CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of July 2, 1998, is by and between GRACO
INC., a Minnesota corporation (the "Borrower"), the banks party hereto
(individually, a "Bank" and, collectively, the "Banks") and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, one of the Banks, as agent for the
Banks (in such capacity, the "Agent").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement the following terms
shall have the following respective meanings (and such meanings shall be equally
applicable to both the singular and plural form of the terms defined, as the
context may require):
"Adjusted Eurodollar Rate": With respect to each Interest Period applicable
to a Eurodollar Rate Advance, the rate (rounded upward, if necessary, to the
next one hundredth of one percent) determined by dividing the Eurodollar Rate
for such Interest Period by 1.00 minus the Eurodollar Reserve Percentage.
"Advance": Any portion of the outstanding Revolving Loans by a Bank as to
which one of the available interest rate options and, if pertinent, an Interest
Period, is applicable. An Advance may be a Eurodollar Rate Advance or a
Reference Rate Advance.
"Affiliate": When used with reference to any Person, (a) each Person that,
directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person which beneficially owns or holds,
directly or indirectly, five percent or more of any class of voting stock of the
Person referred to (or if the Person referred to is not a corporation, five
percent or more of the equity interest), (c) each Person, five percent or more
of the voting stock (or if such Person is not a corporation, five percent or
more of the equity interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person's officers,
directors, joint venturers and partners. The term control (including the terms
"controlled by" and "under common control with") means the possession, directly,
of the power to direct or cause the direction of the management and policies of
the Person in question.
"Agent": As defined in the opening paragraph hereof.
"Aggregate Revolving Commitment Amount": As of any date, the sum of the
Revolving Commitment Amounts of all the Banks, as the same may be reduced from
time to time as provided in Section 2.8.
"Applicable Fee Percentage": Subject to the last two sentences of this
definition, with respect to the period beginning on the later of the twentieth
day of the second month of each fiscal quarter and the fifth day after the date
on which financial statements required by Section 5.1(c) are delivered to the
Agent and ending on the nineteenth day of the second month of the following
fiscal quarter, the percentage specified as the Applicable Fee Percentage based
on the Cash Flow Leverage Ratio calculated as of the last day of the preceding
fiscal quarter:
Cash Flow Leverage Ratio
(in each case, to 1.00) Applicable Fee Percentage
2.26 or greater 0.250 % per annum
1.51 to 2.25 0.225 % per annum
1.01 to 1.50 0.200 % per annum
.76 to 1.00 0.175 % per annum
.75 or less 0.150 % per annum
During the period beginning on the Closing Date and ending on November 19, 1998,
the Applicable Fee Percentage shall be 0.225%. Notwithstanding the foregoing, if
the Borrower has not furnished the quarterly financial statements and reports
required under Sections 5.1(c) for any fiscal quarter by the fifteenth day of
the second month of the following fiscal quarter, the Applicable Fee Percentage
shall be 0.250% for the period from the twentieth day of such second month until
the fourth day after the day on which such financial statements and reports are
delivered.
"Applicable Lending Office": For each Bank and for each type of Advance,
the office of such Bank identified as such Bank's Applicable Lending Office on
the signature pages hereof or such other domestic or foreign office of such Bank
(or of an Affiliate of such Bank) as such Bank may specify from time to time, by
notice given pursuant to Section 9.4, to the Agent and the Borrower as the
office by which its Advances of such type are to be made and maintained.
"Applicable Letter of Credit Fee Percentage": Subject to the last two
sentences of this definition, with respect to the period beginning on the later
of the twentieth day of the second month of each fiscal quarter and the fifth
day after the date on which financial statements required by Section 5.1(c) are
delivered to the Agent, and ending on the nineteenth day of the second month of
the following fiscal quarter, the percentage specified as the Applicable Letter
of Credit Fee Percentage based on the Cash Flow Leverage Ratio calculated as of
the last day of the preceding fiscal quarter:
Cash Flow Leverage Ratio Applicable Letter of Credit Fee
(in each case, to 1.00) Percentage
2.26 or greater 0.750 % per annum
1.51 to 2.25 0.625 % per annum
1.01 to 1.50 0.550 % per annum
.76 to 1.00 0.500 % per annum
.75 or less 0.450 % per annum
During the period beginning on the Closing Date and ending on November 19, 1998,
the Applicable Letter of Credit Fee Percentage shall be 0.625%. Notwithstanding
the foregoing, if the Borrower has not furnished the quarterly financial
statements and reports required under Sections 5.1(c) for any fiscal quarter by
the fifteenth day of the second month of the following fiscal quarter, the
Applicable Letter of Credit Fee Percentage shall be 0.750% for the period from
the twentieth day of such second month until the fourth day after the day on
which such financial statements and reports are delivered.
"Applicable Margin": Subject to the last two sentences of this definition,
with respect to the period beginning on the later of the twentieth day of the
second month of each fiscal quarter and the fifth day after the date on which
financial statements required by Section 5.1(c) are delivered to the Agent, and
ending on the nineteenth day of the second month of the following fiscal
quarter, the percentage specified as applicable to Eurodollar Rate Advances or
Reference Rate Advances, as appropriate, based on the Cash Flow Leverage Ratio
calculated as of the last day of the preceding fiscal quarter:
Cash Flow Eurodollar Reference
Leverage Ratio Rate Advances Rate Advances
2.26 or greater 0.750 % per annum 0.00%
1.51 to 2.25 0.625 % per annum 0.00
1.01 to 1.50 0.550 % per annum 0.00
.76 to 1.00 0.500 % per annum 0.00
.75 or less 0.450 % per annum 0.00
During the period beginning on the Closing Date and ending on November 19, 1998,
the Applicable Margin for Eurodollar Rate Advances shall be 0.625%.
Notwithstanding the foregoing, if the Borrower has not furnished the quarterly
financial statements and reports required under Sections 5.1(c) for any fiscal
quarter by the fifteenth day of the second month of the following fiscal
quarter, the Applicable Margin for Eurodollar Rate Advances shall be 0.75% for
the period from the twentieth day of such second month until the fourth day
after the day on which such financial statements and reports are delivered.
"Bank": As defined in the opening paragraph hereof.
"Board": The Board of Governors of the Federal Reserve System or any
successor thereto.
"Borrower": As defined in the opening paragraph hereof.
"Borrower Loan Documents": This Agreement, the Revolving Notes and the
Pledge Agreement.
"Business Day": Any day (other than a Saturday, Sunday or legal holiday in
the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota.
"Capital Expenditures": For any period, the sum of all amounts that would,
in accordance with GAAP, be included as additions to property, plant and
equipment on a consolidated statement of cash flows for the Borrower during such
period, in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, (b) to the extent related to and not included
in (a) above, materials, contract labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP), and (c) other
capital expenditures and other uses recorded as capital expenditures or similar
terms having substantially the same effect.
"Capitalized Lease": A lease of (or other agreement conveying the right to
use) real or personal property with respect to which at least a portion of the
rent or other amounts thereon constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations": As to any Person, the obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board), and, for purposes
of this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP (including such Statement No.
13).
"Cash Flow Leverage Ratio": For any date of determination, the ratio of
(a) the sum (without duplication) of the aggregate principal amount of all
outstanding Indebtedness of the Borrower (including, without
limitation, all Capitalized Lease Obligations) and the Subsidiaries,
determined as of the last day of that period,
to
(b) EBITDA for the period of four fiscal quarters, ending on such date,
in each case determined on a consolidated basis in accordance with GAAP.
"Change of Control": The occurrence, after the Closing Date, of any of the
following circumstances: (a) any Person or two or more Persons acting in concert
acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of securities of the Borrower (or other securities
convertible into such securities) representing 25% or more of the combined
voting power of all securities of the Borrower entitled to vote in the election
of directors, or any Person or two or more Persons acting in concert acquiring
by contract or otherwise, or entering into a definitive contract or arrangement
which upon consummation will result in its or their acquisition of, control over
securities of the Borrower (or other securities convertible into such
securities) representing 25% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election of directors;
provided that a Change of Control shall not occur as a result of a merger,
consolidation or other transaction, or a definitive agreement for a merger,
consolidation or other transaction, in which the persons who beneficially owned
the voting stock of the Borrower immediately prior to the transaction continue
to own, directly or indirectly, at least 60% of the voting stock of the
corporation surviving such transaction or its parent corporation (measured by
voting power rather than number of shares) in substantially the same percentage
relative to each other as they owned before the transaction (except as affected
by cashing out fractional shares or dissenting shareholders); or (b) any event
or occurrence as a result of which a majority of the members of the Board of
Directors of the Borrower are not Continuing Directors.
"Closing Date": Any Business Day between the date of this Agreement and
July 9, 1998 selected by the Borrower for the making of the first Revolving
Loans hereunder; provided, that all the conditions precedent to the obligation
of the Banks to make such Loans, as set forth in Article III have been
satisfied.
"Code": The Internal Revenue Code of 1986, as amended.
"Contingent Obligation": With respect to any Person at the time of any
determination, without duplication, any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in any manner, whether
directly or otherwise: (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any direct or indirect security therefor, (b)
to purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain
working capital, equity capital or other financial statement condition of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
otherwise to protect the owner thereof against loss in respect thereof, or (d)
entered into for the purpose of assuring in any manner the owner of such
Indebtedness of the payment of such Indebtedness or to protect the owner against
loss in respect thereof; provided, that the term "Contingent Obligation" shall
not include endorsements for collection or deposit, in each case in the ordinary
course of business.
"Continuing Director": means, as of any date of determination, any member
of the Board of Directors of the Borrower who (i) was a member of such Board of
Directors on the date of this Agreement or (ii) was nominated for election or
elected or appointed to such Board of Directors by the Board of Directors at a
time when a majority of the Board consisted of Continuing Directors.
"Default": Any event which, with the giving of notice (whether such notice
is required under Section 7.1, or under some other provision of this Agreement,
or otherwise) or lapse of time, or both, would constitute an Event of Default.
"Default Rate": The rate as set out in Section 2.5(c) hereof.
"Documentary Letter of Credit": A Letter of Credit which requires that the
drafts thereunder be accompanied by a document of title covering or securing
title to the goods acquired with the proceeds of such drafts.
"Domestic Subsidiary": Any Subsidiary which is not a Foreign Subsidiary.
"EBITDA": For any period of determination, the consolidated net income of
the Borrower before deductions for income taxes, Interest Expense, depreciation
and amortization, all as determined in accordance with GAAP, excluding therefrom
(to the extent included during any period) (a) nonoperating gains (including,
without limitation, extraordinary or unusual gains, gains from discontinuance of
operations, gains arising from the sale of assets and other nonrecurring gains)
of the Borrower and its Subsidiaries during the applicable period and (b)
similar nonoperating losses (including, without limitation, losses arising from
the sale of assets and other nonrecurring losses) of the Borrower and its
Subsidiaries during such period, provided, however, that no adjustment pursuant
to the foregoing clauses (a) and (b) shall be made except to the extent the net
total of such adjustments would exceed $1,000,000.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate": Any trade or business (whether or not incorporated) that
is a member of a group of which the Borrower is a member and which is treated as
a single employer under Section 414 of the Code.
"Eurodollar Business Day": A Business Day which is also a day for trading
by and between banks in United States dollar deposits in the interbank
Eurodollar market and a day on which banks are open for business in New York
City.
"Eurodollar Rate": With respect to each Interest Period applicable to a
Eurodollar Rate Advance, the average per annum offered rate for deposits in
United States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%)
for delivery of such deposits on the first day of such Interest Period, for the
number of days in such Interest Period, which appears on the Reuters Screen LIBO
page as of 11:00 a.m., London time (or such other time as of which such rate
appears) two Eurodollar Business Days prior to the first day of such Interest
Period, or the per annum rate for such deposits determined by the Agent at such
time based on such other published service of general application as shall be
selected by the Agent for such purpose; provided, that in lieu of determining
the rate in the foregoing manner, the Agent may determine the rate based on
rates at which United States dollar deposits are offered to the Agent in the
interbank Eurodollar market at such time for delivery in Immediately Available
Funds on the first day of such Interest Period in an amount approximately equal
to the Advance by the Agent to which such Interest Period is to apply (rounded
upward, if necessary, to the nearest 1/16 of 1%). "Reuters Screen LIBO page"
means the display designated as page "LIBO" on the Reuters Monitor Money Rate
Screen (or such other page as may replace the LIBO page on such service for the
purpose of displaying London interbank offered rates of major banks for United
States dollar deposits).
"Eurodollar Rate Advance": An Advance with respect to which the interest
rate is determined by reference to the Adjusted Eurodollar Rate.
"Eurodollar Reserve Percentage": As of any day, that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board for
determining the maximum reserve requirement (including any basic, supplemental
or emergency reserves) for a member bank of the Federal Reserve System, with
deposits comparable in amount to those held by the Agent, in respect of
"Eurocurrency Liabilities" as such term is defined in Regulation D of the Board.
The rate of interest applicable to any outstanding Eurodollar Rate Advances
shall be adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Event of Default": Any event described in Section 7.1.
"Fixed Charge Coverage Ratio": For any period of determination, the ratio
of
(a) EBITDA, minus the sum of (i) Capital Expenditures and (ii) taxes paid
in cash by the Borrower and the Subsidiaries,
to
(b) the sum of Interest Expense and all required principal payments with
respect to Indebtedness (including but not limited to the principal
portion of payments with respect to Capitalized Lease Obligations of
the Borrower and the Subsidiaries but excluding required principal
payments under Section 2.6 other than principal payments required
under Section 2.6 as a result of a reduction in the Revolving
Commitments under Section 2.8(a)(i),
in each case determined for said period on a consolidated basis in accordance
with GAAP.
"Foreign Subsidiary": Any corporation that is a foreign corporation, as
defined in Section 7701(a)(5) of the Internal Revenue Code of 1986, more than 50
percent of (i) the total combined voting power of all classes of stock of such
corporation entitled to vote, or (ii) the total value of the stock of such
corporation, is directly or indirectly owned by the Borrower.
"GAAP": Generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of any date of determination.
"Guaranty": A guaranty, in the form of Exhibit A, of the Obligations,
executed and delivered to the Agent in connection with this Agreement.
"Holding Account": A deposit account belonging to the Agent for the benefit
of the Banks into which the Borrower may be required to make deposits pursuant
to the provisions of this Agreement, such account to be under the sole dominion
and control of the Agent and not subject to withdrawal by the Borrower, with any
amounts therein to be held for application toward payment of any outstanding
Letters of Credit when drawn upon.
"Immediately Available Funds": Funds with good value on the day and in the
city in which payment is received.
"Indebtedness": With respect to any Person at the time of any
determination, without duplication, (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid or accrued, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (e) all obligations of
such Person issued or assumed as the deferred purchase price of property or
services, (f) all obligations of others secured by any Lien on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed, (g) all Capitalized Lease Obligations of such Person, (h) all net
obligations of such Person in respect of interest rate protection agreements,
(i) all Indebtedness of such Person, actual or contingent, as an account party
in respect of letters of credit or bankers' acceptances, (j) all obligations of
any partnership or joint venture as to which such Person is or may become
personally liable, and (k) all Contingent Obligations of such Person.
"Interest Expense": For any period of determination, the aggregate
consolidated amount, without duplication, of interest paid, accrued or scheduled
to be paid in respect of any Indebtedness of the Borrower and its Subsidiaries,
on a consolidated basis, including (a) all but the principal component of
payments in respect of conditional sale contracts, Capitalized Leases and other
title retention agreements, (b) commissions, discounts and other fees and
charges with respect to letters of credit and bankers' acceptance financings and
(c) net costs under interest rate protection agreements, in each case determined
in accordance with GAAP.
"Interest Period": With respect to each Eurodollar Rate Advance, the period
commencing on the date of such Advance or on the last day of the immediately
preceding Interest Period, if any, applicable to an outstanding Advance and
ending one, two, three, or six months thereafter, as the Borrower may elect in
the applicable notice of borrowing, continuation or conversion; provided that:
(a) Any Interest Period that would otherwise end on a day which is not a
Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end
on the next preceding Eurodollar Business Day;
(b) Any Interest Period that begins on the last Eurodollar Business Day of
a calendar month (or a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Eurodollar Business Day of a calendar
month; and
(c) Any Interest Period that would otherwise end after the Revolving
Commitment Ending Date shall end on the Revolving Commitment Ending
Date.
Interest Periods shall be selected so that any repayments of outstanding
Advances occurring upon any mandatory reduction of the Aggregate Revolving
Commitment Amount pursuant to Section 2.8(a) can be made without having to pay a
Eurodollar Rate Advance prior to the last day of the Interest Period applicable
thereto. No more than ten Interest Periods may exist at any one time.
"Investment": The acquisition, purchase, making or holding of any stock or
other security, any loan, advance, contribution to capital, extension of credit
(except for trade and customer accounts receivable for inventory sold or
services rendered in the ordinary course of business and payable in accordance
with customary trade terms), any acquisitions of real or personal property
(other than real and personal property acquired in the ordinary course of
business) and any purchase or commitment or option to purchase stock or other
debt or equity securities of or any interest in another Person or any integral
part of any business or the assets comprising such business or part thereof. The
amount of any Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
"Letter of Credit": An irrevocable letter of credit issued by the Agent
pursuant to this Agreement for the account of the Borrower.
"Letter of Credit Fee": As defined in Section 2.27.
"Lien": With respect to any Person, any security interest, mortgage,
pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
Capitalized Lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"Loan Documents": The Borrower Loan Documents and any Guaranties executed
and delivered in connection herewith.
"Majority Banks": At any time, Banks holding at least 51% of the aggregate
unpaid principal amount of the Revolving Notes or, if no Revolving Loans are at
the time outstanding hereunder, Banks holding at least 51% of the Aggregate
Revolving Commitment Amount.
"Multiemployer Plan": A multiemployer plan, as such term is defined in
Section 4001 (a) (3) of ERISA, which is maintained (on the Closing Date, within
the five years preceding the Closing Date, or at any time after the Closing
Date) for employees of the Borrower or any ERISA Affiliate.
"Obligations": The Borrower's obligations in respect of the due and
punctual payment of principal and interest on the Revolving Notes when and as
due, whether by acceleration or otherwise and all fees (including Revolving
Commitment Fees), expenses, indemnities, reimbursements and other obligations of
the Borrower under this Agreement or any other Borrower Loan Document, in all
cases whether now existing or hereafter arising or incurred.
"PBGC": The Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions
thereof.
"Person": Any natural person, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Plan": Each employee benefit plan (whether in existence on the Closing
Date or thereafter instituted), as such term is defined in Section 3 of ERISA,
maintained for the benefit of employees, officers or directors of the Borrower
or of any ERISA Affiliate.
"Pledge Agreement": A pledge agreement in the form attached hereto as
Exhibit B, whereby the Borrower pledges 65% of its stock in each of the Foreign
Subsidiaries to the Agent for the benefit of the Banks.
"Prohibited Transaction": The respective meanings assigned to such term in
Section 4975 of the Code and Section 406 of ERISA.
"Reference Rate": The rate of interest from time to time publicly announced
by the Agent as its "reference rate." The Agent may lend to its customers at
rates that are at, above or below the Reference Rate. For purposes of
determining any interest rate hereunder or under any other Loan Document which
is based on the Reference Rate, such interest rate shall change as and when the
Reference Rate shall change.
"Reference Rate Advance": An Advance with respect to which the interest
rate is determined by reference to the Reference Rate.
"Regulatory Change": Any change after the Closing Date in federal, state or
foreign laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
any Bank under any federal, state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reportable Event": A reportable event as defined in Section 4043 of ERISA
and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any waiver in accordance with
Section 412(d) of the Code.
"Repurchase": The purchase by the Borrower of 5,800,000 shares of its
outstanding common stock for a purchase price not to exceed $33 per share on the
Closing Date.
"Restricted Payments": With respect to the Borrower, collectively, all
dividends or other distributions of any nature (cash, securities other than
common stock of the Borrower, assets or otherwise), and all payments on any
class of equity securities (including warrants, options or rights therefor)
issued by the Borrower, whether such securities are authorized or outstanding on
the Closing Date or at any time thereafter, and any redemption or purchase of,
or distribution in respect of (other than distributions in common stock of the
Borrower), any of the foregoing, whether directly or indirectly.
"Revolving Commitment": With respect to a Bank, the agreement of such Bank
to make Revolving Loans to the Borrower in an aggregate principal amount
outstanding at any time not to exceed such Bank's Revolving Commitment Amount
upon the terms and subject to the conditions and limitations of this Agreement.
"Revolving Commitment Amount": With respect to a Bank, initially the amount
set opposite such Bank's name as its "Revolving Commitment Amount" in Schedule
1.1(a), as the same may be reduced from time to time pursuant to Section 2.8.
"Revolving Commitment Ending Date": June 30, 2003.
"Revolving Commitment Fees": As defined in Section 2.9 (b).
"Revolving Loan": As defined in Section 2.1.
"Revolving Loan Date": The date of the making of any Revolving Loans
hereunder.
"Revolving Note": A promissory note of the Borrower in the form of Exhibit
C hereto.
"Revolving Percentage": With respect to any Bank, the percentage equivalent
of a fraction, the numerator of which is the Revolving Commitment Amount of such
Bank and the denominator of which is the Aggregate Revolving Commitment Amounts.
"Solvency Certificate": A certificate in the form attached hereto as
Exhibit D from the Borrower, attesting to the solvency of the Borrower
immediately after the Closing Date, after giving effect to the transactions
contemplated by this Agreement and the Repurchase.
"Standby Letter of Credit": A Letter of Credit that is not a Documentary
Letter of Credit.
"Subordinated Debt": Any Indebtedness of the Borrower, now existing or
hereafter created, incurred or arising, which is subordinated in right of
payment to the payment of the Obligations in a manner and to an extent (a) that
Majority Banks have approved in writing prior to the creation of such
Indebtedness, or (b) as to any Indebtedness of the Borrower existing on the date
of this Agreement, that Majority Banks have approved as Subordinated Debt in a
writing delivered by Majority Banks to the Borrower on or prior to the Closing
Date.
"Subsidiary": Any corporation or other entity of which securities or other
ownership interests having ordinary voting power for the election of a majority
of the board of directors or other Persons performing similar functions are
owned by the Borrower either directly or through one or more Subsidiaries.
"Tangible Net Worth": As of any date of determination, the sum of the
amounts set forth on the consolidated balance sheet of the Borrower, prepared in
accordance with GAAP, as the sum of the common stock, preferred stock,
additional paid-in capital and retained earnings of the Borrower, less the book
value of all intangible assets of the Borrower and its Subsidiaries, including
all such items as goodwill, trademarks, trade names, service marks, copyrights,
patents, licenses, unamortized debt discount and expenses and the excess of the
purchase price of the assets of any business acquired by the Borrower or any of
its Subsidiaries over the book value of such assets.
"Termination Date": The earliest of (a) the Revolving Commitment Ending
Date, (b) the date on which the Revolving Commitments are terminated pursuant to
Section 7.2 hereof, (c) the date on which the Revolving Commitment Amounts are
reduced to zero pursuant to Section 2.8 hereof or (d) unless otherwise agreed by
the Majority Banks, in their sole discretion, the date on which a Change of
Control becomes effective.
"Total Revolving Outstandings": As of any date of determination, the sum of
(a) the aggregate unpaid principal balance of Revolving Loans outstanding on
such date, (b) the aggregate maximum amount available to be drawn under Letters
of Credit outstanding on such date and (c) the aggregate amount of Unpaid
Drawings on such date.
"Unpaid Drawing": As defined in Section 2.23.
"Unused Revolving Commitment": With respect to any Bank as of any date of
determination, the amount by which such Bank's Revolving Commitment Amount
exceeds such Bank's Revolving Percentage of Total Revolving Outstandings.
"U.S. Bank": U.S. Bank National Association, in its capacity as one of the
Banks hereunder.
Section 1.2 Accounting Terms and Calculations. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP. To the extent any change in GAAP affects any computation
or determination required to be made pursuant to this Agreement, such
computation or determination shall be made as if such change in GAAP had not
occurred unless the Borrower and Majority Banks agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".
Section 1.4 Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly requires,
"or" has the inclusive meaning represented by the phrase "and/or".
ARTICLE II
TERMS OF THE CREDIT FACILITIES
Section 2.1 The Revolving Commitments. On the terms and subject to the
conditions hereof, each Bank severally agrees to make loans (each, a "Revolving
Loan" and, collectively, the "Revolving Loans") to the Borrower on a revolving
basis at any time and from time to time from the Closing Date to the Termination
Date, during which period the Borrower may borrow, repay and reborrow in
accordance with the provisions hereof, provided, that the unpaid principal
amount of outstanding Revolving Loans of a Bank plus the Revolving Percentage of
the amount available to be drawn under any outstanding Letters of Credit shall
not at any time exceed the Revolving Commitment Amount of such Bank and the
Total Revolving Outstandings shall not at any time exceed the Aggregate
Revolving Commitment Amount. Revolving Loans hereunder shall be made by the
several Banks ratably in the proportion of their respective Revolving Commitment
Amounts. Revolving Loans may be obtained and maintained, at the election of the
Borrower but subject to the limitations hereof, as Reference Rate Advances or
Eurodollar Rate Advances or any combination thereof.
Section 2.2 Procedure for Revolving Loans. Any request by the Borrower for
Revolving Loans hereunder shall be in writing or by telephone and must be given
so as to be received by the Agent not later than 11:00 a.m. (Minneapolis time)
three Eurodollar Business Days prior to the requested Revolving Loan Date if the
Revolving Loans (or any portion thereof) are requested as Eurodollar Rate
Advances and not later than 11:00 a.m. (Minneapolis time) on the requested
Revolving Loan Date if the Revolving Loans are requested as Reference Rate
Advances. Each request for Revolving Loans hereunder shall be irrevocable and
shall be deemed a representation by the Borrower that on the requested Revolving
Loan Date and after giving effect to the requested Revolving Loans the
applicable conditions specified in Article III have been and will be satisfied.
Each request for Revolving Loans hereunder shall specify (i) the requested
Revolving Loan Date, (ii) the aggregate amount of Revolving Loans to be made on
such date which shall be in a minimum amount of $5,000,000 or, if more, an
integral multiple of $500,000 in excess thereof, (iii) whether such Revolving
Loans are to be funded as Reference Rate Advances or Eurodollar Rate Advances
(and, if such Revolving Loans are to be made with more than one applicable
interest rate choice, specifying the amount to which each interest rate choice
is applicable) and (iv) in the case of Eurodollar Rate Advances, the duration of
the initial Interest Period applicable thereto. The Agent may rely on any
telephone request for Revolving Loans hereunder which it believes in good faith
to be genuine; and the Borrower hereby waives the right to dispute the Agent's
record of the terms of such telephone request. The Agent shall promptly notify
each other Bank of the receipt of such request, the matters specified therein,
and of such Bank's ratable share of the requested Revolving Loans. On the date
of the requested Revolving Loans, each Bank shall provide its share of the
requested Revolving Loans to the Agent in Immediately Available Funds not later
than 1:00 p.m., Minneapolis time. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the Agent
will make available to the Borrower at the Agent's principal office in
Minneapolis, Minnesota in Immediately Available Funds not later than 3:00 p.m.
(Minneapolis time) on the requested Revolving Loan Date the amount of the
requested Revolving Loans. If the Agent has made a Revolving Loan to the
Borrower on behalf of a Bank but has not received the amount of such Revolving
Loan from such Bank by the time herein required, such Bank shall pay interest to
the Agent on the amount so advanced at the overnight Federal Funds rate from the
date of such Revolving Loan to the date funds are received by the Agent from
such Bank, such interest to be payable with such remittance from such Bank of
the principal amount of such Revolving Loan (provided, however, that the Agent
shall not make any Revolving Loan on behalf of a Bank if the Agent has received
prior notice from such Bank that it will not make such Revolving Loan). If the
Agent does not receive payment from such Bank by the next Business Day after the
date of any Revolving Loan, the Agent shall be entitled to recover such
Revolving Loan, with interest thereon at the rate (or rates) then applicable to
the such Revolving Loan, on demand, from the Borrower, without prejudice to the
Agent's and the Borrower's rights against such Bank. If such Bank pays the Agent
the amount herein required with interest at the overnight Federal Funds rate
before the Agent has recovered from the Borrower, such Bank shall be entitled to
the interest payable by the Borrower with respect to the Revolving Loan in
question accruing from the date the Agent made such Revolving Loan.
Section 2.3 Revolving Notes. The Revolving Loans of each Bank shall be
evidenced by a single Revolving Note payable to the order of such Bank in a
principal amount equal to such Bank's Revolving Commitment Amount originally in
effect. Upon receipt of each Bank's Revolving Note from the Borrower, the Agent
shall mail such Revolving Note to such Bank. Each Bank shall enter in its
ledgers and records the amount of each Revolving Loan, the various Advances
made, converted or continued and the payments made thereon, and each Bank is
authorized by the Borrower to enter on a schedule attached to its Revolving Note
a record of such Revolving Loans, Advances and payments; provided, however that
the failure by any Bank to make any such entry or any error in making such entry
shall not limit or otherwise affect the obligation of the Borrower hereunder and
on the Revolving Notes, and, in all events, the principal amounts owing by the
Borrower in respect of the Revolving Notes shall be the aggregate amount of all
Revolving Loans made by the Banks less all payments of principal thereof made by
the Borrower.
Section 2.4 Conversions and Continuations. On the terms and subject to the
limitations hereof, the Borrower shall have the option at any time and from time
to time to convert all or any portion of the Revolving Loans into Reference Rate
Advances or Eurodollar Rate Advances, or to continue a Eurodollar Rate Advance
as such; provided, however that a Eurodollar Rate Advance may be converted or
continued only on the last day of the Interest Period applicable thereto and no
Advance may be converted to or continued as a Eurodollar Rate Advance if a
Default or Event of Default has occurred and is continuing on the proposed date
of continuation or conversion. Advances may be converted to, or continued as,
Eurodollar Rate Advances only in integral multiples, as to the aggregate amount
of the Advances of all Banks so converted or continued, of $500,000. The
Borrower shall give the Agent written notice of any continuation or conversion
of any Advances and such notice must be given so as to be received by the Agent
not later than 11:00 a.m. (Minneapolis time) three Eurodollar Business Days
prior to requested date of conversion or continuation in the case of the
continuation of, or conversion to, Eurodollar Rate Advances and on the date of
the requested conversion to Reference Rate Advances. Each such notice shall
specify (a) the amount to be continued or converted, (b) the date for the
continuation or conversion (which must be (i) the last day of the preceding
Interest Period for any continuation or conversion of Eurodollar Rate Advances,
and (ii) a Eurodollar Business Day in the case of continuations as or
conversions to Eurodollar Rate Advances and a Business Day in the case of
conversions to Reference Rate Advances), and (c) in the case of conversions to
or continuations as Eurodollar Rate Advances, the Interest Period applicable
thereto. Any notice given by the Borrower under this Section shall be
irrevocable. If the Borrower shall fail to notify the Agent of the continuation
of any Eurodollar Rate Advances within the time required by this Section, such
Advances shall, on the last day of the Interest Period applicable thereto,
automatically be converted into Reference Rate Advances of the same principal
amount. All conversions and continuation of Advances must be made uniformly and
ratably among the Banks.
Section 2.5 Interest Rates, Interest Payments and Default Interest.
Interest shall accrue and be payable on the Revolving Loans as follows:
(a) Subject to paragraph (c) below, each Eurodollar Rate Advance shall
bear interest on the unpaid principal amount thereof during the
Interest Period applicable thereto at a rate per annum equal to the
sum of (i) the Adjusted Eurodollar Rate for such Interest Period, plus
(ii) the Applicable Margin.
(b) Subject to paragraph (c) below, each Reference Rate Advance shall bear
interest on the unpaid principal amount thereof at a varying rate per
annum equal to the sum of (i) the Reference Rate, plus (ii) the
Applicable Margin.
(c) Upon the occurrence of any Event of Default, each Advance shall, at
the option of the Majority Banks, bear interest until paid in full (i)
during the balance of any Interest Period applicable to such Advance,
at a rate per annum equal to the sum of the rate applicable to such
Advance during such Interest Period plus 2.0%, and (ii) otherwise, at
a rate per annum equal to the sum of (1) the Reference Rate, plus (2)
the Applicable Margin for Reference Rate Advances, plus (3) 2.0%.
(d) Interest shall be payable (i) with respect to each Eurodollar Rate
Advance having an Interest Period of three months or less, on the last
day of the Interest Period applicable thereto; (ii) with respect to
any Eurodollar Rate Advance having an Interest Period greater than
three months, on the last day of the Interest Period applicable
thereto and on each day that would have been the last day of the
Interest Period for such Advance had successive Interest Periods of
three months duration been applicable to such Advance; (iii) with
respect to any Reference Rate Advance, on the last day of each month;
(iv) with respect to all Advances, upon any permitted prepayment (on
the amount prepaid); and (v) with respect to all Advances, on the
Termination Date; provided that interest under Section 2.5 (c) shall
be payable on demand.
Section 2.6 Repayment. The unpaid principal amount of all Revolving Loans,
together with all accrued and unpaid interest thereon, shall be due and payable
on the Termination Date. If at any time the aggregate unpaid principal balance
of the Revolving Notes exceeds the Aggregate Revolving Commitment Amount, the
Borrower shall immediately repay to the Agent for the account of the Banks the
amount of such excess. Any such payments shall be shared ratably among the Banks
and shall be applied first against Reference Rate Advances and then to
Eurodollar Rate Advances in order starting with the Eurodollar Rate Advances
having the shortest time to the end of the applicable Interest Period.
Section 2.7 Optional Prepayments. The Borrower may prepay Reference Rate
Advances, in whole or in part, at any time, without premium or penalty. Any such
prepayment must be accompanied by accrued and unpaid interest on the amount
prepaid. Each partial prepayment shall be in an aggregate amount for all the
Banks of $500,000 or an integral multiple thereof. Except upon an acceleration
following an Event of Default, following a mandatory reduction in the Aggregate
Revolving Commitment Amount or upon termination of the Revolving Commitments in
whole, the Borrower may pay Eurodollar Rate Advances only on the last day of the
Interest Period applicable thereto. Amounts paid (unless following an
acceleration, following a mandatory reduction in the Aggregate Revolving
Commitment Amount or upon termination of the Revolving Commitments in whole) or
prepaid on Advances under this Section 2.7 may be reborrowed upon the terms and
subject to the conditions and limitations of this Agreement. Amounts paid or
prepaid on the Advances under this Section 2.7 shall be for the account of each
Bank in proportion to its share of outstanding Revolving Loans.
Section 2.8 Reduction of Revolving Commitment Amounts or Termination of
Revolving Commitments.
(a) Mandatory Reductions. The Aggregate Revolving Commitment Amounts shall
be reduced as follows:
(i) On the following dates, the Aggregate Revolving Commitment
Amounts shall be reduced by the following amounts:
Reduction Date Reduction Amount
-------------------- ----------------
September 30, 1998 $3,000,000
December 31, 1998 3,000,000
March 31, 1999 3,000,000
June 30, 1999 3,000,000
September 30, 1999 4,500,000
December 31, 1999 4,500,000
March 31, 2000 4,500,000
June 30, 2000 4,500,000
September 30, 2000 5,500,000
December 31, 2000 5,500,000
March 31, 2001 5,500,000
June 30, 2001 5,500,000
September 30, 2001 6,000,000
December 31, 2001 6,000,000
March 31, 2002 6,000,000
June 30, 2002 6,000,000
September 30, 2002 6,000,000
December 31, 2002 6,000,000
March 31, 2002 6,000,000
(ii) Proceeds of Asset Sales. The Aggregate Revolving Commitment
Amount shall be reduced by an amount equal to 100% of the net
cash proceeds of each sale of assets of the Borrower or any
Subsidiary (other than proceeds from the sale of inventory in the
ordinary course and proceeds paid by the Borrower or any
Subsidiary) to the extent such proceeds are not reinvested in
assets of similar utility within 180 days of the receipt thereof
and the Borrower provides to the Agent, on or prior to the 180th
day after such receipt, an officer's certificate in form and
substance acceptable to the Agent demonstrating such
reinvestment; provided, however, that such reduction shall not be
required with respect to the first $2,500,000 of proceeds of each
such sale received on or after the Closing Date. The reduction
shall occur on the 181st day after the receipt of sale proceeds
under this section, unless such proceeds have been reinvested as
required in this section.
(iii)Proceeds of Equity Issuance. The Aggregate Revolving Commitment
Amount shall be reduced by an amount equal to 50% of the proceeds
of any issuance of equity securities by the Borrower (other than
proceeds received upon exercise of stock options by employees or
directors of the Borrower or any of its Subsidiaries and proceeds
received from any employee of the Borrower or any of its
Subsidiaries under the Borrower's employee stock purchase plan),
net of the actual cash expenses paid by the Borrower or any
Subsidiary in connection with such issuance. Such reduction shall
occur two Business days after such proceeds are received.
All such reductions of the Aggregate Revolving Commitment Amount shall be
applied ratably among the Banks.
(b) Optional Reductions. The Borrower may, at any time, upon not less than
5 Business Days prior written notice to the Agent, reduce the
Revolving Commitment Amounts, ratably, with any such reduction in a
minimum aggregate amount for all the Banks of $5,000,000, or, if more,
in an integral multiple of $1,000,000; provided, however, that the
Borrower may not at any time reduce the Aggregate Revolving Commitment
Amounts below the Total Revolving Outstandings. The Borrower may, at
any time, when no Letters of Credit are outstanding, upon not less
than ten Business Days prior written notice to the Agent, terminate
the Revolving Commitments in their entirety. Upon termination of the
Revolving Commitments pursuant to this Section, the Borrower shall pay
to the Agent for the account of the Banks the full amount of all
outstanding Revolving Loans, all accrued and unpaid interest thereon,
all unpaid Revolving Commitment Fees accrued to the date of such
termination, any indemnities payable with respect to Advances pursuant
to Section 2.17 and all other unpaid obligations of the Borrower to
the Agent and the Banks hereunder.
Section 2.9 Fees.
2.9(a) Agent's Fees. The Borrower shall pay to the Agent, for its own
account, fees ("Agent's Fees") in accordance with the terms of a letter
agreement dated as of June 2, 1998.
2.9(b) Revolving Commitment Fee. The Borrower shall pay to the Agent
for the account of each Bank fees (the "Revolving Commitment Fees") in an
amount determined by applying the Applicable Fee Percentage to the average
daily Unused Revolving Commitment of such Bank for the period from the
Closing Date to the Termination Date. Such Revolving Commitment Fees are
payable in arrears quarterly on the last day of each quarter and on the
Termination Date.
Section 2.10 Computation. Revolving Commitment Fees and Letter of Credit
Fees shall be computed on the basis of actual days elapsed and a year of 360
days. Interest shall be computed on the basis of actual days elapsed and a year
of 360 days with respect to Eurodollar Advances, and on the basis of actual days
elapsed and a year of 365 or 366 days, as applicable, with respect to Reference
Rate Advances.
Section 2.11 Payments. Payments and prepayments of principal of, and
interest on, the Revolving Notes and all fees, expenses and other obligations
under this Agreement payable to the Agent or the Banks shall be made without
setoff or counterclaim in Immediately Available Funds not later than 3:00 p.m.
(Minneapolis time) on the dates called for under this Agreement and the
Revolving Notes to the Agent at its main office in Minneapolis, Minnesota. Funds
received after such time shall be deemed to have been received on the next
Business Day. The Agent will promptly distribute in like funds to each Bank its
ratable share of each such payment of principal, interest, Revolving Commitment
Fees and Letter of Credit Fees by the Agent for the account of the Banks.
Whenever any payment to be made hereunder or on the Revolving Notes shall be
stated to be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time, in the case
of a payment of principal, shall be included in the computation of any interest
on such principal payment.
Section 2.12 Use of Loan Proceeds. The proceeds of the initial Revolving
Loans shall be used first to finance the Repurchase. Any remaining balance of
the initial Revolving Loans and the proceeds of any subsequent Revolving Loans
shall be used for the Borrower's general business purposes in a manner not in
conflict with any of the Borrower's covenants in this Agreement.
Section 2.13 Interest Rate Not Ascertainable, Etc. If, on or prior to the
date for determining the Adjusted Eurodollar Rate in respect of the Interest
Period for any Eurodollar Rate Advance, any Bank determines (which determination
shall be conclusive and binding, absent error) that:
(a) deposits in dollars (in the applicable amount) are not being made
available to such Bank in the relevant market for such Interest
Period, or
(b) the Adjusted Eurodollar Rate will not adequately and fairly reflect
the cost to such Bank of funding or maintaining Eurodollar Rate
Advances for such Interest Period,
such Bank shall forthwith give notice to the Borrower and the other Banks of
such determination, whereupon the obligation of such Bank to make or continue,
or to convert any Advances to, Eurodollar Rate Advances shall be suspended until
such Bank notifies the Borrower and the Agent that the circumstances giving rise
to such suspension no longer exist. While any such suspension continues, all
further Advances by such Bank shall be made as Reference Rate Advances. No such
suspension shall affect the interest rate then in effect during the applicable
Interest Period for any Eurodollar Rate Advance outstanding at the time such
suspension is imposed.
Section 2.14 Increased Cost. If any Regulatory Change:
(a) shall subject any Bank (or its Applicable Lending Office) to any tax,
duty or other charge with respect to its Eurodollar Rate Advances, its
Revolving Note or its obligation to make Eurodollar Rate Advances or
shall change the basis of taxation of payment to any Bank (or its
Applicable Lending Office) of the principal of or interest on its
Eurodollar Rate Advances or any other amounts due under this Agreement
in respect of its Eurodollar Rate Advances or its obligation to make
Eurodollar Rate Advances (except for changes in the rate of tax on the
overall net income of such Bank or its Applicable Lending Office
imposed by the jurisdiction in which such Bank's principal office or
Applicable Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve, special deposit
or similar requirement (including, without limitation, any such
requirement imposed by the Board, but excluding with respect to any
Eurodollar Rate Advance any such requirement to the extent included in
calculating the applicable Adjusted Eurodollar Rate) against assets
of, deposits with or for the account of, or credit extended by, any
Bank's Applicable Lending Office or shall impose on any Bank (or its
Applicable Lending Office) or the interbank Eurodollar market any
other condition affecting its Eurodollar Rate Advances, its Revolving
Note or its obligation to make Eurodollar Rate Advances;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Eurodollar Rate
Advance, or to reduce the amount of any sum received or receivable by such Bank
(or its Applicable Lending Office) under this Agreement or under its Revolving
Note, then, within 30 days after demand by such Bank (with a copy to the Agent),
the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. Each Bank will
promptly notify the Borrower and the Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Bank to
compensation pursuant to this Section and will designate a different Applicable
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If any Bank fails to give such notice within 45
days after it obtains knowledge of such an event, such Bank shall, with respect
to compensation payable pursuant to this Section, only be entitled to payment
under this Section for costs incurred from and after the date 45 days prior to
the date that such Bank does give such notice. A certificate of any Bank
claiming compensation under this Section, setting forth the additional amount or
amounts to be paid to it hereunder and stating in reasonable detail the basis
for the charge and the method of computation, shall be conclusive in the absence
of error. In determining such amount, any Bank may use any reasonable averaging
and attribution methods. Failure on the part of any Bank to demand compensation
for any increased costs or reduction in amounts received or receivable with
respect to any Interest Period shall not constitute a waiver of such Bank's
rights to demand compensation for any increased costs or reduction in amounts
received or receivable in any subsequent Interest Period (subject to the
limitation contained in the third preceding sentence).
Section 2.15 Illegality. If any Regulatory Change shall make it unlawful or
impossible for any Bank to make, maintain or fund any Eurodollar Rate Advances,
such Bank shall notify the Borrower and the Agent, whereupon the obligation of
such Bank to make or continue, or to convert any Advances to, Eurodollar Rate
Advances shall be suspended until such Bank notifies the Borrower and the Agent
that the circumstances giving rise to such suspension no longer exist. Before
giving any such notice, such Bank shall designate a different Applicable Lending
Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If
such Bank determines that it may not lawfully continue to maintain any
Eurodollar Rate Advances to the end of the applicable Interest Periods, all of
the affected Advances shall be automatically converted to Reference Rate
Advances as of the date of such Bank's notice, and upon such conversion the
Borrower shall indemnify such Bank in accordance with Section 2.17.
Section 2.16 Capital Adequacy. In the event that any Regulatory Change
reduces or shall have the effect of reducing the rate of return on any Bank's
capital or the capital of its parent corporation (by an amount such Bank deems
material) as a consequence of its Revolving Commitment and/or Advances to a
level below that which such Bank or its parent corporation could have achieved
but for such Regulatory Change (taking into account such Bank's policies and the
policies of its parent corporation with respect to capital adequacy), then the
Borrower shall, within 30 days after written notice and demand from such Bank
(with a copy to the Agent), pay to such Bank additional amounts sufficient to
compensate such Bank or its parent corporation for such reduction. If any Bank
fails to give such notice within 45 days after it obtains knowledge of such an
event, such Bank shall, with respect to compensation payable pursuant to this
Section, only be entitled to payment under this Section for diminished returns
as a result of such reduction for the period from and after the date 45 days
prior to the date that such Bank does give such notice. Any determination by
such Bank under this Section and any certificate as to the amount of such
reduction given to the Borrower by such Bank shall be final, conclusive and
binding for all purposes, absent error.
Section 2.17 Funding Losses; Eurodollar Rate Advances. The Borrower shall
compensate each Bank, upon its written request, for all losses, expenses and
liabilities (including any interest paid by such Bank to lenders of funds
borrowed by it to make or carry Eurodollar Rate Advances to the extent not
recovered by such Bank in connection with the re-employment of such funds and
including loss of anticipated profits) which such Bank may sustain: (i) if for
any reason, other than a default by such Bank, a funding of a Eurodollar Rate
Advance does not occur on the date specified therefor in the Borrower's request
or notice as to such Advance under Section 2.2 or 2.4, or (ii) if, for whatever
reason (including, but not limited to, acceleration of the maturity of Advances
following an Event of Default), any repayment of a Eurodollar Rate Advance, or a
conversion pursuant to Section 2.15, occurs on any day other than the last day
of the Interest Period applicable thereto. A Bank's request for compensation
shall set forth the basis for the amount requested and shall be final,
conclusive and binding, absent error.
Section 2.18 Discretion of Banks as to Manner of Funding. Each Bank shall
be entitled to fund and maintain its funding of Eurodollar Rate Advances in any
manner it may elect, it being understood, however, that for the purposes of this
Agreement all determinations hereunder (including, but not limited to,
determinations under Section 2.17) shall be made as if such Bank had actually
funded and maintained each Eurodollar Rate Advances during the Interest Period
for such Advance through the purchase of deposits having a maturity
corresponding to the last day of the Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period.
Section 2.19 Withholding Taxes.
2.19(a) Banks to Submit Forms. Each Bank, as of the date it becomes a
party hereto, represents to the Borrower and the Agent that it is either
(i) a corporation or association organized under the laws of the United
States or any State thereof or (ii) is entitled to complete exemption from
United States withholding tax imposed on or with respect to any payments,
including fees, to be made pursuant to this Agreement (x) under an
applicable provision of a tax convention to which the United States is a
party or (y) because it is acting through a branch, agency or office in the
United States and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States. Each Bank that is
not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) shall submit to the Borrower and the Agent, on or before the
Closing Date or the day on which such Bank becomes a party hereto, a duly
completed and signed copy of either Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding on all payments to be
received by such Bank hereunder) or Form 4224 (relating to all payments to
be received by such Bank hereunder) of the United States Internal Revenue
Service. Thereafter and from time to time, each such Bank shall submit to
the Borrower and the Agent such additional duly completed and signed copies
of one or the other of such Forms (or such successor Forms as shall be
adopted from time to time by the relevant United States taxing authorities)
as may be (i) reasonably requested by the Borrower or the Agent and (ii)
required and permitted under then-current United States law or regulations
to avoid United States withholding taxes on payments in respect of all
payments to be received by such Bank hereunder. Upon the request of the
Borrower or the Agent, each Bank that is a United States person (as such
term is defined in Section 7701(a)(30) of the Code) shall submit to the
Borrower and the Agent a certificate in such form as is reasonably
satisfactory to the Borrower and the Agent to the effect that it is such a
United States person.
2.19(b) Inability of a Bank. If any Bank that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code)
determines that, as a result of any Regulatory Change, the Borrower or the
Agent is required by law or regulation to make any deduction, withholding
or backup withholding of any taxes, levies, imposts, duties, fees,
liabilities or similar charges of the United States of America, any
possession or territory of the United States of America (including the
Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the
United States of America ("U.S. Taxes") from any payments to a Bank
pursuant to any Loan Document in respect of the Obligations payable to such
Bank then or thereafter outstanding, the amount payable by the Borrower
will be increased to the amount which, after deduction from such increased
amount of all U.S. Taxes required to be withheld or deducted therefrom,
will yield the amount required under any Loan Document to be paid with
respect thereto; provided, that the Borrower shall not be required to pay
any additional amount pursuant to this Section 2.19(b) to any Bank (i) that
on the date this Agreement is executed or the date such Bank becomes a
party hereto, as applicable, is neither (x) entitled to submit Form 1001
(relating to such Bank and entitling it to a complete exemption from
withholding on all payments to be received by such Bank hereunder) or Form
4224 (relating to all payments to be received by such Bank hereunder) nor
(y) a United States person (as such term is defined in Section 7701(a)(30)
of the Code), or (ii) that has failed to submit any form or certificate
that it was required to file pursuant to subsection (a) and entitled to
file under applicable law or (iii) arising from such Bank's failure to
comply with any certification, identification or other similar requirement
under United States income tax laws or regulations (including backup
withholding) to establish entitlement to exemption from such U.S. Taxes;
and provided, further, that if a Bank, as a result of any amount paid by
the Borrower to such Bank pursuant to this Section 2.19, shall realize a
tax credit or refund, which tax credit or refund would not have been
realized but for the Borrower's payment of such amount, such Bank shall pay
to the Borrower an amount equal to such tax credit or refund. Each Bank may
determine the portion, if any, of any tax credit or refund attributable to
the Borrower's payments using such attribution and accounting methods as
such Bank reasonably selects, and such Bank's determination of the portion
of any tax credit or refund attributable to the Borrower's payments shall
be conclusive in the absence of manifest error. The obligation of the
Borrower under this Section 2.19(b) shall survive the payment in full of
the Obligations and the termination of the Revolving Commitment of such
Bank.
Section 2.20 Letters of Credit. Upon the terms and subject to the
conditions of this Agreement, the Agent agrees to issue Letters of Credit for
the account of the Borrower from time to time between the Closing Date and the
Termination Date in such amounts as the Borrower shall request; provided that no
Letter of Credit will be issued in any amount which, after giving effect to such
issuance, would cause Total Revolving Outstandings to exceed the Aggregate
Revolving Commitment Amount, or would cause the sum of the aggregate maximum
amount available to be drawn under Letters of Credit outstanding plus the
aggregate amount of Unpaid Drawings to exceed $15,000,000.
Section 2.21 Procedures for Letters of Credit. Each request for a Letter of
Credit shall be made by the Borrower in writing, by telex, facsimile
transmission or electronic conveyance received by the Agent by 11:00 a.m.,
Minneapolis time, on a Business Day which is not less than one Business Day
prior to the requested date of issuance (which shall also be a Business Day).
Each request for a Letter of Credit shall be deemed a representation by the
Borrower that on the date of issuance of such Letter of Credit and after giving
effect thereto the applicable conditions specified in Article III have been and
will be satisfied. The Agent may require that such request be made on such
letter of credit application and reimbursement agreement form as the Agent may
from time to time specify, along with satisfactory evidence of the authority and
incumbency of the officials of the Borrower making such request. In the event of
any conflict between the provisions of any such application or agreement and
this Agreement, the terms of this Agreement shall govern. The Agent shall
promptly notify the other Banks of the receipt of the request and the matters
specified therein. On the date of each issuance of a Letter of Credit the Agent
shall send notice to the other Banks of such issuance.
Section 2.22 Terms of Letters of Credit. Letters of Credit shall be issued
in support of obligations of the Borrower or its Subsidiaries incurred in the
ordinary course of their business. All Letters of Credit must expire not later
than the Business Day preceding the Revolving Commitment Ending Date. No Letter
of Credit may have a term longer than twenty-four months.
Section 2.23 Agreement to Repay Letter of Credit Drawings. If the Agent has
received documents purporting to draw under a Letter of Credit that the Agent
believes conform to the requirements of the Letter of Credit, or if the Agent
has decided that it will comply with the Borrower's written or oral request or
authorization to pay a drawing on any Letter of Credit that the Agent does not
believe conforms to the requirements of the Letter of Credit, it will notify the
Borrower of that fact. The Borrower shall reimburse the Agent by 10:00 a.m.
(Minneapolis time) on the day on which such drawing is to be paid in Immediately
Available Funds in an amount equal to the amount of such drawing. Any amount by
which the Borrower has failed to reimburse the Agent for the full amount of such
drawing by 11:00 a.m. on the date on which the Agent in its notice indicated
that it would pay such drawing, until reimbursed from the proceeds of Loans
pursuant to Section 2.26 or out of funds available in the Holding Account, is an
"Unpaid Drawing."
Section 2.24 Obligations Absolute. The obligations of the Borrower under
Section 2.23 to repay the Agent for any amount drawn on any Letter of Credit and
to repay the Banks for any Revolving Loans made under Section 2.26 to cover
Unpaid Drawings shall be absolute, unconditional and irrevocable, shall continue
for so long as any Letter of Credit is outstanding notwithstanding any
termination of this Agreement, and shall be paid strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including without
limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of Credit;
(b) The existence of any claim, setoff, defense or other right which the
Borrower may have or claim at any time against any beneficiary,
transferee or holder of any Letter of Credit (or any Person for whom
any such beneficiary, transferee or holder may be acting), the Agent
or any Bank or any other Person, whether in connection with a Letter
of Credit, this Agreement, the transactions contemplated hereby, or
any unrelated transaction; or
(c) Any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect whatsoever.
Neither the Agent nor any Bank nor officers, directors or employees of any
thereof shall be liable or responsible for, and the obligations of the Borrower
to the Agent and the Banks shall not be impaired by:
(i) The use which may be made of any Letter of Credit or for any acts or
omissions of any beneficiary, transferee or holder thereof in
connection therewith;
(ii) The validity, sufficiency or genuineness of documents, or of any
endorsements thereon, even if such documents or endorsements should,
in fact, prove to be in any or all respects invalid, insufficient,
fraudulent or forged;
(iii)The acceptance by the Agent of documents that appear on their face to
be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; or
(iv) Any other action of the Agent in making or failing to make payment
under any Letter of Credit if in good faith and in conformity with
U.S. or foreign laws, regulations or customs applicable thereto.
Notwithstanding the foregoing, the Borrower shall have a claim against the
Agent, and the Agent shall be liable to the Borrower, to the extent, but only to
the extent, of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by the Agent's willful misconduct
or gross negligence in determining whether documents presented under any Letter
of Credit comply with the terms thereof.
Section 2.25 Increased Cost for Letters of Credit. If any Regulatory Change
shall either (a) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by the Agent or
any Bank's obligation to make Advances to cover Unpaid Drawings, or (b) shall
impose on any Bank any other conditions affecting this Agreement or any Letter
of Credit; and the result of any of the foregoing is to increase the cost to the
Agent or any Bank of issuing or maintaining any Letter of Credit or such Bank's
obligation to make Advances to cover Unpaid Drawings, or reduce the amount of
any sum received or receivable by the Agent or any Bank hereunder, then, upon
demand (which demand shall be given by the Agent or Bank affected by such
increased cost or reduction promptly after it determines such increased cost or
reduction) to the Borrower by the Agent or such Bank, the Borrower shall pay to
the Agent or such Bank the additional amount or amounts as will compensate the
Agent or such Bank for such increased cost or reduction. If the Agent or a Bank
fails to give such notice within 45 days after it obtains knowledge of such a
Regulatory Change, the Agent or the Bank shall, with respect to compensation
payable pursuant to this Section, only be entitled to payment under this Section
for costs incurred from and after the date 45 days prior to the date that the
Agent or the Bank does give such notice. A certificate of the Agent or a Bank
claiming compensation under this Section, setting forth the additional amount or
amounts to be paid to it hereunder and stating in reasonable detail the basis
for the charge and the method of computation, shall be conclusive in the absence
of manifest error. In determining such amount, the Agent or Bank shall use
reasonable averaging and attribution methods. Failure on the part of the Agent
or a Bank to demand compensation for any increased costs or reduction in amounts
received or receivable with respect to any period shall not constitute a waiver
of the Agent's or that Bank's rights to demand compensation for any increased
costs or reduction in amounts received or receivable in any subsequent period
(subject to the limitation contained in the third preceding sentence).
Section 2.26 Loans to Cover Unpaid Drawings. Whenever any Unpaid Drawing
exists for which there are not then funds in the Holding Account to cover the
same, the Agent shall give the other Banks notice to that effect, specifying the
amount thereof, in which event each Bank is authorized (and the Borrower does
hereby so authorize each Bank) to, and shall, make a Revolving Loan (as a
Reference Rate Advance) to the Borrower in an amount equal to such Bank's
Revolving Percentage of the amount of the Unpaid Drawing. The Agent shall notify
each Bank by 11:00 a.m. (Minneapolis time) on the date such Unpaid Drawing
occurs of the amount of the Revolving Loan to be made by such Bank. Notices
received after such time shall be deemed to have been received on the next
Business Day. Each Bank shall then make such Revolving Loan (regardless of
noncompliance with the applicable conditions precedent specified in Article III
hereof and regardless of whether an Event of Default then exists) and each Bank
shall provide the Agent with the proceeds of such Revolving Loan in Immediately
Available Funds, at the office of the Agent, not later than 2:00 p.m.
(Minneapolis time) on the day on which such Bank received such notice (or, in
the case of notices received after 11:00 a.m., Minneapolis time, is deemed to
have received such notice). The Agent shall apply the proceeds of such Revolving
Loans directly to reimburse itself for such Unpaid Drawing. If any portion of
any such amount paid to the Agent should be recovered by or on behalf of the
Borrower from the Agent in bankruptcy, by assignment for the benefit of
creditors or otherwise, the loss of the amount so recovered shall be ratably
shared between and among the Banks in the manner contemplated by Section 8.11
hereof. If at the time the Banks make funds available to the Agent pursuant to
the provisions of this Section, the applicable conditions precedent specified in
Article III shall not have been satisfied, the Borrower shall pay to the Agent
for the account of the Banks interest on the funds so advanced at the Default
Rate beginning on the date of the advance if notice from the Agent is received
within five Business Days, or otherwise on the date the Agent notifies the
Borrower that the applicable conditions precedent in Article III have not been
satisfied. If for any reason any Bank is unable to make a Revolving Loan to the
Borrower to reimburse the Agent for an Unpaid Drawing, then such Bank shall
immediately purchase from the Agent a risk participation in such Unpaid Drawing,
at par, in an amount equal to such Bank's Revolving Percentage of the Unpaid
Drawing (before deducting the amount of any Revolving Loans made by other Banks
to reimburse the Agent for such Unpaid Drawing). In consideration of and in
furtherance of the foregoing, each Bank hereby unconditionally and absolutely
agrees to pay to the Agent, for the Agent's own account, such Bank's Revolving
Percentage of each Unpaid Drawing (before deducting the amount of any Revolving
Loans made by other Banks to reimburse the Agent for such Unpaid Drawing). The
Agent shall promptly notify each Bank that is unable to make a Revolving Loan to
reimburse the Agent for an Unpaid Drawing of that Bank's Revolving Percentage of
such Unpaid Drawing. Each Bank shall pay to the Agent, not later than 2:00 P.M.
(Minneapolis time) on the date it receives such notice, such Bank's Revolving
Percentage of such Unpaid Drawing.
Section 2.27 Letter of Credit Fees. The Borrower shall pay to the Agent for
the account of the Banks, quarterly in arrears on the last day of each
September, December, March and June, beginning September 30, 1998, a fee (a
"Letter of Credit Fee") in an amount determined by applying the Applicable
Letter of Credit Fee Percentage to the average daily outstanding face amount of
each Letter of Credit during the period of three months ending on each payment
date. In addition to the Letter of Credit Fee, the Borrower shall pay to the
Agent, for its own account, for each Letter of Credit issued (a) on demand, all
issuance, amendment, drawing and other fees regularly charged by the Agent to
its letter of credit customers, (b) on the last day of each September, December,
March and June, a fronting fee determined by applying a per annum rate of
one-tenth of one percent (0.10%) to the average daily outstanding face amount of
such Letter of Credit during the period of three months ending on each payment
date, and (c) on demand, all out-of-pocket expenses incurred by the Agent in
connection with the issuance, amendment, administration or payment of any Letter
of Credit.
2.28 Substitution of Bank. In the event the Borrower is required pursuant
to Section 2.14, 2.16, 2.19 or 2.25 to pay any additional amount to any Bank, or
any Bank provides notice to the Borrower that its obligation to make or continue
Eurodollar Advances or convert Revolving Loans into Eurodollar Advances is
superceded pursuant to Section 2.13 or 2.15, such Bank shall, if no Default or
Event of Default has occurred and is continuing, upon the request of the
Borrower to such Bank and the Agent, assign, pursuant to and in accordance with
the provisions of Section 9.6, all of its rights and obligations under this
Agreement and under the Notes to another Bank or a Transferee selected by the
Borrower and reasonably satisfactory to the Agent, in consideration for (i) the
payment by such assignee to the assigning Bank of the principal of, and interest
accrued and unpaid to the date of such assignment on, the Note or Notes of such
Bank, (ii) the payment by the Borrower to the assigning Bank of any and all
other amounts owing to such Bank under any provision of this Agreement accrued
and unpaid to the date of such assignment and (iii) the Borrower's release of
the assigning Bank from any further obligation or liability under this
Agreement. Notwithstanding anything to the contrary in this Section 2.28, in no
event shall the replacement of any Bank result in a decrease in the Aggregate
Revolving Commitment Amount.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions of Initial Transaction. The making of the initial
Revolving Loans and/or the issuing of the initial Letter of Credit shall be
subject to the prior or simultaneous fulfillment of the following conditions:
3.1(a) Documents. The Agent shall have received the following in
sufficient counterparts (except for the Revolving Notes) for each Bank:
(i) A Revolving Note drawn to the order of each Bank, executed by a
duly authorized officer (or officers) of the Borrower and dated
the Closing Date.
(ii) The Pledge Agreement duly executed by an authorized officer (or
officers) of the Borrower and dated the Closing Date, together
with Uniform Commercial Code financing statements, in form and
substance satisfactory to the Agent, covering the same.
(iii)A copy of the corporate resolution of the Borrower authorizing
the execution, delivery and performance of the Borrower Loan
Documents, certified as of the Closing Date by the Secretary or
an Assistant Secretary of the Borrower.
(iv) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of the Borrower authorized
to execute the Borrower Loan Documents and to request Revolving
Loans and conversions and continuations of Advances hereunder,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of the Borrower.
(v) A copy of the Articles of Incorporation of the Borrower with all
amendments thereto, certified by the appropriate governmental
official of the jurisdiction of its incorporation as of a date
not more than 10 days prior to the Closing Date.
(vi) A certificate of good standing for the Borrower in the
jurisdiction of its incorporation, certified by the appropriate
governmental officials as of a date not more than 10 days prior
to the Closing Date.
(vii)A copy of the bylaws of the Borrower, certified as of the
Closing Date by the Secretary or an Assistant Secretary of the
Borrower.
(viii) Such corporate, partnership and other organizational documents
and certificates as the Agent may request with respect to the due
organization, good standing, power and authority of any
Subsidiary.
(ix) A certificate dated the Closing Date of the chief executive
officer or chief financial officer of the Borrower certifying as
to the matters set forth in Sections 3.2 (a) and 3.2 (b) below.
(x) The Solvency Certificate, executed by the chief financial officer
of the Borrower and dated the Closing Date.
3.1(b) Opinion. The Borrower shall have requested Xxxxxx X. Xxxxxxxx
and Faegre & Xxxxxx, LLP, its counsel, to prepare written opinions,
addressed to the Banks and dated the Closing Date, covering the matters set
forth in Exhibit E hereto, and such opinions shall have been delivered to
the Agent in sufficient counterparts for each Bank.
3.1(c) Repurchase. The initial Revolving Loan and such other funds as
the Borrower may have available for such purpose shall be disbursed,
simultaneously with the making of the initial Revolving Loan, to effect the
Repurchase.
3.1(d) Compliance. The Borrower shall have performed and complied with
all agreements, terms and conditions contained in this Agreement required
to be performed or complied with by the Borrower prior to or simultaneously
with the Closing Date.
3.1(e) No Material Adverse Change. No material adverse change has
occurred in the business, operations, property, assets, prospects or
conditions, financial or otherwise of the Borrower, or the loan syndication
market or the capital markets generally, since the date of the most recent
financial statements of the Borrower delivered to the Banks prior to the
date hereof.
3.1(f) Other Matters. All corporate and legal proceedings relating to
the Borrower and the Subsidiaries and all instruments and agreements in
connection with the transactions contemplated by this Agreement shall be
satisfactory in scope, form and substance to the Agent, the Banks and the
Agent's special counsel, and the Agent shall have received all information
and copies of all documents, including records of corporate proceedings, as
any Bank or such special counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified by
proper corporate or governmental authorities.
3.1(g) Fees and Expenses. The Agent shall have received for itself and
for the account of the Banks all fees and other amounts due and payable by
the Borrower on or prior to the Closing Date, including the reasonable fees
and expenses of counsel to the Agent payable pursuant to Section 9.2, to
the extent the Borrower has received a xxxx therefor.
Section 3.2 Conditions Precedent to all Revolving Loans and Letters of
Credit. The obligation of the Banks to make any Revolving Loans hereunder
(including the initial Revolving Loans), and the obligation of the Agent to
issue any Letter of Credit (including the initial Letter of Credit), shall be
subject to the fulfillment of the following conditions:
3.2(a) Representations and Warranties. The representations and
warranties contained in Article IV shall be true and correct in all
material respects on and as of the Closing Date (other than the
representation and warranty set forth in the last sentence of Section 4.5),
on the date of each Revolving Loan or on the date each Letter of Credit is
to be issued, with the same force and effect as if made on such date,
except with respect to representations and warranties which by their terms
speak as of an earlier date.
3.2(b) No Default. No Default or Event of Default shall have occurred
and be continuing on the Closing Date, and on the date of each Revolving
Loan, or on the date a Letter of Credit is issued, or will exist after
giving effect to the Revolving Loans made or Letters of Credit issued on
such date.
3.2(c) Notices and Requests. The Agent shall have received the
Borrower's request for such Loans as required under Section 2.2 or request
for the issuance of Letters of Credit under Section 2.21, and all
statements in such request are true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make Revolving
Loans hereunder, and to induce the Agent to issue Letters of Credit hereunder,
the Borrower represents and warrants to the Banks:
Section 4.1 Organization, Standing, Etc. The Borrower is a corporation duly
incorporated and validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted, to enter into this
Agreement and the Pledge Agreement, to issue the Revolving Notes and to perform
its obligations under the Borrower Loan Documents. Each Subsidiary is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted. Each of
the Borrower and the Subsidiaries (a) holds all certificates of authority,
licenses and permits necessary to carry on its business as presently conducted
in each jurisdiction in which it is carrying on such business, except where the
failure to hold such certificates, licenses or permits would not have a material
adverse effect on the business, operations, property, assets or condition,
financial or otherwise, of the Borrower and the Subsidiaries taken as a whole,
and (b) is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character of the properties owned, leased or operated
by it or the business conducted by it makes such qualification necessary and the
failure so to qualify would permanently preclude the Borrower or such Subsidiary
from enforcing its rights with respect to any assets or expose the Borrower or
such Subsidiary to any liability, which in either case would be material to the
Borrower and the Subsidiaries taken as a whole.
Section 4.2 Authorization and Validity. The execution, delivery and
performance by the Borrower of the Borrower Loan Documents have been duly
authorized by all necessary corporate action by the Borrower, and this Agreement
constitutes, and the Revolving Notes and other Borrower Loan Documents when
executed will constitute, the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, subject to limitations as to enforceability which might result from
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and subject to limitations on the availability of equitable
remedies.
Section 4.3 No Conflict; No Default. The execution, delivery and
performance by the Borrower of the Borrower Loan Documents will not (a) violate
any provision of any law, statute, rule or regulation or any order, writ,
judgment, injunction, decree, determination or award of any court, governmental
agency or arbitrator presently in effect having applicability to the Borrower,
(b) violate or contravene any provision of the Articles of Incorporation or
bylaws of the Borrower, or (c) result in a breach of or constitute a default
under any material indenture, loan or credit agreement or any other material
agreement, lease or instrument to which the Borrower is a party or by which it
or any of its properties may be bound or result in the creation of any Lien
thereunder. Neither the Borrower nor any Subsidiary is in default under or in
violation of any such law, statute, rule or regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, loan or credit
agreement or other agreement, lease or instrument in any case in which the
consequences of such default or violation could have a material adverse effect
on the business, operations, properties, assets or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole.
Section 4.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Borrower Loan Documents.
Section 4.5 Financial Statements and Condition. The Borrower's audited
consolidated financial statements as at December 26, 1997 and its unaudited
financial statements as at March 27, 1998, as heretofore furnished to the Banks,
have been prepared in accordance with GAAP on a consistent basis (except for the
absence of footnotes and subject to year-end audit adjustments as to the interim
statements) and fairly present the financial condition of the Borrower and its
Subsidiaries as at such dates and the results of their operations and changes in
financial position for the respective periods then ended. As of the dates of
such financial statements, neither the Borrower nor any Subsidiary had any
material obligation, contingent liability, liability for taxes or long-term
lease obligation which is not reflected in such financial statements or in the
notes thereto. Since December 26, 1997, there has been no material adverse
change in the business, operations, property, assets or condition, financial or
otherwise, of the Borrower and its Subsidiaries taken as a whole.
Section 4.6 Litigation. Except as set forth on Schedule 4.6, there are no
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary or any of their
properties before any court or arbitrator, or any governmental department,
board, agency or other instrumentality which, if determined adversely to the
Borrower or such Subsidiary, would have a material adverse effect on the
business, operations, property or condition (financial or otherwise) of the
Borrower and the Subsidiaries taken as a whole or on the ability of the Borrower
or any Subsidiary to perform its obligations under the Loan Documents.
Section 4.7 Environmental, Health and Safety Laws. Except as set forth on
Schedule 4.7, there does not exist any violation by the Borrower or any
Subsidiary of any applicable federal, state or local law, rule or regulation or
order of any government, governmental department, board, agency or other
instrumentality relating to environmental, pollution, health or safety matters
which will or threatens to impose a material liability on the Borrower or a
Subsidiary or which would require a material expenditure by the Borrower or such
Subsidiary to cure. Except as set forth on Schedule 4.7, neither the Borrower
nor any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole. Except as set out in Schedule 4.7, the Borrower
does not have knowledge that it or its property or any Subsidiary or the
property of any Subsidiary will become subject to environmental laws or
regulations during the term of this Agreement, compliance with which could
reasonably be expected to require Capital Expenditures which would have a
material adverse effect on the business, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken as
a whole.
Section 4.8 ERISA. Each Plan is in compliance with all applicable
requirements of ERISA and the Code and with all applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements, except where any such failure to comply and all such
failures taken together would not have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise)
of the Borrower and its Subsidiaries, taken as a whole. No Reportable Event has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would reasonably be expected to result in the institution of
proceedings to terminate any Plan under Section 4042 of ERISA. With respect to
each Plan subject to Title IV of ERISA, as of the most recent valuation date for
such Plan, the present value (determined on the basis of reasonable assumptions
employed by the independent actuary for such Plan and previously furnished in
writing to the Banks) of such Plan's projected benefit obligations did not
exceed the fair market value of such Plan's assets.
Section 4.9 Federal Reserve Regulations. Neither the Borrower nor any
Subsidiary is engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying margin
stock (as defined in Regulation U of the Board). The value of all margin stock
owned by the Borrower does not constitute more than 25% of the value of the
assets of the Borrower.
Section 4.10 Title to Property; Leases; Liens; Subordination. Each of the
Borrower and the Subsidiaries has (a) good and marketable title to its real
properties and (b) good and sufficient title to, or valid, subsisting and
enforceable leasehold interest in, its other material properties, including all
real properties, other properties and assets, referred to as owned by the
Borrower and its Subsidiaries in the most recent financial statement referred to
in Section 4.5 (other than property disposed of since the date of such financial
statements in the ordinary course of business). None of such properties is
subject to a Lien, except as allowed under Section 6.13. The Borrower has not
subordinated any of its rights under any obligation owing to it to the rights of
any other person.
Section 4.11 Taxes. Each of the Borrower and the Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of the Borrower). No tax Liens have been filed and no material claims
are being asserted with respect to any such taxes, fees or charges. The charges,
accruals and reserves on the books of the Borrower in respect of taxes and other
governmental charges are adequate and the Borrower knows of no proposed material
tax assessment against it or any Subsidiary or any basis therefor.
Section 4.12 Trademarks, Patents. Except as set forth on Schedule 4.12,
each of the Borrower and the Subsidiaries possesses or has the right to use all
material patents, trademarks, trade names, service marks and copyrights, and
applications therefor, and all technology, know-how, processes, methods and
designs used in or necessary for the conduct of its business, all without known
conflict with the rights of others.
Section 4.13 Burdensome Restrictions. Neither the Borrower nor any
Subsidiary is a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction which would foreseeably have a
material adverse effect on the business, properties, assets, operations or
condition (financial or otherwise) of the Borrower or its Subsidiaries, taken as
a whole, or on the ability of the Borrower or any Subsidiary to carry out its
obligations under any Loan Document.
Section 4.14 Force Majeure. Since the date of the most recent financial
statement referred to in Section 4.5, the business, properties and other assets
of the Borrower and the Subsidiaries have not been materially and adversely
affected in any way as the result of any fire or other casualty, strike,
lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation,
riot, civil disturbance, activity of armed forces or act of God.
Section 4.15 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 4.16 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
Section 4.17 Retirement Benefits. Except as set forth on Schedule 4.17 and
except as required under Section 4980B of the Code, Section 601 of ERISA or
applicable state law, neither the Borrower nor any Subsidiary is obligated to
provide post-retirement medical or insurance benefits with respect to employees
or former employees.
Section 4.18 Subsidiaries Schedule 4.18 sets forth as of the date of this
Agreement a list of all Subsidiaries and the number and percentage of the shares
of each class of capital stock owned beneficially or of record by the Borrower
or any Subsidiary therein, and the jurisdiction of incorporation of each
Subsidiary. Each such Subsidiary is a Foreign Subsidiary.
Section 4.19 Solvency. As of the Closing Date, the Borrower has capital
sufficient to carry on its business and transactions and all businesses and
transactions in which it is about to engage and is solvent and able to pay its
debts as they mature and the Borrower and the Subsidiaries own property the fair
saleable value of which, on a going concern basis, is greater than the amount
required to pay the Borrower's and the Subsidiaries' Indebtedness. No transfer
of property is being made and no Indebtedness is being incurred in connection
with the transactions contemplated by this Agreement with the intent to hinder,
delay or defraud either present or future creditors of the Borrower, any
Subsidiary or any Affiliate. On the Closing Date, after giving effect to the
transactions contemplated hereunder, the representations and conclusions set out
in the Solvency Certificate are true and correct. The Solvency Certificate does
not omit to state any material fact necessary to make the statements contained
therein not misleading.
Section 4.20 Millennium Compliance. The Borrower has reviewed and assessed
its business operations and computer systems and made inquiry of the Borrower's
key suppliers, vendors and customers with respect to the "year 2000 problem"
(that is, that computer applications and equipment may not be able to properly
perform date-sensitive functions before, during and after January 1, 2000) and,
based on that review and inquiry, the Borrower has no reason to believe that the
year 2000 problem will result in a material adverse change in the business
condition (financial or otherwise), operations or prospects of the Borrower and
its Subsidiaries taken as a whole, or in the Borrower's ability to repay the
Banks. This representation will be a continuing representation for the remainder
of the term of this Agreement.
Section 4.21 Full Disclosure. Subject to the following sentence, the
information furnished by or on behalf of the Borrower in connection with or
pursuant to this Agreement including, without limitation, the financial
statements referred to in Section 4.5 hereof, taken as a whole, is complete and
correct in all material respects and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained therein not misleading. Certificates or statements
furnished by or on behalf of the Borrower to the Banks consisting of projections
or forecasts of future results or events have been prepared in good faith and
based on good faith estimates and assumptions of the management of the Borrower,
and the Borrower has no reason to believe that such projections or forecasts are
not reasonable.
ARTICLE V
AFFIRMATIVE COVENANTS
Until any obligation of the Banks hereunder to make the Revolving Loans and
of the Agent to issue Letters of Credit shall have expired or been terminated,
the Revolving Notes and all of the other Obligations have been paid in full and
all outstanding Letters of Credit have expired, unless the Majority Banks shall
otherwise consent in writing:
Section 5.1 Financial Statements and Reports. The Borrower will furnish to
the Banks:
5.1(a) As soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, the consolidated financial
statements of the Borrower and the Subsidiaries consisting of at least
statements of income, cash flow and changes in stockholders' equity, and a
consolidated balance sheet as at the end of such year, setting forth in
each case in comparative form corresponding figures from the previous
annual audit, certified without qualification by Deloitte & Touche LLP or
other independent certified public accountants of recognized national
standing selected by the Borrower and reasonably acceptable to the Agent,
together with any management letters, management reports or other
supplementary comments or reports to the Borrower or its board of directors
furnished by such accountants.
5.1(b) Together with the audited financial statements required under
Section 5.1 (a), a statement by the accounting firm performing such audit
to the effect that it has reviewed this Agreement and that in the course of
performing its examination nothing came to its attention that caused it to
believe that any Default or Event of Default exists, or, if such Default or
Event of Default exists, describing its nature.
5.1(c) As soon as available and in any event within 45 days after the
end of each fiscal quarter, unaudited consolidated statements of income,
cash flow and changes in stockholders' equity for the Borrower and the
Subsidiaries for such quarter and for the period from the beginning of such
fiscal year to the end of such quarter, and a consolidated balance sheet of
the Borrower as at the end of such quarter, setting forth in comparative
form figures for the corresponding period for the preceding fiscal year,
accompanied by a certificate signed by the chief financial officer of the
Borrower stating that such financial statements present fairly the
financial condition of the Borrower and the Subsidiaries and that the same
have been prepared in accordance with GAAP (except for the absence of
footnotes and subject to year-end audit adjustments).
5.1(d) As soon as practicable and in any event within 45 days after
the end of each fiscal quarter, a Compliance Certificate in the form
attached hereto Exhibit F, signed by the chief financial officer of the
Borrower, demonstrating in reasonable detail compliance (or noncompliance,
as the case may be) with these Sections: 6.15, 6.16, and 6.17, as at the
end of such quarter and stating that as at the end of such quarter there
did not exist any Default or Event of Default or, if such Default or Event
of Default existed, specifying the nature and period of existence thereof
and what action the Borrower proposes to take with respect thereto.
5.1(e) Immediately upon any officer of the Borrower becoming aware of
any Default or Event of Default, a notice describing the nature thereof and
what action the Borrower proposes to take with respect thereto.
5.1(f) Immediately upon any officer of the Borrower becoming aware of
the occurrence, with respect to any Plan, of any Reportable Event or any
Prohibited Transaction, a notice specifying the nature thereof and what
action the Borrower proposes to take with respect thereto, and, when
received, copies of any notice from PBGC of intention to terminate or have
a trustee appointed for any Plan.
5.1(g) Promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements mailed to the Borrower's
shareholders, and copies of all registration statements, periodic reports
and other documents filed with the Securities and Exchange Commission (or
any successor thereto) or any national securities exchange.
5.1(h) From time to time, such other information regarding the
business, operation and financial condition of the Borrower and the
Subsidiaries as any Bank may reasonably request.
Section 5.2 Corporate Existence. The Borrower will maintain, and cause each
Subsidiary to maintain, its corporate existence in good standing under the laws
of its jurisdiction of incorporation and its qualification to transact business
in each jurisdiction where failure so to qualify would permanently preclude the
Borrower or such Subsidiary from enforcing its rights with respect to any
material asset or would expose the Borrower or such Subsidiary to any material
liability; provided, however, that nothing herein shall prohibit the merger or
liquidation of the Borrower or any Subsidiary allowed under Section 6.1.
Section 5.3 Insurance. The Borrower shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable insurance companies
such insurance as may be required by law and such other insurance in such
amounts and against such hazards as is customary in the case of reputable firms
engaged in the same or similar business and similarly situated.
Section 5.4 Payment of Taxes and Claims. The Borrower shall file, and cause
each Subsidiary to file, all tax returns and reports which are required by law
to be filed by it and will pay, and cause each Subsidiary to pay, before they
become delinquent all taxes, assessments and governmental charges and levies
imposed upon it or its property and all claims or demands of any kind (including
but not limited to those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower's or such Subsidiary's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on the Borrower's or such Subsidiary's books
in accordance with GAAP.
Section 5.5 Inspection. The Borrower shall permit any Person designated by
the Agent or any Bank to visit and inspect any of the properties, corporate
books and financial records of the Borrower and the Subsidiaries, to examine and
to make copies of the books of accounts and other financial records of the
Borrower and the Subsidiaries, and to discuss the affairs, finances and accounts
of the Borrower and the Subsidiaries with, and to be advised as to the same by,
its officers at such reasonable times and intervals as the Agent or the
requesting Bank may designate. So long as no Event of Default exists, the Agent
or Bank making such visits, inspections and examinations shall pay its own
expenses, but any such visits, inspections and examinations made while any Event
of Default is continuing shall be at the expense of the Borrower.
Section 5.6 Maintenance of Properties. The Borrower will maintain, and
cause each Subsidiary to maintain its properties used or useful in the conduct
of its business in good condition, repair and working order, and supplied with
all necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
Section 5.7 Books and Records. The Borrower will keep, and will cause each
Subsidiary to keep, adequate and proper records and books of account in which
full and correct entries will be made of its dealings, business and affairs.
Section 5.8 Compliance. The Borrower will comply, and will cause each
Subsidiary to comply, in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject; provided, however, that failure so to comply shall not be a
breach of this covenant if such failure does not have, or is not reasonably
expected to have, a materially adverse effect on the properties, business,
prospects or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, and the Borrower or such Subsidiary is acting in
good faith and with reasonable dispatch to cure such noncompliance.
Section 5.9 Notice of Litigation. The Borrower will give prompt written
notice to the Agent of the commencement of any action, suit or proceeding before
any court or arbitrator or any governmental department, board, agency or other
instrumentality affecting the Borrower or any Subsidiary or any property of the
Borrower or a Subsidiary or to which the Borrower or a Subsidiary is a party in
which an adverse determination or result could have a material adverse effect on
the business, operations, property or condition (financial or otherwise) of the
Borrower and the Subsidiaries taken as a whole or on the ability of the Borrower
or any Subsidiary to perform its obligations under this Agreement and the other
Loan Documents, stating the nature and status of such action, suit or
proceeding.
Section 5.10 ERISA. The Borrower will maintain, and cause each Subsidiary
to maintain, each Plan in compliance with all material applicable requirements
of ERISA and of the Code and with all applicable rulings and regulations issued
under the provisions of ERISA and of the Code and will not and not permit any of
the ERISA Affiliates to (a) engage in any transaction in connection with which
the Borrower or any of the ERISA Affiliates would be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section
4975 of the Code, in either case in an amount exceeding $500,000, (b) fail to
make full payment when due of all amounts which, under the provisions of any
Plan, the Borrower or any ERISA Affiliate is required to pay as contributions
thereto, or permit to exist any accumulated funding deficiency (as such term is
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, with respect to any Plan in an aggregate amount exceeding $500,000 or
(c) fail to make any payments in an aggregate amount exceeding $500,000 to any
Multiemployer Plan that the Borrower or any of the ERISA Affiliates may be
required to make under any agreement relating to such Multiemployer Plan or any
law pertaining thereto.
Section 5.11 Environmental Matters; Reporting. The Borrower will observe
and comply with, and cause each Subsidiary to observe and comply with, all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise have
a material adverse effect on the Borrower and the Subsidiaries taken as a whole.
The Borrower will give the Agent prompt written notice of any violation as to
any environmental matter by the Borrower or any Subsidiary and of the
commencement of any judicial or administrative proceeding relating to health,
safety or environmental matters (a) in which an adverse determination or result
could result in the revocation of or have a material adverse effect on any
operating permits, air emission permits, water discharge permits, hazardous
waste permits or other permits held by the Borrower or any Subsidiary which are
material to the operations of the Borrower or such Subsidiary, or (b) which will
or threatens to impose a material liability on the Borrower or such Subsidiary
to any Person or which will require a material expenditure by the Borrower or
such Subsidiary to cure any alleged problem or violation.
Section 5.12 Further Assurances. The Borrower shall promptly correct any
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment or recordation thereof. Promptly upon request by the Agent or the
Majority Banks, the Borrower also shall provide such other instruments as the
Agent or the Majority Banks may reasonable require from time to time in order:
(a) to carry out more effectively the purposes of the Loan Documents; (b) to
perfect and maintain the validity, effectiveness and priority of any security
interests intended to be created by the Loan Documents; and (c) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm unto the
Banks the rights granted now or hereafter intended to be granted to the Banks
under any Loan Document or under any other instrument executed in connection
with any Loan Document or that the Borrower may be or become bound to convey,
mortgage or assign to the Agent for the benefit of the Banks in order to carry
out the intention or facilitate the performance of the provisions of any Loan
Document. The Borrower shall furnish to the Banks evidence satisfactory to the
Agent of every such recording, filing or registration.
Section 5.13 Millennium Compliance. The Borrower agrees to take all actions
reasonably necessary to ensure that the representation and warranty set forth in
Section 4.20 remains true at all times, and the Borrower agrees to promptly
notify the Banks if, at any time during the term of this Agreement, the Borrower
becomes aware of facts or circumstances such that the representation and
warranty set forth in Section 4.20 would or might be untrue if made on such date
or this covenant has been or may be breached. The Borrower will promptly deliver
to the Banks such information relating to the representation and warranty set
forth in Section 4.20 and this covenant as any Bank requests from time to time,
including, without limitation, any information pertaining to the review and
assessment described in Section 4.20.
Section 5.14 Share Certificates. On or before August 2, 1998, the Borrower
shall deliver to the Agent certificates evidencing sixty-five per cent (65%) of
each class of the stock of each Subsidiary listed in Schedule 4.18, to the
extent such certificates exist and such delivery (a) is legally permissible and
(b) will not otherwise have a material adverse tax consequence to the Borrower.
ARTICLE VI
NEGATIVE COVENANTS
Until any obligation of the Banks hereunder to make the Revolving Loans and
of the Agent to issue Letters of Credit shall have expired or been terminated,
the Revolving Notes and all of the other Obligations have been paid in full and
all outstanding Letters of Credit have expired, unless the Majority Banks shall
otherwise consent in writing:
Section 6.1 Merger. The Borrower will not, and not allow any Subsidiary to,
merge or consolidate into or with any other Person, except that (a) any
Subsidiary may merge or consolidate with another Subsidiary or with the Borrower
provided that, if the merger is with the Borrower, the Borrower shall be the
continuing or surviving corporation, and with a Person that is not the Borrower
or a Subsidiary, provided that the continuing or surviving corporation shall be
a Subsidiary or the disposition of the assets of such Subsidiary would be
permitted pursuant to Section 6.2(f), and (b) the Borrower may merge or
consolidate with, or sell substantially all of its assets to, another
corporation if (i) such other corporation is organized under the laws of any
state of the United States, (ii) such other corporation assumes in a writing
satisfactory to the Banks all of the obligations of the Borrower under the Loan
Documents, (iii) no Event of Default exists or would exist immediately after any
such proposed merger, consolidation or sale, and (iv) no Change of Control will
occur as a result of such proposed merger, consolidation or sale.
Section 6.2 Disposition of Assets. The Borrower will not, and will not
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one transaction or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
6.2(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
6.2(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are applied with reasonable
promptness to the purchase price of such replacement equipment;
6.2(c) the sale of assets by a Subsidiary to another Subsidiary or to
the Borrower;
6.2(d) the endorsement of accounts receivable by Graco KK in the
ordinary course of its business;
6.2(e) sales by the Borrower of substantially all of its assets
permitted pursuant to Section 6.1; and
6.2(f) other dispositions of property (including mergers and
consolidations involving a Subsidiary if the continuing or surviving
corporation is not a Subsidiary) during the term of this Agreement the
total sale price of which shall not exceed $25,000,000 in the aggregate for
all such transactions combined.
Section 6.3 Plans. The Borrower will not permit, and will not allow any
Subsidiary to permit, any event to occur or condition to exist which would
permit any Plan to terminate under any circumstances which would cause the Lien
provided for in Section 4068 of ERISA to attach to any assets of the Borrower or
any Subsidiary; and the Borrower will not permit, as of the most recent
valuation date for any Plan subject to Title IV of ERISA, the present value
(determined on the basis of reasonable assumptions employed by the independent
actuary for such Plan and previously furnished in writing to the Banks) of such
Plan's projected benefit obligations to exceed the fair market value of such
Plan's assets.
Section 6.4 Change in Nature of Business. The Borrower will not, and will
not permit any Subsidiary to, make any material change in the nature of the
business of the Borrower or such Subsidiary, as carried on at the date hereof.
Section 6.5 Subsidiaries. After the date of this Agreement, the Borrower
will not, and will not permit any Subsidiary to, form or acquire any corporation
which would thereby become a Subsidiary; provided, that the Borrower may form or
acquire additional Subsidiaries as long as (A) all of the issued and outstanding
shares of each class of capital stock, partnership interests in or other
ownership interests in each such Subsidiary is owned, directly or indirectly, by
the Borrower (except for directors' qualifying shares, shares or other ownership
interests issued to satisfy local ownership requirements and shares or other
ownership interests issued for similar legal purposes), and (B) each Domestic
Subsidiary shall have executed and delivered to the Agent a Guaranty, together
with such certificates and opinions as the Agent may reasonably request in
connection therewith, and sixty-five percent (65%) of the shares of each Foreign
Subsidiary shall have been pledged to the Agent for the benefit of the Banks
pursuant to the Pledge Agreement.
Section 6.6 Negative Pledges; Subsidiary Restrictions. The Borrower will
not, and will not permit any Subsidiary to, enter into any agreement, bond, note
or other instrument with or for the benefit of any Person other than the Banks
which would (i) prohibit the Borrower or such Subsidiary from granting, or
otherwise limit the ability of the Borrower or such Subsidiary to grant, to the
Banks any Lien on any assets or properties of the Borrower or such Subsidiary
(provided that Capitalized Leases and purchase money obligations which impose
restrictions on the ability of the Borrower or its Subsidiaries to grant Liens
on the assets subject to such Capitalized Leases or purchase money obligations,
lines of credit obtained by a Foreign Subsidiary that impose restrictions on the
ability of such Foreign Subsidiary to grant Liens on its assets, and agreements
governing Indebtedness permitted solely pursuant to Section 6.12(h) shall not be
deemed to violate this section), or (ii) require the Borrower or such Subsidiary
to xxxxx x Xxxx to any other Person if the Borrower or such Subsidiary grants
any Lien to the Banks. The Borrower will not permit any Subsidiary to place or
allow any restriction, directly or indirectly, on the ability of such Subsidiary
to (a) pay dividends or any distributions on or with respect to such
Subsidiary's capital stock or (b) make loans or other cash payments to the
Borrower.
Section 6.7 Restricted Payments. The Borrower will not make any Restricted
Payments except for the Repurchase, unless both before and after giving effect
thereto, no Default or Event of Default will have occurred and be continuing.
Section 6.8 Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction with any Affiliate of
the Borrower, except upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate; provided that transactions between
or among the Borrower and its Domestic Subsidiaries shall not be subject to this
Section 6.8.
Section 6.9 Accounting Changes. The Borrower will not, and will not permit
any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change its fiscal year or
the fiscal year of any Subsidiary; provided that any Subsidiary may change its
fiscal year to a fiscal year that is identical to that of the Borrower.
Section 6.10 Subordinated Debt. The Borrower will not, and will not permit
any Subsidiary to (a) make any scheduled payment of the principal of or interest
on any Subordinated Debt which would be prohibited by the terms of such
Subordinated Debt and any related subordination agreement; (b) directly or
indirectly make any prepayment on or purchase, redeem or defease any
Subordinated Debt or offer to do so (whether such prepayment, purchase or
redemption, or offer with respect thereto, is voluntary or mandatory); (c) amend
or cancel the subordination provisions applicable to any Subordinated Debt; (d)
take or omit to take any action if as a result of such action or omission the
subordination of such Subordinated Debt, or any part thereof, to the Obligations
might be terminated, impaired or adversely affected; or (e) omit to give the
Agent prompt notice of any notice received from any holder of Subordinated Debt,
or any trustee therefor, or of any default under any agreement or instrument
relating to any Subordinated Debt by reason whereof such Subordinated Debt might
become or be declared to be due or payable.
Section 6.11 Investments. The Borrower will not, and will not permit any
Subsidiary to, acquire for value, make, have or hold any Investments, except:
6.11(a) Investments existing on the date of this Agreement as set
forth on Schedule 6.11(a) hereto.
6.11(b) Travel advances to management personnel and employees in the
ordinary course of business.
6.11(c) Investments in readily marketable direct obligations issued or
guaranteed by the United States or any agency thereof and supported by the
full faith and credit of the United States.
6.11(d) Certificates of deposit or bankers' acceptances issued by any
commercial bank organized under the laws of the United States or any State
thereof which has (i) combined capital and surplus of at least $50,000,000,
and (ii) an investment grade credit rating with respect to its senior
unsecured indebtedness from a nationally recognized rating service that is
satisfactory to the Agent.
6.11(e) Eurocurrency deposits in banks having capital and surplus in
excess of $100,000,000 in the aggregate.
6.11(f) Money market mutual funds which are readily redeemable.
6.11(g) Forward exchange contracts for foreign currencies purchased by
the Borrower and its Subsidiaries to hedge risks arising in the ordinary
course of their businesses. 6.11(h) Commercial paper given one of the
highest two ratings by a nationally recognized rating service.
6.11(i) Repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America.
6.11(j) Other readily marketable Investments in debt securities which
are reasonably acceptable to the Agent.
6.11(k) Investments in Subsidiaries, to the extent the capitalization,
formation or acquisition of any such Subsidiary is not otherwise prohibited
by the terms of this Agreement.
6.11(l) Any other Investment if the aggregate consideration therefor
does not exceed $1,000,000.
Any Investments under clauses (c), (d), (h) or (i) above must mature within
one year of the acquisition thereof by the Borrower or a Subsidiary.
Section 6.12 Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, incur, create, issue, assume or suffer to exist any Indebtedness,
except:
6.12(a) The Obligations.
6.12(b) Indebtedness existing on the date of this Agreement and
disclosed on Schedule 6.12(b) hereto, and any extension or refinancing
thereof; provided that any such extension or refinancing does not increase
the amount of the Indebtedness so extended or refinanced.
6.12(c) Intercompany indebtedness among the Borrower and its Domestic
Subsidiaries; and guaranties by the Borrower of any permitted Indebtedness
of its Subsidiaries.
6.12(d) Interest rate swap, cap or option agreements, pursuant to
which the Borrower or any of its Subsidiaries xxxxxx interest rate risk
with respect to any of its Indebtedness which bears interest at a floating
rate, provided that the provider of such swap, cap or option agreement is
one of the Banks or another provider reasonably acceptable to the Agent.
6.12(e) Indebtedness secured by Liens permitted under Section 6.13(i)
hereof.
6.12 (f) Indebtedness incurred by Foreign Subsidiaries under working
capital lines of credit in an amount not greater than 140% of the amount
available under such lines on the Closing Date (which lines of credit are
disclosed in Schedule 6.12(b)).
6.12 (g) Indebtedness of Foreign Subsidiaries to the Borrower or a
Domestic Subsidiary in an amount not to exceed $10,000,000 in the
aggregate.
6.12 (h) Other Indebtedness not to exceed $10,000,000 in the
aggregate.
Section 6.13 Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter into,
or make any commitment to enter into, any arrangement for the acquisition of any
property through conditional sale, lease-purchase or other title retention
agreements, with respect to any property now owned or hereafter acquired by the
Borrower or a Subsidiary, except:
6.13(a) Liens granted to the Agent and the Banks under the Pledge
Agreement to secure the Obligations.
6.13(b) Liens existing on the date of this Agreement and disclosed on
Schedule 6.13 (b) hereto.
6.13(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Borrower or
a Subsidiary.
6.13(d) Liens for taxes, fees, assessments and governmental charges
not delinquent or to the extent that payment therefor shall not at the time
be required to be made in accordance with the provisions of Section 5.4.
6.13(e) Liens of carriers, warehousemen, mechanics and materialmen,
and other like Liens arising in the ordinary course of business, for sums
not due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 5.4.
6.13(f) Liens incurred or deposits or pledges made or given in
connection with, or to secure payment of, indemnity, performance or other
similar bonds.
6.13(g) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such deposit account is
not a dedicated cash collateral account and is not subject to restriction
against access by the Borrower or a Subsidiary in excess of those set forth
by regulations promulgated by the Board, and (ii) such deposit account is
not intended by the Borrower or any Subsidiary to provide collateral to the
depository institution.
6.13(h) Encumbrances in the nature of zoning restrictions, easements
and rights or restrictions of record on the use of real property and
landlords Liens under leases on the premises rented, which do not
materially detract from the value of such property or impair the use
thereof in the business of the Borrower or a Subsidiary.
6.13(i) The interest of any lessor under any Capitalized Lease entered
into after the Closing Date or purchase money Liens on property acquired
after the Closing Date; provided that such Liens are limited to the
property acquired and do not secure Indebtedness other than the related
Capitalized Lease Obligations or the purchase price of such property.
6.13(j) Liens on the property of a Subsidiary to secure Indebtedness
of such Subsidiary to the Borrower or another Subsidiary.
Section 6.14 Contingent Liabilities. The Borrower will not, and will not
permit any Subsidiary to, be or become liable on any Contingent Obligations
except Contingent Obligations existing on the date of this Agreement and
described on Schedule 6.14.
Section 6.15 Tangible Net Worth. The Borrower will not permit its Tangible
Net Worth at any time to be less than (i) for each fiscal year of the Borrower
ending after June 30, 1998, fifty percent of the Borrower's consolidated net
income for such fiscal year or, in the case of the Borrower's fiscal year ending
December 31, 1998, for the period from July 1, 1998 through December 31, 1998,
if positive, plus (ii) one hundred percent of the amount added to the net worth
of the Borrower as a result of the issuance and sale by the Borrower of
additional shares of its capital stock after June 30, 1998, minus (iii)
$25,000,000.
Section 6.16 Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio, as of the last day of any fiscal quarter for the
four consecutive fiscal quarters ending on that date, to be less than 1.35 to
1.0.
Section 6.17 Cash Flow Leverage Ratio. The Borrower will not permit the
Cash Flow Leverage Ratio, as of the last day of any fiscal quarter, to be more
than 2.5 to 1.0.
Section 6.18 Loan Proceeds. The Borrower will not, and will not permit any
Subsidiary to, use any part of the proceeds of any Revolving Loans directly or
indirectly, and whether immediately, incidentally or ultimately, (a) to purchase
or carry margin stock (as defined in Regulation U of the Board) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund Indebtedness originally incurred for such purpose or (b) for any purpose
which entails a violation of, or which is inconsistent with, the provisions of
Regulations G, U or X of the Board.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:
7.1(a) The Borrower shall fail to make when due, whether by
acceleration or otherwise, any payment of principal of or interest on any
Revolving Note or any other Obligation required to be paid to the Agent or
any Bank pursuant to this Agreement.
7.1(b) Any representation or warranty made by or on behalf of the
Borrower or any Subsidiary in this Agreement or any other Loan Document or
by or on behalf of the Borrower or any Subsidiary in any certificate,
statement, report or document herewith or hereafter furnished to any Bank
or the Agent pursuant to this Agreement or any other Loan Document shall
prove to have been false or misleading in any material respect on the date
as of which the facts set forth are stated or certified.
7.1(c) The Borrower shall fail to comply with Sections 5.2 or 5.3
hereof or any Section of Article VI hereof.
7.1(d) The Borrower or any Subsidiary shall fail to comply with any
other agreement, covenant, condition, provision or term contained in this
Agreement or any other Loan Document (other than those hereinabove set
forth in this Section 7.1) and such failure to comply shall continue for 30
calendar days after whichever of the following dates is the earliest: (i)
the date the Borrower gives notice of such failure to the Banks, (ii) the
date the Borrower should have given notice of such failure to the Banks
pursuant to Section 5.1, or (iii) the date the Agent or any Bank gives
notice of such failure to the Borrower.
7.1(e) The Borrower or any Subsidiary shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian, trustee
or receiver of the Borrower or such Subsidiary or for a substantial part of
the property thereof or, in the absence of such application, consent or
acquiescence, a custodian, trustee or receiver shall be appointed for the
Borrower or a Subsidiary or for a substantial part of the property thereof
and shall not be discharged within 45 days, or the Borrower or any
Subsidiary shall make an assignment for the benefit of creditors.
7.1(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against the Borrower or any Subsidiary, and, if instituted against the
Borrower or any Subsidiary, shall have been consented to or acquiesced in
by the Borrower or such Subsidiary, or shall remain undismissed for 60
days, or an order for relief shall have been entered against the Borrower
or such Subsidiary.
7.1(g) Any dissolution or liquidation proceeding not permitted by
Section 6.1 shall be instituted by or against the Borrower or a Subsidiary,
and, if instituted against the Borrower or any Subsidiary, shall be
consented to or acquiesced in by the Borrower or such Subsidiary or shall
remain for 45 days undismissed.
7.1(h) A judgment or judgments for the payment of money in excess of
the sum of $1,000,000 in the aggregate shall be rendered against the
Borrower and the Subsidiaries and either (i) the judgment creditor executes
on such judgment or (ii) such judgment remains unpaid or undischarged for
more than 60 days from the date of entry thereof or such longer period
during which execution of such judgment shall be stayed during an appeal
from such judgment.
7.1(i) The maturity of any material Indebtedness of the Borrower
(other than Indebtedness under this Agreement) or a Subsidiary shall be
accelerated, or the Borrower or a Subsidiary shall fail to pay any such
material Indebtedness when due (after the lapse of any applicable grace
period) or, in the case of such Indebtedness payable on demand, when
demanded (after the lapse of any applicable grace period), or any event
shall occur or condition shall exist and shall continue for more than the
period of grace, if any, applicable thereto and shall have the effect of
causing, or permitting the holder of any such Indebtedness or any trustee
or other Person acting on behalf of such holder to cause, such material
Indebtedness to become due prior to its stated maturity or to realize upon
any collateral given as security therefor. For purposes of this Section,
Indebtedness of the Borrower or a Subsidiary shall be deemed "material" if
it exceeds $1,000,000 as to any item of Indebtedness or in the aggregate
for all items of Indebtedness with respect to which any of the events
described in this Section 7.1(i) has occurred.
7.1(j) Any execution or attachment shall be issued whereby any
substantial part of the property of the Borrower and its Subsidiaries,
taken as a whole, shall be taken or attempted to be taken and the same
shall not have been vacated or stayed within 30 days after the issuance
thereof.
7.1(k) The Pledge Agreement or any Guaranty shall, at any time, cease
to be in full force and effect or shall be judicially declared null and
void, or the validity or enforceability thereof shall be contested by the
Borrower or any Subsidiary, or the Agent shall cease to have a valid and
perfected security interest having the priority contemplated thereunder in
all of the collateral described in the Pledge Agreement, other than by
action or inaction of the Agent or the Banks and other than as a result of
a merger or sale permitted by Section 6.01 or 6.02.
Section 7.2 Remedies. If (a) any Event of Default described in Sections
7.1(e), (f) or (g) shall occur with respect to the Borrower, the Revolving
Commitments shall automatically terminate and the Revolving Notes and all other
Obligations shall automatically become immediately due and payable, and the
Borrower shall without demand pay into the Holding Account an amount equal to
the aggregate face amount of all outstanding Letters of Credit; or (b) any other
Event of Default shall occur and be continuing, then, upon receipt by the Agent
of a request in writing from the Majority Banks, the Agent shall take any of the
following actions so requested: (i) declare the Revolving Commitments
terminated, whereupon the Revolving Commitments shall terminate, (ii) declare
the outstanding unpaid principal balance of the Revolving Notes, the accrued and
unpaid interest thereon and all other Obligations to be forthwith due and
payable, whereupon the Revolving Notes, all accrued and unpaid interest thereon
and all such Obligations shall immediately become due and payable, in each case
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding; and (iii) demand that the Borrower pay into the
Holding Account an amount equal to the aggregate face amount of all outstanding
Letters of Credit. Upon the occurrence of any of the events described in clause
(a) of the preceding sentence, or upon the occurrence of any of the events
described in clause (b) of the preceding sentence when so requested by the
Majority Banks, the Agent may exercise all rights and remedies under any of the
Loan Documents, and enforce all rights and remedies under any applicable law.
Section 7.3 Offset. In addition to the remedies set forth in Section 7.2,
upon the occurrence of any Event of Default and thereafter while the same be
continuing, the Borrower hereby irrevocably authorizes each Bank to set off any
Obligations owed to such Bank against all deposits and credits of the Borrower
with, and any and all claims of the Borrower against, such Bank and the Agent to
set off any Obligations (whether owing to the Agent or a Bank) against all
amounts in the Holding Account. Such right shall exist whether or not such Bank
shall have made any demand hereunder or under any other Loan Document, whether
or not the Obligations, or any part thereof, or deposits and credits held for
the account of the Borrower is or are matured or unmatured, and regardless of
the existence or adequacy of any collateral, guaranty or any other security,
right or remedy available to such Bank or the Banks. Each Bank agrees that, as
promptly as is reasonably possible after the exercise of any such setoff right,
it shall notify the Borrower of its exercise of such setoff right; provided,
however, that the failure of such Bank to provide such notice shall not affect
the validity of the exercise of such setoff rights. Nothing in this Agreement
shall be deemed a waiver or prohibition of or restriction on any Bank to all
rights of banker's Lien, setoff and counterclaim available pursuant to law.
ARTICLE VIII
THE AGENT
The following provisions shall govern the relationship of the Agent with
the Banks.
Section 8.1 Appointment and Authorization. Each Bank appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such respective powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers or employees shall
be liable for any action taken or omitted to be taken by it under or in
connection with the Loan Documents, except for its own gross negligence or
willful misconduct. The Agent shall act as an independent contractor in
performing its obligations as Agent hereunder and nothing herein contained shall
be deemed to create any fiduciary relationship among or between the Agent, the
Borrower or the Banks.
Section 8.2 Note Holders. The Agent may treat the payee of any Revolving
Note as the holder thereof until written notice of transfer shall have been
filed with it, signed by such payee and in form satisfactory to the Agent.
Section 8.3 Consultation With Counsel. The Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
Section 8.4 Loan Documents. The Agent shall not be under a duty to examine
or pass upon the validity, effectiveness, genuineness or value of any of the
Loan Documents or any other instrument or document furnished pursuant thereto,
and the Agent shall be entitled to assume that the same are valid, effective and
genuine and what they purport to be.
Section 8.5 U.S. Bank and Affiliates. With respect to its Revolving
Commitment and the Revolving Loan made by it, U.S. Bank shall have the same
rights and powers under the Loan Documents as any other Bank and may exercise
the same as though it were not the Agent consistent with the terms thereof, and
U.S. Bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower as if it were not the
Agent.
Section 8.6 Action by Agent. Except as may otherwise be expressly stated in
this Agreement, the Agent shall be entitled to use its discretion with respect
to exercising or refraining from exercising any rights which may be vested in it
by, or with respect to taking or refraining from taking any action or actions
which it may be able to take under or in respect of, the Loan Documents. The
Agent shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Banks, and such instructions shall be binding upon all holders of
Revolving Notes; provided, however, that the Agent shall not be required to take
any action which exposes the Agent to personal liability or which is contrary to
the Loan Documents or applicable law. The Agent shall incur no liability under
or in respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties and to be consistent
with the terms of this Agreement.
Section 8.7 Credit Analysis. Each Bank has made, and shall continue to
make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrower in
connection with entering into this Agreement and has made its own appraisal of
the creditworthiness of the Borrower. Except as explicitly provided herein, the
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect to such
operations, business, property, condition or creditworthiness, whether such
information comes into its possession on or before the first Event of Default or
at any time thereafter.
Section 8.8 Notices of Event of Default, Etc. In the event that the Agent
shall have acquired actual knowledge of any Event of Default or Default, the
Agent shall promptly give notice thereof to the Banks.
Section 8.9 Indemnification. Each Bank agrees to indemnify the Agent, as
Agent (to the extent not reimbursed by the Borrower), ratably according to such
Bank's share of the aggregate Revolving Commitment Amounts from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on or incurred by the Agent in any way relating
to or arising out of the Loan Documents or any action taken or omitted by the
Agent under the Loan Documents, provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. No payment by any Bank under this
Section shall relieve the Borrower of any of its obligations under this
Agreement.
Section 8.10 Payments and Collections. All funds received by the Agent in
respect of any payments made by the Borrower on the Revolving Notes or Revolving
Commitment Fees shall be distributed forthwith by the Agent among the Banks, in
like currency and funds as received, ratably according to each Bank's Revolving
Percentage. After any Event of Default has occurred, all funds received by the
Agent, whether as payments by the Borrower or as realization on collateral or on
any Guaranties, shall (except as may otherwise be required by law) be
distributed by the Agent in the following order: (a) first to the Agent or any
Bank who has incurred unreimbursed costs of collection with respect to any
Obligations hereunder, ratably to the Agent and each Bank in the proportion that
the costs incurred by the Agent or such Bank bear to the total of all such costs
incurred by the Agent and all Banks; (b) next to the Agent for the account of
the Banks (in accordance with their respective Revolving Percentages) for
application on the Revolving Notes; and (c) last to the Agent for the account of
the Banks (in accordance with their respective Revolving Percentages) for any
unpaid Revolving Commitment Fees and other Obligations owing by the Borrower
hereunder.
Section 8.11 Sharing of Payments. If any Bank shall receive and retain any
payment, voluntary or involuntary, whether by setoff, application of deposit
balance or security, or otherwise, in respect of Indebtedness under this
Agreement or the Revolving Notes in excess of such Bank's share thereof as
determined under this Agreement, then such Bank shall purchase from the other
Banks for cash and at face value and without recourse, such participation in the
Revolving Notes held by such other Banks as shall be necessary to cause such
excess payment to be shared ratably as aforesaid with such other Banks;
provided, that if such excess payment or part thereof is thereafter recovered
from such purchasing Bank, the related purchases from the other Banks shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest. Subject to the participation
purchase obligation above, each Bank agrees to exercise any and all rights of
setoff, counterclaim or banker's lien first fully against any Revolving Notes
and participations therein held by such Bank, next to any other Indebtedness of
the Borrower to such Bank arising under or pursuant to this Agreement and to any
participations held by such Bank in Indebtedness of the Borrower arising under
or pursuant to this Agreement, and only then to any other Indebtedness of the
Borrower to such Bank.
Section 8.12 Advice to Banks. The Agent shall forward to the Banks copies
of all notices, financial reports and other communications received hereunder
from the Borrower by it as Agent, excluding, however, notices, reports and
communications which by the terms hereof are to be furnished by the Borrower
directly to each Bank.
Section 8.13 Resignation. If at any time U.S. Bank shall deem it advisable,
in its sole discretion, it may submit to each of the Banks and the Borrower a
written notification of its resignation as Agent under this Agreement, such
resignation to be effective upon the appointment of a successor Agent, but in no
event later than 30 days from the date of such notice. Upon submission of such
notice, the Majority Banks may appoint a successor Agent; provided that, with
respect to any successor Agent appointed prior to the occurrence of an Event of
Default, such successor Agent is consented to by the Borrower (which consent
will not be unreasonably withheld).
ARTICLE IX
MISCELLANEOUS
Section 9.1 Modifications. Notwithstanding any provisions to the contrary
herein, any term of this Agreement may be amended with the written consent of
the Borrower; provided that no amendment, modification or waiver of any
provision of this Agreement or any other Loan Document or consent to any
departure therefrom by the Borrower or other party thereto shall in any event be
effective unless the same shall be in writing and signed by the Majority Banks,
and then such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the purpose for which given. (The Agent may
enter into amendments or modifications of, and grant consents and waivers to
departure from the provisions of, those Loan Documents to which the Banks are
not signatories without the Banks joining therein, provided the Agent has first
obtained the separate prior written consent to such amendment, modification,
consent or waiver from the Majority Banks.) Notwithstanding the forgoing, no
such amendment, modification, waiver or consent shall:
9.1(a) Reduce the rate or extend the time of payment of interest
thereon, or reduce the amount, or extend the time for payment, of the
principal thereof, or modify any of the provisions of any Revolving Note
with respect to the payment or repayment thereof, without the consent of
the holder of each Revolving Note so affected; or
9.1(b) Increase the amount or extend the time of any Revolving
Commitment of any Bank, or postpone any scheduled reduction of the
Aggregate Revolving Commitment Amounts pursuant to Section 2.8(a)(i),
without the consent of such Bank; or
9.1(c) Reduce the rate or extend the time of payment of any fee
payable to a Bank, without the consent of the Bank affected; or
9.1(d) Except as may otherwise be expressly provided in any of the
other Loan Documents, release any material portion of collateral securing,
or any guaranties for, all or any part of the Obligations without the
consent of all the Banks; or
9.1(e) Amend the definition of Majority Banks or otherwise reduce the
percentage of the Banks required to approve or effectuate any such
amendment, modification, waiver, or consent, without the consent of all the
Banks; or
9.1(f) Amend any of the foregoing Sections 9.1 (a) through (e) or this
Section 9.1 (f) without the consent of all the Banks; or
9.1(g) Amend any provision of this Agreement relating to the Agent in
its capacity as Agent without the consent of the Agent.
9.1(h) Amend any provision of this Agreement relating to the issuance
of Letters of Credit without the consent of the Agent.
Section 9.2 Expenses. Whether or not the transactions contemplated hereby
are consummated, the Borrower agrees to reimburse the Agent upon demand for all
reasonable out-of-pocket expenses paid or incurred by the Agent (including
filing and recording costs and fees and expenses of Xxxxxx & Xxxxxxx LLP,
counsel to the Agent) in connection with the negotiation, preparation, approval,
review, execution, delivery, administration, amendment, modification and
interpretation of this Agreement and the other Loan Documents and any commitment
letters relating thereto. The Borrower shall also reimburse the Agent and each
Bank upon demand for all reasonable out-of-pocket expenses (including expenses
of legal counsel) paid or incurred by the Agent or any Bank in connection with
the collection and enforcement of this Agreement and any other Loan Document.
The obligations of the Borrower under this Section shall survive any termination
of this Agreement.
Section 9.3 Waivers, etc. No failure on the part of the Agent or the holder
of a Revolving Note to exercise and no delay in exercising any power or right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
The remedies herein and in the other Loan Documents provided are cumulative and
not exclusive of any remedies provided by law.
Section 9.4 Notices. Except when telephonic notice is expressly authorized
by this Agreement, any notice or other communication to any party in connection
with this Agreement shall be in writing and shall be sent by manual delivery,
telegram, telex, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent or any Bank under Article II hereof shall be deemed to
have been given only when received by the Agent or such Bank.
Section 9.5 Taxes. The Borrower agrees to pay, and save the Agent and the
Banks harmless from all liability for, any stamp or other taxes which may be
payable with respect to the execution or delivery of this Agreement or the
issuance of the Revolving Notes, which obligation of the Borrower shall survive
the termination of this Agreement.
Section 9.6 Binding Effect; Assignments and Participations.
(a) Whenever in this Agreement or any other Loan Agreement any of the
parties hereto or thereto is referred to, such reference shall be
deemed to refer to the successors and any permitted assigns of
such party and this Agreement and the other Loan Documents shall
be binding upon and inure to the benefit of each party hereto and
the respective successors and assigns of each of them, except
that the Borrower may not assign its rights or delegate its
obligations hereunder or under any other Loan Document without
the prior written consent of all of the Banks.
(b) Any Bank may (i) with the prior written consent (except in the
case of an assignment by any Bank to an Affiliate of such Bank or
to another Bank) of the Agent and, prior to the occurrence of an
Event of Default, the Borrower, which consent shall not be
unreasonably withheld, assign its rights and delegate its
obligations under this Agreement and any other Loan Document,
including, without limitation, all or any portion of its
Revolving Commitment, its Revolving Note, its Revolving Loans and
any other Obligation owned by it, to one or more banks, financial
institutions or other Person generally engaged in the business of
making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business, provided, that the aggregate
amount of the Revolving Commitment which is the subject of the
assignment shall be $10,000,000 or an integral multiple of
$10,000,000 in excess thereof, except (I) in the case of an
assignment by one Bank to another Bank, in which case the
aggregate amount of the Commitment which is the subject of the
assignment shall be $1,000,000 or an integral multiple of
$1,000,000 in excess thereof, and (II) in the case of the
assignment by any Bank of its Commitment in full, and provided,
that following any such assignment, the transferring Bank shall
continue to hold a Commitment in an aggregate amount not less
than $10,000,000, unless it has assigned its Commitment in full,
and (ii) sell participations therein to one or more banks,
financial institutions or other persons generally engaged in the
business and making, purchasing or otherwise investing in
commercial loans. Any such assignee under clause (i) of the
preceding sentence, to the extent of such assignment (unless
otherwise provided therein), shall have all the rights and
obligations of a Bank hereunder and the assigning Bank shall be
released from its duties and obligations under this Agreement to
the extent of such assignment. Upon any assignment and delegation
as contemplated in clause (i) of the second preceding sentence,
(A) the Agent shall revise Schedule 1.1(a) to reflect such
assignment and delegation and distribute such revised Schedule
1.1(a) to the Borrower and the Banks, (B) the Borrower shall, at
the request of either the assignor or assignee Bank, execute and
deliver new Revolving Notes to the assignor Bank (if it retains a
Revolving Commitment following such assignment) and the assignee
Bank, in the principal amount of their respective Revolving
Commitments, and (C) the assignor Bank shall pay to the Agent an
assignment fee in the amount of $3,500. Upon the delivery of such
new Revolving Notes, the assignor Bank shall return to the
Borrower its Revolving Note in effect prior to such assignment
and delegation. Notwithstanding the sale of any such
participation under clause (ii) of the fifth preceding sentence,
(x) no such participant shall be deemed to be or have the rights
and obligations of a Bank hereunder except that any such
participant shall have a right of setoff under Section 7.3 as if
it were a Bank and the amount of its participation were owing
directly to such participant by the Borrower obligated thereon
and (y) each Bank, in connection with selling any such
participation, shall not condition its rights in connection with
consenting to amendments or granting waivers concerning any
matter under any Loan Document upon obtaining the consent of such
participant other than on matters relating to (1) any reduction
in the amount of any principal of, or the amount of or rate of
interest or fee in connection with, its Revolving Commitment or
any Obligation, or (2) any extension of the termination of its
Revolving Commitment or the maturity of any principal of or
interest on any Obligation.
Section 9.7 Confidentiality of Information. The Agent and each Bank shall
use reasonable efforts to assure that information about the Borrower and its
operations, affairs and financial condition, not generally disclosed to the
public or to trade and other creditors, which is furnished to the Agent or such
Bank pursuant to the provisions hereof is used only for the purposes of this
Agreement shall not be divulged to any Person other than the Banks, their
Affiliates and their respective officers, directors, employees and agents,
except: (a) to their attorneys and accountants, (b) in connection with the
enforcement of the rights of the Banks hereunder and under the Revolving Notes,
the Guaranties and the Pledge Agreement or otherwise in connection with
applicable litigation, (c) in connection with assignments and participations and
the solicitation of prospective assignees and participants referred to in the
immediately preceding Section (provided that such assignees, participants and
prospective assignees and participants have agreed to be bound by the provisions
of this Section 9.7 as if they were a "Bank"), and (d) as may otherwise be
required or requested by any regulatory authority having jurisdiction over any
Bank or by any applicable law, rule, regulation or judicial process, the opinion
of such Bank's counsel concerning the making of such disclosure to be binding on
the parties hereto. No Bank shall incur any liability to the Borrower by reason
of any disclosure permitted by this Section 9.7.
Section 9.8 Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE REVOLVING NOTES SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED
STATES APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision of this
Agreement and the other Loan Documents and any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto shall
be interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement, the other Loan Documents or any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be held to be prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement, the other Loan Documents or any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto.
Section 9.9 Consent to Jurisdiction. THIS AGREEMENT AND THE OTHER BORROWER
LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT
SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN
ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY
OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE AGENT AT ITS
OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 9.10 Waiver of Jury Trial. EACH OF THE BORROWER , THE AGENT AND THE
BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 9.11 Survival of Agreement. All representations, warranties,
covenants and agreement made by the Borrower herein or in the other Borrower
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be deemed to have been relied upon by the Banks and shall survive
the making of the Revolving Loans by the Banks and the execution and delivery to
the Banks by the Borrower of the Revolving Notes, regardless of any
investigation made by or on behalf of the Banks, and shall continue in full
force and effect as long as any Obligation is outstanding and unpaid and so long
as the Revolving Commitments have not been terminated; provided, however, that
the obligations of the Borrower under Section 9.2, 9.5 and 9.12 shall survive
payment in full of the Obligations and the termination of the Revolving
Commitments.
Section 9.12 Indemnification. The Borrower hereby agrees to defend,
protect, indemnify and hold harmless the Agent and the Banks and their
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Agent and the Banks and their respective Affiliates (each of the
foregoing being an "Indemnitee" and all of the foregoing being collectively the
"Indemnitees") from and against any and all claims, actions, damages,
liabilities, judgments, costs and expenses (including all reasonable fees and
disbursements of counsel which may be incurred in the investigation or defense
of any matter) imposed upon, incurred by or asserted against any Indemnitee,
whether direct, indirect or consequential and whether based on any federal,
state, local or foreign laws or regulations (including securities laws,
environmental laws, commercial laws and regulations), under common law or on
equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with the execution,
delivery, performance or enforcement of any Loan Document, any
commitments relating thereto, or any transaction contemplated by
any Loan Document; or
(b) by reason of, relating to or in connection with any credit
extended or used under the Loan Documents or any act done or
omitted by any Person, or the exercise of any rights or remedies
thereunder, including the acquisition of any collateral by the
Banks by way of foreclosure of the Lien thereon, deed or xxxx of
sale in lieu of such foreclosure or otherwise;
provided, however, that the Borrower shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses resulting from
such Indemnitee's gross negligence or willful misconduct. In the event this
indemnity is unenforceable as a matter of law as to a particular matter or
consequence referred to herein, it shall be enforceable to the full extent
permitted by law.
This indemnification applies, without limitation, to any act, omission, event or
circumstance existing or occurring on or prior to the later of the Termination
Date or the date of payment in full of the Obligations, including specifically
Obligations arising under clause (b) of this Section. The indemnification
provisions set forth above shall be in addition to any liability the Borrower
may otherwise have. Without prejudice to the survival of any other obligation of
the Borrower hereunder the indemnities and obligations of the Borrower contained
in this Section shall survive the payment in full of the other Obligations.
Section 9.13 Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
Section 9.14 Entire Agreement. This Agreement and the other Borrower Loan
Documents embody the entire agreement and understanding between the Borrower,
the Agent and the Banks with respect to the subject matter hereof and thereof.
This Agreement supersedes all prior agreements and understandings relating to
the subject matter hereof. Nothing contained in this Agreement or in any other
Loan Document, expressed or implied, is intended to confer upon any Persons
other than the parties hereto any rights, remedies, obligations or liabilities
hereunder or thereunder.
Section 9.15 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 9.16 Borrower Acknowledgments. The Borrower hereby acknowledges
Section 9.16 Borrower Acknowledgments. The Borrower hereby acknowledges that (a)
it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents, (b) neither the Agent nor any Bank
has any fiduciary relationship to the Borrower, the relationship being solely
that of debtor and creditor, (c) no joint venture exists between the Borrower
and the Agent or any Bank, and (d) neither the Agent nor any Bank undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the business or operations of the Borrower and the
Borrower shall rely entirely upon its own judgment with respect to its business,
and any review, inspection or supervision of, or information supplied to, the
Borrower by the Agent or any Bank is for the protection of the Banks and neither
the Borrower nor any third party is entitled to rely thereon.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
GRACO INC.
By
Title
Address for Borrower:
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxx 00000
U.S. BANK NATIONAL ASSOCIATION,
In its individual corporate capacity and as Agent
By
Title
Address:
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx MPFP0607
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By
Title
Address:
000 Xxxxx XxXxxxx
Mail Station 231-0602
Xxxxxxx, XX 00000
THE NORTHERN TRUST COMPANY
By
Title
Address:
Middle Market Group
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
THE BANK OF NEW YORK
By
Title
Address:
Commercial Banking
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
NBD BANK
By
Title
Address:
Midwest Banking
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By
Title
Address:
Norwest Center
Sixth and Marquette
Xxxxxxxxxxx, XX 00000
BANK OF TOKYO-MITSUBISHI, LTD.
By
Title
Address:
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
WACHOVIA BANK, N.A.
By
Title
Address:
Atlanta Branch
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
FUJI BANK, LIMITED
By
Title
Address:
U.S. Corporate Banking
000 Xxxx Xxxxxx Xxxxx 0000
Xxxxx 0000
Xxxxxxx, XX 00000
ABN AMRO BANK N.V.
By
Title
By
Title
Address:
0000 X.X. Xxxx Xxxxx
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
with a copy to:
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
EXHIBIT A
FORM OF
GUARANTY
THIS GUARANTY, dated as of ____________________ is made and given by
_____________________________, a ___________________ (the "Guarantor"), in favor
of the Banks from time to time party to the Credit Agreement dated as of July 2
, 1998 (as the same may hereafter be amended, supplemented, restated, or
otherwise modified from time to time, the "Credit Agreement"), by and between
Graco Inc., a Minnesota corporation (the "Borrower"), such Banks and U.S. Bank
National Association, as agent for such Banks (in such capacity, the "Agent").
RECITALS
A. The Borrower, the Banks and the Agent have entered into the Credit
Agreement pursuant to which the Banks have agreed to extend to the Borrower a
revolving credit facility.
B. It is a condition precedent to the obligation of the Banks to extend
credit accommodations pursuant to the terms of the Credit Agreement that this
Guaranty be executed and delivered by the Guarantor.
C. The Borrower owns, directly or indirectly, all of the issued and
outstanding capital stock of the Guarantor, and intends to use a portion of the
credit accommodations extended by the Banks under the Credit Agreement to
finance the Guarantor's business.
D. The Guarantor expects to derive benefits from the extension of credit
accommodations to the Borrower by the Banks and finds it advantageous, desirable
and in its best interests to execute and deliver this Guaranty to the Banks.
NOW, THEREFORE, In consideration of the credit accommodations to be
extended to the Borrower and for other good and valuable consideration, the
Guarantor hereby covenants and agrees with the Banks as follows:
Section 1. Defined Terms. As used in this Guaranty, the following terms
shall have the meaning indicated:
"Obligations" shall mean (a) all indebtedness, liabilities and obligations
of the Borrower to the Banks or the Agent of every kind, nature or description
under the Credit Agreement, including the Borrower's obligation on any
promissory note or notes under the Credit Agreement and any note or notes
hereafter issued in substitution or replacement thereof, in all cases whether
due or to become due, and whether now existing or hereafter arising or incurred.
"Person" shall mean any natural person, corporation, partnership, joint
venture, firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
Section 2. The Guaranty. Subject to the following Section, the Guarantor
hereby absolutely and unconditionally guarantees to the Agent and the Banks the
payment when due (whether at a stated maturity or earlier by reason of
acceleration or otherwise) and performance of the Obligations.
Section 3. Limitation; Insolvency Laws. Notwithstanding any other provision
hereof, the obligation of the Guarantor on this Guaranty is limited to the
amount which can be guaranteed by the Guarantor under applicable federal and
state laws relating to the insolvency of debtors without this Guaranty being
held to be avoidable or unenforceable. The Guarantor acknowledges and agrees
that Obligations may be created and continued in any amount, without affecting
or impairing the liability of the Guarantor hereunder, and the Banks may pay (or
allow for the payment of) Obligations out of any sums received by or available
to the Banks on account of Obligations from the Borrower or any other Person
(except the Guarantor), from the properties of the Borrower or such other
Persons, out of collateral security or from any other source and such payment
(or allowance) shall not reduce, affect or impair the liability of the Guarantor
hereunder. The liability of the Guarantor shall be a continuing liability and
shall not be affected by (nor shall anything herein contained be deemed a
limitation upon) the amount of credit which may be extended to the Borrower, the
number of transactions with the Borrower, repayments by the Borrower, or the
allocation by the Banks of repayments by the Borrower, it being the
understanding of the Guarantor that the Guarantor's liability shall continue
hereunder so long as there are any Obligations outstanding and until the
expiration of the obligations, if any, of the Bank to extend credit
accommodations to the Borrower. Any payment made by the Guarantor hereunder
shall be effective to reduce or discharge such liability only if accompanied by
a written transmittal document, received by the Agent, advising the Banks that
such payment is made under this Guaranty for such purpose. To the extent that
any payment to, or realization by, the Banks on the guaranteed Obligations
exceeds the limitations of this Section and is otherwise subject to avoidance
and recovery in any such proceeding, the amount subject to avoidance shall in
all events be limited to the amount by which such actual payment or realization
exceeds such limitation, and this Guaranty as limited shall in all events remain
in full force and effect and be fully enforceable against the Guarantor. This
Section is intended solely to preserve the rights of the Banks hereunder against
the Guarantor and neither the Guarantor, the Borrower, any other guarantor of
the Obligations nor any Person shall have any right, claim or defense under this
Section that would not otherwise be available under applicable insolvency laws.
Section 4. Continuing Guaranty. This Guaranty is an absolute, unconditional
and continuing guaranty of payment and performance of the Obligations, and the
obligations of the Guarantor hereunder shall not be released, in whole or in
part, by any action or thing which might, but for this provision of this
Guaranty, be deemed a legal or equitable discharge of a surety or guarantor,
other than irrevocable payment and performance in full of the Obligations. No
notice of the Obligations to which this Guaranty may apply, or of any renewal or
extension thereof need be given to the Guarantor and none of the foregoing acts
shall release the Guarantor from liability hereunder. The Guarantor hereby
expressly waives (a) demand of payment, presentment, protest, notice of
dishonor, nonpayment or nonperformance on any and all forms of the Obligations;
(b) notice of acceptance of this Guaranty and notice of any liability to which
it may apply; (c) all other notices and demands of any kind and description
relating to the Obligations now or hereafter provided for by any agreement,
statute, law, rule or regulation; and (d) any and all defenses of the Borrower
pertaining to the Obligations except for the defense of discharge by payment.
The Guarantor shall not be exonerated with respect to the Guarantor's
liabilities under this Guaranty by any act or thing except irrevocable payment
and performance of the Obligations, it being the purpose and intent of this
Guaranty that the Obligations constitute the direct and primary obligations of
the Guarantor and that the covenants, agreements and all obligations of the
Guarantor hereunder be absolute, unconditional and irrevocable. The Guarantor
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage, deed of trust or security agreement securing all or any part of the
Obligations, whether or not the liability of the Borrower or any other Person
for such deficiency is discharged pursuant to statute, judicial decision or
otherwise. The acceptance of this Guaranty by the Banks is not intended and does
not release any liability previously existing of any guarantor or surety of any
indebtedness of the Borrower to the Banks.
Section 5. Other Transactions. The Agent and the Banks are expressly
authorized (a) to exchange, surrender or release with or without consideration
any or all collateral and security which may at any time be placed with it by
the Borrower or by any other Person, or to forward or deliver any or all such
collateral and security directly to the Borrower for collection and remittance
or for credit, or to collect the same in any other manner without notice to the
Guarantor; and (b) to amend, modify, extend or supplement the Credit Agreement,
any note or other instrument evidencing the Obligations or any part thereof and
any other agreement with respect to the Obligations, waive compliance by the
Borrower or any other Person with the respective terms thereof and settle or
compromise any of the Obligations without notice to the Guarantor and without in
any manner affecting the absolute liabilities of the Guarantor hereunder. No
invalidity, irregularity or unenforceability of all or any part of the
Obligations or of any security therefor or other recourse with respect thereto
shall affect, impair or be a defense to this Guaranty. The liabilities of the
Guarantor hereunder shall not be affected or impaired by any failure, delay,
neglect or omission on the part of the Agent or any Bank to realize upon any of
the Obligations of the Borrower to the Agent or such Bank, or upon any
collateral or security for any or all of the Obligations, nor by the taking by
the Agent or any Bank of (or the failure to take) any other guaranty or
guaranties to secure the Obligations, nor by the taking by the Agent or any Bank
of (or the failure to take or the failure to perfect its security interest in or
other lien on) collateral or security of any kind. No act or omission of the
Agent or any Bank, whether or not such action or failure to act varies or
increases the risk of, or affects the rights or remedies of the Guarantor, shall
affect or impair the obligations of the Guarantor hereunder. The Guarantor
acknowledges that this Guaranty is in effect and binding without reference to
whether this Guaranty is signed by any other Person or Persons, that possession
of this Guaranty by the Agent shall be conclusive evidence of due delivery
hereof by the Guarantor and that this Guaranty shall continue in full force and
effect, both as to the Obligations then existing and/or thereafter created,
notwithstanding the release of or extension of time to any other guarantor of
the Obligations or any part thereof.
Section 6. Actions Not Required. The Guarantor hereby waives any and all
right to cause a marshalling of the assets of the Borrower or any other action
by any court or other governmental body with respect thereto or to cause the
Agent or any Bank to proceed against any security for the Obligations or any
other recourse which the Agent or any Bank may have with respect thereto and
further waives any and all requirements that the Agent or any Bank institute any
action or proceeding at law or in equity, or obtain any judgment, against the
Borrower or any other Person, or with respect to any collateral security for the
Obligations, as a condition precedent to making demand on or bringing an action
or obtaining and/or enforcing a judgment against, the Guarantor upon this
Guaranty. The Guarantor further acknowledges that time is of the essence with
respect to the Guarantor's obligations under this Guaranty. Any remedy or right
hereby granted which shall be found to be unenforceable as to any Person or
under any circumstance, for any reason, shall in no way limit or prevent the
enforcement of such remedy or right as to any other Person or circumstance, nor
shall such unenforceability limit or prevent enforcement of any other remedy or
right hereby granted.
Section 7. No Subrogation. Notwithstanding any payment or payments made by
the Guarantor hereunder or any setoff or application of funds of the Guarantor
by the Agent or any Bank, the Guarantor shall not be entitled to be subrogated
to any of the rights of the Agent or any Bank against the Borrowers or any other
guarantor or any collateral security or guaranty or right of offset held by the
Agent or any Bank for the payment of the Obligations, nor shall the Guarantor
seek or be entitled to seek any contribution or reimbursement from either of the
Borrower or any other guarantor in respect of payments made by the Guarantor
hereunder, until all amounts owing to the Agent and the Banks by the Borrower on
account of the Obligations are irrevocably paid in full and until the expiration
of the obligations, if any, of the Bank to extend credit accommodations to the
Borrower. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
irrevocably paid in full, such amount shall be held by the Guarantor in trust
for the Banks, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Agent in the
exact form received by the Guarantor (duly indorsed by the Guarantor to the
Agent, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Agent and the Banks may determine.
Section 8. Application of Payments. Any and all payments upon the
Obligations made by the Guarantor or by any other Person, and/or the proceeds of
any or all collateral or security for any of the Obligations, may be applied by
the Agent and the Banks on such items of the Obligations as they may elect.
Section 9. Recovery of Payment. If any payment received by the Agent or any
Bank and applied to the Obligations is subsequently set aside, recovered,
rescinded or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of the Borrower or any
other obligor), the Obligations to which such payment was applied shall for the
purposes of this Guaranty be deemed to have continued in existence,
notwithstanding such application, and this Guaranty shall be enforceable as to
such Obligations as fully as if such application had never been made. References
in this Guaranty to amounts "irrevocably paid" or to "irrevocable payment" refer
to payments that cannot be set aside, recovered, rescinded or required to be
returned for any reason.
Section 10. Borrower's Financial Condition. The Guarantor is familiar with
the financial condition of the Borrower, and the Guarantor has executed and
delivered this Guaranty based on the Guarantor's own judgment and not in
reliance upon any statement or representation of the Agent or any Bank. Neither
the Agent nor any Bank shall have any obligation to provide the Guarantor with
any advice whatsoever or to inform the Guarantor at any time of the actions,
evaluations or conclusions of the Agent or any Bank on the financial condition
or any other matter concerning the Borrower.
Section 11. Remedies. All remedies afforded to the Agent or any Bank by
reason of this Guaranty are separate and cumulative remedies and it is agreed
that no one of such remedies, whether or not exercised by the Agent or any Bank,
shall be deemed to be in exclusion of any of the other remedies available to the
Agent or any Bank and no one of such remedies shall in any way limit or
prejudice any other legal or equitable remedy which the Agent or any Bank may
have hereunder and with respect to the Obligations. Mere delay or failure to act
shall not preclude the exercise or enforcement of any rights and remedies
available to the Agent or any Bank.
Section 12. Bankruptcy of the Borrower. The Guarantor expressly agrees that
the liabilities and obligations of the Guarantor under this Guaranty shall not
in any way be impaired or otherwise affected by the institution by or against
the Borrower or any other Person of any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or any other similar proceedings for
relief under any bankruptcy law or similar law for the relief of debtors and
that any discharge of any of the Obligations pursuant to any such bankruptcy or
similar law or other law shall not diminish, discharge or otherwise affect in
any way the obligations of the Guarantor under this Guaranty, and that upon the
institution of any of the above actions, such obligations shall be enforceable
against the Guarantor.
Section 13. Costs and Expenses. The Guarantor will pay or reimburse the
Agent or any Bank on demand for all out-of-pocket expenses (including in each
case all reasonable fees and expenses of counsel) incurred by the Agent or any
Bank arising out of or in connection with the enforcement of this Guaranty
against the Guarantor or arising out of or in connection with any failure of the
Guarantor to fully and timely perform the obligations of the Guarantor
hereunder.
Section 14. Waivers and Amendments. This Guaranty can be waived, modified,
amended, terminated or discharged only explicitly in a writing signed by the
Agent, on behalf of the Banks. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given.
Section 15. Notices. Any notice or other communication to any party in
connection with this Guaranty shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at (i) in the case of the
Guarantor, the address specified on the signature page hereof, and (ii) in the
case of the Agent or any Bank, the address specified on the signature pages of
the Credit Agreement, or at such other address as such party shall have
specified in writing. All periods of notice shall be measured from the date of
delivery thereof if manually delivered, from the date of sending thereof if sent
by telegram, telex or facsimile transmission, from the first business day after
the date of sending if sent by overnight courier, or from four days after the
date of mailing if mailed.
Section 16. Guarantor Acknowledgments. The Guarantor hereby acknowledges
that (a) counsel has advised the Guarantor in the negotiation, execution and
delivery of this Guaranty, (b) neither the Agent nor any Bank has any fiduciary
relationship to the Guarantor, the relationship being solely that of debtor and
creditor, and (c) no joint venture exists between the Guarantor and the Agent
and the Banks.
Section 17. Representations and Warranties. The Guarantor hereby represents
and warrants to the Agent and the Banks that:
17(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
power and authority and the legal right to own and operate its properties
and to conduct the business in which it is currently engaged.
17(b) It has the power and authority and the legal right to execute
and deliver, and to perform its obligations under, this Guaranty and has
taken all necessary corporate action to authorize such execution, delivery
and performance.
17(c) This Guaranty constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
17(d) The execution, delivery and performance of this Guaranty will
not (i) violate any provision of any law, statute, rule or regulation or
any order, writ, judgment, injunction, decree, determination or award of
any court, governmental agency or arbitrator presently in effect having
applicability to it, (ii) violate or contravene any provision of its
organizational documents, or (iii) result in a breach of or constitute a
default under any indenture, loan or credit agreement or any other
agreement, lease or instrument to which it is a party or by which it or any
of its properties may be bound or result in the creation of any lien
thereunder. It is not in default under or in violation of any such law,
statute, rule or regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, loan or credit agreement or
other agreement, lease or instrument in any case in which the consequences
of such default or violation could have a material adverse effect on its
business, operations, properties, assets or condition (financial or
otherwise).
17(e) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority is required on its part to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability
of, this Guaranty.
17(f) There are no actions, suits or proceedings pending or, to its
knowledge, threatened against or affecting it or any of its properties
before any court or arbitrator, or any governmental department, board,
agency or other instrumentality which, if determined adversely to it, would
have a material adverse effect on its business, operations, property or
condition (financial or otherwise) or on its ability to perform its
obligations hereunder.
17(g) It expects to derive benefits from the transactions resulting in
the creation of the Obligations. The Agent and the Banks may rely
conclusively on the continuing warranty, hereby made, that the Guarantor
continues to be benefitted by the Banks' extension of credit accommodations
to the Borrower and neither the Agent nor any Bank shall have any duty to
inquire into or confirm the receipt of any such benefits, and this Guaranty
shall be effective and enforceable by the Agent and the Banks without
regard to the receipt, nature or value of any such benefits.
Section 18. Continuing Guaranty; Assignments under Credit Agreement. This
Guaranty shall (a) remain in full force and effect until irrevocable payment in
full of the Obligations and the expiration of the obligations, if any, of the
Bank to extend credit accommodations to the Borrower, (b) be binding upon the
Guarantor, its successors and assigns and (c) inure to the benefit of, and be
enforceable by, the Agent, the Banks and their respective successors,
transferees, and assigns. Without limiting the generality of the foregoing
clause (c), any Bank may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement to any other Persons to the
extent and in the manner provided in the Credit Agreement and may similarly
transfer all or any portion of its rights under this Guaranty to such Persons.
Section 19. Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT
GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
Whenever possible, each provision of this Guaranty and any other statement,
instrument or transaction contemplated hereby or relating hereto shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Guaranty or any other statement, instrument
or transaction contemplated hereby or relating hereto shall be held to be
prohibited or invalid under such applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty or any other statement, instrument or transaction contemplated hereby
or relating hereto.
Section 20. Consent to Jurisdiction. THIS GUARANTY MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. XXXX,
MINNESOTA; AND THE GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN
THE EVENT THE GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS GUARANTY, THE AGENT AT ITS OPTION SHALL BE ENTITLED
TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-
DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO
HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
Section 21. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 22. General. All representations and warranties contained in this
Guaranty or in any other agreement between the Guarantor and the Agent or any
Bank shall survive the execution, delivery and performance of this Guaranty and
the creation and payment of the Obligations. Captions in this Guaranty are for
reference and convenience only and shall not affect the interpretation or
meaning of any provision of this Guaranty.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date
first above written.
GUARANTOR:
By
Title
Address:
Attention:
EXHIBIT B
FORM OF
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of July 2, 1998, is made and given by GRACO
INC., a Minnesota corporation (the "Pledgor"), to U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as agent (in such capacity, the
"Agent") for the Banks from time to time party to the "Credit Agreement" (as
defined below).
RECITALS
A. The Pledgor, the Banks party thereto and the Agent have entered into a
Credit Agreement dated as of July 2, 1998 (as the same may hereafter be amended,
restated, or otherwise modified from time to time, the "Credit Agreement")
pursuant to which the Banks have agreed to extend to the Pledgor certain credit
accommodations.
B. The Pledgor is the owner of the shares of certain "Foreign Subsidiaries"
(as defined in the Credit Agreement).
C. It is a condition precedent to the obligation of the Banks to extend
credit accommodations pursuant to the terms of the Credit Agreement that this
Agreement be executed and delivered by the Pledgor.
D. The Pledgor finds it advantageous, desirable and in the best interests
of the Pledgor to comply with the requirement that this Agreement be executed
and delivered to the Agent.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to enter into the Credit Agreement and to extend credit accommodations to
the Pledgor thereunder, the Pledgor hereby agrees with the Agent for the Banks'
benefit as follows:
Section 1. Defined Terms.
1(a) As used in this Agreement, the following terms shall have the
meanings indicated:
"Collateral" shall have the meaning given to such term in Section 2.
"Event of Default" shall have the meaning given to such term in
Section 11.
"Foreign Subsidiaries" shall have the meaning given to such term in
the Credit Agreement.
"Lien" shall mean any security interest, mortgage, pledge, lien,
charge, encumbrance, title retention agreement or analogous instrument or
device (including the interest of the lessors under capitalized leases),
in, of or on any assets or properties of the Person referred to, but shall
not include restrictions imposed by the securities laws of any jurisdiction
unless that restriction is for the purpose of paying liabilities.
"Obligations" shall mean (a) all indebtedness, liabilities and
obligations of the Pledgor to the Agent or any Bank of every kind, nature
or description under the Credit Agreement, including the Pledgor's
obligation on any promissory note or notes under the Credit Agreement and
any note or notes hereafter issued in substitution or replacement thereof
and (b) all liabilities of the Pledgor under this Agreement, in all of the
foregoing cases whether due or to become due, and whether now existing or
hereafter arising or incurred.
"Person" shall mean any individual, corporation, partnership, limited
partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or
any other entity, whether acting in an individual, fiduciary or other
capacity.
"Pledged Shares" shall mean the shares of capital stock of each
Foreign Subsidiary pledged to the Agent, for the benefit of the Banks,
pursuant to Section 2.
"Security Interest" shall have the meaning given to such term in
Section 2.
1(b) Terms Defined in Uniform Commercial Code. All other terms used in
this Agreement that are not specifically defined herein or the definitions
of which are not incorporated herein by reference shall have the meaning
assigned to such terms in the Uniform Commercial Code in effect in the
State of Minnesota as of the date first above written to the extent such
other terms are defined therein.
1(c) Singular/Plural, Etc. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular,
the singular, the plural and "or" has the inclusive meaning represented by
the phrase "and/or." The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The words
"hereof," "herein," "hereunder," and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections are references to Sections in this Pledge
Agreement unless otherwise provided.
Section 2. Pledge. As security for the payment and performance of all of
the Obligations, the Pledgor hereby pledges to the Agent, for the benefit of the
Banks, and grants to the Agent, for the benefit of the Banks, a security
interest (the "Security Interest") in the following (the "Collateral"):
2(a) Sixty-five percent (65%) of each class of issued and outstanding
capital stock (or similar equity interests) of each Foreign Subsidiary now
owned or hereafter created or acquired by the Company, and the certificates
representing the Pledged Shares, and all dividends, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares.
2(b) All proceeds of any and all of the foregoing (including proceeds
that constitute property of types described above); provided, that the
foregoing security interest shall not attach to the capital stock of any
Foreign Subsidiary to the extent that the pledge thereof is prohibited by
the laws of the jurisdiction of such Foreign Subsidiary's organization.
Section 3. Delivery of Collateral. All certificates and instruments
representing or evidencing the Pledged Shares shall be delivered to the
Agent contemporaneously with the execution of this Agreement or, for
Foreign Subsidiaries created or acquired hereafter, with the issuance or
acquisition of such Pledged Shares, but, in each case, only to the extent
such certificates and instruments exist and such delivery (i) is
permissible and (ii) will not otherwise have a material adverse tax
consequence to the Pledgor. All such certificates and instruments shall be
held by or on behalf of the Agent pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Agent. The Agent shall have the right at any
time, after an Event of Default, to cause any or all of the Collateral to
be transferred of record into the name of the Agent or its nominee (but
subject to the rights of the Pledgor under Section 6) and to exchange
certificates representing or evidencing Collateral for certificates of
smaller or larger denominations. The Pledgor shall execute and deliver to
the Agent such items of assignment and transfer (including, without
limitation, assignments of financing statements and recordable assignments
of mortgages and deeds of trust) of any Collateral as the Agent may from
time to time reasonably request. Notwithstanding any of the foregoing, as
to any Collateral consisting of book-entry or uncertificated securities or
securities which are held by a third Person, the Pledgor shall, at the
request of the Agent, to the extent permitted by applicable law, deliver to
the Agent evidence satisfactory to the Agent that such Collateral has been
registered in the name of, or as pledged to, the Agent. Such evidence shall
include the acknowledgment of the issuer or Person holding such Collateral
that such issuer or Person holds such Collateral as agent for the Agent and
that such Collateral is identified on the books of such issuer or third
Person as belonging to or pledged to the Agent.
Section 4. Certain Warranties and Covenants. The Pledgor makes the
following warranties and covenants:
4(a) The Pledgor has title to the Pledged Shares and will have title
to each other item of Collateral hereafter acquired, free of all Liens
except the Security Interest.
4(b) The Pledgor has full power and authority to execute this Pledge
Agreement, to perform the Pledgor's obligations hereunder and to subject
the Collateral to the Security Interest created hereby.
4(c) No financing statement covering all or any part of the Collateral
is on file in any public office (except for any financing statements filed
by the Agent).
4(d) The Pledged Shares have been duly authorized and validly issued
by the issuer thereof and are fully paid and non-assessable. The
certificates representing the Pledged Shares are genuine. Except as may be
provided by the law of the jurisdiction in which a Foreign Subsidiary is
organized, the Pledged Shares are not subject to any offset or similar
right or claim of the issuers thereof.
4(e) The Pledged Shares constitute sixty-five percent (65%) of the
issued and outstanding shares of stock of the respective issuers thereof.
Section 5. Further Assurances. The Pledgor agrees that at any time and from
time to time, at the expense of the Pledgor, the Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action
that may be necessary or that the Agent may reasonably request, in order to
perfect and protect the Security Interest or to enable the Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral (but
any failure to request or assure that the Pledgor execute and deliver such
instruments or documents or to take such action shall not affect or impair the
validity, sufficiency or enforceability of this Agreement and the Security
Interest, regardless of whether any such item was or was not executed and
delivered or action taken in a similar context or on a prior occasion).
Section 6. Voting Rights; Dividends; Etc.
6(a) Subject to paragraph (d) of this Section 6, the Pledgor shall be
entitled to exercise or refrain from exercising any and all voting and
other consensual rights pertaining to the Pledged Shares or any other stock
that becomes part of the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Credit Agreement;
provided, however, that the Pledgor shall not exercise or refrain from
exercising any such right if such action could reasonably be expected to
have a material adverse effect on the value of the Collateral or any
material part thereof.
6(b) Subject to paragraph (e) of this Section 6, the Pledgor shall be
entitled to receive, retain, and use in any manner not prohibited by the
Credit Agreement any and all interest and dividends paid in respect of the
Collateral.
6(c) The Agent shall execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights that it is entitled to exercise
pursuant to Section 6 (a) hereof and to receive the dividends and interest
that it is authorized to receive and retain pursuant to Section 6 (b)
hereof.
6(d) Upon the occurrence and during the continuance of any Event of
Default, the Agent shall have the right in its sole discretion, and the
Pledgor shall execute and deliver all such proxies and other instruments as
may be necessary or appropriate to give effect to such right, to terminate
all rights of the Pledgor to exercise or refrain from exercising the voting
and other consensual rights that it would otherwise be entitled to exercise
pursuant to Section 6 (a) hereof, and all such rights shall thereupon
become vested in the Agent who shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual
rights; provided, however, that the Agent shall not be deemed to possess or
have control over any voting rights with respect to any Collateral unless
and until the Agent has given written notice to the Pledgor that any
further exercise of such voting rights by the Pledgor is prohibited and
that the Agent and/or its assigns will henceforth exercise such voting
rights; and provided, further, that neither the registration of any item of
Collateral in the Agent's name nor the exercise of any voting rights with
respect thereto shall be deemed to constitute a retention by the Agent of
any such Collateral in satisfaction of the Obligations or any part thereof.
6(e) Upon the occurrence and during the continuance of any Event of
Default:
(i) all rights of the Pledgor to receive the dividends and interest
that it would otherwise be authorized to receive and retain pursuant
to Section 6(b) hereof shall cease, and all such rights shall
thereupon become vested in the Agent who shall thereupon have the sole
right to receive and hold such dividends as Collateral, and
(ii) all payments of interest and dividends that are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section 6
(e) shall be received in trust for the benefit of the Banks, shall be
segregated from other funds of the Pledgor and shall be forthwith paid
over to the Agent as Collateral in the same form as so received (with
any necessary indorsement).
Section 7. Transfers and Other Liens; Additional Shares.
7(a) Except as may be permitted by the Credit Agreement, the Pledgor
agrees that it will not (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to, any of the
Collateral or any other shares of stock (or similar equity interests) in
any Foreign Subsidiary, or (ii) create or permit to exist any Lien, upon or
with respect to any of the Collateral.
7(b) The Pledgor agrees that it will (i) cause each issuer of the
Pledged Shares that it controls not to issue any stock or other securities
in addition to or in substitution for the Pledged Shares issued by such
issuer, except to the Pledgor or as may be required by or as may be
required by applicable law, and (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, 65% of any and all additional
shares of stock or other securities of each issuer of the Pledged Shares.
Section 8. Agent Appointed Attorney-in-Fact. The Pledgor hereby appoints
the Agent the Pledgor's attorney-in-fact, with full authority in the place and
stead of such Pledgor and in the name of such Pledgor or otherwise, from time to
time in the Agent's good-faith discretion, to take any action and to execute any
instrument that the Agent may reasonably believe necessary or advisable to
accomplish the purposes of this Agreement (subject to the rights of the Pledgor
under Section 6 hereof), in a manner consistent with the terms hereof,
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any dividend or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
Section 9. Agent May Perform. If the Pledgor fails to perform any agreement
contained herein, the Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by the Pledgor under Section 14 hereof.
Section 10. The Agent's Duties. The powers conferred on the Agent hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. The Agent shall be deemed to have
exercised reasonable care in the safekeeping of any Collateral in its possession
if such Collateral is accorded treatment substantially equal to the safekeeping
which the Agent accords its own property of like kind. Except for the
safekeeping of any Collateral in its possession and the accounting for monies
and for other properties actually received by it hereunder, the Agent shall have
no duty, as to any Collateral, as to ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not the Agent or any Bank has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any Persons or any other rights pertaining to any
Collateral. The Agent will take action in the nature of exchanges, conversions,
redemption, tenders and the like requested in writing by the Pledgor with
respect to any of the Collateral in the Agent's possession if the Agent in its
reasonable judgment determines that such action will not impair the Security
Interest or the value of the Collateral, but a failure of the Agent to comply
with any such request shall not of itself be deemed a failure to exercise
reasonable care.
Section 11. Default. Each of the following occurrences shall constitute an
Event of Default under this Agreement: (a) the Pledgor shall fail to observe or
perform any covenant or agreement applicable to the Pledgor under this Agreement
and such failure shall continue for a period of ten (10) days after notice from
the Agent; or (b) any representation or warranty made by the Pledgor in this
Agreement or in any financial statements, reports or certificates heretofore or
at any time hereafter submitted by or on behalf of the Pledgor to the Agent or
any Bank shall prove to have been false or misleading in any material respect
when made; or (c) any Event of Default shall occur under the Credit Agreement.
Section 12. Remedies upon Default. If any Event of Default shall have
occurred and be continuing:
12(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code of the State of Minnesota (the "Code") in effect at
that time (whether or not the Code then applies to the affected
Collateral), and may, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Agent may reasonably believe are commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten days' prior notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Pledgor hereby waives all requirements of law, if any,
relating to the marshalling of assets which would be applicable in
connection with the enforcement by the Agent of its remedies hereunder,
absent this waiver.
12(b) The Agent may notify any Person obligated on any of the
Collateral that the same has been assigned or transferred to the Agent and
that the same should be performed as requested by, or paid directly to, the
Agent, as the case may be. The Pledgor shall join in giving such notice, if
the Agent so requests. The Agent may, in the Agent's name or in the
Pledgor's name, demand, xxx for, collect or receive any money or property
at any time payable or receivable on account of, or securing, any such
Collateral or grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change the obligation of
any such Person.
12(c) Any cash held by the Agent or any Bank as Collateral and all
cash proceeds received in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion
of the Agent, be held as collateral for, or then or at any time thereafter
be applied in whole or in part against, all or any part of the Obligations
(including any expenses of the Agent payable pursuant to Section 14
hereof).
Section 13. Waiver of Certain Claims. The Pledgor acknowledges that because
of present or future circumstances, a question may arise under the Securities
Act of 1933, as from time to time amended (the "Securities Act"), with respect
to any disposition of the Collateral permitted hereunder. The Pledgor
understands that compliance with the Securities Act may very strictly limit the
course of conduct of the Agent if the Agent were to attempt to dispose of all or
any portion of the Collateral and may also limit the extent to which or the
manner in which any subsequent transferee of the Collateral or any portion
thereof may dispose of the same. There may be other legal restrictions or
limitations affecting the Agent in any attempt to dispose of all or any portion
of the Collateral under the applicable foreign or Blue Sky or other securities
laws or similar laws analogous in purpose or effect. The Agent may be compelled
to resort to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such Collateral for
their own account for investment only and not to engage in a distribution or
resale thereof. The Pledgor agrees that the Agent shall not incur any liability,
and any liability of the Pledgor for any deficiency shall not be impaired, as a
result of the sale of the Collateral or any portion thereof at any such private
sale in a manner that the Agent reasonably believes is commercially reasonable
(within the meaning of Section 9-504(3) of the Uniform Commercial Code). Subject
to the preceding sentence, the Pledgor hereby waives any claims against the
Agent arising by reason of the fact that the price at which the Collateral may
have been sold at such sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Agent shall accept the first offer received and does
not offer any portion of the Collateral to more than one possible purchaser. The
Pledgor further agrees that the Agent has no obligation to delay sale of any
Collateral for the period of time necessary to permit the issuer of such
Collateral to qualify or register such Collateral for public sale under the
Securities Act, applicable Blue Sky laws and other applicable state and federal
securities laws, even if said issuer would agree to do so and the Agent hereby
acknowledges that the Pledgor has no obligation to cause the issuer to do so.
Without limiting the generality of the foregoing, the provisions of this Section
would apply if, for example, the Agent were to place all or any portion of the
Collateral for private placement by an investment banking firm, or if such
investment banking firm purchased all or any portion of the Collateral for its
own account, or if the Agent placed all or any portion of the Collateral
privately with a purchaser or purchasers.
Section 14. Costs and Expenses; Indemnity. The Pledgor will pay or
reimburse the Agent on demand for all out-of-pocket expenses (including in each
case all filing and recording fees and taxes and all reasonable fees and
expenses of counsel and of any experts and agents) incurred by the Agent in
connection with the creation, perfection, protection, satisfaction, foreclosure
or enforcement of the Security Interest and the preparation, administration,
continuance, amendment or enforcement of this Agreement, and all such costs and
expenses shall be part of the Obligations secured by the Security Interest. The
Pledgor shall indemnify and hold the Agent and the Banks harmless from and
against any and all claims, losses and liabilities (including reasonable
attorneys' fees) growing out of or resulting from this Agreement (including
enforcement of this Agreement) or the Agent's actions pursuant hereto, except
claims, losses or liabilities resulting from the Agent's gross negligence or
willful misconduct of the indemnified party as determined by a final judgment of
a court of competent jurisdiction. Any liability of the Pledgor to indemnify and
hold the Agent and the Banks harmless pursuant to the preceding sentence shall
be part of the Obligations secured by the Security Interest. The obligations of
the Pledgor under this Section shall survive any termination of this Agreement.
Section 15. Waivers and Amendments; Remedies. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security Interest can be
released, only explicitly in a writing signed by the Agent. A waiver so signed
shall be effective only in the specific instance and for the specific purpose
given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to the Agent. All rights and
remedies of the Agent and the Banks shall be cumulative and may be exercised
singly in any order or sequence, or concurrently, at the Agent's option, and the
exercise or enforcement of any such right or remedy shall neither be a condition
to nor bar the exercise or enforcement of any other.
Section 16. Notices. Any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first business day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed.
Section 17. Pledgor Acknowledgments. The Pledgor hereby acknowledges that
(a) the Pledgor has been advised by counsel in the negotiation, execution and
delivery of this Agreement, (b) neither the Agent nor any Bank has a fiduciary
relationship to the Pledgor, the relationship being solely that of debtor and
creditor, and (c) no joint venture exists between the Pledgor and the Agent or
any Bank.
Section 18. Continuing Security Interest; Assignments under Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Obligations and the expiration of the obligation, if any, of the
Banks to extend credit accommodations to the Pledgor, (b) be binding upon the
Pledgor, its successors and assigns, and (c) inure, together with the rights and
remedies of the Agent hereunder, to the benefit of the Agent and the Banks, and
be enforceable by the Agent and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), each Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement to any other Person to the extent and in the manner provided in
the Credit Agreement, and may similarly transfer all or any portion of its
rights under this Pledge Agreement to such Persons.
Section 19. Termination of Security Interest. Upon payment in full of the
Obligations and the expiration of any obligation of the Banks to extend credit
accommodations to the Borrower, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Pledgor. Upon any
such termination, the Agent will return to the Pledgor such of the Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof and
execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence such termination. Any reversion or return of the
Collateral upon termination of this Agreement and any instruments of transfer or
termination shall be at the expense of the Pledgor and shall be without warranty
by, or recourse on, the Agent or any Bank. As used in this Section, "Pledgor"
includes any assigns of Pledgor, any Person holding a subordinate security
interest in any part of the Collateral or whoever else may be lawfully entitled
to any part of the Collateral.
Section 20. Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
MINNESOTA, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO
NATIONAL BANKS; PROVIDED, HOWEVER, THAT NO EFFECT SHALL BE GIVEN TO CONFLICT OF
LAWS PRINCIPLES OF THE STATE OF MINNESOTA, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE MANDATORILY GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF MINNESOTA. Whenever possible,
each provision of this Agreement and any other statement, instrument or
transaction contemplated hereby or relating hereto shall be interpreted in such
manner as to be effective and valid under such applicable law, but, if any
provision of this Agreement or any other statement, instrument or transaction
contemplated hereby or relating hereto shall be held to be prohibited or invalid
under such applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto.
Section 21. Consent to Jurisdiction. THIS AGREEMENT MAY BE ENFORCED IN ANY
FEDERAL COURT OR STATE COURT SITTING IN MINNESOTA; AND THE PLEDGOR CONSENTS TO
THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE
IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE PLEDGOR COMMENCES ANY ACTION
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE
AGENT AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 22. Waiver of Jury Trial. EACH OF THE PLEDGOR, BY ITS EXECUTION AND
DELIVERY HEREOF, AND THE AGENT AND THE BANKS, BY THEIR ACCEPTANCE OF THIS
AGREEMENT, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 24. General. All representations and warranties contained in this
Agreement or in any other agreement between the Pledgor and the Agent or any
Bank shall survive the execution, delivery and performance of this Agreement and
the creation and payment of the Obligations. The Pledgor waives notice of the
acceptance of this Agreement by the Agent or any Bank. Captions in this
Agreement are for reference and convenience only and shall not affect the
interpretation or meaning of any provision of this Agreement.
IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PLEDGOR:
GRACO INC.
By
Title
Address for Pledgor:
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxx 00000
Address for the Agent:
U.S. Bank National Association
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Fax (000) 000-0000
EXHIBIT C
TO CREDIT AGREEMENT
FORM OF
REVOLVING NOTE
$_____________
____________________, 000
Xxxxxxxxxxx, Xxxxxxxxx
FOR VALUE RECEIVED, GRACO INC., a Minnesota corporation, hereby promises to pay
to the order of___________(the "Bank") at the main office of U.S. Bank National
Association in Minneapolis, Minnesota, in lawful money of the United States of
America in Immediately Available Funds (as such term and each other capitalized
term used herein are defined in the Credit Agreement hereinafter referred to) on
the Revolving Commitment Ending Date, the principal amount of AND NO/100 DOLLARS
($_______) or, if less, the aggregate unpaid principal amount of the Revolving
Loans made by the Bank under the Credit Agreement, and to pay interest (computed
on the basis of actual days elapsed and a year of 360 days) in like funds on the
unpaid principal amount hereof from time to time outstanding at the rates and
times set forth in the Credit Agreement.
This note is one of the Revolving Notes referred to in the Credit Agreement
dated as of July 2, 1998 (as the same may hereafter be from time to time
amended, restated or otherwise modified, the "Credit Agreement") among the
undersigned, the Bank and the other banks named therein. This note is secured,
it is subject to certain permissive prepayments and its maturity is subject to
acceleration, in each case upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all costs and
expenses of collection, including reasonable attorneys' fees. The undersigned
waives demand, presentment, notice of nonpayment, protest, notice of protest and
notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.
GRACO INC.
By_________________Title___________
EXHIBIT D
TO CREDIT AGREEMENT
FORM OF
SOLVENCY CERTIFICATE
TO: U.S. Bank National Association, as Agent
U.S. Bank Place
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
This Solvency Certificate is delivered to you pursuant to clause (x) of Section
3.1(a) of the Credit Agreement, dated as of July 2, 1998 (the "Credit
Agreement"), between GRACO INC. (the "Borrower"), certain Banks party thereto
and U.S. Bank National Association, as Agent. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings so
defined.
I, ____________________________, chief financial officer of the Borrower, hereby
certify as follows:
1. I am the chief financial officer of the Borrower. I have held such
position since __________________________. In that capacity, I have participated
actively in the management of the financial affairs of the Borrower. I have,
together with other officers of the Borrower, acted on behalf of the Borrower in
connection with the negotiation of the Credit Agreement, the other Loan
Documents and the Repurchase. I am also familiar with the properties, business,
assets and liabilities of the Borrower and its Subsidiaries.
2. I certify that I have carefully reviewed the contents of this
Certificate and have made such investigations and inquiries as I deem necessary
and prudent in connection with the matters set forth herein. Among other things,
I have reviewed the Loan Documents and other agreements, documents and
instruments pursuant to which the Repurchase will occur.
3. In connection with preparation for consummation of the Credit Agreement
and the Repurchase, I have caused the preparation of and have reviewed pro forma
consolidated net income and cash flow projections for the Borrower for its
fiscal years ending through , inclusive (the "Projections"). The Projections,
which are attached hereto as Exhibit I, give effect to the consummation of the
Credit Agreement and the Repurchase. It is contemplated that the debt
obligations of the Borrower are to be paid from the cash flow generated by the
operation of the Borrower. No asset dispositions to pay the debt obligations of
the Borrower are anticipated by the Projections, other than sales of inventory
in the ordinary course of the Borrower's business. In connection with the
preparation of the Projections, I have made such investigation and inquiries as
I deemed reasonably necessary and prudent therefor and specifically have relied
on historical information, sales, costs, and other data supplied by the
management personnel and personnel responsible for the various operations
involved of the Borrower. The principal assumptions upon which the Projections
are based are stated therein, which assumptions I believe are reasonable.
4. I have also supervised and participated in the preparation of the pro
forma balance sheet of the Borrower as of the Closing Date (the "Closing Date
Balance Sheet"). The Closing Date Balance Sheet is attached hereto as Exhibit
II, and reflects (a) the assets and liabilities of the Borrower at historical
costs, and (b) the adjustments which would result upon consummation of the
Repurchase.
5. I believe that the financial information and assumptions which underlie
and form the basis for the Projections, the Closing Date Balance Sheet and the
representations made in this Certificate were reasonable when made and continue
to be reasonable as of the date hereof, provided that such Projections should
not be viewed as facts because actual results during the period covered by such
Projections will differ from projected results.
6. For purposes of this Certificate: (a) the term "indebtedness" means all
obligations and liabilities of the Borrower, whether matured or unmatured,
liquidated or unliquidated, disputed or undisputed, secured or unsecured,
subordinated, absolute, fixed or contingent; and (b) the term "present fair
salable value" means the value (determined on a going concern basis) which would
be realized from an interested purchaser aware of all relevant information
relating to the assets or group of assets being sold and who is willing to
purchase under ordinary selling conditions in an existing and not theoretical
market if the assets or group of assets are disposed of within a period of six
months to one year.
7. As of the date hereof, assuming the Repurchase is consummated on and as
of the date hereof and taking into account the effect thereof, it is my opinion
that (a) the present fair salable value of the assets of the Borrower
(determined on a going concern basis) is in excess of the total amount of its
indebtedness, (b) the Borrower will be able to pay its debts and obligations as
they mature in the ordinary course of its business as proposed to be conducted
following the Repurchase, and (c) the Borrower does not have an unreasonably
small capital to carry out its business as proposed to be conducted following
the Repurchase. My conclusion is supported by the Closing Date Balance Sheet and
the Projections.
8. The cash flow from the operations of the Borrower will be sufficient to
provide cash necessary to repay its indebtedness, including the indebtedness
incurred pursuant to the Loan Documents, as such indebtedness matures.
Therefore, following the incurrence of the indebtedness pursuant to the Loan
Documents and consummation of the Repurchase, the Borrower will not have
indebtedness beyond its ability to pay as such indebtedness matures. My
calculations are supported by the Projections.
9. The Borrower does not intend to, or believe that it will, incur
indebtedness beyond its ability to pay such indebtedness as it matures.
10. In consummating the Repurchase, the Borrower does not intend to delay,
hinder or defraud either present or future creditors or other persons to which
the Borrower is or will become, on or after the date hereof, indebted.
11. The Borrower is not "insolvent" as that term is defined in the
Bankruptcy Code and/or Uniform Fraudulent Transfer Act and/or the Uniform
Fraudulent Conveyance Act.
12. In reaching the conclusions set forth in this Certificate, I have
reviewed and considered, among other things:
(a) the Closing Date Balance Sheet;
(b) the Projections;
(c) the values of the Borrower's now owned real property, equipment,
inventory, computer software, customer lists, tradenames, trade secrets and
proprietary information, and all other property of the Borrower, real and
personal, tangible and intangible;
(d) the experience of management of the Borrower in acquiring and
disposing of its assets and managing its businesses;
(e) all indebtedness of the Borrower known to me, including, among
other things, claims arising out of pending or, to my knowledge, threatened
litigation against the Borrower;
(f) historical and anticipated growth in the Borrower's sales volume;
(g) the customary terms of trade payables and other obligations owed
to the Borrower, and the amount of credit extended by and to customers of
the Borrower; and
(h) the level of capital customarily maintained by the Borrower and
other entities engaged in the same or similar business as the business of
the Borrower.
13. The Borrower does not contemplate filing a petition for relief under
the United States Bankruptcy Code or for receivership, arrangement, liquidation
or reorganization, or any similar purpose, under any state law, nor do I have
any knowledge of any bankruptcy or insolvency proceedings threatened against the
Borrower.
14. The Borrower hereby acknowledges that the Banks and the Agent, in
entering into the Credit Agreement and the other Loan Documents and agreeing to
make loans and otherwise extend credit thereunder, have relied on the accuracy
of this Certificate and the attachments hereto.
IN WITNESS WHEREOF, I have executed this Certificate as of July
____________, 1998.
GRACO INC.
By:
Name:
Title: Chief Financial Officer
I am the chief executive officer of the Borrower. I have reviewed the
foregoing certificate, the Projections and the Closing Date Balance Sheet. I am
not aware of any inaccuracy in any of the foregoing certificate, the Projections
or the Closing Date Balance Sheet, I believe that the financial information and
assumptions which underlie and form the basis for the Projections, the Closing
Date Balance Sheet and the representations made in the foregoing Certificate
were reasonable when made and continue to be reasonable as of the date hereof,
and I agree with the conclusions stated in the foregoing Certificate.
Name:
Title: Chief Executive Officer
EXHIBIT E TO
CREDIT AGREEMENT
FORM OF
OPINION OF COUNSEL
TO THE BORROWER AND
ITS SUBSIDIARIES
The opinions of counsel to the Borrower which are called for by Article III
of the Credit Agreement (the "Credit Agreement") shall be addressed to the Banks
and dated the Closing Date. It shall be satisfactory in form and substance to
the Agent and shall cover the matters set forth below, subject to such
assumptions, exceptions and qualifications as may be acceptable to the Agent and
counsel to the Agent. Capitalized terms used herein have the respective meanings
given such terms in the Credit Agreement.
(i) The Borrower is a corporation duly incorporated and validly existing
and in good standing under the laws of the State of Minnesota and has all
requisite corporate power and authority to carry on its business as now
conducted, to enter into the Borrower Loan Documents and to perform all of its
obligations under each and all of the foregoing. The Borrower is duly qualified
and in good standing as a foreign corporation in the states of California,
Colorado, Georgia, Illinois, Louisiana, Michigan, New Jersey, South Dakota and
Texas.
(ii) The execution, delivery and performance by the Borrower of the
Borrower Loan Documents have been duly authorized by all necessary corporate
action by the Borrower.
(iii) The Borrower Loan Documents have been duly executed and delivered by
the Borrower and constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms.
(iv) The execution, delivery and performance by the Borrower of the
Borrower Loan Documents will not (i) violate any provision of any law, statute,
rule or regulation or, to the best knowledge of such counsel, any order, writ,
judgment, injunction, decree, determination or award of any court, governmental
agency or arbitrator presently in effect having applicability to the Borrower,
(ii) violate or contravene any provision of the Articles of Incorporation or
bylaws of the Borrower, or (iii) result in a breach of or constitute a default
under any material indenture, loan or credit agreement or any other agreement,
lease or instrument known to such counsel to which the Borrower is a party or by
which it or any of its properties may be bound or result in the creation of any
Lien thereunder.
(v) No order, consent, approval, license, authorization or validation of,
or filing, recording or registration with, or exemption by, any governmental or
public body or authority is required on the part of the Borrower to authorize,
or is required in connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of, the Borrower Loan
Documents, except for any necessary filing or recordation of or with respect to
any of the Security Documents.
(vi) To the best knowledge of such counsel, there are no actions, suits or
proceedings pending or threatened against or affecting the Borrower or any of
its properties before any court or arbitrator, or any governmental department,
board, agency or other instrumentality which (i) challenge the legality,
validity or enforceability of the Borrower Loan Documents, or (ii) if determined
adversely to the Borrower, would have a material adverse effect on the business,
operations, property or condition (financial or otherwise) of the Borrower and
the Subsidiaries as a consolidated enterprise or on the ability of the Borrower
to perform its obligations under the Borrower Loan Documents.
(vii) Neither the Borrower nor any Subsidiary is a "holding company," or a
"subsidiary company" of a "holding company," or an affiliate of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(viii) Neither the Borrower nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(ix) The making of the Revolving Loans and the application of the proceeds
thereof by the Borrower as provided in the Credit Agreement will not violate
Regulation
(x) To the extent that the Uniform Commercial Code, as in effect in the
State of Minnesota (the "Code") applies, and assuming that the Agent has taken
and is retaining possession of the stock certificates evidencing the shares of
stock described in the Pledge Agreement ( the "Pledged Stock"), there has been
created under the Pledge Agreement, and there has been granted to the Agent, on
behalf of the Banks, a valid security interest and lien upon the Pledged Stock.
EXHIBIT F TO
CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATEMPLIANCE CERTIFICATE
To: U.S. Bank National Association
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected chief financial officer of Graco, Inc. (the
"Borrower");
(2) I have reviewed the terms of the Credit Agreement dated as of July 2,
1998 between the Borrower, U.S. Bank National Association and certain Banks
named therein (the "Credit Agreement") and I have made, or have caused to be
made under my supervision, a detailed review of the transactions and conditions
of the Borrower during the accounting period covered by the Attachment hereto;
(3) The examination described in paragraph (2) did not disclose, and I have
no knowledge, whether arising out of such examinations or otherwise, of the
existence of any condition or event which constitutes a Default or an Event of
Default (as such terms are defined in the Credit Agreement) during or at the end
of the accounting period covered by the Attachment hereto or as of the date of
this Certificate, except as described below (or on a separate attachment to this
Certificate). The exceptions listing, in detail, the nature of the condition or
event, the period during which it has existed and the action which the Borrower
has taken, is taking or proposes to take with respect to each such condition or
event are as follows:
--------------------------------------------------------------------------------
The foregoing certification, together with the computations in the
Attachment hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _____ day of ______________,
1998, pursuant to Section 5.1 (d) of the Credit Agreement.
GRACO INC.
By
Title
SCHEDULE 1.1(a)
GRACO INC.
REVOLVING COMMITMENTS OF THE
BANK GROUP AS OF JULY 2, 1998
Commitment Commitment
Banks Percentages Amount
----- ----------- ------
U.S. Bank National Association 13.2368421053% $25,150,000.00
The Bank of New York 11.25% 21,375,000.00
NBD Bank 11.25% 21,375,000.00
Norwest Bank of Minnesota,
National Association 11.25% 21,375,000.00
Wachovia Bank, N.A. 11.25% 21,375,000.00
ABN AMRO Bank N.V. 11.25% 21,375,000.00
Bank of America National Trust 11.25% 21,375,000.00
and Savings Association
The Northern Trust Company 7.00% 13,300,000.00
The Bank of Tokyo-Mitsubishi, Ltd. 7.00% 13,300,000.00
The Fuji Bank Limited 5.0000000000% 10,000,000.00
TOTALS 100.0000000000% $190,000,000.00
SCHEDULE 4.6
GRACO INC.
LITIGATION
1. The Company is named as a defendant in a total of eighteen (18) lawsuits
based on product liability claims. The Company has also received a
communication from potential claimants in total of twenty-four(24)
instances with respect to possible product liability claims which have not
yet resulted in a suit. The Company has reported all of the foregoing
matters to its product liability insurance carrier, and such carrier has
undertaken to fulfill all its policy commitments without reservation of
rights or other dispute.
2. NORDSON CORPORATE V. GRACO INC., U.S. District Court for the Northern
District of Ohio, Eastern Division. The suit alleges infringement of
Nordson patents by the Company's Precision-Flo robot-mounted sealant and
adhesive application system. Litigation is in process.
3. XXXXX XXXXXXX V. GRACO INC. United States District Court, District of
Minnesota. Plaintiff is alleging failure to make reasonable accomodation
and retaliatory dismissal under the Americans with Disabilities Act.
4. The Company and its Subsidiaries are parties to a number of tax and other
governmental fee proceedings to obtain refunds and appeal valuation
decisions. None of the claimed refunds are reflected on the books of the
Company.
SCHEDULE 4.7
GRACO INC.
ENVIRONMENTAL MATTERS
1. Releases or potential releases of certain hazardous substances have been
detected at the Company's Main Plant in Minneapolis. The Company
participated in the Voluntary Investigation and Cleanup program of the
Minnesota Pollution Control Agency ("MPCA"). On July 17, 1997, the MPCA
determined to take no action with regard to the releases and not to refer
the release to Superfund authorities for further action.
2. The Company has been brought into five actions involving the clean-up of
landfills. The Company has paid approximately $27,000 to settle four of
them. The only open action is at Zionsville, Indiana, where the Company is
part of a group attempting to negotiate a settlement with the Environmental
Protection Agency. Negotiations continue.
3. In 1996, the MPCA identified the Company, among others, as a potentially
responsible party for release of hazardous substances at a site in
Minneapolis, known as the Warden Oil Site. Company records indicate that
the Company sent to the site only used oil for recycling, which represents
approximately 0.5% of the total volume at the site. Activities concerning
the site are in the preliminary stages. Neither the nature nor extent of
the Company's responsibility for any release or clean-up can be determined
at this time.
SCHEDULE 4.12
INTELLECTUAL PROPERTY
1. The Company has received written notice from counsel for Xxxxxx Spray Tech
that a Company product, the GTS-4900 HVLP Sprayer, may infringe upon a
patent application which has been filed by Xxxxxx Spray Tech and is
currently pending.
2. Reference is hereby made to the disclosure made in Item No. 2 of Schedule
4.6.
SCHEDULE 4.17
POST-RETIREMENT MECICAL OR INSURANCE BENEFITS
1. The Company has a Retiree Medical Credit Plan. Effective December 31, 1992,
the Company implemented a cost sharing arrangement for medical coverage
after retirement. The features of the Retiree Medical Credit Plan are
described in detail in the Summary Plan Description, "Retiree Medical
Credit Plan," Form No. 318-106, 2/93 which has been provided to the Agent's
counsel.
SCHEDULE 4.18
SUBSIDIARIES
Jurisdiction of Number of
Subsidiary Organization Shares Owned Share Owner
---------- --------------- ------------ -----------
Equipos Graco Argentina S.A. Argentina 26,345 The Company
1 Xxxxxx X. Xxxxxxxx
Graco Barbados FSC Limited Barbados 100 The Company
Graco Canada Incorporated Canada 10,000 The Company
Graco Chile Limitada Chile CH 20,289,850 The Company
Ch 10,150 Xxxxx X.Xxxx
Graco do Brasil Limitada Brazil 84,999 The Company
1 Xxxxx X. Xxxx
Graco Europe N.V. Belgium 5,999 The Company
1 Graco N.V.
Graco GmbH Germany DM 5,650,000 The Company
Graco Hong Kong Limited Hong Kong 1,999 The Company
1 Xxxxxx X. Xxxxxxxx
Graco K.K. Japan 660,000 The Company
Graco Korea Inc. Korea 125,500 The Company
Graco Limited England 100,000 The Company
Graco N.V. Belgium 216,874 The Company
1 Xxxxxx X. Xxxxxxxx
Graco S.A. France 31,619 The Company
1 Xxxxxx Xxxxxxxxx
1 Xxxxx X. Xxxx
1 Xxxxx X. Xxxxxx
1 Xxxxxx X. Xxxxxxxx
1 Philippe Lalieu
1 Xxxxxxx X. Xxxxxx
Graco S.r.l. Italy 19,999,000 The Company
1,000 Xxxxxx X. Xxxxxxxx
With respect to each Subsidiary, the Share Owners listed above
corresponding to such Subsidiary own, collectively, 100% of the capital stock of
such subsidiary.
SCHEDULE 6.11(a)
EXISTING INVESTMENTS
1. The Company owns 3 units in National Equity Fund 1992 Limited Partnership.
The Company's investment is in the aggregate original principal amount of
$3 million.
2. The Company owns 2 units in USA Metropolitan Tax Credit Fund II L.P. The
Company's investment is in the aggregate original amount of $2 million.
3. The Company owns 1/4 unit in Metropolitan Low-Income Neighborhood Housing
Limited Partnership II. The Company's investment is in the aggregate
original principal amount of $250,000.
SCHEDULE 6.12(b)
EXISTING INDEBTEDNESS
A chart showing the outstanding debt of the Company and the Subsidiaries
for borrowed money as of May 1998 is attached to this Schedule 6.12(b) as
Exhibit A. Items listed below that are followed by an asterisk relate to entries
in Exhibit A under which debt was outstanding as of May 1998.
1. Obligations of the Company as the account party in respect of letter of
credit no. S405286 issued by Norwest Bank Minnesota, National Association in
favor of National Union Fire Insurance Co. of Pittsburgh, PA in the amount of
$172,000.
2. Obligations of Graco Canada Inc. as the account party in respect of
letter of guarantee no. G18572/00000 issued by The Bank of Nova Scotia in favor
of Toronto Dominion Bank in the amount of 60,000 Canadian dollars.
3. Obligations of the Company as the account party in respect of letter of
credit no. 76693 issued by First Bank National Association in favor of Seoul
Bank in the amount of 1,120,000,000 Korean won.*
4. Obligations of Graco Canada Inc. as the account party in respect of
letter of guarantee no. ILG 055/00000 issued by The Bank of Nova Scotia in favor
of Revenue Canada Customs and Excise in the amount of 25,000 Canadian dollars.
5. Obligations of the Company as the account party in respect of letter of
credit no. S405711 issued by Norwest Bank Minnesota, National Association in
favor of CWT Distribution Limited in the amount of 72,991 Singapore dollars.
6. Obligations of the Company as the account party in respect of letter of
credit no.000-00-3671-0 issued by The Bank of New York in favor of the State of
Minnesota, Department of Commerce in the amount of $3,278,607.
7. Obligations of the Company as the account party in respect of letter of
credit no. CLC 906/755063, as amended, issued by The Fuji Bank, Limited, Chicago
Branch, in favor of Norwest Bank Minnesota, National Association in the amount
of $6,360,000. Letter of credit no. CLC 906/755063 was issued in connection with
the bonds referred to in Item No. 17 below.*
8. Obligations of the Company with respect to its investment in National
Equity Fund Limited Partnership, including those under the Investor Promissory
Note dated December 30, 1992 in an aggregate original principal amount of $3
million.*
9. Obligations of the Company with respect to its investment in USA
Metropolitan Tax Credit Fund II L.P., including those under the USA Metropolitan
Tax Credit Fund II L.P. Nine-Installment Promissory Note dated November 23, 1994
in an aggregate original principal amount of $2 million.*
10. Obligations of the Company under the ISDA Master Agreement dated as of
July 2, 1998, between the Company and Wachovia Bank, N.A, as supplemented. The
agreement is a standard interest rate protection agreement relating to the
Company's obligations in connection with the bonds referred to in Item No. 17
below.*
11. Obligations of Graco Canada Inc. to The Bank of Nova Scotia pursuant to
credit facilities established under the letter dated May 9, 1998 from The Bank
of Nova Scotia to Graco Canada Inc. and the Agreement regarding Operating Credit
Line dated as of May 21, 1998, between The Bank of Nova Scotia and Graco Canada
Inc. Graco Canada Inc. may periodically borrow Canadian dollars and U.S. dollars
under the credit facilities up to the equivalent of 4 million Canadian dollars.
12. Obligations of Graco K.K. to The Fuji Bank, Limited pursuant to credit
facilities established under the Agreement on Bank Transactions between The Fuji
Bank, Limited and Graco K.K. Graco K.K. may periodically borrow Japanese yen
under the credit facilities up to 500,000,000 Japanese yen.
13. Obligations of Graco K.K. to The First National Bank of Chicago (f/k/a
NBD Bank) pursuant to credit facilities established under the Agreement on Bank
Transactions dated November 21, 1991, between Graco K.K. and The First National
Bank of Chicago. Graco K.K. may periodically borrow Japanese yen under the
credit facilities up to 500,000,000 Japanese yen.*
14. Obligations of Graco Korea Inc. to Seoul Bank pursuant to credit
facilities established under the Bank Credit Line Agreement between Graco Korea
Inc. and Seoul Bank dated as of July 9, 1997. Pursuant to the credit facilities,
Graco Korea Inc. received a loan of an aggregate principal amount of 1 billion
Korean won from Seoul Bank which matures on July 8, 1998, at which time a
payment of approximately $586,000 is due.*
15. Obligations of Graco N.V. to Bank Brussels Xxxxxxx pursuant to credit
facilities established under letters from Bank Brussels Xxxxxxx to Graco N.V.
dated October 19, 1993, February 14, 1994, September 16, 1994, February 21,
1996, October 7, 1996 (2 letters) and December 2, 1996. Pursuant to the letter
dated October 19, 1993, Graco N.V. received a loan from Bank Brussels Xxxxxxx in
an aggregate principal amount of 50 million Belgian francs, which matures in
February 1999. In addition, Graco N.V. may periodically borrow Belgian francs,
German marks and French francs under the credit facilities up to 96 million
Belgian francs, 300,000 German marks and 1 million French francs, respectively.*
16. REDI Fund loan of an aggregate principal amount of $750,000 to the
Company by the South Dakota Board of Economic Development, and the obligations
under the agreements and note pursuant to which such loan was made or under
which it is secured. The loan was made in June 1993 and matures in September
1998, at which time a balloon payment of approximately $576,000 is due.*
17. Industrial Development Refunding Revenue Bonds (Graco Inc. Project),
Series 1988, issued by the city of Golden Valley, Minnesota in an aggregate
original principal amount of $6,000,000, and the obligations under the
agreements pursuant to which such bonds were issued and under which they are
secured.*
18. Reference is hereby made to the disclosures made in Schedules 6.13(b)
and 6.14.
EXHIBIT A TO SCHEDULE 6.12(b)
(U.S. $ in thousands)
Total
Outstanding,
May
SHORT-TERM DEBT: 1998
------------
Subsidiaries:
Fuji Bank (500,000,000 yen credit -
line to Graco K.K)
Bank of Nova Scotia (4,000,000
Canadian dollar credit line to -
Graco Canada Inc.)
First National Bank of
Chicago-Japan (500,000,000 yen 3,124
credit line to Graco K.K.)
Seoul Bank of Korea (1,000,000,000
won loan to Graco Korea Inc.) 586
Bank Brussels Xxxxxxx (96,000,000
Belgian franc credit line to -
Graco N.V.)
Bank Brussels Xxxxxxx (1,000,000
French franc credit line to -
Graco N.V.)
Bank Brussels Xxxxxxx (300,000
German xxxx credit line to -
Graco N.V.)
Bank Overdrafts 386
------------
$4,096
============
Total
Amount Outstanding,
Due Within May
LONG-TERM DEBT: One Year 1998
------------- ------------
The Company:
Industrial Development Refunding
Revenue Bonds, City of Golden
Valley, Swap fixed rate 4.38%,
payable in annual installments 500 3,500
from 1993 - 2002
Federal Low Income Housing Tax
Credit, National Equity Fund,
payable in annual installments 405 807
from 1993 - 2000
Federal Low Income Housing Tax
credit, the Xxxxxxx Group,
payable in annual installments 310 980
from 1994 - 2002
Sioux Falls, South Dakota,
Revolving Economic Development
and Initiative Fund, 20 year
amortization at 2%, with
balloon payment of remaining 573 576
principal and interest due in
1998
Subsidiaries:
Graco N.V. - BBL Bank Nasselt
European Co & Steel Community,
6.40%, 50,000,000 Belgian
francs, payable in semi-annual - 1,375
installments, due February 1999
------------- ------------
$1,788 $7,238
============= ============
SCHEDULE 6.13(b)
EXISTING LIENS
1. Lien on certain equipment located at the Company's Sioux Falls, South
Dakota facility securing obligations of the Company to the South Dakota Board of
Economic Development related to the loan referred to in Item No. 16 of Schedule
6.12(b).
2. Lien on the Company's interest in National Equity Fund 1992 Limited
Partnership securing obligations of the Company to National Equity Fund 1992
Limited Partnership related to the investment referred to in Item No. 8 of
Schedule 6.12(b).
3. Lien in favor of Great West Life & Annuity Insurance Company, assignee
of USA Metropolitan Tax Credit Fund II L.P., on the Company's interest in USA
Metropolitan Tax Credit Fund II L.P. securing obligations of the Company related
to the investment referred to in Item No. 9 of Schedule 6.12(b).
4. Lien on the Company's property located at 0000 Xxxxx Xxxxxxxx Xxxxxxx,
Xxxxxx Xxxxxx, Xxxxxxxxx securing obligations of the Company to The Fuji Bank,
Limited, related to the letter of credit referred to in Item No. 7 of Schedule
6.12(b).
5. Lien in favor of The Fuji Bank, Limited, on certain of the bonds
referred to in Item No. 17 of Schedule 6.12(b) securing obligations of the
Company to The Fuji Bank, Limited, related to the letter of credit referred to
in Item No. 7 of Schedule 6.12(b).
SCHEDULE 6.14
EXISTING CONTINGENT OBLIGATIONS
1. Pursuant to the Guarantee dated September 30, 1988, the Company
guarantees the obligations of Graco Canada Inc. to The Bank of Nova Scotia up to
4,000,000 Canadian dollars under the credit facilities referred to in Item No.
11 of Schedule 6.12(b).
2. Pursuant to the Guaranty by the Company to The Fuji Bank, Limited re:
Graco K.K. Line of Credit dated September 25, 1997, the Company guarantees the
obligations of Graco K.K. to The Fuji Bank, Limited up to 500,000,000 Japanese
yen under the credit facilities referred to in Item No. 12 of Schedule 6.12(b).
3. Pursuant to the Continuing Guaranty dated November 1, 1991, the Company
guarantees the obligations of Graco K.K. to The First National Bank of Chicago
(f/k/a NBD Bank) up to 500,000,000 Japanese yen under the credit facilities
referred to in Item No. 13 of Schedule 6.12(b).
4. Pursuant to letters from the Company to Bank Brussels Xxxxxxx dated
November 22, 1993, November 14, 1994, March 20, 1996 and May 30, 1997, the
Company guarantees the obligations of Graco N.V. to Bank Brussels Xxxxxxx up to
158,000,000 Belgian francs in the aggregate under the credit facilities referred
to in Item No. 15 of Schedule 6.12(b).
5. Reference is hereby made to the disclosures made in Items No. 1 through
7 of Schedule 6.12(b).
