EXHIBIT 10.32
EXECUTION COPY
THIRD AMENDMENT AND ASSUMPTION AGREEMENT
WITH RESPECT TO
NOTE PURCHASE AGREEMENT
THIS THIRD AMENDMENT AND ASSUMPTION AGREEMENT WITH RESPECT TO NOTE
PURCHASE AGREEMENT is entered into as of December 31, 1998 among BETZDEARBORN
INC., a Pennsylvania corporation ("BetzDearborn"), XXXXXX FIDUCIARY TRUST
COMPANY ("Xxxxxx"), in its capacity as successor Trustee (the "Trustee") of The
BetzDearborn Inc. Employee Stock Ownership and 401(k) Trust (the "ESOT") of the
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan (the "Plan"),
HERCULES INCORPORATED, a Delaware corporation (the "Company"), the undersigned
subsidiaries of the Company and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
("Prudential").
WITNESSETH:
WHEREAS, BetzDearborn adopted the Xxxx Laboratories, Inc. Employee
Stock Ownership Plan (the "Plan") effective January 1, 1989, changed the name of
the Plan to the name shown above and most recently amended and restated the Plan
effective January 1, 1994; and
WHEREAS, pursuant to the Plan and effective January 1, 1989,
BetzDearborn entered into an Agreement of Trust with Mellon Bank, N.A.
("Mellon") as trustee ("Trustee"), thereby establishing the ESOT; and
WHEREAS, as of June 19, 1989, the ESOT and BetzDearborn entered into a
Note Purchase Agreement with Prudential whereby the ESOT sold and Prudential
purchased $100,000,000 principal amount of the ESOT's Notes (guaranteed by
BetzDearborn), $93,500,000 of which are still outstanding and held by
Prudential, which Note Purchase Agreement was amended by a First Amendment
thereto as of June 25,1996 and a Second Amendment thereto as of June 25, 1998
and which was supplemented and amended by a Consent and Waiver and Assumption
(the "Consent and Assumption") effective October 15, 1998 executed by and among
BetzDearborn, the Company and Prudential (as so amended and supplemented by said
Amendments and the Consent and Assumption being herein called the "Note
Agreement"); and
WHEREAS, as of October 1, 1992, BetzDearborn removed Mellon as Trustee,
appointed Xxxxxx as successor Trustee and amended and restated the foregoing
Agreement of Trust, retitling it as "Trust Agreement for Xxxx Laboratories Inc.
Employee Stock Ownership and 401(k) Plan," and continued the ESOT with the
successor Trustee; and
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of July
30, 1998 among the Company, Water Acquisition Co. and BetzDearborn, BetzDearborn
became a wholly-owned subsidiary of the Company on October 15, 1998 (the
"Merger"); and
WHEREAS, in connection with the Merger the Company and various of its
Subsidiaries (including BetzDearborn) executed and delivered the Credit
Agreement, dated as of October 15, 1998, by and among the Company, such
Subsidiaries of the Company as may from time to time be Borrowers and/or
Guarantors thereunder in accordance with the provisions thereof (collectively
with the Company the "Bank Credit Parties"), the several banks and other
financial institutions from time to time parties thereto (the "Lenders"),
NationsBank, N.A., a national banking association, as administrative agent for
the Lenders and The Chase Manhattan Bank, Xxxxxx Guaranty Trust Company of New
York and Citibank, N.A. as Co-Syndication Agents (herein called the "Credit
Agreement"); and
WHEREAS, Prudential executed and delivered the Consent and Assumption
at the request of BetzDearborn and the Company providing for the waiver of the
applicability of various provisions of the Note Agreement for a period ending
November 16, 1998, which period has been extended to December 31, 1998 (the
"Waiver Period"); and
WHEREAS, pursuant to the Consent and Amendment the Company has assumed
all of the payment obligations of BetzDearborn and the ESOT under the Note
Agreement and the ESOT Notes (the "Original Assumption"); and
WHEREAS, Prudential gave the consents and waivers contained in the
Consent and Assumption on the understanding that prior to the expiration of the
Waiver Period there would be executed and delivered and put into place
documentation according Prudential (and each other holder of Notes) equal and
ratable treatment with the Lenders under the Credit Agreement in respect of the
right of payment of, and security for and guarantees of, the respective
obligations owing to the Lenders under the Credit Agreement and to the holders
of the ESOT Notes under the Note Agreement, all pursuant to documentation
satisfactory to Prudential in its absolute discretion; such documentation to
include, without limitation, (i) an assumption agreement from the Company
confirming the Original Assumption and further providing for the Company to
become "the Company" for all purposes under the Note Agreement (including
amendments to the Note Agreement to incorporate the existing covenants and
defaults contained in the Credit Agreement and any future amendments thereto
which have the effect of adding to or making the existing covenants and defaults
more restrictive), (ii) guarantees from Subsidiaries of the Company and rights
to collateral in respect of the obligations under the Note Agreement and the
Notes thereunder in the same manner as provided to the Lenders under the Credit
Agreement, (iii) an intercreditor agreement among the Lenders under the Credit
Agreement and Prudential as to sharing collateral and recoveries in respect of
the obligations under and in respect of the Credit Agreement and the Note
Agreement and the Notes thereunder, (iv) the receipt by Prudential of an
amendment fee of $116,875, and (v) an increase in the annual rate of interest on
the Notes outstanding from time to time under the Note Agreement; and
WHEREAS, the parties hereto desire to amend certain provisions of the
Note Agreement as contemplated by the Consent and Assumption; and
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NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants and agreements contained herein, the parties hereto agree as follows:
SECTION 1. ASSUMPTION BY HERCULES; DISCHARGE OF BETZDEARBORN
Hercules Incorporated ("Hercules") hereby unconditionally and expressly
assumes the due and punctual performance of all payment obligations of
BetzDearborn under the Note Agreement (including, without limitation, those
arising under the provisions of paragraph 7 and 8 of the Note Agreement) and the
due and punctual performance of every other covenant of the Notes and the Note
Agreement on the part of BetzDearborn to be performed or observed, all to the
same extent and with the same effect as if Hercules had originally executed the
Note Agreement and had been named as "the Company" therein. Hercules having
assumed the payment and performance of such obligations (i) BetzDearborn is
hereby relieved of all obligations and covenants under the Note Agreement
(except insofar as BetzDearborn shall have obligations as a Guarantor under the
Note Agreement as amended hereby), and (ii) Hercules shall succeed to, and be
substituted for, and may exercise every right and power of, "the Company" under
the Note Agreement (including, without limitation, those under paragraph 8
thereof).
SECTION 2. AMENDMENTS TO NOTE AGREEMENT
SECTION 2.1. (PARAGRAPH 5) Paragraph 5 of the Note Agreement is amended
and restated in its entirety to read as follows:
5. COVENANTS
5.1. Affirmative Covenants. So long as this Agreement, any of the Notes
or any other Credit Document shall remain in effect or any of the principal of
or interest on any of the Notes or any other amount payable by a Credit Party to
the holder of any Note pursuant to this Agreement, any of the Notes or any other
Credit Document shall remain unpaid, unless waived in writing by the Required
Holders, each Credit Party covenants and agrees that:
(a) Financial Statements (i) The Company will deliver to each holder
of a Note in duplicate:
(A) within ninety (90) days after the end of each of its
fiscal years, the consolidated statement of financial position of the
Company and its Consolidated Subsidiaries as of the end of such year,
and the related consolidated statements of income, stockholders' equity
and cash flows for the year then ended, accompanied by a certificate of
independent public accountants of recognized standing satisfactory to
the Required Holders as to such statements, which certificate will
contain no material exceptions or qualifications except such as are
acceptable to the Required Holders;
(B) within sixty (60) days after the end of each of the first
three (3) quarters of each of its fiscal years, the consolidated
statement of financial position of the Company and its Consolidated
Subsidiaries as at the end of such quarters,
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and the related consolidated statements of income and cash flows for
such quarters and the portion of the fiscal year then ended;
(C) promptly upon the filing thereof, copies of all Form 8-K,
10-K, and 10-Q reports, if any, which the Company shall have filed with
the Securities and Exchange Commission;
(D) in the event the Company Notes are not outstanding,
promptly upon its becoming available and in any event within 30 days
after such time as such reports are required to be filed with the IRS,
a copy of the annual report of the Plan on Form 5500;
(E) in the event the Company Notes are not outstanding,
promptly upon its becoming available, copies of the Annual Report on
Form 11-K of the Plan as filed with the Commission;
(F) in the event the Company Notes are not outstanding,
promptly following the Company's obtaining knowledge thereof, a notice
of the occurrence of any event that could, in the reasonable judgment
of the Company, be expected to give rise to a change in the interest
rate applicable to the Notes or the payment of any amount by the ESOT
pursuant to paragraph 7; provided, however, that the Company shall not
be required pursuant to this paragraph (G) to give notice of the
introduction or enactment of any amendments to ERISA or the Code or of
the proposal or adoption of any regulations under either ERISA or the
Code or any other matter of public knowledge;
(G) from time to time such additional information regarding
the financial position or business of the Company as the holder of any
Note may reasonably request; and
(H) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (A) and (B) above, a certificate
of a Responsible Officer of the Company (1) stating that in the course
of the performance of his duties he would normally obtain knowledge of
any condition or event which constitutes, or which after notice or
lapse of time or both would constitute, an Event of Default specified
in paragraph 9, (2) stating whether or not he has obtained knowledge of
any such condition or event and, if so, specifying each such condition
or event of which he has knowledge and the nature and period of
existence thereof and the action the Company is taking and proposes to
take with respect thereto and (3) setting forth the calculations
required to establish compliance with subparagraph 5.2(d).
(ii) The Company shall promptly give notice to each holder of Notes of
(A) the occurrence of any Default or Event of Default, accompanied by a
certificate specifying the nature of such Default or Event of Default, the
period of existence thereof and the action that the Company has taken or
proposes to take with respect thereto and (B) the occurrence of any of the
following with respect to the Company or any of its
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Consolidated Subsidiaries (x) the pendency or commencement of any
litigation, arbitral or governmental proceeding against such Person
which if adversely determined could reasonably be expected to have a
Material Adverse Effect or (y) the institution of any proceedings
against such Person with respect to, or the receipt of notice by such
Person of potential liability or responsibility for violation, or
alleged violation of any federal, state or local law, rule or
regulation, including but not limited to, Environmental Laws, the
violation of which could reasonably be expected to have a Material
Adverse Effect.
(b) Payment of Obligations. It will, and will cause each of its
Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its obligations of
whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the Company or
its Subsidiaries, as the case may be.
(c) Conduct of Business and Maintenance of Existence. It will, and will
cause each of the Material Subsidiaries to, (i) continue to engage in business
of the same general type as now conducted by it and preserve, renew and keep in
full force and effect its corporate existence (except in connection with mergers
or consolidations permitted under subparagraph 5.2(b)) and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business and (ii) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.
(d) Maintenance of Property, Insurance. It will, and will cause each of
the Material Subsidiaries to, (i) keep all property useful and necessary in its
business in good working order and condition, except where the failure to keep
such property in good working order could not reasonably be expected to have a
Material Adverse Effect and (ii) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amount and
against at least such risks as are usually insured against in the same general
area by companies engaged in the same or a similar business (it being understood
that the Company may maintain self-insurance to a similar extent as is commonly
maintained by companies engaged in the same or a similar business).
(e) Books and Records. It will, and will cause each of the Material
Subsidiaries to, keep proper books of records and account in which full, true
and correct entries in conformity with generally accepted accounting principles
in effect with respect to such Person (meaning GAAP for the Company and its
Domestic Subsidiaries) and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities.
(f) Material Subsidiaries. The Company and the Material Subsidiaries
shall at all times collectively account for 90% or more of the net income and
assets, respectively, of the Company and its Consolidated Subsidiaries.
(g) Year 2000 Compliance. The Company will promptly notify each holder
of Notes in the event any Credit Party discovers or determines that any computer
application that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000
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Compliant (as defined in subparagraph 3.19 of the Third Amendment), except to
the extent that such failure could not reasonably be expected to have a Material
Adverse Effect.
