EXHIBIT 10.1
CONDITIONAL WAIVER AND AMENDMENT NO. 4 TO CREDIT AGREEMENT
CONDITIONAL WAIVER AND AMENDMENT NO. 4, dated as of April 12, 2000
(this "Waiver and Amendment"), to the CREDIT AGREEMENT, dated as of May 21, 1998
(the "Credit Agreement"), among Apogee Enterprises, Inc., a Minnesota
corporation (the "Borrower"), each of the lenders from time to time parties
thereto (collectively, the "Lenders"), and The Bank of New York, as L/C Issuer,
Administrative Agent for the Lenders and Swing Line Lender, as such Credit
Agreement was amended by AMENDMENT NO. 1, dated as of July 22, 1998, CONDITIONAL
WAIVER AND AMENDMENT NO. 2, dated as of November 10, 1998. and WAIVER AND
AMENDMENT NO. 3, dated as of September 14, 1999.
RECITALS
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A. The Borrower, in connection with a joint venture with PPG Industries,
Inc. ("PPG"), proposes to contribute to the joint venture, to be known as PPG
Auto Glass, LLC, certain of its assets relating to its wholesale autoglass
distribution business, which assets are held by a number of its subsidiaries.
B. The Credit Agreement places certain restrictions on the Borrower's
ability to transfer its assets.
C. The Lenders desire to waive these restrictions to the Credit Agreement
with respect the abovementioned contribution.
D. In addition, the parties desire to reduce the Total Commitment, make
various amendments to the Credit Agreement and enter into a security agreement
to secure certain assets and properties of the Borrower and its Subsidiaries.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Amendments.
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(a) Pursuant to Section 11.05 of the Credit Agreement, the definition
of "Applicable Margin" in Section 1.01(c) of the Credit Agreement shall be
amended to read in its entirety as follows:
"Applicable Margin" means, at any date and with respect to each
Loan, the applicable margin set forth below based upon the Debt/EBITDA
Ratio as of such date (it being understood that measurement of the
Debt/EBITDA Ratio as of any Measurement Date is sufficient for this
purpose):
Applicable Margin
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Eurodollar
Debt/EBITDA Ratio ABR Loans Loans
------------------------------------- ------------- --------------
3.50 or greater 1.000% 2.250%
3.00 or greater, but less than 3.50 0.750 2.000
2.50 or greater, but less than 3.00 0.500 1.750
2.00 or greater, but less than 2.50 0.375 1.625
Less than 2.00 0.250 1.500
(b) Pursuant to Section 11.05 of the Credit Agreement, the definition
of "EBITDA" in Section 1.01(c) of the Credit Agreement shall be amended to read
in its entirety as follows:
"EBITDA means, for any period, the consolidated net income of the
Borrower for such period, before subtracting consolidated income taxes,
Interest Expense, depreciation, and amortization (including, without
limitation, amortization associated with goodwill, deferred debt expenses,
restricted stock and option costs and non-competition agreements) of the
Borrower for such period. For purposes of this Agreement, the parties
hereto agree that the Borrower's (or any of its Subsidiaries') share of
the net income, before subtracting income taxes, interest expense,
depreciation, and amortization, from any unconsolidated joint venture
investments shall be included in EBITDA. In addition, the parties agree
that (i) income, expenses and charges relating to discontinued operations
(whether resulting in a net positive or a net negative) shall be excluded
from EBITDA and (ii) EBITDA shall be adjusted pro forma for any
acquisitions or divestitures by the Borrower or its Subsidiaries by adding
or subtracting, as the case may be, for the entire period for which EBITDA
is being calculated, the EBITDA (for such acquired or divested business,
calculated in accordance with this definition) attributable to any
acquired or divested business."
