<PAGE>
- --------------------------------------------------------------------------------
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Date of Report (Date of Earliest Event Reported) September 3, 1999
CURRENT REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-13418
FALCON BUILDING PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 36-3931893
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
233 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Office)
(312) 906-9700
(Registrant's telephone number, including area code)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 3, 1999, Falcon Building Products, Inc. (the "Company")
sold all of the stock of Falcon Manufacturing, Inc. the parent company of
DeVilbiss Air Power Company (together "DeVilbiss") to Pentair, Inc. for cash
proceeds of $460 million subject to customary working capital adjustments.
In conjunction with the sale of DeVilbiss, and using the proceeds
therefrom, the Company amended and restated its credit agreement to terminate
the term loan portion of the agreement (retaining the $125 million revolving
credit facility) and terminated its accounts receivable securitization
program. In addition, the Company amended the indentures to its 9 1/2% Senior
Subordinated Notes and 10 1/2% Senior Subordinated Discount Notes (together,
the "Notes") to release Falcon Manufacturing, Inc. and DeVilbiss Air Power
Company as guarantors of these obligations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
Not applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial
information of Falcon Building Products, Inc. and subsidiaries
reflecting the sale of DeVilbiss are filed herewith:
Introduction to Unaudited Pro Forma Condensed
Consolidated Financial Statements
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the year ended December 31, 1998
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the six months ended June 30, 1999
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
(c) Exhibits required by Item 601 of Regulation S-K are listed in the
Index to Exhibits, which is incorporated herein by reference.
2
<PAGE>
INTRODUCTION TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial statements (the
"Pro Forma Statements") of Falcon Building Products, Inc. (the "Company")
give effect to the sale of Falcon Manufacturing, Inc., the parent company of
DeVilbiss Air Power Company (together "DeVilbiss") for cash proceeds of $460
million; the termination of the term loan portion of the Company's credit
facility; and the termination of the Company's accounts receivable
securitization program.
The Pro Forma Statements are based on the estimates and assumptions set
forth in the notes to such Pro Forma Statements. The Pro Forma Statements
have been prepared using the historical audited annual and unaudited interim
financial statements of the Company for the year ended December 31, 1998, and
the six months ended June 30, 1999, respectively.
These Pro Forma Statements are presented for illustrative purposes only
and are not necessarily indicative of the operating results or financial
position that might have been achieved had the transactions occurred as of an
earlier date, nor are they an indication of operating results or financial
position that may occur in the future. These Pro Forma Statements should be
read in conjunction with the Company's annual report on Form 10-K as of
December 31, 1998, and the Company's unaudited condensed consolidated
financial statements as of June 30, 1999.
3
<PAGE>
FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
LESS: PRO FORMA
HISTORICAL DEVILBISS (a) ADJUSTMENTS PRO FORMA
----------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 21.8 $ -- $ 114.7 (b) $ 136.5
Trade receivables, net..................................... 14.9 -- 46.7 (c) 61.6
Inventories, net........................................... 108.8 55.5 -- 53.3
Other current assets....................................... 71.9 8.5 (49.5)(c) 13.9
------------ ------------- -------------- ------------
Total current assets....................................... 217.4 64.0 111.9 265.3
Property, plant and equipment, net.............................. 130.1 36.1 -- 94.0
Goodwill........................................................ 71.8 18.9 -- 52.9
Investment in and advances to subsidiary........................ -- (41.6) (41.6)(d) --
Other long-term assets.......................................... 23.2 0.6 (4.2)(e) 18.4
------------ ------------- -------------- ------------
------------ ------------- -------------- ------------
Total assets............................................... $ 442.5 $ 78.0 $ 66.1 $ 430.6
------------ ------------- -------------- ------------
------------ ------------- -------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion long-term debt............................. $ 2.2 $ 0.1 $ (1.0)(f) $ 1.1
Accounts payable........................................... 74.0 45.2 -- 28.8
Accrued liabilities........................................ 76.6 27.2 -- 49.4
------------ ------------- -------------- ------------
Total current liabilities.................................. 152.8 72.5 (1.0) 79.3
Senior indebtedness............................................. 177.8 0.2 (172.5)(f) 5.1
Senior subordinated notes....................................... 270.6 -- -- 270.6
Accrued employee benefit obligations............................ 16.4 1.7 -- 14.7
Other long-term liabilities..................................... 20.9 3.6 -- 17.3
------------ ------------- -------------- ------------
Total liabilities.......................................... 638.5 78.0 (173.5) 387.0
------------ ------------- -------------- ------------
Stockholders' equity (deficit):
Common stock............................................... 0.1 -- -- 0.1
Notes receivable arising from stock purchase plan.......... (1.7) -- -- (1.7)
Retained earnings (deficit)................................ (191.1) -- 238.0 (g) 46.9
Pension liability adjustment............................... (3.3) -- 1.6 (h) (1.7)
------------ ------------- -------------- ------------
Total stockholders' equity (deficit)....................... (196.0) -- 239.6 43.6
------------ ------------- -------------- ------------
Total liabilities and stockholders' equity...................... $ 442.5 $ 78.0 $ 66.1 $ 430.6
------------ ------------- -------------- ------------
------------ ------------- -------------- ------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
4
<PAGE>
FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
LESS: PRO FORMA
HISTORICAL DEVILBISS (a) ADJUSTMENTS PRO FORMA
------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net sales............................................ $ 765.8 $ 389.1 $ -- $ 376.7
Cost of sales........................................ 640.0 326.7 -- 313.3
------------- --------------- ---------------- ----------------
Gross earnings.................................. 125.8 62.4 -- 63.4
Selling and administrative expenses.................. 64.9 28.5 -- 36.4
Restructuring and other charges...................... 8.2 1.1 -- 7.1
Securitization expense............................... 3.8 -- (3.8) (i) --
------------- --------------- ---------------- ----------------
Operating income................................ 48.9 32.8 3.8 19.9
Net interest expense................................. 43.8 -- (15.9) (j) 27.9
------------- --------------- ---------------- ----------------
Income (loss) from continuing operations before
income taxes.................................... 5.1 32.8 19.7 (8.0)
Provision (benefit) for income taxes from
continuing operations........................... 2.6 12.2 7.2 (k) (2.4)
------------- --------------- ---------------- ----------------
Income (loss) from continuing operations............. 2.5 20.6 12.5 (5.6)
Income from discontinued operations, net of taxes.... -- (20.6) -- 20.6
------------- --------------- ---------------- ----------------
------------- --------------- ---------------- ----------------
Net income...................................... $ 2.5 $ -- $ 12.5 $ 15.0
------------- --------------- ---------------- ----------------
------------- --------------- ---------------- ----------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
5
<PAGE>
FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
LESS: PRO FORMA
HISTORICAL DEVILBISS (a) ADJUSTMENTS PRO FORMA
------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net sales............................................ $ 500.3 $ 269.4 $ -- $ 230.9
Cost of sales........................................ 407.9 218.4 -- 189.5
------------- --------------- ---------------- ----------------
Gross earnings.................................. 92.4 51.0 -- 41.4
Selling and administrative expenses.................. 49.1 20.9 -- 28.2
Restructuring and other charges...................... (12.0) -- -- (12.0)
Securitization expense............................... 2.2 -- (2.2) (i) --
------------- --------------- ---------------- ----------------
Operating income................................ 53.1 30.1 2.2 25.2
Net interest expense................................. 21.8 -- (7.1) (j) 14.7
------------- --------------- ---------------- ----------------
Income from continuing operations before
income taxes.................................... 31.3 30.1 9.3 10.5
Provision for income taxes from continuing
operations...................................... 12.7 11.7 3.5 (k) 4.5
------------- --------------- ---------------- ----------------
Income from continuing operations.................... 18.6 18.4 5.8 6.0
Income from discontinued operations, net of taxes.... -- (18.4) -- 18.4
------------- --------------- ---------------- ----------------
------------- --------------- ---------------- ----------------
Net income...................................... $ 18.6 $ -- $ 5.8 $ 24.4
------------- --------------- ---------------- ----------------
------------- --------------- ---------------- ----------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
6
<PAGE>
FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The Unaudited Pro Forma Condensed Consolidated Balance Sheet was
prepared assuming the sale of DeVilbiss, the repayment of the term loan, and
the termination of Falcon's asset securitization program occurred on June 30,
1999. The Unaudited Pro Forma Condensed Consolidated Statements of Income for
the year ended December 31, 1998 and the six months ended June 30, 1999 were
prepared as if the sale of DeVilbiss, the repayment of the term loan, and the
termination of Falcon's asset securitization program had occurred on
January 1, 1998.
(2) PRO FORMA BALANCE SHEET ADJUSTMENTS
The following pro forma adjustments are incorporated in the Unaudited
Pro Forma Condensed Consolidated Balance Sheet as a result of the sale of
DeVilbiss, the repayment of the term loan, and the termination of Falcon's
asset securitization program:
(a) Reflects the historical balance sheet of DeVilbiss.
(b) Reflects the following:
Proceeds from sale of business....................... $ 460.0
Repayment of Term Loan............................... (173.5)
Repurchase of accounts receivable.................... (100.2)
Payment of taxes..................................... (59.2)
Payment of estimated transaction fees................ (12.4)
--------
$ 114.7
--------
--------
(c) Reflects the repurchase of accounts receivable due to termination
of asset securitization program net of the effects of the sale of
DeVilbiss.
(d) Reflects elimination of the investment in DeVilbiss.
(e) Reflects the write-off of deferred issuance costs associated with
the retired debt and asset securitization program.
(f) Reflects retirement of the term loan portion of the credit facility.
(g) Reflects the following:
Pretax gain on the sale of DeVilbiss................. $ 300.4
Write off of deferred debt issuance costs............ (4.2)
--------
296.2
Tax effect of above.................................. (58.2)
--------
$ 238.0
--------
--------
(h) Reflects SFAS No. 88 Adjustment on Pension Plan.
7
<PAGE>
FALCON BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(3) PRO FORMA INCOME STATEMENT ADJUSTMENTS
The following pro forma adjustments are incorporated in the Unaudited
Pro Forma Condensed Consolidated Statements of Income as a result of the sale
of DeVilbiss, the repayment of the term loan, and the termination of Falcon's
asset securitization program:
(a) Reflects historical operations of DeVilbiss.
(i) Reflects the elimination of historical securitization expense of
$3.8 million and $2.2 million for the year ended December 31,
1998, and the six months ended June 30, 1999, respectively.
(j) Reflects the elimination of interest expense on the retired debt
of $15.9 million and $7.1 million for the year ended December 31,
1998 and the six months ended June 30, 1999, respectively. These
amounts included the related amortization of debt issuance costs
of $0.7 million and $0.3 million for the year ended December 31,
1998 and the six months ended June 30, 1999, respectively.
(k) Reflects the tax effect of (i) and (j) above at an assumed effective
income tax rate of 37.5%.
The pro forma income statements do not reflect interest income on
amounts that may have been invested had the transactions occurred on January
1, 1998. The excess proceeds may have generated interest income of $7.2
million and $3.6 million for the year ended December 31, 1998 and the six
months ended June 30, 1999, respectively, at an assumed rate of 5.0%, had the
funds been invested.
Additionally, the pro forma income statements do not reflect a pretax
gain on the sale of DeVilbiss of approximately $300.4 million ($240.6
million, net) and an extraordinary charge of $4.2 million, ($2.6 million,
net) relating to the write-off of deferred financing costs.
8
<PAGE>
INDEX TO EXHIBITS
2.1 Stock Purchase Agreement dated as of August 12, 1999, between
Falcon Building Products, Inc. and Pentair, Inc.
4.1 Supplemental Indenture between Falcon Building Products, Inc. and
Harris Trust and Savings Bank, as Trustee, dated as of September 3,
1999, relating to the Company's 9 1/2% Senior Subordinated Notes and
10 1/2% Senior Subordinated Discount Notes.
4.2 Amended and Restated Credit Agreement among the several lenders from
time to time parties hereto, Chase Securities, Inc., as lead arranger
and book manager, Bankers Trust Company, as documentation agent, and
the Chase Manhattan Bank, as administrative agent for the lenders.
99.1 Press release issued by Falcon Building Products, Inc. on September
3, 1999.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FALCON BUILDING PRODUCTS, INC.
By: /s/ Anthony J. Navitsky
------------------------------------
Anthony J. Navitsky
VICE PRESIDENT-FINANCE AND TREASURER
Dated: September 20, 1999
<PAGE>
Exhibit 2.1
- ----------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
by and between
FALCON BUILDING PRODUCTS, INC.
and
PENTAIR, INC.
Dated as of August 12, 1999
- ----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 Purchase and Sale of the Shares . . . . . . . . . . . . . 1
Section 1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Closing Payment . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Post Closing Purchase Price Adjustment. . . . . . . . . . 2
Section 1.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Organization. . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Authority Relative to this Agreement. . . . . . . . . . . 5
Section 2.4 Consents and Approvals; No Violations . . . . . . . . . . 5
Section 2.5 Financial Statements. . . . . . . . . . . . . . . . . . . 6
Section 2.6 Absence of Certain Changes; No Undisclosed Liabilities. . 6
Section 2.7 No Default. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9 Certain Agreements. . . . . . . . . . . . . . . . . . . . 7
Section 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.11 Environmental Matters . . . . . . . . . . . . . . . . . . 8
Section 2.12 Employee Benefit Matters. . . . . . . . . . . . . . . . . 9
Section 2.13 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.14 Labor Relations . . . . . . . . . . . . . . . . . . . . . 10
Section 2.15 Intellectual Property . . . . . . . . . . . . . . . . . . 10
Section 2.16 Real Property . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.17 Compliance with Laws; Licenses and Permits. . . . . . . . 11
Section 2.18 Product Warranty and Product Liability. . . . . . . . . . 12
Section 2.19 Employment Compensation . . . . . . . . . . . . . . . . . 12
Section 2.20 Certain Relationships . . . . . . . . . . . . . . . . . . 12
Section 2.21 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.22 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . 13
i
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Authority Relative to this Agreement. . . . . . . . . . . 14
Section 3.3 Consents and Approvals; No Violations . . . . . . . . . . 14
Section 3.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5 Funds Available . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6 Absence of Proceedings. . . . . . . . . . . . . . . . . . 14
Section 3.7 Investment Intent . . . . . . . . . . . . . . . . . . . . 15
Section 3.8 Status as Accredited Investor . . . . . . . . . . . . . . 15
Section 3.9 No Outside Reliance . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of the Company. . . . . . . . . . . . 15
Section 4.2 Access to Information . . . . . . . . . . . . . . . . . . 17
Section 4.3 Government Approvals. . . . . . . . . . . . . . . . . . . 17
Section 4.4 Third Party Consents. . . . . . . . . . . . . . . . . . . 17
Section 4.5 Public Announcements. . . . . . . . . . . . . . . . . . . 18
Section 4.6 Directors' and Officers' Indemnification. . . . . . . . . 18
Section 4.7 Employee Contracts. . . . . . . . . . . . . . . . . . . . 18
Section 4.8 Resignation of Directors. . . . . . . . . . . . . . . . . 19
Section 4.9 Notification of Certain Matters . . . . . . . . . . . . . 19
Section 4.10 Settlement of Intercompany Accounts . . . . . . . . . . . 19
Section 4.11 Receivables Securitization Program. . . . . . . . . . . . 19
Section 4.12 Straddle Period Tax Provisions. . . . . . . . . . . . . . 19
Section 4.13 Pension and Savings Plans . . . . . . . . . . . . . . . . 20
Section 4.14 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.15 Certain Agreements. . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to Purchaser's Obligations . . . . . . . . . . 23
Section 5.2 Conditions to Seller's Obligations. . . . . . . . . . . . 24
ii
<PAGE>
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . 25
Section 6.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
MISCELLANEOUS
Section 7.1 Non-Survival of Representations and Warranties;
Agreements. . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.2 Entire Agreement; Assignment. . . . . . . . . . . . . . . 26
Section 7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.5 Descriptive Headings. . . . . . . . . . . . . . . . . . . 27
Section 7.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.7 Fees and Expenses . . . . . . . . . . . . . . . . . . . . 27
Section 7.8 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.9 Specific Performance. . . . . . . . . . . . . . . . . . . 28
iii
<PAGE>
SCHEDULES
Schedule 1.4 Net Operating Assets at March 31, 1999
Schedule 2.1 States of Qualification
Schedule 2.2(a) Company Capitalization
Schedule 2.2(b) Subsidiary Capitalization
Schedule 2.4 No Violations
Schedule 2.5 Financial Statements
Schedule 2.6 Certain Changes; Disclosed Liabilities
Schedule 2.7 No Default
Schedule 2.8 Litigation
Schedule 2.9 Certain Agreements
Schedule 2.10 Taxes
Schedule 2.11 Environmental Matters
Schedule 2.12(a) Employee Benefit Matters: Benefits Plans
Schedule 2.12(b) Employee Benefit Matters: Certain Plans
Schedule 2.14 Labor Relations
Schedule 2.15 Intellectual Property
Schedule 2.16(a) Real Property: List of Real Properties
Schedule 2.16(b) Real Property: Consents and Defaults
Schedule 2.16(c) Real Property: Title
Schedule 2.17 Compliance with Laws; Licenses and Permits
Schedule 2.18 Product Warranty and Product Liability
Schedule 2.19 Employment Compensation
Schedule 2.20 Certain Relationships
Schedule 2.21 Year 2000
Schedule 2.22 Insurance
Schedule 4.1 Conduct of the Business of the Company
Schedule 4.7 Employee Contracts
Schedule 4.13(b) Actuarial Assumptions
Schedule 5.1(e) Terminated Agreements
Schedule 5.1(f) Consents
Schedule 7.8(c) Knowledge
iv
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of August 12, 1999 (the
"AGREEMENT"), is by and between Falcon Building Products, Inc., a Delaware
corporation ("SELLER"), and Pentair, Inc., a Minnesota corporation
("PURCHASER").
WHEREAS, Seller is the owner of 100% of the issued and outstanding
capital stock (the "SHARES") of Falcon Manufacturing, Inc., a Delaware
corporation (the "COMPANY");
WHEREAS, the Company is the owner of 100% of the issued and outstanding
capital stock of DeVilbiss Air Power Company, a Delaware corporation (the
"SUBSIDIARY"); and
WHEREAS, Seller desires to sell to Purchaser the Shares, and Purchaser
desires to purchase for the amount provided herein, and on the terms and
subject to the conditions set forth in this Agreement, the Shares.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms
and conditions hereof, on the Closing Date, Seller shall sell, assign,
transfer and deliver to Purchaser, free and clear of all liens, the Shares,
and Purchaser shall purchase the Shares from Seller, at the price and in the
manner set forth in this Article I.
Section 1.2 PURCHASE PRICE. The aggregate purchase price for the
Shares is Four Hundred Sixty Million Dollars ($460,000,000) (the "BASE
PURCHASE PRICE"), subject to adjustment as provided in Section 1.4 hereof.
Section 1.3 CLOSING PAYMENT. At the Closing, Purchaser shall deliver
to Seller payment, by wire transfer to a bank account designated in writing
by Seller at least two business days prior to the Closing Date, of
immediately available funds in an amount equal to the Base Purchase Price
plus or minus the Estimated Adjustment Amount (as defined herein). The
"Estimated Adjustment Amount" means the amount by which the Base Purchase
Price would be adjusted pursuant to Section 1.4 hereof based upon an
estimated Closing Date balance sheet of the Company and the Subsidiary
prepared in good faith by Seller in a manner consistent with the accounting
methods and practices followed in the preparation of the March Balance Sheet
(as defined in Section 2.5), which balance sheet will be delivered to
Purchaser not less than five (5) business days prior to the Closing Date.
The Base Purchase Price plus or minus the Estimated Adjustment Amount is
referred to herein as the "CLOSING DATE AMOUNT".
1
<PAGE>
Section 1.4 POST CLOSING PURCHASE PRICE ADJUSTMENT.
(a) As soon as practicable after the Closing Date, but in any event
not later than the 60th day after the Closing Date, Seller shall prepare
and deliver to Purchaser a consolidated balance sheet of the Company and
the Subsidiary as of the Closing Date in the form set forth in Schedule
1.4, prepared in a manner consistent with the accounting methods and
practices followed in the preparation of the March Balance Sheet (the
"CLOSING BALANCE SHEET"), and a certificate of Seller that the Closing
Balance Sheet has been prepared in such manner. Purchaser shall assist
Seller in the preparation of the Closing Balance Sheet and shall provide
Seller and its independent auditors access at all reasonable times to the
personnel, properties, books and records of the Company and the Subsidiary
for such purpose. Purchaser's independent auditors may participate in the
preparation of the Closing Balance Sheet; PROVIDED, HOWEVER, that Purchaser
acknowledges that Seller shall have the primary responsibility and
authority for preparing the Closing Balance Sheet.
(b) During the 30-day period following Purchaser's receipt of the
Closing Balance Sheet, Purchaser and its independent auditors shall be
permitted to review the working papers relating to the Closing Balance
Sheet. The Closing Balance Sheet shall become final and binding upon the
parties on the 30th day following delivery thereof, unless Purchaser gives
written notice of its disagreement with the Closing Balance Sheet (a
"NOTICE OF DISAGREEMENT") to Seller prior to such date. Any Notice of
Disagreement shall (i) specify in reasonable detail the nature of any
disagreement so asserted, (ii) only include disagreements based on
mathematical errors or based on Net Operating Assets not being calculated
in accordance with this Section 1.4 and (iii) be accompanied by a
certificate of Purchaser that it has complied with the covenants set forth
in Section 1.4(e). If a Notice of Disagreement is received by Seller in a
timely manner, then the Closing Balance Sheet (as revised in accordance
with this sentence) shall become final and binding upon Seller and
Purchaser on the earlier of (A) the date Seller and Purchaser resolve in
writing any differences they have with respect to the matters specified in
the Notice of Disagreement or (B) the date any disputed matters are finally
resolved in writing by the Accounting Firm (as defined herein). During the
30-day period following the delivery of a Notice of Disagreement, Seller
and Purchaser shall seek in good faith to resolve any differences that they
may have with respect to the matters specified in the Notice of
Disagreement. During such period, Seller and its auditors shall have
access to the working papers of Purchaser and its auditors prepared in
connection with their certification of the Notice of Disagreement. At the
end of such 30-day period, Seller and Purchaser shall submit to a
nationally recognized independent public accounting firm (the "ACCOUNTING
FIRM") for review and resolution any and all matters that remain in dispute
and were properly included in the Notice of Disagreement. The Accounting
Firm shall be Arthur Andersen or, if such firm is unable or unwilling to
act, such other nationally recognized independent public accounting firm as
shall be agreed upon by the parties hereto in writing. The scope of the
disputes to be resolved by the Accounting Firm shall be limited to whether
the calculation of Net Operating Assets was done in accordance with this
Section 1.4, and whether there were mathematical errors in such
calculation.
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The Accounting Firm is not to make any other determination. Seller and
Purchaser agree to use reasonable efforts to cause the Accounting Firm
to render a decision resolving the matters submitted to the Accounting
Firm within 30 days following submission or, if earlier, as soon as
reasonably practicable after submission. Judgment may be entered upon
the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be
enforced. The cost of the fees and expenses of the Accounting Firm
pursuant to this Section 1.4 shall be borne by Purchaser and Seller in
inverse proportion as they may prevail on matters resolved by the
Accounting Firm, which proportionate allocations shall also be
determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matters submitted.
Each of Seller and Purchaser shall be responsible for the fees and
disbursements of their respective independent auditors incurred as a
result of this Section 1.4(b).
(c) The Base Purchase Price shall be increased by the amount by which
Net Operating Assets (as finally determined in accordance with this
Section 1.4) exceeds $132,353,000 or the Base Purchase Price shall be
decreased by the amount by which Net Operating Assets (as finally
determined in accordance with this Section 1.4) is less than $132,353,000,
as the case may be. The Base Purchase Price as so increased or decreased
shall hereinafter be referred to as the "ADJUSTED PURCHASE PRICE". If the
Closing Date Amount is less than the Adjusted Purchase Price, Purchaser
shall, and if the Closing Date Amount is more than the Adjusted Purchase
Price, Seller shall, within five business days after the Closing Balance
Sheet becomes final and binding on the parties, make payment by wire
transfer in immediately available funds of the amount of such difference,
together with interest thereon at a rate of six percent (6%), calculated on
the basis of the actual number of days elapsed divided by 365, from the
Closing Date to the date of payment. Either party may, in its discretion,
make a payment to the other pursuant to this Section 1.4 prior to final
determination of the Closing Balance Sheet for purpose of reducing the
interest it may be obligated to pay pursuant to such provision.
(d) The term "NET OPERATING ASSETS" means the amount by which the sum
of (i) Trade Receivables Net, (ii) Inventories Net, (iii) Other Current
Assets and (iv) Property, Plant & Equipment (before Accumulated
Depreciation) exceeds the sum of (A) Trade Payables, (B) Other Accounts
Payable, (C) Accrued Income Taxes-State, and (D) Other Accrued Expenses
as set forth on the Closing Balance Sheet.
(e) During the period of time from and after the Closing Date through
the resolution of any adjustment to the Purchase Price contemplated by this
Section 1.4, Purchaser shall afford to Seller and any accountants, counsel
or financial advisers retained by Seller in connection with any adjustment
to the Purchase Price contemplated by this Section 1.4 reasonable access
upon advance notice and during normal business hours to all the properties,
books, contracts, personnel and records of the Company and the Subsidiary
relevant to the adjustment contemplated by this Section 1.4.
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Section 1.5 CLOSING. Upon the terms and subject to the conditions
contained herein, the closing of the transactions contemplated hereby (the
"CLOSING") shall take place at the offices of Gibson, Dunn & Crutcher LLP, 200
Park Avenue, 48th Floor, New York, New York 10166, or any other mutually agreed
upon location, at 9:00 a.m. New York City time on the date (the "CLOSING DATE")
which is three (3) business days after the conditions set forth in Article V
hereof have been satisfied or waived, or any other mutually agreed upon time.
At the Closing, the parties will deliver to each other such certificates and
other documents as are reasonably agreed upon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 2.1 ORGANIZATION.
(a) Seller is a corporation validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now conducted.
(b) Each of the Company and the Subsidiary is a corporation validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
conducted, and is duly qualified or licensed or in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to have such
power or authority or to be qualified or licensed and in good standing
would not constitute a Material Adverse Effect (as defined herein). The
states in which each of the Company and the Subsidiary is, as of the date
hereof, qualified to do business are listed on Schedule 2.1. Except for
the Company's ownership of 100% of the capital stock of the Subsidiary,
neither the Company nor the Subsidiary owns or controls, directly or
indirectly, any other equity interest in any corporation, partnership,
joint venture, limited liability company, trust, firm or other entity. The
Company has heretofore made available to Purchaser accurate and complete
copies of the certificate of incorporation and by-laws, as in effect on the
date hereof, of the Company and the Subsidiary.
Section 2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 1,100
shares of common stock, par value $1.00 per share, of which 1,000 shares
are issued and outstanding. All of the issued and outstanding Shares have
been validly issued, fully paid and are nonassessable and were not issued
in violation of any preemptive rights or rights of any person to acquire
such Shares. Except as disclosed on Schedule 2.2(a), all such Shares are
owned by Seller free and clear of all liens, charges, security interests,
claims or
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encumbrances, and there are no subscriptions, options, warrants, calls
or other agreements or commitments to which Seller or the Company is a
party relating to the issuance, sale, purchase, redemption, conversion,
exchange, transfer or voting of any shares of capital stock of the
Company, and there are no outstanding stockholder agreements, voting
trusts, proxies or other agreements or understandings with respect to or
concerning the purchase, sale or voting of any of the equity securities
of the Company.
(b) The authorized capital stock of the Subsidiary consists of 3,000
shares of common stock, par value $0.10 per share, of which 100 shares are
issued and outstanding. All such shares have been validly issued, fully
paid and are non-assessable and were not issued in violation of any
preemptive rights or rights of any person to acquire such securities.
Except as disclosed on Schedule 2.2(b), all such shares are owned by the
Company free and clear of all liens, charges, security interests, claims or
encumbrances, and there are no subscriptions, options, warrants, calls or
other agreements or commitments to which Seller, the Company or the
Subsidiary is a party relating to the issuance, sale, purchase, redemption,
conversion, exchange, transfer or voting of any shares of capital stock of
the Subsidiary, and there are no outstanding stockholder agreements, voting
trusts, proxies or other agreements or understandings with respect to or
concerning the purchase, sale or voting of any of the equity securities of
the Subsidiary.
Section 2.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the other documents and instruments to be
executed and delivered by Seller pursuant hereto and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Seller. No other corporate approvals are required on the part of
Seller, the Company or the Subsidiary or their respective stockholders to
authorize the execution and delivery of this Agreement or the other documents
and instruments to be executed and delivered by Seller to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and, assuming the due authorization, execution
and delivery hereof by Purchaser, constitutes a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (b) is subject to general principles of equity.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), no filing
with, and no permit, authorization, consent or approval of, any
governmental body or authority is necessary for the consummation by Seller
of the transactions contemplated by this Agreement.
(b) Except as disclosed on Schedule 2.4, the execution and delivery
of this Agreement by Seller and the consummation by Seller of the
transactions contemplated
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hereby and compliance by Seller with any of the provisions hereof will
not (i) violate any provision of the certificate of incorporation or
by-laws of Seller, the Company or the Subsidiary, (ii) result in a
violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default or give rise to any right of
termination, cancellation, material modification or acceleration under,
or result in the creation of any lien or encumbrance on any asset of the
Company or the Subsidiary under, any note, bond, mortgage, indenture,
license, contract, lease, agreement or other instrument or obligation to
which Seller, the Company or the Subsidiary is a party or by which any
of them or any of their properties or assets may be bound, except for
such violations, breaches, defaults, rights, liens and encumbrances that
would not, individually or in the aggregate, constitute a Material
Adverse Effect or (iii) assuming compliance with the HSR Act, violate
any order, writ, injunction, decree, statute, treaty, rule or regulation
applicable to Seller, the Company, the Subsidiary or any of their
properties or assets.
Section 2.5 FINANCIAL STATEMENTS. Attached as Schedule 2.5 are true and
correct copies of the Company's unaudited consolidated balance sheet and
statement of income for the year ended December 31, 1998, and the Company's
unaudited consolidated balance sheets and statements of income for the three
months ended March 31, 1999 (the "MARCH BALANCE SHEET") and the six months ended
June 30, 1999 (collectively, the "FINANCIAL STATEMENTS"). Except as disclosed
on Schedule 2.5, the Financial Statements have been prepared in accordance with
generally accepted accounting principles, subject to the Company Accounting
Policies (as described in Schedule 2.5), applied on a consistent basis, have
been prepared in accordance with the books and records of the Company and the
Subsidiary and fairly present in all material respects the consolidated
financial position of the Company and the Subsidiary as at the dates thereof and
the consolidated results of the Company and the Subsidiary's operations for the
periods then ended except, in the case of interim financial statements, for
normal year-end adjustments.
Section 2.6 ABSENCE OF CERTAIN CHANGES; NO UNDISCLOSED LIABILITIES.
Except as set forth in Schedule 2.6 or as contemplated by this Agreement, since
December 31, 1998, the Company and the Subsidiary have conducted their
businesses in the ordinary course consistent with past practices and have not
(a) suffered any change, condition, event or occurrence which, individually or
in the aggregate, is reasonably likely to constitute a Material Adverse Effect,
(b) entered into or modified any material transaction, other than according to
the ordinary and usual course of such businesses or (c) made any material change
in the Company's accounting principles. Except (x) for liabilities or
obligations incurred in the ordinary course of business, (y) for liabilities or
obligations incurred in connection with the transactions contemplated by this
Agreement and (z) as set forth on Schedule 2.6, since December 31, 1998, the
Company and the Subsidiary have not incurred any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) and, to the knowledge of
Seller, there is no basis for any such liability or obligation, that would be
required to be reflected or reserved against in a consolidated balance sheet of
the Company prepared in accordance with generally accepted accounting
principles. None of the liabilities described in clauses (x), (y) or (z) of the
preceding sentence has or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
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Section 2.7 NO DEFAULT. Except as disclosed on Schedule 2.7, neither
the Company nor the Subsidiary is in default or violation (and no event has
occurred which with notice or the lapse of time or both would constitute a
default or violation) of any term, condition or provision of (a) its certificate
of incorporation or its by-laws, (b) any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which the Company or the
Subsidiary is now a party or by which it or any of its properties or assets may
be bound except in the case of (b) for any defaults or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Material Adverse Effect.
Section 2.8 LITIGATION. Except as disclosed on Schedule 2.8 there is no
action, suit, arbitration, claim, proceeding or governmental investigation
pending nor, to the knowledge of Seller, has Seller, the Company or the
Subsidiary received any written notice or threat of any action, suit,
arbitration, claim, proceeding or governmental investigation involving the
Company or the Subsidiary before any court or other governmental or regulatory
body which is reasonably likely to result in a liability of the Company or the
Subsidiary in excess of $500,000 or have a material adverse effect on the
ability of Seller to consummate the transactions contemplated by this Agreement.
Section 2.9 CERTAIN AGREEMENTS. Except as disclosed on Schedule 2.9,
and excluding contracts, agreements or commitments for the sale or purchase of
products by the Subsidiary in the ordinary course of its business as of the date
hereof, neither the Company nor the Subsidiary is a party to or bound by any
contract, agreement or commitment (a) with respect to which the aggregate of
payments to become due from or to the Company or the Subsidiary are in excess of
$1,000,000 or for which the cost to terminate such contract, agreement or
commitment is in excess of $1,000,000 or (b) which is otherwise material to the
Company and the Subsidiary taken as a whole. Except as disclosed on Schedule
2.9, neither the Company nor the Subsidiary is a party to or bound by any
contract, agreement or commitment regarding the employment, services,
consulting, termination or severance from employment of any director, officer or
employee of the Company or the Subsidiary that provides for payments in excess
of $100,000 in any year.
Section 2.10 TAXES. For the purposes of this Agreement, the term "taxes"
shall mean all taxes (including without limitation, leasing, franchise, excise,
income, gross receipts, sales, use, occupational, tangible and intangible
personal property, real property and stamp taxes and taxes imposed under the
Internal Revenue Code of 1986, as amended (the "CODE"), payments in lieu of
taxes, levies, imposts, duties, assessments, fees (including, without
limitation, license, documentation, recording and registration fees), charges
and withholdings of any nature whatsoever, together with any penalties, fines,
additions to tax, assessments or interest thereon, whether disputed or
undisputed, howsoever due and owing to any federal, state, county, local or
foreign government or to any governmental agency, subdivision or taxing
authority of any of the foregoing by the Company or the Subsidiary or (for any
taxable year with respect to which tax liability could be imposed on the Company
or the Subsidiary pursuant to Treasury Regulation Section 1.1502-6) each
consolidated, combined or affiliated group of which the Company or the
Subsidiary is or has been a member. Except as disclosed on Schedule 2.10, the
Company, the Subsidiary and each consolidated, combined or affiliated group of
which the Company or the
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Subsidiary is or has been a member for any taxable year for which tax
liability could be imposed on the Company or the Subsidiary pursuant to
Treasury Regulation Section 1.1502-6 (or any similar provision of any state,
local or foreign regulation) (a) have filed all federal, state, foreign and
local tax returns in respect of income or similar taxes required to be filed
for tax years ended prior to the date of this Agreement and in respect of
which such filings have become due, except for those tax returns for which
requests for extensions have been filed, and all such returns are complete
and correct in all material respects, (b) have paid or accrued all taxes
shown to be due and payable on such returns, and (c) have "open" years for
federal income tax returns only as disclosed on Schedule 2.10. Except as
disclosed on Schedule 2.10, (i) there are no audits or other examinations of
the federal and state income tax returns of the Company or the Subsidiary
pending or underway by the IRS or the appropriate state taxing authorities,
and (ii) neither the Company nor the Subsidiary has received from the IRS or
from the taxing authorities of any state, county, local or other jurisdiction
any notice of underpayment of income taxes or other deficiency which has not
been paid or accrued, nor has any objection been received with respect to any
return or report filed by the Company or the Subsidiary. Except as disclosed
on Schedule 2.10, neither the Company nor the Subsidiary is a party to any
agreement providing for the allocation or sharing of taxes. The provision
made for taxes on the March Balance Sheet was sufficient for the payment of
all taxes owed as of the date thereof. Since the date of the March Balance
Sheet, neither the Company nor the Subsidiary has incurred any taxes other
than taxes incurred in the ordinary course of business consistent in type and
amount with past practices.