(h) Plan Existence. As long as the Company Notes are not outstanding,
each of the Company and the ESOT will (i) do all things necessary to comply with
the requirements for an "exempt loan" to the ESOT as defined in Treasury
Regulation sections 54.4975-7 and 54.4975-11 and the requirements, if any, that
may be promulgated from time to time with respect to section 133 of the Code,
(ii) do all things necessary to maintain and keep in full force and effect the
Plan as an "employee stock ownership plan", within the meaning of section
4975(e)(7) of the Code and section 407(d)(6) of ERISA; (iii) cause the Plan and
the ESOT to be operated and administered at all times and be amended as
necessary so as to remain qualified under sections 401(a), 401(k) and 4975(e)(7)
of the Code and the ESOT to remain tax-exempt under section 501(a) of the Code;
(iv) cause all other actions to be taken which are necessary for the Plan and
the ESOT to be in material compliance with all applicable requirements of ERISA
(including Titles I and II thereof) and the Code and the regulations thereunder
as from time to time in effect and applicable to the Plan and the ESOT; (v) take
no action to amend or otherwise modify any Plan Document in a manner that would
result in the extension of credit represented by the Notes ceasing to qualify as
a "securities acquisition loan" within the meaning of section 133(b) of the
Code. The Company covenants that it will make contributions to the ESOT as
required by the Plan. Nothing in this subparagraph 5.1(h) is intended to give
any Person, other than the holders of the Notes, any rights.
(i) Audits/Inspections. Upon reasonable notice and during normal
business hours, each Credit Party will permit representatives appointed by the
holder of any Note, including, without limitation, independent accountants,
agents, attorneys and appraisers, to visit and inspect such Credit Party's
property, including its books and records, its accounts receivable and
inventory, its facilities and its other business assets, and to make photocopies
or photographs thereof and to write down and record any information such
representative obtains and shall permit such holder of a Note or its
representatives to investigate and verify the accuracy of information provided
to the holders of the Notes, and to discuss all such matters with the executive
officers, pertinent employees and representatives of the Credit Parties;
provided, however, that so long as neither (x) an Event of Default shall have
occurred and be continuing nor (y) the Collateral Period shall have begun and be
continuing, (i) no verification of accuracy of information shall include
contacting the account debtors under any accounts receivable of any Credit Party
and (ii) such visits and inspections shall not (A) disrupt the normal business
operations of any Credit Party, (B) be conducted by more than 5 Persons at any
one time or (C) occur more frequently than annually. The holder of a Note, by
accepting the benefits of this subparagraph 5.1(i) agrees to keep confidential
the information obtained from any such audit or inspection in accordance with
the provisions of paragraph 140.
(j) Additional Credit Parties. At the time any Person becomes a
Material Domestic Subsidiary (other than a Receivables Financing SPC or a
Preferred Stock SPC) or a "Credit Party" under the Credit Agreement, in each
case prior to a Credit Improvement Date, the Company shall so notify the holders
of the Notes and promptly thereafter (but in any event within 30 days after the
date thereof) shall (a) cause such Person to execute a Guarantor Joinder
Agreement in substantially the same form as Exhibit C, (b) execute an
appropriate pledge agreement in substantially the form of the Pledge Agreements
and otherwise in a form
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reasonably acceptable to the Collateral Agent, which pledge agreement will be
effective only during the Collateral Period and which will obligate the Company
to, upon the occurrence of the Collateral Effective Date (or within 30 days of
the notice referred to above if the Collateral Period shall have begun and shall
then be continuing), cause all of the capital stock of such Person to be
delivered to the Collateral Agent (together with undated stock powers, if
applicable, signed in blank) and pledged to the Collateral Agent, (c) if such
Person has any Subsidiaries, cause such Person to execute a pledge agreement in
substantially the form of the Pledge Agreements and otherwise in a form
reasonably acceptable to the Collateral Agent, which pledge agreement will be
effective only during the Collateral Period and which will obligate such Person
to, upon the occurrence of the Collateral Effective Date (or within 30 days of
the notice referred to above if the Collateral Period shall have begun and shall
then be continuing), cause all of the capital stock of its Domestic Subsidiaries
and 65% of the capital stock of its Material First Tier Foreign Subsidiaries to
be delivered to the Collateral Agent (together with undated stock powers, if
applicable, signed in blank) and pledged to the Collateral Agent, and (d)
deliver, or cause such Person to deliver, such other documentation as the
Collateral Agent may reasonably request in connection with the foregoing,
including, without limitation, certified resolutions and other organizational
and authorizing documents of such Person, favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above) and, if the
Collateral Period shall have begun and shall then be continuing, appropriate
UCC-1 financing statements, all in form, content and scope reasonably
satisfactory to the Collateral Agent.
(k) Collateral Effective Date. Upon the occurrence of the Collateral
Effective Date and during the ensuing Collateral Period, the Pledge Agreements
shall be in full force and effect and the Collateral Agent, on behalf of the
holders of the Notes, shall have a Lien on the Collateral described in the
Pledge Agreements. Within ten Business Days following the Collateral Effective
Date, the Company shall deliver to the Collateral Agent, in form and substance
reasonably satisfactory to the Collateral Agent:
(i) all stock certificates evidencing the stock pledged to the
Collateral Agent pursuant to the Pledge Agreements, together with duly
executed in blank undated stock powers attached thereto;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Collateral Agent's
sole discretion, to perfect the security interest of the holders of the
Notes in the Collateral;
(iii) an opinion of counsel addressed to the Collateral Agent,
on behalf of the holders of the Notes, covering such issues as
reasonably requested by the Collateral Agent, including the attachment
and perfection of the liens; and
(iv) an Officer's Certificate (with copies delivered to each
holder of Notes) signed by a Responsible Officer to the effect
specified in Schedule V attached hereto.
(l) Initial Hybrid Equity Transaction. No later than January 15, 1999,
the Company shall complete the Initial Hybrid Equity Transaction.
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(m) Contributions to the ESOT. As long as the Company Notes are not
outstanding, the Company covenants that it will make contributions to the ESOT
in amounts sufficient, together with other funds legally available therefor, to
enable the Trustee to make payments of principal, Market Premium, if any, and
interest of the ESOT Notes when due. Nothing in this subparagraph 5.1(m) is
intended to give any Person, other than holders of the Notes, any rights.
5.2. Negative Covenants. So long as this Agreement, any of the Notes or
any other Credit Document shall remain in effect or any of the principal of or
interest on any of the Notes or any other amount payable by a Credit Party to
the holder of any Note pursuant to this Agreement, any of the Notes or any other
Credit Document shall remain unpaid, unless waived in writing by the Required
Holders, each Credit Party covenants and agrees that:
(a) Limitation on Liens. It will not, and will not permit any of the
Material Subsidiaries to, create, incur, assume or suffer to exist any Lien on
any Property owned by such Person or on any capital stock of any Material
Subsidiary now or hereafter owned by such Person to secure Indebtedness, or
acquire any such Property subject to any conditional sale or title retention
agreement, except: (i) purchase money security arrangements upon Property
acquired subsequent to the date of this Agreement, provided that each such
security arrangement does not exceed 80% of the cost or fair value of the
Property acquired and is a lien only on such Property, or renewals or extensions
of any such security arrangement upon the same Property and not in a greater
Amount; (ii) Liens on Property in favor of, or any conditional sale or title
retention agreement relating to any Property with, the United States of America
or any State thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any such political subdivision,
or any agent or trustee acting on behalf of any of the foregoing, or any agent
or trustee acting on behalf of the holders of obligations issued by any of the
foregoing, to secure partial, progress, advance or other payments pursuant to
any agreement, understanding, contract, lease or statute (including, but not
limited to, agreements, understandings, contracts, leases or statutes that
require the construction of Property and sale thereof to any of the named
departments, agencies or political divisions, as a part of the lease or
installment purchase of such Property by the Company or any Material Subsidiary)
or to secure any indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of construction of the Property subject
to such Liens; (iii) any reservation or exception contained in any instrument
under which the Company or any Material Subsidiary owns or shall acquire any
Property and under the terms of which any vendor, lessor or assignor reserves or
excepts an interest in oil, gas or any other mineral or the proceeds thereof,
(iv) any conveyance or assignment under the terms of which the Company or any
Material Subsidiary conveys or assigns an interest in oil, gas or any, other
mineral or the proceeds thereof whether or not such conveyance or assignment is
in connection with or substantially simultaneous with an extension of credit to
the grantee or assignee thereunder on a basis providing for repayment of all or
substantially all of such advance out of such proceeds or out of production from
such interest; (v) any lien upon any Property owned by the Company or any
Material Subsidiary or in which the Company or any Material Subsidiary owns an
interest to secure payment of its proportionate part of the expenses of
developing or conducting operations for the recovery, storage, transportation or
sale of the mineral resources of such Property (or Property with which it is
unitized); (vi) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with
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the ordinary conduct of the business of the Company or such Material Subsidiary;
(vii) Liens (not otherwise permitted hereunder) which secure indebtedness for
borrowed money not exceeding (as to the Company and all Material Subsidiaries)
$60,000,000 in aggregate amount at any time outstanding; (viii) any Liens
securing indebtedness for borrowed money of a wholly-owned Material Subsidiary
of the Company, to the Company or to another wholly-owned Material Subsidiary of
the Company; (ix) Liens for taxes not yet due or that are being contested in
good faith and by appropriate proceedings; (x) carriers', warehousemen's,
mechanic's, materialmen's, repairmen's or other like Liens arising in the
ordinary course of business; (xi) pledges and deposits made in the ordinary
course of business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations; (xii) deposits to
secure the performance of bids, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (xiii) Liens in favor of
customs revenue authorities arising as a matter of law to secure payment of
customs duties; (xiv) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part of any lien referred
to in the foregoing clauses (i) to (v), inclusive, provided that the obligation
secured thereby shall not exceed the obligation so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to that portion of the Property which secured the
lien so extended, renewed or replaced (plus improvements on such Property); and
(xv) Liens in favor of the Collateral Agent to secure the Pledgor Obligations
(as defined in the Pledge Agreements).
(b) Limitations on Mergers, Asset Sales and Asset Purchases. It will
not, and will not permit any of its Subsidiaries to, (i) merge or consolidate
with or into any other Person or (ii) sell, lease or otherwise dispose of any of
its assets or purchase another Person or the assets of another Person, in any
case described in this clause (iii) in a transaction or series of related
transactions that is a Covered Transaction, unless (A) in the case of clause (i)
above, if a Credit Party is a party to such transaction the resulting or
surviving corporation shall be such Credit Party (or, if such merger or
consolidation involves two Credit Parties, a Credit Party) and, if the Company
is a party to such a transaction with another Credit Party, the Company shall be
the resulting or surviving corporation, (B) in the case of clause (i) and clause
(ii) above, after giving effect on a Pro Forma Basis to any such merger,
consolidation, sale, lease or other disposition or any such purchase, no Default
or Event of Default shall have occurred or be continuing, (C) in the case of a
purchase covered by clause (ii) above, such purchase either is an intercompany
purchase or does not require a cash purchase price in excess of $75,000,000 in
the aggregate in cash consideration and (D) in the case of an Asset Disposition
covered by clause (ii) above and while the Notes are outstanding, no later than
two (2) Business Days prior to such Asset Disposition, the holders of the Notes
shall have received a certificate of a Responsible Officer of the Company
specifying the anticipated or actual date of such Asset Disposition, briefly
describing the assets to be sold or otherwise disposed of and setting forth the
net book value of such assets, the aggregate consideration and the Net Cash
Proceeds to be received for such assets in connection with such Asset
Disposition, and thereafter the Credit Parties shall, within the period of 180
days following the consummation of such Asset Disposition, apply (or cause to be
applied) an amount equal to the Net Cash Proceeds of such Asset Disposition to
(A) make Eligible Reinvestments or (B) prepay the Term Loans under the Credit
Agreement in accordance with the terms of subsection 2.6(b)(ii) thereof (as such
provision is in effect on October 15, 1998) (herein called a "Bank Prepayment");
provided that if the Company elects to make a Bank
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Prepayment the Company will give written notice thereof to the holders of the
Notes not later than 30 days prior thereto and in that notice shall make (or
shall cause the ESOT to make) an offer to prepay a principal amount of the Notes
(at 100% of the principal amount thereof plus accrued interest thereon), pro
rata among the holders thereof, which shall be the same percentage of the Notes
at the time outstanding as the percentage of the outstanding Term Loan being
prepaid in connection with the Bank Prepayment. If the Company (or the ESOT)
shall make an offer to prepay Notes as aforesaid, it will specify the date of
prepayment (which shall be the same day as the prepayment of the Term Loan under
the Credit Agreement) and will prepay the Notes of those holders which shall
have accepted such offer by notice given to the Company at least five (5) days
prior to the date of prepayment.
Upon the sale of Capital Stock of a Material Domestic Subsidiary or
Material First Tier Foreign Subsidiary permitted by this subparagraph 5.2(b),
the Credit Parties may (to the extent applicable) request the Collateral Agent
(and the Collateral Agent is authorized, on behalf of the holders of the Notes)
to deliver to the Credit Parties, upon the Credit Parties' request and at the
Credit Parties' expense, such documentation as is reasonably necessary to
evidence the release of the Collateral Agent's security interest, if any, in
such Capital Stock, including, without limitation, amendments or terminations of
UCC financing statements, if any, the return of stock certificates, if any, and
the release of such Subsidiary from all of its obligations, if any, under the
Credit Documents.
