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Exhibit 4(e)
This CREDIT AGREEMENT (as it may from time to time be amended, restated
or otherwise modified, this "Agreement") is made effective as of the 5th day of
November, 1998, among APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio
corporation, One Applied Plaza, Cleveland, Ohio 44115 ("Borrower"), the banking
institutions named in SCHEDULE 1 attached hereto and made a part hereof
(collectively, "Banks", and individually, "Bank"), and KEYBANK NATIONAL
ASSOCIATION, 127 Public Square, Cleveland, Ohio 44114-1306, as agent for the
Banks under this Agreement ("Agent").
WITNESSETH:
WHEREAS, Borrower, Canadian Borrowers (as hereinafter defined) and the
Banks desire to contract for the establishment of credits in the aggregate
principal amounts hereinafter set forth, to be made available to Borrower and
Canadian Borrowers upon the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of any Person, or any
business or division of any Person, (b) the acquisition of in excess of fifty
percent (50%) of the Voting Power of any Person, or (c) the acquisition of
another Person (other than a Company) by merger or consolidation or any other
combination with such Person.
"Activation Date" shall mean the date upon which the Canadian
Commitments become effective, in accordance with Section 2.6 hereof.
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Bank in respect of the Debt, if such payment results in that
Bank having less than its pro rata share (based upon its Commitment Percentage
or Revised Commitment Percentage, as then applicable, and, in the case of an
Equalization Event pursuant to the terms of Section 8.5 hereof, based upon its
Equalization Percentage, as defined in Section 8.5 hereof) of the Debt then
outstanding, than was the case immediately before such payment.
"Affiliate" shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and "control" (including
the correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and
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policies of a Company, whether through the ownership of voting securities, by
contract or otherwise.
"Agent Fee Letter" shall mean the Agent Fee Letter from Borrower to
Agent, dated as of the Closing Date.
"Applicable Facility Fee Rate" shall mean:
(a) for the period from the Closing Date through February 28, 1999,
twenty (20) basis points; and
(b) commencing with the financial statements for the fiscal quarter
ended December 31, 1998, the number of basis points set forth in the following
matrix, based upon the result of the computation of the Leverage Ratio, shall be
used to establish the number of basis points that will go into effect on March
1, 1999 and thereafter:
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APPLICABLE
LEVERAGE RATIO FACILITY FEE RATE
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Greater than or equal to 3.50 to 1.00 40.00 basis points
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Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00 25.00 basis points
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Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00 20.00 basis points
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Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00 15.00 basis points
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Less than 2.00 to 1.00 12.50 basis points
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Changes to the Applicable Facility Fee Rate shall be effective on the first day
of the month following the date upon which Agent received, or, if earlier,
should have received, pursuant to Section 5.3 hereof, the financial statements
of the Companies. The above matrix does not modify or waive, in any respect, the
requirements of Section 5.7 hereof, the rights of the Banks to charge the
Default Rate, or the rights and remedies of the Banks pursuant to Articles VII
and VIII hereof.
"Applicable Margin" shall mean:
(a) for the period from the Closing Date through February 28, 1999,
thirty (30) basis points; and
(b) commencing with the financial statements for the fiscal quarter
ended December 31, 1998, the number of basis points set forth in the following
matrix, based upon the result of the computation of the Leverage Ratio, shall be
used to establish the number of basis points that will go into effect on March
1, 1999 and thereafter:
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- -----------------------------------------------------------------------------------------------------------
APPLICABLE
LEVERAGE RATIO MARGIN
- -----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.50 to 1.00 90.00 basis points
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Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00 50.00 basis points
- -----------------------------------------------------------------------------------------------------------
Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00 30.00 basis points
- -----------------------------------------------------------------------------------------------------------
Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00 25.00 basis points
- -----------------------------------------------------------------------------------------------------------
Less than 2.00 to 1.00 22.50 basis points
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Changes to the Applicable Margin shall be effective on the first day of the
month following the date upon which Agent received, or, if earlier, should have
received, pursuant to Section 5.3 hereof, the financial statements of the
Companies. The above matrix does not modify or waive, in any respect, the
requirements of Section 5.7 hereof, the rights of the Banks to charge the
Default Rate, or the rights and remedies of the Banks pursuant to Articles VII
and VIII hereof.
"Assignment Agreement" shall mean an Assignment and Acceptance
Agreement in the form of EXHIBIT F hereto.
"Assumption Agreement" shall mean each of the Assumption Agreements
executed by a Canadian Borrower after the Closing Date, in the form of EXHIBIT H
hereto, as the same may from time to time be amended, restated or otherwise
modified.
"Base Rate" shall mean a rate per annum equal to the greater of (a) the
Prime Rate or (b) one-half of one percent (1/2%) in excess of the Federal Funds
Effective Rate. Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.
"Base Rate Loan" shall mean a Loan described in Section 2.1A hereof on
which Borrower shall pay interest at a rate based on the Base Rate.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to close in Cleveland, Ohio; and (a) if the applicable
Business Day relates to any LIBOR Loan, on which dealings are carried on in the
London interbank eurodollar market, or (b) if the applicable Business Day
relates to any CAD Loan, on which banks are not required or authorized to close
in Toronto, Ontario, Canada.
"CAD Base Rate" shall mean the per annum interest rate established from
time to time by Bank of Montreal as Bank of Montreal's prime rate, whether or
not such rate is publicly announced; the CAD Base Rate may not be the lowest
interest rate charged by Bank of Montreal for commercial or other extensions of
credit. Each change in the CAD Base Rate shall be effective immediately from and
after such change.
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"CAD Base Rate Loan" shall mean a Loan described in Section 2.1D hereof
on which Canadian Borrowers shall pay interest at a rate based on the CAD Base
Rate.
"CAD Equivalent" shall mean the amount denominated in CAD, as of any
date of determination, that could be purchased with the amount of Dollars at the
most favorable spot exchange rate quoted by Agent at approximately 11:00 A.M.
(Cleveland, Ohio time) on such date.
"CAD Exposure" shall mean, at any time, the aggregate principal amount
of all CAD Loans outstanding.
"CAD Fixed Rate Loan" shall mean a Loan described in Section 2.1D
hereof on which Borrower shall pay interest at a rate based on the Canadian
Domestic Rate.
"CAD Loan" shall mean a CAD Base Rate Loan or CAD Fixed Rate Loan.
"CAD Loan Note" shall mean any CAD Loan Note executed and delivered
pursuant to Section 2.1D hereof.
"Canadian Bank"shall mean a Bank that is designated as a Canadian Bank
on SCHEDULE 1 hereto.
"Canadian Borrower" shall mean each of the Subsidiaries of Borrower set
forth on SCHEDULE 3 hereof, together with any other Subsidiary of Borrower that,
on or after the Closing Date, satisfies the requirements of Section 2.3 hereof.
"Canadian Commitment" shall mean the obligation hereunder of each
Canadian Bank, during the Canadian Commitment Period, to participate in the
making of CAD Loans up to the aggregate amount set forth opposite such Canadian
Bank's name under the column headed "Canadian Commitment Amount", as listed in
SCHEDULE 1 hereof (or such lesser amount as shall be determined pursuant to
Section 2.10 hereof).
"Canadian Commitment Period" shall mean the period from the Activation
Date to October 31, 2003 or such earlier date on which the Commitment shall have
been terminated pursuant to Article VIII hereof.
"Canadian Dollars" and "CAD" shall mean the lawful currency of Canada.
"Canadian Domestic Rate" shall mean, for any Interest Period with
respect to a CAD Fixed Rate Loan, the per annum rate of interest determined by
Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) as of approximately 10:00 A.M. (Cleveland,
Ohio time) on the date of such CAD Fixed Rate Loan, as provided by Reuters and
designated as the "Bankers Acceptance Rate" in Schedule B on page CDMM (or any
similar company or service that provides rate quotations comparable to those
currently provided by such companies) as the rate for CAD deposits in
immediately available funds with a maturity
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comparable to such Interest Period. In the event that such rate quotation is not
available for any reason, then the rate shall be determined by Agent as of
approximately 11:00 A.M. (Cleveland, Ohio time) on the date of such CAD Fixed
Rate Loan, to be the average (rounded upwards, if necessary, to the nearest one
sixteenth of one percent (1/16th of 1%)) of the per annum rates at which CAD
deposits in immediately available funds in an amount comparable to such CAD
Fixed Rate Loan and with a maturity comparable to such Interest Period are
offered to the prime banks by leading banks in the London interbank market.
"Change in Control" shall mean (a) the acquisition of, or, if earlier,
the director approval of the acquisition of, ownership or voting control,
directly or indirectly, beneficially or of record, on or after the Closing Date,
by any Person or group (within the meaning of Rule 13d-3 of the SEC under the
Securities Exchange Act of 1934, as then in effect), of shares representing more
than thirty-three percent (33%) of the aggregate ordinary Voting Power
represented by the issued and outstanding capital stock of Borrower; or (b) the
occupation of a majority of the seats (other than vacant seats) on the board of
directors of Borrower by Persons who were neither (i) nominated by the board of
directors of Borrower nor (ii) appointed by directors so nominated.
"Closing Date" shall mean the effective date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
"Commitment" shall mean the obligation hereunder of (a) the Domestic
Banks, during the Commitment Period, to extend credit pursuant to the Revolving
Credit Commitments, and (b) the Canadian Banks, during the Canadian Commitment
Period, to extend credit pursuant to the Canadian Commitments, up to, for both
(a) and (b) hereof, the Total Commitment Amount.
"Commitment Percentage" shall mean, for each Bank, the percentage set
forth opposite such Bank's name under the column headed "Commitment Percentage"
as listed on SCHEDULE 1 hereto.
"Commitment Period" shall mean the period from the Closing Date to
October 31, 2003 or such earlier date on which the Commitment shall have been
terminated pursuant to Article VIII hereof.
"Company" shall mean Borrower or a Subsidiary.
"Companies" shall mean Borrower and all Subsidiaries.
"Compliance Certificate" shall mean a certificate, substantially in the
form of the attached EXHIBIT F.
"Consideration" shall mean, in connection with an Acquisition, the
aggregate consideration paid, including borrowed funds, cash, the issuance of
securities or notes, the
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assumption or incurring of liabilities (direct or contingent), the payment of
Consulting Fees or fees for a covenant not to compete and any other
consideration paid for the purchase.
"Consolidated" shall mean the resultant consolidation of the financial
statements of Borrower and its Subsidiaries in accordance with GAAP, including
principles of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.13 hereof.
"Consolidated Depreciation and Amortization Charges" shall mean, for
any period, the aggregate of all such charges for fixed assets, leasehold
improvements and general intangibles (specifically including goodwill) of
Borrower for such period, as determined on a Consolidated basis and in
accordance with GAAP.
"Consolidated EBIT" shall mean, for any period, on a Consolidated
basis, (a) Consolidated Net Earnings for such period plus the aggregate amounts
deducted in determining such Consolidated Net Earnings in respect of (i) income
taxes, (ii) Consolidated Interest Expense, and (iii) nonrecurring noncash
charges and losses, minus (b) nonrecurring noncash gains.
"Consolidated EBITDA" shall mean, for any period, (a) Consolidated
EBIT, plus (b) Consolidated Depreciation and Amortization Charges.
"Consolidated Interest Expense" shall mean, for any period,
Consolidated interest expense of Borrower for such period, determined in
accordance with GAAP.
"Consolidated Net Earnings" shall mean, for any period, Consolidated
net income (loss) of Borrower for such period, determined in accordance with
GAAP.
"Consolidated Tangible Net Worth" shall mean, at any date, the
shareholders' equity of Borrower less intangibles of Borrower, and as determined
on a Consolidated basis as of such date in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any date, the Consolidated
shareholders' equity of Borrower, determined as of such date in accordance with
GAAP.
"Consulting Fees" shall mean all consulting fees paid in connection
with an Acquisition to the extent such consulting fees represent part or all of
the consideration paid in connection with such Acquisition.
"Controlled Group" shall mean a Company and each Person required to be
aggregated with a Company under Code Sections 414(b), (c), (m) or (o).
"Debt" shall mean, collectively, all Indebtedness incurred by Borrower
or Canadian Borrowers to Agent and the Banks pursuant to this Agreement and
includes the principal of and
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interest on all Notes and each extension, renewal or refinancing thereof, in
whole or in part, the facility fees, other fees and any prepayment fees payable
hereunder.
"Default Rate" shall mean a rate per annum equal to two percent (2%) in
excess of the applicable interest rate from time to time in effect.
"Derived CAD Rate" shall mean a rate per annum equal to the sum of the
Applicable Margin plus the Canadian Domestic Rate.
"Derived LIBOR Rate" shall mean a rate per annum equal to the sum of
the Applicable Margin plus the LIBOR Rate.
"Designated Lending Office" shall mean the office of Agent, c/o Bank of
Montreal, 1 First Canadian Place, 24th Floor, Toronto, Ontario M5X1A1,
Attention: Sam Gazdar, or such other office and address in Canada as Agent may
from time to time designate.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Dollar Equivalent" of a CAD Loan or any other amount stated in CAD
shall mean the Dollar equivalent of such amount, determined by Agent on the
basis of its spot rate at approximately 10:00 A.M. (Cleveland, Ohio time) on the
date two (2) Business Days before the date of such determination, for the
purchase of CAD with Dollars for delivery on the date of such determination.
With respect to a CAD Loan, Agent shall notify each Canadian Borrower of the
Dollar Equivalent of such CAD Loan at the time that Dollar Equivalent is
determined.
"Domestic Bank" shall mean a Bank that is designated as a Domestic Bank
on SCHEDULE 1 hereto.
"Domestic Subsidiary" shall mean a Subsidiary organized under the laws
of a state of the United States.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States or, if applicable, Canada, or by any state, province,
territory or municipality thereof or by any court, agency, instrumentality,
regulatory authority or commission of any of the foregoing concerning air
quality, soil quality, water quality, wetlands, solid waste or the protection of
public health, human health, safety or the environment or the Release of any
Hazardous Substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated pursuant thereto.
"ERISA Event" shall mean: (a) the existence of any condition or event
with respect to a Plan which presents a risk of the imposition of an excise tax
or any other liability on a Company or of the imposition of a Lien on the assets
of a Company, (b) a Controlled Group member has engaged in a non-exempt
"prohibited transaction" (as defined under ERISA Section 406 or Code
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Section 4975) or a breach of a fiduciary duty under ERISA which could result in
liability to a Company, (c) a Controlled Group member has applied for a waiver
from the minimum funding requirements of Code Section 412 or ERISA Section 302
or a Controlled Group member is required to provide security under Code Section
401(a)(29) or ERISA Section 307, (d) a Reportable Event has occurred with
respect to any Pension Plan as to which notice is required to be provided to the
PBGC, (e) a Controlled Group member has withdrawn from a Multiemployer Plan in a
"complete withdrawal" or a "partial withdrawal" (as such terms are defined in
ERISA Sections 4203 and 4205, respectively), (f) a Multiemployer Plan is in or
is likely to be in reorganization under ERISA Section 4241, (g) a Plan (and any
related trust) which is intended to be qualified under Code Sections 401 and 501
fails to be so qualified or any "cash or deferred arrangement" under any such
Plan fails to meet the requirements of Code Section 401(k), (h) the PBGC takes
any steps to terminate a Pension Plan or appoint a trustee to administer a
Pension Plan, or a Controlled Group member takes steps to terminate a Pension
Plan, (i) a Controlled Group member or a Plan fails to satisfy any material
requirement of law applicable to a Plan, (j) an action or suit is pending with
respect to a Plan, other than a routine claim for benefits, and such action or
suit, if determined adversely, would have a material adverse effect on the
business, operations or condition (financial or otherwise) of any Company, or
(k) a Controlled Group member incurs or is expected to incur any liability for
post-retirement benefits under any Welfare Plan, other than as required by ERISA
Section 601, ET. SEQ. or Code Section 4980B.
"Eurocurrency Reserve Percentage" shall mean, for any Interest Period
in respect of any LIBOR Loan, as of any date of determination, the aggregate of
the then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to such
Interest Period (if more than one (1) such percentage is applicable, the daily
average of such percentages for those days in such Interest Period during which
any such percentage shall be so applicable) by the Board of Governors of the
Federal Reserve System, any successor thereto, or any other banking authority,
domestic or foreign, to which a Bank may be subject in respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Federal Reserve Board) or in respect of any other category of liabilities,
including deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extension of credit or other assets that include
the LIBOR Loans. For purposes hereof, such reserve requirements shall include,
without limitation, those imposed under Regulation D of the Federal Reserve
Board, and the LIBOR Loans shall be deemed to constitute Eurocurrency
Liabilities subject to such reserve requirements without benefit of credits for
proration, exceptions or offsets which may be available from time to time to any
Bank under said Regulation D.
"Event of Default" shall mean an event or condition that constitutes an
event of default as defined in Article VII hereof.
"Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
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substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the Closing Date.
"Financial Officer" shall mean any of the following officers: chief
executive officer, president, any vice president, chief financial officer,
treasurer, controller, assistant treasurer or assistant controller.
"Foreign Subsidiary" shall mean a Subsidiary that is not a Domestic
Subsidiary.
"Fronting Bank" shall mean, as to any Letter of Credit transaction
hereunder, Agent as issuer of the Letter of Credit, or, in the event that Agent
is unable to issue a Letter of Credit, such other Bank (other than a Canadian
Bank) as shall agree to issue the Letter of Credit in its own name, but on
behalf of the Banks hereunder.
"Funded Indebtedness" shall mean all Indebtedness for borrowed money,
including, but not limited to, Subordinated Indebtedness, if any.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Borrower.
"Guarantor" shall mean a Person that pledges its credit or property in
any manner for the payment or other performance of the indebtedness, contract or
other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or Person that
agrees conditionally or otherwise to make any purchase, loan or investment in
order thereby to enable another to prevent or correct a default of any kind.
"Guarantor of Payment" shall mean each of the Companies listed on
Schedule 2 hereto, and any other Person that shall deliver a Subsidiary Guaranty
of Payment to Agent subsequent to the Closing Date.
"Guaranty of Payment" shall mean a Subsidiary Guaranty of Payment or a
Parent Guaranty of Payment.
"Hazardous Substance" shall mean any hazardous, toxic or dangerous
pollutant, contaminant, substance or waste or any such pollutant, contaminant,
substance or waste that is defined or listed under any Environmental Law or that
is otherwise regulated or prohibited or subject to investigation or remediation
under any Environmental Law because of its hazardous, toxic, dangerous or
injurious properties, including, without limitation: (i) any "hazardous
substance" as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended;
(ii) any "hazardous waste" as now or hereafter defined under the Resource
Conservation and Recovery Act, 42 U.S.C. section 690l et seq., as amended; (iii)
hydrocarbons and/or petroleum products or fractions thereof, natural gas,
natural gas liquids, liquefied natural gas and synthetic gas usable for fuel;
(iv) asbestos containing material; (v) flammable explosives; (vi)
polychlorinated biphenyls; (vii) radioactive
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materials; and (viii) any substance for which special handling or notification
is required for its collection, storage, treatment, use or disposal.
"Hedge Agreement" shall mean any hedge agreement, interest rate swap,
cap, collar or floor agreement, or other interest rate management device entered
into by Borrower with Agent or any of the Banks.
"Indebtedness" shall mean, for any Company (excluding in all cases
trade payables payable in the ordinary course of business by such Company), (a)
all obligations to repay borrowed money, direct or indirect, incurred, assumed,
or guaranteed, (b) all obligations for the deferred purchase price of capital
assets, (c) all obligations under conditional sales or other title retention
agreements, (d) all reimbursement obligations (contingent or otherwise) under
any letter of credit, banker's acceptance, currency swap agreement, interest
rate swap, cap, collar or floor agreement or other interest rate management
device, (e) all synthetic leases, (f) all lease obligations which have been or
should be capitalized on the books of such Company in accordance with GAAP, and
(g) any other transaction (including forward sale or purchase agreements) having
the commercial effect of a borrowing of money entered into by such Company to
finance its operations or capital requirements.
"Intercreditor Agreement" shall mean the Intercreditor Agreement among
Agent, on behalf of and for the benefit of the Banks, and each of the Purchasers
(as defined in the Note Purchase Agreement), dated as of the Closing Date, as
the same may from time to time be amended, restated, or otherwise modified.
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Period" shall mean:
(a) with respect to any LIBOR Loan, the period commencing on the date
such LIBOR Loan is made and ending on the last day of such period, as selected
by Borrower pursuant to the provisions hereof and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of such period, as selected by Borrower pursuant to
the provisions hereof; provided that, the duration of each Interest Period for a
LIBOR Loan shall be one (1) month, two (2) months, three (3) months or six (6)
months, in each case as Borrower may select upon notice, as set forth in Section
2.2 hereof, and further provided that: (i) if Borrower fails to so select the
duration of any Interest Period with respect to a LIBOR Loan, Borrower shall be
deemed to have converted such LIBOR Loan to a Base Rate Loan at the end of the
then current Interest Period, and (ii) Borrower may not select any Interest
Period for a LIBOR Loan that ends after any date when principal is due on such
LIBOR Loan; or
(b) with respect to any CAD Fixed Rate Loan, the period commencing on
the date such CAD Fixed Rate Loan is made and ending on the last day of such
period, as selected by a Canadian Borrower pursuant to the provisions hereof
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last
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day of such period, as selected by a Canadian Borrower pursuant to the
provisions hereof; provided that, the duration of each Interest Period for a CAD
Fixed Rate Loan shall be one (1) month, two (2) months, three (3) months or six
(6) months, in each case as a Canadian Borrower may select upon notice, as set
forth in Section 2.2 hereof, and further provided that: (i) if a Canadian
Borrower fails to so select the duration of any Interest Period with respect to
a CAD Fixed Rate Loan, such Canadian Borrower shall be deemed to have converted
such CAD Fixed Rate Loan to a Canadian Base Rate Loan at the end of the then
current Interest Period, and (ii) a Canadian Borrower may not select any
Interest Period for a CAD Fixed Rate Loan that ends after any date when
principal is due on such CAD Fixed Rate Loan.
"Letter of Credit" shall mean any commercial documentary letter of
credit or standby letter of credit that shall be issued by a Fronting Bank for
the benefit of Borrower or a Guarantor of Payment, including amendments thereto,
if any, and shall have an expiration date no later than the earlier of (a) one
(1) year after its date of issuance or (b) thirty (30) days prior to the last
day of the Commitment Period.
"Letter of Credit Commitment" shall mean the commitment of Agent (or a
Fronting Bank), on behalf of the Banks (prior to the Activation Date) and on
behalf of the Domestic Banks (on and after the Activation Date), to issue
Letters of Credit in an aggregate outstanding face amount of up to Fifteen
Million Dollars ($15,000,000), during the Commitment Period, on the terms and
conditions set forth in Section 2.1C hereof.
"Letter of Credit Exposure" shall mean the sum of (a) the aggregate
undrawn face amount of all issued and outstanding Letters of Credit, and (b) the
aggregate of the draws made on Letters of Credit that have not been reimbursed
by Borrower or converted to a Revolving Loan pursuant to Section 2.1C hereof.
"Leverage Ratio" shall mean, at any time, on a Consolidated basis and
in accordance with GAAP, the ratio of (a) Funded Indebtedness (based upon the
financial statements of the Companies for the most recently completed fiscal
quarter) to (b) Consolidated EBITDA (based upon the financial statements of the
Companies for the most recently completed four (4) fiscal quarters); provided
that for the purposes of computing the Leverage Ratio, (i) Acquisitions that
have been made by any Company (so long as such Acquisition is permitted pursuant
to Section 5.13 hereof), including through asset or stock Acquisition, merger or
consolidation, during such four-quarter period shall be deemed to have occurred
on the first day of the four-quarter reference period, and (ii) (A) losses and
charges attributable to discontinued operations, as determined in accordance
with GAAP, and (B) operations or businesses disposed of during such four-quarter
period shall be excluded from such calculation.
"LIBOR Loan" shall mean a Loan described in Section 2.1A hereof on
which Borrower shall pay interest at a rate based on the LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period with respect to a
LIBOR Loan, the quotient (rounded upwards, if necessary, to the nearest one
sixteenth of one percent (1/16th of 1%)) of: (a) the per annum rate of interest,
determined by Agent in accordance with its usual
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procedures (which determination shall be conclusive absent manifest error) as of
approximately 11:00 A.M. (London time) two (2) Business Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, as provided by
Telerate Service, Bloomberg's or Reuters (or any other similar company or
service that provides rate quotations comparable to those currently provided by
such companies) as the rate in the London interbank market for Dollar deposits
in immediately available funds with a maturity comparable to such Interest
Period, DIVIDED BY (b) a number equal to 1.00 MINUS the Eurocurrency Reserve
Percentage. In the event that such rate quotation is not available for any
reason, then the rate (for purposes of clause (a) hereof) shall be the rate,
determined by Agent as of approximately 11:00 A.M. (London time) two (2)
Business Days prior to the beginning of such Interest Period pertaining to such
LIBOR Loan, to be the average (rounded upwards, if necessary, to the nearest one
sixteenth of one percent (1/16th of 1%)) of the per annum rates at which Dollar
deposits in immediately available funds in an amount comparable to such LIBOR
Loan and with a maturity comparable to such Interest Period are offered to the
prime banks by leading banks in the London interbank market. The LIBOR Rate
shall be adjusted automatically on and as of the effective date of any change in
the Eurocurrency Reserve Percentage.
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance on or pledge of, or conditional sale or other title retention
agreement with respect to any property (real or personal) or asset.
"Loan" or "Loans" shall mean the credit granted to Borrower or Canadian
Borrowers by the Banks in accordance with Section 2.1A, B or D hereof.
"Loan Documents" shall mean this Agreement, each of the Notes, each of
the Guaranties of Payment, the Intercreditor Agreement, the Agent Fee Letter,
each Assumption Agreement, all documentation relating to each Letter of Credit
and any other documents relating to any of the foregoing, as any of the
foregoing may from time to time be amended, restated or otherwise modified or
replaced.
"Majority Banks" shall mean the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Total Commitment Amount, or, if there is any
borrowing hereunder, the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the aggregate amount outstanding under the Notes (other than the
Swing Line Note); provided, however, that (a)(i) the Canadian Commitments shall
be excluded from this calculation prior to the Activation Date, and (ii) on and
after the Activation Date, no Bank shall be included in this calculation other
than a Bank that is either a Domestic Bank or a Canadian Bank; and (b) for
purposes of calculating the percentage of the Total Commitment Amount of the
Canadian Banks and the amount outstanding on the CAD Loan Notes, the Dollar
Equivalent of the CAD amount shall be calculated based upon the exchange rate in
effect on the Closing Date.
"Maximum Amount" shall mean, for each Bank, the amount set forth
opposite such Bank's name under the column headed "Maximum Amount" as listed on
SCHEDULE 1 hereto.
13
"Moody's" shall mean Moody's Investors Service, Inc., or any successor
to such company.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
"Negotiated Rate" shall mean a fixed rate of interest per annum quoted
to Borrower by Agent based upon Agent's cost of funds, and agreed to by
Borrower.
"Note" shall mean any Revolving Credit Note, any CAD Loan Note, the
Swing Line Note, or any other note delivered pursuant to this Agreement.
"Note Purchase Agreement" shall mean collectively the (a) Note Purchase
and Private Shelf Facility dated as of October 31, 1992, between Borrower and
each of the Purchasers (as defined therein), as amended, and (b) the Private
Shelf Agreement dated as of November 27, 1996, between Borrower and each of the
Purchasers (as defined therein), as amended, as each of the foregoing may from
time to time be further amended, restated or otherwise modified.