Section 2.11 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule
2.11, to the knowledge of Seller, the properties, assets and operations of
the Company and the Subsidiary are in compliance with applicable federal,
state and local laws, rules, regulations, orders, decrees, judgments,
permits, licenses, common law and other requirements relating to the
protection of human health or the environment including those relating to the
generation, handling, disposal, transportation, release, threatened release
or remediation of Hazardous Materials (as defined herein), other than any
such failures to be in compliance which are not, in the aggregate, reasonably
likely to constitute a Material Adverse Effect. With respect to such
properties, assets and operations, except as disclosed on Schedule 2.11, (a)
there are no conditions, circumstances, omissions, actions or plans of the
Company or the Subsidiary that are reasonably expected to interfere with,
prevent compliance with, impose liability under, or which give rise to any
claim under, any applicable Environmental Law, (b) neither the Company nor
the Subsidiary has received written notice from any court or governmental or
regulatory body that the Company or the Subsidiary is in violation or
allegedly in violation of, does not comply or allegedly does not comply with,
is responsible or potentially responsible for the investigation or cleanup of
Hazardous Materials under, or that there is a basis for liability or alleged
liability under, any applicable Environmental Law, (c) there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, order, decree, directive, notice or
demand letter pending or outstanding relating to Environmental Laws and
relating to the Company or the Subsidiary or any uses, activities or
operations at or in connection with the Real Property threatened against the
Company or the Subsidiary or the Real Property relating to any Environmental
Laws and (d) neither the Company nor the Subsidiary has received written
notice of a claim pursuant to any agreement that requires it to pay,
reimburse, guaranty, pledge, defend, indemnify or hold harmless any person
for or against liabilities or costs arising in
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connection with Hazardous Materials or under Environmental Laws. "Hazardous
Material" means any substance: (i) the presence of which requires
investigation or remediation under any Environmental Law or (ii) which is
defined, regulated or designated as a "hazardous waste," "hazardous
substance," pollutant, or contaminant under any Environmental Law including,
without limitation, asbestos, polychlorinated biphenyls, petroleum, crude oil
or natural gas, or fractions thereof.
Section 2.12 EMPLOYEE BENEFIT MATTERS.
(a) All employee benefit plans covering current or former employees
of the Company and the Subsidiary or with respect to which the Company or
the Subsidiary has liability (excluding any benefit plans referred to in
the Agreement, dated October 1, 1994, among the Company, the Pension
Benefit Guaranty Corporation (the "PBGC") and the other signatories
thereto) are listed on Schedule 2.12(a), except such benefit plans which
are not material (the "BENEFIT PLANS"). True and complete copies of the
Benefit Plans and material related documents have been made available to
Purchaser. Except as provided in Schedule 2.12(a), to the extent
applicable, the Benefit Plans comply in all material respects with the
requirements of applicable law including, without limitation, the
Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code, and any Benefit Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service (the "IRS") or such Benefit Plan has been submitted to the
IRS for determination of its qualified status. There has been no
application for waiver or waiver of the minimum funding standards imposed
by Section 412 of the Code and no "accumulated funding deficiency" within
the meaning of Section 412(a) of the Code exists with respect to any
Benefit Plan. Except as provided in Schedule 2.12(a), neither the Company
nor the Subsidiary has incurred any material liability or penalty (i) under
Section 4975 of the Code or Section 406 of ERISA with respect to any
Benefit Plan, or (ii) to the PBGC (except for PBGC premiums). Except as
provided in Schedule 2.12(a), each Benefit Plan has been maintained and
administered in all material respects in compliance with its terms and with
applicable law including, without limitation, ERISA and the Code to the
extent applicable thereto. To the knowledge of Seller and the Company,
there are no pending, nor has Seller, the Company or the Subsidiary
received notice of any threatened, material claims (other than routine
claims for benefits) against or otherwise involving any of the Benefit
Plans. All material contributions required to be made as of the date of
this Agreement to the Benefit Plans to which the Company or the Subsidiary
is required to contribute have been made or provided for.
(b) Except as provided in Schedule 2.12(b), no Benefit Plan provides
for post-employment health, life insurance, or other welfare benefit
coverage, other than as may be required under "COBRA" pursuant to Part VI
of Title I of ERISA. Except as set forth on Schedule 2.12, each Benefit
Plan can be amended or terminated at any time without approval from any
person (other than the board of directors of the plan sponsor or the plan
administrator), without advance notice (other than the notice required by
Section 204(h) of ERISA for defined benefit pension plans), and without
liability other
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than for benefits accrued prior to such amendment or termination.
Except as disclosed in Schedule 2.12(b), with respect to each Benefit
Plan and any other similar arrangement or plan either currently or
previously terminated, maintained, or contributed to by any entity which
either is currently or was previously under common control with the
Company as determined under Code Section 414 or ERISA Section
4001(a)(14), no event has occurred and no condition exists that after
the Closing Date could subject Purchaser, directly or indirectly, to any
liability under Section 412, 413, 4971, 4975, or 4980B of the Code or
Section 302, 502, 515, 601, 606, or Title IV of ERISA. Except as set
forth on Schedule 2.12(b), no agreement, commitment, or obligation
exists to increase any benefits under any Benefit Plan or to adopt any
new Benefit Plan. No Benefit Plan has any unfunded accrued benefits
that are not fully reflected in the Financial Statements to the extent
required by generally accepted accounting principles. No Benefit Plan
is a multiemployer plan (as defined in ERISA Sections 3(37) or
4001(a)(3). Neither the Company nor the Subsidiary contributes to or
maintains any multiple-employer plan within the meaning of Section 413
of the Code.
(c) Seller has provided Purchaser with a list of each Transferred
Employee who participates in the SERP (as defined in Section 4.13(i)) and
the current level of benefits provided to such SERP participants.
Section 2.13 BROKERS. No broker, finder or investment banker (other than
Salomon Smith Barney Inc.) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of Seller, the Company or the
Subsidiary.
Section 2.14 LABOR RELATIONS. Except as set forth in Schedule 2.14, as
of the date hereof (a) there are no collective bargaining agreements to which
either the Company or the Subsidiary is a party or by which it is bound and
(b) to the knowledge of Seller, there are no pending or threatened activities
regarding the establishment, modification or extension of any such collective
bargaining agreement.
Section 2.15 INTELLECTUAL PROPERTY. Set forth on Schedule 2.15 is a
complete list of, as of the date thereon, all patents and trademarks owned or
licensed by the Company or the Subsidiary. Except as set forth in
Schedule 2.15, the Company or the Subsidiary owns or possesses adequate rights
to use all patents, trademarks, trade names, inventions, processes, designs,
formulas, know-how and other intellectual property rights used by it in the
conduct its business as presently conducted. Except as set forth in Schedule
2.15, to the knowledge of the Company, neither the Company nor the Subsidiary
has received any written notice or claim since December 31, 1998 asserting that
the Company or the Subsidiary has infringed or is infringing the intellectual
property rights of any third party.
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Section 2.16 REAL PROPERTY.
(a) Set forth on Schedule 2.16(a) is a complete list of all real
property (i) owned by the Company or the Subsidiary (the "OWNED
PROPERTY"), or in which the Company or the Subsidiary has legal,
beneficial or equitable title together with the principal uses for which
each such Owned Property is used and (ii) with respect to which the
Company or the Subsidiary is lessee, sublessee, licensee or other
occupant or user (the "LEASED PROPERTY" and, collectively with the Owned
Property, the "REAL PROPERTY"), together with the principal uses for
which each Leased Property is used.
(b) Seller has not received written notice of and has no knowledge of
any claim of adverse possession or prescriptive rights involving any of the
Real Property which has had or is reasonably likely to have a Material
Adverse Effect. All of the Real Property is currently being ingressed and
egressed by the Company or the Subsidiary to and from the public street
systems for all usual street and road purposes. The Company has no
knowledge of any order or decree requiring repair, alteration, or
correction of any existing condition affecting any Real Property owned by
the Company. Neither the Company nor the Subsidiary has received written
notice of any material breach or event of default on its part under the
lease for any Leased Property which is material to its business and has no
knowledge of any material breach or default on the part of any other party
to such lease. All material leases for Leased Property are in full force
and effect and are valid and enforceable against the parties thereto in
accordance with their terms. No material rental or other payments are
delinquent under any such leases. Except as set forth on Schedule 2.16(b),
the transactions contemplated hereby do not require the consent of any
party to, and will not constitute an event of default under or permit any
party to terminate or change the existing terms of, any material lease.
(c) Except as disclosed on Schedule 2.16(c), the Company or the
Subsidiary, as applicable, has good and marketable title in fee simple to
the Owned Property, good leasehold title to the Leased Property, and good
title to all assets, businesses, plants, buildings, fixtures and
improvements located on the Owned Property, in each case free and clear of
any mortgages, deeds of trust, liens, security interests, judgments,
options, encroachments, easements, rights-of-way and other imperfections of
title. Except as disclosed on Schedule 2.16(c), neither the Company's nor
the Subsidiary's assets, business or properties are subject to any
restrictions with respect to the transferability thereof, and the Company's
and the Subsidiary's title thereto will not be affected in any material way
by the transactions contemplated hereby.
Section 2.17 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. Except as set
forth on Schedule 2.17, each of the Company and the Subsidiary is in compliance
in all material respects with, and has for the past two years complied in all
material respects with, all applicable laws, regulations and orders. Except as
set forth on Schedule 2.17, neither the Company nor the Subsidiary has received
written notice from any governmental or regulatory body of any violation or
alleged violation of, or is subject to material liability for past or continuing
violation of, any applicable laws, regulations and orders. The Company and the
Subsidiary have all
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material licenses, permits, approvals, authorizations and consents of all
governmental or regulatory bodies and all certification organizations
required, and all exemptions from requirements to obtain or apply for any of
the foregoing, for the conduct of the business and the operation of the
Company's and the Subsidiary's facilities. Except as set forth in Schedule
2.17, the Company and the Subsidiary are and have been in compliance, in all
material respects, with all such permits, licenses, approvals, authorizations
and consents.
Section 2.18 PRODUCT WARRANTY AND PRODUCT LIABILITY. Schedule 2.18
contains a true, correct and complete copy of the standard warranty or
warranties of the Subsidiary for sales of Products and, except as expressly
identified therein, there are no warranties, deviations from standard
warranties, commitments or obligations with respect to the return, repair or
replacement of Products. Schedule 2.18 sets forth the provision for warranty
expense reflected on the Subsidiary's financial statements for the years
ending December 31, 1997 and December 31, 1998 and for the six months ending
June 30, 1999. Schedule 2.18 also contains a description of all pending
product warranty and product liability claims. There are no defects in
design, construction or manufacture of Products that would adversely affect
performance or create an unusual risk of injury to persons or property.
Except as set forth on Schedule 2.18, since June 17, 1997 none of the
Products has been the subject of any replacement, field fix, retrofit,
modification or recall campaign and, to the Subsidiary's knowledge, no facts
or conditions exist which could reasonably be expected to result in such a
recall campaign. All Products have been designed, manufactured and labeled
so as to meet and comply in all material respects with all governmental
standards and specifications and all applicable laws currently in effect, and
have received all governmental approvals necessary to allow their sale and
use. "PRODUCTS" means any and all products currently or at any time
previously designed, manufactured, distributed or sold by the Subsidiary or
any predecessor under any brand name or mark under which products are or have
been manufactured, distributed or sold by the Subsidiary.
Section 2.19 EMPLOYMENT COMPENSATION. Schedule 2.19 contains a true
and correct list of all employees to whom the Company or the Subsidiary is
paying compensation, including bonuses and incentives, at an annual rate in
excess of $100,000 for services rendered or otherwise.
Section 2.20 CERTAIN RELATIONSHIPS. Schedule 2.20 describes each
lease, contract, agreement or other commitment between the Company or the
Subsidiary, on the one hand, and any Affiliate or officer or director of the
Company or the Subsidiary, on the other hand, obligating the Company or the
Subsidiary to make payments to such Affiliate or officer or director other
than agreements related to the employment of any such officer or director.
No Affiliate or officer or director of the Subsidiary has any direct or
indirect interest in (a) any entity that does business with the Company or
the Subsidiary in connection with the operation of, or is competitive with,
the business of the Company and the Subsidiary or (b) any property, asset or
right that is used by the Company or the Subsidiary in the conduct of its
business. "AFFILIATE" means the Company or the Subsidiary and any entity of
which the Company or the Subsidiary owns, directly or indirectly, a 10% or
greater equity interest.
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Section 2.21 YEAR 2000. Except as identified on Schedule 2.21, to
the Company's and the Subsidiary's knowledge, none of the Products and none
of the personal property, equipment or assets owned or leased by the Company
or the Subsidiary, including but not limited to computer software, databases,
hardware, controls and peripherals, has characteristics or qualities that may
cause it to fail to operate and produce data on and after January 1, 2000
(including taking into effect that such year is a leap year), or use data
based on time periods on or after January 1, 2000 (including taking into
effect that such year is a leap year), or use data based on time periods on
or after January 1, 2000 (including taking into effect that such year is a
leap year) accurately and without delay, interruption or error solely as a
result of the fact that the time at which and the date on which such software
is operating is on or after 12:00 a.m. on January 1, 2000 (including taking
into effect that such year is a leap year) (a "YEAR 2000 DEFECT")). Except
as identified on Schedule 2.21, to the Company's and the Subsidiary's
knowledge, none of the property or assets owned or leased by the Company or
the Subsidiary will fail to perform in any material respect or require any
material repair, rewrite, conversion or other adaptation because of a Year
2000 Defect. To the Company's and the Subsidiary's knowledge, no software
licensed by the Company or the Subsidiary contains a Year 2000 Defect. The
Company and the Subsidiary have no obligations under warranty or service or
other agreements to rectify a Year 2000 Defect of any person or to indemnify
any person in the event the Company or the Subsidiary experience a Year 2000
Defect.
Section 2.22 INSURANCE. Schedule 2.22 sets forth a complete list
and description of all policies (including the carrier, a description of
coverage and the years for which such policies are applicable) of workers'
compensation, general and product liability, automotive liability and
umbrella or excess liability insurance for which the Company or the
Subsidiary are named insureds (collectively, the "INSURANCE POLICIES").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 3.1 ORGANIZATION. Purchaser is a corporation validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified or licensed or in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary, except where the failure to have such power or
authority or to be qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect. Purchaser
has heretofore made available to Seller accurate and complete copies of its
certificate or articles of incorporation and by-laws, or equivalent
organizational documents, and such documents have not been amended to date.
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Section 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by Purchaser and, assuming the due authorization, execution and
delivery hereof by Seller, constitutes a valid and binding agreement of
Purchaser, enforceable against it in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors'
rights generally and (b) is subject to general principles of equity.
Section 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for applicable requirements of the HSR Act, no filing
with, and no permit, authorization, consent or approval of any governmental
body or authority is necessary for the consummation by Purchaser of the
transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby and
compliance by Purchaser with any of the provisions hereof will not
(i) violate any provision of the certificate or articles of incorporation
or by-laws, or equivalent organizational documents, of Purchaser,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination, cancellation, material modification or acceleration under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation
to which Purchaser is a party or by which Purchaser or any of its
properties or assets may be bound, except for such violations, conflicts
and breaches that would not, individually or in the aggregate, constitute a
Material Adverse Effect or (iii) assuming compliance with the HSR Act,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser or any of its properties or assets.
Section 3.4 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser.
Section 3.5 FUNDS AVAILABLE. Purchaser will have available to it as
of the Closing immediately available funds necessary to consummate the
transactions contemplated hereby. To the extent such funds are to be
provided by third parties, Purchaser has provided the Company with complete
and correct copies of all documents relating to the provision of such funds.
Section 3.6 ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding or investigation pending, or to the knowledge of Purchaser,
threatened, against Purchaser which
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might adversely affect or restrict Purchaser's ability to consummate the
transactions contemplated by this Agreement.
Section 3.7 INVESTMENT INTENT. Purchaser is purchasing the Shares
hereunder solely for its own account and with no intention of distributing or
reselling the Shares or any part thereof, or interest therein, in any
transaction that would be in violation of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or any other securities laws of the United
States of America or any state thereof.
Section 3.8 STATUS AS ACCREDITED INVESTOR. Purchaser is an
"ACCREDITED INVESTOR" (as that term is defined in Rule 501 of Regulation D
under the Securities Act). Purchaser has such knowledge and experience in
business and financial matters so that Purchaser is capable of evaluating the
merits and risks of an investment in the Shares. Purchaser understands the
full nature and risk of an investment in the Shares. Purchaser further
acknowledges that it has had access to the books and records of the Company
and the Subsidiary, is generally familiar with the business being conducted
by the Company and the Subsidiary and has had an opportunity to ask questions
concerning the Company and the Subsidiary and the Shares; PROVIDED, HOWEVER,
that nothing herein shall affect the representations and warranties of Seller
hereunder.
Section 3.9 NO OUTSIDE RELIANCE. Purchaser has not relied and is not
relying upon any statement or representation not made in this Agreement or a
Schedule hereto or any document required to be provided by Seller pursuant to
this Agreement.
ARTICLE IV
COVENANTS
Section 4.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Closing, Seller will cause the Company to, and the Company
will cause the Subsidiary to, conduct its operations according to its
ordinary and usual course of business and consistent with past practices, and
Seller will cause the Company to, and the Company will cause the Subsidiary
to, use its commercially reasonable best efforts, consistent with prudent
business judgment, to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain
satisfactory relationships with licensors, suppliers, contractors,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, and except as otherwise
contemplated in Schedule 4.1 or elsewhere in this Agreement, prior to the
Closing, Seller will cause the Company not to, and the Company will cause the
Subsidiary not to, without the prior written consent of Purchaser (not to be
unreasonably withheld):
(a) amend its certificate of incorporation or by-laws;
(b) issue, sell, encumber or deliver or agree or commit to issue,
sell, encumber or deliver any shares of capital stock, or issue any
securities convertible into, exchangeable for or representing a right to
purchase or receive, or enter into any contract or arrangement with respect
to the issuance of, shares of capital stock;
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(c) split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock; or redeem or otherwise acquire any of its securities or any
securities of the Subsidiary;
(d) incur or guarantee any additional indebtedness for borrowed money
other than (i) through intercompany borrowings from Seller in the ordinary
course of business or (ii) borrowings under Seller's existing revolving
credit facility and accounts receivable facility in the ordinary course;
(e) enter into, amend any existing, or adopt any new bonus, pension,
change of control, deferred compensation, health, plant closing, profit
sharing, severance or other employee benefit agreements that increase the
total compensation of any officer, director or employee of the Company or
the Subsidiary, increase the compensation or fringe benefits of any
director, officer or employee of the Company or the Subsidiary, or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing, except for any of the foregoing with respect to employees of the
Company or the Subsidiary which are (i) implemented in the ordinary course
of business consistent with past practice and will not result in a material
increase in benefits or compensation expense to the Company or the
Subsidiary or (ii) to be paid by Seller in cancellation of any outstanding
options to purchase Seller's capital stock;
(f) except for capital expenditures contemplated by clause (g) below
and except in connection with the manufacture and sale of products in the
ordinary course of business consistent with past practice, acquire (whether
by merger, consolidation or otherwise), sell (whether by merger,
consolidation or otherwise), lease, encumber, transfer or dispose of in
excess of $500,000 of assets;
(g) make or commit to make any capital expenditures other than (i)
consistent with the amended capital spending plan for the Subsidiary in
1999 attached as Schedule 4.1(g) and (ii) additional capital expenditures
not exceeding $250,000 individually and not exceeding $2.0 million in the
aggregate;
(h) make any material tax elections (except in the ordinary course of
business consistent with past practice) or settle or compromise any
material federal, state or local income tax liability in excess of any
amounts that may have been reserved therefor, or waive or extend the
statute of limitations in respect of any such taxes;
(i) (i) materially modify, amend or terminate any material contract
or agreement to which it is a party or waive, release or assign any
material rights or claims thereunder or (ii) settle any material suit or
claim of liability against the Company;
(j) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles, methods or practices used by it;
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(k) adopt a plan of complete or partial liquidation, dissolution,
consolidation, restructuring, recapitalization, reorganization or merger;
(l) enter into an agreement or make a commitment (other than
agreements or commitments under existing purchase arrangements) for the
purchase or supply of products or components of products, which involves
consideration or other expenditure, or to which the aggregate of payments
to become due from or to the Company or the Subsidiary are, in excess of
$1.0 million;
(m) directly or indirectly (through a representative or otherwise)
solicit or furnish any information to any prospective buyer, commence, or
conduct presently ongoing, negotiations with any other party or enter into
any agreement with any other party concerning the sale of the Company, the
Subsidiary, the Company's or the Subsidiary's assets or business or any
part thereof, or any equity securities of the Company or the Subsidiary (an
"ACQUISITION PROPOSAL"), and Seller shall immediately advise Purchaser of
the receipt of any Acquisition Proposal; or
(n) enter into an agreement binding the Company or the Subsidiary to
do any of the foregoing.
Section 4.2 ACCESS TO INFORMATION. From the date of this Agreement
to the Closing, upon reasonable notice and to the extent permitted by
applicable law, Seller will cause the Company to cause, and the Company will
cause the Subsidiary to cause, their respective officers, directors,
employees and auditors and agents to (a) give Purchaser and its accountants,
counsel and other authorized representatives, reasonable access during normal
business hours to the plants, offices, warehouses and other facilities, to
Company and Subsidiary management, and to the books and records of the
Company and the Subsidiary, (b) permit Purchaser and its authorized
representatives to make such reasonable inspections as they may require and
(c) furnish to Purchaser and its authorized representatives such financial
and operating data and other information with respect to the business and
properties of the Company and the Subsidiary as Purchaser may from time to
time reasonably request. Without limiting the foregoing, Seller will cause
the Company to, and the Company will cause the Subsidiary to, provide
Purchaser with interim monthly financial statements of the Company and the
Subsidiary as and when they are available.
Section 4.3 GOVERNMENT APPROVALS. Each of the parties hereto agrees
to use its commercially reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement, including without limitation
compliance with the HSR Act.
Section 4.4 THIRD PARTY CONSENTS. The Company and the Subsidiary
will use commercially reasonable efforts prior to the Closing to obtain all
consents, approvals and agreements of, and to give all notices and make all
filings with, any third parties necessary to authorize, approve or permit the
consummation of the transactions contemplated by this Agreement.
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Section 4.5 PUBLIC ANNOUNCEMENTS. Prior to the Closing, neither
party to this Agreement shall issue or seek the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, except
as agreed by the parties or where such release or announcement is required by
law or by the rules of the New York Stock Exchange; provided that, prior to
making any permitted announcement, such party will seek advice of counsel as
to the need for such announcement and will utilize its commercially
reasonable best efforts to give the other party notice thereof and to consult
with the other party regarding the timing and terms thereof.
Section 4.6 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) Purchaser acknowledges and agrees that all rights to
indemnification now existing in favor of the directors, officers, employees
and agents of the Company and the Subsidiary (the "INDEMNIFIED PARTIES") as
provided in their respective certificates of incorporation or by-laws or by
contract or otherwise as in effect on the date hereof with respect to
matters occurring prior to the Closing shall survive the Closing and shall
continue in full force and effect for a period of not less than six years
from the Closing.
(b) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation (whether arising before, at or
after the Closing) is made or threatened against any Indemnified Party, on
or prior to the sixth anniversary of the Closing, the provisions of this
Section 4.6 shall continue in effect until the final disposition of such
claim, action, suit, proceeding or investigation.
(c) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs
and legal representatives. The Indemnification provided for herein shall
not be deemed exclusive of any other rights to which an Indemnified Party
is entitled, whether pursuant to law, contract or otherwise. The Company
or Subsidiary shall pay all expenses, including attorneys' fees, that may
be incurred by any Indemnified Party in enforcing his or her
indemnification rights.
Section 4.7 EMPLOYEE CONTRACTS. Purchaser agrees to honor, and from
and after the Closing shall cause the Company and the Subsidiary to honor, in
accordance with their respective terms as in effect on the date hereof, all
of the employment, termination, severance, indemnity and bonus agreements and
arrangements to which the Company or the Subsidiary is a party and which are
set forth on Schedule 4.7. In the event that the Company, the Subsidiary or
Purchaser or any of their respective successors or assigns (a) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (b)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary to
effectuate the purpose of this Section 4.7, proper provision shall be made so
that the successors and assigns of the Company, the Subsidiary or Purchaser
shall succeed to the obligations set forth in this Section 4.7 and none of
the actions described in clauses (a) or (b) shall be taken until such
provision is made.
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Section 4.8 RESIGNATION OF DIRECTORS. Prior to the Closing, Seller
will cause the Company to deliver to Purchaser evidence satisfactory to
Purchaser of the resignation of all directors of the Company and the
Subsidiary, effective upon the Closing.
Section 4.9 NOTIFICATION OF CERTAIN MATTERS. Seller shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to Seller,
of (a) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or
warranty of either party contained in this Agreement to be untrue or
inaccurate and (b) any failure of Seller or Purchaser to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by either party hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.9 shall not limit or otherwise affect the remedies
available hereunder to the party giving or receiving such notice.
Section 4.10 SETTLEMENT OF INTERCOMPANY ACCOUNTS. At or prior to the
Closing, Seller shall cause to be settled or canceled all intercompany
advances and loans between the Company and the Subsidiary, on the one hand,
and Seller, on the other hand.
Section 4.11 RECEIVABLES SECURITIZATION PROGRAM. At or prior to the
Closing, the Subsidiary shall acquire from Seller's receivables
securitization program, or Seller shall otherwise permit Purchaser to
acquire, all of the receivables in such program that originated from sales of
product by the Subsidiary.
Section 4.12 STRADDLE PERIOD TAX PROVISIONS.
(a) Purchaser shall timely prepare and file with the appropriate
authorities all tax returns required to be filed by the Company or the
Subsidiary for any taxable period that includes (but does not end on) the
Closing Date, and for any taxable period of the Company or the Subsidiary
that ends on or before the Closing Date with respect to which the due date
(including extensions) for the timely filing of a return has not passed,
and will pay all taxes due with respect to such returns, reports and forms
(other than returns or reports in respect of (i) United States federal
income taxes, or (ii) income or similar taxes of any state in which the
Company is included in a combined report or consolidated return with Seller
for such period, which returns or reports shall be filed by Seller).
Purchaser and Seller agree to cause the Company and the Subsidiary to file
all tax returns for the period including the Closing Date on the basis that
(x) the Closing occurred as of 5:00 p.m. on the Closing Date, and (y) the
relevant taxable period ended as of the close of business on the Closing
Date, unless the relevant taxing authority will not accept a return, report
or form filed on that basis. In the case of any taxable period including,
but not ending on, the Closing Date, the income of the Company and the
Subsidiary will be apportioned to the period up to and including the
Closing Date and the period after the Closing Date by closing the books of
the Company and the Subsidiary as of the end of the Closing Date.
(b) Seller, the Company, the Subsidiary and Purchaser shall
reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives reasonably to
cooperate, in preparing and filing all returns, reports
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and forms relating to taxes (including amended returns and claims for
refund), including maintaining and making available to each other all
records necessary in connection with taxes and in resolving all disputes
and audits with respect to all taxable periods relating to taxes.
Purchaser and Seller recognize that Seller and its affiliates will need
access, from time to time, after the Closing Date, to certain accounting
and tax records and information held by the Company and the Subsidiary
to the extent such records and information pertain to events occurring
prior to the Closing Date; therefore, Purchaser agrees, and agrees to
cause the Company and the Subsidiary, to (i) use their best efforts to
properly retain and maintain such records until such time as Seller
agrees that such retention and maintenance is no longer necessary, and
(ii) allow Seller and its agents and representatives (and agents or
representatives of any of its affiliates), at time and dates mutually
acceptable to the parties, to inspect, review and make copies of such
records as Seller may deem necessary or appropriate from time to time,
such activities to be conducted during normal business hours and at
Seller's expense.
(c) All transfer, documentary, sales, use, registration and other
such taxes incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by Purchaser, and Seller and Purchaser
shall cooperate in timely making all filings, returns, reports and forms as
may be required to comply with the provisions of such tax laws.
(d) Seller hereby indemnifies and holds harmless Purchaser from and
against all taxes, liabilities, costs and expenses incurred by Purchaser,
the Company or the Subsidiary resulting from or arising out of any
liability of the Company or the Subsidiary for taxes of any person other
than the Company or the Subsidiary under Treasury Regulation Section
1.1502-6 (or any similar provision of any state, local or foreign
regulation).
Section 4.13 PENSION AND SAVINGS PLANS.
(a) Each employee of the Subsidiary who is a current participant in
the Falcon Building Products, Inc. Employee Savings Plan (the "SAVINGS
PLAN") (i) shall have his or her accrued benefit under the Savings Plan
become 100% vested and nonforfeitable as of the Closing Date and (ii) shall
be entitled to receive an allocation of any and all employer contributions
made to the Savings Plan for the plan year which includes the Closing Date,
including the contributions required to be made pursuant to paragraph (f)
of this Section 4.13. Each employee of the Subsidiary who is a current
participant in the Falcon Building Products, Inc. Cash Balance Pension Plan
(the "CASH BALANCE PLAN") shall have his or her accrued benefit under the
Cash Balance Plan become 100% vested and nonforfeitable.
(b) Seller shall transfer, or cause the trustee of the Cash Balance
Plan to transfer, to the trustee of a qualified defined benefit pension
plan maintained by Purchaser or any entity required by Section 414 of the
Code to be treated as a single employer with Purchaser (an "ERISA
AFFILIATE") (either currently existing or hereinafter established by
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Purchaser or such ERISA Affiliate) (the "TRANSFEREE PENSION PLAN") such
amounts (in cash or in marketable securities at market values determined by
the plan trustee) under the Cash Balance Plan as are required by Section
414(1) of the Code for each employee of the Subsidiary on the Closing Date
(the "TRANSFERRED EMPLOYEES"). The transferred amount shall be calculated
as of the Closing Date by Seller's actuaries, and agreed to by Purchaser's
actuaries (such agreement not to be unreasonably withheld), using service
and compensation for service to the Closing Date, and on the basis of the
actuarial assumptions set forth in Schedule 4.13(b), together with interest
thereon at the rate of six percent (6%), calculated on the basis of the
actual number of days elapsed divided by 365, from the Closing Date to the
date of transfer, and considering (i) as plan assets actual and receivable
contributions through the Closing Date and (ii) as plan liabilities
benefits accrued through the Closing Date. Unless otherwise agreed to in
writing by Purchaser and Seller, the transfer date shall occur within 60
days after Purchaser obtains and presents to Seller evidence satisfactory
to Seller that the Transferee Pension Plan is qualified under the
applicable provisions of the Code. Such evidence of qualification shall be
supplied by Purchaser within 90 days of the Closing Date.
(c) Seller shall transfer, or cause the trustee of the Savings Plan
to transfer, to the trustee of a qualified defined contribution pension
plan maintained by Purchaser (either currently existing or hereinafter
established by Purchaser or an ERISA Affiliate of Purchaser) (the
"TRANSFEREE SAVINGS PLAN"), in cash or in marketable securities at market
values determined by the plan trustee, the entire value of each Transferred
Employee's accounts under the Savings Plan as determined under the
provisions of the Savings Plan. Unless otherwise agreed by Seller and
Purchaser, the transfer shall occur within 60 days after Purchaser presents
to Seller evidence satisfactory to Seller that the Transferee Savings Plan
is qualified under the applicable provisions of the Code. Such evidence of
qualification shall be provided by Purchaser within 90 days of the Closing
Date.
(d) After the transfers described above, none of Seller, the Cash
Balance Plan or the Savings Plan, or any fiduciary of such plans, shall
have any liability or obligation to pay or otherwise provide to the
Transferred Employees any benefits accrued or provided for under the Cash
Balance Plan or the Savings Plan, and Purchaser, the Transferee Pension
Plan and the Transferee Savings Plan shall assume full liability for such
benefits, and shall indemnify and hold harmless Seller, the Cash Balance
Plan, the Savings Plan and the fiduciaries of such plans from and against
the same.
(e) The Transferee Pension Plan and Transferee Savings Plan (i) shall
provide respectively, for the payment of all benefits accrued under the
Cash Balance Plan and the Savings Plan (within the meaning of Section 411
and other sections of the Code) prior to the Closing Date by the
Transferred Employees; and (ii) shall recognize, respectively, the service,
prior to the Closing Date, of the Transferred Employees who participated in
the Cash Balance Plan and the Savings Plan immediately prior to the Closing
Date for eligibility, vesting and benefit accrual purposes under the
Transferee Pension Plan and Transferee Savings Plan to the same extent that
such service is recognized for such
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purposes under the Cash Balance Plan and the Savings Plan prior to the
Closing Date (subject to the 100% vesting set forth in Section 4.13(a)
above).
(f) At Closing, Seller shall cause the Company or the Subsidiary to
pay over to the Savings Plan all employer and employee contributions of the
Company and the Subsidiary to the Savings Plan not made as of the Closing
Date for all calendar months ending on or prior to the Closing Date and for
the portion of the calendar month in which the Closing Date occurs. For
purposes of this paragraph, the employee contributions shall be those
amounts withheld or required to be withheld from employees' compensation
for the period prior to and including the Closing Date, and employer
contributions shall be the employer contributions that would be required to
be made with respect to such employee contributions.
(g) At Closing, Seller shall cause the Company or the Subsidiary to
pay over to the Cash Balance Plan the sum of (i) all contributions of the
Company and the Subsidiary to the Cash Balance Plan for the plan years of
the plan ending prior to the Closing Date remaining uncontributed, and (ii)
a pro rata portion of the Company's and/or Subsidiary's annual contribution
for the portion of the plan year in which the Closing Date occurs, such
pro-rata portion to be based solely on service and compensation for
services through the Closing Date. In each case, the annual contribution
shall be the amount necessary to meet the minimum funding standards of
ERISA Section 302 and Section 412 of the Code, determined in accordance
with the most recent actuarial valuation for the Plan.
(h) The Company and the Subsidiary shall continue to make
contributions to the Savings Plan and the Cash Balance Plan in accordance
with their respective historical business practices through the Closing
Date.
(i) As of the Closing Date, Purchaser shall assume and shall
continue, with respect to and for the benefit of all Transferred Employees,
the Falcon Building Products, Inc. Supplemental Retirement Plan ("SERP") in
accordance with Section 9.5 thereof. Purchaser shall furthermore assume
all liability under the SERP relating to the Transferred Employees, and
shall indemnify and hold Seller and the SERP harmless from and against any
and all liability relating thereto.
Section 4.14 INSURANCE. Prior to the Closing, Seller shall cause the
counter parties to the indemnity agreements and claims handling agreements
related to the Insurance Policies (including self-insured, deductible,
retrospective and guaranteed cost insurance plans) to enter into agreements, on
customary terms and conditions (including but not limited to posting customary
letters of credit or other security or collateral), with the Company and/or the
Subsidiary (or Purchaser) which shall either novate or amend such indemnity
agreements and claims handling agreements thereby transferring to the Company
and/or the Subsidiary (or Purchaser) the assumed worker's compensation, general
and automobile plan liabilities that relate to or arise out of the Company and
the Subsidiary's operations. Following the Closing, (a) Seller shall continue
to provide the Company and the Subsidiary full access to coverage under the
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Insurance Policies, and (b) Seller shall not take any action (other than
submission of claims) in with respect to the Insurance Policies that would have
an adverse effect on the Company's or the Subsidiary's ability to avail
themselves of the coverage under the Insurance Policies.
Section 4.15 CERTAIN AGREEMENTS. From and after the Closing, Seller
shall not take any actions with respect to the agreements listed in Items 15,
26, 27, 28 or 29 of Schedule 2.9 that adversely effects the Subsidiary without
the prior written consent of Purchaser.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligation of
Purchaser to purchase the Shares and effect the Closing shall be subject to the
satisfaction or waiver at or prior to the Closing of the following:
(a) no statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by any court or
governmental authority which makes illegal the purchase and sale of the
Shares or otherwise prohibits the consummation of the transactions
contemplated hereby;
(b) any waiting period applicable to the purchase and sale of the
Shares under the HSR Act shall have terminated or expired;
(c) there shall have been no material breach by Seller in the
performance of any of its covenants, agreements or obligations herein; none
of the representations and warranties of Seller contained or referred to in
Article II shall fail to be true and correct as of the date hereof and on
the Closing Date as though made on such date, except for
(i) representations and warranties that speak as of a specific date other
than the Closing Date (which need only be true and correct as of such
date), (ii) representations and warranties which are not qualified by
Material Adverse Effect or otherwise by material adversity (which need be
true and correct except for such inaccuracies as in the aggregate (together
with the inaccuracies referred to in the following clause (iii)) would not
have a Material Adverse Effect), (iii) representations and warranties which
are qualified by Material Adverse Effect or otherwise by material adversity
shall also be true and correct without regard to such qualification except
for such inaccuracies as in the aggregate (together with the inaccuracies
referred to in the preceding clause (ii)) would not have a Material Adverse
Effect and (iv) changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by
Purchaser; and there shall have been delivered to Purchaser a certificate
to such effect, dated the Closing Date and signed by the President or other
senior executive officer of Seller;
(d) Seller shall have performed in all material respects all
agreements herein required to be performed by it on or prior to the
Closing; and
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(e) all consents under or pursuant to the agreements listed on
Schedule 5.1(e) shall have been obtained.
Section 5.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of
Seller to sell the Shares and effect the Closing shall be subject to the
satisfaction or waiver at or prior to the Closing of the following:
(a) no statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by any court or
governmental authority which makes illegal the purchase and sale of the
Shares or otherwise prohibits the consummation of the transactions
contemplated hereby;
(b) any waiting period applicable to the purchase and sale of the
Shares under the HSR Act shall have terminated or expired;
(c) there shall have been no material breach by Purchaser in the
performance of any of its covenants, agreements or obligations herein; none
of the representations and warranties of Purchaser contained or referred to
in Article III shall fail to be true and correct as of the date hereof and
on the Closing Date as though made on such date, except for
(i) representations and warranties that speak as of a specific date other
than the Closing Date (which need only be true and correct as of such
date), (ii) representations and warranties which are not qualified by
Material Adverse Effect or otherwise by material adversity (which need be
true and correct except for such inaccuracies as in the aggregate (together
with the inaccuracies referred to in the following clause (iii)) would not
have a Material Adverse Effect), (iii) representations and warranties which
are qualified by Material Adverse Effect or otherwise by material adversity
shall also be true and correct without regard to such qualification except
for such inaccuracies as in the aggregate (together with the inaccuracies
referred to in the preceding clause (ii)) would not have a Material Adverse
Effect and (iv) changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Seller;
and there shall have been delivered to Seller a certificate to such effect,
dated the Closing Date and signed by the President or other senior
executive officer of Purchaser;
(d) Purchaser shall have performed in all material respects all
agreements herein required to be performed by it on or prior to the
Closing; and
(e) all consents under or pursuant to the agreements listed on
Schedule 5.1(f) shall have been obtained.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
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(a) by mutual written consent of Purchaser and Seller;
(b) by Purchaser or Seller if the Closing shall not have occurred on
or before September 30, 1999; provided, however, that the right to
terminate the Agreement under this Section 6.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on
or before such date; or
(c) by Purchaser or Seller if any court of competent jurisdiction in
the United States or other governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the purchase and sale of the Shares and such order,
decree, ruling or other action shall have become final and nonappealable.
Section 6.2 EFFECT OF TERMINATION. Nothing contained in Section 6.1
shall relieve any party from liability for any breach of this Agreement. In the
event of the termination of this Agreement, the confidentiality agreement
previously entered into between Seller and Purchaser (the "CONFIDENTIALITY
AGREEMENT") shall survive and be in full force and effect.
Section 6.3 AMENDMENT. This Agreement may be amended by action taken by
Seller and Purchaser at any time. No such amendment shall be effective unless
it is in writing signed on behalf of each of the parties.
Section 6.4 EXTENSION; WAIVER. At any time prior to the Closing, either
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered by the other parties pursuant hereto
or (c) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES; AGREEMENTS.
The representations and warranties made herein shall terminate upon the Closing;
PROVIDED, HOWEVER, that the representations and warranties provided in Section
2.2 shall survive until the sixth anniversary of the Closing Date; PROVIDED,
FURTHER, however, that in the case of the representations and warranties
provided in Section 2.10, to the extent the breach thereof results in the
Company or the Subsidiary being liable for taxes of any person other than the
Company or the Subsidiary pursuant to Treasury Regulation Section 1.1502-6, such
representations and warranties shall survive until 60 days following the
expiration of the applicable statute of limitations. All covenants and
agreements set forth in this Agreement shall survive in accordance with their
terms.
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Section 7.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) together
with the Confidentiality Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof, (b) may not be assigned by a party, by
operation of law or otherwise, without the prior written consent of the other
party and (c) shall be binding upon the parties hereto and their respective
successors and permitted assigns.
Section 7.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) upon receipt if given by delivery by hand, (b) upon transmission
if given by facsimile (receipt confirmed), (c) one business day after being sent
by prepaid overnight carrier with guaranteed delivery (with record of receipt)
or (d) five business days after being deposited in the mail by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
if to Purchaser:
Pentair, Inc.
Waters Edge Plaza
1500 County Road B2 West
Saint Paul, Minnesota 55113-3105
Facsimile: (651) 639-5203
Telephone: (651) 639-5228
Attention: Louis L. Ainsworth, Esq.
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Facsimile: (414) 297-4900
Telephone: (414) 271-2400
Attention: Benjamin F. Garmer, III, Esq.
if to Seller:
Falcon Building Products, Inc.
233 S. Wacker Drive, Suite 3500
Chicago, Illinois 60606
Facsimile: (312) 575-1432
Telephone: (312) 906-9700
Attention: Gus J. Athas, Esq.
with a copy to:
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Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Facsimile: (212) 351-4035
Telephone: (212) 351-4000
Attention: E. Michael Greaney, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 7.5 DESCRIPTIVE HEADINGS. The table of contents and descriptive
headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
Section 7.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall he deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 7.7 FEES AND EXPENSES. Each party hereto shall bear its own
expenses in connection with this Agreement and the transactions contemplated
hereby.
Section 7.8 MISCELLANEOUS.
(a) "MATERIAL ADVERSE EFFECT" means, with respect to the Company and
the Subsidiary, any material adverse effect on the financial condition,
business or results of operations of the Company and the Subsidiary, taken
as a whole, excluding in all cases any such effect resulting from one or
more of the following: (i) any events or conditions generally affecting
the industry in which the Company and the Subsidiary operate or from
changes in general business or economic conditions; (ii) the announcement
of the transactions contemplated by this Agreement or Purchaser's plans
with respect to the business conducted by the Subsidiary; (iii) compliance
by Seller, the Company or the Subsidiary with the terms of this Agreement;
and (iv) the death or disability of any executive officer of the Company or
the Subsidiary.
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(b) "MATERIAL ADVERSE EFFECT" means, with respect to Purchaser, any
effect that is materially adverse to the ability of Purchaser to consummate
the purchase of the Shares.
(c) In each provision of this Agreement in which a representation or
warranty is qualified to the "KNOWLEDGE" of a party or by reference to
whether a party has received notice of any matter, unless otherwise stated
in such provision, such phrase means that such party does not have actual
knowledge of any state of facts which is different from the facts described
in the representation or warranty or actual knowledge of receipt of the
notice described in the representation and warranty. With respect to
Seller, the Company and the Subsidiary, such knowledge shall refer solely
to the "knowledge" of any of the individuals identified on Schedule 7.8(c).
Section 7.9 SPECIFIC PERFORMANCE. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed as of the day and year first above written.
FALCON BUILDING PRODUCTS, INC.
By: /s/ Gus J. Athas
--------------------------------
Name: Gus J. Athas
Title: Executive Vice President
PENTAIR, INC.
By: /s/ Louis L. Ainsworth
--------------------------------
Name: Louis L. Ainsworth
Title: Senior Vice President
and General Counsel
<PAGE>
EXHIBIT 4.1
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated as of
September 3, 1999 between Falcon Building Products, Inc., a Delaware
corporation (the "COMPANY"), and Harris Trust and Savings Bank, as trustee
under the indentures referred to below (the "TRUSTEE").
RECITALS
1. On June 17, 1997, the Company issued (i) $145 million 9 1/2% Senior
Subordinated Notes (the "9 1/2% NOTES") pursuant to an Indenture between the
Company and the Trustee (as amended from time to time, the "9 1/2%
INDENTURE") and (ii) $170 million aggregate principal amount at maturity of
10 1/2% Senior Subordinated Discount Notes (the "10 1/2% NOTES" and together
with the 9 1/2% Notes, the "NOTES") pursuant to an Indenture between the
Company and the Trustee (as amended from time to time, the "10 1/2%
INDENTURE" and together with the 9 1/2% Indenture, the "INDENTURES").
2. Falcon Manufacturing, Inc. ("FMI") is a direct wholly-owned
subsidiary of the Company and DeVilbiss Air Power Company ("DEVILBISS") is a
direct wholly-owned subsidiary of FMI.
3. FMI and DeVilbiss are Guarantors under the Indentures.
4. The Company has entered into a Stock Purchase Agreement dated as of
August 12, 1999 with Pentair, Inc., pursuant to which Pentair has agreed to
purchase all of the outstanding capital stock of FMI.
5. Section 11.04 of the Indentures provide that upon the sale of all
of the capital stock of any Guarantor, such Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee.
6. Section 9.01(iv) of the Indentures permit an amendment to the
Indentures to release FMI and DeVilbiss as Guarantors and, pursuant to
Section 9.06 of the Indentures, the Trustee is authorized to execute and
deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Trustee mutually covenant and agree for the
equal and ratable benefit of the holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indentures.
<PAGE>
2. RELEASE OF SUBSIDIARY GUARANTEES. From and after the date hereof,
FMI and DeVilbiss shall be forever released and discharged from each of their
Subsidiary Guarantees and shall have no liability whatsoever in respect of
the Notes or the Indentures.
3. GOVERNING LAW. The internal laws of the State of New York shall
govern this Supplemental Indenture, without regard to the conflict of laws
provisions thereof.
4. EFFECT OF SUPPLEMENTAL INDENTURES. Except as expressly provided in
this Supplemental Indenture, all terms and provisions of the Indentures shall
remain in full force and effect without modification.
5. COUNTERPARTS. This Supplemental Indenture may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Faxed
signatures shall be treated as original signatures for all purposes.
[Signatures Appear on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
FALCON BUILDING PRODUCTS, INC.
/s/ Gus J. Athas
By: _____________________________
Gus J. Athas,
Executive Vice President,
General Counsel and Secretary
/s/ Anthony J. Navitsky
By: _____________________________
Anthony J. Navitsky,
Vice President-Finance
and Treasurer
HARRIS TRUST AND SAVINGS BANK
as Trustee
/s/ Daniel G. Donovan
By: _____________________________
Name: Daniel G. Donovan
Title: Assistant Vice President
3
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EXECUTION COPY
EXHIBIT 4.2
- -------------------------------------------------------------------------------
FALCON BUILDING PRODUCTS, INC.
------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JUNE 17, 1997,
AS AMENDED AND RESTATED AS OF SEPTEMBER 3, 1999
------------------------------------
$125,000,000
CREDIT FACILITY
------------------------------------
CHASE SECURITIES INC.,
AS LEAD ARRANGER AND BOOK MANAGER,
BANKERS TRUST COMPANY,
AS DOCUMENTATION AGENT,
AND
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions; Calculations of
Certain Financial Ratios and Negative Covenants. . . 20
SECTION 2. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . 21
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS . . . . . . 21
3.1 Revolving Credit Commitments . . . . . . . . . . . . 21
3.2 Commitment Fee . . . . . . . . . . . . . . . . . . . 22
3.3 Proceeds of Revolving Credit Loans . . . . . . . . . 22
3.4 Swing Line Commitment. . . . . . . . . . . . . . . . 22
3.5 Issuance of Letters of Credit. . . . . . . . . . . . 24
3.6 Participating Interests. . . . . . . . . . . . . . . 24
3.7 Procedure for Opening Letters of Credit. . . . . . . 25
3.8 Payments in Respect of Letters of Credit . . . . . . 25
3.9 Letter of Credit Fees. . . . . . . . . . . . . . . . 26
3.10 Letter of Credit Reserves. . . . . . . . . . . . . . 26
3.11 Further Assurances . . . . . . . . . . . . . . . . . 27
3.12 Obligations Absolute . . . . . . . . . . . . . . . . 27
3.13 Assignments. . . . . . . . . . . . . . . . . . . . . 28
3.14 Participations . . . . . . . . . . . . . . . . . . . 28
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS . . . . . . . . . . . 29
4.1 Procedure for Borrowing. . . . . . . . . . . . . . . 29
4.2 Conversion and Continuation Options. . . . . . . . . 29
4.3 Changes of Commitment Amounts. . . . . . . . . . . . 30
4.4 Optional and Mandatory Prepayments . . . . . . . . . 31
4.5 Interest Rates and Payment Dates . . . . . . . . . . 32
4.6 Computation of Interest and Fees . . . . . . . . . . 33
4.7 Certain Fees . . . . . . . . . . . . . . . . . . . . 33
4.8 Inability to Determine Interest Rate . . . . . . . . 34
4.9 Pro Rata Treatment and Payments. . . . . . . . . . . 34
4.10 Illegality . . . . . . . . . . . . . . . . . . . . . 37
4.11 Requirements of Law. . . . . . . . . . . . . . . . . 37
4.12 Indemnity. . . . . . . . . . . . . . . . . . . . . . 40
4.13 Repayment of Loans; Evidence of Debt . . . . . . . . 40
4.14 Replacement of Lenders . . . . . . . . . . . . . . . 41
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 42
5.1 Financial Condition. . . . . . . . . . . . . . . . . 42
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5.2 No Change. . . . . . . . . . . . . . . . . . . . . . 43
5.3 Corporate Existence; Compliance with Law . . . . . . 43
5.4 Corporate Power; Authorization . . . . . . . . . . . 44
5.5 Enforceable Obligations. . . . . . . . . . . . . . . 44
5.6 No Legal Bar . . . . . . . . . . . . . . . . . . . . 44
5.7 No Material Litigation . . . . . . . . . . . . . . . 45
5.8 Investment Company Act . . . . . . . . . . . . . . . 45
5.9 Federal Regulation . . . . . . . . . . . . . . . . . 45
5.10 No Default . . . . . . . . . . . . . . . . . . . . . 45
5.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 45
5.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . 46
5.13 Ownership of Property; Liens . . . . . . . . . . . . 46
5.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 46
5.15 Collateral Documents . . . . . . . . . . . . . . . . 47
5.16 Copyrights, Patents, Permits, Trademarks and
Licenses . . . . . . . . . . . . . . . . . . . . . . 48
5.17 Environmental Matters. . . . . . . . . . . . . . . . 48
5.18 Accuracy and Completeness of Information . . . . . . 49
5.19 Year 2000. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 49
6.1 Conditions to Effectiveness. . . . . . . . . . . . . 49
6.2 Conditions to All Loans and Letters of Credit. . . . 50
SECTION 7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 51
7.1 Financial Statements . . . . . . . . . . . . . . . . 51
7.2 Certificates; Other Information. . . . . . . . . . . 52
7.3 Payment of Obligations . . . . . . . . . . . . . . . 53
7.4 Conduct of Business and Maintenance of Existence . . 53
7.5 Maintenance of Property; Insurance . . . . . . . . . 54
7.6 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . 54
7.7 Notices. . . . . . . . . . . . . . . . . . . . . . . 54
7.8 Environmental Laws . . . . . . . . . . . . . . . . . 56
7.9 Additional Collateral. . . . . . . . . . . . . . . . 56
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 58
8.1 Indebtedness . . . . . . . . . . . . . . . . . . . . 59
8.2 Limitation on Liens. . . . . . . . . . . . . . . . . 60
8.3 Limitation on Contingent Obligations . . . . . . . . 62
8.4 Prohibition of Fundamental Changes . . . . . . . . . 63
8.5 Prohibition on Sale of Assets. . . . . . . . . . . . 63
8.6 Limitation on Investments, Loans and Advances. . . . 64
8.7 Capital Expenditures . . . . . . . . . . . . . . . . 66
8.8 Interest Rate Agreements . . . . . . . . . . . . . . 67
8.9 Debt to EBITDA . . . . . . . . . . . . . . . . . . . 67
8.10 Interest Coverage. . . . . . . . . . . . . . . . . . 67
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8.11 Limitation on Dividends. . . . . . . . . . . . . . . 67
8.12 Transactions with Affiliates . . . . . . . . . . . . 68
8.13 Prepayments and Amendments of Subordinated Debt. . . 68
8.14 Limitation on Changes in Fiscal Year . . . . . . . . 69
8.15 Limitation on Lines of Business. . . . . . . . . . . 69
SECTION 9. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10. THE ADMINISTRATIVE AGENT; THE ISSUING LENDER . . . . . . . . 72
10.1 Appointment. . . . . . . . . . . . . . . . . . . . . 72
10.2 Delegation of Duties . . . . . . . . . . . . . . . . 72
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . 72
10.4 Reliance by Administrative Agent . . . . . . . . . . 73
10.5 Notice of Default. . . . . . . . . . . . . . . . . . 73
10.6 Non-Reliance on Administrative Agent and Other
Lenders . . . . . . . . . . . . . . . . . . . . . . 73
10.7 Indemnification. . . . . . . . . . . . . . . . . . . 74
10.8 The Administrative Agent in its Individual Capacity. 74
10.9 Successor Administrative Agent . . . . . . . . . . . 74
10.10 Issuing Lender as Issuer of Letters of Credit. . . . 75
SECTION 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 75
11.1 Amendments and Waivers . . . . . . . . . . . . . . . 75
11.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 76
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . 77
11.4 Survival of Representations and Warranties . . . . . 77
11.5 Payment of Expenses and Taxes. . . . . . . . . . . . 78
11.6 Successors and Assigns; Participations and
Assignments . . . . . . . . . . . . . . . . . . . . 79
11.7 Adjustments; Set-off . . . . . . . . . . . . . . . . 82
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . 83
11.9 Governing Law; No Third Party Rights . . . . . . . . 84
11.10 Submission to Jurisdiction; Waivers. . . . . . . . . 84
11.11 Releases . . . . . . . . . . . . . . . . . . . . . . 84
11.12 Interest . . . . . . . . . . . . . . . . . . . . . . 85
11.13 Special Indemnification. . . . . . . . . . . . . . . 85
11.14 Permitted Payments and Transactions. . . . . . . . . 86
</TABLE>
SCHEDULES
Schedule I List of Addresses for Notices; Lending Offices; Commitment
Amounts
Schedule II Pricing and Commitment Fee Grid
Schedule 3.5 Existing Letters of Credit
Schedule 5.11 Taxes
Schedule 5.12 Subsidiaries
Schedule 5.13 Fee and Leased Properties
Schedule 5.15(b) UCC Filing Offices
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<PAGE>
Schedule 5.16 Trademarks and Copyrights
Schedule 8.1(a) Existing Indebtedness
Schedule 8.2(h) Existing Liens
Schedule 8.3(d) Existing Contingent Obligations
EXHIBITS
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B [Intentionally Omitted]
EXHIBIT C Form of Swing Line Note
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E-1 Form of Company Security Agreement
EXHIBIT E-2 Form of Subsidiary Security Agreement
EXHIBIT F Form of Subsidiary Guarantee
EXHIBIT G-1 Form of Company Pledge Agreement
EXHIBIT G-2 Form of Subsidiary Pledge Agreement
EXHIBIT H Form of L/C Participation Certificate
EXHIBIT I Form of Swing Line Loan Participation Certificate
EXHIBIT J Form of Subsection 4.11(d)(2) Certificate
EXHIBIT K [Intentionally Omitted]
EXHIBIT L-1 Form of Company Closing Certificate
EXHIBIT L-2 Form of Subsidiaries Closing Certificate
EXHIBIT M Form of Mortgage
iv
<PAGE>
CREDIT AGREEMENT, dated as of June 17, 1997, as amended and restated
as of September 3, 1999 (this "AGREEMENT"), among FALCON BUILDING PRODUCTS,
INC., a Delaware corporation (the "COMPANY"), the several lenders from time
to time parties hereto (the "LENDERS"), CHASE SECURITIES INC. ("CSI"), as
lead arranger and book manager (the "ARRANGER"), BANKERS TRUST COMPANY, as
documentation agent (in such capacity, the "DOCUMENTATION AGENT"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent
for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, the Company entered into the Credit Agreement, dated as of
June 17, 1997 (the "EXISTING CREDIT AGREEMENT "), with the several lenders
parties thereto, the arranger named therein, the documentation agent named
therein and The Chase Manhattan Bank, as administrative agent;
WHEREAS, the parties hereto have agreed to amend and restate the
Existing Credit Agreement as provided in this Agreement, which Agreement
shall become effective upon the satisfaction of the conditions precedent set
forth in subsection 6.1 hereof; and
WHEREAS, it is the intent of the parties hereto that this Agreement
not constitute a novation of the obligations and liabilities existing under
the Existing Credit Agreement or evidence repayment of any of such
obligations and liabilities and that this Agreement amend and restate in its
entirety the Existing Credit Agreement and re-evidence the obligations of the
Company outstanding thereunder;
NOW, THEREFORE, in consideration of the above premises, the parties
hereto hereby agree that on the Amendment/Restatement Effective Date (as
defined below) the Existing Credit Agreement shall be amended and restated in
its entirety as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms defined in
the caption hereto shall have the meanings set forth therein, and the
following terms have the following meanings:
"ADDITIONAL MORTGAGE": as defined in subsection 7.9(e).
"ADJUSTMENT DATE": as defined in the definition of Applicable
Margin.
"AFFILIATE": of any Person (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with such Person, or (b) any Person who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such Person
or (iii) of any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (x)
to vote 25% or more of the
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<PAGE>
securities having ordinary voting power for the election of directors of such
Person, whether by ownership of securities, contract, proxy or otherwise, or
(y) to direct or cause the direction of the management and policies of such
Person, whether by ownership of securities, contract, proxy or otherwise.
"AGREEMENT": this Credit Agreement, as amended, supplemented
or modified from time to time.
"ALTERNATE BASE RATE": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof: "PRIME RATE" shall mean the rate of
interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City
(the Prime Rate not being intended to be the lowest rate of interest charged
by the Administrative Agent in connection with extensions of credit to
debtors); "BASE CD RATE" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is
one and the denominator of which is one minus the C/D Reserve Percentage and
(b) the C/D Assessment Rate; "THREE-MONTH SECONDARY CD RATE" shall mean, for
any day, the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the
public information telephone line of the Federal Reserve Bank of New York
(which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding Business
Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it; and
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"ALTERNATE BASE RATE LOANS": Loans at such time as they are
made and/or being maintained at a rate of interest based upon the Alternate
Base Rate.
"AMENDMENT/RESTATEMENT EFFECTIVE DATE": the date on which the
conditions precedent set forth in subsection 6.1 shall be satisfied, which
date is September 3, 1999.
2
<PAGE>
"APPLICABLE MARGIN": for Revolving Credit Loans and Swing Line
Loans of the Types set forth below, the rate per annum set forth under the
relevant column heading opposite such Loans below:
<TABLE>
<CAPTION>
Alternate Base Rate Loans Eurodollar Loans
------------------------- ----------------
<S> <C> <C>
Revolving Credit Loans: 0.50% 1.50%
Swing Line Loans: 0.50% Not applicable
</TABLE>
; PROVIDED that the Applicable Margin will be adjusted on each Adjustment
Date (as defined below) to the applicable rate per annum set forth in the
pricing grid attached hereto as Schedule II based on the Leverage Ratio as
determined from the relevant financial statements delivered pursuant to
subsection 7.1. Changes in the Applicable Margin resulting from changes in
the Leverage Ratio shall become effective on the date (the "ADJUSTMENT DATE")
on which such financial statements are delivered to the Lenders (but in any
event not later than the 50th day after the end of each of the first three
quarterly periods of each fiscal year or the 95th day after the end of each
fiscal year as the case may be) and shall remain in effect until the next
change to be effected pursuant to this definition, PROVIDED that (a) the
Applicable Margin shall be initially the rate per annum set forth under the
relevant column heading above; (b) if for any reason the financial statements
required by subsection 7.1 are not timely delivered to the Lenders, the
Leverage Ratio shall be (i) during the period from the date upon which such
financial statements were required to be delivered until the date upon which
they actually are delivered, the Applicable Margin in effect immediately
prior to the date such financial statements were due, and (ii) if such
financial statements, when actually delivered, would have required an
increase in the Applicable Margin over the Applicable Margin in effect
immediately prior to the date such financial statements were due, the Company
shall promptly following the delivery of such financial statements pay to the
Lenders and the Administrative Agent any additional amounts of interest or
fees which would have been payable on any previous Interest Payment Date had
such higher Applicable Margin been in effect from the date such financial
statements were required to be delivered; and PROVIDED, FURTHER, that any
change in the Applicable Margin as a result of a change in the Leverage Ratio
shall apply to all Loans for each day during the period commencing on the
effective date of such change and ending on the date immediately preceding
the effective date of the next such change in the Applicable Margin.
"ARRANGER": as defined in the Preamble hereto.
"ASSET SALE": any sale, sale-leaseback, or other disposition
by the Company or any Subsidiary restricted by subsection 8.5 of any of its
property or assets, including the stock of any Subsidiary, except sales and
dispositions permitted by subsections 8.5(a), (b), (c), (f), (g), (h) and (j).
"ASSIGNEE": as defined in subsection 11.6(c).
"ASSIGNMENT AND ACCEPTANCE": an assignment and acceptance
substantially in the form of Exhibit D.
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<PAGE>
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Lender, at a
particular time, an amount equal to (a) the amount of such Lender's Revolving
Credit Commitment at such time LESS (b) the sum of (i) the aggregate unpaid
principal amount at such time of all Revolving Credit Loans made by such Lender
pursuant to subsection 3.1, (ii) such Lender's Revolving Credit Commitment
Percentage of the aggregate unpaid principal amount at such time of all Swing
Line Loans, PROVIDED that for purposes of calculating the Revolving Credit
Commitments pursuant to subsection 3.2 the amount referred to in this clause
(ii) shall be zero, (iii) such Lender's L/C Participating Interest in the
aggregate amount available to be drawn at such time under all outstanding
Letters of Credit issued by the Issuing Lender and (iv) such Lender's Revolving
Credit Commitment Percentage of the aggregate outstanding amount of L/C
Obligations; collectively, as to all the Lenders, the "AVAILABLE REVOLVING
CREDIT COMMITMENTS".
"BANKRUPTCY CODE": Title I of the Bankruptcy Reform Act of 1978,
as amended and codified at Title 11 of the United States Code.
"BOARD": the Board of Governors of the Federal Reserve System,
together with any successor.
"BORROWING DATE": any Business Day specified in a notice pursuant
to (a) subsection 3.4 or 4.1 as a date on which the Company requests the Swing
Line Lender or the Lenders to make Loans hereunder or (b) subsection 3.5 as a
date on which the Company requests the Issuing Lender to issue a Letter of
Credit hereunder.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close.
"CAPITAL EXPENDITURES": for any period, all amounts which would,
in accordance with GAAP, be set forth as capital expenditures (exclusive of any
amount attributable to capitalized interest) on the consolidated statement of
cash flows or other similar statement of the Company and its Subsidiaries for
such period and shall in any event include expenditures in connection with
acquisitions the Company elects to be included as Capital Expenditures pursuant
to subsection 8.6(g)(iii)(B) but shall exclude (x) any expenditures made with
the proceeds of condemnation or eminent domain proceedings affecting real
property or with insurance proceeds and (y) any expenditures made in connection
with subsection 8.5(i); PROVIDED that any Capital Expenditures financed with the
proceeds of any Indebtedness permitted hereunder (other than Indebtedness
incurred hereunder) shall be deemed to be a Capital Expenditure only in the
period in which, and by the amount which, any principal of such Indebtedness is
repaid.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof having maturities of not more than six months from the date of
acquisition, (b) certificates of deposit and eurodollar time
4
<PAGE>
deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight
bank deposits, in each case with any lender or with any domestic (in the case
of any investments, acquisitions or holdings by the Company or its Domestic
Subsidiaries) commercial bank or trust company having capital and surplus in
excess of $300,000,000, (c) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses
(a) and (b) entered into with any financial institution meeting the
qualifications specified in clause (b) above, (d) commercial paper having the
highest rating obtainable from S&P or Moody's and in each case maturing
within one year after date of acquisition; (e) investment funds investing 95%
of their assets in securities of the type described in clauses (a)-(d) above,
(f) readily marketable direct obligations issued by any state of the United
States or any political subdivision thereof having one of the two highest
rating categories obtainable from either S&P or Moody's and (g) indebtedness
with a rating of "A" or higher from S&P or "A2" or higher from Moody's.
"C/D ASSESSMENT RATE": for any day the net annual assessment rate
(rounded upwards, if necessary, to the next 1/100 of 1%) determined by the
Administrative Agent to be payable on such day to the Federal Deposit Insurance
Corporation or any successor ("FDIC") for FDIC's insuring time deposits made in
Dollars at offices of the Administrative Agent in the United States.
"C/D RESERVE PERCENTAGE": for any day as applied to any Base CD
Rate, that percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board for determining maximum reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board) in respect of
new non-personal time deposits in Dollars having a maturity of 30 days or more.
"CHANGE IN LAW": with respect to any Lender, the adoption of, or
change in, any law, rule, regulation, policy, guideline or directive (whether or
not having the force of law) or any change in the interpretation or application
thereof by any Governmental Authority having jurisdiction over such Lender, in
each case after the Closing Date.
"CHANGE OF CONTROL": shall be considered to have occurred if
(i) at any time prior to an IPO by the Company, Investcorp or any of its
Affiliates (PROVIDED that for purposes of this definition only the reference
to 25% in the definition of Affiliate contained in subsection 1.1 shall be
deemed to be 51%) or Subsidiaries, any Person that is a member of the senior
management of the Company, or any entity the majority of the equity ownership
interests of which is owned by such senior management of the Company, shall
cease to own, directly or indirectly, in the aggregate, at least 51% of the
issued and outstanding voting stock of the Company, free and clear of all
Liens or (ii) at any time after an IPO by the Company, if any Person (other
than Investcorp, any of its Affiliates or Subsidiaries, any Person that is a
member of the senior management of the Company, any entity the majority of
the equity ownership interests of which is owned by such senior management of
the Company or any Person acting in the capacity of an underwriter), whether
singly or in concert with one or more Persons, shall, directly or indirectly,
have acquired, or acquire the power (x) to vote or direct the voting of 30%
or more, on a fully diluted basis, of the outstanding common stock of the
Company or (y) to elect
5
<PAGE>
or designate for election a majority of the Board of Directors of the Company
by voting power, contract or otherwise.
"CHASE": The Chase Manhattan Bank, a New York banking
corporation, and its successors.
"CLOSING DATE": June 17, 1997.
"CODE": the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL": all assets of the Credit Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"COMMERCIAL L/C": a commercial documentary Letter of Credit
under which the Issuing Lender agrees to make payments in Dollars for the
account of the Company, on behalf of the Company or a Subsidiary, in respect
of obligations of the Company or such Subsidiary in connection with the
purchase of goods or services in the ordinary course of business.
"COMMITMENT": as to any Lender at any time, such Lender's Swing
Line Commitment and/or Revolving Credit Commitment; collectively, as to all the
Lenders, the "COMMITMENTS".
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company and which is treated as a single employer under Section 414(b) or (c)
of the Code.
"COMPANY": as defined in the preamble hereto.
"COMPANY PLEDGE AGREEMENT": the Pledge Agreement,
substantially in the form of Exhibit G-1, to be made by the Company in favor
of the Administrative Agent, for the ratable benefit of the Lenders, as the
same may be amended, modified or supplemented from time to time.
"COMPANY SECURITY AGREEMENT": the Company Security Agreement,
substantially in the form of Exhibit E-1, to be made by the Company in favor of
the Administrative Agent, for the ratable benefit of the Lenders, as the same
may be amended, modified or supplemented from time to time.
"CONSOLIDATED CURRENT ASSETS": at a particular date, all amounts
which would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Company and its Subsidiaries as at such date.
"CONSOLIDATED CURRENT LIABILITIES": at a particular date, all
amounts which would, in conformity with GAAP, be included under current
liabilities on a consolidated balance sheet of the Company and its Subsidiaries
as at such date, excluding the current portion of long-term debt and the entire
outstanding principal amount of the Revolving Credit Loans.
6
<PAGE>
"CONSOLIDATED EBITDA": for any period, the Consolidated Net
Income of the Company and its Subsidiaries for such period, PLUS, without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) total income tax
expense, (b) interest expense, amortization or writeoff of debt discount,
debt issuance, warrant and other equity issuance costs and commissions,
discounts, redemption premium and other fees and charges associated with the
Loans, letters of credit permitted hereunder, Financing Leases, the
Subordinated Debt or the acquisition or repayment of any debt securities of
the Company permitted hereunder, and net costs associated with Interest Rate
Agreements to which the Company is a party in respect of the Loans (including
commitment fees and other periodic bank charges), (c) costs of surety bonds,
(d) depreciation and amortization expense, (e) amortization of inventory
write-up under APB 16, amortization of intangibles (including, but not
limited to, goodwill and costs of interest-rate caps and the cost of
non-competition agreements) and organization costs, (f) non-cash amortization
of Financing Leases, (g) franchise taxes, (h) management fees paid as
contemplated by subsection 11.14 and charges related to management fees
prepaid in connection with the Merger (as such term is defined in the
Existing Credit Agreement), (i) all cash dividend payments (and non-cash
dividend expenses) on any series of preferred stock, (j) any expenses
incurred in connection with any merger, any acquisition or joint venture
permitted herein, (k) any other write-downs, write-offs, minority interests
and other non-cash charges or expenses, (l) any non-cash restructuring charge
or reserve, (m) expenses and charges related to any equity offering, (n)
expenses consisting of internal software development costs that are expensed
during the period but could have been capitalized in accordance with GAAP,
(o) securitization expense, and (p) nonrecurring litigation or claim
settlement charges or expenses; PROVIDED that (i) the cumulative effect of a
change in accounting principles (effected either through cumulative effect
adjustment or a retroactive application) shall be excluded, (ii) the net
income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded, (iii) the
impact of foreign currency and hedging translations and transactions shall be
excluded, and (iv) all other extraordinary gains and losses shall be excluded.
"CONSOLIDATED FUNDED INDEBTEDNESS": at a particular date, all
Indebtedness (other than Indebtedness described in clauses (b), (c), (d) or
(f) of the definition of "Indebtedness" included in this subsection 1.1), of
the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP at such date.
"CONSOLIDATED NET INCOME": for any period, net income of the
Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; PROVIDED that: (i) the net income (but not loss) of any
Person that is not a Subsidiary or that is accounted for by the equity method
of accounting shall be included only to the extent of the amount of dividends
or distributions paid in cash to the Company or a wholly-owned Subsidiary and
(ii) net income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that
Subsidiary of that net income is prohibited or not permitted at the date of
determination.
"CONTINGENT OBLIGATION": as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness ("PRIMARY
OBLIGATIONS") of any other
7
<PAGE>
Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d) otherwise
to assure or hold harmless the owner of any such primary obligation against
loss in respect thereof; PROVIDED, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount (based
on the maximum reasonably anticipated net liability in respect thereof as
determined by the Company in good faith) of the primary obligation or portion
thereof in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated net liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by the Company in good faith.
"CONTRACTUAL OBLIGATION": 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 the
property owned by it is bound.
"CREDIT DOCUMENTS": the collective reference to this
Agreement, the Notes, the Pledge Agreements, the Security Agreements, the
Mortgages and the Guarantees.
"CREDIT PARTIES": the collective reference to the Company and
each Subsidiary which may from time to time be party to a Credit Document.
"DEFAULT": any of the events specified in Section 9, whether
or not any requirement for the giving of notice, the lapse of time, or both,
has been satisfied.
"DOLLARS" and "$": dollars in lawful currency of the United
States.
"DOMESTIC SUBSIDIARY": any Subsidiary other than a Foreign
Subsidiary.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority or requirements
of law (including, without limitation, common law) regulating or imposing
liability or standards of conduct concerning environmental or public health
protection matters, including, without limitation, Hazardous Materials, as
now or may at any time hereafter be in effect.
"ENVIRONMENTAL PERMITS": any and all permits, licenses,
registrations, notifications, exemptions and any other authorizations required
under any Environmental Law.
8
<PAGE>
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"EURODOLLAR BASE RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined by the Administrative Agent to be the arithmetic mean (rounded to
the nearest 1/100th of 1%) of the offered rates for deposits in Dollars with
a term comparable to such Interest Period that appears on the Telerate
British Bankers Association Interest Settlement Rates Page (as defined below)
at approximately 11:00 A.M., London time, on the second full Business Day
preceding the first day of such Interest Period; PROVIDED that if there shall
at any time no longer exist a Telerate British Bankers Association Interest
Settlement Rates Page, "Eurodollar Base Rate" shall mean, with respect to
each day during each Interest Period pertaining to a Eurodollar Loan, the
rate per annum equal to the rate at which Chase is offered Dollar deposits at
or about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where
the eurodollar and foreign currency and exchange operations in respect of its
Eurodollar Loans are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of its Eurodollar Loan to be outstanding
during such Interest Period. "TELERATE BRITISH BANKERS ASSOC. INTEREST
SETTLEMENT RATES PAGE" shall mean the display designated as Page 3750 on the
Telerate System Incorporated Service (or such other page as may replace such
page on such service for the purpose of displaying the rates at which Dollar
deposits are offered by leading banks in the London interbank deposit market).
"EURODOLLAR LENDING OFFICE": as to any Lender the office of
such Lender which shall be making or maintaining Eurodollar Loans.
"EURODOLLAR LOANS": Loans at such time as they are made and/or
being maintained at a rate of interest based upon a Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined
for such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in Section 9,
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
9
<PAGE>
"EXCESS CASH FLOW": for any fiscal year of the Company,
commencing with the fiscal year ending on December 31, 1999, the excess of
(a) Consolidated EBITDA for such fiscal year over (b) the sum, without
duplication, of (i) the aggregate amount actually paid by the Company and its
Subsidiaries in cash during such fiscal year on account of capital
expenditures or acquisitions (other than capital expenditures made with the
proceeds of eminent domain or condemnation proceedings to the extent such
proceeds are not included in the determination of Consolidated EBITDA for
such fiscal year), (ii) the aggregate amount of payments of principal in
respect of any Indebtedness during such fiscal year (other than any such
payments of principal pursuant to subsections 4.4(b)(i) and (ii) to the
extent such amounts are not included in Consolidated EBITDA or any such
payments of principal in respect of any revolving credit facility to the
extent that there is not an equivalent reduction in such facility), (iii)
increases in working capital (calculated as Consolidated Current Assets at
the end of such fiscal year MINUS Consolidated Current Liabilities as at the
end of such fiscal year) of the Company and its Subsidiaries for such fiscal
year (excluding any increase in cash or Cash Equivalents above an increase
deemed in good faith by the Company to be necessary or desirable for the
operation of the business of the Company and its Subsidiaries), (iv) cash
interest expense (including fees paid in connection with letters of credit
and surety bonds and commitment fees and other periodic bank charges) of the
Company, (v) the amount of taxes actually paid in cash by the Company and its
Subsidiaries for such fiscal year either during such fiscal year or within a
normal payment period thereof, (vi) to the extent added to Consolidated Net
Income of the Company and its Subsidiaries in calculating Consolidated EBITDA
for such fiscal year, the net cost of Interest Rate Agreements, franchise
taxes and management fees, (vii) the net income of any Subsidiary shall be
excluded to the extent that such amount is accounted for under the equity
method to the extent cash dividends are not paid or the declaration or
payment of dividends is not permitted without prior governmental approval
(which has not been obtained), (viii) the amount of cash actually paid by the
Company in connection with clauses (b) (without duplication) (g), (h), (i),
(j), (m), (n), (o), (p) and clauses (iii) and (iv) of the proviso in the
definition of Consolidated EBITDA and (ix) the amount of any cash actually
paid in connection with reserves established in accordance with GAAP;
PROVIDED that to the extent any amount of cash is actually paid by the
Company in connection with clause (p) in the definition of Consolidated
EBITDA in any fiscal year in which the Company does not have Excess Cash
Flow, such amount, to the extent it was not applied to reduce Consolidated
EBITDA in determining the existence of Excess Cash Flow in the year such
amount was paid, may be carried forward to subsequent fiscal years of the
Company and applied once to reduce the amount of any Excess Cash Flow for any
such fiscal years.
"EXISTING CREDIT AGREEMENT": as defined in the first Recital
hereto.
"FEE PROPERTY": as defined in subsection 5.13.
"FINANCING LEASE": (a) any lease of property, real or
personal, the obligations under which are capitalized on a consolidated
balance sheet of the Company and its consolidated Subsidiaries and (b) any
other such lease to the extent that the then present value of any rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
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"FMI SALE": the sale by the Company of 100% of the Capital Stock
of Falcon Manufacturing, Inc. as contemplated by the Stock Purchase Agreement,
dated as of August 12, 1999, between the Company and Pentair, Inc.
"FOREIGN SUBSIDIARY": any Subsidiary which is not organized under
the laws of the United States or any state thereof or the District of Columbia.
"GAAP": generally accepted accounting principles in the United
States in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any state
or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTEES": the collective reference to the Subsidiary
Guarantee and any guarantee which may from time to time be executed and
delivered by a Subsidiary pursuant to subsection 7.9.
"HAZARDOUS MATERIALS": any hazardous materials, hazardous
wastes, hazardous pesticides or hazardous or toxic substances, and any other
material that may give rise to liability under any Environmental Law,
including, without limitation, asbestos, petroleum, any other petroleum
products (including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls and urea-formaldehyde insulation.
"INDEBTEDNESS": of a Person, at a particular date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (b) the undrawn face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder and unpaid reimbursement obligations with respect
thereto, (c) all liabilities (other than Lease Obligations and liabilities in
connection with reserves established in accordance with GAAP) secured by any
Lien on any property owned by such Person, even though such Person has not
assumed or become liable for the payment thereof, (d) Financing Leases, (e)
indebtedness incurred in connection with any Receivables Facility and (f) all
indebtedness of such Person arising under acceptance facilities, but
excluding (i) trade and other accounts payable and accrued expenses payable
in the ordinary course of business which are not overdue for a period of more
than 90 days or, if overdue for more than 90 days, as to which a dispute
exists and adequate reserves in conformity with GAAP have been established on
the books of such Person and (ii) letters of credit supporting the purchase
of goods in the ordinary course of business and expiring no more than six
months from the date of issuance; PROVIDED that obligations in respect of
Interest Rate Agreements shall not be included in this definition.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
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"INTEREST COVERAGE RATIO": on the last day of any fiscal
quarter of the Company, the ratio of (a) Consolidated EBITDA for the period
of four fiscal quarters ending on such day; PROVIDED that for purposes of
calculating the Interest Coverage Ratio interest expense in respect of a
Receivables Facility shall not be added to Consolidated Net Income to
determine Consolidated EBITDA to (b) cash interest expense (excluding (i)
fees payable on account of letters of credit, (ii) to the extent included in
interest expense in accordance with GAAP, net costs associated with Interest
Rate Agreements to which the Company is party in respect of the Loans and
other periodic bank charges and amortization of debt discount (including
discount of liabilities and reserves established under APB 16) and (iii)
interest expense in respect of a Receivables Facility, costs of debt issuance
and interest expense on customer deposits)) for such period net of interest
income, in each case, for or during such period on a consolidated basis for
the Company and its Subsidiaries.
"INTEREST PAYMENT DATE": (a) as to Alternate Base Rate Loans,
the last day of each March, June, September and December, commencing on the
first such day to occur after any Alternate Base Rate Loans are made or any
Eurodollar Loans are converted to Alternate Base Rate Loans, (b) as to any
Eurodollar Loan in respect of which the Company has selected an Interest
Period of one, two or three months, the last day of such Interest Period and
(c) as to any Eurodollar Loan in respect of which the Company has selected a
longer Interest Period than the periods described in clause (b), the last day
of each three calendar month interval during such Interest Period and, in
addition, the last day of such Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan:
(a) initially, the period commencing on, as the case
may be, the Borrowing Date or conversion date with respect to
such Eurodollar Loan and ending one, two, three or six months
thereafter (or, if and when available to all Lenders, nine or
twelve months thereafter) as selected by the Company in its
notice of borrowing as provided in subsection 4.1 or its notice
of conversion as provided in subsection 4.2; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months
thereafter (or, if and when available to all Lenders, nine or
twelve months thereafter) as selected by the Company by
irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current
Interest Period with respect to such Eurodollar Loan;
PROVIDED that the foregoing provisions relating to Interest
Periods are subject to the following:
(A) if any Interest Period would otherwise end
on a day which is not a Business Day, that Interest Period shall be
extended to the next succeeding Business Day, unless the result of
such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day;
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(B) any Interest Period that would otherwise
extend beyond the Revolving Credit Termination Date shall end on
the Revolving Credit Termination Date, or if the Revolving Credit
Termination Date shall not be a Business Day, on the next preceding
Business Day;
(C) if the Company shall fail to give notice as
provided above in clause (b), it shall be deemed to have selected a
conversion of a Eurodollar Loan into an Alternate Base Rate Loan
(which conversion shall occur automatically and without need for
compliance with the conditions for conversion set forth in
subsection 4.2);
(D) any Interest Period that begins on the last
day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a
calendar month; and
(E) the Company shall select Interest Periods
so as not to require a prepayment (to the extent practicable) or a
scheduled payment of a Eurodollar Loan during an Interest Period
for such Eurodollar Loan.
"INTEREST RATE AGREEMENT": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement.
"INVESTCORP": Investcorp S.A., a Luxembourg corporation.
"INVESTMENT GRADE SECURITIES": (i) securities issued or
directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (other than Cash Equivalents), (ii)
debt securities or debt instruments with a rating of BBB- or higher by S&P or
Baa3 by Moody's or the equivalent of such rating by such rating organization,
or if no rating of S&P's or Moody's then exists, the equivalent of such
rating by any other nationally recognized securities rating agency, but
excluding any debt securities or instruments constituting loans or advances
among the Company and its Subsidiaries and (iii) investments in any fund that
invests exclusively in investments of the type described in clauses (i) and
(ii) which fund may also hold immaterial amounts of cash pending investment
and/or distribution.
"INVESTORS": as defined in the Recitals hereto.
"IPO": any sale by the Company through a public offering of
its common (or other voting) stock pursuant to an effective registration
statement (other than a registration statement on Form S-4, S-8 or any
successor or similar form) filed under the Securities Act of 1933, as amended.
"ISSUING LENDERS": Chase and any of its Affiliates, including
Chase Manhattan Bank Delaware, as issuer of the Letters of Credit; with
respect to any Letter of Credit, the term "Issuing Lender" shall mean the
Issuing Lender with respect to such Letter of Credit.
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"L/C APPLICATION": as defined in subsection 3.5(a).
"L/C OBLIGATIONS": the obligations of the Company to reimburse
the Issuing Lender for any payments made by the Issuing Lender under any
Letter of Credit that have not been reimbursed by the Company pursuant to
subsection 3.8(a).
"L/C PARTICIPATING INTEREST": an undivided participating
interest in the face amount of each issued and outstanding Letter of Credit
and the L/C Application relating thereto.
"L/C PARTICIPATION CERTIFICATE": a certificate in substantially
the form of Exhibit I.
"LEASE OBLIGATIONS": of the Company and its Subsidiaries, as
of the date of any determination thereof, the rental commitments of the
Company and its Subsidiaries determined on a consolidated basis, if any,
under leases for real and/or personal property (net of rental commitments
from sub-leases thereof), excluding however, obligations under Financing
Leases.
"LEASED PROPERTIES": as defined in subsection 5.13.
"LETTERS OF CREDIT": the collective reference to the Commercial
L/Cs and the Standby L/Cs; individually, a "LETTER OF CREDIT".
"LEVERAGE RATIO": as defined in subsection 8.9; PROVIDED that
for purposes of calculating the Leverage Ratio on any date, the unencumbered
(other than Liens permitted pursuant to subsection 8.2(f)) cash and Cash
Equivalent balances of the Company and its Subsidiaries on such date shall be
deducted from the amount of Consolidated Funded Indebtedness on such date.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing, except for the filing of
financing statements in connection with Lease Obligations incurred by the
Company or its Subsidiaries to the extent that such financing statements
relate to the property subject to such Lease Obligations).
"LOANS": the collective reference to the Swing Line Loans and
the Revolving Credit Loans; individually, a "LOAN".
"MOODY'S": Moody's Investors Service, Inc.
"MORTGAGED PROPERTIES": (a) the Real Property designated as
"Mortgaged Property" on Schedule 5.13 and (b) any fee Real Property covered
by a Mortgage delivered pursuant to subsection 7.9(e).
"MORTGAGES": as defined in subsection 7.9(d).
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"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET PROCEEDS": the aggregate cash proceeds received by the
Company or any Subsidiary in respect of:
(a) (i) any issuance or borrowing of any debt securities
or loans by the Company or any Subsidiary other than debt or loans
permitted to be incurred or borrowed pursuant to subsection 8.1 or
(ii) any issuance of Capital Stock (excluding any such issuance to
any Investor or any Affiliate thereof);
(b) any Asset Sale, excluding (i) any net proceeds
received upon any condemnation or exercise of rights of eminent
domain to the extent the same shall be deemed not to constitute Net
Proceeds pursuant to the proviso to subsection 8.5(d) and (ii) any
proceeds of insurance received upon any casualty or loss;
(c) any cash received in respect of substantially
like-kind exchanges of property to the extent provided in the proviso
to subsection 8.5(e); and
(d) any cash payments received in respect of promissory
notes delivered to the Company or such Subsidiary in respect of an
Asset Sale;
in each case net of (without duplication) (A) the amount required to
repay any Indebtedness (other than the Loans) secured by a Lien on any assets
of the Company or a Subsidiary that are collateral for any such debt
securities or loans that are sold or otherwise disposed of in connection with
such Asset Sale, (B) the reasonable expenses (including legal fees and
brokers' and underwriters' commissions, lenders fees or credit enhancement
fees, in any case, paid to third parties or, to the extent permitted hereby,
Affiliates) incurred in effecting such issuance or sale and (C) any taxes
reasonably attributable to such sale and reasonably estimated by the Company
or such Subsidiary to be actually payable.
"NON-FUNDING LENDER": as defined in subsection 4.9(c).
"NOTES": the collective reference to the Swing Line Note and
the Revolving Credit Notes; each of the Notes, a "NOTE".
"PARTICIPANTS": as defined in subsection 11.6(b).
"PARTICIPATING LENDER": any Lender (other than the Issuing
Lender) with respect to its L/C Participating Interest in each Letter of
Credit.
"PAYMENT SHARING NOTICE": a written notice from the Company or
any Lender informing the Administrative Agent that an Event of Default has
occurred and is continuing and directing the Administrative Agent to allocate
payments thereafter received from or on behalf of the Company in accordance
with the provisions of subsection 4.9.
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"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
"PERMITTED LIENS": Liens permitted to exist under subsection
8.2.
"PERSON": an individual, partnership, corporation, business
trust, joint stock company, limited liability company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"PLAN": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PLEDGE AGREEMENTS": the collective reference to the Company
Pledge Agreement and any pledge agreement from time to time executed and
delivered by the Company or any Subsidiary providing for the pledge of the
Capital Stock of any Subsidiary pursuant to subsection 7.9.
"PRO FORMA EVENTS": as defined in subsection 5.1(c).
"REAL PROPERTY": each Fee Property and Leased Property listed
on Schedule 5.13.
"RECEIVABLES FACILITY": one or more non-recourse receivables
facilities providing for the sale, encumbrance or other disposition, at any
time or from time to time, of all or a portion of the accounts receivable of
the Company or any of its Subsidiaries, whether existing on the date of this
Agreement or hereafter arising.
"RECEIVABLES FACILITY ASSETS": accounts receivable and related
ancillary rights, including, without limitation, any security interests or
guarantees securing the payment of such receivables, of the Company or any of
its Subsidiaries, whether existing on the date hereof or hereafter arising,
that are sold, encumbered or disposed of at any time or from time to time in
connection with a Receivables Facility, other than accounts receivable
repurchased by the Company pursuant to subsection 6.1(c).
"RECEIVABLES SPV": a special purpose company established by
the Company or any of its Subsidiaries and so existing solely for purposes of
a Receivables Facility.
"REFUNDED SWING LINE LOANS": as defined in subsection 3.4(b).
"REGISTER": as defined in subsection 11.6(d).
"RELATED DOCUMENT": any agreement, certificate, document or
instrument relating to a Letter of Credit.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization as such term is used in Section
4241 of ERISA.
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"REPORTABLE EVENT": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
is waived under subpart B of PBGC Reg. Section 4042.
"REQUIRED LENDERS": at a particular time, the holders of at
least 51% of the Revolving Credit Commitments or, if the Revolving Credit
Commitments are terminated, the aggregate unpaid principal amount of the
Revolving Credit Loans, and participations in Swing Line Loans and the
aggregate amount available to be drawn at such time under all outstanding
Letters of Credit and L/C Obligations. The Revolving Credit Commitments of
any Non-Funding Lender shall be disregarded in determining Required Lenders
at any time.
"REQUIREMENT OF LAW": as to any Person, the Articles or
Certificate of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, order, or
determination of an arbitrator or a court or other Governmental Authority, in
each case, applicable to or binding upon such Person or any of its property
or to which such Person or any of its property is subject.
"RESPONSIBLE OFFICER": with respect to any Person, the
president, chief executive officer, the chief operating officer, the chief
financial officer, treasurer, controller or any vice president of such Person.
"REVOLVING CREDIT COMMITMENT": as to any Lender, its
obligations to make Revolving Credit Loans to the Company pursuant to
subsection 3.1 and to purchase its L/C Participating Interest in any Letter
of Credit, in an aggregate amount not to exceed the amount set forth under
such Lender's name in Schedule I opposite the caption "Revolving Credit
Commitment" or in Schedule 1 to the Assignment and Acceptance by which such
Lender acquired its Revolving Credit Commitment, as the same may be reduced
from time to time pursuant to subsection 4.3 or 4.4(b) or adjusted pursuant
to subsection 11.6(c); collectively, as to all the Lenders, the "REVOLVING
CREDIT COMMITMENTS".
"REVOLVING CREDIT COMMITMENT PERCENTAGE": as to any Lender at
any time, the percentage of the aggregate Revolving Credit Commitments then
constituted by such Lender's Revolving Credit Commitment.
"REVOLVING CREDIT COMMITMENT PERIOD": the period from and
including the Closing Date to but not including the Revolving Credit
Termination Date.
"REVOLVING CREDIT LENDER": any Lender with a Revolving Credit
Commitment.
"REVOLVING CREDIT LOAN" and "REVOLVING CREDIT LOANS": as
defined in subsection 3.1(a).
"REVOLVING CREDIT NOTE": as defined in subsection 4.13(e).
"REVOLVING CREDIT TERMINATION DATE": the earlier of (a) June
30, 2003 and (b) such other earlier date as the Revolving Credit Commitments
shall terminate hereunder.
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"SECURITY AGREEMENTS": the collective reference to the Company
Security Agreement, the Subsidiary Security Agreement and any security
agreement which may from time to time be executed and delivered by a
Subsidiary of the Company pursuant to subsection 7.9.
"SECURITY DOCUMENTS": the collective reference to the Pledge
Agreements, the Security Agreements and the Mortgages.
"SENIOR DISCOUNT NOTES": the senior subordinated discount
notes which were issued under the Indenture, dated as of June 17, 1997
between the Company and Harris Trust and Savings Bank, as Trustee, together
with any refinancing thereof permitted hereunder.
"SENIOR SUBORDINATED NOTES": the senior subordinated notes
which were issued under the Indenture, dated as of June 17, 1997 between the
Company and Harris Trust and Savings Bank, as Trustee, together with any
refinancing thereof permitted hereunder.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"S&P": Standard and Poor's Ratings Services, a division of
McGraw-Hill Companies, Inc.
"STANDBY L/C": an irrevocable letter of credit under which the
Issuing Lender agrees to make payments in Dollars for the account of the
Company, on behalf of the Company or any Subsidiary in respect of obligations
of the Company or such Subsidiary incurred pursuant to contracts made or
performances undertaken or to be undertaken or like matters relating to
contracts to which the Company or such Subsidiary is or proposes to become a
party in the ordinary course of the Company's or such Subsidiary's business,
including, without limiting the foregoing, for insurance purposes or in
respect of advance payments or as bid or performance bonds or for any other
purpose for which a standby letter of credit might customarily be issued.
"SUBORDINATED DEBT": (i) unsecured notes or debentures of the
Company, subordinated to the prior payment of the Loans and the other
obligations under the Credit Documents, that were issued on the Closing Date
or that may be issued by the Company after the Closing Date (including the
Senior Discount Notes and Senior Subordinated Notes), PROVIDED that either
(x) such notes or debentures have terms which are as favorable to the Lenders
as the terms set forth in the indentures governing the Senior Discount Notes
and Senior Subordinated Notes and the conditions contained in clauses
(i)(y)(c) and (d) of this definition are met or (y)(a) unless otherwise
agreed to by the Supermajority Lenders, no part of the principal amount of
any such notes or debentures shall have a scheduled maturity date earlier
than June 30, 2006, (b) unless otherwise agreed to by the Required Lenders,
(I) the subordination provisions of which are as favorable to the Lenders as
such provisions set forth in the indentures governing the Senior Discount
Notes and Senior Subordinated Notes, (II) the terms and conditions thereof
(including, without limitation, subordination, covenant and events of default
provisions thereof but excluding any call protection provisions) taken as a
whole shall be at least as favorable to the Company and the Lenders as such
terms and conditions set forth in the indentures governing the
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Senior Discount Notes and Senior Subordinated Notes, and (III) and the
non-default cash interest rate thereon shall not exceed 15% per annum and the
total non-default interest rate shall not exceed 17% per annum, (c) no
covenant contained in this Agreement or any of the other Credit Documents
would be violated on the proposed issuance date after giving effect to (I)
the issuance of such notes or debentures, (II) the payment of all issuance
costs, commissions, discounts, redemption premiums and other fees and charges
associated therewith, (III) the use of proceeds thereof and (IV) the
redemption, repayment, retirement and repurchase of all Indebtedness of the
Company and its Subsidiaries to be redeemed, repaid or repurchased in
connection therewith and (d) substantially final drafts of the documentation
governing any such notes or debentures, showing the terms thereof, shall have
been furnished to the Administrative Agent at least 5 days prior to the date
of issuance of such notes or debentures and (ii) unsecured notes or
debentures of the Company, subordinated to the prior payment of the Loans and
the other obligations under the Credit Documents, that may be issued by the
Company to refinance previously issued Subordinated Debt, PROVIDED that (a)
unless otherwise agreed to by the Required Lenders, (I) no part of the
principal amount of any such notes or debentures shall have a scheduled
amortization date earlier then June 30, 2006 and (II) the interest rate and
subordination provisions shall be at least as favorable to the Company and
the Lenders as such provisions of refinanced Subordinated Debt and the other
terms and conditions thereof (including, without limitation, the covenant and
event of default provisions thereof) taken as a whole shall be at least as
favorable to the Company and the Lenders as such refinanced Subordinated Debt
and (b) the conditions contained in clauses (i)(y)(c) and (d) of this
definition shall be met.
"SUBSECTION 4.11(d)(2) CERTIFICATE": as defined in subsection
4.11(d).
"SUBSIDIARY": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock of each
class or other interests having ordinary voting power (other than stock or
other interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or
the management of which is otherwise controlled, by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person. A Subsidiary shall be deemed wholly-owned by a
Person who owns directly or indirectly all of the voting shares of stock or
other interests of such Subsidiary having voting power under ordinary
circumstances to vote for directors or other managers of such corporation,
partnership or other entity, except for directors' qualifying shares. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
"SUBSIDIARY GUARANTEE": the Subsidiary Guarantee,
substantially in the form of Exhibit F, to be made by certain Domestic
Subsidiaries of the Company (other than any Receivable SPV) in favor of the
Administrative Agent for the ratable benefit of the Lenders, as the same may
be amended, modified or supplemented from time to time.
"SUBSIDIARY PLEDGE AGREEMENT": the Subsidiary Pledge
Agreement, substantially in the form of Exhibit G-2, to be made by certain
Domestic Subsidiaries of the Company (other
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than any Receivable SPV) in favor of the Administrative Agent for the ratable
benefit of the Lenders, as the same may be amended, modified or supplemented
from time to time.
"SUBSIDIARY SECURITY AGREEMENT": the Subsidiary Security
Agreement, substantially in the form of Exhibit E-2, to be made by certain
Domestic Subsidiaries of the Company (other than any Receivables SPV) in
favor of the Administrative Agent for the ratable benefit of the Lenders, as
the same may be amended, modified or supplemented from time to time.
"SUPERMAJORITY LENDERS": at a particular time, the holders of
at least 66-2/3% of the Revolving Credit Commitments or, if the Revolving
Credit Commitments are terminated, the aggregate unpaid principal amount of
the Revolving Credit Loans, and participations in Swing Line Loans and the
aggregate amount available to be drawn at such time under all outstanding
Letters of Credit and L/C Obligations. The Revolving Credit Commitments of
any Non-Funding Lender shall be disregarded in determining Supermajority
Lenders at any time.
"SWING LINE COMMITMENT": the Swing Line Lender's obligation to
make Swing Line Loans pursuant to subsection 3.4.
"SWING LINE LENDER": Chase in its capacity as lender of the
Swing Line Loans.
"SWING LINE LOAN PARTICIPATION CERTIFICATE": a certificate in
substantially the form of Exhibit I.
"SWING LINE LOANS": as defined in subsection 3.4(a).
"SWING LINE NOTE": as defined in subsection 4.13(e).
"TRANSFEREE": as defined in subsection 11.6(f).
"TYPE": as to any Loan, its nature as an Alternate Base Rate
Loan or Eurodollar Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments thereof.
"UNITED STATES": the United States of America.
"1998 FORM 10-K": the annual report on Form 10-K of the
Company filed with the Securities and Exchange Commission on March 31, 1999.
1.2 OTHER DEFINITIONAL PROVISIONS; CALCULATIONS OF CERTAIN
FINANCIAL RATIOS AND NEGATIVE COVENANTS.
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(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Notes, any
other Credit Document or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in the Notes, any other Credit
Document and any certificate or other document made or delivered pursuant
hereto, accounting terms relating to the Company and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in subsection
1.1 to the extent not defined, shall have the respective meanings given to
them under GAAP. To the extent there are any changes in GAAP from the date of
this Agreement, the financial covenants set forth herein at the option of the
Company will either (i) continue to be determined in accordance with GAAP in
effect on the Closing Date, as applicable, or (ii) be adjusted or reset to
reflect such changes in GAAP, such adjustments or resets to be mutually
agreed to by the Company and the Administrative Agent.
(c) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
section, subsection, schedule and exhibit references are to this Agreement
unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to the singular and plural forms of such terms.
(e) For the purposes of calculations made pursuant to
subsection 8.7, 8.9 or 8.10 or Schedule II hereto for any period commencing
prior to the Amendment/Restatement Effective Date, such calculations shall be
made after giving effect to the Pro Forma Events as if such events had
occurred on the first day of such period.
(f) For the purposes of determining utilization of basket
amounts pursuant to Section 8 in respect of amounts measured over a period of
time commencing prior to the Amendment/Restatement Effective Date, any such
utilization occurring prior to such date shall continue to be included as
utilization after such date.
SECTION 2. [INTENTIONALLY OMITTED]
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 REVOLVING CREDIT COMMITMENTS..
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to the extent of its Revolving Credit Commitment to extend
credit to the Company from time to time on any Borrowing Date during the
Revolving Credit Commitment Period (i) by purchasing an L/C Participating
Interest in each Letter of Credit issued by the Issuing Lender and (ii) by
making loans in Dollars (individually, such a Loan is a "Revolving Credit
Loan", and collectively such Loans are the "Revolving Credit Loans") to the
Company from time to time. Notwithstanding the above, in no event shall any
Revolving Credit Loans be made, or Letter of
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Credit be issued, if the aggregate amount of the Revolving Credit Loans to be
made or Letter of Credit to be issued would, after giving effect to the use
of proceeds, if any, thereof, exceed the aggregate Available Revolving Credit
Commitments nor shall any Letter of Credit be issued if after giving effect
thereto the sum of the undrawn amount of all outstanding Letters of Credit
and the amount of all L/C Obligations would exceed $15,000,000. During the
Revolving Credit Commitment Period, the Company may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions
hereof, and/or by having the Issuing Lender issue Letters of Credit, having
such Letters of Credit expire undrawn upon or if drawn upon, reimbursing the
Issuing Lender for such drawing, and having the Issuing Lender issue new
Letters of Credit.
(b) Each borrowing of Revolving Credit Loans pursuant to the
Revolving Credit Commitments shall be in an aggregate principal amount of the
lesser of (i) $1,000,000 or a whole multiple of $100,000 in excess thereof in
the case of Alternate Base Rate Loans, and $2,000,000 or a whole multiple of
$1,000,000 in excess thereof, in the case of Eurodollar Loans and (ii) the
Available Revolving Credit Commitments, except that any borrowing of
Revolving Credit Loans to be used solely to pay a like amount of Swing Line
Loans may be in the aggregate principal amount of such Swing Line Loans.
3.2 COMMITMENT FEE. The Company agrees to pay to the
Administrative Agent for the account of each Lender (other than any
Non-Funding Lender) a commitment fee from and including the Closing Date to
and including the Revolving Credit Termination Date computed at the
applicable rate (on each Adjustment Date pursuant to the guidelines set forth
in the definition of Applicable Margin) per annum set forth on Schedule II on
the average daily amount of the Available Revolving Credit Commitment of such
Lender during the period for which payment is made (whether or not the
Company shall have satisfied the applicable conditions to borrow or for the
issuance of a Letter of Credit set forth in Section 6). Such commitment fee
shall be payable quarterly in arrears on the last day of each March, June,
September and December and on the Revolving Credit Termination Date.
3.3 PROCEEDS OF REVOLVING CREDIT LOANS. The Company shall use the
proceeds of Revolving Credit Loans for working capital purposes, to finance
capital expenditures and interest obligations of the Company and its
Subsidiaries, to finance acquisitions permitted by subsection 8.6(g) and for
general corporate purposes (other than repurchases of Subordinated Debt).
3.4 SWING LINE COMMITMENT.
(a) Subject to the terms and conditions hereof, the Swing
Line Lender agrees, so long as the Administrative Agent has not received
notice that an Event of Default has occurred and is continuing, to make swing
line loans (individually, a "SWING LINE LOAN"; collectively, the "SWING LINE
LOANS") to the Company from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time
outstanding not to exceed $10,000,000, PROVIDED that no Swing Line Loan may
be made if the aggregate principal amount of the Swing Line Loans to be made
would exceed the aggregate Available Revolving Credit Commitments at such
time. Amounts borrowed by the Company under this subsection 3.4 may
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be repaid and, through but excluding the Revolving Credit Termination Date,
reborrowed. All Swing Line Loans shall be made as Alternate Base Rate Loans
and shall not be entitled to be converted into Eurodollar Loans. The Company
shall give the Swing Line Lender irrevocable notice (which notice must be
received by the Swing Line Lender prior to 3:00 p.m., New York City time) on
the requested Borrowing Date specifying the amount of each requested Swing
Line Loan, which shall be in an aggregate minimum amount of $250,000 or a
whole multiple of $100,000 in excess thereof. The proceeds of each Swing
Line Loan will be made available by the Swing Line Lender to the Company by
crediting the account of the Company at the office of the Swing Line Lender
with such proceeds. The proceeds of Swing Line Loans may be used solely for
the purposes referred to in subsection 3.3.
(b) The Swing Line Lender at any time in its sole and
absolute discretion may, and on the fifteenth day (or if such day is not a
Business Day, the next Business Day) and last Business Day of each month
shall, on behalf of the Company (which hereby irrevocably directs the Swing
Line Lender to act on its behalf) request each Revolving Credit Lender,
including the Swing Line Lender, to make a Revolving Credit Loan in an amount
equal to such Lender's Revolving Credit Commitment Percentage of the amount
of the Swing Line Loans (the "REFUNDED SWING LINE LOANS") outstanding on the
date such notice is given. Unless any of the events described in paragraph
(f) of Section 9 shall have occurred (in which event the procedures of
paragraph (c) of this subsection 3.4 shall apply) each such Lender shall make
the proceeds of its Revolving Credit Loan available to the Swing Line Lender
for the account of the Swing Line Lender at the office of the Swing Line
Lender specified in subsection 11.2 (or such other location as the Swing Line
Lender may direct) prior to 12:00 noon (New York City time) in funds
immediately available on the Business Day next succeeding the date such
notice is given. The proceeds of such Revolving Credit Loans shall be
immediately applied to repay the Refunded Swing Line Loans.
(c) If prior to the making of a Revolving Credit Loan
pursuant to paragraph (b) of this subsection 3.4 one of the events described
in paragraph (f) of Section 9 shall have occurred, each Revolving Credit
Lender will, on the date such Loan was to have been made, purchase an
undivided participating interest in the Refunded Swing Line Loan in an amount
equal to its Revolving Credit Commitment Percentage of such Refunded Swing
Line Loan. Each such Lender will immediately transfer to the Swing Line
Lender in immediately available funds, the amount of its participation and
upon receipt thereof the Swing Line Lender will deliver to such Lender a
Swing Line Loan Participation Certificate dated the date of receipt of such
funds and in such amount.
(d) Whenever, at any time after the Swing Line Lender has
received from any Revolving Credit Lender such Lender's participating
interest in a Refunded Swing Line Loan, the Swing Line Lender receives any
payment on account thereof, the Swing Line Lender will distribute to such
Lender its participating interest in such amount (appropriately adjusted, in
the case of interest payments, to reflect the period of time during which
such Lender's participating interest was outstanding and funded) in like
funds as received; PROVIDED that in the event that such payment received by
the Swing Line Lender is required to be returned, such Lender will
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return to the Swing Line Lender any portion thereof previously distributed by
the Swing Line Lender to it in like funds as such payment is required to be
returned by the Swing Line Lender.
(e) The obligation of each Revolving Credit Lender to
purchase participating interests pursuant to subsection 3.4(c) shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the Swing Line
Lender, the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of an Event of Default; (iii) any adverse change in
the condition (financial or otherwise) of the Company; (iv) any breach of
this Agreement by the Company or any other Lender; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
3.5 ISSUANCE OF LETTERS OF CREDIT.
(a) The Company may from time to time request the Issuing
Lender to issue a Standby L/C or a Commercial L/C by delivering to the
Administrative Agent at its address specified in subsection 11.2 a letter of
credit application in the Issuing Lender's then customary form (the "L/C
APPLICATION") completed to the satisfaction of the Issuing Lender, together
with the proposed form of such Letter of Credit (which shall comply with the
applicable requirements of paragraph (b) below) and such other certificates,
documents and other papers and information as the Issuing Lender may
reasonably request; PROVIDED that if the Issuing Lender informs the Company
that it is for any reason unable to open such Letter of Credit, the Company
may request any Lender to open such Letter of Credit upon the same terms
offered to the Issuing Lender and each reference to the Issuing Lender for
purposes of subsections 3.5 through 3.14, 6.1 and 6.2 shall be deemed to be a
reference to such issuing Lender. The letters of credit identified on
Schedule 3.5 shall at all times be deemed to be a "Letter of Credit" or
"Letters of Credit" for all purposes of this Agreement and the other Loan
Documents.
(b) Each Standby L/C and Commercial L/C issued hereunder
shall, among other things, (i) be in such form requested by the Company as
shall be acceptable to the Issuing Lender in its sole discretion and (ii)
have an expiry date occurring not later than 365 days after the date of
issuance of such Letter of Credit and may be automatically renewed on its
expiry date for an additional period equal to the initial term, but in no
case shall any Letter of Credit have an expiry date occurring later than the
Revolving Credit Termination Date. Each L/C Application and each Letter of
Credit shall be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the State of New York.
3.6 PARTICIPATING INTERESTS. Effective in the case of each Standby
L/C and Commercial L/C (if applicable) as of the date of the opening thereof,
the Issuing Lender agrees to allot and does allot, to itself and each other
Revolving Credit Lender, and each such Lender severally and irrevocably
agrees to take and does take in such Letter of Credit and the related L/C
Application (if applicable), an L/C Participating Interest in a percentage
equal to such Lender's Revolving Credit Commitment Percentage.
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3.7 PROCEDURE FOR OPENING LETTERS OF CREDIT. The Issuing Lender
will notify each Lender after the end of each calendar month of any L/C
Applications received by the Issuing Lender from the Company during such
month. Upon receipt of any L/C Application from the Company, the Issuing
Lender will process such L/C Application, and the other certificates,
documents and other papers delivered to the Issuing Lender in connection
therewith, in accordance with its customary procedures and, subject to the
terms and conditions hereof, shall promptly open such Letter of Credit by
issuing the original of such Letter of Credit to the beneficiary thereof and
by furnishing a copy thereof to the Company and, after the end of the
calendar month in which such Letter of Credit was opened, to the other
Lenders, PROVIDED that no such Letter of Credit shall be issued if subsection
3.1 would be violated thereby.
3.8 PAYMENTS IN RESPECT OF LETTERS OF CREDIT.
(a) The Company agrees forthwith upon demand by the Issuing
Lender and otherwise in accordance with the terms of the L/C Application
relating thereto, (i) to reimburse the Issuing Lender for any payment made by
the Issuing Lender under any Letter of Credit issued for the account of the
Company and (ii) to pay interest on any unreimbursed portion of any such
payment from the date of such payment until reimbursement in full thereof at
a rate per annum equal to (A) on or prior to the date which is one Business
Day after the day on which the Issuing Lender demands reimbursement from the
Company for such payment, the Alternate Base Rate plus the Applicable Margin
for the Revolving Credit Loans and (B) thereafter, the Alternate Base Rate
plus the Applicable Margin for the Revolving Credit Loans plus 2%.
(b) In the event that the Issuing Lender makes a payment
under any Letter of Credit and is not reimbursed in full therefor forthwith
upon demand of the Issuing Lender, and otherwise in accordance with the terms
of the L/C Application relating to such Letter of Credit, the Issuing Lender
will promptly notify each other Revolving Credit Lender. Forthwith upon its
receipt of any such notice, each such other Lender will transfer to the
Issuing Lender, in immediately available funds, an amount equal to such other
Lender's PRO RATA share (based on its Revolving Credit Commitment) of the L/C
Obligation arising from such unreimbursed payment. Promptly, upon its
receipt from such other Lender of such amount, the Issuing Lender will
complete, execute and deliver to such other Lender an L/C Participation
Certificate dated the date of such receipt and in such amount.
(c) Whenever, at any time after the Issuing Lender has made
a payment under any Letter of Credit and has received from any other
Revolving Credit Lender such other Lender's PRO RATA share of the L/C
Obligation arising therefrom, the Issuing Lender receives any reimbursement
on account of such L/C Obligation or any payment of interest on account
thereof, the Issuing Lender will promptly distribute to such other Lender
its PRO RATA share thereof in like funds as received; PROVIDED that in the
event that the receipt by the Issuing Lender of such reimbursement or such
payment of interest (as the case may be) is required to be returned, such
other Lender will return to the Issuing Lender any portion thereof previously
distributed by the Issuing Lender to it in like funds as such reimbursement
or payment is required to be returned by the Issuing Lender.
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3.9 LETTER OF CREDIT FEES.
(a) In lieu of any letter of credit commissions and fees
provided for in any L/C Application relating to Standby or Commercial L/Cs
(other than standard issuance, amendment and negotiation fees), the Company
agrees to pay the Administrative Agent, for the account of the Issuing Lender
and the Participating Lenders, with respect to each Standby or Commercial L/C
issued for the account of the Company, a Standby or Commercial L/C fee, as
the case may be, equal to the Applicable Margin for Revolving Credit Loans
which are Eurodollar Loans per annum (of which the Issuing Lender shall
retain for its own account, as the issuing bank and not on account of its L/C
Participating Interest therein, 1/4 of 1% per annum) on the daily average
amount available to be drawn under each Standby L/C in the case of a Standby
L/C and on the maximum face amount of each Commercial L/C in the case of a
Commercial L/C, in either case, payable, in arrears, on the last day of each
fiscal quarter of the Company. The Administrative Agent will disburse any
Standby or Commercial L/C fees received pursuant to this subsection 3.9(a) to
the respective Lenders promptly following the receipt of any such fees in the
case of a Standby L/C and, in the case of a Commercial L/C, following the end
of the calendar month in which such Commercial L/C fees were received.
Notwithstanding the foregoing, the Company agrees to pay standard issuance,
amendment and negotiation fees to the Issuing Lender.
(b) For purposes of any payment of fees required pursuant to
this subsection 3.9, the Administrative Agent agrees to provide to the
Company a statement of any such fees to be so paid; PROVIDED that the failure
by the Administrative Agent to provide the Company with any such invoice
shall not relieve the Company of its obligation to pay such fees.
3.10 LETTER OF CREDIT RESERVES.
(a) If any Change in Law shall either (i) impose, modify,
deem or make applicable any reserve, special deposit, assessment or similar
requirement against letters of credit issued by the Issuing Lender or (ii)
impose on the Issuing Lender any other condition regarding this Agreement
(with respect to Letters of Credit) or any Letter of Credit, and the result
of any event referred to in clause (i) or (ii) above shall be to increase the
cost of the Issuing Lender of issuing or maintaining any Letter of Credit
(which increase in cost shall be the result of the Issuing Lender's
reasonable allocation of the aggregate of such cost increases resulting from
such events), then, upon demand by the Issuing Lender, the Company shall
immediately pay to the Issuing Lender, from time to time as specified by the
Issuing Lender, additional amounts which shall be sufficient to compensate
the Issuing Lender for such increased cost, together with interest on each
such amount from the date demanded until payment in full thereof at a rate
per annum equal to the rate applicable to Alternate Base Rate Loans pursuant
to subsection 4.5(b). The Company shall not be required to make any payments
to the Issuing Lender for any additional amounts pursuant to this subsection
3.10(a) unless the Issuing Lender has given written notice to the Company of
its intent to request such payments prior to or within 60 days after the date
on which the Issuing Lender became entitled to claim such amounts. A
certificate, setting forth in reasonable detail the calculation of the
amounts involved, submitted by the
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Issuing Lender to the Company concurrently with any such demand by the
Issuing Lender, shall be conclusive, absent manifest error, as to the amount
thereof.
(b) In the event that any Change in Law with respect to the
Issuing Lender shall, in the opinion of the Issuing Lender, require that any
obligation under any Letter of Credit be treated as an asset or otherwise be
included for purposes of calculating the appropriate amount of capital to be
maintained by the Issuing Lender or any corporation controlling the Issuing
Lender, and such Change in Law shall have the effect of reducing the rate of
return on the Issuing Lender's or such corporation's capital, as the case may
be, as a consequence of the Issuing Lender's obligations under such Letter of
Credit to a level below that which the Issuing Lender or such corporation, as
the case may be, could have achieved but for such Change in Law (taking into
account the Issuing Lender's or such corporation's policies, as the case may
be, with respect to capital adequacy) by an amount deemed by the Issuing
Lender to be material, then from time to time following notice by the Issuing
Lender to the Company of such Change in Law, within 15 days after demand by
the Issuing Lender, the Company shall pay to the Issuing Lender such
additional amount or amounts as will compensate the Issuing Lender or such
corporation, as the case may be, for such reduction. The Issuing Lender
agrees that, upon the occurrence of any event giving rise to the operation of
paragraph (a) or (b) of this subsection 3.10 with respect to the Issuing
Lender, it will, if requested by the Company and to the extent permitted by
law or by the relevant Governmental Authority, endeavor in good faith to
avoid or minimize the increase in costs or reduction in payments resulting
from such event; PROVIDED that such avoidance or minimization can be made in
such a manner that the Issuing Lender, in its sole determination, suffers no
economic, legal or regulatory disadvantage. The Company shall not be
required to make any payments to the Issuing Lender for any additional
amounts pursuant to this subsection 3.10(b) unless the Issuing Lender has
given written notice to the Company of its intent to request such payments
prior to or within 60 days after the date on which the Issuing Lender became
entitled to claim such amounts. A certificate, in reasonable detail setting
forth the calculation of the amounts involved, submitted by the Issuing
Lender to the Company concurrently with any such demand by the Issuing
Lender, shall be conclusive, absent manifest error, as to the amount thereof.
(c) The Company and each Participating Lender agree that the
provisions of the foregoing paragraphs (a) and (b) shall apply equally to
each Participating Lender in respect of its L/C Participating Interest in
such Letter of Credit, as if the references in such paragraphs and provisions
referred to, where applicable, such Participating Lender or, in the case of
paragraph (b), any corporation controlling such Participating Lender.
3.11 FURTHER ASSURANCES. The Company hereby agrees, from time to
time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Lender more fully to effect
the purposes of this Agreement and the issuance of Letters of Credit
hereunder.
3.12 OBLIGATIONS ABSOLUTE. The payment obligations of the Company
under this Agreement with respect to the Letters of Credit shall be
unconditional and irrevocable and shall
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be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) the existence of any claim, set-off, defense or other
right which the Company or any of its Subsidiaries may have at any time
against any beneficiary, or any transferee, of any Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be acting),
the Issuing Lender, the Administrative Agent or any Lender, or any other
Person, whether in connection with this Agreement, any Credit Document, the
transactions contemplated herein, or any unrelated transaction;
(ii) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent or invalid or any statement
therein being untrue or inaccurate in any respect;
(iii) payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate or other document which does
not comply with the terms of such Letter of Credit or is insufficient in any
respect, except where such payment constitutes gross negligence or willful
misconduct on the part of the Issuing Lender; or
(iv) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing, except for any such circumstances or
happening constituting gross negligence or willful misconduct on the part of
the Issuing Lender.
3.13 ASSIGNMENTS. No Participating Lender's participation in any
Letter of Credit or any of its rights or duties hereunder shall be
subdivided, assigned or transferred (other than in connection with a transfer
of part or all of such Participating Lender's Revolving Credit Commitment in
accordance with subsection 11.6(c)) without the prior written consent of the
Issuing Lender, which consent will not be unreasonably withheld. Such
consent may be given or withheld without the consent or agreement of any
other Participating Lender. Notwithstanding the foregoing, a Participating
Lender may subparticipate its L/C Participating Interest without obtaining
the prior written consent of the Issuing Lender.
3.14 PARTICIPATIONS. The obligation of each Revolving Credit Lender
to purchase participating interests pursuant to subsection 3.6 shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the Issuing Lender,
the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of an Event of Default; (iii) any adverse change in
the condition (financial or otherwise) of the Company; (iv) any breach of
this Agreement by the Company or any other Lender; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
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SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS
4.1 PROCEDURE FOR BORROWING.
(a) The Company may borrow under the Commitments on any
Business Day, PROVIDED that, with respect to any borrowing, the Company shall
give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 12:00 noon (or, with respect to
Swing Line Loans, 3:00 p.m.), New York City time, (i) three Business Days
prior to the requested Borrowing Date if all or any part of the Loans are to
be Eurodollar Loans and (ii) one Business Day prior to the requested
Borrowing Date (or, in the case of Swing Line Loans, on the requested
Borrowing Date) if the borrowing is to be solely of Alternate Base Rate
Loans) and specifying (A) the amount of the borrowing, (B) whether such Loans
are initially to be Eurodollar Loans or Alternate Base Rate Loans or a
combination thereof, (C) if the borrowing is to be entirely or partly
Eurodollar Loans, the length of the Interest Period for such Eurodollar Loans
and (D) whether the Loan is a Swing Line Loan or a Revolving Credit Loan.
Upon receipt of such notice the Administrative Agent shall promptly notify
each Lender. Not later than 12:00 noon, New York City time, on the Borrowing
Date specified in such notice, each Lender shall make available to the
Administrative Agent at the office of the Administrative Agent specified in
subsection 11.2 (or at such other location as the Administrative Agent may
direct) an amount in immediately available funds equal to the amount of the
Loan to be made by such Lender (except that proceeds of Swing Line Loans will
be made available to the Company in accordance with subsection 3.4(a)). Loan
proceeds received by the Administrative Agent hereunder shall promptly be
made available to the Company by the Administrative Agent's crediting the
account of the Company, at the office of the Administrative Agent specified
in subsection 11.2, with the aggregate amount actually received by the
Administrative Agent from the Lenders and in like funds as received by the
Administrative Agent.
(b) Any borrowing of Eurodollar Loans hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, (i) the aggregate principal amount of all Eurodollar Loans
having the same Interest Period shall not be less than $2,000,000 or a whole
multiple of $1,000,000 in excess thereof and (ii) no more than six Interest
Periods shall be in effect at any one time.
4.2 CONVERSION AND CONTINUATION OPTIONS.
(a) Subject to subsection 4.12, the Company may elect from
time to time to convert Eurodollar Loans into Alternate Base Rate Loans by
giving the Administrative Agent irrevocable notice of such election, to be
received by the Administrative Agent prior to 12:00 noon, New York City time,
at least three Business Days prior to the proposed conversion date. The
Company may elect from time to time to convert all or a portion of the
Alternate Base Rate Loans (other than Swing Line Loans) then outstanding to
Eurodollar Loans by giving the Administrative Agent irrevocable notice of
such election, to be received by the Administrative Agent prior to 12:00
noon, New York City time, at least three Business Days prior to the proposed
conversion date, specifying the Interest Period selected therefor, and, if no
Default or Event of Default has occurred and is continuing, such conversion
shall be made on the requested
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conversion date or, if such requested conversion date is not a Business Day,
on the next succeeding Business Day. Upon receipt of any notice pursuant to
this subsection 4.2, the Administrative Agent shall promptly notify each
Lender thereof. All or any part of the outstanding Loans (other than Swing
Line Loans) may be converted as provided herein, PROVIDED that partial
conversions of Alternate Base Loans shall be in the aggregate principal
amount of $1,000,000 or a whole multiple of $100,000 in excess thereof and
the aggregate principal amount of the resulting Eurodollar Loans outstanding
in respect of any one Interest Period shall be at least $2,000,000 or a whole
multiple of $1,000,000 in excess thereof.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Company giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such
Loans, PROVIDED that no Eurodollar Loan may be continued as such (i) when any
Event of Default has occurred and is continuing and the Administrative Agent
or the Required Lenders have, by written notice to the Company, determined
that such a continuation is not appropriate, (ii) if, after giving effect
thereto, subsection 4.1(b) would be contravened or (iii) after the date that
is one month prior to the Revolving Credit Termination Date.
4.3 CHANGES OF COMMITMENT AMOUNTS.
(a) The Company shall have the right, upon not less than
three Business Days' notice to the Administrative Agent, to terminate or from
time to time to permanently reduce the Revolving Credit Commitments, subject
to the provisions of this subsection 4.3. To the extent, if any, that the
sum of the amount of the Revolving Credit Loans, Swing Line Loans and L/C
Obligations then outstanding and the amounts available to be drawn under
outstanding Letters of Credit exceeds the amount of the Revolving Credit
Commitments as then reduced, the Company shall be required to make a
prepayment equal to such excess amount, the proceeds of which shall be
applied, FIRST, to payment of the Swing Line Loans then outstanding, SECOND,
to payment of the Revolving Credit Loans then outstanding, THIRD, to payment
of any L/C Obligations then outstanding, and FOURTH, to cash collateralize
any outstanding Letters of Credit on terms reasonably satisfactory to the
Administrative Agent. Any such termination of the Revolving Credit
Commitments shall be accompanied by prepayment in full of the Revolving
Credit Loans, Swing Line Loans and L/C Obligations then outstanding and by
cash collateralization of any outstanding Letters of Credit on terms
reasonably satisfactory to the Administrative Agent. Upon termination of the
Revolving Credit Commitments, any Letter of Credit then outstanding that has
been so cash collateralized shall no longer be considered a "Letter of
Credit" as defined in subsection 1.1 and any L/C Participating Interests
heretofore granted by the Issuing Lender to the Lenders in such Letter of
Credit shall be deemed terminated (subject to automatic reinstatement in the
event that such cash collateral is returned and the Issuing Lender is not
fully reimbursed for any such L/C Obligations) but the Letter of Credit fees
payable under subsection 3.9 shall continue to accrue to the Issuing Lender
and the Participating Lenders (or, in the event of any such automatic
reinstatement, as provided in subsection 3.9) with respect to such Letter of
Credit until the expiry thereof (PROVIDED that in lieu of paying a Standby or
Commercial L/C fee, as the case may be, equal to the Applicable Margin for
Revolving Credit Loans which
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are Eurodollar Loans per annum, the Company shall pay to the Administrative
Agent an amount equal to .25% per annum).
(b) In the case of termination of the Revolving Credit
Commitments, interest accrued on the amount of any prepayment relating
thereto and any unpaid commitment fee accrued hereunder shall be paid on the
date of such termination. Any such partial reduction of the Revolving Credit
Commitments shall be in an amount of $2,000,000 or a whole multiple of
$1,000,000 in excess thereof and shall, in each case, reduce permanently the
amount of the Revolving Credit Commitments then in effect.
4.4 OPTIONAL AND MANDATORY PREPAYMENTS.
(a) Subject to subsection 4.12, the Company may at any time
and from time to time prepay Loans, in whole or in part, without premium or
penalty, by irrevocable notice to the Administrative Agent by 10:00 a.m., New
York City time, on the same Business Day (or, in the case of Swing Line
Loans, by irrevocable notice to the Administrative Agent by 12:00 noon, New
York City time, on the same Business Day) in the case of Alternate Base Rate
Loans, and three Business Days' irrevocable notice to the Administrative
Agent in the case of Eurodollar Loans, specifying the date and amount of
prepayment. Upon receipt of such notice the Administrative Agent shall
promptly notify each Lender thereof. If such notice is given, the Company
shall make such prepayment, and the payment amount specified in such notice
shall be due and payable, on the date specified therein. Partial prepayments
of Revolving Credit Loans shall be in an aggregate principal amount equal to
the lesser of (A) (I) $2,000,000, or a whole multiple of $1,000,000 in excess
thereof with respect to Eurodollar Loans or (II) $1,000,000 or a whole
multiple of $100,000 in excess thereof with respect to Alternate Base Rate
Loans and (B) the aggregate unpaid principal amount of the Revolving Credit
Loans, as the case may be.
(b) (i) If, subsequent to the Amendment/Restatement
Effective Date, the Company or any of its Subsidiaries shall incur or permit
the incurrence of any Indebtedness (other than Indebtedness permitted
pursuant to subsection 8.1) 100% of the Net Proceeds thereof shall be
promptly applied toward the permanent reduction of the Revolving Credit
Commitments.
(iii) If, subsequent to the Amendment/Restatement
Effective Date, the Company or any of its Subsidiaries shall receive Net
Proceeds from any Asset Sale, such Net Proceeds shall be promptly applied
toward the permanent reduction of the Revolving Credit Commitments; PROVIDED
that such Net Proceeds need not be applied to the reduction of the Revolving
Credit Commitments until the earlier of the date that the aggregate amount of
Net Proceeds received by the Company or any of its Subsidiaries from any
Asset Sales exceeds $2,000,000 (and has not yet been applied to the reduction
of the Revolving Credit Commitments hereunder) and the date which is six
months after the last application of Net Proceeds pursuant to this subsection
4.4(b)(ii).
(iii) If for any fiscal year there shall be Excess Cash
Flow for such fiscal year, 100% of such Excess Cash Flow shall be applied to
prepay Loans and LC Obligations (but not to reduce Revolving Credit
Commitments) in the order set forth in
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subsection 4.4(b)(iv). Each such application shall be made not later than
120 days after the end of such fiscal year.
(iv) any reduction of the Revolving Credit Commitments
made pursuant to subsection 4.4(b)(i) or (ii) shall be accompanied by the
prepayment of, FIRST, the Swing Line Loans, SECOND, the Revolving Credit
Loans and, THIRD, the L/C Obligations to the extent, if any, that the sum of
the aggregate outstanding principal amount of Revolving Credit Loans, the
aggregate outstanding principal amount of all Swing Line Loans, the aggregate
amount available to be drawn under all outstanding Letters of Credit and the
aggregate outstanding amount of all L/C Obligations, in each case of all
Lenders, exceeds the amount of the aggregate Revolving Credit Commitments as
so reduced, PROVIDED that if the aggregate principal amount of Revolving
Credit Loans, Swing Line Loans and L/C Obligations then outstanding is less
than the amount of such excess (because Letters of Credit constitute a
portion thereof), the Company shall, to the extent of the balance of such
excess, replace outstanding Letters of Credit and/or deposit an amount in
cash in a cash collateral account established for the benefit of the Lenders.
(iv) The Company shall give the Administrative Agent
(which shall promptly notify each Lender) at least one Business Day's notice
of each prepayment or mandatory reduction pursuant to this subsection 4.4(b)
setting forth the date and amount thereof. Except as otherwise may be agreed
by the Company and the Required Lenders, and subject to subsection
4.4(b)(iv), any prepayment of Loans pursuant to this subsection 4.4 shall be
applied, FIRST, to any Alternate Base Rate Loans then outstanding and the
balance of such prepayment, if any, to the Eurodollar Loans then outstanding;
PROVIDED that prepayments of Eurodollar Loans, if not on the last day of the
Interest Period with respect thereto, shall, at the Company's option, be
prepaid subject to the provisions of subsection 4.12 or the amount of such
prepayment (after application to any Alternate Base Rate Loans) shall be
deposited with the Administrative Agent as cash collateral for the Loans on
terms reasonably satisfactory to the Administrative Agent and thereafter
shall be applied in the order of the Interest Periods next ending most
closely to the date such prepayment is required to be made and on the last
day of each such Interest Period. After such application, unless an Event of
Default shall have occurred and be continuing, any remaining interest earned
on such cash collateral shall be paid to the Company.
4.5 INTEREST RATES AND PAYMENT DATES.
(a) Eurodollar Loans shall bear interest for each day during
each Interest Period applicable thereto, commencing on (and including) the
first day of such Interest Period to, but excluding, the last day of such
Interest Period, on the unpaid principal amount thereof at a rate per annum
equal to the Eurodollar Rate determined for such Interest Period plus the
Applicable Margin.
(b) Alternate Base Rate Loans shall bear interest for the
period from and including the date such Loans are made to, but excluding, the
maturity date thereof, or to, but excluding, the conversion date if such
Loans are earlier converted into Eurodollar Loans on the
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npaid principal amount thereof at a rate per annum equal to the Alternate
Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any
of the Loans or (ii) any interest payable thereon shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise) such Loan, if
a Eurodollar Loan, shall be converted into an Alternate Base Rate Loan at the
end of the then-current Interest Period for said Eurodollar Loan (which
conversion shall occur automatically and without need for compliance with the
conditions for conversion set forth in subsection 4.2), and any such overdue
amount shall, without limiting the rights of the Lenders under Section 9,
bear interest (which shall be payable on demand) at a rate per annum which is
2% plus the Alternate Base Rate plus the Applicable Margin (or, in the case
of a Eurodollar Loan, the Eurodollar Rate for the Interest Period plus the
Applicable Margin plus 2%, if higher) from the date of such non-payment until
paid in full (as well after as before judgment).
(d) Except as otherwise expressly provided for in this
subsection 4.5, interest shall be payable in arrears on each Interest Payment
Date.
4.6 COMPUTATION OF INTEREST AND FEES.
(a) Interest in respect of Alternate Base Rate Loans, at any
time that the Alternate Base Rate is determined by reference to the Prime
Rate, and all fees hereunder shall be calculated on the basis of a 365 (or
366 as the case may be) day year for the actual days elapsed. Interest in
respect of Eurodollar Loans and in respect of Alternate Base Rate Loans at
any time that the Alternate Base Rate is determined by reference to the Base
CD Rate or the Federal Funds Effective Rate shall be calculated on the basis
of a 360 day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Company and the Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Alternate Base Rate or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on
the day on which such change in the Alternate Base Rate is announced or such
change in the Eurocurrency Reserve Requirements becomes effective, as the
case may be. The Administrative Agent shall as soon as practicable notify
the Company and the Lenders of the effective date and the amount of each such
change.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Company and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Company or any Lender, deliver to the Company or such Lender a statement
showing the quotations used by the Administrative Agent in determining the
Eurodollar Rate.
4.7 CERTAIN FEES. The Company agrees to pay to the Administrative
Agent, for its own account, a non-refundable agent's fee in an amount
previously agreed to with the Administrative Agent, payable in advance on the
Closing Date and on the first day of each fiscal year of the Company
thereafter.
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4.8 INABILITY TO DETERMINE INTEREST RATE. In the event that the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that (a) by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for any Interest Period with
respect to (i) proposed Loans that the Company has requested be made as
Eurodollar Loans, (ii) any Eurodollar Loans that will result from the
requested conversion of all or part of the Alternate Base Rate Loans into
Eurodollar Loans or (iii) the continuation of any Eurodollar Loan as such for
an additional Interest Period, or (b) dollar deposits in the relevant amount
and for the relevant period with respect to any such Eurodollar Loan are not
generally available to the Lenders in their respective Eurodollar Lending
Offices' interbank eurodollar markets, the Administrative Agent shall
forthwith give telecopy notice of such determination, confirmed in writing,
to the Company and the Lenders at least one day prior to, as the case may be,
the requested Borrowing Date, the conversion date or the last day of such
Interest Period. If such notice is given (i) any requested Eurodollar Loans
shall be made as Alternate Base Rate Loans, (ii) any Alternate Base Rate
Loans that were to have been converted to Eurodollar Loans shall be continued
as Alternate Base Rate Loans, and (iii) any outstanding Eurodollar Loans
shall be converted on the last day of the then current Interest Period
applicable thereto into Alternate Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans shall
be made and no Alternate Base Rate Loans shall be converted to Eurodollar
Loans.
4.9 PRO RATA TREATMENT AND PAYMENTS.
(a) Except to the extent otherwise provided herein, each
borrowing of Loans by the Company from the Lenders and any reduction of the
Commitments of the Lenders hereunder shall be made PRO RATA according to the
Revolving Credit Commitment Percentages of the Lenders.
(b) Whenever any payment received by the Administrative
Agent under this Agreement or any Note or any other Credit Document is
insufficient to pay in full all amounts then due and payable to the
Administrative Agent and the Lenders under this Agreement:
(i) If the Administrative Agent has not received a
Payment Sharing Notice (or, if the Administrative Agent has received a
Payment Sharing Notice but the Event of Default specified in such Payment
Sharing Notice has been cured or waived in accordance with the provisions of
this Agreement), such payment shall be distributed by the Administrative
Agent and applied by the Administrative Agent and the Lenders in the
following order: FIRST, to the payment of fees and expenses due and payable
to the Administrative Agent under and in connection with this Agreement and
the other Credit Documents; SECOND, to the payment of all expenses due and
payable under subsection 11.5, ratably among the Lenders in accordance with
the aggregate amount of such payments owed to each such Lender; THIRD, to the
payment of fees due and payable under subsections 3.2 and 3.9, ratably among
the Lenders in accordance with the Revolving Credit Commitment Percentage of
each Lender and, in the case of the Issuing Lender, the amount retained by
the Issuing Lender for its own account pursuant to subsection 3.9; FOURTH, to
the payment of interest then due and payable on the Loans and the L/C
Obligations ratably in accordance with the aggregate amount of interest owed
to each such Lender; and FIFTH, to the
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payment of the principal amount of the Loans and the L/C Obligations which is
then due and payable ratably among the Lenders in accordance with the
aggregate principal amount owed to each such Lender; or
(ii) If the Administrative Agent has received a
Payment Sharing Notice which remains in effect, all payments received by the
Administrative Agent under this Agreement or any Note shall be distributed by
the Administrative Agent and applied by the Administrative Agent and the
Lenders in the following order: FIRST, to the payment of all amounts
described in clauses "FIRST" through "THIRD" of the foregoing clause (i) in
the order set forth therein; SECOND, to the payment of the interest accrued
on all Loans and L/C Obligations, regardless of whether any such amount is
then due and payable, ratably among the Lenders in accordance with the
aggregate accrued interest plus the aggregate principal amount of all Loans
and L/C Obligations then due and payable and owed to such Lender; and THIRD,
to the payment of the principal amount of all Loans and L/C Obligations,
regardless of whether any such amount is then due and payable, ratably among
the Lenders in accordance with the aggregate principal amount owed to such
Lender.
(c) If any Lender (a "NON-FUNDING LENDER") has (x) failed to
make a Revolving Credit Loan required to be made by it hereunder, and the
Administrative Agent has determined that such Lender is not likely to make
such Revolving Credit Loan or (y) given notice to the Company or the
Administrative Agent that it will not make, or that it has disaffirmed or
repudiated any obligation to make, any Revolving Credit Loan, in each case by
reason of the provisions of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, or otherwise, (i) any payment made on
account of the principal of the Revolving Credit Loans outstanding shall be
made as follows:
(A) in the case of any such payment made on any date
when and to the extent that in the determination of the Administrative Agent
the Company would be able under the terms and conditions hereof to reborrow
the amount of such payment under the Commitments and to satisfy any
applicable conditions precedent set forth in Section 6 to such reborrowing,
such payment shall be made on account of the outstanding Revolving Credit
Loans held by the Lenders other than the Non-Funding Lender PRO RATA
according to the respective outstanding principal amounts of the Revolving
Credit Loans of such Lenders; and
(B) otherwise, such payment shall be made on account
of the outstanding Revolving Credit Loans held by the Lenders PRO RATA
according to the respective outstanding principal amounts of such Revolving
Credit Loans; and (ii) any payment made on account of interest on the
Revolving Credit Loans shall be made PRO RATA according to the respective
amounts of accrued and unpaid interest due and payable on the Revolving
Credit Loans with respect to which such payment is being made. The Company
agrees to give the Administrative Agent such assistance in making any
determination pursuant to subparagraph (i)(A) of this paragraph as the
Administrative Agent may reasonably request. Any such determination by the
Administrative Agent shall be conclusive and binding on the Lenders.
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(d) All payments (including prepayments) to be made by the
Company on account of principal, interest and fees shall be made without
set-off or counterclaim and shall be made to the Administrative Agent, for
the account of the Lenders at the Administrative Agent's office located at
270 Park Avenue, New York, New York 10017, in lawful money of the United
States and in immediately available funds. The Administrative Agent shall
promptly distribute such payments in accordance with the provisions of
subsection 4.9(b) upon receipt in like funds as received. If any payment
hereunder (other than payments on Eurodollar Loans) would become due and
payable on a day other than a Business Day, such payment shall become due and
payable on the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and with respect to payments of
principal, interest thereon shall be payable at the then applicable rate
during such extension), unless the result of such extension would be to
extend such payment into another calendar month in which event such payment
shall be made on the immediately preceding Business Day.
(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount which would constitute its Revolving Credit Commitment Percentage
of such borrowing available to the Administrative Agent, the Administrative
Agent may assume that such Lender is making such amount available to the
Administrative Agent in accordance with subsection 4.1 and the Administrative
Agent may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount
with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
subsection 4.9(e) shall be conclusive absent manifest error. If such
Lender's Revolving Credit Commitment Percentage of such borrowing is not in
fact made available to the Administrative Agent by such Lender within three
Business Days of such Borrowing Date, the Administrative Agent shall also be
entitled to recover such amount with interest thereon at the rate per annum
applicable to Alternate Base Rate Loans hereunder (in lieu of any otherwise
applicable interest), on demand, from the Company, without prejudice to any
rights which the Company or the Administrative Agent may have against such
Lender hereunder. Nothing contained in this subsection 4.9 shall relieve any
Lender which has failed to make available its ratable portion of any
borrowing hereunder from its obligation to do so in accordance with the terms
hereof.
(f) The failure of any Lender to make the Loan to be made by
it on any Borrowing Date shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on such Borrowing Date, but no
Lender shall be responsible for the failure of any other Lender to make the
Loan to be made by such other Lender on such Borrowing Date.
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(g) All payments and optional prepayments (other than
prepayments as set forth in subsection 4.11 with respect to increased costs)
of Eurodollar Loans hereunder shall be in such amounts and be made pursuant
to such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurodollar Loans with the same Interest Period shall
not be less than $2,000,000 or a whole multiple of $1,000,000 in excess
thereof.
4.10 ILLEGALITY. Notwithstanding any other provision herein, if any
Change in Law occurring after the date that any lender becomes a Lender party
to this Agreement, shall make it unlawful for such Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, the commitment of such
Lender hereunder to make Eurodollar Loans or to convert all or a portion of
Alternate Base Rate Loans into Eurodollar Loans shall forthwith be suspended
until such time, if any, as such illegality shall no longer exist and such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Alternate Base Rate Loans for the duration of the
respective Interest Periods (or, if permitted by applicable law, at the end
of such Interest Periods) and all payments of principal which would otherwise
be applied to such Eurodollar Loans shall be applied instead to such Lender's
Alternate Base Rate Loans. The Company hereby agrees to pay any Lender,
promptly upon its demand, any amounts payable pursuant to subsection 4.12 in
connection with any conversion in accordance with this subsection 4.10 (such
Lender's notice of such costs, as certified in reasonable detail as to such
amounts to the Company through the Administrative Agent, to be conclusive
absent manifest error).
4.11 REQUIREMENTS OF LAW.
(a) In the event that any Change in Law or compliance by any
Lender with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority occurring after the
date that any lender becomes a Lender party to this Agreement:
(i) does or shall subject any such Lender or its
Eurodollar Lending Office to any tax of any kind whatsoever with respect to
this Agreement, any Note or any Eurodollar Loans made by it, or change the
basis of taxation of payments to such Lender or its Eurodollar Lending Office
of principal, the commitment fee, interest or any other amount payable
hereunder (except for (x) net income and franchise taxes imposed on the net
income of such Lender or its Eurodollar Lending Office by the jurisdiction
under the laws of which such Lender is organized or any political subdivision
or taxing authority thereof or therein, or by any jurisdiction in which such
Lender's Eurodollar Lending Office is located or any political subdivision or
taxing authority thereof or therein, including changes in the rate of tax on
the overall net income of such Lender or such Eurodollar Lending Office, and
(y) taxes resulting from the substitution of any such system by another
system of taxation, PROVIDED that the taxes payable by Lenders subject to
such other system of taxation are not generally charged to borrowers from
such Lenders having loans or advances bearing interest at a rate similar to
the Eurodollar Rate);
(ii) does or shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar requirement against
assets held by, or deposits or
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other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of such
Lender which are not otherwise included in the determination of the
Eurodollar Rate; or
(iii) does or shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender
or its Eurodollar Lending Office of making, converting, renewing or
maintaining advances or extensions of credit or to reduce any amount
receivable hereunder, in each case, in respect of its Eurodollar Loans, then,
in any such case, the Company shall promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender for such
additional cost or reduced amount receivable which such Lender deems to be
material as determined by such Lender with respect to such Eurodollar Loans,
together with interest on each such amount from the date demanded until
payment in full thereof at a rate per annum equal to the Alternate Base Rate
plus 1%.
(b) In the event that any Change in Law occurring after the
date that any lender becomes a Lender party to this Agreement with respect to
any such Lender shall, in the opinion of such Lender, require that any
Commitment of such Lender be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
such Lender or any corporation controlling such Lender, and such Change in
Law shall have the effect of reducing the rate of return on such Lender's or
such corporation's capital, as the case may be, as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or
such corporation, as the case may be, could have achieved but for such Change
in Law (taking into account such Lender's or such corporation's policies, as
the case may be, with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time following notice by such
Lender to the Company of such Change in Law as provided in paragraph (c) of
this subsection 4.11, within 15 days after demand by such Lender, the Company
shall pay to such Lender such additional amount or amounts as will compensate
such Lender or such corporation on an after-tax basis, as the case may be,
for such reduction.
(c) The Company shall not be required to make any payments
to any Lender for any additional amounts pursuant to this subsection 4.11
unless such Lender has given written notice to the Company, through the
Administrative Agent, of its intent to request such payments prior to or
within 60 days after the date on which such Lender became entitled to claim
such amounts. If any Lender has notified the Company through the
Administrative Agent of any increased costs pursuant to paragraph (a) of this
subsection 4.11, the Company at any time thereafter may, upon at least three
Business Days' notice to the Administrative Agent (which shall promptly
notify the Lenders thereof), and subject to subsection 4.12, prepay (or
convert into Alternate Base Rate Loans) all (but not a part) of the
Eurodollar Loans then outstanding. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of paragraph (a) of this
subsection 4.11 with respect to such Lender, it will, if requested by the
Company and to the extent permitted by law or by the relevant Governmental
Authority, endeavor in good faith to avoid or minimize the increase in costs
or reduction in payments resulting from such event (including, without
limitation, endeavoring to change its Eurodollar Lending Office); PROVIDED,
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that such avoidance or minimization can be made in such a manner that such
Lender, in its sole determination, suffers no economic, legal or regulatory
disadvantage. If any Lender requests compensation from the Company under this
subsection 4.11, the Company may, by notice to such Lender (with a copy to
the Administrative Agent), suspend the obligation of such Lender thereafter
to make or continue Loans of the Type with respect to which such compensation
is requested, or to convert Loans of any other Type into Loans of such Type,
until the Requirement of Law giving rise to such request ceases to be in
effect, PROVIDED that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
(d) Each Lender (and in case of an Assignee on the date it
becomes a Lender) that is not a United States Person (as defined in Section
7701(a)(30) of the Code) for federal income tax purposes either (1) in the
case of a Lender that is a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, (i) represents to the Company (for the benefit of the Company
and the Administrative Agent) that under applicable law and treaties no taxes
are required to be withheld by the Company or the Administrative Agent with
respect to any payments to be made to such Lender in respect of the Loans or
the L/C Participating Interests, (ii) agrees to furnish to the Company, with
a copy to the Administrative Agent, either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 (wherein such Lender claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) agrees (for the benefit of the Company
and the Administrative Agent), to the extent it may lawfully do so at such
times, to provide the Company, with a copy to the Administrative Agent, a new
Form 4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed by such
Lender, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption or (2) in the case
of a Lender that is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, (i) represents to the Company (for the benefit of the Company
and the Administrative Agent) that it is not a bank within the meaning of
Section 881(c)(3)(A) of the Code, (ii) agrees to furnish to the Company, with
a copy to the Administrative Agent, (A) a certificate substantially in the
form of Exhibit J hereto (any such certificate, a "SUBSECTION 4.11(d)(2)
CERTIFICATE") and (B) two accurate and complete original signed copies of
Internal Revenue Service Form W-8, certifying to such Lender's legal
entitlement at the date such Lender became a party to this Agreement to an
exemption from U.S. withholding tax under the provisions of Section 881(c) of
the Code with respect to all payments to be made under this Agreement, and
(iii) agrees, to the extent legally entitled to do so, upon reasonable
request by the Company, to provide to the Company (for the benefit of the
Company and the Administrative Agent) such other forms as may be required in
order to establish the legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Agreement. Notwithstanding
any provision of this subsection 4.11 or 4.9(d) to the contrary, the Company
shall have no obligation to pay any amount to or for the account of any
Lender (or the Eurodollar Lending Office of any Lender) on account of any
taxes pursuant to this subsection 4.11, to the extent that such amount
results from (i) the failure of any Lender to comply with its obligations
pursuant to this subsection 4.11, (ii) any representation or warranty made or
deemed to be made by any Lender pursuant to this subsection 4.11(d) proving
to have been incorrect, false or misleading in any material respect when so
made or deemed to be made
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or (iii) any Change in Law or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority, the effect of which would be to subject to any
taxes any payment made pursuant to this Agreement to any Lender making the
representation and covenants set forth in subsection 4.11(d)(2), which
payment would not be subject to such taxes were such Lender eligible to make
and comply with, and actually made and complied with, the representation and
covenants set forth in subsection 4.11(d)(1) hereinabove.
(e) A certificate in reasonable detail as to any amounts
submitted by such Lender, through the Administrative Agent, to the Company,
shall be conclusive in the absence of manifest error. The covenants
contained in this subsection 4.11 shall survive the termination of this
Agreement and repayment of the Loans.
4.12 INDEMNITY. The Company agrees to indemnify each Lender and to
hold such Lender harmless from any loss or expense (but without duplication
of any amounts payable as default interest) which such Lender may sustain or
incur as a consequence of (a) default by the Company in payment of the
principal amount of or interest on any Eurodollar Loans of such Lender,
including, but not limited to, any such loss or expense arising from interest
or fees payable by such Lender to lenders of funds obtained by it in order to
make or maintain its Eurodollar Loans hereunder, (b) default by the Company
in making a borrowing after the Company has given a notice in accordance with
subsection 4.1 or in making a conversion of Alternate Base Rate Loans to
Eurodollar Loans or in continuing Eurodollar Loans as such, in either case,
after the Company has given notice in accordance with subsection 4.2, (c)
default by the Company in making any prepayment after the Company has given a
notice in accordance with subsection 4.4 or (d) a payment or prepayment of a
Eurodollar Loan or conversion (including without limitation, as a result of
subsection 4.4 and/or a conversion pursuant to subsection 4.10) of any
Eurodollar Loan into an Alternate Base Rate Loan, in either case on a day
which is not the last day of an Interest Period with respect thereto,
including, but not limited to, any such loss or expense arising from interest
or fees payable by such Lender to lenders of funds obtained by it in order to
maintain its Eurodollar Loans hereunder (but excluding loss of profit). This
covenant shall survive termination of this Agreement and repayment of the
Loans.
4.13 REPAYMENT OF LOANS; EVIDENCE OF DEBT.
(a) The Company hereby unconditionally promises to pay to
the Administrative Agent for the account of each Lender (i) the then unpaid
principal amount of each Revolving Credit Loan of such Lender on the
Revolving Credit Termination Date and (ii) the then unpaid principal amount
of the Swing Line Loans of the Swing Line Lender on the Revolving Credit
Termination Date. The Company hereby further agrees to pay interest on the
unpaid principal amount of the Loans from time to time outstanding from the
date hereof until payment in full thereof at the rates per annum and on the
dates set forth in subsection 4.5.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Company to
such Lender resulting from each
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Loan of such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this
Agreement.
(c) The Administrative Agent shall maintain the Register
pursuant to subsection 11.6(d), and a subaccount therein for each Lender, in
which shall be recorded (i) the amount of each Loan made hereunder, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Company to each Lender hereunder and (iii) both the amount of any sum
received by the Administrative Agent hereunder from the Company and each
Lender's share thereof.
(d) The entries made in the Register and the accounts of
each Lender maintained pursuant to subsection 4.13(b) shall, to the extent
permitted by applicable law, be PRIMA FACIE evidence of the existence and
amounts of the obligations of the Company therein recorded; PROVIDED that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Company to repay (with applicable interest) the Loans made
to such Company by such Lender or to repay any other obligations in
accordance with the terms of this Agreement.
(e) The Company agrees that, upon the request to the
Administrative Agent by any Lender, the Company will execute and deliver to
such Lender (i) a promissory note of the Company evidencing the Revolving
Credit Loans of such Lender, substantially in the form of Exhibit A with
appropriate insertions as to date and principal amount (a "REVOLVING CREDIT
NOTE"), and/or (ii) in the case of the Swing Line Lender, a promissory note
of the Company evidencing the Swing Line Loans of the Swing Line Lender,
substantially in the form of Exhibit C with appropriate insertions as to date
and principal amount (the "SWING LINE NOTE").
4.14 REPLACEMENT OF LENDERS. In the event any Lender or the Issuing
Lender is a Non-Funding Lender, exercises its rights pursuant to subsection
4.10 or requests payments pursuant to subsections 3.10 or 4.11, the Company
may require, at the Company's expense (including payment of any processing
fees under subsection 11.6(e)) and subject to subsection 4.12, such Lender or
the Issuing Lender to assign, at par plus accrued interest and fees, without
recourse (in accordance with subsection 11.6) all of its interests, rights
and obligations hereunder (including all of its Commitments and the Loans and
other amounts at the time owing to it hereunder and its Notes and its
interest in the Letters of Credit) to a bank, financial institution or other
entity specified by the Company, PROVIDED that (i) such assignment shall not
conflict with or violate any law, rule or regulation or order of any court or
other Governmental Authority, (ii) the Company shall have received the
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, to such assignment, (iii) the Company shall have
paid to the assigning Lender or the Issuing Lender all monies other than
principal, interest and fees accrued and owing hereunder to it (including
pursuant to subsections 3.10, 4.10, 4.11 and 4.12) and (iv) in the case of a
required assignment by the Issuing Lender, the Letters of Credit shall be
canceled and returned to the Issuing Lender.
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SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans and to induce the Issuing Lender to issue, and the
Participating Lenders to participate in, the Letters of Credit, the Company
hereby represents and warrants to each Lender and the Administrative Agent as
of the Amendment/Restatement Effective Date and as of the making of any
extension of credit hereunder:
5.1 FINANCIAL CONDITION.
(a) The consolidated audited balance sheets of the Company
and its consolidated Subsidiaries as at December 31, 1997 and December 31,
1998 and the related consolidated statements of operations and of cash flows
for the fiscal years ended on each such dates, audited by
PricewaterhouseCoopers LLP, copies of which have heretofore been furnished to
each Lender, present fairly in accordance with GAAP the consolidated
financial condition of the Company and its consolidated Subsidiaries as at
such dates, and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. All such financial
statements have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants and
as disclosed therein). Neither the Company nor any of its consolidated
Subsidiaries had, at the date of each balance sheet referred to above, any
material Contingent Obligation, contingent liability or liability for taxes,
or any long-term lease or unusual forward or long-term commitment, including,
without limitation, any material interest rate or foreign currency swap or
exchange transaction, which is not reflected in the foregoing statements or
in the notes thereto or expressly permitted to be incurred hereunder.
(b) The unaudited consolidated balance sheet of the Company
and its consolidated Subsidiaries as at June 30, 1999 and the related
consolidated statements of operations and of cash flows for the six-month
period then ended, certified by a Responsible Officer of the Company, copies
of which have heretofore been furnished to each Lender, present fairly in
accordance with GAAP the financial position of the Company and its
consolidated Subsidiaries as at such date and the consolidated results of
their operations and their consolidated cash flows for the six-month period
then ended (subject to normal year-end adjustments). Such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP (except as approved by such Responsible
Officer and disclosed therein). The Company and its consolidated
Subsidiaries did not have at the date of such balance sheet, any material
Contingent Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency exchange
transaction, which is not reflected in such balance sheet or in the notes
thereto or in the notes to the Company's audited financial statements.
During the period from December 31, 1998 to the Amendment/Restatement
Effective Date, no dividends or other distributions have been declared, paid
or made upon the Capital Stock of the Company or any of its consolidated
Subsidiaries nor has any of the Capital Stock of the Company or any of its
consolidated Subsidiaries been redeemed, retired, purchased or otherwise
acquired for value by
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the Company or any of its consolidated Subsidiaries, respectively, except as
permitted under the Existing Credit Agreement.
(c) The unaudited consolidated PRO FORMA balance sheet of
the Company and its consolidated Subsidiaries, as of June 30, 1999, certified
by a Responsible Officer of the Company (the "PRO FORMA BALANCE SHEET"),
copies of which have been furnished to each Lender, is the unaudited balance
sheet of the Company and its consolidated Subsidiaries adjusted to give
effect (as if such events had occurred on the date set forth therein) to (i)
the consummation of the FMI Sale and (ii) the application of the Net Proceeds
thereof in accordance with subsections 6.1(b) and (c) (collectively, the
"PRO FORMA EVENTS"). The Pro Forma Balance Sheet, together with the notes
thereto, were prepared based on good faith assumptions in accordance with
GAAP and is based on the best information available to the Company as of the
date of delivery thereof and reflects on a PRO FORMA basis the financial
position of the Company and its consolidated Subsidiaries as of June 30,
1999, as adjusted, as described above, assuming that the Pro Forma Events had
actually occurred as of June 30, 1999.
5.2 NO CHANGE. Since December 31, 1998, (a) there has been no
change, and (as of the Amendment/Restatement Effective Date only) no
development or event which has had or could reasonably be expected to have a
material adverse effect on (i) the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken
as a whole, (ii) the ability of the Company and its Subsidiaries to perform
their obligations under the Credit Documents and with respect to the other
financings contemplated hereby or (iii) the rights and remedies of the
Lenders under the Credit Documents and (b) no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Company nor has any of the Capital Stock of the Company been redeemed,
retired, repurchased or otherwise acquired for value by the Company or any of
its Subsidiaries, except as permitted by subsection 8.11. For avoidance of
doubt, Subsidiaries in this subsection 5.2 (and in other provisions of this
Section 5 utilizing concepts of the type set forth in clause (i) or (ii)
above) shall mean the Company's Subsidiaries after giving effect to the FMI
Sale.
5.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Company
and its Subsidiaries (a) is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation, (b) has full
corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to use
its corporate name and to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted other than such
franchises, licenses, permits, authorizations and approvals the lack of
which, individually or in the aggregate, would not have a material adverse
effect on the business, assets, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries, taken as a whole, (c) is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership, leasing or holding of its
properties makes such qualification necessary, except such jurisdictions
where the failure so to qualify would not have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, and (d) is
in compliance with all applicable statutes, laws, ordinances, rules, orders,
permits and regulations of any governmental authority or
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instrumentality, domestic or foreign (including, without limitation, those
related to Hazardous Materials and substances), except where noncompliance
would not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole. Neither the Company nor any of its
Subsidiaries has received any written communication from a Governmental
Authority that alleges that the Company or any of its Subsidiaries is not in
compliance, in all material respects, with all material federal, state, local
or foreign laws, ordinances, rules and regulations.
5.4 CORPORATE POWER; AUTHORIZATION. Each of the Company and its
Subsidiaries has the corporate power and authority to make, deliver and
perform each of the Credit Documents to which it is a party, and the Company
has the corporate power and authority and legal right to borrow hereunder and
to have Letters of Credit issued for its account hereunder. Each of the
Company and its Subsidiaries has taken all necessary corporate action to
authorize the execution, delivery and performance of each of the Credit
Documents to which it is or will be a party and the Company has taken all
necessary corporate action to authorize the borrowings hereunder and the
issuance of Letters of Credit for its account hereunder. No consent or
authorization of, or filing with, any Person (including, without limitation,
any Governmental Authority) is required in connection with the execution,
delivery or performance by the Company or any of its Subsidiaries, or for the
validity or enforceability against the Company or any of its Subsidiaries, of
any Credit Document except for consents, authorizations and filings which
have been obtained or made and are in full force and effect and except (i)
such consents, authorizations and filings, the failure to obtain or perform
(x) which would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries taken as a whole and (y) which would not adversely
affect the validity or enforceability of any of the Credit Documents or the
rights or remedies of the Administrative Agent or the Lenders thereunder, and
(ii) such filings as are necessary to perfect the Liens of the Lenders
created pursuant to this Agreement and the Security Documents.
5.5 ENFORCEABLE OBLIGATIONS. This Agreement has been, and each of
the other Credit Documents will be, duly executed and delivered on behalf of
such Credit Party that is party thereto. This Agreement constitutes, and
each of the other Credit Documents will constitute upon execution and
delivery, the legal, valid and binding obligation of such Credit Party, and
is enforceable against such Credit Party in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law).
5.6 NO LEGAL BAR. The execution, delivery and performance of each
Credit Document, the incurrence or issuance of and use of the proceeds of the
Loans and of drawings under the Letters of Credit and the transactions
contemplated by the Credit Documents, (a) will not violate any Requirement of
Law or any Contractual Obligation applicable to or binding upon the Company
or any Subsidiary or any of their respective properties or assets, in any
manner which, individually or in the aggregate, (i) would have a material
adverse effect on the ability of the Company or any such Subsidiary to
perform its obligations under the Credit Documents to which it is a party,
(ii) would give rise to any liability on the part of the Administrative Agent
or
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any Lender, or (iii) would have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, and (b) will not result in the
creation or imposition of any Lien on any of its properties or assets
pursuant to any Requirement of Law applicable to it, as the case may be, or
any of its Contractual Obligations, except for the Liens arising under the
Security Documents.
5.7 NO MATERIAL LITIGATION. No litigation by, investigation known
to the Company by, or proceeding of, any Governmental Authority is pending
against the Company or any of its Subsidiaries with respect to the validity,
binding effect or enforceability of any Credit Document, the Loans made
hereunder, the use of proceeds thereof or of any drawings under a Letter of
Credit and the other transactions contemplated hereby. Other than as
disclosed in the 1998 Form 10-K, no lawsuits, claims, proceedings or
investigations are pending or, to the best knowledge of the Company,
threatened as of the Amendment/Restatement Effective Date against or
affecting the Company or a Subsidiary or any of their respective properties,
assets, operations or businesses, in which there is a probability of an
adverse determination, and is reasonably likely, if adversely decided, to
have a material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of the Company and its Subsidiaries,
taken as a whole.
5.8 INVESTMENT COMPANY ACT. Neither the Company nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment
company" (as each of the quoted terms is defined or used in the Investment
Company Act of 1940, as amended).
5.9 FEDERAL REGULATION. No part of the proceeds of any of the
Loans or Subordinated Debt or any drawing under a Letter of Credit will be
used for any purpose which violates the provisions of Regulation T, U or X of
the Board. Neither the Company nor any of its Subsidiaries is engaged or will
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under said
Regulation U.
5.10 NO DEFAULT. The Company and each of its Subsidiaries have
performed all material obligations required to be performed by them under
their respective Contractual Obligations and they are not (with or without
the lapse of time or the giving of notice, or both) in breach or default in
any respect thereunder, except to the extent that such breach or default
would not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole. Neither the Company nor any of its
Subsidiaries is in default under any material judgment, order or decree of
any Governmental Authority, domestic or foreign, applicable to it or any of
its respective properties, assets, operations or business, except to the
extent that any such defaults would not, in the aggregate, have a material
adverse effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole.
5.11 TAXES. Except as set forth on Schedule 5.11, each of the
Company and its Subsidiaries has filed or caused to be filed all material tax
returns which, to the knowledge of the Company, are required to be filed and
has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees
or
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other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves (or
other sufficient provisions) in conformity with GAAP have been provided on
the books of the Company or its Subsidiaries, as the case may be); and no tax
Lien has been filed, and, to the knowledge of the Company, no written claim
is being asserted, with respect to any such tax, fee or other charges.
5.12 SUBSIDIARIES. After giving effect to the consummation of the
FMI Sale, the Subsidiaries and their jurisdiction of incorporation shall be
as set forth on Schedule 5.12.
5.13 OWNERSHIP OF PROPERTY; LIENS. As of the Amendment/Restatement
Effective Date and as of the making of any extension of credit hereunder
(subject to transfers and dispositions of property permitted under subsection
8.5), each of the Company and its Subsidiaries has good and valid title to
all of its material assets (other than real property or interests in real
property) in each case free and clear of all mortgages, liens, security
interests or encumbrances of any nature whatsoever except Permitted Liens.
With respect to real property or interests in real property, as of the
Amendment/Restatement Effective Date, each of the Company and its
Subsidiaries has (i) fee title to all of the real property listed on Schedule
5.13 under the heading "Fee Properties" (each, a "FEE PROPERTY"), and (ii)
good and valid title to the leasehold estates in all of the real property
leased by it and listed on Schedule 5.13 under the heading "Leased
Properties" (each, a "LEASED PROPERTY"), in each case, free and clear of all
mortgages, liens, security interests, easements, covenants, rights-of-way and
other similar restrictions of any nature whatsoever, except (A) Permitted
Liens and (B) as to Leased Property, the terms and provisions of the
respective lease therefor, including, without limitation, the matters set
forth on Schedule 5.13, and any matters affecting the fee title and any
estate superior to the leasehold estate related thereto. The Fee Properties
and the Leased Properties constitute, as of the Amendment/Restatement
Effective Date, all of the real property owned in fee or leased by the
Company and its Subsidiaries.
5.14 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which
this representation is made or deemed made with respect to any Plan that
would result in a material liability to the Company, and each Plan has
complied in all material respects with the applicable provisions of ERISA and
the Code. Neither the Company nor any Commonly Controlled Entity has: been
involved in any transaction that would cause the Company to be subject to
material liability with respect to a Plan to which the Company or any
Commonly Controlled Entity contributed or was obligated to contribute during
the six-year period ending on the date this representation is made or deemed
made; or incurred any material liability under Title IV of ERISA which would
become or remain a material liability of the Company after the
Amendment/Restatement Effective Date. No termination of a Single Employer
Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen,
during such five-year period that would result in a material liability to the
Company. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not,
as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to
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such accrued benefits that would result in a material liability to the
Company. Neither the Company nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Company nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Company or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made, in either case that would result in a material liability to the
Company. To the knowledge of the Company, no such Multiemployer Plan is in
Reorganization or Insolvent. The present value (determined using actuarial
and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the liability of the Company and
each Commonly Controlled Entity for post retirement benefits to be provided
to their current and former employees under Plans which are welfare benefit
plans (as defined in Section 3(1) of ERISA) does not, in the aggregate,
exceed the assets under all such Plans allocable to such benefits by an
amount that would result in a material liability to the Company, except as
disclosed in the Company's audited financial statement provided to the
Lenders prior to the Amendment/Restatement Effective Date. For purposes of
this subsection 5.14, a material liability shall exceed $7,500,000.
5.15 COLLATERAL DOCUMENTS.
(a) Each of the Pledge Agreements is effective to create in
favor of the Administrative Agent, for the ratable benefit of the Lenders, a
legal, valid and enforceable security interest in the pledged stock described
therein; stock certificates representing or constituting the pledged stock
described in each of the Pledge Agreements have been delivered to the
Administrative Agent; and such security interest constitutes a perfected
first lien on, and security interest in, all right, title and interest of the
pledgor party thereto in the pledged stock described therein.
(b) Each of the Security Agreements is effective to create
in favor of the Administrative Agent, for the ratable benefit of the Lenders,
a legal, valid and enforceable security interest in the collateral described
therein, and Uniform Commercial Code financing statements have been filed in
each of the jurisdictions listed on Schedule 5.15(b), and upon the taking of
possession by the Administrative Agent of any such collateral the security
interests in which may be perfected only by possession, such security
interests will, subject to the existence of Permitted Liens, constitute
perfected first priority liens on, and security interests in, all right,
title and interest of the debtor party thereto in the collateral described
therein, except to the extent that a security interest cannot be perfected
therein by the filing of a financing statement or the taking of possession
under the Uniform Commercial Code of the relevant jurisdiction.
(c) Upon execution and delivery thereof by the Company, each
Mortgage will be effective to create in favor of the Administrative Agent,
for the ratable benefit of the Lenders, a legal, valid and enforceable
security interest in the collateral described therein, and upon recording the
Mortgages in the jurisdictions listed on Schedule 5.13 (or, in the case of a
Mortgage delivered pursuant to subsection 7.9, the jurisdiction in which the
property covered by such Mortgage is located), such security interests will,
subject to the existence of Permitted
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Liens, constitute first liens on, and perfected security interests in, all
rights, title and interest of the debtor party thereto in the collateral
described therein.
5.16 COPYRIGHTS, PATENTS, PERMITS, TRADEMARKS AND LICENSES.
Schedule 5.16 sets forth a true and complete list as of the
Amendment/Restatement Effective Date of all material trademarks (registered
or unregistered), trade names, service marks, patents, pending patent
applications and copyrights and applications therefor owned, used or filed by
or licensed to the Company and its Subsidiaries and, with respect to
registered trademarks (if any), contains a list of all jurisdictions in which
such trademarks are registered or applied for and all registration and
application numbers. Except as set forth on Schedule 5.16, the Company or a
Subsidiary owns or has the right to use, trademarks (registered or
unregistered), trade names, service marks, patents, pending patent
applications and copyrights and applications therefor referred to in such
Schedule. Except as set forth on Schedule 5.16, to the best knowledge of the
Company, no claims are pending by any Person with respect to the ownership,
validity, enforceability or the Company's or any Subsidiary's use of any such
trademarks (registered or unregistered), trade names, service marks, patents,
pending patent applications and copyrights, or applications therefor,
challenging or questioning the validity or effectiveness of any of the
foregoing, in any jurisdiction, domestic or foreign, except to the extent
such claims could not reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
5.17 ENVIRONMENTAL MATTERS. Except insofar as any exceptions to the
following, individually or in the aggregate, could not reasonably be expected
to result in a material adverse effect on the business, assets, conditions
(financial or otherwise) or operations of the Company and its Subsidiaries
taken as a whole:
(a) to the best knowledge of the Company, the properties
owned, leased, or otherwise operated by the Company or any of its
Subsidiaries do not contain, and have not previously contained, in, on or
under, including, without limitation, the soil and groundwater thereunder,
any Hazardous Materials in amounts or concentrations that constitute or
constituted a violation of, or could reasonably give rise to liability under,
Environmental Laws;
(b) to the best knowledge of the Company, the properties
owned or leased, or otherwise operated by the Company or any of its
Subsidiaries and all operations and facilities at such properties are in
compliance with all Environmental Laws, and there is no contamination or
violation of any Environmental Law which could interfere with the continued
operation of, or impair the fair saleable value of, such property;
(c) neither the Company nor any of its Subsidiaries has
received or is aware of any written complaint, notice of violation, alleged
violation, or notice of investigation or of potential liability under
Environmental Laws with regard to the Company or its Subsidiaries, nor does
the Company or any of its Subsidiaries have knowledge that any such action is
being contemplated, considered or threatened;
(d) to the best knowledge of the Company, Hazardous
Materials have not been generated, treated, stored or disposed of at, on or
under any properties presently or formerly owned, leased, or otherwise
operated by the Company or any of its Subsidiaries, nor have any
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Hazardous Materials been transported from any such property, or come to be
located at any other property, in violation of or in a manner that could
reasonably give rise to liability under any Environmental Laws; and
(e) there are no governmental administrative actions or
judicial proceedings pending or, to the best knowledge of the Company and its
Subsidiaries, threatened under any Environmental Law to which the Company or
any of its Subsidiaries is a party, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements, other than permits authorizing
operations by the Company or any of its Subsidiaries, outstanding under any
Environmental Law.
5.18 ACCURACY AND COMPLETENESS OF INFORMATION. The factual
statements contained in the financial statements referred to in subsection
5.1, the 1998 Form 10-K, the Credit Documents (including the schedules
thereto) and any other certificates or documents furnished or to be furnished
to the Administrative Agent or the Lenders from time to time in connection
with this Agreement, taken as a whole, do not and will not, to the best
knowledge of the Company, as of the date when made, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not misleading in light of the
circumstances in which the same were made, all except as otherwise qualified
herein or therein, such knowledge qualification being given only with respect
to factual statements made by Persons other than the Company or any of its
Subsidiaries.
5.19 YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of the material computer systems
of the Company and its Subsidiaries, as so reprogrammed, will be completed in
all material respects by October 31, 1999. The cost to the Company and its
Subsidiaries of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Company and its Subsidiaries
(including, without limitation, reprogramming errors and the failure of
others' systems or equipment) would not reasonably be expected to result in a
Default or Event of Default or a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Company and its
Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the
Company and its Subsidiaries to conduct their respective businesses without
resulting in a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole.
SECTION 6. CONDITIONS PRECEDENT
6.1 CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to the satisfaction of the following conditions
precedent:
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(a) AGREEMENT. The Administrative Agent shall have received
this Agreement, executed and delivered by a duly authorized officer of the
Company and the Required Lenders.
(b) TERM LOANS. The Term Loans (as defined in the Existing
Credit Agreement) shall have been prepaid in full, together with accrued
interest thereon.
(c) RECEIVABLES FACILITIES. All Receivables Facilities
existing on the Amendment/Restatement Effective Date shall have been
terminated.
(d) PRO FORMA BALANCE SHEET. The Administrative Agent shall
have received the Pro Forma Balance Sheet described in subsection 5.1(c).
(e) FEES AND EXPENSES. The Administrative Agent shall have
received reimbursement for all of its out-of-pocket costs and reasonable
expenses incurred in connection with this Agreement, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.
(f) AMENDMENT FEE. The Administrative Agent shall have
received an amendment fee for the account of each Lender executing this
Agreement and delivering its executed signature page (including by facsimile)
to the Administrative Agent prior to the 5:00 p.m., New York City time, on
September 2, 1999, in an amount equal to 0.15% of such Lender's Revolving
Credit Commitment.
6.2 CONDITIONS TO ALL LOANS AND LETTERS OF CREDIT. The obligation
of each Lender to make any Loan (other than any Revolving Credit Loan the
proceeds of which are to be used to repay Refunded Swing Line Loans) and the
obligation of the Issuing Lender to issue any Letter of Credit is subject to
the satisfaction of the following conditions precedent on the relevant
Borrowing Date:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made in or pursuant to Section 5 or which are
contained in any other Credit Document shall be true and correct in all
material respects on and as of the date of such Loan or of the issuance of
such Letter of Credit as if made on and as of such date (unless stated to
relate to a specific earlier date, in which case, such representations and
warranties shall be true and correct in all material respects as of such
earlier date).
(b) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing on such Borrowing Date or after
giving effect to such Loan to be made or such Letter of Credit to be issued
on such Borrowing Date.
Each borrowing by the Company hereunder and the issuance of each Letter of
Credit by the Issuing Lender hereunder shall constitute a representation and
warranty by the Company as of the date of such borrowing or issuance that the
conditions in clauses (a) and (b) and of this subsection 6.2 have been
satisfied.
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SECTION 7. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan, Note or L/C Obligation remains outstanding and unpaid, any
amount (unless cash in an amount equal to such amount has been deposited to a
cash collateral account established by the Administrative Agent) remains
available to be drawn under any Letter of Credit or any other amount is owing
to any Lender or the Administrative Agent hereunder or under any of the other
Credit Documents, it shall, and, in the case of the agreements contained in
subsections 7.3 through 7.6, and 7.8 through 7.9, the Company shall cause
each of its Subsidiaries to:
7.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent
(with sufficient copies for each Lender which the Administrative Agent shall
promptly furnish to each Lender):
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Company, a copy of the consolidated
balance sheet of the Company and its consolidated Subsidiaries as at the end
of such fiscal year and the related consolidated statements of stockholders'
equity and cash flows and the consolidated statements of income of the
Company and its Subsidiaries for such fiscal year, setting forth in each case
in comparative form the figures for the previous year and, in the case of the
consolidated balance sheet referred to above, reported on, without a "going
concern" or like qualification or exception, or qualification arising out of
the scope of the audit, or qualification which would affect the computation
of financial covenants, by independent certified public accountants of
nationally recognized standing;
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of each
fiscal year of the Company, the unaudited consolidated balance sheet of the
Company and its Subsidiaries as at the end of each such quarter and the
related unaudited consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and the portion of the
fiscal year of the Company through such date, setting forth in each case in
comparative form the figures for the corresponding quarter in, and year to
date portion of, the previous year, and the figures for such periods in the
budget prepared by the Company and furnished to the Administrative Agent,
certified by the chief financial officer, controller or treasurer of the
Company as being fairly stated in all material respects;
(c) as soon as available, but in any event not later than 45
days after the beginning of each fiscal year of the Company to which such
budget relates, a preliminary consolidated operating budget for the Company
and its Subsidiaries taken as a whole; and as soon as available, any material
revision to or any final revision of any such preliminary annual operating
budget or any such consolidated operating budget; and
(d) concurrently with the delivery of financial statements
pursuant to subsection 7.1(a) or (b), a certificate of the chief financial
officer or treasurer of the Company setting forth, in reasonable detail, the
computations of Capital Expenditures as of the last day of the fiscal period
covered by such financial statements, the ratio of Consolidated Funded
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Indebtedness to Consolidated EBITDA as of such last day, and the Interest
Coverage Ratio as of such last day;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal year-end
audit adjustments) and to be prepared in reasonable detail and (except in the
case of the statements referred to in paragraphs (c) and (d) of this
subsection 7.1) in accordance with GAAP.
7.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Administrative
Agent (with sufficient copies for each Lender which the Administrative Agent
shall promptly deliver to each Lender):
(a) concurrently with the delivery of the consolidated
financial statements referred to in subsection 7.1(a), a letter from the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary to express their
opinion on such financial statements no knowledge was obtained of any Default
or Event of Default under subsections 4.4(b), 8.1, 8.3, and 8.5 through 8.11,
except as specified in such letter;
(b) within 15 days of the delivery of the financial
statements referred to in subsections 7.1(a) and (b) (except that the
certificate referred to in clause (iii) below shall be delivered concurrently
with such financial statements), a certificate of the chief financial officer
or treasurer of the Company stating that, to the best of such officer's
knowledge, during such period (i) no Subsidiary has been formed or acquired
(or, if any such Subsidiary has been formed or acquired, the Company has
complied with the requirements of subsection 7.9 with respect thereto), (ii)
neither the Company nor any of its Subsidiaries has changed its name, its
principal place of business, its chief executive office or the location of
any material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect
thereto, (iii) each of the Company and its Subsidiaries has observed or
performed all of its respective covenants and other agreements, and satisfied
every material condition, contained in this Agreement, the Notes and the
other Credit Documents to be observed, performed or satisfied by it, and that
such officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate, (iv) showing in detail as of the end
of the related fiscal period the figures and calculations supporting such
statement in respect of clause (e) of subsection 8.1, clauses (b) and (e) of
subsection 8.3 and subsections 8.6 through 8.11 and any other calculations
reasonably requested by the Administrative Agent with respect to the
quantitative aspects of the other covenants contained herein, (v) if not
specified in the financial statements delivered pursuant to subsection 7.1,
specifying the aggregate amount of interest paid or accrued by the Company
and its Subsidiaries, and the aggregate amount of depreciation, depletion and
amortization charged on the books of the Company and its Subsidiaries, during
such accounting period, and (vi) identify any owned Real Proerty of the
Company or a Domestic Subsidiary acquired during such accounting period that,
together with any improvements thereon, has a value of at least $5,000,000;
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(c) promptly upon receipt thereof, copies of all final
reports submitted to the Company or to any of its Subsidiaries by independent
certified public accountants in connection with each annual, interim or
special audit of the books of the Company or any of its Subsidiaries made by
such accountants, and, upon the request of any Lender (through the
Administrative Agent), any final comment letter submitted by such accountants
to management in connection with their annual audit;
(d) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available to the public generally by the Company or any of its Subsidiaries,
if any, and all regular and periodic reports and all final registration
statements and final prospectuses, if any, filed by the Company or any of its
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any Governmental Authority succeeding to any of its functions;
(e) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) and (b), a management summary
describing and analyzing the performance of the Company and its Subsidiaries
during the periods covered by such financial statements;
(f) within 50 days after the end of each fiscal quarter, a
summary of all Asset Sales during such fiscal quarter including the amount of
all Net Proceeds from such Asset Sales not previously applied to prepayments
of the Loans and reductions of the Commitments pursuant to the proviso to
subsection 4.4(b)(ii); and
(g) promptly, such additional financial and other
information as any Lender may from time to time reasonably request (through
the Administrative Agent).
7.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all
its obligations and liabilities of whatever nature, except (a) when the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Company or any of its
Subsidiaries, as the case may be, (b) for delinquent obligations which do not
have a material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole and (c) for trade and other accounts payable in the ordinary
course of business which are not overdue for a period of more than 90 days
or, if overdue for more than 90 days, as to which a dispute exists and
adequate reserves in conformity with GAAP have been established on the books
of the Company or any of its Subsidiaries, as the case may be.
7.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in businesses of the same general type as now conducted by it, and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all material rights, material
privileges, franchises, copyrights, patents, trademarks and trade names
necessary or desirable in the normal conduct of its business except for
rights, privileges, franchises, copyrights, patents, trademarks and
tradenames the loss of which would not in the aggregate have a material
adverse effect on the business, assets, condition (financial or otherwise) or
results
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of operations of the Company and its Subsidiaries taken as a whole, and
except as otherwise permitted by subsections 8.4 and 8.5; and comply with all
applicable Requirements of Law except to the extent that the failure to
comply therewith would not, in the aggregate, have a material adverse effect
on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.
7.5 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Keep all property useful and necessary in its business
in good working order and condition (ordinary wear and tear excepted); and
(b) Maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and with
only such deductibles as are usually maintained by, and against at least such
risks (but including, in any event, public liability insurance) as are
usually insured against in the same general area by, companies engaged in the
same or a similar business, and furnish to each Lender, (i) annually, a
schedule disclosing (in a manner substantially similar to that used in the
schedule provided pursuant to subsection 6.1(o)) all insurance against
products liability risk maintained by the Company and its Subsidiaries
pursuant to this subsection 7.5(b) or otherwise and (ii) upon written request
of any Lender, full information as to the insurance carried; PROVIDED that
the Company may implement programs of self insurance in the ordinary course
of business and in accordance with industry standards for a company of
similar size so long as reserves are maintained in accordance with GAAP for
the liabilities associated therewith.
7.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities which permit financial statements to be prepared in conformity
with GAAP and all Requirements of Law; and permit representatives of any
Lender upon reasonable notice (made through the Administrative Agent and no
more frequently than quarterly unless a Default or Event of Default shall
have occurred and be continuing) to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be requested upon reasonable
notice, and to discuss the business, operations, assets and financial and
other condition of the Company and its Subsidiaries with officers and
employees thereof and with their independent certified public accountants
with prior reasonable notice to, and coordination with, the chief financial
officer or the treasurer of the Company.
7.7 NOTICES. Promptly give notice to the Administrative Agent (to
be distributed by the Administrative Agent to the Lenders):
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any
instrument or other agreement, guarantee or collateral document of the
Company or any of its Subsidiaries which default or event of default has not
been waived and would have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company
and
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its Subsidiaries taken as a whole, or any other default or event of default
under any such instrument, agreement, guarantee or other collateral document
which, but for the proviso to clause (e) of Section 9, would have constituted
a Default or Event of Default under this Agreement, or (ii) litigation,
investigation or proceeding which may exist at any time between the Company
or any of its Subsidiaries and any Governmental Authority, or receipt of any
notice of any environmental claim or assessment against the Company or any of
its Subsidiaries by any Governmental Authority, which in any such case would
have a material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole;
(c) of any litigation or proceeding against the Company or
any of its Subsidiaries (i) in which more than $3,000,000 of the amount
claimed is not covered by insurance or (ii) in which injunctive or similar
relief is sought which if obtained would have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole;
(d) of the following events, as soon as practicable after,
and in any event within 30 days after, the Company knows or has reason to
know thereof: (i) the occurrence of any Reportable Event with respect to any
Plan which Reportable Event could reasonably result in material liability to
the Company and its Subsidiaries taken as a whole, or (ii) the institution of
proceedings or the taking of any other action by PBGC, the Company or any
Commonly Controlled Entity to terminate, withdraw or partially withdraw from
any Plan and, with respect to a Multiemployer Plan, the Reorganization or
Insolvency of such Plan, in each of the foregoing cases which could
reasonably result in material liability to the Company and its Subsidiaries
taken as a whole, and in addition to such notice, deliver to the
Administrative Agent and each Lender whichever of the following may be
applicable: (A) a certificate of a Responsible Officer of the Company
setting forth details as to such Reportable Event and the action that the
Company or such Commonly Controlled Entity proposes to take with respect
thereto, together with a copy of any notice of such Reportable Event that may
be required to be filed with PBGC, or (B) any notice delivered by PBGC
evidencing its intent to institute such proceedings or any notice to PBGC
that such Plan is to be terminated, as the case may be;
(e) concurrently with the delivery of the information
delivered pursuant to subsection 7.2(f) and each prepayment required pursuant
to subsection 4.4(b)(ii), of any Asset Sale or substantially like-kind
exchange of real property by the Company or any of its Subsidiaries; and
(f) of a material adverse change known to the Company or its
Subsidiaries in the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries taken as a whole.
Each notice pursuant to this subsection 7.7 shall be accompanied by a
statement of a Responsible Officer of the Company setting forth details of
the occurrence referred to therein and (in the cases of clauses (a) through
(d)) stating what action the Company proposes to take with respect thereto.
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7.8 ENVIRONMENTAL LAWS.
(a) (i) Comply with all Environmental Laws applicable to it,
and obtain, comply with and maintain any and all Environmental Permits
necessary for its operations as conducted and as planned; and (ii) take
reasonable efforts to ensure that all of its tenants, subtenants,
contractors, subcontractors, and invitees comply with all Environmental Laws,
and obtain, comply with and maintain any and all Environmental Permits,
applicable to any of them insofar as any failure to so comply, obtain or
maintain could result in a material adverse effect on the Company and its
Subsidiaries taken as a whole. Noncompliance by the Company or any of its
Subsidiaries with any applicable Environmental Law or Environmental Permit
shall be deemed not to constitute a breach of this 7.8(a); PROVIDED that,
upon learning of any such noncompliance, the Company and its Subsidiaries
shall promptly undertake reasonable efforts to achieve compliance or to
contest by appropriate proceedings any alleged noncompliance and, PROVIDED,
FURTHER, that, in any case, such noncompliance, and any other noncompliance
with Environmental Law and any contesting of allegations of noncompliance
with Environmental Laws, individually or in the aggregate, could not
reasonably be expected to give rise to a material adverse effect on the
Company and its Subsidiaries taken as a whole.
(b) Comply in a timely manner with all orders and lawful
directives regarding Environmental Laws issued to the Company or any of its
Subsidiaries by any Governmental Authority, other than such orders and lawful
directives as to which an appeal or other challenge has been timely and
properly taken in good faith and the pendency of any and all such appeals and
other challenges could not reasonably be expected to give rise to a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(c) Maintain, update as appropriate, and implement in all
material respects an environmental program reasonably designed to (i) ensure
that the Company, its Subsidiaries, any of their respective operations
(including, without limitation, disposal), and any properties owned, leased
or operated by any of them, attain and remain in substantial compliance with
all applicable Environmental Laws; (ii) reasonably and prudently manage any
liabilities or potential liabilities that the Company, any of the other
Credit Parties, any of their respective operations (including, without
limitation, disposal), and any properties owned or leased by any of them, may
have under all applicable Environmental Laws; and (iii) ensure that the
Company and its Subsidiaries undertake reasonable efforts to identify, and
reasonably evaluate, issues of compliance with and liability under
Environmental Laws prior to acquiring, directly or indirectly, any ownership
or leasehold interest in real property, or other interest in any real
property that could give rise to Company or any of its Subsidiaries being
subjected to liability under any Environmental Law as a result of such
acquisition.
7.9 ADDITIONAL COLLATERAL.
(a) Subject to subsection 7.9(e), with respect to any assets
acquired after the Closing Date by the Company or any of its Domestic
Subsidiaries that are intended to be subject to the Lien created by any of
the Security Documents but which are not so subject (but, in any event,
excluding (x) any assets described in paragraph (b) or (c) of this
subsection, (y) immaterial
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assets and (z) Receivables Facility Assets), promptly (and in any event
within 30 days after the acquisition thereof): (i) execute and deliver to
the Administrative Agent such amendments or supplements to the relevant
Security Documents or such other documents as the Administrative Agent shall
deem necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a Lien on such assets, and (ii) take all actions
necessary or advisable to cause such Lien to be duly perfected to the extent
required by such Security Document in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be reasonably requested by the
Administrative Agent.
(b) With respect to any Person that is or becomes a
Subsidiary (other than (y) any Foreign Subsidiary or (z) any Receivables SPV)
that has material assets, promptly upon the request of the Administrative
Agent: (i) execute and deliver to the Administrative Agent, for the benefit
of the Lenders, a new pledge agreement or such amendments to the relevant
Pledge Agreement as the Administrative Agent reasonably shall deem necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by the
Company or any of its Subsidiaries, (ii) deliver to the Administrative Agent
the certificates representing such Capital Stock, together with undated stock
powers executed and delivered in blank by a duly authorized officer of the
Company or such Subsidiary, as the case may be, and (iii) cause such new
Subsidiary (A) to become a party to the Subsidiary Guarantee and the
Subsidiary Security Agreement or such comparable documentation which is in
form and substance reasonably satisfactory to the Administrative Agent, and
(B) to take all actions necessary or advisable to cause the Lien created by
the Subsidiary Security Agreement to be duly perfected to the extent required
by such agreement in accordance with all applicable Requirements of Law,
including, without limitation, the filing of financing statements in such
jurisdictions as may be reasonably requested by the Administrative Agent.
(c) With respect to any Person that is or becomes a Foreign
Subsidiary and that has material assets, promptly upon the request of the
Administrative Agent: (i) execute and deliver to the Administrative Agent a
new pledge agreement or such amendments to the relevant Pledge Agreement as
the Administrative Agent reasonably shall deem necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a Lien on
the Capital Stock of such Subsidiary which is owned by the Company or any of
its Subsidiaries (provided that in no event shall more than 65% of the
Capital Stock of any such Foreign Subsidiary be required to be so pledged),
(ii) deliver to the Administrative Agent any certificates representing such
Capital Stock, together with undated stock powers executed and delivered in
blank by a duly authorized officer of the Company or such Subsidiary, as the
case may be, and take or cause to be taken all such other actions under the
law of the jurisdiction of organization of such Foreign Subsidiary as may be
necessary or advisable to perfect such Lien on such Capital Stock, and if
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described in clauses (i) and (ii)
immediately preceding, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Administrative Agent.
(d) Within 10 days of the Closing Date, the Administrative
Agent shall have received (i) fully executed counterparts of deeds of trust,
leasehold deeds of trust, mortgages,
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leasehold mortgages and similar documents in each case in form and substance
reasonably satisfactory to the Administrative Agent and substantially in the
form of Exhibit M (each a "MORTGAGE" and collectively, the "MORTGAGES")
covering all the Mortgaged Properties, and arrangements reasonably
satisfactory to the Administrative Agent shall be in place to provide that
counterparts of such Mortgages shall be promptly recorded upon execution in
all places to the extent necessary or desirable, in the reasonable judgment
of the Administrative Agent, effectively to create a valid and enforceable
first priority Lien, subject only to Permitted Liens, on each Mortgaged
Property in favor of the Administrative Agent (or such other trustee as may
be required or desired under local law) for the benefit of the Lenders, (ii)
a lender's title insurance policy, paid for by the Company, issued by a
nationally recognized title insurance company, together with such
endorsements, coinsurance and reinsurance as may be reasonably requested by
the Administrative Agent, in form and substance reasonably acceptable to the
Administrative Agent, insuring each Mortgage as a first lien on the relevant
Mortgaged Property and subject only to Liens expressly agreed to by the
Administrative Agent and (iii) such other documents (including without
limitation, current ALTA/ASCM surveys of any parcel of Real Property made in
accordance with ALTA/ASCM standards, including Table A, Items Nos. 1-4 and
6-13) as are reasonably required by the Administrative Agent.
(e) Upon the request of the Administrative Agent, the
Company will, and will cause its Domestic Subsidiaries to, promptly grant to
the Administrative Agent, within 60 days of such request, security interests
and mortgages (an "ADDITIONAL MORTGAGE") in such owned Real Property of the
Company and its Domestic Subsidiaries as are acquired after the Closing Date
by the Company or such Subsidiary and that, together with any improvements
thereon, individually have a value of at least $5,000,000, as additional
security for the obligations of the Credit Parties under any Credit Document
(unless the subject property is already mortgaged to a third party to the
extent permitted by subsection 8.2). Such Mortgages shall be granted
pursuant to documentation reasonably satisfactory in form and substance to
the Administrative Agent and shall constitute valid and enforceable perfected
Liens subject only to Permitted Liens and such other Liens reasonably
acceptable to the Administrative Agent. The Additional Mortgages or
instruments related thereto shall be duly recorded or filed in such manner
and in such places as are required by law to establish, perfect, preserve and
protect the Liens in favor of the Administrative Agent required to be granted
pursuant to the Additional Mortgages and all taxes, fees and other charges
payable in connection therewith shall be paid in full. If requested by the
Administrative Agent or the Required Lenders, the Company shall provide a
lender's title policy with respect to each such Additional Mortgage
conforming to the requirements of subsection 7.9(d).
SECTION 8. NEGATIVE COVENANTS
The Company hereby agrees that it shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly so long as the
Commitments remain in effect or any Loan, Note or L/C Obligation remains
outstanding and unpaid, any amount (unless cash in an amount equal to such
amount has been deposited to a cash collateral account established by the
Administrative Agent) remains available to be drawn under any Letter of Credit
or any other amount is owing to any Lender or the Administrative Agent hereunder
or under any other Credit
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Document (it being understood that each of the permitted exceptions to each
of the covenants in this Section 8 is in addition to, and not overlapping
with, any other of such permitted exceptions except to the extent expressly
provided):
8.1 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) the Indebtedness outstanding on the
Amendment/Restatement Effective Date and reflected on Schedule 8.1(a),
including the refinancing of any such Indebtedness on terms and conditions
taken as a whole no less favorable to the Company and its Subsidiaries or the
Lenders;
(b) Indebtedness consisting of the Loans and in connection
with the Letters of Credit and this Agreement;
(c) Indebtedness (i) of the Company to any Subsidiary, (ii)
of any Domestic Subsidiary to the Company or any other Subsidiary; PROVIDED
that such Indebtedness referred to in this clause (c), if to the Company or
any Domestic Subsidiary, is evidenced by a promissory note or promissory
notes which has or have been pledged to the Administrative Agent on terms and
conditions satisfactory to the Administrative Agent and (iii) of any Foreign
Subsidiary to the Company or any other Subsidiary in an aggregate principal
amount at any time outstanding not to exceed $15,000,000 PLUS the sum of any
amounts dividended or distributed to the Company or any Domestic Subsidiary
by any Foreign Subsidiary, LESS the sum of (A) the amount of any guarantees
of obligations of Foreign Subsidiaries pursuant to subsection 8.3(c)(ii) and
(B) the amount of any investments made in a Foreign Subsidiary pursuant to
subsection 8.6(b)(iii);
(d) Indebtedness of the Company in respect of:
(i) $145,000,000 principal amount of Senior
Subordinated Notes and $170,000,000 principal amount of Senior Discount
Notes, in each case issued on the Closing Date; and
(ii) Subordinated Debt in an aggregate principal
amount not to exceed the sum of (A) $145,000,000 in aggregate principal
amount of Senior Subordinated Notes (or any refinancing thereof permitted
hereunder) and 6% of such amount plus (B) the accreted value of Senior
Discount Notes (or any refinancing thereof permitted hereunder) at the time
of such refinancing and 6% of such value, the proceeds (net of any fees and
expenses in connection therewith) of which shall be applied to prepay,
redeem, retire or repurchase Subordinated Debt.
(e) Indebtedness of the Company and its Subsidiaries for
industrial revenue bonds or other similar governmental and municipal bonds,
for the deferred purchase price of newly acquired property and to finance
equipment of the Company and its Subsidiaries (pursuant to purchase money
mortgages or otherwise and whether owed to the seller or a third party) used
in the ordinary course of business (PROVIDED such financing is entered into
within 180 days of the acquisition of such property) of the Company and its
Subsidiaries in an amount (based on the remaining balance of the obligations
therefor on the books of the Company and its Subsidiaries) which shall not
exceed $15,000,000 in the aggregate at any one time outstanding and
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Indebtedness of the Company and its Subsidiaries in respect of Financing
Leases to the extent subsections 8.7 and 8.10 would not be contravened;
(f) Indebtedness of the Company and its Domestic
Subsidiaries in an aggregate principal amount at any one time outstanding not
in excess of $15,000,000;
(g) Indebtedness of the Company or any of its Subsidiaries
pursuant to one or more Receivables Facilities PROVIDED that the Company may
not enter into a Receivables Facility unless it has received the written
consent of the Required Lenders;
(h) Indebtedness in respect of letters of credit (other than
Letters of Credit issued hereunder) in an aggregate principal amount equal to
$10,000,000 at any one time outstanding;
(i) (i) Indebtedness assumed in connection with acquisitions
permitted by subsection 8.6(g) (so long as such Indebtedness was not incurred
in anticipation of such acquisitions), (ii) Indebtedness of newly acquired
Subsidiaries acquired in such acquisitions (so long as such Indebtedness was
not incurred in anticipation of such acquisition) and (iii) Indebtedness owed
to the seller in any acquisition permitted by subsection 8.6(g) constituting
part of the purchase price thereof, all of which Indebtedness permitted by
this subsection 8.1(i) shall not exceed in the aggregate at any one time
$20,000,000 outstanding;
(j) Indebtedness in connection with workmen's compensation
obligations and general liability exposure of the Company and its
Subsidiaries;
(k) Additional unsecured subordinated indebtedness of the
Company and its Subsidiaries provided that (i) such Indebtedness shall not
exceed $10,000,000 in aggregate principal amount at any time outstanding plus
any additional principal amount of such Indebtedness issued in lieu of cash
interest on such outstanding Indebtedness or any refinancing thereof, (ii) no
part of the principal amount of such Indebtedness shall have a maturity date
earlier than the one-year anniversary of the Revolving Credit Termination
Date and (ii) the non-default interest rate thereon shall not exceed 12% per
annum; and
(l) Indebtedness of Foreign Subsidiaries in an aggregate
principal amount at any time outstanding not in excess of the equivalent at
the date of each incurrence thereof of $15,000,000.
8.2 LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets, income or profits, whether now
owned or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental
charges not yet delinquent or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the case may
be, in accordance with GAAP;
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(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary course
of business in respect of obligations which are not yet due or which are
bonded or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(c) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, tenders,
trade or government contracts (other than for borrowed money), leases,
licenses, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(e) easements (including, without limitation, reciprocal
easement agreements), rights-of-way, building, zoning and similar
restrictions, utility agreements, covenants, reservations, restrictions,
encroachments, changes, and other similar encumbrances or title defects
incurred, or leases or subleases granted to others, in the ordinary course of
business, which do not in the aggregate materially detract from the aggregate
value of the properties of the Company and its Subsidiaries, taken as a
whole, or in the aggregate materially interfere with or adversely affect in
any material respect the ordinary conduct of the business of the Company and
its Subsidiaries on the properties subject thereto, taken as a whole;
(f) Liens in favor of the Administrative Agent and the
Lenders pursuant to the Credit Documents, including Liens pursuant to the
Credit Documents in respect of Interest Rate Agreements, and bankers' liens
arising by operation of law;
(g) Liens on property of the Company or any of its
Subsidiaries created solely for the purpose of securing Indebtedness
permitted by subsection 8.1(e) representing or incurred to finance, refinance
or refund the purchase price of property, 8.1(i) (so long as in the case of
clauses (i) and (ii) thereof such Lien was not incurred in anticipation of
the related acquisition), or 8.1(l) PROVIDED that no such Lien incurred in
connection with Indebtedness pursuant to subsection 8.1(e) and 8.1(i) shall
extend to or cover other property of the Company or such Subsidiary other
than the respective property so acquired, and the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such property;
(h) Liens existing on the Amendment/Restatement Effective
Date and described in subsection 5.13 or Schedule 8.2(h) (including the
extension of any Liens listed on such Schedule relating to any Indebtedness
permitted under subsection 8.1(a) in connection with any refinancing of such
Indebtedness permitted by such subsection, PROVIDED that no such Lien shall
extend to or cover other property of the Company or the respective Subsidiary
other than the respective property so encumbered and the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the original
principal amount of the Indebtedness so secured;
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(i) Liens on documents of title and the property covered
thereby securing Indebtedness in respect of the Commercial L/Cs;
(j) (i) mortgages, liens, security interests, restrictions,
encumbrances or any other matter of record that have been placed by any
developer, landlord or other third party on property over which the Company
or any Subsidiary of the Company has easement rights or on any Leased
Property and subordination or similar agreements relating thereto and (ii)
any condemnation or eminent domain proceedings affecting any real property;
(k) Liens in connection with workmen's compensation
obligations and general liability exposure of the Company and its
Subsidiaries;
(l) Liens on goods (and proceeds thereof) securing
reimbursement obligations in respect of commercial letters of credit issued
in accordance with the terms of this Agreement; and
(m) Liens on any Receivables Facility Assets to secure the
repayment of any Indebtedness incurred under any Receivables Facility
permitted by subsection 8.1(g).
8.3 LIMITATION ON CONTINGENT OBLIGATIONS. Create, incur, assume or
suffer to exist any Contingent Obligation except:
(a) the Guarantees;
(b) other guarantees by the Company incurred in the ordinary
course of business for an aggregate amount not to exceed $3,000,000 at any
one time;
(c) guarantees by the Company or any Domestic Subsidiary (i)
of obligations of Domestic Subsidiaries of the Company or the Company and
(ii) of obligations of Foreign Subsidiaries of the Company in an aggregate
principal amount not to exceed $15,000,000 plus the sum of any amounts
dividended or distributed to the Company or any Domestic Subsidiary by such
Foreign Subsidiaries, less any amounts outstanding in accordance with
subsections 8.1(c)(iii) and 8.6(b)(iii).
(d) Contingent Obligations existing on the Closing Date and
described in Schedule 8.3(d) and Contingent Obligations relating to any
Indebtedness permitted under subsection 8.1(a);
(e) guarantees of obligations to third parties in connection
with relocation of employees of the Company or any of its Subsidiaries, in an
amount which, together with all loans and advances made pursuant to
subsection 8.6(f), shall not exceed $3,000,000 at any time outstanding;
(f) Contingent Obligations in connection with workmen's
compensation obligations and general liability exposure of the Company and
its Subsidiaries; and
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(g) subordinated guarantees in respect of the Subordinated
Debt issued by Subsidiaries of the Company which have also issued Guarantees,
PROVIDED that such subordinated guarantees are subordinated to the Guarantees
on substantially the same basis as the Subordinated Debt is subordinated to
the Loans.
8.4 PROHIBITION OF FUNDAMENTAL CHANGES. Enter into any merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or engage in any type of business
other than of the same general type now conducted by it, except (a) for the
transactions otherwise permitted pursuant to clause (b) of subsection 8.5,
(b) any Subsidiary of the Company may be merged with and into the Company or
a wholly-owned Domestic Subsidiary of the Company, (c) Subsidiaries with a
net book value not greater than $100,000 may be dissolved and (d) any
Subsidiary may otherwise be dissolved; PROVIDED that upon dissolution, the
assets of such Subsidiary are transferred to the Company or a wholly-owned
Domestic Subsidiary of the Company on the terms and subject to the conditions
set forth in subsection 8.5(b).
8.5 PROHIBITION ON SALE OF ASSETS. Convey, sell, lease (other than
a sublease of real property), assign, transfer or otherwise dispose of
(including through a transaction of merger or consolidation of any Subsidiary
of the Company) any of its property, business or assets (including, without
limitation, other payments and receivables but excluding leasehold
interests), whether now owned or hereafter acquired, except:
(a) for sales or other dispositions of inventory in the
ordinary course of business;
(b) that the Company or any Subsidiary of the Company may
sell, lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to, and any Subsidiary of the Company may
merge with and into, the Company or a wholly-owned Domestic Subsidiary of the
Company, and the Company or any Subsidiary of the Company may sell or
otherwise dispose of, or part with control of any or all of, the Capital
Stock of any Subsidiary to a wholly-owned Domestic Subsidiary of the Company
or the Company, PROVIDED that no such transaction may be effected if it would
result in the transfer of any assets of, or any Capital Stock of, the Company
or a Subsidiary to, or the merger with and into, another Subsidiary all of
the Capital Stock of which owned by the Company or any Subsidiary has not
been pledged to the Administrative Agent and which has not guaranteed the
obligations of the Company, for the benefit of the Lenders, under the Notes
and this Agreement, and granted liens or security interests in favor of the
Administrative Agent, for the benefit of the Lenders, on substantially all of
its assets to secure such guarantee, pursuant to a guarantee, security
agreement and other documentation reasonably satisfactory to the
Administrative Agent;
(c) leases of Fee Properties and other real property owned
in fee;
(d) any condemnation or eminent domain proceedings affecting
any real property, PROVIDED that the parties hereto agree that the net
proceeds received in connection with such proceeding shall be deemed not to
constitute "Net Proceeds" if such net proceeds are reinvested in new or
existing properties within eighteen months;
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(e) substantially like-kind exchanges of real property;
PROVIDED that only any cash received by the Company or any Subsidiary of the
Company in connection with such an exchange (net of all costs and expenses
incurred in connection with such transaction or with the commencement of
operation of real property received in such exchange) shall be deemed to be
Net Proceeds and shall be applied as provided for in subsection 4.4(b)(ii);
(f) for the sale or other disposition of any property that,
in the reasonable judgment of the Company has become uneconomic, obsolete or
worn out, and which is sold or disposed of in the ordinary course of business;
(g) for the sale or other disposition of any property the
aggregate amount of the net proceeds received in respect of which shall not
exceed $5,000,000 during the term of this Agreement;
(h) the sale, encumbrance or other disposition at any time
or from time to time of Receivables Facility Assets pursuant to a Receivables
Facility approved as contemplated by subsection 8.1(g);
(i) any sale or disposition of any interest in real
property; PROVIDED that (i) the net proceeds of any such sale shall
constitute Net Proceeds only to the extent such net proceeds are not
reinvested in real property within twelve months from the date of such sale,
(ii) if the real property so sold constituted Collateral under the Security
Documents then any real property purchased with the net proceeds thereof
shall be mortgaged for the benefit of the Lenders if required by subsection
7.9(e) and in accordance therewith and (iii) the aggregate outstanding amount
of net proceeds held by the Company at any time for reinvestment in respect
of any real property sold pursuant to this paragraph shall not exceed
$10,000,000; and
(j) the FMI Sale.
8.6 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures or other securities of, or make any other
investment in (including, without limitation, any acquisition of all or any
substantial portion of the assets, and any acquisition of a business or a
product line, of other companies, other than the acquisition of inventory in
the ordinary course of business), any Person (except to the extent permitted
by Section 8.7), except:
(a) the Company may make loans or advances to any Domestic
Subsidiary, and any Subsidiary may make loans or advances to the Company or
any Domestic Subsidiary, to the extent in each case the Indebtedness created
thereby is permitted by subsection 8.1(c);
(b) (i) any Subsidiary may make investments in the Company
(by way of capital contribution or otherwise), (ii) the Company and any
Subsidiary may make investments in, or create, any wholly-owned Domestic
Subsidiary (by way of capital contribution or otherwise) or make investments
permitted by subsection 8.5(b), PROVIDED that, in any such case, the
requirements of subsection 7.9 are satisfied and (iii) the Company and any
Subsidiary may make investments in, or create, any wholly-owned Foreign
Subsidiary (by way of capital
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contribution or otherwise), PROVIDED that (x) the requirements of subsection
7.9 are satisfied and (y) the aggregate amount of all investments in such
Foreign Subsidiaries shall not exceed (I) $15,000,000 (plus the sum of any
amount dividended or distributed by such Foreign Subsidiaries to the Company
or any Domestic Subsidiary), MINUS (II) the amount of any Indebtedness of any
Foreign Subsidiary at any such time outstanding in accordance with subsection
8.1(c)(iii) or 8.3 (c)(ii);
(c) the Company and its Subsidiaries may invest in, acquire
and hold Cash Equivalents and Investment Grade Securities;
(d) the Company or any of its Subsidiaries may make payroll
advances in the ordinary course of business;
(e) the Company or any of its Subsidiaries may acquire and
hold receivables owing to it, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms (PROVIDED that nothing in this clause (e) shall prevent the Company or
any Subsidiary from offering such concessionary trade terms, or from
receiving such investments, in connection with the bankruptcy or
reorganization of their respective suppliers or customers or the settlement
of disputes with such customers or suppliers arising in the ordinary course
of business, as management deems reasonable in the circumstances);
(f) the Company or any of its Subsidiaries may make travel
and entertainment advances and relocation and other loans to officers and
employees of the Company or any such Subsidiary, PROVIDED that the aggregate
principal amount of all such loans and advances outstanding at any one time,
together with the guarantees of such loans and advances made pursuant to
subsection 8.3(e), shall not exceed $3,000,000 at any one time outstanding;
(g) the Company and its Subsidiaries may make expenditures
to acquire all or a portion of the Capital Stock or assets of any Person
engaged primarily in one or more businesses in which the Company and its
Subsidiaries are engaged or directly related thereto or in the building
products industry generally, PROVIDED that, after giving PRO FORMA effect to
any such acquisition and the financing thereof, (i) the amount of the
expenditures in connection with such acquisition does not exceed $35,000,000
without the prior written consent of the Required Lenders, (ii) the
provisions of subsection 7.9 are satisfied, (iii) either (A) the ratio of
Consolidated Funded Indebtedness (excluding Indebtedness in respect of the
Senior Discount Notes permitted hereunder) as of the day of such acquisition
to Consolidated EBITDA for the period of four fiscal quarters ending as at
the last day of the most recently ended fiscal quarter is less than 4.00 to
1.00; PROVIDED that the last four fiscal quarters of Consolidated EBITDA (as
may be adjusted for identified post acquisition cost savings reasonably
agreed to by the Company and the Administrative Agent) of each acquired
company, business or group of assets during the testing period shall be added
for purposes of calculating such ratio or (B) the amount of expenditures in
connection with such acquisition does not exceed $5,000,000 and the Company
elects (by prior written notice to the Administrative Agent) to treat such
expenditures as "Capital Expenditures" for purposes of this Agreement,
including but not limited to subsection
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8.7, and (iv) no Default or Event of Default has occurred and is continuing
or would result therefrom;
(h) the Company or any of its Subsidiaries may make
investments in, or loans or investments to, joint ventures or other Persons
engaged primarily in one or more businesses in which the Company and its
Subsidiaries are engaged or directly related thereto or in the building
products industry generally, in an aggregate principal amount not to exceed
$10,000,000 (plus the sum of any amounts dividended or distributed to the
Company or any Domestic Subsidiary of the Company by such joint venture or
other Person); PROVIDED that at the time of and after giving effect thereto
no Default or Event of Default shall have occurred and be continuing or would
result therefrom;
(i) the Company may use amounts equal to any Net Proceeds
(net of all related payments, including bonuses) from the FMI Sale remaining
after (x) prepayment in full of the Term Loans (as defined in the Existing
Credit Agreement) and (y) the termination of any Receivables Facility
existing on the Amendment/Restatement Effective Date to repurchase Senior
Discount Notes or Senior Subordinated Notes; and
(j) if no Revolving Credit Loans, Swing Line Loans or L/C
Obligations are outstanding, the Company may apply any Excess Cash Flow
remaining after the application thereof pursuant to subsection 4.4(b)(iii) to
the repurchase of Senior Discount Notes or Senior Subordinated Notes.
For the purposes of this subsection 8.6, the payment by the Company of
expenses and operating costs of any Domestic Subsidiary incurred in the
ordinary course of its business shall not be considered to be a loan, advance
or other investment of the Company in such Domestic Subsidiary and shall be
permitted under this Agreement.
8.7 CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditures, except that the Company and its Subsidiaries may make or commit
to make Capital Expenditures not exceeding the amount set forth below (the
"BASE AMOUNT") for each of the fiscal years or periods of the Company (or
other period) set forth below:
<TABLE>
<CAPTION>
Fiscal Year or Period Base Amount
---------------------------- ------------------
<S> <C>
1999 $30,000,000
2000 $20,000,000
2001 $21,000,000
2002 $22,000,000
January - June 2003 $12,000,000
</TABLE>
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PROVIDED that (i) for any period set forth above, the Base Amount set forth
above may be increased by a maximum of 50% of the Base Amount for any such
period by carrying over to any such period any portion of the Base Amount (as
increased) not spent in the immediately preceding period and (ii) for each
period of the Company, the Base Amount set forth above shall be increased in
the event any Person or assets of such Person (an "ACQUIRED PERSON") is
acquired as permitted herein by an amount equal to 110% of the amount of
capital expenditures (determined in accordance with GAAP) of such Acquired
Person for the twelve months prior to the date it was acquired ("ACQUIRED
CAPITAL EXPENDITURES"); PROVIDED that, with respect to the fiscal year in
which such Person becomes an Acquired Person, the Base Amount shall be
increased by the product of (A) the Acquired Capital Expenditures of such
Acquired Person times (B) a fraction, the numerator of which is the number of
days remaining in the fiscal year of the Company in which such Acquired
Person was acquired and the denominator of which is 365; and PROVIDED,
FURTHER, that, notwithstanding anything to the contrary herein, additional
Capital Expenditures may be made with net proceeds received in property sales
or dispositions under subsection 8.5(g).
8.8 INTEREST RATE AGREEMENTS. Enter into, create, incur, assume or
suffer to exist any Interest Rate Agreements or obligations in respect
thereof except in the ordinary course of business for non-speculative
purposes.
8.9 DEBT TO EBITDA. At the last day of any fiscal quarter, permit
the ratio (the "LEVERAGE RATIO") of Consolidated Funded Indebtedness as of
such day to Consolidated EBITDA for the period of four fiscal quarters ending
on such day to be greater than 4.00 to 1.00; PROVIDED that, with respect to
any acquisition permitted by subsection 8.6(g), the last four fiscal quarters
of Consolidated EBITDA (as may be adjusted for post acquisition cost savings
reasonably agreed to by the Company and the Administrative Agent) of the
acquired company shall be added for the purposes of calculating the ratio.
8.10 INTEREST COVERAGE. At the last day of any fiscal quarter,
permit the Interest Coverage Ratio to be less than 2.50 to 1.00.
8.11 LIMITATION ON DIVIDENDS. Declare any dividends on any shares
of any class of Capital Stock, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement or other acquisition of any shares of any class of
Capital Stock, or any warrants or options to purchase such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Company or any of its Subsidiaries; except that:
(a) Subsidiaries may pay dividends to the Company or to
Domestic Subsidiaries which are directly or indirectly wholly-owned by the
Company;
(b) the Company may pay or make dividends or distributions
to any holder of its Capital Stock in the form of additional shares of
Capital Stock of the same class and type; and
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(c) the Company may repurchase Capital Stock of the Company
owned by former, present or future employees of the Company or its
Subsidiaries or their assigns, estates and heirs, provided that the aggregate
amount expended by the Company pursuant to this clause (c) shall not in the
aggregate exceed (i) $2,500,000 in any fiscal year or (ii) $7,500,000 during
the term of this Agreement, plus any amounts contributed to the Company as a
result of resales of such repurchased shares of Capital Stock.
Notwithstanding anything to the contrary in this Agreement, so long as no
Default or Event of Default has occurred and is continuing, the Company may
repurchase up to 40,000 shares (cumulative from September 11, 1997 (the date
of Consent No. 1 under the Existing Credit Agreement)) of Class A common
stock of the Company at a purchase price of $17.75 per share (the
"Repurchased Stock") and in connection therewith pay any reasonable
transaction costs related to such repurchase. The Company, at its election,
may cancel the Repurchased Stock or hold the Repurchased Stock in its
treasury.
8.12 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate except for
transactions which are otherwise permitted under this Agreement and which are
in the ordinary course of the Company's or a Subsidiary's business and which
are upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than it would obtain in a hypothetical comparable arm's length
transaction with a Person not an Affiliate, PROVIDED that nothing in this
subsection 8.12 shall prohibit the Company or its Subsidiaries from engaging
in the following transactions: (x) the performance of the Company's or any
Subsidiary's obligations under any employment contract, collective bargaining
agreement, employee benefit plan, related trust agreement or any other
similar arrangement heretofore or hereafter entered into in the ordinary
course of business, (y) the payment of compensation to employees, officers,
directors or consultants in the ordinary course of business, or (z) the
maintenance of benefit programs or arrangements for employees, officers or
directors, including, without limitation, vacation plans, health and life
insurance plans, deferred compensation plans, and retirement or savings plans
and similar plans, in each case, in the ordinary course of business.
8.13 PREPAYMENTS AND AMENDMENTS OF SUBORDINATED DEBT. (a)
Optionally prepay, retire, redeem, purchase, defease or exchange, or make any
mandatory prepayment, retirement, redemption, purchase or defeasance of any
Subordinated Debt (other than (x) any redemption or purchase of Senior
Subordinated Notes or Senior Discount Notes (1) with proceeds of Subordinated
Debt as permitted by subsection 8.1(d) or (2) as contemplated by subsection
8.6(i) or 8.6(j), (y) any refinancing of the Subordinated Debt contemplated
in the definition thereof or (z) any redemption or purchase of Subordinated
Debt with the proceeds of the issuance of Capital Stock of the Company) or
pay any interest on Subordinated Debt in cash if such interest may be paid by
the issuance of additional Subordinated Debt or (b) waive, amend, supplement,
modify, terminate or release the provisions of any Subordinated Debt, to the
extent that any such waiver, amendment, supplement, modification, termination
or release would be materially adverse to the Lenders.
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8.14 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year
of the Company to end on a day other than December 31 in any calendar year.
8.15 LIMITATION ON LINES OF BUSINESS. Enter into any business,
either directly or through any Subsidiary, except for those businesses in
which the Company or any Subsidiary is engaged on the date of this Agreement
(or which are directly related thereto or those related generally to the
building products industry).
SECTION 9. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
events:
(a) The Company shall fail to (i) pay any principal of any
Loan or Note when due in accordance with the terms hereof or thereof or to
reimburse the Issuing Lender in accordance with subsection 3.8 or (ii) pay
any interest on any Loan or Note or any other amount payable hereunder within
five days after any such interest or other amount becomes due in accordance
with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by
any Credit Party in any Credit Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) The Company shall default in the observance or
performance of any agreement contained in subsection 7.7(a) or 7.9 or Section
8 of this Agreement or the Company shall default in the observance or
performance of any agreement contained in subsections 5(a), (h) through (k)
and (o) of the Company Security Agreement or subsections 5(a), (b) and (c)
of the Company Pledge Agreement or any Subsidiary shall default in the
observance or performance of any agreement contained in subsections (a),(h)
through (k) and (o) of the Subsidiary Security Agreement, subsection 10 of
the Subsidiary Guarantee or subsections 5(a), (b) and (c) of the Subsidiary
Pledge Agreement or Section 5, 6 or 7 of any Mortgage; or
(d) Any Credit Party shall default in the observance or
performance of any other agreement contained in any Credit Document and such
default shall continue unremedied for a period of 30 days; or
(e) The Company or any of its Subsdiiaries (other than a
Receivables SPV) shall (i) default in any payment of principal of or interest
on or other amounts in respect of any Indebtedness (other than the Loans, the
L/C Obligations and any inter-company debt) or Interest Rate Agreement or in
the payment of any Contingent Obligation, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness,
Interest Rate Agreement or Contingent Obligation was created; or (ii) default
in the observance or performance of any other agreement or condition relating
to any such Indebtedness, Interest Rate Agreement or Contingent Obligation or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of
such Contingent Obligation (or a trustee or agent
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on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity, any applicable grace period having expired, or
such Contingent Obligation to become payable, any applicable grace period
having expired; in each case, PROVIDED that the aggregate principal amount of
all such Indebtedness, Interest Rate Agreements and Contingent Obligations
under which a default exists or which would then become due or payable equals
or exceeds $7,500,000; or
(f) (i) The Company or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Company or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against the Company or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against the Company or any of its Subsidiaries
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv) the
Company or any of its Subsidiaries shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) the Company or any
of its Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of
the Company or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA, (v) the Company or any Commonly Controlled
Entity shall, or in the reasonable opinion of the Required Lenders is likely
to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event
or condition shall occur or exist with respect to a Plan, and such event or
condition, together with all other such events or conditions, relating to a
Plan, if any, would be reasonably likely to subject the Company or any
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of its Subsidiaries to any tax, penalty or other liabilities in the aggregate
resulting in a material adverse effect to the Company and its Subsidiaries
taken as a whole; or
(h) One or more judgments or decrees shall be entered
against the Company or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $7,500,000 or more and
all such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within the time required by the terms of such
judgment; or
(i) Any Credit Document shall cease, for any reason, to be
in full force and effect or any Credit Party or any of its Subsidiaries shall
so assert in writing, or any Security Document shall cease to be effective to
grant a perfected Lien on the collateral described therein with the priority
purported to be created thereby (other than as a result of any action or
inaction on the part of the Administrative Agent or the Lenders), subject to
such exceptions as may be permitted therein or herein, and in the case of any
Security Agreement, such condition shall continue unremedied for 30 days
after notice thereof to the Company by the Administrative Agent or any
Lender; or
(j) There shall have occurred a Change of Control; or
(k) The subordination provisions of any document governing
any Subordinated Debt shall cease, for any reason, to be valid or any Credit
Party or any of its Subsidiaries shall so assert in writing;
then, and in any such event, (a) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to the
Company, automatically (i) the Commitments shall immediately terminate and
the Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the Notes shall immediately become due and
payable, and (ii) all obligations of the Company in respect of the Letters of
Credit, although contingent and unmatured, shall become immediately due and
payable and the Issuing Lender's obligations to issue the Letters of Credit
shall immediately terminate and (b) if such event is any other Event of
Default, so long as any such Event of Default shall be continuing, either or
both of the following actions may be taken: (i) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Company,
declare the Commitments and the Issuing Lender's obligations to issue the
Letters of Credit to be terminated forthwith, whereupon the Commitments and
such obligations shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of
the Required Lenders, the Administrative Agent shall, by notice of default to
the Company, (A) declare all or a portion of the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement
and the Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable, and (B) declare all or a portion of the
obligations of the Company in respect of the Letters of Credit, although
contingent and unmatured, to be due and payable forthwith, whereupon the same
shall immediately become due and payable and/or demand that the Company
discharge any or all of the obligations supported by the Letters of Credit by
paying or
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prepaying any amount due or to become due in respect of such obligations.
All payments under his Section 9 on account of undrawn Letters of Credit
shall be made by the Company directly to a cash collateral account
established by the Administrative Agent for such purpose for application to
the Company's reimbursement obligations under subsection 3.8 as drafts are
presented under the Letters of Credit, with the balance, if any, to be
applied to the Company's obligations under this Agreement and the Notes as
the Administrative Agent shall determine with the approval of the Required
Lenders. Except as expressly provided above in this Section 9, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 10. THE ADMINISTRATIVE AGENT; THE ISSUING LENDER
10.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints Chase as the Administrative Agent and Bankers Trust Company as the
Documentation Agent under this Agreement and irrevocably authorizes Chase as
Administrative Agent and Bankers Trust Company as Documentation Agent for
such Lender to take such action on its behalf under the provisions of the
Credit Documents and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent or the Documentation Agent by
the terms of the Credit Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent and the Documentation
Agent shall not have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Credit Documents or otherwise exist
against the Administrative Agent or the Documentation Agent.
10.2 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement and each of the other Credit Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in subsection 10.3.
10.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with the Credit Documents
(except for its or such Person's own gross negligence or willful misconduct),
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in the Credit Documents or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Administrative Agent under or in connection with, the Credit
Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Credit Documents or for any failure of
any Credit Party to perform its obligations thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, any Credit Document, or to inspect the
properties, books or records of any Credit Party.
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10.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, entries maintained in the Register, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex
or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take
any action under any Credit Document unless it shall first receive such
advice or concurrence of the Required Lenders (or, where a higher percentage
of the Lenders is expressly required hereunder, such Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under any Credit Document in accordance with a request of the
Required Lenders (unless a higher percentage of Lenders is expressly
required), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Notes.
10.5 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received written
notice from a Lender or the Company or any other Credit Party referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative
Agent receives such a notice, the Administrative Agent shall promptly give
notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; PROVIDED that unless and until
the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
10.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each
Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the
affairs of the Credit Parties, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Company and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently
and without reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to
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make its own credit analysis, appraisals and decisions in taking or not
taking action under the Credit Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company and its
Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Credit Parties which may come into the possession of
the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
10.7 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Credit Parties and without limiting the obligation of the Credit Parties
to do so), ratably according to the respective amounts of their respective
Commitments (or, to the extent such Commitments have been terminated,
according to the respective outstanding principal amounts of the Loans and
the L/C Obligations and the respective obligations, whether as Issuing Lender
or a Participating Lender, under the Letter of Credit), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including without limitation at any time following the
payment of the Loans) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Credit
Documents or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing;
PROVIDED that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The
agreements in this subsection 10.7 shall survive the repayment of the Loans
and all other amounts payable hereunder.
10.8 THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Company and its
Subsidiaries as though the Administrative Agent were not the Administrative
Agent hereunder. With respect to its Loans made or renewed by it and any
Note issued to it, the Administrative Agent shall have the same rights and
powers, duties and liabilities under the Credit Documents as any Lender and
may exercise the same as though it were not the Administrative Agent and the
terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
10.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under the Credit
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders which successor agent shall, so long as no
Event of Default has occurred and is continuing, be approved by the Company,
which shall not unreasonably withhold its approval, whereupon such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent, and the term
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"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any
other or further act or deed on the part of such former Administrative Agent
or any of the parties to this Agreement or any holders of the Notes. After
any retiring Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Administrative
Agent under the Credit Documents.
10.10 ISSUING LENDER AS ISSUER OF LETTERS OF CREDIT. Each Lender
which is a holder of a Revolving Credit Commitment (collectively "REVOLVING
CREDIT LENDERS") hereby acknowledges that the provisions of this Section 10
shall apply to the Issuing Lender, in its capacity as issuer of the Letters
of Credit, in the same manner as such provisions are expressly stated to
apply to the Administrative Agent, except that obligations to indemnify the
Issuing Lender shall be ratable among the Revolving Credit Lenders in
accordance with their respective Revolving Credit Commitments (or, if the
Revolving Credit Commitments have been terminated, the outstanding principal
amount of their respective Revolving Credit Loans and L/C Obligations and
their respective participating interests in the outstanding Letters of
Credit).
SECTION 11. MISCELLANEOUS
11.1 AMENDMENTS AND WAIVERS. Except as otherwise expressly set
forth in this Agreement, no Credit Document nor any terms thereof may be
amended, supplemented, waived or modified except in accordance with the
provisions of this subsection 11.1. With the written consent of the Required
Lenders, the Administrative Agent and the respective Credit Parties or their
Subsidiaries may, from time to time, enter into written amendments,
supplements or modifications hereto for the purpose of adding any provisions
to any Credit Document to which they are parties or changing in any manner
the rights of the Lenders or of any such Credit Party or its Subsidiaries
thereunder or waiving, on such terms and conditions as the Administrative
Agent may specify in such instrument, any of the requirements of any such
Credit Document or any Default or Event of Default and its consequences;
PROVIDED that:
(a) no such waiver and no such amendment, supplement or
modification shall release collateral not required or permitted by any Credit
Document to be released and which, in the aggregate with all other collateral
released pursuant to this clause (a) (other than collateral released pursuant
to the proviso to this clause (a)) during the calendar year in which such
proposed release would be effected and the immediately preceding calendar
year, has fair market value on the proposed date of release in excess of 20%
of the fair market value of all collateral (including any Guarantee) on such
date without the written consent of the Supermajority Lenders; PROVIDED that,
notwithstanding the foregoing, this clause (a) shall not be applicable to and
no consent shall be required for (i) releases of collateral in connection
with any Asset Sales permitted by subsection 8.5, (ii) releases of collateral
in accordance with subsection 11.11 or (iii) upon the reincorporation of the
Company or any Subsidiary in a new jurisdiction or the creation of a new
Subsidiary of the Company, any release of collateral in connection with the
transfer of such released collateral to such reincorporated entity or new
Subsidiary in compliance with subsection 8.4, PROVIDED that the
Administrative Agent, in its sole discretion, determines that
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such release and transfer, together with any grant and perfection of a new
Lien therein in favor of the Administrative Agent, will cause no material
impairment of the value of the collateral taken as a whole, after giving
effect to such release and transfer;
(b) no such waiver and no such amendment, supplement or
modification shall extend the final maturity date of any Note or the
scheduled payment date of any installment of any Loan, or reduce the rate or
extend the time of payment of interest thereon, or change the method of
calculating interest thereon, or reduce or extend the time of payment of any
fee payable to the Lenders hereunder, or reduce the principal amount thereof,
or change the amount of any Lender's Commitment or Revolving Credit
Commitment Percentage, or amend, modify or waive any provision of subsection
4.9(b) or this subsection 11.1 or reduce the percentage specified in the
definition of Required Lenders or reduce the percentage specified in the
definition of Supermajority Lenders or consent to the assignment or transfer
by any Credit Party of any of its rights and obligations under any Credit
Document, in each case, without the prior written consent of each Lender
directly affected thereby; and
(c) no such waiver and no such amendment, supplement or
modification affecting the then Administrative Agent or Issuing Lender shall
amend, modify or waive any provision of Section 10 without the written
consent of such Administrative Agent and Issuing Lender.
any such waiver and any such amendment, supplement or modification described
in this subsection 11.1 shall apply equally to each of the Lenders and shall
be binding upon each Credit Party and its Subsidiaries, the Lenders, the
Administrative Agent and the Issuing Lender and all future holders of the
Notes and the Loans. Any extension of a Letter of Credit by the Issuing
Lender shall be treated hereunder as a new Letter of Credit. In the case of
any waiver, the Credit Parties, the Lenders, the Administrative Agent and
Issuing Lender shall be restored to their former position and rights
hereunder and under the outstanding Notes, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
11.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or telex, if one is listed), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when
delivered by hand, or three Business Days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when sent, confirmation
of receipt received, or, in the case of telex notice, when sent, answerback
received, addressed as follows in the case of the Company, the Administrative
Agent, and as set forth in Schedule I in the case of any Lender, or to such
other address as may be hereafter notified by the respective parties hereto
and any future holders of the Notes:
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The Company: Falcon Building Products, Inc.
233 South Wacker Drive, Suite 3500
Chicago, Illinois 60606
Attention: Gus J. Athas and
Anthony Navitsky
Telecopy: (312) 906-9704
With a copy to: Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
The Administrative Agent
and Swing Line Lender: The Chase Manhattan Bank Agent Bank Services
1 Chase Manhattan Plaza, 8th floor
New York, New York 10081
Attention: Janet M. Belden
Telecopy: (212) 622-0122
With a copy to: Chase Securities Inc.
10 South LaSalle Street
23rd Floor
Chicago, Illinois 60603
Attention: Jon R. Hinard
Telecopy: (312) 443-1964
PROVIDED that any notice, request or demand to or upon the Administrative
Agent or the Lenders pursuant to subsections 3.4, 3.5, 4.1, 4.2, 4.3 and 4.4
shall not be effective until received and, PROVIDED, FURTHER, that the
failure to provide the copies of notices to the Company provided for in this
subsection 11.2 shall not result in any liability to the Administrative Agent.
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
11.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement, the Letters of
Credit and the Notes.
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11.5 PAYMENT OF EXPENSES AND TAXES. The Company agrees (a) to pay
or reimburse the Administrative Agent, the Documentation Agent and the
Arranger for all their reasonable out-of-pocket costs and expenses incurred
in connection with the development, negotiation, preparation and execution of
the Credit Documents and any other documents prepared in connection herewith,
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of one
counsel to the Administrative Agent, the Documentation Agent and the
Arranger, (b) to pay or reimburse all of the reasonable expenses, including
without limitation, reasonable fees and expenses of counsel, incurred by the
Administrative Agent in connection with the administration of the facilities
provided for herein or in connection with any amendments, waivers, work-outs
or restructurings in respect thereof, (c) to pay or reimburse the
Administrative Agent, the Documentation Agent, the Arranger, the Issuing
Lender and each Lender for all their costs and expenses incurred in
connection with, and to pay, indemnify, and hold the Administrative Agent,
the Documentation Agent, the Arranger, the Issuing Bank and each Lender
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever arising out of or in
connection with, the enforcement or preservation of any rights under any
Credit Document and any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Administrative Agent, the
Arranger and each Lender incurred in connection with the foregoing and in
connection with advising the Administrative Agent with respect to its rights
and responsibilities under this Agreement and the documentation relating
thereto, (d) to pay, indemnify, and to hold the Administrative Agent, the
Documentation Agent, the Arranger and each Lender harmless from any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other similar taxes
(other than withholding taxes), if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any Credit
Document and any such other documents, and (e) to pay, indemnify, and hold
the Administrative Agent, the Documentation Agent, the Arranger, the Issuing
Bank and each Lender and their respective Affiliates, officers, directors and
trustees harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature hatsoever (including, without
limitation, reasonable fees and disbursements of counsel) which may be
incurred by or asserted against the Administrative Agent, the Documentation
Agent, the Arranger, the Issuing Bank or the Lenders or such Affiliates,
officers, directors or trustees (x) arising out of or in connection with any
investigation, litigation or proceeding related to this Agreement, the other
Credit Documents, the proceeds of the Loans or the Subordinated Debt and the
transactions contemplated by or in respect of such use of proceeds, or any of
the other transactions contemplated hereby, whether or not the Administrative
Agent, the Documentation Agent, the Arranger, the Issuing Bank or any of the
Lenders or such Affiliates, officers, directors or trustees is a party
thereto, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the Company, any of its Subsidiaries or any of the facilities
and properties owned, leased or operated by the Company or any of its
Subsidiaries, or (y) without limiting the generality of the foregoing, by
reason of or in connection with the execution and delivery or transfer of, or
payment or failure to make payments under,
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Letters of Credit (it being agreed that nothing in this subsection 11.5(e)(y)
is intended to limit the Company's obligations pursuant to subsection 3.8)
(all the foregoing, collectively, the "INDEMNIFIED LIABILITIES"), PROVIDED
that the Company shall have no obligation hereunder with respect to
indemnified liabilities of the Administrative Agent, the Documentation Agent,
the Arranger, the Issuing Bank or any Lender or any of their respective
Affiliates, officers, directors and trustees arising from (i) the gross
negligence or willful misconduct of the person seeking indemnification or
(ii) legal proceedings commenced against the Administrative Agent, the
Documentation Agent, the Arranger, the Issuing Bank or Lender by any security
holder or creditor thereof arising out of and based upon rights afforded any
such security holder or creditor solely in its capacity as such or (iii)
legal proceedings commenced against the Administrative Agent, the
Documentation Agent, the Arranger, the Issuing Bank or any such Lender by any
Transferee (as defined in subsection 11.6). Without limiting the foregoing,
and to the extent permitted by applicable law, the Company agrees not to
assert, and hereby waives (and shall cause the Subsidiaries not to assert and
to waive) all rights for contribution or any other rights of recovery with
respect to all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, under or related to Environmental Laws, that any of them might
have by statute or otherwise against the Administrative Agent, the
Documentation Agent, the Arranger, the Issuing Lender or any Lender. The
agreements in this subsection 11.5 shall survive repayment of the Loans and
all other amounts payable hereunder.
11.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)
This Agreement shall be binding upon and inure to the benefit of the Company,
the Lenders, the Administrative Agent, the Documentation Agent, the Arranger,
all future holders of the Notes and the Loans, and their respective
successors and assigns, except that the Company may not assign or transfer
any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking or lending business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("PARTICIPANTS")
participating interests in any Loan owing to such Lender, any participating
interest in the Letters of Credit of such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder. In the event of any such sale by a Lender of participating
interests to a Participant, such Lender's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall
remain the holder of any such Note for all purposes under this Agreement and
the Company and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents. The Company
agrees that if amounts outstanding under this Agreement and the Notes are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed
to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement or any Note; PROVIDED that such right of setoff shall be
subject to the obligation of
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such Participant to share with the Lenders, and the Lenders agree to share
with such Participant, as provided in subsection 11.7. The Company also
agrees that each Participant shall be entitled to the benefits of subsections
3.10, 4.11 and 4.12 with respect to its participation in the Letters of
Credit and in the Commitments and the Loans outstanding from time to time as
if it were a Lender; PROVIDED that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred. Each Lender agrees that the
participation agreement pursuant to which any Participant acquires its
participating interest (or any other document) may afford voting rights to
such Participant, or any right to instruct such Lender with respect to voting
hereunder, only with respect to matters requiring the consent of either all
of the Lenders hereunder.
(c) Subject to paragraph (g) of this subsection 11.6, any
Lender may, in the ordinary course of its commercial banking, lending or
investment business and in accordance with applicable law, (i) at any time
and from time to time assign all or any part of its rights and obligations
under this Agreement and the Notes to any Lender or any Affiliate thereof,
PROVIDED that, in the event of a sale of less than all of such rights and
obligations, such assigning Lender after any such sale to any other Lender or
any Affiliate of such Lender shall retain Commitments and/or Loans and/or L/C
Participating Interests aggregating at least $5,000,000 (or such lesser
amount as the Administrative Agent may determine) and (ii) with the consent
of the Company and the Administrative Agent (which in each case shall not be
unreasonably withheld or delayed) at any time and from time to time assign to
one or more additional banks, mutual funds or financial institutions or
entities (each, an "ASSIGNEE"), all or any part of its rights and obligations
under this Agreement and the Notes, pursuant to an Assignment and Acceptance,
executed by such Assignee, such transferor Lender (and, in the case of an
Assignee that is not then a Lender or an Affiliate thereof, by the Company
and the Administrative Agent), and delivered to the Administrative Agent for
its acceptance and recording in the Register (as defined below); PROVIDED
that (A) each such sale pursuant to clause (ii) of this subsection 11.6(c)
shall be in a principal amount of $5,000,000 or more unless the Assigning
Lender is transferring all of its rights and obligations and (B) in the event
of a sale of less than all of such rights and obligations, such Lender after
any such sale shall retain Commitments and/or Loans and/or L/C Participating
Interests aggregating at least $5,000,000 (or such lesser amount as the
Administrative Agent and the Company may determine). Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (y) the assigning
Lender thereunder shall, to the extent of the interest transferred, as
reflected in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of a transferor Lender's rights and
obligations under this Agreement, such transferor Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of the
indemnification provisions set forth in subsection 11.5).
(d) The Administrative Agent, which for purposes of this
subsection 11.6(d) only shall be deemed to be the agent of the Company, shall
maintain at the address of the
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Administrative Agent referred to in subsection 11.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "REGISTER") for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amounts of the Loans owing to, each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Company, the Administrative Agent and the Lenders shall treat
each Person whose name is recorded in the Register as the owner of a Loan or
other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Credit Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder shall be
effective only upon appropriate entries with respect thereto being made in
the Register. The Register shall be available for inspection by the Company
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case of an
Assignee that is not then a Lender or an Affiliate thereof, by the Company
and the Administrative Agent), together with payment to the Administrative
Agent of a registration and processing fee of $4,000 if the Assignee is not a
Lender prior to the execution of such supplement and $1,000 otherwise, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Company. On or prior to
such effective date, the Company at its own expense, shall execute and
deliver to the Administrative Agent (in exchange for any or all of the
Revolving Credit Notes of the assigning Lender, if any) new Revolving Credit
Notes to the order of such Assignee (if requested) in an amount equal to the
Revolving Credit Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment hereunder,
new Revolving Credit Notes to the order of the assigning Lender in an amount
equal to the Commitment retained by it hereunder (if requested). Such new
Notes shall be dated the Closing Date and shall otherwise be in the form of
the Notes replaced thereby.
(f) The Administrative Agent, the Documentation Agent, the
Arranger and the Lenders agree that they will use reasonable efforts to
protect the confidentiality of any confidential information concerning the
Company and its Subsidiaries and Affiliates. Notwithstanding the foregoing,
the Company authorizes each Lender to disclose to any Participant or Assignee
(each, a "TRANSFEREE") and any prospective Transferee any and all information
in such Lender's possession concerning the Company and its Subsidiaries which
has been delivered to such Lender by or on behalf of the Company pursuant to
this Agreement or which has been delivered to such Lender by or on behalf of
the Company in connection with such Lender's credit evaluation of the Company
and its Subsidiaries prior to becoming a party to this Agreement; PROVIDED
that each Lender shall cause its respective prospective Transferees to agree
in writing to protect the confidentiality of any confidential information
concerning the Company and its Subsidiaries and Affiliates.
(g) If, pursuant to this subsection 11.6, any interest in
this Agreement or any Note is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United States or
any State thereof, the transferor Lender shall cause such Transferee,
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concurrently with the effectiveness of such transfer either (1) in the case
of a Transferee that is a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, (i) to represent to the transferor Lender (for the benefit of
the transferor Lender, the Administrative Agent and the Company) that under
applicable law and treaties no taxes will be required to be withheld by the
Administrative Agent, the Company or the transferor Lender with respect to
any payments to be made to such Transferee in respect of the Loans or L/C
Participating Interests, (ii) to furnish to the transferor Lender (and, in
the case of any Transferee registered in the Register, the Administrative
Agent and the Company) either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit of the
transferor Lender, the Administrative Agent and the Company) to the extent
permitted by then-current law to provide the transferor Lender (and, in the
case of any Transferee registered in the Register, the Administrative Agent
and the Company) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption or (2) in the case of any Transferee that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code, (i) to represent to
the transferor Lender (for the benefit of the transferor Lender, the
Administrative Agent and the Company) that it is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (ii) to furnish to the
transferor Lender (and, in the case of any Transferee registered in the
Register, to the Company), with a copy to the Administrative Agent, (A) a
Subsection 4.11(d)(2) Certificate and (B) two (2) accurate and complete
original signed copies of Internal Revenue Service Form W-8, certifying to
such Transferee's legal entitlement on the date of the effectiveness of such
transfer to an exemption from U.S. withholding tax under the provisions of
Section 881(c) of the Code with respect to all payments to be made under this
Agreement, and (iii) to agree (for the benefit of the transferor Lender, the
Administrative Agent and the Company), to the extent legally entitled to do
so, upon reasonable request by the transferor Lender (or, in the case of any
Transferee registered in the Register, the Administrative Agent or the
Company), to provide to the transferor Lender, the Administrative Agent and
the Company such other forms as may be required to establish the legal
entitlement of such Transferee to an exemption from withholding tax with
respect to payments under this Agreement.
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions
do not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
11.7 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITTED
LENDER") shall at any time receive any payment of all or part of any of its
Loans or L/C Participating Interests, as the case may be, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in clause (f) of Section 9, or otherwise) in a greater proportion
than any such payment to and collateral received by any other Lender, if any,
in respect of such other Lender's Loans or L/C Participating
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Interests, as the case may be, or interest thereon, such benefitted Lender
shall purchase for cash from the other Lenders such portion of each such
other Lender's Loans or L/C Participating Interests, as the case may be, or
shall provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such benefitted Lender
to share the excess payment or benefits of such collateral or proceeds
ratably with each of the Lenders; PROVIDED that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. The Company
agrees that each Lender so purchasing a portion of another Lender's Loans
and/or L/C Participating Interests may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
The Administrative Agent shall promptly give the Company notice of any
set-off, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to
the Company, any such notice being expressly waived by the Company to the
extent permitted by applicable law, upon the filing of a petition under any
of the provisions of the federal bankruptcy code or amendments thereto, by or
against; the making of an assignment for the benefit of creditors by; the
application for the appointment, or the appointment, of any receiver of, or
of any substantial portion of the property of; the issuance of any execution
against any substantial portion of the property of; the issuance of a
subpoena or order, in supplementary proceedings, against or with respect to
any substantial portion of the property of; or the issuance of a warrant of
attachment against any substantial portion of the property of; the Company to
set off and apply against any indebtedness, whether matured or unmatured, of
the Company to such Lender, any amount owing from such Lender to the Company,
at or at any time after, the happening of any of the above mentioned events,
and as security for such indebtedness, the Company hereby grants to each
Lender a continuing security interest in any and all deposits, accounts or
moneys of the Company then or thereafter maintained with such Lender, subject
in each case to subsection 11.7(a) of this Agreement. The aforesaid right of
set-off may be exercised by such Lender against the Company or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of the
Company, or against anyone else claiming through or against the Company or
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the making, filing or issuance, or service
upon such Lender of, or of notice of, any such petition; assignment for the
benefit of creditors; appointment or application for the appointment of a
receiver; or issuance of execution, subpoena, order or warrant. Each Lender
agrees promptly to notify the Company and the Administrative Agent after any
such set-off and application made by such Lender, PROVIDED that the failure
to give such notice shall not affect the validity of such set-off and
application.
11.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this
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<PAGE>
Agreement signed by all the parties shall be lodged with the Company and the
Administrative Agent. This Agreement shall become effective with respect to
the Company, the Administrative Agent, the Documentation Agent and the
Lenders when the Administrative Agent shall have received copies of this
Agreement executed by the Company, the Administrative Agent, the
Documentation Agent and the Lenders, or, in the case of any Lender, shall
have received telephonic confirmation from such Lender stating that such
Lender has executed counterparts of this Agreement or the signature pages
hereto and sent the same to the Administrative Agent.
11.9 GOVERNING LAW; NO THIRD PARTY RIGHTS. This Agreement and the
Notes and the rights and obligations of the parties under this Agreement and
the Notes shall be governed by, and construed and interpreted in accordance
with, the law of the State of New York. This Agreement is solely for the
benefit of the parties hereto and their respective successors and assigns,
and, except as set forth in subsection 11.6, no other Persons shall have any
right, benefit, priority or interest under, or because of the existence of,
this Agreement.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. (a) Each party to this
Agreement hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any of the other
Credit Documents, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts
of the State of New York, the courts of the United States for the
Southern District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in subsection 11.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
(b) Each party hereto unconditionally waives trial by jury
in any legal action or proceeding referred to in paragraph (a) above and any
counterclaim therein.
11.11 RELEASES. The Administrative Agent and Lenders agree to
cooperate with the Company and its Subsidiaries with respect to any sale or
other disposition permitted by subsection 8.5 and promptly take such action
and execute and deliver such instruments and documents necessary to release
the liens and security interests created by the Security Documents
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relating to any of the assets or property affected by any such sale permitted
by subsection 8.5. including, without limitation, any Uniform Commercial Code
amendment, release or termination or partial release or termination
statements. The parties hereto hereby authorize the Administrative Agent to
execute releases of Collateral and guarantees in connection with the FMI Sale.
11.12 INTEREST. Each provision in this Agreement and each other
Credit Document is expressly limited so that in no event whatsoever shall the
amount paid, or otherwise agreed to be paid, by the Company for the use,
forbearance or detention of the money to be loaned under this Agreement or
any other Credit Document or otherwise (including any sums paid as required
by any covenant or obligation contained herein or in any other Credit
Document which is for the use, forbearance or detention of such money),
exceed that amount of money which would cause the effective rate of interest
to exceed the highest lawful rate permitted by applicable law (the "HIGHEST
LAWFUL RATE"), and all amounts owed under this Agreement and each other
Credit Document shall be held to be subject to reduction to the effect that
such amounts so paid or agreed to be paid which are for the use, forbearance
or detention of money under this Agreement or such other Credit Document
shall in no event exceed that amount of money which would cause the effective
rate of interest to exceed the Highest Lawful Rate. Notwithstanding any
provision in this Agreement or any other Credit Document to the contrary, if
the maturity of the Loans or the obligations in respect of the other Credit
Documents are accelerated for any reason, or in the event of any prepayment
of all or any portion of the Loans or the obligations in respect of the other
Credit Documents by the Company or in any other event, earned interest on the
Loans and such other obligations of the Company may never exceed the Highest
Lawful Rate, and any unearned interest otherwise payable on the Loans or the
obligations in respect of the other Credit Documents that is in excess of the
Highest Lawful Rate shall be cancelled automatically as of the date of such
acceleration or prepayment or other such event and (if theretofore paid)
shall, at the option of the holder of the Loans or such other obligations, be
either refunded to the Company or credited on the principal of the Loans. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and the Lenders
shall, to the maximum extent permitted by applicable law, amortize, prorate,
allocate and spread, in equal parts during the period of the actual term of
this Agreement, all interest at any time contracted for, charged, received or
reserved in connection with this Agreement.
11.13 SPECIAL INDEMNIFICATION. Notwithstanding any provision in this
Agreement to the contrary, (A) each Lender, or Transferee of any Lender
pursuant to subsection 11.6(g) of this Agreement, shall indemnify the Company
and the Administrative Agent, and hold each of them harmless against any and
all payments, expenses or taxes which the Company or the Administrative Agent
may become subject to or obligated to pay if and to the extent that, (i) on
the Closing Date or the effective date of transfer, as the case may be, such
Lender, or such Transferee of a Lender pursuant to subsection 11.6(g) of this
Agreement, (a) makes the representation and covenants set forth in subsection
4.11(d)(2) of this Agreement, or, in the case of a Transferee, pursuant to
subsection 11.6(g)(2) of this Agreement and the Assignment and Acceptance,
and (b) is not in fact also qualified to make the representation and
covenants set forth in subsection 4.11(d)(1) of this Agreement or, in the
case of a Transferee, pursuant to
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subsection 11.6(g)(2) of this Agreement and the Assignment and Acceptance,
and (ii) as a result of any Change in Law or compliance by such Lender, or
Transferee, with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority the Company or the
Administrative Agent is required to make any additional payments on account
of U.S. withholding taxes and amounts related thereto with respect to any
payments under this Agreement, any Note, or a Eurodollar Loan, made prior to
such Change in Law or request or directive, none of which payments would have
been required if such Lender, or Transferee, was qualified on the Closing
Date or the date of the transfer, as the case may be, to make the
representation and covenants set forth in subsection 4.11(d)(1) of this
Agreement or pursuant to subsection 11.6(g)(1) of this Agreement and the
Assignment and Acceptance, as the case may be, and (B) each Lender, or
Transferee, agrees that to the extent any amount payable by such Lender or
Transferee pursuant to tis subsection 11.13 remains unpaid on any Interest
Payment Date or the date on which any prepayment is made, the Company shall
have the right to set-off against any payment due to such Lender or
Transferee on such date any amounts owing to the Company pursuant to this
subsection 11.13.
11.14 PERMITTED PAYMENTS AND TRANSACTIONS. Notwithstanding any
provision to the contrary contained in this Agreement, the Company and its
Subsidiaries shall be permitted to pay fees and expenses pursuant to or in
respect of, the following agreements, and, in the case of clauses (a) and (d)
below, to engage in the following transactions: (a)(i) the Agreement for
Management and Advisory Services, between Investcorp International, Inc.
("III") and FBP Acquisition Corp., Inc., a Delaware corporation
("ACQUISITIONCO") dated as of June 17, 1997, (ii) the Loan Financing Advisory
Agreement between III and AcquisitionCo dated as of March 20, 1997, (iii) the
Equity Placement Fee Letter between Investcorp and AcquisitionCo dated June
17, 1997, (iv) the Standby Commitment Agreement between AcquisitionCo and
Invifin S.A. dated as of June 17, 1997 and (v) the Agreement and Plan of
Merger, dated as March 20, 1997, as amended; (b) agreements with any Person
or Persons providing for the payment of customary fees in connection with
serving as a director of the Company or any Subsidiary of the Company; (c)
agreements providing for the payment of commercially reasonable fees in
connection with any permitted financing, refinancing, sale, transfer, sale
and leaseback or other permitted disposition of any assets of the Company or
its Subsidiaries; (d) the borrowing of any Indebtedness to the extent, and
upon the terms and conditions, the same is expressly permitted under
subsection 8.1; and (e) agreements providing for commercially reasonable fees
in connection with any permitted purchase or acquisition of stock or assets
by the Company or any of its Subsidiaries.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
FALCON BUILDING PRODUCTS, INC.
/s/ Anthony Navitsky
By:___________________________
Name: Anthony Navitsky
Title: Vice President-Finance
and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent, Issuing Lender and as a
Lender
/s/ Deborah Davey
By:___________________________
Name: Deborah Davey
Title: Vice President
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Schedule I to the
Credit Agreement
------------------
Lenders, Addresses and Commitments
<TABLE>
<CAPTION>
Revolving Credit
Commitment
----------------------
<S> <C>
THE CHASE MANHATTAN BANK $10,000,000.00
270 Park Avenue
New York, NY 10017
Attn: Deborah Davey
Telecopy: 212-270-1674
BANKBOSTON, N.A. $8,000,000.00
100 Federal Street
Boston, MA 02110
Attn: Gregory Badger
Telecopy: 617-434-4929
BANKERS TRUST COMPANY $10,000,000.00
130 Liberty Street, 30th Floor
New York, NY 10016
Attn: Patsy Hogan
Telecopy: 212-250-7218
CITICORP USA, INC. $8,000,000.00
399 Park Avenue, 6th Floor
New York, NY 10043
Attn: George Dewey
Telecopy: 212-758-6278
FLEET NATIONAL BANK $8,000,000.00
1 Federal Street
Boston, MA 02110
Attn: James Silva
Telecopy: 212-907-5637
FIRST UNION NATIONAL BANK $3,000,000.00
301 South College Street, DC-5
Charlotte, NC 28288-0737
Attn: George Woolsey
Telecopy: 704-374-3300
1
<PAGE>
PNC BANK, NATIONAL ASSOCIATION $8,000,000.00
500 West Madison Street, Suite 3140
Chicago, IL 60661
Attn: Kenneth D. Sweder
Telecopy: 312-906-3420
CREDIT AGRICOLE INDOSUEZ $16,000,000.00
55 East Monroe, Suite 4700
Chicago, IL 60603
Attn: Susan Knight
Telecopy: 312-987-0303
BANK OF TOKYO-MITSUBISHI TRUST $11,000,000.00
COMPANY
1251 Avenue of the Americas
New York, NY 10020-1104
Attn: Paul Malecki
Telecopy: 212-782-4981
HARRIS TRUST & SAVINGS BANK $11,000,000.00
111 West Monroe Street
Chicago, IL 60609
Attn: John Dillon
Telecopy: 312-461-2591
NATIONAL WESTMINSTER BANK PLC $11,000,000.00
175 Water Street, 26th Fl.
New York, NY 10038
Attn: Edward Weld
Telecopy: 212-602-4319
HELLER FINANCIAL , INC. $7,000,000.00
500 West Monroe
Chicago, IL 60661
Attn: Linda Wolf
Telecopy: 312-441-7357
GENERAL ELECTRIC CAPITAL CORP. $7,000,000.00
201 High Ridge Road
Stamford, CT 06927
Attn: Tom McNichols
Telecopy: 203-316-7978
BANK OF AMERICA NT&SA $7,000,000.00
231 South LaSalle St., 9th Floor
2
<PAGE>
Chicago, IL 60697
Attn: Carl Jordan.
Telecopy: 312-828-6560
TOTAL ALLOCATION $125,000,000.00
</TABLE>
3
<PAGE>
Schedule II to the
Credit Agreement
------------------
Pricing and Commitment Fee Grid
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Applicable Margin
--------------------------
Eurodollar Commitment
Leverage Ratio ABR Loans Loans Fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Greater than or equal to 5.0 1.50% 2.50% .50%
to 1.0
- --------------------------------------------------------------------------------
Less than 5.0 to 1.0, but greater 1.25% 2.25% .50%
than or equal to 4.5 to 1.0
- --------------------------------------------------------------------------------
Less than 4.5 to 1.0, but greater 1.00% 2.00% .375%
than or equal to 4.0 to 1.0
- --------------------------------------------------------------------------------
Less than 4.0 to 1.0, but greater 0.75% 1.75% .375%
than or equal to 3.5 to 1.0
- --------------------------------------------------------------------------------
Less than 3.5 to 1.0 0.50% 1.50% .375%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 99.1
COMPANY CONTACT:
TONY NAVITSKY (312) 575-1450
FRIDAY SEPTEMBER 3, 1999
COMPANY PRESS RELEASE
SOURCE: FALCON BUILDING PRODUCTS, INC.
FALCON BUILDING PRODUCTS COMPLETES SALE OF DEVILBISS AIR POWER TO PENTAIR
Chicago, September 3/PRNewswire/--Falcon Building Products, Inc. announced
today that it has completed the previously announced sale of its wholly-owned
air power tool division, DeVilbiss Air Power Company, to Pentair, Inc. for
approximately $460 million.
DeVilbiss Air Power Company is a leading manufacturer of air compressors,
pressure washers, generators and associated tools and accessories. DeVilbiss
products are directed at the consumer, do-it-yourself and contractor markets
and are sold primarily through the home improvement and building products
retail channel. For the twelve months ended June 30, 1999, DeVilbiss
generated revenues of approximately $470 million.
Falcon Building Products, headquartered in Chicago, owns Hart & Cooley, Inc.,
a leading manufacturer of heating, ventilation and air conditioning (HVAC)
products, and Mansfield Plumbing Products, Inc., a manufacturer of high
quality plumbing fixtures for the residential construction and remodeling
markets. Falcon will continue to explore strategic alternatives with respect
to these businesses, including potential acquisitions to enhance the
businesses and potential divestitures or other transactions to maximize
shareholder value.
Any statements made about anticipated future operations or results are
forward-looking statements subject to risks and uncertainties such as those
described in Falcon's Annual Report on Form 10-K for the year ended December
31, 1998. Actual results may differ materially from anticipated results.
