall purchase, the Notes
identified to such other Purchasers on Schedule I.
4.6 Legal Investment. As of the Closing Date, each Purchaser shall have
determined that its purchase of the Notes shall be permitted by the laws and
regulations of the jurisdiction to which it is subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the
character of the particular investment.
4.7 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
the Purchasers and their counsel and the Purchasers shall have received such
counterpart originals or certified or other copies of such documents and
instruments as they may reasonably request.
4.8 Bank Financing. The Company and the Banks shall have entered into the Bank
Financing and the Company shall have delivered to you copies of the Bank
Financing Documents, in form and substance satisfactory to you, and each other
document executed in connection therewith requested by you, certified as true
and correct by the treasurer of the Company.
4.9 Other Materials. The Purchasers shall have received such other documents,
certificates and information with respect to the matters contemplated by this
Agreement as they shall have reasonably requested.
4.10 Private Placement Number. The Company shall have obtained and provided to
each Purchaser a private placement number for the Notes from Standard & Poor's
CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners).
Section 5. Representations and Warranties. To induce each of the Purchasers to
acquire the Notes, the Company hereby makes the following representations and
warranties to each Purchaser:
5.1 Corporate Existence. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and in good standing in the states identified in Section 5.1 of
Schedule III and in every other state in which it is doing business or engaging
in activities which in each case require qualification in such state, except
where the failure to be so qualified or in good standing would not have a
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Material Adverse Effect, and it has full power and authority and all necessary
licenses and permits to own and operate its properties and to carry on its
business. As of the Closing Date, the Company has no Subsidiaries other than as
identified in Section 5.1 of Schedule III. Each Subsidiary (and in the event
that the Company subsequently forms or acquires any additional Subsidiary or
Subsidiaries to the extent permitted by this Agreement, each such additional
Subsidiary) is (and will be) a corporation duly organized, validly existing and
in good standing under the laws of the state or other jurisdiction of its
incorporation, is (and will be) duly qualified and in good standing in every
other state or other jurisdiction in which it is doing business or engaging in
activities which require qualification in such state or other jurisdiction,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect, and has (or will have) full power and authority to own
and operate its properties and to carry on its business. The Company has good
title to the shares of stock it owns in each Subsidiary, free and clear of any
Liens, and such stock is fully paid and non-assessable.
5.2 Corporate Authority. The Company has full corporate power, authority and
legal right to execute, deliver and perform the Operative Documents to which it
is a party, and all other instruments and agreements contemplated hereby and
thereby, and to perform its obligations hereunder and thereunder and such
actions have been duly authorized by all necessary corporate action. No notice
to or consent, approval, vote or other authorization of the shareholders of the
Company is required in connection with this Agreement, the Operative Documents
or the transactions contemplated hereby or thereby.
5.3 No Default. The execution, delivery and performance of the Company's
Operative Documents will not result in the imposition of a Lien on any property
of the Company or its Subsidiaries and will not conflict with or constitute a
default under (a) any provision of applicable law, rule or regulation or any
order, judgment or decree of any court or other governmental agency or
instrumentality or its certificate of incorporation or by-laws or (b) the
provisions of any indenture, contract, instrument or agreement to which it is a
party or by which it or its Subsidiaries or any of their property may be bound.
5.4 Validity of Agreements. The Operative Documents have been duly authorized,
executed and delivered by the Company, the Notes have been duly issued and the
Operative Documents constitute its legal, valid and binding agreements,
enforceable against the Company in accordance with their respective terms
(except to the extent that enforcement thereof may be limited by any applicable
bankruptcy, reorganization, moratorium or similar laws now or hereafter in
effect, or by principles of equity).
5.5 Litigation. Except as set forth in Section 5.5 of Schedule III, neither
the Company nor any of its Subsidiaries is a party to, or subject to, any
pending lawsuit, administrative proceeding, arbitration, labor dispute, or
governmental inspection or investigation, which could have a material adverse
effect upon the transactions contemplated hereby or could result in a Material
Adverse Change, nor is the Company aware of any threatened lawsuit,
administrative proceeding, arbitration, labor dispute or governmental
inspection or investigation to which it or any of its Subsidiaries may become a
party or subject, which, if instituted or adversely determined as to any
entity, could have a material adverse effect upon the transactions contemplated
hereby or could result in a Material Adverse Change. None of the Company, its
Subsidiaries, or any of their officers or directors have been temporarily or
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permanently enjoined or barred by any court, tribunal, governmental or
administrative agency or self-regulatory body from engaging in or continuing any
conduct or practice in connection with the businesses in which the Company or
its Subsidiaries is engaged. Neither the Company nor any of its Subsidiaries is
in default under any material order, license, demand, writ, injunction or decree
of any court, tribunal, governmental or administrative agency or self-regulatory
body. There is no continuing order, judgment or decree of any court, tribunal,
governmental or administrative agency or self-regulatory body enjoining the
Company or its Subsidiaries from taking or requiring them to take any action of
any kind or to which any such entity or any of their businesses, properties or
assets are subject or by which they are bound. The Company is not aware of any
state of facts, circumstances, or contemplated events that are likely to give
rise to any material lawsuit, administrative proceeding, arbitration, labor
dispute, or governmental inspection or investigation involving the Company or
any of its Subsidiaries.
5.6 Compliance with Laws; Consents. Neither the Company nor any of its
Subsidiaries is in violation of any laws, regulations, ordinances, rules, orders
or judicial or governmental decrees in any respect which has or could have any
material adverse effect whatsoever upon the validity or enforceability of or
ability of the Company to perform any of the terms of the Operative Documents or
which is or could result in a Material Adverse Change. No consent, approval,
authorization or giving of notice to, registration with, order of or
qualification or filing with any court, regulatory authority or other
governmental body, or the taking of any other action in respect of the
transactions contemplated by the Operative Documents is required by or on behalf
of the Company or any of its Subsidiaries, except such consents, approvals,
authorizations, notices, registrations, orders, qualifications, filings, or
other actions as have been effected, given or obtained.
5.7 Defaults Under Other Documents. Neither the Company nor any of its
Subsidiaries is in default or in violation (nor has any event occurred which,
with notice or lapse of time or both, would constitute a default or violation)
under (i) any agreement or instrument to which they may be a party or under
which they or any of their properties may be bound and the result of which could
have a material adverse effect upon the transactions contemplated hereby or
could result in a Material Adverse Change, or (ii) any charter document. Upon
the issuance of the Notes there is no condition or event in effect which would
constitute an Event of Default or Potential Event of Default hereunder.
5.8 Judgments. There are no outstanding or unpaid judgments which could have a
Material Adverse Effect.
5.9 Disclosure. The Financial Statements were prepared in accordance with GAAP
and fairly and accurately present the consolidated financial condition of the
Company and its Subsidiaries as of the dates reflected therein, and the results
of their operations and cash flows for the periods then ended, in accordance
with GAAP. The Financial Statements, the Private Placement Memorandum and the
other written material furnished to the Purchasers by the Company prior to
Closing and identified on Schedule II do not, as of their respective dates,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made. There has been no Material Adverse Change since
June 30, 1995 except as may be reflected in the Financial Statements, the
Private Placement Memorandum or the other written material
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furnished to the Purchasers by the Company and identified on Schedule II.
5.10 Securities Laws. The Company has not, nor has any Person acting or
purporting to act on behalf of it, directly or indirectly, offered the Notes for
sale to, or solicited any offer to buy the Notes from, or otherwise negotiated
in respect thereof with, any Person other than the Purchasers and not more than
90 other institutional investors, or done (or omitted to do) any other act, nor
will it do any act, so as to bring the issuance or sale of the Notes within the
registration requirements of the '33 Act, and the Company has complied with or
is exempt from the registration provisions of all state securities or "blue sky"
laws applicable to the issuance or sale of the Notes.
5.11 Margin Stock. The Company will issue the Notes in the ordinary course of
its business and use the proceeds thereof solely for the purposes set forth in
Section 6.12. No part of the proceeds of the Notes will be used to purchase or
carry any Margin Stock or any Margin Security, or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock or Margin Security. No
part of the proceeds of the Notes will be used for any purpose that violates, or
which is inconsistent with, the provisions of Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System of the United States.
5.12 Regulations of Federal Reserve System. The Company and its Subsidiaries are
not engaged in the business of extending or obtaining credit for the purchase or
carrying of any Margin Stock nor do they own any Margin Security. No action will
otherwise be taken or permitted by the Company which would result in violation
of Regulations G, T, U or X or any similar regulation of the Board of Governors
of the Federal Reserve System of the United States or a violation of Section 7
of the '34 Act, in each case as at the time in effect.
5.13 Title to Property; Leases. The Company and its Subsidiaries have good,
indefeasible and marketable title to their assets and properties reflected in
the Financial Statements (excluding leased or licensed property and excluding
assets sold in the ordinary course of business of the Company and its
Subsidiaries after the respective dates of such Financial Statements) and none
of such assets or properties (including their interests in leased and licensed
property) are subject to Liens except Permitted Liens. The Company and its
Subsidiaries enjoy and are entitled to quiet, peaceful and undisturbed
possession of all their leased property and all leases with respect to such
property are valid, subsisting and in full force and effect.
5.14 Debt. The Company and its Subsidiaries are not obligated with respect to
any Debt other than as set forth in Section 5.14(a) of Schedule III. The Company
and its Subsidiaries are not subject to any material contingent liabilities
other than as set forth in Section 5.14(b) of Schedule III.
5.15 Pari Passu Ranking. Except to the extent noted in Section 5.15 of Schedule
III, the Company's payment obligations on the Notes rank at least pari passu
with the Company's payment obligations in respect of all other Debt set forth in
Sections 5.14(a) and 5.14(b) of Schedule III.
5.16 Transaction Regulations. The Company is not subject to regulation under any
statute or regulation that limits the amount of borrowing of money by the
Company or the amount of
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the Notes that may be issued hereunder. Neither the issuance and sale of the
Notes nor the Company's use of the proceeds thereof as contemplated by this
Agreement will violate any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any ruling issued thereunder or any enabling legislation or Presidential
Executive Order in connection therewith.
5.17 Taxes. The Company and its Subsidiaries have made timely filings of all tax
returns which are required to be filed, have paid all Taxes that are due and
payable (other than those being diligently contested in good faith by
appropriate proceedings and with respect to which adequate reserves in
accordance with GAAP have been established), and have made adequate accruals,
reserves and provisions for the payment of all current Taxes in accordance with
GAAP. All federal income tax liabilities of the Company and its Subsidiaries
have been finally determined by the Internal Revenue Service and satisfied, or
the time for audit has expired, for all fiscal periods through February 29,
1992.
5.18 Zoning. The Company and its Subsidiaries are in material compliance with
all zoning, land use, subdivision, fire and building code, historic preservation
and similar statutes, regulations, ordinances and rules that are material to the
possession, use and operation of their property.
5.19 OSHA. The Company and its Subsidiaries are in compliance with the
Occupational Safety and Health Act of 1970, as amended, and all rules and
regulations thereunder, and with all similar federal and state statutes, rules
and regulations, and there are no investigations or citations outstanding
against the Company or its Subsidiaries thereunder, except in each case where
the failure to comply or the investigation or citation would not have a Material
Adverse Effect or materially impair the Company's performance of its
Obligations.
5.20 Environmental Matters.
(a) Each of the Company and its Subsidiaries has obtained all
environmental, health and safety permits, licenses and other authorizations
required under all Environmental Laws to carry on its business as now being
conducted, except where failure to obtain such permits, licenses or
authorizations would not, individually or in the aggregate, have a Material
Adverse Effect. Each of such permits, licenses and authorizations is in
good standing and each of the Company and its Subsidiaries is in
substantial compliance with the terms and conditions of all such permits,
licenses and authorizations, and is also in substantial compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
individually or in the aggregate therewith would not have a Material
Adverse Effect.
(b) In addition, except as set forth in Section 5.20(b) of Schedule III:
(i) no notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been served, no
penalty has been assessed and no investigation or review is pending or,
to the
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knowledge of the Company, threatened by any governmental or other
entity with respect to any alleged failure by the Company or any of its
Subsidiaries to have any environmental, health or safety permit,
license or other authorization required under any Environmental Law in
connection with the conduct of the business of the Company or any of
its Subsidiaries or with respect to any generation, treatment, storage,
recycling, transportation, discharge or disposal, or any Release of any
Hazardous Materials generated by the Company or any of its
Subsidiaries;
(ii) neither the Company nor any of its Subsidiaries is a treatment,
storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act or under any comparable state or local
statute; and, to the knowledge of the Company,
(1) no polychlorinated biphenyls (PCB's) are present at any
property owned or leased by the Company or any of its
Subsidiaries;
(2) no asbestos or asbestos-containing materials are present at
any property owned or leased by the Company or any of its
Subsidiaries, which, under any applicable Environmental Laws,
would require encapsulation, removal, an operations and
maintenance program, or other remedial action;
(3) there are no underground storage tanks or surface impoundments
for Hazardous Materials (excluding, for purposes of this Section
5.20(b)(ii)(3), petroleum and petroleum products), active or
abandoned, at any property owned or leased by the Company or any
of its Subsidiaries; and
(4) during the time the Company and its Subsidiaries have owned,
leased or operated their respective properties, no Hazardous
Materials have been Released, in a reportable quantity under
statutes, ordinances, rules, regulations or orders in effect at
the time of Release which established such quantity, at, on or
under any property now or previously owned by the Company or any
of its Subsidiaries;
(iii) to the knowledge of the Company, neither the Company nor any of
its Subsidiaries has transported or arranged for the transportation of
any Hazardous Material to any location that is listed on the National
Priorities List under CERCLA, or on any similar state or local list or
that is the subject of Federal, state or local enforcement actions or
other investigations that may lead to environmental claims against the
Company or any of its Subsidiaries; and
(iv) no Liens have been filed under or pursuant to any Environmental
Laws on any of the real property or properties owned or leased by the
Company or any of its Subsidiaries, and to the knowledge of the Company
no government actions have been taken or are in process that could
subject any of such properties to such Liens and neither the Company
nor any of its Subsidiaries
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would be required to place any notice or restriction relating to the
presence of Hazardous Materials at any property owned by it in any deed
to such property.
5.21 ERISA. The Company, its Subsidiaries and their Related Persons have
fulfilled their respective obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the Code
(except for the adoption of certain amendments for which the remedial amendment
period under Section 401(b) of the Code has not expired), and have not incurred
any material liability to the Pension Benefit Guaranty Corporation or any Plan
(including any Multiemployer Plan), other than an obligation to fund or make
contributions to any such Plan in accordance with its terms and in the ordinary
course of business. The execution and delivery of this Agreement and the
Operative Documents and the sale of the Notes to the Purchasers will not involve
any transaction subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed under Section 4975 of the Code. The
foregoing representation is made by the Company in reliance on the purchasers'
representations in Section 2.2(b). If the name of any employee benefit plan has
been disclosed to the Company pursuant to Section 2.2(b) the Company is not a
party in interest with respect to any such plan and securities of the Company
are not employer securities with respect to any such plan. The Company has
delivered to the Purchasers a list of all employee benefit plans (other than
welfare plans) with respect to which the Company is party in interest and with
respect to which its securities are employer securities. As used in this section
the terms "employee benefit plan," "welfare plan," "party in interest" and
"employer securities" have the meanings assigned to them in ERISA.
5.22 Material Contracts. There is no pending or threatened breach or declaration
of default under any material management agreement, consulting agreement or any
other agreement between the Company or its Subsidiaries and their respective
shareholders, directors, officers or other Persons exercising significant
control or policy-making authority over or within the Company or its
Subsidiaries and all other material contracts which individually or in the
aggregate would have a Material Adverse Effect.
5.23 Employment Liabilities. The Company and its Subsidiaries have complied in
all material respects with all federal, state and local statutes, regulations,
ordinances, rules and orders respecting employment, employment practices, terms
and conditions of employment, wages and hours, and benefits. The Company and its
Subsidiaries have withheld all amounts required by law to be withheld from their
employees' wages and salaries and are not liable for any arrears of wages or any
taxes, interest or penalties for failure to comply with the foregoing.
5.24 Intellectual Property. The Company and its Subsidiaries own or have the
right to use, without payment to any third party, all Intellectual Property
material to the operation of their business. Except as disclosed in Section 5.24
of Schedule III, to the best of the knowledge of the Company, there are no Liens
encumbering the Intellectual Property and no such Intellectual Property owned or
used by the Company or its Subsidiaries infringes the patent, copyright,
trademark, trade secret or other proprietary rights of any third party and the
Company is not aware of any such claim of infringement by any third party.
Except as disclosed in Section 5.24 of Schedule III, to the best of the
Company's knowledge, no third party has materially infringed or threatened to
infringe the patent, copyright, trademark, trade secret and other proprietary
rights of the Company or its Subsidiaries in their Intellectual
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Property.
5.25 Company Status. Neither the Company nor any of its Subsidiaries is: (a) an
"investment company," or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended; (b) a
"holding company" or a "subsidiary company" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (c) a "public utility"
within the meaning of the Federal Power Act, as amended.
5.26 Product Liability. To the best of the Company's knowledge, neither the
Company nor any of its Subsidiaries is subject to any material liability,
regardless of whether arising in contract, tort or otherwise, including strict
liability, related to or arising from any product or the packaging therefor
produced, sold or distributed by the Company or any Subsidiary.
5.27 Insurance. The Company has in full force and effect insurance which
complies with the provisions of Section 6.7 hereof.
Section 6. General Affirmative Covenants. The Company hereby covenants with the
Noteholders:
6.1 Financial Date. The Company shall deliver to the Noteholders:
(a) within 45 days after the end of each of the first three Fiscal Quarters
in the Company's Fiscal Year, copies of the unaudited consolidated financial
statements (balance sheet, statement of earnings, and statement of cash
flows) for the Company and its Subsidiaries for such period and for the
corresponding period of the prior Fiscal Year, which statements of earnings
and cash flows shall also set forth figures for the period from the
beginning of the current Fiscal Year to the end of such quarter;
(b) within 45 days after the end of each of the first three Fiscal Quarters
in the Company's Fiscal Year, a certificate of the chief financial officer
or treasurer of the Company to the effect that the financial statements
provided pursuant to clause (a) above fairly and accurately present the
consolidated financial condition of the Company and its Subsidiaries as of
the date indicated and the results of its operations and its cash flows for
the periods indicated, subject to normal changes resulting from year-end
audit adjustments, and were prepared in accordance with GAAP, that such
officer has reviewed and understands the terms of this Agreement, that the
Company is in compliance with its covenants of this Agreement and that no
Event of Default or Potential Event of Default exists hereunder, such
certificate to contain in reasonable detail such calculations as are
necessary to confirm the Company's compliance with Section 7.2, Section 7.3,
Section 7.6, Section 7.10, Sections 8.1 through 8.5 and Section 11.46 and to
contain the listing of all Restricted Subsidiaries and the listing of all
Subsidiaries which are not Restricted Subsidiaries;
(c) within 90 days after the end of the Company's Fiscal Year, copies of the
audited consolidated financial statements (balance sheet, statement of
earnings, statement of stockholders' equity and statement of cash flows) for
the Company and its Subsidiaries and unaudited consolidating statements
(only balance sheet and
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statement of earnings) for the Company and its Restricted Subsidiaries on a
consolidated basis for such Fiscal Year and the prior Fiscal Year, together
with an unqualified opinion by KPMG Peat Marwick or other independent
accountants of nationally recognized standing, which opinion certificate
shall state that the financial statements fairly present, in all material
respects, the financial position of the Company and its Subsidiaries as of
the date indicated and the results of their operations and their cash flows
for the periods indicated, all in accordance with GAAP, and that the audit
by such accountants in connection with such financial statements was made in
accordance with generally accepted auditing standards;
(d) within 90 days after the end of the Company's Fiscal Year, a certificate
from the chief financial officer or treasurer of the Company to the effect
that the financial statements provided pursuant to clause (c) above fairly
and accurately present the consolidated financial condition of the Company
and its Subsidiaries as of the date indicated and the results of its
operations and its cash flows for the periods indicated, and were prepared
in accordance with GAAP, that such officer has reviewed and understands the
terms of this Agreement, that the Company is in compliance with its
covenants in this Agreement and that no Event of Default or Potential Event
of Default exists hereunder, such certificate to contain in reasonable
detail such calculations as are necessary to confirm the Company's
compliance with Section 7.2, Section 7.3, Section 7.6, Section 7.10,
Sections 8.1 through 8.5 and Section 11.46 and to contain the listing of all
Restricted Subsidiaries and the listing of all Subsidiaries which are not
Restricted Subsidiaries; a certificate of the independent accountants that
audited the financial statements referenced in clause (c) above that, in the
course of their examination necessary to their certification of the
foregoing, they have obtained no knowledge of any Event of Default or
Potential Event of Default, or if, in the opinion of such accountants, any
Event of Default or Potential Event of Default shall exist, stating the
nature and status thereof; and a copy of the auditor's letters to
management, if any, in connection with the audit referenced in clause (c);
(e) immediately following the completion by its independent auditors of any
interim or special audit of the Company, a copy of any opinion furnished to
the Company by such auditors and a copy of the auditor's letters to
management, if any, in connection with any such audit; and
(f) from time to time, such other information as any one or more of the
Noteholders may reasonably request.
6.2 Inspection of Properties and Books. The Company shall, and shall cause its
Subsidiaries to, recognize and honor the right of any Noteholder, upon
reasonable notice and at its own expense, to visit and inspect any of the
properties of, to examine and to take extracts from the books, accounts and
records of, and to discuss the affairs, finances or accounts of, the Company and
its Subsidiaries and to be advised as to the same by the officers and senior
management of the Company and the independent public accountants for the Company
who are hereby expressly authorized and directed to undertake such actions, at
such times, in such detail and through such agents and representatives as such
Noteholder may reasonably desire; provided, however, that any discussions by the
Noteholders with the independent public accountants of the Company shall be
conducted upon reasonable notice
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to the Company, which shall have the right to participate in such discussions;
and, provided further, that such discussions shall be limited to the extent
necessary to preserve the accountant-client privilege as to any matters related
to pending litigation by or against the Company. The cost of such discussions
shall be borne by the Noteholders except to the extent such amounts are
indemnified costs under Section 6.13 hereof.
6.3 Payments. The Company shall pay all monetary Obligations when due and before
they become delinquent.
6.4 Notices. The Company shall give each of the Noteholders:
(a) immediate notice of the Company's obtaining knowledge of: (i) the
occurrence of any Event of Default or Potential Event of Default hereunder;
(ii) any occurrence constituting an event of default or any occurrence which
with notice or the passage of time or both may constitute an event of
default under the Bank Financing Documents; (iii) the occurrence of a
reportable event (as such term is defined in Section 4043 of ERISA) or a
prohibited transaction (as such term is defined in Section 4975 of the Code)
in connection with any Plan relating to the Company or any Related Person,
or any other claim or occurrence constituting a breach of Section 7.1 or
which with notice or passage of time or both may constitute an Event of
Default under Section 9.11; (iv) the commencement of, or any threatened
lawsuit, proceeding, arbitration, labor dispute or governmental claim,
inspection or investigation involving the Company or any Subsidiary, which
if adversely determined as to such entity, could have a Material Adverse
Effect; (v) the accrual of any material unpaid assessments for Taxes against
the Company or any Subsidiary or the assets, property or revenue of any of
them, if in excess of adequate reserves therefor; (vi) any environmental
investigation by any governmental authority to quantify levels of Hazardous
Materials located on premises which have at any time been owned, leased or
occupied by the Company or any of its Subsidiaries; (vii) a threat that the
Company or any Subsidiary may be named, or the naming of such entity, as a
potentially responsible party for contamination of real property or ground
water (including past and present waste disposal sites) with Hazardous
Materials; and (viii) any change in or discharge of the independent
accountants used by the Company;
(b) prompt notice of: (i) the Company's obtaining knowledge that the opinion
of its independent accountants with respect to its annual financial
statements will not be unqualified; (ii) the acquisition of any Subsidiary;
(iii) the Company's obtaining knowledge of the accrual of or occurrence of
any event giving rise to any material contingent liability of the Company or
any Subsidiary or which does or which with notice or the passage of time or
both would constitute an event of default under any other material document,
instrument or agreement to which the Company or any of its Subsidiaries is a
party or by which they or their property may be bound; and (iv) the
Company's obtaining knowledge of any Material Adverse Change which results
in any of the representations and warranties in Sections 5.1 through 5.27
becoming untrue or incorrect at any time;
(c) 60 days' prior written notice of any material change in general business
operations and prompt written notice of any change or intended change of
control of
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the Company or any Subsidiary; and
(d) such other notices as may be specifically required elsewhere in this
Agreement, at the times there specified.
6.5 Corporate Matters. The Company shall provide the Noteholders with notice of
changes in its Fiscal Year and with copies of all notices (including, without
limitation, notice of annual and special meetings), waivers of notice, proxies,
consents, reports and other documents, instruments, agreements and materials
provided, filed or received by the Company, its officers or directors, with or
from the SEC or any other governmental authority. All such materials shall be
provided to the Noteholders contemporaneously with the effective date of any
change in the Company's Fiscal Year and, as to SEC and other governmental
filings, by the due date of their filing with, or promptly upon receipt from,
the SEC or other governmental authority.
6.6 Accounting. The Company shall, and shall cause its Subsidiaries to, keep
true books of record and accounts in which full and correct entries will be made
of all their business and financial transactions, and shall reflect in their
financial statements adequate accruals and appropriations to reserves, all in
accordance with GAAP.
6.7 Maintenance of Property. The Company shall, and shall cause its Subsidiaries
to, maintain their property in good condition, repair and working order, and
make all necessary renewals, replacements, additions, betterments and
improvements thereto and shall maintain insurance with financially sound and
reputable insurers having at least an "A-" rating with A.M. Best on their
property and business (including, without limitation, property and casualty,
liability, business interruption, leasehold and data processing insurance),
consistent with sound business practice and as is customary in the case of
corporations or entities of established reputation in the same or a similar
business and similarly situated.
6.8 Corporate Existence. The Company shall, and shall cause its Subsidiaries to,
do or cause to be done all things necessary to preserve and keep in full force
and effect their corporate existence, good standing and permits and licenses in
their respective states of incorporation and their good standing and
qualification to do business in all states in which they are doing business or
engaging in activities which require qualification; provided, however, that the
Company and its Subsidiaries may enter into consolidations and mergers permitted
by Section 7.2 and may engage in liquidations of Subsidiaries where all of the
assets of the liquidated Subsidiary are transferred to the Company or another
wholly owned Restricted Subsidiary.
6.9 Intellectual Property. The Company shall, and shall cause its Subsidiaries
to, in accordance with the standards of ordinary business practices in its
industry, maintain the right to use, refrain from transfer, disposition or
encumbrance of, protect against and prosecute material third party infringements
of, and defend against material third party claims challenging their rights and
interests in, their Intellectual Property to the extent that failure to comply
with this Section 6.9 would create a Material Adverse Change and in no event
shall the Company transfer its material Intellectual Property to a Subsidiary
which is not a Restricted Subsidiary.
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6.10 Taxes. The Company shall and shall cause its Subsidiaries to pay all Taxes
imposed upon them before any penalties or interest accrue thereon; provided,
however, that no such Taxes need be paid for so long as they are being
diligently contested in good faith by appropriate proceedings and with respect
to which adequate reserves in accordance with GAAP have been established.
6.11 Governmental Regulations. The Company shall, and shall cause its
Subsidiaries to comply in all material respects with all applicable laws,
regulations, ordinances, rules, orders and judicial or governmental decrees
(including, without limitation, environmental), and, in any event, with all
laws, regulations, ordinances, rules, orders and judicial or governmental
decrees, the violation of which could have any material adverse effect
whatsoever on the validity or enforceability of any of its Operative Documents
or which could have a Material Adverse Effect.
6.12 Use of Proceeds. Proceeds of the Notes shall be used by the Company for the
purpose of repaying existing indebtedness as set forth on Section 5.14(a) of
Schedule III and for other general corporate purposes.
6.13 Expenses. The Company shall, regardless of whether Closing occurs, pay and
indemnify the Noteholders for all reasonable costs and expenses incurred by the
Noteholders in connection with this Agreement, the Operative Documents and the
transactions contemplated hereby and thereby, including, without limitation:
(a) out-of-pocket costs and expenses incurred in connection with preparing,
negotiating and reproducing this Agreement and the Operative Documents,
along with all opinions and certificates referenced herein and the specific
fees set forth in Section 4.4;
(b) costs and expenses including, without limitation, out-of-pocket costs
incurred in connection with any Company-requested amendments hereto or to
the Operative Documents (whether or not entered into), or in connection
with any waiver or consent requested by the Company (whether or not
granted);
(c) costs and expenses, including, without limitation, out-of-pocket costs
incurred in connection with or as a result of any Potential Event of
Default or Event of Default hereunder or in connection with any enforcement
by any Noteholder of its rights hereunder or under any Operative Document,
including, without limitation, the costs of any inspection pursuant to
Section 6.2 after the occurrence of an Event of Default or Potential Event
of Default (but excluding routine costs and expenses pertaining to
administration of this Agreement prior to an Event of Default or Potential
Event of Default); and
(d) documentary, stamp, or similar taxes (including interest and penalties,
if any) payable in respect of this Agreement or any Note, regardless of
when assessed.
Except as otherwise provided herein, any such costs and expenses shall be due
and payable within ten days after the due date thereof. In addition, the Company
shall pay all fees of NationsBanc Capital Markets, Inc. and any other broker's
or finder's fees in respect of the
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transaction contemplated hereby.
6.14 Bank Financing Amendments. The Company shall give each of the Noteholders a
substantially contemporaneous notice and a copy of any amendment to or waiver of
the terms of the Bank Financing Documents actually made or granted.