"Notice of CAD Loan" shall mean a Notice of CAD Loan in the form of the
attached EXHIBIT D.
"Notice of Revolving Loan" shall mean a Notice of Revolving Loan in the
form of the attached EXHIBIT E.
"Obligor" shall mean (a) a Person whose credit or any of whose property
is pledged to the payment of the Debt and includes, without limitation, any
Guarantor, and (b) any signatory to a Related Writing.
"Parent Guaranty of Payment" shall mean each Guaranty of Payment of
Debt, in the form of EXHIBIT I hereto, executed and delivered on or after the
Activation Date in connection herewith by Borrower with respect to each Canadian
Borrower, as the same may from time to time be amended, restated or otherwise
modified.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean a Plan that is a "pension plan" (within the
meaning of ERISA Section 3(2)).
"Permitted Investment" shall mean an investment of a Company in the
stock (or other debt or equity instruments) or assets of a Person that is not a
Company, so long as the aggregate amount of all such investments of all
Companies does not exceed, at any time, an aggregate amount equal to twenty
percent (20%) of the Consolidated Net Worth of the Companies, based upon the
financial statements of the Companies for the most recently completed fiscal
quarter; at such time as a Permitted Investment results in an Acquisition and
the acquired Person becomes a
14
Guarantor of Payment, the amount of such investment shall be excluded from the
calculation of the aforesaid twenty percent (20%).
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
"Plan" shall mean (a) an "employee benefit plan" (within the meaning of
ERISA Section 3(3)) that a Controlled Group member at any time sponsors,
maintains, contributes to, has liability with respect to or has an obligation to
contribute to such plan, or (b) a statutory plan relating to any of such matters
which any Person is required to comply with under the laws of Canada or any
Province of Canada, including, without limitation, the Canada or Quebec Pension
Plans and plans administered pursuant to applicable provincial health tax,
workers' compensation and unemployment insurance legislation.
"Prime Rate" shall mean the interest rate established from time to time
by Agent as Agent's prime rate, whether or not such rate is publicly announced;
the Prime Rate may not be the lowest interest rate charged by Agent for
commercial or other extensions of credit. Each change in the Prime Rate shall be
effective immediately from and after such change.
"Related Writing" shall mean the Loan Documents and any assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by Borrower, any
Subsidiary or any Obligor, or any of their respective officers, to the Banks
pursuant to or otherwise in connection with this Agreement.
"Release" shall mean any release, spill, emission, leaking, pumping,
pouring, emptying, disposing, injection, deposit, discharge, leaching, or
migration into any media, whether soil, surface water, ground water, building
interior or components, air or any combination of the foregoing, and the
movement of any contamination through any media, and including the abandonment
or discarding of barrels, containers and other closed receptacles containing any
Hazardous Substance.
"Reportable Event" shall mean a reportable event as that term is
defined in Title IV of ERISA, except actions of general applicability by the
Secretary of Labor under Section 110 of such Act.
"Revised Commitment Percentage" shall mean, for each Bank, the
percentage set forth opposite such Bank's name under the column headed "Revised
Commitment Percentage" as listed on SCHEDULE 1 hereto.
"Revised Maximum Amount" shall mean, for each Bank, the amount set
forth opposite such Bank's name under the column headed "Revised Maximum Amount"
as listed on SCHEDULE 1 hereto.
15
"Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of (a) each Bank to participate in the making of
Revolving Loans (i) up to the aggregate amount set forth opposite such Bank's
name under the column headed "Revolving Commitment Amount Prior to the
Activation Date" as listed on SCHEDULE 1 hereof, prior to Activation Date, and
(ii) up to the aggregate amount set forth opposite such Bank's name under the
column headed "Revolving Commitment Amount On and After Activation Date" as
listed in SCHEDULE 1 hereof, on and after the Activation Date (or such lesser
amount as shall be determined pursuant to Section 2.9 hereof); (b) each Bank to
participate in the issuance of Letters of Credit pursuant to the Letter of
Credit Commitment; and (c) Agent to make Swing Loans pursuant to the Swing Line
Commitment.
"Revolving Credit Exposure" shall mean, at any time, the sum of (a) the
aggregate principal amount of all Revolving Loans outstanding, (b) the aggregate
principal amount of all Swing Loans outstanding, and (c) the Letter of Credit
Exposure.
"Revolving Credit Note" shall mean any Revolving Credit Note executed
and delivered pursuant to Section 2.1A hereof.
"Revolving Loan" shall mean a Loan granted to Borrower by the Banks in
accordance with Section 2.1A hereof.
"SEC" shall mean the United States Securities and Exchange Commission.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., or any successor to such company.
"Subordinated", as applied to Indebtedness, shall mean that the
Indebtedness has been subordinated (by written terms or written agreement being,
in either case, in form and substance satisfactory to the Banks) in favor of the
prior payment in full of the Debt.
"Subsidiary" of Borrower or any of its Subsidiaries shall mean (a) a
corporation more than fifty percent (50%) of the voting power or capital stock
of which is owned, directly or indirectly, by Borrower or by one or more other
subsidiaries of Borrower or by Borrower and one or more subsidiaries of
Borrower, (b) a partnership or limited liability company of which Borrower, one
or more other subsidiaries of Borrower or Borrower and one or more subsidiaries
of Borrower, directly or indirectly, is a general partner or managing member, as
the case may be, or otherwise has the power to direct the policies, management
and affairs thereof, or (c) any other Person (other than a corporation) in which
Borrower, one or more other subsidiaries of Borrower or Borrower and one or more
subsidiaries of Borrower, directly or indirectly, has at least a majority
ownership interest or the power to direct the policies, management and affairs
thereof.
"Subsidiary Guaranty of Payment" shall mean each Guaranty of Payment of
Debt executed and delivered on or after the Closing Date in connection herewith
by a Guarantor of Payment, as the same may from time to time be amended,
restated or otherwise modified.
16
"Swing Line" shall mean the credit facility established by Agent in
accordance with Section 2.1B hereof.
"Swing Line Commitment" shall mean the commitment of Agent to make
Swing Loans to Borrower up to the maximum aggregate amount at any time
outstanding of Fifteen Million Dollars ($15,000,000) on the terms and conditions
set forth in Section 2.1B hereof.
"Swing Line Note" shall mean the Swing Line Note executed and delivered
pursuant to Section 2.1B hereof.
"Swing Loan" shall mean a Loan granted to Borrower by Agent in
accordance with Section 2.1B hereof.
"Swing Loan Maturity Date" shall mean, with respect to any Swing Loan,
the earlier of (a) thirty (30) days after the date such Swing Loan is made, or
(b) the last day of the Commitment Period.
"Total Capitalization" shall mean (a) Funded Indebtedness plus (b)
Consolidated Tangible Net Worth.
"Total Commitment Amount" shall mean the principal amount of (a) One
Hundred Fifty Million Dollars ($150,000,000) from the Closing Date until the
Activation Date, and (b) on and after the Activation Date, the sum of (i) One
Hundred Million Dollars ($100,000,000) and (ii) Seventy Million Canadian Dollars
(CAD 70,000,000); or such lesser amount as shall be determined pursuant to
Section 2.9 hereof.
"Unmatured Event of Default" shall mean an event or condition which
constitutes, or which with the lapse of any applicable grace period or the
giving of notice or both would constitute, an Event of Default and which has not
been waived by the Majority Banks in writing.
"Voting Power" shall mean, with respect to any Person, the ability to
exercise electoral control, through the ownership, direct or indirect, of shares
of capital stock, partnership interests, membership interests or otherwise, over
the election of members of the board of directors or other similar governing
body of such Person.
"Welfare Plan" shall mean a Plan that is a "welfare plan" within the
meaning of ERISA Section 3 (l).
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity all of the securities or
other ownership interest, of which having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
Any accounting term not specifically defined in this Article I shall
have the meaning ascribed thereto by GAAP.
17
The foregoing definitions shall be applicable to the singular and
plurals of the foregoing defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions of this Agreement, each Bank shall participate to the extent
hereinafter provided in making Loans to Borrower and Canadian Borrowers, and
issuing Letters of Credit at the request of Borrower, in such aggregate amount
as Borrower and Canadian Borrowers shall request pursuant to the Commitment;
provided, however, that in no event shall the aggregate principal amount of all
Loans and Letters of Credit outstanding under this Agreement be in excess of the
Total Commitment Amount.
Prior to the Activation Date, each Bank, for itself and not one for any
other, agrees to participate in Loans made and Letters of Credit issued
hereunder on such basis that (a) immediately after the completion of any
borrowing by Borrower or issuance of a Letter of Credit hereunder, the aggregate
principal amount then outstanding on the Notes (other than the Swing Line Note)
issued to such Bank, when combined with such Bank's pro rata share of the Letter
of Credit Exposure, shall not be in excess of the Maximum Amount for such Bank,
and (b) such aggregate principal amount outstanding on the Notes (other than the
Swing Line Note) issued to such Bank shall represent that percentage of the
aggregate principal amount then outstanding on all Notes (other than the Swing
Line Note) which is such Bank's Commitment Percentage.
On and after the Activation Date:
(a) each Domestic Bank, for itself and not one for any other,
agrees to participate in Revolving Loans made and Letters of Credit
issued hereunder on such basis that (i) immediately after the granting
of any Revolving Loan to Borrower or issuance of a Letter of Credit
hereunder, the aggregate principal amount then outstanding on the
Revolving Credit Note issued to such Domestic Bank, when combined with
such Domestic Bank's pro rata share of the Letter of Credit Exposure,
shall not be in excess of the Revised Maximum Amount for such Domestic
Bank, and (ii) such aggregate principal amount outstanding on the
Revolving Credit Note issued to such Domestic Bank shall represent that
percentage of the aggregate principal amount then outstanding on all
Revolving Credit Notes which is such Domestic Bank's Revised Commitment
Percentage; and
(b) each Canadian Bank, for itself and not for any other,
agrees to participate in CAD Loans granted hereunder on such basis that
(i) immediately after the granting of any CAD Loan to the Canadian
Borrowers, the aggregate principal amount then outstanding on the CAD
Loan Note issued to such Canadian Bank shall not be in excess of the
Revised Maximum Amount for such Canadian Bank, and (ii) such aggregate
18
principal amount outstanding on the CAD Loan Note issued to such
Canadian Bank shall represent that percentage of the aggregate
principal amount then outstanding on all CAD Loan Notes which is such
Canadian Bank's Revised Commitment Percentage.
Prior to the Activation Date, each borrowing (other than Swing Loans)
from the Banks hereunder shall be made pro rata according to the Banks'
respective Commitment Percentages. On and after the Activation Date, the
Revolving Loans shall be made pro rata according to the Domestic Banks'
respective Revised Commitment Percentages and the CAD Loans shall be made pro
rata according to the Canadian Banks' respective Revised Commitment Percentages.
The Loans may be made as Revolving Loans, Swing Loans and CAD Loans,
and Letters of Credit may be issued, as follows:
A. Revolving Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Banks, prior to the Activation Date, and the Domestic
Banks, on and after the Activation Date, shall make a Revolving Loan or
Revolving Loans to Borrower in such amount or amounts as Borrower may from time
to time request, but not exceeding in aggregate principal amount at any time
outstanding hereunder the Revolving Credit Commitments, when such Revolving
Loans are combined with the aggregate principal amount of all Swing Loans
outstanding and the Letter of Credit Exposure. Borrower shall have the option to
borrow Revolving Loans, maturing on the last day of the Commitment Period,
hereunder by means of any combination of (a) Base Rate Loans, or (b) LIBOR
Loans.
Borrower shall pay interest on the unpaid principal amount of Base Rate
Loans outstanding from time to time from the date thereof until paid at the Base
Rate from time to time in effect. Interest on such Base Rate Loans shall be
payable, commencing December 31, 1998, and on the last day of each March, June,
September and December thereafter and at the maturity thereof.
Borrower shall pay interest on the unpaid principal amount of each
LIBOR Loan outstanding from time to time, from the date thereof until paid, at
the Derived LIBOR Rate, fixed in advance for each Interest Period (but subject
to changes in the Applicable Margin) as herein provided for each such Interest
Period. Interest on such LIBOR Loans shall be payable on each Interest
Adjustment Date with respect to an Interest Period (provided that if an Interest
Period exceeds three (3) months, the interest must be paid every three (3)
months, commencing three (3) months from the beginning of such Interest Period).
At the request of Borrower, subject to the notice and other provisions
of Section 2.2 hereof, Agent shall convert Base Rate Loans to LIBOR Loans at any
time and shall convert any LIBOR Loan to a Base Rate Loan on any Interest
Adjustment Date applicable thereto.
The obligation of Borrower to repay the Base Rate Loans and the LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Revolving Credit Note of
19
Borrower in the form of EXHIBIT A hereto, dated the Closing Date, and payable to
the order of such Bank in the principal amount of its Revolving Credit
Commitment, or, if less, the aggregate unpaid principal amount of Revolving
Loans made hereunder by such Bank. Subject to the provisions of this Agreement,
Borrower shall be entitled under this Section 2.1A to borrow funds, repay the
same in whole or in part and re-borrow hereunder at any time and from time to
time during the Commitment Period.
B. Swing Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, Agent shall make a Swing Loan or Swing Loans to Borrower in
such amount or amounts as Borrower may from time to time request; provided that
Borrower shall not request any Swing Loan under the Swing Line if, after giving
effect thereto, (a) the Revolving Credit Exposure would exceed the aggregate
amount of the Revolving Credit Commitments, or (b) the aggregate outstanding
principal amount of all Swing Loans would exceed the Swing Line Commitment. Each
Swing Loan shall be due and payable on the Swing Loan Maturity Date applicable
thereto.
Borrower shall pay interest, for the sole benefit of Agent (and any
Bank that has purchased a participation in such Swing Loan pursuant to this
Section 2.1B), on the unpaid principal amount of each Swing Loan outstanding
from time to time from the date thereof until paid at the Negotiated Rate
applicable to such Swing Loan. Interest on each Swing Loan shall be payable on
the Swing Loan Maturity Date applicable thereto. Each Swing Loan shall bear
interest for a minimum of one (1) day.
The obligation of Borrower to repay the Swing Loans and to pay interest
thereon shall be evidenced by a Swing Line Note of Borrower substantially in the
form of Exhibit B hereto, dated the Closing Date, and payable to the order of
Agent in the principal amount of the Swing Loan Commitment, or, if less, the
aggregate unpaid principal amount of Swing Loans made hereunder by Agent.
Subject to the provisions of this Agreement, Borrower shall be entitled under
this Section 2.1B to borrow funds, repay the same in whole or in part and
reborrow hereunder at any time and from time to time during the Commitment
Period.
On any day when a Swing Loan is outstanding (whether before or after
the maturity thereof), Agent shall have the right to request that each Bank
(other than a Canadian Bank and, on and after the Activation Date, only a
Domestic Bank) purchase a participation in such Swing Loan, and Agent shall
promptly notify each Bank (other than a Canadian Bank and, on and after the
Activation Date, only a Domestic Bank) thereof (by facsimile or telephone,
confirmed in writing). Upon such notice, but without further action, Agent
hereby agrees to grant to each Bank (other than a Canadian Bank and, on and
after the Activation Date, only a Domestic Bank), and each Bank (other than a
Canadian Bank and, on and after the Activation Date, only a Domestic Bank)
hereby agrees to acquire from Agent, an undivided participation interest in such
Swing Loan in an amount equal to such Bank's Commitment Percentage or Revised
Commitment Percentage, as then applicable, of the aggregate principal amount of
such Swing Loan. In consideration and in furtherance of the foregoing, each Bank
(other than a Canadian Bank and, on and after the Activation Date, only a
Domestic Bank) hereby absolutely and
20
unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for its sole account, such Bank's ratable share of such Swing Loan
(determined in accordance with such Bank's Commitment Percentage or Revised
Commitment Percentage, as then applicable). Each Bank (other than a Canadian
Bank and, on and after the Activation Date, only a Domestic Bank) acknowledges
and agrees that its obligation to acquire participations in Swing Loans pursuant
to this Section 2.1B is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of an Unmatured Event of Default or an Event of Default, and that
each such payment shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever and whether or not such Bank's
Revolving Credit Commitment shall have been reduced or terminated. Each Bank
(other than a Canadian Bank and, on and after the Activation Date, only a
Domestic Bank) shall comply with its obligation under this Section 2.1B by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.2(b) with respect to Revolving Loans to be made by such Bank.
If Agent so elects, by giving notice to Borrower and the Banks (other
than the Canadian Banks and, on and after the Activation Date, only the Domestic
Banks), Borrower agrees that Agent shall have the right, in its sole discretion,
to require that any Swing Loan be refinanced as a Revolving Loan. Such Revolving
Loan shall be a Base Rate Loan unless and until converted by Borrower to a LIBOR
Loan pursuant to Sections 2.1A and 2.2 hereof. Upon receipt of such notice by
Borrower, Borrower shall be deemed on such day to have requested a Revolving
Loan in the principal amount of the Swing Loan in accordance with Sections 2.1A
and 2.2 hereof. Each Bank (other than a Canadian Bank and, on and after the
Activation Date, only a Domestic Bank) agrees to make a Revolving Loan on the
date of such notice, subject to no conditions precedent whatsoever. Each Bank
(other than a Canadian Bank and, on and after the Activation Date, only a
Domestic Bank) acknowledges and agrees that such Bank's obligation to make a
Revolving Loan pursuant to Section 2.1A when required by this Section 2.1B is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of an
Unmatured Event of Default or Event of Default, and that its payment to Agent,
for the account of Agent, of the proceeds of such Revolving Loan shall be made
without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not such Bank's Revolving Credit Commitment
shall have been reduced or terminated. Borrower irrevocably authorizes and
instructs Agent to apply the proceeds of any borrowing pursuant to this
paragraph to repay in full such Swing Loan.
C. Letters of Credit.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, Agent (or such other Bank as shall agree to be the Fronting
Bank) shall, in its own name, but only as agent for the Banks (other than the
Canadian Banks and, on and after the Activation Date, only the Domestic Banks),
issue such Letters of Credit for the account of Borrower or any Guarantor of
Payment, as Borrower may from time to time request. Borrower shall not request
any Letter of Credit (and neither Agent nor any Fronting Bank shall be obligated
to issue any Letter of Credit) if, after giving effect thereto, (a) the Letter
of Credit Exposure would exceed the
21
Letter of Credit Commitment, or (b) the Revolving Credit Exposure would exceed
the aggregate amount of the Revolving Credit Commitments. The issuance of each
Letter of Credit shall confer upon each Bank (other than the Canadian Banks and,
on and after the Activation Date, only the Domestic Banks) the benefits and
liabilities of a participation consisting of an undivided pro rata interest in
the Letter of Credit to the extent of that Bank's Commitment Percentage or
Revised Commitment Percentage, as applicable.
Each request for a Letter of Credit shall be delivered to Agent (and
the Fronting Bank, if the Fronting Bank is a Bank other than Agent) not later
than 11:00 A.M. (Cleveland, Ohio time) three (3) Business Days prior to the day
upon which the Letter of Credit is to be issued. Each such request shall be in a
form acceptable to Agent (and the Fronting Bank, if the Fronting Bank is a Bank
other than Agent) and shall specify the face amount thereof, whether such Letter
of Credit is a commercial documentary or a standby letter of credit, the account
party, the beneficiary, the intended date of issuance, the expiry date thereof,
and the nature of the transaction to be supported thereby. Concurrently with
each such request, Borrower, and any Guarantor of Payment for whose benefit the
Letter of Credit is to be issued, shall execute and deliver to Agent (or the
Fronting Bank, if the Fronting Bank is a Bank other than Agent) an appropriate
application and agreement, being in the standard form of the Fronting Bank for
such letters of credit, as amended to conform to the provisions of this
Agreement if required by Agent. Agent shall give each Bank (other than a
Canadian Bank and, on and after the Activation Date, only a Domestic Bank)
notice of each such request for a Letter of Credit.
In respect of each Letter of Credit and the drafts thereunder, if any,
whether issued for the account of Borrower or a Guarantor of Payment, Borrower
agrees to pay to Agent, for the pro rata benefit of the Banks (other than the
Canadian Banks and, on and after the Activation Date, only the Domestic Banks),
a commission based upon the face amount of the Letter of Credit, which shall be
paid quarterly in arrears, on the last day of each March, June, September and
December, at a rate per annum equal to (a) the then current Applicable Margin
for LIBOR Loans (i.e. the Applicable Margin for LIBOR Loans in effect on the
date such Letter of Credit is issued and, as to each quarterly payment
thereafter, the Applicable Margin for LIBOR Loans in effect on the date of such
quarterly payment), times (b) the average undrawn face amount of such Letter of
Credit during such fiscal quarter.
Whenever a Letter of Credit is drawn, Borrower shall immediately
reimburse the Fronting Bank for the amount drawn. In the event that the amount
drawn is not reimbursed by Borrower within one (1) Business Day of the drawing
of such Letter of Credit, at the sole option of Agent (and the Fronting Bank, if
the Fronting Bank is a Bank other than Agent), Borrower shall be deemed to have
requested a Revolving Loan, subject to the provisions of Section 2.1A, in the
amount drawn. Such Revolving Loan shall be evidenced by the Revolving Credit
Notes. Each Bank (other than a Canadian Bank and, on and after the Activation
Date, only a Domestic Bank) agrees to make a Revolving Loan on the date of such
notice, subject to no conditions precedent whatsoever. Each Bank (other than a
Canadian Bank and, on and after the Activation Date, only a Domestic Bank)
acknowledges and agrees that its obligation to make a Revolving Loan pursuant to
Section 2.1A when required by this Section 2.1C is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including, without
limitation, the
22
occurrence and continuance of an Unmatured Event of Default or Event of Default,
and that its payment to Agent, for the account of Agent, of the proceeds of such
Revolving Loan shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever and whether or not such Bank's
Revolving Credit Commitment shall have been reduced or terminated. Borrower
irrevocably authorizes and instructs Agent to apply the proceeds of any
borrowing pursuant to this paragraph to reimburse, in full, the Fronting Bank
for the amount drawn on such Letter of Credit. Each such Revolving Loan shall be
deemed to be a Base Rate Loan unless otherwise requested by and available to
Borrower hereunder. Each Bank is hereby authorized to record on its records
relating to its Revolving Credit Note such Bank's pro rata share of the amounts
paid and not reimbursed on the Letters of Credit.
D. CAD Loans.
Subject to the terms and conditions of this Agreement, during the
Canadian Commitment Period, the Canadian Banks shall make a CAD Loan or CAD
Loans to any Canadian Borrower in such amount or amounts as such Canadian
Borrower may from time to time request, but not exceeding in aggregate principal
amount at any time outstanding hereunder the aggregate amount of the Canadian
Commitments. Canadian Borrowers shall have the option to borrow CAD Loans,
maturing on the last day of the Canadian Commitment Period, by means of any
combination of (a) CAD Base Rate Loans, or (b) CAD Fixed Rate Loans.
Canadian Borrowers shall pay interest, for the sole benefit of the
Canadian Banks, on the unpaid principal amount of CAD Base Rate Loans
outstanding from time to time, from the date thereof until paid, at the CAD Base
Rate from time to time in effect. Interest on such CAD Base Rate Loans shall be
payable on the last day of each March, June, September and December of each year
and at the maturity thereof.
Canadian Borrowers shall pay interest, for the sole benefit of the
Canadian Banks, on the unpaid principal amount of each CAD Fixed Rate Loan
outstanding from time to time, from the date thereof until paid, at the Derived
CAD Rate, fixed in advance for each Interest Period (but subject to changes in
the Applicable Margin) as herein provided for each such Interest Period.
Interest on such CAD Fixed Rate Loans shall be payable on each Interest
Adjustment Date with respect to an Interest Period (provided that if an Interest
Period exceeds three (3) months, the interest must be paid every three (3)
months, commencing three (3) months from the beginning of such Interest Period).
At the request of Canadian Borrowers, subject to the notice and other
provisions of Section 2.2 hereof, the Canadian Banks shall convert CAD Base Rate
Loans to CAD Fixed Rate Loans at any time and shall convert any CAD Fixed Rate
Loan to a CAD Base Rate Loan on any Interest Adjustment Date applicable thereto.
The obligation of Canadian Borrowers to repay the CAD Loans made by
each Canadian Bank and to pay interest thereon shall be evidenced by a CAD Loan
Note of Canadian Borrowers in the form of EXHIBIT C hereto, dated the Activation
Date, and payable to the order of such Canadian Bank in the principal amount of
its Canadian Commitment, or, if less, the aggregate
23
unpaid principal amount of CAD Loans made hereunder by such Canadian Bank.
Subject to the provisions of this Agreement, Canadian Borrowers shall be
entitled under this Section 2.1D to borrow funds, repay the same in whole or in
part and re-borrow hereunder at any time and from time to time during the
Canadian Commitment Period.
SECTION 2.2. CONDITIONS TO LOANS AND LETTERS OF CREDIT. The obligation
of the Banks to make Revolving Loans and CAD Loans, convert any Revolving Loan
or CAD Loan or continue any LIBOR Loan or CAD Fixed Rate Loan, or of Agent (or a
Fronting Bank) to issue Letters of Credit or make Swing Loans hereunder is
conditioned, in the case of each borrowing, conversion, continuation or issuance
hereunder, upon:
(a) all applicable conditions precedent as listed in Article IV hereof
shall have been satisfied;
(b) with respect to the making or conversion of any Revolving Loan,
receipt by Agent of a Notice of Revolving Loan, such notice to be received by
11:00 A.M. (Cleveland, Ohio time) on the proposed date of borrowing or
conversion with respect to a Base Rate Loan, and, with respect to the making,
conversion or continuation of any LIBOR Loan, by 11:00 A.M. (Cleveland, Ohio
time) three (3) Business Days prior to the proposed date of such borrowing,
conversion or continuation. Agent shall notify each Bank of the date, amount and
initial Interest Period (if applicable) promptly upon the receipt of such
notice, and, in any event, by 2:00 P.M. (Cleveland, Ohio time) on the date such
notice is received. On the date that any Revolving Loan is to be made, each Bank
shall provide Agent, not later than 3:00 P.M. (Cleveland, Ohio time), with the
Dollar amount in federal or other immediately available funds required of it.
(c) with respect to the making or conversion of any CAD Loan, receipt
by Agent of a Notice of CAD Loan, such notice to be received by 11:00 A.M.
(Cleveland, Ohio time) on the proposed date of borrowing or conversion with
respect to a CAD Base Rate Loan, and, with respect to the making, conversion or
continuation of any CAD Fixed Rate Loan , by 11:00 A.M. (Cleveland, Ohio time)
three (3) Business Days prior to the proposed date of such borrowing, conversion
or continuation. Agent shall notify each Canadian Bank of the date, amount and
initial Interest Period (if applicable) promptly upon the receipt of such
notice, and, in any event, by 2:00 P.M. (Cleveland, Ohio time) on the date such
notice is received. On the date that any CAD Loan is to be made, each Canadian
Bank shall provide Agent, at the Designated Lending Office, not later than 3:00
P.M. (Cleveland, Ohio time), with the CAD amount in immediately available funds
required of it;
(d) with respect to Swing Loans, receipt by Agent of a Notice of Loan,
such notice to be received by 11:00 A.M. (Cleveland, Ohio time) on the proposed
date of borrowing;
(e) with respect to Letters of Credit, satisfaction of the notice
provisions set forth in Section 2.1C hereof;
(f) each request of Borrower for (i) a Base Rate Loan shall be in an
amount of not less than One Million Dollars ($1,000,000), (ii) a LIBOR Loan
shall be in an amount of not less
24
than Three Million Dollars ($3,000,000), increased by increments of One Million
Dollars ($1,000,000), and (iii) a Swing Loan shall be in the amount of not less
than Two Hundred Fifty Thousand Dollars ($250,000);
(g) each request of a Canadian Borrower for (i) a CAD Base Rate Loan
shall be in an amount of not less than One Million Canadian Dollars (CAD
1,000,000), and (ii) a CAD Fixed Rate Loan shall be in an amount of not less
than Three Million Canadian Dollars (CAD 3,000,000), increased by increments of
One Million Canadian Dollars (CAD 1,000,000);
(h) the fact that no Unmatured Event of Default or Event of Default
shall then exist or immediately after the making, conversion or continuation of
the Loan or issuance of the Letter of Credit would exist; and
(i) the fact that each of the representations and warranties contained
in Article VI hereof shall be true and correct with the same force and effect as
if made on and as of the date of the making, conversion or continuation of such
Loan, or the issuance of the Letter of Credit, except to the extent that any
thereof expressly relate to an earlier date.