(c) Pursuant to Section 11.05 of the Credit Agreement, Section 1.01(c)
of the Credit Agreement shall be amended by adding the following definition of
"Fair Market Value" to that Section, which shall read in its entirety as
follows:
"Fair Market Value" means, with respect to any assets or Property
(other than cash), the price that could be negotiated in an arm's-length
free market transaction for cash, between a willing seller and a willing
buyer, neither of whom is under pressure or compulsion to complete the
transaction. Unless otherwise specified, (i) in the case of assets or
Property with a net book value on the books of the Borrower or its
Subsidiaries at the date of determination less than $15,000,000, Fair
Market Value shall be determined by the chief financial officer or
treasurer of the Borrower acting in good faith and such determination
shall be evidenced by a certificate of the officer making such
determination, (ii) in the case of assets or Property with a net book
value on the books of the Borrower or its Subsidiaries at the date of
determination of greater than or equal to $15,000,000, but less than
$30,000,000, Fair Market Value shall be determined by the Board of
Directors of the Borrower acting in good faith and shall be evidenced by a
certified resolution of the Board of Directors of the Borrower, and (iii)
in the case of assets or Property with a net book value on the books of
the Borrower or its Subsidiaries at the date of determination of greater
than or equal to $30,000,000, Fair Market Value shall be determined by an
investment banking firm, accounting firm or appraisal firm of national
recognition that is not an Affiliate of
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the Borrower or any of its Subsidiaries, which firm shall evidence its
determination by a written opinion setting forth the Fair Market Value."
(d) Pursuant to Section 11.05 of the Credit Agreement, the definition
of "Security Release Date" in Section 1.01(c) of the Credit Agreement shall be
amended to read in its entirety as follows:
"Security Release Date" means, notwithstanding the prior occurrence of
any Security Release Date earlier than April 12, 2000, the earlier to
occur of (i) completion of the Subordinated Debt Transaction and (ii)
delivery by the Borrower of a certificate, signed by a Responsible
Officer, to the effect that during two consecutive fiscal quarters the
Debt/EBITDA Ratio has been below 2.50, provided, however, that in no event
shall the Security Release Date occur prior to March 1, 2001."
(e) Pursuant to Section 11.05 of the Credit Agreement, a subsection
(d) shall be added to the end of Section 2.03 of the Credit Agreement, which
shall read in its entirety as follows:
"(d) If the Borrower or any Subsidiary sells or leases any
substantial (as defined in Section 7.02(a)) part of its assets or Property
in reliance upon clause (iv) in the proviso to Section 7.02(a), the Total
Commitment shall be reduced by an amount equal to that portion of the
after-tax net cash proceeds of such transaction(s) in excess of 5% of the
total assets of the Borrower or such Subsidiary (computed based upon the
total assets of the Borrower or such Subsidiary set forth in the most
recently prepared balance sheet), provided that reductions pursuant to
this Section 2.03(d), and Sections 2.03(b) and 2.03(c), shall not be
required to exceed $100,000,000 in the aggregate during the term of this
Agreement beginning at the effectiveness of the reduction of the Total
Commitment to $200,000,000 pursuant to the terms and conditions of the
Conditional Waiver and Amendment No. 4, dated April 12, 2000."
(f) Pursuant to Section 11.05 of the Credit Agreement, a subsection
(e) shall be added to the end of Section 2.05 of the Credit Agreement, which
shall read in its entirety as follows:
"(e) If the Borrower or any Subsidiary sells or leases any substantial
(as defined in Section 7.02(a)) part of its assets or Property in reliance
upon clause (iv) in the proviso to Section 7.02(a), then not later than
the close of business on the third Business Day after the closing of any
such transaction, the Borrower shall prepay Loans and L/C Obligations in
an amount equal to that portion of the after-tax net cash proceeds of such
transaction(s) in excess of 5% of the total assets of the Borrower or such
Subsidiary (computed based upon the total assets of the Borrower or such
Subsidiary set forth in the most recently prepared balance sheet)."