6.15 Payment of Claims. The Company shall, and shall cause its Subsidiaries to,
pay claims of carriers, warehousemen, workmen and materialmen and judgment liens
prior to such time as nonpayment thereof (a) could result in a Lien on or loss
of the use of property employed by the Company or any one or more of its
Subsidiaries in the conduct of such entity's business (other than those being
diligently contested in good faith by appropriate procedures and with respect to
which adequate reserves in accordance with GAAP have been established) or (b)
could result in a Material Adverse Change.
Section 7. General Negative Covenants.
7.1 ERISA. The Company shall not, and shall not permit any of its Subsidiaries
or any Related Person to:
(a) (i) engage in any transaction in connection with which the Company, any
Subsidiary or any Related Person could be subject to either section 502(i)
of ERISA or a tax imposed by section 4975 of the Code, (ii) fail to make
full payment when due of all amounts which would be deductible by the
Company, the Subsidiary or any Related Person and which, under the
provisions of any Plan, applicable law or applicable collective bargaining
agreement, the Company, the Subsidiary or any Related Person is required to
pay as contributions thereto, or (iii) permit to exist any accumulated
funding deficiency, whether or not waived, with respect to any Plan, if, in
the case of any of subdivision (i), (ii) or (iii) above, such penalty or
tax, or the failure to make such payment, or the existence of such
deficiency, as the case may be, could have a Material Adverse Effect;
(b) permit the amount of unfunded benefit liabilities (within the meaning of
section 4001(a)(18) of ERISA) under all Plans maintained at such time by the
Company, its Subsidiaries or any of its Related Persons to exceed $5
million; or
(c) permit the aggregate complete or partial withdrawal liability under
Title IV of ERISA with respect to all Multiemployer Plans incurred by the
Company, its Subsidiaries or any Related Person to exceed $5 million.
7.2 Merger and Consolidation. The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, consolidate with or merge into any other entity
or permit any other entity to consolidate with or merge into it. Notwithstanding
the foregoing, any Restricted Subsidiary may merge into the Company or into
another wholly owned Restricted Subsidiary. Furthermore, notwithstanding the
foregoing, the Company may enter into such a consolidation or merger transaction
with any Person so long as:
(a) the successor formed by such consolidation or the survivor of such
merger, as the case may be (the "Successor Corporation"), shall be a solvent
corporation
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organized and existing under the laws of a state of the United States of
America, with its principal place of business in the United States, and
doing business primarily in the United States and/or Canada;
(b) if the Company is not the Successor Corporation, such corporation shall
have executed and delivered to each Noteholder its assumption of the due and
punctual performance and observance of each covenant and condition of this
Agreement and the Notes (pursuant to such agreements and instruments as
shall be reasonably satisfactory to the Noteholders holding at least 51% in
principal amount of the aggregate outstanding Notes), and the Company shall
have caused to be delivered to each Noteholder an opinion of nationally
recognized independent counsel, or other independent counsel reasonably
satisfactory to the Noteholders holding at least 51% in principal amount of
the aggregate outstanding Notes, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance with
their terms and comply with the terms hereof;
(c) no Event of Default or Potential Event of Default has occurred and is
continuing and, immediately after the consummation of such transaction, no
Event of Default or Potential Event of Default would exist hereunder; and
(d) immediately after giving effect to such transaction the Successor
Corporation could, without the occurrence of an Event of Default hereunder,
incur at least $1 of additional Funded Debt owing to a Person other than a
Restricted Subsidiary of the Successor Corporation.
7.3 Sales or Other Dispositions of Assets. Except as expressly provided in
Section 7.4, during any Fiscal Year the Company shall not, and shall not permit
any of its Restricted Subsidiaries to, sell, lease or otherwise dispose of any
of its assets (including, without limitation, the stock, other voting securities
of or evidence of indebtedness from any Subsidiary) other than in the ordinary
course of business unless the aggregate book value of assets sold, leased or
otherwise disposed of in such Fiscal Year by the Company and its Restricted
Subsidiaries does not exceed 10% of the total assets of the Company and its
Restricted Subsidiaries as of the end of the Fiscal Year most recently ended. In
no event shall the Company sell stock of a Subsidiary if the remaining stock
held by the Company shall be less than 51% of the outstanding stock of such
Subsidiary. The foregoing shall not prohibit sales by the Company or any
Restricted Subsidiary of:
(a) assets the proceeds of which are used within 180 days to acquire
productive assets used in the ordinary course of business of the Company or
a Restricted Subsidiary and having at least substantially comparable value
or used to pay down Debt of the Company or its Restricted Subsidiaries which
is not subordinate to the Obligations hereunder;
(b) receivables pursuant to a securitization program, provided that:
(i) the aggregate amount of receivables sold pursuant to this Section
7.3(b) shall not exceed $10 Million in any twelve-month period, and
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(ii) the purchasers of such receivables shall have no Lien, assignment,
hypothecation, charge, adverse claim or other encumbrance on non-
purchased receivables; or
(c) assets that are leased-back by the Company or its Restricted
Subsidiaries within 180 days following the acquisition or completion of
construction of such property or assets.
7.4 Additional Stock. The Company shall not: (i) permit any of its Restricted
Subsidiaries to issue any additional shares of capital stock, voting or non-
voting, any warrants, options or other rights to acquire capital stock, or any
securities convertible into capital stock, except to the Company or to another
wholly owned Restricted Subsidiary; or (ii) sell, transfer or otherwise dispose
of any capital stock, voting or non-voting, warrants, options or other rights to
acquire capital stock, or any securities convertible into capital stock, of any
Restricted Subsidiary except to another wholly owned Restricted Subsidiary or
except as provided in Section 7.3.
7.5 Other Agreements. The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any other agreements which violate the terms and
conditions of this Agreement or which, after giving effect thereto or upon the
performance of any covenant contained therein, would constitute, or upon notice
or the passage of time would constitute, an Event of Default, or which would
restrict the ability of one or more Subsidiaries to pay dividends to the
Company.
7.6 Negative Pledge. The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, assume, permit or suffer to exist
with respect to any of the assets of property of the Company (including, without
limitation, its stock in and evidences of debt from Subsidiaries) or any
Restricted Subsidiary, or any income, revenue, or profits therefrom, all whether
now owned or possessed or hereafter acquired, any Lien, assignment,
hypothecation, charge, adverse claim or other encumbrance thereon, excepting
only Permitted Liens (whether or not the Company complies with the last sentence
of this Section 7.6). Except as permitted by Sections 7.3 and 7.4, the Company
shall not transfer or convey any of the assets or property of the Company
(including, without limitation, its stock in Subsidiaries) nor permit the
transfer or conveyance of the assets or property of any Restricted Subsidiary,
or any income, revenue, or profits therefrom, all whether now owned or possessed
or hereafter acquired, for the purpose, or with the effect, of subjecting the
same to payment of any Debt or other obligation in priority of payment over its
general creditors. The Company shall not, and shall not permit any of its
Subsidiaries to, suffer to exist any Debt or obligation which may, by law, if
unpaid or in the event of bankruptcy or insolvency, or otherwise be given
priority in payment over its general creditors, nor shall the Company or any
Subsidiary make any agreement or arrangement to subordinate the payment of the
Notes to any other Debt. Without limiting the generality of the foregoing, if
the Company or any of its Restricted Subsidiaries shall create, incur, assume,
permit or suffer to exist any Lien (other than Permitted Liens) upon any of its
or their property or assets, the Company shall make or cause to be made
effective provision for the Notes to be secured equally and ratably with any
Debt secured by such Lien, so long as such other Debt shall be so secured;
provided, however, that such Lien shall constitute a breach of this Section 7.6
regardless of the Company's compliance with this last sentence.
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7.7 Additional Subsidiaries. Prior to the acquisition of any additional
Restricted Subsidiary, the Company shall provide to each Noteholder a
certificate from the chief financial officer or treasurer of the Company
certifying that as of, and immediately after, the acquisition of such Restricted
Subsidiary, the representations and warranties contained in Section 5 are and
will be true and correct as to such Subsidiary and no Event of Default or
Potential Event of Default exists or, upon such acquisition, will exist.
7.8 Affiliate Transactions. The Company shall not, and shall not permit any
Restricted Subsidiary to enter into any transaction with any Affiliate, their
shareholders, the Affiliates of their shareholders, or the executive officers or
directors or any of the foregoing entities unless the same shall be conducted in
the ordinary course of business on an arms' length basis for fair value in
accordance with reasonable commercial standards and on terms no less favorable
than those available to third parties generally.
7.9 Business Practices. The Company shall not, and shall not permit its
Restricted Subsidiaries to, (a) conduct any line of business which is not
related to their business as conducted on the Closing Date and described in the
Private Placement Memorandum, or (b) take any act or acts which would result in
a substantial change (taken as a whole for the Company and the Restricted
Subsidiaries) in the general nature of the business of the Company and its
Restricted Subsidiaries in effect on the Closing Date.
7.10 Restricted Payments. The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any Restricted Payments if:
(a) the cumulative amount of such Restricted Payments made after June 30,
1995 would exceed the sum of (i) $22,000,000; and (ii) 75% of Consolidated
Net Income (or minus 100% in the case of a deficit) computed on a
cumulative basis from June 30, 1995; and (iii) net proceeds of the issuance
or sale of common stock of the Company after June 30, 1995; and (iv) any
net return of capital, in cash, from a Restricted Investment after June 30,
1995; or
(b) at the time of or as a result of, such Restricted Payment, any Event of
Default would exist.
Notwithstanding the foregoing, any Subsidiary may make a Restricted Payment to
the Company at any time.
7.11 Subsidiary Guarantee. No Subsidiary shall enter into a Guarantee of the
Debt of the Company under its Bank Financing unless such Subsidiary,
simultaneously therewith executes and delivers to the Noteholders a Guarantee of
the Company's Obligations which is equal and ratable to the Guarantee issued in
connection with the Bank Financing. Any such Guarantee for the benefit of the
Noteholders shall be in a form reasonably satisfactory to a majority, by
outstanding principal amount, of the Noteholders.
Section 8. Financial Covenants. The Company hereby covenants with the
Noteholders:
8.1 Minimum Adjusted Net Worth. At no time shall Adjusted Consolidated Net Worth
be less than $75,000,000.
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8.2 Funded Debt. At no time shall Funded Debt of the Company and its Restricted
Subsidiaries exceed 60% of the Total Capitalization.
8.3 Current Debt. The Company shall not, and shall not permit any Restricted
Subsidiary to incur or to have outstanding at any time Current Debt unless
during the preceding 12 month period there shall have been a period of at least
30 consecutive days during which the sum of Current Debt and Funded Debt of the
Company and its Restricted Subsidiaries did not exceed 60% of the sum of Total
Capitalization and Current Debt of the Company and its Restricted Subsidiaries.
8.4 Fixed Charge Coverage. As of the end of each Fiscal Quarter, the Company and
its Restricted Subsidiaries shall have Consolidated Income Available for Fixed
Charges for the period of four Fiscal Quarters then ended of not less than 1.75
times Fixed Charges for such period.
8.5 Restricted Subsidiary Indebtedness. The Company shall not permit any
Restricted Subsidiary to become liable for any Debt, except:
(a) Debt owing to the Company or another wholly owned Restricted Subsidiary;
(b) Debt of Restricted Subsidiaries existing at Closing;
(c) Debt of Restricted Subsidiaries secured by Permitted Liens described
under clause (f) of Section 11.46; and
(d) Debt of any Restricted Subsidiary existing at the time such Restricted
Subsidiary becomes a Restricted Subsidiary, provided that
(i) the incurrence of such Debt was not in anticipation of such Person
becoming a Restricted Subsidiary,
(ii) no Potential Event of Default hereunder or Event of Default shall
result therefrom, and
(iii) immediately after giving effect thereto, the total amount of such
Debt of all Restricted Subsidiaries shall not exceed 10% of Total
Capitalization or otherwise violate one or more covenants in Section 8
hereof.
Section 9. Events of Default. The following occurrences shall constitute Events
of Default:
9.1 Payments. The Company fails to pay when due any scheduled principal payment
or any optional prepayment after giving notice thereof, or any Make-Whole
Premium, or fails to pay within five Business Days of when due any payment of
interest on the Notes.
9.2 Other Obligations. The Company fails to pay any Obligation (other than those
set forth in Section 9.1) within 30 days after the same become due.
9.3 Other Debt. Any one or more of the following events occur:
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(i) the Company or any Subsidiary fails to pay when due or within any
applicable grace or cure period Debt (other than the Obligations but
including, without limitation, any Guarantee given by a Subsidiary as to the
Company's obligations under the Bank Financing) of the Company or a
Subsidiary with an outstanding principal amount of $5,000,000 or more in the
aggregate, regardless of the amount of the payment in default; or
(ii) the Company or any Subsidiary defaults in the performance of any other
term, provision or agreement under which the Debt described in clause (i)
above was created or governed, the effect of which is to permit, with the
giving of notice or lapse of time, or both, the holder of such Debt to cause
such Debt to become due prior to its stated maturity, unless such default is
waived in writing by the holder of such Debt; provided, however, that any
default described in this clause (ii) shall not become an Event of Default
hereunder until 30 days after its occurrence during which period such
default has not been waived in writing by the holder of such Debt; or
(iii) any of such Debt shall be validly declared to be due and payable or
required to be prepaid prior to the stated maturity thereof.
9.4 Undischarged Final Judgments. Final judgment or judgments for the payment of
money (which are not covered by insurance), assessments or levies for the
payment of taxes, or writs or warrants of attachment, is or are outstanding
against the Company or any Subsidiary in an aggregate amount in excess of
$5,000,000, and any such judgment, assessment, levy, writ or warrant of
attachment (a) has been outstanding for more than 30 days from the date of its
entry and (b) has not been discharged, paid, bonded against, released, vacated,
reversed, stayed (and discharged within 30 days after expiration of any stay),
or appealed and a funded (but not necessarily segregated) reserve established
therefor if not otherwise bonded against.
9.5 False Representations. Any representation or warranty made by the Company
(either on behalf of itself or any Subsidiary) in this Agreement or in any
certificate or report delivered pursuant hereto is false or misleading in any
material respect when made.
9.6 Negative and Financial Covenants. The Company (a) fails to comply with any
covenant set forth in Sections 7.2, 7.3, 7.4, 7.5, 7.6, 7.9, 7.10 and 7.11 and
Section 8, or (b) fails to comply with any covenant set forth in any other
sections of Section 7 and such failure is not cured within 10 Business Days of
the event or condition constituting such failure.
9.7 Affirmative Covenants. The Company (whether as to itself or any Subsidiary)
fails to comply with any covenant set forth in Section 6 or any other covenant
or agreement set forth herein (other than the covenants set forth in Section 7
and Section 8) and such failure continues for more than 30 days after the
occurrence thereof.
9.8 Involuntary Bankruptcy Proceedings.
(a) A receiver, liquidator or trustee of the Company or any Subsidiary or
any of their property (whether real or personal, tangible or intangible) is
appointed by court order and such order is not discharged within 60 days; or
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(b) An order for relief is entered in any bankruptcy proceeding in which
the Company or any Subsidiary is a "debtor" within the meaning of the Bankruptcy
Code; or
(c) A petition is filed against the Company or any Subsidiary under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter in
effect, and is not dismissed within 60 days after such filing.
9.9 Voluntary Petitions. The Company or any Subsidiary files a petition in
voluntary bankruptcy or seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
consents to the filing of any petition under any such law.
9.10 Assignments for Benefit of Creditors. The Company or any Subsidiary (a)
makes an assignment for the benefit of its creditors, or (b) is generally not
paying its debts as they become due, or (c) has announced that it will not pay
its debts as they become due, or (d) consents to the appointment of a receiver,
trustee or liquidator of the Company or any Subsidiary or of all or any part of
their property.
9.11 ERISA Violation. The Company, any Subsidiary or any Related Person shall
receive notice that it is in violation of ERISA, by which the Company, the
Subsidiary and/or any Related Persons have incurred liability which is likely to
have a Material Adverse Effect, and shall not have cured such violation within
30 days after receiving such notice.
Section 10. Remedies.
10.1 Acceleration. Upon the occurrence of an Event of Default under Sections
9.8, 9.9, or 9.10, all outstanding principal and accrued interest on the Notes
shall become automatically and immediately due and payable. Upon the occurrence
of any Event of Default under Section 9.1, any Noteholder may, upon written
notice, declare all outstanding principal, Make-Whole Premium, if any, and
accrued interest on its Notes to be immediately due and payable. Upon the
occurrence of any Event of Default other than under Sections 9.8, 9.9 or 9.10
any Noteholders holding at least 25% in principal amount of the aggregate
outstanding Notes, upon written notice, may declare all outstanding principal
and interest on all outstanding Notes to be immediately due and payable. In any
of the above events, no presentment, protest, demand or notice other than that
expressly provided above shall be necessary, all of which are hereby waived by
the Company. Upon any acceleration of the Notes pursuant to this Section 10,
there shall be added to the amount due thereunder: (a) all costs and expenses
due in accordance with Section 6.13; and (b) a Make-Whole Premium determined as
of the date of acceleration in accordance with Section 1.2(b) (considering the
acceleration as a prepayment). Noteholders holding 51% or more in principal
amount of the aggregate outstanding Notes may, in their sole and absolute
discretion, rescind and annul any declaration of acceleration hereunder, other
than a declaration of acceleration based on an Event of Default under Section
9.1, if: (i) the Company has made all payments of principal, interest, Make-
Whole Premiums, if any, and expenses then due (other than as are due solely by
reason of declaration of such acceleration); (ii) any and all other Events of
Default have been cured
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to the satisfaction of or waived by the Noteholders; and (iii) no judgment or
decree has been entered for the payment of amounts due pursuant to this
Agreement or the Notes.
10.2 Other Remedies. In addition to the rights set forth in Section 10.1, upon
the occurrence of an Event of Default the Noteholders shall have all other
rights and remedies available at law and in equity, including, without
limitation, for specific performance, for injunctive relief restraining
violation hereof, and in aid of the exercise of any right or power granted
herein.
10.3 Remedies in General. No course of dealing between the Company and the
Noteholders shall operate as a waiver of any of the Noteholders' rights
hereunder or under any Note. No delay or omission on the part of the
Noteholders in exercising any rights hereunder or under the Notes shall operate
as a waiver of such right or any other right hereunder or as an acquiescence in
any Event of Default or other event or course of conduct by the Company. No
waiver or consent shall be binding or effective unless in writing and signed by
the requisite number of Noteholders. No waiver on any one occasion or with
respect to any one matter shall be construed as a waiver of any right or remedy
as to any future occasion or any other matter. No single or partial exercise of
any right or remedy hereunder, or the exercise of any other right or remedy by
the Noteholders, shall preclude the exercise of any rights or remedies,
hereunder or otherwise, by the Noteholders. All rights and remedies herein and
in any other Operative Document shall be cumulative and may be exercised
separately or concurrently. The Noteholders may exercise their rights under
this Section 10 either collectively or individually in accordance with the terms
of this Agreement.
Section 11. Definitions. The following terms shall have the meanings set forth
below.
11.1 Adjusted Consolidated Net Worth. "Adjusted Consolidated Net Worth" shall
mean the consolidated stockholders' equity of the Company and its Restricted
Subsidiaries appearing on a consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with GAAP as of the date of
determination, less the aggregate amount of all Restricted Investments held by
the Company and the Restricted Subsidiaries as of the date of determination in
excess of 10% of such consolidated stockholders' equity of the Company and its
Restricted Subsidiaries.
11.2 Affiliate. As applied to any Person, "Affiliate" shall mean any Person,
directly or indirectly controlling or controlled by or under common control with
such Person, including, without limitation, any officer or director of such
Person and any Person beneficially owning or holding 5% or more of any class of
voting securities, provided that, for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise, and provided further
that no institutional Noteholder shall be deemed to be an Affiliate of the
Company or any of its Subsidiaries solely by reason of ownership of the Notes or
other securities issued in exchange for the Notes or by reason of having the
benefits of any agreements or covenants of the Company contained in this
Agreement. As used herein the term "Affiliate", when used without reference to
any Person, means an Affiliate of the Company (other than a Restricted
Subsidiary).
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11.3 Agreement. "Agreement" shall mean this Note Purchase Agreement dated as
of April 15, 1996 by and among the Purchasers and the Company.
11.4 Bank Financing. "Bank Financing" shall mean the $75 Million unsecured
financing extended to the Company by NationsBank of Texas, N.A. ("NationsBank"),
Bank One, Indianapolis, National Association, and Bank of America Illinois
(together, the "Banks") and any similar or replacement credit facilities. "Bank
Financing Documents" shall mean the Credit Agreement dated as of April 15, 1996,
by and among the Company, the Banks and NationsBank as agent for the Banks, as
amended from time to time, and any documents evidencing any similar or
replacement credit facilities.
11.5 Bankruptcy Code. "Bankruptcy Code" shall mean the United States
Bankruptcy Code, 11 U.S.C. (S)101 et seq. as amended from time to time.
11.6 Business Day. "Business Day" shall mean as to any Note any week day other
than a day on which banks are authorized to be closed or insurance companies are
generally closed in the city in which payments under such Note are to be made.
11.7 Capital Lease. "Capital Lease" shall mean as applied to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
which would, in accordance with GAAP, be required to be classified and accounted
for as a capital lease on a balance sheet of such Person.
11.8 Capital Lease Obligation. "Capital Lease Obligation" shall mean, with
respect to any Capital Lease, the amount of the obligation of the lessee
thereunder which would, in accordance with GAAP, appear as a liability on a
balance sheet of such lessee in respect of such Capital Lease.
11.9 CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
11.10 Closing. "Closing" shall mean the consummation of the sale and purchase
of the Notes pursuant to this Agreement, as further referenced in Section 3.
11.11 Closing Date. "Closing Date" shall mean the date on which the Closing
occurs.
11.12 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
11.13 Company. "Company" shall mean THE RIVAL COMPANY, a Delaware corporation.
11.14 Consolidated Income Available for Fixed Charges. "Consolidated Income
Available for Fixed Charges" for any period shall mean the sum of Consolidated
Net Income for such period plus income tax expense, as defined according to
GAAP, plus Fixed Charges, plus amortization expense related to goodwill,
deferred charges and other intangible assets.
11.15 Consolidated Net Income. "Consolidated Net Income" shall mean with
reference to any period, the net income (or deficit) of the Company and its
Restricted Subsidiaries for such
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period (taken as a cumulative whole), after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for deferred income
taxes), amortization of debt discount and other deferred charges, contingency
reserves, depreciation, depletion and all other proper deductions, all
determined in accordance with GAAP on a consolidated basis, after eliminating
all intercompany transactions and after deducting portions of income properly
attributable to minority interests, if any, in the stock and surplus of any
subsidiaries; provided, that there shall be excluded:
(a) (i) the undistributed income (or net loss) of any entity which is not
a Restricted Subsidiary, and (ii) the net income (or net loss) of any
entity accrued prior to the date it becomes a Restricted Subsidiary or is
merged into or consolidated with the Company or a Restricted Subsidiary;
(b) any aggregate net gain or net loss reflected during such period
arising from the sale, exchange or other disposition of capital assets
(such term to include all fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets, and all
securities) other than in the ordinary course of business; and
(c) any extraordinary, unusual or non-recurring gains or losses.
11.16 Current Debt. "Current Debt" for any period shall mean, without
duplication, all Debt of any Person other than Funded Debt.
11.17 Debt. "Debt" as applied to any Person, shall mean, without duplication,
the sum of (a) all indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed, (b) all indebtedness
secured by any Lien on any property or asset owned or held by such Person
subject thereto, whether or not the indebtedness secured thereby shall have been
assumed, (c) all indebtedness of others with respect to which such Person has
become liable by way of a Guarantee, (d) Capital Lease Obligations and (e) all
recourse obligations of such Person, whether absolute or contingent, matured or
unmatured, including, without limitation, any Guarantee, related to asset
securitization programs established by such Person to which such Person has sold
any of its assets. In determining the Debt of any Person, there shall be
included all indebtedness of such Person of the character referred to in clauses
(a) through (e) deemed to be extinguished under GAAP but for which such Person
remains legally liable.
11.18 Environmental Laws. "Environmental Laws" shall mean all applicable
federal, state, and local statutes, regulations, ordinances, rules and orders as
in effect from time to time pertaining to the environment (land, air, and
water), pollution, asbestos, waste disposal, and the handling, use, storage or
disposal of hazardous or toxic substances, whether on-site or off-site,
including without limitation CERCLA, the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act, the Superfund Amendments and
Reauthorization Act, the Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Safe Drinking Water Act, the Occupational
Safety and Health Act and all applicable state statutes, as amended from time to
time.
11.19 ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974,
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as amended from time to time.
11.20 Event of Default. "Event of Default" shall mean the occurrence of an
event described in Section 9.
11.21 Financial Statements. "Financial Statements" shall mean the audited
financial statements (balance sheet, statement of income, statement of cash
flows) of the Company and its Subsidiaries on a consolidated basis for the
Fiscal Year ended June 30, 1995, the Company's Quarterly Financial Report and
Form 10-Q for the period ended December 31, 1995, the Company's Form 8-K dated
January 2, 1996, and the Company's Form 10-K and Proxy Statement for the Fiscal
Year ended June 30, 1995, all as provided to the Purchasers.
11.22 Fiscal Quarter. "Fiscal Quarter" shall mean any three-month fiscal period
of the Company treated as a fiscal quarter by the Company.
11.23 Fiscal Year. "Fiscal Year" shall mean the annual fiscal period of the
Company.
11.24 Fixed Charges. "Fixed Charges" shall mean, with reference to any period,
the sum of the following for the Company and its Restricted Subsidiaries on a
consolidated basis, after eliminating all intercompany items in accordance with
GAAP:
(a) Interest Expense properly charged or chargeable to income during such
period in accordance with GAAP; and
(c) all Operating Lease Rentals properly charged or chargeable to income
during such period in accordance with GAAP.
11.25 Funded Debt. "Funded Debt" shall mean, at any date of determination, (a)
all Debt (excluding amounts outstanding under the Bank Financing) of any Person
and, if such Person is the Company, its Restricted Subsidiaries which by its
terms or by the terms of any instrument or agreement relating thereto matures,
or which is otherwise payable or unpaid, more than one year from, or is directly
or indirectly renewable or extendible at the option of the Person to a date more
than one year (including an option of the Person under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of more than one year) from the date of the creation thereof; provided
that Funded Debt under this Section 11.25(a) shall include, at any date of
determination, any portion of such Funded Debt outstanding on such date which
matures on demand or within one year from such date (whether by sinking fund,
other required prepayment or final payment at maturity) and which is not
directly or indirectly renewable, extendible or refundable, at the option of
such Person to a date more than one year from such date; (b) the amount, if any,
which does not have to be repaid during any clean-down period under the Bank
Financing; and (c) as to the Bank Financing, any other amount required by GAAP
to be shown as long-term debt on a consolidated balance sheet of the Company and
its Restricted Subsidiaries.
11.26 GAAP. "GAAP" shall mean generally accepted accounting principles as set
forth from time to time in the opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements of the
Financial Accounting Standards Board or in such opinions and other entities as
shall be approved by a significant segment of the
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accounting profession, consistently applied.
11.27 Guarantee. "Guarantee" shall mean as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or services regardless of the non-delivery or nonfurnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be deemed to be the maximum amount for which such Person may be
liable as guarantor, upon the occurrence of any contingency or otherwise, under
or by virtue of its Guarantee.
11.28 Hazardous Materials. "Hazardous Materials" shall mean, at any time, (a)
any "hazardous substance" as defined in (S)l01(14) of CERCLA or applicable
sections of any of the Environmental Laws at such time; (b) any "hazardous
waste", "infectious waste", "hazardous product", "Hazardous Material",
"pollutants" or "contaminants" as defined in applicable sections of any of the
Environmental Laws at such time; and (c) any additional substances, materials or
products which at such time are classified or considered to be hazardous or
toxic or otherwise regulated under any of the Environmental Laws.
11.29 Intellectual Property. "Intellectual Property" shall mean any trade
secret, patent, patent application, copyright, trademark, service mark, brand,
brandmark, brand name, trade name, label, and every other proprietary invention,
process, design, plant, work of authorship and work protectable under titles 35
or 17 of the United States Code.
11.30 Interest Expense. "Interest Expense" shall mean net interest expense, as
defined according to GAAP, and presented on the income statement of any Person,
and capitalized interest expense.
11.31 Investment. "Investment" shall mean as applied to any Person, (a) any
direct or indirect purchase or other acquisition by such Person of stock or
other securities of or any partnership interest in any other Person; (b) any
direct or indirect capital contribution by such Person to any other Person; (c)
any loan or advance by such Person to any other Person, including all debt and
accounts receivable from such other Person which are not current assets or which
did not arise from sales to such other Person in the ordinary course of
business; (d) any direct or indirect purchase or other acquisition by such
Person of any assets other than assets used in the ordinary course of business;
and (e) any liability or obligation of such Person to make any such purchase,
acquisition, loan, advance or capital contribution.
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11.32 Liens. "Liens" shall mean as to any Person, any interest in property
securing an obligation owed to, or a claim by, any other Person including,
without limitation, any mortgage, lien, pledge, adverse claim, charge, security
interest or other encumbrance in or on, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease with respect to, any
property or asset owned or held by such Person, or the signing or filing of a
financing statement which names such Person as debtor, or the signing of any
security agreement authorizing any other party as the secured party thereunder
to file any financing statement. For the purposes of this Agreement, a Person
shall be deemed to be the owner of any assets which it has placed in trust for
the benefit of the holders of Debt of such Person and such trust shall be deemed
to be a Lien if such Debt is deemed to be extinguished under GAAP and such
Person remains legally liable therefor.