At no time shall Borrower request that LIBOR Loans be outstanding for
more than ten (10) different Interest Periods at any time or shall Canadian
Borrowers request that CAD Fixed Rate Loans be outstanding for more than five
(5) different Interest Periods at any time.
Each request by Borrower or any Canadian Borrower for the making,
conversion or continuation of a Loan, or for the issuance of a Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower and
Canadian Borrowers as of the date of such request as to the facts specified in
(h) and (i) above.
Each request for a LIBOR Loan shall be irrevocable and binding on
Borrower and Borrower shall indemnify Agent and the Banks against any loss or
expense incurred by Agent or the Banks as a result of any failure by Borrower to
consummate such transaction including, without limitation, any loss or expense
incurred by reason of liquidation or re-employment of deposits or other funds
acquired by the Banks to fund such LIBOR Loan. A certificate as to the amount of
such loss or expense submitted by the Banks to Borrower shall be conclusive and
binding for all purposes, absent manifest error.
Each request for a CAD Fixed Rate Loan shall be irrevocable and binding
on Canadian Borrowers and Canadian Borrowers shall indemnify Agent and the
Canadian Banks against any loss or expense incurred by Agent or the Canadian
Banks as a result of any failure by Canadian Borrowers to consummate such
transaction including, without limitation, any loss or expense incurred by
reason of liquidation or re-employment of deposits or other funds acquired by
the Canadian Banks to fund such CAD Fixed Rate Loan. A certificate as to the
amount of such loss or expense submitted by the Canadian Banks to Canadian
Borrowers shall be conclusive and binding for all purposes, absent manifest
error.
25
SECTION 2.3. CANADIAN BORROWERS. At the request of Borrower, a
Subsidiary of Borrower may become a Canadian Borrower hereunder, provided that
all of the following requirements are met: (a) Borrower shall have provide to
Agent a written request that such Subsidiary be designated as a Canadian
Borrower pursuant to the terms of this Agreement; (b) such Subsidiary shall be
organized under the laws of Canada or a Province of Canada and shall be a
Wholly-Owned Subsidiary of Borrower; (c) Borrower shall have guaranteed the
obligations of such Subsidiary under this Agreement pursuant to the terms of a
Parent Guaranty of Payment; (d) such Subsidiary shall have executed and
delivered to Agent, for delivery to each Canadian Bank, a CAD Loan Note in favor
of such Canadian Bank, and, if required by Agent, all Canadian Borrowers shall
execute and deliver new CAD Loan Notes replacing the existing CAD Loan Notes, if
any; (e) such Subsidiary shall have executed an Assumption Agreement; and (f)
Borrower shall have provided to Agent all of the other documents required by
Section 4.2 hereof with respect to such Subsidiary.
SECTION 2.4. JOINT AND SEVERAL LIABILITY OF CANADIAN BORROWERS. Each
request by a Canadian Borrower for the making, conversion or continuation of a
CAD Loan shall be deemed to be a joint and several request by all Canadian
Borrowers. Each Canadian Borrower hereby authorizes any other Canadian Borrower
to request a CAD Loan hereunder and agrees that it is receiving or will receive
a direct pecuniary benefit therefor. Each Canadian Borrower acknowledges and
agrees that the Canadian Banks are providing the Canadian Commitments for the
Canadian Borrowers at the request of each Canadian Borrower and with the
understanding that each Canadian Borrower is and shall remain fully liable,
jointly and severally, for payment in full of all CAD Loans and other
Indebtedness and obligations incurred by Canadian Borrowers in connection with
the Canadian Commitments.
SECTION 2.5. MAXIMUM LIABILITY OF EACH CANADIAN BORROWER.
(a) Subject to subpart (e) hereof, but otherwise notwithstanding
anything to the contrary contained in this Agreement, the maximum liability of
any Canadian Borrower under this Agreement shall not exceed the sum of (a) that
portion of the Loans and Letters of Credit, the proceeds of which are used to
make Valuable Transfers (as hereinafter defined) to or for the benefit of such
Canadian Borrower, plus (b) ninety-five percent (95%) of the Adjusted Net Worth
(as hereinafter defined), but only to the extent that the Adjusted Net Worth is
a positive number, of such Canadian Borrower at the date of this Agreement.
(b) For purposes of this Section 2.5,
"Adjusted Net Worth" shall mean, as of any date of
determination thereof, the excess of (i) the amount of the fair
saleable value of the assets of such Canadian Borrower as of the date
of such determination, determined in accordance with applicable federal
and state laws governing determinations of insolvency of debtors, over
(ii) the amount of all liabilities of such Canadian Borrower,
contingent or otherwise, as of the date of such determination,
determined on the basis provided in the preceding clause (i), and in
all events prior to giving effect to Valuable Transfers; and
26
"Valuable Transfer" shall mean (i) all loans, advances or
capital contributions made to such Canadian Borrower with proceeds of
the Loans and Letters of Credit, (ii) the fair market value of all
property acquired with proceeds of the Loans and Letters of Credit and
transferred to such Canadian Borrower, (iii) the interest on and the
fees in respect of the Loans and Letters of Credit, the proceeds of
which are used to make such a Valuable Transfer, and (iv) the value of
any quantifiable economic benefits not included in clauses (i) through
(iii) above, but includable in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors,
accruing to such Canadian Borrower as a result of the Loans and Letters
of Credit.
(c) Each Canadian Borrower agrees that the Debt may at any time and
from time to time exceed the maximum liability of such Canadian Borrower
hereunder without impairing this Agreement or affecting the rights and remedies
of Agent and the Banks hereunder.
(d) No payment or payments made by any Canadian Borrower or any other
Obligor or any other Person or received or collected by Agent or the Canadian
Banks from any Canadian Borrower or any other Obligor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Indebtedness and other obligations incurred pursuant to the Canadian
Commitments shall be deemed to modify, reduce, release or otherwise affect the
liability of any Canadian Borrower or other Obligor under this Agreement, and
each Canadian Borrower shall, notwithstanding any such payment or payments
(other than payments made to Agent or the Canadian Banks by such Canadian
Borrower or payments received or collected by Agent or the Canadian Banks from
such Canadian Borrower), remain liable for all of the Indebtedness and other
obligations incurred pursuant to the Canadian Commitments up to the maximum
liability amount of such Canadian Borrower determined as set forth in this
Section until all of the Indebtedness and other obligations incurred pursuant to
the Canadian Commitments is indefeasibly paid in full in cash.
(e) Anything in this Section 2.5 to the contrary notwithstanding, in no
event shall such Canadian Borrower's liability set forth in this Section 2.5
exceed the maximum amount that, after giving effect to the incurring of the
obligations hereunder and to any rights to contribution of such Canadian
Borrower from other affiliates of such Canadian Borrower or any Obligor, would
not render the Canadian Banks' rights to payment hereunder void, voidable or
avoidable under any applicable fraudulent transfer law; and further provided
that if a greater amount of the Indebtedness and other obligations incurred
pursuant to the Canadian Commitments than the maximum liability set forth in
this Section 2.5 could be repaid by such Canadian Borrower as a result of an
increase in such Canadian Borrower's Adjusted Net Worth subsequent to the date
hereof, without rendering the Canadian Banks' rights to payment hereunder void,
voidable or avoidable under any applicable fraudulent transfer law, then the
amount of such Canadian Borrower's maximum liability calculated in subpart (a)
of this Section 2.5 shall be calculated based upon such Canadian Borrower's
Adjusted Net Worth on such later date, rather than the date of execution of this
Agreement.
SECTION 2.6. ACTIVATION DATE.
27
(a) At any time Borrower may request of Agent, with a copy to each of
the Banks, that the Canadian Commitments become effective. Such request shall be
made in writing not fewer than fifteen (15) Business Days, or such shorter time
as shall be agreed to by Agent and the Canadian Banks, prior to the proposed
date upon which Borrower has requested that the Canadian Commitments become
effective; provided, however, that the Canadian Commitments shall only become
effective if (i) an Unmatured Event of Default or Event of Default shall not
have occurred; (ii) there shall be one or more Canadian Borrowers hereunder;
(iii) a material adverse change, in the opinion of Agent and the Majority Banks
shall not have occurred in the financial condition, operations or prospects of
the Companies; (iv) an opinion of Canadian counsel, in form and substance
acceptable to Agent and the Canadian Banks, shall have been delivered to Agent
for the benefit of the Banks, with respect to the validity and enforceability of
the Credit Agreement and the CAD Loan Notes under Canadian law; and (v) Agent
shall have provided certification to the Banks that the Canadian Commitments
have become effective and that the Revised Commitment Percentages and the
Revised Maximum Amounts are in effect.
(b) Upon the Canadian Commitments becoming effective, (i) the
Commitment Percentage of each Bank shall become the Revised Commitment
Percentage applicable to such Bank; (ii) all outstanding Revolving Loans shall
be repaid (subject to the prepayment fees set forth in Section 2.8 hereof) and
may be reborrowed in accordance with the terms and conditions of this Agreement;
(iii) the Revolving Credit Commitments of the Banks shall be reduced in an
amount to be consistent with the definition of "Revolving Credit Commitment";
(iv) each Revolving Credit Note shall be marked "Canceled" and returned to Agent
for delivery to Borrower and new Notes shall be executed and delivered by
Borrower to each Domestic Bank and by Canadian Borrowers to each Canadian Bank;
(v) the Commitment of any Bank that is not a Domestic Bank or a Canadian Bank
shall automatically be terminated and such Bank shall cease to be a Bank under
the terms of this Agreement, except with respect to any right to indemnification
pursuant to Section 10.6 hereof.
SECTION 2.7. PAYMENT ON NOTES, ETC.
(a) Payments in CAD. All payments (including prepayments) of principal
and interest on any CAD Loan and all payments with respect to the facility fee
for or any other payment with respect to the Canadian Commitments shall be made
in same day CAD funds at the Designated Lending Office for the benefit of the
Canadian Banks. All such payments shall be remitted by Borrower to the
Designated Lending Office not later than 11:00 A.M. (Cleveland, Ohio time) on
the due date thereof in same day funds. In the event that such payment is due on
a date when the Designated Lending Office is not open for business, then such
payment shall be made on the next preceding day upon which the Designated
Lending Office is open for business. Any payments received at Designated Lending
Office after 11:00 A.M. (Cleveland, Ohio time) shall be deemed to have been made
and received on the next following Business Day.
(b) Payments in Dollars. With respect to any Revolving Loan or Swing
Loan, all payments (including prepayments) to Agent of the principal of or
interest on such Loan shall be made in Dollars. With respect to any other
payment to Agent and the Banks that is not covered
28
by subsection (a) hereof, such other payment, including but not limited to
principal, interest, fees or any other amount owed by Borrower under this
Agreement, shall be made in Dollars. All payments described in this subsection
(b) shall be remitted to Agent at its main office for the account of the Banks
(other than the Canadian Banks and, on and after the Activation Date, for the
account of the Domestic Banks) except as otherwise provided herein, not later
than 2:00 P.M. (Cleveland, Ohio time) on the due date thereof in immediately
available funds. Any such payments received by Agent after 2:00 P.M. (Cleveland,
Ohio time) shall be deemed to have been made and received on the next following
Business Day.
(c) Payments Net of Taxes. All payments under this Agreement shall be
made absolutely net of, without deduction or offset for, and altogether free and
clear of, any and all present and future taxes, levies, deductions, charges and
withholdings and all liabilities with respect thereto, under the laws of the
United States of America or any foreign jurisdiction (or any state or political
subdivision thereof), excluding income and franchise taxes imposed on any Bank
(and withholding relating thereto) under the laws of the United States of
America or Canada or any other foreign jurisdiction (or any state or political
subdivision thereof). If Borrower or any Canadian Borrower is compelled by law
to deduct any such taxes or levies (other than such excluded taxes) or to make
any such other deductions, charges or withholdings, then Borrower or such
Canadian Borrower, as the case may be, shall pay such additional amounts as may
be necessary in order that the net payments after such deduction, and after
giving effect to any United States or foreign jurisdiction (or any state or
political subdivision thereof) income taxes required to be paid by the Banks in
respect of such additional amounts, shall equal the amount of interest provided
in Section 2.1 hereof for each Loan plus any principal then due.
(d) Payments to Banks. Upon Agent's receipt of payments hereunder,
Agent shall immediately distribute to each Bank its ratable share, if any, of
the amount of principal, interest, and facility and other fees received by it
for the account of such Bank. Payments received by Agent in Dollars shall be
delivered to the Banks in immediately available funds. Payments received at the
Designated Lending Office in CAD shall be delivered to the Canadian Banks in
same day funds. Each Bank shall record any principal, interest or other payment,
the principal amounts of the Prime Rate Loans, LIBOR Loans, CAD Base Rate Loans,
CAD Fixed Rate Loans, Swing Loans, the type of currency for each Loan, all
prepayments and the applicable dates, including Interest Periods, with respect
to the Loans made and payments received by such Bank, by such method as such
Bank may generally employ; provided, however, that failure to make any such
entry shall in no way detract from the obligations of Borrower or Canadian
Borrower, as the case may be, under each such Note. The aggregate unpaid amount
of Loans, types of Loans and Interest Periods with respect to such Loans set
forth on the records of Agent shall be rebuttably presumptive evidence of the
principal and interest owing and unpaid on each Note.
(e) Timing of Payments. Whenever any payment to be made hereunder,
including, without limitation, any payment to be made on any Note, shall be
stated to be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall in
each case be included in the computation of the interest payable
29
on such Note; provided, however, that, with respect to any LIBOR Loan or CAD
Loan, if the next succeeding Business Day falls in the succeeding calendar
month, such payment shall be made on the preceding Business Day and the relevant
Interest Period shall be adjusted accordingly.
SECTION 2.8. PREPAYMENT.
(a) Right to Prepay.
(i) Prior to the Activation Date, Borrower shall have the
right, at any time or from time to time, to prepay, on a pro rata basis
for all of the Banks (other than the Canadian Banks), all or any part
of the principal amount of the Revolving Credit Notes then outstanding
as designated by Borrower, plus interest accrued on the amount so
prepaid to the date of such prepayment.
(ii) On and after the Activation Date:
(A) Borrower shall have the right, at any time or
from time to time, to prepay, on a pro rata basis for all of
the Domestic Banks, all or any part of the principal amount of
the Revolving Credit Notes then outstanding, as designated by
Borrower, plus interest accrued on the amount so prepaid to
the date of such prepayment; and
(B) Canadian Borrowers shall have the right, at any
time or from time to time, to prepay, on a pro rata basis for
all of the Canadian Banks, all or any part of the principal
amount of the CAD Loan Notes then outstanding, as designated
by Canadian Borrowers, plus interest accrued on the amount so
prepaid to the date of such prepayment.
(iii) Borrower shall have the right, at any time or from time
to time, to prepay, for the benefit of Agent, all or any part of the
principal amount of the Swing Line Note then outstanding, as designated
by Borrower, plus interest accrued on the amount so prepaid to the date
of such prepayment.
(b) Prepayment Fees.
(i) Prepayments of Base Rate Loans and CAD Base Rate Loans
shall be without any premium or penalty.
(ii) In the case of prepayment of a LIBOR Loan, Borrower
agrees that if the reinvestment rate with respect to LIBOR Loans, as
quoted by the money desk of Agent ("Reinvestment Rate"), shall be lower
than the LIBOR Rate applicable to the LIBOR Loan which is intended to
be prepaid (hereinafter, "Last LIBOR"), then Borrower shall, upon
written notice by Agent, promptly pay to Agent, for the benefit of (A)
the Banks (other than the Canadian Banks), if such prepayment is made
prior to the Activation Date,
30
or (B) the Domestic Banks, if such prepayment is made on or after the
Activation Date, in immediately available funds, a prepayment fee equal
to the product of (1) a rate (the "Prepayment Rate") which shall be
equal to the difference between the Last LIBOR and the Reinvestment
Rate, times (2) the principal amount of the LIBOR Loan which is to be
prepaid, times (3) (x) the number of days remaining in the Interest
Period of the LIBOR Loan which is to be prepaid divided by (y) three
hundred sixty (360). Each prepayment of a LIBOR Loan shall be in the
aggregate principal sum of not less than Three Million Dollars
($3,000,000), except in the case of a mandatory prepayment pursuant to
Section 2.12 or Article III hereof.
(iii) In the case of prepayment of a CAD Fixed Rate Loan,
Canadian Borrowers agree that if the reinvestment rate for CAD funds,
as quoted by the money desk of Agent ("CAD Reinvestment Rate"), shall
be lower than the Canadian Domestic Rate applicable to the CAD Fixed
Rate Loan which is intended to be prepaid (hereinafter, "Last CAD
Rate"), then Canadian Borrowers shall, upon written notice by Agent,
promptly pay to Agent at the Designated Lending Office, for the benefit
of the Canadian Banks, in immediately available funds, a prepayment fee
equal to the product of (1) a rate (the "Prepayment Rate") which shall
be equal to the difference between the Last CAD Rate and the CAD
Reinvestment Rate, times (2) the principal amount of the CAD Fixed Rate
Loan which is to be prepaid, times (3) (x) the number of days remaining
in the Interest Period of the CAD Fixed Rate Loan which is to be
prepaid divided by (y) three hundred sixty (360). Each prepayment of a
CAD Fixed Rate Loan shall be in the aggregate principal sum of not less
than Three Million Canadian Dollars (CAD 3,000,000), except in the case
of a mandatory prepayment pursuant to Section 2.12 or Article III
hereof.
(iv) In the case of prepayment of a Swing Loan, Borrower
agrees to pay Agent, on demand, for any resulting loss, cost or expense
incurred by Agent as a result thereof, including, without limitation,
any loss incurred in obtaining, liquidating or employing deposits.
(c) Notice of Prepayment.
(i) Borrower shall give Agent written notice of prepayment of
any Base Rate Loan or Swing Loan by not later than 11:00 A.M.
(Cleveland, Ohio time) on the Business Day such prepayment is to be
made and written notice of the prepayment of any LIBOR Loan not later
than 1:00 P.M. (Cleveland, Ohio time) three (3) Business Days before
the Business Day on which such prepayment is to be made.
(ii) Canadian Borrowers shall give Agent written notice of
prepayment of any CAD Base Rate Loan by not later than 11:00 A.M.
(Cleveland, Ohio time) on the Business Day such prepayment is to be
made and written notice of the prepayment of any CAD Fixed Rate Loan
not later than 1:00 P.M. (Cleveland, Ohio time) three (3) Business Days
before the Business Day on which such prepayment is to be made.
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SECTION 2.9. FACILITY AND OTHER FEES.
(a) Prior to the Activation Date, Borrower shall pay to Agent, for the
ratable account of the Banks (other than the Canadian Banks), as a consideration
for the Commitment hereunder, a facility fee from the date hereof until the
earlier of the Activation Date or the last day of the Commitment Period equal to
(i) the Applicable Facility Fee Rate in effect on the payment date, times (ii)
the Total Commitment Amount. The facility fee shall be payable quarterly, in
arrears, commencing December 31, 1998, and on the last day of each December,
March, June and September thereafter and on (A) the Activation Date and (B) the
last day of the Commitment Period.
(b) On and after the Activation Date, Borrower shall pay to Agent, for
the ratable account of the Domestic Banks, as a consideration for the Revolving
Credit Commitments hereunder, a facility fee from the Activation Date until the
last day of the Commitment Period equal to (i) the Applicable Facility Fee Rate
in effect on the payment date, times (ii) the average daily aggregate amount of
the Revolving Credit Commitments in effect during such quarter. The facility fee
shall be payable quarterly, in arrears, on the last day of each March, June,
September and December of each year and on the last day of the Commitment
Period.
(c) On and after the Activation Date, Canadian Borrowers shall pay to
Agent at the Designated Lending Office, for the ratable account of the Canadian
Banks, as a consideration for the Canadian Commitments hereunder, a facility fee
from the Activation Date until the last day of the Canadian Commitment Period
equal to (i) the Applicable Facility Fee Rate in effect on the payment date,
times (ii) the average daily aggregate amount of the Canadian Commitments in
effect during such quarter. The facility fee shall be payable quarterly, in
arrears, on the last day of each March, June, September and December of each
year and on the last day of the Commitment Period.
(d) Borrower shall pay to Agent, for its sole benefit, all fees set
forth in the Agent Fee Letter.
SECTION 2.10. REDUCTION OF COMMITMENT.
(a) Prior to the Activation Date, Borrower may at any time or from time
to time permanently reduce in whole or ratably in part the Commitment of the
Banks to an amount not less than the aggregate principal amount of the Loans and
Letters of Credit then outstanding, by giving Agent not fewer than three (3)
Business Days' notice, provided that any such partial reduction shall be in an
aggregate amount, for all of the Banks, of Five Million Dollars ($5,000,000), or
any integral multiple thereof. Agent shall promptly notify each Bank of the date
of each such reduction and such Bank's proportionate share thereof. If required
by Agent, Borrower, Canadian Borrowers, the Banks and Agent shall execute an
amendment to this Agreement to make any conforming changes deemed necessary or
appropriate by Agent as a result of any such reduction of Commitment. After each
such reduction, the facility fees payable hereunder shall be calculated upon the
Commitment of the Banks as so reduced.
32
(b) On and after the Activation Date:
(i) Borrower may at any time or from time to time permanently
reduce in whole or ratably in part the Revolving Credit Commitments of
the Domestic Banks to an amount not less than the Revolving Credit
Exposure, by giving Agent not fewer than three (3) Business Days'
notice, provided that any such partial reduction shall be in an
aggregate amount, for all of the Domestic Banks, of Five Million
Dollars ($5,000,000), or any integral multiple thereof. Agent shall
promptly notify each Domestic Bank of the date of each such reduction
and such Domestic Bank's proportionate share thereof. If required by
Agent, Borrower, Canadian Borrowers, the Banks and Agent shall execute
an amendment to this Agreement to make any conforming changes deemed
necessary or appropriate by Agent as a result of any such reduction of
the Revolving Credit Commitments. After each such reduction, the
facility fees payable with respect to the Revolving Credit Commitments
shall be calculated upon the Revolving Credit Commitments of the
Domestic Banks as so reduced; or
(ii) Canadian Borrowers may at any time or from time to time
permanently reduce in whole or ratably in part the Canadian Commitments
of the Canadian Banks to an amount not less than the CAD Exposure, by
giving Agent not fewer than three (3) Business Days' notice, provided
that any such partial reduction shall be in an aggregate amount, for
all of the Canadian Banks, of Five Million Canadian Dollars (CAD
5,000,000), or any integral multiple thereof. Agent shall promptly
notify each Canadian Bank of the date of each such reduction and such
Canadian Bank's proportionate share thereof. If required by Agent,
Borrower, Canadian Borrowers, the Banks and Agent shall execute an
amendment to this Agreement to make any conforming changes deemed
necessary or appropriate by Agent as a result of any such reduction of
the Canadian Commitments. After each such reduction, the facility fees
with respect to the Canadian Commitments shall be calculated upon the
Canadian Commitments of the Canadian Banks as so reduced.
(c) If Borrower and Canadian Borrowers reduce in whole the Commitment
of the Banks, on the effective date of such reduction (Borrower and Canadian
Borrowers having prepaid in full the unpaid principal balance, if any, of the
Notes, together with all interest and facility and other fees accrued and
unpaid, and provided that no Letter of Credit Exposure shall exist), all of the
Notes shall be delivered to Agent marked "Canceled" and Agent shall redeliver
such Notes to Borrower and Canadian Borrowers. Any partial reduction in the
Commitment, the Revolving Credit Commitments or the Canadian Commitments shall
be effective during the remainder of the Commitment Period.
SECTION 2.11. COMPUTATION OF INTEREST AND FEES; DEFAULT RATE. Interest
on Loans (other than Base Rate Loans and CAD Base Rate Loans) and facility and
other fees and charges hereunder shall be computed on the basis of a year having
three hundred sixty (360) days and calculated for the actual number of days
elapsed. Interest on Base Rate Loans and CAD Base Rate Loans shall be computed
on the basis of a year having three hundred sixty-five (365) days or three
hundred sixty-six (366) days, as the case may be, and calculated for the actual
33
number of days elapsed. Anything herein to the contrary notwithstanding, if an
Event of Default shall occur hereunder, (a) the principal of each Note and the
unpaid interest thereon shall bear interest, until paid, at the Default Rate;
and (b) the fee for the aggregate undrawn face amount of all issued and
outstanding Letters of Credit shall be increased to two percent (2%) in excess
of the then applicable fee from time to time in effect pursuant to Section 2.1C
hereof. In no event shall the rate of interest hereunder exceed the maximum rate
allowable by law.
SECTION 2.12. MANDATORY PAYMENT.
(a) Prior to the Activation Date, if the Revolving Credit Exposure at
any time exceeds the Total Commitment Amount, Borrower shall, as promptly as
practicable, but in no event later than the next Business Day, prepay an
aggregate principal amount of the Revolving Loans sufficient to bring the
Revolving Credit Exposure within the Total Commitment Amount.
(b) On and after the Activation Date, if the Revolving Credit Exposure
at any time exceeds the aggregate amount of the Revolving Credit Commitments,
Borrower shall, as promptly as practicable, but in no event later than the next
Business Day, prepay an aggregate principal amount of the Revolving Loans
sufficient to bring the Revolving Credit Exposure within the aggregate amount of
the Revolving Credit Commitments.
(c) On and after the Activation Date, if the CAD Exposure at any time
exceeds the aggregate amount of the Canadian Commitments, Canadian Borrowers
shall, as promptly as practicable, but in no event later than the next Business
Day, prepay an aggregate principal amount of the CAD Loans sufficient to bring
the CAD Exposure within the aggregate amount of the Canadian Commitments.
(d) On and after the Activation Date, if the sum of (i) the Revolving
Credit Exposure, plus (ii) the CAD Exposure at any time exceeds the Total
Commitment Amount, then, as promptly as practicable, but in no event later than
the next Business Day, Borrower and Canadian Borrowers shall prepay an aggregate
principal amount of the Revolving Loans and the CAD Loans, as appropriate,
sufficient to bring the sum of the Revolving Credit Exposure and the CAD
Exposure within the Total Commitment Amount.
(e) Any prepayment of a LIBOR Loan or CAD Fixed Rate Loan pursuant to
this Section 2.12 shall be subject to the prepayment fees set forth in Section
2.8 hereof.