(g) Pursuant to Section 11.05 of the Credit Agreement, Section 3.07(a)
of the Credit Agreement shall be amended to read in its entirety as follows:
"(a) The Commitment Fee. The Borrower agrees to pay to the
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Administrative Agent, for the respective accounts of the Lenders, on the
last day of each calendar quarter of each year, commencing with the first
such day after the Effective Date, and on the Commitment Termination Date,
a fee (the "Commitment Fee") computed by applying (i) the applicable
percentage per annum set forth below based on the Debt/EBITDA Ratio on
each day during the then-ending quarter (or shorter period ending with the
Commitment Termination Date) (it being
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understood that measurement of the Debt/EBITDA as of any Measurement Date
is sufficient for this purpose) to (ii) the Available Commitment on such
day:
Commitment Fee
Debt/EBITDA Ratio Percentage Per Annum
----------------- --------------------
3.50 or greater 0.450%
3.00 or greater, but less than 3.50 0.400
2.50 or greater, but less than 3.00 0.350
2.00 or greater, but less than 2.50 0.325
Less than 2.00 0.300
(h) Pursuant to Section 11.05 of the Credit Agreement, Section 7.02(a)
of the Credit Agreement shall be amended to read in its entirety as follows:
"(a) Mergers, Consolidations and Sales of Assets. Be a party to any
-------------------------------------------
merger, consolidation or share exchange, or sell, transfer, lease or
otherwise dispose of all or any substantial part of its assets or
Property, including any disposition of assets or Property as part of a
sale and leaseback transaction, or in any event sell or discount (with or
without recourse) any of its notes or accounts receivable, or permit any
Subsidiary so to do; provided, however, that this Section shall not apply
to nor operate to prevent (i) the Borrower being a party to any merger
where the Borrower is the surviving Person if, after giving effect to such
merger, no Default or Event of Default would then exist, (ii) any
Subsidiary (A) merging into the Borrower or (B) being a party to any
merger which does not involve the Borrower where a Subsidiary is the
surviving Person if, after giving effect to such merger, no Default or
Event of Default would then exist, (iii) the Borrower or any Subsidiary
from selling its inventory in the ordinary course of its business or (iv)
the Borrower or any Subsidiary from selling or leasing any substantial
part of its assets (including, without limitation, notes and accounts
receivable) or Property, including any disposition of assets or Property
as part of a sale and leaseback transaction, as long as (A) the
consideration to be paid for such assets or Property at the time of the
closing of any such transaction is Fair Market Value for such assets or
Property and at least 75% in the form of cash or cash equivalents, (B) the
Borrower complies with Sections 2.03(d) and 2.05(e) and (C) all sales or
leases pursuant to the exception in this clause (iv) shall not, in the
aggregate, exceed $100 million. The term "substantial" as used herein
shall mean an amount in excess of 5% of the total assets of the Borrower
or such Subsidiary (computed based upon the total assets of the Borrower
or such Subsidiary set forth in the most recently prepared balance sheet)
per year. For purposes of this Section 7.02(a) the Property of the
Borrower and its Subsidiaries shall be valued at the greater of book or
Fair Market Value of such Property."
(i) Pursuant to Section 11.05 of the Credit Agreement, Section
7.02(d)(xiii) of the Credit Agreement shall be amended to read in its entirety
as follows:
"(xiii) notwithstanding Section 7.02(d)(ix),
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(A) additional Investments in joint ventures existing as of
the date hereof, provided that (1) no Default or Event of Default
exists or would exist after giving effect to such Investments and (2)
the aggregate purchase price to be paid after the date hereof for such
Investments do not exceed $40,000,000; and
(B) additional Investments in that certain joint venture,
the primary vehicle for which is a limited liability company known as
PPG Auto Glass, LLC, provided that (1) all such Investments do not
exceed, in the aggregate, $5,000,000 during any fiscal year and (2) any
amount of additional Investments in this joint venture shall be
subtracted from the maximum allowable amount of Capital Expenditures
under Section 7.02(e) for the fiscal year in which the additional
Investment is made."
(j) Pursuant to Section 11.05 of the Credit Agreement,
Sections 7.02(e) and (f) of the Credit Agreement shall be amended to read in
their entirety as follows:
"(e) Capital Expenditures. Make any Capital Expenditures, or
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permit any Subsidiary so to do, exceeding, in the aggregate for the
Borrower and the Subsidiaries, $30,000,000 in the fiscal year 2001 and
$40,000,000 in any one fiscal year thereafter; provided that after the
second anniversary hereof and notwithstanding the foregoing, the Borrower
and its Subsidiaries may make additional Capital Expenditures up to an
aggregate of $50,000,000 for the construction of glass technology
facilities.