11.33 Make-Whole Premium. "Make-Whole Premium" shall mean an amount, if any,
but not less than zero, by which (a) the present value as of the date in respect
of which the Make-Whole Premium is to be determined of all scheduled principal
and interest payments thereafter due on the portion of the principal amount of
the Note to be prepaid, discounted semiannually at a rate equal to the sum of 50
basis points and the then existing yield to maturity of U.S. Treasury Securities
with an average life to maturity nearest to the remaining Weighted Average Life
to Maturity of such Note, as determined by reference to (i) the yields for such
U.S. Treasury Securities reported, as of 10:00 A.M. (New York City time) on the
Business Day next preceding the respective payment date by the Bloomberg
Financial Markets service available on the Telerate Information System (page
500, bid side) (or any successor service), or (ii) if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, as reported by the then most recent Federal Reserve Statistical
Release H.15(519) which has become publicly available as of the date which is
two Business Days prior to the date as of which prepayment is to be made (or, if
such Statistical Release is no longer published, any publicly available source
of such market data), exceeds (b) the portion of the principal amount of the
Note to be prepaid. For purposes of computations under clause (a) above, if the
date on which any Make-Whole Premium is due is not a date on which interest
payments are due to be made under the terms of the Notes, then the amount of the
next succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such date and required to be paid on such date pursuant to
Section 1.2(b) or Section 10.1, as the case may be.
11.34 Margin Security. "Margin Security" shall have the meaning assigned to
such term in Regulation G of the Board of Governors of the Federal Reserve
System of the United States as amended from time to time.
11.34 Margin Stock. "Margin Stock" shall have the meaning assigned to such term
in Regulation U of the Board of Governors of the Federal Reserve System of the
United states as amended from time to time.
11.34 Material Adverse Change or Effect. "Material Adverse Change" and
"Material Adverse Effect" shall mean a material adverse change or effect,
respectively, with respect to the assets, business, management, operations or
condition, financial or otherwise, of the Company and its Restricted
Subsidiaries taken as a whole.
31
<PAGE>
11.37 Multiemployer Plan. "Multiemployer Plan" shall mean a Plan meeting the
definition of "multiemployer plan" contained in either 29 U.S.C. (S)1002(37) or
29 U.S.C. (S)1301(a)(3), or a Plan employed by more than one employer, to which
contributions are or have been made by the Company or any Related Person.
11.38 NAIC Annual Statement. "NAIC Annual Statement" shall have the meaning
specified in Section 2.2(b).
11.39 Noteholders. "Noteholders" shall mean the holders of the Notes, as
reflected in the Note Register referenced in Section 1.3. The initial
Noteholders shall be the Purchasers.
11.40 Notes. "Notes" shall mean the Notes as specified in Section 1.1 hereof.
11.41 Obligations. "Obligations" shall mean all obligations of the Company or
its Subsidiaries under the Operative Documents, including without limitation all
amounts due under the Notes or any Guarantees given to the Noteholders under
Section 7.11 hereof.
11.42 Operating Lease. "Operating Lease" shall mean any lease of the Company or
its Restricted Subsidiaries of any property (whether real, personal or mixed)
which is not a Capital Lease, other than any such lease having a term (including
all renewal terms, whether or not exercised) of less than 12 months from the
date of inception of such lease.
11.43 Operating Lease Rentals. "Operating Lease Rentals" shall mean the total
rentals due on Operating Leases for the respective period in question, including
amounts payable in respect of taxes, maintenance and other similar impositions
under the Operating Leases.
11.44 Operative Documents. "Operative Documents" shall mean the Notes, this
Agreement, and all certificates, opinions and other documents issued or
delivered in connection with the Notes and this Agreement.
11.45 Permitted Investments. "Permitted Investments" shall mean any Investment
in:
(a) one or more Restricted Subsidiaries or any Person which, concurrent
with such Investment, becomes a Restricted Subsidiary;
(b) property used in the ordinary course of the Company's business;
(c) marketable direct obligations issued or guaranteed by the United
States of America or issued by any agency thereof or by Canada maturing
within three years from the date of acquisition thereof;
(d) marketable general obligation bonds or notes issued by any state of
the United States or any political subdivision of any such state or any
public instrumentality thereof or of any province of Canada maturing within
three years from the date of acquisition thereof and having at all times
one of the top two ratings from one of the Rating Agencies;
(e) certificates of deposit or banker's acceptances maturing within one
year from
32
<PAGE>
the date of acquisition thereof issued by commercial banks or trust
companies organized under the laws of the United States of America, the
debt obligations of which or that of its holding company, at all times,
would be rated by one of the Rating Agencies in one of its top two rating
categories;
(f) commercial paper maturing not more than 270 days from the date of
acquisition thereof and having at all times one of the two top rating
classifications from one of the Rating Agencies; and
(g) Investments other than as described in (a) through (f) above which
are existing on the Closing Date and listed on Section 11.45 of Schedule
III.
11.46 Permitted Liens. "Permitted Liens" shall mean:
(a) pledges or deposits by the Company and its Restricted Subsidiaries
under workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Debt by the Company or its
Restricted Subsidiaries), or leases to which the Company or its Restricted
Subsidiaries are parties, or deposits of cash or United States of America
Government Bonds to secure surety or appeal bonds or performance bonds to
which the Company or its Restricted Subsidiaries are parties or which are
issued for their account;
(b) Liens imposed by law, such as carriers', warehousemen's,
materialmen's and mechanics' liens, or Liens arising out of judgments or
awards against the Company and its Restricted Subsidiaries with respect to
which the Company and its Restricted Subsidiaries at the time shall
currently be prosecuting an appeal or proceedings for review in good faith
and by proper procedure and with respect to which adequate reserves have
been established on the books of the Company;
(c) Liens for taxes not yet subject to penalties for nonpayment and Liens
for taxes the payment of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have
been established;
(d) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, rights of way, highways and
railroad crossings, sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use
of real properties or other Liens incidental to the conduct of the
business of the Company or any of its Restricted Subsidiaries or to the
ownership of their property which Liens were not incurred in connection
with Debt of the Company or any of its Restricted Subsidiaries, and which
Liens do not individually or in the aggregate materially detract from the
value of said properties or materially impair the operation of the
business taken as a whole of the Company or such Restricted Subsidiaries;
(e) Liens existing on the Closing Date and specified on Schedule III
hereto, provided that the principal amount of Debt associated with such
Liens in no event shall exceed the principal amount of such Debt on the
Closing Date and do not affect the title to or
33
<PAGE>
use of the assets encumbered thereby;
(f) Purchase money Liens securing payment of the purchase price of fixed
assets purchased or constructed after Closing, including Liens existing on
such fixed assets at the time of acquisition thereof or at the time of
acquisition by the Company or any Restricted Subsidiary of any business
entity then owning such fixed assets (so long as they were not incurred or
extended in contemplation of such acquisition), provided that (i) the Lien
is solely on property purchased or constructed within 180 days prior to
the filing of such Lien; (ii) at the time of such filing, Debt secured by
the Lien does not exceed the cost of such property; and (iii) the
incurrence of Debt secured by such Lien is not prohibited by any other
covenant or limitation contained in this Agreement;
(g) Liens securing Debt of a Restricted Subsidiary to the Company; and
(h) other Liens (including potential Liens under the Bank Financing to
secure reimbursement obligations on letters of credit, such potential
Liens to be valued at the face amount of such outstanding letters of
credit), provided that the aggregate amount of Debt secured by such other
Liens shall not at any time exceed an amount equal to 10% of Adjusted
Consolidated Net Worth.
11.47 Person. "Person" shall mean a corporation, association, partnership,
trust, joint venture, organization, business, individual, government (or
political subdivision thereof) or governmental agency.
11.48 Plan. "Plan" shall mean an "employee pension benefit plan" as defined
in Section 3 of ERISA.
11.49 Potential Event of Default. "Potential Event of Default" shall mean a
condition or event which, with notice or the passage of time, or both, would
constitute an Event of Default.
11.50 Private Placement Memorandum. "Private Placement Memorandum" shall mean
the March 1996 Private Placement Memorandum prepared by NationsBanc Capital
Markets, Inc. regarding $50,000,000 of Senior Notes due in 2008, and provided to
the Purchasers to induce them to purchase the Notes.
11.51 Purchasers. "Purchasers" shall mean the institutional investors who
purchase the Notes and who are set forth on Schedule I.
11.52 QPAM. "QPAM" shall have the meaning specified in Section 2.2(b)(iv).
11.53 QPAM Exemption. "QPAM Exemption" shall mean Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
11.54 Rating Agencies. "Rating Agencies" shall mean Duff & Phelps, Inc.,
Moody's Investors Services and Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
11.55 Related Person. "Related Person" shall mean any corporation or trade or
business that is a member of the same controlled group of corporations (within
the meaning of Section
34
<PAGE>
414(b) of the Code) as the Company or is under common control (within the
meaning of Section 414(c) of the Code) with the Company or is a member of any
affiliated service group (within the meaning of Section 414(m) of the Code)
which includes the Company or is otherwise treated as part of the controlled
group which includes the Company (within the meaning of Section 414(o) of the
Code).
11.56 Release. "Release" or "Released" shall mean, at any time, any "release"
of Hazardous Materials as defined in (S)101(22) of CERCLA or applicable sections
of any of the Environmental Laws at such time and any terms similar thereto as
used in any Environmental Laws at such time.
11.57 Restricted Investments. "Restricted Investments" shall mean all
Investments other than Permitted Investments.
11.58 Restricted Payments. "Restricted Payments" shall mean dividends
(including, without limitation, dividends payable in cash and other non-cash
distributions and all accrued cumulative dividends on preferred stock, but
excluding dividends payable in stock of the Person); stock redemptions and
repurchases; issuances of or payments with respect to warrants, options, rights
or puts; other cash distributions in respect of the capital stock of the Person,
excluding dividends, stock redemptions and repurchases, warrants, options,
rights and puts; other cash distributions in respect of capital stock between
the Company and its Restricted Subsidiaries or between Restricted Subsidiaries;
and the acquisition of any Restricted Investment. In valuing the amount of any
non-cash Restricted Payment, the board of directors of the Person shall make a
good faith valuation thereof and shall reflect the same in its minutes.
11.59 Restricted Subsidiary. "Restricted Subsidiary" shall mean any Subsidiary
(i) of which at least 51% of the voting securities are owned by the Company
and/or one or more wholly owned Restricted Subsidiaries, (ii) which is organized
under the laws of the United States, any state thereof, Canada, or any province
thereof, (iii) which maintains substantially all of its assets and conducts
substantially all of its business within the United States and/or Canada, and
(iv) which the Company has designated a Restricted Subsidiary by notice in
writing given to the Noteholders, and shall also include, so long as they are
Subsidiaries, Waverly Products Company Limited, Patton Electric Company Hong
Kong, Ltd., Bionaire International B.V., Bionaire France s.a.r.l. and Bionaire
Worldwide Management Inc. The Company's initial Restricted Subsidiaries are
identified in Section 11.59 of Schedule III.
11.60 SEC. "SEC" shall mean the Securities and Exchange Commission.
11.61 Source. "Source" shall have the meaning specified in Section 2.2(b).
11.62 Subsidiary. "Subsidiary" shall mean as to any Person, any entity in which
such Person and/or one or more Subsidiaries of such Person owns or controls a
majority of the outstanding voting securities of the entity. As used herein the
term "Subsidiary" when used without reference to any Person, means a Subsidiary
of the Company.
11.63 Successor Corporation. "Successor Corporation" shall have the meaning
specified in Section 7.2(a).
35
<PAGE>
11.64 Taxes. "Taxes" shall mean all taxes, assessments and other governmental
fees, charges, claims and levies, including, without limitation, any such
amounts based on revenue, income, gross receipts, purchases, leases, licenses,
sales, use, business, franchises, shares, operations, business occupation,
capital surplus, earnings, distributions, dividends, properties, assets, wages,
employment or services, and further including, without limitation, any penalties
or interest thereon.
11.65 '34 Act. "34 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
11.66 '33 Act. "33 Act" shall mean the Securities Act of 1933, as amended from
time to time.
11.67 Total Capitalization. "Total Capitalization" shall mean Funded Debt of
the Company and its Restricted Subsidiaries plus Adjusted Consolidated Net
Worth.
11.68 Weighted Average Life to Maturity. "Weighted Average Life to Maturity"
shall mean as applied to any Debt at any date, the number of years obtained by
dividing (a) the then outstanding principal amount of such Debt into (b) the
total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment,
including payment at final maturity, in respect thereof, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between such
date and the date on which such payment is to be made.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All references in this Agreement to Sections are to
sections of this Agreement unless otherwise indicated. Unless otherwise
indicated, all references in this Agreement to Exhibits or Schedules are to
Exhibits and Schedules attached to this Agreement. All such Exhibits and
Schedules shall be deemed incorporated herein by this reference.
Section 12. Miscellaneous.
12.1 Entire Agreement. This Agreement is the complete and exclusive statement
of the understanding between the parties and supersedes all prior offers,
proposals, understandings and agreements, oral or written, between the parties
relating to the subject matter hereof.
12.2 Amendments; Changes and Modifications. This Agreement may not be
effectively amended, changed, modified or altered, except in writing and
thereupon executed by the Company and the number of holders of all then
outstanding Notes required for approvals under Section 12.9.
12.3 Applicable Law: Submission to Jurisdiction. This Agreement shall be
governed by and construed pursuant to the laws of the State of Missouri. Any
legal action or proceeding with respect to this Agreement or any other Operative
Document may be brought in the courts of the State of Missouri or of the United
States of America for the Western District of Missouri and, by execution and
delivery of this Agreement, the Company hereby accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Company irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or
36
<PAGE>
certified mail, postage prepaid, to the Company at its address specified in
Section 12.4, such service to become effective 30 days after such mailing. The
Company hereby irrevocably waives trial by jury, any objection based on forum
non conveniens, and any objection to venue of any action instituted hereunder
and consents to the granting of such legal or equitable relief as is deemed
appropriate by the court. Nothing herein shall affect the right of any
Noteholder to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction.
12.4 Notices. All communications under the Operative Documents shall be in
writing and addressed to the parties as follows:
To the Company:
THE RIVAL COMPANY
800 East 101 Terrace
Kansas City, Missouri 64131
Attention: Treasurer
To the Noteholders:
At the address shown for each Noteholder on Schedule I or such other
address as the Noteholders may specify in writing from time to time.
Notices shall be deemed given or made when served personally or when deposited
in the United States mail (registered or certified) or with a nationally
recognized express courier properly addressed with postage or delivery charges
prepaid or when transmitted by telex or telegraphic means or by telecopy or
facsimile transmissions, answer back confirmed.
12.5 Captions. The captions and headings are for convenience only and in no way
define, limit or describe the scope or intent of any provisions or sections of
this Agreement.
12.6 Counterparts. This Agreement may be executed in several counterparts and
such counterparts together shall constitute one and the same instrument.
12.7 Assignment. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party, and all covenants, promises and agreements by or on
behalf of the Company or any Subsidiaries which are contained in this Agreement
shall bind and inure to the benefit of the successors and assigns of the
Noteholders. Notwithstanding the foregoing, the Company shall not assign its
rights or delegate its duties under this Agreement, except in connection with a
merger or consolidation permitted by Section 7.2, without the prior written
consent of each of the Noteholders.
12.8 Survival of Representations and Warranties. All representations and
warranties made herein, and in the certificates delivered pursuant hereto, shall
survive the execution and delivery to the Noteholders of this Agreement, any
inspection, investigation or audit made by
37
<PAGE>
or on behalf of the Noteholders, the purchase of the Notes, and the disposition
of the proceeds thereof, and such representations and warranties shall continue
in full force and effect so long as any Note is outstanding and unpaid or the
Company has not satisfied in full its Obligations to the Noteholders.
12.9 Consents: Noteholder Action. Except as otherwise provided herein, all
actions, consents, waivers and approvals by the Noteholders shall be deemed
taken or given and amendments hereto deemed agreed to if the holders of more
than 51% or more in principal amount of the outstanding Notes have indicated
their assent. Any concessions made by the Company to any Noteholder shall be
offered to and for the benefit of all Noteholders. Notwithstanding the
foregoing, any amendment to or waiver of the payment terms of the Notes
(including, without limitation, any amendment or waiver respecting maturity,
principal amount, interest rate, Make-Whole Premium, or timing of payment of any
of the foregoing, regardless of whether related to mandatory or optional
payments) or any amendment or waiver to the percentage voting requirement
contained herein shall require the unanimous approval of the holders of all
Notes. For purposes of this Agreement, Notes held by the Company, its
Subsidiaries, or their Affiliates shall not be considered in determining whether
any percentage voting requirement has been satisfied.
12.10 Reproduction of Documents. This Agreement, the Operative Documents, and
all documents, instruments, agreements and certificates relating thereto,
including, without limitation all consents, waivers, approvals, amendments and
notices which may hereafter be executed or given, all documents delivered at
Closing (excluding the Notes) and all documents, materials, certificates and
reports previously or hereafter provided to the Noteholders by the Company
(including, without limitation, the Financial Statements and the Private
Placement Memorandum) may be reproduced by the Noteholders by photographic,
photostatic, microfilm, microcard, miniature photographic or other similar
process and the original of any such reproduction may be destroyed. The Company
hereby stipulates and agrees that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
12.11 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns, any rights remedies, obligations or
liabilities under or by reason of this Agreement.
(The rest of this page intentionally left blank.)
38
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
April 19, 1996.
THE RIVAL COMPANY
By:
-------------------------
Name:
Title:
<PAGE>
SCHEDULE I
PURCHASERS
<TABLE>
<CAPTION>
====================================================================================================================================
Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (CRP)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
Note Registration Number; R-1; $2,000,000
Principal Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Federal Funds Wire Transfer
Method
Bankers Trust Company
Account Information New York, NY
ABA #: 021001033
Private Placement Processing
A/C #: 99-911-145
For further credit to A/C: The Lincoln National Life Insurance Company
(CRP)
Custody Account No.: 98231
- ------------------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- ------------------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Bankers Trust Company
Attn: Private Placement Unit
P.O. Box 998
Bowling Green Station
New York, NY 10274
with a copy to:
Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By
----------------------------
Name:
Title:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Schedule I-1
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (CRP)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Instructions re Delivery of Notes Bankers Trust Company
14 Wall Street, 4th Floor, Window #44
New York, NY 10005
Attn: Marlene Maynard, Mail Stop 4049
(in cover letter refer to account name and custody account number)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-0472300
====================================================================================================================================
</TABLE>
Schedule I-2
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (LFP)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
Note Registration Number; R-2; $2,000,000
Principal Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Federal Funds Wire Transfer
Method
Bankers Trust Company
Account Information New York, NY
ABA #: 021001033
Private Placement Processing
A/C #: 99-911-145
For further credit to A/C: The Lincoln National Life Insurance Company
(LFP)
Custody Account No.: 98185
- ------------------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal, premium and interest) of
the payment being made:
- ------------------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Bankers Trust Company
Attn: Private Placement Unit
P.O. Box 998
Bowling Green Station
New York, NY 10274
with a copy to:
Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By ______________________________________
Name:
Title:
===================================================================================================================================
</TABLE>
Schedule I-3
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (LFP)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Instructions re Delivery of Notes Bankers Trust Company
14 Wall Street, 4th Floor, Window #44
New York, NY 10005
Attn: Marlene Maynard, Mail Stop 4049
(in cover letter refer to account name and custody account number)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-0472300
====================================================================================================================================
</TABLE>
Schedule I-4
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (UIN)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
Note Registration Number; R-3; $2,000,000
Principal Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Federal Funds Wire Transfer
Method
Bankers Trust Company
Account Information New York, NY
ABA #: 021001033
Private Placement Processing
A/C #: 99-911-145
For further credit to A/C: The Lincoln National Life Insurance Company
(UIN)
Custody Account No.: 98127
- ------------------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal, premium and interest) of
the payment being made:
- ------------------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Bankers Trust Company
Attn: Private Placement Unit
P.O. Box 998
Bowling Green Station
New York, NY 10274
with a copy to:
Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By
--------------------------------------
Name:
Title:
====================================================================================================================================
</TABLE>
Schedule I-5
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (UIN)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Instructions re Delivery of Notes Bankers Trust Company
14 Wall Street, 4th Floor, Window #44
New York, NY 10005
Attn: Marlene Maynard, Mail Stop 4049
(in cover letter refer to account name and custody account number)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-0472300
====================================================================================================================================
</TABLE>
Schedule I-6
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (IAL)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
Note Registration Number; R-4; $10,000,000
Principal Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Federal Funds Wire Transfer
Method
Bankers Trust Company
Account Information New York, NY
ABA #: 021001033
Private Placement Processing
A/C #: 99-911-145
For further credit to A/C: The Lincoln National Life Insurance Company
(IAL)
Custody Account No.: 98194
- ------------------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- ------------------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Bankers Trust Company
Attn: Private Placement Unit
P.O. Box 998
Bowling Green Station
New York, NY 10274
with a copy to:
Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By
----------------------------------------
Name:
Title:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Schedule I-7
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (IAL)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Instructions re Delivery of Notes Bankers Trust Company
14 Wall Street, 4th Floor, Window #44
New York, NY 10005
Attn: Marlene Maynard, Mail Stop 4049
(in cover letter refer to account name and custody account number)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-0472300
====================================================================================================================================
</TABLE>
Schedule I-8
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Purchaser Name LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Name in Which Note is Registered LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
Note Registration Number; R-5; $1,000,000
Principal Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Federal Funds Wire Transfer
Method
Account Information The Chase Manhattan Bank N.A.
New York, NY
ABA #: 021 00 0021
CHASE NYC/ CTR/ BNF
A/C #900-9-000200
Further Credit to: G-06323
For the Account of: Lincoln Natl Health & Casualty Ins
- ------------------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- ------------------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Other Instructions LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By
-------------------------------------------------
Name:
Title:
- ------------------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes The Chase Manhattan Bank
One Chase Manhattan Plaza
Level 4B; Window #9
New York, NY 10081
For Acct: G-06323
Attn: Receive Free Cage - Frank Taylor
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-1495207
====================================================================================================================================
</TABLE>
Schedule I-9
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Purchaser Name AMERICAN STATES INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Name in Which Note is Registered SALKELD & CO
- ------------------------------------------------------------------------------------------------------------------------------------
Note Registration Number; R-6; $1,750,000
Principal Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Federal Funds Wire Transfer
Method
Account Information Bankers Trust Company; New York, NY
ABA #: 021001033
Private Placement Processing
A/C #: 99-911-145
Further Credit to: American States Ins Co
Custodial Account: 97131
- ------------------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- ------------------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments American States Life Insurance Company
500 North Meridian Street
Indianapolis, IN 46204
Att: Corporate Accounting
- ------------------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street; Renaissance Square
Fort Wayne, IN 46802
Att: Investments/Private Placements
- ------------------------------------------------------------------------------------------------------------------------------------
Other Instructions AMERICAN STATES INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By
---------------------------------------
Name:
Title:
- ------------------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Bankers Trust Company
14 Wall Street, 4th Floor, Window 44
New York, NY 10005
For Acct: American States Ins Co
Custodial Acct: 97131
Attention: George Flores
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-0145400
====================================================================================================================================
</TABLE>
Schedule I-10
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name AMERICAN STATES LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered SALKELD & CO
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-7; $1,000,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Bankers Trust Company; New York, NY
ABA #: 021001033
Private Placement Processing
A/C #: 99-911-145
Further Credit to: American Sts Life Ins Co
Custodial Account: 97136
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments American States Life Insurance Company
500 North Meridian Street
Indianapolis, IN 46204
Att: Corporate Accounting
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Att: Investments/Private Placements
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions AMERICAN STATES LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Bankers Trust Company
14 Wall Street, 4th Floor; Window 44
New York, NY 10005
For Acct: American States Life Ins Co
Custodial Acct: 97136
Attention: George Flores
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-1007048
======================================================================================================================
</TABLE>
Schedule I-11
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered CUDD & CO
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-8; $2,000,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information The Chase Manhattan Bank N.A.
New York, NY
ABA #: 021000021
A/C #: 900-9-000200
Further Credit to: G-05996 First Penn-Pacific
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Lincoln Investment Management, Inc.
200 East Berry Street; Renaissance Square
Fort Wayne, IN 46802
Att: Investments/Private Placements
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street; Renaissance Square
Fort Wayne, IN 46802
Att: Investments/Private Placements
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Chase Manhattan Bank
One Chase Manhattan Plaza
Level 4B
Window #9
New York, NY 10081
For Account: G-05996 First Penn-Pacific Life
Ins. Co.
Att: Frank Taylor - Receive Free Cage
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 23-2044248
======================================================================================================================
</TABLE>
Schedule I-12
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name ALLIED LIFE INSURANCE COMPANY "A"
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered HARNY & CO
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-9; $1,000,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Harris Trust & Savings, Chicago, IL
ABA #: 071 000 288
Attention: Trust Collections
DDA Account #: 109-211-3
Further credit: Allied Life Ins Co "A"
Account No.: 23-97588
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Harris Trust & Savings
111 W. Monroe Street
Chicago, IL 60690
Attn: Private Placements
For Acct: Allied Life Ins 23-97588
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
For A/C: Allied Life Insurance Company
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions ALLIED LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Bank of Montreal
77 Water Street
Securities Svcs - 5th Floor
Attn: Rich Halleck
New York, NY 10005
For A/C: Harris Trust & Savings
Further Credit to: 23-97588, Allied Life Ins Co
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 42-0921353
======================================================================================================================
</TABLE>
Schedule I-13
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name SONS OF NORWAY
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered VAR & CO
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-10; $500,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information First Bank N.A., Minneapolis, MN
ABA #: 091 0000 22
CR: First Trust National Association
A/C#: 180121167365 - TSU 020
F/C: 12601910, Sons of Norway
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Ms. Kathy Budewitz
Mail Code: SPEN0402
First Trust Center
180 E. 5th St., P.O. Box 64190
St. Paul, MN 55164-0190
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions SONS OF NORWAY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes First Trust National Association
Physical Unit, Trade Settlement Services
9th Floor
180 E. 5th Street
St. Paul, MN 55101
For Account: 12601910, Sons of Norway
Attention: Tara Steenblock
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 41-0547795
======================================================================================================================
</TABLE>
Schedule I-14
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name SECURITY-CONNECTICUT LIFE INSURANCE COMPANY (SPDA)
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered SECURITY-CONNECTICUT LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-11; $1,750,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Shawmut Bank Connecticut, N.A.
777 Main Street, Hartford, CT 06115
ABA Routing #: 011900445
For acct of: Sec-Conn Life (SPDA)
Acct #: 0156196
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Security-Connecticut Life Insurance Company
20 Security Drive
Avon, CT 06001
Att: Jodi Dean
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Att: Investment/Private Placements
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions SECURITY-CONNECTICUT LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Security-Connecticut Life Insurance Company
20 Security Drive
Avon, CT 06001
Att: Jodi Dean
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 35-1468921
======================================================================================================================
</TABLE>
Schedule I-15
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name ALLSTATE LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Notes are Registered ALLSTATE LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Numbers; Principal Amounts R-12; $4,000,000
R-13; $4,000,000
R-14; $2,000,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Notes
Method Federal Funds Wire Transfer
Account Information BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = Rival Company
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Allstate Insurance Company
Investment Operations - Private Placements
3075 Sanders Road, STE G4A
Northbrook, IL 60062-7127
Telephone: (847) 402-8709
Telecopy: (847) 402-7331
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Allstate Life Insurance Company
Private Placements Department
3075 Sanders Road, STE G3A
Northbrook, IL 60062-7127
Telephone: (847) 402-4394
Telecopy: (847) 402-3092
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions ALLSTATE LIFE INSURANCE COMPANY
By_______________________
Name:
By_______________________
Name:
Authorized Signatories
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Harris Trust and Savings Bank
111 West Monroe Street
Institutional Custody, 5E
Chicago, Illinois 60690
Attention: Lisa Cox
For Allstate Life Insurance Company/Safekeeping
Account No. 23-91317
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 36-2554642
======================================================================================================================
</TABLE>
Schedule I-16
<PAGE>
Schedule I-17
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name SECURITY FIRST LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered SECURITY FIRST LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-15; $5,000,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Bank of New York
1 Wall Street
New York, NY 10286
ABA No.: 021000018
Account Name: Security First Group Corporate
Bond Account
Account No.: 328175
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Security First Life Insurance Company
c/o London Life Insurance Company
255 Dufferin Avenue
London, Ontario N6A 4K1
Attn: Manager U.S. Fixed Income (Private
Placements)
Securities Department
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Security First Life Insurance Company
c/o London Life Insurance Company
255 Dufferin Avenue
London, Ontario N6A 4K1
Attn: Manager U.S. Fixed Income (Private
Placements)
Securities Department
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions SECURITY FIRST LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Bank of New York
1 Wall Street
Window A, Third Floor
New York, NY 10286
Re: Account Name: Security First Group Corporate
Bond Account
Account #: 328175
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 540696644
======================================================================================================================
</TABLE>
Schedule I-18
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name PAN-AMERICAN LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered PAN-AMERICAN LIFE INSURANCE COMPANY
----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-16; $5,000,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information First National Bank of Commerce
210 Baronne Street
New Orleans, LA 70112
ABA No.: 065-000-029
For credit to Pan-American Life Insurance Company
Account No.: 1100-29496
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Pan-American Life Insurance Company
Pan American Life Center
601 Poydras Street
New Orleans, LA 70130
Attn: Investment Department - 28th Floor, Bond &
Stock Accounting
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices Pan-American Life Insurance Company
Pan American Life Center
601 Poydras Street
New Orleans, LA 70130
Attn: Investment Department - 28th Floor, Fixed
Income Securities
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions PAN-AMERICAN LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Pan-American Life Insurance Company
Pan American Life Center
601 Poydras Street
New Orleans, LA 70130
Attn: Marylyn Andree, Investment Department -
28th Floor
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 72-0281240
======================================================================================================================
</TABLE>
Schedule I-19
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C>
Purchaser Name NATIONSBANC CAPITAL MARKETS, INC.
- ----------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered HARE & CO.
- ----------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal Amount R-17; $5,000,000
- ----------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Bank of New York
ABA # 021000018
BNF: IOC 569, GSCS, MIC
Ref: Rival
- ----------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: THE RIVAL COMPANY
Description of
Security: 7.21% Senior Notes due April 15, 2008
Security Number: 768020 A* 0
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- ----------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments NationsBanc Capital Markets, Inc.
100 N. Tryon Street, 6th Floor
Charlotte, NC 28255
Attn: Syndicate
- ----------------------------------------------------------------------------------------------------------------------
Address for All other Notices NationsBanc Capital Markets, Inc.
100 N. Tryon Street, 6th Floor
Charlotte, NC 28255
Attn: Syndicate
- ----------------------------------------------------------------------------------------------------------------------
Other Instructions NATIONSBANC CAPITAL MARKETS, INC.
By_______________________
Name:
Title:
- ----------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Bank of New York
1 Wall Street, 3rd Floor
Dealers Clearance, Window B
Acct: NationsBanc Capital Markets, Inc.
New York, NY 10015
- ----------------------------------------------------------------------------------------------------------------------
Tax Identification Number 561684171
======================================================================================================================
</TABLE>
Schedule I-20
<PAGE>
SCHEDULE II
OTHER FINANCIAL DATA
None.
Schedule II-1
<PAGE>
SCHEDULE III
THE RIVAL COMPANY
DISCLOSURE STATEMENT
THE RIVAL COMPANY Disclosure Schedule is made and delivered by The Rival
Company (the "Company") to the Purchasers set forth in Schedule I pursuant to
the Note Purchase Agreement dated as of April 15, 1996 among such parties (the
"Agreement"). Capitalized terms not defined herein shall have the meanings set
forth in the Agreement. Each item disclosed herein is disclosed only in
connection with the specific section within which it is contained. No statement
herein is false or misleading in any material respect. The Company has not
omitted to state any material fact required to make any statement herein, taken
in conjunction with the Agreement, not misleading, whether or not such material
fact is expressly required to be disclosed by the applicable captions. The
disclosures made herein are true and accurate as of the Closing Date. The
Company covenants to amend THE RIVAL COMPANY Disclosure Schedule from time to
time as necessary so that the disclosures made herein remain true and accurate
at all times during the period from the date hereof through and including the
close of business on the Closing Date.
SECTION 5.1 CORPORATE EXISTENCE. The Company is duly qualified and in
good standing in each of the following states:
Delaware
Missouri
Mississippi
The Company has no Subsidiaries, except as set forth below:
<TABLE>
<CAPTION>
================================================================================
NAME JURISDICTION OF OWNERSHIP
INCORPORATION PERCENTAGE
================================================================================
<S> <C> <C>
Waverly Products Company Limited Jamaica 100%
================================================================================
Pollenex Corporation Missouri 100%
================================================================================
Rival Manufacturing Co. of Canada, Ltd. Canada 100%
================================================================================
Fasco Consumer Products, Inc. Delaware 100%
===============================================================================
Patton Electric Company, Inc. Indiana 100%
===============================================================================
Patton Electric Company Hong Kong, Ltd. Hong Kong 100%
===============================================================================
RC Acquisition, Inc. Canada 100%(a)
===============================================================================
Bionaire, Inc. Canada 100%(b)
===============================================================================
Bionaire Corporation New Jersey 100%(c)
===============================================================================
Bionaire Worldwide Management, Inc. Florida 100%(d)
===============================================================================
</TABLE>
Schedule III-1
<PAGE>
<TABLE>
<CAPTION>
================================================================================
NAME JURISDICTION OF OWNERSHIP
INCORPORATION PERCENTAGE
================================================================================
<S> <C> <C>
Bionaire International B.V. Netherlands 100%(c)
================================================================================
Bionaire France s.a.r.l. France 100%(e)
================================================================================
</TABLE>
(a) Stock owned by Rival Manufacturing Co. of Canada Ltd.
(b) Stock owned by RC Acquisition, Inc.
(c) Stock owned by Bionaire, Inc.
(d) Stock owned by Bionaire Corporation. Bionaire Worldwide Management, Inc.
currently has no operations and will be liquidated on or before July 1,
1996.
(e) Stock is 90% owned by Bionaire International B.V. and 10% owned by
Bionaire, Inc.
SECTION 5.5 LITIGATION. The representations and warranties of the Company
and its Subsidiaries as described in Section 5.5 of the Agreement are correct,
except as set forth below:
None.
SECTION 5.14 DEBT.
(a) The Company and its Subsidiaries are not obligated with respect to any
Debt other than as set forth below:
1. Indebtedness pursuant to a $75 Million Credit Agreement among The Rival
Company and certain Banks with NationsBank of Texas, N.A. as agent dated as of
April 15, 1996.
2. Indebtedness pursuant to the $50 Million Note Purchase Agreement dated
as of July 23, 1993.
3. Indebtedness pursuant to a $15 Million Promissory Note dated March 25,
1996 between The Rival Company and NationsBank of Texas, N.A. This debt will be
retired on the Closing Date.
4. Indebtedness of Bionaire, Inc. pursuant to a $10 Million unsecured
Credit Facility dated as of April 17, 1996 between Bionaire, Inc. and Bank of
America Canada, and guaranteed by The Rival Company. The outstanding principal
amount of such Indebtedness as of the Closing Date is approximately $6,800,000.
This Indebtedness replaces approximately U.S. $6.0 Million secured Indebtedness
of Bionaire, Inc. which was outstanding under a Secured Revolving Credit and
Term Loan Facility between Bionaire Inc. and Royal Bank of Canada.
5. Indebtedness of Patton Electric Hong Kong, Ltd. under a HK $15,000,000
(approximately U.S. $2,000,000) Credit Facility with Bank of America National
Trust and Savings Association. Such facility is guaranteed by The Rival
Schedule III-2
<PAGE>
Company and is used primarily for the issuance of documentary letters of
credit to suppliers in Asia.
(b) The Company and its Subsidiaries are not subject to any material
contingent liabilities other than as set forth below:
None.
SECTION 5.15 PARI PASSU RANKING. The Company's payment obligations on the
Notes rank at least pari passu with the Company's payment obligations in respect
of all other Debt.
SECTION 5.20(B) ENVIRONMENTAL MATTERS. The exceptions referenced in
5.20(b) are as follows:
Kansas City, Missouri:
In June, 1992, the Company terminated the lease of its former office/warehouse
facility at 36th and Bennington, Kansas City, Missouri. Upon lease termination,
the landlord engaged an engineer to perform an environmental study of the
property. The landlord has performed some remediation at the site and has
requested reimbursement of their expenses in the amount of $108,946. The
Company has not determined the extent of its responsibility, if any, for such
expenses.
SECTION 5.24 INTELLECTUAL PROPERTY. Except as disclosed below, to the
best of the Company's knowledge, there are no Liens encumbering the Intellectual
Property and no such Intellectual Property owned or used by the Company or its
Subsidiaries infringes the patent, copyright, trademark, trade secret or other
proprietary rights of any third party and the Company is not aware of any such
claim of infringement by any third party:
None.
Except as disclosed below, to the best of the Company's knowledge, no third
party has materially infringed or threatened to infringe the patent, copyright,
trademark, trade secret and other proprietary rights of the Company or its
Subsidiaries in their Intellectual Property:
None.
SECTION 11.45(G) PERMITTED INVESTMENTS. The following investments other
than as described in Section 11.45(a) through (f) of the Agreement were existing
on the Closing Date:
A fractional ownership interest in Association of Home Appliance
Manufacturers, a captive off-shore insurance company.
Various common stock, preferred stock and debt instruments obtained through
reorganization of the Company's customers. Such investments have an
aggregate book value of not more than $500,000 as of the Closing Date.
SECTION 11.46(E) PERMITTED LIENS. The Company is a party to the existing
Liens as set
Schedule III-3
<PAGE>
forth below and the principal amount of Debt associated with such Liens does not
exceed the principal amount of such Debt on the date hereof and does not affect
the title to or the use of the assets encumbered thereby:
Liens in favor of Royal Bank of Canada pursuant to a Credit Agreement with
Bionaire, Inc. Such Liens to be released on or about the Closing Date.
SECTION 11.59 RESTRICTED SUBSIDIARY. The Company's initial Restricted
Subsidiaries are set forth below:
Pollenex Corporation, a Missouri corporation
Rival Manufacturing Co. of Canada, Ltd., a Canadian corporation
Waverly Products Company, Ltd., a Jamaican corporation
Fasco Consumer Products, Inc., a Delaware corporation
Patton Electric Company, Inc., an Indiana corporation
Patton Electric Company Hong Kong, Ltd., a Hong Kong corporation
RC Acquisition, Inc., a Canadian corporation
Bionaire, Inc., a Canadian corporation
Bionaire Worldwide Management, Inc., a Florida corporation
Bionaire International B.V., a Netherlands corporation
Schedule III-4
<PAGE>
EXHIBIT 1.1
FORM OF NOTE
THE RIVAL COMPANY
7.21% SENIOR NOTE DUE APRIL 15, 2008
No. R-__ PPN: 768020 A* 0
$________ ________ __, ____
THE RIVAL COMPANY (the "Company"), a Delaware corporation, for value
received, hereby promises to pay to ______ or registered assigns the principal
sum of ______ DOLLARS ($______) on April 15, 2008 and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) on the unpaid principal
balance hereof from the date of this Note at the rate of 7.21% per annum,
semiannually on April 15 and October 15 in each year, commencing on October 15,
1996, until the principal amount hereof shall become due and payable; and to pay
on demand interest on any overdue principal (including any overdue partial
payment of principal) and Make-Whole Premium, if any, and (to the extent
permitted by applicable law) on any overdue installment of interest (the due
date of such payments to be determined without giving effect to any grace
period), at a rate per annum equal to the lesser of (a) the highest rate allowed
by applicable law or (b) 9.21% per annum.
Payments of principal, Make-Whole Premium, if any, and interest shall be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Purchase Agreement
(defined below).
This Note is one of an issue of Notes of the Company issued in an aggregate
principal amount limited to $50,000,000 pursuant to the Company's Note Purchase
Agreement (as amended from time to time, the "Note Purchase Agreement"), dated
as of April 15, 1996, with the purchasers listed on Schedule I thereto, is
entitled to the benefits thereof and subject to the terms thereof, and the terms
of which are incorporated herein by reference. Capitalized terms used herein
and not defined herein have the meanings specified in the Note Purchase
Agreement.
As provided in the Note Purchase Agreement, (i) a portion of the principal
of this Note must be repaid (and will become due and payable) prior to the
stated maturity hereof, (ii) all or a portion of the principal of this Note may
be repaid at the option of the Company (and will, on the exercise of such
option, become due and payable) prior to the stated maturity hereof and a Make-
Whole Premium may be due in connection therewith, and (iii) all of the principal
of this Note (together with any applicable Make-Whole Premium) may, under
certain circumstances, be declared due and payable in the manner and with the
effect provided in the Note Purchase Agreement.
Exhibit 1.1-1
<PAGE>
This Note is a registered Note and is transferable only by surrender
thereof at the principal office of the Company as specified in the Note Purchase
Agreement, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of this Note or his attorney duly authorized
in writing.
THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
MISSOURI.
THE RIVAL COMPANY
By:
----------------------------------
Name:
Title:
Exhibit 1.1-2
<PAGE>
EXHIBIT 4.1(A)
COMPANY OUTSIDE COUNSEL OPINION
[Letterhead of Hillix, Brewer, Hoffaus, Whittaker & Wright]
[Closing Date]
Purchasers of Notes
Shown on Attachment A
Re: The Rival Company
$50,000,000 Senior Notes Due 2003
Ladies and Gentlemen:
We have acted as counsel to The Rival Company, a Delaware corporation (the
"Company") in connection with the preparation of the Note Purchase Agreement
dated as of the date hereof (the "Agreement") among the Company and the
Purchasers set forth in Schedule I to the Agreement (collectively, the
"Purchasers") and the "Operative Documents" referenced therein and have
participated on the Company's behalf in the transaction contemplated thereby.
This Opinion Letter is provided to you at the request of the Company pursuant to
Section 4.1(a) of the Agreement. Capitalized terms used in this Opinion Letter
are defined as set forth in the Agreement or the Accord (see below).
This Opinion Letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion Letter should be
read in conjunction therewith. The Law covered by the opinions expressed herein
is limited to the Law of the State of Missouri, the corporate Law of the State
of Delaware and the Federal Law of the United States.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under and by virtue of the Law of Delaware and is qualified, in
good standing and authorized to do business as a foreign corporation in the
States of Missouri and Mississippi.
2. Pollenex Corporation, Rival Manufacturing Company of Canada, Ltd.,
Fasco Consumer Products, Inc., Patton Electric Company, Inc., R.C. Acquisitions,
Inc., Bionare, Inc. and Bionare Corporation are corporations duly incorporated,
validly existing and in good
Exhibit 4.1(a)-1
<PAGE>
Purchasers of Notes
Shown on Attachment A
[Closing Date]
Page 2
standing under and by virtue of the laws of their jurisdictions of
incorporation. In providing the opinions expressed in this paragraph, with
respect to Rival Manufacturing Company of Canada, Ltd., Fasco Consumer
Products, Inc., Patton Electric Company, Inc., R.C. Acquisitions, Inc., Bionare,
Inc. and Bionare Corporation, we have reviewed only the certificates of good
standing, articles of incorporation, and by-laws relative to those corporations
included in the applicable secretaries' certificates delivered to the Banks at
Closing, and have made no other investigation or inquiry.
3. The Company has taken all necessary action to duly authorize the
execution and delivery of the Operative Documents and the issue and sale of the
Notes by the signers thereof and the transactions thereunder.
4. The Company possesses the requisite power to enter into the Operative
Documents to issue and sell the Notes, and to perform its obligations
thereunder.
5. Each of the Operative Documents is enforceable against the Company in
accordance with its terms.
6. Execution and delivery by the Company of, and performance of its
agreements in, the Operative Documents do not: (i) violate the Constituent
Documents of the Company; (ii) breach, result in a default under, or result in
the imposition of a lien under the Bank Financing Documents, any contracts
dealing with money borrowed or future payments or receipts in excess of
$1,000,000 by the Company or any Subsidiary, or, to our Actual Knowledge, any
other existing agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
assets may be bound or affected; or (iii) breach or otherwise violate any
existing obligation of the Company or any Subsidiary under any Court Order.
7. Execution and delivery by the Company of, and performance by the
Company of its agreements in, the Operative Documents do not violate applicable
provisions of Law.
8. No authorization, consent approval, registration, license or any form
of exemption of any governmental authority is required in connection with the
execution, delivery and performance by the Company of its obligations under the
Operative Documents or the offer, issuance or sale of any of the Notes.
9. The payment by the Company and receipt by the Noteholders of all
principal, interest and premium required to be paid pursuant to the terms of the
Notes will not violate the usury laws of the State of Missouri.
Exhibit 4.1(a)-2
<PAGE>
Purchasers of Notes
Shown on Attachment A
[Closing Date]
Page 3
10. The offering and sale of the Notes under the circumstances
contemplated by the Agreement are exempt from the registration provisions of the
Securities Act of 1933, as amended, and the Company is not required to qualify
an indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended.
11. Neither the Company nor any of the Subsidiaries is: (a) an "investment
company", or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended; (b) a "holding
company" or a "subsidiary company" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended; or (c) a "public utility" within the meaning of
the Federal Power Act, as amended.
12. The use of the proceeds from the issuance of the Notes, as
contemplated by the Agreement, will not violate Regulations G, T, U, or X of the
Board of Governors of the Federal Reserve System.
13. With respect to any "employee benefit plan" maintained by the Company
or any Subsidiary, the execution and delivery of the Agreement and the Company's
Operative Documents and the sale of the Notes will not involve any transaction
subject to the prohibitions of Section 406 of ERISA or in connection with which
a tax could be imposed under Section 4975 of the Code.
We hereby confirm to you that there are no actions or proceedings against
the Company or any Subsidiary, pending or overtly threatened in writing, before
any court, governmental agency or arbitrator which: (i) seek to affect the
enforceability of or to enjoin the transaction contemplated by the Operative
Documents; or (ii) except as has been disclosed to Hebb & Gitlin as counsel for
the Purchasers by our letter dated April 12, 1996, involve an amount in
controversy in excess of $1,000,000, any contract dealing with money borrowed or
future payments or receipts in excess of $1,000,000 by the Company or any
Subsidiary, or any claim that the Board of Directors of the Company or any
Subsidiary have violated their fiduciary duties to stockholders.
The General Qualifications apply to the opinions set forth in paragraphs 7
through 13 above as well as to our opinion set forth in paragraph 5 above.
The phrase Primary Lawyer Group, as used in the Accord, is hereby modified
and for the purposes of applying the Accord to this Opinion Letter the Primary
Lawyer Group means only the lawyers in this firm who have given substantive
legal attention to representation of the Company.
Exhibit 4.1(a)-3
<PAGE>
Purchasers of Notes
Shown on Attachment A
[Closing Date]
Page 4
A copy of this opinion Letter may be delivered by you to any subsequent
Noteholder or prospective Noteholder in connection with their acquisition or
consideration of acquisition of a Note or Notes, and such persons may rely on
this opinion letter as if it were addressed and had been delivered to them on
the date hereof. In addition, a copy of this Opinion Letter may be delivered by
you to and relied upon by Hebb & Gitlin P.C. for purposes of rendering its
opinion to you pursuant to Section 4.1(b) of the Agreement. Subject to the
foregoing, this Opinion Letter may be relied upon by you only in connection with
the foregoing transaction and may not be used or relied upon by you or any other
person for any purpose whatsoever, except to the extent authorized by the
Accord, without in each instance our prior written consent.
Very truly yours,
HILLIX, BREWER, HOFFAUS, WHITTAKER &
WRIGHT
Exhibit 4.1(a)-4
<PAGE>
ATTACHMENT A
The Lincoln National Insurance Company
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Lincoln National Health & Casualty Insurance Company
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
American States Insurance Company
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
American States Life Insurance Company
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
First Penn-Pacific Life Insurance Company
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Allied Life Insurance Company "A"
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
Sons of Norway
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Security-Connecticut Life Insurance Company
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Allstate Life Insurance Company
3075 Sanders Road, STE G3A
Northbrook, IL 60062-7127
Security First Life Insurance Company
255 Dufferin Avenue
London, Ontario N6A 4K1
Pan-American Life Insurance Company
Pan American Life Center
601 Poydras Street
New Orleans, LA 70130
Exhibit 4.1(a)-5
<PAGE>
Nationsbanc Capital Markets, Inc.
100 N. Tryon Street, 6th Floor
Charlotte, NC 28255
Hebb & Gitlin
One State Street
Hartford, CT 06103
Exhibit 4.1(a)-6
<PAGE>
CREDIT AGREEMENT
among
THE RIVAL COMPANY
and
CERTAIN BANKS
Agent:
NATIONSBANK OF TEXAS, N.A.
Dated as of April 15, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms................................................. 1
1.2 Accounting Principles......................................... 10
1.3 Other Definitions; Rules of Construction...................... 10
SECTION 2. TERMS OF THE FACILITIES....................................... 11
2.1 Credit........................................................ 11
2.2 Loans/Standby Letters of Credit............................... 11
2.2.1 Loans.................................................. 11
2.2.2 Interest............................................... 11
2.2.3 Payments of Principal and Interest..................... 11
2.2.4 Borrowing Procedure.................................... 12
2.2.5 Method of Payments..................................... 14
2.2.6 Use of Proceeds........................................ 15
2.3 Provisions Applicable to All Facilities....................... 15
2.3.1 Calculation of Interest/Default Rate................... 15
2.3.2 Manner of Payment - Immediately Available Funds........ 15
2.3.3 Procedures for Electing Optional Rates................. 16
2.3.4 Fees................................................... 18
2.3.5 Non-Receipt of Funds by the Agent...................... 19
2.3.6 Interest Recapture..................................... 19
2.3.7 Maximum Rate........................................... 20
2.4 Additional Standby Letter of Credit Provisions................ 20
SECTION 3. WARRANTIES.................................................... 22
3.1 Corporation Existence and Standing............................ 22
3.2 Loan Documents - Corporate Power. Authorization and Validity.. 22
3.3 Loan Documents - Compliance with Laws and Contracts........... 22
3.4 Financial Statements.......................................... 23
3.5 Taxes......................................................... 23
3.6 Litigation.................................................... 23
3.7 ERISA......................................................... 23
3.8 Defaults...................................................... 23
3.9 Liabilities. Investments and Guarantees....................... 24
3.10 Compliance with Governmental Requirements..................... 24
3.11 Rights to Conduct Business.................................... 24
3.12 No Casualty................................................... 24
3.13 Regulation U.................................................. 24
3.14 Governmental Consents......................................... 24
3.15 Subsidiaries.................................................. 24
3.16 Environmental Compliance...................................... 24
(i)
<PAGE>
3.17 Marketable Title.............................................. 25
3.18 Contracts of Surety........................................... 25
3.19 Insolvency.................................................... 25
3.20 Regulation.................................................... 25
3.21 Full Disclosure............................................... 25
3.22 General....................................................... 26
SECTION 4. COVENANTS..................................................... 26
4.1 Affirmative Covenants......................................... 26
4.1.1 Financial Reporting................................... 26
4.1.2 Minimum Net Worth..................................... 27
4.1.3 Fixed Charge Coverage Ratio........................... 28
4.1.4 Leverage Ratio........................................ 28
4.1.5 Notice of Material Adverse Change..................... 28
4.1.6 Conduct of Business................................... 28
4.1.7 Taxes................................................. 28
4.1.8 Insurance............................................. 28
4.1.9 Compliance with Laws.................................. 28
4.1.10 Maintenance of Properties............................. 28
4.1.11 Inspection............................................ 29
4.1.12 Trade Accounts........................................ 29
4.1.13 Use of Proceeds....................................... 29
4.1.14 Reports............................................... 29
4.1.15 Licenses.............................................. 29
4.1.16 Notice of Environmental Matters....................... 29
4.1.17 Subsidiary Guaranties................................. 30
4.2 Negative Covenants............................................ 30
4.2.1 Dispose of Property................................... 30
4.2.2 Liens................................................. 30
4.2.3 Merger, Etc........................................... 30
4.2.4 Dividends............................................. 30
4.2.5 Sell and Leaseback.................................... 31
4.2.6 Indebtedness.......................................... 31
4.2.7 Investments........................................... 31
4.2.8 Loans and Advances.................................... 31
4.2.9 Guarantees............................................ 31
4.2.10 Special Corporate Transactions........................ 32
4.2.11 Accounting Policies................................... 32
4.2.12 Change of Business.................................... 32
4.2.13 Benefit Plans......................................... 32
4.2.14 Margin Stock.......................................... 32
4.2.15 Other Agreements...................................... 32
4.2.16 Judgments............................................. 32
4.2.17 Principal Office...................................... 32
(ii)
<PAGE>
SECTION 5. CONDITIONS PRECEDENT TO LOANS................................. 32
5.1 Conditions to Initial Advance.................................. 32
5.1.1 Opinion of Counsel..................................... 33
5.1.2 Organizational Documents............................... 33
5.1.3 Corporate Resolutions.................................. 33
5.1.4 Incumbency Certificates................................ 33
5.1.5 Loan Documents......................................... 33
5.1.6 Insurance.............................................. 33
5.1.7 Facility Fees.......................................... 33
5.1.8 Repayment of Existing Bank Indebtedness................ 33
5.1.9 Additional Documentation............................... 33
5.2 Conditions to Subsequent Advances.............................. 34
SECTION 6. DEFAULT....................................................... 34
6.1 Events of Default............................................. 34
6.2 Acceleration.................................................. 36
6.3 Subrogation................................................... 36
6.4 Deposit to Secure Reimbursement Obligations................... 36
6.5 Preservation of Rights........................................ 37
SECTION 7. THE AGENT..................................................... 37
7.1 Appointment................................................... 37
7.2 Powers........................................................ 37
7.3 Exculpatory Provisions........................................ 37
7.4 Reliance by Agent............................................. 38
7.5 Defaults/Notices.............................................. 38
7.6 Non-Reliance on Agent and Other Banks......................... 38
7.7 Rights as Bank................................................ 39
7.8 Agent's Indemnification and Reimbursement..................... 39
7.9 Successor Agent............................................... 39
SECTION 8. GENERAL PROVISIONS............................................ 40
8.1 Waivers, Amendments and Remedies.............................. 40
8.2 Taxes......................................................... 40
8.3 Successors and Assigns........................................ 41
8.4 Waiver of Setoff.............................................. 41
8.5 Severability.................................................. 41
8.6 ENTIRE AGREEMENT.............................................. 41
8.7 Several Obligations........................................... 41
8.8 Costs and Expenses............................................ 41
8.9 CHOICE OF LAW................................................. 42
8.10 Headings...................................................... 42
8.11 Notices....................................................... 42
8.12 Counterparts.................................................. 43
(iii)
<PAGE>
8.13 Participations and Assignments................................ 43
8.13.1 Participations........................................ 43
8.13.2 Assignments........................................... 43
8.14 Setoff........................................................ 44
8.15 Indemnification............................................... 44
8.16 Additional Amounts Payable.................................... 44
8.17 Banks Not in Control.......................................... 45
8.18 Adjustments................................................... 45
8.19 Application of Proceeds....................................... 45
8.20 Exceptions to Covenants....................................... 46
8.21 Survival...................................................... 46
Schedule 1.1 - Banks and Commitments
Schedule 3.6 - Litigation
Schedule 3.15 - Subsidiaries
Schedule 3.16 - Environmental Compliance
Schedule 4.2.2 - Liens
Schedule 4.2.6 - Existing Indebtedness
Schedule 4.2.9 - Guarantees
Exhibit A - Note
Exhibit B - Application for Advance
Exhibit C - Standby Letter of Credit Application
Exhibit D - Compliance Certificate
Exhibit E - Legal Opinion of Borrower's Counsel
(iv)
<PAGE>
CREDIT AGREEMENT
----------------
THIS AGREEMENT, made as of the 15th day of April, 1996, among THE RIVAL
COMPANY, a Delaware corporation (the "BORROWER"), NATIONSBANK OF TEXAS, N.A.,
BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, BANK OF AMERICA ILLINOIS, and
other financial institutions from time to time that may become parties hereto
(collectively the "BANKS" or individually a "BANK"), and NATIONSBANK OF TEXAS,
N.A., a national banking association as agent for the Banks hereunder (in such
capacity, together with any successor in such capacity, the "AGENT");
SECTION 1. DEFINITIONS
----------------------
1.1 Defined Terms. As used in this Agreement:
"ADJUSTED LIBOR" means, for each LIBOR Loan, the rate per annum (rounded
up, if necessary, to the nearest 1/16%) determined by the Agent to be equal to
the quotient of (a) the LIBOR divided by (b) 1 minus the Reserve Requirement.
"ADVANCE" means a disbursement of proceeds of the Loans.
"AGREEMENT" means this Credit Agreement, as amended, renewed, extended, or
restated from time to time.
"APPLICABLE MARGIN" is determined by reference to the following table:
==============================================================================
Applicable
Level Leverage Ratio Margin for Applicable Standby
Adjusted LIBOR Margin for Letter of
Loans CD Loans Credit Fees
- ------------------------------------------------------------------------------
I Less than .40 to 1.0 .45% .575% .45%
- ------------------------------------------------------------------------------
II Less than or equal .50% .625% .50%
to .50 to 1.0 but
greater than or equal
to .40 to 1.0
- ------------------------------------------------------------------------------
III Greater than .50 to .75% .875% .75%
1.0
==============================================================================
(a) Initially, the Applicable Margin shall be at Level III.
(b) The Applicable Margin shall be subject to adjustment (upwards or
downwards, as appropriate) on the effective date of any transaction permitted by
SECTION 4.2.3 hereof based upon the Leverage Ratio determined from a pro forma
Consolidated balance sheet, fairly prepared, and in form and substance
satisfactory to the
<PAGE>
Agent, delivered to the Agent not less than seven (7) Banking Days prior to the
scheduled effective date of any such transaction. In the event the Agent has not
received the required pro forma Consolidated balance sheet within the time
period provided herein, the maximum Leverage Ratio set forth in the foregoing
table shall be conclusively presumed to be correct, effective on the effective
date of any such transaction until the tenth (10th) Banking Day after the Agent
receives such required pro forma Consolidated balance sheet, at which time the
Applicable Margin shall be adjusted based upon the Leverage Ratio determined
from such pro forma Consolidated balance sheet.
(c) Also, the Applicable Margin shall be subject to adjustment annually
(upwards or downwards, as appropriate) based upon the Leverage Ratio determined
from the Borrower's most recent audited annual Consolidated financial statements
(commencing with the June 30, 1996 fiscal year end) delivered to the Banks
pursuant to SECTION 4.1.1 hereof. The adjustment (upwards or downwards, as
appropriate), if any, to the Applicable Margin shall be effective on the tenth
(10th) Banking Day after the Agent receives such audited annual Consolidated
financial statements. In the event the Agent has not received the required
Consolidated financial statements pursuant to SECTION 4.1.1 hereof within the
time period provided therein, the maximum Leverage Ratio set forth in the
foregoing table shall be conclusively presumed to be correct until the tenth
(10th) Banking Day after the Agent receives such required Consolidated financial
statements, at which time the Adjusted Margin shall be adjusted based upon the
Leverage Ratio determined from such Consolidated financial statements.
(d) In no event shall the Applicable Margin be adjusted downward if there
exists a Default or Potential Default on the date on which such downward
adjustment would otherwise become effective until such time as the Default or
Potential Default has been cured, waived or ceases to exist. The provisions set
forth in this definition are not intended to and shall not be construed as
authorizing any violation by the Borrower of SECTION 4.1.4 hereof or a waiver of
SECTION 4.1.4 hereof or any commitment by the Banks to waive any violation by
the Borrower of SECTION 4.1.4 hereof.
"APPLICATION" shall have the meaning ascribed in SECTION 2.2.4(a) hereof.
"AUTHORIZED OFFICER" means the chief financial officer, the treasurer and
the controller or such other officer of the Borrower whose authority to perform
acts to be performed only by an Authorized Officer under the terms of this
Agreement is evidenced by a certified copy of an appropriate resolution of the
Board of Directors of the Borrower.
"BANK AFFILIATE" means, as to any Bank, another bank (a) which directly or
indirectly controls, or is controlled by, or is under common control with the
subject Bank, (b) which directly or indirectly beneficially owns or holds Fifty
Percent (50%) or more of any class of the voting stock of the subject Bank, (c)
of which Fifty Percent (50%) or more of the voting stock of which is directly or
indirectly beneficially owned or held by the subject Bank. For purposes of this
definition, the term "control" means the possession, directly or indirectly, of
the power
2
<PAGE>
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"BANKING DAY" means, (a) for all purposes, a day on which the principal
domestic office of each Bank is open for the purpose of conducting substantially
all of its business activities, and (b) if the context in which the reference to
this term is made relates to a LIBOR Loan, LIBOR Interest Period, or notice with
respect to a LIBOR Loan, a day on which dealings in U.S. dollars deposits are
carried on in the London interbank market and banks are open for business in
London, and (c) if the context in which the reference to this term is made
relates to a CD Rate Loan, CD Rate Interest Period, or notice with respect to a
CD Rate Loan, a day on which commercial banking institutions in New York, New
York are open for the purpose of conducting substantially all of their business
activities.
"BASE RATE" means a rate per annum equal to the greater of (i) the Prime
Rate and (ii) the Federal Funds Effective Rate plus 1/2 of 1%.
"CAPITALIZED LEASE" means any lease of property which would be capitalized
on a balance sheet of a Person prepared in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" means the amount of the obligations of a
Person under Capitalized Leases which would be shown as liabilities on a balance
sheet of a Person prepared in accordance with GAAP.
"CD RATE" means with respect to a CD Rate Loan for the relevant CD Rate
Interest Period, the per annum rate of interest equal to the sum (rounded
upward, if necessary, to the nearest 0.01%) of (a) the quotient obtained by
dividing (i) the rate of interest determined by the Agent to be the average
(rounded upward, if necessary, to the nearest 0.01%) of the prevailing rates per
annum bid [at approximately 9:00 A.M. (Dallas time)] two (2) Banking Days prior
to the first day of the applicable CD Rate Interest Period by two or more New
York certificate of deposit dealers of recognized standing selected by the Agent
for the purchase at face value from the Agent (or, at the Agent's discretion, an
affiliate of the Agent) of its certificates of deposit in amounts and having
maturities comparable to the amount and CD Rate Interest Period of such CD Rate
Loan, by (ii) one minus the applicable Reserve Requirement (expressed as a
decimal) applicable to such CD Rate Interest Period, plus (b) the actual (or, if
not known, the estimated) per annum assessment rate (rounded upward, if
necessary, to the nearest 0.01%) payable by the Agent to The Federal Deposit
Insurance Corporation (or its successor) for insuring liability for time
deposits, as in effect from time to time.
"CD RATE INTEREST PERIOD" means a period commencing on any date a
Permissible Increment of the Loans is to bear interest at an Optional Rate to be
calculated by reference to the CD Rate, and ending, as selected by the Borrower,
on the 30th, 60th, 90th or 180th (or with the consent of all Banks, the 270th or
360th) day thereafter; provided, that (a) no CD Rate Interest Period shall
extend beyond the maturity date of the applicable Loan, (b) if a CD Rate
Interest Period would end on a day that is not a Banking Day, such CD Rate
Interest Period shall
3
<PAGE>
be extended to the next Banking Day unless such Banking Day would fall in the
next calendar month, in which event such CD Rate Interest Period shall end on
the immediately preceding Banking Day, and (c) the CD Rate shall remain fixed
throughout the relevant CD Rate Interest Period.
"CD RATE LOAN" means any Loan when and to the extent that the interest rate
therefor is determined by reference to the CD Rate.
"COMMITMENT" means, for a Bank, the amount -- subject to cancellation and
termination under this Agreement -- that is stated beside its name on SCHEDULE
1.1 or most recent supplement to it.
"COMMITMENT PERIOD" means the period from the date hereof until June 30,
1999, unless extended by a written agreement executed by all of the Banks.
"COMPLIANCE CERTIFICATE" means a Compliance Certificate, in the form of
Exhibit D, duly executed by the chief financial officer or treasurer of the
Borrower.
"CONSOLIDATED" means a calculation or a determination for a Person and its
Subsidiaries made in accordance with GAAP, including principles of
consolidation.
"CONSOLIDATED INDEBTEDNESS" means the Indebtedness of the Borrower and its
Subsidiaries on a Consolidated basis in accordance with GAAP and as shown on the
balance sheets furnished to the Banks from time to time pursuant to SECTION
4.1.1 hereof.
"CONSOLIDATED NET WORTH" means the excess of the Borrower's Consolidated
total assets over the Borrower's Consolidated Total Liabilities, each determined
in accordance with GAAP and as shown on the balance sheets furnished to the
Banks from time to time pursuant to SECTION 4.1.1 hereof.
"CONSOLIDATED TOTAL LIABILITIES" means the Consolidated total liabilities
of the Borrower and its Subsidiaries, determined in accordance with GAAP and as
shown on the financial statements furnished to the Banks from time to time
pursuant to SECTION 4.1.1 hereof.
"DEFAULT" means an event described in SECTION 6.1 hereof.
"DOLLARS" and the sign "$" means lawful money of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any trade or business, whether or not incorporated,
which together with the Borrower would be treated as a single employer under
ERISA.
4
<PAGE>
"ENVIRONMENTAL LAWS" means all provisions of laws, statutes, ordinances,
rules, regulations, permits, licenses, judgments, writs, injunctions, decrees,
orders, awards and standards promulgated by any Governmental Authority
concerning health, safety and protection of, or regulations of the discharge or
substances into, the environment.
"FACILITIES" means the Loans, the Standby Letters of Credit, and any and
all participations in the Standby Letters of Credit.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Banking Day, for the immediately preceding Banking Day) by the Federal Reserve
Bank of Dallas, or, if such rate is not so published for any day which is a
Banking Day, the average of the quotations at approximately 10:00 A.M. (Dallas
time) on such day on such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.
"FIXED CHARGE COVERAGE RATIO" means the ratio of (a) the sum of (i)
Consolidated net income before Consolidated interest expense, Consolidated taxes
and Consolidated extraordinary items, (ii) Consolidated depreciation expense,
and (iii) Consolidated amortization expense, to (b) the sum of (i) Consolidated
current maturities of long term indebtedness, (ii) Consolidated capital
expenditures, (iii) Consolidated income tax expense determined on a cash basis,
(iv) Consolidated dividends paid or currently payable, and (v) Consolidated
interest expense. The Fixed Charge Coverage Ratio shall be determined from the
financial statements furnished to the Banks from time to time pursuant to
SECTION 4.1.1 hereof, and will be computed for the four (4) fiscal quarters
immediately preceding the date of determination.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time as promulgated by the Financial Standards
Accounting Board and recognized and interpreted by the American Institute of
Certified Public Accountants.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including, without limiting the generality of the foregoing, any agency, body,
commission, court or department thereof, whether federal, state, local or
foreign.
"GUARANTOR" means each Subsidiary which executes a Guaranty.
"GUARANTY" means a continuing Guaranty, in form and substance satisfactory
to the Banks, duly executed by each Guarantor to the Banks supporting the
Obligations, including any amendment, modification, reaffirmation, substitution
or replacement thereof.
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"INDEBTEDNESS" means (a) all indebtedness or other obligations of a Person
for borrowed money or for the deferred purchase price of property or services;
(b) all indebtedness or other obligations of any other Person for borrowed money
or for the deferred purchase price of property or services, the payment or
collection of which the subject Person has guaranteed (except by reason of
endorsement for collection in the ordinary course of business) or in respect of
which such Person is liable, contingently or otherwise, including, without
limitation, liability to reimburse draws under any letter of credit, liability
by way of agreement to purchase, to provide funds for payment, to supply funds
to or otherwise to invest in such other Person, or otherwise to assure a
creditor against loss; (c) all indebtedness or other obligations of any other
Person for borrowed money or for the deferred purchase price of property or
services secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance upon or in
property owned by the subject Person, whether or not the subject Person has
assumed or become liable for the payment of such indebtedness or obligations;
and (d) Capitalized Lease Obligations of a Person.
"INFORMAL REQUESTS" shall have the meaning ascribed in SECTION 2.2.4(a)
hereof.
"INTEREST PERIOD" means a LIBOR Interest Period or a CD Rate Interest
Period, or both, as the context requires.
"LEVERAGE RATIO" means the ratio of (a) Consolidated Indebtedness to (b)
the sum of Consolidated Net Worth and Consolidated Indebtedness, as determined
from the Borrower's most recent annual or quarterly Consolidated financial
statements.
"LIBOR" means, as of any time the same is to be determined by the Agent,
the per annum interest rate (rounded up, if necessary, to the nearest 1/16%) at
which deposits in immediately available funds of U.S. Dollars in Permissible
Increments is quoted by leading banks in the London interbank market for the
offering to other leading banks in that market for the applicable LIBOR Interest
Period at approximately 11:00 a.m. (London time) two (2) Banking Days prior to
the commencement of any LIBOR Interest Period.
"LIBOR INTEREST PERIOD" means a period commencing on any date a Permissible
Increment of the Loans is to bear interest at an Optional Rate to be calculated
by reference to the Adjusted LIBOR, and ending, as selected by the Borrower, on
the numerically corresponding day in the first, second, third, or sixth calendar
month thereafter; provided, that (a) any LIBOR Interest Period that begins on
the last Banking Day of the calendar month (or any day on which there is no
numerically corresponding day in the appropriately subsequent calendar month)
shall end on the last Banking Day of the appropriate subsequent calendar month,
(b) no LIBOR Interest Period shall extend beyond the maturity date of the
applicable Loan, (c) if a LIBOR Interest Period would end on a day that is not a
Banking Day, such LIBOR Interest Period shall be extended to the next Banking
Day unless such Banking Day would fall in the next calendar month, in which
event such LIBOR Interest Period shall end on the immediately preceding
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Banking Day, and (d) the Adjusted LIBOR shall remain fixed throughout the
relevant LIBOR Interest Period.
"LIBOR LOAN" means any Loan when and to the extent that the interest rate
therefor is determined by reference to the Adjusted LIBOR.
"LOAN DOCUMENTS" means this Agreement, the Notes, any Guaranty, any Standby
Letter of Credit Applications, and any other documents or instruments now or
hereafter executed and delivered by or on behalf of the Borrower or any
Guarantor to any Bank or the Agent to further evidence, govern or support the
Obligations, and any and all renewals, extensions, amendments, or restatements
of or to any of the foregoing.
"LOANS" means the loans from the Banks to the Borrower pursuant to this
Agreement.
"LOSS" shall have the meaning ascribed in SECTION 8.15 hereof.
"MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for each Bank, the
maximum non-usurious amount and the maximum non-usurious rate of interest which,
under applicable law, such Bank is permitted to contract for, charge, take,
reserve, or receive on the Obligations.
"NATIONSBANK" means NationsBank of Texas, N.A., a national banking
association.
"NON-USE FEE" means the fee required to be paid by the Borrower pursuant to
SECTION 2.3.4(c) hereof.
"NOTES" means promissory notes in substantially the form attached as
EXHIBIT A and all renewals, extensions, amendments, increases, decreases, and
replacements of, to, or for any of them.
"OBLIGATIONS" means all of the unpaid principal amount of, and accrued
interest on, the Notes, actual and contingent reimbursement obligations under
the Standby Letters of Credit, all commitment fees, Standby Letter of Credit
fees, Non-Use Fees, all other obligations and liabilities of the Borrower to the
Banks or to any Bank or to the Agent in connection with the Facilities of every
type and description, direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, or otherwise arising under the
Loan Documents whether or not contemplated by the Borrower or the Banks as of
the date hereof, including, without limitation, any Advances under the Loans
beyond the Commitment Period or pursuant to any amendment of this Agreement or
any of the other Loan Documents, all reasonable costs of collection and
enforcement of any and all thereof, including reasonable attorneys' fees.
"OPTIONAL RATE" means a rate selected by the Borrower to be calculated by
reference to Adjusted LIBOR or the CD Rate.
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"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to ERISA, or any successor entity.
"PERMISSIBLE INCREMENT" shall mean a minimum principal amount of One
Million Dollars ($1,000,000) and in minimum increments of One Hundred Thousand
Dollars ($100,000) above One Million Dollars ($1,000,000).
"PERMITTED ENCUMBRANCES" means (a) liens for taxes or assessments which are
not yet due, liens for taxes or assessments or liens of judgments which are
being contested, appealed or reviewed in good faith by appropriate proceedings
which prevent foreclosure of any such lien or levy of execution thereunder and
against which liens, if any, adequate insurance or reserves have been provided;
(b) to the extent that the value of the collateral in the aggregate does not
exceed $2,000,000, (x) pledges or deposits to secure payment of workers'
compensation obligations and (y) deposits or indemnities to secure public or
statutory obligations or for similar purposes, provided that, such obligations
shall be unsecured except to the extent of such deposits, unless required by
applicable law; (c) those minor defects which do not materially affect title to
the Borrower's assets; (d) liens imposed by law, such as carrier's,
warehousemen's and mechanics' liens, and other similar liens arising in the
ordinary course of business which secure payment of obligations not more than
sixty (60) days past due, including, without limitation, liens on goods which
are shipped pursuant to documentary letters of credit; (e) utility easements,
building restrictions, zoning ordinances and such other encumbrances or charges
against real property as are of a nature generally existing with respect to
properties of a similar character and which do not in any material way affect
the marketability of the same or interfere with the use thereof in the business
of the Borrower; (f) lessors' interests under Capitalized Leases; (g) those
further encumbrances (if any) shown on SCHEDULE 4.2.2 attached hereto; (h) liens
securing payment of the purchase price of fixed assets acquired (including on
assets of businesses acquired) or constructed after the date hereof, provided
that (other than liens on assets of businesses acquired) (1) the lien is solely
on property acquired or constructed within 60 days prior to the filing of such
lien, (2) at the time of such filing, the indebtedness secured by such lien does
not exceed the cost of such property, and (3) the incurrence of indebtedness
secured by such lien is not prohibited by any other covenant or limitation
contained herein; (i) licenses or leases of patents, trademarks or trade names;
and (j) refundings or extensions of the liens permitted above for amounts not
exceeding the principal amount of indebtedness secured by such liens at the time
of refunding or extension.
"PERSON" means and includes an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a Governmental
Authority.
"PLAN" means an Employee Benefit Plan which is covered by Title 4 of ERISA
or subject to the minimum lending standards under Section 412 of the Internal
Revenue Service as to which the Borrower or any Subsidiary may have any
liability.
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"POTENTIAL DEFAULT" means the occurrence of an event specified in SECTION
6.1(b), (d)(vi), (e), (f) or (g) hereof, which would, if uncured, become a
Default with the giving of notice or the passage of time, or both.
"PREPAYMENT PREMIUM" means the excess, if any, determined by the Banks of
(a) the present value, at the time of prepayment, of the interest payments which
would have been payable on account of an amount prepaid from the date of
prepayment until the end of the period during which interest would have accrued
at an Optional Rate, but for prepayment, over (b) the present value at the time
of a prepayment of interest payments calculated at the Reinvestment Rate. The
discount rate used by the Banks in determining such present values shall be the
Reinvestment Rate.
"PRIME RATE" shall mean the rate of interest established and quoted from
time to time by NationsBank as its "prime rate", such rate to change on the
effective date of each change in such established and quoted rate; provided that
the Prime Rate shall not necessarily be representative of the rate charged by
NationsBank on any particular loan or class of loans.
"PRO RATA SHARE" means, for any Bank, when used with reference to an
aggregate or total amount, an amount equal to the product of (a) such aggregate
or total amount, (b) a fraction, the numerator of which shall be such Bank's
Commitment and the denominator of which shall be the aggregate of the Banks'
Commitments.
"QUALIFIED INVESTMENTS" means (a) short term obligations of, or fully
guaranteed by, the United States of America or any agency thereof, (b)
commercial paper rated not less than "A-1" or better by Standard & Poor's
Corporation or "P-1" or better by Moody's Investors Service, Inc., (c) demand
deposit accounts maintained in the ordinary course of business, (d) certificates
of deposit issued by any of the Banks or by commercial banks having capital and
surplus in excess of One Hundred Million Dollars ($100,000,000), and (e) bank
repurchase agreements issued by a Federal Reserve member bank fully secured by
short term obligations of, or fully guaranteed by, the United States of America
or any agency thereof.
"REINVESTMENT RATE" means a rate which the Banks estimate, at the time of a
prepayment, they would receive upon reinvesting the principal amount of the
prepayment in an obligation which presents a credit risk substantially similar
(as determined in accordance with the commercial credit rating system then used
by the Banks) to that which is then presented by the Loan or Loans for a period
approximately equal to the balance of the period during which interest would
accrue on the portion of the amount of the Loan or Loans prepaid bearing
interest at an Optional Rate, but for prepayment.
"REQUIRED BANKS" means Banks in the aggregate holding at least Sixty-Six
and Two-Thirds Percent (66-2/3%) of the sum of (a) the unpaid principal amount
of the Loans, and (b) the outstanding face amount of all Standby Letters of
Credit; or, if no Loans or Standby Letters of Credit are outstanding, Banks in
the aggregate having at least Sixty-Six and Two-Thirds Percent (66-2/3%) of the
Commitments.
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"RESERVE REQUIREMENT" means, (i) for any LIBOR Loan for any LIBOR Interest
Period therefor, the daily average of the stated maximum rate (expressed as a
decimal) at which reserves, including any marginal, supplemental, or emergency
reserves, are required to be maintained during such Interest Period under
Regulation D by member banks of the Federal Reserve System against "EUROCURRENCY
LIABILITIES" (as such term is used in Regulation D), and (ii) for any CD Rate
Loan for any CD Rate Interest Period, the daily average of the stated maximum
rate (expressed as a decimal) at which such reserves are required to be
maintained during such CD Rate Interest Period in respect of nonpersonal time
deposits in Dollars, but in each case without benefit or credit of proration,
exemptions, or offsets that might otherwise be available from time to time under
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by the
Banks against any category of liabilities that includes deposits by reference to
which the Adjusted LIBOR or CD Rate is to be determined or any category or
extension of credit or other assets that includes LIBOR Loans or CD Rate Loans.
Each determination by the Agent of the Reserve Requirement shall be presumed to
be correct.
"STANDBY LETTER OF CREDIT APPLICATIONS" means, collectively, each
Application for Standby Letter of Credit, substantially in the form of EXHIBIT C
hereto, duly executed by the Borrower in favor of NationsBank to govern a
Standby Letter of Credit, as any of the same may be amended from time to time.
"STANDBY LETTERS OF CREDIT" means standby letters of credit issued by
NationsBank from time to time at the request of, and for the account of, the
Borrower pursuant to and in accordance with SECTION 2.2.4(b) hereof.
"SUBSIDIARY" means, as to any Person, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the Board of
Directors or other managers of such corporation are at the time owned, directly
or indirectly through one or more intermediaries, or both, by such Person.
1.2 Accounting Principles. Under the Loan Documents -- unless otherwise
stated -- (a) GAAP determines all accounting and financial terms and compliance
with financial covenants, (b) GAAP in effect on the date of this Agreement
determines compliance with financial covenants, (c) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period, and (d) while
the Borrower has any Consolidated Subsidiaries, all accounting and financial
terms and compliance with financial covenants must be on a Consolidated basis,
as applicable.
1.3 Other Definitions; Rules of Construction. Terms defined in the
introductory paragraph of this Agreement and used herein shall have the
respective meanings ascribed in such introductory paragraph. The foregoing
definitions shall be equally applicable to both the single and plural forms of
the defined terms. Use of the terms "herein", "hereof", and "hereunder" shall
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be deemed references to this Agreement in its entirety and not to the Section
clause in which such term appears.
SECTION 2. TERMS OF THE FACILITIES
----------------------------------
2.1 Credit. Subject to the terms and conditions of this Agreement, the
Banks will make the Facilities available to the Borrower as described in this
SECTION 2.
2.2 Loans/Standby Letters of Credit. The Banks will make revolving credit
loans to the Borrower as follows:
2.2.1 Loans. Subject to the terms and conditions hereof, each Bank
severally agrees to make Loans to the Borrower from time to time during the
Commitment Period in a principal amount not in excess of the unborrowed
portion of such Bank's Commitment on the borrowing date. During the
Commitment Period, the Borrower may use the Commitments by borrowing,
prepaying the Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Loans made by the Banks pursuant
hereto shall be evidenced by the Notes.
2.2.2 Interest. Prior to maturity or Default, the principal amount of
the Loans outstanding from time to time shall bear interest at a rate per
annum equal to the Base Rate, except that at the option of the Borrower,
exercised as provided in SECTION 2.3.3 hereof, interest may accrue prior to
maturity on any Permissible Increment of outstanding Advances of the Loans
not then subject to an Optional Rate, at the Adjusted LIBOR plus the
Applicable Margin or the CD Rate plus the Applicable Margin for the LIBOR
Interest Period or CD Rate Interest Period, as the case may be. At the
expiration of such Optional Rate on such Permissible Increment, unless, in
each case, the Borrower selects an Optional Rate as provided in SECTION
2.3.3 hereof, interest shall again accrue at the Base Rate. After maturity
or Default, interest shall be calculated in accordance with SECTION 2.3.1
hereof.
2.2.3 Payments of Principal and Interest. Interest only on the
outstanding Advances of the Loans from time to time which bear interest at
the Base Rate shall be due and payable in arrears on the first (1st) day of
each calendar quarter throughout the term of the Commitment Period.
Interest on each Permissible Increment of Advances outstanding which are
subject to an Optional Rate, shall be due and payable in arrears on the
last day of the LIBOR Interest Period or CD Rate Interest Period to which
that Permissible Increment is subject, provided that, with respect to each
Permissible Increment of Advances which is subject to an Optional Rate with
an Interest Period of 120 days or more, interest on such Permissible
Increment of Advances shall also be due and payable in arrears on the first
(1st) day of each calendar quarter throughout the term of the Commitment
Period. During each fiscal year, the Borrower shall make principal payments
in an amount sufficient that the outstanding principal balance of Advances
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under the Loans shall not exceed $45,000,000 for a 45 consecutive day
period chosen by the Borrower and notified to the Banks in the Compliance
Certificate next following the last day of such period. Unless the Loans
are sooner paid or extended by the Banks in their sole discretion, the
entire principal balance of the Loans, together with all accrued and unpaid
interest thereon, and all fees and charges payable in connection therewith,
shall be due and payable on the last day of the Commitment Period.
2.2.4 Borrowing Procedure.
(a) Loans. As the Borrower desires to obtain Loans hereunder,
the Borrower shall give the Agent notice of the Borrower's intention
to borrow pursuant to the Commitments by not later than 12:00 Noon
(Dallas time), on the proposed Banking Day of borrowing. Such notice
shall be on a written form of Application for Advance in the form of
EXHIBIT B hereto (an "APPLICATION") signed by an Authorized Officer;
provided that the Agent may, in its discretion, accept such notice
made orally by an Authorized Officer, or upon a request transmitted to
the Agent by telex, facsimile machine or other form of written
electronic communication and signed by an Authorized Officer (all such
requests for Advances not made by submission of an Application being
referred to herein as "INFORMAL REQUESTS"). The Agent may rely on any
Informal Request which shall have been received by it in good faith
from anyone reasonably believed to be an Authorized Officer. Each
Informal Request shall promptly be confirmed by a duly executed
Application if the Agent so requires and shall in and of itself
constitute a representation and warranty that no Default or Potential
Default has occurred and is continuing or would result from the making
of the requested Advance and that the requested Advance shall not
cause the principal balance of the Loans to exceed the aggregate
Commitments. The Agent shall notify the Banks of the Borrower's intent
to borrow by 1:00 P.M. (Dallas time) on the proposed Banking Day of
borrowing. Subject to the limitations of SECTION 2.2.1, the principal
amount of each Loan made by each Bank shall be that portion of the
aggregate loans made that the Commitment of such Bank bears to the
aggregate of the Commitments of the Banks. By 2:00 P.M. (Dallas time)
on each such borrowing date, each Bank severally agrees to make its
portion of the Loans then being made to the Borrower by making
available to the Agent, either by wire transfer to the Agent's main
office in Dallas, Texas, or by deposit to any correspondent account
which Agent may maintain with that Bank, the amount to be advanced by
such Bank. The Borrower hereby authorizes the disbursement of each
such Loan by deposit to the account of the Borrower with NationsBank,
and NationsBank as Agent, shall, by 2:00 P.M. (Dallas time) on the
date received, credit the amount so received from each Bank to the
account of the Borrower with NationsBank. The aggregate principal
amount of Loans made on any borrowing date shall be in minimum amounts
of Five Hundred Thousand Dollars ($500,000) and in integral multiples
of One Hundred Thousand Dollars ($100,000). All Advances by the Banks
and payments by the Borrower shall be recorded by the
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Banks on their books and records, and the principal amount outstanding
from time to time, plus interest payable thereon, shall be determined
from the books and records of the Banks. The books and records of the
Banks shall be presumed prima facie correct as to such matters.
(b) Standby Letters of Credit. Subject to the terms and
conditions hereof, the Commitments, at the option of the Borrower upon
delivery of a proper Standby Letter of Credit Application, may also be
utilized in the form of Standby Letters of Credit issued by
NationsBank for the account of the Borrower. Each Standby Letter of
Credit shall have an expiry date not later than the earlier of (i) one
(1) year from the date of issuance, or (ii) one (1) day before the
expiration of the Commitment Period. The sum of the aggregate of the
Standby Letters of Credit outstanding at any time and the aggregate
amount of unreimbursed drawings shall not exceed Five Million Dollars
($5,000,000), and, when taken together with the aggregate principal
amount of Loans then outstanding, shall at no time exceed the
aggregate Commitments. Each Standby Letter of Credit issued pursuant
to this SECTION 2.2.4(b) and each unreimbursed drawing thereunder
shall count against and reduce the Commitments by the amount of such
Standby Letter of Credit outstanding unless and until such Standby
Letter of Credit expires by its terms or otherwise terminates or the
amount of a drawing thereunder is reimbursed, in which event the
Commitments shall be reinstated by the amount of such Standby Letter
of Credit or the amount of such reimbursement, as the case may be. The
amount of any Standby Letter of Credit outstanding at any time for all
purposes hereof shall be the maximum amount which could be drawn
thereunder under any circumstances from and after the date of
determination. Each such Standby Letter of Credit shall conform to the
general requirements of NationsBank for the issuance of such credits,
as to form and substance, shall be subject to the Uniform Customs and
Practices for Documentary Credits (1983 Revision), International
Chamber of Commerce Publication No. 400 and shall be a letter of
credit which NationsBank may lawfully issue. If and to the extent a
drawing is at any time made under any Standby Letter of Credit, the
Borrower agrees to pay to NationsBank immediately and unconditionally
upon demand for reimbursement, in lawful money of the United States,
an amount equal to each amount which shall be so drawn, together with
interest from the date of such drawing to and including the date such
payment is reimbursed to NationsBank or converted to Loans as provided
herein. Until demand for reimbursement, such interest shall be
calculated at a variable rate per annum equal to the Base Rate, and
interest shall be calculated after such demand at a variable rate per
annum equal to the Base Rate plus Two Percent (2%). NationsBank shall
have the right to convert automatically the reimbursement Obligations
of the Borrower arising out of any such drawing into Loans, and the
Borrower and the other Banks hereby irrevocably authorize NationsBank
to refinance, without notice to the Borrower and the other Banks, the
reimbursement Obligations of the Borrower arising out of any such
drawing into Loans, evidenced by the Notes and for all purposes
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under, on and subject to the terms and conditions of this Agreement,
but without regard to the conditions precedent to making an Advance
under the Loans or to any requirement of this Agreement that each Loan
be in a minimum amount or multiple. This Agreement and the other Loan
Documents shall supersede any terms of any letter of credit
applications or other documents which are irreconcilably inconsistent
with the terms hereof or thereof. For administrative convenience,
NationsBank shall issue the Standby Letters of Credit for the account
of the Banks pursuant to the arrangements set forth below, and,
accordingly, the outstanding portion of each Standby Letter of Credit
shall be deemed to utilize the Commitment of each Bank according to
its Pro Rata Share. Each Bank severally agrees to participate in each
Standby Letter of Credit issued by NationsBank hereunder according to
its Pro Rata Share of the Commitments. Each Bank's participation shall
be funded by funding its Pro Rata Share of the Commitments upon any
drawing under any Standby Letter of Credit not reimbursed the same day
as a drawing thereunder by the Borrower; and thereupon, each such Bank
shall be entitled to, and NationsBank shall remit to each such Bank,
its respective Pro Rata Share of any amounts (including any interest
thereon) received by NationsBank in reimbursement of such drawing. The
Borrower agrees to pay to NationsBank for the pro rata benefit of the
Banks at the time of issuance (or renewal, if applicable) of each
Standby Letter of Credit, Standby Letter of Credit fees in the amount
of the per annum Applicable Margin for the face amount of each Standby
Letter of Credit subject to a minimum fee in each case of Five Hundred
Dollars ($500). Such fees shall be calculated for the period of time
the Standby Letter of Credit is to be outstanding on the basis that an
entire year consists of three hundred sixty (360) days. Such fees will
be allocated among the Banks in accordance with their respective Pro
Rata Shares and will be remitted by NationsBank to the Banks promptly
upon receipt. The Borrower also agrees to pay NationsBank for its own
account at the time of issuance (or renewal, if applicable) of each
Standby Letter of Credit, a fronting and issuance fee in the amount of
.125% per annum of the face amount of each Standby Letter of Credit.
The Borrower hereby authorizes NationsBank to collect such fees by
deducting the amount thereof from any account of the Borrower at
NationsBank, advising the Borrower to that effect. NationsBank agrees
to make demand for reimbursement of the amount of any drawing under
the Standby Letters of Credit if directed to do so by the Required
Banks and in any event no later than the last day of the Commitment
Period.
2.2.5 Method of Payments . All payments of principal and interest on
the Notes shall be made by the Borrower to the Agent at its main office in
Dallas, Texas, by 1:00 P.M. (Dallas time) on the date when due, and shall
be applied pro rata among the Banks in accordance with the outstanding
principal amounts of the Notes held by them. Each payment delivered to the
Agent for the account of any Bank shall be delivered by the Agent for the
account of such Bank no later than 2:00 P.M. (Dallas time) on the same day.
Optional prepayments of principal shall be a minimum of Five Hundred
Thousand
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Dollars ($500,000) and in integral multiples of One Hundred Thousand
Dollars ($100,000).
2.2.6 Use of Proceeds. The proceeds of Advances of Loans shall be
used for general corporate purposes.
2.3 Provisions Applicable to All Facilities. The following provisions are
applicable to all Facilities:
2.3.1 Calculation of Interest/Default Rate. To the extent permitted
by law, interest on outstanding Advances shall be calculated on the basis
that an entire year's interest is earned in three hundred sixty (360) days;
provided that, interest on outstanding Advances which are subject to the
Base Rate shall be calculated on the basis of a 365/366 day year, unless
the Base Rate is based on the Federal Funds Effective Rate, in which case
interest shall be calculated on the basis that an entire year's interest is
earned in three hundred sixty (360) days. If any installment of principal
or interest on any Loan becomes due and payable on a day other than a
Banking Day, the maturity of the installment of principal or interest shall
be extended to the next succeeding Banking Day, and interest shall be
payable during such extension of maturity. All payments received by the
Agent after 1:00 P.M. (Dallas time) on any Banking Day shall be deemed to
be received on the next succeeding Banking Day for the purpose of
calculation of interest. After the maturity of any Loan, whether by
acceleration or otherwise, or while and so long as there shall exist any
uncured Default, all Loans shall bear interest at a per annum rate equal to
Two Percent (2%) above the otherwise applicable rate. While there exists
any uncured Default but prior to maturity, interest accrued at the Default
rate shall be payable as accrued from the date of Default on demand by the
Agent as directed by the Required Banks. The Required Banks' determination
of the date of Default and the amount of interest due and payable at the
Default rate of interest shall be deemed prima facie correct, and the
Borrower acknowledges the right of the Required Banks to impose the
applicable Default rate of interest from the date the Default occurred even
though such Default may not have been known by the Banks or the Borrower
until a later date and even though the Borrower has paid interest at the
regular rate of interest during such period. After maturity, whether by
acceleration or otherwise, interest shall be payable as accrued and without
demand.
2.3.2 Manner of Payment - Immediately Available Funds. All payments
with respect to the Facilities shall be payable at the principal office of
the Agent in Dallas, Texas, in funds available for the Banks' immediate use
at that city, and no payment will be considered to have been made until
received in such funds. Except as otherwise provided in SECTION 8.19
hereof, all payments received on account of any of the Loans will be
applied first to the satisfaction of any interest which is then due and
payable, and to principal only after all interest which is due and payable
has been satisfied. All payments received by the Agent by 1:00 P.M. (Dallas
time) on a Banking Day shall be remitted to each Bank in accordance with
its Pro Rata Share of such payment by 2:00
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P.M. (Dallas time) that same Banking Day and payments received by the Agent
after 1:00 P.M. (Dallas time) on a Banking Day shall be remitted to each
Bank in accordance with its Pro Rata Share of such payment by 12:00 Noon
(Dallas time) on the next succeeding Banking Day.
2.3.3 Procedures for Electing Optional Rates. Optional Rates may be
elected only in accordance with the following procedures and subject to the
other conditions contained in this Agreement:
(a) No Optional Rate may be elected at any time a Default or a
Potential Default exists.
(b) The Borrower shall notify the Agent of its election or
renewal of an Optional Rate prior to 2:00 P.M. (Dallas time) not less
than three (3) Banking Days prior to the commencement of a LIBOR
Interest Period or CD Rate Interest Period specifying (i) the election
or renewal date (which shall be the first day of the relevant Interest
Period), (ii) the amount of the Loan (or Loans taken together) elected
or renewed which amount shall be in a Permissible Increment, (iii)
whether the Loan shall be subject to the Adjusted LIBOR or the CD
Rate, and (iv) the duration of the LIBOR Interest Period or CD Rate
Interest Period selected to apply thereto. The Agent shall immediately
notify the Banks whenever an Optional Rate is selected by the
Borrower.
(c) An election of an Optional Rate may be communicated to the
Agent only by an Authorized Officer of the Company. Such election may
be communicated by telephone or by telex, facsimile machine or other
form of written electronic communication, or by a writing delivered to
the Agent. The Borrower shall confirm in writing any election
communicated by telephone and such written confirmation shall be
signed by an Authorized Officer. The Agent shall be entitled to rely
on any verbal communication of the election of an Optional Rate which
is received by a designated employee of the Agent from anyone
reasonably believed in good faith by such employee to be an Authorized
Officer of the Borrower.
(d) Not more than four (4) Interest Periods may be selected at
any one time to apply to outstanding Advances of the Loans.
(c) Notwithstanding any other provision of this Agreement, in
the event that any Bank determines (which determination shall be
conclusive and binding upon the Borrower) that by reason of
circumstances affecting the London interbank market, adequate and
reasonable means do not exist for ascertaining the LIBOR for any LIBOR
Interest Period at a time when a rate calculated by reference to
Adjusted LIBOR is requested or when the outstanding balance of
Advances under the Loans is being maintained at a rate calculated by
reference
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to the Adjusted LIBOR, the Agent shall forthwith give notice of such
determination, confirmed in writing, to the Borrower. If such notice is
given, then no rate calculated by reference to the Adjusted LIBOR may be
selected by the Borrower and any outstanding principal balance of Advances
under the Loans then bearing interest at a rate calculated by reference to
the Adjusted LIBOR shall be converted, on the last day of the then current
LIBOR Interest Period, to the Base Rate.
(f) If any law or any governmental regulation, guideline or order or
interpretation or application thereof by any Governmental Authority charged
with the interpretation or administration thereof or compliance with any
request or directive of any central bank or other Governmental Authority
whether or not having the force of law (i) imposes, modifies or deems
applicable any reserve, special deposit or similar requirement against
assets held by, credit extended by, deposits with or for the account of, or
other acquisition of funds by, any Bank (other than requirements expressly
included herein in the determination of the Adjusted LIBOR or CD Rate
hereunder), or (ii) imposes upon any Bank any other condition or expense
with respect to this Agreement, or the making, maintenance or funding of
any part of the proceeds of an Optional Rate Advance or any security
therefor; and the result of any of the foregoing is to increase the cost
to, reduce the income receivable by, or impose any expense upon any Bank
with respect to the outstanding balance of the Loans bearing interest at
the Optional Rate or the making, maintenance or funding of any part thereof
by an amount which any Bank deems to be material (any Bank being deemed for
this purpose to have made, maintained or funded the proceeds of an Optional
Rate Advance from certificates of deposit), such Bank shall from time to
time notify the Borrower of the amount determined in good faith (using any
averaging and attribution methods employed in good faith) by such Bank
(which determination shall be presumed to be correct) to be necessary to
compensate such Bank for such increase in cost, reduction in income or
additional expense. Such amount shall be due and payable by the Borrower to
such Bank ten (10) Banking Days after such notice is given. If a Bank
desires to make a claim for increased cost, reduction in income or
additional expense, it shall send a certificate to the Borrower within
sixty (60) days after such Bank could calculate the increased cost,
reduction in income or additional expense, specifying the amount of such
increase in cost, reduction in income or additional expense (which
certificate shall be presumed prima facie to be correct as to such amount
due and payable); provided, however, that if a Bank fails to send a
certificate within such sixty (60) day period, such Bank shall, with
respect to compensation payable pursuant to this SECTION 2.3.3(f), only be
entitled to payment under this SECTION 2.3.3(f) for increased cost,
reduction in income or additional expense from and after the date sixty
(60) days prior to the date that such Bank sends such certificate.
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(g) Any payment of the outstanding principal balance bearing interest
at an Optional Rate on a day other than the last day of the corresponding
Interest Period (whether or not such payment is mandatory or automatic and
whether or not such payment is then due) shall be subject to
contemporaneous payment of the Prepayment Premium if, at the time of
prepayment, the Reinvestment Rate is less than the Optional Rate at which
interest accrues on such principal balance. If at the time of any voluntary
or mandatory prepayment of any portion of the principal of any Loan,
interest accrues at both an Optional Rate or Rates and at the Base Rate on
portions of a Loan or Loans, then any prepayment of principal will be
applied first to the portion of a Loan or Loans on which interest accrues
at the Base Rate and next to the portion or portions at which interest
accrues at an Optional Rate or Rates.
(h) In addition to the compensation required by SECTION 2.3.3(f) and
(g) hereof, the Borrower shall indemnify each Bank (on a net basis) against
any loss or expense (including loss of margin) which any Bank has sustained
or incurred as a consequence of any (i) attempt by the Borrower to revoke
(expressly, by later inconsistent notices or otherwise) in whole or in part
any notice stated herein to be irrevocable (the Agent having in its sole
discretion the option (A) to give effect to such attempted revocation and
obtain indemnity under this SECTION 2.3.3(h), or (B) to treat such
attempted revocation as having no force or effect, as if never made), or
(ii) default by the Borrower in the performance or observance of any
covenant or condition contained in the Loan Documents including without
limitation any failure of the Borrower to pay when due (by acceleration or
otherwise) any principal, interest or any other amount due hereunder or
under the Loan Documents. If any Bank sustains or incurs any such loss or
expense it shall notify the Borrower of the amount determined in good faith
by such Bank (which determination shall be conclusive and binding on the
Borrower) to be necessary to indemnify such Bank for such loss or expense.
Such amount shall be due and payable by the Borrower to such Bank ten (10)
Banking Days after such notice is given.
2.3.4 Fees.
(a) Agent Fee. In consideration of its services as Agent hereunder,
the Borrower shall pay the Agent an Agent's fee pursuant to the terms of a
letter agreement between the Agent and the Borrower dated this date.
(b) Non-Use Fee. The Borrower shall pay to the Agent for the pro rata
benefit of the Banks a Non-Use Fee on the average daily (beginning April
15, 1996) unborrowed portion of the Commitments, which fee shall be due and
payable quarterly in arrears; equal to .15% per annum when the Applicable
Margin for Adjusted LIBOR Loans is at Level I, .20% per annum when the
Applicable Margin for Adjusted LIBOR Loans is at Level II, and .25% when
the
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Applicable Margin for Adjusted LIBOR Loans is at Level III. Such Non-Use
Fee shall be calculated on the basis of the actual number of days elapsed
and a 365/366 day year.
2.3.5 Non-Receipt of Funds by the Agent.
(a) From the Banks. Unless the Agent shall have received notice from
a Bank by 2:00 P.M. (Dallas time) on a proposed Banking Day on which such
Bank is to provide funds to the Agent for a Loan to be made by such Bank
that such Bank will not make available to the Agent such funds, the Agent
may assume that such Bank has made such funds available to the Agent on the
date of such Loan in accordance with this Agreement and the Agent in its
sole discretion may, but shall not be obligated to, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent such Bank has not made such funds available to
the Agent, such Bank agrees 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 a rate per annum equal to the Federal
Funds Effective Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's
Loan for purposes of this Agreement. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Agent 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 the rate of interest applicable at
the time to the relevant Loan.
(b) From the Borrower. Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Banks 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 in its sole discretion may, but shall not
be obligated to, in reliance upon such assumption, cause to be distributed
to each Bank on such due date an amount equal to the amount then due such
Bank. If and to the extent the Borrower has not made such payment in full
to the Agent, each Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date
the Agent recovers such amount at a rate per annum equal to the Federal
Funds Effective Rate.
2.3.6 Interest Recapture. If the designated rate applicable to any Loan
exceeds the Maximum Rate, the rate of interest on such Loan shall be limited to
the Maximum Rate, but any subsequent reductions in such designated rate shall
not reduce the rate of
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interest thereon below the Maximum Rate until the total amount of interest
accrued thereon equals the amount of interest which would have accrued thereon
if such designated rate had at all times been in effect. In the event that at
maturity (stated or by acceleration), or at final payment of the Notes, the
total amount of interest paid or accrued is less than the amount of interest
which would have accrued if such designated rates had at all times been in
effect, then, at such time and to the extent permitted by law, the Borrower
shall pay an amount equal to the difference between (a) the lesser of the amount
of interest which would have accrued if such designated rates had at all times
been in effect and the amount of interest which would have accrued if the
Maximum Rate had at all times been in effect, and (b) the amount of interest
actually paid or accrued on the Notes.
2.3.7 Maximum Rate. Regardless of any provision contained in any Loan
Document, no Bank shall ever be entitled to contract for, charge, take, reserve,
receive, or apply, as interest on the Obligations, or any part thereof, any
amount in excess of the Maximum Rate, and, if the Banks ever do so, then such
excess shall be deemed a partial prepayment of principal and treated hereunder
as such and any remaining excess shall be refunded to the Borrower. In
determining if the interest paid or payable exceeds the Maximum Rate, the
Borrower and the Banks shall, to the maximum extent permitted under applicable
law, (a) treat all Loans as but a single extension of credit (and the Banks and
the Borrower agree that such is the case and that provision herein for multiple
Loans is for convenience only), (b) characterize any nonprincipal payment as an
expense, fee, or premium rather than as interest, (c) exclude voluntary
prepayments and the effects thereof, and (d) amortize, prorate, allocate, and
spread the total amount of interest throughout the entire contemplated term of
the Obligations; provided that, if the Obligations are paid and performed in
full prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Maximum Amount,
the Banks shall refund such excess, and, in such event, the Banks shall not, to
the extent permitted by law, be subject to any penalties provided by any laws
for contracting for, charging, taking, reserving, or receiving interest in
excess of the Maximum Amount. If the laws of the State of Texas are applicable
for purposes of determining the "Maximum Rate" or the "Maximum Amount," such
term shall mean the "indicated rate ceiling" from time to time in effect under
Article 1.04, Title 79, Revised Civil Statutes of Texas, as amended. Pursuant to
Article 15.10(b) of Chapter 15, Subtitle 79, Revised Civil Statutes of Texas,
1925, as amended, the Borrower agrees that such Chapter 15 (which regulates
certain revolving credit loan accounts and revolving triparty accounts) shall
not govern or in any manner apply to the Obligations.
2.4 Additional Standby Letter of Credit Provisions. The obligation of the
Borrower to reimburse any drawing under any Standby Letter of Credit shall be
absolute, unconditional and irrevocable and shall be paid and performed strictly
in accordance with the terms of this Agreement under all circumstances,
whatsoever, including, without limitation, the following:
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(a) any lack of validity or enforceability of any Standby Letter of
Credit or any Loan Document;
(b) any amendment or waiver of or consent to departure from the terms
of any Standby Letter of Credit or any Loan Document;
(c) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against the beneficiary of any Standby
Letter of Credit, any transferee of any Standby Letter of Credit, the Banks
or any other Person, whether in connection with the Loan Documents, such
Standby Letter of Credit or any unrelated transaction;
(d) any statement, draft or other document presented under any Standby
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(e) the surrender or impairment of any security for the performance or
observance of the terms of the Loan Documents or such Standby Letter of
Credit; or
(f) any circumstance, happening or admission whatsoever, whether or not
similar to any of the foregoing, including, without limitation, those
matters described below.
The parties benefitted by any Standby Letter of Credit shall be deemed to
be the agents of the Borrower, and except as expressly set forth herein, the
Borrower assumes all risks for their acts, omissions, or misrepresentations.
Neither NationsBank nor any of its affiliates or correspondents shall be
responsible for the validity, sufficiency, truthfulness or genuineness of any
document required to draw under any Standby Letter of Credit even if such
document should in fact prove to be in any and all respects invalid,
insufficient, fraudulent or forged, provided only that the document appears on
its face to be in accordance with the terms of the Standby Letter of Credit.
NationsBank, its affiliates and correspondents shall not be responsible for any
failure of any draft to bear reference or adequate reference to the applicable
Standby Letter of Credit or for the failure of any Person to note the amount of
any draft on any Standby Letter of Credit or to surrender or take up any Standby
Letter of Credit, each of which provisions may be waived by NationsBank, or for
errors, omissions, interruptions, or delays in transmission or delivery of any
messages or documents. Without limiting the generality of the foregoing, the
Borrower agrees that any action taken by NationsBank or any of its affiliates or
correspondents under or in connection with any Standby Letter of Credit shall be
binding upon the Borrower and shall not put NationsBank or any such affiliates
or correspondents under any such resulting liability to the Borrower.
NationsBank shall not be liable for consequential damages or for any action or
failure to take action under or in connection with any Standby Letter of Credit
except for any such action or failure to take action which constitutes gross
negligence or willful
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misconduct, it being expressly understood that NationsBank will be indemnified
for its own negligence. NationsBank is expressly hereby authorized to honor any
request for payment which is made under or in compliance with the terms of any
Standby Letter of Credit without regard to and without any duty on its part to
inquire into the existence of any disputes or controversies between the Borrower
and any beneficiary of any Standby Letter of Credit or any other Person or into
respective rights, duties or liabilities of any of them or whether any facts or
occurrences represented in any of the documents presented under any Standby
Letter of Credit are true and correct. No Person, other than the parties hereto,
shall have any rights of any nature under this Agreement or by reason hereof.
NationsBank shall not be liable to the Banks participating in any Standby Letter
of Credit except for gross negligence or willful misconduct in connection with
such Standby Letter of Credit. In no event shall NationsBank's reliance and
payment against documents presented under a Standby Letter of Credit appearing
on its face to substantially comply with the terms thereof be deemed to
constitute gross negligence or willful misconduct.
SECTION 3. WARRANTIES
--------------------
In order to induce the Banks to enter into this Agreement and to make
Advances pursuant to their Commitments and to induce NationsBank to issue
Standby Letters of Credit, the Borrower represents and warrants to the Banks,
which representations and warranties will survive the delivery of the Notes, the
making of the Loans and the establishment of the Facilities, that:
3.1 Corporation Existence and Standing. The Borrower and each Subsidiary is
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is qualified, in good standing
and authorized to do business in such other states wherein non-qualification
would have a material adverse effect on the Borrower or its operations.
3.2 Loan Documents - Corporate Power. Authorization and Validity. The
Borrower possesses the requisite power to enter into and execute the Loan
Documents to be executed by it and to perform its obligations thereunder. The
execution and delivery by the Borrower of the Loan Documents to be executed by
it have been duly authorized by proper corporate proceedings and each and all of
such documents constitute legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws and equitable principles affecting the rights of creditors.
3.3 Loan Documents - Compliance with Laws and Contracts. Neither the
execution and delivery by the Borrower of the Loan Documents, the consummation
of the transactions contemplated herein and therein, nor compliance with the
provisions hereof will violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any Subsidiary or the
Borrower's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Borrower or
any Subsidiary is a party or is subject, or by which the Borrower or any
Subsidiary, or its properties, is bound,
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or conflicts with or constitutes a default thereunder, or results in the
creation or imposition of any lien pursuant to the terms of any such indenture,
instrument or agreement.
3.4 Financial Statements. The December 31, 1995 Consolidated financial
statements of the Borrower heretofore delivered to the Banks were prepared in
accordance with GAAP in effect on the date such statements were prepared and
fairly present the financial condition of the Borrower and its Subsidiaries at
such date and the results of their operations for the period then ended. No
material adverse change in the condition of the Borrower and its Subsidiaries as
shown on the above-described financial statements has occurred since the date
thereof. Since such date, the Borrower and its Subsidiaries as a Consolidated
group have not incurred any contingent liabilities that could materially
adversely affect their financial condition.
3.5 Taxes. To the best of its knowledge after due investigation, the
Borrower and each of its Subsidiaries has filed all United States federal income
tax returns and all other tax returns which are required to be filed and has
paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Borrower and each of its Subsidiaries, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided. The charges, accruals and reserves on the books of the Borrower
and each of its Subsidiaries in respect of any taxes or other governmental
charges are adequate.
3.6 Litigation. No litigation or proceeding in any court or before any
other Governmental Authority is presently pending or threatened, and no claim
has been asserted, against the Borrower or any Subsidiary which, if adversely
determined, would materially affect the business, operations, properties or
prospects of the Borrower or any Subsidiary.
3.7 ERISA. The Borrower and each ERISA Affiliate is in compliance in all
material respects with all applicable provisions of ERISA, and neither the
Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other
than usual fees and assessments imposed by the PBGC. Neither a "reportable
event", nor a "prohibited transaction", has occurred under, nor has there
occurred any complete or partial withdrawal from, nor has there occurred any
other event which would constitute grounds for termination of or the appointment
of a trustee to administer any Plan (including any "multiemployer plan")
maintained for "employees" of the Borrower or any ERISA Affiliate, all within
the meanings ascribed by ERISA.
3.8 Defaults. No Default or Potential Default has occurred and is
continuing. There does not presently exist any material default or any
circumstance which with notice, lapse of time, or both, would constitute a
material default under the terms and conditions of any trust, debenture,
indenture, note, bond, instrument, mortgage, lease, agreement, order, decree, or
judgment to which the Borrower or any Subsidiary is a party or by which it or
its assets may be bound or affected.
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3.9 Liabilities. Investments and Guarantees. The Borrower and its
Subsidiaries have no material undisclosed liability, direct or indirect,
absolute or contingent, except those included within the financial statements
described in SECTION 3.4 above.
3.10 Compliance with Governmental Requirements. The Borrower and each of
its Subsidiaries are in substantial compliance with all applicable requirements
of law and of all Governmental Authorities that are material to the conduct of
their respective businesses.
3.11 Rights to Conduct Business. The Borrower and each of its Subsidiaries
possesses all franchises, licenses, permits, patents, copyrights, trademarks and
consents of appropriate Governmental Authorities required to own their
respective properties and as are necessary or useful to carry on their
respective businesses.
3.12 No Casualty. As of the date hereof, neither the business nor the
properties of the Borrower or any of its Subsidiaries is materially adversely
affected by any fire, explosion, accident, strike, lock-out or other labor
dispute, drought, storm, earthquake, embargo, act of God or of the public enemy
or other casualty.
3.13 Regulation U. The Borrower is not engaged in the business of extending
credit for the purposes of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the borrowings hereunder will be used to purchase or
carry margin stock or to extend credit to others for the purpose of purchasing
or carrying margin stock.
3.14 Governmental Consents. Each authorization by or consent, approval or
exemption of any Governmental Authority required in connection with the
execution and delivery by the Borrower of the Loan Documents, its performance
hereunder and thereunder, and the borrowings by the Borrower hereunder has been
obtained.
3.15 Subsidiaries. Except as disclosed on SCHEDULE 3.15 hereto, the
Borrower has no Subsidiaries or other ownership interest in any other Person.
3.16 Environmental Compliance. Except as disclosed on SCHEDULE 3.16 hereto,
or otherwise disclosed in writing to the Banks, (a) the Borrower and each of its
Subsidiaries is, to the best of Borrower's knowledge after due investigation, in
substantial compliance with all Environmental Laws, including, without
limitation, all Environmental Laws in jurisdictions in which the Borrower or any
of its Subsidiaries owns or operates, or has owned or operated, a facility or
site, arranges or has arranged for disposal or treatment of hazardous
substances, solid waste or other waste, accepts or has accepted for transport
any hazardous substances, solid waste or other wastes or holds or has held any
interest in real property or otherwise; (b) no litigation or proceeding arising
under, relating to or in connection with any Environmental Law is pending or
threatened against the Borrower or any of its Subsidiaries, any real property in
which the Borrower or any of its Subsidiaries holds or has held an interest or
on which it has conducted any past or present operation of the Borrower or any
of its Subsidiaries; and (c) no release,
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threatened release or disposal of hazardous waste, solid waste or other wastes
is occurring, or has occurred, on, under or to any real property in which the
Borrower or any Subsidiary holds any interest or performs any of its operations,
in violation of any Environmental Law. As used in this Section, "litigation or
proceeding" means any demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by a
Governmental Authority or other Person.
3.17 Marketable Title. The Borrower and each of its Subsidiaries has good
and marketable title to all of its real properties and good title to all of its
other properties and assets, including, without limitation, those shown on the
financial statements delivered pursuant to SECTION 3.4, except such properties
or assets as have been disposed of since the date of such financial statements
in the ordinary course of business or as are no longer used or useful in the
conduct of its business. Except for Permitted Encumbrances, none of the assets
of the Borrower or any of its Subsidiaries are subject to any mortgage, pledge,
security interest, title retention lien or other encumbrance. Except to evidence
Permitted Encumbrances, no financing statement or similar instrument which names
the Borrower or any of its Subsidiaries as debtor or relates to any of its
property has been filed in any state or other jurisdiction and remains
unreleased, and neither the Borrower nor any of its Subsidiaries has signed any
financing statement or similar instrument or security agreement authorizing the
secured party thereunder to file any such financing statement or similar
instrument.
3.18 Contracts of Surety. Except for endorsements by the Borrower or any of
its Subsidiaries of negotiable instruments for deposit or collection in the
ordinary course of business and except as set forth on SCHEDULE 4.2.10 hereto,
neither the Borrower nor any of its Subsidiaries is a party to any contract of
guaranty or surety.
3.19 Insolvency. Neither the Borrower nor any Subsidiary is "insolvent"
within the meaning of that term as defined in (S)101(29) of the Federal
Bankruptcy Code and each is able to pay its debts as they mature.
3.20 Regulation. The Borrower is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company" or an "affiliate of a holding company" or a "Subsidiary of a holding
company" within the meanings of the public Utility Holding Company Act of 1935,
as amended.
3.21 Full Disclosure. No information, exhibit, memorandum, or report
(excluding estimated future operating results) furnished by the Borrower to the
Banks in connection with the negotiation of the Loans contains any material
misstatement of fact, or omits to state any fact necessary to make the
statements contained therein not materially misleading, and all estimated future
operating results, if furnished, were prepared on the basis of assumptions,
data, information, tests or other conditions believed to be valid or accurate or
to exist at the time such estimates were prepared and furnished. There presently
exists no fact or circumstance relative to the Borrower or any Subsidiary
whether or not disclosed, which is presently anticipated to have a material
adverse effect upon the business, operations, financial condition, properties or
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prospects of the Borrower and its Subsidiaries or the ability of the Borrower or
any Subsidiary to fully perform its obligations under the Loan Documents.
3.22 General. All statements contained in any certificate or financial
statement prepared and delivered by or on behalf of the Borrower to any Bank
under the Loan Documents shall constitute representations and warranties made by
the Borrower hereunder.
SECTION 4. COVENANTS
--------------------
4.1 Affirmative Covenants. So long as any Bank has a Commitment hereunder,
any Standby Letter of Credit is outstanding, and until the Obligations are paid
in full, unless the Required Banks shall otherwise consent in writing, the
Borrower will:
4.1.1 Financial Reporting. Furnish the Banks:
(a) As soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year, Consolidated financial
statements of the Borrower certified after audit by certified public
accountants acceptable to the Banks including a balance sheet,
statement of income and retained earnings and a statement of cash
flows, with accompanying notes to financial statements all prepared in
accordance with GAAP on a Consolidated basis consistent with prior
years unless specifically noted thereon, and accompanied by an
unqualified opinion of said accountants, the auditor's management
letter describing any deficiencies in the internal controls or other
matters of significance discovered by such auditor during the course of
the audit, and further accompanied by unaudited consolidating balance
sheets and statements of income and a certificate of the chief
financial officer or treasurer of the Borrower that there exists no
Default or Potential Default under the Loan Documents, or if any
Default or Potential Default exists, stating the nature and status
thereof;
(b) As soon as possible, but in any event within forty-five (45)
days after the end of each of the Borrower's first three (3) fiscal
quarters, similar unaudited Consolidated statements of the Borrower as
of the end of such quarter and the results of their operations for the
portion of the fiscal year then elapsed, and consolidating balance
sheets and income statements, all prepared in accordance with GAAP on a
Consolidated and consolidating basis consistent with prior periods,
unless specifically otherwise noted thereon, and accompanied by the
certificate of the chief financial officer or treasurer of the Borrower
that there exists no Default or Potential Default under the Loan
Documents or if any Default or Potential Default exists, stating the
nature and status thereof;
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(c) As soon as possible, but in any event within forty-five (45)
days after the end of each fiscal quarter, a fully executed and
completed Compliance Certificate, signed by the chief financial officer
or treasurer of the Borrower;
(d) As soon as possible, but in any event within five (5) days
after the Borrower becomes aware thereof, a written statement signed by
an Authorized Officer of the Borrower as to the occurrence of any
Default or Potential Default stating the specific nature thereof, the
Borrower's intended action to cure the same and the time period in
which such cure is to occur;
(e) As soon as possible, but in any event within ten (10) days
after the commencement thereof, a written statement describing any
litigation, arbitration, administrative or other proceeding instituted
by or against the Borrower or any Subsidiary which, if adversely
determined, may have a material effect upon the business, operations,
financial condition, properties or prospects of the Borrower and its
Subsidiaries as a Consolidated group;
(f) As soon as possible, but in any event within ten (10) days
after the Borrower becomes aware thereof, a written statement signed by
an Authorized Officer of the Borrower describing any "reportable event"
or "prohibited transaction" which has occurred with respect to any Plan
(all within the meanings ascribed by ERISA) and the action which the
Borrower proposes to take with respect thereto;
(g) As soon as possible, but in any event within ten (10) days
after the filing with the Securities and Exchange Commission, or any
successor thereto, or any state securities regulatory authority, copies
of all registration statements and all periodic and special reports
required or permitted to be filed under federal or state securities
laws and regulations; and
(h) As soon as they are proposed and immediately upon their being
made, any amendments to the Note Purchase Agreements and Canadian
Revolver described in SECTION 4.2.6(g) and (h).
(i) Such other information as the Banks may from time to time
reasonably request.
4.1.2 Minimum Net Worth. Maintain at all times a Consolidated Net Worth
of not less than the sum of (a) $80,000,000, (b) 75% of the net proceeds
received by the Borrower from the issuance of equity securities, and (c)
50% of Consolidated net income from July 1, 1995 to the date as of which
any calculation is being made hereunder, taken as one accounting period,
but without deduction for any net loss during any fiscal quarter.
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4.1.3 Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
Ratio of not less than 1.15 to 1.0.
4.1.4 Leverage Ratio. Maintain a Leverage Ratio of not greater than .60
to 1.0 at the last day of each September 30, December 31, March 31 and June
30.
4.1.5 Notice of Material Adverse Change. Give prompt notice in writing
to the Banks of the occurrence of any development, financial or otherwise,
including pending or threatened litigation, arbitration, administrative or
other proceeding which might materially adversely affect the business,
properties, affairs or prospects of the Borrower and its Subsidiaries as a
Consolidated group or the ability of the Borrower to perform the
Obligations.
4.1.6 Conduct of Business. Carry on and, subject to the exceptions to
the prohibitions in SECTIONS 4.2.3 and 4.2.12, cause each Subsidiary to
carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as presently conducted, and do
all things necessary to remain duly incorporated, validly existing and in
good standing as a corporation in its jurisdiction of incorporation and
maintain all requisite authority to conduct its respective business in each
jurisdiction in which conducted.
4.1.7 Taxes. Pay and cause each Subsidiary to pay when due all taxes,
assessments and governmental charges and levies upon it or its income,
profit or property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have
been created.
4.1.8 Insurance. Maintain and cause each Subsidiary to maintain in full
force and effect adequate insurance in amounts and against liabilities
consistent with sound business practice and upon terms acceptable to the
Banks.
4.1.9 Compliance with Laws. Comply and cause each Subsidiary to comply
in all material respects with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which the Borrower or any
Subsidiary may be subject, including, without limitation, all Environmental
Laws and ERISA.
4.1.10 Maintenance of Properties. Do and cause each Subsidiary to do
all things reasonably necessary to maintain, preserve, protect and keep its
material properties in good repair, working order and condition, and make
all necessary and proper repairs, renewals and replacements so that its
business may be properly conducted at all reasonable times. To the extent
permitted by SECTION 4.2.1, nothing herein shall prevent the Company or any
Subsidiary from selling or abandoning properties which are not material and
are of no further use.
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4.1.11 Inspection. Permit and cause each Subsidiary to permit the Banks
at their own expense, by their representatives and agents, to inspect any
of the properties, corporate books and financial records of the Borrower
and its Subsidiaries, to examine and make copies of the books of accounts
and other financial records of the Borrower and its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries with, and to be advised as to the same by, its officers at
such reasonable times as the Banks may designate.
4.1.12 Trade Accounts. Pay and cause each Subsidiary to pay all trade
accounts in accordance with industry practices.
4.1.13 Use of Proceeds. Use the proceeds of the Loans solely for the
purposes herein described.
4.1.14 Reports. File and cause each Subsidiary to file, as appropriate,
on a timely basis, annual reports, operating records and any other reports
or filings required to be made with any Governmental Authority.
4.1.15 Licenses. Maintain and cause each Subsidiary to maintain in full
force and effect all material operating permits, licenses, franchises, and
rights used by or useful to the Borrower or a Subsidiary in the ordinary
course of business.
4.1.16 Notice of Environmental Matters. Notify the Banks immediately
upon obtaining knowledge that to the extent it could reasonably be expected
to result in a material adjustment to its financial statements as required
by GAAP:
(a) any premises which have at any time been owned or occupied
by or have been under lease to the Borrower or any Subsidiary are the
subject of an environmental investigation by any Governmental Authority
having jurisdiction over the regulation of hazardous substances or
Environmental Laws, the purpose of which investigation is to quantify
the levels of hazardous substances located on such premises, or
(b) the Borrower or any Subsidiary has been named or is
threatened to be named as a party responsible for the possible
contamination of any real property or ground water with hazardous
substances, including, but not limited to the contamination of past and
present waste disposal sites.
If the Borrower or any Subsidiary is notified of any event described at
items (a) or (b) above, the Borrower shall, upon request of the Required
Banks, immediately engage or cause the Subsidiary to engage a firm or firms
of engineers or environmental consultants appropriately qualified to
determine as quickly as practical the extent of contamination and the
potential financial liability of the Borrower or the Subsidiary with
respect thereto, and the Banks shall be provided with a copy of any report
prepared by such firm or by
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any Governmental Authority as to such matters as soon as any such report
becomes available to the Borrower or the Subsidiary, provided, however,
that as any such report will likely be prepared in anticipation of
litigation with respect to such alleged contamination, it shall be reviewed
only by such officers of the Banks as have reason to know its contents, and
the Banks, unless required by law, shall not disclose the contents or
existence of such report to any other person whomsoever without the prior
written consent of Borrower.
4.1.17 Subsidiary Guaranties. At the sole discretion of the Required
Banks at any time after the assets of the Subsidiaries are at least twenty
percent (20%) of the Borrower's Consolidated total assets, the Borrower,
upon request of the Required Banks, will cause each Subsidiary to execute
and deliver a Guaranty and deliver to Agent such resolutions, opinions and
other Loan Documents in connection therewith as Agent may request, all in a
form reasonably satisfactory to the Banks.
4.2 Negative Covenants. So long as any Bank has a Commitment hereunder, any
Standby Letter of Credit is outstanding, and until the Obligations are paid in
full, unless the Required Banks shall otherwise consent in writing, the Borrower
will not, nor will it permit any Subsidiary to:
4.2.1 Dispose of Property. Except in the ordinary course of business,
sell, transfer, lease or otherwise dispose of its assets or properties, or
discount, with or without recourse, any of its accounts receivable, except
(a) sales from inventory in the ordinary course of business, (b) occasional
sales of obsolete assets for consideration not less than the fair market
value thereof, (c) the sale, discount, or transfer of delinquent accounts
receivable in the ordinary course of business for purposes of collection,
and (d) sales, transfers, leases and other dispositions of other assets,
including discounts of accounts receivable, not exceeding Five Million
Dollars ($5,000,000) in the aggregate in any twelve (12) month period or
10% of Consolidated Net Worth in the aggregate.
4.2.2 Liens. Create, incur, or suffer to exist, any mortgage, pledge,
lien or other encumbrance upon any of its properties or assets, real or
personal, tangible or intangible, whether now owned or hereafter acquired,
except Permitted Encumbrances.
4.2.3 Merger, Etc. Enter into any merger or consolidation with, or
acquisition of, any Person or any substantial portion of its assets, except
so long as there exists no Default or Potential Default and no Default or
Potential Default would be occasioned thereby, and as long as the Borrower
is the survivor, the Borrower may merge or consolidate with or acquire
stock or assets or assume liabilities of a Person engaged in the same
business as the Borrower, or one similar thereto.
4.2.4 Dividends. Other than to the Borrower, declare or pay any
dividends or make any distribution on account of its stock, in cash or
other property other than in common stock of the Borrower, or purchase,
redeem, retire or otherwise acquire any
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shares of stock of the Borrower, except so long as no Default or Potential
Default then exists or would be occasioned by such payment, purchase,
redemption, retirement or acquisition, the Borrower may pay legal dividends
and make such legal purchases, redemptions and acquisitions which in the
aggregate do not exceed the sum of $8,000,000, plus 50% of Consolidated net
income earned after June 30, 1995, taken as one accounting period.
4.2.5 Sell and Leaseback. Enter into any arrangements, directly or
indirectly, with a Person whereby the Borrower or any Subsidiary shall sell
or transfer any property used or useful in its business and then or
thereafter rent or lease such property for substantially the same purpose
as the property sold or transferred.
4.2.6 Indebtedness. Create, incur or suffer to exist any Indebtedness
or liability under commercial or standby letters of credit, except (a) the
Obligations, (b) that listed in SCHEDULE 4.2.6, (c) trade accounts and
normal business accruals payable in the ordinary course of business, (d)
true operating leases so long as the total rental payments thereunder do
not exceed one percent (1%) of net sales in the aggregate in any fiscal
year, (e) commercial letters of credit in an amount not to exceed
$5,000,000 in the aggregate at any time outstanding, (f) other Indebtedness
not to exceed 10% of Consolidated Net Worth at any time, (g) $92 million in
Indebtedness issued pursuant to the Note Purchase Agreements between the
Company and the purchasers listed therein dated as of July 23, 1993, and
the other to be dated subsequent to the date hereof, and (h) the Canadian
Dollar equivalent of U.S. $10 million, pursuant to a revolving credit
facility for the Borrower's Canadian operations on terms and subject to
documentation satisfactory to the Required Banks.
4.2.7 Investments. Make or suffer to exist any investments, or
commitments therefor, in any other Person, except (a) Qualified
Investments, (b) those in existence on the date hereof and included within
the financial statements described in SECTION 3.4, (c) as permitted by
SECTIONS 4.2.3 and 4.2.8 hereof, (d) investments in and guarantees of
Indebtedness of joint ventures and investments in the stock of customers
received in lieu of defaulted accounts receivable which do not exceed in
the aggregate ten percent (10%) of Consolidated Net Worth at any time, and
(e) other investments which do not exceed $1,000,000 in common stock and
other securities which are not Qualified Investments.
4.2.8 Loans and Advances. Make any loan, disbursement or advance to, or
investment in, any Person, except (a) extensions of trade credit and
advances to suppliers in the ordinary course of business, and (b) loans,
disbursements or advances to employees not exceeding Five Hundred Thousand
Dollars ($500,000) in the aggregate outstanding at any time.
4.2.9 Guarantees. Make or suffer to exist any guarantees of or
otherwise be responsible in any manner with respect to the obligations of
any other Person, except (a) endorsements of instruments for deposit or
collection in the ordinary course of
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business, (b) guarantees in favor of the Banks, (c) as permitted by SECTION
4.2.7(d), (d) guarantees of Indebtedness of wholly-owned Subsidiaries, and
(e) upon delivery to the Agent of Guarantees required by SECTION 4.1.17
hereof, guarantees of the Subsidiaries of the Indebtedness described in
SECTION 4.2.6(g) hereof.
4.2.10 Special Corporate Transactions. Engage in any material
transaction with any Person (other than Subsidiaries) other than on an
arm's length basis.
4.2.11 Accounting Policies. Change its fiscal year or any of its
significant accounting policies, except to the extent necessary to comply
with GAAP.
4.2.12 Change of Business. Make any material change in the nature of
its business as carried on at the date of this Agreement.
4.2.13 Benefit Plans. Permit any condition to exist in connection with
any Plan which could result in the Borrower or a Subsidiary incurring any
material liability, fine or penalty.
4.2.14 Margin Stock. Use or cause or permit the proceeds of the Loans
to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended from time to time.
4.2.15 Other Agreements. Enter into any agreement containing any
provision which would be violated or breached in any material respect by
the performance of its obligations under this Agreement or under any other
Loan Document.
4.2.16 Judgments. Permit uninsured judgments and/or monetary penalties
rendered against it or any Subsidiary in excess of Seven Hundred Fifty
Thousand ($750,000) in the aggregate in any judicial or administrative
proceeding to remain unsatisfied for a period in excess of thirty (30) days
unless such judgments and/or penalties are being contested in good faith by
appropriate proceedings and execution upon any such judgments have been
stayed and appropriate reserves have been established with respect thereto.
4.2.17 Principal Office. Change the location of its principal office
unless it gives not less than thirty (30) days prior written notice of such
change to the Agent.
SECTION 5. CONDITIONS PRECEDENT TO LOANS
----------------------------------------
5.1 Conditions to Initial Advance. The Banks shall not be obligated to make
the initial Advances under their Commitments, and NationsBank shall not be
obligated to issue any Standby Letter of Credit unless (a) no Default or
Potential Default shall then exist, (b) all legal matters
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incident to such borrowing shall be satisfactory to the Banks and their counsel,
and (c) the following conditions precedent shall have been fulfilled to the
satisfaction of the Banks and all of the documents required to be delivered to
the Agent or the Banks shall be satisfactory to the Agent and the Banks in form
and substance:
5.1.1 Opinion of Counsel. The Banks shall have received a favorable
written opinion of counsel to the Borrower as to those matters reasonably
required by the Banks.
5.1.2 Organizational Documents. The Agent shall have received certified
copies of each of the Borrower's and each (if marked by an asterisk on
SCHEDULE 3.15) Subsidiary's articles of incorporation and by-laws, both as
amended, accompanied by recent certificates of good standing issued by the
Secretary of State of its state of incorporation and those states in which
the Borrower or such Subsidiary owns property, maintains offices or
conducts business.
5.1.3 Corporate Resolutions. The Agent shall have received certified
copies of resolutions of the Board of Directors of the Borrower authorizing
the execution and delivery of the Loan Documents, and designating by name
and title the officer or officers of the Borrower authorized to execute the
Loan Documents.
5.1.4 Incumbency Certificates. The Agent shall have received incumbency
certificates, executed by the secretary or assistant secretary of the
Borrower, which shall identify the name and title and bear the signature of
the officers of the Borrower authorized to sign the Loan Documents, and the
Banks shall be entitled to rely upon such certificates until informed of
any change in writing by the Borrower.
5.1.5 Loan Documents. The Agent shall have received the Loan Documents
duly executed by the authorized officers of the Borrower.
5.1.6 Insurance. The Agent shall have received evidence of insurance
showing that the insurance required hereunder to be maintained by the
Borrower and its Subsidiaries is in full force and effect.
5.1.7 Facility Fees. The fee due to the Agent before the first Advance
or Standby Letter of Credit described in the letter agreement dated this
date between the Agent and the Borrower shall have been paid to the Agent.
5.1.8 Repayment of Existing Bank Indebtedness. Repayment in full of all
amounts outstanding pursuant to that Credit Agreement among the Borrower,
NationsBank of Texas, N.A., Bank One, Indianapolis, National Association,
Bank of America Illinois, and NationsBank of Texas, N.A., as Agent, dated
as of July 23, 1993, as amended, and cancellation of all commitments
thereunder.
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5.1.9 Additional Documentation. Such other documents as the Banks may
reasonably request shall have been delivered to the Agent.
5.2 Conditions to Subsequent Advances. NationsBank shall not be obligated
to issue Standby Letters of Credit and the Banks shall not be obligated to make
subsequent Advances under their Commitments unless (a) no Default or Potential
Default shall then exist, (b) all legal matters incident to such borrowing shall
be satisfactory to the Banks and their counsel, and (c) each representation and
warranty contained in SECTION 3 hereof shall be and remain true and correct,
except to the extent any such representation or warranty relates solely to an
earlier date and except changes reflecting transactions permitted by this
Agreement. Each borrowing notice or other request for financial accommodation
under the Facilities shall constitute a representation or warranty by the
Borrower that the applicable conditions contained in this SECTION 5 have been
satisfied and shall also constitute the representation and warranty that no
material adverse change affecting the Borrower's business, operations, financial
condition, properties or prospects has occurred since the date of the last
financial statements furnished to the Banks pursuant to SECTION 4.1.1 hereof.
SECTION 6. DEFAULT
------------------
6.1 Events of Default. The occurrence of any one or more of the following
events shall constitute a Default:
(a) nonpayment of any payment of principal or interest on any of the
Notes, or any fee or other payment Obligation in connection with any
Facility; or breach by the Borrower or any Subsidiary of any provision of
SECTION 4.1 or SECTION 4.2;
(b) the breach of any other provision of the Loan Documents which is
not remedied within fifteen (15) days after written notice from Agent;
(c) any representation or warranty made by the Borrower or any
Guarantor to the Banks under or in connection with the Loan Documents is
false or misleading in any material respect as of the date made;
(d) the Borrower or a Subsidiary shall (i) have an order for relief
entered with respect to it under the Federal Bankruptcy Act, (ii) admit in
writing its inability to pay its debts generally as they become due, (iii)
make an assignment for the benefit of creditors, (iv) apply for, consent
to, or acquiesce in, the appointment of a receiver, trustee, liquidator or
similar official for it or any substantial part of its property, (v)
institute any proceeding seeking any order for relief under the Federal
Bankruptcy Act or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debtors under any law relating
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to bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi) fail to have
vacated or set aside within thirty (30) days of its entry any order of
a court appointing without its consent a receiver, trustee, liquidator
or similar official for it or any substantial part of its property;
(e) without the application, approval or consent of the Borrower
or a Subsidiary, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower, or a Subsidiary or any
substantial part of its property, or any proceeding described in item
(d) shall be instituted against the Borrower or a Subsidiary and such
appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of thirty (30) consecutive days;
(f) any order is entered in any proceedings against the Borrower
or a Subsidiary decreeing the dissolution or split-up of the Borrower
or a Subsidiary or the divestiture of a substantial portion of the
assets of the Borrower or a Subsidiary, which order is not vacated or
set aside within thirty (30) days of its entry, or any Governmental
Authority shall condemn, seize or otherwise appropriate, or take
custody or control of all or any substantial portion of the property
of the Borrower or a Subsidiary;
(g) there occurs any Reportable Event or Prohibited Transaction
under, or any complete or partial withdrawal from, or any other event
which would constitute grounds for termination of or the appointment
of a trustee to administer, any Plan maintained by the Borrower or any
ERISA Affiliate for the benefit of its Employees (as such terms are
defined in ERISA) which could have a material adverse effect on the
financial condition of the Borrower or any of its Subsidiaries;
(h) the failure of the Borrower or a Subsidiary to pay when due
or within any applicable grace or cure period its obligations for (A)
other borrowed money, (B) the deferred purchase price of property or
services (exclusive of the failure to pay trade payables), or (C)
trade payables more than thirty (30) days past due, if such defaulted
or past due obligations in (A) through (C) exceed One Million Dollars
($1,000,000) in the aggregate at any time, or the default by the
Borrower or any Subsidiary in the performance of any other term,
provision or condition contained in any agreement under which any such
obligation was created or governed, the effect of which is to permit,
with the giving of notice or lapse of time, or both, the holder of
such obligation to cause such obligation to become due prior to its
stated maturity, unless such default is waived in writing by the
holder of such obligation; or any of such obligation shall be validly
declared to be due and payable or required to be prepaid prior to the
stated maturity thereof;
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(i) any default by a Guarantor under a Guaranty or the
termination or revocation or the attempted termination or revocation
of a Guaranty by a Guarantor; or
(j) If a Person controls (as that term is defined in the second
sentence of the definition of Bank Affiliate) the Borrower.
6.2 Acceleration. If any Default described in SECTION 6.1, ITEM (D) or
(E), occurs, the commitments of the Banks to make, renew or convert Advances of
the Loans, or to issue Standby Letters of Credit hereunder shall automatically
terminate and the Obligations (including, without limitation, an obligation to
deposit with the Agent a sum equal to the aggregate face amount of the
outstanding Standby Letters of Credit pursuant to SECTION 6.4 hereof) shall
immediately become due and payable without any election or action on the part of
any Bank. If any other Default occurs, then upon the declaration of the
Required Banks, or the Agent, at the direction of the Required Banks, the
obligations of the Banks to make, renew or convert Advances of the Loans, and
the obligation of NationsBank to issue Standby Letters of Credit under this
Agreement shall terminate and the Obligations (including, without limitation, an
obligation to deposit with the Agent a sum equal to the aggregate face amount of
the outstanding Standby Letters of Credit pursuant to SECTION 6.4 hereof) shall
immediately become due and payable. In either event, the Obligations shall
become immediately due and payable without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives. The
remedies of the Banks specified in this Agreement and the other Loan Documents
shall not be exclusive and the Banks may avail themselves of any of the remedies
provided by law as well as any equitable remedies available to the Banks, and
each and every remedy shall be cumulative and concurrent and shall be in
addition to every other remedy now or hereafter existing at law or in equity.
6.3 Subrogation. NationsBank shall, to the extent of any payments made by
NationsBank under any Standby Letter of Credit, be subrogated to all rights of
the beneficiary of such Standby Letter of Credit as to all obligations of the
Borrower with respect to which such payment shall have been made by NationsBank.
6.4 Deposit to Secure Reimbursement Obligations. When any Default or
Potential Default has occurred and is continuing, the Required Banks or the
Agent at the direction of the Required Banks may demand that the Borrower
immediately pay to the Agent an amount equal to the aggregate outstanding amount
of the Standby Letters of Credit and the Borrower shall immediately upon any
such demand make such payment. The Borrower hereby irrevocably grants to the
Agent for the benefit of NationsBank (for itself and any Bank participating in
such Standby Letters of Credit) a security interest in all funds deposited to
the credit of or in transit to any deposit account or fund established pursuant
to this SECTION 6.4, including, without limitation, any investment of such fund.
The Borrower hereby acknowledges and agrees that the Agent and NationsBank would
not have an adequate remedy at law for failure by the Borrower to honor any
demand made under this SECTION 6.4 and that the Agent and NationsBank shall have
the right to require the Borrower specifically to perform its undertakings in
this SECTION 6.4
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whether or not any draws have been made under any Standby Letter of Credit. In
the event the Agent or NationsBank makes a demand pursuant to this SECTION 6.4,
and the Borrower makes the payment demanded, the Agent agrees to invest the
amount of such payment for the account of the Borrower and at the Borrower's
risk and direction in Qualified Investments.
6.5 Preservation of Rights. No delay or omission of the Agent or any Bank
to exercise any power or right under the Loan Documents shall impair such power
or right or be construed to be a waiver of any Default or an acquiescence
therein, and any single or partial exercise of any power or right shall not
preclude other or further exercise thereof or the exercise of any other power or
right. No Advance hereunder shall constitute a waiver of any of the conditions
of any Bank's obligation to make further Advances, nor, in the event Borrower is
unable to satisfy any such condition, shall a waiver of such condition in any
one instance have the effect of precluding any Bank from thereafter declaring
such inability to be a Default hereunder. No course of dealings shall be
binding upon the Agent or any Bank.
SECTION 7. THE AGENT
--------------------
7.1 Appointment. Each of the Banks hereby designates and appoints
NationsBank as the Agent of such Bank under this Agreement and the other Loan
Documents, and each such Bank authorizes NationsBank, as Agent to act as the
Agent for such Bank. The duties of the Agent shall be administrative in nature,
and the Agent shall not have a fiduciary relationship in respect of any Bank by
reason of this Agreement, and the Agent shall not be deemed to have assumed any
obligation towards or relationship or agency or trust with or for the Borrower.
The provisions of this SECTION 7 are solely for the benefit of the Agent and the
Banks, and the Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof.
7.2 Powers. The Agent shall have and may exercise such powers hereunder
and under the other Loan Documents as are specifically delegated to the Agent by
the terms hereof and thereby, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the Banks, or any
obligation to the Banks to take any action hereunder or thereunder except any
action specifically provided by this Agreement or the other Loan Documents to be
taken by the Agent. The Agent shall take such action or refrain from taking
such action as is directed by the Required Banks, or, if this Agreement or the
Loan Documents requires that such direction shall be given by all of the Banks,
then by all the Banks.
7.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
to be taken by it under or in connection with this Agreement or the other Loan
Documents except for its or for such person's own gross negligence or willful
misconduct, or be responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent or any of the Banks under or in connection with this Agreement or for the
value, validity, effectiveness, genuineness,
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enforceability or sufficiency of this Agreement or any of the other Loan
Documents or for any failure of the Borrower to perform the Obligations. The
Agent shall not be under any obligation to any of the Banks to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or the conditions of, this Agreement. The Agent shall be fully justified in
failing or refusing to take any action hereunder or under the other Loan
Documents unless it shall first be indemnified to its satisfaction by the Banks
pro rata against any and all liability and expense which may be incurred by it
or by reason of taking or continuing to take any such action.
7.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person. The Agent shall in all cases be fully protected in acting, or
refraining from acting, hereunder or under the other Loan Documents in
accordance with written instructions signed by the Required Banks pursuant to
SECTION 6.2, 6.4, 7.5, 7.9, or 8.1, or signed by all of the Banks as required by
SECTION 8.1 hereof, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all the Banks and on all holders of the
Notes. Further, the Agent shall be entitled to rely, with respect to legal
matters, upon the opinion of counsel selected by the Agent. The Agent may deem
and treat the payee of any Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof shall
have been filed with the Agent. Any requests, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
7.5 Defaults/Notices. Except for a Default specified in SECTION 6.1(A)
hereof, the Agent shall not be deemed to have knowledge of the occurrence of any
Default or Potential Default unless the Agent has received written notice from a
Bank or the Borrower specifying such Default or Potential Default and stating
that such notice is a "NOTICE OF DEFAULT". In the event that the Agent receives
such a notice, the Agent shall promptly give written notice thereof to the
Banks. Any time a Bank has actual knowledge of the occurrence of any Default or
Potential Default, such Bank shall promptly give written notice thereof to the
Agent. The Agent shall take such action with respect to a Default or a
Potential Default as shall be reasonably directed in writing by the Required
Banks or all the Banks, as applicable, provided, however, that, unless and until
the Agent shall have received such direction, the Agent may take such action, or
refrain from taking such action with respect thereto, as it shall deem advisable
in the best interests of the Banks. The Agent shall have no obligation to
impose or collect the Default rate of interest as provided in SECTION 2.3.1
hereof unless and until instructed in writing by the Required Banks, which
written instruction shall include the Required Banks' determination of the date
of Default and the amount of interest due and payable by the Borrower.
7.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees or agents has made any representations or warranties to it and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or
38
<PAGE>
warranty by the Agent to any of the Banks. Each Bank represents to the Agent
that it has, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, financial
condition and creditworthiness of the Borrower and made its own decision to make
its loans hereunder and enter into this Agreement. Each Bank also represents
that it will independently and without reliance upon the Agent or the other
Banks, and based upon such documents and information as it may deem appropriate
at the time, continue to make its own credit analysis and decisions in taking or
not taking action under this Agreement. The Agent makes no representation or
warranty of any kind with respect to the validity, enforceability, legality or
sufficiency of the Loan Documents or any of the other documents referred to or
contemplated herein or therein.
7.7 Rights as Bank. The Agent shall have the same rights and powers
hereunder as any Bank and may exercise the same as though it were not the Agent,
and the term "BANK" or "BANKS" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent may accept deposits
from, lend money to, and generally engage in any kind of banking or trust
business with the Borrower as if it were not the Agent. The Borrower hereby
authorizes the Agent, as the Agent may elect in its sole discretion, to discuss
with and furnish to the Banks or for a proper business purpose to any other
Person having an interest in the Obligations (whether as a guarantor, pledgor,
participant, purchaser or otherwise) all financial statements, audit reports and
other information pertaining to the Borrower whether such information was
provided by the Borrower or prepared or obtained by the Agent. Neither the Agent
nor any of its employees, officers, directors or agents makes any representation
or warranty regarding any audit reports or other analysis of the Borrower's
condition which the Agent may elect to distribute, whether such information was
provided by the Borrower or prepared or obtained by the Agent, nor shall the
Agent or any of its employees, officers, directors or agents be liable to any
Person receiving a copy of such reports or analysis for any inaccuracy or
omission contained therein or relating thereto.
7.8 Agent's Indemnification and Reimbursement. The Banks agree to
indemnify and to reimburse the Agent (to the extent not reimbursed by the
Borrower) according to their Pro Rata Shares, from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
upon, 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 Bank shall be liable for any portion of the foregoing resulting from the
Agent's gross negligence or willful misconduct. Without limiting the foregoing,
each Bank agrees to indemnify and reimburse the Agent (to the extent not
reimbursed by the Borrower) promptly upon demand for its Pro Rata Share, (a) for
any expenses not reimbursed by the Borrower and for which the Agent is entitled
to reimbursement by the Borrower hereunder, and (b) for all out-of-pocket
expenses (including, without limitation, fees and disbursements of counsel)
incurred by the Agent on behalf of the Banks in connection with the preparation,
administration (other than ordinary expenses of administration and Agent's
39
<PAGE>
fees), or enforcement of, or legal advice in respect its rights or
responsibilities under this Agreement.
7.9 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Banks and the Borrower and may be removed at any time with
or without cause by the Required Banks. The Agent may also be removed by all
the Banks (except for a Bank that is also the Agent) for gross negligence or
willful misconduct of its obligations under this Agreement or the other Loan
Documents. Upon any such resignation or removal, the Required Banks shall have
the right to appoint a successor Agent. If no successor Agent shall have been
so appointed by the Required Banks and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving notice of resignation,
then the retiring Agent may appoint a successor Agent. Such successor Agent
shall be a commercial bank having capital and retained earnings of at least One
Hundred Million Dollars ($100,000,000). Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent 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 hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this SECTION 7 shall continue in effect
for its benefit with respect to any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder.
SECTION 8. GENERAL PROVISIONS
-----------------------------
8.1 Waivers, Amendments and Remedies. No delay or omission of the Agent or
any of the Banks to exercise any power or right under the Loan Documents shall
impair such power or right or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any such power or
right shall not preclude other or further exercise thereof or the exercise of
any other power or right. No waiver, amendment, modification, consent or other
variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing and signed by the Required Banks,
and, to the extent any rights or duties of the Agent may be affected thereby,
the Agent; provided, however, that no waiver, amendment, modification, consent
or other variation shall without the consent of the Agent and all of the Banks
(a) authorize or permit the extension of time for paying the principal of, or
interest on, the Obligations, or any fees payable thereunder, or any reduction
in the principal amount thereof or the rate of interest or fees thereon, (b)
amend (i) the respective percentages of the Banks' Commitments, (ii) the
definition of Required Banks or the percentage of Banks required to take or
approve any action hereunder, or (iii) provisions of this SECTION 8.1 or
SECTIONS 6.1 or 6.2, (c) release any Guaranty, or (d) waive, amend, or modify
any other provision of the Loan Documents or a Guaranty which creates an
obligation on the part of the Borrower or any Guarantor to indemnify the Agent
or any Bank or to pay money to the Agent or any Bank. Except for waivers and
consents granted by the Required Banks for violations and requests by the
Borrower with respect to the provisions of SECTION 4, no amendment or
modification of the provisions of SECTIONS 4.1.2, 4.1.3, and 4.1.4, shall be
valid without the written agreement of all the Banks. Any such waiver,
amendment, modification or consent shall be effective only in the specific
instance and for the specific purpose for which given. All
40
<PAGE>
remedies contained in the Loan Documents or by law afforded shall be cumulative
and all shall be available to the Banks until the Obligations have been paid in
full.