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ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS;
CAPITAL ADEQUACY
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If, at any time,
any law, treaty or regulation (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or the interpretation
thereof by any governmental authority charged with the administration thereof or
any central bank or other fiscal, monetary or other authority shall impose
(whether or not having the force of law), modify or deem applicable any reserve
and/or special deposit requirement (other than reserves included in the
Eurocurrency Reserve Percentage, the effect of which is reflected in the
interest rate(s) of the LIBOR Loan(s) or CAD Fixed Rate Loan(s) in question)
against assets held by, or deposits in or for the amount of any LIBOR Loan or
CAD Fixed Rate Loan by, any Bank, and the result of the foregoing is to increase
the cost (whether by incurring a cost or adding to a cost) to such Bank of
making or maintaining hereunder any LIBOR Loan or CAD Fixed Rate Loan or to
reduce the amount of principal or interest received by such Bank with respect to
such LIBOR Loan or CAD Fixed Rate Loan, then, upon demand by such Bank,
Borrower, or Canadian Borrowers, as applicable, shall pay to such Bank from time
to time on Interest Adjustment Dates with respect to such LIBOR Loan or CAD
Fixed Rate Loan, as additional consideration hereunder, additional amounts
sufficient to fully compensate and indemnify such Bank for such increased cost
or reduced amount, assuming (which assumption such Bank need not corroborate)
such additional cost or reduced amount was allocable to such LIBOR Loan or CAD
Fixed Rate Loan. A certificate as to the increased cost or reduced amount as a
result of any event mentioned in this Section 3.1, setting forth the
calculations therefor, shall be promptly submitted by such Bank to Borrower or
Canadian Borrowers, as applicable, and shall, in the absence of manifest error,
be conclusive and binding as to the amount thereof. Notwithstanding any other
provision of this Agreement, after any such demand for compensation by any Bank,
Borrower or Canadian Borrowers, as applicable, upon at least three (3) Business
Days' prior written notice to such Bank through Agent, may prepay any affected
LIBOR Loan or CAD Fixed Rate Loan in full or convert such LIBOR Loan to a Base
Rate Loan or CAD Fixed Rate Loan to a CAD Base Rate Loan, regardless of the
Interest Period thereof. Any such prepayment or conversion shall be subject to
the prepayment fees set forth in Section 2.8 hereof. Each Bank shall notify
Borrower or Canadian Borrowers, as the case may be, as promptly as practicable
(with a copy thereof delivered to Agent) of the existence of any event which
will likely require the payment by Borrower or Canadian Borrower, as applicable,
of any such additional amount under this Section.
SECTION 3.2. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, any Bank shall, with respect to this Agreement or
any transaction under this Agreement, be subjected to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of such Bank) and if any such measures
or any other similar measure shall result in an increase in the cost to such
Bank of making or maintaining any LIBOR Loan or CAD Fixed Rate Loan or in a
reduction in the amount of principal, interest or facility fee receivable by
such Bank in respect thereof, then such Bank shall promptly notify Borrower
35
stating the reasons therefor. Borrower shall thereafter pay to such Bank, upon
demand from time to time on Interest Adjustment Dates with respect to such LIBOR
Loan or CAD Fixed Rate Loan, as applicable, as additional consideration
hereunder, such additional amounts as shall fully compensate such Bank for such
increased cost or reduced amount. A certificate as to any such increased cost or
reduced amount, setting forth the calculations therefor, shall be submitted by
such Bank to Borrower or Canadian Borrowers, as applicable, and shall, in the
absence of manifest error, be conclusive and binding as to the amount thereof.
If any Bank receives such additional consideration from Borrower or
Canadian Borrowers pursuant to this Section 3.2, such Bank shall use reasonable
efforts to obtain the benefits of any refund, deduction or credit for any taxes
or other amounts on account of which such additional consideration has been paid
and shall reimburse Borrower or Canadian Borrowers, as applicable, to the
extent, but only to the extent, that such Bank shall receive a refund of such
taxes or other amounts together with any interest thereon or an effective net
reduction in taxes or other governmental charges (including any taxes imposed on
or measured by the total net income of such Bank) of the United States or any
state or subdivision thereof by virtue of any such deduction or credit, after
first giving effect to all other deductions and credits otherwise available to
such Bank. If, at the time any audit of such Bank's income tax return is
completed, such Bank determines, based on such audit, that it was not entitled
to the full amount of any refund reimbursed to Borrower or Canadian Borrower, as
the case may be, as aforesaid or that its net income taxes are not reduced by a
credit or deduction for the full amount of taxes reimbursed to Borrower or
Canadian Borrowers as aforesaid, Borrower or Canadian Borrowers, as applicable,
upon demand of such Bank, shall promptly pay to such Bank the amount so refunded
to which such Bank was not so entitled, or the amount by which the net income
taxes of such Bank were not so reduced, as the case may be.
Notwithstanding any other provision of this Agreement, after any such
demand for compensation by any Bank, Borrower or Canadian Borrowers, as
applicable, upon at least three (3) Business Days' prior written notice to such
Bank through Agent, may prepay any affected LIBOR Loan or CAD Fixed Rate Loan in
full or convert such LIBOR Loan to a Base Rate Loan or such CAD Fixed Rate Loan
to a CAD Base Rate Loan, regardless of the Interest Period of any thereof. Any
such prepayment or conversion shall be subject to the prepayment fees set forth
in Section 2.8 hereof.
SECTION 3.3. EURODOLLAR OR CANADIAN DEPOSITS UNAVAILABLE OR INTEREST
RATE UNASCERTAINABLE. In respect of any LIBOR Loan or CAD Fixed Rate Loan, in
the event that Agent shall have determined that dollar deposits of the relevant
amount for the relevant Interest Period for such LIBOR Loan or CAD Fixed Rate
Loan are not available to Agent in the applicable eurodollar or CAD market or
that, by reason of circumstances affecting such market, adequate and reasonable
means do not exist for ascertaining the LIBOR Rate or Canadian Domestic Rate
applicable to such Interest Period, as the case may be, Agent shall promptly
give notice of such determination to Borrower or Canadian Borrowers, as
applicable, and (a) with respect to difficulty ascertaining the LIBOR Rate, (i)
any notice of a new LIBOR Loan (or conversion of an existing Base Rate Loan to a
LIBOR Loan) previously given by Borrower and not yet borrowed (or converted, as
the case may be) shall be deemed a notice to
36
make a Base Rate Loan, and (ii) Borrower shall be obligated either to prepay, or
to convert to a Base Rate Loan, any outstanding LIBOR Loan on the last day of
the then current Interest Period with respect thereto; or (b) with respect to
difficulty ascertaining the Canadian Domestic Rate, (i) any notice of a new CAD
Fixed Rate Loan (or conversion of an existing CAD Base Rate Loan to a CAD Fixed
Rate Loan) previously given by Canadian Borrowers and not yet borrowed (or
converted, as the case may be) shall be deemed a notice to make a CAD Base Rate
Loan, and (ii) Canadian Borrower shall be obligated either to prepay, or to
convert to a CAD Base Rate Loan, any outstanding CAD Fixed Rate Loan on the last
day of the then current Interest Period with respect thereto.
SECTION 3.4. INDEMNITY. Without prejudice to any other provisions of
this Article III, Borrower hereby agrees to indemnify each Bank and Canadian
Borrowers agree to indemnify each Canadian Bank against any loss or expense
which such Bank may sustain or incur as a consequence of any default by Borrower
or Canadian Borrowers, as the case may be, in payment when due of any amount
hereunder in respect of any LIBOR Loan or CAD Fixed Rate Loan, including, but
not limited to, any penalty incurred by such Bank in respect of funds borrowed
by it for the purpose of making or maintaining such LIBOR Loan or CAD Fixed Rate
Loan, as determined by such Bank in the exercise of its sole but reasonable
discretion. A certificate as to any such loss or expense shall be promptly
submitted by such Bank to Borrower or Canadian Borrowers, as applicable, and
shall, in the absence of manifest error, be conclusive and binding as to the
amount thereof.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS OR CAD FIXED RATE
LOANS UNLAWFUL. If, at any time, any new law, treaty or regulation, or any
change in any existing law, treaty or regulation, or any interpretation thereof
by any governmental or other regulatory authority charged with the
administration thereof, shall make it unlawful for any Bank to fund any LIBOR
Loan or CAD Fixed Rate Loan which it is committed to make hereunder with moneys
obtained in the eurodollar or Canadian market, the commitment of such Bank to
fund such LIBOR Loan or CAD Fixed Rate Loan shall, upon the happening of such
event forthwith be suspended for the duration of such illegality, and such Bank
shall by written notice to Borrower or Canadian Borrowers, as applicable, and
Agent declare that its commitment with respect to such LIBOR Loan or CAD Fixed
Rate Loan has been so suspended and, if and when such illegality ceases to
exist, such suspension shall cease and such Bank shall similarly notify Borrower
or Canadian Borrowers, as applicable, and Agent. If any such change shall make
it unlawful for any Bank to continue in effect the funding in the applicable
eurodollar market of any LIBOR Loan, or Canadian market of any CAD Fixed Rate
Loan, previously made by it hereunder, such Bank shall, upon the happening of
such event, notify Borrower or Canadian Borrowers, as applicable, Agent and the
other Banks thereof in writing stating the reasons therefor, and, (a) with
respect to LIBOR Loans, Borrower shall, on the earlier of (i) the last day of
the then current Interest Period or (ii) if required by such law, regulation or
interpretation, on such date as shall be specified in such notice, either
convert such LIBOR Loan to a Base Rate Loan or prepay such LIBOR Loan to the
Banks in full; or (b) with respect to CAD Fixed Rate Loans, Canadian Borrowers
shall, on the earlier of (i) the last day of the then current Interest Period or
(ii) if required by such law, regulation or interpretation, on such date as
shall be specified in such notice, either convert such CAD Fixed Rate to a CAD
Base Rate Loan or
37
prepay such CAD Fixed Rate Loan to the Banks in full. Any such prepayment or
conversion shall be subject to the prepayment fees described in Section 2.8
hereof.
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
SECTION 3.7. CAPITAL ADEQUACY. If any Bank shall have determined, after
the Closing Date, that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its lending office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Bank's capital (or
the capital of its holding company) as a consequence of its obligations
hereunder to a level below that which such Bank (or its holding company) could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies or the policies of its holding company with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within fifteen (15) days after demand by such Bank (with
a copy to Agent), Borrower shall pay to such Bank such additional amount or
amounts as shall compensate such Bank (or its holding company) for such
reduction. Each Bank shall designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods. Failure on the
part of any Bank to demand compensation for any reduction in return on capital
with respect to any period shall not constitute a waiver of such Bank's rights
to demand compensation for any reduction in return on capital in such period or
in any other period. The protection of this Section shall be available to each
Bank regardless of any possible contention of the invalidity or inapplicability
of the law, regulation or other condition which shall have been imposed.
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ARTICLE IV. CONDITIONS PRECEDENT
SECTION 4.1. CONDITIONS PRECEDENT TO CLOSING. The obligation of the
Banks to make the first Loan and of Agent (or a Fronting Bank) to issue the
first Letter of Credit is subject to Borrower satisfying each of the following
conditions:
(a) NOTES. Borrower shall have executed and delivered to each Bank
(other than the Canadian Banks) its Revolving Credit Note and shall have
executed and delivered to Agent the Swing Line Note.
(b) SUBSIDIARY GUARANTIES OF PAYMENT. Borrower shall have delivered to
Agent a Subsidiary Guaranty of Payment executed by each Guarantor of Payment.
(c) OFFICER'S CERTIFICATE, RESOLUTIONS, ORGANIZATIONAL DOCUMENTS.
Borrower and each Guarantor of Payment shall have delivered to each Bank (other
than the Canadian Banks) an officer's certificate certifying the names of the
officers of Borrower or such Guarantor of Payment authorized to sign the Loan
Documents, to which Borrower or such Guarantor of Payment, as the case may be,
is a party, together with the true signatures of such officers and certified
copies of (a) the resolutions of the board of directors of Borrower and each
Guarantor of Payment evidencing approval of the execution and delivery of the
Loan Documents and the execution of other Related Writings to which Borrower or
such Guarantor of Payment, as the case may be, is a party, and (b) the Articles
(or Certificate) of Incorporation and Regulations (Bylaws) and all amendments
thereto of Borrower and each Guarantor of Payment.
(d) LEGAL OPINION. Borrower shall have delivered to Agent an opinion of
counsel for Borrower and each Guarantor of Payment, in form and substance
satisfactory to Agent and the Banks.
(e) GOOD STANDING CERTIFICATES. Borrower shall have delivered to Agent
a good standing certificate for Borrower and each Guarantor of Payment, issued
on or about the Closing Date by the Secretary of State in the state where
Borrower or such Guarantor of Payment is incorporated.
(f) CLOSING AND LEGAL FEES; AGENT FEE LETTER. Borrower shall have (a)
paid to Agent, for its sole benefit, the fees described in the Agent Fee Letter,
(b) paid to Agent, for the pro rata benefit of the Banks (other than the
Canadian Banks), a closing fee in an amount equal to fifteen basis (15) points
times the Total Commitment Amount, (c) paid all legal fees and expenses of Agent
in connection with the preparation and negotiation of the Loan Documents, and
(d) executed and delivered to Agent the Agent Fee Letter and the Closing Fee
Letter.
(g) NOTE PURCHASE AGREEMENT. Borrower shall have provided to Agent
evidence that the Companies have obtained all required consents under each of
the Note
39
Purchase Agreements necessary for Borrower to enter into this Agreement and the
other Loan Documents to which Borrower is a party and to consummate the
transaction contemplated hereby.
(h) INTERCREDITOR AGREEMENT. The Intercreditor Agreement shall have
been executed by each party thereto and shall have been acknowledged by Borrower
and each Guarantor of Payment.
(i) NO MATERIAL ADVERSE CHANGE. No material adverse change, in the
opinion of Agent and the Majority Banks, shall have occurred in the financial
condition, operations or prospects of the Companies since March 31, 1998.
(j) MISCELLANEOUS. Borrower shall have provided such other items and
shall have satisfied such other conditions as may be reasonably required by
Agent or the Banks.
SECTION 4.2. CONDITIONS PRECEDENT TO CAD LOANS. The obligation of the
Canadian Banks to make a CAD Loan to a Canadian Borrower is subject to each
Canadian Borrower and, if applicable, Borrower satisfying each of the following
conditions:
(a) ACTIVATION DATE. The Activation Date shall have occurred and all
conditions set forth in Section 2.6 hereof shall have been satisfied.
(b) NOTES. Canadian Borrowers shall have executed and delivered to each
Canadian Bank its CAD Loan Note.
(c) PARENT GUARANTY OF PAYMENT. Borrower shall have executed and
delivered to Agent a Parent Guaranty of Payment.
(d) ASSUMPTION AGREEMENT. Each Canadian Borrower shall have executed
and delivered to Agent an Assumption Agreement.
(e) OFFICER'S CERTIFICATE, RESOLUTIONS, ORGANIZATIONAL DOCUMENTS. Each
Canadian Borrower shall have delivered to Agent and each Canadian Bank an
officer's certificate certifying the names of the officers of such Canadian
Borrower authorized to sign the Loan Documents, to which such Canadian Borrower
is a party, together with the true signatures of such officers and certified
copies of (a) the resolutions of the board of directors of such Canadian
Borrower evidencing approval of the execution and delivery of the Loan Documents
and the execution of other Related Writings to which such Canadian Borrower is a
party, and (b) the organizational and governing documents, and all amendments
thereto, of such Canadian Borrower.
(f) LEGAL OPINION. Each Canadian Borrower shall have delivered to Agent
and each Canadian Bank an opinion of counsel for such Canadian Borrower, in form
and substance satisfactory to Agent and the Canadian Banks.
40
(g) GOOD STANDING CERTIFICATES. Each Canadian Borrower shall have
delivered to Agent and the Canadian Banks a good standing certificate for such
Canadian Borrower, issued on or about the Activation Date by the appropriate
governmental authority in the jurisdiction where such Canadian Borrower is
organized.
(h) MISCELLANEOUS. Borrower and each Canadian Borrower shall have
provided such other items and shall have satisfied such other conditions as may
be reasonably required by Agent or the Canadian Banks.
ARTICLE V. COVENANTS
Borrower and each Canadian Borrower agree that so long as the
Commitment remains in effect and thereafter until the principal of and interest
on all Notes and all other payments and fees due hereunder shall have been paid
in full, Borrower and each Canadian Borrower shall perform and observe, and
shall cause each Subsidiary to perform and observe, each of the following
provisions:
SECTION 5.1. INSURANCE. Each Company shall (a) maintain insurance to
such extent and against such hazards and liabilities as is commonly maintained
by companies similarly situated; and (b) within ten (10) days of any Bank's
written request, furnish to such Bank such information about any Company's
insurance as that Bank may from time to time reasonably request, which
information shall be prepared in form and detail satisfactory to such Bank and
certified by a Financial Officer of such Company.
SECTION 5.2. MONEY OBLIGATIONS. Each Company shall pay in full (a)
prior in each case to the date when penalties would attach, all material taxes,
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested in good faith by appropriate
and timely proceedings and for which adequate reserves have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its material wage
obligations to its employees in compliance with the Fair Labor Standards Act (29
U.S.C. 206-207) or any comparable provisions; and (c) all of its other material
obligations calling for the payment of money (except only those so long as and
to the extent that the same shall be contested in good faith and for which
adequate reserves have been established in accordance with GAAP) before such
payment becomes overdue.
41
SECTION 5.3. FINANCIAL STATEMENTS. Borrower shall furnish to each Bank:
(a) within fifty (50) days after the end of each of the first three (3)
quarter-annual periods of each fiscal year of Borrower, balance sheets of
Borrower as of the end of such period and statements of income (loss),
shareholders' equity and cash flows for the quarter and fiscal year to date
periods, all prepared on a Consolidated basis, in accordance with GAAP, and in
form and detail satisfactory to the Banks and certified by a Financial Officer
of Borrower; provided, however, that delivery pursuant to paragraph (f) below of
copies of the Quarterly Report on Form 10-Q of the Companies for such quarterly
period filed with the SEC shall be deemed to satisfy the requirements of this
paragraph (a);
(b) within one hundred (100) days after the end of each fiscal year of
Borrower, an annual audit report of Borrower for that year prepared on a
Consolidated basis, in accordance with GAAP, and in form and detail satisfactory
to the Banks and certified by an independent public accountant satisfactory to
the Banks, which report shall include balance sheets and statements of income
(loss), shareholders' equity and cash flows for that period, together with a
certificate by the accountant setting forth the Unmatured Events of Default and
Events of Default coming to its attention during the course of its audit or, if
none, a statement to that effect; provided, however, that delivery pursuant to
paragraph (f) below of copies of the Annual Report on Form 10-K of the Companies
for such quarterly period filed with the SEC shall be deemed to satisfy the
requirements of this paragraph (b);
(c) concurrently with the delivery of the financial statements in (a)
and (b) above, a Compliance Certificate;
(d) as soon as available, copies of all notices, reports, definitive
proxy or other statements and other documents sent by Borrower to its
shareholders or to the holders of any of its debentures or bonds or the trustee
of any indenture securing the same or pursuant to which they are issued; and
(e) within ten (10) days of any Bank's written request, such other
information about the financial condition, properties and operations of any
Company as such Bank may from time to time reasonably request, which information
shall be submitted in form and detail satisfactory to such Bank and certified by
a Financial Officer of the Company or Companies in question.
SECTION 5.4. FINANCIAL RECORDS. Each Company shall at all times
maintain true and complete records and books of account including, without
limiting the generality of the foregoing, appropriate reserves for possible
losses and liabilities, all in accordance with GAAP, and at all reasonable times
(during normal business hours and upon notice to the Company in question) permit
the Banks to examine that Company's books and records and to make excerpts
therefrom and transcripts thereof.
SECTION 5.5. FRANCHISES. Borrower and each Canadian Borrower shall
preserve and maintain at all times its existence and its material rights and
franchises.
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SECTION 5.6. ERISA COMPLIANCE. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any Plan.
Borrower shall furnish to the Banks (a) as soon as possible and in any event
within thirty (30) days after any Company knows or has reason to know that any
material Reportable Event with respect to any Plan has occurred, a statement of
the Financial Officer of such Company, setting forth details as to such
Reportable Event and the action which such Company proposes to take with respect
thereto, together with a copy of the notice of such Reportable Event given to
the PBGC if a copy of such notice is available to such Company, and (b) promptly
after receipt thereof a copy of any material notice such Company, or any member
of the Controlled Group may receive from the PBGC or the Internal Revenue
Service with respect to any Plan administered by such Company; provided, that
this latter clause shall not apply to notices of general application promulgated
by the PBGC or the Internal Revenue Service. Borrower shall promptly notify the
Banks of any material taxes assessed, proposed to be assessed or which Borrower
has reason to believe may be assessed against a Company by the Internal Revenue
Service with respect to any Plan. As used in this Section "material" means the
measure of a matter of significance which shall be determined as being an amount
equal to five percent (5%) of the Consolidated Net Worth of Borrower. As soon as
practicable, and in any event within twenty (20) days, after any Company becomes
aware that a material ERISA Event has occurred, such Company shall provide Bank
with notice of such ERISA Event with a certificate by a Financial Officer of
such Company setting forth the details of the event and the action such Company
or another Controlled Group member proposes to take with respect thereto.
Borrower shall, at the request of Agent or any Bank, deliver or cause to be
delivered to Agent or such Bank, as the case may be, true and correct copies of
any documents relating to the Plan of any Company.
SECTION 5.7. FINANCIAL COVENANTS.
(a) INTEREST COVERAGE. The Companies shall not suffer or permit at any
time the ratio of (i) Consolidated EBIT to (ii) Consolidated Interest Expense to
be less than 2.50 to 1.00, based upon the financial statements of the Companies
for the most recently completed four (4) fiscal quarters. For purposes of
calculation of the ratio set forth in this subsection only, the effects of up to
Fifteen Million Dollars ($15,000,000) of pre-tax nonrecurring charges taken by
the Companies on or before December 31, 1998 shall be excluded.
(b) NET WORTH. The Companies shall not suffer or permit their
Consolidated Net Worth at any time, based upon the financial statements of the
Companies for the most recently completed fiscal quarter, to fall below the
current minimum amount required, which current minimum amount required shall be
Two Hundred Forty Million Dollars ($240,000,000) on the Closing Date through
June 29, 1999, with such current minimum amount required to be positively
increased by the Increase Amount on June 30, 1999, and by an additional Increase
Amount on the last day of each fiscal year thereafter. As used herein, the term
"Increase Amount" shall mean an amount equal to thirty percent (30%) of the
positive Consolidated Net Earnings of the Companies for the fiscal year then
ended.
43
(c) FUNDED INDEBTEDNESS TO TOTAL CAPITALIZATION. The Companies shall
not suffer or permit at any time the ratio of (i) Funded Indebtedness to (ii)
Total Capitalization to exceed 0.58 to 1.00, based upon the financial statements
of the Companies for the most recently completed fiscal quarter.
For purposes of calculating the covenants set forth in this Section 5.7, GAAP
shall be applied as in effect on the Closing Date, unless otherwise agreed by
Borrower, Agent and the Majority Banks.
SECTION 5.8. BORROWING. No Company shall create, incur or have
outstanding any Indebtedness of any kind; provided, that this Section shall not
apply to:
(a) the Loans or any other Indebtedness incurred to Agent or the Banks
pursuant to this Agreement;
(b) Indebtedness under any Hedge Agreement;
(c) the Indebtedness existing as of the Closing Date as set forth in
Schedule 5.8 hereto;
(d) loans to a Company from a Company so long as each such Company is
Borrower or a Guarantor of Payment, or loans to a Canadian Borrower from a
Canadian Borrower;
(e) secured Indebtedness (including any capital lease obligation) so
long as the aggregate amount of all such Indebtedness outstanding at any time
for all Companies does not exceed an amount equal to twenty percent (20%) of the
Consolidated Net Worth of the Companies, based upon the financial statements of
the Companies for the most recently completed fiscal quarter; or
(f) additional unsecured Indebtedness of a Company, to the extent not
otherwise permitted pursuant to subparts (a) through (e) hereof; provided,
however, that (i) if the Companies incur any Indebtedness to any creditor in an
aggregate principal amount in excess of an amount equal to ten percent (10%) of
the Consolidated Net Worth of the Companies (based upon the financial statements
of the Companies for the most recently completed fiscal quarter), and (ii) any
Company (other than Borrower) is liable for such Indebtedness, then, upon
request of Agent, Borrower shall cause each Person that is a party to any
document, instrument or agreement evidencing such Indebtedness to enter into an
intercreditor agreement, in form and substance satisfactory to Agent and the
Majority Banks, which intercreditor agreement shall contain terms and conditions
substantially similar to the terms and conditions contained in the Intercreditor
Agreement.
SECTION 5.9. LIENS. No Company shall create, assume or suffer to exist
any Lien upon any of its property or assets, whether now owned or hereafter
acquired; provided that this Section shall not apply to the following:
44
(a) Liens for taxes not yet due or which are being actively contested
in good faith by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP;
(b) other statutory Liens incidental to the conduct of its business or
the ownership of its property and assets that (i) were not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and (ii) do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of its
business;
(c) Liens on property or assets of a Subsidiary to secure obligations
of such Subsidiary to Borrower or a Guarantor of Payment or Liens on property or
assets of a Canadian Borrower to secure obligations of such Canadian Borrower to
another Canadian Borrower;
(d) Liens relating to ledger balances, consignments and other similar
arrangements;
(e) easements or other minor defects or irregularities in title of real
property not interfering in any material respect with the use of such property
in the business of any Company; or
(f) any other Liens (including all Liens existing on the Closing Date,
which Liens are set forth on SCHEDULE 5.9A hereto) so long as the aggregate
amount of Indebtedness secured by all such Liens (when added to the aggregate
amount of all asset securitizations) does not exceed for all Companies at any
time an aggregate amount equal to twenty percent (20%) of the Consolidated Net
Worth of the Companies, based upon the financial statements of the Companies for
the most recently completed fiscal quarter.
SECTION 5.10. REGULATIONS U and X. No Company shall take any action
that would result in any non-compliance of the Loans with Regulations U and X of
the Board of Governors of the Federal Reserve System.
SECTION 5.11. INVESTMENTS AND LOANS. No Company shall (a) create,
acquire or hold any Subsidiary, (b) make or hold any investment in any stocks,
bonds or securities of any kind, (c) be or become a party to any joint venture
or other partnership without the prior written consent of Agent and the Majority
Banks, (d) make or keep outstanding any advance or loan to any Person, or (e) be
or become a Guarantor of any kind, except guarantees securing only indebtedness
of the Companies incurred or permitted pursuant to this Agreement; provided,
that this Section shall not apply to:
(i) any endorsement of a check or other medium of payment for deposit
or collection through normal banking channels or similar transaction in the
normal course of business;
(ii) any investment in direct obligations of the United States of
America or in certificates of deposit issued by a member bank (having capital
resources in excess of One Hundred Million Dollars ($100,000,000)) of the
Federal Reserve System;
45
(iii) any investment in commercial paper or securities which at the
time of such investment is assigned the highest quality rating in accordance
with the rating systems employed by either Moody's or Standard & Poor's;
(iv) the holding of or an investment in the Subsidiaries listed on
SCHEDULE 6.1 (as such schedule may be amended from time to time) hereto;
(v) loans to a Company from a Company so long as each such Company is
Borrower or a Guarantor of Payment or loans to a Canadian Borrower from a
Canadian Borrower;
(vi) any guaranty by a Company of Indebtedness of another Company so
long as such Indebtedness is permitted pursuant to Section 5.8 hereof;
(vii) any guaranty by a Canadian Borrower of Indebtedness of another
Canadian Borrower so long as such Indebtedness is permitted pursuant to Section
5.8 hereof;
(viii) any advance or loan to an officer, employee, agent or similar
Person of or consultant to a Company, made in the ordinary course of such
Company's business, so long as all such advances and loans from all Companies
aggregate not more than the maximum principal sum of Five Million Dollars
($5,000,000) at any time outstanding;
(ix) any Permitted Investment;
(x) the creation, acquisition or holding of any Domestic Subsidiary so
long as such Domestic Subsidiary, if required pursuant to Section 5.19 hereof,
becomes a Guarantor of Payment in accordance with Section 5.19, and, with the
prior written consent of Agent and the Majority Banks, the creation, acquisition
or holding of any Foreign Subsidiary; or
(xi) any investment by a Foreign Subsidiary (other than a Canadian
Borrower) in Borrower or any Subsidiary.
SECTION 5.12. MERGER AND SALE OF ASSETS. No Company shall merge or
consolidate with any other Person or sell, lease or transfer or otherwise
dispose of all or a substantial part of its assets to any Person, except that,
if no Unmatured Event of Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:
(a) any Subsidiary may merge or consolidate with (i) Borrower (provided
that Borrower shall be the continuing or surviving Person) or (ii) any Guarantor
of Payment, provided that either (A) the continuing or surviving Person shall be
a Subsidiary that is a Guarantor of Payment, or (B) after giving effect to any
merger or consolidation pursuant to this sub-clause (ii), Borrower and/or one or
more Subsidiaries that are Guarantors of Payment shall own not less than the
same percentage of the outstanding Voting Power of the continuing or surviving
Person as Borrower and/or one or more Subsidiaries (that are Guarantors of
Payment) owned of the merged Subsidiary immediately prior to such merger;
46
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to (i) Borrower, (ii) any Subsidiary that is a Guarantor of
Payment, or (iii) any Guarantor of Payment, of which Borrower and/or one or more
Subsidiaries, which are Guarantors of Payment, shall own not less than the same
percentage of Voting Power as Borrower and/or one or more Subsidiaries (which
are Guarantors of Payment) then own of the Subsidiary making such sale, lease,
transfer or other disposition;
(c) any Canadian Borrower may merge or consolidate with another
Canadian Borrower;
(d) any Canadian Borrower may sell, lease, transfer or otherwise
dispose of any of its assets to another Canadian Borrower;
(e) any Company may engage in any such conduct in connection with an
Acquisition permitted pursuant to Section 5.13 hereof so long as the resulting
Person is either Borrower or a Guarantor of Payment;
(f) any Company may sell, lease, transfer or otherwise dispose of any
of its assets to any Person (in addition to any such sale, lease, transfer or
disposal to Borrower or a Guarantor of Payment) so long as the aggregate amount
of all such assets sold, leased, transferred or otherwise disposed of by all
Companies does not exceed Twenty Million Dollars ($20,000,000) for the period
from the Closing Date until the termination of this Agreement; or
(g) any Foreign Subsidiary (other than a Canadian Borrower) may merge
or consolidate with any Foreign Subsidiary.
SECTION 5.13. ACQUISITIONS. No Company shall effect an Acquisition
unless:
(a) no Unmatured Event of Default or Event of Default shall then exist
or immediately thereafter shall begin to exist;
(b) the Acquisition is made by (i) Borrower or a Guarantor of Payment
and Borrower or such Guarantor of Payment is the surviving entity of such
Acquisition (in the case of a merger, consolidation or other combination) or the
Person to be acquired becomes a Guarantor of Payment promptly after such
Acquisition (in the case of the acquisition of the stock (or other equity
interest) of a Person), (ii) a Canadian Borrower and such Canadian Borrower is
the surviving entity of such Acquisition (in the case of a merger, consolidation
or other combination) or the Person to be acquired becomes a Canadian Borrower
promptly after such Acquisition (in the case of the acquisition of the stock (or
other equity interest) of a Person), or (iii) a Foreign Subsidiary (other than a
Canadian Borrower);
(c) the Companies are in full compliance with the Loan Documents both
prior to and subsequent to such Acquisition; and
47
(d) Borrower provides to Agent and the Banks, at least ten (10) days
prior to the consummation of such Acquisition, whether by Borrower or a Canadian
Borrower, written notice of such Acquisition, and with respect to any
Acquisition in which the Consideration paid is in excess of Fifty Million
Dollars ($50,000,000), historical financial statements of such Person and a pro
forma financial statement of the Companies accompanied by a certificate of a
Financial Officer of Borrower showing pro forma compliance with Section 5.7
hereof, both before and after such Acquisition.
SECTION 5.14. NOTICE. Borrower shall cause a Financial Officer of
Borrower to promptly notify Agent and the Banks whenever any Unmatured Event of
Default or Event of Default may occur hereunder or any representation or
warranty made in Article VI hereof or elsewhere in this Agreement or in any
Related Writing may for any reason cease in any material respect to be true and
complete.
SECTION 5.15. ENVIRONMENTAL COMPLIANCE. Each Company shall comply in
all material respects with any and all Environmental Laws including, without
limitation, (a) all Environmental Laws in jurisdictions in which any Company
owns or operates a facility or site, arranges for disposal or treatment of any
Hazardous Substance, solid waste or other wastes, accepts for transport any
Hazardous Substances, solid waste or other wastes or holds any interest in real
property or otherwise, and (b) all Environmental Laws relating to permits,
licenses, approval, authorizations, consents and registrations required for such
Company's operation. Borrower shall furnish to the Banks, promptly after receipt
thereof, a copy of any notice any Company may receive from any governmental
authority, private person or entity or otherwise that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the Release or disposal of any Hazardous Substance, solid
waste or other wastes on, under, to or about any real property in which any
Company holds any interest or performs any of its operations, in material
violation of any Environmental Law. As used in this Section, "litigation or
proceeding" means any demand, claim, notice, suit, suit in equity action,
administrative action, investigation or inquiry whether brought by any
governmental authority, private person or entity or otherwise. Borrower shall
defend, indemnify and hold Agent and the Banks harmless against all costs,
expenses, claims, damages, penalties and liabilities of every kind or nature
whatsoever (including attorneys fees) arising out of or resulting from the
noncompliance of any Company with any Environmental Law.
SECTION 5.16. AFFILIATE TRANSACTIONS. No Company shall, or shall permit
any Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
a Company on terms that are less favorable to such Company or such Subsidiary,
as the case may be, than those that might be obtained at the time in a
transaction with a non-Affiliate; provided, however, that the foregoing shall
not prohibit (a) the payment of customary and reasonable directors' fees to
directors who are not employees of a Company; or (b) any transaction between a
Company (if Borrower or a Guarantor of Payment) and an Affiliate (if Borrower or
a Guarantor of Payment) which Borrower
48
reasonably determines in good faith is beneficial to Borrower and its Affiliates
as a whole and which is not entered into for the purpose of hindering the
exercise by Agent or the Banks of their rights or remedies under this Agreement.
SECTION 5.17. USE OF PROCEEDS. Borrower's use of the proceeds of the
Revolving Credit Notes shall be for working capital and other general corporate
purposes of Borrower and its Subsidiaries and for Acquisitions permitted
pursuant to the terms of this Agreement. Canadian Borrowers' use of the proceeds
of the CAD Loan Notes shall be for working capital and other general corporate
purposes of the Canadian Borrowers.
SECTION 5.18. CORPORATE NAME. No Company shall change its corporate
name unless Borrower shall provide Agent with thirty (30) days prior written
notice thereof.
SECTION 5.19. SUBSIDIARY GUARANTIES. Each Subsidiary (other than a
Foreign Subsidiary) created, acquired or held subsequent to the Closing Date
shall, within ten (10) days after such Subsidiary is created or acquired,
execute and deliver to Agent a Subsidiary Guaranty of Payment of all of the
Debt, such agreement to be in form and substance acceptable to Agent and the
Majority Banks, along with such corporate governance and authorization documents
and an opinion of counsel as may be deemed necessary or advisable by Agent and
the Majority Banks; provided, however, that a Subsidiary shall not be required
to execute such Subsidiary Guaranty of Payment if (a) (i) the total assets of
such Subsidiary are less than the amount of One Million Dollars ($1,000,000),
and (ii) the aggregate of the total assets of all such Subsidiaries with total
asset values of less than One Million Dollars ($1,000,000) does not exceed the
aggregate amount of Two Million Dollars ($2,000,000), or (b) it is a Foreign
Subsidiary. In the event that the total assets of any Subsidiary that is not a
Guarantor of Payment by reason of subpart (a) of this Section are at any time
equal to or greater than One Million Dollars ($1,000,000), Borrower shall
provide Agent and the Banks with prompt written notice of such asset value and
shall provide to Agent a Subsidiary Guaranty of Payment.
SECTION 5.20. GUARANTY UNDER NOTE PURCHASE AGREEMENT. No Company shall
be or become a Guarantor of the Indebtedness incurred pursuant to the Note
Purchase Agreement unless such Company is also a Guarantor of Payment under this
Agreement.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Borrower and each Canadian Borrower, represents and warrants that the
statements set forth in this Article VI are true, correct and complete.
SECTION 6.1. CORPORATE EXISTENCE; FOREIGN QUALIFICATION; SUBSIDIARIES
(a) Each Company is an entity duly organized, validly existing, and in
good standing under the laws of its state of organization and is duly qualified
and authorized to do business and is in good standing as a foreign entity in
each jurisdiction where the character of its property or
49
its business activities makes such qualification necessary, except where the
failure to so qualify would not have a material adverse effect on the business,
operations or condition (financial or otherwise) of such Company.
(b) SCHEDULE 6.1 hereto sets forth (i) the state of organization of
Borrower, and (ii) each state or other jurisdiction in which Borrower is
qualified to do business as a foreign corporation.
(c) SCHEDULE 6.1 hereto sets forth (i) each Subsidiary of Borrower and
each Subsidiary of each Company, (ii) such Subsidiary's state of organization,
(iii) each state or other jurisdiction in which such Subsidiary is qualified to
do business as a foreign entity, and (iv) the direct or indirect ownership of
Borrower in such Subsidiary.
SECTION 6.2. CORPORATE AUTHORITY. Each Company has the right and power
and is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Company is a party have
been duly authorized and approved by such Company's Board of Directors and are
the valid and binding obligations of such Company, enforceable against such
Company in accordance with their respective terms. The execution, delivery and
performance of the Loan Documents will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Liens permitted under Section 5.9 hereof)
upon any assets or property of any Company under the provisions of, such
Company's Certificate (Articles) of Incorporation, Bylaws (Regulations) or any
agreement.
SECTION 6.3. COMPLIANCE WITH LAWS. Each Company:
(a) holds all material permits, certificates, licenses, orders,
registrations, franchises, authorizations, and other approvals from federal,
state, local, and foreign governmental and regulatory bodies necessary for the
conduct of its business and is in compliance in all material respects with all
applicable laws relating thereto;
(b) is in compliance in all material respects with all federal, state,
local, or foreign applicable statutes, rules, regulations, and orders including,
without limitation, those relating to environmental protection, occupational
safety and health, and equal employment practices; and
(c) is not in material violation of or in default under any agreement
to which it is a party or by which its assets are subject or bound.
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS. Except as
disclosed on SCHEDULE 6.4 hereto and as to any of which, if determined
adversely, would not have a material adverse effect on the business, property or
operations (financial or otherwise) of any Company, there are (a) no lawsuits,
actions, investigations, or other proceedings pending or threatened against
Borrower or any of its Subsidiaries, or in respect of which Borrower or any of
its Subsidiaries may have any liability, in any court or before any governmental
authority,
50
arbitration board, or other tribunal, (b) no orders, writs, injunctions,
judgments, or decrees of any court or government agency or instrumentality to
which any Company is a party or by which the property or assets of any Company
are bound, and (c) no grievances, disputes, or controversies outstanding with
any union or other organization of the employees of any Company, or threats of
work stoppage, strike, or pending demands for collective bargaining.
SECTION 6.5. TITLE TO ASSETS. Each Company has good title to and
ownership of all property it purports to own, which property is free and clear
of all Liens, except those permitted under Section 5.9 hereof.
SECTION 6.6. LIENS AND SECURITY INTERESTS. On and after the Closing
Date, except for Liens permitted pursuant to Section 5.9 hereof, (a) there is no
financing statement outstanding covering any personal property of any Company;
(b) there is no mortgage outstanding covering any real property of any Company;
and (c) no real or personal property of any Company is subject to any security
interest or Lien of any kind.
SECTION 6.7. TAX RETURNS. All federal, state and local tax returns and
other reports required by law to be filed in respect of the income, business,
properties and employees of each Company have been filed and all taxes,
assessments, fees and other governmental charges which are due and payable have
been paid, except as otherwise permitted herein or the failure to do so does not
and will not cause or result in a material adverse effect on the business,
operations or condition (financial or otherwise) of such Company. The provision
for taxes on the books of each Company is adequate for all years not closed by
applicable statutes and for the current fiscal year.
SECTION 6.8. ENVIRONMENTAL LAWS. Each Company is in compliance in all
material respects with any and all Environmental Laws including, without
limitation, (a) all Environmental Laws in all jurisdictions in which any Company
owns or operates, or has owned or operated, a facility or site, arranges for
disposal or treatment of any Hazardous Substance, solid waste or other wastes,
accepts or has accepted for transport any Hazardous Substance, solid waste or
other wastes or holds or has held any interest in real property or otherwise,
and (b) all Environmental Laws relating to permits, licenses, approvals,
authorizations, consents and registrations required for such Company's
operation. No litigation or proceeding arising under, relating to or in
connection with any Environmental Law is pending or, to the best knowledge of
each Company, threatened against any Company, any real property in which any
Company holds or has held an interest or any past or present operation of any
Company that is likely to have a material adverse effect on the Companies taken
as a whole. No Release, threatened Release or disposal of any Hazardous
Substance, solid waste or other wastes is occurring, or has occurred (other than
those that are currently being cleaned up in accordance with Environmental
Laws), on, under or to any real property in which any Company holds any interest
or performs any of its operations, in violation of any Environmental Law that is
likely to have a material adverse effect on the Companies taken as a whole. As
used in this Section, "litigation or proceeding" means any demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by any governmental authority, private Person or
otherwise.
51
SECTION 6.9. CONTINUED BUSINESS. There exists no actual, pending, or,
to Borrower's knowledge, any threatened termination, cancellation or limitation
of, or any modification or change in the business relationship of any Company
and any customer or supplier, or any group of customers or suppliers, whose
purchases or supplies, individually or in the aggregate, are material to the
business of any Company, and there exists no present condition or state of facts
or circumstances which would materially affect adversely any Company in any
respect or prevent a Company from conducting such business or the transactions
contemplated by this Agreement in substantially the same manner which it was
theretofore conducted.
SECTION 6.10. EMPLOYEE BENEFITS PLANS. SCHEDULE 6.10 hereto identifies
each Pension Plan. No ERISA Event has occurred or is expected to occur with
respect to an Pension Plan. Full payment has been made of all amounts which a
Controlled Group member is required, under applicable law or under the governing
documents, to have been paid as a contribution to or a benefit under each
Pension Plan. The liability of each Controlled Group member with respect to each
Pension Plan has been fully funded based upon reasonable and proper actuarial
assumptions, has been fully insured, or has been fully reserved for on its
financial statements. No changes have occurred or are expected to occur that
would cause a material increase in the cost of providing benefits under the
Pension Plan. With respect to each Pension Plan that is intended to be qualified
under Code Section 401(a): (a) the Pension Plan and any associated trust
operationally comply with the applicable requirements of Code Section 401(a),
(b) the Pension Plan and any associated trust have been amended to comply, in
all material respects, with all such requirements as currently in effect, other
than those requirements for which a retroactive amendment can be made within the
"remedial amendment period" available under Code Section 401(b) (as extended
under Treasury Regulations and other Treasury pronouncements upon which
taxpayers may rely), (c) the Pension Plan and any associated trust have received
a favorable determination letter from the Internal Revenue Service stating that
the Pension Plan qualifies under Code Section 401(a), that the associated trust
qualifies under Code Section 501(a) and, if applicable, that any cash or
deferred arrangement under the Pension Plan qualifies under Code Section 401(k),
unless the Pension Plan was first adopted at a time for which the
above-described "remedial amendment period" has not yet expired, (d) the Pension
Plan currently satisfies the requirements of Code Section 410(b), without regard
to any retroactive amendment that may be made within the above-described
"remedial amendment period", and (e) no contribution made to the Pension Plan is
subject to an excise tax under Code Section 4972. With respect to any Pension
Plan, the "accumulated benefit obligation" of Controlled Group members with
respect to the Pension Plan (as determined in accordance with Statement of
Accounting Standards No. 87, "Employers' Accounting for Pensions") does not
exceed the fair market value of Pension Plan assets. The aggregate potential
amount of liability that would result if all Controlled Group members withdrew
from all Multiemployer Plans in a "complete withdrawal" (within the meaning of
ERISA Section 4203) would be Zero Dollars ($0.00).
SECTION 6.11. CONSENTS OR APPROVALS. No consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority or any other Person is required to be obtained or
completed by Borrower or any Canadian Borrower in connection with the execution,
delivery or performance of any of the Loan Documents to which
52
Borrower or a Canadian Borrower, as the case may be, is a party, which has not
already been obtained or completed.
SECTION 6.12. SOLVENCY.
(a) Borrower has received consideration which is the reasonable
equivalent value of the obligations and liabilities that Borrower has incurred
to the Banks. Borrower is not insolvent as defined in any applicable state or
federal statute, nor will Borrower be rendered insolvent by the execution and
delivery of the Loan Documents to Agent and the Banks. Borrower is not engaged
or about to engage in any business or transaction for which the assets retained
by it are or will be an unreasonably small amount of capital, taking into
consideration the obligations to Agent and the Banks incurred hereunder.
Borrower does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay such debts as they mature.
(b) Each Canadian Borrower has received consideration which is the
reasonable equivalent value of the obligations and liabilities that such
Canadian Borrower has incurred to the Canadian Banks. No Canadian Borrower is
insolvent as defined in any applicable state or federal statute or applicable
foreign law or regulation, nor will any Canadian Borrower be rendered insolvent
by the execution and delivery to Agent and the Canadian Banks of the Loan
Documents to which such Canadian Borrower is a party. No Canadian Borrower is
engaged or about to engage in any business or transaction for which the assets
retained by such Canadian Borrower are or will be an unreasonably small amount
of capital, taking into consideration the obligations of such Canadian Borrower
to Agent and the Canadian Banks incurred hereunder. No Canadian Borrower intends
to, nor does such Canadian Borrower believe that such Canadian Borrower will,
incur debts beyond its ability to pay such debts as they mature.
SECTION 6.13. FINANCIAL STATEMENTS. The Consolidated financial
statements for the Companies for the fiscal year ended June 30, 1997, and the
interim financial statements for the fiscal period ended March 31, 1998 (other
than end of period adjustments on such interim financial statements and the
notes thereto), furnished to Agent and the Banks, are true and complete, have
been prepared in accordance with GAAP, and fairly present the Companies'
financial condition as of the date of such financial statements and the results
of their operations for the period then ending. Since the dates of such
statements, there has been no material adverse change in any Company's financial
condition, properties or business nor any change in any Company's accounting
procedures.
SECTION 6.14. REGULATIONS. Borrower is not engaged 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 meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States of America). Neither the granting of any Loan (or any conversion
thereof) nor the use of the proceeds of the Loans will violate, or be
inconsistent with, the provisions of Regulation U or X of said Board of
Governors.
SECTION 6.15. MATERIAL AGREEMENTS. Except as disclosed on SCHEDULE 6.15
hereto, no Company is a party to any (a) debt instrument; (b) lease (capital,
operating or
53
otherwise), whether as lessee or lessor thereunder; (c) contract, commitment,
agreement, or other arrangement involving the purchase or sale of any inventory
by it, or the license of any right to or by it; (d) contract, commitment,
agreement, or other arrangement with any of its "Affiliates" (as such term is
defined in the Securities Exchange Act of 1934, as amended); (e) management or
employment contract or contract for personal services with any of its Affiliates
which is not otherwise terminable at will or on less than ninety (90) days'
notice without liability; (f) collective bargaining agreement; or (g) other
contract, agreement, understanding, or arrangement which, as to subsections (a)
through (g), above, if violated, breached, or terminated for any reason, would
have or would be reasonably expected to have a material adverse effect on the
business, operation or condition (financial or otherwise) of any Company.
SECTION 6.16. INTELLECTUAL PROPERTY. Each Company owns, possesses, or
has the right to use all of the patents, patent applications, trademarks,
service marks, copyrights, licenses, and rights with respect to the foregoing
material to the conduct of its business without any known conflict with the
rights of others.
SECTION 6.17. INSURANCE. Each Company maintains with financially sound
and reputable insurers insurance with coverage and limits as required by law and
as is customary with Persons engaged in the same businesses as the Companies.
SECTION 6.18. ACCURATE AND COMPLETE STATEMENTS. Neither this Agreement
nor any report filed with the SEC contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained therein
not misleading.
SECTION 6.19. YEAR 2000 COMPLIANCE. Each Company is reviewing the areas
within its business and operations that could be adversely affected by, and have
developed or are developing a program to address on a timely basis the "Year
2000 Problem" (that is, the risk that computer application used by the Companies
may be unable to recognize and perform properly date-sensitive functions
involving dates after December 31, 1999). Based upon such review and based upon
such ongoing evaluation as Borrower from time to time deems advisable, each
Company reasonably believes that the "Year 2000 Problem" will not have a
material adverse effect on Borrower or on the Companies taken as a whole.
SECTION 6.20. NOTE PURCHASE AGREEMENT. (a) No Event of Default (as
defined in the Note Purchase Agreement) or Default (as defined in the Note
Purchase Agreement) exists, nor will any such Event of Default or Default exist
immediately after the granting of any loan under this Agreement or the Note
Purchase Agreement, or any agreement executed in connection therewith; (b) no
Company has incurred any "Debt" (as defined in the Note Purchase Agreement) in
violation of Section 6B(2) of the Note Purchase Agreement; and (c) the Debt (as
defined herein) constitutes "Debt" (as defined in the Note Purchase Agreement)
permitted pursuant to Section 6B(2) of the Note Purchase Agreement.
SECTION 6.21. DEFAULTS. No Unmatured Event of Default or Event of
Default exists hereunder, nor will any begin to exist immediately after the
execution and delivery hereof.
54
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
SECTION 7.1. PAYMENTS. If the principal of or interest on any Note or
any facility or other fee shall not be paid in full when due and payable.
SECTION 7.2. SPECIAL COVENANTS. If any Company or any Obligor shall
fail or omit to perform and observe Sections 5.7, 5.8, 5.9, 5.11, 5.12 or 5.13
hereof.
SECTION 7.3. OTHER COVENANTS. If any Company or any Obligor shall fail
or omit to perform and observe any agreement or other provision (other than
those referred to in Sections 7.1 or 7.2 hereof) contained or referred to in
this Agreement or any Related Writing that is on such Company's or Obligor's
part, as the case may be, to be complied with, and that Unmatured Event of
Default shall not have been fully corrected within thirty (30) days after the
giving of written notice thereof to Borrower by Agent or any Bank that the
specified Unmatured Event of Default is to be remedied.
SECTION 7.4. REPRESENTATIONS AND WARRANTIES. If any representation or
warranty made in or pursuant to this Agreement or any Related Writing furnished
by any Company or any Obligor to the Banks or any thereof or any other holder of
any Note, shall be materially false.
SECTION 7.5. CROSS DEFAULT. If any Company or any Obligor shall default
in the payment of principal or interest due and owing upon any other obligation
for borrowed money in excess of the aggregate, for all such obligations for all
such Companies and Obligors, of Ten Million Dollars ($10,000,000) (or the CAD
Equivalent) beyond any period of grace provided with respect thereto or in the
performance or observance of any other agreement, term or condition contained in
any agreement under which such obligation is created, if the effect of such
default is to allow the acceleration of the maturity of such Indebtedness or to
permit the holder thereof to cause such Indebtedness to become due prior to its
stated maturity.
SECTION 7.6. ERISA DEFAULT. The occurrence of one or more ERISA Events
which (a) the Majority Banks determine could have a material adverse effect on
the financial condition of the Companies when taken as a whole, or (b) results
in a Lien on any of the assets of any Company.
SECTION 7.7. CHANGE IN CONTROL. If any Change in Control shall occur.
SECTION 7.8. MONEY JUDGMENT. A final judgment or order for the payment
of money shall be rendered against any Company or any Obligor by a court of
competent jurisdiction, which remains unpaid or unstayed and undischarged for a
period (during which execution shall not be effectively stayed) of thirty (30)
days after the date on which the right to
55
appeal has expired, provided that the aggregate of all such judgments for all
such Companies and Obligors shall exceed Ten Million Dollars ($10,000,000) (or
the CAD Equivalent).
SECTION 7.9.VALIDITY OF LOAN DOCUMENTS. (a) The validity, binding
effect or enforceability of any Loan Document against Borrower, any Canadian
Borrower or any Guarantor of Payment shall be contested by any Company or any
other Obligor; (b) Borrower, any Canadian Borrower or any Guarantor of Payment
shall deny that it has any or further liability or obligation thereunder; or (c)
any Loan Document shall be terminated, invalidated or set aside, or be declared
ineffective or inoperative or in any way cease to give or provide to Agent and
the Banks the material benefits purported to be created thereby.
SECTION 7.10. NOTE PURCHASE AGREEMENT. If (a) any Event of Default (as
defined in the Note Purchase Agreement) or Default (as defined in the Note
Purchase Agreement) shall occur under the Note Purchase Agreement or any
agreement executed in connection therewith, (b) without the prior written
consent of Agents and the Majority Banks, the Note Purchase Agreement shall be
amended or modified in violation of any covenant hereunder, or (c) the debt
incurred in connection with the Note Purchase Agreement shall be accelerated for
any reason.
SECTION 7.11. SOLVENCY. If any Company or any Obligor shall (a)
discontinue business, (b) generally not pay its debts as such debts become due,
(c) make a general assignment for the benefit of creditors, (d) apply for or
consent to the appointment of a receiver, a custodian, a trustee, an interim
trustee or liquidator of all or a substantial part of its assets, (e) be
adjudicated a debtor or have entered against it an order for relief under Title
11 of the United States Code, as the same may be amended from time to time, (f)
file a voluntary petition in bankruptcy or file a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to take advantage of
any other law (whether federal or state) relating to relief of debtors, or admit
(by answer, by default or otherwise) the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief of debtors, (g) suffer
or permit to continue unstayed and in effect for thirty (30) consecutive days
any judgment, decree or order entered by a court of competent jurisdiction,
which approves a petition seeking its reorganization or appoints a receiver,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, or (h) take, or omit to take, any action in order thereby to
effect any of the foregoing.
ARTICLE VIII. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or
elsewhere:
SECTION 8.1. OPTIONAL DEFAULTS. If any Event of Default referred to in
Section 7.1, 7.2., 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.10 hereof shall occur,
the Majority Banks shall have the right, in their discretion, by directing
Agent, on behalf of the Banks, to give written notice to Borrower and the
Canadian Borrowers to:
56
(a) terminate the Commitment and the credits hereby established, if not
theretofore terminated, and, immediately upon such election, the obligations of
the Banks, and each thereof, to make any further Loan and the obligation of
Agent (or a Fronting Bank) to issue any Letter of Credit immediately shall be
terminated, and/or
(b) accelerate the maturity of all of the Debt (if it be not already
due and payable), whereupon all of the Debt shall become and thereafter be
immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by Borrower and each Canadian Borrower.
SECTION 8.2. AUTOMATIC DEFAULTS. If any Event of Default referred to in
Section 7.11 hereof shall occur:
(a) the Commitment and the credits hereby established shall
automatically and immediately terminate, if not theretofore terminated, and no
Bank thereafter shall be under any obligation to grant any further Loan, nor
shall Agent (or a Fronting Bank) be obligated to issue any Letter of Credit, and
(b) the principal of and interest then outstanding on all Notes, and
all of the Debt, shall thereupon become and thereafter be immediately due and
payable in full (if it be not already due and payable), all without any
presentment, demand or notice of any kind, which are hereby waived by Borrower
and each Canadian Borrower.
SECTION 8.3. LETTERS OF CREDIT. If the maturity of the Notes is
accelerated pursuant to Sections 8.1 or 8.2 hereof, Borrower shall immediately
deposit with Agent, as security for Borrower's and any Guarantor of Payment's
obligations to reimburse Agent and the Banks for any then outstanding Letters of
Credit, cash equal to the sum of the aggregate undrawn balance of any then
outstanding Letters of Credit. Agent and the Banks are hereby authorized, at
their option, to deduct any and all such amounts from any deposit balances then
owing by any Bank to or for the credit or account of any Company, as security
for Borrower's and any Guarantor of Payment's obligations to reimburse Agent and
the Banks for any then outstanding Letters of Credit.
SECTION 8.4. OFFSETS. If there shall occur or exist any Event of
Default referred to in Section 7.11 hereof or if the maturity of the Notes is
accelerated pursuant to Section 8.1 or 8.2 hereof, each Bank shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all Debt then owing by Borrower or any Canadian Borrower to
that Bank (including, without limitation, any participation purchased or to be
purchased pursuant to Section 8.5 hereof), whether or not the same shall then
have matured, any and all deposit balances and all other indebtedness then held
or owing by that Bank, or any affiliate of such Bank, to or for the credit or
account of Borrower or any Canadian Borrower (provided that no Bank, nor any
affiliate of such Bank, may offset any account designated as a trust, escrow or
other special account unless permitted by law), all without notice to or demand
upon Borrower, any Canadian Borrower or any other Person, all such notices and
demands being hereby expressly waived by Borrower and each Canadian Borrower.
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SECTION 8.5. EQUALIZATION PROVISION.
(a) Prior to the Activation Date, each Bank (other than a Canadian
Bank) agrees with the other Banks that if it, at any time, shall obtain any
Advantage over the other Banks (other than the Canadian Banks), or any thereof,
in respect of the Debt (except under Article III hereof), it shall purchase from
such other Banks, for cash and at par, such additional participation in the Debt
as shall be necessary to nullify the Advantage.
(b) On and after the Activation Date, (i) only the Domestic Banks shall
be obligated, upon the terms and conditions set forth in this Agreement, to fund
Revolving Loans, participate in the issuance of Letters of Credit, and, upon the
request of Agent, participate in the issuance of Swing Loans, and (ii) only the
Canadian Banks shall be obligated, upon the terms and conditions set forth in
this Agreement, to fund CAD Loans; provided that, notwithstanding the foregoing
obligations or lack thereof on the part of any Domestic Bank or Canadian Bank
and anything in this Agreement to the contrary notwithstanding, on or after the
Activation Date upon the earlier of (A) the occurrence of an Event of Default
specified in Section 7.11 hereof, or (B) the acceleration of the Debt pursuant
to Section 8.2 hereof (hereinafter, an "Equalization Event"), each Domestic Bank
and Canadian Bank agrees with the other Domestic Banks and Canadian Banks that
if it, at any time, shall obtain any Advantage over the other Domestic Banks and
Canadian Banks, or any thereof, in respect of the Debt (except under Article III
hereof) then outstanding (as calculated, with respect to the outstanding CAD
Loans and any other amounts outstanding with respect to the Canadian
Commitments, using the Dollar Equivalent in effect on the Equalization Date, as
hereinafter defined), then such Bank having an Advantage shall purchase from the
other Domestic Banks and Canadian Banks, for cash and at par, such additional
participation in the Debt as shall be necessary to nullify the Advantage. For
purposes of determining whether or not an Advantage exists after an Equalization
Event has occurred, Agent shall, as of the date that the Equalization Event
occurs (the "Equalization Date"),
(i) convert the aggregate amount of the Canadian Commitments
to the Dollar Equivalent (using the Dollar Equivalent in effect on the
Closing Date) for such amount (the "Converted Amount");
(ii) convert the amount of the Canadian Commitment of each
Canadian Bank to the Dollar Equivalent (using the Dollar Equivalent in
effect on the Closing Date) for such amount (with respect to each
Canadian Bank, the "Converted Commitment Amount" of such Canadian
Bank);
(iii) add the Converted Amount to the aggregate amount of the
Revolving Credit Commitments (the "Equalization Maximum Amount"); and
(iv) determine an equalization percentage (the "Equalization
Percentage") for (A) each Canadian Bank, by dividing its Converted
Commitment Amount by the Equalization Maximum Amount and (B) for each
Domestic Bank, by dividing the amount of its Revolving Credit
Commitment by the Equalization Maximum Amount.
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(c) If any such Advantage resulting in the purchase of an additional
participation as set forth in subparts (a) or (b) hereof shall be recovered in
whole or in part from the Bank receiving the Advantage, each such purchase shall
be rescinded, and the purchase price restored (but without interest unless the
Bank receiving the Advantage is required to pay interest on the Advantage to the
Person recovering the Advantage from such Bank) ratably to the extent of the
recovery.
(d) Each Bank further agrees with the other Banks that if it at any
time shall receive any payment for or on behalf of Borrower or any Canadian
Borrower on any Indebtedness owing by Borrower or such Canadian Borrower to that
Bank by reason of offset of any deposit or other Indebtedness, it will apply
such payment first to any and all Indebtedness owing by Borrower or such
Canadian Borrower to that Bank pursuant to this Agreement (including, without
limitation, any participation purchased or to be purchased pursuant to this
Section or any other Section of this Agreement). Borrower and each Canadian
Borrower agree that any Bank so purchasing a participation from the other Banks
or any thereof pursuant to this Section may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Bank was a direct creditor of Borrower or such Canadian Borrower in the
amount of such participation.
ARTICLE IX. THE AGENT
The Banks authorize KeyBank National Association and KeyBank National
Association hereby agrees to act as agent for the Banks in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby
irrevocably appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers hereunder as are delegated to Agent by the
terms hereof, together with such powers as are reasonably incidental thereto,
including, without limitation, to execute and deliver the Intercreditor
Agreement. Neither Agent nor any of its directors, officers, attorneys or
employees shall be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct.
SECTION 9.2. NOTE HOLDERS. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with it,
signed by such payee and in form satisfactory to Agent.
SECTION 9.3. CONSULTATION WITH COUNSEL. Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the opinion of such counsel.
SECTION 9.4. DOCUMENTS. Agent shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Documents or any other
59
Related Writing furnished pursuant hereto or in connection herewith or the value
of any collateral obtained hereunder, and Agent shall be entitled to assume that
the same are valid, effective and genuine and what they purport to be.
SECTION 9.5. AGENT AND AFFILIATES. With respect to the Loans, Agent
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not Agent, and Agent and its affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with any Company or affiliate thereof.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and
agreed that Agent shall be entitled to assume that no Unmatured Event of Default
or Event of Default has occurred and is continuing, unless Agent has been
notified by a Bank in writing that such Bank believes that an Unmatured Event of
Default or Event of Default has occurred and is continuing and specifying the
nature thereof.
SECTION 9.7. ACTION BY AGENT. So long as Agent shall be entitled,
pursuant to Section 9.6 hereof, to assume that no Unmatured Event of Default or
Event of Default shall have occurred and be continuing, Agent shall be entitled
to use its discretion with respect to exercising or refraining from exercising
any rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions which it may be able to take under or in
respect of, this Agreement. Agent shall incur no liability under or in respect
of this Agreement by acting upon any notice, certificate, warranty or other
paper or instrument believed by it to be genuine or authentic or to be signed by
the proper party or parties, or with respect to anything which it may do or
refrain from doing in the reasonable exercise of its judgment, or which may seem
to it to be necessary or desirable in the premises.
SECTION 9.8. NOTICES, DEFAULT, ETC. In the event that Agent shall have
acquired actual knowledge of any Unmatured Event of Default, Agent shall
promptly notify the Banks and shall take such action and assert such rights
under this Agreement as the Majority Banks shall direct and Agent shall inform
the other Banks in writing of the action taken. Agent may take such action and
assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Notes.
SECTION 9.9. INDEMNIFICATION OF AGENT. The Banks agree to indemnify
Agent (to the extent not reimbursed by Borrower and Canadian Borrowers), ratably
according to their respective Commitment Percentages or Revised Commitment
Percentages, as then applicable, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against Agent in its capacity as agent in any way
relating to or arising out of this Agreement or any Loan Document or any action
taken or omitted by Agent with respect to this Agreement or any Loan Document,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorney fees) or disbursements resulting from Agent's gross
negligence, willful misconduct or from any action taken or omitted by Agent in
any capacity other than as agent under this Agreement.
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SECTION 9.10. SUCCESSOR AGENT. Agent may resign as agent hereunder by
giving not fewer than thirty (30) days' prior written notice to Borrower,
Canadian Borrowers and the Banks. If Agent shall resign under this Agreement,
then either (a) the Majority Banks shall appoint from among the Banks a
successor agent for the Banks (with the consent of Borrower so long as an Event
of Default has not occurred and which consent shall not be unreasonably
withheld), or (b) if a successor agent shall not be so appointed and approved
within the thirty (30) day period following Agent's notice to the Banks of its
resignation, then Agent shall appoint a successor agent who shall serve as agent
until such time as the Majority Banks appoint a successor agent. Upon its
appointment, such successor agent shall succeed to the rights, powers and duties
as agent, and the term "Agent" shall mean such successor effective upon its
appointment, and the former agent's rights, powers and duties as agent shall be
terminated without any other or further act or deed on the part of such former
agent or any of the parties to this Agreement.
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ARTICLE X. MISCELLANEOUS
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between
Agent and such Bank. Each Bank represents that it has made and shall continue to
make its own independent investigation of the creditworthiness, financial
condition and affairs of the Companies in connection with the extension of
credit hereunder, and agrees that Agent has no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or other
information with respect thereto (other than such notices as may be expressly
required to be given by Agent to the Banks hereunder), whether coming into its
possession before the granting of the first Loans hereunder or at any time or
times thereafter. Each Bank represents that it has reviewed each of the Loan
Documents, including, but not limited to, the Intercreditor Agreement. Each
Bank, by its signature to this Agreement, agrees to be bound by and subject to
the terms and conditions of the Intercreditor Agreement as if it were an
original party thereto.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of Agent, any Bank or the holder of any Note in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are cumulative and in addition
to any other rights, powers or privileges held by operation of law, by contract
or otherwise.
SECTION 10.3. AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Banks and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
Anything herein to the contrary notwithstanding, unanimous consent of the Banks
shall be required with respect to (a) any increase in the Commitment hereunder,
(b) the extension of maturity of the Notes, the payment date of interest
thereunder, or the payment of facility or other fees or amounts payable
hereunder, (c) any reduction in the rate of interest on the Notes, or in any
amount of principal or interest due on any Note, or the payment of facility or
other fees hereunder or any change in the manner of pro rata application of any
payments made by Borrower or Canadian Borrowers to the Banks hereunder, (d) any
change in any percentage voting requirement, voting rights, or the Majority
Banks definition in this Agreement, (e) the release of any Guarantor of Payment,
or (f) any amendment to the Intercreditor Agreement, this Section 10.3 or
Section 8.5 hereof. Notice of amendments or consents ratified by the Banks
hereunder shall immediately be forwarded by Borrower to all
62
Banks. Each Bank or other holder of a Note shall be bound by any amendment,
waiver or consent obtained as authorized by this Section, regardless of its
failure to agree thereto.
SECTION 10.4. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to Borrower or
Canadian Borrowers, mailed or
63
delivered to it, addressed to it at the address or Borrower or such Canadian
Borrower specified on the signature pages of this Agreement, if to a Bank,
mailed or delivered to it, addressed to the address of such Bank specified on
the signature pages of this Agreement, or, as to each party, at such other
address as shall be designated by such party in a written notice to each of the
other parties. All notices, statements, requests, demands and other
communications provided for hereunder shall be given by overnight delivery or
first class mail with postage prepaid by registered or certified mail, addressed
as aforesaid, or sent by facsimile with telephonic confirmation of receipt,
except that all notices hereunder shall not be effective until received.
SECTION 10.5. COSTS, EXPENSES AND TAXES. Borrower and Canadian
Borrowers agree to pay on demand all costs and expenses of Agent, including, but
not limited to, (a) administration, travel and out-of-pocket expenses,
including, but not limited to, attorneys' fees and expenses, of Agent in
connection with the preparation, negotiation and closing of the Loan Documents
and the administration of the Loan Documents, the collection and disbursement of
all funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent in connection with the
administration of the Loan Documents and the other instruments and documents to
be delivered hereunder, (c) the reasonable fees and out-of-pocket expenses of
special counsel for Agent, with respect to the foregoing, and of local counsel,
if any, who may be retained by said special counsel with respect thereto, and
(d) all costs and expenses, including reasonable attorneys' fees and expenses of
Agent and the Banks, in connection with the restructuring or enforcement of the
Debt, the Loan Documents or any Related Writing. In addition, Borrower (and
Canadian Borrowers to the extent relating to the Canadian Commitments, the CAD
Loans or any Canadian Borrower) shall pay any and all stamp and other taxes and
fees payable or determined to be payable in connection with the execution and
delivery of the Loan Documents, and the other instruments and documents to be
delivered hereunder, and agrees to hold Agent and each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes or fees.
SECTION 10.6. INDEMNIFICATION.
(a) Borrower agrees to defend, indemnify and hold harmless Agent and
the Banks from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys' fees and expenses) or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against Agent or any Bank in
connection with any investigative, administrative or judicial proceeding
(whether or not such Bank or Agent shall be designated a party thereto) or any
other claim by any Person relating to or arising out of this Agreement or any
actual or proposed use of proceeds of the Loans or any of the Debt, or any
activities of any Company or any Obligor or any of their affiliates; provided
that no Bank nor Agent shall have the right to be indemnified under this Section
for its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction. All obligations provided for in this Section 10.6 shall
survive any termination of this Agreement, including, but not limited to the
termination of the Commitment of any Bank pursuant to Sections 2.6 or 10.10
hereof.
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(b) Each Canadian Borrower agrees to defend, indemnify and hold
harmless Agent and the Canadian Banks from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees and expenses) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
Agent or any Canadian Bank in connection with any investigative, administrative
or judicial proceeding (whether or not such Canadian Bank or Agent shall be
designated a party thereto) or any other claim by any Person relating to or
arising out of the Canadian Commitments, the CAD Loans, any activities of any
Canadian Borrower or any actual or proposed use of proceeds of the CAD Loans or
any of the Indebtedness or other obligations incurred in connection with the
Canadian Commitments; provided that no Canadian Bank nor Agent shall have the
right to be indemnified under this Section for its own gross negligence or
willful misconduct as determined by a court of competent jurisdiction. All
obligations provided for in this Section 10.6 shall survive any termination of
this Agreement, including, but not limited to the termination of the Commitment
of any Bank pursuant to Sections 2.6 or 10.10 hereof.
SECTION 10.7. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS. The
obligations of the Banks hereunder are several and not joint. Nothing contained
in this Agreement and no action taken by Agent or the Banks pursuant hereto
shall be deemed to constitute the Banks a partnership, association, joint
venture or other entity. No default by any Bank hereunder shall excuse the other
Banks from any obligation under this Agreement; but no Bank shall have or
acquire any additional obligation of any kind by reason of such default.
Anything in Section 2.1 hereof to the contrary notwithstanding, in the event of
a default by such Bank, each of the Banks recognizes and agrees that such
default may cause (a) the amount of Revolving Loans evidenced by the Revolving
Credit Note of such other Bank to be a greater percentage of the aggregate
amount of Revolving Loans then outstanding for all Banks, or (b) the amount of
CAD Loans evidenced by the CAD Loan Note of such other Bank to be a greater
percentage of the aggregate amount of CAD Loans outstanding for all Banks, than
such other Bank's Commitment Percentage, or Revised Commitment Percentage, as
applicable; in such event each Bank shall continue to extend credit hereunder
regardless of the foregoing (a) or (b). The relationship between (i) Borrower
and Canadian Borrowers and (ii) the Banks, with respect to the Loan Documents
and the Related Writings, is and shall be solely that of debtor and creditors,
respectively, and neither Agent nor any Bank has any fiduciary obligation toward
Borrower or Canadian Borrower with respect to any such documents or the
transactions contemplated thereby.
SECTION 10.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
SECTION 10.9. BINDING EFFECT; BORROWER'S ASSIGNMENT. This Agreement
shall become effective when it shall have been executed by Borrower, Agent and
by each Bank and thereafter shall be binding upon and inure to the benefit of
Borrower, each Canadian Borrower, Agent and each of the Banks and their
respective successors and assigns,
65
except that neither Borrower nor any Canadian Borrower shall have the right to
assign its rights hereunder or any interest herein without the prior written
consent of Agent and all of the Banks.
SECTION 10.10. BANK ASSIGNMENTS/PARTICIPATIONS
A. Assignments of Commitments. Each Bank shall have the right at any
time or times to assign to another financial institution, without recourse, all
or a percentage of all of the following: (a) that Bank's Commitment, (b) all
Loans made by that Bank, (c) that Bank's Notes, and (d) that Bank's interest in
any Letter of Credit and any participation purchased pursuant to Section 2.1B or
8.5 hereof; provided, however, that a Canadian Bank shall only have the right to
make an assignment to another Canadian Bank. In the case of each assignment
under this Agreement, the assignor and the assignee shall comply with the
following requirements:
(i) Prior Consent. No assignment may be consummated
pursuant to this Section 10.10 without the prior written consent of
Borrower and Agent (other than an assignment by any Bank to any
affiliate of such Bank which affiliate is either wholly-owned by such
Bank or is wholly-owned by a Person that wholly owns, either directly
or indirectly, such Bank), which consent of Borrower and Agent shall
not be unreasonably withheld; provided, however, that, Borrower's
consent shall not be required if, at the time of the proposed
assignment, any Unmatured Event of Default or Event of Default shall
then exist. Anything herein to the contrary notwithstanding, any Bank
may at any time make a collateral assignment of all or any portion of
its rights under the Loan Documents to a Federal Reserve Bank, and no
such assignment shall release such assigning Bank from its obligations
hereunder;
(ii) Minimum Amount. Each such assignment shall be in a
minimum amount of the lesser of Ten Million Dollars ($10,000,000) of
the assignor's Commitment and interest herein or the entire amount of
the assignor's Commitment and interest herein;
(iii) Assignment Fee; Assignment Agreement. Unless the
assignment shall be to an affiliate of the assignor or the assignment
shall be due to merger of the assignor or for regulatory purposes,
either the assignor or the assignee shall remit to Agent, for its own
account, an administrative fee of Two Thousand Five Hundred Dollars
($2,500). Unless the assignment shall be due to merger of the assignor
or a collateral assignment for regulatory purposes, the assignor shall
(A) cause the assignee to execute and deliver to Borrower and Agent an
Assignment Agreement, and (B) execute and deliver, or cause the
assignee to execute and deliver, as the case may be, to Agent such
additional amendments, assurances and other writings as Agent may
reasonably require and which contains a confidentiality covenant
reasonably acceptable to Borrower; and
(iv) Non-U.S. Assignee. If the assignment is to be made to an
assignee which is organized under the laws of any jurisdiction other
than the United States or any state thereof, the assignor Bank shall
cause such assignee, at least five (5) Business Days prior to the
effective date of such assignment, (A) to represent to the assignor
Bank (for the benefit of the assignor Bank, Agent and Borrower) that
under applicable law and treaties no taxes will be required to be
withheld by Agent, Borrower or the assignor with respect
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to any payments to be made to such assignee in respect of the Loans
hereunder, (B) to furnish to the assignor (and, in the case of any
assignee registered in the Register (as defined below), Agent and
Borrower) either (1) U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 or (2) United States Internal
Revenue Service Form W-8 or W-9, as applicable (wherein such assignee
claims entitlement to complete exemption from U.S. federal withholding
tax on all interest payments hereunder), and (C) to agree (for the
benefit of the assignor, Agent and Borrower) to provide the assignor
Bank (and, in the case of any assignee registered in the Register,
Agent and Borrower) a new Form 4224 or Form 1001 or Form W-8 or W-9, as
applicable, 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 assignee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
Upon satisfaction of the requirements specified in clauses (i) through
(iv) above, Borrower shall execute and deliver (A) to Agent, the assignor and
the assignee, any consent or release (of all or a portion of the obligations of
the assignor) required to be delivered by Borrower in connection with the
Assignment Agreement, and (B) to the assignee, an appropriate Note or Notes.
After delivery of the new Note or Notes, the assignor's Note or Notes being
replaced shall be returned to Borrower marked "replaced".
Upon satisfaction of the requirements of set forth in (i) through (iv),
and any other condition contained in this Section 10.10A, (A) the assignee shall
become and thereafter be deemed to be a "Bank" for the purposes of this
Agreement, (B) in the event that the assignor's entire interest has been
assigned, the assignor shall cease to be and thereafter shall no longer be
deemed to be a "Bank" and (C) the signature pages hereto and Schedule 1 hereof
shall be automatically amended, without further action, to reflect the result of
any such assignment.
Agent shall maintain at its address referred to in Section 10.4 hereof
a copy of each Assignment Agreement delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Loans owing to, each Bank from time
to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower, Agent and the Banks may treat each financial
institution whose name is recorded in the Register as the owner of the Loan
recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Bank at any reasonable time and from
time to time upon reasonable prior notice.
B. Sale of Participations. Each Bank shall have the right at any time
or times, without the consent of Agent or Borrower, to sell one or more
participations or sub-participations to a financial institution, as the case may
be, in all or any part of (a) that Bank's Commitment, (b) that Bank's Commitment
Percentage, (c) any Loan made by that Bank, (d) any Note delivered to that Bank
pursuant to this Agreement, and (e) that Bank's interest in any Letter of Credit
and any participation, if any, purchased pursuant to Section 2.1B or 8.5 hereof
or this
67
Section 10.10B; provided, however, that any such participant or sub-participant
shall not be deemed to be a "Bank" under this Agreement.
The provisions of Article III shall inure to the benefit of each
purchaser of a participation or sub-participation and Agent shall continue to
distribute payments pursuant to this Agreement as if no participation has been
sold.
68
In the event that any Bank shall sell any participation or
sub-participation, that Bank shall, as between itself and the purchaser, retain
all of its rights (including, without limitation, rights to enforce against
Borrower the Loan Documents and the Related Writings) and duties pursuant to the
Loan Documents and the Related Writings, including, without limitation, that
Bank's right to approve any waiver, consent or amendment pursuant to Section
10.3, except if and to the extent that any such waiver, consent or amendment
would:
(i) reduce any fee or commission allocated to the participation or
sub-participation, as the case may be,
(ii) reduce the amount of any principal payment on any Loan
allocated to the participation or sub-participation, as the
case may be, or reduce the principal amount of any Loan so
allocated or the rate of interest payable thereon, or
(iii) extend the time for payment of any amount allocated to the
participation or sub-participation, as the case may be.
No participation or sub-participation shall operate as a delegation of
any duty of the seller thereof. Under no circumstance shall any participation or
sub-participation be deemed a novation in respect of all or any part of the
seller's obligations pursuant to this Agreement.
SECTION 10.11. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to Sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
SECTION 10.12. INVESTMENT PURPOSE. Each of the Banks represents and
warrants to Borrower that it is entering into this Agreement with the present
intention of acquiring any Note issued pursuant hereto for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Bank shall at all times retain full control over the
disposition of its assets.
SECTION 10.13. ENTIRE AGREEMENT. This Agreement, any Note and any other
agreement, document or instrument attached hereto or referred to herein or
executed on or as of the Closing Date integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
SECTION 10.14. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement, each of the Notes and any Related Writing shall be governed by and
construed in accordance with the laws of the State of Ohio and the respective
rights and obligations of Borrower, Canadian Borrowers and the Banks shall be
governed by Ohio law, without regard to
69
principles of conflict of laws. Borrower and each Canadian Borrower hereby
irrevocably submits to the non-exclusive jurisdiction of any Ohio state or
federal court sitting in Cleveland, Ohio, over any action or proceeding arising
out of or relating to this Agreement, the Debt or any Related Writing, and
Borrower and each Canadian Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such Ohio
state or federal court. Borrower, on behalf of itself and its Subsidiaries,
hereby irrevocably waives, to the fullest extent permitted by law, any objection
it may now or hereafter have to the laying of venue in any action or proceeding
in any such court as well as any right it may now or hereafter have to remove
such action or proceeding, once commenced, to another court on the grounds of
FORUM NON CONVENIENS or otherwise. Borrower and each Canadian Borrower agree
that a final, nonappealable judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
SECTION 10.15. LEGAL REPRESENTATION OF PARTIES. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.
[Remainder of page intentionally left blank.]
70
SECTION 10.16. JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR
ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
Address: One Applied Plaza APPLIED INDUSTRIAL TECHNOLOGIES,
Cleveland, Ohio 44115 INC.
Attention: John R. Whitten,
Vice President-Chief By: /s/ John R. Whitten
Financial Officer and -------------------------------
Treasurer Title:
----------------------------
and
-------------------------------
Title:
----------------------------
Address: Key Center KEYBANK NATIONAL ASSOCIATION,
127 Public Square as Agent and as a Bank
Cleveland, Ohio 44114
Attention: Large Corporate By:/s/ Brendan A. Lawlor
Banking Division ---------------------
Brendan A. Lawlor, Assistant
Vice President
Address: 1900 East Ninth Street NATIONAL CITY BANK
Locator #2104
Cleveland, Ohio 44114
Attention: Corporate Banking
By:/s/ Terri L. Cable
-------------------------------
Terri L. Cable, Vice President
Address: 611 Woodward Avenue NBD BANK
Detroit, MI 48226
Attention: Corporate Banking
By: /s/ Paul R. DeMelo
-------------------------------
Paul R. DeMelo, Vice President
71
Address: One Mellon Bank Center MELLON BANK, N.A.
Room 4530
Pittsburgh, PA 15258-0001
Attention: Corporate Banking
By: /s/ Mark F. Johnston
-------------------------------
Mark F. Johnston, Assistant Vice
President
Address: 249 Fifth Avenue PNC BANK, NATIONAL ASSOCIATION
PI-POPP-02-2
Pittsburgh, PA 15222-2707
Attention: Corporate Banking
By: /s/ William V. Armitage
-------------------------------
Title: Vice President
------------------------------
Address: 1350 Euclid Avenue, Suite 211 STAR BANK, N.A.