(f) Dividends and Purchase of Stock. (i) Declare any
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dividends (other than dividends payable in capital stock of the Borrower)
on any shares of any class of its capital stock, or apply any of its
Property or assets to the purchase, redemption or other retirement of, or
set apart any sum for the payment of any dividends on, or for the
purchase, redemption or other retirement of, or make any other
distribution by reduction of capital or otherwise in respect of, any
shares of any class of capital stock of the Borrower, or permit any
Subsidiary which is not a Wholly Owned Subsidiary so to do, or permit any
Subsidiary to purchase or acquire any shares of any class of capital stock
of the Borrower, unless, immediately after giving effect to such action,
(A) there shall not have occurred any Default or Event of Default that is
continuing and (B) the aggregate amount of such payments and distributions
during any 12-month period shall not have exceeded 110% of such aggregate
amounts paid or distributed in the 12-month period preceding such 12-month
period; and
(ii) Permit any Subsidiary to (x) issue a Guaranty or (y)
enter into any agreement or instrument which by its terms restricts the
ability of such Subsidiary to (A) declare or pay dividends or make similar
distributions, (B) repay principal of, or pay any interest on, any
Indebtedness owed to the Borrower or any Subsidiary described in Section
7.02(d)(xi)(A), (C) make payments of royalties, licensing fees and similar
amounts to the Borrower or any other Subsidiary, (D) make loans or
advances to the Borrower or any other Subsidiary or (E) permit the
Borrower to engage in consolidated cash management consistent with its
current practices."
(k) Pursuant to Section 11.05 of the Credit Agreement,
Sections 7.03(b), (c) and (d) of the Credit Agreement shall be amended to read
in their entirety as follows:
"(b) Interest Coverage Ratio. The ratio of (i) EBITDA to
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(ii) Interest Expense for the twelve-month period ending on the last day
of any fiscal quarter to be less than (A) 2.75 through and including March
2, 2001 or (B) 3.00 after March 2, 2001.
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(c) Senior Debt/EBITDA Ratio. The Senior Debt/EBITDA Ratio to exceed
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the ratio specified below:
Date Ratio
---- -----
Through December 1, 2000 4.00
After December 1, 2000 through March 2, 2001 3.50
After March 2, 2001 through March 1, 2002 3.25
After March 1, 2002 2.75
(d) Debt/EBITDA Ratio. The Debt/EBITDA Ratio to exceed the ratio
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specified below:
Date Ratio
---- -----
Through December 1, 2000 4.25
After December 1, 2000 through March 2, 2001 3.75
After March 2, 2001 through March 1, 2002 3.50
After March 1, 2002 3.25."
(l) Pursuant to Section 11.05 of the Credit Agreement, the parties
hereby agree to reduce the Total Commitment, on a pro rata basis, to
$200,000,000. As of the date hereof, taking into account such reduction of the
Total Commitment, the Commitment of each Lender shall be as follows:
Lender Commitment % of Total Commitment
------ ---------- ---------------------
The Bank of New York $36,363,637.20 18.00000000%
U.S. Bank National Association $30,909,090.80 15.45454540%
Xxxxxx Trust and Savings Bank $27,272,727.20 13.00000000%
The Bank of Nova Scotia $23,636,363.60 11.00000000%
Comerica Bank $23,636,363.60 11.81818180%
The Sumitomo Bank, Limited $18,181,818.00 9.00000000%
Firstar Bank of Minnesota, N.A. $18,181,818.00 9.09090900%
Xxxxx Fargo Bank, N.A. $10,909,090.80 5.00000000%
Regions Bank $10,909,090.80 5.45454550%
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Section 2. Conditional Waivers.
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(a) The Borrower represents and warrants to the Lenders that the
description of the transactions appearing in Exhibit 1, regarding a proposed
joint venture (the "Joint Venture") between the Borrower, certain of its
Subsidiaries and PPG, including creation of a limited liability company to
purchase, market and sell automotive glass parts and related supplies for sale
to wholesalers and automotive glass retailers located primarily in the United
States, (i) is true, complete and correct in all material respects as of the
date hereof and (ii) contains true, complete and correct descriptions of all
documents to be entered into or otherwise executed in connection with the
establishment of the Joint Venture (such documents to be known as the "JV
Documents").