8.2 Taxes. Any taxes (excluding income taxes payable by the Banks) payable
or ruled payable by federal or state authority in respect of the Loan Documents
shall be paid by the Borrower together with interest and penalties, if any.
8.3 Successors and Assigns. The Loan Documents shall be binding upon and
inure to the benefit of the Borrower, the Banks and the Agent, and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights under the Agreement or any interest herein, without
the prior written consent of the Banks.
8.4 Waiver of Setoff. The Borrower agrees that it will not exercise any
right of setoff on any of the Notes or assert any claim for reduction or credit
against any of the Notes except when actual payment has been made.
8.5 Severability. If any provision of any of the Loan Documents is
contrary to the governing law, the same shall not invalidate any of the other
provisions hereof or thereof.
8.6 ENTIRE AGREEMENT. A CREDIT AGREEMENT IN WHICH THE AMOUNT INVOLVED
EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING
AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY'S AUTHORIZED
REPRESENTATIVE. THE RIGHTS AND OBLIGATIONS OF THE BORROWER, THE GUARANTORS, THE
BANKS, AND THE AGENT SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS,
DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES
ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN
WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE
BORROWER, ANY GUARANTOR, ANY BANK, AND/OR THE AGENT REPRESENT THE FINAL
AGREEMENT BETWEEN THE BORROWER, THE GUARANTORS, THE BANKS, AND THE AGENT AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BY SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH
PARTIES. THIS PARAGRAPH IS INCLUDED HEREIN PURSUANT TO SECTION 26.02 OF THE
TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED FROM TIME TO TIME.
8.7 Several Obligations. The respective obligations of the Banks hereunder
are several and not joint and no Bank shall be or be deemed to be the partner or
agent of any other (except to the extent to which the Agent is authorized to act
as such). The failure of any Bank to perform any of its obligations hereunder
shall not relieve any other Bank from any of its obligations hereunder.
41
<PAGE>
8.8 Costs and Expenses. The Borrower shall reimburse the Agent for any and
all reasonable costs, charges and out-of-pocket expenses, including, without
limitation, reasonable fees and out-of-pocket expenses of counsel for the Agent,
paid or incurred by the Agent in connection with the preparation, review,
execution, delivery, amendment, modification, and administration of the Loan
Documents. The Borrower shall also reimburse the Agent and each Bank for any and
all reasonable costs, charges and out-of-pocket expenses, including, without
limitation, reasonable fees and out-of-pocket expenses of counsel, paid or
incurred in connection with the collection and enforcement (whether through
negotiations, legal proceedings or otherwise) of the Loan Documents. Any Bank
may pay or deduct from the loan proceeds any of such expenses, and any proceeds
so applied shall be deemed to be Advances under this Agreement evidenced by the
Notes, shall bear interest at the rate of interest provided in the Notes, and,
if such payment or deduction results in any over-borrowing hereunder, shall be
payable on demand.
8.9 CHOICE OF LAW. UNLESS OTHERWISE SPECIFICALLY STATED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
THEREUNDER AND HEREUNDER SHALL BE GOVERNED BY, AND BE CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, NOTWITHSTANDING THE FACT
THAT TEXAS CONFLICT OF LAW RULES MIGHT OTHERWISE REQUIRE THE SUBSTANTIVE RULES
OF LAW OF ANOTHER JURISDICTION TO APPLY. THE BORROWER CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY, TEXAS,
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS MADE UPON THE BORROWER. ALL
SERVICE OF PROCESS MAY BE MADE BY MESSENGER, CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, OR BY REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS STATED
IN SECTION 8.11 HEREOF. THE BORROWER WAIVES ANY OBJECTION WHICH THE BORROWER
MAY HAVE TO ANY PROCEEDING COMMENCED IN A FEDERAL OR STATE COURT LOCATED WITHIN
DALLAS COUNTY, TEXAS, BASED UPON IMPROPER VENUE OR FORUM NON CONVENIENS.
NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF THE BANKS TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
8.10 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
8.11 Notices. Any notice required or permitted to be given under this
Agreement or any of the Loan Documents may be, and shall be deemed, given when
actually delivered, or, if mailed, shall be deemed to have been given five (5)
days after the date when sent by registered or certified United States mail, or,
if by telex, shall be deemed to have been given upon receipt of the appropriate
answerback, addressed to Agent or any Bank at the address specified on SCHEDULE
1.1, or if to the Borrower, as follows:
42
<PAGE>
800 East 101st Terrace
Kansas City, Missouri 64131
Attention: Treasurer
Notwithstanding the foregoing, any notices to the Agent shall not be effective
until actually received. The Borrower and the Banks may each change the address
for service of notice upon it by a notice in writing to the others pursuant to
this Section.
8.12 Counterparts . This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement.
8.13 Participations and Assignments.
------------------------------
8.13.1 Participations . No Bank may participate, sell, transfer or
assign all or any portion of its rights and obligations under this
Agreement or its Loans without the prior written consent of the Borrower
and the Agent, except without any consent of the Borrower or the Agent, any
Bank may sell participations of all or part of any interest in its Loans to
any Bank Affiliate; and provided, however, the Borrower's consent shall not
be required during the continuance of a Default. The Borrower agrees that
any permitted participant shall, subject to the provisions of SECTION 8.18,
at any time during a Default have the right to set off obligations owed to
such participant and not paid when due against any accounts or other assets
of the Borrower held by, on deposit with or in the possession of such
participant.
8.13.2 Assignments. Subject to the provisions of this section (and if
no Default is continuing, upon the prior written consent of the Borrower
and the Agent), any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, sell to one or more
financial institutions (each a "PURCHASER") a proportionate part (not less
than $5,000,000 and in integral multiples of $1,000,000) of all or any part
of its rights and obligations under the Loan Documents, and such Purchaser
shall assume such rights and obligations, pursuant to an assignment
agreement reasonably acceptable to the Agent. Upon delivery of an executed
copy of the assignment agreement to the Borrower and the Agent and payment
to the Agent of an administrative fee of $2,500 by the selling Bank, from
and after the assignment's effective date (which shall be after the date of
such delivery), such Purchaser shall for all purposes be a Bank party to
this agreement and shall have all the rights and obligations of a Bank
under this agreement to the same extent as if it were an original party
hereto with a Commitment as set forth in the assignment agreement, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent (which may be 100% if it has sold 100% of its interest
in the Obligations and Loan Documents), and, except as provided in the
following sentence, no further consent or action by the Borrower, the
Banks, or the Agent shall be required. Upon the consummation of any
transfer to a Purchaser pursuant to this clause, SCHEDULE 1.1 shall
automatically be deemed to reflect the name, address, and Commitment of
such Purchaser, the Agent shall deliver to the Borrower and the
43
<PAGE>
Banks an amended SCHEDULE 1.1 reflecting such changes, the Borrower shall
execute and deliver to each of the transferor Bank and such Purchaser a
Note in the face amount of its Commitment following such transfer, and,
upon receipt of such Note, such transferor Bank shall return to the
Borrower the Note previously delivered to such Bank hereunder. A Purchaser
shall be subject to all the provisions in this section and to SECTION 8.3
the same as if it were a Bank signatory hereto as of the date of this
agreement.
8.14 Setoff. Upon the occurrence of a Default, each Bank is authorized at
any time and from time to time thereafter, without notice to the Borrower, to
set off, appropriate and apply any and all monies, securities and other
property of the Borrower now or hereafter held or received by, or in transit to,
any Bank from or for the Borrower, against any Obligation in such order and
manner as the Banks may reasonably determine or as provided in this Agreement.
8.15 Indemnification. The Borrower agrees to indemnify each Bank, and its
respective successors and assigns (including any purchaser of any participation
in the Facilities), and its directors, officers and employees, against all
losses, claims, costs, damages, liabilities and expenses, including, without
limitation, all expenses of litigation or preparation therefor (a "LOSS"), which
it may pay or incur in connection with or arising out of the direct or indirect
application of the Proceeds of the Advances hereunder, and in connection with
any mergers, consolidations or acquisitions permitted hereunder, unless such
Loss is occasioned by the gross negligence or wilful misconduct of such Bank.
Without limiting the generality of the foregoing, the Borrower agrees to
indemnify and hold harmless each Bank, and its respective successors and assigns
(including any purchaser of a participation in the Facilities) and its
directors, agents, attorneys, officers and employees from and against any Loss
which any of them may pay or incur in investigating, preparing for, defending
against, or providing evidence, producing documents or taking any other action
in respect of any commenced or threatened litigation, administrative proceeding
or investigation under any federal securities law or any other statute,
regulation, or rule of common law. The indemnity set forth herein shall be in
addition to any other Obligations of the Borrower to the Banks hereunder or at
common law or otherwise, and shall survive any termination of this Agreement,
the expiration of this Agreement and the payment of all Obligations. Payments
by the Borrower under this SECTION 8.15 shall not reduce any other Obligations.
8.16 Additional Amounts Payable. If any change in any existing law or the
enactment, adoption or judicial or administrative interpretation of any law,
regulation, treaty, guideline or directive (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System), whether
or not having the force of law, or compliance with the same by any Bank, either
(a) subjects any Bank to any additional tax, duty, charge, deduction or
withholding with respect to any of the Facilities (other than a tax measured by
the net or gross income of such Bank), or (b) imposes or increases any reserve,
special deposit or similar requirement on account of any of the Facilities not
otherwise provided for in this Agreement, or (c) imposes increased minimum
capital requirements on any Bank on account of its issuing or maintaining any of
the Facilities; and if any of the foregoing (w) results in an increase to such
Bank in the cost of issuing or maintaining any of the Facilities, or making any
payment on account of any
44
<PAGE>
of the Facilities, (x) reduces the amount of any payment receivable by such Bank
under this Agreement with respect to any of the Facilities, (y) requires such
Bank to make any payment calculated by reference to the gross amount of any sum
received or paid by such Bank pursuant to any of the Facilities, or (z) reduces
the rate of return on such Bank's capital to a level below that which such Bank
could otherwise have achieved (taking into consideration such Bank's policies
with respect to Capital Adequacy) for which such costs, payment or reduction
such Bank is not compensated pursuant to SECTION 2.3.3(F), then the Borrower
shall pay to such Bank, as additional compensation for the Facilities, such
amounts as will compensate such Bank for such increased cost, payment or
reduction. Within twenty (20) days after (i) the initial demand therefor, which
initial demand, if made, shall be given by such Bank within sixty (60) days
after such Bank could calculate the increased cost, payment or reduction and
(ii) presentation by such Bank of a certificate to the Borrower containing a
statement of the cause of such increased cost, payment or reduction and a
calculation of the amount thereof (which statement and calculation shall be
presumed to be correct), the Borrower shall pay the additional amount payable
measured from the date such change, enactment, adoption or interpretation first
affects such Bank; provided, however, that if a Bank fails to make such initial
demand within such sixty (60) day period, such Bank shall, with respect to
compensation payable pursuant to this SECTION 8.16, only be entitled to payment
under this SECTION 8.16 for such additional compensation from and after the date
sixty (60) days prior to the date such Bank makes its initial demand for
additional compensation.
8.17 Banks Not in Control. None of the covenants or other provisions
contained in the Loan Documents shall or shall be deemed to, give the Banks the
rights or power to exercise control over the affairs and/or management of the
Borrower, any of its Subsidiaries or any Guarantor, the power of the Banks being
limited to the right to exercise the remedies provided in the Loan Documents;
provided, however, that if any Bank becomes the owner of any stock or other
equity interest in, any Person whether through foreclosure or otherwise, such
Bank shall be entitled (subject to requirements of law) to exercise such legal
rights as it may have by being owner of such stock, or other equity interest in,
such Person.
8.18 Adjustments. If any Bank (a "BENEFITED BANK") shall at any time
receive any payment of all or any part of the Obligations hereunder, or interest
thereon, or receive any collateral in respect thereof (whether by set-off or
otherwise) in a greater proportion than its ratable portion, such Benefited Bank
shall purchase for cash from the other Banks such portions of the other Banks'
Notes, or shall provide such other Banks with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause the
Benefited Bank to share the excess payment or benefits of such collateral or
proceeds ratably with the other Banks; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from the
Benefited Bank, such purchase shall be rescinded, and the purchase price and
benefits returned to the extent of such recovery, but without interest. The
Borrower agrees that each Bank so purchasing a portion of another Bank's Notes
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion.
45
<PAGE>
8.19 Application of Proceeds. Notwithstanding any contrary provision of
any other Loan Document, after the occurrence of a Default and acceleration of
the Obligations, including, without limitation, proceeds received, shall be
applied by the Agent to payment of the Obligations in the following order:
(a) First, to payment of all costs and expenses of the Agent and
the Banks incurred in connection with the preservation, collection and
enforcement of the Obligations;
(b) Second, to the payment of that portion of the Obligations
constituting accrued and unpaid interest and fees, pro rata among the
Banks in accordance with their Pro Rata Shares;
(c) Third, to the payment of the principal amount of the
Obligations, pro rata among the Banks in accordance with their Pro
Rata Shares;
(d) Fourth, to the payment of any other Obligations not referred
to above to the Agent or any of the Banks as may be properly payable;
and
(e) Fifth, the balance, if any, after all the Obligations have
been satisfied, shall be returned to the Borrower.
8.20 Exceptions to Covenants. Neither the Borrower nor any Subsidiary
shall take any action or fail to take any action which is permitted as an
exception to any of the covenants contained in any Loan Document if such action
or omission would result in the breach of any other covenant contained in any of
the Loan Documents.
8.21 Survival. All covenants, agreements, undertakings, representations,
and warranties made in any of the Loan Documents shall survive all closings
under the Loan Documents and, except as otherwise indicated, shall not be
affected by any investigation made by any party. All rights of reimbursement
and indemnification shall survive termination of this Agreement and payment in
full of the Obligations.
46
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed
this Agreement as of the date first above written.
THE RIVAL COMPANY, a Delaware corporation
By: /s/ Stanley D. Biggs
------------------------------------
Its: Vice President, Treasurer
------------------------------------
NATIONSBANK OF TEXAS, N.A.,
as Agent and a Bank
By:
------------------------------------
Its:
------------------------------------
BANK ONE, INDIANAPOLIS, NATIONAL
ASSOCIATION, a Bank
By:
------------------------------------
Its:
------------------------------------
BANK OF AMERICA ILLINOIS, a Bank
By:
------------------------------------
Its:
------------------------------------
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed
this Agreement as of the date first above written.
THE RIVAL COMPANY, a Delaware corporation
By:
-----------------------------------
Its:
-----------------------------------
NATIONSBANK OF TEXAS, N.A.,
as Agent and a Bank
By: /s/ Perry B. Stephenson
-----------------------------------
Perry B. Stephenson
Its:
-----------------------------------
Senior Vice President
BANK ONE, INDIANAPOLIS, NATIONAL
ASSOCIATION, a Bank
By:
-----------------------------------
Its:
-----------------------------------
BANK OF AMERICA ILLINOIS, a Bank
By:
-----------------------------------
Its:
-----------------------------------
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed
this Agreement as of the date first above written.
THE RIVAL COMPANY, a Delaware corporation
By:
-----------------------------------
Its:
-----------------------------------
NATIONSBANK OF TEXAS, N.A.,
as Agent and a Bank
By:
-----------------------------------
Its:
-----------------------------------
BANK ONE, INDIANAPOLIS, NATIONAL
ASSOCIATION, a Bank
By:
-----------------------------------
Its:
-----------------------------------
BANK OF AMERICA ILLINOIS, a Bank
By: /s/ R. Guy Stapleton
-----------------------------------
R. Guy Stapleton
Its:
-----------------------------------
Managing Director
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed
this Agreement as of the date first above written.
THE RIVAL COMPANY, a Delaware corporation
By:
-----------------------------------
Its:
-----------------------------------
NATIONSBANK OF TEXAS, N.A.,
as Agent and a Bank
By:
-----------------------------------
Its:
-----------------------------------
BANK ONE, INDIANAPOLIS, NATIONAL
ASSOCIATION, a Bank
By: /s/ Anthony Schlichte
-----------------------------------
Its: Vice President & Manager
-----------------------------------
BANK OF AMERICA ILLINOIS, a Bank
By:
-----------------------------------
Its:
-----------------------------------
<PAGE>
SCHEDULE 1.1
------------
BANKS AND COMMITMENTS
---------------------
<TABLE>
<CAPTION>
Bank and Address Commitment
=====================================================
<S> <C>
NationsBank of Texas, N.A. $33,000,000
901 Main Street, 67th Floor
Dallas, Texas 75202
Telecopy No. (214) 508-0980
Attn: Perry B. Stephenson
Senior Vice President
=====================================================
Bank One, Indianapolis, National 21,000,000
Association
Bank One Center-Tower
111 Monument Circle, Suite 1911
Indianapolis, Indiana 46277-0119
Telecopy No. (317) 321-8830
Attn: Holly Fischer Durbin
Relationship Manager
=====================================================
Bank of America Illinois 21,000,000
231 South La Salle Street
Chicago, Illinois 60697
Telecopy No. (312) 987-1276
Attn: R. Guy Stapleton
Managing Director
=====================================================
TOTAL $75,000,000
=====================================================
</TABLE>
<PAGE>
SCHEDULE 3.15
-------------
THE RIVAL COMPANY
-----------------
SUBSIDIARIES
------------
Each is 100 percent owned by The Rival Company:
Rival Manufacturing of Canada, Ltd, a Canadian Corporation *
Waverly Products Company Limited, a Jamaican Corporation
Pollenex Corporation, a Missouri Corporation *
Fasco Consumer Products, Inc., a Delaware Corporation *
Patton Electric Company, Inc., an Indiana Corporation *
Patton Electric Company, Hong Kong, Ltd., a Hong Kong Corporation
A 100 percent owned subsidiary of Rival Canada:
RC Acquisition, Inc., a Canadian Corporation
A 100 percent owned subsidiary of RC Acquisition, Inc.:
Bionaire Inc., a Canadian Corporation *
Each is either directly or indirectly, a 100 percent owned subsidiary of
Bionaire Inc.:
Bionaire Corporation, a New Jersey Corporation *
Bionaire International B.V., a Netherlands Corporation
Bionaire Worldwide Management, Inc., a Florida Corporation
Bionaire France, a French Corporation
<PAGE>
SCHEDULE 3.16
-------------
THE RIVAL COMPANY
-----------------
ENVIRONMENTAL COMPLIANCE
------------------------
Kansas City, Missouri:
In June, 1992, the Company terminated the lease of its former office/warehouse
facility at 36th and Bennington, Kansas City, Missouri. Upon lease termination,
the landlord engaged an engineer to perform an environmental study of the
property. The landlord has performed some remediation at the site. The Company
has not determined the extent of its responsibility, if any, for such expense.
<PAGE>
SCHEDULE 4.2.2
--------------
THE RIVAL COMPANY
-----------------
LIENS
-----
Liens on assets of Bionaire Inc. and its subsidiaries related to a Secured
Revolving Credit and Term Loan Facility between Bionaire Inc. and Royal Bank of
Canada with an unpaid balance of approximately U.S. $6 million.
<PAGE>
SCHEDULE 4.2.6
--------------
THE RIVAL COMPANY
-----------------
EXISTING INDEBTEDNESS
---------------------
8.21.1 Indebtedness pursuant to the Credit Agreement among The Rival
Company and NationsBank of Texas, N.A., Bank One, Indianapolis, N.A., and Bank
of America Illinois, dated as of July 23, 1993, as amended, which will be paid
in full with the proceeds of the first Advances pursuant to the Credit
Agreement, as required by SECTION 5.1.11 thereof.
Indebtedness pursuant to a $15 million Promissory Note dated March 25,
1996, between The Rival Company and NationsBank of Texas, N.A., which will be
paid either at its stated maturity or, if issued before then, with the proceeds
of the Indebtedness issued pursuant to the Note Purchase Agreement to be dated
subsequent to the date hereof.
Indebtedness of Bionaire Inc. pursuant to a Secured Revolving Credit and
Term Loan Facility with an unpaid balance of approximately U.S. $6 million
between Bionaire Inc. and Royal Bank of Canada.
Schedule 4.2.6
--------------
<PAGE>
EXHIBIT A
---------
PROMISSORY NOTE
---------------
$______________________ April 15, 1996
FOR VALUE RECEIVED, THE RIVAL COMPANY, a Delaware Corporation ("MAKER"),
promises to pay to the order of _____________________________________ ("PAYEE")
that portion of the principal amount of $________________________ that may be
disbursed and outstanding under this note, together with interest.
This note is one of the "Notes" under the Credit Agreement dated as of the
same date as this note (as renewed, extended, amended, supplemented, replaced,
or restated, the "CREDIT AGREEMENT"), among Maker, Payee and certain other
"Banks," and NationsBank of Texas, N.A. (as agent for itself and other Banks,
"AGENT"). All of the defined terms in the Credit Agreement have the same
meanings when used in this note.
This note incorporates by reference the principal and interest payment
terms in the Credit Agreement for this note -- including, without limitation,
the final maturity of the last day of the Commitment Period.
This note incorporates by reference all other provisions in the Credit
Agreement applicable to this note -- such as provisions for disbursements of
principal, applicable interest rates before and after Default, voluntary and
mandatory prepayments, acceleration of maturity, exercise of rights, payment of
attorneys' fees, court costs, and other costs of collection, and certain
waivers, choice of Texas and United States federal law, usury savings, and other
matters applicable to "Loan Documents" under the Credit Agreement.
THE RIVAL COMPANY, Maker
By ____________________________________________
(Name) ____________________________________________
(Title)____________________________________________
Exhibit A
---------
<PAGE>
EXHIBIT B
---------
APPLICATION FOR ADVANCE
-----------------------
Date: _____________________
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Gentlemen:
The Rival Company hereby requests an Advance in the amount of
$_____________ under the Loans provided for in that certain Credit Agreement
dated as of April 15, 1996, (the "Agreement"), among The Rival Company, certain
"Banks" and NationsBank of Texas, N.A. ("NationsBank") individually and as agent
for itself and the Banks ("Agent"). Please disburse this Advance by crediting
the amount thereof to The Rival Company's Account No. ____________________
maintained with NationsBank. Capitalized terms not specifically defined herein
shall have the meaning described in the Agreement.
In connection with this request, the undersigned certifies as follows:
The undersigned is an Authorized Officer of The Rival Company.
Each of the representations and warranties contained in Section 3 of
the Agreement (each as modified or otherwise affected by Section 5.2) are true
and correct as of this date.
No material adverse change affecting The Rival Company's business,
operations, financial condition, properties or prospects has occurred since the
date of the last financial statements furnished to the Banks pursuant to Section
4.1.1 of the Agreement.
No Default or Potential Default currently exists.
Very truly yours,
THE RIVAL COMPANY
By:_______________________________________
------------------------------------------
(Printed Name)
AUTHORIZED OFFICER OF THE RIVAL
COMPANY
EXHIBIT B
<PAGE>
EXHIBIT D
---------
COMPLIANCE CERTIFICATE
FOR _______________ ENDED _______________, 199__ (the "SUBJECT PERIOD")
AGENT: NationsBank of Texas, N.A. DATE: ______________, 199__
BORROWER: The Rival Company
- --------------------------------------------------------------------------------
This certificate is delivered under the Credit Agreement, as it may be from
time to time renewed, extended, amended, replaced, or restated, (the "CREDIT
AGREEMENT") dated as of April 15, 1996, among The Rival Company, NationsBank of
Texas, N.A., as a Bank and the Agent, and certain financial institutions listed
and referred to as Banks in the Credit Agreement. Unless stated otherwise, all
capitalized terms in this Certificate shall have the same meanings ascribed to
them in the Credit Agreement.
I certify to the Agent and the Banks that, on the date of this certificate,
(a) I am an Authorized Officer of the Borrower; (b) the financial statements of
the Borrower attached to this certificate were prepared in accordance with GAAP,
and present fairly the (consolidated and consolidating, if applicable) financial
condition and results of operations of the Borrower as of, and for the (quarter
or fiscal year) ended on, the last day of the Subject Period; (c) a review of
the activities of the Borrower and its subsidiaries during the Subject Period
has been made under my supervision with a view to determining whether, during
the Subject Period, the Borrower and its subsidiaries performed and complied
with all of their obligations under the Loan Documents, and during the Subject
Period, to my knowledge (i) the Borrower and its subsidiaries performed and
complied with all of their obligations under the Loan Documents (except for the
deviations, if any, set forth on a schedule annexed to this certificate) in all
material respects, and (ii) no Default (nor any Potential Default) has occurred
which has not been cured or waived (except the Defaults or Potential Defaults,
if any, described on the schedule annexed to this certificate); and (d) to my
knowledge, the status of compliance by the Borrower with SECTIONS 4.1.2, 4.1.3
AND 4.1.4 of the Credit Agreement at the end of the Subject Period is as set
forth on the schedule annexed to this certificate.
By
__________________________________________________
(Name)
__________________________________________________
(Title)
__________________________________________________
<PAGE>
SCHEDULE TO COMPLIANCE CERTIFICATE
8.22 Describe deviations from performance or compliance with covenants, if
any -- CLAUSE (C)(I) of attached certificate -- if none, so state:
8.23 Describe Defaults or Potential Defaults, if any -- CLAUSE (C)(II) of
the attached certificate -- if none, so state:
8.24 Reflect compliance with covenants in SECTIONS 4.1.2, 4.1.3 AND 4.1.4
at end of Subject Period (on a consolidated basis, if applicable) -- CLAUSE (D)
of the attached certificate:
Section 4.1.2 Minimum Net Worth
A. Net Worth
$
===========
B. Required Minimum Net Worth
(1) Fixed Sum $ 80,000,000
(2) 75% of proceeds of equity securities
issuance since April 15, 1996 + $
-----------
(3) 50% of consolidated net income
since July 1, 1995 (without deducting
net loss for any fiscal quarter) + $
-----------
(4) Required Minimum Net Worth = $
===========
1 Exhibit D
---------
<PAGE>
Section 4.1.3 Fixed Charge Coverage Ratio
A. EBITDA
(1) Net Income before interest expense,
taxes and extraordinary items $
-----------
(2) Depreciation expense $
-----------
(3) Amortization expense $
-----------
(4) EBITDA = $
===========
B. Fixed Charges
(1) Current maturities of
long term debt $
------------
(2) Capital expenditures $
------------
(3) Cash tax expenditures $
------------
(4) Dividends paid or currently
payable $
------------
(5) Interest Expense $
------------
(6) Total = $
============
C. Fixed Charges Coverage Ratio
[Line A(7) / B(6)] = : 1.0
============
D. Minimum Required Fixed Charge
Coverage Ratio 1.15 : 1.0
============
Section 4.1.4 Leverage Ratio
(A) Indebtedness $
------------
(B) Net Worth $
------------
2 Exhibit D
---------
<PAGE>
(C) Leverage Ratio
(Line A / Line A + B) ------------
(D) Maximum allowed for the last
day of the Subject Period .60 to 1.0
------------
3 Exhibit D
---------
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES EXHIBT 11
EARNINGS PER SHARE
(in thousands except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
03/31/96 03/31/95 03/31/96 03/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net earnings $ 1,572 $ 1,750 $ 14,121 $ 12,450
======== ======== ======== ========
Primary Earnings Per Share
- --------------------------
Weighted average common and common
equivalent shares outstanding 9,959 9,330 9,940 9,441
======== ======== ======== ========
Earnings per common and common
equivalent share $ 0.16 $ 0.19 $ 1.42 $ 1.32
======== ======== ======== ========
Share computation:
Average common shares
outstanding 9,726 9,150 9,722 9,239
Average number of options
outstanding 549 410 539 414
Less treasury shares acquired
with proceeds from exercise
of options (316) (230) (321) (212)
-------- -------- ------- --------
Weighted average common and common
equivalent shares outstanding 9,959 9,330 9,940 9,441
======== ======== ======= ========
</TABLE>
* Fully diluted earnings per share is equal to primary earnings per share for
all periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Form 10Q for the 3/31/96 Quarter and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1995
<PERIOD-START> JUL-01-1995 JUL-01-1994
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 320 214
<SECURITIES> 0 0
<RECEIVABLES> 58,183 36,171
<ALLOWANCES> 2,374 1,585
<INVENTORY> 88,229 52,144
<CURRENT-ASSETS> 146,697 88,857
<PP&E> 60,814 42,226
<DEPRECIATION> 24,572 20,493
<TOTAL-ASSETS> 236,406 151,382
<CURRENT-LIABILITIES> 88,132 24,148
<BONDS> 38,000 42,000
<COMMON> 97 93
0 0
0 0
<OTHER-SE> 106,477 82,904
<TOTAL-LIABILITY-AND-EQUITY> 236,406 151,382
<SALES> 233,263 179,109
<TOTAL-REVENUES> 233,263 179,109
<CGS> 167,879 128,304
<TOTAL-COSTS> 167,879 128,304
<OTHER-EXPENSES> 37,144 27,410
<LOSS-PROVISION> 342 353
<INTEREST-EXPENSE> 4,816 2,942
<INCOME-PRETAX> 23,221 20,295
<INCOME-TAX> 9,100 7,845
<INCOME-CONTINUING> 14,121 12,450
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 14,121 12,450
<EPS-PRIMARY> 1.42 1.32
<EPS-DILUTED> 1.42 1.32
</TABLE>