ML 4449
Cleveland, Ohio 44115
Attention: Corporate Banking
By: /s/ W. Gregory Schmid
-------------------------------
W. Gregory Schmid, Assistant
Vice President
Address: U.S. Corporate Banking BANK OF MONTREAL
115 South LaSalle Street
12th Floor
Chicago, IL 60603
Attention: Corporate Banking
By: /s/ Sheila C. Weimer
-------------------------------
Title: Director
-------------------------------
Address: BCE Place FIRST CHICAGO NBD BANK, CANADA
PO Box 613
161 Bay Street, Suite 4240
Toronto, Ontario M5J251
Attention: Corporate Banking
By: /s/ Paul R. DeMelo
-------------------------------
Title: Vice President
-----------------------------
Address: 77 King Street West MELLON BANK CANADA
Suite 3200
Toronto, Ontario M5K1K2
Attention: Corporate Banking
Room F006350 By: /s/ Edward McGrath
-------------------------------
Title: Vice President
-------------------------------
72
Address: 1 First Canadian Place BANK OF MONTREAL
24th Floor
Toronto, Ontario M5X1A1
Attention: Corporate Banking
By: /s/ Ben Ciallella
-------------------------------
Ben Ciallella, Director
73
SCHEDULE 1
Revolving
Revised Revolving Commitment Amount Canadian
Banking Commitment Commitment Commitment Amount On and After Commitment Amount
Institution Percentage Percentage Prior to Activation Date
Activation Date
KeyBank National Association, 26.6667% 40% $40,000,000 $40,000,000 -0-
a Domestic Bank
National City Bank, 23.3334% 35% 35,000,000 35,000,000 -0-
a Domestic Bank
NBD Bank 16.6667% -0- 25,000,000 - 0 - -0-
Mellon Bank, NA 10% -0- 15,000,000 - 0 - -0-
PNC Bank, National Association, 10% 15% 15,000,000 15,000,000 -0-
a Domestic Bank
Bank of Montreal 6.6667% -0- 10,000,000 - 0 - -0-
Star Bank, N.A., 6.6667% 10% 10,000,000 10,000,000 - 0 -
a Domestic Bank
First Chicago NBD Bank Canada, a -0- 50% -0- -0- CAD 35,000,000
Canadian Bank
Mellon Bank Canada, -0- 30% -0- -0- CAD 21,000,000
a Canadian Bank
Bank of Montreal, -0- 20% -0- -0- CAD 14,000,000
a Canadian Bank
Total 100% 100% $150,000,000 $100,000,000 CAD 70,000,000
Total Commitment Amount
Banking
Institution Maximum Amount Revised Maximum Amount
KeyBank National Association, $40,000,000 $40,000,000
a Domestic Bank
National City Bank, 35,000,000 35,000,000
a Domestic Bank
NBD Bank 25,000,000 - 0 -
Mellon Bank, NA 15,000,000 - 0 -
PNC Bank, National Association, 15,000,000 15,000,000
a Domestic Bank
Bank of Montreal 10,000,000 - 0 -
Star Bank, N.A., 10,000,000 10,000,000
a Domestic Bank
First Chicago NBD Bank Canada, a -0- CAD 35,000,000
Canadian Bank
Mellon Bank Canada, -0- CAD 21,000,000]
a Canadian Bank
Bank of Montreal, -0- CAD 14,000,000
a Canadian Bank
Total $150,000,000 $100,000,000
CAD 70,000,000
Total Commitment Amount $150,000,000 $100,000,000
CAD 70,000,000
74
SCHEDULE 2
GUARANTORS OF PAYMENT
1. Applied Industrial Technologies-ABC, Inc., an Ohio corporation
2. Applied Industrial Technologies-DBB, Inc., an Ohio corporation
3. Applied Industrial Technologies-Dixie, Inc., a Tennessee corporation
4. Applied Industrial Technologies-Mainline, Inc., a Wisconsin corporation
5. Applied Industrial Technologies-Midwest, Inc., an Ohio corporation
6. Applied Industrial Technologies-GA LP, a Delaware limited partnership
7. Applied Industrial Technologies-TN LP, a Delaware limited partnership
8. Applied Industrial Technologies-TX LP, a Delaware limited partnership
9. Applied Industrial Technologies-PA LLC, a Pennsylvania limited liability company
10. Air and Hydraulics Engineering, Incorporated, an Alabama corporation
11. American Bearing and Power Transmission, Inc., a Michigan corporation
12. ESI Acquisition Corporation, an Ohio corporation
13. Moore Bearing Company, a Michigan corporation
14. The Ohio Ball Bearing Company, an Ohio corporation
15. Bearings Pan American, Inc., an Ohio corporation
16. Bearings Sales and Services, Inc., a West Virginia corporation
17. BER Capital, Inc., a Delaware corporation
75
SCHEDULE 3
CANADIAN BORROWERS
None as of the Closing Date.
76
EXHIBIT A
REVOLVING CREDIT NOTE
$_______________ Cleveland, Ohio
November 5, 1998
FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES,
INC. ("Borrower") promises to pay on the last day of the Commitment Period, as
defined in the Credit Agreement (as hereinafter defined), to the order of
_________ ("Bank") at the Main Office of KEYBANK NATIONAL ASSOCIATION, Agent,
127 Public Square, Cleveland, Ohio 44114-1306 the principal sum of
DOLLARS
or the aggregate unpaid principal amount of all Revolving Loans made by Bank to
Borrower pursuant to Section 2.1A of the Credit Agreement, whichever is less, in
lawful money of the United States of America. As used herein, "Credit Agreement"
means the Credit Agreement dated as of November 5, 1998, among Borrower, the
banks named therein and KeyBank National Association, as Agent, as the same may
from time to time be amended, restated or otherwise modified. Capitalized terms
used herein shall have the meanings ascribed to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each Revolving Loan from time to time outstanding, from the date of such
Revolving Loan until the payment in full thereof, at the rates per annum which
shall be determined in accordance with the provisions of Section 2.1A of the
Credit Agreement. Such interest shall be payable on each date provided for in
such Section 2.1A; provided, however, that interest on any principal portion
which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Base Rate Loans and LIBOR Loans, and payments of principal of any thereof, shall
be shown on the records of Bank by such method as Bank may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from Borrower's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be the Default Rate. All payments of principal of and interest
on this Note shall be made in immediately available funds.
This Note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare
77
this Note due prior to its stated maturity, and other terms and conditions upon
which this Note is issued.
This Note is subject to the provisions of the Intercreditor Agreement
and any holder of this Note, by its acceptance hereof, agrees to be bound by the
provisions of the Intercreditor Agreement as if it were an original party
thereto. Any holder of this Note shall have the right, at any time, to obtain
from Borrower a copy of the Intercreditor Agreement.
Except as expressly provided in the Credit Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.
JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By:_______________________________________
Title:______________________________________
and_______________________________________
Title:______________________________________
78
EXHIBIT B
SWING LINE NOTE
$15,000,000 Cleveland, Ohio
November 5, 1998
FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES,
INC. ("Borrower"), promises to pay to the order of KEYBANK NATIONAL ASSOCIATION
("Bank") at the Main Office of KEYBANK NATIONAL ASSOCIATION, as Agent, 127
Public Square, Cleveland, Ohio 44114-1306 the principal sum of
FIFTEEN MILLION AND 00/100 .............................................DOLLARS
or the aggregate unpaid principal amount of all Swing Loans, as defined in the
Credit Agreement (as hereinafter defined), made by Bank to Borrower pursuant to
Section 2.1B of the Credit Agreement, whichever is less, in lawful money of the
United States of America on the earlier of the last day of the Commitment
Period, as defined in the Credit Agreement, or, with respect to each Swing Loan,
the Swing Loan Maturity Date applicable thereto. As used herein, "Credit
Agreement" means the Credit Agreement dated as of November 5, 1998, among
Borrower, the banks named therein and KeyBank National Association, as Agent, as
it may from time to time be amended, restated or otherwise modified. Capitalized
terms used herein shall have the meanings ascribed to them in the Credit
Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each Swing Loan from time to time outstanding, from the date of such Swing
Loan until the payment in full thereof, at the rates per annum which shall be
determined in accordance with the provisions of Section 2.1B of the Credit
Agreement. Such interest shall be payable on each date provided for in such
Section 2.1B; provided, however, that interest on any principal portion which is
not paid when due shall be payable on demand.
The principal sum hereof from time to time and payments of principal
hereof, shall be shown on the records of Bank by such method as Bank may
generally employ; provided, however, that failure to make any such entry shall
in no way detract from Borrower's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at the Default
Rate. All payments of principal of and interest on this Note shall be made in
immediately available funds.
Except as expressly provided in the Credit Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.
79
This Note is subject to the provisions of the Intercreditor Agreement
and any holder of this Note, by its acceptance hereof, agrees to be bound by the
provisions of the Intercreditor Agreement as if it were an original party
thereto. Any holder of this Note shall have the right, at any time, to obtain
from Borrower a copy of the Intercreditor Agreement.
This Note is the Swing Line Note referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the undersigned's
payment obligations hereunder, the right of the holder hereof to declare this
Note due prior to its stated maturity, and other terms and conditions upon which
this Note is issued.
JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By:_______________________________________
Title:______________________________________
and_______________________________________
Title:______________________________________
80
EXHIBIT C
CAD LOAN NOTE
CAD ___________ Cleveland, Ohio
_________, 199_
FOR VALUE RECEIVED, the undersigned, ________________________
(collectively "Canadian Borrowers", and individually "Canadian Borrower"),
jointly and severally promise to pay on the last day of the Canadian Commitment
Period, as defined in the Credit Agreement (as hereinafter defined), to the
order of _________ ("Canadian Bank") at the Designated Lending Office, as
defined in the Credit Agreement, the principal sum of
CANADIAN DOLLARS
or the aggregate unpaid principal amount of all CAD Loans made by the Canadian
Banks to Canadian Borrowers pursuant to Section 2.1D of the Credit Agreement,
whichever is less, in lawful money of Canada. As used herein, "Credit Agreement"
means the Credit Agreement dated as of November 5, 1998, among Applied
Industrial Technologies, Inc., the banks named therein and KeyBank National
Association, as Agent, as the same may from time to time be restated, amended or
otherwise modified. Capitalized terms used herein shall have the meanings
ascribed to them in the Credit Agreement.
Canadian Borrowers also promise to pay interest on the unpaid principal
amount of each CAD Loan from time to time outstanding, from the date of such CAD
Loan until the payment in full thereof, at the rates per annum which shall be
determined in accordance with the provisions of Section 2.1D of the Credit
Agreement. Such interest shall be payable on each date provided for in such
Section 2.1D; provided, however, that interest on any principal portion which is
not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
CAD Base Rate Loans and CAD Fixed Rate Loans, and payments of principal thereof,
shall be shown on the records of Canadian Borrowers by such method as Canadian
Borrowers may generally employ; provided, however, that failure to make any such
entry shall in no way detract from the obligations of Canadian Borrowers under
this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be the Default Rate. All payments of principal of and interest
on this Note shall be made in immediately available funds.
This Note is subject to the provisions of the Intercreditor Agreement
and any holder of this Note, by its acceptance hereof, agrees to be bound by the
provisions of the Intercreditor Agreement as if it were an original party
thereto. Any holder of this
81
Note shall have the right, at any time, to obtain from any Canadian Borrower a
copy of the Intercreditor Agreement.
This Note is one of the CAD Loan Notes referred to in the Credit
Agreement. Reference is made to the Credit Agreement for a description of the
right of the undersigned to anticipate payments hereof, the right of the holder
hereof to declare this Note due prior to its stated maturity, and other terms
and conditions upon which this Note is issued.
Except as expressly provided in the Credit Agreement, each Canadian
Borrower expressly waives presentment, demand, protest and notice of any kind.
JURY TRIAL WAIVER. EACH CANADIAN BORROWER, AGENT AND EACH CANADIAN BANK
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG CANADIAN BORROWERS, AGENT AND THE
CANADIAN BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
------------------------------------------
By:_______________________________________
Title:______________________________________
and_______________________________________
Title:______________________________________
------------------------------------------
By:_______________________________________
Title:______________________________________
and_______________________________________
Title:______________________________________
82
EXHIBIT D
NOTICE OF CAD LOAN
[Date]_______________________, 19____
KeyBank National Association, as Agent for the Canadian Banks,
as defined in the Credit Agreement, as hereinafter defined
127 Public Square
Cleveland, Ohio 44114-0616
Attention: [___________________]
Ladies and Gentlemen:
The undersigned, [_____________________________________________] and
[__________________________], each a Canadian Borrower, as defined in the Credit
Agreement, as hereinafter defined, refers to the Credit Agreement, dated as of
November 5, 1998 ("Credit Agreement", the terms defined therein being used
herein as therein defined), among Applied Industrial Technologies, Inc., the
Banks, as defined in the Credit Agreement, and KeyBank National Association, as
Agent, and hereby gives you notice, pursuant to Section 2.2 of the Credit
Agreement that the undersigned hereby requests a CAD Loan, as defined in the
Credit Agreement, from the Canadian Banks, as defined in the Credit Agreement,
and in connection therewith sets forth below the information relating to the CAD
Loan (the "Proposed CAD Loan") as required by Section 2.2 of the Credit
Agreement:
(a) The request is for a ___ CAD Loan, ___ conversion of a CAD Loan, or
___ continuation of a CAD Loan. (Check one.)
(b) The Business Day of the Proposed CAD Loan is __________, 19__.
(c) The amount of the Proposed CAD Loan is _______________ Canadian.
(c) The Proposed CAD Loan is to be a CAD Base Rate Loan ____ / CAD
Fixed Rate Loan ___. (Check one.)
(d) If the Proposed CAD Loan is a CAD Fixed Rate Loan, the Interest
Period requested is one (1) month ___, two (2) months ___, three
(3) months ___, six (6) months ____ (Check one.)
[Each of] the undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
Proposed CAD Loan:
83
(i) the representations and warranties contained in each Loan
Document are correct, before and after giving effect to the Proposed
CAD Loan and the application of the proceeds therefrom, as though made
on and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Proposed CAD Loan, or the application of proceeds therefrom,
which constitutes an Unmatured Event of Default or Event of Default;
and
(iii) the conditions set forth in Section 2.2 and Article IV
of the Credit Agreement have been satisfied.
Very truly yours,
[-----------------------------------]
By:______________________________________
Name:___________________________________
Title:____________________________________
[-----------------------------------]
By:______________________________________
Name:___________________________________
Title:____________________________________
84
EXHIBIT E
NOTICE OF REVOLVING LOAN
[Date]_______________________, 19____
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114-0616
Attention:
Ladies and Gentlemen:
The undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., refers to the
Credit Agreement, dated as of November 5, 1998 ("Credit Agreement", the terms
defined therein being used herein as therein defined), among the undersigned,
the Banks, as defined in the Credit Agreement, and KeyBank National Association,
as Agent, and hereby gives you notice, pursuant to Section 2.2 of the Credit
Agreement that the undersigned hereby requests a Loan under the Credit
Agreement, and in connection therewith sets forth below the information relating
to the Loan (the "Proposed Loan") as required by Section 2.2 of the Credit
Agreement:
(a) The request is for a ___ Loan, ___ conversion of a Loan, or ___
continuation of a Loan. (Check one.)
(b) The Business Day of the Proposed Loan is __________, 19__.
(c) The amount of the Proposed Loan is $_______________.
(c) The Proposed Loan is to be a Base Rate Loan ____ /LIBOR Loan
___/Swing Loan____. (Check one.)
(d) If the Proposed Loan is a LIBOR Loan, the Interest Period requested
is one (1) month ___, two (2) months ___, three (3) months ___,
six (6) months ____ (Check one.)
(e) If the Proposed Loan is a Swing Loan, the requested maturity of the
Swing Loan is ____ days.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Loan:
85
(i) the representations and warranties contained in each Loan
Document are correct, before and after giving effect to the Proposed
Loan and the application of the proceeds therefrom, as though made on
and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Proposed Loan, or the application of proceeds therefrom,
which constitutes an Unmatured Event of Default or Event of Default;
and
(iii) the conditions set forth in Section 2.2 and Article IV
of the Credit Agreement have been satisfied.
Very truly yours,
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By:______________________________________
Name:___________________________________
Title:____________________________________
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EXHIBIT F
COMPLIANCE CERTIFICATE
For Fiscal [Quarter] [Year] ended ____________________
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) I am the duly elected President or Chief Financial Officer of
APPLIED INDUSTRIAL TECHNOLOGIES, INC. ("Borrower");
(2) I am familiar with the terms of that certain Credit Agreement,
dated as of November 5, 1998, among the undersigned, the Banks, as defined in
the Credit Agreement, and KeyBank National Association, as Agent (as the same
may from time to time be amended, restated or otherwise modified, the "Credit
Agreement", the terms defined therein and not otherwise defined in this
Certificate being used herein as therein defined), and the terms of the other
Loan Documents, and I have made, or have caused to be made under my supervision,
a review in reasonable detail of the transactions and condition of Borrower and
its Subsidiaries during the accounting period covered by the attached financial
statements;
(3) The review described in paragraph (2) above did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
or constituted an Unmatured Event of Default or Event of Default, at the end of
the accounting period covered by the attached financial statements or as of the
date of this Certificate;
(4) The representations and warranties made by Borrower contained in
each Loan Document are true and correct as though made on and as of the date
hereof; and
(5) Set forth on Attachment I hereto are calculations of (a) the
Leverage Ratio, and (b) the financial covenants set forth in Section 5.7 of the
Credit Agreement, which calculations pursuant to such Section 5.7 hereof show
compliance with the terms thereof.
IN WITNESS WHEREOF, I have signed this certificate the ___ day of
_________, 19___.
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By: ____________________________________
Title:___________________________________
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EXHIBIT G
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment and Acceptance Agreement (this "Assignment Agreement")
between ______________________ (the "Assignor") and ______________________ (the
"Assignee") is dated as of ________, 199_. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. Assignor is a party to a Credit Agreement,
dated as of November 5, 1998 (which, as it may from time to time be amended,
restated or otherwise modified is herein called the "Credit Agreement"), among
APPLIED INDUSTRIAL TECHNOLOGIES, INC., ("Borrower"), the banking institutions
named on SCHEDULE 1 thereto (collectively, "Banks" and, individually, "Bank"),
and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. Assignor hereby sells and assigns to
Assignee, and Assignee hereby purchases and assumes from Assignor, an interest
in and to Assignor's rights and obligations under the Credit Agreement,
effective as of the Assignment Effective Date (as hereinafter defined), equal to
the percentage interest specified on ANNEX 1 hereto (hereinafter, "Assignee's
Percentage") of Assignor's right, title and interest in and to (a) the
Commitment of Assignor as set forth on ANNEX 1 (hereinafter, "Assigned Amount"),
(b) any Loan made by Assignor which is outstanding on the Assignment Effective
Date, (c) Assignor's interest in any Letter of Credit, as defined in the Credit
Agreement, which is issued and outstanding on the Assignment Effective Date, (d)
any Note delivered to Assignor pursuant to the Credit Agreement, and (e) the
Credit Agreement and the other Related Writings. After giving effect to such
sale and assignment and on and after the Assignment Effective Date, Assignee
shall be deemed to have a "Commitment Percentage" under the Credit Agreement
equal to the Commitment Percentage set forth in subparts I.C on ANNEX 1 hereto.
3. ASSIGNMENT EFFECTIVE DATE. The Assignment Effective Date (the
"Assignment Effective Date") shall be two (2) Business Days (or such other time
agreed to by Agent) after the following conditions precedent have been
satisfied:
(a) receipt by Agent of this Assignment Agreement, including ANNEX 1
hereto, properly executed by Assignor and Assignee and accepted and consented to
by Agent and, if necessary pursuant to the provisions of Section 10.10(A)(i) of
the Credit Agreement, by Borrower;
(b) receipt by Agent from Assignor of a fee of Two Thousand Five
Hundred Dollars ($2,500), in accordance with Section 10.10A of the Credit
Agreement;
88
(c) receipt by Agent from Assignee of an administrative questionnaire,
or other similar document, which shall include (i) the address for notices under
the Credit Agreement, (ii) the address of its Lending Office, (iii) wire
transfer instructions for delivery of funds by Agent, (iv) and such other
information as Agent shall request; and
(d) receipt by Agent from Assignor or Assignee of any other information
required pursuant to Section 10.10 of the Credit Agreement or otherwise
necessary to complete the transaction contemplated hereby.
4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of
Loans hereunder, Assignee shall pay Assignor, on the Assignment Effective Date,
an amount in Dollars equal to Assignee's Percentage. Any interest, fees and
other payments accrued prior to the Assignment Effective Date with respect to
the Assigned Amount shall be for the account of Assignor. Any interest, fees and
other payments accrued on and after the Assignment Effective Date with respect
to the Assigned Amount shall be for the account of Assignee. Each of Assignor
and Assignee agrees that it will hold in trust for the other part any interest,
fees or other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and to pay the other party any such amounts
which it may receive promptly upon receipt thereof.
5. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY. Assignee
represents and warrants to Assignor, Borrower, Agent and the other Banks (a)
that it is capable of making and has made and shall continue to make its own
credit determinations and analysis based upon such information as Assignee
deemed sufficient to enter into the transaction contemplated hereby and not
based on any statements or representations by Assignor, (b) Assignee confirms
that it meets the requirements to be an assignee as set forth in Section 10.10
of the Credit Agreement; (c) Assignee confirms that it is able to fund the Loans
and the Letters of Credit as required by the Credit Agreement; (d) Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and the Related Writings
are required to be performed by it as a Bank thereunder; and (e) Assignee
represents that it has reviewed each of the Loan Documents, including, but not
limited to the Intercreditor Agreement and by its signature to this Agreement,
agrees to be bound by and subject to the terms and conditions of the
Intercreditor Agreement as if it were an original party thereto. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to Assignor and that Assignor makes no representation or
warranty of any kind to Assignee and shall not be responsible for (i) the due
execution, legality, validity, enforceability, genuineness, sufficiency or
collectability of the Credit Agreement or any Related Writings, (ii) any
representation, warranty or statement made in or in connection with the Credit
Agreement or any of the Related Writings, (iii) the financial condition or
creditworthiness of Borrower or any Guarantor, (iv) the performance of or
compliance with any of the terms or provisions of the Credit Agreement or any of
the Related Writings, (v) inspecting any of the property, books or records of
Borrower, or (vi) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Loans or Letters of Credit. Neither Assignor nor any of its officers, directors,
employees, agents or
89
attorneys shall be liable for any mistake, error of judgment, or action taken or
omitted to be taken in connection with the Loans, the Letters of Credit, the
Credit Agreement or the Related Writings, except for its or their own bad faith
or willful misconduct. Assignee appoints Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to Agent by the terms thereof.
6. INDEMNITY. Assignee agrees to indemnify and hold Assignor harmless
against any and all losses, cost and expenses (including, without limitation,
attorneys' fees) and liabilities incurred by Assignor in connection with or
arising in any manner from Assignee's performance or non-performance of
obligations assumed under this Assignment Agreement.
7. SUBSEQUENT ASSIGNMENTS. After the Assignment Effective Date,
Assignee shall have the right pursuant to Section 10.10 of the Credit Agreement
to assign the rights which are assigned to Assignee hereunder, provided that (a)
any such subsequent assignment does not violate any of the terms and conditions
of the Credit Agreement, any of the Related Writings, or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Credit Agreement or any of the Related Writings
has been obtained, (b) the assignee under such assignment from Assignee shall
agree to assume all of Assignee's obligations hereunder in a manner satisfactory
to Assignor and (c) Assignee is not thereby released from any of its obligations
to Assignor hereunder.
8. REDUCTIONS OF AGGREGATE AMOUNT OF COMMITMENTS. If any reduction in
the Total Commitment Amount occurs between the date of this Assignment Agreement
and the Assignment Effective Date, the percentage of the Total Commitment Amount
assigned to Assignee shall remain the percentage specified in Section 1 hereof
and the dollar amount of the Commitment of Assignee shall be recalculated based
on the reduced Total Commitment Amount.
9. ACCEPTANCE OF AGENT; NOTICE BY ASSIGNOR. This Assignment Agreement
is conditioned upon (a) the acceptance and consent of Agent and, if necessary
pursuant to Section 10.10A of the Credit Agreement, upon the acceptance and
consent of Borrower; provided, that the execution of this Assignment Agreement
by Agent and, if necessary, by Borrower is evidence of such acceptance and
consent; and (b) Assignor giving notice to Agent and each other Senior Creditor
(as defined in the Intercreditor Agreement) of the assignment under this
Assignment Agreement pursuant to Section 13 of the Intercreditor Agreement.
10. ENTIRE AGREEMENT. This Assignment Agreement embodies the entire
agreement and understanding between the parties hereto and supersede all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof.
11. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Ohio.
90
12. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth under each party's name on the signature pages hereof.
91
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
ASSIGNOR:
Address: _______________________________ _________________________________
Attn:___________________________________ By:______________________________
Phone: _________________________________ Title:___________________________
Fax:____________________________________
ASSIGNEE:
Address: _______________________________ _________________________________
Attn:___________________________________ By:______________________________
Phone: _________________________________ Title: __________________________
Fax:____________________________________
Accepted and Consented to this ___ day of ___, 199_:
KEYBANK NATIONAL ASSOCIATION,
as Agent
By: __________________________
Title:_________________________
Accepted and Consented to this ___ day of _______, 19__:
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By:___________________________
Title:__________________________
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ANNEX 1
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
On and after ___________, 199_ (the "Assignment Effective Date"), the
Commitment of Assignee, and, if this is less than an assignment of all of
Assignor's interest, Assignor, shall be as follows:
I. ASSIGNEE'S COMMITMENT
A. Assignee's Percentage __________%
B. Assigned Amount $__________
C. Assignee's Commitment Percentage
under the Credit Agreement __________%
II. ASSIGNOR'S COMMITMENT
A. Assignor's Commitment Percentage
under the Credit Agreement __________%
B. Assignor's Commitment Amount
under the Credit Agreement $__________
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EXHIBIT H
FORM OF ASSUMPTION AGREEMENT
[ON AND AFTER ACTIVATION DATE, CANADIAN BANKS WILL BE A PARTY]
This ASSUMPTION AGREEMENT ("Agreement") is made effective as of the ___
day of _________, 19[__], by and among [______________], a [Canadian
corporation] ("Obligor"), APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio
corporation ("Borrower"), each of the domestic banks listed as a Domestic Bank
on SCHEDULE 1 to the Credit Agreement, as hereinafter defined (collectively,
"Domestic Banks", and individually, "Domestic Bank"), each of the Canadian banks
listed as a Canadian Bank on SCHEDULE 1 to the Credit Agreement (collectively,
"Canadian Banks", and individually, "Canadian Bank"), and KEYBANK NATIONAL
ASSOCIATION, as agent for the Domestic Banks and the Canadian Banks ("Agent"):
WHEREAS, Borrower, Agent, the Domestic Banks and the Canadian Banks
(collectively, "Banks", and individually, "Bank") are parties to the Credit
Agreement dated as of November 5, 1998 (as the same may from time to time be
amended, restated or otherwise modified, the "Credit Agreement", each
capitalized term not defined herein being used herein as therein defined)
wherein Agent, the Domestic Banks and the Canadian Banks have agreed to make
Loans to Borrower and Canadian Borrowers, respectively, and Agent has agreed to
issue Letters of Credit to Borrower on behalf of the Domestic Banks, all upon
certain terms and conditions;
WHEREAS, pursuant to Section 2.3 of the Credit Agreement, Borrower has
requested that effective on _____________, 19[__] (the "Assumption Effective
Date"), Obligor shall be designated as a "Canadian Borrower" under the Credit
Agreement;
WHEREAS, Agent and the Banks are willing to allow Obligor to become a
"Canadian Borrower" under the Credit Agreement and the Canadian Banks are
willing to make CAD Loans to Obligor pursuant to the Canadian Commitment, upon
certain terms and conditions as set forth in the Credit Agreement, one of which
is that Obligor assume all of the Canadian Obligations (as hereinafter defined)
and this Agreement is being executed and delivered in consideration of each
financial accommodation, if any, granted to Obligor by Agent and the Canadian
Banks and for other valuable considerations;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Obligor hereby agrees as follows:
1. ASSUMPTION. On and after the Assumption Effective Date, Obligor
irrevocably and unconditionally assumes all of the obligations of each Canadian
Borrower under the Credit Agreement (the "Canadian Obligations") as fully as if
Obligor had been an original party to the Credit Agreement, including, but not
limited to: (a) all CAD Loans; (b) all other indebtedness now owing or hereafter
incurred by each Canadian
94
Borrower to the Canadian Banks pursuant to the Credit Agreement and the CAD
Notes executed in connection therewith; (c) each renewal, extension,
consolidation or refinancing of any of the foregoing, in whole or in part; (d)
all interest from time to time accruing on any of the foregoing, and all
facility and other fees pursuant to the Credit Agreement that relate to the
Canadian Commitment or the CAD Loans; (e) every other liability, now or
hereafter owing to the Canadian Banks by each Canadian Borrower pursuant to the
Credit Agreement, and includes, without limitation, every liability, whether
owing by only such Canadian Borrower or by such Canadian Borrower with one or
more others in a several, joint or joint and several capacity, whether owing
absolutely or contingently, whether created by note, overdraft, guaranty of
payment or other contract or by quasi-contract, tort, statute or other operation
of law, whether incurred directly to any Canadian Bank or acquired by any
Canadian Bank by purchase, pledge or otherwise and whether participated to or
from it in whole or in part; and (f) all costs and expenses, including
attorneys' fees, incurred by Agent or the Canadian Banks in connection with the
Canadian Commitment or the CAD Loans or in connection with the collection of any
portion of the indebtedness described in (a), (b), (c), (d) or (e) hereof.
2. OBLIGOR PARTY TO THE CREDIT AGREEMENT. On and after the Effective
Date, Obligor shall (a) be designated a "Canadian Borrower" pursuant to the
terms and conditions of the Credit Agreement, and (b) become bound by all
representations, warranties, covenants, provisions and conditions of the Credit
Agreement and each other Loan Document applicable to the Canadian Borrowers as
if Obligor had been the original party making such representations, warranties
and covenants.
3. OBLIGOR REPRESENTATIONS AND WARRANTIES. Obligor represents and
warrants to Agent and each of the Banks that:
[(a) Obligor is a corporation duly organized, validly existing
and in good standing under the laws of [Canada] and the Province of
[_______], and is duly qualified to do business in each Province in
which Obligor is doing business;]
(b) Obligor has full power, authority and legal right to
execute and deliver this Agreement, and to perform and observe the
provisions hereof and of the Credit Agreement and the CAD Notes, and
the officers acting on Obligor's behalf have been duly authorized to
execute and deliver this Agreement;
(c) this Agreement, the Credit Agreement and the CAD Notes are
each valid and binding upon Obligor and enforceable against Obligor in
accordance with their respective terms; and
(d) neither the execution and delivery of this Agreement, nor
the performance and observance of the provisions hereof, by Obligor
will conflict with, or constitute a violation or default under, any
provision of any applicable law or of any contract (including, without
limitation, Obligor's [Articles of
95
Incorporation and Code of Regulations]) or of any other writing
binding upon Obligor in any manner.
4. BORROWER AND OBLIGOR REPRESENTATIONS AND WARRANTIES. Borrower and
Obligor represent and warrant to Agent and each of the Banks that:
(a) no Unmatured Event of Default or Event of Default exists
under the Credit Agreement, nor will any occur immediately after the
execution and delivery of this Agreement or by the performance or
observance of any provision hereof; and
(b) neither Borrower nor Obligor has any claim or offset
against, or defense or counterclaim to, any Company's obligations or
liabilities under the Credit Agreement or any Related Writing.
5. BORROWER'S OBLIGATIONS NOT AFFECTED. Anything herein to the contrary
notwithstanding, Borrower shall remain bound by the terms and conditions of all
of the Loan Documents to which Borrower is a party regardless of the assumption
of the Canadian Obligations by Obligor hereunder or the enforceability thereof.
6. WAIVER OF CLAIMS. Each of Borrower and Obligor hereby waives and
releases Agent and each of the Banks and their respective directors, officers,
employees, attorneys, affiliates and subsidiaries from any and all such claims,
offsets, defenses and counterclaims of which Borrower or Obligor is aware, such
waiver and release being with full knowledge and understanding of the
circumstances and effect thereof and after having consulted legal counsel with
respect thereto.
7. CONDITIONS PRECEDENT. Concurrently with the execution of this
Agreement, Borrower and Obligor, as appropriate, shall:
(a) satisfy each of the conditions set forth in Section 4.2 of the
Credit Agreement;
(b) pay all legal fees and expenses of Agent incurred in connection
with this Agreement;
(c) cause each Guarantor of Payment and each other Canadian Borrower to
consent and agree to and acknowledge the terms of this Agreement; and
(d) provide such other items as may be reasonably required by Agent, or
the Banks in connection with this Agreement.
8. BINDING NATURE OF AGREEMENT. All provisions of the Credit Agreement
shall remain in full force and effect and be unaffected hereby. This Agreement
is a Related Writing as defined in the Credit Agreement. This Agreement shall
bind and benefit Borrower and Obligor and their respective successors and
assigns, provided that
96
the interest assigned hereunder shall not be further assigned without the prior
written consent of Agent and the Banks.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
10. OHIO LAW TO GOVERN. The rights and obligations of all parties
hereto shall be governed by the laws of the State of Ohio, without regard to
principles of conflicts of laws.
11. JURY TRIAL WAIVER. EACH OF THE UNDERSIGNED, TO THE EXTENT PERMITTED
BY LAW, WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, ANY OF THE BANKS,
ANY CANADIAN BORROWER, ANY GUARANTOR AND/OR BORROWER ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN EACH OF THEM IN CONNECTION WITH THIS INSTRUMENT OR ANY NOTE OR OTHER
AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH
OR THE TRANSACTIONS RELATED HERETO.
OBLIGOR:
[---------------------------]
By:_____________________________
Title:__________________________
and ____________________________
Title:__________________________
BORROWER:
APPLIED INDUSTRIAL TECHNOLOGIES, INC.
By:________________________________
97
Title:_______________________________
and _______________________________
Title:_______________________________
AGENT:
KEYBANK NATIONAL ASSOCIATION,
as Agent
By:_______________________________
Brendan A. Lawlor
Assistant Vice President
DOMESTIC BANKS:
[ADD SIGNATURES OF DOMESTIC BANKS]
CANADIAN BANKS:
[ADD SIGNATURES OF CANADIAN BANKS]
ACKNOWLEDGMENT
--------------
[ADD ACKNOWLEDGMENT OF GUARANTORS OF PAYMENT]
ACKNOWLEDGMENT
--------------
[ADD ACKNOWLEDGMENT OF OTHER CANADIAN BORROWERS]
98
EXHIBIT I
FORM OF PARENT GUARANTY OF PAYMENT
1. RECITALS.
APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation
("Borrower"), the financial institutions listed on Schedule 1 to the Credit
Agreement, as hereinafter defined (collectively, "Banks," and individually,
"Bank") and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent"), are
parties to the Credit Agreement.
Pursuant to the terms and conditions of the Credit Agreement, the
Canadian Banks, as defined in the Credit Agreement, may from time to time make
CAD Loans, as hereinafter defined, to [________________], a [Canadian federal
corporation] ("Canadian Borrower"). Borrower desires that the Canadian Banks
grant the financial accommodations to Canadian Borrower as described in the
Credit Agreement.
Borrower deems it to be in the direct pecuniary and business interests
of Borrower that Canadian Borrower obtain from the Canadian Banks the Canadian
Commitment, as defined in the Credit Agreement, and the CAD Loans provided for
in the Credit Agreement.
Borrower understands that the Banks are willing to continue to make the
Loans, as defined in the Credit Agreement, to Borrower, and that the Canadian
Banks are willing to make the CAD Loans to Canadian Borrower only upon certain
terms and conditions, one of which is that Borrower guarantee the payment of the
Canadian Debt, as hereinafter defined, and this instrument is being executed and
delivered in consideration of the Banks continuing to grant financial
accommodations to Borrower and of the Canadian Banks making CAD Loans to
Canadian Borrower pursuant to the Credit Agreement and for other valuable
considerations.
2. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
2.1. "Canadian Debt" shall mean, collectively, (a) all CAD Loans; (b)
all other indebtedness now owing or hereafter incurred by Canadian Borrower to
the Canadian Banks pursuant to the Credit Agreement and the CAD Notes executed
in connection therewith; (c) each renewal, extension, consolidation or
refinancing of any of the foregoing, in whole or in part; (d) all interest from
time to time accruing on any of the foregoing, and all facility and other fees
relating to the CAD Loans and the Canadian Commitment pursuant to the Credit
Agreement; (e) every other liability, now or hereafter owing to the Canadian
Banks by Canadian Borrower pursuant to the Credit Agreement, and includes,
without limitation, every liability, whether owing by only Canadian Borrower or
by Canadian Borrower with one or more others in a several, joint or joint and
several capacity, whether owing absolutely or contingently, whether created by
note,
99
overdraft, guaranty of payment or other contract or by quasi-contract, tort,
statute or other operation of law, whether incurred directly to any Canadian
Bank or acquired by any Canadian Bank by purchase, pledge or otherwise and
whether participated to or from such Canadian Bank in whole or in part; and (f)
all costs and expenses, including attorneys' fees, incurred by Agent or the
Canadian Banks in connection with the CAD Loans or the Canadian Commitment or in
connection with the collection of any portion of the indebtedness described in
(a), (b), (c), (d) or (e) hereof.
2.2. "CAD Loan" shall mean any CAD Loan, as defined in the Credit
Agreement, granted by the Canadian Banks pursuant to the Credit Agreement.
2.3. "Collateral" shall mean, collectively, all property, if any,
securing the Canadian Debt or any part thereof at the time in question.
2.4. "Credit Agreement" shall mean the Credit Agreement executed by and
among Borrower, Agent and the Banks and dated as of the 5th day of November,
1998, as it may from time to time be amended, restated or otherwise modified.
2.5. "Obligor" shall mean any Person that, or any of whose property, is
or shall be obligated on the Canadian Debt, or any part thereof, in any manner
and includes, without limiting the generality of the foregoing, any other
Canadian Borrower, as defined, for purposes of this definition only, in the
Credit Agreement and any other co-maker, endorser, guarantor of payment,
subordinating creditor, assignor, grantor of a security interest, pledgor,
mortgagor or any hypothecator of property, if any.
2.6. "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, corporation,
limited liability company, institution, trust, estate, government or other
agency or political subdivision thereof or any other entity.
Except as otherwise specifically defined herein, capitalized terms used herein
that are defined in the Credit Agreement shall have their respective meanings
ascribed to them in the Credit Agreement.
3. GUARANTY OF DEBT. Borrower hereby absolutely and unconditionally
guarantees the prompt payment in full of all of the Canadian Debt as and when
the respective parts thereof become due and payable. If the Canadian Debt, or
any part thereof, shall not be paid in full when due and payable, Agent, on
behalf of the Canadian Banks, in each case shall have the right to proceed
directly against Borrower under this instrument to collect the payment in full
of the Canadian Debt, regardless of whether or not Agent and the Canadian Banks
shall have theretofore proceeded or shall then be proceeding against Canadian
Borrower or any other Obligor or Collateral, if any, or any of the foregoing, it
being understood that Agent and the Canadian Banks, in their sole discretion may
proceed against any Obligor and any Collateral, and may exercise each right,
power or privilege that Agent or the Canadian Banks may then have, either
simultaneously or separately, and, in any event, at such time or times and as
often and in
100
such order as Agent and the Canadian Banks, in their sole discretion, may from
time to time deem expedient to collect the payment in full of the Canadian Debt.
4. PAYMENTS CONDITIONAL. Whenever any Canadian Bank shall credit any
payment to the Canadian Debt or any part thereof, whatever the source or form of
payment, the credit shall be conditional as to Borrower unless and until the
payment shall be final and valid as to all the world. Without limiting the
generality of the foregoing, Borrower agrees that if any check or other
instrument with which such payment is made shall be dishonored by the drawer or
any party thereto, or if any proceeds of Collateral or payment so applied shall
thereafter be recovered by any trustee in bankruptcy or any other Person, each
Canadian Bank, in each case, may reverse any entry relating thereto in its books
and Borrower shall remain liable therefor even if such Canadian Bank may no
longer have in its possession any evidence of the Canadian Debt to which the
payment in question was applied.
5. BORROWER'S OBLIGATIONS ABSOLUTE AND UNCONDITIONAL. Regardless of the
duration of time, regardless of whether Canadian Borrower may from time to time
cease to be indebted to the Canadian Banks and irrespective of any act, omission
or course of dealing whatever on the part of Agent or any Bank, Borrower's
liabilities and other obligations under this instrument shall remain in full
effect until the payment in full of the Canadian Debt. Without limiting the
generality of the foregoing:
5.1. CANADIAN BANKS HAVE NO DUTY TO MAKE ADVANCES. No Canadian Bank
shall at any time be under any duty to Borrower to grant any financial
accommodation to Canadian Borrower, irrespective of any duty or commitment of
any of the Canadian Banks to Canadian Borrower, or to follow or direct the
application of the proceeds of any such financial accommodation;
5.2. BORROWER'S WAIVER OF NOTICE, PRESENTMENT, ETC. Borrower waives (a)
notice of the granting of any CAD Loan to Canadian Borrower or the incurring of
any other indebtedness by Canadian Borrower or the terms and conditions thereof,
(b) presentment, demand for payment and notice of dishonor of the Canadian Debt
or any part thereof, or any other indebtedness incurred by Canadian Borrower to
any of the Canadian Banks, (c) notice of any indulgence granted to any Obligor,
and (d) any other notice to which Borrower might, but for this waiver, be
entitled;
5.3. CANADIAN BANKS' RIGHTS NOT PREJUDICED BY ACTION OR OMISSION. The
Canadian Banks, in their sole discretion pursuant to the Credit Agreement, may,
without any prejudice to their rights under this instrument, at any time or
times, without notice to or the consent of Borrower, (a) grant Canadian Borrower
whatever financial accommodations that the Canadian Banks may from time to time
deem advisable, even if Canadian Borrower might be in default in any respect and
even if those financial accommodations might not constitute indebtedness the
payment of which is guaranteed hereunder, (b) assent to any renewal, extension,
consolidation or refinancing of the Canadian Debt, or any part thereof, (c)
forbear from demanding security, if the Canadian
101
Banks shall have the right to do so, (d) release any Obligor or Collateral or
assent to any exchange of Collateral, if any, irrespective of the consideration,
if any, received therefor, (e) grant any waiver or consent or forbear from
exercising any right, power or privilege that the Canadian Banks may have or
acquire, (f) assent to any amendment, deletion, addition, supplement or other
modification in, to or of any writing evidencing or securing any Canadian Debt
or pursuant to which any Canadian Debt is created, (g) grant any other
indulgence to any Obligor, (h) accept any Collateral for, or any other Obligor
upon, the Canadian Debt or any part thereof, and (i) fail, neglect or omit in
any way to realize upon any Collateral or to protect the Canadian Debt, or any
part thereof, or any Collateral therefor;
5.4. LIABILITIES SURVIVE BORROWER'S DISSOLUTION. Borrower's liabilities
and other obligations under this instrument shall survive any dissolution of
Borrower; and
5.5. LIABILITIES ABSOLUTE AND UNCONDITIONAL. Borrower's liabilities and
other obligations under this instrument shall be absolute and unconditional
irrespective of any lack of validity or enforceability of the Credit Agreement,
any CAD Note, any Loan Document or any other agreement, instrument or document
evidencing the CAD Loans or related thereto, or any other defense available to
Borrower in respect of this instrument.
6. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
each of the Canadian Banks that (a) Borrower has legal power and right to
execute and deliver this instrument and to perform and observe the provisions
hereof; and (b) the officers executing and delivering this instrument on behalf
of Borrower have been duly authorized to do so, and this instrument, when
executed, is legal and binding upon Borrower in every respect.
7. DISABILITY OF BORROWER OR CANADIAN BORROWER. Without limiting the
generality of any of the other provisions hereof, Borrower specifically agrees
that, upon the dissolution of Borrower or Canadian Borrower and/or the filing or
other commencement of any bankruptcy or insolvency proceedings by, for or
against Borrower or Canadian Borrower, including without limitation, any
assignment for the benefit of creditors or other proceedings intended to
liquidate or rehabilitate Borrower or Canadian Borrower, the Canadian Banks, in
their sole discretion, may declare the unpaid principal balance of and accrued
interest on the Canadian Debt to be forthwith due and payable in full without
notice. Upon the occurrence of any of the events enumerated in the immediately
preceding sentence, Borrower shall, upon the demand of Agent, on behalf of the
Canadian Banks, whenever made, purchase from the Canadian Banks (without
recourse upon any Canadian Bank and without warranties either express or
implied) the CAD Notes or any other evidence of the Canadian Debt for an amount
equal to the then unpaid principal balance of and accrued interest on the
Canadian Debt.
8. WAIVER OF BORROWER'S RIGHTS AGAINST CANADIAN BORROWER AND
COLLATERAL. To the extent permitted by law, Borrower waives any claim or other
right which Borrower might now have or hereafter acquire against Canadian
Borrower or any other Obligor which arises from the existence or performance of
Borrower's liabilities or other obligations under this instrument, including,
without
102
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, and any right to participate in any claim or remedy of any
Canadian Bank against Canadian Borrower or any Collateral which any Canadian
Bank now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law.
103
9. NOTICE. All notices, requests, demands and other communications
provided for hereunder shall be in writing and mailed or delivered to the
respective addresses specified on the signature pages of the Credit Agreement.
All notices, statements, requests, demands and other communications provided for
hereunder shall be deemed to be given or made when delivered or forty-eight (48)
hours after being deposited in the mails with postage prepaid by registered or
certified mail, addressed as aforesaid, or sent by facsimile with telephonic
confirmation of receipt, except that notices pursuant to any of the provisions
hereof shall not be effective until received.
10. GOVERNING LAW; SUBMISSION TO JURISDICTION. The provisions of this
instrument and the respective rights and duties of Borrower and the Canadian
Banks hereunder shall be governed by and construed in accordance with Ohio law,
without regard to principles of conflict of laws. Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this instrument, any Loan Document or any Related Writing, and
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably waives,
to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of venue in any action or proceeding in any such court as
well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. Borrower agrees that a final, nonappealable judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
11. MISCELLANEOUS. This instrument shall bind Borrower and Borrower's
successors and assigns and shall inure to the benefit of Agent and each Canadian
Bank and their respective successors and assigns, including (without limitation)
each holder of any CAD Note evidencing any Canadian Debt. If at any time one or
more provisions of this instrument is or becomes invalid, illegal or
unenforceable in whole or in part, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
This instrument constitutes a final written expression of all of the terms of
this instrument, is a complete and exclusive statement of those terms and
supersedes all oral representations, negotiations and prior writings, if any,
with respect to the subject matter hereof. The relationship between (a) Borrower
and (b) Agent and the Canadian Banks with respect to this instrument is and
shall be solely that of debtor and creditors, respectively, and neither Agent
nor any Canadian Bank shall have any fiduciary obligation toward Borrower with
respect to this instrument or the transactions contemplated hereby. The captions
herein are for convenience of reference only and shall be ignored in
interpreting the provisions of this instrument.
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12. JURY TRIAL WAIVER. BORROWER, AGENT AND THE CANADIAN BANKS, TO THE
EXTENT PERMITTED BY LAW, EACH WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG
AGENT, ANY OF THE CANADIAN BANKS, CANADIAN BORROWER AND/OR BORROWER ARISING OUT
OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN EACH OF THEM IN CONNECTION WITH THIS INSTRUMENT OR ANY NOTE
OR OTHER AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION
THEREWITH OR THE TRANSACTIONS RELATED THERETO.
Signed as of the [ ] day of [_________], 199[_], at Cleveland, Ohio.
Address: __________________________________ [ ]
By:
Title:
And:
Title:
105
- ------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of November 5, 1998
among
APPLIED INDUSTRIAL TECHNOLOGIES, INC.,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as Banks,
and
KEYBANK NATIONAL ASSOCIATION,
as Agent
- -----------------------------------------------------------------------------
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS 1
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT 16
SECTION 2.2. CONDITIONS TO LOANS AND LETTERS OF CREDIT 22
SECTION 2.3. CANADIAN BORROWERS 24
SECTION 2.4. JOINT AND SEVERAL LIABILITY OF
CANADIAN BORROWERS 24
SECTION 2.5. MAXIMUM LIABILITY OF EACH CANADIAN
BORROWER 25
SECTION 2.6. ACTIVATION DATE 26
SECTION 2.7. PAYMENT ON NOTES, ETC. 27
SECTION 2.8. PREPAYMENT 28
SECTION 2.9. FACILITY AND OTHER FEES 30
SECTION 2.10. REDUCTION OF COMMITMENT 30
SECTION 2.11. COMPUTATION OF INTEREST AND FEES;
DEFAULT RATE 32
SECTION 2.12. MANDATORY PAYMENT 32
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS;
CAPITAL ADEQUACY 33
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. 33
SECTION 3.2. TAX LAW, ETC. 33
SECTION 3.3. EURODOLLAR OR CANADIAN DEPOSITS UNAVAILABLE
OR INTEREST RATE UNASCERTAINABLE 34
SECTION 3.4. INDEMNITY 35
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS
OR CAD FIXED RATE LOANS UNLAWFUL 35
SECTION 3.6. FUNDING 35
SECTION 3.7. CAPITAL ADEQUACY 36
ARTICLE IV. CONDITIONS PRECEDENT 36
SECTION 4.1. CONDITIONS PRECEDENT TO CLOSING 36
SECTION 4.2. CONDITIONS SUBSEQUENT TO CLOSING DATE 37
ARTICLE V. COVENANTS 38
SECTION 5.1. INSURANCE 38
SECTION 5.2. MONEY OBLIGATIONS 39
SECTION 5.3. FINANCIAL STATEMENTS 39
SECTION 5.4. FINANCIAL RECORDS 40
SECTION 5.5. FRANCHISES 40
107
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SECTION 5.6. ERISA COMPLIANCE 40
SECTION 5.7. FINANCIAL COVENANTS 40
SECTION 5.8. BORROWING 41
SECTION 5.9. LIENS 42
SECTION 5.10. REGULATIONS U and X 42
SECTION 5.11. INVESTMENTS AND LOANS 42
SECTION 5.12. MERGER AND SALE OF ASSETS 43
SECTION 5.13. ACQUISITIONS 44
SECTION 5.14. NOTICE 45
SECTION 5.15. ENVIRONMENTAL COMPLIANCE 45
SECTION 5.16. AFFILIATE TRANSACTIONS 45
SECTION 5.17. USE OF PROCEEDS 46
SECTION 5.18. CORPORATE NAME 46
SECTION 5.19. SUBSIDIARY GUARANTIES 46
SECTION 5.20. GUARANTY UNDER NOTE PURCHASE AGREEMENT 46
ARTICLE VI. REPRESENTATIONS AND WARRANTIES 46
SECTION 6.1. CORPORATE EXISTENCE; FOREIGN QUALIFICATION;
SUBSIDIARIES 46
SECTION 6.2. CORPORATE AUTHORITY 47
SECTION 6.3. COMPLIANCE WITH LAWS 47
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS 47
SECTION 6.5. TITLE TO ASSETS 48
SECTION 6.6. LIENS AND SECURITY INTERESTS 48
SECTION 6.7. TAX RETURNS 48
SECTION 6.8. ENVIRONMENTAL LAWS 48
SECTION 6.9. CONTINUED BUSINESS 48
SECTION 6.10. EMPLOYEE BENEFITS PLANS 49
SECTION 6.11. CONSENTS OR APPROVALS 49
SECTION 6.12. SOLVENCY 49
SECTION 6.13. FINANCIAL STATEMENTS 50
SECTION 6.14. REGULATIONS 50
SECTION 6.15. MATERIAL AGREEMENTS 50
SECTION 6.16. INTELLECTUAL PROPERTY 51
SECTION 6.17. INSURANCE 51
SECTION 6.18. ACCURATE AND COMPLETE STATEMENTS 51
SECTION 6.19. YEAR 2000 COMPLIANCE 51
SECTION 6.20. NOTE PURCHASE AGREEMENT 51
SECTION 6.21. DEFAULTS 51
ARTICLE VII. EVENTS OF DEFAULT 51
SECTION 7.1. PAYMENTS 52
SECTION 7.2. SPECIAL COVENANTS 52
108
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SECTION 7.3. OTHER COVENANTS 52
SECTION 7.4. REPRESENTATIONS AND WARRANTIES 52
SECTION 7.5. CROSS DEFAULT 52
SECTION 7.6. ERISA DEFAULT 52
SECTION 7.7. CHANGE IN CONTROL 52
SECTION 7.8. MONEY JUDGMENT 52
SECTION 7.9. VALIDITY OF LOAN DOCUMENTS 52
SECTION 7.10. NOTE PURCHASE AGREEMENT 53
SECTION 7.11. SOLVENCY 53
ARTICLE VIII. REMEDIES UPON DEFAULT 53
SECTION 8.1. OPTIONAL DEFAULTS 53
SECTION 8.2. AUTOMATIC DEFAULTS 53
SECTION 8.3. LETTERS OF CREDIT 53
SECTION 8.4. OFFSETS 53
SECTION 8.5. EQUALIZATION PROVISION 53
ARTICLE IX. THE AGENT 56
SECTION 9.1. APPOINTMENT AND AUTHORIZATION 56
SECTION 9.2. NOTE HOLDERS 56
SECTION 9.3. CONSULTATION WITH COUNSEL 56
SECTION 9.4. DOCUMENTS 56
SECTION 9.5. AGENT AND AFFILIATES 56
SECTION 9.6. KNOWLEDGE OF DEFAULT 56
SECTION 9.7. ACTION BY AGENT 57
SECTION 9.8. NOTICES, DEFAULT, ETC. 57
SECTION 9.9. INDEMNIFICATION OF AGENT 57
SECTION 9.10. SUCCESSOR AGENT 57
ARTICLE X. MISCELLANEOUS 58
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION 58
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES 58
SECTION 10.3. AMENDMENTS, CONSENTS 58
SECTION 10.4. NOTICES 58
SECTION 10.5. COSTS, EXPENSES AND TAXES 59
SECTION 10.6. INDEMNIFICATION 59
SECTION 10.7. OBLIGATIONS SEVERAL;
NO FIDUCIARY OBLIGATIONS 60
SECTION 10.8. EXECUTION IN COUNTERPARTS 60
SECTION 10.9. BINDING EFFECT; BORROWER'S ASSIGNMENT 60
SECTION 10.10. BANK ASSIGNMENTS/PARTICIPATIONS 60
SECTION 10.11. SEVERABILITY OF PROVISIONS; CAPTIONS 63
SECTION 10.12. INVESTMENT PURPOSE 63
SECTION 10.13. ENTIRE AGREEMENT 63
SECTION 10.14. GOVERNING LAW; SUBMISSION TO JURISDICTION 63
SECTION 10.15. LEGAL REPRESENTATION OF PARTIES 64
SECTION 10.16. JURY TRIAL WAIVER 65
SCHEDULE 1 BANKS AND COMMITMENTS 68
SCHEDULE 2 GUARANTORS OF PAYMENT 69
SCHEDULE 3 CANADIAN BORROWERS 70
EXHIBIT A REVOLVING CREDIT NOTE 71
EXHIBIT B SWING LINE NOTE 73
EXHIBIT C CAD LOAN NOTE 75
EXHIBIT D NOTICE OF CAD LOAN 77
EXHIBIT E NOTICE OF REVOLVING LOAN 79
EXHIBIT F COMPLIANCE CERTIFICATE 81
EXHIBIT G FORM OF ASSIGNMENT AND
ACCEPTANCE AGREEMENT 82
EXHIBIT H FORM OF ASSUMPTION AGREEMENT 87
EXHIBIT I FORM OF PARENT GUARANTY OF
PAYMENT 92