(b) Pursuant to Section 11.05(a) of the Credit Agreement, the Lenders
hereby waive, insofar as necessary to permit the Borrower and its Subsidiaries
initially to participate in, contribute to, execute documents establishing, and
otherwise undertake the transactions contemplated by, the Joint Venture, the
restrictions contained in (i) Section 7.02(a) of the Credit Agreement on sales,
transfers or other dispositions of a substantial part of the assets or property
of the Borrower or its Subsidiaries and (ii) Section 7.02(d) of the Credit
Agreement on investments, acquisitions, loans, advances and guaranties, in each
case subject to the conditions contained in this Waiver. Anything herein or
elsewhere to the contrary notwithstanding, such waivers are granted only insofar
as necessary to permit the Joint Venture.
(c) JV Documents Condition. The parties hereto understand that this Waiver
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and Amendment is being executed and delivered prior to the execution of
definitive JV Documents (such date of the execution of definitive JV Documents
to be known herein as the "JV Execution Date"). The waivers set forth in Section
2(b) above shall become effective as of the date of execution of this Waiver and
Amendment only insofar as necessary to permit the Borrower and its certain
Subsidiaries to execute the definitive JV Documents. The waivers in Section 2(b)
above will not become fully effective to permit the "Closing" of the Joint
Venture (as such term is defined in the JV Documents) until the following
conditions are satisfied, and shall become null, void and unenforceable if any
of the following conditions are not satisfied:
(i) promptly upon execution of the definitive JV Documents, the
Borrower shall have provided a copy of the executed JV Documents (including
any and all schedules and exhibits thereto) to the Administrative Agent by
facsimile or other electronic means or overnight mail for delivery on the
date following the JV Execution Date; and
(ii) the Administrative Agent, after consultation with the Lenders,
but in its sole discretion, shall have determined that the representations,
warranties, covenants, agreements and other provisions of the JV Documents
are acceptable to the Administrative Agent and are acceptable in light of
the descriptions of the Joint Venture and the JV Documents in Exhibit 1.
The Administrative Agent shall, as promptly as practicable after the delivery of
the JV Documents pursuant to Section 2(c)(i), notify the Borrower of its
determination under Section 2(c)(ii).
(d) Performance Condition. In addition to the conditions of Section 2(c)
---------------------
above, and in consideration of the grant of the waivers described in section
2(b) above, the parties hereto agree that:
(i) the value of the assets transferred by Borrower or any of its
Subsidiaries to the Joint Venture shall not exceed $45 million in net
book value,
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(ii) the consummation of the Joint Venture shall occur on or
prior to December 31, 2000,
(iii) any borrowings by, or other indebtedness of, the Joint
Venture, to the extent that the same may create any obligation or
liability, contingent or otherwise, of the Borrower or any Subsidiary,
shall be in accordance with the obligations and negative covenants of
the Borrower and its Subsidiaries contained in the Credit Agreement
(including, without limitation, the restrictions on Investments in
Section 7.02(d) of the Credit Agreement), and
(iv) for the avoidance of doubt, the limited liability company
established by the Joint Venture shall not be considered a
"Subsidiary" of the Borrower for purposes of the Credit Agreement and
other Credit Documents. The Borrower agrees to, and shall cause its
Subsidiaries to, comply with all provisions of the Credit Agreement
and other Credit Documents, including, but not limited to, the
negative covenants contained in Section 7.02 of the Credit Agreement,
in connection with any contribution or capital infusion to (other than
the initial contribution of capital at the "Closing" of the Joint
Venture, as such term is defined in the JV Documents), any investment
in, any sale, lease, transfer or disposal of assets to, or any loan or
granting of other credit to, such limited liability company.
Failure to satisfy the conditions in Section 2(c) and this section 2(d) shall
result in the waivers granted in Section 2(b) being null, void and
unenforceable.