(c) Limitations on Sale/Leaseback Transactions. It will not, and will
not permit any of the Material Subsidiaries to, sell or transfer any
manufacturing Properties to anyone (other than the Company or to a Material
Subsidiary in which the Company owns 50% or more of the voting stock) with the
intention of taking back a lease of such Property or any similar Property,
except in connection with a lease for a temporary period during or at the end of
which it is intended that the use by the Company or its Material Subsidiary of
such Property will be discontinued.
(d) Financial Covenants.
(i) Leverage Ratio. It will not permit, as of the
last day of any fiscal quarter, the Leverage Ratio to exceed
the ratio set forth below for the applicable period:
Period Maximum Leverage Ratio
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Closing Date through March 31, 1999 5.0 to 1.0
April 1, 1999 through September 30, 1999 4.5 to 1.0
October 1, 1999 through September 30, 2000 3.5 to 1.0
October 1, 2000 and thereafter 3.0 to 1.0
(ii) Minimum Net Worth. It will not permit at any
time Consolidated Net Worth to be less than $520,000,000,
increased on a cumulative basis as of the last day of each
fiscal quarter (commencing on December 31, 1998) by an amount
equal to the sum of (x) 40% of Consolidated Net Income, if
positive, for such fiscal quarter and (y) 80% of any Equity
Issuances (including an issuance of hybrid equity securities
(e.g., trust preferred capital securities), but only if such
issuance increases Consolidated Net Worth) commenced in such
fiscal quarter.
10
(iii) Interest Coverage Ratio. It will not permit, as
of the last day of any fiscal quarter, the Interest Coverage
Ratio to be less than the ratio set forth below for the
applicable period:
Period Maximum Leverage Ratio
------ ----------------------
Closing Date through September 30, 1999 2.5 to 1.0
October 1, 1998 and thereafter 3.0 to 1.0
(e) Limitations on Transactions with Affiliates. It will not, and will
not permit any of its Subsidiaries to, enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of its or
such Subsidiary's business (or is a transaction among wholly-owned Subsidiaries
of the Company) and (c) upon fair and reasonable terms no less favorable to it
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate; provided that
it shall not be a breach of this covenant to the extent that the failure of the
Company or any of its Subsidiaries to comply with the foregoing would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(f) Limitations on Indebtedness of the Material Subsidiaries. It will
not permit any of the Material Subsidiaries to contract, create, incur, assume
or permit to exist any Indebtedness, except:
(i) Indebtedness arising under this Agreement and the
Notes and the other Credit Documents and under the Credit
Agreement and the other Credit Documents (as defined in the
Credit Agreement);
(ii) Indebtedness of the Material Subsidiaries set
forth in Schedule IV (but not including any renewals,
refinancings or extensions thereof);
(iii) obligations of the Material Subsidiaries in
respect of Hedging Agreements entered into in order to manage
existing or anticipated interest rate or exchange rate risks
and not for speculative purposes;
(iv) obligations of the Material Subsidiaries in
connection with any Permitted Receivables Financing, to the
extent such obligations constitute Indebtedness;
(v) unsecured intercompany Indebtedness owing by a
Material Subsidiary to a Credit Party or a Subsidiary of A
Credit Party; and
(vi) in addition to the Indebtedness otherwise
permitted by this subparagraph 5.2(f), other Indebtedness
hereafter incurred by the Material Subsidiaries provided that
(A) the aggregate outstanding principal amount of such
Indebtedness shall not exceed $150,000,000 at any time and (B)
such Indebtedness shall not cause the Company and the Material
Subsidiaries to violate the provisions of subparagraph
5.2(a)(vii).
(g) Fiscal Year, Organizational Documents. It will not, and will not
permit any of the Material Subsidiaries to, change its fiscal year or amend,
modify or change its articles of
11
incorporation (or corporate charter or other similar organizational document) or
bylaws (or other similar document) without the prior written consent of the
Required Holders.
(h) Limitation on Restricted Actions. It will not, and will not permit
any of the Material Subsidiaries (other than a Receivables Financing SPC in
connection with a Permitted Receivables Financing) to, directly or indirectly,
create or otherwise cause, incur, assume, suffer or permit to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Person to (i) pay dividends or make any other distribution on any of
such Person's capital stock, (ii) pay any Indebtedness owed to the Company or
any other Credit Party, (iii) make loans or advances to any other Credit Party
or (iv) transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (A) customary
nonassignment or net worth provisions in any lease governing a leasehold
interest, (B) any agreement or other instrument of a Person existing at the time
it becomes a Subsidiary of the Borrower; provided that such encumbrance or
restriction is not applicable to any other Person, or any property of any other
Person, other than such Person becoming a Subsidiary of the Borrower and was not
entered into in contemplation of such Person becoming a Subsidiary of the
Borrower, and (C) this Agreement and the Notes and the other Credit Documents
and the Credit Agreement and the other Credit Documents (as defined in the
Credit Agreement).
(i) No Other Negative Pledges. It will not, and will not permit any of
the Material Subsidiaries to, enter into, assume or become subject to any
agreement prohibiting or otherwise restricting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any security for such obligation if security is given for
some other obligation, except pursuant to (x) the documents executed in
connection with any Permitted Receivables Financing (but only to the extent that
the related prohibitions against other encumbrances pertain to the applicable
transferred assets actually sold, contributed, financed or otherwise conveyed or
pledged pursuant to such Permitted Receivables Financing) and (y) this Agreement
and the other Credit Documents and the Credit Agreement and the other Credit
Documents (as defined in the Credit Agreement).
(j) Incorporated Provisions. The Company will not amend or supplement
the Credit Agreement (or any agreement replacing the Credit Agreement in whole
or in part) in any manner, or enter into, amend or supplement any other
agreement relating to Indebtedness, if the effect thereof would be to adopt,
amend or add covenants or defaults, the effect of which are more restrictive on
the Company and its Subsidiaries than are the covenants and defaults contained
herein, unless the Company shall execute and deliver to the holders of the Notes
an instrument in writing supplementing this Agreement and extending the benefit
of such Additional Provisions to the holders of the Notes. Once incorporated in
this Agreement, no waiver or consent under or amendment or termination of, the
Credit Agreement (or any such other agreement), shall have any effect on the
Additional Provisions as incorporated herein.
*******************************************
SECTION 2.2. (PARAGRAPH 6) of the Note Agreement is amended in its
entirety to read as follows:
12
6. GUARANTY
6.1. Guaranty of Payment. Subject to paragraph 6.7 below, each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to the
holder of each Note the prompt payment of the Guaranteed Obligations in full
when due (whether at stated maturity, as a mandatory prepayment, by acceleration
or otherwise). This guaranty is a guaranty of payment and not merely of
collection and is a continuing guaranty and shall apply to all Guaranteed
Obligations whenever arising.
6.2. Obligations Unconditional. The obligations of the Guarantors
hereunder are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of the Credit Documents, or
any other agreement or instrument referred to herein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this guaranty may be enforced by
each holder of a Note without the necessity at any time of resorting to or
exhausting any security or collateral and without the necessity at any time of
having recourse to the Notes, this Agreement (including, without limitation,
under paragraph 8) or any other Credit Documents or any collateral, if any,
hereafter securing the Guaranteed Obligations or otherwise and each Guarantor
hereby waives the right to require the holder of any Note to proceed against any
other Credit Party or any other Person (including a co-guarantor) or to require
the holder of any Note to pursue any other remedy or enforce any other right.
Each Guarantor further agrees that it shall have no right of subrogation,
indemnity, reimbursement or contribution against any other Credit Party or any
other guarantor of the Guaranteed Obligations for amounts paid under this
guaranty until such time as the holders of the Notes have been paid in full, and
no Person or Governmental Authority shall have any right to request any return
or reimbursement of funds from the holder of any Note in connection with monies
received under this Agreement. Each Guarantor further agrees that nothing
contained herein shall prevent the holder of any Note from suing on the Notes,
this Agreement or any other Credit Document or foreclosing its security interest
in or Lien on any collateral, if any, securing the Guaranteed Obligations or
from exercising any other rights available to it under this Agreement, the
Notes, or any other instrument of security, if any, and the exercise of any of
the aforesaid rights and the completion of any foreclosure proceedings shall not
constitute a discharge of any of a Guarantor's obligations hereunder; it being
the purpose and intent of each Guarantor that its obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances. Neither
a Guarantor's obligations under this guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of a Credit Party or by reason of the bankruptcy or insolvency of a
Credit Party. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Guaranteed Obligations and notice of or proof
of reliance of by the holder of any Note upon this guaranty or acceptance of
this guaranty. The Guaranteed Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this guaranty. All dealings between the
Company and any of the Guarantors, on the one hand, and the holders of Notes, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this guaranty,
13
6.3. Modifications. Each Guarantor agrees that (a) all or any part of
the security which hereafter may be held for the Guaranteed Obligations, if any,
may be exchanged, compromised or surrendered from time to time; (b) the holders
of the Notes shall not have any obligation to protect, perfect, secure or insure
any such security interests, liens or encumbrances which hereafter may be held,
if any, for the Guaranteed Obligations or the properties subject thereto; (c)
the time or place of payment of the Guaranteed Obligations may be changed or
extended, in whole or in part, to a time certain or otherwise, and may be
renewed or accelerated, in whole or in part; (d) a Credit Party and any other
party liable for payment under this Agreement may be granted indulgences
generally; (e) any of the provisions of the Notes, this Agreement or any other
Credit Document may be modified, amended or waived; (f) any party (including any
co-guarantor) liable for the payment thereof may be granted indulgences or be
released; and (g) any deposit balance for the credit of a Credit Party or any
other party liable for the payment of the Guaranteed Obligations or liable upon
any security therefor may be released, in whole or in part, at, before or after
the stated, extended or accelerated maturity of the Guaranteed Obligations, all
without notice to or further assent by such Guarantor, which shall remain bound
thereon, notwithstanding any such exchange, compromise, surrender, extension,
renewal, acceleration, modification, indulgence or release.
6.4. Waiver of Rights. Each Guarantor expressly waives to the fullest
extent permitted by applicable law: (a) notice of acceptance of this guaranty by
the holders of the Notes; (b) presentment and demand for payment or performance
of any of the Guaranteed Obligations; (c) protest and notice of dishonor or of
default (except as specifically required in this Agreement) with respect to the
Guaranteed Obligations or with respect to any security therefor; (d) notice of
the holders of the Notes obtaining, amending, substituting for, releasing,
waiving or modifying any security interest, lien or encumbrance, if any,
hereafter securing the Guaranteed Obligations, or the holders of the Notes
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; (e) all other notices to which such Guarantor
might otherwise be entitled in connection with the guaranty evidenced by this
paragraph 6; and (f) demand for payment under this guaranty.
6.5. Reinstatement. The obligations of the Guarantors under this
paragraph 6 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise, and each Guarantor agrees that it will indemnify
each holder of Notes on demand for all reasonable, documented costs and expenses
(including, without limitation, reasonable, documented fees of counsel) incurred
by such holder in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
6.6. Remedies. Each Guarantor agrees that, as between the Guarantors,
on the one hand, and the holders of the Notes, on the other hand, the Guaranteed
Obligations may be declared to be forthwith due and payable as provided in
paragraph 9 (and shall be deemed to have become automatically due and payable in
the circumstances provided in paragraph 9) notwithstanding any stay, injunction
or other prohibition preventing such declaration (or preventing such Guaranteed
Obligations from becoming automatically due and payable) as
14
against any other Person and that, in the event of such declaration (or such
Guaranteed Obligations being deemed to have become automatically due and
payable), such Guaranteed Obligations (whether or not due and payable by any
other Person) shall forthwith become due and payable by the Guarantors. The
Guarantors acknowledge and agree that, during the Collateral Period, their
obligations hereunder shall be secured in accordance with the terms of the
Collateral Documents and that, during the Collateral Period, the holders of the
Notes may exercise their rights and remedies thereunder in accordance with the
terms thereof
6.7. Limitation of Guaranty. Notwithstanding any provision to the
contrary contained herein, to the extent the obligations of any Guarantor shall
be adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Federal Bankruptcy Code (as now or hereinafter in effect)).
6.8. Rights of Contribution. The Guarantors agree among themselves
that, in connection with payments made hereunder, each Guarantor shall have
contribution rights against the other Guarantors as permitted under applicable
law. Such contribution rights shall be subordinate and subject in night of
payment to the obligations of the Guarantors under the Credit Documents and no
Guarantor shall exercise such rights of contribution until all Guaranteed
Obligations have been paid in full.
6.9. Releases of Certain Guarantors. Upon the occurrence of a Credit
Improvement Date, the Company may by written notice to the holders of the Notes
request that any Material Domestic Subsidiary or Additional Credit Party be
released from its guaranty pursuant to this paragraph 6. Promptly upon receipt
of such written request, the holders of the Notes shall, at the expense of the
Company, execute and deliver a release acknowledging the termination of the
guaranties of the Material Domestic Subsidiaries and/or Additional Credit
Parties specified in such request.
*******************************************
SECTION 2.3. (PARAGRAPH 9A) Paragraph 9A of the Note Agreement is
hereby amended in its entirety to read as follows:
9.A DEFAULT; ACCELERATION. If any of the following events shall occur
and be continuing for any reason whatsoever (and whether such occurrence shall
be voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(a) default in the payment of
(i) any principal (including any Required Installment Payment)
of or Market Premium on any Note when the same shall become due,
whether at maturity or at the times specified in paragraph 4A or 4B or
otherwise, either by the terms thereof or otherwise as herein provided,
or
15
(ii) any interest on any Note when the same shall become due
and such default shall continue for more than 3 days, or
(iii) any other amount payable by any Credit Party hereunder
or under any other Credit Document when the same shall become due and
such default shall continue for more than 3 days; or
(b) the Company states or otherwise claims in writing that any of its
obligations under paragraph 8 is not enforceable in accordance with its terms;
or
(c) default in the performance or breach of any covenant of the Company
or the ESOT contained in (i) subparagraph 5.1 (h) or (m), (ii) paragraph 7 of
this Agreement and continuance of such default or breach for a period of 5
Business Days or (iii) paragraph 8; or
(d) any Credit Party shall (i) fail to perform or observe any covenant
contained in subparagraph 5.1(e), (h), (i) or (j) or subparagraph 5.2 hereof or
(ii) fail to perform or observe any covenant contained in subparagraphs
5.1(a)(i)(A), (B) or (H) or subparagraph 5.1(a)(ii) hereof and such failure
referred to in this subparagraph 9A(d) shall continue unremedied for a period of
five (5) days after the earlier of a Responsible Officer of the Company becoming
aware of such failure or written notice specifying such failure and stating that
such notice is a "Notice of Default" hereunder is given, by registered or
certified mail or by courier, to the Company on behalf of the Credit Parties by
the holder of any Note; or
(e) any Credit Party shall fail to perform or observe (i) any term,
covenant or agreement contained herein or in any Note (other than those
specified in clauses (a) through (d) above) and such failure shall continue
unremedied for a period of thirty (30) days after the earlier of a Responsible
Officer of the Company becoming aware of such failure or written notice
specifying such failure and stating that such notice is a "Notice of Default"
hereunder is given, by registered or certified mail or by courier, to the
Company on behalf of the Credit Parties by the holder of any Note or (ii) any
term, covenant or agreement contained in any other Credit Document and such
failure shall continue unremedied beyond any applicable grace or cure period; or
(f) any representation or warranty made or deemed made by the ESOT or a
Credit Party pursuant to this Agreement or in any other Credit Document or in
any other document or certificate delivered pursuant hereto or in connection
with any amendment hereof or any other Credit Document or any consent or waiver
or thereunder shall prove to have been incorrect or misleading in any material
respect as of the date made or deemed made; or
(g) the Company or any Material Subsidiary shall fail to pay at
maturity, or within any applicable period of grace, any Indebtedness (other than
the Indebtedness referred to in clause (a) above) or any obligations under
Hedging Agreements, in each case with an outstanding principal or notional
amount in excess of $25,000,000, or fail to observe or perform any term,
covenant or agreement contained in any agreement by which it is bound evidencing
or securing Indebtedness or any obligations under Hedging Agreements, in each
case with an outstanding principal or notional amount in excess of $25,000,000
for such period of time as would permit, or would have permitted (assuming the
giving of appropriate notice if required)
16
the holder or holders thereof or of any obligations issued thereunder (or a
trustee or agent on behalf of such holder or holders), to accelerate the
maturity thereof, or of any such obligation; provided, however, that if any such
failure shall be cured by the Company or such Material Subsidiary or waived by
the requisite holders of the defaulted obligations, then the default hereunder
by reason of such failure shall be deemed to have been cured and waived by the
Required Holders unless prior thereto the Notes shall have been declared to be
or shall have become immediately due and payable hereunder; or
(h) the Company or any Material Subsidiary shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
administrator, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (v) be
adjudicated as bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, administration,
reorganization, winding-up or composition or adjustment of debts, (vii) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under such Bankruptcy Code, or
(viii) be authorized by its Board of Directors to take any of the foregoing
actions; or
(i) a proceeding or case shall be commenced, without the application or
consent of the Company or any Material Subsidiary, in any court of competent
jurisdiction, seeking (i) the liquidation, administration, reorganization,
dissolution or winding-up, or the composition or readjustment of debts, of the
Company or any Material Subsidiary, (ii) the appointment of a trustee, receiver,
administrator, custodian, liquidator or the like of the Company or any Material
Subsidiary, or of all or any substantial part of its assets or (iii) similar
relief in respect of the Company or any Material Subsidiary, under any law
relating to bankruptcy, insolvency, administration, reorganization, winding-up
or composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect, in any
such case for a period of sixty (60) consecutive days, or an order for relief
against the Company or any Material Subsidiary, shall be entered in an
involuntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); or
(j) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any ERISA
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to an ERISA Plan or any
Lien in favor of the PBGC or an ERISA Plan shall arise on the assets of the
Company, any Material Subsidiary or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such ERISA Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Company, any Material Subsidiary or any
Commonly Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a withdrawal from,
or the Insolvency or Reorganization of, a
17
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to an ERISA Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(k) one or more judgments or decrees shall be entered against the
Company or any Material Subsidiary, involving in the aggregate a liability (not
paid or fully covered by insurance) of $50,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or
(l) this Agreement, any of the Notes or any other Credit Document shall
cease, for any reason, to be in full force and effect, or any Credit Party shall
so assert or any Credit Party shall disaffirm or deny any of its obligations
thereunder; or
(m) either (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of more than 30% of then outstanding voting stock of the Company or
(ii) the Company shall merge or consolidate with any Person other than in a
transaction permitted under subparagraph 5.2(b); or
(n) if ESOT Notes are outstanding, any order, judgment or decree is
entered in any proceeding by a court of competent jurisdiction decreeing that
the Plan, the ESOT or the ESOT Transaction has not been properly established or
consummated, as the case may be (other than as specified in clause (b)(ii) of
paragraph 4A), in any material respect, and such order, judgment or decree
remains unstayed and in effect for more than 60 days of the time such order,
judgment or decree first becomes appealable;
then (a) if such event is an Event of Default specified in clause (h) or (i) of
this paragraph 9A with respect to the Company, all of the Notes at the time
outstanding shall automatically become immediately due and payable at par
together with interest accrued thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company and the ESOT,
and (b) if such event is any other continuing Event of Default, the holder or
holders of at least 25% of the aggregate principal amount of the Notes at the
time outstanding may at its or their option, by notice in writing to the Company
and the ESOT, declare all of the Notes to be, and all of the Notes shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with the Market Premium, if any, with respect to
each Note, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Company and the ESOT and the Company shall
give notice in writing of such declaration to the other holders, provided that
(x) if such event is a continuing Event of Default specified in sub-clause (i)
or (ii) of clause (a) of this paragraph 9A in respect of any Note, any holder of
Notes may, at its option, by notice in writing to the Company and the ESOT,
declare all of the Notes held by such holder to be, and all of such Notes shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with the Market Premium, if any, with respect to
each such Note, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company and the ESOT, (y) if any
holder of Notes shall have declared all of the Notes held by such holder to be
due and payable pursuant to clause (x) of this proviso, then the Company shall
give notice in writing of such
18
declaration to the other holders of Notes and any such other holder may at any
time thereafter and until the later of (A) the expiration of 60 days after such
other holder shall have received notice from the Company of such declaration and
(B) the date on which all Events of Default and Defaults have been cured or
waived pursuant to paragraph 14C, by notice in writing to the Company and the
ESOT, declare all of the Notes held by such other holder to be immediately due
and payable, together with interest accrued thereon and together with the Market
Premium, if any, with respect to each such Note without presentment, demand,
protest or any other notice of any kind, all of which are hereby waived by the
Company and the ESOT. Nothing in this Agreement shall permit (i) a transfer of
assets of the ESOT to any Person in excess of the amount permitted under
Treasury Regulation Sec. 54.4975-7(b)(6), or (ii) if the holder of any Note is a
disqualified person within the meaning of the Code or the Regulations
thereunder, the transfer of assets of the ESOT to such holder except upon the
failure of the ESOT to make payment of regularly scheduled payments of principal
and interest on such Notes, and then only to the extent of such failure.
SECTION 2.4. (PARAGRAPH 12) Paragraph 12A of the Note Agreement is
hereby amended (a) by deleting the following defined terms:
Affiliate Consolidated Interest Expense ERISA
Acquisition Agreement Consolidated Net Income Exchange Act
Additional Interest Consolidated Net Worth Guarantee
Bankruptcy Law Consolidated Operating Profit Interest Coverage Ratio
Bankruptcy Remote Subsidiary Consolidated Subsidiary Mortgages
Board of Directors Credit Agreement Net Assets
Business Day Current Assets Permitted Receivables
Capitalized Lease Current Debt Disposition Transaction
Capitalized Lease Obligation Current Liabilities Permitted Securitization
Code Affiliate Debt Person
Consolidated Assets Depreciation Sale-Leaseback Transaction
Consolidated Debt Derivatives Obligations Total Capital
Consolidated EBIT ERISA Affiliate Wholly-owned Consolidated
Subsidiary
and (b) by adding the following defined terms and other provisions:
"Acquisition": the acquisition by the Company and/or any of its
Subsidiaries of the Capital Stock of BetzDearborn pursuant to the Merger
Agreement.
19
"Additional Credit Party": each Person that becomes a Guarantor after
the date of the Third Amendment as provided in subparagraph 5.1(j).
"Additional Interest": at any time the annual rate of interest
determined by reference to Schedule X hereto.
"Affiliate": as to any specified Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a specified Person means the power, directly or indirectly, either
to (a) vote 20% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person whether through the ownership of voting
securities, by contract or otherwise.
"Agreement": this Agreement, as amended, supplemented or modified from
time to time.
"Asset Disposition": the disposition of any or all of the assets
(including without limitation the Capital Stock of a Subsidiary) of the Company
or any of its Consolidated Subsidiaries whether by sale, lease, transfer or
otherwise (including a disposition pursuant to any casualty or condemnation
event, but excluding a disposition pursuant to a Permitted Receivables
Financing). The term "Asset Disposition" shall not include (i) the sale of
inventory in the ordinary course of business, (ii) the sale or disposition of
machinery and equipment no longer used or useful in the conduct of such Person's
business or (iii) any Equity Issuance.
"Attributed Principal Amount": on any day, with respect to any
Permitted Receivables Financing entered into by the Company or any of its
Consolidated Subsidiaries, the aggregate amount (with respect to any such
transaction, the "Invested Amount") paid to, or borrowed by, such Person as of
such date under such Permitted Receivables Financing, minus the aggregate amount
received by the applicable Receivables Financier (as defined in the definition
of "Permitted Receivables Financing") and applied to the reduction of the
Invested Amount under such Permitted Receivables Financing.
"BetzDearborn": BetzDearborn, Inc., a Pennsylvania corporation.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in Philadelphia, Pennsylvania or New York City are
authorized or required by law to close.
"Capital Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
"Closing Date": October 15, 1998.
20
"Code": the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations issued thereunder as in effect from time to
time.
"Collateral": all collateral described in and covered by the Collateral
Documents.
"Collateral Agent": NationsBank, N.A. (or any successor thereto) or any
successor agent appointed pursuant to the provisions of the Intercreditor
Agreement, dated as of December __, 1998, among NationsBank, NA. (as Agent under
the Credit Agreement and as Collateral Agent) and The Prudential Insurance
Company of America.
"Collateral Documents": the Pledge Agreements, and such other documents
executed and delivered in connection with the attachment and perfection of the
security interests given for the benefit of the holders of the Notes in the
Collateral, including without limitation, UCC financing statements, provided
that it is understood that such Collateral Documents will be effective only
during the Collateral Period.
"Collateral Effective Date": a date subsequent to the Closing Date on
which the Index Debt is rated worse than BB+ by S&P or rated worse than Bal by
Xxxxx'x.
"Collateral Period": the period in time from the Collateral Effective
Date until a subsequent Credit Improvement Date.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which's under common control with a Credit Party within the meaning of Section
4001 of ERISA or is part of a group which includes a Credit Party and which is
treated as a single employer under Section 414 of the Code.
"Consolidated EBITDA": for any fiscal period, (i) Consolidated Net
Income for such period, plus (ii) Consolidated Interest Expense for such period,
plus (iii) to the extent deducted in computing such Consolidated Net Income, the
sum of (a) taxes, (b) depreciation, (c) amortization, (d) any non-cash charges
and (e) any extraordinary, unusual or non-recurring cash losses or cash charges
incurred in connection with (x) the Acquisition in an amount not to exceed $170
million after taxes in the aggregate for all such add-backs pursuant to this
subclause (x) and (y) the settlement prior to the Closing Date of certain
litigation in an amount not to exceed $63 million after taxes in the aggregate
for all such add-backs pursuant to this subclause (y), minus (iv) any
extraordinary gains and noncash gains.
"Consolidated Interest Expense": for any fiscal period, the amount of
interest expense paid, accrued or capitalized by the Company and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, including imputed interest expense paid in respect of Capital Lease
obligations and any dividends paid on hybrid equity securities that are tax
deductible (such as dividends on trust preferred capital securities) (but, with
respect to such dividends on hybrid equity securities, without duplication to
the extent a comparable amount is taken by the Company as interest expense on
the interest paid on the related subordinated debt to the Preferred Stock SPC).
"Consolidated Net Income": for any fiscal period, net income of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
21
"Consolidated Net Worth": as of the end of the most recently ended
calendar month, the sum of (i) all items that would be included under
stockholders' equity on a consolidated balance sheet of the Company and its
Consolidated Subsidiaries plus (ii) insurance reserves. Consolidated Net Worth
shall be determined in accordance with generally accepted accounting principles
substantially the same as those used by the Company in preparing the financial
statements referred to in subparagraph 3.2 of the Third Amendment and on a
consolidated basis substantially the same as that used by the Company in
preparing such financial statements; provided, however, that (A) foreign
currency translation adjustments under Financial Accounting Standards Board
Statement No. 52, "Foreign Currency Translation" and (B) items reported in
comprehensive income and accumulated other comprehensive income under Financial
Accounting Standards Statement No. 130 (including but not limited to gains or
losses for derivatives designated as a hedge of exposure to variable cash flows
of forecasted transactions and derivatives designated as a hedge of foreign
currency exposure of a net investment in a foreign operation), shall not in
either case be taken into account in calculating Consolidated Net Worth.
"Consolidated Subsidiary": any Subsidiary the results of whose
operations are, for financial accounting purposes, consolidated with the results
of operations of the Company and its other Consolidated Subsidiaries on the most
recent annual or quarterly financial statements of the Company and its
Consolidated Subsidiaries.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Covered Transaction": the sale, lease, disposition or purchase of
assets by any Person outside the ordinary course of business of such Person and
in a transaction pursuant to which consideration having a fair market value in
excess of $35,000,000 is paid by or received by the Company and its
Subsidiaries.
"Credit Agreement": the Credit Agreement, dated as of October 15, 1998,
by and among the Company, such Subsidiaries of the Company as may from time to
time be Borrowers and/or Guarantors thereunder in accordance with the provisions
thereof, the several banks and other financial institutions from time to time
parties thereto (the "Lenders"), NationsBank, N.A., a national banking
association, as administrative agent for the Lenders and The Chase Manhattan
Bank, Xxxxxx Guaranty Trust Company of New York and Citibank, N.A. as
Co-Syndication Agents, as the same may be amended and be from time to time in
effect (including extensions, renewals, refundings and replacements thereof).
"Credit Documents": collectively, this Agreement, the Notes, the Third
Amendment, any Guarantor Joinder Agreements, the Collateral Documents and all
other related agreements and documents issued, delivered or executed hereunder
or thereunder or pursuant hereto or thereto (in each case, as the same may be
amended, modified, restated, supplemented, extended, renewed or replaced from
time to time).
"Credit Improvement Date": a date subsequent to the Closing Date on
which (i) the Company's Index Debt is rated BBB- or better by S&P or rated Baa3
or better by Xxxxx'x and
22
(ii) the Leverage Ratio as of the end of the most recently ended fiscal quarter
shall be less than 4.0 to 1.0.
"Credit Parties": the Company and the Guarantors.
"Debt Issuance": the issuance of any Indebtedness for borrowed money by
the Company or any of its Consolidated Subsidiaries.
"Default": any event specified in paragraph 9A, whether or not any
requirement therein designated for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiaries": each direct and indirect Subsidiary of the
Company that (a) is domiciled, incorporated or organized under the laws of any
State of the United States or the District of Columbia or (b) maintains the
majority of its assets (determined on a consolidated basis) in the United States
of America.
"Eligible Reinvestment": an acquisition of assets that is (i) not
prohibited under subsection 5.2(b)(ii) and (ii) an acquisition of another
business or any substantial part of another business or other long-term assets,
in each case, in, or used or useful in, the same or a similar line of business
as the Company and its Subsidiaries were engaged in on the Closing Date, or any
reasonable extensions or expansions thereof
"Environmental Laws": any and all lawful and applicable Federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"Equity Issuance": any issuance by the Company or any Consolidated
Subsidiary to any Person other than the Company or a Consolidated Subsidiary of
(a) shares of its Capital Stock, specifically including any hybrid equity
securities (e.g., trust preferred capital securities), (b) any shares of its
Capital Stock pursuant to the exercise of options or warrants or (c) any shares
of its Capital Stock pursuant to the conversion of any debt securities to
equity. The term "Equity Issuance" shall not include any Asset Disposition.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly Controlled
Entity is (or, if such
23
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.
"Event of Default": any event specified in paragraph 9A, provided that
any requirement therein designated for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Existing Credit Agreements": (a) with respect to the Company, (i) that
certain Amended and Restated $700,000,000 Revolving Credit and Competitive
Advance Facility Agreement, dated as of February 7, 1997 (amending and restating
Revolving Credit and Competitive Advance Facility Agreement dated as of December
17, 1993, as amended by First Amendment, dated as of December 15, 1994 and
Second Amendment, dated as of December 15, 1995), among the Company, the several
financial institutions parties thereto, The Chase Manhattan Bank, formerly known
as Chemical Bank, as agent thereunder, Xxxxxx Guaranty Trust Company of New
York, as documentation agent thereunder, and NationsBank, N.A., as syndication
agent thereunder, and (ii) if still in existence, the credit agreement
evidencing the related 364-day facility, (b) with respect to BetzDearborn, that
certain $750,000,000 Credit Agreement dated as of October 20, 1997 among
BetzDearborn, certain of its affiliates and The Chase Manhattan Bank and The
Chase Manhattan Bank of Canada, as Administrative Agents and (c) with respect to
FiberVisions Incorporated ("FiberVisions"), a wholly owned Subsidiary of the
Company, that certain $115,000,000 Credit Agreement dated as of June 26, 1997
among FiberVisions, certain of its Affiliates and NationsBank, N.A., as Agent.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"First Tier Foreign Subsidiary": at any date of determination, each
Foreign Subsidiary in which any one or more of the Company and its Material
Domestic Subsidiaries owns more than 50%, in the aggregate, of the voting
Capital Stock of such Foreign Subsidiary.
"Foreign Subsidiaries": all Subsidiaries of the Company that are not
Domestic Subsidiaries.
"GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranteed Obligations": without duplication, all of the obligations
of the Credit Parties owing (i) to the holders of the Notes, whenever arising,
under this Agreement, the Guarantor Joinder Agreements, the Notes, the
Collateral Documents or any of the other Credit Documents to which a Credit
Party is a party including, but not limited to, obligations with respect to
principal, interest, Market Premium, tax gross-up payments and fees and expense
reimbursement payments and including, without limitation (to the extent
permitted by applicable
24
law), any amounts that would have accrued but for the automatic stay under the
Federal Bankruptcy Code (as now or hereafter in effect).
"Guarantor": each of the Material Domestic Subsidiaries (other than a
Receivables Financing SPC or a Preferred Stock SPC) and each Additional Credit
Party which has executed a Guarantor Joinder Agreement, together with its
successors and assigns.
"Guarantor Joinder Agreement": a Guarantor Joinder Agreement referenced
in subparagraph 5.1(j), a form of which is attached as Exhibit C.
"Hazardous Materials": any substance, material or waste defined or
regulated in or under any Environmental Laws.
"Hedging Agreements": collectively, `interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price hedging
agreements, in each case entered into by the Company or any of its Material
Subsidiaries.
"Indebtedness": with respect to any Person, without duplication, (i)
all indebtedness for borrowed money created, incurred, assumed or guaranteed by
such Person, (ii) all amounts owing by such Person under purchase money
mortgages or other purchase money liens or conditional sales or other title
retention agreements, (iii) all indebtedness secured by mortgages, liens,
security interests, conditional sales or other title retention agreements upon
property owned by such Person (whether or not such Person has assumed or become
liable for the payment of such indebtedness), (iv) all obligations of such
Person in respect of Financing Leases and Synthetic Leases, (v) all guaranty
obligations of such Person with respect to Indebtedness of another Person, (vi)
Indebtedness of any partnership or unincorporated joint venture with respect to
which such Person is legally obligated or has a reasonable expectation of being
liable with respect thereto, (vii) the maximum amount of all standby letters of
credit issued or bankers' acceptances facilities created for the account of such
Person and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (viii) the principal amount of subordinated notes or debentures
issued by such Person to a Preferred Stock SPC in connection with hybrid equity
securities (e.g., trust preferred capital securities), and (ix) the outstanding
Attributed Principal Amount under any Permitted Receivables Financing (other
than a securitization of the receivable evidenced by the Tastemaker note, a $500
million five-year note of IMCERA Group, Inc. bearing interest at 6.2% and
classified as "held at maturity").
"Index Debt": the Company's long-term senior unsecured
non-credit-enhanced debt securities.
"Initial Hybrid Equity Transaction": the issuance, prior to or within
three (3) months of the Closing Date, of equity-like securities by the Company
and/or any of its Consolidated Subsidiaries in an amount sufficient to raise
$170 million in proceeds for the Company.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Multiemployer Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
25
"Interest Coverage Ratio": with respect to the Company and its
Consolidated Subsidiaries for the twelve month period ending on the last day of
any fiscal quarter of the Company (and after giving effect to the Acquisition on
a Pro Forma Basis), the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"Leverage Ratio": with respect to the Company and its Consolidated
Subsidiaries for the twelve month period ending on the last day of any fiscal
quarter (and after giving effect to the Acquisition on a Pro Forma Basis), the
ratio of (a) Indebtedness of the Company and its Consolidated Subsidiaries on
the last day of such period minus the principal amount of subordinated notes or
debentures issued by the Company to a Preferred Stock SPC in connection with
hybrid equity securities (e.g., trust preferred capital securities) to (b)
Consolidated EBITDA for such period.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest to any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"Material Adverse Effect": a material adverse effect on (i) the
operations, business, property or assets, or the condition (financial or
otherwise) of the Company and its Consolidated Subsidiaries taken as a whole or
(ii) the validity or enforceability of this Agreement and the other Credit
Documents or the rights and remedies of the holders of the Notes hereunder or
thereunder.
"Material Domestic Subsidiary": any Domestic Subsidiary that is also a
Material Subsidiary.
"Material First Tier Foreign Subsidiary": any First Tier Foreign
Subsidiary that is also a Material Subsidiary.
"Material Subsidiary": as of any date of determination, any Domestic
Subsidiary or any Foreign Subsidiary that (a) is a Borrower, (b) is listed on
Schedule II attached hereto, which Schedule may be modified from time to time by
the Company by written notice to the holders of the Notes, (c) together with its
Subsidiaries on a consolidated basis, during the twelve months preceding such
date of determination accounts for (or to which may be attributed) 5% or more of
the net income or assets (determined on a consolidated basis) of the Company and
its Subsidiaries or (d) is otherwise necessary for the ongoing business
operations of the Company and its Subsidiaries taken as a whole.
"Merger Agreement": that certain Agreement and Plan of Merger dated as
of July 30, 1998 among the Company, Water Acquisition Co. and BetzDearborn.
"Xxxxx'x": Xxxxx'x Investors Services, Inc.
"Multiemployer Plan": an ERISA Plan which is a multiemployer plan as
defined in Section 400 1 (a)(3) of ERISA.
26
"Net Cash Proceeds": the aggregate cash proceeds received by the
Company or any of its Consolidated Subsidiaries in respect of any Asset
Disposition, Equity Issuance, Debt Issuance or Permitted Receivables Financing,
net of (a) direct costs (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and (b) taxes paid or payable as
a result thereof, it being understood that "Net Cash Proceeds" shall include,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received by the Company or any of its Consolidated
Subsidiaries in any Asset Disposition, Equity Issuance, Debt issuance or
Permitted Receivables Financing.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Receivables Financing": any one or more receivables
financings in which (i) the Company or any of its Consolidated Subsidiaries (a)
sells (as determined in accordance with GAAP) any accounts receivable, notes
receivable, rights to future lease payments or residuals (collectively, together
with certain related property relating thereto and the right to collections
thereon, being the "Transferred Assets") to any Person that is not a Subsidiary
or Affiliate of the Company (with respect to any such transaction, the
"Receivables Financier"), (b) borrows from such Receivables Financier and
secures such borrowings by a pledge of such Transferred Assets and/or (c)
otherwise finances its acquisition of such Transferred Assets and, in connection
therewith, conveys an interest in such Transferred Assets to the Receivables
Financier or (ii) the Company or any of its Consolidated Subsidiaries sells,
conveys or otherwise contributes any Transferred Assets to a Receivables
Financing SPC, which Receivables Financing SPC then (a) sells (as determined in
accordance with GAAP) any such receivables (or an interest therein) to any
Receivables Financier, (b) borrows from such Receivables Financier and secures
such borrowings by a pledge of such receivables or (c) otherwise finances its
acquisition of such receivables and, in connection therewith, conveys an
interest in such receivables to the Receivables Financier, provided that (1)
such receivables financing shall not involve any recourse to the Company or any
of its Consolidated Subsidiaries for any reason other than (A) repurchases of
non-eligible receivables or (B) indemnifications for losses other than credit
losses related to the receivables sold in such financing, (2) such receivables
financing shall not include any guaranty obligations of the Company or any of
its Consolidated Subsidiaries, (3) the Required Holders shall be reasonably
satisfied with the structure of and documentation for any such transaction and
that the terms of such transaction, including the discount at which receivables
are sold, the term of the commitment of the Receivables Financier thereunder and
any termination events, shall be (in the good faith understanding of the
Required Holders) consistent with those prevailing in the market for similar
transactions involving a receivables originator/servicer of similar credit
quality and a receivables pool of similar characteristics and (4) the
documentation for such transaction shall not be amended or modified without the
prior written approval of the Required Holders.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": the BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan,
and its successors.
27
"Pledge Agreements": a collective reference to the Pledge Agreement
dated as of the Closing Date executed by the Company and each of the Material
Domestic Subsidiaries (other than a Receivables Financing SPC or a Preferred
Stock SPC) and substantially in the form of Exhibit I attached hereto and any
and all other pledge agreements executed and delivered by the Credit Parties in
favor of the Collateral Agent, for the benefit of the holders of the Notes and
any other creditors described therein, to secure their obligations under the
Credit Documents and any other loan documents or other agreements described
therein, as amended, modified, extended, renewed or replaced from time to time;
provided that it is understood that the Pledge Agreements will be effective only
during the Collateral Period.
"Preferred Stock SPC": a special purpose entity that is a Subsidiary or
Affiliate of the Company and that is formed for the sole and exclusive purpose
of engaging in activities in connection with the issuance of hybrid equity
securities (e.g., trust preferred capital securities).
"Pro Forma Basis": means, with respect to any transaction, that such
transaction shall be deemed to have occurred (for purposes of calculating
compliance in respect of such transaction with each of the financial covenants
set forth in subparagraph 5.2(d)) as of the first day of the four fiscal quarter
period ending as of the last day of the most recent fiscal quarter preceding the
date of such transaction with respect to which the holders of the Notes shall
have received the financial statements referred to in subparagraph 5.1(a). As
used herein, "transaction" means any corporate merger or consolidation or any
asset disposition or purchase as referred to in subparagraph 5.2(b). Any
Indebtedness incurred or assumed by the Company or any of its Subsidiaries in
order to consummate such transaction (i) shall be deemed to have been incurred
or assumed on the first day of the applicable period and (ii) if such
Indebtedness has a floating or formula rate, then the implied rate of interest
for such Indebtedness for the applicable period for purposes of this definition
shall be determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination.
"Property": any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Receivables Financing SPC": a special purpose entity that is a
Subsidiary or Affiliate of the Company and that is formed for the sole and
exclusive purpose of engaging in activities in connection with the purchase,
sale and financing of accounts receivable in connection with and pursuant to a
Permitted Receivables Financing.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18,.19 or .20 of PBGC Reg.Section 2615.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or
28
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Responsible Officer": when used with respect to the Company, the chief
executive officer or any senior vice president of the Company or, with respect
to financial matters, the vice president and treasurer of the Company.
"S&P": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Company.
"Synthetic Lease": any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP.
"Third Amendment": the Third Amendment and Assumption Agreement dated
as of December 31, 1998, amending and supplementing this Agreement.
All accounting terms not otherwise defined herein shall have the
meanings assigned to them in accordance with GAAP. In the event that a change in
GAAP affects the terms of the covenant contained in subparagraph 5.2(d) hereof
(including the related defined terms used therein), the Company and the Required
Holders shall negotiate in good faith such amendments to such covenant and
related definitions as are necessary to reflect such changes in GAAP and as are
otherwise reasonably satisfactory to the Company and the Required Holders.
SECTION 2.5. (PARAGRAPH 14H) Paragraph 14H of the Note Agreement is
hereby amended by changing the address for notices to the Company (and each
other Credit Party) as follows:
Notices to the Company or any other Credit Hercules Incorporated
Party shall be made to: Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Vice President & Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
29
SECTION 2.6. (PARAGRAPH 14) Paragraph 14 of the Note Agreement Is
hereby @her amended by adding at the end thereof the following new provisions.-
14N. TERMINATION OF COLLATERAL PERIOD. Upon the occurrence of a Credit
Improvement Date that terminates the Collateral Period:
(a) the pledges and grants of security interests pursuant to
the Pledge Agreements, and the covenants and other agreements contained
therein, shall no longer be effective and shall otherwise cease and be
of no further force and effect; and
(b) the Collateral Agent is hereby authorized, at the request
and expense of the Company, (i) to return all items described in
subparagraph 5.1(k) to the Company or the applicable Credit Party and
(ii) to execute and deliver Uniform Commercial Code termination
statements to evidence the termination described in clause (a) above.
14O. CONFIDENTIALITY. For the purposes of this paragraph 14O,
"Confidential Information" means information delivered to the holder of a Note
(the "Noteholder") by or on behalf of any Credit Party in connection with the
transactions contemplated by or otherwise pursuant to this Agreement or any
other Credit Document that is proprietary in nature and that was clearly marked
or labeled or otherwise adequately identified when received by such Noteholder
as being confidential information of such Credit Party, provided that such term
does not include information that (a) was publicly known or otherwise known to
such Noteholder prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Noteholder or any person
acting on its behalf, (c) otherwise becomes known to such Noteholder other than
through disclosure by a Credit Party or (d) constitutes financial statements
delivered to you under subparagraph 5.1(a) that are otherwise publicly
available. Each Noteholder agrees that it will maintain the confidentiality of
such Confidential Information in accordance with procedures adopted by it in
good faith to protect confidential information of third parties delivered to it,
provided that such Noteholder may deliver or disclose Confidential Information
to (i) its directors, officers, trustees, employees, agents, attorneys and
affiliates, (ii) its financial advisors and other professional advisors, (iii)
any other holder of any Note, (iv) any Person to which such Noteholder sells or
offers to sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this paragraph 140), (v) any Person
from which such Noteholder offers to purchase any security of the Company (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this xxxxxxxxx 00X), (xx) any
federal or state regulatory authority having jurisdiction over such Noteholder,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about such Noteholder's investment portfolio or (viii) any other
Person to which such delivery or disclosure may be necessary or appropriate (w)
to effect compliance with any law, rule, regulation or order applicable to, (x)
in response to any subpoena or other legal process, (y) in connection with any
litigation to which such Noteholder is a party or (z) if a Default has occurred
and is continuing, to the extent such Noteholder may determine such delivery and
30
disclosure to be necessary or appropriate in the enforcement or for the
protection of its rights and remedies under its Notes, this Agreement or any
other Credit Document. Each holder of a Note, by its acceptance of a Note, will
be deemed to have agreed to be bound by and to be entitled to the benefits of
this paragraph 140 as though it were a party to this Agreement.
14P. SUBMISSION TO JURISDICTION; WAIVERS:. Without in any way limiting
the provisions of paragraph 13 (all of the terms of which are hereby confirmed),
each Credit Party hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, the Notes and the other Credit
Documents, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof,
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Credit Party in care of the Company at its address set
forth in paragraph 14H or at such other address of which the holders of
the Notes have been notified pursuant to paragraph 14H;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction;
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages; and
(F) WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
14Q. EXHIBITS; SCHEDULES. The Exhibits and Schedules attached to the
Third Amendment shall be considered as Exhibits and Schedules as well to this
Agreement.
SECTION 2.7. (SCHEDULES AND EXHIBIT) The Note Agreement is hereby
further amended by adding the following Schedules and Exhibit which are annexed
to this Agreement (any Schedule having the same number as an existing Schedule
attached to the Note Agreement being substituted for such existing Exhibit or
Schedule in its entirety):
31
SCHEDULE I (Purchaser Schedule)
SCHEDULE II (Material Subsidiaries)
SCHEDULE III (Required Consents, Authorizations, Notices and Filings)
SCHEDULE IV (Existing Indebtedness of the Material Subsidiaries)
SCHEDULE V (Representation Regarding Collateral Documents)
SCHEDULE X (Determination of Additional Interest)
EXHIBIT C (Guarantor Joinder Agreement)
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES
In order to induce Prudential to enter into this Agreement, the Credit
Parties make the following representations, covenants and warranties (other than
those set forth in Section 3.21 which are made by the Trustee in its individual
capacity) which shall survive the execution and delivery of the Credit
Documents:
3.1. Corporate Authority. (a) Each Credit Party is a duly and validly
existing corporation, and is in good standing under the laws of the State of its
incorporation. The execution, delivery and performance of the Credit Documents
are within each Credit Party's corporate authority and have been duly authorized
by proper corporate proceedings. This Agreement has been, and each of the other
Credit Documents required to be executed and delivered by a Credit Party will
be, duly executed and delivered by each Credit Party that is a party thereto.
(b) Each Credit Party (i) has the corporate or other necessary power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged and (ii) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing could not reasonably be expected to have a
Material Adverse Effect.
3.2. Financial Statements. (a) The consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of December 31, 1997, and the
related consolidated statements of income, stockholders' equity and cash flow
(including the notes thereto) for the fiscal year ended on such date, reported
upon by Coopers & Xxxxxxx, present fairly in all material respects the
consolidated financial position of the Company and its Consolidated Subsidiaries
as of said date and the consolidated results of their operations for such fiscal
year, in conformity with GAAP.
(b) The consolidated balance sheets of the Company and its Consolidated
Subsidiaries as of June 30, 1998, and the related consolidated statements of
income and cash flows for the quarterly period ended on such date, present
fairly in all material respects the consolidated financial position of the
Company and its Consolidated Subsidiaries as of said date and the consolidated
results of their operations for such quarterly period, in conformity with GAAP,
provided, however, that such financial statements are subject to year-end
adjustments and are presented without footnotes.
32
(c) The pro forma consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the Closing Date giving effect to the
Acquisition in accordance with the terms of the Merger Agreement and reflecting
estimated purchase price accounting adjustments, has heretofore been furnished
to Prudential. Such pro forma balance sheet is based upon reasonable assumptions
made known to Prudential and upon information not known to be incorrect or
misleading in any material respect.
(d) The financial statements delivered to Prudential pursuant to
subparagraph 5.1 (a)(i)(A) and (B), (i) have been prepared in accordance with
GAAP (except as may otherwise be permitted hereunder) and (ii) present fairly
(on the basis disclosed in the footnotes to such financial statements) the
consolidated financial condition, results of operations and cash flows of the
Company and its Consolidated Subsidiaries as of such date and for such periods.
3.3. Validity of Documents. (a) This Agreement constitutes, and the
other Credit Documents when duly executed and delivered by each Credit Party
that is a party thereto in accordance with this Agreement will constitute,
legal, valid and binding obligations of each Credit Party, each enforceable in
accordance with its terms except as the enforceability of such Credit Document
may be limited (x) by general principles of equity and conflicts of laws or (y)
by bankruptcy, reorganization, insolvency, moratorium or other laws of general
application relating to or affecting the enforcement, of creditors' rights.
Neither the execution, delivery or performance of this Agreement or the other
Credit Documents, nor compliance with the terms and provisions hereof and
thereof, will (i) conflict with, or result in a breach of any provisions of, any
Requirement of Law applicable to the Credit Parties, specifically including the
certificate of incorporation or the by-laws of a Credit Party, or any agreement
or instrument to which a Credit Party is a party, or by which it or its
properties is bound, or constitute a default thereunder, except where such
conflict, breach or default would not reasonably be expected to have a Material
Adverse Effect or (ii) result in or require the creation of any Lien (other than
those contemplated in or created in connection with the Credit Documents) upon a
Credit Party or with respect to its properties.
(b) No consent or authorization of, filing with, notice to or other
similar act by or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of any Credit Party in
connection with the borrowings or other extensions of credit hereunder or with
the execution, delivery, performance, validity or enforceability of the Credit
Documents to which such Credit Party is a party, except for (i) consents,
authorizations, notices and filings described in Schedule III all of which have
been obtained or made or have the status described in such Schedule III and (ii)
filings to perfect the Liens created by the Collateral Documents.
3.4. No Events of Default. No Event of Default specified in paragraph
9A of the Note Agreement (after giving effect to this Agreement) and no event of
default specified in any other agreement evidencing indebtedness of the Company
or any of its Material Subsidiaries for borrowed money in excess of $25,000,000,
and no event which, with the giving of notice or lapse of time, or both, could
become such an Event of Default or event of default, has occurred and is
continuing.
33
3.5. Litigation. Except as set forth on the Quarterly Reports on Form
10-Q filed by each of the Company and BetzDearborn with the Securities and
Exchange Commission for the quarterly period ended September 30, 1998, there are
no actions, suits or proceedings pending or, to the knowledge of a Credit Party,
threatened against or affecting the Company or any Consolidated Subsidiary
before any court or before any governmental or administrative body or agency,
which could reasonably be expected to have a Material Adverse Effect.
3.6. Status Under Certain Statutes. No Credit Party is (i) an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended, (ii) a
"holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, (iii) a "public utility" as such term is defined in the
Federal Power Act, as amended, nor (iv) a "rail carrier" or a person controlled
by or affiliated with a "rail carrier", within the meaning of Title 49, U.S.C.,
or a "carrier" to which 49 U.S.C. Section 11301(b)(1) is applicable.
3.7. No Change. Since June 30, 1998, there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect.
3.8. Federal Regulations. No part of the maintenance of the credit
represented by the Notes involves "purchasing" or "carrying" any "margin stock",
within the respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any holder of a Note,
the Company will furnish to such holder a statement to the foregoing effect in
conformity with the requirements of FR Form U-I (or other appropriate form)
referred to in said Regulation U.
3.9. ERISA. Each of the following statements is true as of the Closing
Date, except to the extent that the events or conditions causing such statements
to be untrue, either individually or in the aggregate, would not be reasonably
likely to result in any liability having a Material Adverse Effect: Neither a
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any ERISA Plan, and each ERISA Plan has complied in
all material respects with the applicable provisions of ERISA and the Code. No
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or an ERISA Plan has arisen, during such five-year period. The present
value of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such ERISA Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither a Credit Party nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither a Credit
Party nor any Commonly Controlled Entity would become subject to any liability
under ERISA if such Credit Party or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely
34
preceding the date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent.
3.10. Regulation on Debt Incurrence, Securities Act. No Credit Party is
subject to regulation under any Federal or State statute or regulation which
limits its ability to incur Indebtedness. None of the transactions contemplated
by this Agreement will violate or result in a violation of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, or
regulations issued pursuant thereto.
3.11. Compliance with Law. Each of the Company and its Consolidated
Subsidiaries is in compliance with all Requirements of Law except to the extent
that the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.12. Taxes. Each of the Company and its Consolidated Subsidiaries has
filed, or caused to be filed, all tax returns (federal, state, local and
foreign) required to be filed and paid (a) all amounts of taxes shown thereon to
be due (including interest and penalties) and (b) all other taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) owing by it, except for such
taxes (i) which are not yet delinquent or (ii) that are being contested in good
faith and by proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP (if such reserves are required pursuant to
GAAP). No Credit Party is aware as of the Closing Date of any proposed tax
assessments against any of the Company and its Consolidated Subsidiaries, which
could reasonably be expected to have a Material Adverse Effect and against which
adequate reserves are not being maintained in accordance with GAAP (if such
reserves are required pursuant to GAAP).
3.13. Material Subsidiaries. Set forth on Schedule II is a complete and
accurate list of all Material Subsidiaries of the Company as of the Closing
Date. Information on Schedule II includes jurisdiction of incorporation, the
number of shares of each class of Capital Stock outstanding, the number and
percentage of outstanding shares of each class owned (directly or indirectly) by
a Credit Party; and the number and effect, if exercised, of all outstanding
options, warrants, rights of conversion or purchase and all other similar rights
with respect thereto. The outstanding Capital Stock of all such Material
Subsidiaries is validly issued, fully paid and nonassessable and is owned by
each such Credit Party, directly or indirectly, free and clear of all Liens
(other than those arising under or contemplated in connection with the Credit
Documents). Other than as set forth in Schedule II, no Material Subsidiary has
outstanding any securities convertible into or exchangeable for its Capital
Stock nor does any such Person have outstanding any rights to subscribe for or
to purchase or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to its Capital Stock.
3.14. Environmental Matters. (a) Except as would not have or be
reasonably expected to have a Material Adverse Effect:
(i) Each of the real properties owned by the Credit Parties
(the "Real Properties") and all operations at the Real Properties are
in compliance with all applicable Environmental Laws, and there is no
violation of any Environmental Law with
35
respect to the Real Properties or the businesses operated by the
Company or any of its Material Subsidiaries (the "Businesses"), and
there are no conditions relating to the Businesses or Real Properties
that would be reasonably expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written notice of, or
inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with Environmental Laws
with regard to any of the Real Properties or the Businesses, nor does
any Credit Party have knowledge or reason to believe that any such
notice is being threatened.
(iii) Hazardous Materials have not been transported or
disposed of from the Real Properties, or generated, treated, stored or
disposed of at, on or under any of the Real Properties or any other
location, in each case by, or on behalf or with the permission of, the
Company or any of its Material Subsidiaries.
(iv) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of any Credit Party, threatened,
under any Environmental Law to which any Credit Party is or, to the
best knowledge of such Credit Party, will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with
respect to the Company or any of its Material Subsidiaries, the Real
Properties or the Businesses.
(v) There has been no release or, to the best knowledge of any
Credit Party, threat of release of Hazardous Materials at or from the
Real Properties, or arising from or related to the operations
(including, without limitation, disposal) of the Company or any of its
Material Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses, in violation of, or in
amounts or in a manner that could give rise to liability under,
Environmental Laws.
(vi) None of the Real Properties contains, or has previously
contained, any Hazardous Materials at, on or under the Real Properties
in amounts or concentrations that, if released, constitute or
constituted a violation of, or would give rise to liability under,
Environmental Laws.
(vii) No Credit Party, nor any of its Subsidiaries, has
assumed any liability of any Person (other than another Credit Party,
or one of its Subsidiaries) under any Environmental Law.
(b) The Company has adopted procedures that are designed to (i) ensure
that each Credit Party, each of its operations and each of the properties owned
or leased by each Credit Party remains in compliance with applicable
Environmental Laws, to the extent that the failure to comply with such
Environmental Laws would have or would be reasonably expected to have a Material
Adverse Effect, and (ii) manage, to the same extent as and in accordance with
the practices of companies engaged in the same or a similar business, any
liabilities or potential
36
liabilities that each Credit Party, any of its operations and each of the
properties owned or leased by each Credit Party may have under applicable
Environmental Laws.
3.15. Solvency. Each Credit Party is and, after consummation of the
transactions contemplated by this Agreement will be Solvent. As used herein,
"Solvent" with respect to any Person, in that Person's reasonable belief and as
of a particular date, that on such date (a) such Person is able to pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (b) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature in their ordinary course,
(c) such Person is not engaged in a business or a transaction, and is not about
to engage in a business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged or is to
engage, (d) the fair value of the assets of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, and (e) the fair value of the assets of such Person
is not less than the amount that will be required to pay the estimable and
probable liability of such Person on its debts as they become absolute and
matured. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities be computed at the amount which, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
3.16. Disclosure. Neither this Agreement nor any financial statements
delivered to Prudential nor any other document, certificate or statement
furnished to Prudential by or on behalf of the Company or any of its
Consolidated Subsidiaries in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading.
3.17. No Burdensome Restrictions. Neither the Company nor any of its
Material Subsidiaries is a party to any agreement or instrument or subject to
any other obligation or any charter or corporate restriction or any provision of
any applicable law, rule or regulation which, individually or in the aggregate,
could have a Material Adverse Effect.
3.18. Representations and Warranties from Merger Agreement. As of the
Closing Date, each of the representations and warranties made in the Merger
Agreement by each of the parties thereto was true and correct in all material
respects.
3.19. Year 2000 Compliance. Each of the Credit Parties has (i)
initiated a review and assessment of all areas within its and each of its
Subsidiaries businesses and operations (including those affected by suppliers,
vendors and customers) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications may not be able to
recognize and properly perform date-sensitive functions after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. Based on the foregoing, each Credit Party believes that all
computer applications that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is,
37
be "Year 2000 Compliant"), except to the extent that a failure to do so could
not reasonably be expected to have a Material Adverse Effect.
3.20. ESOT Notes and Tax Treatment Unaffected. (a) The Plan is an
"employee stock ownership plan" within the meaning of section 4975(e)(7) of the
Code and is qualified under section 401(a) of the Code. The ESOT has been duly
constituted in accordance with the Trust Agreement, is validly existing and is
tax-exempt under section 501(a) of the Code. The ESOT has all requisite power
and authority to own its properties and assets. The execution, delivery and
performance of this Agreement will not (and the transactions relating to the
ESOT effected in connection with the Merger did not) involve any transaction
which is subject to the prohibitions of section 406 of ERISA and will not
otherwise constitute a violation of, or give rise to any liability under, any
other provision of Title I of ERISA or section 4975 of the Code. The shares of
the Company in the ESOT constitute qualifying "employer securities" within the
meaning of section 409(l) of the Code and were acquired for not more than
adequate consideration, within the meaning of section 3(18) of ERISA. Fifty
percent ( 50%) of the interest on the Notes is Excludible from the gross income
of any holder of the Notes for Federal income tax purposes, assuming that such
holder is a Qualified Holder.
(b) It is the present intention of the Company to maintain the ESOT in
full force and effect as "an employee stock ownership plan" within the meaning
of section 4975(e)(7) of the Code and section 407(d)(6) of ERISA.
(c) (i) The Trustee has all requisite power and authority to execute
and deliver and to perform all of the obligations of the ESOT under this
Agreement and the ESOT Notes; (ii) the execution, delivery and performance by
the Trustee of this Agreement and the ESOT Notes will not violate any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Trustee;
(iii) this Agreement and the ESOT Notes constitute legal, valid and binding
obligations of the ESOT enforceable against the ESOT in accordance with their
terms (subject, as to enforceability, to the effect of bankruptcy, insolvency,
moratorium and similar laws affecting the enforcement of creditors' rights
generally and the application of general principles of equity) and (iv) there
are no actions, suits or proceedings pending or, to the best knowledge of the
ESOT, threatened against or involving the ESOT or its properties before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which (x) draw into question the validity
of the Trust Agreement, this Agreement, the Notes or the ESOT Transaction or (y)
if determined adversely to the ESOT, would materially adversely affect the
ability of the Trustee to perform its obligations under the Trust Agreement or
of the ESOT to perform its obligations under this Agreement or the ESOT Notes or
of any of them to consummate the transactions contemplated hereby.
3.21. Trustee's Individual Representations. The following
representations and warranties are made only by the Trustee in its individual
capacity and not by the Company or the ESOT: The Trustee, in its individual
capacity, represents and warrants that (1) the Trustee is a trust company
incorporated under the banking laws of the Commonwealth of Massachusetts with
corporate trust powers and is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has all
requisite power and authority, corporate and otherwise, to conduct its business
and to execute and deliver, and to perform all its
38
obligations under, the Trust Agreement and (2) the execution, delivery and
performance by the Trustee of this Agreement does not violate any provision of
the articles of association or by-laws of the Trustee.
SECTION 4. INTEREST RATE INCREASE
With effect from and after October 15, 1998 the annual interest rate on
the Notes outstanding from time to time under the Note Agreement shall be
subject to adjustment by reference to Schedule X to the Note Agreement (as the
same is hereby amended and attached as Schedule X to this Agreement) and the
ESOT hereby agrees to pay interest on the Notes at the annual rate as so
determined. After giving effect to this Agreement, the rate payable in respect
of the Notes (including Additional Interest and adjustments provided for in
paragraph 7) as determined pursuant to the provisions, of the Note Agreement is
currently (effective from October 15, 1998) 8.96% per annum. For purposes of the
Notes and the Note Agreement the parties hereby agree that the following rates
referred to in the Note Agreement are, as of October 15, 1998 and until changed
by the agreement of the parties, as follows:
"Fully Tax-Exempt Rate" shall mean 6.76% plus the Additional Interest,
if any, per annum.
"Gross-Up Rate" shall mean 9.48% plus the Additional Interest, if any,
per annum.
"Qualified Tax-Exempt Rate" shall mean 8.15% plus the Additional
Interest, if any, per annum.
SECTION 5. EFFECTIVENESS OF THIS AGREEMENT
This Agreement shall become effective upon the execution and delivery
of a counterpart hereof by each of the parties hereto and the satisfaction of
the following conditions precedent on the date hereof (execution and delivery by
Prudential constituting evidence that such conditions have been so satisfied):
(a) Prudential shall have received a copy of this Agreement,
the Intercreditor Agreement, the Pledge Agreements and each of the
other Credit Documents, each duly executed and delivered by the parties
thereto, together with a certificate of the Secretary or Assistant
Secretary of the Company and each other Credit Party (i) as to the
incumbency and specimen signatures of the officers of the Company and
each other Credit Party who are authorized to execute this Agreement,
the acknowledgment to the Intercreditor Agreement and each other
document to be executed and delivered by the Company and each other
Credit Party pursuant hereto, and (ii) certifying that the execution
and delivery of this Agreement and the other Credit Documents have been
duly authorized by all proper corporate action;
(b) Prudential shall have received an opinion of the Assistant
General Counsel of the Company, acting as counsel to each of the Credit
Parties, in a form agreed to by such counsel for the Company and
counsel for Prudential;
39
(c) Prudential shall have received each of the financial
statements referred to in subparagraph 3.2;
(d) Prudential shall have received from a Responsible Officer
of the Company a certificate to the effect that as of the date hereof
(i) all representations and warranties made by the Company and each
other Credit Party in this Agreement and each other Credit Document are
true and correct in all material respects, (ii) the Credit Parties have
terminated, and paid in full any amounts outstanding under, the
Existing Credit Agreements, (iii) no Default or Event of Default (after
giving effect to the amendments to the Note Agreement set forth herein)
shall have occurred and be continuing; (iv) the Acquisition has been
consummated in accordance with the terms of the Merger Agreement and in
compliance with applicable law and regulatory approvals, (v) the
Company did not pay more than $2,500,000,000 (net of option proceeds
and excluding the assumption of Indebtedness) in the aggregate in
connection with the Acquisition and (vi) at least $180,000,000 of the
purchase price paid in connection with the Acquisition was funded by
the Company issuing common stock out of its treasury stock account to
the BetzDearborn Employee Stock Option Plan ("BetzDearborn ESOP") to
purchase the BetzDearborn convertible preferred shares held by, or in
trust for, the BetzDearborn ESOP; and
(e) Prudential shall have received an amendment fee of
$116,875.
SECTION 6. ACKNOWLEDGMENT BY CREDIT PARTIES
Each Credit Party hereby acknowledges that by executing and delivering
a counterpart of this Agreement it is becoming a party to the Note Agreement as
amended by this Agreement and shall be bound by the provisions thereof to the
extent such provisions are applicable to it.
SECTION 7. MISCELLANEOUS
7.1. Defined Terms. Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Note Agreement.
7.2. References. On and after the date of this Agreement, each
reference in the Note Agreement and the Notes shall mean and be a reference to
the Note Agreement as amended by this Agreement.
7.3. Ratification. The Note Agreement, as amended by this Agreement, is
and shall continue to be in full force and effect and is hereby in all respects
ratified and confirmed.
7.4. Counterparts. This Agreement may be executed in any number of
counterparts and by any combination of the parties hereto in separate
counterparts (including by telecopy), each of which counterparts shall be an
original and all of which taken together shall constitute one and the same
agreement.
40
7.5. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
ESOT: BETZDEARBORN INC. EMPLOYEE
---- STOCK OWNERSHIP AND 401(K)
TRUST ESTABLISHED BY THE
BETZDEARBORN INC. EMPLOYEE
STOCK OWNERSHIP AND 401(K)
PLAN
By: XXXXXX FIDUCIARY TRUST
COMPANY as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PRUDENTIAL: THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
COMPANY: HERCULES INCORPORATED,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SUBSIDIARY GUARANTORS: BETZDEARBORN CANADA, INC.,
an Ontario corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
41
HERCULES CREDIT, INC.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
HERCULES FLAVOR, INC.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
WSP, INC.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
AQUALON COMPANY,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
HERCULES FINANCE COMPANY,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FIBERVISIONS, L.L.C.
a Delaware limited liability company
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FIBERVISIONS INCORPORATED,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
42
FIBERVISIONS PRODUCTS, INC.,
a Georgia corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
HERCULES INTERNATIONAL LIMITED,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BETZDEARBORN, INC.,
a Pennsylvania corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BETZDEARBORN EUROPE, INC.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
DRC, LTD.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BL TECHNOLOGIES, INC.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
43
BLI HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BETZDEARBORN PAPER PROCESS
GROUP, INC.,
a Florida corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BETZDEARBORN HYDROCARBON
PROCESS GROUP, INC.,
a Texas corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
44
SCHEDULE I
PURCHASER SCHEDULE
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(1) All payments on account of the Notes held by such purchaser shall be
made by wire transfer of immediately available funds for credit to:
Bank of New York
New York, New York
ABA NO.: 000-000-000
Account No. 000-0000-000
Each such wire transfer shall set forth the name of the
Company, a reference to "BetzDearborn Guaranteed ESOT Notes
Due 2009, PPN _________, INV ___________", and the due date
and application (as among principal interest and Market
Premium) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Xxxxxxx Xxxxxx, 0xx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Trade Management Group
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group-Private Placements
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Trade Management Group
(000) 000-0000
(5) Tax Identification No.: 00-0000000
SCHEDULE II
Material Subsidiaries
SCHEDULE II
AUTHORIZED OUTSTANDING PERCENT OF
JURISDICTION COMPANY SHARES SHARES SHAREHOLDER OUTSTANDING
--------------------------------------------------------------------------------------------------------------------------------
Delaware Hercules Credit, Inc. 10 no par 10 no par Hercules Incorporated 100%
Delaware Hercules Flavor, Inc. 100 no par 100 no par Hercules Incorporated 100%
Delaware WSP, Inc. 1000 @ $1 100 Hercules Incorporated 100%
Delaware Aqualon Company N/A N/A Hercules Credit, Inc. 99%
WSP, Inc. 1%
Delaware Hercules Finance Company N/A N/A Hercules Credit, Inc. 20%
Hercules Flavor, Inc. 80%
Delaware FiberVisions, L.L.C. None None None None
Delaware FiberVisions Incorporated 100 @ $.01 100 FiberVisions, L.L.C. 100%
Georgia FiberVisions Products, Inc. 25,000 @ $1 25,000 FiberVisions A/S 100%
Rijswijk,
The Netherlands Hercules International Limited X/X X/X X/X X/X
Xxxxxxxxxxxx BetzDearborn, Inc. 250,000,000 All Hercules Incorporated 100%
Delaware BetzDearborn Europe, Inc. 10 no par 10 BetzDearborn, Inc. 100%
Delaware DRC, Ltd. 1000 @ $1 20 BetzDearborn, Inc. 100%
Delaware BL Technologies, Inc. 1000 @ $1 10 BetzDearborn, Inc. 50%
10 BetzDearborn Europe, Inc. 50%
Delaware BLI Holdings, Inc. 1000 @ $1 30 BetzDearborn, Inc. 100%
Florida BetzDearborn Paper Process, Inc. 10 no par 10 BetzDearborn, Inc. 100%
Texas BetzDearborn Hydrocarbon
Process Group, Inc. 1000 @ $1 1000 BetzDearborn, Inc. 100%
U.K. Hercules Investments Global, Ltd. 500,001 @ L1 500,001 Hercules Incorporated 90%
Hercules Investments LLC 10%
St. Xxxxxx
Virgin Islands Hercules Overseas Corp. 10 @ $100 10 Hercules Incorporated 100%
SCHEDULE II
AUTHORIZED OUTSTANDING PERCENT OF
JURISDICTION COMPANY SHARES SHARES SHAREHOLDER OUTSTANDING
------------------------------------------------------------------------------------------------------------------------------------
Nassau, Bahamas Hercules International
Trade Corporation Limited 100 @ $500 98 Hercules Incorporated 96%
X. XxxXxxxxx 1%
X. Xxxxxx 1%
Rotterdam,
The Netherlands Hercules Nederland BV Dfl 625,000 Dfl 136,000 Hercules International
Ltd. 100%
Xxxxxxxx Bermuda Xxxxxx Bay Insurance
Co., Ltd. 10,000,000 @ $1 10,000,000 Hercules Incorporated 100%
Brussels, Belgium Hercules Europe NV 123.742 123.742 Hercules Incorporated 100%
Denmark FiberVisions A/S 180 @ DKK 10,000 180 FiberVisions, L.L.C. 100%
Ontario, Canada Hercules Canada Inc. 27,000,000 no par 22,800,000 Hercules Incorporated 100%
Belgium Hercules Belgium N.V. 457.600 of BEF 1000 457.600 Hercules Nederland BV 100%
each
Rijswijk,
The Netherlands Aqualon France BV NLG 200,000 NLG 60,000 Hercules BV 100%
NLG 37,100 Hercules SA
Germany Pomosin GmbH DM 200,000 DM 3,000,000 Copenhagen Pectin A/S 100%
Rijswijk,
The Netherlands Hercules BV NLG 625,000 NLG 137,000 Hercules Nederland BV 100%
London, England Hercules Limited 3,250,000 @ L1 11,442 Hercules Incorporated 100%
Hamburg, Germany Hercules GmbH 1 @ DM 1.650.000 3 Hercules Incorporated 100%
1 @ DM 348.000
1 @ DM 2.000
Lille Skensved,
Denmark Copenhagen Pectin A/S 159 159 Hercules Nederland BV 100%
Ontario, Canada BetzDearborn Canada, Inc. Unlimited 100 BetzDearborn, Inc. 100%
Belgium BetzDearborn Europe, N.V. Unlimited Class A
9,999 Xxxx Chemical
Technologies BV 85.9015%
1,631 BetzDearborn Europe, Inc. 14.0%
1 Xxxx Canada Inc. .0085%
Class B
2,470 Xxxx Canada Inc. 100%
SCHEDULE III
Required Consents and Authorizations
NONE REQUIRED
SCHEDULE IV
EXISTING INDEBTEDNESS OF MATERIAL SUBSIDIARIES
SCHEDULE V
Representation Regarding Collateral Documents
The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens are and will remain perfected security interests and Liens, prior to all
other Liens other than Liens permitted under subparagraph 5.2(a) of the Note
Agreement. Each of the representations and warranties made by the Company and
its Material Domestic Subsidiaries in the Collateral Documents is true and
correct in all material respects.
SCHEDULE X
DETERMINATION OF ADDITIONAL INTEREST
"Additional Interest" in respect of the Notes shall mean the rate per
annum applicable on any date determined based upon the ratings applicable on
such date to the Company's long-term senior unsecured non-credit-enhanced debt
securities (the "Index Debt") by Xxxxx'x and S&P as follows:
Additional
Clause Rating Interest
------ ------ --------
(1) (greater than) A from S&P and (greater than) A2 from Xxxxx'x 0.00%
- -
(2) (greater than or equal to) A from S&P and 0.08%
(greater than or equal to) A2 from Xxxxx'x
(3) BBB+ from S&P and Baal from Xxxxx'x 0.53%
(4) BBB from S&P and Baa2 from Xxxxx'x 0.73%
(5) BBB- from S&P and Baa3 from Xxxxx'x 0.88%
(6) BB+ from S&P and Ba1 from Xxxxx'x 2.30%
(7) BB from S&P and Ba2 from Xxxxx'x 3.30%
(8) BB- from S&P and Ba3 from Xxxxx'x 4.30%
(9) (less than or equal to) BB- (or no rating) from S&P or 6.30%
(less than or equal to) Ba3 (or no rating) from Xxxxx'x
For purposes of the foregoing, (i) if the ratings established by Xxxxx'x and S&P
shall indicate different clauses specified above, the Additional Interest shall
be determined by reference to the numerically higher clause (thus, by way of
example, if the Company's Index Debt is rated BBB+ by S&P and Baa2 by Xxxxx'x,
the clauses indicated are (3) and (4), respectively, resulting in the Additional
Interest being determined by reference to clause (4), which clause is the higher
numbered clause), and (ii) if any rating established by Xxxxx'x or S&P shall be
changed (other than as a result of a change in the rating system of either
Xxxxx'x or S&P) such change shall be effective as of the date on which such
change is first announced by the rating agency making such change. Each change
in the rate of Additional Interest shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change. If the rating system of either
Xxxxx'x or S&P shall change prior to the payment in full of the Notes, the
Company and the holders of the Notes shall negotiate in good faith to
appropriately amend the references to specific ratings in this definition to
reflect such changed rating system. If both Xxxxx'x and S&P shall cease to be in
the business of rating corporate debt obligations, the Company and the holders
of the Notes shall negotiate in
good faith to agree upon a substitute rating agency and to amend the references
to specific ratings in this Schedule to reflect the ratings used by such
substitute rating agency.
