<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended
OR
(X) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from November 1, 1997 to December 31, 1997
Commission File Number 1-11160
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-2617871
------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
2121 San Jacinto Street
Suite 2500, L. B. 31
Dallas, Texas 75201
- ------------------------------ ---------------------
(Address of principal executive (Zip Code)
offices)
(Registrant's telephone number, including area code) (214) 953-4500
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X . No. .
----- -----
At September 11, 1998, 22,039,455 shares of Common Stock, par value $.25, of
the Registrant were outstanding.
1
<PAGE>
INTRODUCTION
On July 30, 1998, the Board of Directors of Global Industrial Technologies, Inc.
(the "Company") voted to change the Company's annual fiscal accounting period
from October 31, 1997 to December 31, 1997. Accordingly, under the new fiscal
year calendar, the Company's quarters will each be comprised of three calendar
months ending March 31, June 30, September 30, and December 31. Formerly, the
Company's fiscal quarters were each comprised of the three calendar months
ending January 31, April 30, July 31 and October 31. The first quarterly
report affected by this change will be the 10-Q Report for the "new" third
quarter of 1998 ending on September 30, 1998. In accordance with SEC rules and
regulations, the Company presents herewith the results of operations for the
two-month period ended December 31, 1997 (the "Transition Period") and the
comparative period ended December 31, 1996.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1 Management's Representation 3
Consolidated Condensed Statements of Earnings for
the two months ended December 31, 1997 and 1996 4
Consolidated Condensed Balance Sheets as of
December 31, 1997 and October 31, 1997 5-6
Consolidated Condensed Statements of Cash Flows
for the two months ended December 31, 1997 and 1996 7
Notes to Consolidated Condensed Financial Statements 8-11
Item 2 Management's Discussion and Analysis 12-15
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
Item 5 Other information
Item 6 Exhibit Index
Signature 16
Exhibit 27 Financial Data Schedules
2
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PART I
FINANCIAL INFORMATION
MANAGEMENT'S REPRESENTATION
The consolidated condensed financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed. The Company believes that the
disclosures are adequate to make the information presented not misleading.
These consolidated condensed financial statements should be read in conjunction
with the financial statements and the notes to consolidated financial statements
included in the Annual Report, Form 10-K for the fiscal year ended October 31,
1997.
In the opinion of the Company, all adjustments have been included that were
necessary to present fairly the financial position of Global Industrial
Technologies, Inc. and subsidiaries as of December 31, 1997; the results of
operations for the two months ended December 31, 1997 and 1996; and the cash
flows for the two months ended December 31, 1997 and 1996. These adjustments
consisted of normal recurring adjustments.
3
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GLOBAL INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In millions except per share data)
<TABLE>
<CAPTION>
Two months ended
Item 1 - Financial Information December 31,
--------------------
1997 1996
--------- ---------
(Unaudited)
<S> <C> <C>
Revenues
Net sales and operating revenues $ 67.8 $ 66.1
Other 0.2 0.2
------- -------
Total Revenues 68.0 66.3
------- -------
Costs and Expenses
Cost of sales 52.7 50.7
Selling, engineering, administrative and
general expenses 16.2 14.1
Interest expense 1.9 1.6
Special charges - 20.5
Other - net 0.8 (0.5)
------- -------
Total Costs and Expenses 71.6 86.4
------- -------
Loss from continuing operations
before income taxes (3.6) (20.1)
Income tax benefit 0.9 5.0
------- -------
Loss from continuing operations (2.7) (15.1)
Discontinued operations:
Earnings from discontinued operations less applicable
income taxes of $.9 and $.3 1.5 0.6
------- -------
Net loss $ (1.2) $ (14.5)
======= =======
Basic earnings (loss) per common share:
Continuing operations $ (0.12) $ (0.67)
======= =======
Discontinued operations $ 0.07 $ 0.03
======= =======
Net loss $ (0.05) $ (0.64)
======= =======
Diluted earnings (loss) per common share:
Continuing operations $ (0.12) $ (0.67)
======= =======
Discontinued operations $ 0.07 $ 0.03
======= =======
Net loss $ (0.05) $ (0.64)
======= =======
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
4
<PAGE>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
ASSETS December 31, 1997 October 31, 1997
- ------ ----------------- ----------------
(Unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 15.9 $ 14.9
Notes and accounts receivable
Public 94.1 92.7
Unconsolidated affiliates 5.7 5.1
----------------- ----------------
99.8 97.8
Less allowance for doubtful accounts 3.5 3.2
----------------- ----------------
96.3 94.6
Inventories
Finished products and work in process 45.4 36.7
Raw materials and supplies 44.6 40.3
----------------- ----------------
90.0 77.0
----------------- ----------------
Deferred income taxes 56.1 56.1
Assets held for sale 71.1 66.2
Asbestos insurance recoveries receivable 63.5 65.1
Prepaid expenses 5.5 3.6
----------------- ----------------
Total Current Assets 398.4 377.5
Investments in Unconsolidated Affiliates 5.1 5.1
Noncurrent Deferred Income Taxes 35.9 28.7
Goodwill - net 56.0 56.3
Other Assets 87.5 90.3
Property, Plant and Equipment - at cost
Land, land improvements and mineral deposits 35.0 33.3
Buildings 88.3 74.4
Machinery and equipment 319.4 317.3
----------------- ----------------
442.7 425.0
Less accumulated depreciation, depletion and amortization 203.8 201.0
----------------- ----------------
Total properties - net 238.9 224.0
----------------- ----------------
Total Assets $ 821.8 $ 781.9
================= ================
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
5
<PAGE>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY December 31, 1997 October 31, 1997
- ------------------------------------ ----------------- ----------------
(Unaudited)
<S> <C> <C>
Current Liabilities
Accounts payable $ 40.4 $ 42.6
Notes payable and current portion of long-term debt 76.1 47.2
Advances from customers on contracts 0.9 5.0
Accrued compensation and benefits 23.5 21.6
Insurance reserves 9.7 10.6
Income taxes currently payable 8.1 9.0
Current deferred income taxes 14.2 14.1
Asbestos related liabilites 53.2 56.9
Other accrued liabilities 21.0 13.3
---------------- ---------------
Total Current Liabilities 247.1 220.3
Long-term Debt 165.5 151.8
Pension Plans and Other Retiree Benefits 48.0 47.6
Noncurrent Deferred Income Taxes 17.0 17.0
Other Liabilities 63.7 61.1
Shareholders' Equity
Common stock 6.8 6.8
Capital in excess of par value 381.5 382.1
Retained earnings 24.3 25.5
Cumulative translation adjustment (50.5) (50.3)
Treasury stock, at cost (75.3) (73.7)
Other (6.3) (6.3)
---------------- ---------------
Total Shareholders' Equity 280.5 284.1
---------------- ---------------
Total Liabilites and Shareholders' Equity $ 821.8 $ 781.9
================ ===============
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
6
<PAGE>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Two months ended
December 31,
------------------
1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net loss $ (1.2) $ (14.5)
Adjustments to reconcile net loss to cash flow
Depreciation, depletion and amortization 4.0 3.6
Special charges - 20.5
Increase in deferred income taxes - (5.2)
Decrease in receivables 6.3 14.4
Increase in inventories (7.0) (5.0)
Increase in asbestos insurance recoveries receivable (1.9) -
Increase in assets held for sale (4.9) (10.3)
Increase (decrease) in accrued compensation 1.4 (4.5)
Increase in accounts payable and accrued liabilities 4.7 5.4
Decrease in advances from customers (4.1) (2.0)
Decrease in income taxes payable (0.9) (1.2)
Other - net (2.9) (4.7)
-------- -------
Net cash used by operating activities (6.5) (3.5)
-------- -------
Cash flows from investing activities
Business acquisitions (4.5) -
Settlement payment on asset sales (5.3) -
Capital expenditures (9.1) (7.5)
-------- -------
Net cash used by investing activities (18.9) (7.5)
-------- -------
Cash flows from financing activities
Proceeds from borrowings 28.6 11.1
Reduction of debt (0.6) (0.8)
Options exercised under employee benefit plans 0.8 -
Purchase of common shares (2.3) -
-------- -------
Net cash generated by financing activities 26.5 10.3
-------- -------
Effect of translation adjustments on cash (0.1) (0.1)
-------- -------
Net increase (decrease) in cash and cash equivalents 1.0 (0.8)
Cash and cash equivalents, beginning of period 14.9 11.5
-------- -------
Cash and cash equivalents, end of period $ 15.9 $ 10.7
======== =======
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
7
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A INTRODUCTION AND BASIS OF PRESENTATION
The accompanying consolidated interim financial statements include the accounts
of Global Industrial Technologies, Inc. together with its subsidiaries and
unconsolidated joint ventures (collectively referred to herein as the
"Company"). The Company conducts its business in four segments: Specialty
Equipment Products, Refractory Products, Minerals, and Forged Products.
The Consolidated Financial Statements, and the notes thereto, have been restated
to reflect the Company's Industrial Tool business segment as a discontinued
operation. Certain prior year amounts have also been restated to conform to the
current year presentation. See Note B -"Discontinued Operations" for more
information.
On July 30, 1998, the Company's Board of Directors voted to change the Company's
annual fiscal accounting period from October 31, 1997 to December 31, 1997.
NOTE B DISCONTINUED OPERATIONS
On March 12, 1998, the Company sold the Industrial Tool segment, including the
common stock of INTOOL, Incorporated. (the U.S. subsidiary operating in this
segment) and the assets of Industrial Tool operations in Canada, Mexico, the
Netherlands and Germany, for cash consideration of $229.2 million including
certain postclosing adjustments. The Industrial Tool segment manufactured and
sold a complete product line of high-quality pneumatic and electric tools for
industrial applications, including assembly and material removal. Revenues of
the Industrial Tool segment were $18.6 million for the period from November 1,
1997 to December 31, 1997 and $13.7 million for the two-month period ended
December 31, 1996.
In connection with the sale of the Industrial Tool segment, the Company retained
certain pension, and postretirement benefits. The Company also retained
liability for certain legal claims, primarily for known claims of alleged
hearing loss and other injuries associated with the use of the Company's
products, and for one-half of any such additional claims made during the five
year period following the closing date. See description of these claims in Note
H to Consolidated Financial Statements in the Company's Annual Report on Form
10-K for the "old" fiscal year ended October 31, 1997.
8
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The assets and liabilities of the Industrial Tool segment have been netted and
presented in the current asset section as a single line item titled "Assets held
for sale" in the accompanying Consolidated Condensed Balance Sheet at December
31, 1997 and October 31, 1997, respectively. A summary of these amounts is as
follows:
<TABLE>
<CAPTION>
December 31, 1997 October 31, 1997
----------------- ----------------
(In millions)
<S> <C> <C>
Assets
Notes and accounts receivable public $ 19.3 $ 21.1
Inventories 23.5 23.7
Goodwill - net 24.0 24.1
Other assets 3.5 3.4
Net property, plant and equipment 19.4 19.0
---------- ----------
Total Assets 89.7 91.3
========== ==========
Liabilities
Accounts payable 3.3 3.7
Income taxes payable 5.0 4.6
Other accrued liabilities 6.1 9.0
Pension plans and other retiree benefits 4.2 7.8
---------- ----------
Total Liabilities 18.6 25.1
========== ==========
Net Assets Held for Sale $ 71.1 $ 66.2
========== ==========
</TABLE>
NOTE C - INVENTORIES
Inventories on the LIFO method were $26.1 million and $22.4 million at December
31, and October 31, 1997, respectively. The excess of average cost, which
approximates replacement or current costs, over the LIFO values would have been
$21.7 million and $21.5 million at December 31, and October 31, 1997,
respectively.
NOTE D - CONTINGENCIES
The Company and its subsidiaries are involved in certain legal actions and
claims arising in the ordinary course of business. See NOTE H to Consolidated
Financial Statements contained in the Company's Annual Report on Form 10-K for
the year ended October 31, 1997, NOTE 18 to Consolidated Financial Statements
contained in A.P. Green Industries, Inc. ("A.P. Green") annual report on Form
10-K for the year ended December 31, 1997, and NOTE 5 to Consolidated Financial
Statements contained in A.P. Green's quarterly report on Form 10-Q for the
quarter ended March 31, 1997. The contingencies discussed in the A.P. Green
filings became reportable by the Company
9
<PAGE>
as a result of its acquisition of A.P. Green on July 1, 1998. In management's
opinion, there have been no material changes in the status of these
contingencies since the date of the aforementioned filings.
NOTE E - EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). The Company
initially adopted SFAS 128 during the "old" fiscal quarter ended January 31,
1998 and, accordingly, earnings per share amounts for all periods presented in
the accompanying condensed consolidated statement of operations are calculated
and presented in accordance with SFAS 128. The statement specifies new standards
for the computation and presentation of earnings per share, requiring the
presentation of both "basic" and "diluted" earnings per share. Basic earnings
per share is calculated as net earnings divided by average common shares
outstanding. Diluted earnings per share is calculated including the dilutive
effects of potential common shares, which include the Company's stock options
and deferred compensation units.
Outstanding options to purchase 1,232,091 and 1,476,801 shares were excluded
from the December 31, 1997 and 1996 respective diluted earnings per share
calculation as their inclusion would be anti-dilutive due to the net loss
incurred for the period. In addition, deferred compensation units representing
234,450 and 290,403 potential common shares were excluded from the December 31,
1997 and 1996 respective diluted earnings per share calculations as the effect
of inclusion in the calculation would also be anti-dilutive.
NOTE F - NEW ACCOUNTING PRONOUNCEMENTS
Comprehensive Income
In June 1997, Statement of Financial Accounting Standards No. 130 (SFAS 130),
"Comprehensive Income," was issued. SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of general
purpose financial statements. This statement is effective for fiscal years
beginning after December 15, 1997 and, accordingly, will be adopted by the
Company during its "new" fiscal third quarter ending September 30, 1998. The
adoption of this statement will not have an impact on the results of operations
or financial position of the Company.
Disclosures about Segments of an Enterprise and Related Information
In June 1997, Statement of Financial Accounting Standards No. 131 (SFAS 131),
"Disclosures about Segments of an Enterprise and Related Information," was
issued. SFAS 131 establishes standards for the way that a public enterprise
reports information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. SFAS 131 is
effective for fiscal years beginning after December 15, 1997, and requires
restatement of earlier periods presented - but not for interim periods in the
initial year of adoption. The Company believes that the majority of the
provisions
10
<PAGE>
called for by this statement have, for the most part, already been applied in
its historical financial statements, which were prepared pursuant to SFAS No.
14, "Financial Reporting for Segments of a Business Enterprise." However,
results of operations for the Minerals segment will be combined with the
Refractories segment in the future, in accordance with SFAS 131. The Company
will adopt the provisions of this statement in the fourth quarter of fiscal
1998, which will not have a significant impact on its results of operations or
financial position.
Employers' Disclosures about Pension and Other Postretirement Benefits
In February 1998, Statement of Financial Accounting Standards No. 132 (SFAS
132), "Employers' Disclosures about Pension and Other Postretirement Benefits",
was issued. SFAS 132 revises employers' disclosures of pensions and other
postretirement benefits, requires additional information on changes in benefit
obligations and fair value of plan assets and eliminates certain disclosures.
SFAS 132 is effective for the year ending December 31, 1998, and requires
restatement of disclosures for earlier periods. Management believes adoption of
this statement will not have a significant impact on the results of operations
or financial position of the Company.
Accounting for Derivative Instruments and Hedging Activities
In June 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133), "
Accounting for Derivative Instruments and Hedging Activities", was issued. SFAS
133 establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair market value. The recording of the offsetting debits or credits is
dependent upon the purpose for which the derivative instrument was entered into.
In cases where specified conditions are met, the Statement permits "hedge"
accounting in which gains and losses on the derivative hedging instrument are
matched with offsetting losses and gains on the underlying item that is being
hedged. This statement is effective for all fiscal quarters of all fiscal
years beginning after June 15, 1999. Earlier application of most of this
statement's provisions is encouraged, but is only permitted as of the beginning
of any fiscal quarter that begins after June 15, 1998. No decision has been
made as to when the Company will adopt this statement. Currently, management
does not anticipate that the adoption of this statement will have a material
impact on the results of operations, financial position, liquidity or compliance
covenants contained within financing arrangements of the Company since,
historically, its use of derivative instruments has been minimal. However, risk
management policies and procedures are continually being refined, and the
Company may, from time to time, increase its use of such instruments, in order
to mitigate potential risks resulting from foreign currency exchange, commodity
price and interest rate fluctuations.
11
<PAGE>
Reporting on the Costs of Start-Up Activities
In August 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position 98-5, (SOP 98-5) "Reporting on the Costs of Start-
Up Activities." SOP 98-5 provides guidance on the financial reporting for
start-up costs, including organization costs, and requires that such costs be
expensed as incurred. SOP 98-5 is effective for all fiscal years beginning
after December 15, 1998, with early adoption encouraged. With few exceptions,
the initial application of SOP 98-5 is to be reported as the cumulative effect
of a change in accounting principle. The Company expects to apply the
provisions of this SOP during its fiscal third quarter ending September 30,
1998. Accordingly, the Company will recognize a pre-tax charge of approximately
$8 million. In the Company's consolidated statement of earnings for the three
and nine-month periods ending September 30, 1998, this charge will be presented
net of tax below both income from continuing operations and income from
discontinued operations.
NOTE G - SUBSEQUENT EVENTS
As discussed in its filing on Form 8-K, filed with the Securities and Exchange
Commission on July 9, 1998, Global Industrial Technologies, Inc. and its wholly
owned subsidiary, BGN Acquisition Corp. (collectively referred to herein as the
"Company") acquired all of the outstanding shares of common stock of A.P. Green
Industries, Inc. ("Green") effective as of July 1, 1998. The purchase was
effected through a public tender offer for Green's outstanding common stock at
an offering price of $22.00 per share and resulted in a total cash purchase
price of approximately $202 million. The total cash purchase price includes
approximately $24 million in other direct transaction costs such as severance
and other change-in-control benefits, and accounting, legal and investment
banking fees. The purchase price was funded through cash on hand, the issuance
of unsecured senior notes, and unused lines of credit. The Company has accounted
for the acquisition as a purchase and, accordingly, the results of operations of
Green will be consolidated with those of the Company prospectively, beginning on
July 1, 1998.
On June 30, 1998, an agreement was entered into whereby the Company issued $75
million in senior notes (the "Notes") to various institutional investors in a
private placement offering. The Notes are exempt from registration pursuant to
Rule 144A of the Securities Act of 1933 and, as such, carry certain restrictions
regarding their resale. The Notes are unsecured and bear interest at a rate of
6.83% per annum. Interest only is payable semi-annually, in June and December
of each year, with the entire principal balance due on June 30, 2008. The Notes
contain certain affirmative and negative covenants which require compliance with
various financial ratios and thresholds including, but not limited to, minimum
consolidated tangible net worth, maximum debt to capitalization and debt to
consolidated tangible net worth, as well as certain limitations on liens and
asset dispositions. The Company utilized proceeds from the Notes primarily
to finance its cash tender offer for the common stock of A.P Green Industries,
Inc.
On August 31, 1998, the Company entered into a senior revolving credit facility
("Facility") with a syndicate of banks. The Facility is unsecured, provides
for an aggregate borrowing limit of $215 million, and matures three years from
the date of execution of the agreement, extendible annually for an additional
year with unanimous bank group consent. The Company has the option of borrowing
under either the United States Prime rate (currently at 8.50%) or a formula-
driven rate based on the London Interbank Offered Rate ("LIBOR"). If the LIBOR-
based option is selected, the applicable interest rate will vary between LIBOR
plus 1.00% and 2.00% per annum, depending on the Company's ratio of Funded Debt
to EBITDA (as defined in the applicable agreement). Additionally, the Company
must pay a commitment fee on the unused portion of the Facility, which will also
fluctuate, between .25% and .50% per annum, depending on the Company's ratio of
Funded Debt to EBITDA. Interest and the commitment fees are both payable in
arrears. Interest is due either monthly or quarterly depending on the type of
funding selected, and the commitment fee is due quarterly. The Facility contains
certain affirmative and negative covenants which require compliance with various
financial ratios and thresholds including, but not limited to, minimum interest
coverage ratio, maximum funded debt to EBITDA and minimum consolidated net
worth, as well as certain limitations on liens, dividends, indebtedness,
acquisitions, capital expenditures and
12
<PAGE>
asset dispositions. The Company plans to utilize the Facility to refinance
certain of its existing indebtedness and for general corporate purposes. As of
September 14, 1998, the lead bank in the facility had not completed a secondary
market participation of $25 million of their commitment under the Facility.
Pursuant to an underwriting agreement with that bank, the terms of the Facility
may be modified in connection with this secondary offering.
NOTE H - INFORMATION BY INDUSTRY SEGMENT
Sales and operating profit results are presented below for the two months ended
December 31, 1997 and 1996.
<TABLE>
<CAPTION>
Two months ended
December 31
---------------------------------------------
1997 1996
---- ----
(In Millions)
<S> <C> <C>
Sales and Operating Revenues:
Refractory Products $48.3 $45.0
Minerals 7.0 8.5
Specialty Equipment Products 7.2 7.7
Forged Products 7.6 7.5
Intersegment sales (2.3) (2.6)
--------- ---------
Total sales and operating revenues
$67.8 $66.1
========= =========
Operating Profit(Loss):
Refractory Products $1.9 $2.4
Minerals (0.3) 1.3
Specialty Equipment Products (0.5) (0.6)
Forged Products 0.8 1.4
Partnership Operations (0.1) -
--------- ---------
Subtotal 1.8 4.5
General corporate expenses (5.4) (4.1)
Special charges - (20.5)
Loss before taxes $(3.6) $(20.1)
========= =========
</TABLE>
13
<PAGE>
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RECENT DEVELOPMENTS
- -------------------
On July 30, 1998, the Board of Directors of Global Industrial Technologies, Inc.
(the "Company") voted to change the Company's annual fiscal accounting period
from October 31, 1997 to December 31, 1997. Accordingly, under the new fiscal
year calendar, the Company's quarters will each be comprised of three calendar
months ending March 31, June 30, September 30, and December 31. Formerly, the
Company's fiscal quarters were each comprised of the three calendar months
ending January 31, April 30, July 31 and October 31. The first quarterly
report affected by this change will be the 10-Q Report for the "new" third
quarter of 1998 ending on September 30, 1998. In accordance with SEC rules and
regulations, the Company presents herewith the results of operations for the
two-month period ended December 31, 1997 (the "Transition Period") and the
comparative period ended December 31, 1996.
RESULTS OF OPERATIONS
- ---------------------
Two months ended December 31, 1997 compared to December 31, 1996.
The Company reported a net loss of $1.2 million or $.05 per share in the
Transition Period from continuing and discontinued operations. For the same
period a year ago, the Company reported a net loss of $14.5 million which
included a $20.5 million pre-tax charge to earnings related to the divestiture
of The Marion Power Shovel Company, British Jeffrey Diamond of the United
Kingdom and a partnership interest in KOMDRESCO of South Africa.
Segment operating profit from continuing operations for the two months was $1.8
million in 1997 compared to $4.5 million in 1996, a decrease of $2.7 million.
The decrease from 1996 was primarily due to production delays in the minerals
segment and start-up expenses for the Ameri-Forge undercarriage division.
General corporate expenses were $1.3 million higher for the two months ended
December 31, 1997 versus 1996 primarily due to increased interest expense and
additional administrative and general costs for the corporate headquarters.
Consolidated total revenues of $68.0 million for the 1997 Transition Period were
higher by $1.7 million, or 2.6 percent, from $66.3 million in the prior year
period. The increase is primarily due to additional sales from the Lota Green
acquisition in the refractory products group. The Company purchased Refractarios
Lota-Green Limitada ("Lota-Green") on June 2, 1997, and combined its operations
with those of Refractarios Chilenos S.A. (RECSA).
14
<PAGE>
Total costs and expenses for the Transition Period were $71.6 million, an
increase of $5.7 million, or 9 percent, from $65.9 million for the same period
in 1996 (excluding the special charge of $20.5 million discussed previously).
Costs of sales were $52.7 million, or 3.9 percent higher than the prior year
period, due primarily to the acquisition of Lota-Green. Selling, engineering,
administrative and general expenses were $16.2 million for the Transition
Period, $2.1 million or 15 percent higher than the $14.1 million for the same
period in 1996. Other - net is an expense of $.8 million for the Transition
Period compared to income of $.5 million for the same period in 1996.
SEGMENT RESULTS
- ---------------
Refractory Products
- -------------------
Revenues for the Transition Period increased $3.3 million over the same two
month period in 1996. The increase was due to the acquisition of Lota Green in
Chile announced in June, 1997. Operating profits in 1997 were $.5 million (21%)
lower than 1996 levels primarily due to higher production costs in Mexico.
In 1997, iron and steel producers accounted for approximately 55% of U.S.
refractory sales for Harbison-Walker Refractories Company (Harbison-Walker) and
30% of U.S. refractory sales for A. P. Green Industries, Inc. (A.P. Green). In
recent months, many U.S. steel producers have dropped prices to compete with low
priced foreign imports due to the severe economic slowdowns in Southeast Asia
and Russia, and decreased production. As a result, sales by refractory producers
to the steel industry are expected to decline in the near term and margins may
be adversely affected. The Company is taking advantage of the economic slowdown,
however, to integrate its manufacturing operations with A.P. Green faster than
originally anticipated. A primary strategic reason for acquiring A.P. Green was
to gain a larger share of other industrial markets, thus decreasing the
Company's exposure to the steel industry demand. In addition, the Company has
already realized significant cost savings as a result of the integration and
elimination of certain historical A.P. Green costs. See also Form 8-K/A filed
with the SEC on September 14, 1998.
Minerals
- --------
Minerals revenues of $7.0 million were down $1.5 million (18%) from the same
period in the prior year due to the effect of prevailing exchange rates between
the U.S. Dollar and European currencies on the ability to competitively price
exports. The segment incurred an operating loss of $.3 million, down $1.6
million from 1996 operating profit of $1.3 million. Reduced sales volume and
unfavorable pricing contributed to the unfavorable earnings result in this
segment for the Transition Period.
The Company is re-evaluating a joint venture to produce calcium aluminates (as
slag conditioners for the steel industry) and lightweight refractory grains at
its facility in Eufala, Alabama. The markets for products to have been
manufactured by the joint venture have not developed as the Company had
anticipated. Termination of the joint venture is expected to be cash neutral and
will result in a charge to earnings in the third quarter of 1998.
Specialty Equipment Products
- ----------------------------
The Specialty Equipment Products segment consists of Corrosion Technology
International (CTI) and the Global Processing Group. The segment's
consolidated revenues for the Transition Period were slightly below 1996 levels
due to a slowdown in shipments from the CTI business. The low
15
<PAGE>
shipment levels during the two month period in both years resulted in a loss for
the segment.
The significant drop in copper, zinc and nickel commodity prices during the last
quarter of 1997 has had a material adverse effect on operating results of this
segment for 1998. Also, economic conditions in Asia stalled sales of nonferrous
metals refining equipment and, as a result, depressed CTI sales and operating
profits. For the future, CTI has taken steps to decrease its dependency on the
nonferrous metal markets by forming a business alliance with Anticorrosivos
Industrales Ltd. (ANCOR) which will enhance the development of broader polymer
concrete applications and markets including pulp and paper, food processing, and
chemical processing. This new alliance will encompass operating facilities in
the United States, Europe, Asia, Australia and Latin America, effective May 1,
1998. In addition, CTI has developed, and is in the preliminary stages of
marketing, products for the municipal waste water market. Recent events and
circumstances, including knowledge of market conditions gained from the alliance
with ANCOR and the dramatic drop in copper prices, have caused the Company t
re-assess the carrying value of the CTI business under FAS-121, "Impairment of
Long-Lived Assets." Although actions have been taken to decrease the dependency
of the business on copper prices in the future, the Company expects to take a
charge to earnings in the third quarter of 1998 to write off a portion of the
goodwill associated with the CTI business.
Forged Products
- ---------------
This segment's revenues of $7.6 million were roughly equivalent to $7.5 million
for the same period a year ago, however, operating profit of $.8 million was
down 43% from operating profits of $1.4 million for the prior year period. The
decrease in operating profit is due primarily to operating losses resulting from
the time required to start-up the segment's Undercarriage product line.
The Company began a program in late 1997 of ordering and installing new
equipment at this segment and implementing more stringent preventative
maintenance programs to avoid the interruptions in flarge production which it
had been experiencing. As a result of these actions, fixed and variable costs
for this segment will be greater than in 1997. Operating margins however are
expected to improve when the intended production efficiencies are realized.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
- ----------------------------------------------------
Cash and cash equivalents were $15.9 million at December 31, 1997, $1 million
(6.7%) higher than at October 31, 1997. The net cash used by operating
activities was $6.5 million for the Transition Period. November and December are
typically low sales volume months for each of the business segments and as such
working capital increased during the Transition Period due to inventory
additions ($7 million) and lower advance payments from customers ($4.1 million).
The Industrial Tool net assets held for sale increased $4.9 million during the
period. The lower sales volume during the period together with increased
collection activity resulted in a $6.3 million decreased in accounts receivable.
The investing activities consisted of $9.1 million for capital expenditures at
the operating segments, a $5.3 million purchase price adjustment relating to a
divested business, and $4.5 million for the acquisition of a German refractories
manufacturer, Magnesitwerk Aken Gmbh ("Aken") on
16
<PAGE>
December 31, 1997. Financing activities for the period generated $26.5 million.
The activities included $28.0 million of proceeds from borrowings less
repayments. The Company also spent $2.3 million for the purchase of the
Company's common shares. Proceeds from employee stock option exercises were $0.8
million.
Excluding the net assets held for sale, the Company's current ratio at December
31, 1997 of 1.4 to 1 was unchanged from October 31, 1997. The Company had
outside debt of $241.6 million at December 31, 1997, compared to $199.0 million
at October 31, 1997 including $14.6 million of subsidiary debt acquired in the
Aken transaction.
As discussed in its filing on Form 8-K, filed with the Securities and Exchange
Commission on July 9, 1998, Global Industrial Technologies, Inc. and its wholly
owned subsidiary, BGN Acquisition Corp. (collectively referred to herein as the
"Company") acquired all of the outstanding shares of common stock of A.P. Green
Industries, Inc. effective July 1, 1998. The purchase was effected through a
public tender offer for A. P. Green's outstanding common stock at an offering
price of $22.00 per share and resulted in a total cash purchase price of
approximately $202 million, including approximately $24 million in other direct
transaction costs such as severance and other change-in-control benefits, and
accounting, legal and investment banking fees. The purchase price was funded
through cash on hand, issuance of the Notes, and unused lines of credit. The
Company has accounted for the acquisition as a purchase, and, accordingly, the
results of operations of A. P. Green will be consolidated with those of the
Company prospectively, beginning on July 1, 1998.
The Company filed Form 8-K/A with the Securities and Exchange Commission on
September 14, 1998 which discloses the Unaudited Pro Forma Condensed
Consolidated Balance Sheet of the Company as of April 30, 1998 which reflects
the pro forma financial position of the Company after giving effect to the
acquired A. P. Green assets and liabilities.
The Company's current ratio after giving effect to the Green acquisition is 1.9
to 1.0. Long-term debt (including current portion) increased to $325 million,
including approximately $32.4 million of A. P. Green indebtedness. A discussion
of recent borrowing arrangements made by the Company are discussed in Note G
"Subsequent Events". Management believes that internally-generated funds and
proceeds of short-term borrowings under existing credit facilities will be
adequate to meet working capital and capital expenditure requirements (capital
expenditures are currently estimated to be approximately $50 million over the
twelve-month period ended December 31, 1998) while maintaining an appropriate
debt to total capitalization ratio.
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
Earnings per share
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). The Company
initially adopted SFAS 128 during the "old" fiscal quarter ended January 31,
1998 and, accordingly, earnings per share amounts
17
<PAGE>
for all periods presented in the accompanying condensed consolidated statement
of operations are calculated and presented in accordance with SFAS 128. The
statement specifies new standards for the computation and presentation of
earnings per share, requiring the presentation of both "basic" and "diluted"
earnings per share. Basic earnings per share is calculated as net earnings
divided by average common shares outstanding. Diluted earnings per share is
calculated including the dilutive effects of potential common shares, which
include the Company's stock options and deferred compensation units.
Comprehensive Income
In June 1997, Statement of Financial Accounting Standards No. 130 (SFAS 130),
"Comprehensive Income," was issued. SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of general
purpose financial statements. This statement is effective for fiscal years
beginning after December 15, 1997 and, accordingly, will be adopted by the
Company during its "new" fiscal third quarter ending September 30, 1998. The
adoption of this statement will not have an impact on the results of operations
or financial position of the Company.
Disclosures about Segments of an Enterprise and Related Information
In June 1997, Statement of Financial Accounting Standards No. 131 (SFAS 131),
"Disclosures about Segments of an Enterprise and Related Information," was
issued. SFAS 131 establishes standards for the way that a public enterprise
reports information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. SFAS 131 is
effective for fiscal years beginning after December 15, 1997, and requires
restatement of earlier periods presented - but not for interim periods in the
initial year of adoption. The Company believes that the majority of the
provisions called for by this statement have, for the most part, already been
applied in its historical financial statements, which were prepared pursuant to
SFAS No. 14, "Financial Reporting for Segments of a Business Enterprise."
However, results of operations for the Minerals segment will be combined with
the Refractories segment in the future, in accordance with SFAS 131. The
Company will adopt the provisions of this statement in the fourth quarter of
fiscal 1998, which will not have a significant impact on its results of
operations or financial position.
Employers' Disclosures about Pension and Other Postretirement Benefits
In February 1998, Statement of Financial Accounting Standards No. 132 (SFAS
132), "Employers' Disclosures about Pension and Other Postretirement Benefits",
was issued. SFAS 132 revises employers' disclosures of pensions and other
postretirement benefits, requires additional information on changes in benefit
obligations and fair value of plan assets and eliminates certain disclosures.
SFAS 132 is effective for the year ending December 31, 1998, and requires
restatement of disclosures for earlier periods. Management believes adoption of
this statement will not have a significant impact on the results of operations
or financial position of the Company.
18
<PAGE>
Accounting for Derivative Instruments and Hedging Activities
In June 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133), "
Accounting for Derivative Instruments and Hedging Activities", was issued. SFAS
133 establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair market value. The recording of the offsetting debits or credits is
dependent upon the purpose for which the derivative instrument was entered into.
In cases where specified conditions are met, the Statement permits "hedge"
accounting in which gains and losses on the derivative hedging instrument are
matched with offsetting losses and gains on the underlying item that is being
hedged. This statement is effective for all fiscal quarters of all fiscal
years beginning after June 15, 1999. Earlier application of most of this
statement's provisions is encouraged, but is only permitted as of the beginning
of any fiscal quarter that begins after June 15, 1998. No decision has been
made as to when the Company will adopt this statement. Currently, management
does not anticipate that the adoption of this statement will have a material
impact on the results of operations, financial position, liquidity or compliance
covenants contained within financing arrangements of the Company since,
historically, its use of derivative instruments has been minimal. However, risk
management policies and procedures are continually being refined, and the
Company may, from time to time, increase its use of such instruments in order to
mitigate potential risks resulting from foreign currency exchange, commodity
price and interest rate fluctuations.
Reporting on the Costs of Start-Up Activities
In August 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position 98-5, (SOP 98-5) "Reporting on the Costs of Start-
Up Activities." SOP 98-5 provides guidance on the financial reporting for
start-up costs, including organization costs, and requires that such costs be
expensed as incurred. SOP 98-5 is effective for all fiscal years beginning
after December 15, 1998, with early adoption encouraged. With few exceptions,
the initial application of SOP 98-5 is to be reported as the cumulative effect
of a change in accounting principle. The Company expects to apply the
provisions of this SOP during its fiscal third quarter ending September 30,
1998. Accordingly, the Company will recognize a pre-tax charge of approximately
$8 million. In the Company's consolidated statement of earnings for the three
and nine-month periods ending September 30, 1998, this charge will be presented
net of tax below both income from continuing operations and income from
discontinued operations.
YEAR 2000 ISSUE
- ---------------
The Year 2000 Issue is the result of computer programs having been written using
two digits rather than four to define a specific year. Absent corrective
actions, a computer program that has date sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
system failures or miscalculations causing disruptions to various activities and
operations.
19
<PAGE>
The Company previously initiated assessments to identify the work efforts
required to assure that systems supporting the business successfully operate
beyond the turn of the century. The scope of this work effort encompasses
information technology systems and systems utilizing embedded technology, such
as microcontrollers.
Plans for achieving Year 2000 compliance were finalized during 1997, and
implementation work was underway by December 31, 1997. The initial phases of
this work, an inventory and assessment of potential problem areas, have been
essentially completed. Modification and testing phases continue, with most
required system modifications to mission critical systems planned for completion
by mid-1999. A significant portion of the Company's direct risk in the
information system area will be mitigated by the implementation of new
accounting, finance and operating systems, which is expected to be completed by
mid-1999. Although not purchased specifically for the purpose of avoiding such
risks, these systems are, nevertheless, fully "Year 2000" compliant.
With respect to embedded technology other than information systems, the Company
has assessed its risk of major malfunctions to be relatively low at its
refractories divisions, since most of its production machinery and equipment is
not numerically controlled. In any event, non Year 2000 compliance would have
only a minimal impact on manufacturing capacity. Ameri-Forge has several
numerically controlled machines, such as presses, rolling mills, heat treatment
equipment and multi-dimensional drills and lathes, most of which have been
purchased within the last 36 months. The Company is currently working with the
equipment's manufacturers to obtain Year 2000 compliance information and expects
to complete its assessment by November 1998.
Attention has also been focused on compliance attainment efforts of vendors and
others, including key system interfaces with customers and suppliers. Most key
suppliers and business partners have been, or will be contacted for
clarification of their Year 2000 plans. These surveys are expected to be
completed by January 1999. Notwithstanding the efforts described above, the
Company could potentially experience disruptions to some aspects of its various
activities and operations, including those resulting from non-compliant systems
utilized by unrelated third party governmental and business entities, for
example, banks and suppliers and other businesses on which the Company's vendors
and customers rely to conduct operations. Work is underway to develop business
contingency plans in order to attempt to mitigate the extent of potential
disruption to business operations.
The Company generally expenses all Year 2000 costs as incurred in accordance
with the provisions established by the Emerging Issues Task Force Release # 96-
14 (EITF 96-14) "Accounting for the Costs Associated with Modifying Computer
Software for the Year 2000." Through September 14, 1998, less than $100,000 of
costs had been incurred in the Company's efforts to achieve Year 2000 compliant
systems (exclusive of costs associated with the purchase and installation of new
hardware and software, more fully discussed above). The ultimate total cost to
the Company of achieving Year 2000 compliant systems is currently estimated to
be less than $500,000, to be expended primarily over the 1998-1999 timeframe,
although the Company expects to have a more refined estimate in November 1998,
once the assessment of Ameri-Forge's equipment is complete. Incremental costs
incurred strictly due to Year 2000
20
<PAGE>
compliance issues are not expected to have a material impact on the Company's
results of operations, financial condition or liquidity.
FORWARD-LOOKING STATEMENTS
- --------------------------
Statements the Company may publish that are not strictly historical are
"forward-looking" statements under the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Although the Company believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations will be
realized. Forward-looking statements involve known and unknown risks which may
cause the Company's actual results and corporate developments to differ
materially from those expected. Factors that could cause results and
developments to differ materially from the Company's expectations include,
without limitation, changes in manufacturing and shipment schedules, delays in
completing plant construction and acquisitions, currency exchange rates, new
product and technology developments, competition within each business segment,
cyclicality of the markets for the products of a major segment, litigation,
significant cost variances, the effects of acquisitions and divestitures, and
other risks described from time to time in the Company's SEC reports including
quarterly reports on Form 10-Q, annual reports on Form 10-K and reports on Form
8-K.
21
<PAGE>
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
The Company and its subsidiaries are involved in certain legal actions and
claims arising in the ordinary course of business. See NOTE H to Consolidated
Financial Statements contained in the Company's Annual Report on Form 10-K for
the year ended October 31, 1997, NOTE 18 to Consolidated Financial Statements
contained in A.P. Green's annual report on Form 10-K for the year ended December
31, 1997, and NOTE 5 to Consolidated Financial Statements contained in A.P.
Green's quarterly report on Form 10-Q for the quarter ended March 31, 1997. The
contingencies discussed in the A.P. Green filings became reportable by the
Company as a result of its acquisition of A.P. Green on July 1, 1998. In
management's opinion, there have been no material changes in the status of these
contingencies since the date of the aforementioned filings.
Item 5 Other Information
On June 30, 1998, an agreement was entered into whereby the Company issued $75
million in senior notes (the "Notes") to various institutional investors in a
private placement offering. The Notes are exempt from registration pursuant to
Rule 144A of the Securities Act of 1933 and, as such, carry certain restrictions
regarding their resale. The Notes are unsecured and bear interest at a rate of
6.83% per annum. Interest only is payable semi-annually, in June and December
of each year, with the entire principal balance due on June 30, 2008. The Notes
contain certain affirmative and negative covenants which require compliance with
various financial ratios and thresholds including, but not limited to, minimum
consolidated tangible net worth, maximum debt to capitalization and debt to
consolidated tangible net worth, as well as certain limitations on liens and
asset dispositions. The Company utilized the proceeds from the Notes primarily
to finance its cash tender offer for the common stock of A.P Green Industries,
Inc.
On August 31, 1998, the Company entered into a senior revolving credit facility
("Facility") with a syndicate of banks. The Facility is unsecured, provides
for an aggregate borrowing limit of $215 million, and matures three years from
the date of execution of the agreement, extendible annually for an additional
year with unanimous bank group consent. The Company has the option of borrowing
under either the United States Prime rate (currently at 8.50%) or a formula-
driven rate based on the London Interbank Offered Rate ("LIBOR"). If the LIBOR-
based option is selected, the applicable interest rate will vary between LIBOR
plus 1.00% and 2.00% per annum, depending on the Company's ratio of Funded Debt
to EBITDA (as defined in the applicable agreement). Additionally, the Company
must pay a commitment fee on the unused portion of the Facility, which will also
fluctuate, between .25% and .50% per annum, depending on the Company's ratio of
Funded Debt to EBITDA. Interest and the commitment fees are both payable in
arrears. Interest is due either monthly or quarterly depending on the type of
funding selected, and the commitment fee is due quarterly. The Facility contains
certain affirmative and negative covenants which require compliance with various
financial ratios and thresholds including, but not limited to, minimum interest
coverage ratio, maximum funded debt to EBITDA and minimum consolidated net
worth, as well as certain limitations on liens, dividends, indebtedness,
acquisitions, capital expenditures and
22
<PAGE>
asset dispositions. The Company plans to utilize the Facility to refinance
certain of its existing indebtedness and for general corporate purposes. As of
September 14, 1998, the lead bank in the facility had not completed a secondary
market participation of $25 million of their commitment under the Facility.
Pursuant to an underwriting agreement with that bank, the terms of the Facility
may be modified in connection with this secondary offering.
Item 6: Exhibits and reports on Form 8-K.
(a) Exhibits
10.1 Note Agreement, dated as of June 30, 1998 with the
Prudential Insurance Company of America and U.S. Private
Placement Fund, for 6.83% Senior Notes due June 30, 2008.
10.2 Credit Facility, dated as of August 31, 1998, with Chase
Bank of Texas, National Association, and the other banks
parties thereto.
(b) Reports on Form 8-K
1. On July 9, 1998, the Company filed a report on Form 8-K,
reporting under Item 2, disclosing the announcement that
the Company had completed its previously announced tender
offer for all of the outstanding shares of common stock,
par value $1.00 per share of A.P. Green Industries, Inc.
for $22.00 net per share in cash.
2. On July 31, 1998, the Company filed a report on Form 8-K,
reporting under Item 8, disclosing the announcement that
the Company's Board of Directors had voted to change the
Company's annual fiscal accounting period from October 31,
1997 to December 31, 1997.
3. On September 14, 1998, the Company filed an amendment to
Form 8-K, reporting under Item 7, presenting unaudited pro
forma financial information of the Company and A.P. Green
Industries, Inc.
23
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GLOBAL INDUSTRIAL TECHNOLOGIES, Inc.
By: /s/
-----------------------------
Donna A. Reeves
Vice President - Controller
(Authorized Officer and Chief
Accounting Officer)
Dated: September 14, 1998
24
<PAGE>
Exhibit 10.1
================================================================================
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
GPX CORP.
$75,000,000 6.83% SENIOR NOTES
DUE June 30, 2008
------------
NOTE AGREEMENT
------------
Dated as of June 30, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Authorization of Issue of Notes...................................................1
2. Purchase and Sale of Notes........................................................1
3. Conditions at Closing.............................................................2
3A. Certain Documents........................................................2
3B. Opinion of Purchasers' Special Counsel...................................2
3C. Representations and Warranties; No Default...............................3
3D. Purchase Permitted by Applicable Laws....................................3
3E. Legal Matters............................................................3
3F. Proceedings..............................................................3
3G. Sale of Notes to Other Purchasers........................................3
3H. Fees.....................................................................3
4. Prepayments.......................................................................3
4A. Optional Prepayment With Yield-Maintenance Amount........................3
4B. Notice of Optional Prepayment............................................3
4C. Partial Payments Pro Rata................................................4
4D. Retirement of Notes......................................................4
5. Affirmative Covenants.............................................................4
5A. Financial Statements.....................................................4
5B. Information Required by Rule 144A........................................6
5C. Inspection of Property and Corporate Books and Records...................6
5D. Covenant to Secure Note Equally..........................................7
5E. Compliance with Laws.....................................................7
5F. Corporate Existence......................................................7
5G. Nature of Business.......................................................7
5H. Insurance................................................................7
5I. Taxes and Claims.........................................................7
5J. Maintenance..............................................................7
6. Negative Covenants................................................................8
6A. Minimum Consolidated Tangible Net Worth..................................8
6B. Limitation on Funded Debt................................................8
6C. Limitation on Current Debt...............................................8
6D. Limitation on Restricted Subsidiary Debt.................................8
6E. Limitation on Liens......................................................8
6F. Asset Dispositions.......................................................9
</TABLE>
i
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<TABLE>
<S> <C>
6G. Merger and Consolidations...............................................10
6H. Transactions with Affiliates............................................11
7. Events of Default................................................................11
7A. Acceleration............................................................11
7B. Rescission of Acceleration..............................................13
7C. Notice of Acceleration or Rescission....................................14
7D. Other Remedies..........................................................14
8. Representations, Covenants and Warranties........................................14
8A. Corporation Organization and Authority..................................14
8B. Financial Statements....................................................15
8C. Actions Pending.........................................................15
8D. Outstanding Debt........................................................16
8E. Title to Properties.....................................................16
8F. Patent, Trademarks, Licenses, etc.......................................16
8G. Taxes...................................................................16
8H. Compliance with Law.....................................................16
8I. Conflicting Agreements and Other Matters................................17
8J. Offering of Notes.......................................................17
8K. Use of Proceeds.........................................................17
8L. ERISA...................................................................17
8M. Certain Laws............................................................18
8N. Governmental Consent....................................................18
8O. Environmental Compliance................................................18
8P. Disclosure..............................................................19
8Q. Hostile Tender Offers...................................................19
9. Representations of Each Purchaser................................................19
9A. Nature of Purchase......................................................19
9B. Source of Funds.........................................................19
10. Definitions......................................................................21
10A. Yield-Maintenance Terms.................................................21
10B. Other Terms.............................................................22
10C. Accounting Principles, Terms and Determinations.........................30
11. Miscellaneous....................................................................30
11A. Note Payments...........................................................30
11B. Expenses................................................................31
11C. Consent to Amendments...................................................31
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes..........32
11E. Persons Deemed Owners; Participations...................................32
11F. Survival of Representations and Warranties; Entire Agreement............33
11G. Successors and Assigns..................................................33
11H. Confidentiality; Disclosure to Other Persons............................33
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
11I. Notices.................................................................34
11J. Payments Due on Non-Business Days.......................................34
11K. Severability............................................................34
11L. Descriptive Headings....................................................35
11M. Satisfaction Requirement................................................35
11N. Governing Law...........................................................35
11O. Counterparts............................................................35
11P. Binding Agreement.......................................................35
11Q. Severalty of Obligations................................................35
11R. Maximum Interest Payable................................................35
11S. Waiver by Co-Makers.....................................................36
</TABLE>
iii
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iv
<PAGE>
INFORMATION SCHEDULE
SCHEDULE 6E -- EXISTING LIENS
SCHEDULE 8C -- ACTIONS PENDING
SCHEDULE 8I -- AGREEMENTS RESTRICTING DEBT
SCHEDULE 8O -- ENVIRONMENTAL COMPLIANCE
SCHEDULE 10 -- ACQUISITIONS
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
EXHIBIT C1 - FORM OF NOTICE OF DESIGNATION OF RESTRICTED SUBSIDIARY
EXHIBIT C2 - FORM OF NOTICE OF DESIGNATION OF UNRESTRICTED SUBSIDIARY
v
<PAGE>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
GPX CORP.
2121 San Jacinto Street
Suite 2500
Dallas, Texas 75201
As of June 30, 1998
To Each of the Purchasers Named in the
Information Schedule Attached Hereto
$75,000,000 6.83% Senior Notes
Ladies and Gentlemen:
The undersigned, GLOBAL INDUSTRIAL TECHNOLOGIES, INC. (the "Company"),
and GPX CORP. (the Company and GPX Corp., collectively, "Co-Makers") hereby
agrees with the purchasers named in the Information Schedule attached hereto
(the "Purchasers") as follows:
PARAGRAPH 1. AUTHORIZATION OF ISSUE OF NOTES.
1. Authorization of Issue of Notes. The Co-Makers will authorize the
issue of their joint and several senior promissory notes in the aggregate
principal amount of $75,000,000, to be dated the date of issue thereof, to
mature June 30, 2008, to bear interest on the unpaid balance thereof from the
date thereof until the principal thereof shall have become due and payable at
the rate of 6.83% per annum and on overdue payments at the rate specified
therein, and to be substantially in the form of Exhibit A attached hereto. The
term "Notes" as used herein shall include each such senior promissory note
delivered pursuant to any provision of this Agreement and each such senior
promissory note delivered in substitution or exchange for any other Note
pursuant to any such provision.
PARAGRAPH 2. PURCHASE AND SALE OF NOTES.
1
<PAGE>
2. Purchase and Sale of Notes. The Co-Makers hereby agree to sell to
each Purchaser and, subject to the terms and conditions herein set forth, each
Purchaser agrees to purchase from the Co-Makers, the aggregate principal amount
of Notes set forth opposite such Purchaser's name in the Information Schedule
attached hereto at 100% of such aggregate principal amount. The Co-Makers will
deliver to each Purchaser, at the offices of Baker & Botts, L.L.P. at 2001 Ross
Avenue, Suite 700, Dallas, Texas 75201, one or more Notes registered in such
Purchaser's name, evidencing the aggregate principal amount of Notes to be
purchased by such Purchaser and in the denomination or denominations specified
with respect to such Purchaser in the Information Schedule against payment of
the purchase price thereof by transfer of immediately available funds for credit
to the Company's account #74-57006 at Bank of America Illinois, 231 South
LaSalle Street, Chicago, Illinois 60697 on the date of closing, which shall be
June 30, 1998 or any other date on or before July 1, 1998 upon which the
Co-Makers and the Purchasers may mutually agree (the "Closing" or the "Date of
Closing").
PARAGRAPH 3. CONDITIONS PRECEDENT.
3. Conditions at Closing. Each Purchaser's obligation to purchase and
pay for the Notes to be purchased by such Purchaser hereunder is subject to the
satisfaction, on or before the Date of Closing, of the following conditions:
3A. Certain Documents. Each Purchaser shall have received the
following, each dated the Date of the Closing:
(i) The Notes to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board of
Directors of each Co-Maker approving the transaction contemplated by
this Agreement and the Notes, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with
respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant Secretary
of each Co-Maker certifying the names and true signatures of the
officers of such Co-Maker authorized to sign this Agreement and the
Notes and the other documents to be delivered hereunder.
(iv) Certified copies of the Certificate of Incorporation and
By-laws of each Co-Maker.
(v) A favorable opinion of Graham L. Adelman, Esq., general
counsel of the Company, counsel for Co-Makers, satisfactory to the
Purchasers and Purchasers' special counsel and substantially in the
form of Exhibit C attached hereto and as to such other matters as the
Purchasers may reasonably request.
(vi) A good standing certificate for each Co-Maker from the
Secretary of State of Delaware, Nevada and Texas dated as of recent
date and such other evidence of the status of the Co-Makers as the
Purchasers may reasonably request.
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(vii) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as the Purchasers may reasonably
request.
3B. Opinion of Purchasers' Special Counsel. Such Purchaser shall have
received from Baker & Botts, L.L.P., who are acting as special counsel for the
Purchasers in connection with this transaction, favorable opinions satisfactory
to such Purchaser as to such matters incident to the matters herein contemplated
as it may reasonably request.
3C. Representations and Warranties; No Default. The representations and
warranties contained in paragraph 8 shall be true on and as of the Date of
Closing, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on the Date of Closing no Event of Default or
Default; and the Company shall have delivered to such Purchaser an Officer's
Certificate, dated the Date of Closing, to both such effects.
3D. Purchase Permitted by Applicable Laws. The offer by the Co-Makers
of, and the purchase of and payment for the Notes to be purchased by such
Purchaser on the Date of Closing on the terms and conditions herein provided
(including the use of the proceeds of such Notes by the Co-Makers) shall not
violate any applicable law or governmental regulation (including, without
limitation, Section 5 of the Securities Act or Regulation T, U, or X of the
Board of Governors of the Federal Reserve System) and shall not subject such
Purchaser to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation.
3E. Legal Matters. Counsel for Purchasers, including any special
counsel for the Purchasers retained in connection with the purchase and sale of
the Notes, shall be satisfied as to all legal matters relating to such purchase
and sale.
3F. Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to such Purchaser,
and such Purchaser shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
3G. Sale of Notes to Other Purchasers. The Co-Makers shall have sold to
each other Purchaser the Notes to be purchased by each such other Purchaser at
the Closing and shall have received payment in full therefor.
3H. Fees. You shall have received a structuring fee of $60,000 provided
for in the preliminary term sheet attached to letter agreement between you and
Company, dated May 28, 1998.
PARAGRAPH 4. PREPAYMENTS.
4. Prepayments. The Notes shall be subject to prepayment only with
respect to the optional prepayments permitted by paragraph 4A.
4A. Optional Prepayment With Yield-Maintenance Amount. The Notes shall
be subject to prepayment, in whole at any time or from time to time in part (in
a minimum principal
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amount of at least $1,000,000, in integral multiples of $100,000), at the option
of the Co-Makers, at 100% of the principal amount so prepaid plus interest
thereon to the prepayment date and the Yield-Maintenance Amount, if any, with
respect to each Note as the case may be. Any partial prepayment of the Notes
pursuant to this paragraph 4A shall be applied pro rata to all of the remaining
required payments of principal, including the payment on the maturity date of
such Notes.
4B. Notice of Optional Prepayment. The Co-Makers shall give the holder
of each Note to be prepaid pursuant to paragraph 4A irrevocable written notice
of any prepayment not less than 10 Business Days prior to the prepayment date,
specifying such prepayment date and specifying the aggregate principal amount of
the Notes to be prepaid on such date, identifying each Note held by such holder,
and the principal amount of each such Note, to be prepaid on such date and
stating that such prepayment is to be made pursuant to paragraph 4A. Notice of
prepayment having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the prepayment date
and together with the Yield-Maintenance Amount, if any, herein provided, shall
become due and payable on such prepayment date. The Co-Makers shall, on or
before the day on which it gives written notice of any prepayment pursuant to
paragraph 4A, give telephonic notice of the principal amount of the Notes to be
prepaid and the prepayment date to each Significant Holder which shall have
designated a recipient for such notices in the Information Schedule attached
hereto or by notice in writing to the Co-Makers.
4C. Partial Payments Pro Rata. Upon any partial prepayment of the Notes
pursuant to paragraph 4A, the principal amount to be prepaid shall be applied
pro rata to all outstanding Notes (including, for the purpose of this paragraph
4C only, all Notes prepaid or otherwise retired or purchased or otherwise
acquired by the Co-Makers or any of their Subsidiaries or Affiliates other than
by prepayment pursuant to paragraph 4A) according to the respective unpaid
principal amounts thereof.
4D. Retirement of Notes. The Co-Makers shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraph 4A or upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder unless the Co-Makers or such Subsidiaries or Affiliates shall
have offered to prepay or otherwise retire or purchase or otherwise acquire, as
the case may be, the same proportion of the aggregate principal amount of Notes
held by each other holder of Notes at the time outstanding upon the same terms
and conditions. In the event that certain holders of Notes decline to accept the
full proportionate amount offered them pursuant to the preceding sentence, the
Co-Makers may within five Business Days offer, only to the holders of Notes who
accepted the full proportionate amount initially offered to them, to prepay or
otherwise retire or purchase or otherwise acquire, as the case may be, the Notes
of such holders on the same terms as Co-Makers' initial offer, in an aggregate
amount equal to the aggregate amount so declined. The additional amount so
offered to each such holder pursuant to the preceding sentence shall be in
proportion to the aggregate amount of Notes held by all such holders to which
the additional amount is so offered. Any Notes so prepaid or otherwise retired
or purchased or otherwise acquired by the Co-Makers or any of their Subsidiaries
or Affiliates shall not be deemed to be outstanding for any purpose under this
Agreement, except as provided in paragraph 4C.
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PARAGRAPH 5. AFFIRMATIVE COVENANTS.
5. Affirmative Covenants. So long as any Note is outstanding and
unpaid, the Company covenants as follows:
5A. Financial Statements. The Company covenants that it will deliver to
each holder of any Notes one copy of the following, unless more copies are
specified on the Purchaser Schedule:
(i) as soon as practicable and in any event within 50 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year: (A) consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries
for the period from the beginning of the current fiscal year to the end
of such quarterly period, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarterly period,
and (B) if the total assets of Unrestricted Subsidiaries exceeds
$15,000,000 at the end of any quarterly period for which financial
statements are required to be provided by subclause (A) above,
consolidated statements of income, stockholders' equity and cash flows
of the Company and its Restricted Subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Company and its
Restricted Subsidiaries as at the end of such quarterly period, all
statements in subclauses (A) and (B) setting forth in each case in
comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and satisfactory in form to the
Required Holder(s) and certified by an authorized financial officer of
the Company, subject to changes resulting from year-end adjustments;
(ii) as soon as practicable and in any event within 95 days
after the end of each fiscal year: (A) consolidated statements of
income and cash flows and a consolidated statement of stockholders'
equity of the Company and its Subsidiaries for such year, and a
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such year, and (B) if the total assets of Unrestricted
Subsidiaries exceeds $15,000,000 at the end of any fiscal year for
which financial statements are required to be provided by subclause (A)
above, consolidated statements of income and cash flows and a
consolidated statement of stockholders' equity of the Company and its
Restricted Subsidiaries for such year, and a consolidated balance sheet
of the Company and its Restricted Subsidiaries as at the end of such
year, all statements in subclauses (A) and (B) setting forth in each
case in comparative form corresponding consolidated figures from the
preceding annual audit, to be in reasonable detail and satisfactory in
form to the Required Holder(s) and, as to the consolidated statements,
reported on by independent public accountants of recognized national
standing selected by the Company whose report shall be without
limitation as to scope of the audit and satisfactory in substance to
the Required Holder(s);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its public stockholders and copies of all registration
statements (without exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission);
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(iv) promptly upon receipt thereof, a copy of each other
material report submitted to the Company or any Restricted Subsidiary
by independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company or any
Restricted Subsidiary; and
(v) (A) promptly after the filing or receiving thereof, copies
of all material reports and notices which the Company or any Subsidiary
files under ERISA with the Internal Revenue Service or the PBGC or the
U.S. Department of Labor or which the Company or any Subsidiary
receives from such corporation and (B) with reasonable promptness,
notice of the occurrence of a reportable event currently described
under clause (4), (7), (9) or (11) of Section 4043(c) ERISA.
(vi) with reasonable promptness, such other information
respecting the condition or operations, financial or otherwise, of the
Company or any of its Restricted Subsidiaries as any Significant Holder
may reasonably request; provided, however, that prior to the occurrence
of a Default or an Event of Default, the Company shall have no
obligation to furnish to any Significant Holder information regarding
strategic plans and similar non-public forward-looking information of
the Company or any Restricted Subsidiary.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each holder of any Notes an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Restricted Subsidiaries with the provisions of paragraphs
6A, 6B, 6C, 6D, 6E, 6F and 6G and stating that there exists no Event of Default
or Default, or, if any Event of Default or Default exists, specifying the nature
and period of existence thereof and what action the Company proposes to take
with respect thereto. Together with each delivery of financial statements
required by clause (ii) above, the Company will deliver to each holder of any
Notes a certificate of such accountants stating that, in making the audit
necessary for their report on such financial statements, they have obtained no
knowledge of any Event of Default or Default, or, if they have obtained
knowledge of any Event of Default or Default, specifying the nature and period
of existence thereof. Such accountants, however, shall not be liable to anyone
by reason of their failure to obtain knowledge of any Event of Default or
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards.
The Company also covenants that immediately after any Responsible
Officer obtains knowledge of an Event of Default, it will deliver to each holder
of any Notes an Officer's Certificate specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto.
5B. Information Required by Rule 144A. The Company will, upon the
request of the holder of any Note, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at such times as
the Company is subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act. For the purpose of this
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paragraph 5B, the term "qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act.
5C. Inspection of Property and Corporate Books and Records. The Company
will permit any Person designated by any holder of any Note in writing, at the
Company's expense if an Event of Default shall have occurred which is continuing
and otherwise at such holder's expense, to visit and inspect any of the
properties of the Company and its Restricted Subsidiaries, to examine the
corporate books and financial records of the Company and its Restricted
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of the Company and its independent public accountants, all at such
reasonable times and as often as such holder may reasonably request in writing.
5D. Covenant to Secure Note Equally. The Company will, if it or any
Restricted Subsidiary shall create or assume any Lien upon any of its property
or assets, whether now owned or hereafter acquired, other than Liens permitted
by the provisions of paragraph 6E (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to paragraph 11C), make
or cause to be made effective provision whereby the Notes will be secured by
such Lien equally and ratably with any and all other Debt thereby secured so
long as any such other Debt shall be so secured.
5E. Compliance with Laws. The Company will comply, and will cause each
of its Restricted Subsidiaries to comply, and in respect to ERISA will cause
each of its ERISA Affiliates to comply, with all applicable laws, rules,
regulations and orders except, in any such case, where failure to comply would
not result in a material adverse effect on the financial position or operations
of the Company and its Restricted Subsidiaries taken as a whole.
5F. Corporate Existence. The Company will and will cause each of its
Restricted Subsidiaries to maintain its corporate existence and all material
licenses and permits necessary for the conduct of its business.
5G. Nature of Business. The Company will not and will not permit any of
its Restricted Subsidiaries to engage in any business, if as a result, when
taken as a whole, the general nature of the business of the Company and its
Restricted Subsidiaries would be substantially changed from the business at the
Date of Closing.
5H. Insurance. The Company will and will cause each of its Restricted
Subsidiaries to maintain insurance in amounts, and against such liabilities and
hazards, and with such carriers, as is customarily maintained in accordance with
prudent business practice by companies operating similar businesses and such
other insurance as required by law, and upon written request by any holder of
any Note, will deliver a certificate specifying the details of such insurance.
5I. Taxes and Claims. The Company will and will cause each of its
Restricted Subsidiaries to promptly pay all Taxes and such obligations owed by
it to vendors, suppliers and other persons for work, labor and materials, other
than such Taxes and obligations which are being contested in good faith and for
which adequate reserves are established.
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5J. Maintenance. The Company will and will cause each of its Restricted
Subsidiaries to maintain its properties in good repair and working order such
that the absence of which would not create a material adverse effect on the
financial position or operation of the Company and its Restricted Subsidiaries,
taken as a whole.
PARAGRAPH 6. NEGATIVE COVENANTS.
6. Negative Covenants. So long as any Note is outstanding and unpaid,
the Company covenants as follows:
6A. Minimum Consolidated Tangible Net Worth. The Company will not
permit Consolidated Tangible Net Worth at any time to be less than the sum of
$280,000,000 plus (i) 25% of Consolidated Net Income, if positive, for each
fiscal quarter beginning after July 31, 1998 and (ii) 100% of the consideration,
to the extent such consideration consists of cash, cash-equivalent assets or
debt obligations, received after July 31, 1998 for the sale of any shares of
stock of the Company (other than shares of Redeemable Preferred Stock).
6B. Limitation on Funded Debt. The Company will not and will not permit
any Restricted Subsidiary to create, incur, assume, or suffer to exist any
Funded Debt if Funded Debt will exceed 50% of the sum of (y) Current Debt and
(z) Total Capitalization.
6C. Limitation on Current Debt. The Company and its Restricted
Subsidiaries will not have Current Debt outstanding on any day, unless during
the 12 consecutive month period preceding such day of determination there shall
have been a period of at least 30 consecutive days on each of which days (i) the
sum of (A) Current Debt plus (B) Funded Debt shall not have exceeded (ii) 50% of
Total Capitalization.
6D. Limitation on Restricted Subsidiary Debt. The Company will not
permit any of its Restricted Subsidiaries to create, incur, assume, or suffer to
exist Debt except: (i) Debt owed to the Company or another wholly-owned
Restricted Subsidiary, (ii) Debt evidenced by the Notes or a guaranty of the
Notes and (iii) other Debt so long as, after giving effect thereto, the
aggregate amount of Priority Debt does not at any time exceed 17.5% of
Consolidated Tangible Net Worth.
6E. Limitation on Liens. The Company will not and will not permit any
of its Restricted Subsidiaries to create, incur, assume, or suffer to exist any
Lien on its property or assets except for:
(i) Liens for property Taxes or Liens securing obligations owed to
mechanics and materialmen provided such Taxes or obligations
are not in violation of paragraph 5I;
(ii) Liens resulting from judgments which the Company is contesting
in good faith by appropriate proceedings, provided that
adequate book reserves shall have been made for such judgment
and such Liens are stayed by appropriate proceedings;
(iii) Liens incidental in the ordinary course of the Company's
business which do not secure Debt and do not materially impair
or detract from the value of such property or asset;
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(iv) Liens created to secure Debt incurred or assumed to pay all or
any part of the purchase price of, or constituting a lease of,
fleet vehicles or office equipment purchased or leased by the
Company or a Restricted Subsidiary, provided that (i) any such
Lien attaches solely to the vehicles or office equipment so
purchased or leased, (ii) the principal amount of the
obligations secured by any such Lien shall at no time exceed
the purchase price of such vehicles or office equipment, (iii)
recourse for the obligations secured by any such Lien shall be
limited solely to the vehicles or office equipment so
purchased or leased, and (iv) any such Lien shall be created
contemporaneously with the purchase or lease of such vehicles
or office equipment;
(v) Liens securing Debt of a Restricted Subsidiary to the Company;
(vi) Liens in existence at Closing and either (A) permitted by
clauses (i) through (v) of this paragraph 6E, or (B) listed on
Schedule 6E;
(vii) Liens securing Debt incurred to pay the purchase price or
costs of construction of fixed assets or assumed as part of
the purchase price of fixed assets, or Liens on fixed assets
of a Restricted Subsidiary securing Debt of such Restricted
Subsidiary where such Liens and Debt existed at the time such
Restricted Subsidiary initially became a Subsidiary (and such
Liens and Debt were not created in contemplation of such
Restricted Subsidiary becoming a Subsidiary) provided (A) in
the case of such Liens securing Debt incurred to pay the
purchase price or costs of construction, the Lien attaches
solely to the fixed assets so purchased or constructed, and
the Lien is created not later than 270 days after the purchase
of or completion of construction of such fixed assets; (B) in
the case of such Liens and Debt existing at the time such
Restricted Subsidiary initially became a Subsidiary, the Lien
attaches solely to the fixed assets which were so encumbered,
and secures solely the Debt so secured, at the time such
Restricted Subsidiary initially became a Subsidiary; (C) at
the time of the creation of such Liens, the Debt secured by
such Liens does not exceed the purchase price or costs of
construction of such fixed assets; (D) the aggregate amount of
Debt secured by Liens permitted by this clause (vii) does not
at any time exceed the remainder of (x) 35% of Consolidated
Tangible Net Worth minus (y) the aggregate amount of Priority
Debt; (E) the incurrence of such Debt is economically
beneficial to the Company; and (F) after giving effect to the
Debt secured by such Liens, no Default or Event of Default
shall exist;
(viii) Other Liens, provided the aggregate amount of Priority Debt
does not at any time exceed 17.5% of Consolidated Tangible Net
Worth.
6F. Asset Dispositions. The Company will not and will not permit its
Restricted Subsidiaries to make any Asset Disposition, other than in the
ordinary course of business, unless:
(i) The Company or such Restricted Subsidiary receives full, fair
and reasonable consideration at the time of such Asset
Disposition at least equal to the fair market value of such
asset being disposed; and either:
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(A) the aggregate book value of all Asset Dispositions during
any fiscal year of the Company does not exceed 15% of the book
value of consolidated assets of the Company and its Restricted
Subsidiaries as of the end of the immediately preceding fiscal
year of the Company, or
(B) an amount equal to the proceeds attributable to or
realized from the portion of the aggregate book value of Asset
Dispositions in any fiscal year of the Company that exceeds
15% of the book value of consolidated assets of the Company
and its Restricted Subsidiaries as of the end of the
immediately preceding fiscal year of the Company (the "Excess
Sale Proceeds") is applied by the Company or any Restricted
Subsidiary within 180 days after the applicable Asset
Disposition to: (I) acquire productive assets consistent with
the general nature of the business of the Company and its
Restricted Subsidiaries, taken as a whole; or (II) invest in
assets allowed for in (i) through (ix) of the definition of
Restricted Investments; provided, any Excess Sale Proceeds
invested in any Restricted Subsidiary as allowed for in (i) of
the definition of Restricted Investments shall be applied by
such Restricted Subsidiary in accordance with this clause (B);
provided, further, any Excess Sale Proceeds invested in assets
allowed for in (iii) through (ix) of the definition of
Restricted Investments shall remain Excess Sale Proceeds
subject to the restrictions set forth in this clause (B), and
shall remain continuously invested in assets allowed for in
(iii) through (ix) of the definition of Restricted Investments
or otherwise be immediately applied as set forth in subclauses
(I), (II) or (III) of this clause (B); or (III) reduce Debt of
the Company or its Restricted Subsidiaries; provided, however,
that any such reduction in Debt resulting from Excess Sale
Proceeds shall be made pro rata with all Debt which is pari
passu with the Notes (including as a voluntary prepayment of
the Notes) outstanding; provided, however, each holder may
elect to waive, in respect of the Notes held by it, the
obligation to prepay its Notes; or
(ii) such Asset Disposition is the disposition of property within
270 days following the date such property is acquired or
constructed by the Company or any Restricted Subsidiary, and
the Company or any Restricted Subsidiary leases, as lessee,
the same property simultaneously with such Asset Disposition
or
(iii) such Asset Disposition is made to the Company or a wholly
owned Restricted Subsidiary.
As used herein, "Asset Disposition" means any sale, lease, transfer,
exchange or other disposition, including any disposition by means of a
merger, consolidation or similar transaction (or series of related
sales, leases, transfers, exchanges or dispositions) of shares of
capital stock of a Restricted Subsidiary, of property or assets
(including any interests therein) by the Company or any Restricted
Subsidiary. For purposes of clause (i) above, the "book value" of any
Asset Disposition of property or assets not wholly-owned by the Company
and Restricted Subsidiaries shall be expressly limited to the Company's
and Restricted Subsidiaries' interest in such property or assets.
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6G. Merger and Consolidations. The Company will not, and will not
permit any Restricted Subsidiary to, merge or consolidate with any other Person,
or sell, lease, transfer or otherwise dispose of all or a substantial part of
its assets (other than as permitted by paragraph 6F), except that,
(a) any Restricted Subsidiary may merge with the Company or
another wholly-owned Restricted Subsidiary and;
(b) the Company may merge with any other Person if (i) at the time
of such merger after giving effect thereto no Default or Event
of Default shall exist; and (ii) the surviving entity shall
exist under the laws of any state of the United States of
America and shall have a majority of all of its assets and
businesses located within the United States of America; and
(iii) such surviving entity shall expressly assume, by written
agreement, all of the obligations under the Notes, and (iv)
such other Person has a net worth of greater than zero and is
otherwise solvent at the time of such merger.
(c) any Restricted Subsidiary may merge with any other Person if
(A)(i) the surviving entity is, or as a result of the merger
or consolidation, becomes a Restricted Subsidiary and (ii)
immediately following such merger no Default or Event of
Default shall exist; or (B) such Restricted Subsidiary is
designated as Unrestricted Subsidiary and immediately
following such designation no Default or Event of Default
would exist.
6H. Transactions with Affiliates. The Company shall not, and shall not
permit any Restricted Subsidiary to, enter into any material transaction or
material arrangement with any Affiliate on terms, when taken as a whole, less
favorable than available in a comparable arms-length transaction in the ordinary
course of business.
PARAGRAPH 7. EVENTS OF DEFAULT.
7. Events of Default.
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of
or Yield-Maintenance Amount payable with respect to any Note when the
same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more than five Business Days after the date due; or
(iii) the Company or any Restricted Subsidiary defaults
(whether as primary obligor or as guarantor or other surety) in any
payment of principal of or interest on any other obligation for money
borrowed (or any Capitalized Lease Obligation, any obligation under
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a conditional sale or other title retention agreement, any obligation
issued or assumed as full or partial payment for property whether or
not secured by a purchase money mortgage or any obligation under notes
payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or the Company or
any Restricted Subsidiary fails to perform or observe any other
agreement, term or condition contained in any agreement under which any
such obligation is created (or if any other event thereunder or under
any such agreement shall occur and be continuing) and the effect of
such failure or other event is to cause such obligation to become due
(or to be repurchased by the Company or any Restricted Subsidiary)
prior to any stated maturity, provided that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing acceleration (or
resale to the Company or any Restricted Subsidiary) shall occur and be
continuing exceeds $5,000,000; or
(iv) any one or more of the representations or warranties
made by the Company herein or by the Company or any of its officers in
any writing furnished in connection with or pursuant to this Agreement
shall be false in any material respect on the date as of which made; or
(v) the Company fails to perform or observe any term,
covenant or agreement contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, covenant, term or condition contained herein and such
failure shall not be remedied within 30 days after any Responsible
Officer obtains actual knowledge thereof; or
(vii) the Company or any Restricted Subsidiary makes an
assignment for the benefit of creditors or is generally not paying its
debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Restricted Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (the "Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or any Restricted Subsidiary petitions or
applies to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian, liquidator or
similar official of the Company or any Restricted Subsidiary, or of any
substantial part of the assets of the Company or any Restricted
Subsidiary, or commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings (other than proceedings for the
voluntary liquidation and dissolution of a Restricted Subsidiary)
relating to the Company or any Restricted Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Restricted
Subsidiary and either (i) the Company or such Restricted Subsidiary by
any act indicates its approval thereof, consent thereto or acquiescence
therein, or (ii) such petition, application or proceedings remains
undismissed,
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undischarged and unbonded for more than 60 days after the filing or
commencement thereof; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) one or more final judgments or orders in an aggregate
amount in excess of $7,500,000 is rendered against the Company or any
Restricted Subsidiary (exclusive of judgment amounts fully covered by
insurance, subject to applicable deductibles or retentions, except
where the insurer is contesting coverage in respect of such judgment),
and either (i) any creditor has commenced execution of such judgment or
order, or (ii) within 30 days after entry thereof, such judgment is not
discharged or execution thereof stayed pending appeal, or within 30
days after the expiration of any such stay, such judgment is not
discharged; or
(xiii) a "reportable event", as defined in Section 4043 of
ERISA and the regulations issued thereunder, occurs with respect to any
Plan, excluding events currently described in clauses (1), (2), (3),
(4), (7), (8), (9), (11), (12) and (13) of Section 4043(c) ERISA.
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, any holder of any Note (other than the Company or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare all of the Notes held by such holder to be, and all of the
Notes held by such holder shall thereupon be and become, immediately due and
payable together with interest accrued thereon, and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind (including, without
limitation, notice of intent to accelerate), all of which are hereby waived by
the Company; (b) if such event is an Event of Default with respect to the
Company specified in clause (viii), (ix) or (x) of this paragraph 7A, all the
Notes then outstanding shall automatically become immediately due and payable
together with interest accrued thereon, with respect to each Note, without
presentment, demand, protest or notice of any kind (including, without
limitation, notice of intent to accelerate), all of which are hereby waived by
the Company; and (c) if such event is any Event of Default other than as
specified in preceding clause (a) or (b), the Required Holder(s) may at its or
their option, by notice in writing to the Company, declare all of the Notes to
be, and all of the Notes shall thereupon be and become, immediately due and
payable together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind (including, without
limitation, notice of intent to accelerate), all of which are hereby waived by
the Company.
7B. Rescission of Acceleration. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, other than payments that
have
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been returned to the Company or applied pro rata to all outstanding Notes
according to the respective unpaid principal amounts thereof, (iii) all Events
of Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. Other Remedies. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
PARAGRAPH 8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
8. Representations, Covenants and Warranties. The Company represents,
covenants and warrants as follows:
8A. Corporation Organization and Authority. Each of Company and
its Restricted Subsidiaries:
(i) is a corporation duly incorporated, validly existing and in
good standing under the laws of their respective jurisdictions
of incorporation;
(ii) has the legal and corporate power and authority to own and
operate their respective properties and to carry on their
respective businesses as now conducted and as presently
proposed to be conducted;
(iii) has the necessary licenses, certificates and permits to own
and operate their respective properties and to carry on their
respective businesses as now conducted and as presently
proposed to be conducted in each jurisdiction in which the
failure to obtain such licenses, certificates and permits, in
the aggregate, would not be reasonably likely to have a
material adverse effect on the financial position and results
of operations of the Company and its Restricted Subsidiaries,
taken as a whole; and
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(iv) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing in each
jurisdiction in which the nature of the business transacted by
it makes such qualification or licensing necessary and in
which the failure to be so qualified or licensed would not be
reasonably likely to have a material adverse effect on the
financial position or results of operations of the Company and
its Restricted Subsidiaries, taken as a whole.
The execution, delivery and performance by the Company of this Agreement and the
Notes are within the Company's corporate powers and have been authorized by all
necessary corporation action.
8B. Financial Statements. The Company has furnished each Purchaser with
the following financial statements, identified by a principal financial officer
of the Company: (i) a consolidated balance sheet of the Company and its
Subsidiaries as at October 31 in each of the years 1995, 1996 and 1997, and
consolidated statements of income, stockholders' equity and cash flows of the
Company and its Subsidiaries for each such year, all reported on by Price
Waterhouse LLP; and (ii) a consolidated balance sheet of the Company and its
Subsidiaries as at April 30 in each of the years 1996, 1997 and 1998 and
consolidated statements of income, stockholders' equity and cash flows for the
six-month period ended on each such date, prepared by the Company. Such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved. The balance sheets fairly present the condition
of the Company and its Subsidiaries as at the dates thereof, and the statements
of income, stockholders' equity and cash flows fairly present the results of the
operations of the Company and its Subsidiaries and their cash flows for the
periods indicated. There has been no material adverse change in the business,
property or assets, condition (financial or otherwise), operations or prospects
of the Company and its Restricted Subsidiaries taken as a whole since October
31, 1997 except changes in the ordinary course of business.
8C. Actions Pending. Except as disclosed on Schedule 8C hereto: (i)
there are no claims, litigation (including, without limitation, derivative
actions), arbitration proceedings, administrative proceedings or investigations
that are pending or threatened against or affecting the Company or any of its
Restricted Subsidiaries (a) which, if adversely determined, after considering
the receipt of proceeds from insurance available to the Company and its
Restricted Subsidiaries, would have a material adverse effect on the financial
position or results of operation of the Company and its Restricted Subsidiaries,
taken as a whole, or (b) which purport to affect the legality, validity, or
enforceability of this agreement or any Note or any action taken or to be taken
pursuant hereto, and there are no inquiries whether formal or informal, from any
governmental agency or authority or otherwise, which would give rise to any such
action, proceeding or investigation; (ii) there are no labor controversies
pending or threatened against the Company or any of its Restricted Subsidiaries
which, based on reasonable assumptions of the Company as to the probable outcome
of any and all such labor controversies, would have a material adverse effect on
the financial position or results of operation of the Company and its Restricted
Subsidiaries, taken as a whole; and (iii) other than any liability incident to
any litigation, proceedings or investigations described in Schedule 8C hereto,
neither the Company nor any of its Restricted Subsidiaries has any material
contingent liabilities.
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8D. Outstanding Debt. Neither the Company nor any of its Restricted
Subsidiaries has outstanding any Debt except as permitted by paragraph 6. There
exists no default under the provisions of any instrument evidencing such Debt or
of any agreement relating thereto.
8E. Title to Properties. The Company has and each of its Restricted
Subsidiaries has good and marketable title to its respective real properties
(other than properties which it leases) and good title to all of its other
respective properties and assets, including the properties and assets reflected
in the balance sheet as at April 30, 1998 referred to in paragraph 8B (other
than properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by paragraph 6E and no
defect or other encumbrance except such which would not be reasonably likely to
have a material adverse effect on the financial position or results of operation
of the Company and its Restricted Subsidiaries, taken as a whole. All leases
necessary in any material respect for the conduct of the respective businesses
of the Company and its Restricted Subsidiaries are valid and subsisting and are
in full force and effect.
8F. Patent, Trademarks, Licenses, etc. To the best of the Company's
knowledge, each of the Company and its Restricted Subsidiaries, owns, possesses
or has the right to use all of the material patents, trademarks, service marks,
trade names, copyrights, trade secrets, and licenses, and rights with respect
thereto, necessary for the present conduct of their respective businesses,
without any known material conflict with the rights of others except for such
intellectual property or conflicts which would not be reasonably likely to have
a material adverse effect on the financial position or results of operations of
the Company and its Restricted Subsidiaries, taken as a whole.
8G. Taxes. All Tax returns required to be filed by each of the Company
and the Restricted Subsidiaries and any other Person with which the Company or
any Restricted Subsidiary files or is required to file a consolidated return in
any jurisdiction have been filed on a timely basis (which timely filing shall
include any instance in which the time for such filing has itself been timely
and properly extended), and all Taxes that are shown to be due and payable have
been paid. Neither the Company nor any Restricted Subsidiary knows of any
proposed additional Tax assessment against it or any such Person that, in the
aggregate, would be reasonably likely to have a material adverse effect on the
financial position or results of operations of the Company and its Restricted
Subsidiaries, taken as a whole.
8H. Compliance with Law. Neither the Company nor any Restricted
Subsidiary has received notice, nor does it have any knowledge, that it is in
violation of any law, ordinance, governmental rule or regulation to which it is
subject, which violations, in the aggregate, management believes would be
reasonably likely to have a material adverse effect on the financial position or
results of operations of the Company and its Restricted Subsidiaries, taken as a
whole.
8I. Conflicting Agreements and Other Matters. Except as set forth in
Schedule 8I attached hereto, neither the Company nor any of its Restricted
Subsidiaries is a party to any contract or agreement or subject to any charter
or other corporate restriction which would be reasonably likely to have a
material adverse effect on the financial position or results of operation of the
Company and its Restricted Subsidiaries, taken as a whole. Neither the execution
nor delivery of this Agreement or the Notes, nor the offering, issuance and sale
of the Notes, nor fulfillment of nor compliance with
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<PAGE>
the terms and provisions hereof and of the Notes will conflict with, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien upon
any of the properties or assets of the Company or any of its Restricted
Subsidiaries pursuant to, the charter or by-laws of the Company or any of its
Restricted Subsidiaries, any award of any arbitrator or any agreement (including
any agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its Restricted
Subsidiaries is subject. Schedule 8I contains a list of all instruments
evidencing any Debt of the Company or such Restricted Subsidiary, any agreement
relating thereto or any other contract or agreement (including its charter)
which limits the amount of, or otherwise imposes restrictions on the incurring
of, Debt of the Company of the type to be evidenced by the Notes.
8J. Offering of Notes. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would subject the issuance or sale of the Notes to the provisions of
Section 5 of the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction.
8K. Use of Proceeds. The proceeds of sale of the Notes will be used to
refinance Current Debt and for general corporate purposes including potential
acquisitions and joint venture investments. None of the proceeds of the sale of
the Notes will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any "margin stock"
as defined in Regulation U (12 CFR Part 227) of the Board of Governors of the
Federal Reserve System ("margin stock") or for the purpose of maintaining,
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any stock that is currently a margin stock or for any other purpose
which might constitute this transaction a "purpose credit" within the meaning of
such Regulation U, unless the Company shall have delivered to each Purchaser an
opinion of counsel satisfactory to such Purchaser stating that the purchase of
such Notes does not constitute a violation of such Regulation U. Neither the
Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation T,
Regulation U or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect.
8L. ERISA. The Company (i) has fulfilled all obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan that
is not a Multiemployer Plan, (ii) is in compliance in all material respects with
all other applicable provisions of ERISA and the Code with respect to each Plan,
and (iii) has not incurred any liability under the Title IV of ERISA to the PBGC
with respect to any Plan or any trust established thereunder. No Plan or trust
created thereunder has been terminated, and there have been no "reportable
events" (as such term is defined in section 4043 of ERISA), with respect to any
Plan or trust created thereunder which reportable event or events will or could
result in the termination of such Plan and give rise to a material liability of
the Company or any ERISA Affiliate in respect thereof. Neither the Company nor
any ERISA Affiliate is or has ever been an employer required to contribute to
any Multiemployer Plan. Neither the Company nor any ERISA Affiliate is or has
ever been a "contributing sponsor" (as such term is defined in section 4001 of
ERISA) in any Multiemployer Plan.
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The execution and delivery of this Agreement and the issuance and sale
of the Notes will be exempt from or will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed under section
502(i) of ERISA or a tax could be imposed pursuant to section 4975 of the Code.
8M. Certain Laws. Neither the Company nor any Restricted Subsidiary is,
or is directly or indirectly controlled by, or acting on behalf of any Person
that is, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended. Neither the Company nor any Restricted Subsidiary is a
"holding company" or an "affiliate" of a "holding company," or a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
8N. Governmental Consent. Neither the nature of the Company or of any
of its Subsidiaries, nor any of their respective businesses or properties, nor
any relationship between the Company or any Subsidiary and any other Person, nor
any circumstance in connection with the offering, issuance, sale or delivery of
the Notes is such as to require any authorization, consent, approval, exemption
or any action by or notice to or filing with any court or administrative or
governmental or regulatory body (other than routine filings after the Date of
Closing with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement,
the offering, issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8O. Environmental Compliance. To the knowledge of a Responsible Officer
of the Company, except as set forth on Schedule 8O hereto, (i) all facilities
and property (including underlying groundwater) owned or leased by the Company
or any of its Restricted Subsidiaries have been and continue to be, in
compliance with all environmental laws, the noncompliance by the Company and its
Restricted Subsidiaries with which, individually or in the aggregate for all
such noncompliance, would have a material adverse effect, (ii) there are no
pending, unresolved or threatened Environmental Actions which (a) individually
or in the aggregate (for all such Environmental Actions) would be reasonably
likely to have a material adverse effect; (iii) there have been no releases of
hazardous materials at, on or under any property now or previously owned or
leased by the Company or any of its Restricted Subsidiaries that, singly or in
the aggregate, have had, have, or may reasonably be expected to have, a material
adverse effect; (iv) the Company and its Restricted Subsidiaries have been
issued and are in compliance with all permits, certificates, approvals, licenses
and other authorizations relating to environmental matters that are necessary or
desirable for their businesses, which failure or failures so to be issued or
comply (individually or in the aggregate) would be likely to have a material
adverse effect; (v) no property now or previously owned or leased by the Company
or any of its Restricted Subsidiaries is listed or proposed for listing (with
respect to owned property only) on the National Priorities List pursuant to
CERCLA, on the CERCLIS (as defined in CERCLA) or on any similar state list of
sites requiring investigation or clean-up; and (vi) no conditions exist at on or
under any property now or previously owned, leased or operated by the Company or
any of its Restricted Subsidiaries which, with the passage of time, or the
giving of notice or both, would give rise to liability under any environmental
law, which liability or liabilities (individually or in the aggregate) would be
likely to have a materially adverse effect. A material adverse effect as used in
this paragraph means a material adverse effect on the
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financial position or results of operation of the Company and its Restricted
Subsidiaries, taken as a whole.
8P. Disclosure. None of this Agreement, any certificate furnished to
any Purchaser by or on behalf of the Company in connection with the Closing, nor
any certificate furnished to any Purchaser by or on behalf of the Company
pursuant hereto contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact peculiar to the Company or any of
its Restricted Subsidiaries which materially adversely affects or in the future
may (so far as the Company can now foresee) materially adversely affect the
business, property or assets, condition (financial or otherwise) or operations
of the Company or any of its Restricted Subsidiaries and which has not been set
forth in this Agreement.
8Q. Hostile Tender Offers. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
PARAGRAPH 9. REPRESENTATIONS OF EACH PURCHASER.
9. Representations of Each Purchaser. Each Purchaser represents as
follows:
9A. Nature of Purchase. Such Purchaser is not acquiring the Notes to be
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be and remain within
its control.
9B. Source of Funds. At least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
such Purchaser to pay the purchase price of the Notes to be purchased by such
Purchaser hereunder:
(a) the Source is an "insurance company general account" (as
the term is defined in PTCE 95-60 (issued July 12, 1995)) in respect of
which the reserves and liabilities (as defined by the annual statement
for life insurance companies approved by the National Association of
Insurance Commissioners (the "NAIC Annual Statement")) for the general
account contract(s) held by or on behalf of any employee benefit plan
together with the amount of the reserves and liabilities for the
general account contract(s) held by or on behalf of any other employee
benefit plans maintained by the same employer (or affiliate thereof as
defined in PTCE 95-60) or by the same employee organization 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 your state
of domicile; or
(b) the Source is a separate account that is maintained solely
in connection with your fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account or 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
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(c) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTCE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTCE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Company in writing pursuant to this paragraph (c), 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
(d) 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 (i) the identity of such QPAM, (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
paragraph (d); or
(e) the Source is a governmental plan; or
(f) 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 paragraph (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this paragraph 9B, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
PARAGRAPH 10. DEFINITIONS.
10. Definitions. For the purpose of this Agreement, the terms defined
in paragraphs 1 and 2 shall have the respective meanings specified therein, and
the following terms shall have the meanings specified with respect thereto below
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
10A. Yield-Maintenance Terms.
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"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on such Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City local time) on the Business Day next
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between yields reported for various maturities.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement
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Date with respect to such Called Principal. The Yield-Maintenance Amount shall
in no event be less than zero.
10B. Other Terms.
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly controls another Person; (ii) which beneficially owns 10%
or more of the voting stock of another Person; (iii) of which 10% or more of the
voting stock is owned by such Person; or (iv) that is an officer or director of
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
"Authorized Officer" shall mean the chief executive officer, chief
financial officer or any vice president of the Company designated as an
"Authorized Officer" of the Company in the Information Schedule attached hereto
or any vice president of the Company designated as an "Authorized Officer" of
the Company for the purpose of this Agreement in an Officer's Certificate
executed by the Company's chief executive officer or chief financial officer and
delivered to the holders of the Notes. Any action taken under this Agreement on
behalf of the Company by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of the Company and whom any
holder of any Note in good faith believes to be an Authorized Officer of the
Company at the time of such action shall be binding on the Company even though
such individual shall have ceased to be an Authorized Officer of the Company.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Business Day" shall mean any day other than (i) a Saturday or a
Sunday, and (ii) a day on which commercial banks in New York City are required
or authorized to be closed.
"Closing" or "Date of Closing" shall have the meaning specified in
paragraph 2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Capitalized Lease Obligation" shall mean any rental obligation which,
under GAAP, would be required to be capitalized on the books of the Company or
any Restricted Subsidiary, taken at the amount thereof accounted for as
indebtedness in accordance with GAAP.
"Consolidated Net Income" shall mean, as to any period, consolidated
gross revenues of the Company and its Restricted Subsidiaries less all operating
and non-operating expenses of the Company and its Restricted Subsidiaries for
such period, including all charges of a proper character (including current and
deferred taxes on income, provision for taxes on unremitted foreign earnings
which are included in gross revenues, and current additions to reserves), but
not including in gross revenues (i) any gains (net of expenses and taxes
applicable thereto) in excess of losses resulting from the transfer of assets
(i.e. assets other than current assets); (ii) any gains resulting from the
write-up of assets; (iii) any equity of the Company or any Restricted Subsidiary
in the undistributed earnings (but not losses) of any corporation which is not a
Restricted Subsidiary; (iv) undistributed
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earnings of any Restricted Subsidiary to the extent that such Restricted
Subsidiary is not at the time permitted to make or pay dividends, repay
intercompany loans or advances, convert such earnings into U.S. dollars or
repatriate earnings; (v) any earnings or losses of any Person acquired by the
Company or any Restricted Subsidiary through purchase, merger, consolidation or
otherwise for any fiscal quarter prior to the fiscal quarter in which the
acquisition occurs; (vi) any deferred credit representing the excess of equity
in any Restricted Subsidiary at the date of acquisition over the cost of the
investment in such Restricted Subsidiary; (vii) gains from the acquisition of
securities or the retirement or extinguishment of Debt; (viii) gains on
collections from insurance policies or settlements; (ix) any income or gain
during such period from any change in accounting principles, from any
discontinued operations or the disposition thereof, from any extraordinary items
or from any prior period adjustments. If the preceding calculation results in a
number less than zero, such amount shall be considered a consolidated net loss.
A change in the designation of a Subsidiary as an Unrestricted Subsidiary or as
a Restricted Subsidiary shall not change Consolidated Net Income for any period
preceding such change.
"Consolidated Tangible Net Worth" shall mean consolidated stockholders'
equity of the Company and its Restricted Subsidiaries, as defined according to
GAAP less (i) the book value of all intangibles acquired or created after
January 1, 1996 (excluding intangible assets, up to the amount of $60,000,000,
related to the acquisitions described on Schedule 10, (ii) Redeemable Preferred
Stock, to the extent included in such consolidated shareholders equity; and
(iii) all Restricted Investments that exceed, in aggregate, 15% of such
consolidated stockholder's equity; provided, however, at any time that (a) the
sum of (I) the portion of Consolidated Net Income attributable to the Mexican
Operations, plus (II) interest expense, taxes, depreciation and amortization
which was deducted in determining such portion of Consolidated Net Income
attributable to the Mexican Operations is (b) equal to or greater than U.S.
$7,500,000 during the period of 12 calendar months then most recently ended, the
original U.S. dollar investment in the Mexican Operations will be included in
Consolidated Tangible Net Worth with no adjustments for foreign currency
translation which has been made in accordance with GAAP. For purposes of this
definition, "Mexican Operations" shall mean the refractory operations of
Indresco de Mexico, S.A. de C.V., Refractarios Mexicanos, S.A. de C.V., Refmex,
S.R.L. de C.V. and Refractarios Green S.R.L. de C.V.
"Current Debt" shall mean, without duplication, Debt other than Funded
Debt.
"Debt" shall mean, as to the Company and each Restricted Subsidiary,
without duplication, the sum of (i) its liabilities for borrowed money, (ii) its
liabilities for the deferred purchase price of property (including, without
limitation, all liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such property), other than
(A) accounts payable arising in the ordinary course of business, and (B)
installment purchase contracts for equipment with a term of less than 12 months,
(iii) its Capitalized Lease Obligations, and (iv) any Guarantee made by it (but
without duplication of the amount of a liability otherwise treated as Debt under
this definition).
"Environmental Actions" shall mean:
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(a) any complaint, claim (whether absolute or contingent,
matured or unmatured), citation, demand, inquiry or inquiries, notice
of violation, correspondence, report, action, assertion of potential
responsibility, lien, encumbrance, or proceeding (whether formal or
informal), brought or issued by any governmental unit, agency, or body
which relates to any of the following:
i) Environmental Laws;
ii) public health risks;
iii) the environmental condition of any real property
that at any time was, is or hereafter will be owned, leased,
operated or otherwise used or controlled by the Company or any
of its Subsidiaries (the "Premises"), or any portion thereof,
any property near the Premises, or any property at which the
Company or any of its Affiliates is conducting or has
conducted operations (including actual or alleged damage or
injury to wildlife, biota, air, surface or subsurface soil or
water, or other natural resources); or
iv) the use, exposure, release, generation,
manufacture, transportation to or from, handling, storage,
treatment, recycling, reclamation, reuse, emission, disposal
or presence of any Hazardous Material either on the Premises,
any adjacent property or any property at which the Company or
any of its Subsidiaries is conducting or has conducted
operations, or the transportation of any Hazardous Material by
the Company, any of its Subsidiaries or any of their
respective agents, employees, consultants, or independent
contractors for sale, treatment, storage, recycling,
reclamation, reuse or disposal;
(b) any violation or claim of violation by the Company or any
of its Subsidiaries of any Environmental Laws;
(c) any Lien for damages caused by, or the recovery of any
costs incurred for the investigation, remediation or cleanup of, any
release or threatened release of any Hazardous Material; or
(d) any complaint, claim (whether absolute or contingent,
matured or unmatured), citation, demand, action or proceeding (whether
formal or informal), brought in connection with or otherwise regarding
the destruction or loss of use of property, or the injury, illness or
death of any officer, director, employee, agent, representative, tenant
or invitee of the Company or any of its Subsidiaries or the injury,
illness or death of any other Person, in each case arising from or
relating to any of the matters described in clauses (i) through (iv),
inclusive, of section (a) of this definition.
"Environmental Laws" means:
(a) any federal statute, law, code, rule, regulation,
ordinance, order, standard, permit, license or requirement (including
consent decrees, judicial decisions and
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administrative orders), together with all related amendments,
implementing regulations and reauthorizations, pertaining to the
protection, preservation, conservation or regulation of the
environment, including (without limitation): the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time
("CERCLA"); the Resource Conservation and Recovery Act, 42 U.S.C.
ss.6901 et seq. and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to
time ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. ss.2601 et
seq.; the Clean Air Act, 42 U.S.C. ss.7401 et seq., and
(b) any state or local statute, law, code, rule, regulation,
ordinance, order, standard, permit, license or requirement (including
consent decrees, judicial decisions and administrative orders),
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation,
conservation or regulation of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Funded Debt" shall mean all Debt having a final maturity of more than
one year from the date of creation thereof, including all payments thereof
required to be made within one year.
"GAAP" shall mean those generally accepted accounting principles as in
effect in the United States of America from time to time.
"Guarantee" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Debt of another, including, without limitation, any such Debt 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 Debt in effect guaranteed by such Person
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such Debt or any security therefor, or to provide funds for
the payment or discharge of such Debt (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), to provide any indemnity
in connection with such Debt, or to maintain the solvency or any balance sheet
or other financial condition of the obligor of such Debt, or to make payment for
any products, materials or supplies or for any
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transportation or service, regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that the Debt of another person will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
of such Debt will be protected against loss in respect thereof; provided,
however, that any such agreement constituting a closing condition to an asset
purchase by the Company or any Restricted Subsidiary shall not constitute a
Guarantee for purposes of this definition. The amount of any Guarantee shall be
equal to the outstanding principal amount of the Debt guaranteed or such lesser
amount to which the maximum exposure of the guarantor shall have been
specifically limited.
"Hazardous Materials" shall mean (a) any "hazardous substance" as
defined by CERCLA, and including the judicial interpretation thereof; (b) any
"pollutant or contaminant" as defined in 42 U.S.C. ss. 9601(33); (c) any
material now defined as "hazardous waste" by RCRA; (d) any petroleum product,
including crude oil and any fraction thereof; (e) natural gas, natural gas
liquids, liquified natural gas, or synthetic gas usable for fuel; (f) any
"hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; (g) any
radioactive material, including any source material, special nuclear material or
by-product material as defined at 42 U.S.C. ss.2011 et seq., and any amendments
thereto and reauthorizations thereof; and (h) any other substance, regardless of
physical form, that is regulated under any past, present or future federal,
state or local government statute, rule or regulation.
"Hostile Tender Offer" shall mean, with respect to the use of proceeds
of any Note, any offer to purchase, or any purchase of, shares of capital stock
of any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of such shares,
equity interests, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer to purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date hereof.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
minimum or compensating deposit arrangement, lien (statutory or otherwise) or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction) or any other type of
preferential arrangement for the purpose, or having the effect, or protecting a
creditor against loss or securing the payment or performance of an obligation.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" shall have the meaning specified in paragraph 1.
"Officer's Certificate" shall mean a certificate signed in the name of
the Company by an Authorized Officer of the Company.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor entity.
"Person" shall mean and include an individual, a corporation, a
partnership, a trust, a joint venture, a limited liability company, an
unincorporated organization and a government or any department or agency
thereof.
"Plan" shall mean any employee pension benefit plan (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"Priority Debt" shall mean the sum of (i) Debt of the Company or any of
its Restricted Subsidiaries secured by Liens other than Liens provided for in
clauses (i) through (vii), inclusive, of paragraph 6E, Limitation on Liens, and
(ii) Debt in respect to which a Restricted Subsidiary, other than GPX Corp., is
liable or has given a Guarantee; provided however that, if such Restricted
Subsidiary has guaranteed the Notes by a guaranty agreement in form and
substance acceptable to the Required Holders and if the holders of such Debt of
such Restricted Subsidiary have entered into an intercreditor agreement with or
for the benefit of the holders of the Notes in form and substance acceptable to
the Required Holders, such Debt of such Restricted Subsidiary will not be
treated as Priority Debt.
"Redeemable Preferred Stock" shall mean each share of the Company's
capital stock that is (a) entitled to preference or priority over any other
shares of the Company's capital stock in respect of payment of dividends or
distribution of assets upon liquidation, and (b) redeemable, payable or required
to be purchased or otherwise retired or extinguished, or convertible into Debt
of the Company (i) at a fixed or determinable date, whether by operation of
sinking fund or otherwise, (ii) at the option of any Person other than the
Company, or (iii) upon the occurrence of a condition not solely within the
control of the Company.
"Required Holder(s)" shall mean the holder or holders of at least 51%
of the aggregate principal amount of the Notes from time to time outstanding.
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, chief financial officer, chief accounting officer and the
general counsel of the Company.
"Restricted Investment" shall mean all investments made after the Date
of Closing, made in cash or by delivery of property, by the Company and its
Restricted Subsidiaries, (x) in any Person, whether by acquisition of stock,
Debt or other obligation or by loan, advance, or capital contribution, or
otherwise, or (y) in any property (item (x) and (y) herein for purposes of this
definition being referred to an "Investments"), except for the following: (i)
Investments in (a) one or more Restricted Subsidiaries or (b) any corporation
which concurrently with such Investment becomes a Restricted Subsidiary; (ii)
any Investment in a business, partnership, joint venture interest, minority
interest or business combination, in the ordinary course of business (other than
investment in Restricted Subsidiaries) provided that the aggregate of such
Investments, as is or would be properly reflected on the then most recent
consolidated balance sheet of the Company and its Restricted Subsidiaries in
accordance with GAAP does not exceed 15% of book value of consolidated assets of
the Company and its Restricted Subsidiaries as so reflected on such balance
sheet; (iii) Investments in
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money market investment programs which are classified as current assets in
accordance with generally accepted accounting principles and which are
administered by reputable broker-dealers; (iv) Investments in certificates of
deposit and bankers acceptances maturing within one year from the date of
acquisition, issued by a commercial bank organized under the laws of the United
States or any state thereof, Canada, Western Europe or Japan, having capital
surplus and undivided profits aggregating at least $500,000,000, provided,
either (A) neither the Company nor any Restricted Subsidiary owes any Debt to
such bank, or (B) if the Company or any Restricted Subsidiary owes any Debt to
such bank, either (x) no default has occurred in the payment of such Debt or in
the performance or observance of any agreement, term or condition contained in
any document or agreement evidencing or governing such Debt, other than any
default which has been cured or permanently waived, or (y) such bank executes a
letter agreement, in form and substance acceptable to Required Holders,
expressly waiving any and all Liens and rights of offset, contractual or
otherwise, of such bank regarding such certificate of deposit or bankers
acceptance, (v) Investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by the Company or
any Restricted Subsidiary, is accorded a rating no lower than "P-2" by Moody's
Investors Services, Inc. or "A-2" by Standard & Poor's Corporation; (vi)
Investments in direct obligations of the United States of America, or
obligations of any agencies or instrumentality of the United States of America
which are fully guaranteed by the United States of America, maturing in three
years or less from the date of acquisition thereof; (vii) Investments in money
market or auction rate preferred stock which, at the time of acquisition by the
Company or any Restricted Subsidiary, is accorded either of the highest two
ratings for such securities by Standard & Poor's Corporation or by Moody's
Investors Services, Inc.; (viii) Investments in municipal bonds maturing in
three years or less from the date of acquisition, which, at the time of
acquisition by the Company or any Restricted Subsidiary, is accorded either the
highest two ratings for such securities by Standard & Poor's Corporation or by
Moody's Investors Services, Inc.; and (ix) other liquid investments maturing in
180 days or less from the date of acquisition thereof, with respect to which the
risk of loss of principal is not greater than the investments described in the
foregoing clauses (iii) through (viii) of this definition.
"Restricted Subsidiary" means 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, and (ii) which is a Subsidiary of the
Company on the Date of Closing or which the Company has designated a Restricted
Subsidiary by notice in writing given to the holders of the Notes in the form
attached hereto as Exhibit C-1, and (iii) which the Company has not thereafter
designated as an Unrestricted Subsidiary by notice in writing given to the
holders of the Notes in the form attached hereto as Exhibit C-2; provided,
however, a Subsidiary may not be designated as a Restricted Subsidiary if (a) it
had previously been designated as a Restricted Subsidiary and had thereafter
been designated as an Unrestricted Subsidiary; (b) it was designated as an
Unrestricted Subsidiary within the preceding 180 days; (c) any of the
representations and warranties contained in paragraph 8 would be false if all
such representations and warranties were to be remade and restated immediately
following such designation; or (d) such designation shall result in any Default
or Event of Default; provided, further, that a Subsidiary may not be designated
as an Unrestricted Subsidiary if (a) it had previously been designated as an
Unrestricted Subsidiary and had thereafter been designated as a Restricted
Subsidiary; (b) it was designated as a Restricted Subsidiary within the
preceding 180 days; (c) any of the representations and warranties contained in
paragraph 8 would be false if all such
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representations and warranties were to be remade and restated immediately
following such designation; or (d) such designation shall result in any Default
or Event of Default.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Significant Holder" shall mean (i) each Purchaser, and each Affiliate
of or separate account managed by a Purchaser that shall hold a Note, so long as
such Purchaser, Affiliate or separate account shall hold (or be committed under
this Agreement to purchase) any Note, or (ii) any other holder of at least 5% of
the aggregate principal amount of the Notes from time to time outstanding.
"Subsidiary" shall mean any corporation of which at least 51% of the
total combined voting power of all classes of outstanding Voting Stock of which
shall, at the time as of which any determination is being made, be owned or
controlled by the Company either directly or through Subsidiaries.
"Taxes" shall mean taxes and assessments of any federal, state or other
governmental authority.
"Total Capitalization" shall mean the sum of (i) Funded Debt of the
Company and its Restricted Subsidiaries, and (ii) Consolidated Tangible Net
Worth.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"Unrestricted Subsidiary" shall mean any Subsidiary that is not a
Restricted Subsidiary.
"Voting Stock" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
10C. Accounting Principles, Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all unaudited financial statements and certificates and reports as to financial
matters required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to clause (ii) of paragraph 5A or, if no such
statements have been so delivered, the most recent audited financial statements
referred to in clause (i) of paragraph 8B. If after the Date of Closing any
change shall occur in GAAP in effect on the Date of Closing (a "GAAP Change")
which results in a change in any computation or definition used in calculating
compliance by the Company with any negative covenant and which has had or may
have a significant effect (whether positive or negative) on the computation of
one or more such covenants (the "Affected Covenants") then the Company shall
deliver to each holder of the Notes within 15 days after the effective date of
such GAAP Change (the "Effective Date") a written notice from the Company (i)
describing the GAAP Change and (ii) setting forth in reasonable detail
(including detailed calculations) why the
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GAAP Change has had or may have a material effect (whether positive or negative)
on the computation of the Affected Covenants. Within 15 days after such written
notice is delivered to each Holder of the Notes, each party hereby agrees to
enter into good faith negotiations for an amendment to this Agreement of the
Affected Covenants so as to place the parties, insofar as possible, in the same
relative position as if the GAAP Change had not occurred. If a GAAP Change which
has had or may have such a material effect occurs, then during the period of the
Effective Date of such GAAP Change until the effective date of an amendment to
this Agreement with respect thereto, the Company shall calculate compliance with
the Affected Covenants as though such GAAP Change had not occurred (and deliver
promptly upon request therefor compliance certificates with respect thereto,
setting forth in reasonable detail compliance with the Affected Covenants and
certified as being true and correct by the chief financial officer of the
Company); provided, however, that if no such amendment to this Agreement shall
become effective within 90 days from the Effective Date of such GAAP Change, the
Company shall calculate compliance with the Affected Covenants as though such
GAAP Change had occurred (and deliver promptly upon request therefor compliance
certificates with respect thereto, setting forth in reasonable detail compliance
with the Affected Covenants and certified as being true and correct by the chief
financial officer of the Company).
PARAGRAPH 11. MISCELLANEOUS.
11. Miscellaneous.
11A. Note Payments. The Co-Makers agree that, so long as any Purchaser
shall hold any Note, they will make payments of principal of, interest on and
any Yield-Maintenance Amount payable with respect to such Note, which comply
with the terms of this Agreement, by wire transfer of immediately available
funds for credit (not later than 12:00 noon, New York City local time, on the
date due) to the account or accounts of such Purchaser, if any, as are specified
in the Information Schedule attached hereto, or, in the case of any Purchaser
not named in the Information Schedule or any Purchaser wishing to change the
account specified for it in the Information Schedule, or such other account or
accounts in the United States as such Purchaser may from time to time designate
in writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. Each Purchaser agrees that, before disposing of
any Note, such Purchaser will make a notation thereon (or on a schedule attached
thereto) of all principal payments previously made thereon and of the date to
which interest thereon has been paid. The Co-Makers agree to afford the benefits
of this paragraph 11A to any Transferee which shall have made the same agreement
as each Purchaser has made in this paragraph 11A.
11B. Expenses. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save each Purchaser
harmless against liability for the payment of, all reasonable attorneys' fees
and incremental out-of-pocket expenses of such attorneys arising in connection
with such transactions, including (i) all document production and duplication
charges and the fees and expenses of any special counsel engaged by such
Purchaser in connection with this Agreement, the transactions contemplated
hereby and, as to each Purchaser and any Transferee, any subsequent proposed
modification of, or proposed consent under, this Agreement (other than
modifications proposed by Purchasers prior to a Default or an Event of Default
and not in response to modifications, consents or other transactions proposed by
the Company), whether or not such proposed modification shall be effected or
proposed consent granted, and (ii) the costs and
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expenses, including attorneys' fees, incurred by such Purchaser or any
Transferee in enforcing (or determining whether or how to enforce) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the transactions contemplated hereby or by reason of such
Purchaser's or such Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case; provided,
however, that if the transactions contemplated hereby are consummated, the
Company will not be obligated to pay, or save a Purchaser harmless from,
attorney fees of special counsel for the Purchasers incurred in connection with
the preparation, execution and delivery of this Agreement. The obligations of
the Company under this paragraph 11B shall survive the transfer of any Note or
portion thereof or interest therein by any Purchaser or any Transferee and the
payment of any Note.
11C. Consent to Amendments. This Agreement may be amended, and the
Co-Makers may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Co-Makers shall obtain the written
consent to such amendment, action or omission to act, of the Required Holder(s)
except that, without the written consent of the holder or holders of all Notes
at the time outstanding, no amendment to this Agreement shall change the
maturity of any Note, or change or affect the principal of, or change or affect
the rate or time of payment of interest on or any Yield-Maintenance Amount
payable with respect to any Note, or affect the time, amount or allocation of
any prepayments, or change the definition of Required Holders. Each holder of
any Note at the time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall have been
marked to indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing between the
Co-Makers and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein and in the Notes, the term "this Agreement"
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable as registered notes without coupons. Notes shall not be
transferred in denominations of less than $5,000,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, a Note may be in a denomination of less than $5,000,000. The Company, on
behalf of Co-Makers, shall keep at its principal office a register in which the
Company shall provide for the registration of Notes and of transfers of Notes.
Upon surrender for registration of transfer of any Note at the principal office
of the Company, each transferee shall deliver to the Company a Purchaser
Schedule for such transferee, and the Co-Makers shall, at their expense, execute
and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees. At
the option of the holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Co-Makers
shall, at their expense, execute and deliver the Notes which the holder making
the exchange is entitled to receive. Each installment of principal payable on
each installment date upon each new Note issued upon any such transfer or
exchange shall be in the same proportion to the unpaid principal amount of such
new Note as the installment of principal payable on such date on the Note
surrendered for registration of transfer or exchange bore to the unpaid
principal amount of such Note. No reference need be made
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<PAGE>
in any such new Note to any installment or installments of principal previously
due and paid upon the Note surrendered for registration of transfer or exchange.
Every Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written notice
from the holder of any Note of the loss, theft, destruction or mutilation of
such Note and (i) in the case of any such loss, theft or destruction, upon (A)
receipt of such holder's unsecured indemnity agreement, if such holder is an
institutional investor with capital of at least $100,000,000, or (B) receipt of
a surety bond in the amount of such Note, if such holder is not an institutional
investor or has capital of less than $100,000,000, or (ii) in the case of any
such mutilation, upon surrender and cancellation of such Note, the Co-Makers
will make and deliver a new Note, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due presentment
for registration of transfer, the Co-Makers may treat the Person in whose name
any Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue, and the Co-Makers shall not be affected by
notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in such Note to any Person on
such terms and conditions as may be determined by such holder in its sole and
absolute discretion.
11F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Co-Makers in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers and the Co-Makers with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to the subject matter hereof.