Section 3. Security Agreement.
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(a) The Borrower agrees to enter into, and shall cause the Subsidiaries
listed on Schedule A hereto to enter into, a security agreement (the "New
Security Agreement") with The Bank of New York, as Administrative Agent and
Collateral Agent, in substantially the same form (with such modifications to the
Collateral as indicated on Schedule B hereto and as otherwise approved by the
Administrative Agent) as the Security Agreement, dated as of May 21, 1998, as
amended, among the Borrower, the debtors party thereto and The Bank of New York,
as Administrative Agent and Collateral Agent, as promptly as reasonably possible
after the date hereof, but in any event no later than 3 Business Days after the
JV Execution Date.
(b) In addition, the Borrower agrees to, at the time of the execution and
deliverance of the New Security Agreement, deliver to the Administrative Agent
(i) copies of Financing Statements (Form UCC-1) to be filed under the Uniform
Commercial Code in the locations approved by the Administrative Agent, and other
financing documents as provided in the New Security Agreement, (ii) evidence
reasonably satisfactory to the Administrative Agent with respect to the
Collateral Agent's first priority security interest in such collateral, other
than collateral subject to Permitted Liens (which may include, but shall not be
limited to, certified copies of Request for Information (Form UCC-11) or
equivalent reports, listing all financing statements which name the Borrower or
any Subsidiary as debtor and which are on file, as of a recent date prior to the
date of the New Security Agreement, in all relevant jurisdictions listed in the
New Security Agreement).
(c) For purposes of the Credit Agreement and all other Credit Documents,
at the time the New Security Agreement is duly executed and delivered by the
parties thereto the term "Security Agreement" shall thereafter mean the New
Security Agreement.
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Section 4. Miscellaneous.
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(a) All capitalized terms not otherwise defined in this Waiver and
Amendment shall have the meanings ascribed to them in the Credit Agreement.
(b) All provisions in Article XI of the Credit Agreement shall apply to
this Waiver and Amendment with equal force and effect as if restated completely
herein.
(c) Except as set forth in this Waiver and Amendment, the Credit Agreement
shall remain in full force and effect without amendment, modification or waiver.
Execution and delivery hereof by a Lender shall not preclude the exercise by
such Lender of any rights under the Credit Agreement (as amended by Section 1
hereof).
(d) This Waiver and Amendment shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such state.
(e) This Waiver and Amendment shall be effective on the first date as of
which a counterpart hereof has been executed and delivered to the Administrative
Agent under the Credit Agreement by the Borrower and the Required Lenders under
the Credit Agreement; provided, however, that Sections 1 and 3 of this Waiver
and Amendment shall become effective on the earlier of (i) the JV Execution Date
and (ii) June 1, 2000.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver and
Amendment to be duly executed as of the date first above written.
APOGEE ENTERPRISES, INC.
By :________________________________
Name:
Title:
THE BANK OF NEW YORK, as Administrative
Agent, L/C Issuer and Swing Line Lender
in the Credit Agreement
By: _________________________________
Name:
Title:
LENDERS (and other Agents)
-------------------------
THE BANK OF NEW YORK, as a
Lender in the Credit Agreement
By: _________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Syndication Agent and a Lender in
the Credit Agreement
By: _________________________________
Name:
Title:
XXXXXX TRUST AND SAVINGS BANK,
as Documentation Agent and a Lender in
the Credit Agreement
By: _________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA, as
Co-Agent and a Lender in the Credit
Agreement
By: _________________________________
Name:
Title:
COMERICA BANK, as Co-Agent and a Lender
in the Credit Agreement
By: _________________________________
Name:
Title:
FIRSTAR BANK OF MINNESOTA,
N.A., as a Lender in the Credit
Agreement
By: _________________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED,
as a Lender in the Credit Agreement
By: _________________________________
Name:
Title:
XXXXX FARGO BANK, N.A., as a Lender in
the Credit Agreement
By: _________________________________
Name:
Title:
REGIONS BANK, as a Lender in the Credit
Agreement
By: _________________________________
Name:
Title:
