<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
FOR QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1998
Commission File Number: 1-12936
TITAN INTERNATIONAL, INC.
(Exact name of Registrant as specified in its Charter)
ILLINOIS 36-3228472
(State of Incorporation) (I.R.S. Employer Identification No.)
2701 SPRUCE STREET, QUINCY, IL 62301
(Address of principal executive offices, including Zip Code)
(217) 228-6011
(Telephone Number)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
SHARES OUTSTANDING AT
CLASS OCTOBER 30, 1998
----- ---------------------
COMMON STOCK, NO PAR VALUE PER SHARE 20,920,613
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<TABLE>
<CAPTION>
TITAN INTERNATIONAL, INC.
TABLE OF CONTENTS
Page Number
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<S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets -
September 30, 1998 and December 31, 1997 1
Consolidated Condensed Statements of Operations
For the Three and Nine Months Ended
September 30, 1998 and 1997 2
Consolidated Condensed Statements of
Cash Flows for the Nine Months Ended
September 30, 1998 and 1997 3
Notes to Consolidated Condensed Financial Statements 4-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
Part II. Other Information and Signature 10-11
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 18,397 $ 21,207
Accounts receivable (net of allowance of
$5,970 and $4,598, respectively) 117,273 112,795
Inventories 168,573 138,432
Prepaid and other current assets 28,652 26,162
-------- --------
Total current assets 332,895 298,596
Property, plant and equipment, net 246,659 210,290
Other assets 46,197 33,768
Goodwill, net 41,831 42,488
-------- --------
Total assets $667,582 $585,142
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 4,945 $ 1,065
Accounts payable 71,091 70,480
Other current liabilities 74,548 43,142
-------- --------
Total current liabilities 150,584 114,687
Deferred income taxes 21,156 21,021
Other long-term liabilities 23,739 19,600
Long-term debt 213,171 181,705
-------- --------
Total liabilities 408,650 337,013
-------- --------
Stockholders' equity
Common stock, no par, 60,000,000 shares authorized,
27,489,597 and 27,380,620, respectively 27 27
Additional paid-in capital 214,443 212,615
Retained earnings 134,451 121,934
Accumulated other comprehensive income (591) (3,340)
Treasury stock at cost: 6,316,784 and 5,738,784 shares,
Respectively (89,398) (83,107)
-------- --------
Total stockholders' equity 258,932 248,129
-------- --------
Total liabilities and stockholders' equity $667,582 $585,142
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
condensed financial statements.
1
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TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except earnings per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 149,186 $ 156,679 $ 517,830 $ 524,247
Cost of sales 130,166 133,991 439,086 442,136
--------- --------- --------- ---------
Gross profit 19,020 22,688 78,744 82,111
Selling, general & administrative expenses 12,538 11,044 38,845 34,206
Research and development expenses 1,465 2,453 5,431 4,805
--------- --------- --------- ---------
Income from operations 5,017 9,191 34,468 43,100
Interest expense 4,678 4,202 13,397 10,948
Other income (334) (862) (683) (1,821)
--------- --------- --------- ---------
Income before income taxes 673 5,851 21,754 33,973
Provision for income taxes 256 2,224 8,267 12,910
--------- --------- --------- ---------
Net income $ 417 $ 3,627 $ 13,487 $ 21,063
========= ========= ========= =========
Earnings per share:
Basic $ .02 $ .17 $ .62 $ .91
Diluted $ .02 $ .17 $ .62 $ .91
Average shares outstanding:
Basic 21,657 21,615 21,687 22,899
Diluted 21,725 21,831 21,856 23,047
</TABLE>
The accompanying notes are an integral part of the consolidated
condensed financial statements.
2
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TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,487 $ 21,063
Depreciation and amortization 25,322 23,755
(Increase)/decrease in receivables 6,387 (12,043)
(Increase)/decrease in inventories (18,860) 8,448
Increase in other current assets (1,176) (8,646)
Decrease in accounts payable (6,878) (4,587)
Increase in other accrued liabilities 6,769 7,504
Other, net (512) (6,028)
--------- ---------
Net cash provided by operating activities 24,539 29,466
Cash flows from investing activities:
Capital expenditures, net (28,462) (29,981)
Acquisitions, net of cash acquired (14,686) 0
Other (7,143) (3,321)
--------- ---------
Net cash used for investing activities (50,291) (33,302)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 30,000 149,250
Payment of debt (954) (75,690)
Repurchase of common stock (5,850) (72,816)
Payment of financing fees (610) (4,300)
Dividends paid (977) (1,059)
Other, net 1,333 1,464
--------- ---------
Net cash provided by/(used for) financing activities 22,942 (3,151)
Net decrease in cash and cash equivalents (2,810) (6,987)
Cash and cash equivalents at beginning of period 21,207 27,406
--------- ---------
Can and cash equivalents at end of period $ 18,397 $ 20,419
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
condensed financial statements.
3
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
A. ACCOUNTING POLICIES
In the opinion of Titan International, Inc. ("Titan" or the "Company"),
the accompanying unaudited consolidated condensed financial statements
contain all adjustments, which are normal and recurring in nature,
necessary to present fairly its financial position as of September 30,
1998, the results of operations for the three and nine months ended
September 30, 1998 and 1997, and cash flows for the nine months ended
September 30, 1998 and 1997.
Accounting policies have continued without change and are described in
the Summary of Significant Accounting Policies contained in the
Company's 1997 Annual Report on Form 10-K. For additional information
regarding the Company's financial condition, refer to the footnotes
accompanying the financial statements as of and for the year ended
December 31, 1997 filed in conjunction with the Company's 1997 Annual
Report on Form 10-K. Details in those notes have not changed
significantly except as a result of normal interim transactions and
certain matters discussed below.
B. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Raw materials $ 58,350 $ 41,486
Work-in-process 18,068 12,412
Finished goods 87,361 82,219
-------- --------
163,779 136,117
LIFO reserve 4,794 2,315
-------- --------
$168,573 $138,432
======== ========
</TABLE>
C. FIXED ASSETS
Property, plant and equipment, net reflects accumulated depreciation of
$120.5 million and $100.4 million at September 30, 1998, and December
31, 1997, respectively. The Company acquired certain assets of Condere
Corporation from the United States Bankruptcy Court for the Southern
District of Mississippi for a total estimated purchase price of $28
million, which included a cash payment of $13 million.
4
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
D. GOODWILL
Goodwill, net reflects accumulated amortization of $5.4 million and
$4.4 million at September 30, 1998, and December 31, 1997,
respectively.
E. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Senior subordinated notes $ 150,000 $ 150,000
Credit facility 30,000 0
Note payable to Pirelli Armstrong Tire Corp. 19,743 19,743
Industrial revenue bonds and other 18,373 13,027
---------- ----------
218,116 182,770
Less: Amounts due within one year 4,945 1,065
---------- ----------
$ 213,171 $ 181,705
========== ==========
</TABLE>
Aggregate maturities of long-term debt at September 30, 1998 are as
follows (in thousands):
October 1 - December 31, 1998 $ 1,306
1999 4,504
2000 20,560
2001 733
2002 and thereafter 191,013
---------
$ 218,116
In September 1998, the Company increased its availability under its
credit facility from $200 million to $250 million. Interest rate and
foreign currency borrowing options and covenants under the new facility
remain similar to those under the prior facility.
5
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
F. STOCK REPURCHASE PROGRAM
The Company's Board of Directors has authorized the Company to
repurchase up to ten million shares of its common stock. During the
quarter ended September 30, 1998, the Company repurchased 0.6 million
shares of common stock in the open market. The Company is authorized to
repurchase an additional 3.7 million common shares.
G. NEW ACCOUNTING STANDARD
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income."
Comprehensive income, which includes net income and the effect of
currency translation, was $3.9 million for the third quarter of 1998,
compared to $3.7 million in 1997. Comprehensive income for the nine
months ended September 30, 1998 was $16.2 million, compared to $23.3
million in 1997.
6
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TITAN INTERNATIONAL, INC.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the quarter ended September 30, 1998, were $149.2 million compared
to 1997 third quarter sales of $156.7 million. Sales for the nine months ended
September 30, 1998, were $517.8 million, compared to 1997 sales of $524.2
million. During the quarter, the Company continued to experience a labor strike
at its Des Moines, Iowa tire facility, the largest of the Company's tire
operations. Production capacity at the Des Moines, Iowa tire facility has
decreased to approximately half of full capacity resulting in a decrease in tire
production volume and therefore a decrease in sales and operating results, as
discussed below. The decrease in sales was partially offset by the acquisition
of Fabrica Uruguaya de Neumaticos S.A. ("FUNSA") in June 1998.
Sales in the agricultural market were $69.7 and $259.9 million for the third
quarter of 1998 and for the nine months ended September 30, 1998 respectively,
as compared to $78.9 and $269.0 million in 1997. Earthmoving/construction market
sales were $40.8 and $135.2 million for the third quarter of 1998 and for the
nine months ended September 30, 1998 respectively, as compared to $40.7 and
127.3 million in 1997. The Company's consumer market sales were $38.7 and $122.7
million for the third quarter of 1998 and for the nine months ended September
30, 1998 respectively, as compared to $37.1 and $127.9 million in 1997. Sales in
all markets were negatively impacted by a labor strike at the Company's Des
Moines, Iowa facility.
Cost of sales was $130.2 and $439.1 million for the third quarter of 1998 and
for the nine months ended September 30, 1998 respectively, as compared to $134.0
and $442.1 million in 1997. Gross profit for the third quarter of 1998 was $19.0
million or 12.7% of net sales, compared to $22.7 million or 14.5% of net sales
for the third quarter of 1997. Gross profit for the nine months ended September
30, 1998 was $78.7 million or 15.2% of net sales, compared to $82.1 million or
15.7% for 1997. Gross profit for the third quarter of 1998 and for the nine
months ended September 30, 1998, was negatively impacted by inefficiencies
caused by the labor strike at the Company's Des Moines, Iowa facility.
Selling, general and administrative ("SG&A") expenses for the third quarter of
1998 were $12.5 million or 8.4% of net sales, compared to $11.0 million or 7.0%
of sales for 1997. SG&A expenses for the nine months ended September 30, 1998
were $38.8 million or 7.5% of sales, compared to $34.2 million or 6.5% of sales
in 1997. The rise in SG&A expenses is primarily due to acquisitions coupled with
increased administrative and systems staffing. Research and development ("R&D")
expenses for the third quarter of 1998 were $1.5 million or 1.0% of net sales,
compared to $2.5 million or 1.6% of sales for 1997. R&D expenses for the nine
months ended September 30, 1998 were $5.4 million or 1.0% of sales, compared to
$4.8 million or 0.9% for 1997.
7
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TITAN INTERNATIONAL, INC.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Income from operations for the third quarter of 1998 was $5.0 million or 3.4% of
net sales, compared to $9.2 million or 5.9% in 1997. Income from operations for
the nine months ended September 30, 1998 was $34.5 million or 6.7% of net sales,
compared to $43.1 million or 8.2% in 1997. Income from operations was impacted
by the items described in the preceding paragraphs.
Interest expense was $4.7 and $13.4 for the third quarter of 1998 and for the
nine months ended September 30, 1998 respectively, compared to $4.2 million and
$10.9 million in 1997. Interest expense increased due the Company's higher
average debt during the third quarter of 1998 and for the nine months ended
September 30, 1998.
Net income for the third quarter of 1998 and for the nine months ended September
30, 1998 was $0.4 and $3.6 million respectively, compared to $3.6 and $21.1
million in 1997. Basic and diluted earnings per share were $.02 and $.62 for the
third quarter and nine months ended September 30, 1998 respectively compared to
$.17 and $.91 in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities of $24.5 million for the nine months ended
September 30, 1998 were attributed to net income, decreases in receivables and
increases in other accrued liabilities. These amounts were partially offset by
increases in inventories and decreases in accounts payable. The Company has
built inventory to meet expected production and sales demand in the next six
months.
The Company has invested $28.5 million in capital expenditures in 1998,
including $4.1 million for equipment and construction related to the
Brownsville, Texas facility. The balance represents various equipment purchases
and building improvements to enhance production capabilities.
During the second quarter, Titan acquired 81 percent of the common stock of
FUNSA. In September 1998, the Company acquired certain assets of Condere
Corporation from the United States Bankruptcy Court for the Southern District of
Mississippi for a total estimated purchase price of $28 million, which included
a cash payment of $13 million.
8
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TITAN INTERNATIONAL, INC.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
In September 1998, the Company increased its availability under its credit
facility from $200 million to $250 million. The Company received $30.0 million
in proceeds from its $250 million revolving credit facility. These proceeds have
been used to fund operations and capital expenditures.
During the quarter ended September 30, 1998, the Company repurchased 0.6 million
shares of common stock in the open market. The Company is authorized to
repurchase an additional 3.7 million common shares.
At September 30, 1998, the Company had cash and cash equivalents of $18.4
million. Cash on hand, anticipated internal cash flows and utilization of
available borrowing under the Company's credit facilities are expected to
provide sufficient liquidity for working capital needs, capital expenditures and
acquisitions for the foreseeable future.
YEAR 2000
The Company's objective is to become Year 2000 compliant, and develop a
contingency plan, by mid-1999. The Company believes it is on schedule to
accomplish this objective. The Company is in process of requesting information
from its significant suppliers and customers that they are addressing this issue
to ensure there will be no major disruptions. The total cost to become Year 2000
compliant has not been material and the Company does not expect future costs to
have a material impact on the Company's financial position or results of
operations. No assurances can be given regarding the Company's compliance,
especially as it relates to third parties. The Company is in process of
developing contingency plans should any Year 2000 failures occur.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Readers should note that in addition to the historical information contained
herein, this Form 10-Q contains forward-looking statements, which are inherently
subject to risks, and uncertainties that could cause actual results to differ
materially from those contemplated by such statements. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in this report, as well as in the Company's 1997 Annual Report on Form
10-K.
9
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TITAN INTERNATIONAL, INC.
PART II. OTHER INFORMATION
ITEMS 1 THROUGH 4 ARE NOT APPLICABLE.
ITEM 5. OTHER MATTERS
Discretionary Proxy Voting Authority/Stockholder Proposals
The Securities and Exchange Commission recently amended Rule
14a-4 under the Securities Exchange Act of 1934, which governs
the use by the Company of discretionary voting authority with
respect to stockholder proposals. Rule 14a-4(c) (1) provides
that, if the proponent of a stockholder proposal fails to
notify the Company at least 45 days prior to the month and day
of mailing the prior year's proxy statement, the proxies of
the Company's management would be permitted to use their
discretionary authority at the Company's next annual meeting
of stockholders if the proposal were raised at the meeting
without any discussion of the matter in the proxy statement.
For purposes of the Company's 1999 Annual Meeting of
Stockholders, this deadline is February 22, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See the index to exhibits immediately preceding the exhibits
filed with this report.
(b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K
during the quarter ended September 30, 1998.
10
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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.
TITAN INTERNATIONAL, INC.
(Registrant)
Date: November 6, 1998 By: /s/ Kent W. Hackamack
-------------------------- ---------------------------------------
Kent W. Hackamack
Vice President of Finance and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
11
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TITAN INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
3 Restated Articles of Incorporation of Titan
4 Multicurrency Credit Agreement dated September 17, 1998 among the
Company, Harris Trust and Savings Bank and the
banks named therein
27 Financial Data Schedule
12
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EXHIBIT 3
TITAN INTERNATIONAL, INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
ARTICLE I
Name
----
The name of the corporation is: TITAN INTERNATIONAL, INC. (the
"Corporation").
ARTICLE II
Purpose
-------
The purpose or purposes for which the Corporation is organized are to
engage in the transaction of any or all lawful businesses for which corporations
may be incorporated under the Illinois Business Corporation Act of 1983, as
amended (the "1983 Act").
ARTICLE III
Authorized Shares
-----------------
Paragraph 1. Number and Class. The number of shares which the
Corporation is authorized to issue, itemized by class, series and par value, if
any, is:
Class Par Value Number of Shares Authorized
----- --------- ---------------------------
Common Stock without par value 60,000,000 shares
Preferred Stock without par value 4,000,000 shares
Paragraph 2. Rights, Preferences and Limitations. The preferences,
qualifications, limitations, restrictions and the special or relative rights in
respect of the shares of each class are:
A. Subject to the preferences accorded the holders of Preferred
Stock pursuant to these Articles of Incorporation (the "Articles") or action of
the Board of Directors of the Corporation (the "Board") taken with respect to
such preferences, holders of Common Stock are entitled to receive such dividends
as may be declared by the Board from time to time and, in the event of any
liquidation, dissolution or winding up of the Corporation, the holders of Common
Stock will be entitled to receive pro rata all of the remaining assets of the
Corporation available for distribution. Each issued and outstanding share of
Common Stock is entitled to one vote.
B. The Board is authorized from time to time to issue shares of
Preferred Stock in one or more series, each series to bear a distinctive
designation and to have
<PAGE> 2
such relative rights, powers, preferences, limitations and restrictions as shall
be stated in the resolution or resolutions of the Board providing for the
issuance thereof. Such resolutions, when filed, shall constitute amendments to
these Articles.
Paragraph 3. No Cumulative Voting. No holder of any shares of any class
of stock of this Corporation shall be entitled to cumulative voting rights in
the election of the Board under any circumstances.
Paragraph 4. Series A Convertible Preferred Stock. By resolution of the
Board of Directors adopted on July 9, 1994, and pursuant to the authority
expressly granted to and vested in the Board of Directors by virtue of Article
III, Paragraph 2 of these Articles, the Board of Directors created a series of
Preferred Stock having the following designations, powers, conversions,
privileges, preferences and other special rights and qualifications, limitations
or restrictions thereof:
A. Designation and Amount. The shares of such series shall be
designated as Series A Convertible Preferred Stock no par value per share (the
"Series A Preferred") and the number of shares constituting such series shall be
1,000,000.
B. Voting Rights. The holders of Series A Preferred shall not be
entitled to vote on any matters submitted to the stockholders of the
Corporation, except as required by applicable law.
C. Dividends.
(1) The holders of each share of Series A Preferred shall have
the right to receive, out of any funds or property legally available therefor,
noncumulative dividends at the same rate and at the same time as any dividends
declared on each share of the Common Stock of the Corporation as presently
constituted, when, as and if declared by the Board of Directors; provided,
however; that if any dividends payable in Common Stock are declared or any other
Capital Event (as defined in Paragraph E(3)(a)) shall occur, then the provisions
hereof relating to anti-dilution shall govern and no dividend or other
distribution shall be made to the holders of Series A Preferred.
(2) If the Corporation at any time shall make a distribution
of its assets to the holders of its Common Stock as a dividend in liquidation or
by way of return of capital or other than as a dividend payable under Paragraph
C(1) above or a Liquidation Event under Paragraph D below, the holders of each
share of Series A Preferred shall be entitled to receive such a distribution at
the same rate and at the same time as paid or distributed on each share of
Common Stock.
-2-
<PAGE> 3
D. Liquidation Preference.
(1) Upon the dissolution, liquidation or winding up of the
affairs of the Corporation, whether voluntary or involuntary (a "Liquidation
Event"), the holders of shares of Series A Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of Common Stock or any class or
series of preferred stock which ranks inferior to Series A Preferred with
respect to rights on the occurrence of a Liquidation Event by reason of their
respective ownership thereof, the amount of $7.50 per share, as adjusted for any
stock dividends, combinations, stock splits, recapitalizations, reorganizations
or other transactions affecting the shares of capital stock of the Corporation
effected without the receipt of consideration by the Corporation (the
"Liquidation Preference"). If upon any Liquidation Event the amounts available
for distribution are insufficient to pay in full the Liquidation Preference to
which the holders of the Series A Preferred are entitled, hen such distributions
shall be made to the holders of Series A Preferred on a pro-rata basis.
(2) Notwithstanding anything to the contrary contained in
subparagraph (1) of this Paragraph D, if the amount that would be payable to the
holders of the Series A Preferred in connection with such Liquidation Event if
such holders had converted such Series A Preferred into the maximum number of
shares of Common Stock into which such Series A Preferred would be convertible
if it automatically converted at the time of the Liquidation Event would be
greater than the Liquidation Preference, then the holders of the Series A
Preferred shall be entitled to receive, as and when received by the holders of
the Common Stock, such alternative liquidation amount in lieu of the Liquidation
Preference.
(3) For purposes of this Paragraph D only, a sale of all or
substantially all of the assets of the Corporation, shall be treated as a
Liquidation Event and shall entitle the holders of Series A Preferred to receive
at the closing of such sale in cash, securities or other property the greater of
the amounts specified in subparagraphs (1) and (2) above.
(4) Whenever the distribution provided for in this Paragraph D
shall be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or property as
determined in good faith by the Board of Directors of the Corporation by any
reasonable method.
E. Conversion. The holders of Series A Preferred shall have no
conversion rights except as set forth below:
(1) Conversion Rights.
(a) Automatic Conversion. Each share of Series A Preferred
shall on the sixth anniversary of the issuance of such share be automatically
converted, without the payment of any additional consideration, into such number
of fully paid and
-3-
<PAGE> 4
nonassessable shares of Common Stock (all of which shall be registered under the
Securities Act of 1933, as amended and all applicable state securities laws on
or prior to issuance) as is determined by dividing $7.50 by the Series A
Conversion Price applicable to such share, determined as hereinafter provided,
in effect on such sixth anniversary. The price at which the shares of Common
Stock shall be deliverable upon conversion of shares of Series A Preferred (as
such price may be adjusted from time to time as provided herein, the "Series A
Conversion Price") shall initially be $60.00 per share of Common Stock. Such
initial Series A Conversion Price shall be adjusted as hereinafter provided.
(2) Mechanics of Conversion.
(a) Before any holder of Series A Preferred shall be
entitled to convert the same into shares of Common Stock, he or she shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or any transfer agent for such stock, and shall give written
notice to the Corporation at such office setting forth the name or names in
which such holder wishes the certificate or certificates for shares of Common
Stock to be issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver to such holder of Series A Preferred, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled. Such certificate or certificates for Common Stock, when issued,
shall represent shares of Common Stock which have been duly authorized, fully
paid and non-assessable.
(b) Notwithstanding any delay or failure by a holder of
Series A Preferred to deliver any certificates for conversion on or after the
sixth anniversary of issuance, such conversion shall be deemed to have been made
as of such sixth anniversary. As of the sixth anniversary of the date of
issuance of any such shares of Series A Preferred then outstanding, such
outstanding shares of Series A Preferred shall be deemed canceled and the
holders thereof shall be treated for all purposes as record holders of the
shares of Common Stock into which such shares of Series A Preferred are
convertible as of such date.
(3) Adjustments to Series A Conversion Price.
(a) Special Definitions. For purposes of this subparagraph
(3), the following definitions shall apply:
(i) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued or pursuant to Paragraph E(3)(c) (or deemed to be
issued) by the Corporation after the Original Issue Date other than Excluded
Securities.
(ii) "Capital Event" shall mean any event or
occurrence contemplated under Paragraph E(3)(f) or E(4).
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<PAGE> 5
(iii) "Common Stock" shall mean the Common Stock, no
par value of the Corporation as constituted on the date of issuance of any
Series A Preferred.
(iv) "Convertible Securities" shall mean any evidences
of indebtedness, warrants, Options or other rights or securities (other than the
Series A Preferred and the Original Warrant) convertible into or exchangeable or
exercisable for, Common Stock or other Convertible Securities.
(v) "Excluded Securities" shall mean all shares of
Common Stock issued or issuable (or deemed to be issued pursuant to Paragraph
E(3)(c)) upon (A) the sale, transfer or exercise of the Original Warrant, (B) to
officers, directors or employees of the Corporation pursuant to stock option,
warrant or stock purchase plans or agreements which plans and/or agreements have
been approved by the Board of Directors of the Corporation prior to the Original
Issue Date, (C) upon conversion of The Corporation 4.75% Subordinated
Convertible Debentures due 2000 in the amount of $103,500,000.00, (D) the Dyneer
Earnout Shares as defined and provided for in the Exchange Agreement dated
September 21, 1993 between the Dyneer Shareholders and the Corporation, or (E)
for which adjustment of the Series A Conversion Price has previously been made
pursuant to Paragraph E(3)(f).
(vi) "Options" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(vii) "Original Issue Date" shall mean August 11,
1994.
(viii) "Original Warrant" shall mean the warrant to
purchase Common Stock of the Corporation at an initial exercise price of $55.00
per share (subject to adjustment as provided therein) issued to Pirelli
Armstrong Tire Corporation as of the Original Issue Date.
(b) No Adjustment of Conversion Price. Any provision
herein to the contrary notwithstanding, no adjustment in the Series A Conversion
Price shall be made in respect of the issuance of Additional Shares of Common
Stock unless the consideration per share (determined in accordance with this
Paragraph E) for an Additional Share of Common Stock issued or deemed to be
issued by the Corporation is less than the Series A Conversion Price for such
series of Series A Preferred Stock in effect on the date of, and immediately
prior to, such issue.
(c) Deemed Issue of Additional Shares of Common Stock. In
the event that the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the
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<PAGE> 6
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities or
Options, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that in any such case as
to which Additional Shares of Common Stock shall be deemed to have been issued:
(i) no further adjustments in the Series A Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of Options or conversion or exchange of
such Convertible Securities;
(ii) if such Options or other Convertible Securities
by their terms provide, with the passage of time or otherwise, for any increase
or decrease in the consideration payable to the Corporation, or decrease or
increase in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Series A Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such other Convertible Securities;
(iii) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto) and any
subsequent adjustments based thereon, shall upon such expiration, be recomputed
as if in the case of Convertible Securities or Options for Common Stock the only
Additional Shares of Common Stock issued were the shares of Common Stock, if
any, actually issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration received therefor
was the consideration actually received by the Corporation for the issue of all
such Options, whether or not exercised, plus the consideration actually received
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the Corporation upon such conversion or exchange.
(d) Determination of Consideration. For purposes of this
subparagraph (c), the consideration received by the Corporation for the issuance
of any Additional Shares of Common Stock shall be computed as follows:
(i) Cash and Property. Such consideration shall:
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<PAGE> 7
(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Corporation excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of receipt
of such property, as determined in good faith by the Board of Directors of the
Corporation by any reasonable method;
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors of the Corporation by any
reasonable method.
(ii) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Paragraph E(3)(c), relating
to Options and Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against dilution) payable
to the Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities for the maximum number of shares, or in
the case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(B) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against dilution) issuable upon
the exercise of such Options or conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of
such Convertible Securities.
(e) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event that the Corporation at a time
after the Original Issue Date shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed issued pursuant to
subparagraph (3)(c)) without consideration or for a consideration per share less
than the Series A Conversion Price in effect on the date of and immediately
prior to such issuance, then and in such event, the Series A Conversion Price
shall be reduced, concurrently with such issuance, to a price (calculated to the
nearest cent) determined
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<PAGE> 8
by multiplying such Series A Conversion Price by a fraction, (A) the numerator
of which shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (2) the number of shares of Common
Stock, which the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Series A Conversion Price in effect immediately prior to such issuance; and
(B) the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of Additional
Shares of Common Stock so issued.
(f) Adjustments to Conversion Prices for Stock Dividends
and for Combinations or Subdivisions of Common Stock. In the event that the
Corporation at any time or from time to time after the Original Issue Date shall
declare or pay, without consideration, any dividend on the Common Stock payable
in Common Stock or in any right to acquire Common Stock for no consideration, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock by stock split, reclassification or
otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock, or in the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the Series A Conversion Price in
effect immediately prior to such event shall, concurrently with the
effectiveness of such event, be proportionately decreased or increased, as
appropriate. In the event that the Corporation shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Corporation shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.
(4) Adjustments for Reclassification, Consolidation, Merger
and Reorganization. If the Common Stock issuable upon conversion of Series A
Preferred shall be changed into the same or a different number of shares of any
other class or classes of stock or securities, and or other property or the
right to receive other property, whether by capital reorganization,
reclassification, consolidation, merger or otherwise (other than a subdivision
or combination of shares provided for in Paragraph E(3)(f) above or a merger or
other reorganization in which the Corporation is the surviving entity), the
Series A Conversion Price then in effect shall, concurrently with the
effectiveness of such reorganization, consolidation, merger or reclassification,
be proportionately adjusted so that the Series A Preferred shall thereafter be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, the kind and amount of
such other class or classes of stock or securities or other property or rights
to receive property equivalent to the number of shares of such other class or
classes of stock or securities or other property or rights to receive property
that the holder of Series A Preferred would have received as a result of
conversion of the Series A Preferred immediately before the change and, in such
case appropriate adjustment shall be made in the application of the provisions
of Paragraph E(3) hereof with respect to the rights and interest thereafter of
the holders of the Series A Preferred, to the end that
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<PAGE> 9
the provisions set forth in this Paragraph E(4) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon conversion of the Series A Preferred (and
all of such shares of such other class or classes or stock or securities into
which the Series A Preferred is thereafter convertible shall be subject to, and
entitled to the benefits of, all of the provisions of this Paragraph E on the
same basis as the Common Stock which the holders would otherwise have been
entitled to receive).
(5) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed under this Paragraph E by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Paragraph E and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of the
holders of Series A Preferred against impairment.
(6) Certificates as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Series A Conversion Price, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred a certificate executed by the Corporation's Chief
Financial Officer setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is based.
(7) Issue Taxes. The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of Series A Preferred pursuant hereto.
(8) Reservation of Stock. The Corporation shall at all times
reserve, cause to be approved for listing on notice of issuance on the principal
stock exchange on which the Common Stock is then listed, and keep available out
of its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series A Preferred, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Preferred.
(9) Fractional Shares. No fractional shares shall be issued
upon the conversion of any share or shares of Series A Preferred. All shares of
Common Stock (including fractions thereof) issuable upon conversion of each
share of Series A Preferred being simultaneously converted by any holder shall
be aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional shares. If, after such aggregation, the
conversion would result in issuance of a fraction of a share of Common Stock,
the Corporation shall, in lieu of issuing any fractional share, issue to the
holder one share with respect to such fractional share.
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ARTICLE IV
Indemnification
---------------
Directors and officers of the Corporation shall be indemnified in
connection with any actual or threatened action or proceeding (including civil,
criminal, administrative or investigative proceedings) arising out of their
service to the Corporation or to another organization at the Corporation's
request and shall be paid expenses incurred in defending any such proceeding in
advance of its final disposition to the fullest extent permitted by law. Persons
who are not directors or officers of the Corporation may be similarly
indemnified in respect of such service to the extent authorized at any time by
the Board or the bylaws of the Corporation. The provisions of this Article shall
be applicable to actions or proceedings commenced after the adoption hereof,
whether arising from acts or omissions occurring before or after the adoption
hereof, and to persons who have ceased to be directors, officers or employees,
and shall inure to the benefit of their heirs, executors and administrators. The
right to indemnification and advancement of expenses conferred hereunder shall
be a contract right which may not be modified retroactively without the written
consent of the director or officer and shall not be deemed exclusive of any
other rights to indemnification or advancement of expenses such person may have
or to which such person may be entitled.
If a claim under this Article is not paid in full by the Corporation
within thirty days after a written claim has been received by the Corporation,
the indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful, in whole or in part, in
any such suit or in a suit brought by the Corporation to recover advances, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such claim. In any action brought by the indemnitee to enforce a right
hereunder (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where the
required undertaking has been tendered to the Corporation), it shall be a
defense that, and in any action brought by the Corporation to recover advances
the Corporation shall be entitled to recover such advances if, the indemnitee
has not met the applicable standard of conduct set forth in the 1983 Act.
Neither the failure of the Corporation (including its Board, a committee of its
Board, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the 1983 Act, nor an actual
determination by the Corporation (including its Board, a committee of its Board,
independent legal counsel, or its shareholders) that the indemnitee has not met
such applicable standard or conduct, shall be a defense to any action brought by
the indemnitee or create a presumption that the indemnitee has not met the
applicable standard of conduct. In any action brought by the indemnitee to
enforce a right hereunder or by the Corporation to recover payments by the
Corporation of advances, the burden of proof shall be on the Corporation.
ARTICLE V
Director Liability
------------------
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<PAGE> 11
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director provided, however, that this Article does not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) under Section 8.65 of the 1983 Act, or (iv) for any transaction from
which the director derived an improper personal benefit. This Article shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the date on which this Article becomes effective. If after this Article
becomes effective, the 1983 Act is amended to authorize the broader elimination
or limitation of liability for a director, then in addition to the foregoing
elimination of liability, upon the effective date of such amendment, the
liability of a director shall without further act also be eliminated and limited
to such broader extent to the fullest extent not prohibited by the 1983 Act as
amended. The provisions of this Article shall be deemed to be a contract with
each director of the Corporation who serves as such at any time while such
provisions are in effect, and each such director shall be deemed to be serving
as much in reliance on the provisions of this Article. No repeal or amendment of
these Articles shall adversely affect any right or any elimination or limitation
of liability of a director existing at the time of the repeal or amendment.
ARTICLE VI
Amendments
----------
Except as otherwise expressly set forth in these Articles, or as
specifically required by law, any amendment to the Articles requiring approval
of shareholders shall be adopted upon receiving the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote on the
amendment and a majority of the outstanding shares of each class or series of
shares, if any, entitled to vote as a class on the amendment. Notwithstanding
the foregoing, an amendment to the Articles to reduce the current requirement
under the 1983 Act that the holders of two-thirds of outstanding shares,
including the holders of two-thirds of any class or series, which is entitled to
a class vote on such transaction, approve certain mergers, consolidations,
exchange transactions, or sales by the Corporation of all or substantially all
of its assets would, itself, require the affirmative vote of holders of
two-thirds of any such class or series.
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<PAGE> 1
EXHIBIT 4
================================================================================
$250,000,000
MULTICURRENCY CREDIT AGREEMENT
Dated as of
SEPTEMBER 17, 1998
Among
TITAN INTERNATIONAL, INC.,
TITAN INVESTMENT CORPORATION,
TITAN CREDIT CORPORATION,
THE BANKS PARTY HERETO,
and
HARRIS TRUST AND SAVINGS BANK,
as Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1 THE REVOLVING CREDIT FACILITY.......................... 1
Section 1.1. The Loan Commitments................................... 1
Section 1.2. Letters of Credit...................................... 1
SECTION 2. GENERAL PROVISIONS..................................... 6
Section 2.1. Applicable Interest Rates.............................. 6
(a) Domestic Rate Loans.................................... 6
(b) Eurocurrency Loans..................................... 6
(c) Applicable Margin...................................... 8
Section 2.2. Minimum Borrowing Amounts.............................. 9
Section 2.3. Manner of Borrowing Committe Loans..................... 9
(a) Notice to the Agent.................................... 9
(b) Notice to the Banks....................................10
(c) Borrower's Failure to Notify...........................10
(d) Disbursement of Committed Loans........................10
Section 2.4. Rate and Currency Determinations.......................10
SECTION 3 THE COMPETITIVE BID FACILITY...........................11
Section 3.1. The Bid Loans..........................................11
Section 3.2. Requests for Bid Loans.................................11
(a) Requests and Confirmations.............................11
(b) Invitation to Bid......................................12
(c) Bids...................................................12
Section 3.3. Notice of Bids; Advice of Rate.........................12
Section 3.4. Acceptance or Rejection of Bids........................13
Section 3.5. Notice of Acceptance or Rejection of Bids..............13
(a) Notice to Banks Making Bids............................13
(b) Disbursement of Bid Loans..............................13
(c) Notice to the Banks....................................14
Section 3.6. Interest on Bid Loans..................................14
Section 3.7. Telephonic Notice......................................14
Section 4. GENERAL PROVISIONS APPLICABLE TO ALL LOANS.............14
Section 4.1. Interest Periods.......................................14
Section 4.2. Maturity of Loans......................................15
Section 4.3. Voluntary Prepayments..................................15
(a) Committed Loans........................................15
(b) Bid Loans..............................................15
(c) Reborrowings...........................................15
Section 4.4. Default Rate...........................................16
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Section 4.5. The Notes..............................................16
Section 4.6. Commitment Terminations................................16
Section 4.7. Mandatory Prepayment...................................17
Section 4.8 Funding Indemnity......................................17
Section 4.9. Appointment of Company as Agent for Titan Investment
and Titan Credit....................................18
SECTION 5. FEES...................................................18
Section 5.1. Facility Fee...........................................18
Section 5.2. Letter of Credit Fees..................................18
Section 5.3. Closing Fee............................................18
Section 5.4. Bid Loan Fee...........................................19
Section 5.5. Agent Fees.............................................19
Section 5.6. Fee Calculations.......................................19
SECTION 6. PLACE AND APPLICATION OF PAYMENTS......................19
Section 6.1. Place and Application of Payments......................19
SECTION 7. DEFINITIONS; INTERPRETATION............................21
Section 7.1. Definitions............................................21
Section 7.2. Interpretation.........................................33
Section 7.3. Unrestricted Subsidiaries..............................33
SECTION 8. REPRESENTATIONS AND WARRANTIES.........................34
Section 8.1. Corporate Organization and Authority...................34
Section 8.2. Subsidiaries...........................................34
Section 8.3. Corporate Authority and Validity of Obligations........34
Section 8.4. Financial Statements...................................35
Section 8.5. Material Adverse Change................................35
Section 8.6. No Litigation; No Labor Controversies..................35
Section 8.7. Taxes..................................................35
Section 8.8. Approvals..............................................35
Section 8.9. ERISA..................................................36
Section 8.10. Government Regulation..................................36
Section 8.11. Margin Stock...........................................36
Section 8.12. Licenses and Authorizations; Compliance with Laws......36
Section 8.13. Ownership of Property; Liens...........................37
Section 8.14. No Burdensome Restrictions; Compliance with Agreements.37
Section 8.15. Full Disclosure........................................37
Section 8.16. Year 2000 Compliance...................................37
SECTION 9. CONDITIONS PRECEDENT...................................37
Section 9.1. Initial Borrowing......................................38
Section 9.2. All Loans..............................................38
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Section 9.3. Additional Conditions to Loans other than Refunding
Borrowings..........................................39
Section 9.4. Replacement of Bank....................................39
SECTION 10. COVENANTS..............................................40
Section 10.1. Maintenance of Business................................40
Section 10.2. Maintenance of Property................................41
Section 10.3. Taxes..................................................41
Section 10.4. Insurance..............................................41
Section 10.5. Financial Reports and Right of Inspection..............41
Section 10.6. Intentionally Left Blank...............................44
Section 10.7. Minimum Tangible Net Worth.............................44
Section 10.8. Interest Coverage Ratio................................44
Section 10.9. Debt to Earnings Ratio.................................44
Section 10.10. Investments, Loans, Advance and Guaranties.............45
Section 10.11. Indebtedness...........................................47
Section 10.12. Liens..................................................47
Section 10.13. Dividends and Certain Other Restricted Payments........50
Section 10.14. Mergers, Consolidations, Leases and Sales..............50
Section 10.15. Maintenance of Subsidiaries............................51
Section 10.16. Company as Operating Company...........................52
Section 10.17. ERISA..................................................52
Section 10.18. Burdensome Contracts with Affiliates...................53
Section 10.19. Change in Fiscal Year..................................53
Section 10.20. Change in the Nature of Business.......................53
Section 10.21. Use of Property and Facilities; Environmental, Health
and Safety Laws.....................................53
Section 10.22. Compliance with Laws...................................53
Section 10.23. Use of Loan Proceeds...................................54
Section 10.24. Designation of Unrestricted Subsidiaries...............54
Section 10.25 Year 2000 Assessment...................................54
Section 10.26. European Monetary Union................................54
SECTION 11. EVENTS OF DEFAULT AND REMEDIES.........................55
Section 11.1. Events of Default......................................55
Section 11.2. Non-Bankruptcy Defaults................................58
Section 11.3. Bankruptcy Defaults....................................58
Section 11.4. Collateral for Undrawn Letters of Credit...............58
Section 11.5. Expenses...............................................59
SECTION 12. CHANGE IN CIRCUMSTANCES................................59
Section 12.1. Change of Law..........................................59
Section 12.2. Unavailability of Deposits or Inability to Ascertain,
or Inadequacy of, LIBOR.............................59
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<PAGE> 5
Section 12.3. Increased Cost and Reduced Return......................60
Section 12.4. Lending Offices........................................61
Section 12.5. Discretion of Bank as to Manner of Funding.............61
SECTION 13. THE AGENT..............................................61
Section 13.1. Appointment and Authorization..........................61
Section 13.2. Agent and Affiliates...................................61
Section 13.3. Action by Agent........................................62
Section 13.4. Consultation with Experts..............................62
Section 13.5. Liability of Agent.....................................62
Section 13.6. Indemnification........................................62
Section 13.7. Credit Decision........................................63
Section 13.8. Resignation or Removal of Agent and Successor Agent....63
Section 13.9. Payments...............................................63
SECTION 14. THE GUARANTEES.........................................64
Section 14.1. The Guarantees.........................................64
Section 14.2. Guarantee Unconditional................................64
Section 14.3. Discharge Only Upon Payment in Full; Reinstatement
in Certain Circumstances............................65
Section 14.4. Waivers................................................65
Section 14.5. Limit on Recovery......................................66
Section 14.6. Stay of Acceleration...................................66
SECTION 15. MISCELLANEOUS..........................................66
Section 15.1. Withholding Taxes......................................66
Section 15.2. No Waiver of Rights....................................67
Section 15.3. Non-Business Day.......................................68
Section 15.4. Documentary Taxes......................................68
Section 15.5. Survival of Representations............................68
Section 15.6. Survival of Indemnities................................68
Section 15.7. Sharing of Set-Off.....................................68
Section 15.8. Notices................................................68
Section 15.9. Counterparts...........................................69
Section 15.10. Successors and Assigns.................................69
Section 15.11. Participants...........................................69
Section 15.12. Assignment Agreements..................................70
Section 15.13. Amendments.............................................71
Section 15.14. Headings...............................................72
Section 15.15. Legal Fees, Other Costs and Indemnification............72
Section 15.16. Set Off................................................72
Section 15.17. Currency...............................................72
Section 15.18. Currency Equivalence...................................73
Section 15.19. Entire Agreement.......................................73
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Section 15.20. Governing Law..........................................73
Section 15.21. PERSONAL JURISDICTION..................................73
(a) EXCLUSIVE JURISDICTION.................................73
(b) OTHER JURISDICTIONS....................................74
SECTION 15.22. WAIVER OF JURY TRIAL...................................74
SECTION 15.23. WAIVER OF BOND.........................................74
SECTION 15.24. ADVICE OF COUNSEL......................................74
Signature...............................................................75
Exhibit A Committed Loan Note
Exhibit B Bid Note
Exhibit C Bid Loan Request Confirmation
Exhibit D Invitation to Bid
Exhibit E Confirmation of Bid
Exhibit F Notice of Acceptance of Bid
Exhibit G Notice of Payment Request
Exhibit H Compliance Certificate
Exhibit I Guarantee Agreement
Exhibit J Employee Benefit Plans
Exhibit K Form of Opinion of Counsel
Exhibit L Certificates Regarding Projections
Schedule 1.2(a) Form of Application for Standby Letter of Credit
Schedule 1.2(b) Form of Application for Commercial Letter of Credit
Schedule 8.2 Subsidiaries of Titan International, Inc.
Schedule 10.12 Liens
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<PAGE> 7
Credit Agreement
To each of the Banks signatory hereto
Ladies and Gentlemen:
The undersigned, Titan International, Inc., an Illinois corporation (the
"Company"), Titan Investment and Titan Credit (the Company, Titan Investment and
Titan Credit being hereinafter referred to collectively as the "Borrowers" and
individually as a "Borrower"), each applies to you for your several commitments,
subject to all the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, to make available to each
Borrower a committed revolving facility for loans and letters of credit and a
discretionary bid facility available solely for loans, all as more fully
hereinafter set forth. Each of you is hereinafter referred to as a "Bank", all
of you are hereinafter referred to collectively as the "Banks" and Harris Trust
and Savings Bank ("Harris Bank") in its capacity as agent hereunder is
hereinafter referred to as the "Agent".
Section 1. The Revolving Credit Facility.
Section 1.1. The Loan Commitments. Subject to the terms and conditions
hereof, each Bank, by its acceptance hereof, severally agrees to extend a
revolving credit (the "Revolving Credit") in the form of a loan or loans
(individually a "Committed Loan" and collectively "Committed Loans") to the
Borrowers from time to time on a revolving basis in U.S. Dollars and Alternative
Currencies in an aggregate outstanding Original Dollar Amount up to the amount
of its commitment set forth on the applicable signature page hereof (its
"Commitment" and cumulatively for all the Banks the "Commitments"), which
Commitments on the date hereof total $250,000,000 (subject to any reductions
thereof pursuant to the terms hereof) prior to the Termination Date. The sum of
the aggregate Original Dollar Amount of outstanding Loans (whether Committed
Loans or Bid Loans) and L/C Obligations shall not exceed the Commitments then in
effect. Each Borrowing of Committed Loans shall be made ratably from the Banks
in proportion to their respective Percentages. As provided in Section 2.3(a)
hereof, the Borrower may elect that each Borrowing of Committed Loans
denominated in U.S. Dollars be made available by means of (i) Eurocurrency Loans
or (ii) Domestic Rate Loans, or any combination thereof. All Committed Loans
denominated in an Alternative Currency shall be Eurocurrency Loans. Each
Borrowing of Committed Loans may be repaid and the principal amount thereof
reborrowed prior to the Termination Date, subject to all reductions in the
Commitments and all other terms and conditions hereof. Simultaneously with the
effectiveness of this Agreement, the Company agrees that it will prepay all
"Committed Loans" under the Existing Credit Agreement which were outstanding
immediately thereunder prior to the effectiveness of this Agreement and that
such prepayment shall be subject to Section 4.8 of the Existing Credit
Agreement.
Section 1.2. Letters of Credit. (a) General Terms. Subject to the terms and
conditions hereof, as part of the Revolving Credit, the Agent shall from time to
time issue standby letters of
<PAGE> 8
credit and commercial letters of credit (each a "Letter of Credit") for the
account of any or all of the Borrowers (whether or not also for the account of
any other Subsidiary of the Company as well) prior to the Termination Date, in
an aggregate undrawn face amount up to the amount of the L/C Sub-Limit, provided
that the aggregate Original Dollar Amount of L/C Obligations at any time
outstanding shall not exceed the difference between the Commitments in effect at
such time and the aggregate Original Dollar Amount of Loans (whether Committed
Loans or Bid Loans) then outstanding. Notwithstanding anything herein to the
contrary, (i) that certain standby letter of credit dated July 8, 1993 issued by
Harris Bank to Hartford Fire Insurance in the original amount of $200,000 (ii)
that certain standby letter of credit dated June 20, 1995 issued by Harris Bank
to The Travelers Companies in the original amount of $4,852,000, (iii) that
certain standby letter of credit dated January 3, 1992 issued by Harris Bank to
City of Danville in the original amount of $46,000, (iv) that certain commercial
letter of credit dated May 26, 1998 issued by Harris Bank to Dnepropolynermash
in the original amount of $387,000, (v) that certain standby letter of credit
dated Apri 22, 1998 issued by Harris Bank to Han Kook Metal and Machine in the
original amount of $1,000,000, (vi) that certain standby letter of credit dated
July 29, 1998 issued by Harris Bank to ABN AMRO Bank N.V. in the original amount
of $3,000,000 and (vii) that certain standby letter of credit dated September 4,
1998 issued by Harris Bank to Condere Corporation and Luke Dove, Counsel for
Unsecured Creditors Committee in the original amount of $15,000,000 shall each
constitute a "Letter of Credit" herein for all purposes of this Agreement to the
same extent, and with the same force and effect as if such Letter of Credit had
been issued at the request of the Company under this Agreement. Each Letter of
Credit shall be issued by the Agent, but each Bank shall be obligated to
reimburse the Agent for its Percentage of the amount of each drawing thereunder
and, accordingly, the undrawn face amount of each Letter of Credit shall
constitute usage of the Commitment of each Ban pro rata in accordance with each
Bank's Percentage.
(b) Term. Each Letter of Credit issued hereunder shall expire not later
than the earlier of (i) one year from the date issued (or be cancelable not
later than one year from the date of issuance and each renewal) or (ii) the
Termination Date.
(c) General Characteristics. Each Letter of Credit issued hereunder shall
be payable in U.S. Dollars or an Available Foreign Currency, shall conform to
the general requirements of the Agent for the issuance of standby or commercial
letters of credit as to form and substance, as the case may be, and shall be a
letter of credit which the Agent may lawfully issue.
(d) Applications. At the time a Borrower requests the Agent to issue a
Letter of Credit (or prior to the first issuance of a Letter of Credit with
regard to a Borrower, in the case of a continuing application), the Company
(acting on behalf of such Borrower) shall execute and deliver to the Agent an
application for such Letter of Credit in the form customarily prescribed by the
Agent for a Letter of Credit of the type requested (individually an
"Application" and collectively the "Applications"). The current form of the
Agent's Application are attached hereto as Schedule 1.2(a) (Standby) and
Schedule 1.2(b) (Commercial). The Agent shall provide the Company and each Bank
with copies of any new form of Application that may, from time to time, be
adopted by the Agent. Notwithstanding anything contained in any Application to
the contrary, (i) the Borrowers shall be jointly and severally liable for all
obligations in respect of each Letter of Credit, (ii) the Borrowers shall pay
fees in connection with each Letter of Credit as
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<PAGE> 9
set forth in Section 5.2 hereof, (iii) before the occurrence of an Event of
Default, the Agent will not call for the funding by a Borrower of any amount
under a Letter of Credit, or any other form of collateral security for the
Borrowers' joint and several obligations in connection with such Letter of
Credit, before being presented with a drawing thereunder, (iv) upon the
occurrence of the Terminatio Date, the full amount then available for drawing
under all outstanding Letters of Credit shall be immediately due and payable in
the manner described in Section 11.4 hereof, and (v) if the Agent is not timely
reimbursed in accordance with Section 1.2(e) hereof (whether out of the proceeds
of a Loan, including a Committed Loan made pursuant to Section 2.3(c) hereof or
otherwise) for the amount of any drawing under a Letter of Credit on the date
such drawing is paid, the Borrowers' join and several obligation to reimburse
the Agent for the amount of such drawing shall bear interest (which the
Borrowers hereby promise to pay) from and after the date such drawing is paid at
a rate per annum equal to (x) in the case of a drawing under a Letter of Credit
denominated in U.S. Dollars or a Letter of Credit denominated in an Available
Foreign Currency as to which the Agent has requested that the Borrowers
reimburse such drawing in U.S. Dollars, the sum of 2% plus the Applicable Margin
for Domestic Rate Loans plus the Domestic Rate from time to time in effect, and
(y) in the case of a drawing under a Letter of Credit denominated in an
Available Foreign Currency as to which the Agent has requested that the
Borrowers reimburse such drawing in such Available Foreign Currency, the sum of
2% plus the Applicable Margin for Domestic Rate Loans plus the Overnight Foreign
Currency Rate. If the Agent issues any Letters of Credit with expiration dates
that are automatically extended, unless the Agent gives notice that the
expiration date will not so extend beyond its then scheduled expiration date,
the Agent will give such notice of non-renewal before the time necessary to
prevent such automatic extension if before such required notice date (i) the
expiration date of such Letter of Credit if so extended would be after the
Termination Date, (ii) the Commitments have been terminated or (iii) a Default
or Event of Default exists and the Required Banks have given the Agent
instructions not to so permit the extension of the expiration date of such
Letter of Credit. The Agent agrees to issue amendments to the Letter(s) of
Credit increasing the amount, or extending the expiration date, thereof at the
request of the relevant Borrower subject to the conditions of Section 9 and the
other terms of this Section 1.2. To the extent so required by any Bank, the
Agent shall furnish to such Bank copies of each Letter of Credit and
modification thereof so required.
(e) The Reimbursement Obligations. Subject to Section 1.2(d) hereof, the
joint and several obligations of the Borrowers to reimburse the Agent for all
drawings under a Letter of Credit (a "Reimbursement Obligation") shall be
governed by the Application related to such Letter of Credit, except that (i)
the reimbursement by each Borrower of draws made under a Letter of Credit
denominated in U.S. Dollars shall be made in U.S. Dollars and (ii) the
reimbursement by each Borrowe of draws made under a Letter of Credit denominated
in an Available Foreign Currency shall be made by payment in U.S. Dollars of the
U.S. Dollar Equivalent, calculated on the date the Agent paid such draw, of the
amount paid by the Agent pursuant to such draw, or, if the Agent shall elect by
notice to the Company (acting on behalf of the Borrowers), by payment in the
Available Foreign Currency which was paid by the Agent pursuant to such drawing
in an amount equal to such drawing and (iii) reimbursement by each Borrower in
U.S. Dollars of a drawing paid by the Agent shall be made by no later than 1:30
p.m. (Chicago time) on the date when such drawing is paid and reimbursement by
each Borrower in an Available Foreign Currency of a drawing paid by the Agent
shall be made by no later than
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<PAGE> 10
12:00 noon local time at the place of payment or if earlier, such local time as
is necessary for such funds to be received and transferred to the Agent for same
day value on the day such Reimbursement Obligation is due; any payment of a
Reimbursement Obligation received after such time shall be deemed to have been
received by the Agent on the next Business Day. If the Borrowers do not make any
such reimbursement payment on the date due and the Participating Banks fund
their participations therein in the manner set forth in Section 1.2(f) below,
then all payments thereafter received by the Agent in discharge of any of the
relevant Reimbursement Obligations shall be distributed in accordance with
Section 1.2(f) below.
The joint and several obligations of the Borrowers to the Agent under this
Section 1.2 shall be absolute, irrevocable and unconditional under any and all
circumstances whatsoever (except, without limiting the Borrowers' joint and
several obligations under each Application, to the extent it is ultimately
determined by a court of competent jurisdiction in a final non-appealable order
that a Borrower is relieved from its obligation to reimburse the Agent for a
drawing under a Letter of Credit because of the Agent's gross negligence or
willful misconduct in determining that documents received under the Letter of
Credit comply with the terms thereof).
(f) The Participating Interests. Each Bank (other than the Bank then acting
as Agent in issuing Letters of Credit), by its acceptance hereof, severally
agrees to purchase from the Agent, and the Agent hereby agrees to sell to each
such Bank (a "Participating Bank"), an undivided percentage participating
interest (a "Participating Interest"), to the extent of its Percentage, in each
Letter of Credit issued by, and each Reimbursement Obligation owed to, the
Agent. Upon any failure by the Borrowers to pay any Reimbursement Obligation at
the time required on the date the related drawing is paid, as set forth in
Section 1.2(e) above, or if the Agent is required at any time to return to a
Borrower or to a trustee, receiver, liquidator, custodian or other Person any
portion of any payment of any Reimbursement Obligation, each Participating Bank
shall, not later than the Business Day it receives a certificate in the form of
Exhibit G hereto from the Agent to such effect, if such certificate is received
before 1:00 p.m. (Chicago time), or not later than the following Business Day,
if such certificate is received after such time, pay to the Agent (i) in the
case of a Reimbursement Obligation payable in U.S. Dollars, an amount equal to
such Participating Bank's Percentage of such unpaid or recaptured Reimbursement
Obligation, such payment to be made in lawful money in the United States, in
immediately available funds at the Agent's principal office in Chicago,
Illinois, together with interest on such amount accrued from the date the
related payment was made by the Agent to the date of such payment by such
Participating Bank at a rate per annum equal to (x) from the date the related
payment was made by the Agent to the date two (2) Business Days after payment by
such Participating Bank is due hereunder, the Federal Funds Rate for each such
day and (y) from the date two (2) Business Days after the date such payment is
due from such Participating Bank to the date such payment is made by such
Participating Bank, the Domestic Rate in effect for each such day and (ii) in
the case of a Reimbursement Obligation payable in an Available Foreign Currency,
an amount equal to such Participating Bank's Percentage of such unpaid or
recaptured Reimbursement Obligation, such payment to be made in such Available
Foreign Currency in such funds which are then customary for the settlement of
international transactions in such currency, together with interest on such
amount accrued from the date the related payment was made by the Agent to the
date of such payment by the Participating Bank at a rate per annum equal to (x)
from the date the related
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<PAGE> 11
payment was made by the Agent to the date two (2) Business Days after payment by
such Participating Bank is due hereunder, the Overnight Foreign Currency Rate
for each such day and (y) from the date two (2) Business Days after the date
such payment is due fro such Participating Bank to the date such payment is made
by such Participating Bank, the sum of 1% plus the Overnight Foreign Currency
Rate for each such day. Each such Participating Bank shall thereafter be
entitled to receive its Percentage of each payment received in respect of the
relevant Reimbursement Obligation and of interest paid thereon, with the Agent
retaining its Percentage as a Bank hereunder.
The several obligations of the Participating Banks to the Agent under this
Section 1.2 shall be absolute, irrevocable and unconditional under any and all
circumstances whatsoever (except, without limiting the Borrowers' joint and
several obligations under each Application, to the extent it is ultimately
determined that the Borrowers are relieved from their obligation to reimburse
the Agent for a drawing under a Letter of Credit because of the Agent's gross
negligence or willful misconduct in determining that documents received under
the Letter of Credit comply with the terms thereof) and shall not be subject to
any set-off, counterclaim or defense to payment which any Participating Bank may
have or have had against the Borrowers, the Agent, any other Bank or any other
Person whatsoever. Without limiting the generality of the foregoing, such
obligations shall not be affected by any Default or Event of Default or by any
reduction or termination of any Commitment of any Bank, and each payment by a
Participating Bank under this Section 1.2 shall be made without any offset,
abatement, withholding or reduction whatsoever. The Agent shall be entitled to
offset amounts received for the account of a Bank under this Agreement against
unpaid amounts due from such Bank to the Agent hereunder (whether, to the extent
then due, as fundings of participations, indemnities or otherwise), but shall
not be entitled to offset against amounts owed to the Agent by any Bank arising
outside this Agreement.
(g) Indemnification. The Participating Banks shall, to the extent of their
respective Percentages, indemnify the Agent (to the extent not reimbursed by the
Borrowers) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from the Agent's gross negligence or willful misconduct) that the Agent may
suffer or incur in connection with any Letter of Credit. The obligations of the
Participating Banks under this Section 1.2(g) and all other parts of this
Section 1.2 shall survive termination of this Agreement and of all other L/C
Documents.
(h) Outstanding Amount of Letters of Credit. For all purposes of this
Agreement, Letters of Credit shall be deemed outstanding as of any time in an
amount equal to the aggregate undrawn amount then available thereunder
(determined in accordance with Section 2.4 hereof) plus all unpaid Reimbursement
Obligations then outstanding. For such purposes, the undrawn amount available
under a Letter of Credit shall be the maximum amount which can be drawn
thereunder under any circumstances and over any period of time.
-5-
<PAGE> 12
SECTION 2. GENERAL PROVISIONS.
Section 2.1. Applicable Interest Rates.
(a) Domestic Rate Loans. Each Domestic Rate Loan made by a Bank shall bear
interest (computed on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed) on the unpaid principal amount thereof from the
date such Loan is made until maturity (whether by acceleration or otherwise) at
a rate per annum equal to the sum of the Applicable Margin plus the Domestic
Rate from time to time in effect, payable on the last day of the applicable
Interest Perio and at maturity (whether by acceleration or otherwise).
"Domestic Rate" means for any day the greater of:
(i) the rate of interest announced by the Agent from time to time as
its prime commercial rate, or equivalent, as in effect on such day, with
any change in the Domestic Rate resulting from a change in said prime
commercial rate to be effective as of the date of the relevant change in
said prime commercial rate; or
(ii) the sum of (x) the rate determined by the Agent in good faith to
be the prevailing rate per annum (not necessarily the arithmetic average,
and in any event rounded upward, if necessary, to the next higher 1/100 of
1%) quoted to the Agent at approximately 10:00 a.m. (Chicago time) (or as
soon thereafter as is practicable) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) by two or more
Federal Funds brokers selected by the Agent for the sale to the Agent at
face value of Federal Funds in an amount equal or comparable to the
principal amount owed to the Agent for which rate is being determined, plus
(y) 1/2 of 1% (0.50%) per annum.
(b) Eurocurrency Loans. Each Eurocurrency Loan made by a Bank shall bear
interest (computed on the basis of a year of 360 days and actual days elapsed)
on the unpaid principal amount thereof from the date such Loan is made until
maturity (whether by acceleration or otherwise) at a rate per annum equal to the
sum of the Applicable Margin plus the Adjusted LIBOR, payable on the last day of
the applicable Interest Period and at maturity (whether by acceleration or
otherwise), and, if the applicable Interest Period is longer than three months,
on each day occurring every three months after the date such Loan is made. All
payments of principal and interest on a Loan shall be made in the same currency
as was advanced by the Banks in connection with such Loan.
"Adjusted LIBOR" means, for any Borrowing of Eurocurrency Loans, a rate per
annum determined in accordance with the following formula:
LIBOR
--------------------------------------
Adjusted LIBOR = 100% - Eurocurrency Reserve Percentage
"LIBOR" means, for each Interest Period, (a) the LIBOR Index Rate for such
Interest Period, if such rate is available, and (b) if the LIBOR Index Rate
cannot be determined, the
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<PAGE> 13
arithmetic average of the rate of interest per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) at which deposits in U.S. Dollars or
the relevant Alternative Currency, as appropriate, in immediately available
funds are offered to the Agent at 11:00 a.m. (London, England time) two Business
Days before the beginning of such Interest Period by at least two major banks in
the London interbank eurocurrency market for a period equal to such Interest
Period and in an amount equal or comparable to the applicable Eurocurrency Loan
scheduled to be outstanding from the Agent during such Interest Period.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars or the relevant Alternative
Currency as appropriate, for a period equal to such Interest Period which
appears on the Applicable Telerate Page, as appropriate for such currency, as of
11:00 a.m. (London, England time) on the date two Business Days before the
commencement of such Interest Period.
"Applicable Telerate Page" means, with regard to Eurocurrency Loans
denominated in U.S. Dollars, the display page designated as "Page 3750" on the
Telerate Service and with regard to each Alternative Currency, the display page
on the Telerate Service as determined by the Agent which displays the
appropriate British Bankers' Association Interest Settlement Rates for such
Alternative Currency (or such other page as may replace such pages, as
appropriate, on that service or such other service as may be nominated by the
British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for deposits
in U.S. Dollars or the Alternative Currency, as applicable).
"Eurocurrency Reserve Percentage" means, for any Borrowing of Eurocurrency
Loans, the daily average for the applicable Interest Period of the maximum rate
at which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed during such Interest Period by the Board of
Governors of the Federal Reserve System (or any successor) under Regulation D on
"eurocurrency liabilities", as defined in such Board's Regulation D (or in
respect of any other category of liabilities that includes deposits by reference
to which the interest rate on Eurocurrency Loans is determined or any category
of extension of credit or other assets that include loans by non-United States
offices of any Bank to United States residents), subject to any amendments of
such reserve requirement by such Board or its successor, taking into account any
transitional adjustments thereto. For purposes of this definition, the
Eurocurrency Loans shall be deemed to be "eurocurrency liabilities" as defined
in Regulation D without benefit or credit for any prorations, exemptions or
offsets under Regulation D.
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<PAGE> 14
(c) Applicable Margin. With respect to Committed Loans and the facility fee
payable under Section 5.1 hereof, the "Applicable Margin" shall mean the rate
specified for such Obligation below, subject to quarterly adjustment as
hereinafter provided:
<TABLE>
<CAPTION>
When Following Status Applicable Margin Applicable Margin
Exists For any Margin For Domestic Rate For Eurocurrency Applicable Margin
Determination Date Loans Is: Loans Is: For Facility Fee Is:
<S> <C> <C> <C>
Level I Status 0% .250% .20%
Level II Status 0% .500% .20%
Level III Status 0% .750% .20%
Level IV Status 0% 1.000% .20%
Level V Status 0% 1.250% .20%
</TABLE>
provided, however, that all of the foregoing percentages set forth in the chart
above are subject to the following:
(i) on or before the date that is ten (10) Business Days after
the latest date by which the Company is required to deliver a Compliance
Certificate to the Agent for a given quarterly accounting period pursuant
to Section 10.5(b) hereof (each date that is ten Business Days after the
latest date by which the Company is required to deliver a Compliance
Certificate to the Agent being herein referred to as the "Margin
Determination Date"), the Agent shall determine whether Level I Status,
Level I Status, Level III Status, Level IV Status or Level V Status exists
as of the close of the applicable quarterly accounting period (the
"quarterly test period") and shall also determine the Debt to Earnings
Ratio as of such close, in each case based upon such Compliance Certificate
and the financial statements delivered to the Agent under Section 10.5
hereof for such quarterly test period, and shall promptly notify the
Company (acting on behalf of the Borrowers) of such determination and of
any change in the Applicable Margin resulting therefrom;
(ii) during the Lower Interest Coverage Period, the Applicable
Margin shall be determined as if the rates specified in the chart above
were in each case .375% higher than each rate otherwise specified in the
chart above;
(iii) any change in the Applicable Margin shall be effective as of
such Margin Determination Date, with such new Applicable Margin to continue
in effect until the next Margin Determination Date. If the Company has not
delivered a Compliance Certificate by the date such Compliance Certificate
is required to be delivered under Section 10.5 hereof, until a Compliance
Certificate is delivered before the next Margin Determination Date, the
Applicable Margin shall be the Applicable Margin for Level V Status as if
the
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<PAGE> 15
Lower Interest Coverage Period were in effect. If the Company subsequently
delivers a Compliance Certificate before the next Margin Determination
Date, the Applicable Margin established by such Compliance Certificate
shall take effect from the date ten (10) Business Days after the date of
such delivery and remain effective until the next Margin Determination
Date;
(iv) the initial Applicable Margin in effect through the first
Margin Determination Date shall be the Applicable Margin for Level II
Status; and
(v) if and so long as any Event of Default has occurred and is
continuing hereunder, notwithstanding anything herein to the contrary, the
Applicable Margin shall be the Applicable Margin for Level V Status as if
the Lower Interest Coverage Period were in effect as calculated for
purposes of Section 2.1(c)(ii).
Section 2.2. Minimum Borrowing Amounts. Each Borrowing of Domestic Rate
Loans shall be in an amount not less than $500,000 and in integral multiples of
$100,000, provided that a Borrowing of Domestic Rate Loans applied to pay a
Reimbursement Obligation pursuant to Section 1.2(e) hereof shall be in an amount
equal to such Reimbursement Obligation. Each Borrowing of Fixed Rate Loans
denominated in U.S. Dollars shall be in an amount not less than $2,000,000 and
any larger amount which is an integral multiple of $500,000. Each Borrowing of
Eurocurrency Loans denominated in an Alternative Currency shall be in an amount
not less than an Original Dollar Amount of $2,000,000 and in such integral
multiple of 100,000 units of the relevant currency as would have an Original
Dollar Amount most closely approximating $500,000 or an integral multiple
thereof.
Section 2.3. Manner of Borrowing Committed Loans.
(a) Notice to the Agent. In order to borrow any Committed Loans, the
Company (acting on behalf of the applicable Borrower) shall give telephonic or
telecopy notice to the Agent (which notice shall be irrevocable once given and,
if by telephone, shall be promptly confirmed in writing) by no later than (i)
2:00 p.m. (Chicago time) on the date at least four (4) Business Days prior to
the date of such requested Borrowing of Eurocurrency Loans denominated in an
Alternative Currency, (ii) 2:00 p.m. (Chicago time) on the date at least three
(3) Business Days prior to the date of each requested Borrowing of Eurocurrency
Loans denominated in U.S. Dollars, and (iii) 11:30 a.m. (Chicago time) on the
date of any requested Borrowing of Domestic Rate Loans. Each such notice shall
specify the date of the requested Borrowing (which shall be a Business Day), the
amount of the requested Borrowing, the type of Loans to comprise such Borrowing,
the currency in which such Loans are to be denominated if such Borrowing is to
be comprised of Eurocurrency Loans denominated in an Alternative Currency, the
name of the Borrower on whose behalf such Borrowing is being requested and, if
such Borrowing is to be comprised of Eurocurrency Loans, the Interest Period
applicable thereto. The Borrowers agree that the Agent may rely on any such
telephonic or telecopy notice given by any person who identifies himself or
herself as being an Authorized Representative without the necessity of
independent investigation and, in the event any telephonic or telecopy notice
conflicts with the written confirmation, such telephonic or telecopy notice
shall govern if the Agent has acted in reliance thereon.
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<PAGE> 16
(b) Notice to the Banks. The Agent shall give prompt telephonic, telex or
telecopy notice to each Bank of any borrowing request it receives pursuant to
Section 2.3(a) above and, if such notice requests the Banks to make Eurocurrency
Loans, the Agent shall give notice to the applicable Borrower and each of the
Banks by like means of the interest rate applicable thereto (but, if such notice
is given by telephone, the Agent shall confirm such rate in writing) and, if
such Borrowing is denominate in an Alternative Currency, the Original Dollar
Amount thereof, promptly after the Agent has made such determination.
(c) Borrower's Failure to Notify. In the event the Company (acting on
behalf of the Borrowers) fails to give notice pursuant to Section 2.3(a) above
of the reborrowing of the principal amount of any maturing Borrowing of
Committed Loans and has not notified the Agent within the period required by
Section 4.3(a) that it intends to prepay such Borrowing, then (i) if such
maturing Borrowing was denominated in U.S. Dollars, the Company (acting on
behalf of the Borrowers) shall be deemed to have requested a new Borrowing of
Domestic Rate Loans in the amount of the maturing Borrowing of Committed Loans
and such new Borrowing shall, subject to Section 9.2 hereof be disbursed to the
Agent (for the account of the Banks) so as to prepay such maturing Borrowing,
and (ii) if such maturing Borrowing was denominated in an Alternative Currency,
the Company (acting on behalf of the Borrowers) shall be deemed to have
requested a new Borrowing in such Alternative Currency with an Interest Period
of one month and such new Borrowing shall, subject to Section 9.2 hereof, be
disbursed to the Agent (for the account of the Banks) so as to prepay such
maturing Borrowing. In the event the Company (acting on behalf of the Borrowers)
fails to give notice pursuant to Section 2.3(a) above of a Borrowing equal to
the amount of a Reimbursement Obligation and has not notified the Agent by 10:00
a.m. (Chicago time) on the day such Reimbursement Obligation becomes due that it
intends to repay such Reimbursement Obligation through funds not borrowed under
this Agreement, the Company (acting on behalf of the Borrowers) shall be deemed
to have requested a Borrowing of Domestic Rate Loans on such day in the amount
of the Reimbursement Obligation then due, subject to Section 9 hereof, which
Borrowing shall be applied to pay the Reimbursement Obligation then due.
(d) Disbursement of Committed Loans. Not later than 1:00 p.m. (Chicago
time) on the date of any Borrowing, each Bank shall make available its Committed
Loan in funds immediately available in Chicago, Illinois at the principal office
of the Agent, except to the extent such Borrowing is a reborrowing, in whole or
in part, of the principal amount of a maturing Borrowing of Committed Loans (a
"Refunding Borrowing"), in which case each Bank shall record the Committed Loan
made by it as a part of such Refunding Borrowing on its books and records or on
a schedule to its Committed Loan Note, as provided in Section 4.5(c) hereof, and
shall effect the repayment, in whole or in part, as appropriate, of its maturing
Committed Loan through the proceeds of such new Committed Loan. Subject to
Section 9 hereof, the Agent shall make the proceeds of each non-Refunding
Borrowing available to the applicable Borrower at the Agent's principal office
in Chicago, Illinois.
Section 2.4. Rate and Currency Determinations. The Agent shall determine
each interest rate applicable to Obligations (other than interest rates
applicable to Bid Loans) and the Original Dollar Amount of all Obligations, and
a determination thereof by the Agent shall be conclusive and binding except in
the case of manifest error. The Original Dollar Amount of a
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Loan shall be determined or redetermined, as applicable, effective as of the
first day of each Interest Period for such Loan and at such additional times and
from time to time, as the Required Banks may request. The Original Dollar Amount
of each Letter of Credit shall be determined or redetermined, as applicable, on
the date of issuance, increase or extension of such Letter of Credit and on the
last day of each calendar quarter thereafter and at the request of any Lender or
any Borrower, at such additional times, and from time to time, as may be
requested; provided, however, that the Original Dollar Amount of a Reimbursement
Obligation shall be calculated on the date of the Agent's payment of the drawing
giving rise to such Reimbursement Obligation and at such additional times, and
from time to time, as the Agent or Required Banks may request.
SECTION 3. THE COMPETITIVE BID FACILITY.
Section 3.1. The Bid Loans. Any Borrower may request the Banks to offer to
make uncommitted loans (each a "Bid Loan" and collectively the "Bid Loans") in
U.S. Dollars in the manner set forth in this Section 3 and in amounts such that
the aggregate Original Dollar Amount of all outstanding Loans (whether Committed
Loans or Bid Loans) and L/C Obligations shall not exceed the Commitments then in
effect. The Banks may, but shall have no obligation to, make such offers and the
Borrowers may, but shall have no obligation to, accept any such offers in the
manner set forth in this Section 3. Each Bank may offer to make Bid Loans in any
amount (whether greater than, equal to, or less than its Commitment), subject to
the limitations (x) that the aggregate Original Dollar Amount of all Loans
(whether Committed Loans or Bid Loans) and L/C Obligations outstanding at any
time shall not at any time exceed the Commitments then in effect, (y) that no
Bid Loan shall be made if at the time thereof or immediately after giving effect
thereto, the aggregate principal amount of Bid Loans then outstanding would
exceed the lesser of the unused Commitments or the Bid Loan Limit and (z) of the
other conditions of this Section 3.
SECTION 3.2. REQUESTS FOR BID LOANS.
(a) Requests and Confirmations. In order to request a Borrowing of Bid
Loans (a "Bid Loan Request"), the Company (acting on behalf of the Borrowers)
shall give telephonic notice to the Agent no later than 2:00 p.m. (Chicago time)
one (1) Business Day before the proposed date of such borrowing, which must be a
Business Day (the "Borrowing Date"), followed on the same day by a duly
completed Bid Loan Request Confirmation, delivered by telecopier or other means
of facsimile communication, substantially in the form of Exhibit C hereto or
otherwise containing the information required by this Section (a "Bid Loan
Request Confirmation"), to be received by the Agent no later than 2:30 p.m.
(Chicago time) on such day. Bid Loan Request Confirmations that do not conform
substantially to the format of Exhibit C or otherwise contain the information
required by this Section 3.2 shall be rejected by the Agent, and the Agent shall
give telephonic notice to the Company (acting on behalf of the Borrowers) of
such rejection promptly after it determines (which determination shall be
conclusive) that the Bid Loan Request Confirmation does not substantially
conform to the format of Exhibit C or otherwise contain the information required
by this Section 3.2. Requests for Bid Loans shall in each case refer to this
Agreement and specify (i) the proposed Borrowing Date (which must be a Business
Day), (ii) the aggregate principal amount thereof (which shall not be less than
$2,000,000 and shall be an integral multiple of $500,000, except as provided in
Section 3.4(ii) hereof), (iii) the Borrower requesting such Bid Loan and (iv) up
to three (3) Interest Periods of 7-180 days with respect to
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the entire amount specified in such Bid Loan Request (and, if so desired by the
such Borrower, specifying the maximum amount such Borrower would borrow for any
specific Interest Period).
(b) Invitation to Bid. Upon receipt by the Agent of a Bid Loan Request
Confirmation that conforms substantially to the format of Exhibit C hereto or
otherwise contains the information required by this Section 3.2, the Agent
shall, by telephone (no later than 3:00 p.m. (Chicago time) on the same day the
Agent receives a Bid Loan Request Confirmation), promptly confirmed by a
telecopy or other form of facsimile communication in the form of Exhibit D
hereto, invite each Bank to bid, on the terms and conditions of this Agreement,
to make Bid Loans pursuant to the Bid Loan Request.
(c) Bids. Each Bank may, in its sole discretion, offer to make a Bid
Loan or Loans (a "Bid") to such Borrower responsive to the Bid Loan Request.
Each Bid by a Bank must be received by the Agent by telephone not later than
9:30 a.m. (Chicago time) on the proposed Borrowing Date promptly confirmed in
writing by a duly completed Confirmation of Bid delivered by telecopier or other
means of facsimile communication substantially in the form of Exhibit E hereto
or otherwise containing the information required by this subsection (c) (a
"Confirmation of Bid"), to be received by the Agent on the same day; provided,
however, that any Bid made by the Agent must be made by telephone to the Company
(acting on behalf of the Borrowers) prior to any Bid by any other Bank by no
later than 9:15 a.m. (Chicago time). Each Bid and each Confirmation of Bid shall
refer to this Agreement and specify (i) the principal amount (which shall not be
less than $2,000,000 and shall be an integral multiple of $500,000) of each Bid
Loan that the Bank is willing to make to such Borrower, (ii) the interest rate
(which shall be computed on the basis of a 360 day year and actual days elapsed
for a period equal to the Interest Period applicable thereto) at which the Bank
is prepared to make each Bid Loan and (iii) the Interest Period applicable to
each such offered Bid Loan. The Agent shall reject any Bid if such Bid (i) does
not specify all of the information specified in the immediately preceding
sentence, (ii)contains any qualifying, conditional, or similar language, (iii)
proposes terms other than or in addition to those set forth in the Bid Loan
Request to which it responds, or (iv) is received by the Agent later than 9:30
a.m. (Chicago time). Any Bid submitted by a Bank pursuant to this Section 3.2
shall be irrevocable and shall be promptly confirmed by a telecopy or other form
of facsimile communication in the form of Exhibit E; provided that in all events
the telephone Bid received by the Agent shall be binding on the relevant Bank
and shall not be altered, modified, or in any other manner affected by any
inconsistent terms contained in, or terms missing from, the Bank's Confirmation
of Bid. Each offer contained in a Bid to make a Bid Loan in a certain amount, at
a certain interest rate, and for a certain Interest Period is referred to herein
as an "Offer".
Section 3.3. Notice of Bids; Advice of Rate. The Agent shall give
telephonic notice to the Company (acting on behalf of the Borrowers) no later
than 10:00 a.m. (Chicago time) on the proposed Borrowing Date of the number of
Bids made, the interest rate(s) and Interest Period(s) applicable to each Offer
contained in each Bid, the maximum principal amount bid at each interest rate
for each Interest Period, and the identity of the Bank making such Bid. The
Agent shall send a written summary of all Bids received by it to the Company on
the same day.
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Section 3.4. Acceptance or Rejection of Bids. The Borrower who requests
such Offers may in its sole and absolute discretion, subject only to the
provisions of this Section 3.4, irrevocably accept or reject, in whole or in
part, any Offer contained in a Bid. No later than 10:30 a.m. (Chicago time) on
the proposed Borrowing Date, the Company (acting on behalf of such Borrower)
shall give telephonic notice to the Agent of whether and to what extent it has
decided to accept or reject any or all of the Offers contained in the Bids made
in response to a Bid Loan Request, which notice shall be promptly confirmed by a
telecopy or other form of facsimile communication to be received by the Agent on
the proposed Borrowing Date; provided, however, that in the event any Offers are
accepted (i) such Borrower shall accept Offers for any of the Interest Periods
specified by such Borrower in its Bid Loan Request Confirmation solely on the
basis of ascending interest rates for each such Interest Period, (ii) if such
Borrower accepts an Offer for a Bid Loan at a particular interest rate for a
particular Interest Period but declines to borrow, or is in such event
restricted by any other condition hereof from borrowing, the maximum principal
amount of Bid Loans in respect of which Offers at such particular interest rate
for such particular Interest Period have been made, then such Borrower shall
accept a pro rata portion of each such Offer at such rate and for such Interest
Period, based as nearly as possible on the ratio of the maximum aggregate
principal amounts of Bid Loans for which each such Offer was made by each Bank
(provided that, if the available principal amount of Bid Loans to be so
allocated is not sufficient to enable Bid Loans to be so allocated to each
relevant Bank in integral multiples of $1,000,000, then such Borrower may round
allocations up or down in integral multiples not less than $500,000 as it shall
deem appropriate), (iii) the aggregate principal amount of all Offers accepted
by such Borrower shall not exceed the maximum amount contained in the related
Bid Loan Request Confirmation, (iv) no Offer of a Bid Loan shall be accepted in
a principal amount less than $2,000,000, except as provided in the immediately
preceding clause (ii) and (v) no Offer shall be accepted if after giving effect
to the Bid Loans to be made pursuant to such Offer the Bid Loans then
outstanding would exceed the lesser of the unused Commitments or the Bid Loan
Limit. Any telephone notice given by the Company (acting on behalf of such
Borrower) pursuant to this Section 3.4 shall be irrevocable and shall not be
altered, modified, or in any other manner affected by any inconsistent terms
contained in, or terms missing from, any written confirmation of such notice.
Section 3.5. Notice of Acceptance or Rejection of Bids.
(a) Notice to Banks Making Bids. The Agent shall give telephonic notice to
each Bank whether any of the Offers contained in its Bid has been accepted (and
if so, in what amount, at what interest rate and for what Interest Period) no
later than 10:45 a.m. (Chicago time) on the proposed Borrowing Date, and each
successful bidder will thereupon become bound, subject to Section 9 and the
other applicable conditions hereof, to make the Bid Loan(s) in respect of which
its Bid ha been accepted. As soon as practicable thereafter the Agent shall send
written notice substantially in the form of Exhibit F hereto to each such
successful bidder; provided, however, that failure to give such notice shall not
affect the obligation of such successful bidder to disburse its Bid Loans as
herein required.
(b) Disbursement of Bid Loans. Not later than 12:00 Noon (Chicago time) on
the Borrowing Date for each Borrowing of a Bid Loan(s), each Bank bound to make
a Bid Loan(s) in accordance with Section 3.5(a) shall make available to the
Agent the principal amount of each
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such Bid Loan in immediately available funds at the Agent's principal office in
Chicago, Illinois. The Agent shall promptly thereafter make available to the
applicable Borrower like funds as received from each Bank, at such office of the
Agent in Chicago, Illinois.
(c) Notice to the Banks. As soon as practicable after each Borrowing Date
for Bid Loans, the Agent shall notify each Bank of the aggregate amount of Bid
Loans advanced pursuant to a Bid Loan Request on such Borrowing Date, the
Interest Period(s) therefor, and the lowest and highest interest rates at which
Bid Loans were made for each Interest Period.
Section 3.6. Interest on Bid Loans. The Borrowers shall pay interest on the
unpaid principal amount of each Bid Loan so accepted from the applicable
Borrowing Date to the maturity thereof at the rate of interest applicable to
such Bid Loan as determined pursuant to the above provisions (calculated on the
basis of a 360 day year and the actual number of days elapsed) payable on the
last day of the Interest Period applicable to such Bid Loan and at maturity
(whether by acceleration or otherwise), and, if the applicable Interest Period
is longer than 90 days, on each day occurring every 90 days after the date such
Loan is made.
Section 3.7. Telephonic Notice. Each Bank's telephonic notice to the Agent
of its Bid pursuant to Section 3.2(c), and the Company's telephonic acceptance
(acting on behalf of the Borrowers) of any Offer contained in a Bid pursuant to
Section 3.4, shall be irrevocable and binding on such Bank and the Borrowers and
shall not be altered, modified, or in any other manner affected by any
inconsistent terms contained in, or missing from, any telecopy or other
confirmation of such telephonic notice. It is understood and agreed by the
parties hereto that the Agent shall be entitled to act, or to fail to act,
hereunder in reliance on its records of any telephonic notices provided for
herein and that the Agent shall not incur any liability to any Person in so
doing if its records conflict with any telecopy or other confirmation of a
telephone notice or otherwise, provided that the Agent has acted, or failed to
act, in good faith. It is further understood and agreed by the parties hereto
that the times of day as set forth in this Section 3 are for the convenience of
all the parties for providing notices and that no party shall incur any
liability or other responsibility for any failure to provide such notices within
the specified times; provided, however, that the Agent shall have no obligation
to notify the Company (acting on behalf of the Borrowers) of any Bid received by
it later than 9:30 a.m. (Chicago time) on the proposed Borrowing Date, and no
acceptance by the Company (acting on behalf of the Borrowers) of any Offer
contained in a Bid shall be effective to bind any Bank to make a Bid Loan, nor
shall the Agent be under any obligation to notify any Person of an acceptance,
if notice of such acceptance is received by the Agent later than 10:30 a.m.
(Chicago time) on the proposed Borrowing Date.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO ALL LOANS.
Section 4.1. Interest Periods. As provided in Section 2.3 hereof, in the
case of Committed Loans, and Section 3.2 hereof, in the case of Bid Loans, at
the time of each request for the Borrowing of Loans hereunder the Borrower
requesting such Borrowing shall select an Interest Period applicable to such
Loans from among the available options. The term "Interest Period" means the
period commencing on the date a Borrowing of Loans is made and ending, (a) in
the case of Domestic Rate Loans, on the last day of the calendar quarter in
which such
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Loan is made (i.e. the first to occur of March 31, June 30, September 30, and
December 31 following the date such Borrowing is made); (b) in the case of
Eurocurrency Loans, the date, as such Borrower may select, 1, 2, 3 or 6 months
thereafter, or if all Banks so consent, 12 months thereafter; and (c) in the
case of Bid Loans, the date, as such Borrower may select, 7-180 days thereafter;
provided, however, that:
(a) any Interest Period for a Borrowing of Domestic Rate Loans
commencing less than 90 days before the Termination Date shall end on
the Termination Date;
(b) with respect to any Borrowing of Fixed Rate Loans, the
Borrowers may not select an Interest Period that extends beyond the
Termination Date;
(c) whenever the last day of any Interest Period would
otherwise be a day that is not a Business Day, the last day of such
Interest Period shall be extended to the next succeeding Business Day,
provided that, in the case of an Interest Period for a Borrowing of
Eurocurrency Loans, if such extension would cause the last day of such
Interest Period to occur in the following calendar month, the last day
of such Interest Period shall be the immediately preceding Business
Day; and
(d)for purposes of determining the Interest Period for a Borrowing
of Eurocurrency Loans, a month means a period starting on one day in a
calendar month and ending on the numerically corresponding day in the next
calendar month; provided, however, that if there is no numerically
corresponding day in the month in which such an Interest Period is to end
or if such an Interest Period begins on the last Business Day of a calendar
month, then such Interest Period shall end on the last Business Day of the
calendar month in which such Interest Period is to end.
Section 4.2. Maturity of Loans. Each Loan shall mature and become due and
payable on the last day of the Interest Period applicable thereto.
Section 4.3. Voluntary Prepayments.
(a) Committed Loans. Each Borrower shall have the privilege of prepaying
without premium or penalty any Borrowing of Domestic Rate Loans in whole or in
part (but, if in part, then in an amount not less than $500,000 and in integral
multiples of $100,000 and such that the minimum amount required for a Borrowing
pursuant to Section 2.2 hereof remains outstanding) at any time upon prior
notice to the Agent no later than 11:00 a.m. (Chicago time) on the date of
prepayment (which shall advise each Bank thereof promptly in writing
thereafter), such prepayment to be made by the payment of the principal amount
to be prepaid and accrued interest thereon to the date fixed for prepayment. The
Borrowers may not prepay any Eurocurrency Loan before its maturity.
(b) Bid Loans. The Borrowers may not prepay any Bid Loan before its
maturity.
(c) Reborrowings. Any amount paid or prepaid before the Termination Date
may, subject to the terms and conditions of this Agreement, be borrowed, repaid
and borrowed again.
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Section 4.4. Default Rate. If any payment of principal on any Loan is not
made when due (whether by acceleration or otherwise), such Loan shall bear
interest (computed on the basis of a year of 360 days and actual days elapsed)
from the date such payment was due until paid in full, payable on demand, at a
rate per annum equal to:
(a) with respect to any Domestic Rate Loan, the sum of two percent (2%)
plus the Domestic Rate from time to time in effect plus the Applicable
Margin;
(b) with respect to any Fixed Rate Loan the sum of two percent (2%)
plus the rate of interest in effect thereon at the time of such default
(including the effect of any increase to Level V Status and deemed
application of the Lower Interest Coverage Period in each case as a result
of such default) until the end of the Interest Period applicable thereto
and, thereafter, at a rate per annum equal to (i) in the case of Fixed Rate
Loans denominated in U.S. Dollars the sum of two percent (2%) plus the
Domestic Rate from time to time in effect plus the Applicable Margin and
(ii) in the case of Fixed Rate Loans denominated in an Alternative
Currency, the sum of two percent (2%) plus the Overnight Foreign Currency
Rate from time to time in effect plus the Applicable Margin.
Section 4.5. The Notes. (a) All Committed Loans made to the Borrowers by a
Bank shall be evidenced by a promissory note of the Borrowers, joint and
severally, in the form of Exhibit A hereto (individually a "Committed Loan Note"
and collectively the "Committed Loan Notes"), each such Committed Loan Note to
be dated the date hereof, payable to the order of the applicable Bank and
otherwise in the form of Exhibit A hereto.
(b)(i) All Bid Loans made to the Borrowers by a Bank shall be evidenced by
a promissory note of the Borrowers, joint and severally, in the form of Exhibit
B hereto (individually, a "Bid Note" and collectively the "Bid Notes"), each
such Bid Note to be dated the date hereof, payable to the order of the
applicable Bank and otherwise in the form of Exhibit B hereto.
(c) Each Bank shall record on its books and records or on a schedule to the
appropriate Note the amount of each Loan made by it to the Borrowers, the
Borrower to whom such Loan was made, the Interest Period and currency thereof,
all payments of principal and interest and the principal balance from time to
time outstanding thereon, in respect of any Fixed Rate Loan, the interest rate
applicable thereto and, in respect of any Committed Loan, the type of such Loan.
The record thereof, whether shown on such books and records of a Bank or on a
schedule to any Note, shall be prima facie evidence as to all such matters;
provided, however, that the failure of any Bank to record any of the foregoing
or any error in any such record shall not limit or otherwise affect the
obligation of the Borrowers to repay all Loans made to them hereunder together
with accrued interest thereon. At the request of any Bank and upon such Bank
tendering to the Borrowers the Note to be replaced, the Borrowers shall furnish
a new Note to such Bank to replace any outstanding Note and at such time the
first notation appearing on a schedule on the reverse side of, or attached to,
such Note shall set forth the aggregate unpaid principal amount of all Loans, if
any, then outstanding thereon.
Section 4.6. Commitment Terminations. The Company shall have the right at
any time and from time to time, upon three (3) Business Days' prior written
notice to the Agent, to
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terminate without premium or penalty, in whole or in part, the Commitments, any
partial termination to be made in an amount not less than $1,000,000 or any
larger amount that is an integral multiple of $1,000,000, and to reduce ratably
each Bank's Commitment; provided that the Commitments may not be reduced to an
amount less than the aggregate Original Dollar Amount of Loans (whether
Committed Loans or Bid Loans) and L/C Obligations then outstanding. Any
termination of Commitments pursuant to this Section 4.6 may not be reinstated.
No Facility Fee shall accrue on any portion of the Commitments that has been so
terminated.
Section 4.7. Mandatory Prepayment. (a) If, within thirty (30) days after
receiving notice under Section 10.5 of a Change of Control Event, the Required
Banks notify the Company (acting on behalf of the Borrowers) that they require
prepayment of the Notes, on the date set forth in such notice (which date shall
be no earlier than (x) five (5) days after such notice is given or (y) the day
on which any Borrower repays any other Debt before its original scheduled due
date, whichever day is earlier), the Borrowers shall pay in full all Obligations
then outstanding, including the prepayment of L/C Obligations in the manner
contemplated by Section 11.4 hereof, and the Commitments shall terminate in
full.
(b) If the aggregate Original Dollar Amount of outstanding Loans and L/C
Obligations shall at any time for any reason exceed the Commitments then in
effect, the Company shall, within three (3) Business Days, pay the amount of
such excess to the Agent for the ratable benefit of the Banks as a prepayment of
Loans (to be applied to such Loan as the Company shall direct at the time of
such payment) and, if necessary, a prefunding of Letters of Credit. Immediately
upon determining the need to make any such prepayment the Company shall notify
the Agent of such required prepayment. Each such prepayment shall be accompanied
by a payment of all accrued and unpaid interest on the Loans prepaid and shall
be subject to Section 4.8 hereof.
Section 4.8. Funding Indemnity. In the event any Bank shall incur any loss,
cost or expense (including, without limitation, any loss of profit, and any
loss, cost or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Fixed Rate
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:
(a) any payment or prepayment of a Fixed Rate Loan on a date other
than the last day of its Interest Period for any reason, whether before or
after default, and whether or not such payment is required by any
provisions of this Agreement, or
(b) any failure (because of a failure to meet the conditions of
Section 9 or otherwise) by a Borrower to borrow a Fixed Rate Loan on the
date specified in a notice given pursuant to Section 2.3 or 3.4 hereof,
then, upon the demand of such Bank, the Borrowers shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any Bank
makes such a claim for compensation, it shall provide to the Borrowers, with a
copy to the Agent, a certificate executed by an officer of such Bank setting
forth the amount of such loss, cost or expense in reasonable
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<PAGE> 24
detail (including an explanation of the basis for and the computation of such
loss, cost or expense) and the amounts shown on such certificate if reasonably
calculated shall be conclusive.
Section 4.9. Appointment of Company as Agent for Titan Investment and Titan
Credit. Titan Investment and Titan Credit each hereby irrevocably appoints the
Company as its agent hereunder to make any and all requests on its behalf,
including without limitation requests under Section 1, 2 or 3 hereof for Loans
or Letters of Credit to be made to it, to give and receive any and all notices
under the Loan Documents, to accept amounts on its behalf and to take any other
action contemplated by the Loan Documents with respect to credit extended to it
hereunder. The Agent and the Banks shall be entitled to conclusively presume
that any action by the Company under the Loan Documents is taken on behalf of
Titan Investment and Titan Credit, whether or not the Company so indicates and
that any notice delivered to the Company has also been delivered to Titan
Investment or Titan Credit.
SECTION 5. FEES.
Section 5.1. Facility Fee. The Borrowers shall pay to the Agent for the
ratable account of the Banks in accordance with their Percentages a facility fee
at the rate per annum equal to the percentage set forth in the applicable row of
the last column of the chart set forth in Section 2.1(c) hereof (as then
determined and computed) in effect on each day of the applicable quarter on the
average daily amount of the Commitments hereunder (whether used or unused),
payable quarterly in arrears on the last day of each March, June, September, and
December, commencing with the first of such dates after the date hereof, and on
the Termination Date.
Section 5.2. Letter of Credit Fees. (a) On the date of issuance or
extension, or increase in the amount, of any Letter of Credit pursuant to
Section 1.2 hereof, the Borrowers shall pay to the Agent, for the sole benefit
of the Agent, an issuance fee equal to 1/8 of 1% (0.125) of the face amount of
(or of the increase in the face amount of) such Letter of Credit. In addition,
quarterly in arrears, on the last day of each calendar quarter, commencing on
the first of such dates after the date hereof, the Borrowers shall pay to the
Agent, for the ratable benefit of the Banks in accordance with their
Percentages, (i) a letter of credit fee at a rate per annum equal to the
Applicable Margin for Committed Loans which are Eurocurrency Loans in effect
during each day of such quarter applied to the daily average face amount of
Financial Letters of Credit outstanding during such quarter and (ii) a letter of
credit fee at a rate per annum equal to the greater of (x) fifty percent (50%)
of the Applicable Margin for Committed Loans which are Eurocurrency Loans in
effect during each day of such quarter or (y) 0.25%, applied to the daily
average face amount of any other Letters of Credit outstanding during such
quarter.
(b) In addition to the letter of credit fees called for above, the
Borrowers further agree to pay to the Agent for its own account such processing
and transaction fees and charges as the Agent from time to time customarily
imposes in connection with any amendment, cancellation, negotiation and/or
payment of letters of credit and drafts drawn thereunder.
Section 5.3. Closing Fee. On the date hereof, the Borrowers shall pay to
the Agent for the account of each Bank party hereto as of the date hereof, a
closing fee as agreed upon between
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the Borrowers and the Agent pursuant to those certain letter agreements dated
September 2, 1998.
Section 5.4. Bid Loan Fee. The Borrowers shall pay to the Agent for its own
account an administrative fee of $250 for each Bid Loan Request by the Borrowers
in excess of six in any given calendar month, such fee to be payable no later
than 3:00 p.m. (Chicago time) on the date each such Bid Loan Request in excess
of six in any given calendar month is received and to be deemed fully earned
whether or not any Bid Loan is made pursuant to such Bid Loan Request.
Section 5.5. Agent Fees. The Borrowers shall pay to the Agent the fees
agreed to in a letter exchanged between them dated May 27, 1998 (the "Agent's
Fee Letter"). The Borrowers shall also pay to the Agent for the sole account of
the Agent the fees agreed to between the Agent and the Borrowers from time to
time in writing.
Section 5.6. Fee Calculations. All fees payable hereunder shall be computed
on the basis of a year of 365 or 366 days, as applicable, for the actual number
of days elapsed.
SECTION 6. PLACE AND APPLICATION OF PAYMENTS.
Section 6.1. Place and Application of Payments. All payments of principal
of and interest on the Loans and the Reimbursement Obligations, and of all other
amounts payable by the Borrowers under this Agreement, shall be made to the
Agent by no later than 12:00 noon (Chicago time) at the principal office of the
Agent in Chicago, Illinois (or such other location in the State of Illinois as
the Agent may designate to the Company) or, if such payment is to be made in an
Agreement Currency, no later than 12:00 noon local time at the place of payment
(or such earlier local time as is necessary for such funds to be received and
transferred to the Agent for same day value on the day such Obligation is due)
to such office as the Agent has previously specified in a notice to the Company
(acting on behalf of the Borrowers) for the benefit of the Person or Persons
entitled thereto. Any payments received after such time shall be deemed to have
been received by the Agent on the next Business Day. All such payments shall be
made (i) in U.S. Dollars, in immediately available funds at the place of
payment, or (ii) in the case of any Loans denominated in an Alternative Currency
or any Reimbursement Obligations payable in an Available Foreign Currency, in
such Alternative Currency or such Available Foreign Currency, as applicable, in
such funds as are then customary for the settlement of international
transactions in such currency. Any payment by the Borrowers to the Agent for
account of the Banks in accordance with the terms hereof shall, to the extent of
such payment, discharge the Borrowers' obligation to make such a payment to the
Banks, provided that if any such payment is rescinded or must otherwise be
restored or returned, the Borrowers' obligations to the Banks with respect to
such payment shall be reinstated as if such payment had never been made. All
such payments shall be made, in all cases, without setoff or counterclaim and
without reduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholdings, restrictions
or conditions of any nature imposed by any government or any political
subdivision or taxing authority thereof (but excluding any taxes imposed or
measured by the net income of any Bank). The Agent will promptly thereafter (and
in any case before the close of business on the day the Agent receives such
funds, if timely received by the Agent) cause to be distributed like funds
relating to the payment of principal or interest on
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Committed Loans or fees ratably to the Banks and like funds relating to the
payment of any other amount payable to any Bank to such Bank, in each case to be
applied in accordance with the terms of this Agreement. If the Agent fails to
distribute such payments to any Bank by such times, the Agent shall pay to such
Bank interest on the amount not paid in respect of each day during the period
commencing on the date such payment was received by the Agent (or the following
Business Day in the case of payments received after 12:00 noon (Chicago time))
and ending on but excluding the date the Agent pays such amount at a rate per
annum equal to (i) if such payment was received by the Agent on account of an
Obligation denominated in U.S. Dollars, the effective rate charged to the Agent
for Federal Funds transactions with member banks of the federal reserve system
for each day as determined by the Agent (or in the case of a day which is not a
Business Day, then for the preceding day) and (ii) if such payment was received
by the Agent on account of an Obligation denominated in an Agreement Currency,
at the Overnight Foreign Currency Rate.
Anything contained herein to the contrary notwithstanding, all payments and
collections received in respect of the indebtedness evidenced by the Notes and
Applications received, in each instance, by the Agent or any of the Banks after
the occurrence of an Event of Default shall be remitted to the Agent and
distributed as follows:
(a) first, to the payment of any reasonable outstanding costs and
expenses incurred by the Agent in protecting, preserving or enforcing
rights under this Agreement, the Notes and the Applications and in any
event including all reasonable costs and expenses of a character which the
Borrowers have agreed to pay under Sections 11.5 and 15.15 hereof (such
funds to be retained by the Agent for its own account unless it has
previously been reimbursed for such costs and expenses by the Banks, in
which event such amounts shall be remitted to the Banks to reimburse them
for payments theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or other
fees or indemnification amounts due under the Notes, the Applications, the
Agent's Fee Letter or this Agreement other than for principal, ratably as
among the Agent and the Banks in accord with the amount of such interest
and other fees or amounts owing each;
(c) third, to the payment of (i) the principal of the Notes and
(ii) after all amounts in clause (i) have been paid, to any liabilities in
respect of unpaid drawings under the Letters of Credit and to the Agent to
be held as collateral security for any undrawn Letters of Credit (until the
Agent is holding an amount of cash equal to the then outstanding amount of
all such Letters of Credit), the aggregate amount paid to or held as
collateral security for the Banks to be allocated pro rata as among the
Banks in accord with the then respective aggregate unpaid principal
balances of the Notes as to which such payments relate and the Letters of
Credit;
(d) fourth, to the Agent and the Banks ratably in accord with the
amounts of other Obligations owing to each of them (other than those
described above) unless and until all such indebtedness, obligations and
liabilities have been fully paid and satisfied; and
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(e) fifth, to the Borrowers or whoever may be lawfully entitled
thereto.
SECTION 7. DEFINITIONS; INTERPRETATION.
Section 7.1. Definitions. The following terms when used herein have the
following meanings:
"Adjusted LIBOR" is defined in Section 2.1(b) hereof.
"Affiliate" shall mean any Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, the Borrower, (ii) which beneficially owns or holds 5% or more of
any class of the Voting Stock of the Borrower or (iii) 5% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 5% or more of the
equity interest) of which is beneficially owned or held by the Borrower or a
Subsidiary. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or otherwise.
"Agent" means Harris Trust and Savings Bank and any successor pursuant to
Section 13.8 hereof.
"Agreement Currency" means and includes Available Foreign Currency and
Alternative Currency.
"Alternative Currency" means French Francs, Pounds Sterling, Deutsche Marks
and Italian Lira.
"Applicable Margin" is defined in Section 2.1(c) hereof.
"Applicable Telerate Page" is defined in Section 2.1(b) hereof.
"Assessment Rate" is defined in Section 2.1(b) hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 9.1(d) hereof or on any
update of any such list provided by the Company to the Agent, or any further or
different officer(s) or employee(s) of the Company so named by any Authorized
Representative in a written notice to the Agent. Any Authorized Representative
shall for all purposes be conclusively deemed to be an Authorized Representative
of Titan Investment and Titan Credit.
"Available Foreign Currency" shall mean (x) each Alternative Currency and
(y) any other currency (other than U.S. Dollars) approved by the Required Banks,
so long as such currencies are freely transferable and convertible into U.S.
Dollars and are traded and readily available to each Bank in the London
interbank market.
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"Bank" means each bank signatory hereto and its successors, and any
assignee of a Bank pursuant to Section 15.12 hereof.
"Bid" is defined in Section 3.2(c) hereof.
"Bid Loan" is defined in Section 3.1 hereof.
"Bid Loan Limit" shall mean an amount equal to the Commitments if and so
long as Level I, Level II or Level III exist and equal at all other times to 50%
of the Commitments.
"Bid Loan Request" is defined in Section 3.2(a) hereof.
"Bid Loan Request Confirmation" is defined in Section 3.2(a) hereof.
"Bid Note" is defined in Section 4.5(b) hereof.
"Borrowers" is defined in the introductory paragraph hereof, with (i) the
term "Borrowers" to mean the Borrowers, collectively, and, also, each
individually, and (ii) all promises and covenants (including promises to pay)
and representations and warranties of and by the Borrowers made in the Loan
Documents or any instruments or documents delivered pursuant thereto to be and
constitute the joint and several promises, covenants, representations and
warranties of and by each and all of such corporations. The term "Borrower"
appearing in such singular form shall be deemed a reference to any of the
Borrowers unless the context in which such term is used shall otherwise require.
"Borrowing" means the total of Loans of a single type made by one or more
Banks on a single date and for a single Interest Period. Borrowings of Committed
Loans are made and maintained ratably from each of the Banks according to their
Percentages. Borrowings of Bid Loans are made from a Bank or Banks in accordance
with the procedures of Section 3 hereof.
"Borrowing Date" is defined in Section 3.2(a) hereof.
"Business Day" means any day other than a Saturday or Sunday on which (w)
banks are not authorized or required to close in Chicago, Illinois or New York,
New York and (x) the Federal Reserve Bank for such cities is generally open for
transaction of its business and (y) if the applicable Business Day relates to
the borrowing or payment of a Eurocurrency Loan denominated in U.S. Dollars, on
which banks are dealing in U.S. Dollar deposits in the interbank market in
London, England and, (z) if the applicable Business Day relates to the borrowing
or payment of a Eurocurrency Loan denominated in an Alternative Currency, on
which banks and foreign exchange markets are open for business in the city where
disbursements of or payments on such Loan are to be made.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
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"Capitalized Lease Obligations" means, for any Person, the amount of such
Person's liabilities under Capitalized Leases determined at any date in
accordance with GAAP.
"CERCLA" is defined in Section 8.12(b) hereof.
"Change of Control Event" means (i) any Person or two or more Persons
acting in concert shall have acquired after the date hereof beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934), directly or indirectly of securities
of the Company (or other securities convertible into such securities)
representing 15% or more of the combined voting power of all securities of the
Company entitled to vote in the election of directors, (ii) during any period of
24 consecutive months, commencing before or after the date of this Agreement,
individuals who at the beginning of such 24 month period were directors of the
Company (the "Initial Directors") shall cease for any reason other than death or
disability to constitute a majority of the Board of Directors of the Company
unless any subsequent or other members of such Board are nominated by a majority
of the Initial Directors, (iii) any Person or two or more Persons acting in
concert shall have acquired after the date hereof by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of control over securities of the Company (or
other securities convertible into such securities) representing 15% or more of
the combined voting power of all securities of the Company entitled to vote in
the election of directors, or (iv) Taylor, for a period in excess of one hundred
eighty (180) consecutive days, shall cease to be a director or executive officer
of the Company for any reason, including without limitation death, resignation,
retirement or incapacity, and an individual acceptable to the Required Banks
shall not be performing the duties and functions of such director or executive
officer of the Company within said 180-day period provided that such acceptance
of such director or executive officer by the Required Banks shall not be
unreasonably withheld. Notwithstanding anything in this definition to the
contrary, Taylor and Masco Tech, Inc., a Delaware corporation, may at any time
own any amount of the securities of the Company and such ownership shall not be
deemed a "Change of Control Event".
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitments" is defined in Section 1.1 hereof.
"Committed Loan Note" is defined in Section 4.5(a) hereof.
"Committed Loans" is defined in Section 1.1 hereof.
"Compliance Certificate" means a certificate in the form of Exhibit H
hereto.
"Confirmation of Bid" is defined in Section 3.2(c) hereof.
"Consolidated Net Income" means, for any period, the net income (or net
loss) of the Company and its Subsidiaries for such period computed on a
consolidated basis in accordance with GAAP; provided, however, that such
computation for each period shall exclude 50% of any non-recurring charges to
such net income during such period resulting from the settlement or
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final resolution of that certain lawsuit related to retiree medical benefits for
the former employees of PATC; further provided, however, that the aggregate
cumulative amount of non-recurring charges so excluded for all periods does not
exceed $18,000,000.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its Property is bound.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any Subsidiary, are treated as a single
employer under Section 414 of the Code.
"Credit Event" means the advancing of any Loan, including any Refunding
Borrowing, or the issuance of, or extension of the expiration date or increase
in the amount of, any Letter of Credit.
"Debt" means, for any Person, any Indebtedness of such Person only of the
types described in clauses (i) through (vii) of the definition of such term.
"Debt to Earnings Ratio" means, as of any time the same is to be
determined, the ratio of Total Funded Debt at such time to EBITDA for the four
then most recently completed consecutive fiscal quarters of the Company.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Deutsche Mark" means the lawful currency of the Federal Republic of
Germany.
"Domestic Rate" is defined in Section 2.1(a) hereof.
"Domestic Rate Loan" means a Loan bearing interest at the rate specified in
Section 2.1(a) hereof.
"Domestic Subsidiary" shall mean any Subsidiary which is not a Foreign
Subsidiary.
"EBIT" means, for any period, Consolidated Net Income for such period plus
all amounts deducted in arriving at such Consolidated Net Income amount for such
period for Interest Expense and for foreign, federal, state and local income tax
expense.
"EBITDA" means, for any period, EBIT for such period plus all amounts
deducted in arriving at such EBIT in respect of all amounts properly charged for
depreciation of fixed assets and amortization of intangible assets during such
period on the books of the Company and its Subsidiaries.
"EMU" means economic and monetary union as contemplated in the Treaty on
European Union.
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"EMU Commencement" means the date of commencement of the third stage of EMU
(which at the date hereof is expected to be on January 1, 1999) or the date on
which circumstances arise which (in the opinion of the Agent) have substantially
the same effect and result in substantially the same consequences as
commencement of the third stage of EMU as contemplated by the Treaty on European
Union.
"EMU Legislation" means legislative measures of the European Council for
the introduction of, changeover to or operation of a single or unified European
currency (whether known as the "euro" or otherwise), being in part the
implementation of the third stage of EMU.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Company, (ii) partnership or other trade or business (whether
or not incorporated) under common control (within the meaning of Section 414(c)
of the Code) with the Company, and (iii) member of the same affiliated service
group (within the meaning of Section 414(m) of the Code) as the Company, any
corporation described in clause (i) above or any partnership or trade or
business described in clause (ii) above.
"Euro" means the single currency of Euro Members of the European Union.
"Euro Member" means each state described as a "participating member state"
in any EMU Legislation.
"Euro Unit" means the currency unit of the Euro.
"Eurocurrency Loan" means a Loan bearing interest at the rate specified in
Section 2.1(b) hereof.
"Eurocurrency Reserve Percentage" is defined in Section 2.1(b) hereof.
"Event of Default" means any of the events or circumstances specified in
Section 11.1 hereof.
"Existing Credit Agreement" means the Credit Agreement dated as of
September 19, 1996, among the Company and the banks referred to therein and
Harris Bank, as agent, as amended and supplemented.
"Facility Fee" means the fee payable by the Company to the Banks under
Section 5.1 hereof.
"Federal Funds" shall mean overnight federal funds traded among members of
the Federal Reserve System and arranged by federal funds brokers.
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<PAGE> 32
"Federal Funds Rate" shall mean the Federal Funds rate described in clause
(x) of Section 2.1(a)(ii) hereof.
"Financial Letter of Credit" shall mean any standby Letter of Credit which
represents an irrevocable obligation to the beneficiary on the part of the Agent
(i) to repay money borrowed by or advanced to or for the account of the account
party or (ii) to make any payment on account of any indebtedness undertaken by
the account party, in the event the account party fails to fulfill its
obligation to the beneficiary and any other standby Letter of Credit which is
not a Performance Letter of Credit.
"Fixed Rate Loan" means Eurocurrency Loans and Bid Loans.
"Foreign Subsidiary" shall mean each Subsidiary which is organized under
the laws of a jurisdiction other than the United States of America or any State
thereof or more than 80% of the sales, earnings or assets (determined on a
consolidated basis) of such Subsidiary are located or derived from operations in
territories of the United States of America and jurisdictions outside the United
States of America.
"French Franc" means the lawful currency of the Republic of France.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied by the Company and its Subsidiaries on a basis
consistent with the preparation of the Company's most recent financial
statements furnished to the Banks pursuant to Section 8.4 hereof.
"Guarantee Agreement" means a letter to the Agent in the form of Exhibit I
hereto executed by each Guarantor whereby it acknowledges it is party hereto as
a Guarantor.
"Guarantor" means each Borrower and in addition includes each Subsidiary of
the Company that executes and delivers to the Agent a Guarantee Agreement in the
form of Exhibit I hereto along with the accompanying closing documents required
by Sections 9.1 or 10.15 hereof, as applicable.
"Guaranty" by any Person means all obligations (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation (including, without limitation,
limited or full recourse obligations in connection with sales of receivables or
any other Property) of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any Property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligation, or (y) to maintain working capital
or other balance sheet condition, or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation, or (iii)
to lease property or to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of the
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Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purpose of all computations made under this Agreement, the
amount of Guaranty in respect of any obligation shall be deemed to be equal to
the maximum aggregate amount of such obligation or, if the Guaranty is limited
to less than the full amount of such obligation, the maximum aggregate potential
liability under the terms of the Guaranty.
"Hazardous Material" means and includes (a) any asbestos, PCBs or dioxins
or insulation or other material composed of or containing asbestos, PCBs or
dioxins and (b) any petroleum product or derivative or other hydrocarbon, and
any hazardous or toxic waste, substance or material defined as such in (or for
purposes of) CERCLA, any so-called "Superfund" or "Superlien" law, or any other
applicable federal, state, local or other statute, law, ordinance, code, rule,
regulation, order or decree regulating or pertaining to any such waste,
substance or material, as now or at any time hereinafter in effect.
"Indebtedness" means and includes, for any Person, all obligations of such
Person, without duplication, which are required by GAAP to be shown as
liabilities on its balance sheet, and in any event shall include all of the
following whether or not so shown as liabilities (i) obligations of such Person
for borrowed money, (ii) obligations of such Person representing the deferred
purchase price of property or services other than accounts payable arising in
the ordinary course of business on terms customary in the trade, (iii)
obligations of such Person evidenced by notes, acceptances, or other instruments
of such Person or arising out of letters of credit issued for such Person's
account, (iv) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from Property now or hereafter owned or
acquired by such Person, (v) Capitalized Lease Obligations of such Person, (vi)
obligations for which such Person is obligated pursuant to a Guaranty and (vii)
obligations arising out of or relating to any interest rate or foreign currency
swap, cap, collar, option, forward or similar agreements entered into by such
Person (it being understood that for purposes of this Agreement the amount of
Indebtedness attributable to such agreement shall be an amount equal to the
highest termination payment, if any, that would be payable by such Person upon
termination of such agreement for any reason, on the date of determination).
"Interest Coverage Ratio" means, as of any time the same is to be
determined, the ratio of EBIT to Interest Expense in each case for the period of
the then four most recently completed consecutive fiscal quarters of the
Company.
"Interest Expense" means, for any period, the sum of all interest charges
minus the sum of all interest income of the Company and its Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP.
Computations of Interest Expense on a pro forma basis for Indebtedness having a
variable interest rate shall be calculated at the rate for such Indebtedness in
effect on the date of any determination.
"Interest Period" is defined in Section 4.1 hereof.
"Investments" is defined in Section 10.10 hereof.
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"Italian Lira" means the lawful currency of the Republic of Italy.
"L/C Documents" means the Letters of Credit, any draft or other document
presented in connection with a drawing thereunder, the Applications and this
Agreement.
"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"L/C Sub-Limit" means $50,000,000.
"Lending Office" is defined in Section 12.4 hereof.
"Letter of Credit" is defined in Section 1.2(a) hereof.
"Level I Status" shall mean, for any Margin Determination Date, that as of
the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Debt to Earnings Ratio is less than or equal to
2.0 to 1.
"Level II Status" shall mean, for any Margin Determination Date, that as of
the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Debt to Earnings Ratio is greater than 2.0 to 1
but less than or equal to 3.0 to 1.
"Level III Status" shall mean, for any Margin Determination Date, that as
of the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Debt to Earnings Ratio is greater than 3.0 to 1
but less than or equal to 3.5 to 1.
"Level IV Status" shall mean, for any Margin Determination Date, that as of
the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Debt to Earnings Ratio is greater than 3.5 to 1
but less than or equal to 4.0 to 1.
"Level V Status" shall mean, for any Margin Determination Date, that as of
the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Debt to Earnings Ratio is greater than 4.0 to 1.
"LIBOR" is defined in Section 2.1(b) hereof.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, including, but not limited to,
the security interest lien arising from a mortgage, encumbrance, pledge,
conditional sale, security agreement or trust receipt, or a lease, consignment
or bailment for security purposes. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purposes of this definition, a Person shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, Capitalized Lease or other arrangement pursuant to
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which title to the Property has been retained by or vested in some other Person
for security purposes, and such retention of title shall constitute a "Lien."
"Loan" means and includes Committed Loans and Bid Loans, and each of them
singly, and the term "type" of Loan refers to its status as a Committed Loan or
Bid Loan or, if a Committed Loan, to its status as a Domestic Rate Loan or
Eurocurrency Loan.
"Loan Documents" means this Agreement and all exhibits hereto, the Notes,
the Applications, the Letters of Credit, the Agent's Fee Letter, when delivered,
and each Guarantee Agreement delivered to the Agent pursuant to Sections 9.1 or
10.15 hereof, as applicable.
"Lower Interest Coverage Period" is defined in Section 10.8 hereof.
"Margin Determination Date" is defined in Section 2.1(c) hereof.
"Material Plan" is defined in Section 11.1(f) hereof.
"Non-Guaranteeing Domestic Subsidiaries" means, as of any time, each
Domestic Subsidiary which is not then obligated on a Guarantee Agreement,
whether because such Domestic Subsidiary is not required to provide a Guarantee
Agreement or because such Domestic Subsidiary has been released in accordance
herewith from its obligations under a Guarantee Agreement it had previously
delivered.
"Non-Guaranteeing Subsidiaries" means, as of any time, each Subsidiary
which is not then obligated on a Guarantee Agreement, whether because such
Subsidiary is not required to provide a Guarantee Agreement or because such
Subsidiary has been released in accordance herewith from its obligations under a
Guarantee Agreement it had previously delivered.
"Note" means and includes the Committed Loan Notes and the Bid Notes and
each individually, unless the context in which such term is used shall otherwise
require.
"Obligations" means all fees payable hereunder, all obligations of the
Borrowers to pay principal or interest on Loans and Reimbursement Obligations,
and all other payment obligations of the Borrowers arising under or in relation
to any Loan Document.
"Offer" is defined in Section 3.2(c) hereof.
"Original Dollar Amount" means (i) the amount of any Obligation, if such
Obligation is denominated in U.S. Dollars, (ii) in relation to any Loan,
Reimbursement Obligation or Letter of Credit denominated in an Agreement
Currency, the U.S. Dollar Equivalent of such Obligation as of the day such
amount is to be computed pursuant to Section 2.4 hereof and (iii) in relation to
any other Obligation denominated in an Agreement Currency, the U.S. Dollar
Equivalent of such Obligation on the day such amount is being computed.
"Overnight Foreign Currency Rate" shall mean for any amount payable in a
currency other than U.S. Dollars, the rate of interest per annum as determined
by the Agent (rounded
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upwards, if necessary, to the nearest whole multiple of one-sixteenth of one
percent (1/16 of 1%)) at which overnight or weekend deposits of the appropriate
currency for delivery in immediately available and freely transferable funds
would be offered by the Agent to major banks in the interbank market upon
request of such major banks for the applicable period as determined above and in
an amount comparable to the unpaid principal amount of the related Loan or
Reimbursement Obligation (or, if the Agent is not placing deposits in such
currency in the interbank market, then the Agent's cost of funds in such
currency for such period).
"Participating Bank" is defined in Section 1.2(f) hereof.
"PATC" means Pirelli Armstrong Tire Corporation, a Delaware corporation.
"PBGC" is defined in Section 10.17 hereof.
"Percentage" means, for each Bank, the percentage of the Commitments
represented by such Bank's Commitment or, if the Commitments have been
terminated, the percentage held by such Bank (including through participation
interests in Reimbursement Obligations) of the aggregate principal amount of all
outstanding Obligations.
"Performance Letter of Credit" shall mean any standby Letter of Credit
which represents an irrevocable obligation to the beneficiary on the part of the
Agent to make payment on account of any default by the account party in the
performance of a nonfinancial or commercial obligation.
"Permitted Company Redemption" shall mean the redemption by the Company
after March 14, 1997 of not more than 8,000,000 (on a cumulative basis on and
after such date) shares of the issued and outstanding common stock which
constitutes Voting Stock of the Company on such date on a fully diluted basis
provided the amount expended on and after such date for such redemptions
aggregates (on a cumulative basis after such date) not more than $100,000,000.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
"Plan" means, with respect to the Company and each Subsidiary at any time,
an employee pension benefit plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group of which the Company or such Subsidiary is a
part, (ii) is maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group of which the Company or such Subsidiary
is a part is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions, or (iii) under which a
member of the Controlled Group of which the Company or such Subsidiary is a part
has any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years or by reason of being deemed a contribution
sponsor under Section 4069 of ERISA.
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"Pounds Sterling" means the lawful currency of the United Kingdom.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, whether now owned or
hereafter acquired.
"Refunding Borrowing" is defined in Section 2.3(d) hereof.
"Reimbursement Obligation" is defined in Section 1.2(e) hereof.
"Required Banks" means, as of the date of determination thereof, Banks
holding at least 51% of the Percentages.
"Restricted Equity Payments" is defined in Section 10.13(a) hereof.
"Restricted Subordinated Debt Payments" is defined in Section 10.13(b)
hereof.
"Security" has the same meaning as in Section 2(l) of the Securities Act of
1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Set-Off" is defined in Section 15.7 hereof.
"Shareholder's Equity" means, as of any date the same is to be determined,
the total shareholder's equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding minority interests in Subsidiaries) which would appear on a balance
sheet of the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP. Notwithstanding anything herein to the contrary, for the
purposes of determining Shareholder's Equity, no value shall be attributed to
any Unrestricted Subsidiary or any Investment therein.
"Subordinated Debt" means all unsecured Debt of the Company that is
expressly subordinated and made junior to the payment and performance in full of
the obligations of the Borrowers hereunder to the Banks and Agent, and evidenced
by a subordination agreement or other written instrument approved by the Agent
and the Required Banks in their sole discretion, pursuant to documentation and
containing interest rates, payment terms, maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material terms
in each case in form and substance satisfactory to the Agent and Required Banks
in their discretion.
The term "subsidiary" means, as to any particular parent Person, any Person
of which more than 50% (by number of votes) of the Voting Stock shall be owned
by such parent Person and/or one or more Persons which are themselves
subsidiaries of such parent Person. The term "Subsidiary" shall mean a
subsidiary of the Company and shall include any subsidiaries of any such
Subsidiary.
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"Tangible Net Worth" means, as of any time the same is to be determined,
the Shareholders' Equity less the sum of (i) the aggregate book value of all
assets which would be classified as intangible assets under GAAP, including,
without limitation, goodwill, patents, trademarks, trade names, copyrights,
franchises and deferred charges (including, without limitation, unamortized debt
discount and expense, organization costs and deferred research and development
expense) and similar assets and (ii) the write-up of assets above cost.
"Taylor" shall mean Maurice Taylor, Jr., an individual of Quincy, Illinois.
"Telerate Service" means the Dow Jones Telerate Service.
"Termination Date" means September 17, 2003 or such earlier date on which
the Commitments are terminated in whole pursuant to Sections 4.6, 4.7, 11.2 or
11.3 hereof.
"Test Date" is defined in Section 10.8 hereof.
"Titan Credit" means Titan Credit Corporation, a Nevada corporation.
"Titan Investment" means Titan Investment Corporation, an Illinois
corporation.
"Titan Tire" means Titan Tire Corporation, an Illinois corporation.
"Total Assets" means, without duplication on a consolidated basis, assets
of the Company and its Subsidiaries (excluding Unrestricted Subsidiaries) as
determined in accordance with GAAP.
"Treaty on European Union" means the Treaty of Rome of March 25, 1957, as
amended by the Single European Act of 1986 and the Maastricht Treaty (which was
signed at Maastricht on February 7, 1992, and came into force on November 1,
1993, as amended from time to time).
"Total Capitalization" means the sum of Total Funded Debt and Tangible Net
Worth.
"Total Funded Debt" means, without duplication on a consolidated basis,
obligations of the Company and its Subsidiaries (excluding Unrestricted
Subsidiaries) for (i) borrowed money and (ii) arising out of letters of credit,
issued for the account of the Company or such Subsidiary (provided that up to
$10,000,000 of such obligations attributable to the undrawn portion of such
letters of credit shall not be included in calculating Total Funded Debt), less
the sum of cash and marketable securities of the Company in excess of
$5,000,000.
"Unfunded Vested Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all vested nonforfeitable
accrued benefits under such Plan exceeds (ii) the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the Controlled Group to the PBGC or such
Plan under Title IV of ERISA.
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"Unrestricted Subsidiary" means any Subsidiary which the Company has
irrevocably designated in writing to the Agent, which shall promptly deliver
copies of such designation to the Banks, as being an "Unrestricted Subsidiary"
for purposes of this Agreement and any subsidiaries of any such Subsidiary. The
Company shall not designate any Borrower as an Unrestricted Subsidiary, and no
Borrower shall be an Unrestricted Subsidiary.
"U.S. Dollar Equivalent" shall mean the amount of U.S. Dollars which would
be realized by converting a foreign currency into U.S. Dollars in the spot
market at the exchange rate quoted by the Agent at 9:00 a.m. Chicago time on the
date of determination to prime banks in the London interbank foreign exchange
market for the purchase of U.S. Dollars with such foreign currency.
"U.S. Dollars" and "$" each means the lawful currency of the United States
of America.
"Voting Stock" shall mean Securities of any class or classes the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness shall be
owned by the Company and/or one or more of its Wholly-owned Subsidiaries.
"Year 2000 Problem" means any significant risk that computer hardware,
software, or equipment containing embedded microchips essential to the business
or operations of any Borrower or any of the Subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
efficiently and reliably as in the case of times or time periods occurring
before January 1, 2000, including the making of accurate leap year calculations.
Section 7.2. Interpretation. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day herein shall be references to Chicago, Illinois time
unless otherwise specifically provided. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP
consistently applied, except where such principles are inconsistent with the
specific provisions of this Agreement.
Section 7.3. Unrestricted Subsidiaries. Notwithstanding anything herein to
the contrary, the term "Subsidiaries" as used in the definitions of the terms
"Consolidated Net Income", "Debt to Earnings Ratio", "EBIT", "EBITDA", "Interest
Expense", "Leverage Ratio", "Shareholder's Equity", "Tangible Net Worth" and
"Total Funded Debt" shall exclude Unrestricted Subsidiaries.
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SECTION 8. REPRESENTATIONS AND WARRANTIES.
The Borrowers hereby represent and warrant to each Bank as to themselves
and, where the following representations and warranties apply to Subsidiaries,
as to each Subsidiary, as follows:
Section 8.1. Corporate Organization and Authority. Each Borrower is duly
organized and existing in good standing under the laws of the jurisdiction of
its incorporation; has all necessary corporate power to carry on its present
business; and is duly licensed or qualified and in good standing in each
jurisdiction in which the nature of the business transacted by it or the nature
of the Property owned or leased by it makes such licensing or qualification
necessary and in which the failure to be so licensed or qualified would
materially and adversely affect its financial condition, business, operations,
Properties, condition (financial or otherwise) or prospects.
Section 8.2. Subsidiaries. Schedule 8.2 (as updated from time to time
pursuant to Sections 10.5(a)(viii) and 10.15) hereto identifies each Subsidiary
which has or holds any Property, the jurisdiction of its incorporation or
organization, as the case may be, the percentage of issued and outstanding
shares of each class of its capital stock or other equity interests owned by the
Company and the Subsidiaries and, if such percentage is not 100% (excluding
directors' qualifying shares as required by law), a description of each class of
its authorized capital stock and other equity interests and the number of shares
of each class issued and outstanding. Each such listed Subsidiary is duly
incorporated and existing in good standing as a corporation under the laws of
the jurisdiction of its incorporation, has all necessary corporate power to
carry on its present business, and is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business transacted by
it or the nature of the Property owned or leased by it makes such licensing or
qualification necessary and in which the failure to be so licensed or qualified
would have a material adverse effect on the financial condition, or the
Property, business or operations, of such Subsidiary. All of the issued and
outstanding shares of capital stock of each such listed Subsidiary are validly
issued and outstanding and fully paid and nonassessable. As of the date of this
Agreement, the Company has not designated any such listed Subsidiary as an
Unrestricted Subsidiary. All such shares owned by the Company are owned
beneficially, and of record, free of any Lien.
Section 8.3. Corporate Authority and Validity of Obligations. Each Borrower
has full right and authority to enter into this Agreement and the other Loan
Documents to which it is a party, to make the borrowings herein provided for, to
issue its Notes in evidence thereof, to apply for the issuance of the Letters of
Credit, and to perform all of its obligations under the Loan Documents to which
it is a party. Each Guarantor has full right and authority to enter into its
Guarantee Agreement and to perform all of its obligations thereunder. Each Loan
Document to which it is a party has been duly authorized, executed and delivered
by any Borrower and each Guarantor and constitutes valid and binding obligations
of any Borrower and each Guarantor enforceable in accordance with its terms. No
Loan Document, nor the performance or observance by any Borrower or any
Guarantor of any of the matters or things therein provided for, contravenes any
provision of law or any charter or by-law provision of any Borrower or any
Guarantor or (individually or in the aggregate) any material Contractual
Obligation of or
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affecting any Borrower or any Guarantor or any of their respective Properties or
results in or requires the creation or imposition of any Lien on any of the
Properties or revenues of any Borrower or any Guarantor.
Section 8.4. Financial Statements. The audit report of the Company for the
year ended December 31, 1997, including a consolidated balance sheet as of
December 31, 1997 and a consolidated statement of profit and loss and
consolidated statement of cash flows for the 12 months ended said date,
certified by Price Waterhouse, and the interim consolidated and consolidating
balance sheets of the Company and the Subsidiaries as at March 31, 1998 and June
30, 1998 and consolidated and consolidating statements of profit and loss for
the respective three and six months then ended prepared by the Company and
heretofore furnished to the Banks, all as heretofore presented to the Banks,
fairly present the financial condition of the Company and the Subsidiaries as at
said dates and the results of operations for the periods covered thereby. As of
the date hereof, the Company and the Subsidiaries have no known contingent
liabilities which are material to the Company or any Subsidiary other than as
indicated on the financial statements accompanying said audit report.
Section 8.5. Material Adverse Change. Since March 31, 1998, there have been
no material adverse changes in the business, operations, Properties, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries taken
as a whole.
Section 8.6. No Litigation; No Labor Controversies. (a) There is no
litigation or governmental proceeding pending, or to the knowledge of the
Borrowers or any Guarantor threatened, against the Borrowers or any Subsidiary
which, if adversely determined, could (individually or in the aggregate)
materially adversely affect the financial, or other condition, operations,
business, Property or prospects of the Company and its Subsidiaries taken as a
whole.
(b) Except for the strike described in the SEC Form 10-Q filed by the
Company for its second fiscal quarter of its fiscal year ending December 31,
1998, there are no labor controversies pending or, to the knowledge of the
Borrowers or any Guarantor threatened, against the Company or any Subsidiary
which could (insofar as the Company may reasonably foresee) materially adversely
affect the business, operations, Property, financial or other condition or
prospects of the Company and its Subsidiaries taken as a whole.
Section 8.7. Taxes. The Company and its Subsidiaries have filed all United
States federal tax returns, and all other tax returns, required to be filed and
have paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company or any Subsidiary, except such taxes, if any, as are
being contested in good faith and for which adequate reserves have been
provided. No notices of tax liens have been filed and no claims are being
asserted concerning any such taxes, which liens or claims are material to the
financial condition of the Company and its Subsidiaries on a consolidated basis
taken as a whole. The charges, accruals and reserves on the books of the Company
and its Subsidiaries for any taxes or other governmental charges are adequate.
Section 8.8. Approvals. No authorization, consent, license, exemption,
filing or registration with any court or governmental department, agency or
instrumentality, nor any
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approval or consent of the stockholders of the Company or any Subsidiary or from
any other Person, is necessary to the valid execution, delivery or performance
by the Company or any Subsidiary of any Loan Document to which it is a party,
except for such thereof as have been obtained and are in full force and effect.
Section 8.9. ERISA. The Company and its ERISA Affiliates are in compliance
in all material respects with the Code and ERISA to the extent applicable to
them and have received no notice to the contrary from the Internal Revenue
Service, the Department of Labor or the Pension Benefit Guaranty Corporation
("PBGC"); as of December 31, 1997, the liability of the Company and its ERISA
Affiliates to the PBGC in respect of unfunded employee benefit plan liabilities
would not have been in excess of $1,600,000 if all employee benefit plans
covering any officers or employees of the Company and its ERISA Affiliates had
been terminated as of such date. Neither the Company nor any ERISA Affiliate has
(i) failed to make a required contribution or payment of a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) or (ii) made a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA from a multiemployer plan.
Neither the Company nor any ERISA Affiliate maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(1) of ERISA which
provides benefits to employees after termination of employment (other than as
required under Section 601 of ERISA) which could result in a material obligation
to pay money, except for such plans as are listed in Exhibit J hereto.
Section 8.10. Government Regulation. No Borrower nor any Subsidiary is an
"investment company" nor a company "controlled" by an "investment company
organized or otherwise created under the laws of the United States or of a
State" within the meaning of the Investment Company Act of 1940, as amended, or
a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 8.11. Margin Stock. No Borrower or any Subsidiary is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock ("margin stock" to have the same meaning herein as in Regulation U of the
Board of Governors of the Federal Reserve System). No Borrower will use the
proceeds of any Loan or Letter of Credit in a manner that violates any provision
of Regulation U or X of the Board of Governors of the Federal Reserve System.
Section 8.12. Licenses and Authorizations; Compliance with Laws. (a) The
Company and each Subsidiary has all necessary licenses, permits and governmental
authorizations to own and operate its Properties and to carry on its business as
currently conducted and contemplated.
(b) The Company and each Subsidiary is in compliance in all material
respects with all applicable state and federal environmental, health and safety
statutes and regulations, including, without limitation, regulations promulgated
under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections
6901 et seq. and, to the best knowledge of the Borrowers, have not acquired,
incurred or assumed, directly or indirectly, any material contingent liability
in connection with the release of any toxic or hazardous waste or substance into
the environment.
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Neither the Company nor any Subsidiary is the subject of any evaluation under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Specified Amendments and Reauthorization Act of 1986, 42
U.S.C. Sections 9601 et seq. ("CERCLA").
Section 8.13. Ownership of Property; Liens. As of the date hereof, the
Company and the Subsidiaries have good and defensible title to their respective
assets as reflected on the consolidated balance sheet of the Company and the
Subsidiaries dated as of June 30, 1998 (except for sales by the Borrower and
such Subsidiaries in the ordinary course of their respective businesses),
subject to no Liens or encumbrances other than such thereof as are permitted by
Section 10.12 hereof
Section 8.14. No Burdensome Restrictions; Compliance with Agreements.
Neither the Company nor any Subsidiary is (a) party or subject to any law,
regulation, rule or order, or any Contractual Obligation that (individually or
in the aggregate) materially adversely affects, or (insofar as the Borrowers may
reasonably foresee) may so affect, the business, operations, Property, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries taken
as a whole or (b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement to
which it is a party, which default materially adversely affects, or (insofar as
the Borrowers may reasonably foresee) may so affect, the business, operations,
Property, financial or other condition, or prospects of the Company and the
Subsidiaries taken as a whole.
Section 8.15. Full Disclosure. All information heretofore furnished by the
Borrowers to the Agent or any Bank for purposes of or in connection with the
Loan Documents or any transaction contemplated thereby is, and all such
information hereafter furnished by the Borrowers to the Agent or any Bank will
be, true and accurate in all material respects and not misleading on the date as
of which such information is stated or certified.
Section 8.16. Year 2000 Compliance. Each Borrower has conducted a
comprehensive review and assessment of the computer applications of such
Borrower and its subsidiaries and has made inquiry of their material external
providers or servicers of information technology or information systems
(including data processors), if any, with respect to any defect in computer
software, data bases, hardware controls and peripherals related to the
occurrence of the year 2000 or the use at any time of any date which is before,
on and after December 31, 1999, in connection therewith. Based on the foregoing
review, assessment and inquiry, each Borrower believes that no such defect could
reasonably be expected to have a material adverse effect on the business or
financial affairs of such Borrower (or of such Borrower and its subsidiaries
taken on a consolidated basis).
SECTION 9. CONDITIONS PRECEDENT.
The obligation of each Bank to make any Loan, or of the Agent to issue,
extend the expiration date (including by not giving notice of non-renewal) of or
increase the amount of any Letter of Credit, shall be subject to the following
conditions precedent:
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Section 9.1. Initial Borrowing. Prior to the initial Credit Event:
(a) The Agent shall have received for each Bank the favorable written
opinion of Schmiedeskamp, Robertson, Neu & Mitchell, counsel to the Company
and the Guarantors, in substantially the form of Exhibit K hereto, and
otherwise in form and substance satisfactory to the Required Banks;
(b) The Agent shall have received for each Bank (i) certified copies of
resolutions of the Board of Directors of each Borrower and each Guarantor
authorizing the execution, delivery and performance of, and indicating the
authorized signers of, the Loan Documents to which it is a party and all
other documents relating thereto and the specimen signatures of such
signers, (ii) copies of the Articles of Incorporation and by-laws for each
Borrower and each Guarantor certified by its Secretary or other appropriate
officer, together with a certificate of good standing certified by the
appropriate governmental officer in the jurisdiction of its incorporation
and (iii) the duly executed and delivered Loan Documents;
(c) The Agent shall have received a Guarantee Agreement from each
Subsidiary (except as set forth in Section 10.15 hereof);
(d) The Agent shall have received a list of the Authorized
Representatives;
(e) Evidence satisfactory to the Agent that the proceeds of such
initial Credit Event shall be used to repay all borrowings other than "Bid
Loans" (as such term is defined in the Existing Credit Agreement)
outstanding under the Existing Credit Agreement. All "Bid Loans"
outstanding under the Existing Credit Agreement shall, upon the initial
Credit Event, for all purposes be deemed to be Bid Loans outstanding
hereunder. Upon such Credit Event, the Company and Banks agree that the
Existing Credit Agreement has been terminated so that no additional
borrowings, or rollovers of borrowings outstanding thereunder, will be
permitted (the Borrowers hereby irrevocably authorizing and directing the
Banks to disburse the proceeds of the first Borrowing hereunder to repay
all borrowings outstanding thereunder); and
(f) Certificates, signed by Authorized Representatives of the Company,
stating that on the date hereof no Default or Event of Default has occurred
and is continuing.
Section 9.2. All Loans. As of the time of each Credit Event hereunder
(including the initial Credit Event):
(a) The Agent shall have received (i) in the case of any Loan, the
Notes of the Borrowers for each Bank required to be delivered pursuant to
Section 4.5 hereof and the notice required by Section 2.3 or 3.5 hereof, as
applicable, (ii) in the case of the issuance of any Letter of Credit, a
duly completed Application for such Letter of Credit and, (iii) in the case
of an extension or increase in the amount of a Letter of Credit, a written
request therefor, in a form acceptable to the Agent;
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(b) Each of the representations and warranties of the applicable
Borrowers set forth in Section 8 (other than Section 8.5) hereof shall be
true and correct as of said time, except to the extent that any such
representation or warranty relates solely to an earlier date;
(c) The Borrowers shall be in full compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred
and be continuing or would occur as a result of making such Credit Event;
(d) After giving effect to the Credit Event, (i) neither the aggregate
Original Dollar Amount nor the U.S. Dollar Equivalent of all Loans (whether
Committed Loans or Bid Loans) and L/C Obligations outstanding hereunder
shall exceed the Commitments, (ii) all Bid Loans outstanding hereunder
shall not exceed the lesser of the unused Commitments or the Bid Loan Limit
and (iii) neither the aggregate Original Dollar Amount nor the U.S. Dollar
Equivalent of all L/C Obligations shall exceed the L/C Sub-Limit;
(e) Such Credit Event shall not violate any order, judgment or decree
of any court or other authority or any provision of law or regulation
applicable to any Bank (including, without limitation, Regulation U of the
Board of Governors of the Federal Reserve System) as then in effect;
Each request for a Borrowing hereunder and each request for the issuance of,
increase in the amount of, or extension of the expiration date of, a Letter of
Credit shall be deemed to be a representation and warranty by the Borrowers on
the date of such Borrowing as to the facts specified in paragraphs (b) and (c)
of this Section 9.2.
Section 9.3. Additional Conditions to Loans other than Refunding
Borrowings. In addition to the conditions set forth in Sections 9.1 and 9.2
hereof, as of the time of each Borrowing other than a Refunding Borrowing, the
representations and warranties set forth in Section 8.5 hereof shall be true as
of said time (except that the date referenced therein shall be deemed a
reference to the date as of which the most recent financial statements furnished
to the Banks pursuant to Section 10.5(a)(i) or 10.5(a)(iii) were prepared), and
the request for such Borrowing, as referred to in Section 9.2(a), shall be and
constitute a representation and warranty as to such matters specified in Section
8.5 hereof (after giving effect to such notification in the date referenced
therein).
Section 9.4. Replacement of Bank. In the event the condition precedent to
extending credit hereunder set forth in Section 9.2(e) hereof has not been
satisfied by reason of circumstances which do not similarly affect the Required
Banks, then the Borrowers may request other Banks hereunder not affected by such
circumstances to assume in full the Commitment then in effect of each Bank
affected by such circumstances (such Bank in such case being herein referred to
as the "Replaceable Bank"), and to purchase the Notes issued to the Replaceable
Bank and its participation in Letters of Credit at a price equal to the
outstanding principal amount of such Notes and the Replaceable Bank's share of
unpaid Reimbursement Obligations in respect of the Letters of Credit plus any
accrued and unpaid interest on such Notes and Reimbursement
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Obligations plus accrued and unpaid facility and letter of credit fees owed to
the Replaceable Bank, and if any Bank or Banks in their sole discretion agree so
to assume in full the Commitment of the Replaceable Bank (each an "Assuming
Bank"), and after payment by the Borrowers to the Replaceable Bank of all
amounts due under the Loan Documents to such Bank (including any amount
specified as due in a certificate submitted under Section 4.8 or 12.3 hereof)
not so paid by the Assuming Bank, then such assumption shall take place in the
manner set forth in subsection (b) below. In the event more than one Bank agrees
to so assume the Commitment of the Replaceable Bank, such Assuming Banks shall
effect such assumption ratably in accordance with their existing Commitments
(but in any event rounded, to the extent possible, to the nearest $1,000,000).
In the event no Bank or Banks agrees to assume in full the Commitment of the
Replaceable Bank, then the Borrowers may nominate one or more banks not then
party to this Agreement so to assume in full the Commitment of the Replaceable
Bank, and if such nominated bank or banks are acceptable to the Required Banks
(excluding the Replaceable Bank), such assumption shall take place in the manner
set forth in subsection (b) below and each such bank or banks shall become a
Bank hereunder (each a "New Bank") and the Replaceable Bank shall no longer be a
party hereto or have any rights hereunder, except as set forth in Section 15.15
hereof.
(b) In the event a Replaceable Bank's Commitment is to be assumed in
full by an Assuming Bank or Banks or a New Bank, then such assumption shall take
place on a date acceptable to the Borrowers, the Replaceable Bank and the
Assuming Bank or New Bank, as the case may be, and such assumption shall take
place through the payment of all amounts due under the Loan Documents to the
Replaceable Bank and the execution of such instruments and documents as shall,
in the reasonable opinion of the Agent, be reasonably necessary or appropriate
for the Assuming Bank or New Bank to assume in full the Commitment of the
Replaceable Bank (including, without limitation, the issuance of new Notes and
the execution of an amendment hereto making any New Bank a party hereto). In the
event no Assuming Bank or New Bank agrees to assume in full the Commitment of
the Replaceable Bank, then such Replaceable Bank shall remain a party hereto and
its Commitment shall remain in effect on the terms and conditions set forth in
this Agreement (including the conditions precedent set forth in Section 9.2
hereof) unless and to the extent to which any circumstance or matter set forth
in Section 9.2(e) with respect to the Replaceable Bank prohibits it from
advancing or loaning to the Borrowers the full amount of its Commitment; in
which case such Commitment shall be limited to such lawful amount as the
Replaceable Bank may lend to the Borrowers for as long as such limitation or
restriction continues.
SECTION 10. COVENANTS.
The Borrowers agree that, so long as any Note or L/C Obligation is
outstanding hereunder or any credit is available to or in use by a Borrower
hereunder, except to the extent compliance in any case or cases is waived in
writing by the Required Banks:
Section 10.1. Maintenance of Business. (a) Each Borrower will preserve and
keep in force and effect its corporate existence and all material leases,
licenses and permits necessary to the proper conduct of its business, subject to
provisions of Section 10.14 hereof. (b) The Company will cause each Subsidiary
to preserve and keep in force and effect, its corporate
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existence and all material leases, licenses and permits necessary to the proper
conduct of its business, subject to provisions of Section 10.14 hereof.
Section 10.2. Maintenance of Property. The Company will maintain, preserve
and keep its plant, Properties and equipment in reasonable repair, working order
and condition in all material respects (except for equipment or other property
no longer used or useful in the conduct of its business or the business of the
Subsidiaries) and will from time to time make all needful and proper repairs,
renewals, replacements, additions and betterments thereto so that at all times
the overall efficiency thereof shall be preserved and maintained and the Company
will cause each Subsidiary to do so in respect of its plant, Properties and
equipment.
Section 10.3. Taxes. The Company will duly pay and discharge, and will
cause each Subsidiary to duly pay and discharge, all taxes, rates, assessments,
fees and governmental charges upon or against the Company or Subsidiary or
against their respective properties, in each case before the same become
delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith and by appropriate proceedings which
prevent enforcement of the matter under contest.
Section 10.4. Insurance. The Company will insure and keep insured, and will
cause each Subsidiary to insure and keep insured, with good and responsible
insurance companies, all insurable property owned by it which is of a character
usually insured by companies similarly situated and in amounts usually insured
by companies similarly situated and operating like properties; and the Company
will insure, and will cause each Subsidiary to insure, such other hazards and
risks (including employers' and public and product liability risks) with good
and responsible insurance companies as and to the extent usually insured by
companies similarly situated and conducting similar businesses. The Company will
upon request of the Agent furnish a certificate setting forth in summary form
the nature and extent of the insurance maintained pursuant to this Section 10.4.
Section 10.5. Financial Reports and Rights of Inspection. (a) The Company
will maintain, and will cause each Subsidiary to develop and maintain, a system
of accounting in accordance with GAAP and will furnish to the Agent and each
Bank such information respecting the business, financial condition, assets and
liabilities (whether absolute or contingent) of the Company and the Subsidiaries
as the Agent or such Bank may reasonably request; and without any request, will
furnish to the Agent (which shall promptly provide copies to the Banks):
(i) within 50 days after the end of each of the first three
quarterly fiscal periods of the Company, a copy of the Company's Form
10-Q Report filed with the SEC;
(ii) within 50 days after the end of each of the first three
quarterly fiscal periods of the Company, the consolidated balance sheet
of the Company and the Subsidiaries (other than the Unrestricted
Subsidiaries and in any event attributing no value to the Unrestricted
Subsidiaries and any Investments therein) as of the end of such quarterly
period and a related consolidated income statement and statement of cash
flows of the Company and the Subsidiaries (other than the Unrestricted
Subsidiaries and in any event excluding any income of the Unrestricted
Subsidiaries except to the extent
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distributed in cash actually paid to the Company) for such quarterly
fiscal period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period, all of which shall be certified by
the Treasurer of the Company as being prepared, to the best of his
knowledge, in accordance with GAAP consistently applied subject to normal
year-end adjustments and provided that such statements may omit footnote
disclosures required by GAAP;
(iii) within 100 days after the end of each fiscal year of the
Company, a copy of the Company's Form 10-K Report filed with the SEC,
including a copy of the annual audit report of the Company and the
Subsidiaries for such year with accompanying financial statements,
prepared by the Company and certified by independent public accountants
of recognized standing selected by the Company and satisfactory to the
Required Banks, in accordance with GAAP;
(iv) within 100 days after the end of each fiscal year of the
Company, the consolidating schedules presenting a consolidated balance
sheet of the Company and the Subsidiaries (other than the Unrestricted
Subsidiaries and in any event attributing no value to the Unrestricted
Subsidiaries and any Investments therein) as of the end of such fiscal
year and the related consolidated income statement and statement of cash
flows of the Company (other than the Unrestricted Subsidiaries and in any
even excluding any income of the Unrestricted Subsidiaries except to the
extent distributed in cash actually paid to the Company) prepared by and
accompanied by a certificate from the same public accountants which
prepared the audit report for the Company for such year, to the effect
that the deletion of the Unrestricted Subsidiaries from the audited
statement for such year was in substantial conformity with GAAP;
(v) as soon as available, and in any event no less than 30 days
following the commencement of each fiscal year of the Company, a copy of
a business and financial plan for the Company and its Subsidiaries (other
than the Unrestricted Subsidiaries) for such fiscal year, month by month,
on a consolidated basis (other than the Unrestricted Subsidiaries and in
any event (x) attributing no value to the Unrestricted Subsidiaries or
any Investment therein and (y) excluding any income of the Unrestricted
Subsidiaries except to the extent distributed in cash actually paid to
the Company), together with such supporting schedules and details as the
Required Banks may reasonably request but in any event including
projected balance sheets, projected cash flow (including details of cash
disbursements) and a projected income statement in each case for each of
the following 12 months;
(vi) not later than 10 days after the receipt thereof, a copy of
any final management letters on internal accounting controls for the
Company or any Subsidiary prepared by its independent public accountants;
(vii) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which the Company
sends to its shareholders, and copies of all other regular, periodic and
special reports and all registration statements which the Company files
with the SEC or any successor thereto, or with any national securities
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exchange (other than routine filings related solely to employee benefit
plans and filings on Forms 3, 4 or 5 regarding insider trading
activities) and
(viii) an updated Schedule 8.2 along with the financial statements
delivered under subsection (ii) or (iv) above, as applicable, for any
calendar quarter during which there is a change in any of the facts
specified in Schedule 8.2 hereto, as then most recently updated.
(b) Each Report required by Section 10.5(a)(ii) or (iv) shall be
accompanied by a certificate in the form attached hereto as Exhibit H signed on
behalf of the Company by its Vice President - Finance setting forth compliance
in reasonable detail with Sections 10.7, 10.8, 10.9, 10.10 and 10.13 hereof and
stating that no Default or Event of Default exists hereunder as of the date of
such certificate, or if such Default or Event of Default exists the nature
thereof shall be specified. Each audit report called for by Section 10.5(a)(iii)
hereof shall be accompanied by a statement of the accountants certifying such
statements to the effect that in the course of their audit (conducted in
accordance with generally accepted auditing standards) they have obtained no
knowledge that a Default or Event of Default has occurred hereunder or, if they
have obtained any such knowledge, describing the same. In the event the Company
is no longer required to file Form 10-Q and 10-K Reports with the SEC, the
Company need not furnish such Reports to the Agent, but shall nonetheless
provide the Agent the financial statements previously contained in such Reports
by the times required by subsections (a)(i) and (iii) above.
(c) Each projection furnished to the Bank pursuant to Section 10.5(a)(v)
shall be accompanied by a written certificate in the form attached hereto as
Exhibit L signed on behalf of the Company by its Vice President -- Finance,
Controller, Treasurer or President to the effect that (i) such projection has
been prepared on a basis consistent with the Company's historical financial
statements and records, together with the assumptions set forth in such
projection, and (ii) such projection reflects the reasonable analysis of the
Company's management and does not reflect results or financial conditions which
are more favorable in any material respect than such management's reasonable
expectations as to the matters set forth therein.
(d) The Borrowers will promptly (and in any event within three Business
Days after knowledge thereof shall have come to the attention of any responsible
officer of the Borrower) give written notice to the Agent (which shall promptly
provide copies to the Banks):
(i) of the occurrence of any Change of Control Event,
(ii) of any Default or Event of Default,
(iii) of any threatened or pending litigation, governmental
proceeding or labor dispute against the Company or any Subsidiary which if
adversely determined would materially adversely affect the business,
Properties, condition (financial or otherwise) or prospects of the Company
or any Subsidiary;
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(iv) of any material development in any such litigation,
proceeding or dispute (whether or not previously disclosed to the Banks
pursuant to the terms hereof) which in any case has a reasonable
possibility of such an effect;
(v) of any default in the payment of rent due under any lease
necessary to the proper conduct of the business of the Company or any
Subsidiary or any action to terminate any such lease or of the receipt of
any notice of any alleged breach of the terms of any such lease; and
(vi) of the receipt of any notice of any alleged breach of the
terms of, or default under, any material Contractual Obligation and of any
notice of alleged material noncompliance with any laws or regulations of
the type described in Section 8.12 hereof.
(e) Upon reasonable notice from the Agent or any Bank, each Borrower will
permit the Agent, such Bank and their representatives during normal business
hours to visit and inspect, under such Borrower's guidance, any of the
properties of such Borrower or any Subsidiary, to examine all of their books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants (and by
this provision each Borrower authorizes such accountants to discuss with the
Banks (and such Persons as any Bank may designate) the finances and affairs of
such Borrower and the Subsidiaries) all at such reasonable times and as often as
may be reasonably requested.
Section 10.6. Intentionally Left Blank.
Section 10.7. Minimum Tangible Net Worth. The Company will at all times
maintain its Tangible Net Worth at not less than the Required Amount. For
purposes of this Section, the term "Required Amount" shall mean the sum of (i)
$135,000,000 plus (ii) 50% of Consolidated Net Income for each fiscal year (if
positive for such year) commencing with the fiscal year beginning on January 1,
1998 plus (iii) 75% of the cash proceeds from a public offering of the common
capital stock or preferred stock of the Company after the date hereof (such
proceeds to be net of seller's and underwriting discounts, accounting, legal and
printing fees and other costs directly incurred and payable as a result of such
offering and also net of repurchases).
Section 10.8. Interest Coverage Ratio. The Company will as of the end of
each fiscal quarter of the Company (each, a "Test Date") maintain an Interest
Coverage Ratio for the four fiscal quarters of the Company then ended of not
less than 1.50 to 1.0; provided, however, that the Company shall be deemed in
compliance with this Section as of not more than two consecutive Test Dates
during the term of this Agreement if the Company maintains as of each such Test
Date, an Interest Coverage Ratio of not less than 1.25 to 1.0 (such period of
not more than two consecutive Test Dates as of which the Company maintains an
Interest Coverage Ratio of less than 1.5 to 1.0 but greater than or equal to
1.25 to 1.0 being herein referred to as the "Lower Interest Coverage Period").
Section 10.9. Debt to Earnings Ratio. The Company will as of each Test Date
maintain the Debt to Earnings Ratio at not more than 5.0 to 1.0.
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Section 10.10. Investments, Loans, Advances and Guaranties. The Company
will not, and will not permit any Subsidiary to, directly or indirectly, make,
retain or have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances to, any other Person, or be
or become liable as endorser, guarantor, surety or otherwise for any debt,
obligation or undertaking of any other Person, or otherwise agree to provide
funds for payment of the obligations of another, or supply funds thereto or
invest therein or otherwise assure a creditor of another against loss or apply
for or become liable to the issuer of a letter of credit which supports an
obligation of another or subordinate any claim or demand it may have to the
claim or demand of any other Person (cumulatively, all of the foregoing, being
"Investments"); provided, however, that the foregoing provisions shall not apply
to nor operate to prevent:
(a) investments in direct obligations of the United States of
America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America provided that any such obligation matures within one year from
the date it is acquired by a Borrower or Subsidiary;
(b) investments in commercial paper rated P-1 by Moody's Investors
Services, Inc. or A-1 by Standard & Poor's Ratings Group, a division of
The McGraw-Hill Companies, Inc. maturing within one year of its date of
issuance;
(c) investments in certificates of deposit issued by any United
States commercial bank having capital and surplus of not less than
$200,000,000 or by any Bank in each case maturing within one year from
the date of issuance thereof or in eurodollar time deposits maturing not
more than one year from the date of acquisition thereof placed with any
Bank or other such commercial bank or in banker's acceptances endorsed by
any Bank or other such commercial bank and maturing within six months of
the date of acceptance;
(d) investments in repurchase obligations with a term of not more
than seven (7) days for underlying securities of the types described in
subsection (a) above entered into with any bank meeting the
qualifications specified in subsection (c) above, provided all such
agreements require physical delivery of the securities securing such
repurchase agreement, except those delivered through the Federal Reserve
Book Entry System;
(e) investments in money market funds that invest solely, and
which are restricted by their respective charters to invest solely, in
investments of the type described in the immediately preceding
subsections (a), (b), (c) and (d) above;
(f) ownership of stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to
a Borrower or any Subsidiary;
(g) endorsements of negotiable instruments for collection in the
ordinary course of business;
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(h) liabilities in respect of letters of credit issued by the Agent or
any Bank;
(i) the Guarantee Agreements;
(j) loans and advances to employees in the ordinary course of business
for travel, relocation, and similar purposes;
(k) acquisitions of all or substantially all of the assets or business
of any other Person or division thereof, or of all or substantially all the
Voting Stock of a Person, so long as (i) no Default or Event of Default
exists or would exist after giving effect to such acquisition, (ii) the
Board of Directors or other governing body of such Person whose Property or
Voting Stock is being so acquired has approved the terms of such
acquisition, (iii) the Company can demonstrate that on a pro forma basis
after giving effect to such acquisition it will continue to comply through
the term of this Agreement with all the terms and conditions of the Loan
Documents and (iv) the Company has provided to the Banks such financial and
other information regarding the Person whose Property or Voting Stock is
being so acquired, including historical financial statements, and a
description of such Person, as the Agent or the Required Banks have
reasonably requested;
(l) Investments by the Company in Subsidiaries (other than the
Unrestricted Subsidiaries), provided that Investments in such Subsidiaries
that become Subsidiaries through an acquisition must comply with the
provisions of subsection (k) above;
(m) loans and advances by Wholly-owned Subsidiaries to the Company and
other Wholly-owned Subsidiaries (other than the Unrestricted Subsidiaries);
(n) a guaranty from Dyneer Corporation to PATC guaranteeing
obligations assumed by Titan Tire (as part of the acquisition by Titan Tire
of certain assets of PATC) to remediate any environmental conditions
existing at PATC's facility in Des Moines, Iowa, provided that the right to
recover on such guaranty is expressly limited to $1,000,000 in the
aggregate; and
(o) Investments by the Company in Unrestricted Subsidiaries, provided
that the aggregate amount of such Investments outstanding at any one time
shall not exceed the lesser of (i) 10% of Tangible Net Worth or (ii)
$20,000,000.
The Company acknowledges and agrees that neither it nor any Subsidiary may
make any Investment in an Unrestricted Subsidiary except as permitted in (o)
above.
In determining the amount of Investments, acquisitions, loans, advances and
guarantees permitted under this Section 10.10, Investments and acquisitions
shall always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guarantees shall be taken at
the amount of obligations guaranteed thereby.
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Section 10.11. Indebtedness. Neither the Company nor any Subsidiary will
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the
Loan Documents;
(b) current liabilities incurred in the ordinary course of business
not incurred through (i) the borrowing of money, or (ii) the obtaining of
credit except for credit on an open account basis customarily extended and
in fact extended in connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 10.3 hereof;
(d) Indebtedness in respect of judgments or awards, provided that in
the case of such Indebtedness which in the aggregate exceed $4,000,000,
(other than any judgment for which a financially sound and reputable
insurer has admitted coverage) such judgments or awards have been in force
for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Company shall
at the time in good faith be prosecuting an appeal or proceedings for
review and in respect of which a stay of execution shall have been obtained
pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and warranties
of products or services and similar transactions, in each case incurred in
the ordinary course of business;
(f) Subordinated Debt;
(g) Indebtedness set forth on Schedule 10.11(g) hereof;
(h) Indebtedness of Wholly-owned Subsidiaries to the Company or to
other Wholly-owned Subsidiaries (other than Unrestricted Subsidiaries); and
(i) Indebtedness not otherwise permitted by this Section
aggregating not more than $75,000,000 at any one time outstanding; and
(j) Indebtedness of Unrestricted Subsidiaries so long as such
Indebtedness is non-recourse to the Company and any of its Subsidiaries
(other than Unrestricted Subsidiaries).
Section 10.12. Liens. The Company will not nor will it permit any
Subsidiary to create, incur, permit to exist or to be incurred any Lien of any
kind on any Property owned by the
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Company or any Subsidiary; provided, however, that this Section 10.12 shall not
apply to nor operate to prevent:
(a) the currently existing Liens set forth on Schedule 10.12 attached
hereto;
(b) Liens in connection with worker's compensation, unemployment
insurance, old age benefits, social security obligations, taxes,
assessments, statutory obligations or other similar charges, good faith
deposits in connection with tenders, contracts or leases to which the
Company or any Subsidiary is a party (other than contracts for borrowed
money), or other deposits required to be made in the ordinary course of
business; provided that in each case the obligation secured is not overdue
or, i overdue, is being contested in good faith by appropriate proceedings
and adequate reserves have been established therefor;
(c) mechanics', workmen's, materialmen's, landlords', carriers' or
other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings and adequate reserves have been established
therefor;
(d) Liens arising out of judgments or awards against the Company or
any Subsidiary with respect to which the Company or such Subsidiary shall
be prosecuting an appeal or proceeding for review and with respect to which
it shall have obtained a stay of execution pending such appeal or
proceeding for review; provided that the aggregate amount of liabilities
(including interest and penalties, if any) of the Company and the
Subsidiaries secured by such Liens shall not exceed $4,000,000 at any one
time outstanding;
(e) Liens for property taxes not yet subject to penalties for
nonpayment, or survey exceptions, encumbrances, mineral or royalty
reservations, easements or reservations of, or rights of others for, rights
of way, sewers, electric lines, pipe lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use
of its properties, which exceptions, encumbrances, easements, reservations,
rights and restrictions do not in the aggregate materially detract from the
value of such properties or materially impair their use in the operation of
the business of the Company and its Subsidiaries;
(f) Liens upon any Property acquired by the Company or any Subsidiary
after the date hereof (A) to secure the payment of all or any part of the
purchase price of such Property upon the acquisition thereof by the Company
or such Subsidiary, or (B) to secure any indebtedness issued, assumed or
guaranteed by the Company or any Subsidiary prior to, at the time of, or
within 90 days after the acquisition of such Property, which indebtedness
is issued, assumed or guaranteed for the purpose of financing all or any
part of the purchase price of such Property, provided that (i) in the case
of any such acquisition the Lien shall not apply to any Property other than
the Property so acquired or purchased and (ii) the aggregate amount of
indebtedness so secured by such Liens shall not exceed $15,000,000 at any
one time outstanding;
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(g) Liens of or upon any Property (other than inventory and accounts
receivable) existing at the time of acquisition thereof by the Company or
any Subsidiary and not created in contemplation of such acquisition;
(h) Liens of or upon any Property of a corporation existing at the
time such corporation is merged with or into or consolidated with the
Company or any Subsidiary or existing at the time of a sale or transfer of
the properties of a corporation (or division thereof) as an entirety or
substantially as an entirety to the Company or any Subsidiary and not
created in contemplation of such transaction, provided that (i) the Lien
shall not apply to any Property not subject thereto immediately prior to
such merger, consolidation, sale or transfer and (ii) any Lien of or upon
any Property existing at the time of acquisition thereof complies with
subsection (g) above;
(i) Liens to secure indebtedness of any Subsidiary to the Company or
to another Subsidiary so long as the indebtedness so secured is not related
to any indebtedness (other than indebtedness hereunder) of the Company or
such other Subsidiary to any Person other than the Company or such other
Subsidiary;
(j) Liens in favor of the United States of America or any State
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any State thereof, or in
favor of any other country or political subdivision, to secure partial,
progress, advance or other payments pursuant to any contract or statute or
to secure any indebtedness incurred or guaranteed for the purpose of
financing or refinancing all or any part of the purchase price of the
Property subject to such Liens, or the cost of constructing or improving
the Property subject to such mortgages (including, without limitation,
mortgages incurred in connection with pollution control, industrial revenue
or similar financings);
(k) Liens upon any Property of Foreign Subsidiaries securing
indebtedness permitted by Section 10.11(c) hereof if and so long as such
Subsidiaries are not required to provide Guarantee Agreements hereunder and
provided the proceeds of such indebtedness were used to finance their
general working capital requirements (including capital expenditures) and
their acquisitions to the extent permitted by Section 10.10(k) hereof;
(l) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in
the foregoing paragraphs (a) through (k), inclusive, provided, however,
that the principal amount of indebtedness secured thereby shall not exceed
the principal amount of indebtedness so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to the Property which was subject to th Lien
so extended, renewed or replaced;
(m) Liens not otherwise permitted under this Section 10.12 on Property
(other than (i) Property of the Company, (ii) shares of capital stock in
any Subsidiary and
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(iii) accounts receivable, inventory and similar working capital assets)
securing Indebtedness in an aggregate principal amount not exceeding
$3,000,000 at any time outstanding; and
(n) Liens upon Property of an Unrestricted Subsidiary to secure
credit extended to such Unrestricted Subsidiary to finance its general
working capital requirements (including capital expenditures).
Section 10.13. Dividends and Certain Other Restricted Payments. (a)
Restricted Equity Payments. The Company will not during any calendar year (i)
declare or pay any dividends on or make any other distributions in respect of
any class of its capital stock or any warrant to acquire any such capital stock
(other than dividends payable solely in its capital stock) or (ii) directly or
indirectly or through any Subsidiary purchase, redeem or otherwise acquire or
retire any of its capital stock or an warrant to acquire any such capital stock
(except out of the proceeds of, or in exchange for, a substantially concurrent
issue and sale of its capital stock) (each such non-excepted declarations or
payments of dividends, purchases, redemptions, retirements and distributions in
respect to capital stock being herein collectively called a "Restricted Equity
Payment") if at the time of such Restricted Equity Payment or immediately after
giving effect thereto, (x) any Event of Default or Default shall occur or be
continuing or (y) the amount of all Restricted Equity Payments made since the
date hereof would exceed 50% of Consolidated Net Income for the period (taken as
a single accounting period) commencing on the date hereof and terminating at the
last fiscal quarter preceding the date of the Restricted Equity Payment at
issue. Notwithstanding the foregoing, this Section shall not apply to nor
prohibit any (x) Permitted Company Redemption or (y) payment in any one calendar
quarter of a cash dividend aggregating not more than $500,000 in respect of the
Company's common stock if at the time thereof and immediately after giving
effect thereto, no Event of Default or Default shall occur or be continuing.
(b) Restricted Subordinated Debt Payments. The Company will not, and will
not permit any Subsidiary to, directly or indirectly make any payment or other
distribution on or in respect of any principal, interest or premium, if any, of
any of the Subordinated Debt or otherwise acquire, prepay or retire any
Subordinated Debt (such payments, distributions, acquisitions, prepayments or
retirements being hereinafter referred to collectively as "Restricted
Subordinated Debt Payments") if such Restricted Subordinated Debt Payment would
be made prior to the scheduled maturity thereof or prior to any other times
required for payment thereof as are in force and effect as of the date hereof if
at the time of such Restricted Subordinated Debt Payment or immediately after
giving effect thereto, (i) any Event of Default or Default shall occur or be
continuing or (ii) Subordinated Debt would be reduced below $125,000,000.
Section 10.14. Mergers, Consolidations, Leases and Sales. (a) The Company
will not, and will not permit any Subsidiary to, sell, transfer, of or otherwise
dispose of all or any substantial part of its property, assets or business, or
in any event sell or discount (with or without recourse) any of its notes or
accounts receivable or be or become liable as lessee of any property theretofore
owned by the Company or any Subsidiary; provided, however, that this Section
shall not apply to nor prohibit:
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(i) the sale by the Company or any Subsidiary of assets no longer
used or useful in the conduct of their respective businesses or from
selling inventory in the ordinary course of their respective businesses; or
(ii) the transfer of any such assets to a Subsidiary of the
Company or a Wholly-owned Subsidiary in exchange for all issued and
outstanding securities or as an additional contribution to capital thereof.
A sale or disposition of assets of the Company shall be deemed substantial
for the foregoing purposes (i) if such assets are sold below the book value of
such assets, such assets constituted 10% or more of the total assets of the
Company or (ii) such assets constituted 20% or more of the total assets of the
Company.
(b) The Company will not, and will not permit any Subsidiary to, be a party
to any merger or consolidation, provided, however that this Section shall not
apply to nor prohibit the merger of any Subsidiary or any other Person acquired
as a result of or created to effect an acquisition permitted by Section 10.10(k)
hereof into the Company or any other Subsidiary as to which the Company holds
either directly or indirectly at least the same percentage equity ownership.
Section 10.15. Maintenance of Subsidiaries. The Company will not assign,
sell or transfer, or permit any Subsidiary to issue, assign, sell or transfer,
any shares of capital stock of a Subsidiary other than to the Company or another
Wholly-owned Subsidiary, provided that this Section shall not apply to nor
operate to prevent:
(a) the transfer of shares of capital stock of the Company or any
Subsidiary as consideration to the transferor in any acquisition permitted
by Section 10.10(k) hereof, provided that notwithstanding anything herein
to the contrary, the Company shall maintain each of Titan Investment and
Titan Credit as a Wholly-owned Subsidiary (except for shares of capital
stock of each of Titan Investment and Titan Credit issued, sold or
transferred pursuant to Section 10.15(b)); and
(b) the issuance, sale and transfer to any Person of any shares
of capital stock of a Subsidiary solely for the purpose of qualifying, and
to the extent legally necessary to qualify, such Person as a director of
such Subsidiary.
As a condition to establishing or acquiring any Subsidiary, unless the
following provisions of this Section otherwise provide, the Company shall (i)
cause such Subsidiary to execute a Guarantee Agreement, (ii) cause such
Subsidiary to deliver documentation similar to that described in Section 9.1(a)
and (b) relating to the authorization for, execution and delivery of, and
validity of such Subsidiary's obligations as a Guarantor hereunder and under the
Guarantee Agreement in form and substance satisfactory to the Required Banks
(including an opinion of counsel for the jurisdiction in which such Subsidiary
is organized) and (iii) deliver an updated Schedule 8.2 to reflect the new
Subsidiary. Upon its delivery of such Guarantee Agreement, and if and so long
thereafter as such Subsidiary is required hereunder to be a
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Guarantor, such Subsidiary shall be conclusively deemed to be a direct signatory
hereto. Notwithstanding anything herein to the contrary:
(a) No Guarantee Agreement shall be required from any Domestic
Subsidiary if and so long as (i) such Domestic Subsidiary is not a Borrower
and (ii) either (x) the aggregate amount of assets of all the
Non-Guaranteeing Domestic Subsidiaries (including such Domestic Subsidiary)
as of the time of determining whether such guaranty is required would not
exceed 5% of Total Assets as of the close of each of the then four most
recently completed fiscal quarters of the Company or (y) (1) the Required
Banks agree in writing not to require such guaranty and (2) the aggregate
amount of assets of all the Non-Guaranteeing Domestic Subsidiaries
(including such Domestic Subsidiary) as of the time of determining whether
such guaranty is required would not exceed 10% of Total Assets as of the
close of each of the then four most recently completed fiscal quarters of
the Company (it being understood and agreed that the consent of all the
Banks is required to amend this sentence); and
(b) No Guarantee Agreement shall be required from any Foreign
Subsidiary if and so long as (i) such Foreign Subsidiary's assets do not
not exceed 10% of Total Assets as of the close of each of the then four
most recently completed fiscal quarters of the Company and (ii) the
aggregate amount of assets of all the Non-Guaranteeing Subsidiaries
(including such Foreign Subsidiary) as of the time of determining whether
such guaranty is required would not exceed 35% of Total Assets as of the
close of each of the then four most recently completed fiscal quarters of
the Company.
Section 10.16. Company as Operating Company. Notwithstanding Sections 10.10
and 10.14 or any other provision of this Agreement, the assets owned directly by
the Company and its Wholly-owned Subsidiaries (other than Unrestricted
Subsidiaries) which are Domestic Subsidiaries (without regard to their ownership
of equity interests in Subsidiaries) shall at all times constitute the majority
of the total consolidated assets of the Company and its Subsidiaries.
Section 10.17. ERISA. The Company will, and will cause each ERISA Affiliate
to, promptly pay and discharge all obligations and liabilities arising under the
Code or ERISA of a character which if unpaid or unperformed would result in the
imposition of a lien against any of their respective properties or assets or a
material obligation to pay money (including, but not limited to any liability to
a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA), will promptly
notify the Banks when the Company becomes aware of the occurrence of any
Reportable Event (as defined in Section 4043 of ERISA) which could result in the
termination by the Pension Benefit Guaranty Corporation ("PBGC") of any employee
benefit plan covering any officers or employees of the Company or any ERISA
Affiliate, any benefits of which are, or are required to be, guaranteed by the
PBGC (a "Plan") or of receipt of any notice from the PBGC of its intention to
seek termination of any such Plan or appointment of a trustee therefor. The
Company will, and will cause each ERISA Affiliate to, notify the Bank of its or
any ERISA Affiliate's intention to terminate any Plan and will not, and will not
permit any ERISA Affiliate to, terminate any such Plan, the termination of which
will result in a material liability to the Company or any ERISA Affiliate,
unless the Company and its ERISA Affiliates shall be in compliance with all of
the terms and conditions of this Agreement after giving effect to any
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estimated liability to the PBGC (as determined by the Plan's independent
actuaries) resulting from such termination or withdrawal.
Section 10.18. Burdensome Contracts with Affiliates. The Company will not,
and will not permit any Subsidiary to, enter into (x) any contract, agreement or
business arrangement with an Affiliate on terms and conditions which in the
aggregate would be reasonably likely to materially adversely affect the
business, condition (financial or otherwise), Properties or operations of the
Company and the Subsidiaries taken as a whole or (y) any contract, agreement or
business arrangement with an Unrestricted Subsidiary on terms and conditions
which are less favorable to the Company or such Subsidiary than would be usual
and customary in similar contracts, agreements or business arrangements between
persons not affiliated with each other (other than the sale of inventory to an
Unrestricted Subsidiary utilizing the Company's standard transfer pricing
methods for divisional and intercompany sales as currently utilized by the
Company in the ordinary course of the Company's business as presently
conducted).
Section 10.19. Change in Fiscal Year. The Company will not change its
fiscal year.
Section 10.20. Change in the Nature of Business. The Company will not, and
will not permit any Subsidiary to, engage in any business or activity if as a
result the general nature of the business of the Company or any Subsidiary would
be changed in any material respect from the general nature of the business
engaged in by the Company or such Subsidiary on the date of this Agreement.
Section 10.21. Use of Property and Facilities; Environmental, Health and
Safety Laws. The Company will, and will cause each of its Subsidiaries to,
comply in all material respects with the requirements of all federal, state and
local environmental and health and safety laws, rules, regulations and orders
applicable to or pertaining to the Properties or business operations of the
Company or any Subsidiary of the Company. Without limiting the foregoing, the
Company will not, and will not permit any Person to, except in accordance with
applicable law, dispose of any Hazardous Material into, onto or from any real
property owned or operated by the Company or any of its Subsidiaries. The
Company will, and will cause each Subsidiary to, promptly provide the Agent with
copies of any notice it receives, or is required to give, with respect to any
material non-compliance (or alleged non-compliance) with any such environmental,
health or safety laws, rules, regulations or orders.
Section 10.22. Compliance with Laws. Without limiting any of the other
covenants of the Company in this Section 10, the Company will, and will cause
each of its Subsidiaries to, conduct its business, and otherwise be, in
compliance with all applicable laws, regulations, ordinances and orders of any
governmental or judicial authorities; provided, however, that neither the
Company nor any Subsidiary of the Company shall be required to comply with any
such law, regulation, ordinance or order, including any relating to
environmental, health or safety, if (x) it shall be contesting such law,
regulation, ordinance or order in good faith by appropriate proceedings and
reserves in conformity with GAAP have been provided therefor on the books of the
Company or such Subsidiary, as the case may be, or (y) the failure to comply
therewith could not in the aggregate have a material adverse effect on the
business, operations, Property or financial or other condition of the Company
and its Subsidiaries taken as a whole.
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Section 10.23. Use of Loan Proceeds. The Borrowers will use all credit
under this Agreement solely (i) to finance general working capital needs, (ii)
for general corporate purposes including without limitation acquisitions
permitted by Section 10.10(k) hereof, (iii) for repurchases of the Company's
common stock permitted hereunder and (iv) to refinance indebtedness of the
Company and its Subsidiaries outstanding on the date hereof.
Section 10.24. Designation of Unrestricted Subsidiaries. The Company will
not designate a Subsidiary as an Unrestricted Subsidiary unless immediately
prior to such designation no Default or Event of Default has occurred and is
continuing and the Company can demonstrate that on a pro forma basis after
giving effect to such designation it will continue to comply through the term of
this Agreement with all the terms and conditions of the Loan Documents.
Section 10.25. Year 2000 Assessment. Each Borrower shall take all actions
necessary and commit adequate resources to assure that its computer-based and
other systems (and those of all of its subsidiaries) are able to effectively
process dates, including dates before, on and after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a material adverse effect on
the business or financial affairs of such Borrower (or of such Borrower and its
subsidiaries taken on a consolidated basis). At the request of the Agent, such
Borrower will provide the Agent with written assurances and substantiations
(including, but not limited to, the result of reports filed with the SEC
prepared in the ordinary course of business) reasonably acceptable to the Agent
as to the capability of such Borrower and its subsidiaries to conduct its and
their businesses and operations before, on and after January 1, 2000, without
experiencing a Year 2000 Problem causing a material adverse effect on the
business or financial affairs of such Borrower (or of such Borrower and its
subsidiaries taken on a consolidated basis).
Section 10.26. European Monetary Union. (a) If, as a result of the EMU
Commencement, (i) any Agreement Currency ceases to be lawful currency of the
state issuing the same and is replaced by the Euro or (ii) any Agreement
Currency and the Euro are at the same time both recognized by the central bank
or comparable governmental authority of the state issuing such currency as
lawful currency of such state, then any amount payable hereunder by any party
hereto in such Agreement Currency (including, without limitation, any Loan to be
made under this Agreement) shall instead be payable in the Euro and the amount
so payable shall be determined by redenominating or converting such amount into
the Euro at the exchange rate officially fixed by the European Central Bank for
the purpose of implementing the EMU, provided, that to the extent any EMU
Legislation provides that an amount denominated either in the Euro or in the
applicable Agreement Currency can be paid either in Euros or in the applicable
Agreement Currency, each party to this Agreement shall be entitled to pay or
repay such amount in Euros or in the applicable Agreement Currency. Prior to the
occurrence of the event or events described in clause (i) or (ii) of the
preceding sentence, each amount payable hereunder in any such Agreement Currency
will, except as otherwise provided herein, continue to be payable only in that
Agreement Currency.
(b) Each Borrower shall from time to time, at the request of the Agent, pay
to the Agent for the account of each Bank the amount of any cost or increased
cost incurred by, or of any reduction in any amount payable to or in the
effective return on its capital to, or of interest or other return foregone by,
such Bank or any holding company of such Bank as a result of the
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introduction of, changeover to or operation of the Euro in any applicable state
to the extent attributable to such Bank's obligations hereunder or for the
credit which is the subject matter hereof.
(c) With respect to the payment of any amount denominated in the Euro or in
any Agreement Currency, the Agent shall not be liable to the Borrowers or any of
the Banks in any way whatsoever for any delay, or the consequences of any delay,
in the crediting to any account of any amount required by this Agreement to be
paid by the Agent if the Agent shall have taken all relevant steps to achieve,
on the date required by this Agreement, the payment of such amount in
immediately available, freely transferable, cleared funds (in the Euro Unit or,
as the case may be, in any Agreement Currency) to the account with the bank in
the principal financial center in the Euro Member which any Borrower or, as the
case may be, any Bank shall have specified for such purpose. In this paragraph
(c), "all relevant steps" means all such steps as may be prescribed from time to
time by the regulations or operating procedures of such clearing or settlement
system as the Agent may from time to time determine for the purpose of clearing
or settling payments of the Euro.
(d) If the basis of accrual of interest or fees expressed in this Agreement
with respect to the currency of any state that becomes a Euro Member shall be
inconsistent with any convention or practice in the London interbank market for
the basis of accrual of interest or fees in respect of the Euro, such convention
or practice shall replace such expressed basis effective as of and from the date
on which such state becomes a Euro Member; provided, that if any Loan in the
currency of such state is outstanding immediately prior to such date, such
replacement shall take effect, with respect to such Loan, at the end of the then
current Interest Period.
(e) In addition, this Agreement (including, without limitation, the
definition of Eurocurrency Loan) will be amended to the extent determined by the
Agent (acting reasonably and in consultation with the Borrowers) to be necessary
to reflect such EMU Commencement and change in currency and to put the Banks and
the Borrowers in the same position, so far as possible, that they would have
been in if such implementation and change in currency had not occurred. Except
as provided in the foregoing provisions of this Section 10.26, no such
implementation or change in currency nor any economic consequences resulting
therefrom shall (i) give rise to any right to terminate prematurely, contest,
cancel, rescind, alter, modify or renegotiate the provisions of this Agreement
or (ii) discharge, excuse or otherwise affect the performance of any obligations
of any Borrower under this Agreement, any Notes or other Loan Documents.
SECTION 11. EVENTS OF DEFAULT AND REMEDIES.
Section 11.1. Events of Default. Any one or more of the following shall
constitute an Event of Default:
(a) (i) default in the payment when due of any principal on any
Note or any Loan evidenced thereby or any Reimbursement Obligation, whether
at the stated maturity thereof or at any other time provided in any Loan
Document; or (ii) default in the
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payment when due of interest on any Note or any Loan evidenced thereby or
any Reimbursement Obligation or in the payment when due of any fee or other
Obligation;
(b) default by a Borrower in the observance or performance of any
covenant set forth in Sections 10.1(a), 10.5(d)(i) or (ii), 10.7, 10.8,
10.9, 10.10, 10.11, 10.12, 10.13, 10.14, 10.15, 10.16, 10.17, 10.18, 10.19,
10.23 or 10.24 hereof or default after notice to the Company in the
observance of any other covenant set forth in Section 10.5 hereof;
(c) default by a Borrower in the observance or performance of any
other provision hereof not mentioned in (a) or (b) above, which is not
remedied within thirty (30) days after notice thereof to the Company
(acting on behalf of the Borrowers) by the Agent or any Bank;
(d) any representation or warranty made herein by any Borrower,
or in any statement or certificate furnished pursuant hereto by any
Borrower, or in connection with any Loan made hereunder, proves untrue in
any material respect as of the date of the issuance or making thereof;
(e) the Company or any Subsidiary shall fail within sixty (60)
days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $4,000,000 (other than any judgment for which
a financially sound and reputable insurer has admitted liability), which is
not stayed on appeal or otherwise being appropriately contested in good
faith in a manner that stays execution on such judgment;
(f) the Company or any other member of its Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess of $500,000
which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Vested Liabilities in excess of $500,000 (collectively,
a "Material Plan") shall be filed under Title IV of ERISA by the Company or
any other member of its Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Company or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within ninety (90) days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
(g) (A) default shall occur in the payment when due (subject to
any applicable grace period) of any indebtedness for borrowed money
aggregating in excess of $4,000,000 which was incurred, assumed or
guaranteed by the Company or any Subsidiary (other than an Unrestricted
Subsidiary), or (B) default or the happening of any event shall occur under
any indenture, agreement or other instrument under which any indebtedness
for borrowed money aggregating in excess of $4,000,000 was incurred, assume
or guaranteed by the Company or any Subsidiary (other than an Unrestricted
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Subsidiary) if the effect of such default is to accelerate, or permit the
acceleration of, the maturity of such indebtedness and such default or
event continues uncured, unremedied and unwaived beyond any applicable
period of grace, or (C) default shall occur in the payment when due
(whether at the stated maturity or by acceleration or mandatory prepayment
in full but not otherwise) of any indebtedness for borrowed money
aggregating in excess of $4,000,000 which was incurred, assumed or
guaranteed by any one or more of the Unrestricted Subsidiaries if the
Required Banks, in good faith, believe such default could materially and
adversely affect the financial condition, business, operations, Properties,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries (other than the Unrestricted Subsidiaries) taken as a whole;
(h) any party obligated on any guarantee of any Obligations shall
purport to disavow, revoke, repudiate or terminate such guarantee or such
guarantee shall be determined to be unenforceable by a court of competent
jurisdiction or shall otherwise cease to be in full force and effect other
than in accordance with its terms;
(i) any agreement purporting to subordinate payment of any
indebtedness to the prior payment of the Notes or any other Obligations
shall be terminated or shall otherwise cease to have any force or effect;
(j) the Company or any Subsidiary makes any payment on account of
the principal of or interest on any indebtedness which payment is
prohibited under the terms of any agreement or other instrument
subordinating such indebtedness to the Notes or any other Obligations;
(k) any payment or distribution of principal or interest shall be
made on or in respect of, or the Company or any Subsidiary shall acquire,
prepay or retire, any indebtedness subordinated to the prior payment of the
Notes or other Obligations, in each case prior to the stated maturity
thereof or prior to any other times required for payment thereof as are in
force and effect as of the date hereof;
(l) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 11.1(m) hereof; or
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(m) a custodian, receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Company or any Subsidiary or
any substantial part of any of their Property, or a proceeding described in
Section 11.1(l)(v) shall be instituted against the Company or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of sixty (60) days.
Section 11.2. Non-Bankruptcy Defaults. When any Event of Default other than
those described in Sections 11.1(l) or (m) has occurred and is continuing, the
Agent shall, by notice to the Company (acting on behalf of the Borrowers), (a)
if so directed by the Required Banks, terminate the remaining Commitments of the
Banks hereunder on the date stated in such notice (which may be the date
thereof); and (b) if so directed by the Banks holding more than 51% of the
aggregate Original Dollar Amount of all Loans then outstanding, (1) declare the
principal of and the accrued interest on all outstanding Loans to be forthwith
due and payable and thereupon all Obligations payable hereunder shall be and
become immediately due and payable without further demand, presentment, protest
or notice of any kind and (2) enforce any and all rights and remedies available
to it under the Loan Documents or applicable law. The Agent, after giving notice
to the Company (acting on behalf of the Borrowers) pursuant to Section 11.1 or
this Section 11.2, shall also promptly send a copy of such notice to the other
Banks, but the failure to do so shall not impair or annul the effect of such
notice.
Section 11.3. Bankruptcy Defaults. When any Event of Default described in
subsections (l) or (m) of Section 11.1 hereof has occurred and is continuing,
then all outstanding Obligations payable hereunder shall immediately become due
and payable without presentment, demand, protest or notice of any kind, and the
obligation of the Banks to extend further credit pursuant to any of the terms
hereof shall immediately terminate.
Section 11.4. Collateral for Undrawn Letters of Credit. (a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 4.7 or under Section 11.2 or 11.3
above, the Borrowers shall forthwith pay the amount required to be so prepaid,
to be held by the Agent as provided in subsection (b) below. Such prepayment
shall be made in U.S. Dollars, unless the Agent elects by notice to the Company
(acting on behalf of the Borrowers), that such prepayment with regard to a
Letter of Credit denominated in an Alternative Available Currency be made in
such Alternative Available Currency.
(b) All amounts prepaid pursuant to subsection (a) above shall be held by
the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Account") as security for, and for
application by the Agent (to the extent available) to, the reimbursement of any
payment under any Letter of Credit then or thereafter made by the Agent and the
Banks, and to the payment of the unpaid balance of any Loans and all other
Obligations. The Account shall be held in the name of and subject to the
exclusive dominion and control of the Agent for the benefit of the Agent and the
Banks. If and when requested by the Company, the Agent shall invest funds held
in the Account from time to time in direct obligations of, or obligations the
principal of and interest on which are
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unconditionally guaranteed by, the United States of America with a remaining
maturity of one year or less, provided that the Agent is irrevocably authorized
to sell investments held in the Account when and as required to make payments
out of the Account for application to amounts due and owing from the Borrowers
to the Agent or Banks under the Loan Documents; provided, however, that if (i)
the Borrowers shall have made payment of all such obligations referred to in
subsection (a) above, (ii) all relevant preference or other disgorgement periods
relating to the receipt of such payments have passed, and (iii) no Letters of
Credit, Commitments, Loans or other Obligations remain outstanding hereunder,
then the Agent shall repay to the Company any remaining amounts held in the
Account.
Section 11.5. Expenses. The Borrowers agree to pay to the Agent and each
Bank, or any other holder of any Note outstanding hereunder, all costs and
expenses incurred or paid by the Agent and such Bank or any such holder,
including reasonable attorneys' fees (which may include allocated costs of
in-house counsel) and court costs, in connection with any Default or Event of
Default hereunder or in connection with the enforcement of any of the terms
hereof or of any Note.
SECTION 12. CHANGE IN CIRCUMSTANCES.
Section 12.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time after the date hereof any change in
applicable law or regulation or in the interpretation or administration thereof
makes it unlawful for any Bank to make or continue to maintain Eurocurrency
Loans or to give effect to its obligations as contemplated hereby, such Bank
shall promptly give notice thereof to the Company (acting on behalf of the
Borrowers), with a copy to the Agent, and such Bank's obligations to make or
maintain Eurocurrency Loans under this Agreement shall terminate until it is no
longer unlawful for such Bank to make or maintain such Eurocurrency Loans. The
Borrowers shall prepay on demand the outstanding principal amount of any such
affected Eurocurrency Loans, together with all interest accrued thereon and all
other amounts then due and payable to such Bank under this Agreement; provided,
however, that if the affected Eurocurrency Loan was denominated in U.S. Dollars
and subject to all of the terms and conditions of this Agreement, the Borrowers
may then elect to borrow the principal amount of the affected Eurocurrency Loan
from such Bank by means of a Domestic Rate Loan from such Bank that shall not be
made ratably by the Banks but only from such affected Bank and payments whereon
shall be made contemporaneously with payments on the relevant Borrowing of
Eurocurrency Loans.
Section 12.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurocurrency Loans:
(a) the Agent determines that deposits in U.S. Dollars or
Agreement Currencies in the applicable amounts are not being offered to it
in the off-shore Eurocurrency market or domestic certificate of deposit
market, as applicable, for such Interest Period, or
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(b) any Bank shall advise the Agent that LIBOR as determined by
the Agent will not adequately and fairly reflect the cost to such Bank of
funding its Eurocurrency Loans for such Interest Period,
then the Agent shall forthwith give notice thereof to the Company (acting on
behalf of the Borrowers) and the Banks, whereupon, until the Agent notifies the
Company (acting on behalf of the Borrowers) that the circumstances giving rise
to such suspension no longer exist, the obligations of the Banks to make
Eurocurrency Loans shall be suspended. The Banks shall promptly give notice to
the Agent, who will promptly give notice to the Company (acting on behalf of the
Borrowers), if the circumstance giving rise to such suspension cease to exist.
Section 12.3. Increased Cost and Reduced Return. (a) If on or after (x) the
date hereof, in the case of any obligation to make Committed Loans, or (y) the
date of the related Bid, in the case of any Bid Loan, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Ban (or its Lending Office) with any request or
directive (whether or not having the force of law if of the type generally
complied with by such Bank in accordance with its banking practices) of any such
authority, central bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge with respect to its Fixed Rate Loans, its Notes or its
obligation to make Fixed Rate Loans or its obligation to issue or
participate in Letters of Credit, or shall change the basis of taxation of
payments to any Bank (or its Lending Office) of the principal of or
interest on its Fixed Rate Loans or any other amounts due under this
Agreement in respect of its Fixed Rate Loans or its obligation to make
Fixed Rate Loans or its obligation to issue or participate in Letters of
Credit (except for changes in the rate of tax on the overall net income of
such Bank or its Lending Office imposed by the jurisdiction in which such
Bank's principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirements (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, such as, for example, a change in official reserve requirements,
but excluding with respect to any Eurocurrency Loan, any such requirement
to the extent included in the Eurocurrency Reserve Percentage used in
computing the Adjusted LIBOR for such Loan) against assets of, deposits
with or for the account of, or credit extended by, any Bank (or its Lending
Office) or shall impose on any Bank (or its Lending Office) or on the
interbank market any other condition affecting its Fixed Rate Loans, its
Notes or its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan or its
obligation to issue or participate in Letters of Credit, or to reduce the amount
of any sum received or receivable by such Bank (or its Lending Office) under
this Agreement or under its Notes with respect thereto, by an amount deemed by
such Bank to be material, then after demand by such Bank (with a copy to the
Agent), the Borrowers shall promptly pay to such Bank such additional amount or
amounts as will
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compensate such Bank for such increased cost or reduction. In determining such
amount, the Bank may use any reasonable averaging and attribution methods.
(b) If any Bank shall determine that the adoption after the date hereof of
any applicable law, rule or regulation regarding capital adequacy, or any change
in any existing law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank (or any of its branches) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Bank or any Person controlling such Bank
as a consequence of such Bank's obligations hereunder or for the credit which is
the subject matter hereof to a level below that which such Bank could have
achieved but for such adoption, change or compliance (taking into consideration
the policies of such Bank or any Person controlling such Bank with respect to
liquidity and capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within fifteen (15) days after demand by such Bank, the
Borrowers shall pay to the Agent for the account of such Bank such additional
amount or amounts reasonably determined by such Bank as will compensate such
Bank for such reduction.
Section 12.4. Lending Offices. Each Bank may, at its option, elect to make
its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "Lending Office") for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a notice to the Company
(acting on behalf of the Borrowers) and the Agent.
Section 12.5. Discretion of Bank as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Bank had actually funded and
maintained each Fixed Rate Loan that is a Committed Loan through the purchase of
deposits in the relevant market having a maturity corresponding to such Loan's
Interest Period and bearing an interest rate equal to LIBOR for such Interest
Period.
SECTION 13. THE AGENT.
Section 13.1. Appointment and Authorization. Each Bank hereby irrevocably
appoints Harris Trust and Savings Bank as Agent for the Banks under this
Agreement and hereby authorizes the Agent to take such action as Agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. The relationship between the Agent and the Banks is and
shall be that of Agent and principal only, and nothing contained in this
Agreement or any other Loan Document shall be construed to constitute the Agent
as a trustee or fiduciary for any Bank, Borrower or Guarantor.
Section 13.2. Agent and Affiliates. In its capacity as a lender hereunder,
the Agent shall have the same rights and powers under this Agreement as any
other Bank and may exercise or
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refrain from exercising the same as though it were not an Agent, and the Agent
and its affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrowers or any Subsidiary or affiliate of the
Borrowers as if it were not the Agent hereunder. The terms Bank and Banks as
used in the Loan Documents, unless the context otherwise clearly requires,
include the Agent in its individual capacity as a Bank.
Section 13.3. Action by Agent. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless the Agent shall be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. In all cases in which this Agreement does not require the Agent to take
certain actions the Agent shall be fully justified in using its discretion in
failing to take or in taking any action hereunder. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Event of Default, except as expressly provided in Section
11.2. The Agent shall be acting as an independent contractor hereunder and
nothing herein shall be deemed to impose on the Agent any fiduciary obligations
to the Banks or the Borrowers.
Section 13.4. Consultation with Experts. The Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
Section 13.5. Liability of Agent. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrowers; (iii) the satisfaction of
any condition specified in Section 9, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, request or statement (whether
written or oral) or other document believed by it to be genuine or to be signed
or sent by the proper party or parties and, in the case of legal matters, in
relying on the advice of counsel (including counsel for the Borrowers). The
Agent may treat the Banks that are named herein as the holders of the Notes and
the indebtedness contemplated herein unless and until the Agent receives notice
of the assignment of the Note and the indebtedness held by a Bank hereunder
pursuant to an assignment contemplated by Section 15.12 hereof.
Section 13.6. Indemnification. Each Bank shall, ratably in accordance with
its Commitment (or, if the Commitments have been terminated in whole, ratably in
accordance with its outstanding Loans), indemnify the Agent (to the extent not
reimbursed by the Borrowers) against any cost, expenses (including reasonable
counsels' fees and disbursements), claims, demands, actions, losses,
obligations, damages, penalties, judgments, suits or liability (except
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such as result from the Agent's gross negligence or willful misconduct) that the
Agent may suffer or incur in connection with this Agreement or any action taken
or omitted by the Agent hereunder.
Section 13.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
Section 13.8. Resignation or Removal of Agent and Successor Agent. Subject
to the appointment and acceptance of a successor Agent as provided below, the
Agent may resign at any time by giving written notice thereof to the Banks and
the Company (acting on behalf of the Borrowers) at any time and may be removed
by the Required Banks upon thirty (30) days prior written notice to the Agent.
Upon any such resignation or removal of the Agent, the Required Banks shall have
the right to appoint, with the consent of the Company (acting on behalf of the
Borrowers) (and in the case of removal, with the consent of the Bank being
removed as Agent, whose consent shall not be unreasonably withheld), a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within thirty (30) days after, as the
case may be, the retiring Agent's giving of notice of resignation or if
appropriate, the removed Agent's receipt of notice of removal, then the retiring
or removed Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any state thereof that has a combined capital and surplus of at
least $200,000,000. Upon the acceptance of its appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring or removed Agent, and the
retiring or removed Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent or any
Agent's removal hereunder as Agent, the provisions of this Section 13 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.
Section 13.9. Payments. Unless the Agent shall have been notified by a Bank
prior to the date on which such Bank is scheduled to make payment to the Agent
of the proceeds of a Loan (which notice shall be effective upon receipt) that
such Bank does not intend to make such payment, the Agent may assume that such
Bank has made such payment when due and the Agent may in reliance upon such
assumption (but shall not be required to) make available to the Borrowers the
proceeds of the Loan to be made by such Bank and, if any Bank has not in fact
made such payment to the Agent, such Bank shall, on demand, pay to the Agent the
amount made available to the Borrowers attributable to such Bank together with
interest thereon in respect of each day during the period commencing on the date
such amount was made available to the Borrowers and ending on (but excluding)
the date such Bank pays such amount to the Agent at a rate per annum equal to
the Federal Funds Rate. If such amount is not received from such Bank by the
Agent immediately upon demand, the Borrowers will, on demand, repay to the Agent
the proceeds of the Loan attributable to such Bank with interest thereon at a
rate per
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annum equal to the interest rate applicable to the relevant Loan, but without
such payment being considered a payment or prepayment of a Loan, so that the
Borrowers will have no liability under Section 4.8 hereof with respect to such
payment. If any Bank shall fail to fund a Loan which it is obligated hereunder
to fund, such Bank shall pay the reasonable attorneys' fees incurred by the
Borrower in enforcing its right to borrow such a Loan. However, if it is
determined that such Bank was not obligated to fund such Loan, the Borrower
shall pay to such Bank any reasonable attorneys' fees incurred by such Bank in
defending such an action.
SECTION 14. THE GUARANTEES.
Section 14.1. The Guarantees. To induce the Banks to provide the credits
described herein and in consideration of benefits expected to accrue to each
Guarantor and each Borrower by reason of the Commitments and for other good and
valuable consideration, receipt of which is hereby acknowledged, each Borrower
hereby unconditionally and irrevocably agrees it is jointly and severally liable
for, and guarantees jointly and severally, and each Guarantor hereby
unconditionally and irrevocably guarantees jointly and severally to the Agent
and the Banks, and each other holder of the indebtedness guaranteed hereby, the
due and punctual payment of all present and future indebtedness of the Borrowers
evidenced by or arising out of the Loan Documents, including, but not limited
to, the due and punctual payment of principal of and interest on the Loans, on
the Notes and on the Reimbursement Obligations and the due and punctual payment
of all other Obligations now or hereafter owed by the Borrowers under the Loan
Documents as and when the same shall become due and payable, whether at stated
maturity, by acceleration or otherwise, according to the terms hereof and
thereof. In case of failure by any Borrower punctually to pay any indebtedness
or other obligations guaranteed hereby, each Guarantor and each Borrower hereby
unconditionally agrees jointly and severally to make such payment or to cause
such payment to be made punctually as and when the same shall become due and
payable, whether at stated maturity, by acceleration or otherwise, and as if
such payment were made by the defaulting Borrower.
Section 14.2. Guarantee Unconditional. The obligations of each Guarantor
and each Borrower as a guarantor under this Section 14 shall be unconditional
and absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any other Borrower or of any other
Guarantor under this Agreement or any other Loan Document or by operation
of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any other Loan Document except to the extent the obligations
of any Guarantor or Borrower under this Section are expressly and
specifically modified thereby;
(c) any change in the corporate existence, structure or ownership
of, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting, any other Borrower, any other Guarantor, or any of
their respective assets, or any resulting release
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or discharge of any obligation of any other Borrower or of any other
Guarantor contained in any Loan Document;
(d) the existence of any claim, set-off or other rights which any
Borrower or any Guarantor may have at any time against the Agent, any Bank
or any other Person, whether or not arising in connection herewith;
(e) any failure to assert, or any assertion of, any claim or
demand or any exercise of, or failure to exercise, any rights or remedies
against any other Borrower, any other Guarantor or any other Person or
Property;
(f) any application of any sums by whomsoever paid or howsoever
realized to any obligation of any Borrower, regardless of what obligations
of the Borrowers remain unpaid;
(g) any invalidity or unenforceability relating to or against any
other Borrower or any other Guarantor for any reason of this Agreement or
of any other Loan Document or any provision of applicable law or regulation
purporting to prohibit the payment by any other Borrower or any other
Guarantor of the principal of or interest on any Note or any other amount
payable by it under the Loan Documents; or
(h) any other act or omission to act or delay of any kind by the
Agent, any Bank or any other Person or any other circumstance whatsoever
that might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of the obligations of the Borrowers or the Guarantor
under this Section 14.
Section 14.3. Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances. Each Borrower's and each Guarantor's obligations under this
Section 14 shall remain in full force and effect until the Commitments are
terminated and the principal of and interest on the Notes and all other amounts
payable by any Borrower under this Agreement and all other Loan Documents shall
have been paid in full. If at any time any payment of the principal of or
interest on any Note or any other amount payable by any Borrower under the Loan
Documents is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of any Borrower or of a Guarantor, or
otherwise, each Borrower's and each Guarantor's obligations under this Section
14 with respect to such payment shall be reinstated at such time as though such
payment had become due but had not been made at such time.
Section 14.4. Waivers. (a) General. Each Borrower and each Guarantor
irrevocably waives acceptance hereof, presentment, demand, protest and any
notice not provided for herein, as well as any requirement that at any time any
action be taken by the Agent, any Bank or any other Person against another
Borrower, another Guarantor or any other Person.
(b) Subrogation and Contribution. Each Guarantor and each Borrower hereby
irrevocably waives any claim or other right it may now or hereafter acquire
against any other Borrower or any other Guarantor that arises from the
existence, payment, performance or
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enforcement of such Guarantor's obligations under this Section 14 or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, or any right to
participate in any claim or remedy of the Agent, any Bank or any other holder of
the indebtedness guaranteed hereby against any other Borrower or any other
Guarantor whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any other Borrower or any other Guarantor directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other right.
Section 14.5. Limit on Recovery. Notwithstanding any other provision
hereof, the right to recovery of the Agent and the Banks against each Guarantor
under this Section 14 shall not exceed $1.00 less than the amount which would
render such Guarantor's obligations under this Section 14 void or voidable under
applicable law, including without limitation fraudulent conveyance law.
Section 14.6. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by any Borrower under this Agreement or any other Loan
Document is stayed upon the insolvency, bankruptcy or reorganization of such
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement or the other Loan Documents shall nonetheless be payable jointly
and severally by the Guarantors and the other Borrowers hereunder forthwith on
demand by the Agent made at the request of the Required Banks.
SECTION 15. MISCELLANEOUS.
Section 15.1. Withholding Taxes. (a) Payments Free of Withholding. Except
as otherwise required by law and subject to Section 15.1(b) hereof, each payment
by the Borrowers and the Guarantors under this Agreement or the other Loan
Documents or in respect of the Letters of Credit shall be made without
withholding for or on account of any present or future taxes (other than overall
net income taxes on the recipient) imposed by or within the jurisdiction in
which any Borrower or any Guarantor is domiciled, any jurisdiction from which
any Borrower or any Guarantor makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein. If any such withholding is
so required, the Borrowers or such Guarantors, as applicable shall make the
withholding, pay the amount withheld to the appropriate governmental authority
before penalties attach thereto or interest accrues thereon and forthwith pay
such additional amount as may be necessary to ensure that the net amount
actually received by each Bank and the Agent free and clear of such taxes
(including such taxes on such additional amount) is equal to the amount which
that Bank or the Agent (as the case may be) would have received had such
withholding not been made. If the Agent or any Bank pays any amount in respect
of any such taxes, penalties or interest the Borrowers and the Guarantors shall
reimburse the Agent or that Bank for that payment on demand in the currency in
which such payment was made. If the Borrowers or the Guarantors pay any such
taxes, penalties or interest, it shall deliver official tax receipts evidencing
that payment or certified copies thereof to the Bank or Agent on whose account
such withholding was made (with a copy to the Agent if not the recipient of the
original) on or before the thirtieth day after payment. If any Bank or the Agent
determines it has received or been granted a credit against or relief or
remission for, or repayment of, any taxes paid or payable by it because of any
taxes, penalties or interest paid by the Borrowers or the Guarantors
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and evidenced by such a tax receipt, such Bank or Agent shall, to the extent it
can do so without prejudice to the retention of the amount of such credit,
relief, remission or repayment, pay to the Borrowers or such Guarantor, as
applicable, such amount as such Bank or Agent determines is attributable to such
deduction or withholding and which will leave such Bank or Agent (after such
payment) in no better or worse position than it would have been in if the
Borrowers had not been required to make such deduction or withholding. Nothing
in this Agreement shall interfere with the right of each Bank and the Agent to
arrange its tax affairs in whatever manner it thinks fit nor oblige any Bank or
the Agent to disclose any information relating to its tax affairs or any
computations in connection with such taxes.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) shall submit
to the Company and the Agent on or before the earlier of the date the initial
Borrowing is made hereunder and thirty (30) days after the date hereof, two duly
completed and signed copies of either Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Bank, including fees, pursuant to the Loan
Documents and the Loans) or Form 4224 (relating to all amounts to be received by
such Bank, including fees, pursuant to the Loan Documents and the Loans) of the
United States Internal Revenue Service. Thereafter and from time to time, each
Bank shall submit to the Company and the Agent such additional duly completed
and signed copies of one or the other of such Forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Company (acting on behalf of the
Borrowers) in a written notice, directly or through the Agent, to such Bank and
(ii) required under then-current United States law or regulations to avoid or
reduce United States withholding taxes on payments in respect of all amounts to
be received by such Bank, including fees, pursuant to the Loan Documents or the
Loans or the Letters of Credit. Upon the request of the Company, each Bank that
is a United States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Company and the Agent a certificate to the effect that
it is such United States person.
(c) Inability of Bank to Submit Forms. If any Bank determines, as a result
of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Company or Agent any form or certificate that such Bank is obligated to submit
pursuant to subsection (b) of this Section 15.1. or that such Bank is required
to withdraw or cancel any such form or certificate previously submitted or any
such form or certificate otherwise becomes ineffective or inaccurate, such Bank
shall promptly notify the Company (acting on behalf of the Borrowers) and Agent
of such fact and the Bank shall to that extent not be obligated to provide any
such form or certificate and will be entitled to withdraw or cancel any affected
form or certificate, as applicable.
Section 15.2. No Waiver of Rights. No delay or failure on the part of the
Agent or any Bank or on the part of the holder or holders of any Note in the
exercise of any power or right under any Loan Document shall operate as a waiver
thereof, nor as an acquiescence in any default, nor shall any single or partial
exercise thereof preclude any other or further exercise of any other power or
right, and the rights and remedies hereunder of the Agent, the Banks and the
holder or holders of any Notes are cumulative to, and not exclusive of, any
rights or remedies which any of them would otherwise have.
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Section 15.3. Non-Business Day. If any payment of principal or interest on
any Note or any fees shall fall due on a day which is not a Business Day, (i)
interest at the rate such Note bears for the period prior to maturity shall
continue to accrue on such principal from the stated due date thereof to and
including the next succeeding Business Day and (ii) such principal, interest and
fees shall be payable on such next succeeding Business Day
Section 15.4. Documentary Taxes. The Borrowers agree that they will pay any
documentary, stamp or similar taxes payable in respect to any Loan Document, the
Applications or the Letters of Credit, including interest and penalties, in the
event any such taxes are assessed, irrespective of when such assessment is made
and whether or not any credit is then in use or available hereunder.
Section 15.5. Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Loan Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as any credit is in use or available hereunder.
Section 15.6. Survival of Indemnities. All indemnities and all other
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield of the Banks with respect to the Loans, including, but not
limited to, Section 4.8, Section 12.3 and Section 15.15 hereof, shall survive
the termination of this Agreement and the other Loan Documents and the payment
of the Loans and all other Obligations hereunder.
Section 15.7. Sharing of Set-Off. Each Bank agrees with each other Bank a
party hereto that if such Bank shall receive and retain any payment, whether by
set-off or application of deposit balances or otherwise ("Set-off"), on any of
the Loans or Reimbursement Obligations in excess of its ratable share of
payments on all such obligations then outstanding to the Banks, then such Bank
shall purchase for cash at face value, but without recourse, ratably from each
of the other Banks such amount of the Loans or Reimbursement Obligations, or
participations therein, held by each such other Banks (or interest therein) as
shall be necessary to cause such Bank to share such excess payment ratably with
all the other Banks; provided, however, that if any such purchase is made by any
Bank, and if such excess payment or part thereof is thereafter recovered from
such purchasing Bank, the related purchases from the other Banks shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest. For purposes of this Section
15.7, amounts owed to or recovered by, the Agent in connection with
Reimbursement Obligations in which Banks have been required to fund their
participation shall be treated as amounts owed to or recovered by the Agent as a
Bank hereunder.
Section 15.8. Notices. Except as otherwise specified herein, all notices
under the Loan Documents shall be in writing (including cable, telecopy, telex
or other electronic communication) and shall be given to a party hereunder at
its address, telecopier number or telex number set forth below or such other
address, telecopier number or telex number as such party may hereafter specify
by notice to the Agent and the Company (acting on behalf of the Borrowers),
given by courier, by United States certified or registered mail, or by other
telecommunication device capable of creating a written record of such notice and
its receipt.
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Notices under the Loan Documents to the Banks and the Agent shall be addressed
to their respective addresses, telecopier, telex, or telephone numbers set forth
on the signature pages hereof, and to the Company (acting on behalf of the
Borrowers) and the Guarantors to:
Titan International, Inc.
2701 Spruce Street
Quincy, Illinois 62301
Attention: General Counsel
Telecopy: (217) 228-3040
Telephone: (217) 228-6011
with a copy to:
Schmiedeskamp, Robertson, Neu & Mitchell
525 Jersey
P.O. Box 1069
Quincy, Illinois 62306
Attention: William M. McCleery, Jr.
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 15.8 or on the signature pages hereof and a
confirmation of receipt of such telecopy has been received by the sender, (ii)
if given by telex, when such telex is transmitted to the telex number specified
in this Section 15.8 or on the signature pages hereof and the answerback is
received by sender, (iii) if given by courier, when delivered, (iv) if given by
mail, three Business Days after such communication is deposited in the mail,
registered with return receipt requested, addressed as aforesaid or (v) if given
by any other means, when delivered at the addresses specified in this Section
15.8 or on the signature pages hereof; provided that any notice given pursuant
to Section 1 hereof shall be effective only upon receipt and notices described
in clauses (i), (ii), (iii), and (v) above that are received after normal
business hours will be deemed received at the opening of business on the next
Business Day.
Section 15.9. Counterparts. This Agreement may be executed in any number of
counterpart signature pages, and by the different parties on different
counterparts, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same instrument.
Section 15.10. Successors and Assigns. This Agreement shall be binding upon
the Borrowers and their successors and assigns, and shall inure to the benefit
of each of the Banks and the benefit of their respective successors and assigns,
including any subsequent holder of any Note. The Borrowers may not assign any of
their rights or obligations under any Loan Document without the written consent
of all of the Banks.
Section 15.11. Participants. Each Bank shall have the right at its own cost
to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and Reimbursement Obligations
and/or Commitments held by such Bank at any
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time and from time to time to one or more other Persons; provided that (i) no
such participation shall relieve any Bank of any of its obligations under this
Agreement, (ii) no Bank shall agree with such participant not to exercise any of
its rights hereunder without the consent of such participant except for rights
which under the terms hereof may only be exercised by all Banks and (iii) no
such participant shall have any direct rights under this Agreement except as
provided in this Section 15.11, and the Agent shall have no obligation or
responsibility to such participant. Any agreement pursuant to which such
participation is granted shall provide that the granting Bank shall retain the
sole right and responsibility to enforce the obligations of the Borrowers and
Guarantors under this Agreement and the other Loan Documents including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of the Loan Documents, except that such agreement may provide that
such Bank will not agree to any modification, amendment or waiver of the Loan
Documents that would reduce the amount of or postpone any fixed date for payment
of any Obligation in which such participant has an interest. Any party to which
such a participation has been granted shall have the benefits of Section 4.8 and
Section 12.3 hereof. Each Borrower and each Guarantor authorizes each Bank to
disclose to any participant or prospective participant under this Section 15.11
any financial or other information pertaining to the Borrowers or any Guarantor.
Section 15.12. Assignment Agreements. Each Bank may, from time to time upon
at least five Business Days' notice to the Agent, assign to other commercial
lenders or a Federal Reserve Bank part of its rights and obligations under this
Agreement (including without limitation the indebtedness evidenced by the Notes
then owned by such assigning Bank, together with an equivalent proportion of its
obligation to make loans and advances and participate in Letters of Credit
hereunder) pursuant to written agreements executed by such assigning Bank, such
assignee lender or lenders, the Borrowers and the Agent, which agreements shall
specify in each instance the portion of the indebtedness evidenced by the Notes
which is to be assigned to each such assignee lender and the portion of the
Commitments of the assigning Bank to be assumed by it (the "Assignment
Agreements"); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of the assigning Bank's rights and
obligations under this Agreement and the assignment shall cover the same
percentage of such Bank's Commitments, Term Commitments, Loans, Notes and
interests in Letters of Credit; (ii) unless the Agent and the Company otherwise
consent, the aggregate amount of the Commitments, Loans, Notes and interests in
the Letters of Credit of the assigning Bank being assigned to such assignee
lender pursuant to each such assignment (determined as of the effective date of
the relevant Assignment Agreement) shall in no event be less than $10,000,000
and shall be an integral multiple of $5,000,000; (iii) each Bank shall maintain
for its own account at least $10,000,000 of its Commitment or assign all of its
Commitment; (iv) the Agent and the Company (acting on behalf of the Borrowers)
must each consent (except for assignments to a Federal Reserve Bank), which
consent shall not be unreasonably withheld, to each such assignment to a party
which was not an original signatory of this Agreement or an Affiliate of such a
signatory, provided, that so long as an Event of Default has occurred and is
continuing, the consent of each Borrower to such an assignment shall not be
required; and (v) the assignee lender must pay to the Agent a processing and
recordation fee of $2,500. Upon the execution of each Assignment Agreement by
the assigning Bank thereunder, the assignee lender thereunder, the Company
(acting on behalf of the Borrowers) and the Agent and payment to such assigning
Bank by such assignee lender of the purchase price for the portion of the
indebtedness of the
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Borrowers being acquired by it, (i) such assignee lender shall thereupon become
a "Bank" for all purposes of this Agreement with Commitments in the amounts set
forth in such Assignment Agreement and with all the rights, powers and
obligations afforded a Bank hereunder, (ii) such assigning Bank shall have no
further liability for funding the portion of its Commitments assumed by such
other Bank and (iii) the address for notices to such assignee Bank shall be as
specified in the Assignment Agreement executed by it. Concurrently with the
execution and delivery of such Assignment Agreement, the Borrowers shall execute
and deliver Notes to the assignee Bank in the amount of its Commitment and Term
Commitment and new Notes to the assigning Bank in the amounts of its Commitment
and Term Commitment after giving effect to the reduction occasioned by such
assignment, such Notes to constitute "Notes" for all purposes of this Agreement.
Upon its receipt of such Notes, the assigning Bank shall return its old Notes to
the Borrowers marked canceled.
Section 15.13. Amendments. Any provision of the Loan Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by (a) the Borrowers, (b) the Required Banks, and (c) if the rights or
duties of the Agent are affected thereby, the Agent; provided that:
(i) no amendment or waiver pursuant to this Section 15.13 shall
(A) increase the Commitment of any Bank without the consent of such Bank or
(B) reduce the amount of or postpone any fixed date scheduled for payment
of any principal of or interest on any Loan or Reimbursement Obligation or
of any fee payable hereunder or (C) extend the Termination Date without the
consent of each Bank;
(ii) no amendment or waiver pursuant to this Section 15.13 shall,
unless signed by each Bank, change any provision of Sections 9.1, 9.2, 9.3
or 11 hereof, or the requirements for provision of Guarantee Agreements in
the last paragraph of Section 10.15 hereof, or this Section 15.13, or the
definition of Required Banks, or affect the number of Banks required to
take any action under the Loan Documents; and
(iii) no amendment or waiver pursuant to this Section 15.13
shall, without the prior written consent of each Bank, materially modify
Section 14 hereof or a Guarantee Agreement or release a Subsidiary from its
Guarantee Agreement or release the stock pledged in lieu of such a
guaranty; provided, however, that (i) the Agent may upon the Company's
request, without the consent of any other Bank, release a Subsidiary from
its Guarantee Agreement or release the stock pledged in lieu of such a
guaranty if (x) at the time of such release and immediately after giving
effect thereto, such Subsidiary would not have been required under Section
10.15 hereof to provide such a guaranty or pledge if one had not already
been delivered, (y) no consent from any Bank was required under Section
10.15 to waive the requirement that such Subsidiary provide a guaranty or
pledge and (z) no Default or Event of Default would occur or be continuing,
and (ii) if the Required Banks so consent in writing, the Agent may release
a Subsidiary from its Guarantee Agreement or release the stock pledged in
lieu of such a guaranty if (x) the Required Banks would in accordance with
Section 10.15 hereof then have the right thereunder to waive the
requirement for such Subsidiary's delivery of such guaranty or pledge had
one not already been delivered and (y) no Default or Event of Default shall
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<PAGE> 78
occur or be continuing at the time of such release or immediately after
giving effect thereto.
Section 15.14. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 15.15. Legal Fees, Other Costs and Indemnification. The Borrowers
agree to pay all reasonable costs and expenses of the Agent in connection with
the preparation and execution of and any amendment, waiver or consent related to
the Loan Documents. The Borrowers further agree to indemnify each Bank, the
Agent, and their respective directors, officers and employees, against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor, whether or not the indemnified Person is a party thereto) which any of
them may incur or reasonably pay arising out of or relating to any Loan Document
or any of the transactions contemplated thereby or the direct or indirect
application or proposed application of the proceeds of any Loan or Letter of
Credit, other than (i) those which arise from the gross negligence or willful
misconduct of the party claiming indemnification or (ii) for costs or
liabilities incurred in suits which are exclusively among the Banks or the Banks
and the Agent regarding damages not caused by the Borrowers or any Guarantor.
The Borrowers, upon demand by the Agent or a Bank at any time, shall reimburse
the Agent or Bank for any legal or other expenses incurred in connection with
investigating or defending against any of the foregoing, except if the same is
directly due to the gross negligence or willful misconduct of the party to be
indemnified or is for such suit exclusively among the Banks or the Banks and the
Agent.
Section 15.16. Set Off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Bank and each subsequent holder of any
Note is hereby authorized by each Borrower and each Guarantor at any time or
from time to time, without notice to the Borrowers, to the Guarantors or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other indebtedness at any time held or owing by that Bank
(or any affiliate thereof) or that subsequent holder to or for the credit or the
account of the Borrowers or any Guarantor, whether or not matured, against and
on account of the obligations and liabilities of any Borrower or any Guarantor
to that Bank or that subsequent holder under the Loan Documents, including, but
not limited to, all claims of any nature or description arising out of or
connected with the Loan Documents, irrespective of whether or not (a) that Bank
or that subsequent holder shall have made any demand hereunder or (b) the
principal of or the interest on the Loans or Notes and other amounts due
hereunder shall have become due and payable pursuant to Section 11 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured.
Section 15.17. Currency. Each reference in this Agreement to U.S. Dollars
or to an Agreement Currency (the "relevant currency") is of the essence. To the
fullest extent permitted by law, the obligation of the Borrowers in respect of
any amount due in the relevant currency under this Agreement shall,
notwithstanding any payment in any other currency (whether
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<PAGE> 79
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the relevant currency that the Bank entitled to receive such payment
may, in accordance with normal banking procedures, purchase with the sum paid in
such other currency (after any premium and costs of exchange) on the Business
Day immediately following the day on which such party receives such payment. If
the amount in the relevant currency that may be so purchased for any reason
falls short of the amount originally due, the Borrowers shall pay such
additional amounts, in the relevant currency, as may be necessary to compensate
for the shortfall. Any obligations of the Borrowers not discharged by such
payment shall, to the fullest extent permitted by applicable law, be due as a
separate and independent obligation and, until discharged as provided herein,
shall continue in full force and effect.
Section 15.18. Currency Equivalence. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due from a Borrower
hereunder or under the Applications in the currency expressed to be payable
herein or under the Applications (the "specified currency") into another
currency, the parties agree that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Agent could purchase the
specified currency with such other currency on the Business Day preceding that
on which final judgment is given. The obligation of the Borrowers in respect of
any such sum due to any Bank or the Agent hereunder or under any Note shall,
notwithstanding any judgment in a currency other than the specified currency, be
discharged only to the extent that, on the Business Day following receipt, such
Bank or the Agent, as applicable, may in accordance with normal banking
procedures purchase the specified currency with such other currency. If the
amount of the specified currency so purchased is less than the sum originally
due to such Bank or the Agent in the specified currency, the Borrowers agree, as
a separate obligation and notwithstanding any such judgment, to indemnify such
Bank and the Agent against such loss, and if the amount of the specified
currency so purchased exceeds the sum of (a) the amount originally due to the
applicable Bank or the Agent in the specified currency plus (b) any amounts
shared with other Banks as a result of allocations of such excess as a
disproportionate payment to such Bank under Section 15.7 hereof, such Bank or
the Agent, as the case may be, agrees to remit such excess to the Borrowers.
Section 15.19. Entire Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior or contemporaneous agreements, whether written or oral, with
respect thereto are superseded thereby.
Section 15.20. Governing Law. This Agreement and the other Loan Documents,
and the rights and duties of the parties hereto, shall be construed and
determined in accordance with the internal laws of the State of Illinois.
Section 15.21. PERSONAL JURISDICTION.
(a) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (b), THE
AGENT, THE BANKS, THE BORROWERS AND THE GUARANTORS AGREE THAT ALL DISPUTES AMONG
THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK
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<PAGE> 80
COUNTY, ILLINOIS, BUT EACH OF THE AGENT, THE BANKS THE BORROWERS AND THE
GUARANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF COOK COUNTY, ILLINOIS. THE BORROWERS AND THE
GUARANTORS WAIVE IN ALL DISPUTES ANY OBJECTION THAT THEY MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(b) OTHER JURISDICTIONS. THE BORROWERS AND THE GUARANTORS AGREE THAT THE
AGENT AND EACH OF THE BANKS SHALL HAVE THE RIGHT TO PROCEED AGAINST THE
BORROWERS AND THE GUARANTORS OR THEIR PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE THE AGENT OR ANY BANK TO REALIZE ON PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF THE AGENT OR ANY BANK. THE BORROWERS AND
THE GUARANTORS AGREE THAT THEY WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN
ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THIS PROVISION BY THE AGENT OR ANY
BANK TO REALIZE ON PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE AGENT OR ANY BANK. THE BORROWERS AND THE GUARANTORS WAIVE ANY
OBJECTION THAT THEY MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT OR
ANY BANK HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION.
SECTION 15.22. WAIVER OF JURY TRIAL. EACH BORROWER, EACH GUARANTOR, THE
AGENT AND EACH BANK EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE AGENT
OR ANY BANK AND ANY BORROWER OR ANY GUARANTOR ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE
TRANSACTIONS RELATED THERETO. EACH OF THE BORROWERS, THE GUARANTORS, THE AGENT
AND THE BANKS HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF
THEM MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
SECTION 15.23. WAIVER OF BOND. EACH BORROWER AND EACH GUARANTOR WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE AGENT OR ANY BANK IN CONNECTION
WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH
OR LEVY UPON ANY SECURITY FOR THE NOTES AND ANY OTHER OBLIGATIONS, TO ENFORCE
ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE AGENT OR ANY BANK, OR
TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER, OR PRELIMINARY
OR PERMANENT INJUNCTION, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER
AGREEMENT OR DOCUMENT BETWEEN THE AGENT OR ANY BANK AND ANY BORROWER OR
GUARANTOR.
SECTION 15.24. ADVICE OF COUNSEL. EACH BORROWER AND EACH GUARANTOR
REPRESENTS TO THE AGENT AND EACH BANK THAT IT HAS DISCUSSED THIS AGREEMENT WITH
ITS LAWYERS.
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<PAGE> 81
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of this 17th day of September, 1998.
TITAN INTERNATIONAL, INC.
By /s/ Kent W. Hackamack
----------------------------------
Name: Kent W. Hackamack
-------------------------------
Title: V.P. of Finance and Treasurer
------------------------------
TITAN INVESTMENT CORPORATION
By /s/ Kent W. Hackamack
----------------------------------
Name: Kent W. Hackamack
-------------------------------
Title: Treasurer
------------------------------
TITAN CREDIT CORPORATION
By /s/ Kent W. Hackamack
----------------------------------
Name: Kent W. Hackamack
-------------------------------
Title: President
------------------------------
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<PAGE> 82
Accepted and Agreed to as of the day and year last above written.
111 West Monroe Street HARRIS TRUST AND SAVINGS BANK,
Chicago, Illinois 60690 in its individual capacity as a Bank
Attention: James H. Colley and as Agent
Telecopy: (312) 293-5041
Telephone: (312) 461-6876
By /s/ James H. Colley
------------------------------------
Commitment: $35,000,000 Name: James H. Colley
------------------------------
Title: Vice President
Lending Offices:
Domestic Rate Loans: 111 West Monroe Street
Chicago, Illinois 60690
Eurocurrency Loans: Nassau Branch
c/o 111 West Monroe Street
Chicago, Illinois 60690
Bid Loans: 111 West Monroe Street
Chicago, Illinois 60690
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<PAGE> 83
One First National Plaza THE FIRST NATIONAL BANK OF CHICAGO
Mail Suite 0088
Chicago, Illinois 60670
Attention: Karen Kaizer
Telecopy: (312) 732-5161 By /s/ Cheryl A. McCabe
Telephone: (312) 732-2330 ---------------------------------
Name: Cheryl A. McCabe
---------------------------
Title: Assistant Vice President
-------------------------
Commitment: $30,000,000
Lending Offices:
Domestic Rate Loans: One First National Plaza
Mail Suite 0088
Chicago, Illinois 60670
Eurocurrency Loans: One First National Plaza
Mail Suite 0088
Chicago, Illinois 60670
Bid Loans: One First National Plaza
Mail Suite 0088
Chicago, Illinois 60670
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<PAGE> 84
233 S. Wacker Drive, Suite 2800 NATIONSBANK, N.A.
Chicago, Illinois 60606
Attention: Mary Carol Daly
Telecopy: (312) 234-5601 By /s/ Mary Carol Daly
Telephone: (312) 234-5618 ---------------------------------
Name: Mary Carol Daly
----------------------------
Title: Vice President
---------------------------
Commitment: $30,000,000
Lending Offices:
Domestic Rate Loans: Independence Center
101 N. Tryon Street
NC 1-001-15-05
Charlotte, North Carolina 28255
Attention: Carole Greene
Eurocurrency Loans: Independence Center
101 N. Tryon Street
NC 1-001-15-05
Charlotte, North Carolina 28255
Attention: Carole Greene
Bid Loans: Independence Center
101 N. Tryon Street
NC 1-001-15-05
Charlotte, North Carolina 28255
Attention: Carole Greene
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<PAGE> 85
Comerica Tower COMERICA BANK
Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226 By /s/ Gregory N. Block
Attention: Gregory Block ---------------------------------
Telecopy: (313) 222-9516
Telephone: (313) 222-7006 Name: Gregory N. Block
----------------------------
Title: Vice President
---------------------------
Commitment: $35,000,000
Lending Offices:
Domestic Rate Loans: Comerica Tower
Detroit Center
5000 Woodward Avenue
Detroit, Michigan 48226
Eurocurrency Loans: Comerica Tower
Detroit Center
5000 Woodward Avenue
Detroit, Michigan 48226
Bid Loans: Comerica Tower
Detroit Center
5000 Woodward Avenue
Detroit, Michigan 48226
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<PAGE> 86
25 Park Place SUNTRUST BANK, ATLANTA
24th Floor - Mail Code 118
Atlanta, Georgia 30303
Attention: Linda L. Dash By /s/ Linda L. Dash
Telecopy: (404) 658-4905 ---------------------------------
Telephone: (404) 658-4923
Name: Linda L. Dash
----------------------------
Title: Vice President
---------------------------
Commitment: $30,000,000
By /s/ Charles C. Pick
---------------------------------
Name: Charles C. Pick
----------------------------
Title: Vice President
---------------------------
Lending Offices:
Domestic Rate Loans: 25 Park Place
24th Floor
Atlanta, Georgia 30303
Eurocurrency Loans: 25 Park Place
24th Floor
Atlanta, Georgia 30303
Bid Loans: 25 Park Place
24th Floor
Atlanta, Georgia 30303
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<PAGE> 87
135 South LaSalle Street ABN AMRO BANK N.V.
Chicago, Illinois 60674-9135
Attention: David Sagers
Telecopy: (312) 606-8425 By /s/ David C. Sagers
Telephone: (312) 904-2854 ---------------------------------
Name: David C. Sagers
----------------------------
Title: Vice President
---------------------------
Commitment: $30,000,000
By /s/ John J. Mack
---------------------------------
Name: John J. Mack
----------------------------
Title: Vice President
---------------------------
Lending Offices:
Domestic Rate Loans: 135 South LaSalle Street
Chicago, Illinois 60674-9135
Eurocurrency Loans: 135 South LaSalle Street
Chicago, Illinois 60674-9135
Bid Loans: 135 South LaSalle Street
Chicago, Illinois 60674-9135
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<PAGE> 88
2777 Inkster Road 10-36 MICHIGAN NATIONAL BANK
Farmington Hills, Michigan 48333
Attention: Joe Redoutey
Telecopy: (248) 473-4345 By /s/ Joseph M. Redoutey
Telephone: (248) 473-4334 ---------------------------------
Name: Joseph M. Redoutey
----------------------------
Title: Relationship Manager
---------------------------
Commitment: $20,000,000
Lending Offices:
Domestic Rate Loans: 2777 Inkster Road 10-36
Farmington Hills, Michigan 48333
Eurocurrency Loans: 2777 Inkster Road 10-36
Farmington Hills, Michigan 48333
Bid Loans: 2777 Inkster Road 10-36
Farmington Hills, Michigan 48333
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<PAGE> 89
Central Division THE BANK OF NEW YORK
1 Wall Street
New York, New York 10286
Attention: John Lokay
Telecopy: (212) 635-1208 By /s/ R. Wes Towns
Telephone: (212) 635-1172 ---------------------------------
Name: R. Wes Towns
----------------------------
Title: Senior Vice President
---------------------------
Commitment: $20,000,000
Lending Offices:
Domestic Rate Loans: 1 Wall Street
New York, New York 10286
Eurocurrency Loans: 1 Wall Street
New York, New York 10286
Bid Loans: 1 Wall Street
New York, New York 10286
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<PAGE> 90
FIRSTAR BANK MILWAUKEE, N.A.
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: John Falb By /s/ John R. Falb
Telecopy: (414) 765-4632 ------------------------------
Telephone: (414) 765-6041
Name: John R. Falb
-------------------------
Title: Vice President
------------------------
Commitment: $20,000,000
Lending Offices:
Domestic Rate Loans: 777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Eurocurrency Loans: 777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Bid Loans: 777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
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<PAGE> 91
EXHIBIT A
COMMITTED NOTE
September 17, 1998
FOR VALUE RECEIVED, the undersigned, Titan International, Inc., an
Illinois corporation (the "Company"), Titan Investment Corporation, an Illinois
corporation ("Titan Investment") and Titan Credit Corporation, a Nevada
corporation ("Titan Credit") (the Company, Titan Investment and Titan Credit are
referred to collectively herein as the "Borrowers") jointly and severally
promise to pay to the order of ________________________ (the "Bank") on the
Termination Date of the hereinafter defined Credit Agreement, at the principal
office of Harris Trust and Savings Bank in Chicago, Illinois, in immediately
available funds, the aggregate unpaid principal amount of all Committed Loans
made by the Bank to the Borrowers under its Commitment pursuant to the Credit
Agreement and with each Committed Loan to mature and become payable on the last
day of the Interest Period applicable thereto, but in no event later than the
Termination Date, together with interest on the principal amount of each
Committed Loan from time to time outstanding hereunder at the rates, and payable
in the manner and on the dates, specified in the Credit Agreement.
The Bank shall record on its books and records or on the schedule
attached to this Note, which is a part hereof, each Committed Loan made by it
pursuant to its Commitment, together with all payments of principal and interest
and the principal balances from time to time outstanding hereon, whether the
Committed Loan is a Domestic Rate Loan or a Eurocurrency Loan and the interest
rate and Interest Period applicable thereto. The record thereof, whether shown
on such books and records or on the schedule to this Note, shall be prima facie
evidence of the same, provided, however, that the failure of the Bank to record
any of the foregoing or any error in any such record shall not limit or
otherwise affect the obligation of the Borrowers to repay all Committed Loans
made pursuant to the Credit Agreement together with accrued interest thereon.
This Committed Loan Note is one of the Notes referred to in the Credit
Agreement dated as of September 17, 1998, among the Borrowers, Harris Trust and
Savings Bank as Agent and the Banks party thereto (as amended from time to time,
the "Credit Agreement"), and this Note and the holder hereof are entitled to all
the benefits provided for thereby or referred to therein, to which Credit
Agreement reference is hereby made for a statement thereof. All capitalized
terms used in this Note, except terms otherwise defined herein, shall have the
same meaning as in the Credit Agreement. This Note shall be governed by and
construed in accordance with the internal laws of the State of Illinois without
regard to choice of law doctrine.
Prepayments may be made hereon and this Note may be declared due prior
to the expressed maturity hereof, all in the events, on the terms and in the
manner as provided for in the Credit Agreement.
<PAGE> 92
The Borrowers hereby waive demand, presentment, protest or notice of
any kind hereunder.
TITAN INTERNATIONAL, INC.
By_______________________________
Name:___________________________
Title:__________________________
TITAN INVESTMENT CORPORATION
By_______________________________
Name:___________________________
Title:__________________________
TITAN CREDIT CORPORATION
By_______________________________
Name:___________________________
Title:__________________________
A-2
<PAGE> 93
EXHIBIT B
BID NOTE
September 17, 1998
FOR VALUE RECEIVED, the undersigned, Titan International, Inc., an
Illinois corporation (the "Company"), Titan Investment Corporation, an Illinois
corporation ("Titan Investment") and Titan Credit Corporation, a Nevada
corporation ("Titan Credit") (the Company, Titan Investment and Titan Credit are
referred to collectively herein as the "Borrowers") jointly and severally
promise to pay to the order of ________________ (the "Bank") on the Termination
Date of the hereinafter defined Credit Agreement, at the principal office of
Harris Trust and Savings Bank in Chicago, Illinois, in immediately available
funds, the aggregate unpaid principal amount of all Bid Loans made by the Bank
to the Borrowers pursuant to the Credit Agreement and with each Bid Loan to
mature and become payable on the last day of the Interest Period applicable
thereto, but in no event later than the Termination Date, together with interest
on the principal amount of each Bid Loan from time to time outstanding hereunder
at the rates, and payable in the manner and on the dates, specified in the
Credit Agreement.
The Bank shall record on its books and records or on the schedule
attached to this Note, which is a part hereof, each Bid Loan made by it pursuant
to the Credit Agreement, together with all payments of principal and interest
and the principal balances thereof from time to time outstanding hereon and the
interest rate and Interest Period applicable thereto. The record thereof,
whether shown on such books and records or on the schedule to this Note, shall
be prima facie evidence of the same, provided, however, that the failure of the
Bank to record any of the foregoing or any error in any such record shall not
limit or otherwise affect the obligation of the Borrowers to repay all Bid Loans
made pursuant to the Credit Agreement together with accrued interest thereon.
This Bid Note is one of the Notes referred to in the Credit Agreement
dated as of September 17, 1998, among the Borrowers, Harris Trust and Savings
Bank as Agent and the Banks party thereto (as amended from time to time, the
"Credit Agreement"), and this Note and the holder hereof are entitled to all the
benefits provided for thereby or referred to therein, to which Credit Agreement
reference is hereby made for a statement thereof. All capitalized terms used in
this Note, except terms otherwise defined herein, shall have the same meaning as
in the Credit Agreement. This Note shall be governed by and construed in
accordance with the internal laws of the State of Illinois without regard to
choice of law doctrine.
At any time and from time to time, the Bank may assign or otherwise
transfer (in whole or in part) to any Person this Note or any Loan hereunder.
This Note may be declared due prior to the expressed maturity hereof on
the terms and in the manner provided for in the Credit Agreement.
<PAGE> 94
The Borrowers hereby waive demand, presentment, protest or notice of
any kind hereunder.
TITAN INTERNATIONAL, INC.
By
Name:_____________________________
Title:____________________________
TITAN INVESTMENT CORPORATION
By
Name:_____________________________
Title:____________________________
TITAN CREDIT CORPORATION
By
Name:_____________________________
Title:____________________________
B-2
<PAGE> 95
EXHIBIT C
BID LOAN REQUEST CONFIRMATION
[Date]
Harris Trust and Savings Bank
as Agent for the Banks party
to the Credit Agreement
referred to below
Attention:
The undersigned, Titan International, Inc. (the "Company") refers to
the Credit Agreement dated as of September 17, 1998 (the "Credit Agreement"),
among the Borrowers, the Banks named therein and Harris Trust and Savings Bank
as Agent for the Banks. Capitalized terms used and not defined herein have the
meanings assigned to them in the Credit Agreement. The Company hereby confirms
that it has, on the date hereof, given you notice pursuant to Section 3.2 of the
Credit Agreement that it requests for the relevant Borrower a Bid Loan Borrowing
under the Credit Agreement, and in that connection sets forth below the terms on
which such Bid Loan Borrowing is requested to be made:
(A) Date of Bid Loan Borrowing(1)
------------
(B) Aggregate Principal Amount of Bid Loan Borrowing(2)
------------
(C) Interest Period(3)
------------
------------
------------
(D) If applicable, maximum amount
------------
requested for each Interest Period(4)
------------
------------
(E) Name of Borrower requesting Bid Loan
------------
- -------------------
(1) The Bid Loan Request Confirmation must be received on a Business Day by
the Facility Agent not later than 2:00 p.m. (Chicago time) one (1)
Business Day before the proposed Borrowing Date.
(2) Not less than $2,000,000 and in integral multiples of $500,000.
(3) Which shall be no more than 180 days or less than 7 days and shall end
not later than the applicable Termination Date.
(4) May not exceed amount in (B) for any Interest Period and for each
Interest Period must be not less than $2,000,000 and in integral
multiples of $500,000.
<PAGE> 96
Upon acceptance of any or all of the Bids offered by Banks in
response to this request, the Borrowers shall be deemed to affirm as of such
date the representations and warranties made in the Credit Agreement to the
extent specified in Section 8 thereof.
Very truly yours,
TITAN INTERNATIONAL, INC.
By
Its_______________________________
C-2
<PAGE> 97
EXHIBIT D
INVITATION TO BID
[Name of Bank] [Date]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of September 17,
1998 (the "Credit Agreement") among Titan International, Inc. (the "Company"),
Titan Investment Corporation, Titan Credit Corporation, the Banks named therein
and Harris Trust and Savings Bank as Agent for the Banks. Capitalized terms used
and not defined herein have the meanings assigned to them in the Credit
Agreement. The Company made a Bid Loan Request on _________________, 19__
pursuant to Section 3.2 of the Credit Agreement for a Bid Loan to ____________,
and in that connection you are invited to submit a Bid by ___[Date]___. Your Bid
must comply with Section 3.2 of the Credit Agreement and the terms set forth
below on which the Bid Loan Request was made.
(A) Date of Proposed Bid Loan Borrowing __________
(B) Aggregate Principal Amount
of Bid Loan Borrowing Interest
Periods
1. ___________________ ______________
2. ___________________ ______________
3. ___________________ ______________
(C) The Bid must be received by Harris Bank not later than
9:30 a.m. (Chicago time) on the proposed Borrowing Date.
Very truly yours,
HARRIS TRUST AND SAVINGS BANK
as Agent for the Banks
By
Its_______________________________
<PAGE> 98
EXHIBIT E
CONFIRMATION OF BID
[Date]
Harris Trust and Savings Bank
as Agent for the Banks party to the
Credit Agreement referred to below
Attention:
The undersigned, [NAME OF BANK], refers to the Credit Agreement dated
as of September 17, 1998 (the "Credit Agreement") among Titan International,
Inc. (the "Company"), Titan Investment Corporation, Titan Credit Corporation
[__], the Banks named therein and Harris Trust and Savings Bank as Agent for the
Banks. Capitalized terms used and not defined herein have the meanings assigned
to them in the Credit Agreement. The undersigned hereby confirms that on the
date hereof it has made a Bid pursuant to Section 3.2 of the Credit Agreement
for a Bid Loan to _____________, in response to the Bid Loan Request made by the
Company on ____________, 19__, and in that connection sets forth below the terms
on which such Bid is made:
Date of proposed Bid Loan Borrowing: ___________________(1)
PRINCIPAL INTEREST INTEREST
AMOUNT(2) PERIOD(3) RATE(4)
Very truly yours,
[NAME OF BANK]
By
Its______________________________________
- ------------------------
(1) As specified in the related Invitation to Bid.
(2) Principal amount bid for each Interest Period may not exceed the
principal amount requested by the Borrower or the maximum amount
requested for that Interest Period, if less. Bids must be made in a
minimum amount of $2,000,000 and in integral multiples of $500,000.
(3) Up to 180 days and not less than 7 days, as specified in the related
Invitation to Bid.
(4) Specify rate of interest per annum computed on the basis of a year of
360 days and actual days elapsed.
<PAGE> 99
EXHIBIT F
NOTICE OF ACCEPTANCE OF BID
[Name of Bank] [Date]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of September 17,
1998 (the "Credit Agreement") among Titan International, Inc. (the "Company")
Titan Investment Corporation, Titan Credit Corporation, the Banks named therein
and Harris Trust and Savings Bank as Agent for the Banks. Capitalized terms used
and not defined herein have the meanings assigned to them in the Credit
Agreement. The Company made a Bid Loan Request on ________________, 19__
pursuant to Section 3.2 of the Credit Agreement for a Bid Loan to _________, and
in that connection you have submitted a Bid. Your Bid has been accepted as set
forth below.
(A) Date of Bid Loan Borrowing __________
(B) Principal Amount of Bid Loan(s) __________
(C) Your Bid accepted:
Interest
Amount: _________ Period: _________ Rate: _________
_________ _________ _________
_________ _________ _________
(D) Aggregate winning bids:
Interest
Amount: _________ Period: _________ Rate: _________
_________ _________ _________
_________ _________ _________
Very truly yours,
HARRIS TRUST AND SAVINGS BANK
as Agent for the Banks
By
Its__________________________
<PAGE> 100
EXHIBIT G
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Bank]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of September 17,
1998 among Titan International, Inc., Titan Investment Corporation, Titan Credit
Corporation, the Banks named therein, and Harris Trust and Savings Bank, as
Agent (the "Credit Agreement"). Capitalized terms used herein and not defined
herein have the meanings assigned to them in the Credit Agreement. [The
Borrowers have failed to pay Reimbursement Obligations in the amount of
________________. Your Bank's Percentage of the unpaid Reimbursement Obligation
is _____________] or [Harris Trust and Savings Bank has been required to return
a payment by a Borrower of a Reimbursement Obligation in the amount of
_________________. Your Bank's Percentage of the returned Reimbursement
Obligations is ________________.]
Very truly yours,
HARRIS TRUST AND SAVINGS BANK
By
Its_____________________________
<PAGE> 101
EXHIBIT H
COMPLIANCE CERTIFICATE
To: The Banks parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain
Credit Agreement dated as of September 17, 1998, among Titan International, Inc.
(the "Company"), Titan Investment Corporation, Titan Credit Corporation, the
Banks party thereto and Harris Trust and Savings Bank as Agent for the Banks (as
amended, the "Agreement"). Unless otherwise defined herein, the capitalized
terms used in this Compliance Certificate have the meaning ascribed thereto in
the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _______________________________ of the
Company;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Company and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or an Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Company's compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
<PAGE> 102
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ______ day of
______________, 19___.
___________________________
H-2
<PAGE> 103
SCHEDULE I
TITAN INTERNATIONAL, INC.
COMPLIANCE CALCULATIONS FOR SEPTEMBER 17, 1998 CREDIT AGREEMENT
CALCULATIONS AS OF _______________, 19__
A. MINIMUM TANGIBLE NET WORTH (SECTION 10.7)
1. $135,000,000 $135,000,000
2. Consolidated Net Income for each
fiscal year (commencing with the
year beginning on 1/1/98) $
---------
3. 50% of Line 2 Amount $
-----------
4. Cash proceeds of public offering (net
of expenses as set forth in
Section 10.7) $
---------
5. 75% of Line 4 Amount $
-----------
6. Sums of Lines 1, 3 and 5 ("Required Amount") $
-----------
7. Tangible Net Worth $
-----------
8. As set forth in Section 10.7,
Tangible Net Worth
(Line 7) must not be
less than the required amount
(Line 6). Company is in Compliance?
(CIRCLE YES OR NO) YES/NO
======
<PAGE> 104
B. INTEREST COVERAGE (SECTION 10.8)
1. Consolidated Net Income as defined
----------
2. Amounts deducted in arriving at
Consolidated Net Income in respect
of:
(A) Interest Expense
----------
(B) Federal, State and Local
Income Tax Expense
----------
3. Sum of Lines 1, 2(a) and 2(b) ("EBIT")
-----------
4. Interest Expense as defined
-----------
5. Ratio of EBIT (Line 3) to Interest
Expense (Line 4) ("Interest Coverage
Ratio") :1
-----------
6. As listed in Section 10.8, the Interest
Coverage Ratio must not be less than
:1
-----------
7. Company is in compliance? (Circle
Yes or No)
YES/NO
===========
C. Total Funded Debt to EBITDA (SECTION 10.9)
1. Total Funded Debt as defined $
-----------
2. EBIT (from Line B3 above)
----------
3. Amounts deducted in arriving at
EBIT in respect of depreciation of
----------
fixed assets and amortization of
intangibles
4. Sum of Lines 2 and 3 ("EBITDA")
-----------
5. Ratio of Total Funded Debt (Line 1)
to EBITDA (Line 4) :1
-----------
-2-
<PAGE> 105
6. Was there Subordinated Debt of the
Company outstanding at end of the
relevant calendar quarter in an
aggregate amount in excess of
$125,000,000 Yes/No
===========
7. As listed in Section 10.9, the Line 5
Ratio must not be more than 5.0:1
===========
8. Company is in compliance? (Circle
yes or no) Yes/No
===========
D. INVESTMENTS, LOANS, ADVANCES AND GUARANTIES (SECTION 10.10)
1. Investments, loans, advances and
guaranties not prohibited by
Section 10.10
2. COMPANY IS IN COMPLIANCE? (CIRCLE Yes/No
YES OR NO) ===========
E. INDEBTEDNESS (SECTION 10.11)
1. Indebtedness in respect of judgments
and awards which have not been
stayed or appealed in accordance with
Section 10.11(d)
2. Is the amount of Indebtedness listed
in Line 1 above in excess of Yes/No
$4,000,000 (Circle yes or no) ===========
3. Subordinated Debt of the Company
outstanding
4. Is the outstanding Subordinated Debt Yes/No
of the Company less than ===========
$125,000,000 (Circle yes or no)
5. Indebtedness outstanding pursuant to
Section 10.11(i)
6. Is the indebtedness outstanding Yes/No
pursuant to Section 10.11(i) in excess of ===========
-3-
<PAGE> 106
$75,000,000 (Circle yes or no)
F. DIVIDENDS AND CERTAIN OTHER RESTRICTED EQUITY PAYMENTS (SECTION 10.13(A))
1. Check either (a) or (b)
(a) The Company has not made ___________
any Restricted Payments (as 1(a)
defined in Section 10.13)
during the period covered by
this Certificate
(b) The Company has made
Restricted Payments during ___________
the period covered by this 1(b)
Certificate
(i) Enter the aggregate
amount of such Restricted
Payments $___________
1(b)(i)
2. If line 1(b) is checked, complete the
following:
(a) After making the Restricted ____________ ___________
Payments referred to above, True *False
no Default or Event of Default
has occurred or is continuing
(Check Either True Or False)
(b) Consolidated Net Income for $___________
the period commencing 1/1/98 2(b)
and terminating at the last
fiscal quarter preceding the
date of such Restricted
Payments
(c) 50% Line 2(b) Amount $___________
2(c)
(d) Aggregate amount of the ____________ ___________
Restricted Payments (shown True *False
on Line 1(b)(i) does not
exceed the amount shown on
Line 2(C). (Check either True
-4-
<PAGE> 107
or False)
* If this item is checked, the Company has defaulted in its
observance of the covenant set forth in Section 10.13 and
triggered an Event of Default under Section 11.1(b).
-5-
<PAGE> 108
Exhibit I
Guarantee Agreement
_______________
, 19___
HARRIS TRUST AND SAVINGS
BANK, as Agent for the Banks
party to the Credit Agreement
dated as of September 17, 1998
among Titan International,
Inc., Titan Investment Corporation,
Titan Credit Corporation,
certain Guarantors, such Banks
and such Agent (the "Credit
Agreement")
Dear Sirs:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [NAME OF GUARANTOR], a [JURISDICTION OF INCORPORATION]
corporation, hereby elects to be a "Guarantor" for all purposes of the Credit
Agreement, effective from the date hereof. The undersigned confirms that the
representations and warranties set forth in Section 8 of the Credit Agreement
are true and correct as to the undersigned as of the date hereof.
Without limiting the generality of the foregoing, the undersigned
hereby agrees to perform all the obligations of a Guarantor under, and to be
bound in all respects by the terms of, the Credit Agreement, including without
limitations Section 14 thereof, to the same extent and with the same force and
effect as if the undersigned were a direct signatory thereto. Accordingly, the
undersigned hereby unconditionally agrees that it shall for all purposes be
conclusively deemed to be a direct signatory to the Credit Agreement.
<PAGE> 109
This Agreement shall be construed in accordance with and governed by
the internal laws of the State of Illinois.
Very truly yours,
[NAME OF GUARANTOR]
By
Name ___________________________
Title __________________________
-2-
<PAGE> 110
EXHIBIT J
EMPLOYEE BENEFIT PLANS
Obligations under United States Federal law to provide COBRA continuation
coverage to terminated employees, which may result in a claim against the
following self insured plans of the Company (with a limit of $35,000 per
employee):
Can-Am Industries, Inc. - Employee's Health Care Plan
<PAGE> 111
EXHIBIT K
FORM OF OPINION OF COUNSEL
<PAGE> 112
EXHIBIT L
CERTIFICATE REGARDING PROJECTIONS
To: The Banks parties to the
Credit Agreement Described Below
This Certificate is furnished pursuant to that certain Credit Agreement
dated as of September 17, 1998, among Titan International, Inc. (the "Company"),
Titan Investment Corporation and Titan Credit Corporation, the Banks party
thereto and Harris Trust and Savings Bank as Agent for the Banks (the
"Agreement"). Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _______________________________ of the
Company;
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial projections (the
"Projections").
3. The Projections have been prepared on a basis consistent with
the Company's historical financial statements and records, together with the
assumptions set forth in the Projections.
4. The Projections reflect the reasonable analysis of the Company's
management and does not reflect results or financial conditions which are more
favorable in any material respect than such management's reasonable expectations
as to the matters set forth therein.
The foregoing certifications, together with the financial projections
delivered with this Certificate in support hereof, are made and delivered this
______ day of ______________, 19___.
________________________
<PAGE> 113
SCHEDULE 1.2(a)
FORMS OF APPLICATION FOR
STANDBY LETTERS OF CREDIT
<PAGE> 114
SCHEDULE 1.2(b)
FORMS OF APPLICATION FOR
COMMERCIAL LETTERS OF CREDIT
<PAGE> 115
SCHEDULE 8.2
SUBSIDIARIES OF TITAN INTERNATIONAL, INC.
<TABLE>
<CAPTION>
JURISDICTION OF
NAME INCORPORATION PERCENTAGE OF OWNERSHIP
<S> <C> <C>
Automotive Wheels, Inc. California 100% - Non-operational, leasing
building and equipment to 3rd party
Titan Credit Corporation Nevada 100%
Titan Distribution, Inc. Illinois 100%
Titan Transportation, Inc. Illinois 100%
Dyneer Corporation Delaware 100% - Holding Company
Dico, Inc. Delaware 100% by Dyneer Corporation Non-
operational
Titan Wheel Corporation Illinois 100% - Holding Company
Titan Wheel Corporation Illinois 100% by Titan Wheel Corporation
of Illinois (formerly a division of Titan
International, Inc.)
Titan Wheel Corporation Iowa 100% by Titan Wheel Corporation
of Iowa (formerly a division of Titan
International, Inc.)
Titan Wheel Corporation Ohio 100% by Titan Wheel Corporation
of Ohio
Titan Wheel Corporation South Carolina 100% by Titan Wheel Corporation
of South Carolina (formerly a division of Titan
International, Inc.)
Titan Wheel Corporation Wisconsin 100% by Titan Wheel Corporation
of Wisconsin (formerly under Dico, Inc.)
Titan Wheel Corporation Virginia 100% by Titan Wheel Corporation
of Virginia (formerly T.D. Wheel Company
of Virginia)
</TABLE>
<PAGE> 116
<TABLE>
<S> <C> <C>
Titan Wheel Corporation Nevada 100% by Titan Wheel Corporation of
of Nevada Virginia (formerly T.D. Wheel, Inc.)
Titan Investment Corporation Illinois 100%
Titan Tire Corporation Illinois 100% by Titan Investment
Corporation
Titan Tire Corporation Ohio 100% by Titan Investment
of Ohio Corporation
Titan Tire Corporation Delaware 100% by Titan Investment
of Tennessee Corporation (formerly Dico
Tire, Inc.)
Titan Tire Corporation Texas 100% by Titan Investment
of Texas Corporation
Titan Wheel & Tire Foreign Sales Barbados 100%
Corporation
Titan International Australia 100%
Australia, PTY, Ltd.
FUNSA Uruguay 81%
Titan Luxemburg, Sarl. Luxenburg 100%
Dyneer Holdings, Ltd. Republic of Ireland 100% by Titan Luxemburg, Sarl.
(Ireland Resident)
Bengower Republic of Ireland (Cayman 100% by Dyneer Holdings, Ltd.
Resident)
Titan Financial Services Republic of Ireland 99% by Bengower
of Ireland, Ltd. (Ireland Resident)
Titan Europe Limited United Kingdom 100% by Titan Luxemburg, Sarl.
Titan Siria Officine Meccaniche SpA Italy 100% by Titan Europe Limited
Sirmac Officine Italy 100% by Titan Europe Limited
Meccaniche SpA
</TABLE>
-2-
<PAGE> 117
<TABLE>
<S> <C> <C>
Titan Distribution (UK), Limited United Kingdom 100% by Titan Europe Limited
(formerly Titan Wheel International,
Ltd.)
Titan Germany, GmbH Germany 100% by Titan Europe, Limited
Titan France SA France 97% by Titan Europe, Limited
Titan Steel Wheels, Ltd. United Kingdom 100% (by Titan Europe, Limited)
Titan Steel Wheels United Kingdom 100% by Titan Steel Wheels Ltd.
Exports Limited
</TABLE>
-3-
<PAGE> 118
SCHEDULE 9.1
OUTSTANDING BORROWINGS UNDER EXISTING CREDIT AGREEMENT
<TABLE>
<CAPTION>
BANK MAKING PRINCIPAL INTEREST MATURITY
LOAN AMOUNT RATE DATE
<S> <C> <C> <C>
Harris Trust and $25,000,000 5.93% October 24, 1998
Savings Bank
The First National
Bank of Chicago $5,000,000 6.06% October 24, 1998
SunTrust Bank, $10,000,000 5.875% October 24, 1998
Atlanta
</TABLE>
<PAGE> 119
SCHEDULE 10.11(g)
EXISTING INDEBTEDNESS
1. Industrial Revenue Bonds in the amount of $9,500,000 relating
to the property located in Greenwood, South Carolina.
2. Promissory Note of the Company dated February 27, 1993 in the
principal amount of $1,680,000 payable to the order of Gardner
Denver, Inc.
3. Promissory Note of Titan Tire dated August 11, 1994 in the
principal amount of $20,148,159 payable to the order of PATC.
<PAGE> 120
SCHEDULE 10.12
LIENS
1. SECURED DEBT
<TABLE>
<CAPTION>
MATURITY AND
PROPERTY ENCUMBERED AMOUNT OF
INDEBTEDNESS INCURRED BY INDEBTEDNESS OWED TO (IF ANY) INDEBTEDNESS
------------------------ -------------------- -------- ------------
<S> <C> <C> <C>
a. Real Estate Lease Town of Saltville, Leasehold Interest Rent of $8,000 per
VA, month payable through
December 15, 2003
b. Issuance of Industrial Bondholders Production Facility in $9,500,000
Revenue Bonds Greenwood, South
Carolina
c. Promissory Note Gardner Denver, former Gardner Denver warehouse $500,000
issued per real estate Inc. warehouse in Quincy,
purchase agreement IL
2. CAPITALIZED LEASE
None
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (A) Sec Form
10-Q for the Quarterl period ended September 30, 1998 and is qualified in its
entirety by reference to such (B) Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 18,397
<SECURITIES> 0
<RECEIVABLES> 123,243
<ALLOWANCES> 5,970
<INVENTORY> 168,573
<CURRENT-ASSETS> 332,895
<PP&E> 367,139
<DEPRECIATION> 120,480
<TOTAL-ASSETS> 667,582
<CURRENT-LIABILITIES> 150,584
<BONDS> 213,171
0
0
<COMMON> 27
<OTHER-SE> 258,905
<TOTAL-LIABILITY-AND-EQUITY> 667,582
<SALES> 517,830
<TOTAL-REVENUES> 517,830
<CGS> 439,086
<TOTAL-COSTS> 439,086
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,397
<INCOME-PRETAX> 21,754
<INCOME-TAX> 8,267
<INCOME-CONTINUING> 13,487
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,487
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