11G. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11H. Confidentiality; Disclosure to Other Persons. For the purposes of
this paragraph 11H, "Confidential Information" means information delivered to a
holder by or on behalf of the Company or any Restricted Subsidiary in connection
with the transactions contemplated by or otherwise pursuant to this Agreement
that is proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by such holder as being
confidential information of the Company or such Restricted Subsidiary, provided
that such term does not include information that (a) was publicly known or
otherwise known to such holder prior to the time of such
32
<PAGE>
disclosure, (b) subsequently becomes publicly known through no act or omission
by such holder or any Person acting on behalf of such holder, (c) otherwise
becomes known to such holder other than through disclosure by the Company or any
Restricted Subsidiary or (d) constitutes financial statements delivered to such
holder under paragraph 5A that are otherwise publicly available. Each holder
will maintain the confidentiality of such Confidential Information in accordance
with procedures adopted by such holder in good faith to protect confidential
information of third parties delivered to such holder; provided that any holder
may deliver or disclose Confidential Information to (i) such holder's directors,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such holder's Notes), (ii) such holder's financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this paragraph 11H,
(iii) any other holder of any Note, (iv) any Institutional Investor to which
such holder sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this paragraph
11H), (v) any Person from which such holder offers to purchase any security of
the Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this paragraph 11H),
(vi) any federal or state regulatory authority having jurisdiction over such
holder, (vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information (including Confidential Information) about such holder's investment
portfolio or (viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule, regulation
or order applicable to such holder, (x) in response to any subpoena or other
legal process, (y) in connection with any litigation to which such holder is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such holder may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under such holder's Notes and this Agreement. Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this paragraph 11H as though it were a
party to this Agreement. On reasonable request by the Company in connection with
the delivery to any holder of a Note of information required to be delivered to
such holder under this Agreement or requested by such holder (other than a
holder that is a party to this Agreement or its nominee), such holder will enter
into an agreement with the Company embodying the provisions of this paragraph
11H. For purposes of this paragraph 11H, "Institutional Investor" means (a) any
original purchaser of a Note, (b) any holder of a Note holding more than 10% of
the aggregate principal amount of the Notes then outstanding, and (c) any bank,
trust company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form that is a qualified institutional buyer under Rule 144A adopted under
the Securities Act.
11I. Notices. All written communications provided for hereunder shall
be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) and (i) if to any Person listed in the Information Schedule
attached hereto, addressed to it at the address specified for such
communications in such Information Schedule, or at such other address as it
shall have specified in writing to the Person sending such communication, and
(ii) if to any other holder of any Note which is not a Person listed in such
Information Schedule, addressed to such other holder at such address as such
other holder shall have specified in writing to the Person sending such
communication, or,
33
<PAGE>
if any such other holder shall not have so specified an address, then addressed
to such other holder in care of the last holder of such Note which shall have so
specified an address to the Person sending such communication; provided,
however, that any such communication to the Company may also, at the option of
the Person sending such communication, be delivered by any other means either to
the Company at its address specified in the Information Schedule or to any
Authorized Officer of the Company. Any telephonic communication pursuant to
paragraph 4C shall be effective to create any rights or obligations under this
Agreement only if an Authorized Officer of the party conveying the information
and of the party receiving the information are parties to the telephone call.
11J. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or Yield-Maintenance Amount payable with respect to, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall not be included in the computation of the interest payable on such
Business Day.
11K. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser or to the Required Holder(s), the
determination of such satisfaction shall be made by such Purchaser or the
Required Holder(s), as the case may be, in the sole and exclusive judgment
(exercised in good faith) of the Person or Persons making such determination.
11N. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK. This Agreement may not be changed orally, but (subject to
the provisions of paragraph 11C) only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought.
11O. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
11P. Binding Agreement. When this Agreement is executed and delivered
by the Co-Makers and Purchasers, it shall become a binding agreement between the
Co-Makers and Purchasers.
11Q. Severalty of Obligations. The sales of Notes to the Purchasers are
to be several sales, and the obligations of the Purchasers under this Agreement
are several obligations. Except
34
<PAGE>
as provided in paragraph 3F, no failure by any Purchaser to perform its
obligations under this Agreement shall relieve any other Purchaser or any Co-
Maker of any of its obligations hereunder, and no Purchaser shall be responsible
for the obligations of, or any action taken or omitted by, any other Purchaser
hereunder.
11R. Maximum Interest Payable. Each Co-Maker, each Purchaser and any
other holders of the Notes specifically intend and agree to limit contractually
the amount of interest payable under this Agreement, the Notes and all other
instruments and agreements related hereto and thereto to the maximum amount of
interest lawfully permitted to be charged under applicable law. Therefore, none
of the terms of this Agreement, the Notes or any instrument pertaining to or
relating to this Agreement or the Notes shall ever be construed to create a
contract to pay interest at a rate in excess of the maximum rate permitted to be
charged under applicable law, and neither any Co-Maker, any guarantor nor any
other party liable or to become liable hereunder, under the Notes, any guaranty
or under any other instruments and agreements related hereto and thereto shall
ever be liable for interest in excess of the amount determined at such maximum
rate, and the provisions of this paragraph 11R shall control over all other
provisions of this Agreement, any Notes, any guaranty or any other instrument
pertaining to or relating to the transactions herein contemplated. If any amount
of interest taken or received by any Purchaser or any holder of a Note shall be
in excess of said maximum amount of interest which, under applicable law, could
lawfully have been collected by such Purchaser or such holder incident to such
transactions, then such excess shall be deemed to have been the result of a
mathematical error by all parties hereto and shall be refunded promptly by the
Person receiving such amount to the party paying such amount, or, at the option
of the recipient, credited ratably against the unpaid principal amount of the
Note or Notes held by such Purchaser or such holder, respectively. All amounts
paid or agreed to be paid in connection with such transactions which would under
applicable law be deemed "interest" shall, to the extent permitted by such
applicable law, be amortized, prorated, allocated and spread throughout the
stated term of this Agreement and the Notes. "Applicable law" as used in this
paragraph means that law in effect from time to time which permits the charging
and collection of the highest permissible lawful, nonusurious rate of interest
on the transactions herein contemplated including laws of the State of New York
and of the United States of America, and "maximum rate" as used in this
paragraph means, with respect to each of the Notes, the maximum lawful,
nonusurious rates of interest (if any) which under applicable law may be charged
to the Co-Makers from time to time with respect to such Notes.
11S. Waiver by Co-Makers. No action which any holder may take or omit
to take in respect of one of the Co-Makers in connection with this Agreement or
the Notes (or any other indebtedness owing by one of the Co-Makers to such
holder), no course of dealing of any holder with one of the Co-Makers, no action
or inaction by one of the Co-Makers, and no change of law or circumstances,
shall release or diminish the other Co-Maker's joint and several obligations,
liabilities, agreements and duties hereunder or under the Notes in any way, or
afford the other Co-Maker any recourse against any holder, regardless of whether
any such action or inaction may increase any risks to or liabilities of such
other Co-Maker. Without limiting the foregoing, the obligations, liabilities,
agreements, and duties of each Co-Maker under this Agreement and the Notes shall
not be released, diminished, impaired, reduced, or affected by the occurrence of
any or all of the following from time to time, even if occurring without notice
to or without the consent of such Co-Maker: Any voluntary or involuntary
liquidation, dissolution, sale of all or substantially all
35
<PAGE>
assets, marshaling of assets or liabilities, receivership, conservatorship,
assignment for the benefit of creditors, insolvency, bankruptcy, reorganization,
arrangement, or composition of the other Co-Maker or any other proceedings
involving the other Co-Maker or any of the assets of the other Co-Maker under
laws for the protection of debtors, or any discharge, impairment, modification,
release, or limitation of the liability of, or stay of actions or lien
enforcement proceedings against, the other Co-Maker, any properties of the other
Co-Maker, or the estate in bankruptcy of the other Co-Maker in the course of or
resulting from any such proceedings; the failure by any holder to file or
enforce a claim in any proceeding described in the immediately preceding clause
or to take any other action in any proceeding to which the other Co-Maker is a
party; the release by operation of law of the other Co-Maker from the Note or
any other obligations to holders; the invalidity, deficiency, illegality, or
unenforceability of the Note or this Agreement against the other Co-Maker, in
whole or in part, any bar by any statute of limitations or other law of recovery
on the Note or this Agreement against the other Co-Maker or other defense or
excuse whatsoever; the failure of the other Co-Maker to sign any instrument or
agreement; without limiting any of the foregoing, any fact or event (whether or
not similar to any of the foregoing) which in the absence of this provision
would or might constitute or afford a legal or equitable discharge or release of
or defense to a Co-Maker other than the actual payment and performance by such
Co-Maker of the Notes. Any holder may pursue one of the Co-Makers before
pursuing any remedies against the other Co-Maker or any other Person. Any holder
may maintain an action against one of the Co-Makers on the Notes without joining
the other Co-Maker and without bringing a separate action against the other Co-
Maker. If any payment to any holder by any Co-Maker is held to constitute a
preference or a voidable transfer under applicable state or federal laws, or if
for any other reason any holder is required to refund such payment to the payor
thereof or to pay the amount thereof to any other Person, such payment to such
holder shall not constitute a release of the other Co-Maker from any liability
hereunder, and each Co-Maker agrees to pay such amount to such holder on demand
and agrees and acknowledges that the obligations of each Co-Maker under this
Agreement and the Notes shall continue to be effective or shall be reinstated,
as the case may be, to the extent of any such payment or payments. Any transfer
by subrogation prior to any such payment or payments shall (regardless of the
terms of such transfer) be automatically voided upon the making of any such
payment or payments, and all rights so transferred shall thereupon revert to and
be vested in holders. Until all of the Obligations under the Notes and this
Agreement have been paid and performed in full, no Co-Maker shall have any right
to exercise any right of subrogation, reimbursement, indemnity, exoneration,
contribution or any other claim which it may now or hereafter have against or to
any other Co-Maker, and each Co-Maker hereby waives any rights to enforce any
remedy which such Co-Maker may have against any other Co-Maker until such time.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
36
<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterparts of this letter and return the same to
the Company, whereupon this letter shall become a binding agreement among the
Co-Makers and the Purchasers.
Very truly yours,
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By
-----------------------------------
Title:
GPX CORP.
By
-----------------------------------
Title:
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By
---------------------------------
Title:
U.S. PRIVATE PLACEMENT FUND
By: Prudential Private Placement Investors, L.P.,
Investment Advisor
By: Prudential Private Placement Investors, Inc.,
its General Partner
By
-----------------------------------
Vice President
37
<PAGE>
INFORMATION SCHEDULE
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
(1) Address for Notices:
2121 San Jacinto Street
Suite 2500 P.O. Box 219022
Dallas, Texas 75201 Dallas, Texas 75221
(2) Receipt of telephonic or facsimile notices:
(214) 953-4500
(214) 953-4596/4597/4598 (facsimile)
(3) Authorized Officers:
J.L. Jackson Chairman, CEO, COO, and President
G.L Adelman Senior Vice President, General Counsel, and Secretary
G.G. Garrison Vice President-- Finance, Treasurer, CFO
M.D. Stott Vice President-- Planning and Development
G.W. Pasley Vice President-- Communications
D.A. Reeves Vice President-- Controller
J.B. Alleman Vice President-- Human Resources
J.M. Bravo Vice President
H. Linser Vice President
38
<PAGE>
INFORMATION SCHEDULE
GPX Corp.
(1) Address for Notices:
Bank of America Plaza
300 South Fourth Street
Suite 1100 P.O. Box 50401
Las Vegas, Nevada 89101 Henderson, Nevada 89016
(2) Receipt of telephonic or facsimile notices:
(702) 386-4789
(702) 598-3651 (facsimile)
(3) Authorized Officers:
G.G. Garrison President
G.L. Adelman Vice President and Secretary
D.A. Reeves Vice President
M.L. Miller Vice President, Asst. Treasurer, and Asst. Secretary
39
<PAGE>
Aggregate
Principal
Amount of Note
Notes to be Denom-
Purchased ination(s)
----------- -----------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $68,000,000 $65,000,000
$ 3,000,000
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer
of immediately available funds for
credit to:
Account No. 890-0304-391 (in the case of
payments on account of the Note
originally issued in the principal
amount of $65,000,000)
The Bank of New York
New York, New York
ABA No.: 021-000-018
Each such wire transfer shall set forth the
name of the Company, a reference to "6.83%
Senior Notes due June 30, 2008, PPN# 37933# \A
INV 6023," and the due date and application
(as among principal, interest, and
Yield-Maintenance Amount) of the payment
being made.
Account No. 890-0304-944 (in the case of payments
on account of the Note originally issued in
the principal amount of $3,000,000)
The Bank of New York
New York, New York
ABA No.: 021-000-018
Each such wire transfer shall set forth the name
of the Company, a reference to "6.83% Senior Notes
due June 30, 2008, PPN# 37933# \A INV 6024", and
the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
40
<PAGE>
Four Gateway Center, 7th Floor
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Trade Management Group
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group - Private Placements
1201 Elm Street - Suite 4900
Dallas, Texas 75720
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Trade Management Group
(973) 802-7298
(5) Tax Identification No.: 22-1211670
U.S. PRIVATE PLACEMENT FUND $7,000,000 $7,000,000
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. U1FF1000002
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
ABA No.: 011-001-234
DDA No.: 108111
Account Name: U.S. Private Placement Fund
Each such wire transfer shall set forth the name
the Company, a reference to "6.83% Senior Notes
due June 30, 2008, PPN 37933", and the
due date and application (as among principal,
interest and Yield- Maintenance Amount) of the
payment being made.
41
<PAGE>
(2) Address for all notices relating to payments:
Mellon Trust
One Cabot Road
Mail Stop #028-003C
Medford, MA 02155-5159
Attention: Derek von Vliet
Telephone: (617) 382-4850
Facsimile: (617) 382-4003
(3) Address for copies of notices under (2) above
and all other communications and notices:
Prudential Private Placement Investors, Inc.
Four Gateway Center
100 Mulberry Street
Neward, New Jersey 02102-4069
Attention: Vice President
Telephone: (973) 802-8608
Facsimile: (973) 802-7045
(4) Recipient of telephonic prepayment notices:
See (2) above.
42
<PAGE>
EXHIBIT A
[FORM OF NOTE]
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
GPX CORP.
6.83% SENIOR NOTE DUE ______________, 2008
No. R-_____ [Date]
$_________
FOR VALUE RECEIVED, the undersigned, GLOBAL INDUSTRIAL TECHNOLOGIES,
INC. (the "Company"), a corporation organized and existing under the laws of the
State of Delaware, and GPX CORP., a corporation organized and existing under the
laws of the State of Nevada (collectively, "Co-Makers"), hereby jointly and
severally promise to pay to _________________________________________________,
or registered assigns, the principal sum of _________________________ DOLLARS on
______________, 20___ with interest (computed on the basis of a 360-day year--
30-day month) (a) on the unpaid balance thereof at the rate of 6.83% per annum
from the date hereof, payable semiannually on the last day of June and December
(each an "Interest Payment Date") in each year, commencing with the June or
December next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Yield-Maintenance Amount (as defined in the Note Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the (lesser of (a) the maximum rate permitted by applicable law or (b)
the greater of (i) 8.83% or (ii) 2% over the rate of interest publicly announced
by Bank of New York from time to time in New York City as its Prime Rate.
Payments of principal of, interest on and any Yield-Maintenance Amount
payable with respect to this Note are to be made at the main office of Bank of
New York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.
This Note is one of the 6.83% Senior Notes (the "Notes") issued
pursuant to a Note Agreement, dated as of ______________, 1998 (the
"Agreement"), among the Co-Makers and the original purchasers of the Notes named
in the Information Schedule attached thereto and is entitled to the benefits
thereof. As provided in the Agreement, this Note is subject to prepayment, in
whole or from time to time in part on the terms specified in the Agreement.
This Note is a registered Note and, as provided in and subject to the
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the
A-1
<PAGE>
name of, the transferee. Prior to due presentment for registration of transfer,
the Co-Makers may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Co-Makers shall not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, on the terms specified in the Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
The Co-Makers and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, notice of intent to accelerate, notice of acceleration (to the extent
set forth in the Agreement), protest and diligence in collecting.
Should any indebtedness represented by this Note be collected at law or
in equity, or in bankruptcy or other proceedings, or should this Note be placed
in the hands of attorneys for collection, the Company agrees to pay, in addition
to the principal, Yield Maintenance Amount, if any, and interest due and payable
hereon, all costs of collecting or attempting to collect this Note, including
reasonable attorneys' fees and expenses (including those incurred in connection
with any appeal).
The Co-Makers, and the purchaser and the registered holder of this Note
specifically intend and agree to limit contractually the amount of interest
payable under this Note to the maximum amount of interest lawfully permitted to
be charged under applicable law. Therefore, none of the terms of this Note shall
ever be construed to create a contract to pay interest at a rate in excess of
the maximum rate permitted to be charged under applicable law, and neither the
Co-Makers nor any other party liable or to become liable hereunder shall ever be
liable for interest in excess of the amount determined at such maximum rate, and
the provisions of paragraph 11R of the Agreement shall control over any contrary
provision of this Note.
A-2
<PAGE>
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the law of such State.
GLOBAL INDUSTRIAL
TECHNOLOGIES, INC.
By
--------------------------------
Vice President
By
--------------------------------
Treasurer
GPX CORP.
By
--------------------------------
Vice President
By
--------------------------------
Treasurer
A-3
<PAGE>
EXHIBIT B
[FORM OF OPINION OF COMPANY'S GENERAL COUNSEL]
[Letterhead of Graham L. Adelman, Esq., general counsel of Company]
______________, 1998
The Prudential Insurance Company of America
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
U.S. Private Placement Fund
c/o The Prudential Insurance Company of America
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Ladies and Gentlemen:
I am general counsel of Global Industrial Technologies, Inc. (the
"Company"), and have acted as counsel for the Company and GPX Corp.
(collectively, the "Co-Makers") in connection with the Note Agreement,
dated as of June 30, 1998, among the Co-Makers and you (the "Note
Agreement"), pursuant to which the Co-Makers have issued to you today joint
and several 6.83% Senior Notes due June 30, 2008 of the Co-Makers in the
aggregate principal amount of $25,000,000 (the "Notes"). All terms used
herein that are defined in the Note Agreement have the respective meanings
specified in the Note Agreement. This letter is being delivered to you in
satisfaction of the condition set forth in paragraph 3B of the Note
Agreement and with the understanding that you are purchasing the Notes in
reliance on the opinions expressed herein. In this connection, I have
examined such certificates of public officials, certificates of officers of
the Co-Makers and copies certified to my satisfaction of corporate
documents and records of the Co-Makers and of other papers, and have made
such other investigations, as I have deemed relevant and necessary as a
basis for my opinion hereinafter set forth. I have relied upon such
certificates of public officials and of officers of the Co-Makers with
respect to the accuracy of material factual matters contained therein which
were not independently established. With respect to the opinion expressed
in paragraph 3 below, I have also relied upon the representation made by
each of you in paragraph 9A of the Note Agreement.
Based on the foregoing and upon such investigation as I have
deemed necessary, it is my opinion that:
1. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. GPX Corp. is
a corporation duly organized and validly existing in good standing under the
laws of the State of Nevada. Each Subsidiary is a
B-1
<PAGE>
corporation duly organized and validly existing in good standing under the laws
of its jurisdiction of incorporation. The Company and its Subsidiaries have the
corporate power to carry on their respective businesses as now being conducted.
Each Co-Maker has the corporate power to enter into the Agreement and perform
its obligations under the Agreement and the Notes.
2. The Note Agreement and the Notes have been duly authorized
by all requisite corporate action and duly executed and delivered by authorized
officers of each Co-Maker, and are valid joint and several obligations of the
Co-Makers, legally binding upon and enforceable jointly and severally against
the Co-Makers in accordance with their respective terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3. It is not necessary in connection with the offering,
issuance, sale and delivery of the Notes under the circumstances contemplated by
the Note Agreement to register the Notes under the Securities Act or to qualify
an indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended.
4. The extension, arranging and obtaining of the credit
represented by the Notes do not result in any violation of Regulation T, U, or X
of the Board of Governors of the Federal Reserve System.
5. The execution and delivery of the Note Agreement and the
Notes, the offering, issuance and sale of the Notes and fulfillment of and
compliance with the respective provisions of the Note Agreement and the Notes do
not conflict with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of, or result in
the creation of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries pursuant to, or require any authorization, consent,
approval, exemption or other action by or notice to or filing with any court,
administrative or governmental body or other Person (other than routine filings
after the date hereof with the Securities and Exchange Commission and/or state
Blue Sky authorities) pursuant to, the charter or by-laws of the Company or any
of its Subsidiaries, any applicable law (including any securities or Blue Sky
law), statute, rule or regulation or (insofar as is known to me after having
made due inquiry with respect thereto) any agreement (including, without
limitation, any agreement listed in Schedule 8I to the Note Agreement),
instrument, order, judgment or decree to which the Company or any of its
Subsidiaries is a party or otherwise subject.
A copy of this letter may be delivered by you or any Transferee to any
Person to which you or such Transferee sells or offers to sell any Note or a
participation in any Note, and such Person may rely upon this letter as if it
were addressed and had been delivered to such Person on the date hereof. Subject
to the foregoing, this letter may be relied upon by you only in connection with
the transactions contemplated by the Agreement and may not be used or relied
upon by you or any other Person for any other purpose whatsoever, without prior
written consent.
Very truly yours,
Graham L. Adelman
B-2
<PAGE>
EXHIBIT C-1
Form of Notice of Designation
of Restricted Subsidiary
Global Industrial Technologies, Inc.
2121 San Jacinto Street
Dallas, Texas 75201
[Date]
To: All Holders of Notes of Global Industrial Technologies, Inc. and GPX Corp.
Ladies and Gentlemen:
Re: Designation of Restricted Subsidiary
We refer to the Note Agreement (the "Agreement") dated as of June
30, 1998 among Global Industrial Technologies, Inc. (the "Company"), and
GPX Corp., and the Purchasers named in the Purchaser Schedules attached
thereto. Capitalized terms used herein have the meanings ascribed thereto
in the Agreement.
Pursuant to the definition of "Restricted Subsidiary" in paragraph
10B of the Agreement, we hereby notify you that the following Subsidiary
has been designated by the Company as an Restricted Subsidiary:
<TABLE>
<CAPTION>
Direct or indirect [if
indirect, provide
Jurisdictions in details and confirm
Jurisdiction of which it is that Intermediaries are
Name of new Incorporation/ registered to Percentage (or are concurrently
Restricted Continuance/ carry on ownership by being designated as)
Subsidiary Amalgamation business the Corporation Restricted Subsidiaries]
--------------------- --------------------- -------------------- --------------------- -------------------------
<S> <C> <C> <C> <C>
</TABLE>
We represent, warrant and covenant to each holder of a Note that:
(a) each of the representations and warranties contained in
the Agreement, insofar as they pertain to Subsidiaries or
Restricted Subsidiaries, is true on and as of the date
hereof with respect to the Restricted Subsidiary that is
the subject of this notice;
(b) as and from the date hereof each of the covenants
contained in the Agreement, insofar as they pertain to
Restricted Subsidiaries, shall also apply with respect to
the Restricted Subsidiary that is the subject of this
notice;
(c) after giving effect to the designation herein referred to,
no Default or Event of Default would occur or exist as a
result of such designation.
C1 - 1
<PAGE>
We confirm that this notice is being concurrently delivered to all
registered holders of Notes under the Agreement in accordance with paragraph 11I
thereof.
Very truly yours,
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:
---------------------------------
C1 - 2
<PAGE>
EXHIBIT C-2
Form of Notice of Designation
of Unrestricted Subsidiary
Global Industrial Technologies, Inc.
2121 San Jacinto Street
Dallas, Texas 75201
[Date]
To: All Holders of Notes of Global Industrial Technologies, Inc. and GPX Corp.
Ladies and Gentlemen:
Re: Designation of Unrestricted Subsidiary
We refer to the Note Agreement (the "Agreement") dated as of June
30, 1998 among Global Industrial Technologies, Inc. (the "Company"), and
GPX Corp. and the Purchasers named in the Purchaser Schedules attached
thereto. Capitalized terms used herein have the meanings ascribed thereto
in the Agreement.
Pursuant to the definition of "Restricted Subsidiary" in paragraph
10B of the Agreement, we hereby notify you that the following Subsidiary
has been designated by the Company as an Unrestricted Subsidiary:
<TABLE>
<CAPTION> Direct or indirect [if
indirect, provide
details and confirm
Jurisdiction of Jurisdictions in that Intermediaries are
Name of new Incorporation/ which it is Percentage (or are concurrently
Restricted Continuance/ registered to ownership by being designated as)
Subsidiary Amalgamation carry on business the Corporation Restricted Subsidiaries]
--------------------- --------------------- -------------------- --------------------- -------------------------
<S> <C> <C> <C> <C>
</TABLE>
We represent, warrant and covenant to each holder of a Note that
after giving effect to the designation herein referred to, no Default or
Event of Default would occur or exist as a result of such designation.
C2 - 1
<PAGE>
We confirm that this notice is being concurrently delivered to all
registered holders of Notes under the Agreement in accordance with paragraph 11I
thereof.
Very truly yours,
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:
--------------------------------
Title:
--------------------
C2 - 2
<PAGE>
SCHEDULE 6E
EXISTING LIENS
None.
<PAGE>
SCHEDULE 8C
ACTIONS PENDING
<PAGE>
SCHEDULE 8I
AGREEMENTS RESTRICTING DEBT
<PAGE>
SCHEDULE 8O
ENVIRONMENTAL COMPLIANCE
<PAGE>
SCHEDULE 10
ACQUISITIONS
<PAGE>
EXHIBIT 10.2
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August 31, 1998, is among GLOBAL
INDUSTRIAL TECHNOLOGIES, INC., a Delaware corporation ("Global"), GPX Corp., a
Nevada corporation ("GPX" and together with Global collectively, the "Borrowers"
and each a "Borrower"), each of the banks or other lending institutions which is
or may from time to time become a signatory or party hereto or any successor or
permitted assignee thereof (each a "Bank" and, collectively, the "Banks"), CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association ("Chase"),
as administrative agent for itself and the other Banks (in such capacity,
together with its successors in such capacity, the "Administrative Agent"), BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, as documentation agent for itself and the other Banks (in such
capacity, together with its successors in such capacity, the "Documentation
Agent"), ABN AMRO BANK N.V., as co-agent for the Banks (in such capacity,
together with its successors in such capacity, the "Co-Agent") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as auction administration agent
for the Banks (in such capacity, together with its successors in such capacity,
the "Auction Administration Agent").
R E C I T A L S:
The Borrowers have requested the Banks to extend credit to the
Borrowers in the form of revolving credit advances not to exceed an aggregate
principal amount of Two Hundred Fifteen Million and No/100 Dollars
($215,000,000.00) at any time outstanding. The Borrowers have also requested the
Banks to provide a procedure pursuant to which the Borrowers may designate that
all of the Banks be invited to bid on an uncommitted basis on borrowings by the
Borrowers scheduled to mature on or prior to the Termination Date. The Banks are
willing to make such extensions of credit to the Borrowers upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section I.1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Acquired Assets" means any assets (including the capital
stock of any Person) acquired by either Borrower or any of the
Subsidiaries pursuant to transactions of the type described in Section
8.4 and Section 8.5.
"Additional Costs" has the meaning specified in Section 4.1.
<PAGE>
"Adjusted EBIT" means, for any period, the sum of (a)
Consolidated Net Income for such period, plus (b) Consolidated Interest
Expense for such period, plus (c) all Income Taxes of the Borrowers and
the Subsidiaries for such period, plus (d) any non-cash write-offs
relating to acquisitions or divestitures made during such period (but
not more than $10,000,000 in the aggregate for such period), plus (e)
nonrecurring costs actually incurred during such period for Synergy
Events (as such term is defined in the definition of Consolidated
EBITDA), provided such costs are described in reasonable detail on a
schedule to the Compliance Certificate for such period, plus (f) all
extraordinary losses for such period, minus (g) all extraordinary gains
for such period.
"Adjustment Date" means each date on which a Compliance
Certificate is due pursuant to Section 7.1(c) hereof(or if any such day
falls on a day other than a Business Day, then on the next succeeding
Business Day).
"Administrative Agent" is defined in the introduction to this
Agreement.
"Administrative Questionnaire" means an administrative
questionnaire in a form satisfactory to the Administrative Agent which
each Bank shall complete and provide to the Administrative Agent,
setting forth such relevant information as Administrative Agent may
request regarding such Bank, including without limitation such Bank's
Applicable Lending Office for each Type of Advance.
"Advance" means a Committed Advance or a Competitive Advance.
"Affiliate" means, as to any Person, any other Person (i)
which directly or indirectly controls or is controlled by, or is under
common control with, such Person, (ii) which beneficially owns 10% or
more of the voting stock of another Person, (iii) of which 10% or more
of the voting stock is owned by such Person; or (iv) that is an officer
or director of such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by
contract or otherwise.
"Agents" means, collectively, the Administrative Agent, the
Documentation Agent, the Co-Agent and the Auction Administration Agent.
"Aken Debt" means the indebtedness of Magnesit werk Aken GmbH,
which indebtedness is non-recourse to the credit of Global.
"Alternate Base Rate" means as of any date of determination, a
rate per annum (rounded upwards, if necessary, to the nearest 1/16th of
1%) equal to the greater of (a) the Prime Rate in effect on such day,
or (b) the sum of the Federal Funds Effective Rate in effect on such
day plus one-half of one percentage point (0.5%). If for any reason the
Administrative Agent shall have determined (which determination shall
be prima facie
-2-
<PAGE>
correct) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure after diligent
effort of the Administrative Agent to obtain sufficient quotations in
accordance with the definition of Federal Funds Effective Rate, the
Alternate Base Rate shall be determined without regard to clause (b) of
the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change
in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective on the effective date
of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively, without notice to Borrowers.
"Anniversary Date" means each anniversary of the date of this
Agreement.
"Applicable Committed Advance Rate" means: (i) during the
period that a Committed Advance is a Floating Rate Advance, the
Alternate Base Rate; and (ii) during the period that a Committed
Advance is a Eurodollar Advance, the Eurodollar Rate plus the
Applicable Percentage.
"Applicable Lending Office" means for each Bank and each Type
of Advance, the lending office of such Bank (or of an Affiliate of such
Bank) designated for such Type of Advance in the Administrative
Questionnaire or such other office of such Bank (or of an Affiliate of
such Bank) as such Bank may from time to time specify to the Borrowers
and the Administrative Agent as the office by which its Advances of
such Type are to be made and maintained.
"Applicable Percentage" means, for any day, (a) with respect
to Eurodollar Advances which are Committed Advances, the margin of
interest over the Eurodollar Rate that is applicable when any
Applicable Committed Advance Rate based on the Eurodollar Rate is
determined under this Agreement, and (b) with respect to commitment
fees payable under Section 2.9, the commitment fee percentage that is
applicable when any such commitment fee is determined under this
Agreement. The Applicable Percentage is subject to adjustment (upwards
or downwards, as appropriate) based on the ratio of Consolidated Funded
Debt to Consolidated EBITDA. Effective as of each Adjustment Date, the
Applicable Percentage shall be adjusted to reflect the Applicable
Percentage prescribed below for the ratio of Consolidated Funded Debt
to Consolidated EBITDA as demonstrated by the most recently delivered
Compliance Certificate:
Ratio of Consolidated Funded Applicable Margin Applicable
Debt to Consolidated EBITDA for Committed Commitment
---------------------- Eurodollar Fee
Advances ---
--------
Less than 2.50 to 1.00 1.00% 0.25%
Greater than or equal to 2.50 to 1.25% 0.25%
1.00 but less than 3.00 to 1.00
Greater than or equal to 3.00 to 1.50% 0.375%
1.00
-3-
<PAGE>
Ratio of Consolidated Funded Applicable Margin Applicable
Debt to Consolidated EBITDA for Committed Commitment
---------------------- Eurodollar Fee
Advances ---
--------
but less than 3.50 to 1.00
Greater than or equal to 3.50 to 1.75% 0.375%
1.00 but less than 4.00 to 1.00
Greater than or equal to 4.00 to 1.00 2.00% 0.50%
The Applicable Percentage shall be 1.75% for Eurodollar Advances which
are Committed Advances and 0.375% for commitment fees from the date
hereof until the first Adjustment Date after the date hereof that the
Compliance Certificate demonstrates a change in the ratio of
Consolidated Funded Debt to Consolidated EBITDA to an amount so that
another Applicable Percentage shall be applied. After each adjustment
of the Applicable Percentage in accordance herewith, the new Applicable
Percentage shall apply until the next Adjustment Date that the
Compliance Certificate demonstrates a change in the ratio of
Consolidated Funded Debt to Consolidated EBITDA to an amount so that
another Applicable Percentage shall be applied. Each adjustment of the
Applicable Percentage shall be made by the Administrative Agent as of
the date the Borrowers deliver a Compliance Certificate demonstrating a
change in the ratio of Consolidated Funded Debt to Consolidated EBITDA;
provided, however, that upon the request of the Administrative Agent,
the Borrowers must provide additional information to demonstrate to the
reasonable satisfaction of the Administrative Agent the required
applicable ratio. If the Borrowers fail to provide sufficient
additional information upon the request of the Administrative Agent to
support the adjustment to a lower Applicable Percentage, the Applicable
Percentage shall be retroactively adjusted to the higher Applicable
Percentage as of the immediately preceding Adjustment Date. If the
Borrowers fail to furnish to the Administrative Agent any Compliance
Certificate within five (5) days after the date required by this
Agreement, then the maximum Applicable Percentage shall apply from the
date the Compliance Certificate was due until the Borrowers furnish the
required Compliance Certificate to the Administrative Agent.
Notwithstanding the foregoing, if the Borrowers later furnish the
required Compliance Certificate which demonstrates to the reasonable
satisfaction of the Administrative Agent that a lower Applicable
Percentage should apply, the Applicable Percentage shall be
retroactively adjusted to the lower Applicable Percentage as of the
immediately preceding Adjustment Date.
"Asset Disposition" has the meaning specified in Section 8.3.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Bank and its assignee and accepted by the
Administrative Agent pursuant to Section 12.6, in substantially the
form of Exhibit "I" hereto.
"Auction Administration Agent" is defined in the introduction
to this Agreement.
-4-
<PAGE>
"Bank" and "Banks" are defined in the introduction to this
Agreement.
"Business Day" means (a) any day on which national banks in
Dallas, Texas are open for the conduct of commercial banking business,
and (b) with respect to all borrowings, payments, Conversions,
Continuations, Interest Periods, and notices in connection with each
Eurodollar Advance, any day which is a Business Day described in clause
(a) above and which is also a day on which dealings in Dollar deposits
are carried out in the Eurodollar interbank market referred to by the
Administrative Agent to determine the Eurodollar Rate for such
Eurodollar Advance.
"Capital Expenditures" means, for any period, all expenditures
(whether paid in cash or accrued as a liability, including the portion
of Capital Lease Obligations originally incurred during such period
that are capitalized for the consolidated balance sheet of the
Borrowers) by the Borrowers and their Subsidiaries during such period
that, in conformity with GAAP, are included in "capital expenditures,"
"additions to property, plant or equipment" or comparable items in the
consolidated financial statements of the Borrowers.
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or personal
property, which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under GAAP.
For purposes of this Agreement, the amount of such Capital Lease
Obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and any successor
statute of similar import, together with the regulations thereunder, in
each case as in effect from time to time.
"Closing Date" means the effective date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Commitment" means, as to each Bank, the obligation of such
Bank to make Committed Advances pursuant to Section 2.1 in an aggregate
principal amount at any time outstanding up to but not exceeding the
amount set forth opposite the name of such Bank on the signature pages
hereto under the heading "Commitment", as such amount may be reduced
pursuant to Section 2.10 or terminated pursuant to Section 2.10 or
Section 10.2 or otherwise.
"Commitment Letter" means that certain commitment letter
agreement dated August 28, 1998, among Global, Chase and Chase
Securities Inc.
"Committed Advance" means an advance of funds by the Banks or
any one of them to a Borrower pursuant to Section 2.5.
-5-
<PAGE>
"Committed Advance Request" means a certificate, in
substantially the form of Exhibit "B-1" hereto, completed and signed by
the Borrowers requesting a Committed Advance.
"Committed Note" means a promissory note executed by the
Borrowers pursuant to Section 2.2, payable to the order of a Bank, in
substantially the form of Exhibit "A-1" hereto, and all extensions,
renewals, and modifications thereof.
"Competitive Advance" means an advance of funds by the Banks
or any one of them to a Borrower pursuant to the bidding procedure
described in Section 2.6.
"Competitive Bid" means an offer by a Bank to make a
Competitive Advance pursuant to Section 2.6.
"Competitive Bid Rate" means, as to any Competitive Bid made
by a Bank pursuant to Section 2.6, (i) in the case of a Eurodollar
Advance, the Margin (which will be added to or subtracted from the
Eurodollar Rate), and (ii) in the case of a Fixed Rate Advance, the
fixed rate of interest, in each case, offered by the Bank making such
Competitive Bid.
"Competitive Bid Request" means a request for Competitive Bids
made by the Borrowers pursuant to Section 2.6 substantially in the form
of Exhibit "B-2".
"Competitive Note" means a promissory note executed by the
Borrowers in accordance with Section 2.2 payable to the order of a
Bank, in substantially the form of Exhibit "A-2" hereto, and all
extensions, renewals, and modifications thereof.
"Competitive Reduction" is defined in Section 2.1.
"Compliance Certificate" means a completed certificate of the
chief executive officer, chief financial officer, corporate controller
or treasurer of the Borrowers, in the form of Exhibit "D" hereto.
"Consolidated Capitalization" means, for any period, the sum
of (a) Consolidated Funded Debt, plus (b) Consolidated Net Worth.
"Consolidated EBITDA" means, for any period, the sum of the
following, calculated on a consolidated basis for Global and its
Subsidiaries without duplication: (a) the amount of Consolidated Net
Income for such period (whether positive or negative), plus (b) (to the
extent actually deducted in calculating Consolidated Net Income)
Consolidated Interest Expense (including the interest portion of
Capital Lease Obligations), Income Taxes, depreciation, amortization,
and other noncash charges, plus (c) losses (or minus gains) from the
sale of fixed assets not in the ordinary course of business and other
extraordinary or nonrecurring items, plus (d) nonrecurring costs
actually incurred during such period for Synergy Events (as such term
is defined below), such as costs for facility closures or
-6-
<PAGE>
terminated personnel, provided such costs are described in reasonable
detail on a schedule to the Compliance Certificate for such period,
less (e) dividends declared and paid to any Person other than a
Borrower or a Guarantor; provided that with respect to Acquired Assets
Global shall prepare historical financial statements for the period
from the beginning of the period for which Consolidated EBITDA is being
calculated to the time of the acquisition of such Acquired Assets as if
the Borrowers or the Subsidiaries owned the Acquired Assets from the
beginning of the period for which Consolidated EBITDA is being
calculated (it being understood such statements may contain (x)
adjustments to reflect cost savings (annualized based on actual cost
savings during such period after the date of such acquisition) due to
actions or measures which have actually been taken to address factors
such as overlapping functions and/or personnel resulting from such
acquisition (such actions and measures being herein referred to as
"Synergy Events"), as described in reasonable detail on a schedule to
the Compliance Certificate for such period, and (y) such other
adjustments as may be agreed to by the Required Banks) relating to
Acquired Assets (other than costs for Synergy Events).
"Consolidated Funded Debt" means, at any particular time, the
sum of the following, calculated on a consolidated basis for Global and
its Subsidiaries in accordance with GAAP, without duplication: (a) all
obligations for borrowed money (as a direct obligor on a promissory
note, bond, debenture or other similar instrument), plus (b) all
Capital Lease Obligations (other than the interest component of such
obligations), plus (c) all obligations for the deferred purchase price
of property excluding (i) trade accounts payable of such Person arising
in the ordinary course of business, (ii) any such obligations which are
non-recourse to the credit of the Borrowers, and (iii) obligations for
earn-out payments which are contingent on performance in connection
with the acquisition of a business.
"Consolidated Interest Expense" means, for any period, the
aggregate interest expense of Global and its Subsidiaries, as
determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, all amounts
which, in conformity with GAAP, would be included under net income on a
consolidated income statement of Global and its Subsidiaries.
"Consolidated Net Worth" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as
stockholder's equity on a consolidated balance sheet of Global and its
Subsidiaries.
"Consolidated Tangible Net Worth" means Consolidated Net
Worth, less (a) any goodwill, including any amounts, however
designated, that represent the excess of the purchase price paid for
assets or stock over the value assigned thereto, (b) patents,
trademarks, trade names, and copyrights, and (c) all other assets which
are properly classified as intangible assets in conformity with GAAP.
-7-
<PAGE>
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.7 of a Eurodollar Advance which is a
Committed Advance from one Interest Period to the next Interest Period.
"Contribution and Indemnification Agreement" has the meaning
specified in Section 5.1(h).
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to Section 2.7 or Article IV of one Type of Advance
into another Type of Advance.
"Debt" means as to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services,
excluding trade accounts payable of such Person arising in the ordinary
course of business, (d) all Capital Lease Obligations of such Person
(excluding the interest component of such Capital Lease Obligations),
(e) all Debt or other obligations of others Guaranteed by such Person,
but only to the extent Guaranteed, (f) all obligations secured by a
Lien existing on property owned by such Person, whether or not the
obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person, (g) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, bankers' acceptances, surety or other bonds and
similar instruments, and (h) all termination liabilities of such Person
in respect of any Plan which is terminated.
"Default" means the occurrence of an event or condition which
with notice or lapse of time or both would become an Event of Default.
"Default Rate" means the lesser of (a) the Maximum Rate or (b)
the sum of the Alternate Base Rate in effect from day to day plus two
percent (2%).
"Dollars" and "$" mean lawful money of the United States of
America.
"Eligible Assignee" means any commercial bank, savings and
loan association, savings bank, finance company, insurance company,
mutual fund, or other financial institution (whether a corporation,
partnership, or other entity) acceptable to the Administrative Agent.
"Environmental Actions" means:
(a) any complaint, claim (whether absolute or contingent,
matured or unmatured), citation, demand, inquiry or inquiries, notice
of violation, correspondence, report, action, assertion of potential
responsibility, lien, encumbrance, or proceeding (whether formal or
informal), brought or issued by any Governmental Authority which
relates to any of the following:
-8-
<PAGE>
(i) Environmental Laws;
(ii) public health risks;
(iii) the environmental condition of any real
property that at any time was, is or hereafter will be owned,
leased, operated or otherwise used or controlled by either
Borrower or any of the Subsidiaries (the "Premises"), or any
portion thereof, any property near the Premises, or any
property at which either Borrower or any of its Affiliates is
conducting or has conducted operations (including actual or
alleged damage or injury to wild life, biota, air, surface or
subsurface soil or water, or other natural resources); or
(iv) the use, exposure, Release, generation,
manufacture, transportation to or from, handling, storage,
treatment, recycling, reclamation, reuse, emission, disposal
or presence of any Hazardous Material either on the Premises,
any adjacent property or any property to which either Borrower
or any of the Subsidiaries is conducting or has conducted
operations, or the transportation of any Hazardous Material by
either Borrower, any of the Subsidiaries or any of their
respective agents, employees, consultants, or independent
contractors for sale, treatment, storage, recycling,
reclamation, reuse or disposal;
(b) any violation or claim of violation by either Borrower or
any of the Subsidiaries of any Environmental Laws;
(c) any Lien for damages caused by, or the recovery of any
costs incurred for the investigation, remediation or cleanup of, any
Release or threatened Release of any Hazardous Material; or
(d) any complaint, claim (whether absolute or contingent,
matured or unmatured), citation, demand, action or proceeding (whether
formal or informal), brought in connection with or otherwise regarding
the destruction or loss of use of property, or the injury, illness or
death of any officer, director, employee, agent, representative, tenant
or invitee of either Borrower or any of the Subsidiaries or the injury,
illness or death of any other Person, in each case arising from or
relating to any of the matters described in clauses (i) through (iv),
inclusive, of subsection (a) of this definition.
"Environmental Laws" means:
(a) any federal statute, law, code, rule, regulation,
ordinance, order, standard, permit, license or requirement (including
consent decrees, judicial decisions and administrative orders),
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation,
conservation or regulation of the
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environment, including (without limitation): CERCLA; RCRA; the Toxic
Substances Control Act, 15 U.S.C. ss.2601 et seq.; and the Clean Air
Act, 42 U.S.C. ss.7401 et seq.; and
(b) any state or local statute, law, code, rule, regulation,
ordinance, order, standard, permit, license or requirement (including
consent decrees, judicial decisions and administrative orders),
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation,
conservation or regulation of the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as either Borrower or any
Subsidiary or is under common control (within the meaning of Section
414(c) of the Code) with either Borrower or any Subsidiary.
"Eurodollar Advances" means Advances the interest rates on
which are determined on the basis of the rates referred to in the
definition of "Eurodollar Rate" in this Section 1.1.
"Eurodollar Rate" means, for any Eurodollar Advance for any
Interest Period therefor, an interest rate per annum determined by the
Administrative Agent at or before 10:00 a.m. (Dallas time) (or as soon
thereafter as practicable) two Business Days before the first day of
such Interest Period, by dividing: (i) the rate per annum equal to the
annual rate of interest shown on the appropriate reference page of
Reuters America, Inc. for a period equal to such Interest Period, or if
such page is not available, the annual rate of interest shown on the
Bloomberg Screen British Banker's LIBOR Fixing for a period equal to
such Interest Period, or if neither of the foregoing is available, the
rate per annum determined by the Administrative Agent to be the rate
per annum at which deposits of Dollars are offered by the Principal
Office of the Administrative Agent to first class banks in the
interbank Eurodollar market selected by the Administrative Agent for a
period equal to such Interest Period and in an amount substantially
equal to the amount of such Eurodollar Advance during such Interest
Period; by (ii) Statutory Reserves.
"Event of Default" has the meaning specified in Section 10.1.
"Extension Request Form" has the meaning specified in Section
2.12.
"Federal Funds Effective Rate" means, for any day, the rate
per annum determined by the Administrative Agent to be equal to the
weighted average of the rate on overnight Federal Funds transactions
with members of the Federal Reserve System arranged by Federal Funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, New York, or if such rate is not so
published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the
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Administrative Agent from three Federal Funds brokers of recognized
standing selected by the Administrative Agent in its sole discretion.
The determination by the Administrative Agent of the rate of interest
per annum provided above shall be conclusive absent manifest error.
"Fee Letter" means that certain fee letter agreement dated
August 28, 1998 among Global, Chase and Chase Securities Inc.
"Fixed Rate Advance" means any Competitive Advance made by a
Bank pursuant to Section 2.6 based upon an actual percentage rate per
annum offered by such Bank, expressed as a decimal (to no more than
four decimal places), and accepted by the Borrowers.
"Floating Rate Advances" means Advances that bear interest
based upon the Alternate Base Rate.
"GAAP" means those generally accepted accounting principles as
in effect in the United States of America from time to time, subject to
Section 1.3.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise,
of such Person (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that
(i) the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business, and (ii) any such agreement
by Global constituting a closing condition to an asset purchase by any
Subsidiary of Global shall not constitute a Guarantee for purposes of
this definition. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantors" means all of the Material Subsidiaries of the
Borrowers as of the Closing Date and each other Subsidiary that at any
time executes a Guaranty Agreement in favor of the Agents and the
Banks. As used herein, the term "Guarantors" shall not include the
Borrowers.
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"Guaranty Agreement" means the Guaranty Agreement in
substantially the form of Exhibit "E-1" hereto, dated the date hereof
and executed by each of the Guarantors, as the same may be amended,
modified, or supplemented from time to time.
"Hazardous Material" means (a) any "hazardous substance" as
defined by CERCLA, and including the judicial interpretation thereof;
(b) any "pollutant or contaminant" as defined in 42 U.S.C. ss.
9601(33); (c) any material now defined as "hazardous waste" by RCRA;
(d) any petroleum product, including crude oil and any fraction
thereof; (e) natural gas, natural gas liquids, liquefied natural gas,
or synthetic gas usable for fuel; (f) any "hazardous chemical" as
defined pursuant to 29 C.F.R. Part 1910; (g) any radioactive material,
including any source material, special nuclear material or byproduct
material as defined at 42 U.S.C. ss.2011 et seq., and any amendments
thereto and reauthorizations, thereof; and (h) any other substance,
regardless of physical form, that is regulated under any Environmental
Laws.
"Income Taxes" means federal, state, local and foreign income
taxes.
"Interest Coverage Ratio" means, as of the last day of any
fiscal quarter of Global, the ratio of (a) Adjusted EBIT for the
12-month period ending on such date to (b) Consolidated Interest
Expense for the 12-month period ending on such date.
"Interest Period" means (a) with respect to any Eurodollar
Advance, each period commencing on the date such Advance is made or
Converted from a Floating Rate Advance or, in the case of each
subsequent, successive Interest Period applicable to a Eurodollar
Advance, the last day of the next preceding Interest Period with
respect to such Advance, and ending on the numerically corresponding
day in the first (1st), second (2nd), third (3rd), or sixth (6th)
calendar month thereafter, as the Borrowers may select as provided in
Section 2.5 or 2.6 hereof, except that each such Interest Period which
commences on the last Business Day of a calendar month (or on any day
for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month, and (b) with respect to any
Fixed Rate Advance, the period commencing on the date of such Advance
and ending on the date specified in the Competitive Bid in which the
offer to make the Fixed Rate Advance was extended; provided that each
such period shall have a duration of not less than seven calendar days
nor more than 360 calendar days. Notwithstanding the foregoing: (a)
each Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (or, if such
succeeding Business Day falls in the next succeeding calendar month, on
the next preceding Business Day); (b) any Interest Period which would
otherwise extend beyond the Termination Date shall end on the
Termination Date; (c) no more than ten (10) Interest Periods for
Eurodollar Advances shall be in effect at the same time; and (d) no
Interest Period for any Eurodollar Advances shall have a duration of
less than one (1) month and, if the Interest Period for any Eurodollar
Advances would otherwise be a shorter period, such Advances shall not
be available hereunder.
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"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise, for the purpose, or having the effect, or protecting
a creditor against loss or securing the payment or performance of an
obligation.
"Loan Documents" means this Agreement and all promissory
notes, guaranties, and other instruments, documents, and agreements
executed and delivered pursuant to or in connection with this
Agreement, as such instruments, documents, and agreements may be
amended, modified, renewed, extended, or supplemented from time to
time.
"Margin" means, as to any Competitive Bid made by a Bank
relating to a Eurodollar Advance, the margin (expressed as a percentage
rate per annum in the form of a decimal to no more than four decimal
places) to be added to or subtracted from the Eurodollar Rate for any
such Eurodollar Advance in order to determine the interest rate
acceptable to such Bank with respect to such Eurodollar Advance.
"Material Adverse Effect" means any set of one or more
circumstances or events which, individually or collectively, could
reasonably be expected to result in any material and adverse effect on
the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrowers and the Subsidiaries on a
consolidated basis.
"Material Subsidiaries" means, collectively, the Subsidiaries
listed on Schedule 3 hereto which are designated as Material
Subsidiaries on the Closing Date, together with any other Subsidiary
that guarantees the debt described in Section 8.1(c) and any other
Subsidiary which the Administrative Agent deems to be a Material
Subsidiary pursuant to Section 7.11 hereof. "Material Subsidiary" means
any one of the Material Subsidiaries.
"Maximum Rate" means, at any time, the maximum rate of
interest under applicable law that the Banks may charge the Borrowers.
The Maximum Rate shall be calculated in a manner that takes into
account any and all fees, payments, and other charges in respect of the
Loan Documents that constitute interest under applicable law. Each
change in any interest rate provided for herein based upon the Maximum
Rate resulting from a change in the Maximum Rate shall take effect
without notice to the Borrower at the time of such change in the
Maximum Rate. For purposes of determining the Maximum Rate under Texas
law, the applicable rate ceiling shall be the indicated rate ceiling
described in, and computed in accordance with, Article 5069-1D.001, et
seq., Vernon's Texas Civil Statutes.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by
either Borrower or any Guarantor or any ERISA Affiliate and which is
covered by Title IV of ERISA.
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"Net Proceeds" from any issuance, sale or other disposition of
any shares of equity securities (or any securities convertible or
exchangeable for any such shares, or any rights, warrants, or options
to subscribe for or purchase any such shares) means the amount equal to
(a) the aggregate gross proceeds of such issuance, sale or other
disposition, less (b) the following: (i) placement agent fees, (ii)
underwriting discounts and commissions, (iii) bank and other lender
fees, and (iv) legal and accounting fees and other expenses payable by
the issuer in connection with such issuance, sale or other disposition.
"Note" means a Competitive Note or a Committed Note.
"Notes" means, collectively, all of the Competitive Notes and
all of the Committed Notes.
"Obligated Party" means any Guarantor or any other Person who
is or becomes party to any agreement that guarantees or secures payment
and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrowers, or either of them, to the Agents and the
Banks, or any of them, arising pursuant to any of the Loan Documents,
now existing or hereafter arising, whether direct, related, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and
several, and all interest accruing thereon and all reasonable
attorneys' fees and other expenses incurred in the enforcement or
collection thereof.
"Payment Date" means the last day of each March, June,
September and December of each year, the first of which shall be the
first such day after the date of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental
Authority, or other entity.
"Plan" means any employee benefit or other plan established or
maintained by either Borrower or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"Prime Rate" means the Prime Rate as publicly announced from
time to time by the Administrative Agent and thereafter entered in the
minutes of the Administrative Agent's Loan and Discount Committee,
automatically fluctuating upward or downward with each announcement
without notice to Borrower or any other Person. Each Borrower
understands that the Prime Rate may not be the Administrative Agent's
best or lowest rate or a favored rate, and any statement,
representation or warranty to that effect is expressly disclaimed by
the Administrative Agent and the Banks.
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"Principal Office" means the principal office of the
Administrative Agent, presently located at 1111 Fannin St., 9th Floor,
MS46, Houston, Texas 77002 and, for purposes of interest rate
determinations, at 707 Travis, Houston, Texas 77002.
"Priority Debt" means the sum of (a) Debt of the Borrowers and
the Subsidiaries, or any of them, secured by Liens other than Liens
provided for in clauses (a) through (g), inclusive of Section 8.2, and
(b) Debt in respect of which a Subsidiary is liable or has given a
Guarantee.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C. ss.6901 et seq. and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect
from time to time.
"RCSA Loan" has the meaning specified in Section 2.8.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented
from time to time.
"Regulatory Change" means, with respect to any Bank, any
implementation, adoption or change after the date of this Agreement of
United States federal, state, or foreign laws, rules or regulations
(including Regulation D) or the adoption or making after such date of
any interpretations, directives, or requests applying to a class of
banks including such Bank of or under any United States federal or
state, or any foreign, laws or regulations (whether or not having the
force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, disbursement,
leaching, or migration of Hazardous Materials into the indoor or
outdoor environment or into or out of property owned by such Person,
including without limitation the movement of Hazardous Materials
through or in the air, soil, surface water, groundwater, or property.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Required Banks" means Banks holding at any time at least
66.67% of the aggregate amount of the Commitments (without giving
effect to any Competitive Reduction) and, in the event the Commitments
have been terminated, Banks holding at least 66.67% of the outstanding
aggregate principal amount of the Advances.
"Responsible Officer" means any of the chief executive
officer, chief operating officer, chief financial officer, chief
accounting officer, treasurer, director of treasury operations and the
general counsel of either Borrower.
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"Restricted Investment" means all investments made after the
Closing Date, made in cash or by delivery of property, by the Borrowers
and the Subsidiaries, (x) in any Person, whether by acquisition of
stock, Debt or other obligation or by loan, advance, capital
contribution, or otherwise, or (y) in any property (items (x) and (y)
herein for purposes of this definition being referred to as
"Investments"), except for the following: (i) Investments by either
Borrower or any Subsidiary in (a) productive assets consistent with the
general nature of the business of the Borrowers and the Subsidiaries,
taken as a whole (subject to the provisions of Section 8.5), (b) one or
more Subsidiaries which are Guarantors or a Borrower hereunder or (c)
any corporation, partnership, joint venture or other entity which
concurrently with such Investment becomes a Guarantor; (ii) any
Investment in a corporation, partnership, joint venture interest,
minority interest or business combination, in the ordinary course of
business (other than investment in Guarantors) provided that the
aggregate of such Investments, as is or would be properly reflected on
the then most recent consolidated balance sheet of Global and its
Subsidiaries in accordance with GAAP does not exceed 15% of book value
of consolidated assets of Global and the Subsidiaries as so reflected
on such balance sheet; (iii) Investments in money market investment
programs which are classified as current assets in accordance with GAAP
and which are administered by reputable broker-dealers; (iv)
Investments in certificates of deposit and bankers acceptances maturing
within one year from the date of acquisition, issued by a commercial
bank having capital surplus and undivided profits aggregating at least
$500,000,000, provided, either (A) neither any Borrower nor any
Subsidiary owes any Debt to such bank, or (B) if any Borrower or any
Subsidiary owes any Debt to such bank, either (x) no default has
occurred in the payment of such Debt or in the performance or
observance of any agreement, term or condition contained in any
document or agreement evidencing or governing such Debt, other than any
default which has been cured or permanently waived, or (y) such bank
executes a letter agreement, in form and substance acceptable to the
Administrative Agent, expressly waiving any and all Liens and rights of
offset, contractual or otherwise, of such bank regarding such
certificate of deposit or bankers acceptance, (v) Investments in
commercial paper maturing in 270 days or less from the date of issuance
which, at the time of acquisition by either Borrower or any Subsidiary,
is accorded a rating no lower than "P-2" by Moody's or "A-2" by S&P;
(vi) Investments in direct obligations of the United States of America,
or obligations of any agency or instrumentality of the United States of
America which are fully guaranteed by the United States of America,
maturing in three years or less from the date of acquisition thereof;
(vii) Investments in money market or auction rate preferred stock
which, at the time of acquisition by either Borrower or any Subsidiary,
is accorded either of the highest two ratings for such securities by
S&P or by Moody's; (viii) Investments in municipal bonds maturing in
three years or less from the date of acquisition, which, at the time of
acquisition by either Borrower or any Subsidiary, is accorded either
the highest two ratings for such securities by S&P or by Moody's; and
(ix) other liquid investments maturing in 180 days or less from the
date of acquisition thereof, with respect to which the risk of loss of
principal is not greater than the investments described in the
foregoing clauses (iii) through (viii) of this definition.
"S&P" means Standard & Poor's Rating Service, a division of
McGraw/Hill, Inc.
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"Statutory Reserves" means the difference (expressed as a
decimal) of the number one minus the aggregate of the maximum reserve
percentages (including, without limitation, any marginal, special,
emergency, or supplemental reserves) expressed as a decimal established
by the Board of Governors of the Federal Reserve System and any other
banking authority to which the Administrative Agent is subject for
Eurocurrency Liabilities (as defined in Regulation D). Such reserve
percentages shall include, without limitation, those imposed under
Regulation D. Eurodollar Advances shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to
such reserve requirements without benefit of or credit for proration,
exceptions or offsets which may be available from time to time to the
Administrative Agent under Regulation D. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Debt" means all Debt of the Borrowers and the
Subsidiaries which is subordinated to the obligations of the Borrowers
and the Guarantors under this Agreement and the other Loan Documents.
"Subsidiary" means (a) any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by one or more of the
Borrowers and the Subsidiaries, and (b) any other entity (i) of which
at least a majority of the ownership, equity or voting interests is at
the time directly or indirectly owned or controlled by one or more of
the Borrowers and the Subsidiaries and (ii) which is treated as a
subsidiary in accordance with GAAP.
"Termination Date" means the earlier of (a) 10:00 a.m. Dallas,
Texas time on August 31, 2001 or such later date to which the
Termination Date may be extended pursuant to Section 2.12, or (b) such
earlier date on which the Commitments terminate as provided in this
Agreement.
"Total Commitment" means at any time the aggregate amount of
the Banks' Commitments, as in effect at such time.
"Type" means any type of Advance (i.e., Floating Rate Advance,
Eurodollar Advance or Fixed Rate Advance).
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas.
Section I.2. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
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specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
Section I.3. Accounting Principles, Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with the most recent audited consolidated financial
statements of Global and its Subsidiaries delivered pursuant to clause (a) of
Section 7.1 or, if no such statements have been so delivered, the most recent
audited financial statements referred to in Section 6.2. If after the Closing
Date any change shall occur in GAAP in effect on the Closing Date (a "GAAP
Change") which results in a change in any computation or definition used in
calculating compliance by the Borrowers with any negative covenant and which has
had or may have a significant effect (whether positive or negative) on the
computation of one or more such covenants (the "Affected Covenants") then the
Borrowers shall deliver to the Administrative Agent within 15 days after the
effective date of such GAAP Change (the "Effective Date") a written notice from
the Borrowers (i) describing the GAAP Change and (ii) setting forth in
reasonable detail (including detailed calculations) why the GAAP Change has had
or may have a material effect (whether positive or negative) on the computation
of the Affected Covenants. Within 15 days after such written notice is delivered
to the Administrative Agent, each party hereby agrees to enter into good faith
negotiations for an amendment to this Agreement of the Affected Covenants so as
to place the parties, insofar as possible, in the same relative position as if
the GAAP Change had not occurred. If a GAAP Change which has had or may have
such a material effect occurs, then during the period of the Effective Date of
such GAAP Change until the effective date of an amendment to this Agreement with
respect thereto, the Borrowers shall calculate compliance with the Affected
Covenants as though such GAAP Change had not occurred (and deliver promptly upon
request therefor compliance certificates with respect thereto, setting forth in
reasonable detail compliance with the Affected Covenants and certified as being
true and correct by the chief financial officers of the Borrowers); provided,
however, that if no amendment to this Agreement shall become effective within 90
days from the Effective Date of such GAAP Change, the Borrowers shall continue
to calculate compliance with the Affected Covenants as though such GAAP Change
had not occurred (and deliver promptly upon request therefor compliance
certificates with respect thereto, setting forth in reasonable detail compliance
with the Affected Covenants and certified as being true and correct by the chief
financial officers of the Borrowers).
ARTICLE II
Advances
Section II.1. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Bank,
severally and not jointly, agrees to make revolving credit advances to the
Borrowers, at any time and from time to time on and after the date hereof to and
including the Termination Date. Notwithstanding the foregoing, (a) the aggregate
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principal amount at any time outstanding of all Committed Advances of a Bank
shall not exceed such Bank's Commitment and (b) the Total Commitment shall be
deemed used from time to time to the extent of the aggregate principal amount of
the Competitive Advances then outstanding, and such deemed use of the Total
Commitment shall be applied to the Banks ratably according to their respective
Commitments (such deemed use of the Total Commitment being a "Competitive
Reduction"), subject, however, to the conditions that (i) at no time shall (A)
the sum of (x) the outstanding aggregate principal amount of all Committed
Advances made by all Banks plus (y) the outstanding aggregate principal amount
of all Competitive Advances made by all Banks exceed (B) the Total Commitment
and (ii) at all times the outstanding aggregate principal amount of all
Committed Advances made by a Bank shall equal the product of (x) the percentage
which its Commitment represents of the Total Commitment times (y) the
outstanding aggregate principal amount of all Committed Advances obligated to
have been made by all Banks. Subject to the foregoing limitations, and the other
terms and provisions of this Agreement, the Borrowers may borrow, repay, and
reborrow hereunder. Advances of each Type made by each Bank shall be made and
maintained at such Bank's Applicable Lending Office for Advances of such Type.
Section II.2. Notes. The obligation of each Borrower to repay each Bank
for Committed Advances made by such Bank to such Borrower and interest thereon
shall be evidenced by a Committed Note executed by the Borrowers, payable to the
order of such Bank, in the principal amount of such Bank's Commitment as
originally in effect, and dated the date hereof. The obligation of each Borrower
to repay each Bank for Competitive Advances made by such Bank to such Borrower
and interest thereon shall be evidenced by a Competitive Note executed by the
Borrowers, payable to the order of such Bank, in the original principal amount
of the Total Commitment and dated the date hereof.
Section II.3. Repayment of Advances. Each Borrower shall repay the
unpaid principal amount of all Committed Advances made to such Borrower, on the
Termination Date. Each Borrower shall repay the unpaid principal amount of each
Competitive Advance made to such Borrower, on the last day of the Interest
Period applicable to such Competitive Advance.
Section II.4. Interest. The unpaid principal amount of the Committed
Advances shall bear interest prior to maturity at a varying rate per annum equal
from day to day to the lesser of (i) the Maximum Rate or (ii) the Applicable
Committed Advance Rate. The unpaid principal amount of the Competitive Advances
shall bear interest prior to maturity at a rate per annum equal to the lesser of
(i) the Maximum Rate or (ii) (A) with respect to each Competitive Advance which
is a Eurodollar Advance, the Eurodollar Rate for the Interest Period for such
Advance plus or minus, as the case may be, the Margin specified by each Bank
with respect to such Advance in its Competitive Bid submitted pursuant to
Section 2.6(b) and (B) with respect to each Competitive Advance which is a Fixed
Rate Advance, the fixed rate of interest offered by each Bank for such Advance
and accepted by the Borrowers pursuant to Section 2.6. Interest shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed (including the first day but excluding the last day) unless such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be. If at
any time the Applicable Committed Advance Rate or the Competitive Bid Rate, as
applicable, for any Advance shall exceed the Maximum Rate,
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thereby causing the interest accruing on such Advance to be limited to the
Maximum Rate, then any subsequent reduction in the Applicable Committed Advance
Rate or the Competitive Bid Rate, as applicable, for such Advance shall not
reduce the rate of interest on such Advance below the Maximum Rate until the
aggregate amount of interest accrued on such Advance equals the aggregate amount
of interest which would have accrued on such Advance if the Applicable Committed
Advance Rate or the Competitive Bid Rate, as applicable, had at all times been
in effect. Accrued and unpaid interest on the Advances made to each Borrower
shall be due and payable by such Borrower as follows:
(a) in the case of Floating Rate Advances, on each Payment
Date;
(b) in the case of each Eurodollar Advance and each Fixed
Rate Advance, on the last day of the Interest Period with respect
thereto and, in the case of an Interest Period with a duration greater
than three months, at three-month intervals after the first day of such
Interest Period;
(c) upon the payment or prepayment of any Advance or the
Conversion of any Advance to an Advance of another Type (but only on
the principal amount so paid, prepaid, or Converted); and
(d) on the Termination Date.
All past due principal and interest (after giving effect to any applicable grace
periods) shall bear interest at the Default Rate. Interest payable at the
Default Rate on any amount due from a Borrower shall be payable by such Borrower
from time to time on demand.
Section II.5. Committed Borrowing Procedure. The Borrowers shall give
the Administrative Agent notice of each requested Committed Advance, by means of
a Committed Advance Request, before 10:00 a.m. Dallas, Texas time on the same
Business Day as the requested date of each Floating Rate Advance and before
10:00 a.m. Dallas, Texas time at least three (3) Business Days before the
requested date of each Eurodollar Advance, specifying: (i) the Borrower to whom
such Advance is to be made, (ii) the requested date of such Advance (which shall
be a Business Day), (iii) the amount of such Advance, (iv) the Type of the
Advance, and (v) in the case of a Eurodollar Advance, the duration of the
Interest Period for such Advance. No Fixed Rate Advance shall be requested or
made pursuant to a Committed Advance Request. The Administrative Agent may
accept telephonic requests for Committed Advances, provided that such acceptance
shall not constitute a waiver of the Administrative Agent's right to delivery of
a Committed Advance Request in connection with subsequent Committed Advances.
Any telephonic request for a Committed Advance by the Borrowers shall be
promptly confirmed by submission of a properly completed Committed Advance
Request to the Administrative Agent. Each Floating Rate Advance shall be in a
minimum principal amount of $5,000,000 or such greater amount which is an
integral multiple thereof. Each Eurodollar Advance shall be in a minimum
principal amount of $5,000,000 or such greater amount which is an integral
multiple thereof. The aggregate principal amount of Eurodollar Advances having
the same Interest Period shall be at least equal to $5,000,000. The
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Administrative Agent shall notify each Bank of the contents of each such notice
on the day such notice is received by Administrative Agent if received by 10:00
a.m. Dallas, Texas time on a Business Day and otherwise on the next succeeding
Business Day. Promptly on the date specified for each Committed Advance
hereunder, each Bank will make available to the Administrative Agent at the
Principal Office in immediately available funds, for the account of the
specified Borrower, such Bank's pro rata share of each Committed Advance. After
the Administrative Agent's receipt of such funds and subject to the terms and
conditions of this Agreement, the Administrative Agent will make each Committed
Advance available to the specified Borrower by depositing the same, in
immediately available funds, in an account of the specified Borrower maintained
with the Administrative Agent designated by the Borrowers or by wire transfer in
accordance with written instructions from the Borrowers. All notices by the
Borrowers to the Administrative Agent under this Section shall be irrevocable
and shall be given not later than the time specified above for such notice on
the day which is not less than the number of Business Days specified above for
such notice.
Section II.6. Competitive Bid Procedure.
(a) In order to request Competitive Bids, the Borrowers shall
hand deliver or telecopy to the Administrative Agent and the Auction
Administration Agent a duly completed Competitive Bid Request, to be
received by the Administrative Agent and the Auction Administration
Agent (i) in the case of Eurodollar Advances, not later than 9:00 a.m.,
Dallas, Texas time, four Business Days before the requested date of
such Competitive Advance and (ii) in the case of Fixed Rate Advances,
not later than 9:00 a.m., Dallas, Texas time, one Business Day before
the requested date of such Competitive Advance. No Alternate Base Rate
Advance shall be requested in, or, except pursuant to Section 4.4, made
pursuant to, a Competitive Bid Request. A Competitive Bid Request that
does not conform substantially to the format of Exhibit "B-2" may be
rejected at the Auction Administration Agent's sole discretion, and the
Auction Administration Agent shall promptly notify the Borrowers of
such rejection by telecopier. Each Competitive Bid Request shall in
each case refer to this Agreement and specify (w) the Borrower to whom
such Advance is to be made, (x) the Type of the Advance, (y) the
requested date of such Competitive Advance (which shall be a Business
Day) and the aggregate principal amount thereof (which shall not be
less than $10,000,000 or greater than the unused Total Commitment on
the requested date for such Competitive Advance and shall be an
integral multiple of $1,000,000), and (z) the Interest Period with
respect thereto (which may not end after the Termination Date).
Promptly after its receipt of a Competitive Bid Request that is not
rejected as aforesaid, the Auction Administration Agent shall invite by
telecopier (substantially in the form set forth in Exhibit B-3 hereto)
the Banks to bid, on the terms and conditions of this Agreement, to
make Competitive Advances pursuant to such Competitive Bid Request.
(b) Each Bank may, in its sole discretion, make one or more
Competitive Bids to the Borrowers responsive to each Competitive Bid
Request. Each Competitive Bid by a Bank must be received by the Auction
Administration Agent via telecopier, substantially in the form of
Exhibit B-4 hereto, (i) in the case of Eurodollar Advances, not later
than 9:00 a.m., Dallas, Texas time, three Business Days before the
requested date for a proposed
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Competitive Advance and (ii) in the case of Fixed Rate Advances, not
later than 8:30 a.m., Dallas, Texas time, on the day of a proposed
Competitive Advance. Competitive Bids that do not conform substantially
to the format of Exhibit B-4 may be rejected by the Auction
Administration Agent after conferring with, and upon the instruction
of, the Borrowers, and the Auction Administration Agent shall notify
the non-conforming Bank of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and (x) specify the
principal amount (which shall be in a minimum principal amount of
$5,000,000 and in an integral multiple of $1,000,000 and which may
equal the entire principal amount of the Competitive Advance requested
by the Borrowers) of the Competitive Advance the Bank is willing to
make to the Borrowers, (y) specify the Competitive Bid Rate(s) at which
the Bank is prepared to make the Competitive Advance and (z) confirm
the Interest Period with respect thereto specified by the Borrowers in
the Competitive Bid Request. A Competitive Bid submitted by a Bank
pursuant to this paragraph (b) shall be irrevocable.
(c) The Auction Administration Agent shall promptly notify
the Borrowers by telecopier of all the Competitive Bids made, the
Competitive Bid Rate and the principal amount of each Competitive
Advance in respect of which a Competitive Bid was made and the identity
of the Bank that made each bid. The Auction Administration Agent shall
send a copy of all Competitive Bids to the Borrowers for their records
as soon as practicable after completion of the bidding process set
forth in this Section 2.6.
(d) The Borrowers may in their sole and absolute discretion,
subject only to the provisions of this Section 2.6(d), accept or reject
any or all of the Competitive Bids referred to in paragraph (c) above;
provided, however, that the aggregate amount of the Competitive Bids so
accepted by the Borrowers may not exceed the principal amount of the
Competitive Advance requested by the Borrowers. The Borrowers shall
notify the Auction Administration Agent by telecopier whether and to
what extent they have decided to accept or reject any or all of the
bids referred to in paragraph (c) above, (i) in the case of Eurodollar
Advances, not later than 11:00 a.m., Dallas, Texas time, three Business
Days before the requested date for a proposed Competitive Advance and
(ii) in the case of Fixed Rate Advances, not later than 9:30 a.m.,
Dallas, Texas time, on the day specified for a proposed Competitive
Advance; provided, however, that (w) the failure by the Borrowers to
give such notice shall be deemed to be a rejection of all the bids
referred to in paragraph (c) above, (x) the Borrowers shall not accept
a bid made at a particular Competitive Bid Rate if the Borrowers have
decided to reject a bid made at a lower Competitive Bid Rate, (y) if
the Borrowers shall accept bids made at a particular Competitive Bid
Rate but shall be restricted by other conditions hereof from borrowing
the full principal amount of Competitive Advances in respect of which
bids at such Competitive Bid Rate have been made or shall not require
the full amount offered thereby, then the Borrowers shall accept a pro
rata portion of each bid made at such Competitive Bid Rate based as
nearly as possible on the respective principal amounts of Competitive
Advances for which such bids were made and (z) no bid shall be accepted
for a Competitive Advance unless such Competitive Advance is in a
minimum principal amount of $5,000,000 and an integral multiple of
$1,000,000. Notwithstanding the foregoing clause (z), if it is
necessary for the Borrowers to accept a pro
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rata allocation of the bids made in response to a Competitive Bid
Request (whether pursuant to the events specified in clause (y) above
or otherwise) and the available principal amount of Competitive
Advances to be allocated among the Banks is not sufficient to enable
Competitive Advances to be allocated to each Bank in a minimum
principal amount of $5,000,000 and in integral multiples of $1,000,000,
then the Borrowers shall select the Banks to be allocated such
Competitive Advances and shall round allocations up or down to the next
higher or lower multiple of $500,000 as it shall deem appropriate. A
notice given by the Borrowers pursuant to this paragraph (d) shall be
irrevocable.
(e) The Auction Administration Agent shall promptly notify
each bidding Bank whether or not its Competitive Bid has been accepted
(and if so, in what amount and at what Competitive Bid Rate) by
telecopier, and each successful bidder will thereupon become bound,
subject to the other applicable conditions hereof, to make the
Competitive Advance in respect of which its bid has been accepted.
After completing the notifications referred to in the immediately
preceding sentence, the Auction Administration Agent shall (i) notify
the Administrative Agent of each Competitive Bid that has been
accepted, the amount thereof and the Competitive Bid Rate therefor and
(ii) notify each Bank of the aggregate principal amount of all
Competitive Bids accepted.
(f) Upon receipt from the Administrative Agent of the
Eurodollar Rate applicable to any Eurodollar Advance to be made by any
Bank pursuant to a Competitive Bid that has been accepted by the
Borrowers pursuant to Section 2.6(d), the Auction Administration Agent
shall notify such Bank of (i) the applicable Eurodollar Rate and (ii)
the sum of the applicable Eurodollar Rate plus the Margin bid by such
Bank.
(g) No Competitive Bid Request shall be made within five
Business Days of the date of any other Competitive Bid Request, unless
the Borrowers and the Auction Administration Agent shall mutually agree
otherwise.
(h) If the Auction Administration Agent or any of its
Affiliates shall at any time have a Commitment hereunder and shall
elect to submit a Competitive Bid in its capacity as a Bank, such Bank
shall submit such bid directly to the Borrowers one quarter of an hour
earlier than the latest time at which the other Banks are required to
submit their bids to the Auction Administration Agent pursuant to
paragraph (b) above.
(i) All notices required by this Section 2.6 shall be made in
accordance with Section 12.10.
(j) Each Bank shall make its portion of each Competitive
Advance on the date specified for such Competitive Advance thereof by
paying the amount required to the Administrative Agent at the Principal
Office in immediately available funds not later than 12:00 noon,
Dallas, Texas time, and the Administrative Agent shall by 2:00 p.m.,
Dallas, Texas time, credit the amounts so received to the general
deposit account of the specified Borrower with the Administrative Agent
or, if Competitive Advances are not made on such
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date because any condition precedent to an Advance herein specified
shall not have been met, return the amounts so received to the
respective Banks as soon as practicable.
Section II.7. Refinancings; Conversions and Continuations.
(a) Each Borrower may refinance all or any part of any
Advance made to such Borrower with an Advance of the same or a
different type made to such Borrower pursuant to Section 2.5 or Section
2.6, subject to the conditions and limitations set forth herein and
elsewhere in this Agreement, including, without limitation,
refinancings of Competitive Advances with Committed Advances and
Committed Advances with Competitive Advances. Any Advance or part
thereof so refinanced shall be deemed to be repaid in accordance with
Section 2.3 with the proceeds of a new Advance hereunder, to the extent
they do not exceed the principal amount of the Advance being
refinanced, shall not be paid by the Banks to the Administrative Agent
or by the Administrative Agent to the Borrowers pursuant to Section
2.6(j); provided, however, that (i) if the principal amount extended by
a Bank in a refinancing is greater than the principal amount extended
by such Bank in the Advance being refinanced, then such Bank shall pay
such difference to the Administrative Agent for distribution to the
Banks described in (ii) below, (ii) if the principal amount extended by
a Bank in the Advance being refinanced is greater than the principal
amount being extended by such Bank in the refinancing, the
Administrative Agent shall return the difference to such Bank out of
amounts received pursuant to (i) above, (iii) to the extent any Bank
fails to pay the Administrative Agent amounts due from it pursuant to
(i) above, any Advance or portion thereof being refinanced shall not be
deemed repaid in accordance with Section 2.3 to the extent of such
failure and the Borrower to whom such Advance was made shall pay such
amount to the Administrative Agent pursuant to Section 2.3 and (iv) to
the extent a Borrower fails to pay to the Administrative Agent any
amounts due from such Borrower in accordance with Section 2.3 as a
result of the failure of a Bank to pay the Administrative Agent any
amounts due as described in (iii) above, the portion of any refinanced
Advance deemed not repaid shall be deemed to be outstanding solely to
the Bank which has failed to pay the Administrative Agent amounts due
from it pursuant to (i) above to the full extent of such Bank's portion
of such refinanced Advance.
(b) Each Borrower shall have the right from time to time to
Convert all or part of one Type of Committed Advance made to such
Borrower into another Type of Committed Advance made to such Borrower
or to Continue all or part of any Committed Advance that is a
Eurodollar Advance by giving the Administrative Agent written notice
(by means of a Committed Advance Request) at least one (1) Business Day
before Conversion into a Floating Rate Advance, and at least three (3)
Business Days before Conversion into or Continuation of a Eurodollar
Advance, specifying: (i) the Borrower to whom such Advance is
outstanding, (ii) the Conversion or Continuation date, (iii) the amount
of the Committed Advance to be Converted or Continued, (iv) in the case
of Conversions, the Type of Committed Advance to be Converted into, and
(v) in the case of a Continuation of or Conversion into a Eurodollar
Advance, the duration of the Interest Period applicable thereto;
provided that (a) Eurodollar Advances may only be Converted on the last
day of the Interest
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Period, (b) except for Conversions to Floating Rate Advances, no
Conversions shall be made while a Default or Event of Default has
occurred and is continuing and no Continuations of any Eurodollar
Advances shall be made while a Default or Event of Default has occurred
and is continuing, unless such Conversion or Continuation has been
approved by Required Banks, and (c) the aggregate principal amount of
Eurodollar Advances having the same Interest Period shall be at least
equal to $5,000,000. All notices given under this Section shall be
irrevocable and shall be given not later than 10:00 a.m. Dallas, Texas
time on the day which is not less than the number of Business Days
specified above for such notice. If the Borrowers shall fail to give
the Administrative Agent the notice as specified above for Continuation
or Conversion of a Eurodollar Advance prior to the end of the Interest
Period with respect thereto, such Eurodollar Advance shall
automatically be Converted into a Floating Rate Advance on the last day
of the Interest Period for such Eurodollar Advance.
Section II.8. Use of Proceeds. The proceeds of Advances shall be used
by the Borrowers or any of the Subsidiaries (subject to the provisions of
Article VIII) for working capital in the ordinary course of business,
acquisitions permitted hereunder, and general corporate purposes. Part of the
proceeds of the initial Advance shall be used to pay in full certain of the
indebtedness of the Borrowers and Subsidiaries as specified on Schedule 2
hereto, which indebtedness shall be paid in full on the date the initial Advance
is made, except for that certain $10,000,000 loan by Chase to Refractarios
Chilenos, S.A., guaranteed by Global (the "RCSA Loan"), which shall be paid in
full on or before the date which is five (5) Business Days after the date the
initial Advance is made. The Borrowers hereby represent and warrant that payment
of the RCSA Loan cannot occur on the date of the initial Advance due to
requirements of Chilean law. In the event the RCSA Loan is not paid in full on
or before the date which is five (5) Business Days after the date the initial
Advance is made, such nonpayment shall be an Event of Default hereunder.
Section II.9. Commitment Fee. The Borrowers jointly and severally agree
to pay to the Administrative Agent for the account of each Bank a commitment fee
on the daily average unused amount of such Bank's Commitment for the period from
and including the date of this Agreement to and including the Termination Date,
at the rate of the Applicable Percentage per annum based on a 360 day year and
the actual number of days elapsed. For the purpose of calculating the commitment
fee hereunder, the Commitments shall be deemed utilized by the amount of all
outstanding Committed Advances and without giving effect to any Competitive
Reduction. Accrued commitment fees shall be payable in arrears on each Payment
Date and on the Termination Date.
Section II.10. Reduction or Termination of Total Commitment
(a) The Borrowers shall have the right to terminate in whole
or reduce in part the unused portion of the Total Commitment upon at
least three (3) Business Days prior notice (which notice shall be
irrevocable) to the Administrative Agent (who shall promptly forward a
copy thereof to each Bank and the Auction Administration Agent)
specifying the effective date thereof, whether a termination or
reduction is being made, and the amount of any partial reduction,
provided that each partial reduction shall be in a minimum amount of
$5,000,000 or such greater amount which is an integral multiple thereof
and the Borrowers shall
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simultaneously prepay the amount by which the aggregate unpaid
principal amount of the Committed Advances and the Competitive Advances
exceeds the Total Commitment (after giving effect to such notice) plus
accrued and unpaid interest on the principal amount so prepaid. The
Total Commitment may not be reinstated after it has been terminated or
reduced.
(b) Each reduction in the Total Commitment pursuant to this
Section 2.10 shall be made ratably among the Banks in accordance with
their respective Commitments. Simultaneously with any termination or
permanent reduction of Commitments pursuant to this Section, the
Borrowers shall jointly and severally pay to the Administrative Agent
for the accounts of the Banks the commitment fee on the amount of the
Total Commitment so terminated or reduced, accrued through the date of
such termination or permanent reduction.
Section II.11. Administrative Fee. The Borrowers shall jointly and
severally pay to the Administrative Agent, solely for its own account, the
annual administration fee described in the Fee Letter, payable annually on the
Closing Date and each Anniversary Date.
Section II.12. Extension of Termination Date. The Termination Date may
be extended annually upon the unanimous written approval of the Banks and the
written agreement of the Borrowers. On or before the thirtieth (30th) day before
each Anniversary Date (but no earlier than the sixtieth (60th) day before such
Anniversary Date), the Borrowers may request that the Termination Date be
extended for a one-year period, by submitting to the Administrative Agent by
such date an Extension Request Form in substantially the form of Exhibit "C-1"
hereto, completed and signed by the Borrowers (each an "Extension Request
Form"). Upon receipt of any Extension Request Form, the Administrative Agent
shall transmit a copy of such Extension Request Form to each of the Banks within
five (5) Business Days after receipt. Each Bank will respond to such request, by
returning the Extension Request Form or a copy thereof to the Administrative
Agent indicating whether such Bank approves or declines such extension, on or
before the tenth (10th) day before such Anniversary Date. However, the failure
by any Bank to so respond shall not be deemed to be an approval of such request
for extension, and no extension of or agreement to extend the Termination Date
shall be effective unless the Administrative Agent shall have received the
written approval of all of the Banks. In the event the Administrative Agent
receives the written approval of all of the Banks, the Administrative Agent
shall promptly notify the Borrowers and the Banks that the Termination Date is
extended to the date which is one year after the Termination Date in effect
immediately prior to such extension, by means of a Notice of Extension in
substantially the form of Exhibit "C-2" hereto, whereupon the Termination Date
shall be extended, effective as of such Anniversary Date, without the necessity
for any further action or documentation. However, the Borrowers shall execute
and deliver or cause to be executed and delivered any and all documents which
may be reasonably required by the Administrative Agent or the Required Banks in
connection with such extension. THE BANKS AND THE ADMINISTRATIVE AGENT SHALL
HAVE NO OBLIGATION OR COMMITMENT WHATSOEVER TO EXTEND THE TERMINATION DATE AT
ANY TIME, AND NONE OF THE BANKS OR THE ADMINISTRATIVE AGENT HAS MADE ANY
REPRESENTATION TO THE BORROWERS REGARDING ANY SUCH EXTENSION.
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Section II.13. Nature of Obligations. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan Documents, (a)
Global shall have no obligation or liability to repay any Advances made to GPX
except pursuant to the guaranty agreement executed by Global in accordance with
Section 5.1(i); and (b) GPX shall have no obligation or liability to repay any
Advances made to Global except pursuant to the guaranty agreement executed by
GPX in accordance with Section 5.1(i).
ARTICLE III
Payments
Section III.1. Method of Payment. All payments of principal, interest,
and other amounts to be made by the Borrowers under this Agreement and the other
Loan Documents shall be made to the Administrative Agent at the Principal Office
in Dollars and immediately available funds, without setoff, deduction, or
counterclaim, not later than 10:00 a.m., Dallas, Texas time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
The Borrowers shall, at the time of making each such payment, specify to the
Administrative Agent the sums payable by the Borrowers under this Agreement and
the other Loan Documents to which such payment is to be applied (and in the
event the Borrowers fail to so specify, or if an Event of Default has occurred
and is continuing, the Administrative Agent may apply such payment to the
Obligations in such order and manner as it may elect in its sole discretion,
subject to Section 3.3 hereof). Each payment received by the Administrative
Agent under this Agreement or any other Loan Document for the account of a Bank
shall be paid promptly to such Bank, in immediately available funds, for the
account of such Bank's Applicable Lending Office. Whenever any payment under
this Agreement or any other Loan Document shall be stated to be due on a day
that is not a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of interest and commitment fee, as the case may be.
Section III.2. Voluntary Prepayment. The Borrowers may prepay the
Advances in whole at any time or from time to time in part without premium or
penalty but with accrued interest to the date of prepayment on the amount so
prepaid, provided that, (a) the Borrowers shall give the Administrative Agent
prior notice of such prepayment and such notice shall be received by the
Administrative Agent before 10:00 a.m. on the date of such prepayment, which
date shall be a Business Day, (b) each partial prepayment of any Eurodollar
Advances or Fixed Rate Advances shall be in the principal amount of $5,000,000
or such greater amount which is an integral multiple thereof, (c) each partial
prepayment of any Floating Rate Advances shall be in the principal amount of
$5,000,000 or such greater amount which is an integral multiple thereof, and (d)
any and all amounts required pursuant to Section 4.5 shall be paid concurrently
with such prepayment. The Borrowers shall not have the right to prepay any
Competitive Advance. All notices under this Section shall be irrevocable.
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Section III.3. Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Committed Advance shall be made by the Banks under
Section 2.5, each payment of the commitment fee under Section 2.9 shall be made
for the account of the Banks, each termination or reduction of the Commitments
under Section 2.10 shall be applied to the Commitments of the Banks pro rata
according to the amounts of their respective Commitments; (b) the making,
Conversion, and Continuation of Committed Advances of a particular Type (other
than Conversions provided for by Section 4.4), including refinancing of
Competitive Advances with Committed Advances, and Committed Advances which are
not refinancings of other Advances, shall be made pro rata among the Banks
according to the amounts of their respective Commitments; (c) each payment and
prepayment of principal and each payment of interest with respect to a Committed
Advance of a particular Type or to a Competitive Advance at a particular
Competitive Bid Rate shall be made to the Administrative Agent for the account
of the Banks holding Committed Advances of such Type or Competitive Advances at
such Competitive Bid Rate, as the case may be, pro rata in accordance with the
respective unpaid principal amounts of such Advances held by such Banks, if any;
and (d) Interest Periods for Committed Advances of a particular Type shall be
allocated among the Banks holding Committed Advances of such Type pro rata
according to the respective principal amounts held by such Banks.
Section III.4. Non-Receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Bank or the Borrowers
(the "Payor") prior to the date on which such Bank is to make payment to the
Administrative Agent of the proceeds of an Advance to be made by it hereunder or
the Borrowers are to make a payment to the Administrative Agent for the account
of one or more of the Banks, as the case may be (such payment being herein
called the "Required Payment"), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the
Administrative Agent, the Administrative Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient of such payment shall, on demand, pay to the
Administrative Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so made
available by the Administrative Agent until the date the Administrative Agent
recovers such amount at a rate per annum equal to (a) in the case of the
Borrowers, the Applicable Committed Advance Rate or Competitive Bid Rate, as
applicable, for such Advance and (b) in the case of such Bank, the Federal Funds
Effective Rate for such period.
Section III.5. Withholding Taxes. All payments by the Borrowers of
principal of and interest on the Advances and of all fees and other amounts
payable under any Loan Document are payable without deduction for or on account
of any present or future taxes, duties or other charges levied or imposed by the
United States of America or by the government of any jurisdiction outside the
United States of America or by any political subdivision or taxing authority of
or in any of the foregoing through withholding or deduction with respect to any
such payments. If any such taxes, duties or other charges are so levied or
imposed, the Borrowers will pay additional interest or will make additional
payments in such amounts so that every net payment of principal of and interest
on the Advances and of all other amounts payable by it under any Loan Document,
after withholding
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or deduction for or on account of any such present or future taxes, duties or
other charges, will not be less than the amount provided for herein or therein,
provided that the Borrowers shall have no obligation to pay such additional
amounts to any Bank to the extent that such taxes, duties, or other charges are
levied or imposed by reason of the failure of such Bank to comply with the
provisions of Section 3.6. Notwithstanding the foregoing, the Banks shall take
such actions as they may reasonably determine, including designating a different
Applicable Lending Office, in order to reduce the amount of additional interest
or additional payments otherwise payable by the Borrowers under this Section
3.5; provided that such action will not, in the sole opinion of the Banks,
violate any law, rule, or regulation or be in any way disadvantageous to any
applicable Bank. The Borrowers shall furnish promptly to the Administrative
Agent for distribution to each affected Bank, as the case may be, official
receipts evidencing any such withholding or reduction.
Section III.6. Withholding Tax Exemption. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrowers and the Administrative Agent two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Bank is entitled to receive payments
from the Borrowers under any Loan Document without deduction or withholding of
any United States federal income taxes. Each Bank which so delivers a Form 1001
or 4224 further undertakes to deliver to Borrowers and the Administrative Agent
two additional copies of such form (or a successor form) on or before the date
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrowers or the Administrative Agent, in each case certifying
that such Bank is entitled to receive payments from the Borrowers under any Loan
Document without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank advises the Borrowers and the Administrative Agent that it
is not capable of receiving such payments without any deduction or withholding
of United States federal income tax.
ARTICLE IV
Yield Protection; Limitations on Advances; Capital Adequacy
Section IV.1. Additional Costs.
(a0 The Borrowers shall jointly and severally pay directly to
each Bank from time to time such amounts as such Bank may determine to
be necessary to compensate it for any costs incurred by such Bank which
such Bank reasonably determines are attributable to its making or
maintaining of any Eurodollar Advances hereunder or its obligation to
make such Advances hereunder, or any reduction in any amount receivable
by such Bank hereunder in respect of any such Advances or such
obligation (such increases in costs and reductions in
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amounts receivable being herein called "Additional Costs"), resulting
from any Regulatory Change which:
(i changes the basis of taxation of any amounts
payable to such Bank under this Agreement or either of its
Notes in respect of any Eurodollar Advances (other than taxes
imposed on or measured by the overall actual or deemed net
income of such Bank or its Applicable Lending Office for any
Eurodollar Advances by the jurisdiction in which such Bank has
its principal office or such Applicable Lending Office); or
(ii imposes or modifies any reserve, special
deposit, minimum capital, capital ratio, or similar
requirement relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or
commitments of, such Bank (including any Eurodollar Advances
or any deposits referred to in the definition of "Eurodollar
Rate" in Section 1.1 hereof).
Each Bank will notify the Borrowers (with a copy to the Administrative
Agent) of any event occurring after the date of this Agreement which
will entitle such Bank to compensation pursuant to this Section 4.1(a)
as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and, will take such actions as
it may reasonably determine, including designating a different
Applicable Lending Office for Eurodollar Advances if such designation
will avoid the need for, or reduce the amount of, such compensation and
will not, in the sole opinion of such Bank, violate any law, rule, or
regulation or be in any way disadvantageous to such Bank, provided that
such Bank shall have no obligation to so designate an Applicable
Lending Office located outside the United States of America. Each Bank
will furnish to the Borrowers a certificate setting forth the basis and
the amount of each request of such Bank for compensation under this
Section 4.1(a). If any Bank requests compensation from the Borrowers
under this Section 4.1(a), the Borrowers may, by notice to such Bank
(with a copy to Administrative Agent), suspend the obligation of such
Bank to make or Continue making, or Convert Advances into, Eurodollar
Advances until the Regulatory Change giving rise to such request ceases
to be in effect (in which case the provisions of Section 4.4 hereof
shall be applicable) and may Convert any Eurodollar Advance into a
Floating Rate Advance, subject to the provisions of Section 4.5.
(b) Without limiting the effect of the foregoing provisions
of this Section 4.1, in the event that, by reason of any Regulatory
Change, any Bank either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a
category of deposits or other liabilities of such Bank which includes
deposits by reference to which the interest rate on Eurodollar Advances
is determined as provided in this Agreement or a category of extensions
of credit or other assets of such Bank which includes Eurodollar
Advances or (ii) becomes subject to restrictions on the amount of such
a category of liabilities or assets which it may hold, then, if such
Bank so elects by notice to the Borrowers the obligation of such Bank
to make or Continue making, or Convert Advances into,
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Eurodollar Advances (including in respect of any Competitive Advance as
to which the Borrowers have accepted such Bank's Competitive Bid; but
as to which the borrowing date has not arrived) hereunder shall be
suspended until such Regulatory Change ceases to be in effect (in which
case the provisions of Section 4.4 hereof shall be applicable).
Notwithstanding the foregoing, each Bank agrees that it will not
suspend its obligation to make or continue making, or Convert Advances
into, Eurodollar Advances unless it suspends such obligations to all of
its borrowers or to all of its borrowers which are similarly situated
and/or are engaged in businesses of the same general nature.
(c) Determinations and allocations by any Bank for purposes
of this Section 4.1 of the effect of any Regulatory Change on its costs
of maintaining its obligations to make Advances or of making or
maintaining Advances or on amounts receivable by it in respect of
Advances, and of the additional amounts required to compensate such
Bank in respect of any Additional Costs, shall be prima facie evidence
of the amounts of such Additional Costs.
Section IV.2. Limitation on Types of Advances. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Advances for any
Interest Period therefor:
(a) The Administrative Agent determines (which determination
shall be conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" in Section
1.1 hereof are not being provided in the relative amounts or for the
relative maturities for purposes of determining the rate of interest
for such Advances as provided in this Agreement; or
(b) Required Banks determine (which determination shall be
conclusive) that, as a result of any contingency affecting the Banks'
costs of funds for Eurodollar Advances, the relevant rates of interest
referred to in the definition of "Eurodollar Rate" in Section 1.1
hereof on the basis of which the rate of interest for such Advances for
such Interest Period is to be determined do not adequately and fairly
reflect the cost to the Banks of making or maintaining such Advances
for such Interest Period;
then the Administrative Agent shall give the Borrowers prompt notice thereof
specifying relevant amounts or periods, and so long as such condition remains in
effect, the Banks shall be under no obligation to make additional Eurodollar
Advances or to Convert Floating Rate Advances into Eurodollar Advances and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Advances, either prepay such Eurodollar Advances or
Convert such Eurodollar Advances into Floating Rate Advances in accordance with
the terms of this Agreement.
Section IV.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Eurodollar Advances hereunder
or (b) maintain Eurodollar Advances hereunder, then such Bank shall promptly
notify the Borrowers (with a copy to the Administrative Agent) thereof and such
Bank's obligation to make or maintain Eurodollar Advances (including in respect
of any Competitive Advance as to which the Borrowers have accepted such Bank's
Competitive Bid;
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but as to which the borrowing date has not arrived) and to Convert Floating Rate
Advances into Eurodollar Advances hereunder shall be suspended until such time
as such Bank may again make and maintain Eurodollar Advances (in which case the
provisions of Section 4.4 hereof shall be applicable).
Section IV.4. Substitute Floating Rate Advances. If the obligation of
any Bank to make Eurodollar Advances shall be suspended pursuant to Section 4.1
or 4.3 hereof, all Committed Advances which would be otherwise made by such Bank
as Eurodollar Advances shall be made instead as Floating Rate Advances and all
Advances which would otherwise be Converted into Eurodollar Advances shall be
Converted instead into (or shall remain as) Floating Rate Advances (and, if an
event referred to in Section 4.1(b) or 4.3 hereof has occurred and such Bank so
requests by notice to the Borrowers (with a copy to the Administrative Agent),
all Eurodollar Advances of such Bank then outstanding shall be automatically
Converted into Floating Rate Advances on the date specified by such Bank in such
notice) and, to the extent that Eurodollar Advances are so made as (or Converted
into) Floating Rate Advances, all payments and prepayments of principal which
would otherwise be applied to such Bank's Eurodollar Advances shall be applied
instead to its Floating Rate Advances.
Section IV.5. Compensation. The Borrowers shall jointly and severally
pay to the Administrative Agent for the account of each Bank, upon the request
of such Bank through the Administrative Agent, such amount or amounts as shall
be sufficient (in the reasonable opinion of such Bank, which opinion shall be
prima facie evidence of such amount or amounts) to compensate it for any loss,
cost, or expense incurred by it as a result of:
(a) Any payment, prepayment or Conversion of a Eurodollar
Advance or Fixed Rate Advance for any reason (including, without
limitation, the acceleration of outstanding Advances pursuant to
Section 10.2) on a date other than the last day of an Interest Period
for such Advance other than pursuant to Section 4.3 or 4.4 hereof; or
(b) Any failure by the Borrowers for any reason (including,
without limitation, the failure of any conditions precedent specified
in Article V to be satisfied) to borrow, Convert, or prepay a
Eurodollar Advance or a Fixed Rate Advance on the date for such
borrowing, Conversion, or prepayment, specified in the relevant notice
of borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, with respect to
Eurodollar Advances, such compensation shall include an amount equal to the
excess, if any, of (i) the amount of interest which otherwise would have accrued
on the principal amount so paid or Converted or not borrowed for the period from
the date of such payment, Conversion, or failure to borrow to the last day of
the Interest Period for such Advance (or, in the case of a failure to borrow,
the Interest Period for such Advance which would have commenced on the date
specified for such borrowing) at the applicable rate of interest for such
Advance provided for herein over (ii) the interest component of the amount such
Bank would have bid in the applicable Eurodollar interbank market for Dollar
deposits of leading banks and amounts comparable to such principal amount and
with maturities comparable to such period.
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Section IV.6. Capital Adequacy. If after the date hereof, any Bank
shall have determined that any Regulatory Change has or would have the effect of
reducing the rate of return on such Bank's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated hereby
to a level below that which such Bank (or its parent) could have achieved but
for such Regulatory Change (taking into consideration such Bank's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within ten (10) Business Days after demand by such Bank
(with a copy to the Administrative Agent), the Borrowers shall jointly and
severally pay to such Bank (or its parent) such additional amount or amounts as
will compensate such Bank for such reduction. Each Bank will furnish to the
Borrowers a certificate of such Bank claiming compensation under this Section
and setting forth the basis and the additional amount or amounts to be paid to
it hereunder. Each such certificate shall be prima facie evidence of the amounts
of the additional compensation to be paid to such Bank. In determining such
amount or amounts, such Bank may use any reasonable averaging and attribution
methods.
ARTICLE V
Conditions Precedent
Section V.1. Initial Extension of Credit. The obligation of the Banks
to make the initial Advance is subject to the condition precedent that the
Administrative Agent shall have received on or before the day of such Advance
all of the following, each dated (unless otherwise indicated) the date hereof,
in form and substance satisfactory to the Administrative Agent:
(a) Resolutions. Resolutions of the Board of Directors of
each Borrower and each Guarantor, certified by the Secretary or an
Assistant Secretary of such Person which authorize (i) the execution,
delivery, and performance by each Borrower of this Agreement and the
other Loan Documents to which such Borrower is or is to be a party, and
(ii) the execution, delivery, and performance by each Guarantor of the
Guaranty Agreement and the other Loan Documents to which such Guarantor
is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of each Borrower
and each Guarantor, respectively, certifying the names of (i) the
officers of each Borrower authorized to sign this Agreement and each of
the other Loan Documents to which such Borrower is or is to be a party
(including the certificates contemplated herein) together with specimen
signatures of such officers, and (ii) the officers of each Guarantor
authorized to sign the Guaranty Agreement and the other Loan Documents
to which such Guarantor is or is to be a party (including the
certificates contemplated therein) together with specimen signatures of
such officers;
(c) Certificates of Incorporation. The certificate of
incorporation of each Borrower and each Guarantor, certified by the
Secretary of State of the state of its incorporation and dated within
twenty (20) days prior to the date hereof;
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(d) Bylaws. The bylaws of each Borrower and each Guarantor,
certified by the Secretary or an Assistant Secretary of such Person;
(e) Governmental Certificates. (i) Certificates of the
appropriate government officials of the respective states of
incorporation of each Borrower and each Guarantor, as to the existence
and good standing of such Persons, and (ii) certificates of the
appropriate governmental officials of each jurisdiction in which the
nature of the business transacted by the Borrowers and the Guarantors
make qualification necessary and in which the failure to be so
qualified would be reasonably likely to have a Material Adverse Effect,
as to the qualification and good standing of such Persons in such
jurisdictions, each dated within ten (10) days prior to the date
hereof;
(f) Notes. The Committed Note and the Competitive Note of
each Bank, each duly executed by each Borrower;
(g) Guaranty Agreement; Subordination. The Guaranty Agreement
executed by each Guarantor, pursuant to which each Guarantor guarantees
the Obligations as provided therein and subordinates any and all Debt
of any Borrower or any Subsidiary to such Guarantor to the prior
payment and performance in full of the Obligations;
(h) Contribution and Indemnification Agreement. A
Contribution and Indemnification Agreement in substantially the form of
Exhibit "F" hereto (the "Contribution and Indemnification Agreement"),
executed by each Borrower and each Guarantor;
(i) Cross-Guaranties of Borrowers. The guaranty agreements,
each in the form of Exhibit "E-2" hereto with appropriate completions,
executed by the respective Borrowers, pursuant to which each Borrower
guarantees the payment and performance of the other Borrower's
obligations under the Loan Agreement, the Note and the other Loan
Documents with respect to all Advances made to such other Borrower;
(j) Opinion of Counsel. A favorable opinion of Graham
Adelman, Esq., general counsel to the Borrowers and the Guarantors, in
form and substance satisfactory to the Administrative Agent, as to the
matters set forth in Exhibit "G" hereto, and such other matters as the
Administrative Agent may reasonably request;
(k) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including reasonable attorneys' fees) referred to in Section
12.1, to the extent incurred, shall have been paid in full by the
Borrowers;
(l) Fees. Evidence that the Borrowers shall have paid to
Chase Securities Inc. the advisory fee provided for in the Fee Letter
and shall have paid any and all other fees provided for therein;
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(m) Compliance Certificate. An initial Compliance Certificate
as of July 31, 1998, executed by the chief executive officer, chief
financial officer, corporate controller or treasurer of Global; and
(n) Lien Searches. The results of current Uniform Commercial
Code searches and tax and judgment lien searches showing all financing
statements and other documents or instruments on file against the
Borrowers and the Guarantors in such jurisdictions as the
Administrative Agent has requested, each such search to be dated no
more than twenty (20) days prior to the date hereof.
Section V.2. All Extensions of Credit. The obligation of the Banks to
make any Advance (including the initial Advance) is subject to the following
additional conditions precedent:
(a) Request for Advance. The Administrative Agent shall have
received in accordance with Section 2.5 or 2.6, as the case may be, a
Committed Advance Request or Competitive Bid Request dated the date of
such Advance and executed by authorized officers of each Borrower;
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing, or would result from
such Advance;
(c) Representations and Warranties. All of the
representations and warranties contained in Article VI hereof and in
the other Loan Documents shall be true and correct in all material
respects on and as of the date of such Advance with the same force and
effect as if such representations and warranties had been made on and
as of such date (except for such representations and warranties as are
limited by their express terms to a specific date);
(d) Confirmatory Certificate. In the event any question
exists regarding the matters set forth in subsections (b) and (c) of
this Section 5.2 and if deemed necessary in the sole but reasonable
discretion of the Administrative Agent or any Bank, the Administrative
Agent shall have received (in sufficient counterparts to provide one to
each Bank) a certificate dated the date of such requested Advance and
signed by a duly authorized officer of each Borrower as to the matters
set forth in subsections (b) and (c) of this Section 5.2 (it being
understood and agreed that each request by the Borrowers for the making
of an Advance shall be deemed to constitute a representation and
warranty by the Borrowers that the conditions precedent set forth in
subsections (b) and (c) of this Section 5.2 will be satisfied at the
time of the making of such Advance), together with such other documents
as the Administrative Agent or any Bank may reasonably request in
support thereof; and
(e) Additional Documentation. The Administrative Agent shall
have received such additional approvals, opinions, or documents as the
Administrative Agent or its legal counsel, Winstead Sechrest & Minick
P.C., may reasonably request.
ARTICLE VI
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Representations and Warranties
------------------------------
To induce the Administrative Agent and the Banks to enter into this
Agreement, each Borrower represents and warrants to the Administrative Agent and
the Banks that:
Section VI.1. Corporation Organization and Authority. Each of the
Borrowers and the Material Subsidiaries:
(a) is a corporation duly incorporated, validly existing and
in good standing under the laws of their respective jurisdictions of
incorporation;
(b) has the legal and corporate power and authority to own
and operate their respective properties and to carry on their
respective businesses as now conducted and as presently proposed to be
conducted;
(c) has the necessary licenses, certificates and permits to
own and operate their respective properties and to carry on their
respective businesses as now conducted and as presently proposed to be
conducted in each jurisdiction in which the failure to obtain such
licenses, certificates and permits, in the aggregate, would be
reasonably likely to have a Material Adverse Effect; and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing in each jurisdiction
in which the nature of the business transacted by it makes such
qualification or licensing necessary and in which the failure to be so
qualified or licensed would be reasonably likely to have a Material
Adverse Effect.
The execution, delivery and performance by each Borrower of this Agreement and
the other Loan Documents to which it is a party are within the corporate powers
of such Borrower and have been authorized by all necessary corporate action. The
execution, delivery and performance by each Guarantor of the Guaranty Agreement
and the other Loan Documents to which it is a party are within the corporate
powers of such Guarantor and have been authorized by all necessary corporate,
partnership or other action.
Section VI.2. Financial Statements. The Borrowers have furnished the
Administrative Agent with the following financial statements, identified by a
principal financial officer of Global: (a) a consolidated balance sheet of
Global and its Subsidiaries as at October 31, 1997, and consolidated statements
of income, stockholders' equity and cash flows of Global and its Subsidiaries
for such year, all audited on by Price Waterhouse LLP; and (b) a consolidated
balance sheet of Global and its Subsidiaries as at April 30, 1998 and
consolidated statements of income, stockholders' equity and cash flows for the
six-month period ended on such date, prepared by Global. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments) and have been prepared in
accordance with GAAP consistently followed throughout
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the periods involved. The balance sheets fairly present the condition of Global
and its Subsidiaries as at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of the operations
of Global and its Subsidiaries and their cash flows for the periods indicated
therein. There has been no material adverse change in the business, property or
assets, condition (financial or otherwise), operations or prospects of Global
and its Subsidiaries taken as a whole since April 30, 1998.
Section VI.3. Actions Pending. Except as disclosed on Schedule 1
hereto: (a) there are no claims, litigation (including, without limitation,
derivative actions), arbitration proceedings, administrative proceedings or
investigations that are pending or threatened against or affecting either
Borrower or any of the Subsidiaries (i) which, if adversely determined, after
considering the receipt of proceeds from insurance available to the Borrowers
and the Subsidiaries, would be reasonably likely to have a Material Adverse
Effect, or (ii) which purport to affect the legality, validity, or
enforceability of this Agreement, the Notes, the Guaranty Agreement or any of
the other Loan Documents or any action taken or to be taken pursuant hereto,
and, to the knowledge of a Responsible Officer, there are no inquiries, from any
Governmental Authority or otherwise, which would give rise to any such action,
proceeding or investigation; (b) there are no labor controversies pending or
threatened against either Borrower or any of the Subsidiaries which, based on
reasonable assumptions of the Borrowers as to the probable outcome of any and
all such labor controversies, would be reasonably likely to have a Material
Adverse Effect; and (c) other than any liability incident to any litigation,
proceedings or investigations described in Schedule 1 hereto or on any other
Schedule hereto, neither any Borrower nor any of the Subsidiaries has any
material contingent liabilities. Except as disclosed in Global's most recent
Form 10-Q Quarterly Report delivered to the Administrative Agent and the Banks
or on Schedule 1 hereto, (a) there are no outstanding judgments against either
Borrower or any Subsidiary which would be required to be disclosed under the
Securities Act of 1933 or the Securities Exchange Act of 1934, and (b) there are
no other outstanding judgments against either Borrower or any Subsidiary which
have not been stayed pending appeal.
Section VI.4. Outstanding Debt. Neither any Borrower nor any of the
Subsidiaries has outstanding any Debt except as permitted by Articles VIII and
IX. There exists no default under the provisions of any instrument evidencing
such Debt or of any agreement relating thereto, except defaults under the RSCA
Loan which RCSA Loan is to be paid in full in accordance with Section 2.8.
Section VI.5. Title to Properties. Each Borrower and each of the
Subsidiaries have good and marketable title to their respective real properties
(other than properties which they lease) and good title to all of its other
respective properties and assets, including the properties and assets reflected
in the balance sheet as at April 30, 1998 referred to in Section 6.2 (other than
properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by Section 8.2 and no defect or
other encumbrance except such which would not be reasonably likely to have a
Material Adverse Effect. All leases necessary in any material respect for the
conduct of the respective businesses of the Borrowers and the Subsidiaries are
valid and subsisting and are in full force and effect.
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Section VI.6. Patent, Trademarks, Licenses, etc. Each of the Borrowers
and the Subsidiaries owns, possesses or has the right to use all of the material
patents, trademarks, service marks, trade names, copyrights, trade secrets, and
licenses, and rights with respect thereto, necessary for the present conduct of
their respective businesses, without any material conflict with the rights of
others except for such intellectual property or conflicts which would not be
reasonably likely to have a Material Adverse Effect.
Section VI.7. Taxes. All tax returns (including without limitation all
federal, state and local income, franchise, employment, property, and sales tax
returns) required to be filed by each of the Borrowers and the Subsidiaries and
any other Person with which any Borrower or any Subsidiary files or is required
to file a consolidated return in any jurisdiction have been filed on a timely
basis (which timely filing shall include any instance in which the time for such
filing has itself been timely and properly extended or in which the requirement
for such filing has been properly contested), and all taxes that are shown to be
due and payable have been paid. Neither any Borrower nor any Subsidiary knows of
any proposed additional tax assessment against it or any such Person that, in
the aggregate, would be reasonably likely to have a Material Adverse Effect.
Section VI.8. Compliance With Law. Neither any Borrower nor any
Subsidiary is in violation of any law, ordinance, governmental rule or
regulation to which it is subject, which violations, in the aggregate,
management believes or has reason to believe would be reasonably likely to have
a Material Adverse Effect.
Section VI.9. Conflicting Agreements and Other Matters. Neither the
execution nor delivery of this Agreement, the Notes or the other Loan Documents
by the Borrowers, nor the execution nor delivery of the Guaranty Agreement or
the other Loan Documents by the Guarantors, nor fulfillment of nor compliance
with the terms and provisions hereof and of the other Loan Documents by the
Borrowers and the Guarantors will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any Lien upon any of the
properties or assets of any Borrower or any of the Subsidiaries pursuant to, the
charter or bylaws of the Borrower or any of the Subsidiaries, any award of any
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
any Borrower or any of the Subsidiaries or any of their property is subject.
Schedule 2 contains a list of all instruments evidencing any Debt of any
Borrower or any Subsidiary, any agreement relating thereto or any other contract
or agreement (including its charter) which limits the amount of, or otherwise
imposes restrictions on the incurring of Debt of any Borrower of the type to be
evidenced by the Notes or the incurring of obligations of any Borrower or any
Guarantor of the type incurred pursuant to this Agreement or the other Loan
Documents.
Section VI.10. Use of Proceeds. The proceeds of the Advances will be
used by the Borrowers for the purposes specified in Section 2.8 hereof and shall
not be used for any other purpose. None of the proceeds of the Advances will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock within the meaning of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve System
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("margin stock"), or for the purpose of maintaining, reducing or retiring any
indebtedness which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulations G, T, U or
X unless the Borrowers shall have delivered to the Administrative Agent an
opinion of counsel satisfactory to the Administrative Agent stating that the
Advances do not constitute a violation of such Regulations G, T, U or X. Neither
any Borrower nor any Guarantor nor any Administrative Agent acting on its behalf
has taken or will take any action which might cause this Agreement, the Notes or
the Guaranty Agreement to violate Regulations G, T, U or X or any other
regulation of the Board of Governors of the Federal Reserve System, in each case
as in effect now or as the same may hereafter be in effect.
Section VI.11. ERISA. Each Borrower, each Guarantor and each ERISA
Affiliate (i) have fulfilled all obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan that is not a Multiemployer
Plan, (ii) are in compliance in all material respects with all other applicable
provisions of ERISA and the Code with respect to each Plan, and (iii) have not
incurred any liability under the Title IV of ERISA to the PBGC with respect to
any Plan or any trust established thereunder. No Plan or trust created
thereunder has been terminated, and there have been no "reportable events" (as
such term is defined in section 4043 of ERISA), with respect to any Plan or
trust created thereunder which reportable event or events will or could result
in the termination of such Plan and give rise to a material liability of the
Company or any ERISA Affiliate in respect thereof. Neither any Borrower, any
Guarantor, any ERISA Affiliate nor any predecessor of any of them, is or has
ever been an employer required to contribute to any Multiemployer Plan, the
termination of which would be reasonably likely to have a Material Adverse
Effect. Neither any Borrower, any Guarantor nor any ERISA Affiliate is or has
ever been a "contributing sponsor" (as such term is defined in section 4001 of
ERISA) in any Multiemployer Plan. Neither any Borrower, any Guarantor, nor any
ERISA Affiliate is currently subject to any "outstanding claim for withdrawal
liability" within the meaning of Section 4001(a)(12) of ERISA.
The execution and delivery of this Agreement, the Notes, the Guaranty
Agreement and the making of the Advances hereunder will be exempt from or will
not involve any transaction which is subject to the prohibitions of section 406
of ERISA and will not involve any transaction in connection with which a penalty
could be imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code.
Section VI.12. Certain Laws. Neither any Borrower nor any Subsidiary
is, or is directly or indirectly controlled by, or acting on behalf of any
Person that is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. Neither any Borrower nor any Subsidiary is a
"holding company" or an "affiliate" of a "holding company," or a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section VI.13. Governmental Consent. Neither the nature of any
Borrower, any Guarantor or of any other of the Subsidiaries, nor any of their
respective businesses or properties, nor any relationship between any Borrower,
any Guarantor or any other Subsidiary and any other Person, nor
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any circumstance in connection with the Advances made hereunder is such as to
require any authorization, consent, approval, exemption or any action by or
notice to or filing with any court or administrative or governmental or
regulatory body in connection with the execution and delivery of this Agreement,
the Notes, the Guaranty Agreement or the other Loan Documents or fulfillment of
or compliance with the terms and provisions of this Agreement, the Notes, the
Guaranty Agreement or the other Loan Documents.
Section VI.14 Disclosure. None of this Agreement, the Notes, the
Guaranty Agreement, the other Loan Documents, any certificate furnished to the
Administrative Agent or any Bank by or on behalf of any Borrower or any
Guarantor in connection with this Agreement or the closing of the transactions
contemplated hereby, nor any information furnished to the Administrative Agent
or any Bank by or on behalf of any Borrower or any Guarantor pursuant hereto
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading; provided, however that such representation and warranty shall not
extend to any "forward-looking" statements. Forward-looking statements involve
known and unknown risks, which may cause actual results and corporate
developments to differ materially from those expected. Factors that could cause
results and developments to differ materially from expectations include, without
limitation, changes in manufacturing and shipment schedules, delays in
completing plant construction and acquisitions, currency exchange rates, new
product and technology developments, competition within business segments,
cyclicity of markets for the products of major segments, litigation, significant
cost variances, the effects of acquisitions and divestitures, and other risks
disclosed from time to time in periodic reports and registration statements
filed by Global under the Securities Exchange Act of 1934, as amended, and the
Securities Act of 1933, as amended. There is no fact peculiar to any Borrower or
any of the Subsidiaries which materially adversely affects or in the future may
(so far as the Borrowers can now foresee) materially adversely affect the
business, property or assets, condition (financial or otherwise) or operations
of any Borrower or any of the Subsidiaries and which has not been set forth in
this Agreement.
Section VI.15. Enforceability. This Agreement, the Notes and the other
Loan Documents to which each Borrower is party constitute legal, valid, and
binding obligations of each Borrower, enforceable against each Borrower in
accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditors' rights and general principles of equity (regardless of whether such
enforcement is considered in an action of law or of equity). The Guaranty
Agreement and the other Loan Documents to which any Guarantor is party
constitute legal, valid, and binding obligations of such Guarantor, enforceable
against such Guarantor in accordance with their respective terms, except as
limited by bankruptcy, insolvency, or other laws of general application relating
to the enforcement of creditors' rights and general principles of equity
(regardless of whether such enforcement is considered in an action of law or of
equity).
Section VI.16. Subsidiaries. Neither Borrower has any Subsidiaries
other than those listed on Schedule 3 hereto, and Schedule 3 (a) designates each
Material Subsidiary as of the Closing Date and the percentage of the total
assets of the Borrowers and the Subsidiaries that the assets of such
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Material Subsidiary comprises, and (b) sets forth the jurisdiction of
incorporation of each Subsidiary and the percentage of such Borrower's or any
Subsidiary's ownership of the outstanding voting stock or partnership interests
of each Subsidiary.
Section VI.17. Compliance with Agreements. Neither any Borrower nor any
Subsidiary is in default in the performance, observance, or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instruments material to its business to which it is a party, except any such
defaults which individually or in the aggregate would not have a Material
Adverse Effect.
Section VI.18.Environmental Matters. To the knowledge of a Responsible
Officer of each Borrower, except as disclosed on Schedule 4 hereto, (a) all
facilities and property (including underlying groundwater) owned or leased by
any Borrower or any of the Subsidiaries have been, and continue to be, in
compliance with all Environmental Laws, the noncompliance by the Borrowers and
the Subsidiaries with which, individually or in the aggregate for all such
noncompliance, would be reasonably likely to have a Material Adverse Effect; (b)
there are no pending, unresolved or threatened Environmental Actions which
(individually or in the aggregate for all such Environmental Actions) would be
reasonably likely to have a Material Adverse Effect; (c) there have been no
Releases of Hazardous Materials at, on or under any property now or previously
owned or leased by any Borrower or any of the Subsidiaries that, singularly or
in the aggregate, have had, have, or may reasonably be expected to have, a
Material Adverse Effect; (d) the Borrowers and the Subsidiaries have been issued
and are in compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters that are necessary or
desirable for their businesses, which failure or failures so to comply
(individually or in the aggregate) would be reasonably likely to have a Material
Adverse Effect; (e) no property now or previously owned or leased by any
Borrower or any of the Subsidiaries is listed or proposed for listing (with
respect to owned property only) on the National Priorities List pursuant to
CERCLA, on the CERCLIS (as defined in CERCLA) or on any similar state list of
sites requiring investigation or cleanup, except with respect to cleanup
obligations that would not be reasonably likely to have a Material Adverse
Effect; and (f) no conditions exist at, on or under any property now or
previously owned, leased or operated by any Borrower or any of the Subsidiaries
which, with the passage of time, or the giving of notice or both, would give
rise to liability under any Environmental Law, which liability or liabilities
(individually or in the aggregate) would be reasonably likely to have a Material
Adverse Effect.
Section VI.19. Solvency. No Borrower or Guarantor is, or after giving
effect to the transactions contemplated in the Loan Documents will be, insolvent
(as that term is defined in 11 U.S.C. ss. 101 or applicable law) as of the
Closing Date or as of the date any such Guarantor executes a Guaranty Agreement
after the Closing Date as required by this Agreement. The obligations incurred
by the Borrowers and the Guarantors under this Agreement and the other Loan
Documents are not voidable obligations under 11 U.S.C. ss. 548 or under any
applicable state law regarding fraudulent transfers, fraudulent conveyances, or
fraudulent incurrence of obligations. The foregoing representations are
supported by the internal projections and forecasts of the Borrowers and the
Subsidiaries.
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Section VI.20. Year 2000 Compliance. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of (i) the
Borrowers' and the Subsidiaries' computer systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrowers' and the Subsidiaries' systems interface) and the testing of
all such systems and equipment, as so reprogrammed, will be completed by
September 30, 1999. The cost to the Borrowers and the Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to the Borrowers and the Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default, an Event of Default or a Material Adverse Effect. To the
knowledge of a Responsible Officer of each Borrower, except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrowers and their
Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the
Borrowers and the Subsidiaries to conduct their business without Material
Adverse Effect.
ARTICLE VII
Affirmative Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, each
Borrower will perform and observe the following affirmative covenants, unless
the Required Banks (or Administrative Agent with the consent of the Required
Banks) shall otherwise consent in writing:
Section VII.1. Reporting Requirements. The Borrowers will furnish to
the Administrative Agent and each Bank:
(a) Annual Financial Statements. As soon as practicable and
in any event within 95 days after the end of each fiscal year of Global
, consolidated statements of income and cash flows and a consolidated
statement of stockholders' equity of Global and its Subsidiaries for
such year, and a consolidated balance sheet of the Global and its
Subsidiaries as at the end of such year, in each case setting forth in
comparative form corresponding consolidated figures from the preceding
annual audit, to be in reasonable detail and satisfactory in form to
the Administrative Agent and audited and certified by, and accompanied
by the unqualified opinion of, Price Waterhouse LLP or another firm of
independent certified public accountants of recognized standing
satisfactory to the Administrative Agent to the effect that such report
has been prepared in accordance with GAAP and presents fairly the
consolidated financial condition and results of operations of Global
and its Subsidiaries at the date and for the periods indicated therein;
(b) Quarterly Financial Statements. As soon as practicable
and in any event within 50 days after July 31, 1998 and thereafter
within 50 days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year of Global, consolidated
statements of income, stockholders' equity and cash flows of Global and
its
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Subsidiaries for the period from the beginning of the current fiscal
year to the end of such quarterly period, and a consolidated balance
sheet of Global and its Subsidiaries as at the end of such quarterly
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and satisfactory in form to the Administrative Agent and
certified by an authorized financial officer of Global, to have been
prepared in accordance with GAAP and to fairly and accurately present
the financial condition and results of operations of Global and its
Subsidiaries, on a consolidated basis, subject to changes resulting
from year-end adjustments;
(c) Compliance Certificate; Certificate of No Default.
(i) Together with each delivery of financial
statements required by clauses (a) and (b) above, a Compliance
Certificate demonstrating (with computations in reasonable
detail) compliance by the Borrowers and the Subsidiaries with
the provisions of this Agreement and certifying as to the
other matters specified in the form of Compliance Certificate
attached hereto as Exhibit "D" and stating that there exists
no Default or Event of Default, or, if any Default or Event of
Default exists, specifying the nature and period of existence
thereof and what action the Borrowers propose to take with
respect thereto, and
(ii) together with each delivery of financial
statements required by clause (a) above, a certificate of such
accountants stating that, in making the audit necessary for
their report on such financial statements, they have obtained
no knowledge of any Default or Event of Default, or, if they
have obtained knowledge of any Default or Event of Default,
specifying the nature and period of existence thereof.
(d) Notice of Litigation, Etc.. As soon as possible, and in
any event within five (5) days after a Responsible Officer obtains
knowledge or becomes aware of any of the following, a written notice
setting forth the details thereof and the action that the Borrowers and
the Subsidiaries have taken, are taking, or propose to take with
respect thereto:
(i) Any and all actions, suits and proceedings
before any Governmental Authority or arbitrator affecting
either Borrower or any Subsidiary which would be required to
be disclosed under the Securities Act of 1933 or the
Securities Exchange Act of 1934; and
(ii) The receipt by any Borrower or any Subsidiary of
notice of any violation of any law, rule, regulation, order,
or decree of any Governmental Authority or arbitrator,
including but not limited to any Environmental Law, or any
license or permit, or any alleged claim or liability under any
Environmental Law, which individually or collectively with
other such violations or claims would reasonably be expected
to have a Material Adverse Effect.
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(e) Proxy Statements, Etc. Promptly upon transmission thereof
copies of all such financial statements, proxy statements, notices and
reports as any Borrower or any Subsidiary shall send to its public
stockholders and copies of all registration statements (without
exhibits) and all reports which any Borrower or any Subsidiary files
with the Securities and Exchange Commission (or any governmental body
or agency succeeding to the functions of the Securities and Exchange
Commission);
(f) Other Reporting Requirements.
(i) promptly upon receipt thereof a copy of each
other material report submitted to the audit and finance
committee of any Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special
audit made by them of the books of any Borrower or any
Subsidiary;
(ii) (A) promptly after the filing or receiving
thereof, copies of all material reports and notices which any
Borrower or any Subsidiary files under ERISA with the Internal
Revenue Service or the PBGC or the U.S. Department of Labor or
which any Borrower or any Subsidiary receives from such
corporation and (B) with reasonable promptness, notice of the
occurrence of a reportable event currently described under
clause (4), (7), (9) or (11) of Section 4043(c) ERISA;
(iii) with reasonable promptness, such other
information respecting the condition or operations, financial
or otherwise, of any Borrower or any of the Subsidiaries as
the Administrative Agent may reasonably request; provided,
however, that prior to the occurrence of a Default or Event of
Default, the Borrowers and the Subsidiaries shall have no
obligation to furnish to the Administrative Agent information
regarding strategic plans and similar non-public
forward-looking information of any Borrower or any Subsidiary;
and
(iv) immediately after any Responsible Officer
obtains knowledge of an Event of Default or a material
Default, a certificate of an officer of each Borrower who is
the chief executive officer, chief financial officer, chief
accounting officer, treasurer or director of treasury
operations specifying the nature and period of existence
thereof and what action the Borrowers propose to take with
respect thereto.
Section VII.2. Inspection of Property and Corporate Books and Records.
Each Borrower will permit, and will cause each Subsidiary to permit, any Person
designated by the Administrative Agent, at the expense of the Borrowers, to
visit and inspect any of the properties of the Borrowers and the Subsidiaries,
to examine the corporate books and financial records of the Borrowers and the
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
business, operations, condition, affairs, finances and accounts of any Borrower
or any of the Subsidiaries with the officers, employees, and independent public
accountants of the Borrowers and the Subsidiaries, all at such reasonable times
and as often as the Administrative Agent may reasonably request.
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Section VII.3. Covenant to Secure Notes Equally. Each Borrower will, if
it or any Material Subsidiary shall create or assume any Lien upon any of its
property or assets, whether now owned or hereafter acquired, other than Liens
permitted by the provisions of Section 8.2, make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Debt thereby secured so long as any such other
Debt shall be so secured.
Section VII.4. Compliance with Laws. Each Borrower will comply, and
will cause each of the Subsidiaries to comply, and in respect to ERISA will
cause each of its ERISA Affiliates to comply, with all applicable laws, rules,
regulations and orders except, in any such case, where failure to comply would
not be reasonably expected to have a Material Adverse Effect.
Section VII.5. Corporate Existence. Each Borrower will maintain, and
will cause each of the Subsidiaries to maintain, its corporate existence and all
material licenses and permits necessary for the conduct of its business, except
where the failure to so maintain such licenses and permits would not reasonably
be expected to have a Material Adverse Effect.
Section VII.6. Insurance. Each Borrower will maintain, and will cause
each of the Subsidiaries to maintain, insurance in amounts, and against such
liabilities and hazards, and with such carriers, as is customarily maintained in
accordance with prudent business practice by companies operating similar
businesses and such other insurance as required by law, and upon written request
by the Administrative Agent, will deliver a certificate specifying the details
of such insurance.
Section VII.7. Taxes and Claims. Each Borrower will, and will cause
each of the Subsidiaries to, pay when due all taxes and all obligations owed by
it to vendors, suppliers and other Persons for work, labor and materials, other
than such taxes and obligations which are being contested in good faith and for
which adequate reserves are established in accordance with GAAP.
Section VII.8. Maintenance. Each Borrower will maintain, and will cause
each of the Subsidiaries to maintain, their properties in good repair and
working order such that the absence of which would not be reasonably expected to
have a Material Adverse Effect.
Section VII.9. Keeping Books and Records. Each Borrower will maintain,
and will cause each of the Subsidiaries to maintain, proper books of record and
account in which full, true, and correct entries in conformity with GAAP shall
be made of all dealings and transactions in relation to its business and
activities.
Section VII.10. Compliance With Agreements. Each Borrower will comply,
and will cause each of the Subsidiaries to comply, in all material respects with
all agreements, contracts, and instruments binding on it or affecting its
properties or business, except where failure to comply would not be reasonably
expected to have a Material Adverse Effect.
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Section VII.11. Further Assurances. Each Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and instruments
and take such further action as may be reasonably requested by the
Administrative Agent to carry out the provisions and purposes of this Agreement,
the Notes, the Guaranty Agreement and the other Loan Documents. Without in any
way limiting the foregoing, if at any time the total assets (determined in
accordance with GAAP but excluding stock of the Subsidiaries) of the Borrowers
and the Guarantors equal less than 80% of the total assets of the Borrowers and
the Subsidiaries on a consolidated basis in accordance with GAAP, the
Administrative Agent or the Required Banks may reasonably request the Borrowers
to cause one or more additional Subsidiaries (which Subsidiary or Subsidiaries
shall then be deemed to be Material Subsidiaries) to execute and deliver to the
Administrative Agent a Guaranty Agreement in form and substance satisfactory to
the Administrative Agent, pursuant to which each such Subsidiary guarantees the
prompt payment and performance in full of all of the Obligations and
subordinates any and all Debt of any Borrower or any Subsidiary to such
Guarantor, together with such legal opinions, corporate and partnership
documents and certificates as Administrative Agent or its counsel may require in
connection therewith.
ARTICLE VIII
Negative Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, each
Borrower will perform and observe the following negative covenants, unless the
Required Banks (or the Administrative Agent with the consent of the Required
Banks) shall otherwise consent in writing:
Section VIII.1. Subsidiary Debt. Global will not permit GPX Corp. or
any of its other Subsidiaries to incur, create, assume, or permit to exist, any
Debt except:
(a) Debt of GPX Corp. under this Agreement;
(b) the obligations of the Guarantors under the Guaranty
Agreements;
(c) Debt existing on the date hereof and described on
Schedule 2 hereto, together with any refinancings,
extensions and renewals (but not increases above
committed amounts thereof as of the Closing Date)
thereof;
(d) Debt owed to a Borrower or a wholly-owned Subsidiary that
is a Guarantor; and
(e) Debt other than Debt permitted under subsections (a), (b)
(c) or (d) of this Section 8.1, so long as, after giving
effect thereto, the aggregate amount of Priority Debt
(excluding Priority Debt described in subsection (c) of
this Section 8.1) does not at any time exceed the sum of
(i) 17.5% of Consolidated Tangible Net Worth, plus (ii)
the principal amount of any
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existing Debt listed on Schedule 2B hereof which is
repaid after the Closing Date (which shall include with
respect to the Aken Debt the maximum committed amount of
such indebtedness as of the Closing Date regardless of
the principal amount outstanding on the Closing Date),
plus (iii) the face amount of all outstanding commercial
letters of credit issued for the account of a Borrower or
a Subsidiary, up to an aggregate amount of $10,000,000.
Section VIII.2. Limitation on Liens. The Borrowers will not and will
not permit any of the Subsidiaries to create, incur, assume, or suffer to exist
any Lien on their property or assets except for:
(a) Liens for property taxes or Liens securing obligations
owed to mechanics and materialmen provided such taxes or obligations
are not in violation of Section 7.7;
(b) Liens resulting from judgments which a Borrower is
contesting in good faith by appropriate proceedings, provided that
adequate book reserves shall have been made for such judgment and such
Liens are stayed by appropriate proceedings;
(c) Liens incidental in the ordinary course of any Borrower's
business which do not secure Debt and do not materially impair or
detract from the value of such property or asset;
(d) Liens created to secure Debt incurred or assumed to pay
all or any part of the purchase price of, or constituting a lease of,
fleet vehicles or office equipment purchased or leased by a Borrower or
a Subsidiary, provided that (i) any such Lien attaches solely to the
vehicles or office equipment so purchased or leased, (ii) the principal
amount of the obligations secured by any such Lien shall at no time
exceed the purchase price of such vehicles or office equipment, (iii)
recourse for the obligations secured by any such Lien shall be limited
solely to the vehicles or office equipment so purchased or leased, and
(iv) any such Lien shall be created contemporaneously with the purchase
or lease of such vehicles or office equipment;
(e) Liens securing Debt of a Subsidiary to a Borrower,
provided that such Liens secure the Obligations equally and ratably
with all other Debt secured thereby pursuant to documentation
reasonably satisfactory to the Agent and the Required Banks.
(f) Liens in existence on the Closing Date and either (i)
permitted by clauses (a) through (e) of this Section 8.2, or (ii)
listed on Schedule 5 hereto;
(g) Liens securing Debt incurred to pay the purchase price or
costs of construction of fixed assets or assumed as part of the
purchase price of fixed assets, or Liens on fixed assets of a
Subsidiary securing Debt of such Subsidiary where such Liens and Debt
existed at the time such Subsidiary initially became a Subsidiary (and
such Liens and Debt were not created in contemplation of such
Subsidiary becoming a Subsidiary) provided (i) in
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the case of such Liens securing Debt incurred to pay the purchase price
or costs of construction, the Lien attaches solely to the fixed assets
so purchased or constructed, and the Lien is created not later than 270
days after the purchase of or completion of construction of such fixed
assets; (ii) in the case of such Liens and Debt existing at the time
such Subsidiary initially became a Subsidiary, the Lien attaches solely
to the fixed assets which were so encumbered, and secures solely the
Debt so secured, at the time such Subsidiary initially became a
Subsidiary; (iii) at the time of the creation of such Liens, the Debt
secured by such Liens does not exceed the purchase price or costs of
construction of such fixed assets; (iv) the aggregate amount of Debt
secured by Liens permitted by this clause (g) does not at any time
exceed the remainder of (A) 35% of Consolidated Tangible Net Worth
minus (B) the aggregate amount of Priority Debt; (v) the incurrence of
such Debt is economically beneficial to the Borrowers; and (vi) after
giving effect to the Debt secured by such Liens, no Default or Event of
Default shall exist;
(h) Other Liens, provided the aggregate amount of Priority
Debt does not at any time exceed the amount set forth in Section
8.1(e).
Section VIII.3. Asset Dispositions. The Borrowers will not and will not
permit the Subsidiaries to make any Asset Disposition, other than in the
ordinary course of business, unless:
(a) Such Borrower or such Subsidiary receives full, fair and
reasonable consideration at the time of such Asset Disposition at least
equal to the fair market value of such asset being disposed; and
either:
(i) the aggregate book value of all Asset
Dispositions during any fiscal year of Global does not exceed
15% of the book value of consolidated assets of the Borrowers
and their Subsidiaries as of the end of the immediately
preceding fiscal year of Global, or
(ii) an amount equal to the proceeds attributable to
or realized from the portion of the aggregate book value of
Asset Dispositions in any fiscal year of Global that exceeds
15% of the book value of consolidated assets of the Borrowers
and the Subsidiaries as of the end of the immediately
preceding fiscal year of Global (the "Excess Sale Proceeds")
is applied by any Borrower or any Subsidiary within 180 days
after the applicable Asset Disposition to: (A) acquire
productive assets consistent with the general nature of the
business of the Borrowers and the Subsidiaries, taken as a
whole; or (B) invest in assets allowed for in clauses (i)
through (ix) of the definition of Restricted Investments;
provided, any Excess Sale Proceeds invested in any Guarantor
as allowed for in clause (i) of the definition of Restricted
Investments shall be applied by such Guarantor in accordance
with this clause (ii); provided, further, any Excess Sale
Proceeds invested in assets allowed for in clauses (iii)
through (ix) of the definition of Restricted Investments shall
remain Excess Sale Proceeds subject to the restrictions set
forth in this clause (ii), and shall remain continuously
invested in assets allowed for in
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clauses (iii) through (ix) of the definition of Restricted
Investments or otherwise be immediately applied as set forth
in subclauses (A), (B) or (C) of this clause (ii); (C) reduce
the outstanding Obligations or other Debt of the Borrowers or
the Subsidiaries; provided, however, that any such reduction
in Debt other than the Obligations resulting from Excess Sale
Proceeds shall be made pro rata with all Debt which is pari
passu with the Obligations (including as a voluntary
prepayment of the Obligations) outstanding; or (D) at any time
which the ratio of Consolidated Funded Debt to Consolidated
EBITDA is less than 3.50 to 1.00, purchase or redeem any
shares of their respective stock or other equity interests,
provided that any such purchase or redemption does not
otherwise cause a Default or Event of Default and provided
further that such ratio shall not at any time exceed the
applicable ratio specified in Section 9.3; or
(b) such Asset Disposition is the disposition of property
within 270 days following the date such property is acquired or
constructed by any Borrower or any Subsidiary, and any Borrower or any
Subsidiary leases, as lessee, the same property simultaneously with
such Asset Disposition; or
(c) such Asset Disposition is made to a Borrower or a
Subsidiary which is a Guarantor hereunder.
As used herein, "Asset Disposition" means any sale, lease,
transfer, exchange or other disposition, including any disposition by
means of a merger, consolidation or similar transaction (or series of
related sales, leases, transfers, exchanges or dispositions) of shares
of capital stock of a Subsidiary, of property or assets (including any
interests therein) by any Borrower or any Subsidiary. For purposes of
clause (a) above, the "book value" of any Asset Disposition of property
or assets not wholly-owned by the Borrowers and Subsidiaries shall be
expressly limited to the Borrowers' and Subsidiaries' interest in such
property or assets.
Section VIII.4. Merger and Consolidations. The Borrowers will not, and
will not permit any Subsidiary to, merge or consolidate with any other Person,
or sell, lease, transfer or otherwise dispose of all or a substantial part of
its assets (other than as permitted by Section 8.3), except that,
(a) any Subsidiary which is a Guarantor may merge with a
Borrower or another Subsidiary which is a Guarantor;
(b) any Subsidiary which is not a Guarantor may merge with
any other Subsidiary which is not a Guarantor; and
(c) either Borrower or any Subsidiary may merge with any
other Person if (i) at the time of such merger after giving effect
thereto no Default or Event of Default shall exist, (ii) in the case of
a merger of a Borrower, such Borrower shall be the surviving entity of
such merger, (iii) in the case of a merger of a Subsidiary which is a
Guarantor with a Person other than the Borrower or a Guarantor, (A) the
surviving entity shall be a Subsidiary and shall
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exist under the laws of any state of the United States of America, (B)
the surviving entity shall expressly assume, by written agreement, all
of the obligations of such Guarantor under the Guaranty Agreement and
(C) the surviving entity has a net worth of greater than zero at the
time of such merger, (iv) in the case of a merger of a Subsidiary which
is not a Borrower or a Guarantor with a Person other than a Borrower or
a Guarantor, the surviving entity shall be a Subsidiary, and (v) the
total cash and non-cash consideration paid and Debt assumed or incurred
by any Borrower or any Subsidiary in connection with all such mergers
shall not exceed the amount permitted by Section 8.5.
Section VIII.5. Acquisitions. Without the prior written consent of the
Required Banks (which consent will not be unreasonably withheld), the Borrowers
will not, and (except for any such transaction between Subsidiaries which are
Guarantors hereunder) will not permit any of the Subsidiaries to, purchase or
otherwise acquire (whether by merger or otherwise) all or substantially all the
assets of, or the equity interests in, any Person, unless, immediately before
such purchase or acquisition and after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing; provided, however, that,
at any time the ratio of Consolidated Funded Debt to Consolidated EBITDA is
greater than 3.75 to 1.00, the total cash and non-cash consideration paid and
Debt assumed or incurred in connection with all such acquisitions made during
the period from the Closing Date through such time of determination shall not
exceed $40,000,000 in the aggregate, provided further that such ratio shall not
at any time exceed the applicable ratio specified in Section 9.3. If the
Borrowers request in writing that the Required Banks consent to any acquisition
not otherwise permitted under this Section 8.5, the Required Banks agree to
respond to any such request within 14 days after the time such request is made
and reasonable supporting documentation and information has been provided to the
Banks.
Section VIII.6. Transactions with Affiliates. Other than transactions
among the Borrowers and the Guarantors, the Borrowers will not, and will not
permit any Subsidiary to, enter into any transaction or arrangement (including,
without limitation, the purchase, sale, or exchange of property or the rendering
of any service) with any Affiliate of such Borrower or such Subsidiary, except
in the ordinary course of and pursuant to the reasonable requirements of such
Borrower's or such Subsidiary's business and upon fair and reasonable terms
which terms when considered together for such transaction are no less favorable
than available in a comparable arms-length transaction with a Person not an
Affiliate of such Borrower or such Subsidiary.
Section VIII.7. Restricted Payments. (a) Except as permitted in Section
8.3 hereof, the Borrowers will not, and will not permit any of the Subsidiaries
to, purchase or redeem any shares of their respective stock or other equity
interests; (b) the Borrowers will not, and will not permit any of its
Subsidiaries to, declare, pay, or make any dividend or distribution (in cash,
property, or obligations) on any shares of any class of its own capital stock
(now or hereafter outstanding) or other equity interests (now or hereafter
outstanding), or on any warrants, options, or other rights with respect to any
shares of any class of its own capital stock (now or hereafter outstanding) or
other equity interests (now or hereafter outstanding) (other than dividends or
distributions payable solely in its stock, or warrants to purchase its stock, or
split-ups or reclassifications of its stock into additional or other shares of
its stock, so long as such transactions do not involve the incurrence of Debt)
nor will it apply, or permit any of the Subsidiaries to apply, any of their
respective funds,
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properties or assets to the purchase, redemption, sinking fund or other
retirement of any shares of any class of its own capital stock (now or hereafter
outstanding) or other equity interests (now or hereafter outstanding); and (c)
the Borrowers will not, and will not permit any of the Subsidiaries to, set
aside any funds or make any deposit for any of the foregoing purposes; provided,
however, (i) the Borrowers may declare, pay and make cash dividends and
distributions and redeem and purchase its stock and equity interests, and set
aside funds for such purposes, in each case so long as no Default or Event of
Default shall have occurred and be continuing immediately prior thereto or will
result therefrom and (ii) any Subsidiary may pay dividends to a Borrower or any
Guarantor.
Section VIII.8. Nature of Business. The Borrowers will not, and will
not permit any of the Subsidiaries to, engage in any business, if as a result,
when taken as a whole, the general nature of the business of the Borrowers and
the Subsidiaries would be substantially changed from the business at the Closing
Date.
Section VIII.9. Restricted Investments. The Borrowers will not make, or
permit any Subsidiary to make, any Restricted Investment.
ARTICLE IX
Financial Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrowers will observe and perform the following financial covenants, unless the
Required Banks (or the Administrative Agent with the consent of the Required
Banks) shall otherwise consent in writing:
Section IX.1. Minimum Consolidated Net Worth. The Borrowers will not
permit the Consolidated Net Worth to be less than the sum of (a) $296,000,000,
plus (b) for the two-month period ending September 30, 1998 and thereafter for
each fiscal quarter of the Borrowers ended through the date of determination,
beginning with the fiscal quarter ending December 31, 1998, 25% of the positive
Consolidated Net Income, after provision for income taxes, of the Borrowers and
the Subsidiaries for such two-month period and such quarter, plus (c) 100% of
the Net Proceeds received by the Borrowers from any issuance, sale or other
disposition of any shares of capital stock or other equity securities of the
Borrowers of any class (or any securities convertible or exchangeable for any
such shares, or any rights, warrants, or options to subscribe for or purchase
any such shares). Notwithstanding anything contained herein to the contrary, for
purposes of calculating Consolidated Net Worth under this Section 9.1 only, (a)
the after-tax effects, up to an aggregate amount of $16,000,000, of any charges
which are incurred by the Borrowers as a result of closing any manufacturing
facility owned by Harbison-Walker Refractories Company, a Subsidiary of Global,
shall reduce the required Consolidated Net Worth, and (b) the after-tax effects
of any write-down of goodwill of Corrosion IP Corp., up to an aggregate amount
of $33,000,000, shall reduce the required Consolidated Net Worth.
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Section IX.2 Interest Coverage Ratio. The Borrowers will maintain or
cause to be maintained, as of the end of each fiscal quarter of the Borrowers
for the most recent four (4) fiscal quarters then ended, an Interest Coverage
Ratio of not less than 2.0 to 1.0.
Section IX.3. Funded Debt/EBITDA Ratio. The Borrowers will maintain or
cause to be maintained, as of the end of each fiscal quarter of the Borrowers
for the most recent four (4) fiscal quarters then ended, a ratio of Consolidated
Funded Debt to Consolidated EBITDA of not greater than the ratio set forth below
during the applicable time period set forth below:
Time Period Ratio
----------- -----
From the Closing Date through the first Anniversary 4.25 to 1.00
Date
From the first Anniversary Date through February 29, 3.75 to 1.00
2000
From February 29, 2000 through the second 3.50 to 1.00
Anniversary Date
From the second Anniversary Date and thereafter 3.25 to 1.00
Section IX.4. Capital Expenditures. The Borrowers will not permit the
aggregate Capital Expenditures of the Borrowers and the Subsidiaries to exceed
$100,000,000 during any fiscal year while the ratio of Consolidated Funded Debt
to Consolidated EBITDA is at any time greater than 3.25 to 1.00, provided that
such ratio shall not at any time exceed the applicable ratio specified in
Section 9.3.
ARTICLE X
Default
Section X.1. Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) Either Borrower fails to pay any installment of principal
on any of the Notes when due or fails to pay any other portion of the
Obligations (other than fees and interest on the Notes) when due.
(b) Either Borrower fails to pay any fees or any interest on
any of the Notes when due and such failure continues for a period of
five (5) calendar days.
(c) Any representation or warranty made or deemed made by
either Borrower, any Subsidiary, or any Obligated Party (or any of
their respective officers) in any Loan
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Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to
have been made.
(d) Either Borrower or any Obligated Party shall fail to
perform, observe, or comply with any of the covenants contained in
Article IX hereof.
(e) Either Borrower or any Obligated Party shall fail to
perform, observe, or comply with any of the covenants contained in
Article VIII hereof, and such failure shall continue for five (5)
calendar days.
(f) Either Borrower or any Obligated Party shall fail to
perform, observe, or comply with any agreement, covenant, term or
condition contained in this Agreement (other than those specified in
subsections (a) through (e) above), and such failure shall not be
remedied within 30 days after any Responsible Officer obtains actual
knowledge thereof.
(g) Either Borrower, any Obligated Party or any other
Subsidiary shall commence a voluntary proceeding seeking liquidation,
reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency, or other similar law now or hereafter
in effect in any jurisdiction or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official of its or a
substantial part of its property or shall consent to any such relief or
to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it or shall make
a general assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any corporate or
partnership action to authorize any of the foregoing.
(h) Any involuntary proceeding shall be commenced against
either Borrower, any Obligated Party or any other Subsidiary seeking
liquidation, reorganization, or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar law now or
hereafter in effect in any jurisdiction or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official for
it or a substantial part of its property, and such involuntary
proceeding shall remain undismissed and unstayed for a period of 60
days.
(i) (i) Either Borrower, any Obligated Party or any other
Subsidiary defaults (whether as primary obligor or as guarantor or
other surety) in any payment of principal of or interest on any Debt
(other than the Obligations and the Aken Debt) beyond any period of
grace provided with respect thereto; or (ii) either Borrower, any
Obligated Party or any other Subsidiary fails to perform or observe any
other agreement, term or condition contained in any agreement under
which any such Debt is created (or if any other event thereunder or
under any such agreement shall occur and be continuing) and the effect
of such failure or other event is to cause or permit the holder or
holders of such Debt (or any Person acting on behalf of such holder or
holders) to cause such Debt to become due (or to be repurchased by
either Borrower, any Obligated Party or any other Subsidiary) prior to
any stated maturity, provided that if any such failure or other event
shall be waived or cured (as evidenced by a
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writing from such holder or holders of such Debt or any Person acting
on behalf of such holder or holders) then, to the extent of such waiver
or cure, the Event of Default hereunder by reason of such failure or
other event shall be deemed likewise to have been thereupon waived or
cured except to the extent such failure or other event otherwise
constitutes a Default or Event of Default under any provision of this
Agreement other than this Section 10.1(i); provided that the aggregate
amount of all Debt as to which such a payment default shall occur and
be continuing or such a failure or other event permitting or causing
acceleration (or resale to any Borrower or any Subsidiary) shall occur
and be continuing exceeds $10,000,000.
(j) One or more final judgments or orders in an aggregate
amount in excess of $15,000,000 is rendered against either Borrower,
any Obligated Party or any other Subsidiary (exclusive of judgment
amounts to the extent covered by insurance, subject to applicable
deductibles or retentions, except where the insurer is contesting
coverage in respect of such judgment), and either (i) any creditor has
commenced execution of such judgment or order, or (ii) within 30 days
after entry thereof such judgment is not discharged or execution
thereof stayed pending appeal, or within 30 days after the expiration
of any such stay, such judgment is not discharged.
(k) A Reportable Event occurs with respect to any Plan,
excluding events currently described in clauses (2), (3), (4), (7),
(8), (9), (11), (12) and (13) of Section 4043(c) of ERISA.
(l) A complete or partial withdrawal under Section 4201 or
4204 of ERISA from a Multiemployer Plan or a reorganization,
insolvency, or termination of any Multiemployer Plan or an assertion by
a Multiemployer Plan of withdrawal liability against either Borrower,
any Obligated Party, any Subsidiary or any ERISA Affiliate occurs and
such event or condition, together with all other such events or
conditions, if any, have subjected or could in the reasonable opinion
of the Required Banks subject such Borrower, such Obligated Party or
any Subsidiary to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which individually or in the aggregate exceed or could reasonably be
expected to exceed $5,000,000.
(m) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
either Borrower, any Obligated Party or any other Subsidiary or any of
their respective shareholders, or either Borrower, any Obligated Party
or any other Subsidiary shall deny that it has any further liability or
obligation under any of the Loan Documents.
(n) Either Borrower, any Obligated Party or any other
Subsidiary, or any of their properties, revenues, or assets, shall
become subject to an order of forfeiture, seizure, or divestiture which
could have a Material Adverse Effect, and the same shall not have been
discharged within 30 days from the date of entry thereof.
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(o) Any Material Adverse Effect shall occur.
(p) The RCSA Loan is not paid in full on or before the date
specified in Section 2.8.
Section X.2. Remedies Upon Default. If any Event of Default shall occur
and be continuing, the Administrative Agent may, with the consent of the
Required Banks (and if directed by the Required Banks, shall), do any one or
more of the following: (a) declare the Obligations or any part thereof to be
immediately due and payable, and the same shall thereupon become immediately due
and payable, without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by each Borrower, (b) terminate the Commitments without notice to either
Borrower, (c) reduce any claim to judgment, and (d) exercise any and all rights
and remedies afforded by the laws of the State of Texas or any other
jurisdiction, by any of the Loan Documents, by equity, or otherwise; provided,
however, that upon the occurrence of an Event of Default under Section 10.1(g)
or (h), the Commitments of the Banks shall automatically terminate, and the
Obligations shall become immediately due and payable without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by each Borrower.
Section X.3. Performance by the Administrative Agent. If either
Borrower shall fail to perform any covenant or agreement contained in any of the
Loan Documents, the Administrative Agent may perform or attempt to perform such
covenant or agreement on behalf of such Borrower. In such event, each Borrower
agrees to, at the request of the Administrative Agent, promptly pay any amount
expended by the Administrative Agent in connection with such performance or
attempted performance to the Administrative Agent, together with interest
thereon at the Default Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that neither the Administrative Agent nor any
Bank shall have any liability or responsibility for the performance of any
obligation of either Borrower under this Agreement or any other Loan Document.
Secton X.4. Setoff. If an Event of Default shall have occurred and be
continuing, each Bank shall have the right to set off and apply against the
Obligations in such manner as such Bank may determine, at any time and without
notice to either Borrower, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from such Bank to such Borrower whether or not the Obligations are then due.
Each Bank agrees to promptly notify the Administrative Agent after any such
setoff and application. The rights and remedies of the Banks hereunder are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Banks may have.
ARTICLE XI
The Agents
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Section XI.1. Appointment, Powers and Immunities. In order to expedite
the various transactions contemplated by this agreement, the Banks hereby
irrevocably appoint and authorize (a) Chase to act as their Administrative Agent
hereunder and under each of the other Loan Documents, and (b) The Chase
Manhattan Bank to act as their Auction Administration Agent hereunder and under
each of the other Loan Documents. Chase consents to such appointment and agrees
to perform the duties of the Administrative Agent as specified herein. The Chase
Manhattan Bank consents to such appointment and agrees to perform the duties of
the Auction Administration Agent as specified herein. The Banks authorize and
direct the Administrative Agent and the Auction Administration Agent to take
such action in their name and on their behalf under the terms and provisions of
the Loan Documents and to exercise such rights and powers thereunder as are
specifically delegated to or required of such Agents for the Banks, together
with such rights and powers as are reasonably incidental thereto. The
Administrative Agent is hereby expressly authorized to act as the Administrative
Agent on behalf of itself and the other Banks:
(a) To receive on behalf of each of the Banks any payment of
principal, interest, fees or other amounts paid pursuant to this
Agreement and the Notes and to distribute to each Bank its pro rata
share of all payments so received as provided in this Agreement;
(b) To receive all documents and items to be furnished
under the Loan Documents;
(c) To act as nominee for and on behalf of the Banks
in and under the Loan Documents;
(d) To arrange for the means whereby the funds of the Banks
are to be made available to the Borrowers;
(e) To distribute to the Banks information, requests,
notices, payments, prepayments, documents and other items received from
the Borrowers, the other Obligated Parties, and other Persons;
(f) To execute and deliver to the Borrowers, the other
Obligated Parties, and other Persons, all requests, demands, approvals,
notices, and consents received from the Banks;
(g) To the extent permitted by the Loan Documents, to
exercise on behalf of each Bank all rights and remedies of Banks upon
the occurrence of any Event of Default; and
(h) To take such other actions as may be requested by
Required Banks.
Neither any Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or omitted
to be taken by any of them hereunder or otherwise in connection with this
Agreement or any of the other Loan Documents except for its or their own gross
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negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Administrative Agent and the Auction Administration
Agent, as applicable, (i) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the
Administrative Agent; (ii) shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Loan Documents, and shall
not by reason of this Agreement or any other Loan Document be a trustee or
fiduciary for any Bank; (iii) shall not be required to initiate any litigation
or collection proceedings hereunder or under any other Loan Document except to
the extent requested by Required Banks; (iv) shall not be responsible to the
Banks for any recitals, statements, representations or warranties contained in
this Agreement or any other Loan Document, or any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Loan Document, or for the value, validity, effectiveness,
enforceability, or sufficiency of this Agreement or any other Loan Document or
any other document referred to or provided for herein or therein or for any
failure by any Person to perform any of its obligations hereunder or thereunder;
(v) may consult with legal counsel (including counsel for the Borrowers),
independent public accountants, and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants, or experts; and (vi)
shall incur no liability under or in respect of any Loan Document by acting upon
any notice, consent, certificate, or other instrument or writing believed by it
to be genuine and signed or sent by the proper party or parties. As to any
matters not expressly provided for by this Agreement, the Agents shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by Required Banks, and such instructions of
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks; provided, however, that no Agent shall be required
to take any action which exposes such Agent to personal liability or which is
contrary to this Agreement or any other Loan Document or applicable law.
Section XI.2. Rights of Agents as Banks. With respect to their
Commitments, the Advances made by them and the Notes issued to them, each Bank
that is an Agent shall have the same rights and powers hereunder as any other
Bank and may exercise the same as though it were not acting as an Agent, and the
term "Bank" or "Banks" shall, unless the context otherwise indicates, include
each Bank that is an Agent in its individual capacity. Each Agent and its
Affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to, act as trustee under indentures of, provide merchant
banking services to, and generally engage in any kind of business with the
Borrowers, any of their Subsidiaries, any other Obligated Party, and any other
Person who may do business with or own securities of the Borrowers, any
Subsidiary, or any other Obligated Party, all as if it were not acting as the an
Agent and without any duty to account therefor to the Banks. Neither the
Documentation Agent nor the Co-Agent shall have any duties or responsibilities
under this Agreement or the other Loan Documents except in its role as a Bank.
Section XI.3. Sharing of Payments, Etc. If any Bank shall obtain any
payment of any principal of or interest on any Advance made by it under this
Agreement or payment of any other obligation under the Loan Documents then owed
by the Borrower or any other Obligated Party to such Bank, whether voluntary,
involuntary, through the exercise of any right of setoff, banker's lien,
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counterclaim or similar right, or otherwise, in excess of its pro rata share,
such Bank shall promptly purchase from the other Banks participations in the
Advances held by them hereunder in such amounts, and make such other adjustments
from time to time as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of the other Banks in accordance with its
pro rata portion thereof. To such end, all of the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess payment is thereafter rescinded or must
otherwise be restored. Each Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Bank so purchasing a
participation in the Advances made by the other Banks may exercise all rights of
setoff, banker's lien, counterclaim, or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Advances to the
Borrowers in the amount of such participation. Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower.
SECTION XI.4. INDEMNIFICATION. THE BANKS HEREBY AGREE TO INDEMNIFY EACH
AGENT FROM AND HOLD EACH AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 12.1 AND 12.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE
BORROWER UNDER SECTIONS 12.1 AND 12.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENTS, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY
BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH AGENT IN ANY WAY RELATING
TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO
BE TAKEN BY SUCH AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS;
PROVIDED, FURTHER, THAT NO BANK SHALL BE LIABLE TO AN AGENT FOR ANY PORTION OF
THE FOREGOING TO THE EXTENT CAUSED BY SUCH AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE BANKS THAT THE AGENTS SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS
AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, REASONABLE EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF ANY AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK
AGREES TO REIMBURSE EACH AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE
(CALCULATED ON THE BASIS OF THE COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET
EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY SUCH AGENT IN CONNECTION WITH
THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
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PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT SUCH AGENT IS NOT
REIMBURSED FOR SUCH EXPENSES BY THE BORROWERS.
Section XI.5. Independent Credit Decisions. Each Bank agrees that it
has independently and without reliance on any Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrowers (including without limitation due diligence
regarding year 2000 compliance) and decision to enter into this Agreement and
that it will, independently and without reliance upon any Agent or any other
Bank, and based upon such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Loan Documents. No Agent
shall be required to keep itself informed as to the performance or observance by
any Borrower or any Obligated Party of this Agreement or any other Loan Document
or to inspect the properties or books of any Borrower or any Obligated Party.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Administrative Agent hereunder or
under the other Loan Documents, no Agent shall have any duty or responsibility
to provide any Bank with any credit or other financial information concerning
the affairs, financial condition or business of any Borrower or any Obligated
Party (or any of their Affiliates) which may come into the possession of such
Agent or any of its Affiliates.
Section XI.6. Several Commitments. The Commitments and other
obligations of the Banks under this Agreement are several. The default by any
Bank in making an Advance in accordance with its Commitment shall not relieve
the other Banks of their obligations under this Agreement. In the event of any
default by any Bank in making any Advance, each nondefaulting Bank shall be
obligated to make its Advance but shall not be obligated to advance the amount
which the defaulting Bank was required to advance hereunder. In no event shall
any Bank be required to advance an amount or amounts which shall in the
aggregate exceed such Bank's Commitment. No Bank shall be responsible for any
act or omission of any other Bank.
Section XI.7 Successor Administrative Agent. Subject to the appointment
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving notice thereof to the
Banks, the Auction Administration Agent and the Borrowers and the Administrative
Agent may be removed at any time with or without cause by Required Banks. Upon
any such resignation or removal, Required Banks will have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by Required Banks and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent's giving of
notice of resignation or the Required Banks' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent, which shall be a commercial
bank organized under the laws of the United States of America or any state
thereof and having combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000). Upon the acceptance of its appointment as successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all rights, powers, privileges, immunities,
and duties of the resigning or removed Administrative Agent, and the resigning
or removed Administrative Agent shall be discharged from
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its duties and obligations under this Agreement and the other Loan Documents.
After any Administrative Agent's resignation or removal as Administrative Agent,
the provisions of this Article XI shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was the
Administrative Agent.
Section XI.8. Successor Auction Administrative Agent. Subject to the
appointment and acceptance of a successor Auction Administration Agent as
provided below, the Auction Administration Agent may resign at any time by
giving written notice thereof to the Banks, the Administrative Agent and the
Borrowers and the Auction Administration Agent may be removed at any time with
or without cause by the Required Banks. Upon any such resignation or removal,
Required Banks will have the right to appoint a successor Auction Administration
Agent. If no successor Auction Administration Agent shall have been so appointed
and shall have accepted such appointment within thirty (30) days after the
retiring Auction Administration Agent's of giving notice of resignation or the
Required Banks' removal of the retiring Auction Administration Agent, then the
retiring Auction Administration Agent may, on behalf of the Banks, appoint a
successor Auction Administration Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any state thereof
and having combined capital and surplus of at least One Hundred Million Dollars
($100,000,000). Upon the acceptance of its appointment as successor Auction
Administration Agent, such successor Auction Administration Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges,
immunities, and duties of the resigning or removed Auction Administration Agent,
and the resigning or removed Auction Administration Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any Auction Administration Agent's resignation or removal as
the Auction Administration Agent, the provisions of this Article XI shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was the Auction Administration Agent.
Section XI.9. Effect on Borrowers. The provisions set forth in this
Article XI shall not affect or limit the rights or obligations of the Borrowers
except to the extent expressly provided therein.
ARTICLE XII
Miscellaneous
Section XII.1. Expenses. The Borrowers hereby jointly and severally
agree to pay on demand: (a) all actual out-of-pocket costs and expenses of the
Agents in connection with the preparation, negotiation, execution, and delivery
of this Agreement and the other Loan Documents and any and all amendments,
modifications, renewals, extensions, and supplements thereof and thereto and the
syndication and administration of the transactions contemplated by the Loan
Documents, including, without limitation, the reasonable fees and expenses of
legal counsel for the Agents (not to exceed any applicable cap specified in the
Commitment Letter), (b) all costs and expenses of the Agents and the Banks, or
any of them, in connection with any Default or Event of Default and the
enforcement of this Agreement or any other Loan Document, including, without
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limitation, the reasonable fees and expenses of legal counsel for the Agents and
the Banks, or any of them, (c) all transfer, stamp, documentary, or other
similar taxes, assessments, or charges levied by any Governmental Authority in
respect of this Agreement or any of the other Loan Documents, and (d) all other
reasonable costs and expenses incurred by the Agents in connection with this
Agreement or any other Loan Document.
SECTION XII.2. INDEMNIFICATION. THE BORROWERS HEREBY JOINTLY AND
SEVERALLY AGREE TO INDEMNIFY EACH AGENT AND EACH BANK AND EACH AFFILIATE THEREOF
AND THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, ATTORNEYS,
AGENTS, AND PARTICIPANTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND
ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, INTEREST, EXPENSES (INCLUDING ATTORNEYS' FEES), AND AMOUNTS PAID IN
SETTLEMENT TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY
ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE,
ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY ANY BORROWER
OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY
OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF ANY BORROWER OR ANY SUBSIDIARY, (E)
ANY AND ALL TAXES, LEVIES, DEDUCTIONS, AND CHARGES IMPOSED ON ANY AGENT OR ANY
BANK, OR (F) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER
PROCEEDING, RELATING TO ANY OF THE FOREGOING; PROVIDED, HOWEVER THAT (I) NO
BORROWER SHALL HAVE ANY OBLIGATION TO PAY OR MAKE REIMBURSEMENT FOR ANY
SETTLEMENT OF LITIGATION WITH A THIRD PARTY TO WHICH SUCH BORROWER HAS NOT
CONSENTED (WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD), AND (II) NO PERSON
TO BE INDEMNIFIED HEREUNDER SHALL HAVE THE RIGHT TO BE INDEMNIFIED FOR ITS OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITING ANY PROVISION OF THIS
AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND REASONABLE
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM
THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section XII.3. Limitation of Liability. None of any Agent, any Bank, or
any Affiliate, officer, director, employee, attorney, or agent thereof shall
have any liability with respect to, and
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each Borrower hereby waives, releases, and agrees not to sue any of them upon,
any claim for any special, indirect, incidental, or consequential damages
suffered or incurred by such Borrower in connection with, arising out of, or in
any way related to, this Agreement or any of the other Loan Documents, or any of
the transactions contemplated by this Agreement or any of the other Loan
Documents. Each Borrower hereby waives, releases, and agrees not to sue any
Agent or any Bank or any of their respective Affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents.
Section XII.4. No Fiduciary Relationship. The relationship between each
Borrower and each Bank with respect to the Loan Documents and the transactions
governed thereby is solely that of debtor and creditor, and neither any Agent
nor any Bank has any fiduciary or other special relationship with any Borrower
with respect to the Loan Documents and the transactions governed thereby, and no
term or condition of any of the Loan Documents shall be construed so as to deem
the relationship between any Borrower and any Bank with respect to the Loan
Documents and the transactions governed thereby to be other than that of debtor
and creditor.
Section XII.5. No Waiver; Cumulative Remedies. No failure on the part
of any Agent or any Bank to exercise and no delay in exercising, and no course
of dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights and remedies
provided by law.
Section XII.6. Successors and Assigns
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. Neither Borrower shall be permitted to assign or transfer any
of its rights or obligations hereunder without the prior written
consent of the Administrative Agent and all of the Banks. Any Bank may
sell participations to one or more banks or other institutions in or to
all or a portion of its rights and obligations under this Agreement and
the other Loan Documents (including, without limitation, all or a
portion of its Commitments and the Advances owing to it); provided,
however, that (i) such Bank's obligations under this Agreement and the
other Loan Documents (including, without limitation, its Commitment)
shall remain unchanged, (ii) such Bank shall remain solely responsible
to the Borrowers for the performance of such obligations, (iii) such
Bank shall remain the holder of its Notes for all purposes of this
Agreement, (iv) the Borrowers shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents, and (v)
such Bank shall not sell a participation that conveys to the
participant the right to vote or give or withhold consents under this
Agreement or any other Loan Document, other than the right to vote upon
or consent to (A) any increase of such Bank's Commitment, (B) any
reduction of the
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principal amount of, or interest to be paid on, the Advances of such
Bank, (C) any reduction of any commitment fee or other amount payable
to such Bank under any Loan Document, or (D) any postponement of any
date for the payment of any amount payable in respect of the Advances
of such Bank. Such participants shall have no rights under the Loan
Documents, other than certain voting rights as provided above. Subject
to the following, each Bank may obtain (on behalf of its participants)
the benefits of Article IV with respect to all participations in its
part of the Obligations outstanding from time to time.
(b) Each Borrower and each of the Banks agree that any Bank
may at any time assign to one or more Eligible Assignees all, or a
proportionate part of all, of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation,
all or a portion of its Commitment and the same portion of the
Committed Advances owing to it); provided, however, that (i) each such
assignment shall be of a consistent, and not a varying, percentage of
all of the assigning Bank's rights and obligations under this Agreement
and the other Loan Documents (other than any Competitive Advances, any
Competitive Notes and any right to make Competitive Advances), (ii)
except in the case of an assignment of all of a Bank's rights and
obligations under this Agreement and the other Loan Documents, the
amount of the Commitment of the assigning Bank being assigned pursuant
to each assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less
than $5,000,000, and the amount of the Commitment of the assigning Bank
remaining after each such assignment shall in no event be less than
$5,000,000, and (iii) the parties to each such assignment shall execute
and deliver to the Administrative Agent for its acceptance and
recording in the Register (as defined below), an Assignment and
Acceptance, together with any Note or Notes subject to such assignment,
and a processing and recordation fee of $3,000.00. Upon such execution,
delivery, acceptance, and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall
be at least ten (10) Business Days after the execution thereof, or, if
so specified in such Assignment and Acceptance, the date of acceptance
thereof by the Administrative Agent, (x) the assignee thereunder shall
be a party hereto as a "Bank" and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and under the Loan Documents and (y) the Bank that is an
assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement and the other Loan Documents (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of a
Bank's rights and obligations under the Loan Documents, such Bank shall
cease to be a party thereto).
(c) By executing and delivering an Assignment and Acceptance,
the Bank that is an assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance,
such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability,
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genuineness, sufficiency, or value of the Loan Documents or any other
instrument or document furnished pursuant thereto; (ii) such assigning
Bank makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or any
Obligated Party or the performance or observance by any Borrower or any
Obligated Party of its obligations under the Loan Documents; (iii) such
assignee confirms that it has received a copy of the other Loan
Documents, together with copies of the financial statements referred to
in Section 6.2 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent or
such assignor or any other Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents; (v) such assignee confirms that
it is an Eligible Assignee; (vi) such assignee appoints and authorizes
the Administrative Agent and the Auction Administration Agent to take
such action as agent on its behalf and exercise such powers under the
Loan Documents as are delegated to each such Agent by the terms
thereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Bank.
(d) The Administrative Agent may maintain at its Principal
Office a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Banks and the Commitment of, and principal amount of
the Advances owing to, each Bank from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrowers, the Administrative
Agent, and the Banks may treat each Person whose name is recorded in
the Register as a Bank hereunder for all purposes under the Loan
Documents. The Register shall be available for inspection by any
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and assignee representing that it is an Eligible
Assignee, together with any Note or Notes subject to such assignment,
the Administrative Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit "H" hereto
and all requirements set forth in this Section have been satisfied, (i)
accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, if any, and (iii) give prompt
written notice thereof to the Borrowers. Within five (5) Business Days
after its receipt of such notice, the Borrowers, at their expense,
shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note or Notes, if any (x) a new Committed Note payable
to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance,
(y) if the assigning Bank has retained its Competitive Note, a new
Competitive Note to the order of the Eligible Assignee and, (z) if the
assigning Bank has retained a Commitment, a new Committed Note payable
to the order of the assigning Bank in an amount equal to the Commitment
retained
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by it hereunder (each such promissory note shall constitute a "Note"
for purposes of the Loan Documents). Such new Committed Notes shall be
in an aggregate face amount of the surrendered Committed Note, shall be
dated the effective date of such Assignment and Acceptance, and shall
otherwise be in substantially the form of Exhibit "A-1" hereto. Such
new Competitive Note, if any, shall be in the face amount of the Total
Commitment, shall be dated the effective date of such Assignment and
Acceptance, and shall otherwise be in substantially the form of Exhibit
"A-2" hereto.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrowers or their
Subsidiaries furnished to such Bank by or on behalf of any Borrower or
its Subsidiaries.
(g) Any Bank may at any time, without the consent of the
Borrower or the Administrative Agent, collaterally assign all or any of
its rights under the Loan Documents to a Federal Reserve Bank;
provided, however, that no such assignment shall release the assigning
Bank from its obligations thereunder.
Section XII.7. Survival. All representations and warranties made in
this Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by any Agent or any Bank or any closing shall affect the
representations and warranties or the right of any Agent or any Bank to rely
upon them. Without prejudice to the survival of any other obligation of the
Borrowers hereunder, the obligations of the Borrowers under Sections 12.1, 12.2
and Article IV shall survive repayment of the Notes and termination of the
Commitments.
Section XII.8. Amendments, Etc.. No amendment or waiver of any
provision of this Agreement, the Notes, or any other Loan Document to which
either Borrower is a party (other than any amendment or waiver regarding fees
payable to any Agent or any Affiliate of any Agent solely for its account), nor
any consent to any departure by either Borrower therefrom, shall in any event be
effective unless the same shall be agreed or consented to in writing by Required
Banks (or Administrative Agent with the consent of Required Banks) and each
Borrower, and each such waiver, amendment, or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
that no amendment, waiver, or consent shall, unless in writing and signed by all
of the Banks and each Borrower, do any of the following: (a) increase
Commitments of the Banks or subject the Banks to any additional obligations; (b)
reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder (except any fees payable to the Administrative Agent or any
Affiliate of the Administrative Agent solely for its account as specified
herein, in the Fee Letter or otherwise); (c) extend the Termination Date
(pursuant to Section 2.12 or otherwise) or postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder (except any fees payable to the Administrative Agent or any
Affiliate of the Administrative Agent solely for its account as specified
herein, in the Fee Letter or otherwise); (d) waive or modify any of the
conditions specified
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in Article V; (e) change the definition of "Required Banks" or the percentage of
the Commitments or of the aggregate unpaid principal amount of the Notes which
shall be required for the Banks or any of them to take any action under this
Agreement; (f) change any provision contained in this Section 12.8; or (g)
release any of the Guarantors in whole or in part or waive any of the Guaranty
Agreements in whole or in part. Notwithstanding anything to the contrary
contained in this Section, (1) no amendment, waiver, or consent shall be made
with respect to Article XI hereof without the prior written consent of the
Administrative Agent, and (2) no amendment, waiver, or consent shall affect the
rights or duties of the Auction Administration Agent without the prior written
consent of Auction Administration Agent.
Section XII.9. Maximum Interest Rate. No provision of this Agreement or
any other Loan Document shall require the payment or the collection of interest
in excess of the maximum amount permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any Loan Document or otherwise in connection with this loan
transaction, the provisions of this Section shall govern and prevail and neither
any Borrower nor the sureties, guarantors, successors, or assigns of any
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event any Bank ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness; and, if the principal has been paid in
full, any remaining excess shall forthwith be paid to the Borrowers. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, each Borrower and each Bank shall, to the extent permitted by applicable
law, (a) characterize any non-principal payment as an expense, fee, or premium
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the entire contemplated term of
the indebtedness evidenced by the Notes so that interest for the entire term
does not exceed the Maximum Rate.
Sectopm XII.10. Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents shall be given in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof; or, as to any party at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid; provided, however, notices to any
Agent pursuant to Article II shall not be effective until received by such
Agent.
Section XII.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. ANY ACTION OR PROCEEDING AGAINST EITHER
BORROWER UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS MAY BE
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BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS. EACH BORROWER
HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS,
AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN
INCONVENIENT FORUM. EACH BORROWER AGREES THAT SERVICE OF PROCESS UPON IT MAY BE
MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS
SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12.10.
NOTHING HEREIN OR IN ANY OF THE OTHER LOAN DOCUMENTS SHALL AFFECT THE RIGHT OF
ANY AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF ANY AGENT OR ANY BANK TO BRING ANY ACTION OR PROCEEDING
AGAINST EITHER BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN
OTHER JURISDICTIONS.
Section XII.12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section XII.13. Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section XII.14. Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section XII.15. Non-Application of Chapter 346 of Texas Finance Code.
The provisions of Chapter 346 of the Texas Finance Code (Vernon's Texas Code
Annotated) are specifically declared by the parties hereto not to be applicable
to this Agreement or any of the other Loan Documents or to the transactions
contemplated hereby.
Sectopm XII.16. Construction. Each Borrower, each Agent and each Bank
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section XII.17. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or Event of Default if such action
is taken or such condition exists.
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Section XII.18. Confidentiality; Disclosure to Other Persons. For the
purposes of this Section 12.18, "Confidential Information" means information
delivered to any Agent or any Bank by or on behalf of any Borrower or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such Agent
or Bank as being confidential information of such Borrower or such Subsidiary;
provided that such term does not include information that (a) was publicly known
or otherwise known to such Agent or Bank prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by such Agent
or Bank or any Person acting on behalf of such Agent or Bank, (c) otherwise
becomes known to such Agent or Bank other than through disclosure by any
Borrower or any Subsidiary or (d) constitutes financial statements delivered to
such Agent or Bank under Section 7.1 that are otherwise publicly available. Each
Agent and each Bank will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by such Agent or Bank in good
faith to protect confidential information of third parties delivered to such
Agent or Bank; provided that any Agent or Bank may deliver or disclose
Confidential Information to (i) such Agent's or Bank's directors, officers,
employees, agents, attorneys, auditors and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such Agent's or Bank's Notes), (ii) such Agent's or Bank's
financial advisors and other professional advisors who agree or are otherwise
bound to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 12.18, (iii) any other Agent or Bank,
(iv) any Eligible Assignee to which such Agent or Bank sells or offers to sell
one or both of its Notes or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 12.18), (v) any Person
from which such Agent or Bank offers to purchase any security of any Borrower
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 12.18, (vi) any
federal or state regulatory authority having jurisdiction over such Agent or
Bank, (vii) any nationally recognized rating agency that requires access to
information (including Confidential Information) about such Agent's or Bank's
investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to such Agent or Bank, (x) in response
to any subpoena or other legal process, (y) in connection with any litigation to
which such Agent or Bank is a party or (z) if an Event of Default has occurred
and is continuing, to the extent such Agent or Bank may reasonably determine
such delivery and disclosure to be necessary or appropriate in the enforcement
or for the protection of the rights and remedies under such Agent's or Bank's
Notes and this Agreement.
Section XII.19. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, EACH BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF
ANY AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
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Section XII.20. NOTICE OF FINAL AGREEMENT. THIS AGREEMENT, THE NOTES,
AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWERS:
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
GPX CORP.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
2121 San Jacinto, Suite 2500
Dallas, Texas 75201
Fax No. (214) 953-4594
Telephone No.: (214) 953-4574
Attention: Mark T. Carter
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AGENTS AND BANKS:
----------------
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Administrative Agent and
as a Bank
Commitment By:
-------------------------------------
Mae Kantipong
$85,000,000 Vice President
Address for Notices:
2200 Ross Avenue, 3rd Floor
Dallas, Texas 75201
Fax No.: (214) 965-2044
Telephone No.: (214) 965-2159
Attention: Mae Kantipong
THE CHASE MANHATTAN BANK,
as Auction Administration Agent
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notices:
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Fax No.: (212) 552-5627
Telephone No.: (212) 552-7259
Attention: Chris Consomer
Auction Administration
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Documentation
Agent and as a Bank
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Commitment Address for Notices:
$50,000,000 231 LaSalle Street
Chicago, Illinois 60697
Fax No.: (312) 987-1276
Telephone No.: (312) 828-5330
Attention: Chris Murphy
ABN AMRO BANK N.V.,
as Co-Agent and as a Bank
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Commitment Address for Notices:
$35,000,000 Three Riverway, Suite 1700
Houston, Texas 77056
Fax No.: (713) 961-1699
Telephone No.: (713) 964-3311
Attention: Diego Puiggari
-71-
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Commitment Address for Notices:
$20,000,000 249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Fax No.: (412)762-6484
Telephone No.: (412) 762-3202
Attention: Philip K. Liebscher
NATIONAL CITY BANK
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Commitment Address for Notices:
$15,000,000 155 East Broad Street
Columbus, Ohio 43215-0033
Fax No.: (614) 463-6770
Telephone No.: (614) 463-7298
Attention: Jeff Hawthorne
-72-
<PAGE>
THE NORTHERN TRUST CO.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Commitment Address for Notices:
$10,000,000 50 S. LaSalle Street, B-11
Chicago, Illinois 60675
Fax No.: (312) 444-5055
Telephone No.: (312) 444-5646
Attention: Jim Monhart
-73-
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit Description of Exhibit Section
- ------- -------------------------------- -------
"A-1" Form of Committed Note 1.1, 2.2
"A-2" Form of Competitive Note 1.1, 2.2
"B-1" Committed Advance Request 1.1, 2.5
"B-2" Competitive Bid Request 1.1, 2.6
"B-3" Form of Notice to Banks of
Competitive Bid Request 2.6(a)
"B-4" Form of Competitive Bid 2.6(b)
"C-1" Extension Request Form 2.12
"C-2" Notice of Extension 2.12
"D" Compliance Certificate 7.1(c)
"E-1" Form of Guaranty Agreement (Subsidiaries) 1.1, 5.1(g)
"E-2" Form of Guaranty Agreement (Borrowers) 5.1(i)
"F" Contribution and Indemnification Agreement 5.1(h)
"G" Matters to be Addressed in Opinion of Counsel 5.1(j)
"H" Assignment and Acceptance 12.6
INDEX TO SCHEDULES
------------------
Schedule Description of Exhibit Section
- -------- -------------------------------- -------
1 Existing Litigation 6.3
2 Existing Debt, Contractual Restrictions, Etc. 6.9, 8.1
3 Subsidiaries 6.16
4 Environmental Matters 6.18
5 Existing Liens 8.2
-74-
<PAGE>
SCHEDULE 1
Existing Litigation
-------------------
<PAGE>
SCHEDULE 2
Existing Debt, Contractual Restrictions, Etc.
---------------------------------------------
<PAGE>
SCHEDULE 3
Subsidiaries
------------
Percentage of Voting
Stock or other interest
Name of Jurisdiction of owned by the
Subsidiary Organization Borrower or a Subsidiary
---------- ------------ ------------------------
<PAGE>
SCHEDULE 4
Environmental Matters
---------------------
<PAGE>
SCHEDULE 5
Existing Liens
--------------
<PAGE>
REVISION COVER SHEET
to
CREDIT AGREEMENT
among
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.,
GPX CORP.
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent,
ABN AMRO BANK N.V.,
as Co-Agent,
THE CHASE MANHATTAN BANK,
as Auction Administration Agent,
and
THE BANKS
Draft of: 8/27/98
Marked from Draft of: 8/14/98
REVISION KEY
------------
Text
- ----
* = Text deleted
Text printed in bold type and double underlined has been added.
================================================================================
THIS RED-LINED DRAFT MAY APPEAR SOMEWHAT DIFFERENT FROM THE ACTUAL REVISED
DOCUMENT AND MAY APPEAR IN PLACES TO CONTAIN FORMATTING ERRORS. THIS IS A
FUNCTION OF THE AUTOMATIC COMPUTER SOFTWARE PROGRAM AND DOES NOT AFFECT THE
REVISED DOCUMENT. IN ADDITION, COMPUTERIZED RED-LINING OF THOSE SECTIONS OF THIS
DOCUMENT WITH SUBSTANTIAL REVISIONS MAY CONTAIN INACCURATE DELETION OR ADDITION
INDICATIONS DUE TO PROGRAMMING LIMITATIONS; AND THOSE SECTIONS SHOULD BE READ IN
THEIR ENTIRETY.
- --------------------------------------------------------------------------------
<PAGE>
********************************************************************************
CREDIT AGREEMENT
among
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.,
GPX CORP.,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent,
ABN AMRO BANK N.V.,
as Co-Agent,
THE CHASE MANHATTAN BANK,
as Auction Administration Agent,
and
THE BANKS PARTY HERETO
Dated as of August 31, 1998
********************************************************************************
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - Definitions................................................... 1
Section 1.1. Definitions................................................ 1
Section 1.2. Other Definitional Provisions.............................. 18
Section 1.3. Accounting Principles, Terms and Determinations............ 18
ARTICLE II - Advances..................................................... 19
Section 2.1. Commitments................................................ 19
Section 2.2. Notes...................................................... 19
Section 2.3. Repayment of Advances...................................... 20
Section 2.4. Interest................................................... 20
Section 2.5. Committed Borrowing Procedure.............................. 21
Section 2.6. Competitive Bid Procedure.................................. 21
Section 2.7. Refinancings; Conversions and Continuations................ 24
Section 2.8. Use of Proceeds............................................ 26
Section 2.9. Commitment Fee............................................. 26
Section 2.10. Reduction or Termination of Total Commitment............... 26
Section 2.11. Administrative Fee......................................... 26
Section 2.12. Extension of Termination Date.............................. 26
Section 2.13. Nature of Obligations...................................... 27
ARTICLE III - Payments.................................................... 27
Section 3.1. Method of Payment.......................................... 27
Section 3.2. Voluntary Prepayment....................................... 28
Section 3.3. Pro Rata Treatment......................................... 28
Section 3.4. Non-Receipt of Funds by the Administrative Agent........... 28
Section 3.5. Withholding Taxes.......................................... 29
Section 3.6. Withholding Tax Exemption.................................. 29
ARTICLE IV - Yield Protection; Limitations on Advances; Capital Adequacy.. 30
Section 4.1. Additional Costs........................................... 30
Section 4.2. Limitation on Types of Advances............................ 31
Section 4.3. Illegality................................................. 32
Section 4.4. Substitute Floating Rate Advances.......................... 32
Section 4.5. Compensation............................................... 33
Section 4.6. Capital Adequacy........................................... 33
-i-
<PAGE>
ARTICLE V - Conditions Precedent.......................................... 34
Section 5.1. Initial Extension of Credit................................ 34
Section 5.2. All Extensions of Credit................................... 35
ARTICLE VI - Representations and Warranties............................... 36
Section 6.1. Corporation Organization and Authority..................... 36
Section 6.2. Financial Statements....................................... 37
Section 6.3. Actions Pending............................................ 37
Section 6.4. Outstanding Debt........................................... 38
Section 6.5. Title to Properties........................................ 38
Section 6.6. Patent, Trademarks, Licenses, etc.......................... 38
Section 6.7. Taxes...................................................... 38
Section 6.8. Compliance with Law........................................ 39
Section 6.9. Conflicting Agreements and Other Matters................... 39
Section 6.10. Use of Proceeds............................................ 39
Section 6.11. ERISA...................................................... 40
Section 6.12. Certain Laws............................................... 40
Section 6.13. Governmental Consent....................................... 40
Section 6.14. Disclosure................................................. 40
Section 6.15. Enforceability............................................. 41
Section 6.16. Subsidiaries............................................... 41
Section 6.17. Compliance With Agreements................................. 41
Section 6.18. Environmental Matters...................................... 42
Section 6.19. Solvency................................................... 42
Section 6.20. Year 2000 Compliance....................................... 42
ARTICLE VII - Affirmative Covenants....................................... 43
Section 7.1. Reporting Requirements..................................... 43
Section 7.2. Inspection of Property and Corporate Books and Records..... 45
Section 7.3. Covenant to Secure Notes Equally........................... 45
Section 7.4. Compliance with Laws....................................... 46
Section 7.5. Corporate Existence........................................ 46
Section 7.6. Insurance.................................................. 46
Section 7.7. Taxes and Claims........................................... 46
Section 7.8. Maintenance................................................ 46
Section 7.9. Keeping Books and Records.................................. 46
Section 7.10. Compliance With Agreements................................. 46
Section 7.11. Further Assurances......................................... 46
ARTICLE VIII - Negative Covenants......................................... 47
Section 8.1. Subsidiary Debt............................................ 47
Section 8.2. Limitation on Liens........................................ 48
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
Section 8.3. Asset Dispositions......................................... 49
Section 8.4. Merger and Consolidations.................................. 50
Section 8.5. Acquisitions............................................... 51
Section 8.6. Transactions with Affiliates............................... 51
Section 8.7. Restricted Payments........................................ 51
Section 8.8. Nature of Business......................................... 52
Section 8.9. Restricted Investments..................................... 52
ARTICLE IX - Financial Covenants.......................................... 52
Section 9.1. Minimum Consolidated Net Worth............................. 52
Section 9.2. Interest Coverage Ratio.................................... 53
Section 9.3. Funded Debt/EBITDA Ratio................................... 53
Section 9.4. Capital Expenditures....................................... 53
ARTICLE X - Default....................................................... 53
Section 10.1. Events of Default.......................................... 53
Section 10.2. Remedies Upon Default...................................... 56
Section 10.3. Performance by the Administrative Agent.................... 56
Section 10.4. Setoff..................................................... 56
ARTICLE XI - The Agents................................................... 57
Section 11.1. Appointment, Powers and Immunities......................... 57
Section 11.2. Rights of Agents as Banks.................................. 58
Section 11.3. Sharing of Payments, Etc................................... 59
Section 11.4. INDEMNIFICATION............................................ 59
Section 11.5. Independent Credit Decisions............................... 60
Section 11.6. Several Commitments........................................ 60
Section 11.7. Successor Administrative Agent............................. 60
Section 11.8. Successor Auction Administration Agent..................... 61
Section 11.9. Effect on Borrowers........................................ 61
ARTICLE XII - Miscellaneous............................................... 61
Section 12.1. Expenses................................................... 61
Section 12.2. INDEMNIFICATION............................................ 62
Section 12.3. Limitation of Liability.................................... 63
Section 12.4. No Fiduciary Relationship.................................. 63
Section 12.5. No Waiver; Cumulative Remedies............................. 63
Section 12.6. Successors and Assigns..................................... 63
Section 12.7. Survival................................................... 66
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
Section 12.8. Amendments, Etc............................................ 66
Section 12.9. Maximum Interest Rate...................................... 67
Section 12.10. Notices.................................................... 67
Section 12.11. GOVERNING LAW; VENUE; SERVICE OF PROCESS................... 68
Section 12.12. Counterparts............................................... 68
Section 12.13. Severability............................................... 68
Section 12.14. Headings................................................... 68
Section 12.15. Non-Application of Chapter 346 of Texas Finance Code....... 68
Section 12.16. Construction............................................... 69
Section 12.17. Independence of Covenants.................................. 69
Section 12.18. Confidentiality; Disclosure to Other Persons............... 69
Section 12.19. WAIVER OF JURY TRIAL....................................... 70
Section 12.20. NOTICE OF FINAL AGREEMENT.................................. 70
-iv-
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